Quebec 18-K/A Annual report (foreign governments) (amended)

Exhibit 99.8

PUBLIC ACCOUNTS 2022-2023	Consolidated Financial Statements of the Gouvernement du Québec

Fiscal year ended March 31, 2023

Published in accordance with section 86

of the Financial Administration Act (CQLR, chapter A-6.001)

Public Accounts 2022-2023 – Volume 1

Legal deposit – Bibliothèque et Archives nationales du Québec

December 2023

ISSN 0706-2850 (Print version)

ISSN 1925-1823 (PDF)

© Gouvernement du Québec, 2023

His Honour the Honourable J. Michel Doyon

Lieutenant-Governor of Québec

Parliament Building

Québec

Your Honour,

I am pleased to present you with the Public Accounts of the Gouvernement du Québec for the fiscal year ended March 31, 2023. They are presented in two volumes:

Volume 1 includes the consolidated financial statements of the Gouvernement du Québec audited by the Auditor General of Québec, a financial analysis of these financial statements, the budgetary balance established in accordance with the Balanced Budget Act, the balance of the stabilization reserve as well as changes in main trends, including those of the government’s consolidated revenue and expenditure, net debt and gross debt over 10 fiscal years.

Volume 2 includes the report of excess expenditures and other costs of budgetary departments and bodies over appropriations approved by Parliament and the report of special funds’ excess expenditures and investments over amounts approved by Parliament as well as detailed information for each department, budgetary body, and special fund.

Respectfully yours,

Eric Girard
Minister of Finance

Québec, December 2023

Mr. Eric Girard

Minister of Finance

Parliament Building

Québec

Dear Minister,

In accordance with the commission entrusted to me, I have the honour of presenting the Public Accounts of the Gouvernement du Québec for the fiscal year ended March 31, 2023. These accounts have been prepared under section 86 of the Financial Administration Act (CQLR, chapter A-6.001), in accordance with the government’s accounting policies and the public sector accounting standards.

Respectfully yours,

Lucie Pageau, CPA
Comptroller of Finance

Québec, December 2023

Table of contents

Presentation of the Public Accounts		1
Section A: Analysis of the consolidated financial statements
1.	Highlights of the 2022-2023 fiscal year	5
2.	Variance analysis	8
	2.1.    Own-source revenue	9
	2.2.    Federal government transfers	15
	2.3.    Consolidated expenditure	18
3.	Balanced Budget Act	37
4.	Analysis of main trends	40
5.	Results of the indicator analysis	52
6.	Additional information	64
Appendix 1: Risks and uncertainties		68
Section B: Consolidated financial statements
Statement of responsibility		73
Independent Auditor’s Report		75
Consolidated statement of operations and accumulated operating deficit		81
Consolidated statement of financial position		82
Consolidated statement of change in net debt		83
Consolidated statement of remeasurement gains and losses		84
Consolidated statement of cash flow		85
Notes to the consolidated financial statements		87
Glossary		197

Presentation of the Public Accounts

The Public Accounts 2022-2023 have been prepared by the Comptroller of Finance for the Minister of Finance in accordance with the accounting policies adopted by the Conseil du trésor and the public sector accounting standards and pursuant to the provisions of section 86 of the Financial Administration Act (CQLR, chapter A-6.001). They are published in two volumes. In addition to these volumes, further information is published on the Ministère des Finances website in the section Public Accounts 2022-2023 – In brief.

Volume 1 – Consolidated financial statements of the Gouvernement du Québec

Volume 1 presents the results and financial position of the Gouvernement du Québec. The financial operations include those of the National Assembly, of the people it appoints, of the government departments, and of all bodies, funds and enterprises controlled by the government.

Volume 1 presents a financial analysis to increase the usefulness and transparency of these consolidated financial statements. The analysis includes the highlights for the 2022-2023 fiscal year and compares the actual results with both forecast results forecast in the 2022-2023 budget and the 2021-2022 results. It also presents the government’s budget balance in compliance with the Balanced Budget Act as well as the stabilization reserve’s balance. Finally, it presents the development of main trends relating to important items in the consolidated financial statements and the outcome of the analysis of 11 indicators.

In accordance with the Auditor General Act (CQLR, chapter V-5.01), the Auditor General of Québec prepares an Independent Auditor’s Report included with the government’s consolidated financial statements and in which she expresses her opinion on the financial statements.

Volume 2 – Financial information on the Consolidated Revenue Fund: general fund and special funds

Volume 2 presents the financial information on the Consolidated Revenue Fund, which is made up of the general fund and the special funds. This volume is divided into two sections. The first section shows the revenue of government departments and budget-funded bodies, their authorized appropriations, the expenses and other costs charged to each of these appropriations and, lastly, the financial operations of the specified purpose accounts they administer. The second section presents the revenue of the special funds as well as their approved and realized expenses and investments.

Acknowledgements

Preparing the Public Accounts requires the participation and collaboration of many employees from different government departments, funds, bodies, and organizations in the health and social services, education and higher education networks as well as employees from government enterprises. We would like to thank all of them for their help in preparing these documents.

PUBLIC ACCOUNTS 2022-2023 1

ANALYSIS OF THE

CONSOLIDATED

FINANCIAL STATEMENTS

▌ 1.  Highlights of the 2022-2023 fiscal year

Summary of consolidated results

Fiscal year ended March 31, 2023

(millions of dollars)

	Budget 2022-2023 (1),(2)			Actual results as at March 31, 2023			Change compared with Budget						Actual results as at March 31, 2022 (3)		Change compared with the 2021-2022 actual results
							M$			%			(restated)		M$			%
REVENUE
Income and property taxes		60 506			64 521			4 015			6.6			62 328		2 193			3.5
Consumption taxes		26 706			26 597			(109	)		(0.4	)		24 597		2 000			8.1
Duties and permits		5 171			5 741			570			11.0			6 057		(316	)		(5.2	)
Miscellaneous revenue		11 680			12 083			403			3.5			10 705		1 378			12.9
Revenue from government enterprises		5 628			6 620			992			17.6			5 960		660			11.1
Own-source revenue		109 691			115 562			5 871			5.4			109 647		5 915			5.4
Federal government transfers		28 790			28 737			(53	)		(0.2	)		29 184		(447	)		(1.5	)
Total revenue		138 481			144 299			5 818			4.2			138 831		5 468			3.9
EXPENDITURE
Santé et Services sociaux		54 459			59 406			4 947			9.1			56 668		2 738			4.8
Éducation		18 689			19 499			810			4.3			17 405		2 094			12.0
Enseignement supérieur		10 010			9 655			(355	)		(3.5	)		8 747		908			10.4
Famille		7 893			7 835			(58	)		(0.7	)		7 277		558			7.7
Transports et Mobilité durable		7 115			6 451			(664	)		(9.3	)		7 017		(566	)		(8.1	)
Emploi et Solidarité sociale		5 390			8 983			3 593			66.7			8 385		598			7.1
Affaires municipales et Habitation		3 929			4 928			999			25.4			3 541		1 387			39.2
Économie, Innovation et Énergie		3 656			3 205			(451	)		(12.3	)		3 064		141			4.6
Environnement, Lutte contre les changements climatiques, Faune et Parcs		1 859			1 673			(186	)		(10.0	)		1 730		(57	)		(3.3	)
Others portfolios		17 144			15 608			(1 536	)		(9.0	)		13 739		1 869			13.6
Sub-total		130 144			137 243			7 099			5.5			127 573		9 670			7.6
Debt service		8 842			10 058			1 216			13.8			8 640		1 418			16.4
Total expenditure		138 986			147 301			8 315			6.0			136 213		11 088			8.1
Provision for economic risks and other support and recovery measures		2 500						(2 500	)		(100.0	)
(DEFICIT) ANNUAL OPERATING SURPLUS		(3 005	)		(3 002	)		3			—			2 618		(5 620	)		—

(1) These numbers correspond to data presented in Budget 2022-2023 of the Ministère des Finances tabled on March 22, 2022, adjusted to reflect changes in the composition of portfolios following shifts in ministers’ responsibilities in the fall of 2022. In addition, the forecast related to the change in application of the accounting standard respecting transfer payments as well as certain items that were presented differently in budget have been reclassified in the different portfolios to ensure their comparability with the actual expenditures recorded at March 31, 2023. Details of these reclassifications are presented in Note 3 of the consolidated financial statements.

(2) For the purposes of establishing budget forecasts, certain factors that constitute risk and uncertainty factors do not depend directly on the government but can lead to real results that differ from those anticipated. Such factors are presented in Appendix 1, “Risks and uncertainties”.

(3) Certain figures for 2021-2022 have been reclassified for consistency with the presentation adopted as at March 31, 2023.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 5

1.  Highlights of the 2022-2023 fiscal year (cont’d)

6 PUBLIC ACCOUNTS 2022-2023

1.  Highlights of the 2022-2023 fiscal year (cont’d)

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 7

1.  Highlights of the 2022-2023 fiscal year (cont’d)

Budget balance

In Budget 2022-2023, tabled on March 22, 2022, the government forecast a deficit of $3 005 million for fiscal 2022-2023 as well as a budgetary deficit of $6 450 million within the meaning of the Balanced Budget Act (CQLR, chapter E-12.00001), taking into account the payment of $3 445 million in dedicated revenue to the Generations Fund.

The consolidated financial statements of the Gouvernement du Québec for the fiscal year ended March 31, 2023 show an annual operating deficit of $3 002 million. Taking into account deposits of revenues dedicated to the Generations Fund of $3 082 million, the budgetary balance for the fiscal year ended March 31, 2023 shows a deficit of $6 084 million. Within the meaning of the Balanced Budget Act, after using the entire stabilization reserve, the government’s budgetary balance shows a deficit of $5 635 million.

In 2021-2022, in the context of the pandemic and in order to gradually reduce the deficit without adversely affecting services to Quebecers nor the sustainable recovery of economic growth, the provisions of the Balanced Budget Act prohibiting an actual or forecast budgetary deficit, and those requiring the elimination of any deficit, were suspended. These suspensions remained in effect until 2022-2023. The lifting of these suspensions, announced in the 2023-2024 budget speech, became effective on April 1, 2023. In accordance with the provisions of the Act, the plan to restore fiscal balance that accompanied the 2023-2024 budget provides a framework for forecast deficits until a balanced budget is achieved in 2027-2028.

▌ 2.  Variance analysis

In accordance with the standards set out by the Public Sector Accounting Board, the financial analysis that accompanies the government’s consolidated financial statements compares real results with those in its initial budget, adjusted to take into account some reclassifications,¹ as well as those of the previous fiscal year.

¹ The budget forecasts for expenditures by portfolios have been reclassified to ensure comparability with actual expenditures recorded as at March 31, 2023. Details of these reclassifications are presented in Note 3, “Reclassification of comparative financial information” of the consolidated financial statements.

8 PUBLIC ACCOUNTS 2022-2023

2.  Variance analysis (cont’d)

2.1. Own-source revenue

Income and property taxes

Fiscal year ended March 31, 2023

(millions of dollars)

	Budget 2022-2023		Actual results as at March 31, 2023		Change with 2022-2023 budget						Actual results as at March  31, 2022		Change with 2021-2022 actual results
					M$			%					M$		%
Personal income tax		41 147		42 251		1 104			2.7			40 924		1 327		3.2
Contributions for health services		7 299		7 914		615			8.4			7 402		512		6.9
Corporate taxes		10 882		13 243		2 361			21.7			12 926		317		2.5
School property tax		1 178		1 113		(65	)		(5.5	)		1 076		37		3.4
TOTAL		60 506		64 521		4 015			6.6			62 328		2 193		3.5

The 2022-2023 forecast of $60 506 million reflected mainly the effects of increased economic activity on tax revenues, including higher personal income tax revenues. This increase was due in particular to growth in household income, which in turn was supported by the recovery in employment and growth in wages and salaries. The forecast for corporate taxes took into account a favourable trend in economic activity, but still reflected a decrease compared with actual results as at March 31, 2022, given the exceptional nature of the increase in the net operating surplus of corporations in 2021-2022, partly supported by non-recurring government support measures related to the pandemic.

The increase in nominal GDP of 8.4% in 2022, compared to the forecast of 6.4% announced in the 2022-2023 budget, essentially reflects stronger-than-expected price growth. This significant rise in prices has translated into favourable trends in tax revenues, up 6.6% compared with the forecast.

The increase in wages and salaries, supported by a strong labour market, had a direct impact on personal income tax revenue and revenue from contributions to health services, explaining a large part of the 2.7% and 8.4% variations from the budget, and the 3.2% and 6.9% increases from the actual results as at March 31, 2022.

The changes associated with personal income tax also take into account the reduction in income attributable to the 1-percentage-point reduction in the first two tax brackets as of January 1, 2023, and the 6.44% indexation of the tax system¹ for 2023, linked to the increase in consumer prices.

Moreover, the net operating surplus of corporations, which is higher than in 2021-2022, and its more favourable trend than forecast, account for most of the 2.5% increase in revenues from corporate taxes compared with actual results as at March 31, 2022, and the 21.7% change in revenues from corporate taxes compared with the forecast.

¹ Statutory indexation of the main parameters of the personal income tax system, namely the various tax brackets, the basic amount and several deductions and tax credits. The indexation rate is determined by the increase in the Québec consumer price index, excluding alcohol, tobacco and recreational cannabis.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 9

2.  Variance analysis (cont’d)

2.1. Own-source revenue (cont’d)

Consumption taxes

Fiscal year ended March 31, 2023

(millions of dollars)

	Budget 2022-2023		Actual results as at March 31, 2023		Change with 2022-2023 budget						Actual results as at March 31, 2022		Change with 2021-2022 actual results
					M$			%			M$					%
Sales		22 940		22 911		(29	)		(0.1	)		20 894		2 017			9.7
Fuel		2 141		2 157		16			0.7			2 090		67			3.2
Tobacco		899		817		(82	)		(9.1	)		893		(76	)		(8.5	)
Alcoholic beverages		637		635		(2	)		(0.3	)		638		(3	)		(0.5	)
Cannabis		89		77		(12	)		(13.5	)		82		(5	)		(6.1	)
TOTAL		26 706		26 597		(109	)		(0.4	)		24 597		2 000			8.1

The 2022-2023 forecast of $26 706 million reflected notably the growth in household consumption¹ compared with the previous year, supported among other things by reduced uncertainty linked to the pandemic, by government initiatives to offset the rising cost of living, and by the disbursement of a portion of accumulated household savings.

As at March 31, 2023, revenue from consumption taxes, mainly the Québec sales tax, is generally comparable to forecasts, with a downward variation of 0.4%.

Compared with actual results as at March 31, 2022, revenue from consumption taxes is up 8.1%. As forecast, this change is explained by growing domestic demand, despite the mitigating effect of higher interest rates and inflation on household consumption.

Moreover, higher prices for goods and services, exacerbated in particular by supply constraints, rising energy prices, labour shortages and geopolitical tensions, also played a role in the rise in revenue from consumption taxes.

¹ Household consumption excluding food expenditures and shelter.

10 PUBLIC ACCOUNTS 2022-2023

2.  Variance analysis (cont’d)

2.1. Own-source revenue (cont’d)

Duties and permits

Fiscal year ended March 31, 2023

(millions of dollars)

	Budget 2022-2023		Actual results as at March 31, 2023		Change with 2022-2023 budget				Actual results as at March 31, 2022		Change with 2021-2022 actual results
					M$		%				M$			%
Motor vehicles		1 529		1 562		33		2.2		1 525		37			2.4
Natural resources		1 748		2 014		266		15.2		2 371		(357	)		(15.1	)
Greenhouse gas emissions		1 077		1 267		190		17.6		1 299		(32	)		(2.5	)
Other		817		898		81		9.9		862		36			4.2
TOTAL		5 171		5 741		570		11.0		6 057		(316	)		(5.2	)

The 2022-2023 forecast of $5 171 million, which was lower than actual results as at March 31, 2022, reflected the especially high level of revenue from duties and permits in 2021-2022, due in particular to non-recurring revenues from the auction of greenhouse gas (GHG) emission allowances. Additional revenues of $664 million were generated in 2021-2022 by the resale of unsold units from the May and August 2020 auctions. Moreover, this forecasted decline also took into account an expected decrease in the economic value of iron, which would affect government royalties from mining operations.

As at March 31, 2023, revenues from duties and permits of $5 741 million exceeded the forecast by 11.0%. This improvement is attributable in particular to a better-than-expected trend in revenue from mining royalties in the average unit price of units sold at the auction of GHG emission allowances.

Compared with actual results for 2021-2022, those for fiscal year 2022-2023 show a decrease of 5.2%, mainly attributable to additional revenues in 2021-2022 from the auction of GHG emission allowances and to variations in mining royalties, influenced by changes in market prices for metals. In this regard, the decrease in mining revenues between the two years can be explained both by the sustained metal prices of recent years and by the significant drop that followed in 2022-2023.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 11

2.  Variance analysis (cont’d)

2.1. Own-source revenue (cont’d)

Miscellaneous revenue

Fiscal year ended March 31, 2023

(millions of dollars)

	Budget 2022-2023		Actual results as at March 31, 2023		Change with 2022-2023 budget				Actual results as at March 31, 2022		Change with 2021-2022 actual results
					M$		%				M$		%
Miscellaneous revenue		11 680		12 083		403		3.5		10 705		1 378		12.9

The 2022-2023 forecast of $11 680 million reflected a generalized growth in the various revenues generated by the different organizations that make up the government, particularly those of the health and social services, education and higher education networks. Among other things, the forecast took into account an increase in revenues from tuition fees, linked to an expected growth in the higher education clientele.

Actual miscellaneous revenue as at March 31, 2023 of $12 083 million exceeds the forecast by 3.5%. This variation is due in particular to higher-than-forecast growth in interest income on tax receivables administered by the Agence du revenu du Québec, growth explained in part by the rise in interest rates.

Compared to the previous fiscal year’s actual results, revenue growth can be broken down as follows (millions of dollars):

	Actual results as at March 31, 2023		Actual results as at March 31, 2022		Change with 2021-2022 actual results
					M$			%
Sales of goods and services		5 741		5 311		430			8.1
User contributions		1 977		1 781		196			11.0
Income on accounts receivable and loans		1 052		541		511			94.5
Income on investments		525		636		(111	)		(17.5	)
Fines, forfeitures and recoveries		1 228		934		294			31.5
Third-party donations		1 003		966		37			3.8
Tuition fees		451		410		41			10.0
Transfers from entities other than the federal government		106		126		(20	)		(15.9	)
TOTAL		12 083		10 705		1 378			12.9

12 PUBLIC ACCOUNTS 2022-2023

2. Variance analysis (cont’d)

2.1. Own-source revenue (cont’d)

Miscellaneous revenue (cont’d)

The overall growth of $1 378 million is mainly the result of the increase relating to the sales of goods and services, user contributions as well as income on accounts receivable and loans.

Sales of goods and services

The variation of $430 million is due in particular to the increase in revenues collected by school service centres and school boards, notably for childcare services. This increase is due to revenue losses related to temporary school closures in 2021-2022 linked to the pandemic.

User contributions

The $196-million increase is mainly due to a $143-million increase in revenues from health and social services institutions, attributable among other things to growth in contributions from non-resident users, and to higher revenues from users of adult residential care in rehabilitation centres and residential and long-term care centres, the latter increase being explained in particular by rate increases.

Income on accounts receivable and loans

The $511-million increase is mainly due to higher interest income on tax claims administered by the Agence du revenu du Québec, due to higher interest rates on accounts receivable.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 13

2. Variance analysis (cont’d)

2.1. Own-source revenue (cont’d)

Revenue from government enterprises

Fiscal year ended March 31, 2023

(millions of dollars)

			Actual results			Change with						Actual results		Change with
	Budget		as at			2022-2023						as at		2021-2022
	2022-2023		March 31, 2023			budget						March 31, 2022		actual results
						M$			%					M$			%
Hydro-Québec		2 525		3 665			1 140			45.1			3 059		606			19.8
Société des alcools du Québec		1 360		1 427			67			4.9			1 349		78			5.8
Loto-Québec		1 383		1 597			214			15.5			1 118		479			42.8
Investissement Québec		256		(226	)		(482	)		(188.3	)		341		(567	)		(166.3	)
Other		104		157			53			51.0			93		64			68.8
TOTAL		5 628		6 620			992			17.6			5 960		660			11.1

The 2022-2023 forecast of $5 628 million reflected an increase in revenue from Loto-Québec, due to a return to full operation of its facilities, and a decrease in revenues from Hydro-Québec due to the anticipated drop in the net value of electricity exports.

Hydro-Québec

Contrary to forecasts, supported by sustained economic activity and skyrocketing world energy prices, the net value of Hydro-Québec’s electricity exports increased considerably, explaining both the 45.1% variation compared to the 2022-2023 budget and the 19.8% increase compared to actual results for 2021-2022. The increase compared with 2021-2022 is, however, partially offset by the rise in the corporation’s operating expenses, caused in particular by the growth in the business and the intensification of maintenance activities.

Investissement Québec

Revenues from Investissement Québec were 188.3% lower than forecast, and 166.3% lower than actual results as at March 31, 2022. The unfavourable return on investments in the Venture Capital and Investment Funds portfolio is mainly due to the volatility of rates on the stock markets and the uncertain economic context related to the inflationary environment, restrictive monetary policies and geopolitical risks.

Loto-Québec

The 15.5% variation from the forecast is due in particular to higher-than-expected growth in casino and gaming room customer traffic. In addition to the increase in customer traffic, the 42.8% increase over fiscal year 2022-2023 results from the negative impact of the pandemic on the corporation’s performance in 2021-2022, due in part to the closure of gaming establishments between April and June 2021.

14 PUBLIC ACCOUNTS 2022-2023

2. Variance analysis (cont’d)

2.2. Federal government transfers

Federal government transfers

Fiscal year ended March 31, 2023

(millions of dollars)

			Actual results		Change with						Actual results		Change with
	Budget		as at		2022-2023						as at		2021-2022
	2022-2023		March 31, 2023		budget						March 31, 2022		actual results
					M$			%					M$			%
Equalization		13 666		13 666		—			—			13 119		547			4.2
Health transfers		7 078		7 082		4			0.1			8 203		(1 121	)		(13.7	)
Transfers for post-secondary education and other social programs		1 531		1 294		(237	)		(15.5	)		1 529		(235	)		(15.4	)
Other programs		6 515		6 695		180			2.8			6 333		362			5.7
TOTAL		28 790		28 737		(53	)		(0.2	)		29 184		(447	)		(1.5	)

The 2022-2023 forecast of $28 790 million assumed that certain federal government transfers resulting from agreements reached in the context of the pandemic were non-recurring.

As at March 31, 2023, federal government transfers of $28 737 million are essentially in line with the forecast, with a downward variation of $53 million, or 0.2%.

This variation is mainly attributable to a higher-than-forecast increase in the value of the Québec special abatement,¹ resulting in a greater-than-forecast decrease of $361 million in transfers for health, and of $222 million in transfers for post-secondary education and other social programs.

Moreover, the following items partially offset this downward variation compared with the forecast:

● a one-time transfer of $450 million in 2022-2023, under the Canada Health Transfer, to catch up on surgeries;

● higher-than-forecast revenues of $180 million from the “Other programs” category, due in particular to transfer revenues from the federal government for personal protective equipment (PPE) and other supplies received and used by March 31, 2023.

¹ The Québec special abatement (16.5% of federal personal income tax collected in Québec) is subtracted from federal government transfer revenues.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 15

2. Variance analysis (cont’d)

2.2. Federal government transfers (cont’d)

Compared with actual results for 2021-2022, those for 2022-2023 show a decrease of $447 million, due to the net impact of the following items:

Equalization

The growth of $547 million, or 4.2%, in equalization revenues is explained by the increase in the equalization envelope across Canada, whose growth is linked to that of Canada’s nominal GDP.

Health transfers

The $1 121-million decrease in health transfers is due in particular to:

● one-time transfers in 2021-2022, including:

¾ $902 million as a supplementary Canada Health Transfer to support Québec in managing the pandemic,

¾ $226 million for Canada’s COVID-19 immunization plan,

¾ $221 million for the long-term care component of the health funding agreement;

● a $361-million decrease due to an upward revision in the value of the Québec special abatement, a portion of which is subtracted from the Canada Health Transfer.

The decrease is partially offset by:

● a one-time transfer of $450 million in 2022-2023 from the Canada Health Transfer to catch up on surgeries;

● an increase of $402 million in 2022-2023 related to the indexation of the Canada Health Transfer.

Transfers for post-secondary education and other social programs

The $235-million decrease is mainly due to the increase of the value of the Québec special abatement,¹ a portion of which is deducted from the Canada Social Transfer, reducing transfer revenues for post-secondary education and other social programs by $221 million.

Other programs

The $362-million increase in transfer revenues for other programs is explained by various changes:

● a $341-million increase in revenues from the asymmetrical childcare agreement signed in 2021-2022 for a period of 5 years;

● an additional transfer of $197 million from the federal government to support public transit authorities in the wake of the pandemic;

● an increase of $152 million in transfers related to the gas tax and Québec contribution programs, mainly for the “Infrastructure and drinking water” component.

16 PUBLIC ACCOUNTS 2022-2023

2. Variance analysis (cont’d)

2.2. Federal government transfers (cont’d)

Other programs (cont’d)

These increases are largely offset by:

● the downward variation of $235 million related to the increase in reimbursements under the youth allowance program, reimbursements which are deducted from revenues;

● a $239-million decrease in federal transfer revenues related to pandemic-related personal protective equipment (PPE) and other supplies received and used by March 31, 2023;

● the one-time transfer in 2021-2022 of $130 million related to the Safe Return to Class Fund agreement, aimed at ensuring the safety of students and staff in the context of the pandemic.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 17

2. Variance analysis (cont’d)

2.3. Consolidated expenditure

Santé et services sociaux

Fiscal year ended March 31, 2023

(millions of dollars)

			Actual results		Change with				Actual results		Change with
	Budget		as at		2022-2023				as at		2021-2022
	2022-2023		March 31, 2023		budget				March 31, 2022		actual results
					M$		%		(restated)		M$		%
Transfers				8 168						6 626		1 542		23.3
Remuneration				36 490						35 969		521		1.4
Operating				14 627						13 996		631		4.5
Doubtful accounts and other allowances				121						77		44		57.1
TOTAL		54 459		59 406		4 947		9.1		56 668		2 738		4.8

This portfolio includes mainly the activities of the health and social services network institutions and the programs administered by the Régie de l’assurance maladie du Québec. It also includes the expenditures of other health-related government agencies such as Héma-Québec.

Change with 2022-2023 budget

This portfolio’s expenditures for 2022-2023, at $59 406 million, exceeded forecasts by $4 947 million, a variation of 9.1%. This variance is mainly due to:

● an increase in the senior assistance refundable tax credit announced in the Update on Québec’s Economic and Financial Situation – Fall 2022, resulting in an additional expenditure of $1 444 million.

The residual variance of $3 503 million is explained in particular by:

● higher-than-anticipated operating expenses, due to higher-than-anticipated inflation in the prices of goods and services;

● higher-than-expected pandemic management costs, particularly for personal protective equipment (PPE) and other supplies;

● salary provisions arising from government offers tabled in December 2022, including a lump-sum remuneration to all employees on duty during the 2022-2023 fiscal year.

Change with 2021-2022 actual results

The growth of $2 738 million, compared with actual results for 2021-2022, is essentially due to higher expenses for transfers, remuneration and operations.

18 PUBLIC ACCOUNTS 2022-2023

2. Variance analysis (cont’d)

2.3. Consolidated expenditure (cont’d)

Santé et services sociaux (cont’d)

Transfers

The $1 542-millions increase in transfer expenditures is primarily due to a $1 444-millions increase attributable to an increase in the amount for the senior assistance refundable tax credit starting in 2022.

Remuneration

The $521-million increase in remuneration expenses was mainly due to:

● salary provisions arising from government offers tabled in December 2022 as part of the renewal of collective agreements;

● an increase in pension plan expenses due to the growth in assessable payroll contributions by plan members;

● salary indexations and increments.

These increases are partially offset by additional one-time expenses incurred by health and social services institutions to manage the pandemic in 2021-2022, including remuneration of personnel working for the vaccination campaign and the allocation of incentive bonuses in the health sector.

Operating

The $631-million increase in operating expenses was mainly due to:

● a $428-million increase in expenditures by health and social services institutions, relating in particular to the costs of drugs, food, medical and surgical supplies, as well as maintenance and repairs;

● a $355-million write-down in the value of personal protective equipment (PPE) and other supplies in inventory as at March 31, 2023, to reflect the decline in the market value of this equipment.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 19

2. Variance analysis (cont’d)

2.3. Consolidated expenditure (cont’d)

Éducation

Fiscal year ended March 31, 2023

(millions of dollars)

			Actual results		Change with				Actual results		Change with
	Budget		as at		2022-2023				as at		2021-2022
	2022-2023		March 31, 2023		budget				March 31, 2022		actual results
					M$		%		(restated)		M$		%
Transfers				1 095						1 016		79		7.8
Remuneration				14 194						12 836		1 358		10.6
Operating				4 200						3 548		652		18.4
Doubtful accounts and other allowances				10						5		5		100.0
TOTAL		18 689		19 499		810		4.3		17 405		2 094		12.0

This portfolio mainly covers the activities of preschool, primary and secondary education institutions. It also includes programs to promote leisure and sports activities, and to manage national parks.

Change with 2022-2023 budget

Expenditure in this portfolio was $810 million higher than forecast. This was mainly due to:

● a faster-than-anticipated complete recovery of school service centre and school board activities, resulting in higher-than-anticipated expenditures;

● higher-than-anticipated expenses for school transportation, following the renewal of agreements with transport companies in 2022-2023;

● salary provisions arising from government offers tabled in December 2022, including a lump-sum remuneration to all employees in service during the 2022-2023 fiscal year.

Change with 2021-2022 actual results

The $2 094-million increase in expenditures compared with actual results for 2021-2022 stems primarily from higher remuneration and operating expenses.

20 PUBLIC ACCOUNTS 2022-2023

2. Variance analysis (cont’d)

2.3. Consolidated expenditure (cont’d)

Éducation (cont’d)

Remuneration

The $1 358-million increase in remuneration expenses was mainly due to:

● salary indexations, increments and an increase in the number of teachers linked to the rise in the number of students;

● provisions arising from government offers tabled in December 2022 as part of the renewal of collective agreements;

● changes in pension plan expenses as a result of growth in assessable payroll contributions by plan members.

Operating

The $652-million increase in operating expenses is explained in particular by the rise in the cost of school transport, due notably to the renewal of contracts, by the increase in building maintenance expenses, and by the complete post-pandemic resumption of sports, cultural and extracurricular activities.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 21

2. Variance analysis (cont’d)

2.3. Consolidated expenditure (cont’d)

Enseignement supérieur

Fiscal year ended March 31, 2023

(millions of dollars)

			Actual results			Change with						Actual results			Change with
	Budget		as at			2022-2023						as at			2021-2022
	2022-2023		March 31, 2023			budget						March 31, 2022			actual results
						M$			%			(restated)			M$			%
Transfers				4 597									4 095			502			12.3
Remuneration				3 958									3 675			283			7.7
Operating				1 119									981			138			14.1
Doubtful accounts and other allowances				(19	)								(4	)		(15	)		375.0
TOTAL		10 010		9 655			(355	)		(3.5	)		8 747			908			10.4

This portfolio mainly comprises expenditures on college and university educational institutions. It also includes student financial assistance.

Change with 2022-2023 budget

Expenditures in this portfolio were $355 million lower than forecast. This variance can be explained in particular by:

● a decline in the number of students enrolled in general and vocational colleges (CEGEPs), when an increase had been forecast;

● lower-than-anticipated expenditures for the Perspective Québec bursary program, effective as of the fall 2022 college and university sessions and designed to promote access to post-secondary studies in targeted programs of study. This variation is explained by a lower-than-expected clientele.

Change with 2021-2022 actual results

The $908-million increase in expenditures compared with actual results for 2021-2022 stems primarily from higher transfer and remuneration expenses.

22 PUBLIC ACCOUNTS 2022-2023

2. Variance analysis (cont’d)

2.3. Consolidated expenditure (cont’d)

Enseignement supérieur (cont’d)

Transfers

The $502-million increase in transfer expenditures is mainly due to:

● an increase of $220 million attributable to higher grants to private universities, notably to reflect the 2022-2023 salary indexation, as well as additional investments in higher education announced in the 2022-2023 budget to improve higher education graduation rates;

● an increase of $125 million related to the Perspectives Québec bursary program, effective as of the fall 2022 college and university sessions.

Remuneration

The $283-million increase in remuneration expenses is mainly attributable to:

● staff increments and salary indexations;

● salary provisions relating to government offers tabled in December 2022 as part of the renewal of collective agreements.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 23

2. Variance analysis (cont’d)

2.3. Consolidated expenditure (cont’d)

Famille

Fiscal year ended March 31, 2023

(millions of dollars)

			Actual results		Change with						Actual results		Change with
	Budget		as at		2022-2023						as at		2021-2022
	2022-2023		March 31, 2023		budget						March 31, 2022		actual results
					M$			%					M$		%
Transfers				7 627								7 088		539		7.6
Remuneration				117								105		12		11.4
Operating				91								84		7		8.3
Doubtful accounts and other allowances				―								—		—		—
TOTAL		7 893		7 835		(58	)		(0.7	)		7 277		558		7.7

This portfolio mainly includes expenses dedicated to the financing of educational childcare services and financial assistance for families.

Change with 2022-2023 budget

Actual results for 2022-2023, amounting to $7 835 million, are comparable to the forecast.

Change with 2021-2022 actual results

Actual results show growth of $558 million compared with 2021-2022, mainly due to higher transfer expenditures.

Transfers

The $539-million increase in transfer expenditures is mainly due to:

● a $193-million increase in subsidies to childcare centres (CPEs) and daycare centres, due in particular to salary increases resulting from the new national agreement signed in December 2021, feedback for management staff resulting from the agreement in principle signed in December 2022, and the creation of new places in the network in 2022-2023;

● a $122-million increase in expenses associated with the family allowance tax credit, due to indexation of the credit by 2.64% as of January 1, 2022, and by 6.44% as of January 1, 2023.

24 PUBLIC ACCOUNTS 2022-2023

2. Variance analysis (cont’d)

2.3. Consolidated expenditure (cont’d)

Transport et Mobilité durable

Fiscal year ended March 31, 2023

(millions of dollars)

			Actual results		Change with						Actual results		Change with
	Budget		as at		2022-2023						as at		2021-2022
	2022-2023		March 31, 2023		budget						March 31, 2022		actual results
					M$			%			(restated)		M$			%
Transfers				2 699								3 500		(801	)		(22.9	)
Remuneration				708								677		31			4.6
Operating				3 035								2 832		203			7.2
Doubtful accounts and other allowances				9								8		1			12.5
TOTAL		7 115		6 451		(664	)		(9.3	)		7 017		(566	)		(8.1	)

This portfolio mainly includes expenditures for the construction, maintenance and operation of road infrastructure, as well as the financing of public transit services. Expenditures also include management of the government’s fleet of rolling stock, aircrafts and ferry services.

Change with 2022-2023 budget

Actual results for 2022-2023, in the amount of $6 451 million, were $664 million below the forecast. This difference is mainly due to:

● subsidies granted for municipal infrastructure and public transit projects that were $586 million lower than forecast, mainly due to the fact that less work was carried out than anticipated;

● expenditures $373 million lower than forecast due to additional delays in the approval of certain projects under the Programme d’aide gouvernementale d’infrastructures en transport collectif (PAGITC), thus delaying the completion of work scheduled for March 31, 2023.

This downward variation is partially offset by:

● the granting of an additional $200 million subsidy to the Autorité régionale de transport métropolitain (ARTM) in March 2023, announced as part of the 2023-2024 budget, to support the revival of public transit and help maintain services despite declining ridership;

● advance payments¹ of financial assistance totalling $500 million for infrastructure projects included in the Québec Infrastructure Plan (QIP) 2023-2033, generating expenditures not provided for in the 2022-2023 budget:

¹ This is the financial assistance paid by the government for infrastructure projects before the work is carried out by the recipients.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 25

2. Variance analysis (cont’d)

2.3. Consolidated expenditure (cont’d)

Transport et Mobilité durable (cont’d)

¾ $237 million to the Réseau de transport de la Capitale (RTC) for preparatory work on Québec city’s structuring public transit network project,

¾ $146 million to the ARTM to contribute to projects aimed at integrating its operations with those of the Réseau express métropolitain (REM),

¾ $117 million paid to the Société de transport de Laval (STL) for an infrastructure expansion project to increase their capacity and accommodate electric buses.

Change with 2021-2022 actual results

The $566-million reduction in expenditures compared with actual results for 2021-2022 is primarily due to a decrease in transfer expenditures, partially offset by an increase in operating expenditures.

Transfers

The $801-million decrease in transfer expenditures compared with 2021-2022 is mainly due to:

● a $1 019-million decrease in grants for municipal infrastructure and public transit projects, due to:

¾ the advance payment¹ of $1 120 million in financial assistance for infrastructure projects to the Société de transport de Montréal (STM) in 2021-2022,

¾ a $399-million decrease in the cost of work compared with the previous year;

this decrease in partially offset by anticipated payments¹ of public transit subsidies totalling $500 million in 2022-2023, namely $237 million granted to the RTC, $146 million granted to the ARTM, and $117 million granted to the STL;

● the $100-million increase in 2022-2023 in subsidies to support public transit authorities faced with the repercussions of the COVID-19 pandemic, subsidies which are granted through the emergency public transit assistance program (PAUTCP) in the continuation of the Safe Restart Agreement;

● an increase of $105 million in one-time assistance allocated to the ARTM to support the recovery of public transit.

Operating

The $203-million increase in operating expenditures is mainly due to higher spending on road snow removal, attributable to higher costs for contracts, salt and fuel.

¹ This is the financial assistance paid by the government for infrastructure projects before the work is carried out by the recipients.

26 PUBLIC ACCOUNTS 2022-2023

2. Variance analysis (cont’d)

2.3. Consolidated expenditure (cont’d)

Emploi et Solidarité sociale

Fiscal year ended March 31, 2023

(millions of dollars)

			Actual results		Change with				Actual results		Change with
	Budget		as at		2022-2023				as at		2021-2022
	2022-2023		March 31, 2023		budget				March 31, 2022		actual results
					M$		%				M$		%
Transfers				8 372						7 811		561		7.2
Remuneration				442						410		32		7.8
Operating				145						140		5		3.6
Doubtful accounts and other allowances				24						24		—		—
TOTAL		5 390		8 983		3 593		66.7		8 385		598		7.1

This portfolio mainly includes expenditures on financial assistance programs for individuals, including last-resort assistance and employment assistance programs. Expenditures related to the activities of Services Québec, the Directeur de l’état civil and the Registraire des entreprises, as well as to the administration of the Québec Parental Insurance Plan, are also included in this portfolio.

Change with 2022-2023 budget

Actual results for 2022-2023, amounting to $8 983 million, exceeded forecasts by $3 593 million. This variation is mainly due to:

● a one-time payment to cope with the rising cost of living, announced when the Update on Québec’s Economic and Financial Situation – Fall 2022 was tabled. The expenditure associated with this measure amounts to $3 367 million;

● the payment of an additional $100 million envelope in March 2023 when the 2023-2024 budget was tabled, earmarked for the short-term training program to support businesses experiencing recruitment difficulties.

Change with 2021-2022 actual results

The $598-million increase in expenditures compared with actual results for 2021-2022 is essentially due to higher transfer expenditures.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 27

2. Variance analysis (cont’d)

2.3. Consolidated expenditure (cont’d)

Emploi et Solidarité sociale (cont’d)

Transfers

The $561-million increase in transfers is mainly due to:

● a one-time payment to cope with the rising cost of living, announced when the Update on Québec’s Economic and Financial Situation – Fall 2022 was tabled. The expenditure associated with this measure amounts to $3 367 million;

● an increase of $287 million in costs associated with the last-resort financial assistance, due to an increase in the clientele following the significant increase in 2022-2023 from asylum seekers, and to the annual indexation of benefits. This growth is also due to the increase in benefits resulting from the Government Action Plan to Foster Economic Inclusion and Social Participation, which aims to help more than 100 000 people out of poverty and increase the income of people living in poverty;

● an increase of $215 million in participation allowances granted by the Labour Market Development Fund to support integration into the labour market. This increase is explained in particular by the revision of the policy concerning income support granted to participants;

● an increase of $155 million for various employment assistance measures, including the announcement, in the 2023-2024 budget, of an additional $100 million for the short-term training program.

This increase is partially offset by expenditures arising from measures announced in 2021-2022 to mitigate the increase in the cost of living, namely $2 994 million for the one-time amount and $681 million for the exceptional allowance.

28 PUBLIC ACCOUNTS 2022-2023

2. Variance analysis (cont’d)

2.3. Consolidated expenditure (cont’d)

Affaires municipales et Habitation

Fiscal year ended March 31, 2023

(millions of dollars)

			Actual results		Change with				Actual results			Change with
	Budget		as at		2022-2023				as at			2021-2022
	2022-2023		March 31, 2023		budget				March 31, 2022			actual results
					M$		%		(restated)			M$		%
Transfers				4 624						3 430			1 194		34.8
Remuneration				117						115			2		1.7
Operating				176						163			13		8.0
Doubtful accounts and other allowances				11						(167	)		178		(106.6	)
TOTAL		3 929		4 928		999		25.4		3 541			1 387		39.2

This portfolio mainly includes expenditures on financial support for municipalities, notably for infrastructure, social housing and compensation in lieu of taxes, as well as regional and metropolitan development measures.

Change with 2022-2023 budget

Actual results for 2022-2023, amounting to $4 928 million, exceed the forecast by $999 million. This variation is mainly due to:

● subsidies granted for municipal infrastructure projects that were $720 million higher than forecast, a change which was due in particular to larger-than-anticipated projects, as well as subsidy adjustments relating to work carried out in previous years;

● certain measures announced after the 2022-2023 budget, including:

¾ subsidies totalling $225 million for the construction of 3 000 social and affordable housing units through a partnership with tax-advantaged funds and Desjardins, announced when the Update on Québec’s Economic and Financial Situation – Fall 2022 was tabled,

¾ expenses of $251 million announced when the 2023-2024 budget was tabled to accelerate and support the purchase and construction of social and affordable housing.

Change with 2021-2022 actual results

The $1 387-million increase compared with actual results for 2021-2022 is mainly due to higher transfer expenditures and higher doubtful accounts and other allowances.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 29

2. Variance analysis (cont’d)

2.3. Consolidated expenditure (cont’d)

Affaires municipales et Habitation (cont’d)

Transfers

The $1 194-million change in transfer expenditures compared with the previous year’s results is essentially due to the following factors:

● $637 million in additional subsidies granted for municipal infrastructure projects, owing in particular to more substantial work than in 2021-2022 and subsidy adjustments relating to work carried out in previous years;

● $225 million in subsidies to support the construction of 3 000 social and affordable housing units through a partnership with tax-advantaged funds and Desjardins, announced when the Update on Québec’s Economic and Financial Situation – Fall 2022 was tabled;

● $145 million to support the RCMs’ local and regional development efforts as part of the 2020-2024 partnership of the Regions and Rurality Fund.

Doubtfoul accounts and other allowances

The change in expenses for doubtful accounts and other allowances compared with the previous year is mainly due to the introduction, in 2021-2022, of the Société d’habitation du Québec (SHQ) financial assistance program to preserve community housing stock, which has resulted in a downward revision of the provision for losses on loan guarantees by $155 million as at March 31, 2022.

30 PUBLIC ACCOUNTS 2022-2023

2. Variance analysis (cont’d)

2.3. Consolidated expenditure (cont’d)

Économie, Innovation et Énergie

Fiscal year ended March 31, 2023

(millions of dollars)

			Actual results		Change with						Actual results		Change with
	Budget		as at		2022-2023						as at		2021-2022
	2022-2023		March 31, 2023		budget						March 31, 2022		actual results
					M$			%					M$			%
Transfers				2 744								2 763		(19	)		(0.7	)
Remuneration				83								81		2			2.5
Operating				179								173		6			3.5
Doubtful accounts and other allowances				199								47		152			323.4
TOTAL		3 656		3 205		(451	)		(12.3	)		3 064		141			4.6

This portfolio mainly includes expenditures dedicated to financing economic development projects, as well as supporting research, innovation and the development of energy resources.

Change with 2022-2023 budget

Actual results for 2022-2023, amounting to $3 205 million, were lower than forecast by $451 million. This variance is notably due to the fact that investment files under the Economic Development Fund progressed differently than planned, resulting in a lower-than-expected provision for doubtful accounts.

Change with 2021-2022 actual results

The $141-million increase in expenditures compared with actual results for 2021-2022 is mainly due to the $152-million increase in the expense for doubtful accounts and other allowances which was exceptionally low as at March 31, 2022 due to the revision of the valuation allowance on certain loans as a result of the improved risk of non-recovery.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 31

2. Variance analysis (cont’d)

2.3. Consolidated expenditure (cont’d)

Environnement, Lutte contre les changements climatiques, Faune et Parcs

Fiscal year ended March 31, 2023

(millions of dollars)

			Actual results		Change with						Actual results		Change with
	Budget		as at		2022-2023						as at		2021-2022
	2022-2023		March 31, 2023		budget						March 31, 2022		actual results
					M$			%					M$			%
Transfers				1 083								1 097		(14	)		(1.3	)
Remuneration				293								274		19			6.9
Operating				293								356		(63	)		(17.7	)
Doubtful accounts and other allowances				4								3		1			33.3
TOTAL		1 859		1 673		(186	)		(10.0	)		1 730		(57	)		(3.3	)

This portfolio mainly includes expenditures on measures to fight climate change, protect the environment and conserve biodiversity. These expenditures also include the operation of public dams, land management of the State’s water domain, and the conservation of wildlife resources and their habitats.

Change with 2022-2023 budget

Expenditure for the portfolio was $186 million lower than forecast. This is due to a number of variations, including lower-than-anticipated expenditures in the form of subsidies for businesses in the industrial sector to support their plans to reduce GHG emissions, and in the form of investments to maximize the efficient use of energy and replace fossil fuels with electricity and other renewable energies. The lower-than-expected subsidies are due in particular to less substantial work than anticipated.

Change with 2021-2022 actual results

Actual results for 2022-2023 are comparable to those for 2021-2022, with a slight decrease of $57 million compared with the previous year’s results.

32 PUBLIC ACCOUNTS 2022-2023

2. Variance analysis (cont’d)

2.3. Consolidated expenditure (cont’d)

Other portfolios

Fiscal year ended March 31, 2023

(millions of dollars)

	Budget 2022-2023		Actual results as at March 31, 2023		Change with 2022-2023 budget					Actual results as at March 31, 2022		Change with 2021-2022 actual results
						M$		%			(restated)		M$		%
Conseil du trésor et Administration gouvernementale
Transfers				68							51		17		33.3
Remuneration				863							843		20		2.4
Operating				195							231		(36	)	(15.6	)
Doubtful accounts and other allowances				1							1		—		—
Sub-total		2 419		1 127		(1 292	)	(53.4	)		1 126		1		0.1
Others
Transfers				5 799							5 103		696		13.6
Remuneration				5 131							4 680		451		9.6
Operating				3 187							2 523		664		26.3
Doubtful accounts and other allowances				364							307		57		18.6
Sub-total		14 725		14 481		(244	)	(1.7	)		12 613		1 868		14.8
Total		17 144		15 608		(1 536	)	(9.0	)		13 739		1 869		13.6

This group includes expenditures from the 16 other portfolios, which comprise, in particular, programs in the cultural, immigration, tourism, and natural resources sectors, as well as the activities of the judicial system, the public safety sector, the international relations sector, the legislative branch and central agencies.¹ This group also includes sums provided for in the Contingency Fund of the Conseil du trésor et Administration gouvernementale portfolio. These sums aim to cover unexpected expenses that may arise in any of the government’s programs in the various portfolios. However, actual expenses financed by the contingency fund are recognized in the portfolios that benefited from them.

¹ Ministère des Finances, Ministère du Conseil exécutif and Secrétariat du Conseil du trésor.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 33

2. Variance analysis (cont’d)

2.3. Consolidated expenditure (cont’d)

Other portfolios (cont’d)

Change with 2022-2023 budget

As at March 31, 2023, other portfolio expenditures of $15 608 million were $1 536 million lower than forecast. The share attributable to the Conseil du trésor et Administration gouvernementale portfolio is due in particular to various recourses of the Contingency Fund in order to make up for insufficient resources in certain programs, including:

● recourses totalling $327 million for the Emploi et Solidarité sociale portfolio, mainly due to an unplanned increase of $219 million in last-resort financial assistance and the announcement of an additional envelope of $100 million when the 2023-2024 budget was tabled, intended for the short-term training program to support businesses experiencing recruitment difficulties;

● a recourse of $200 million for the benefit of the Transport et Mobilité durable portfolio for additional financial assistance announced in the 2023-2024 budget to support the recovery of public transit,

● a recourse of $198 million for the Transport et Mobilité durable portfolio relating to advance payments of subsidies, totalling $500 million, for public transit at the RTC, ARTM and STL;

● recourses totalling $225 million for the Affaires municipales et Habitation portfolio relating to subsidies to support the construction of 3 000 social and affordable housing units through a partnership with tax-advantaged funds and Desjardins;

● a recourse of $154 million for the Affaires municipales et Habitation portfolio, relating in particular to the measures announced in the 2023-2024 budget to accelerate and support the purchase and construction of social and affordable housing.

Change with 2021-2022 actual results

Actual results for 2022-2023 are $1 869 million higher than for 2021-2022. On the one hand, the 2022-2023 actual results of the Conseil du trésor et Administration gouvernementale portfolio are comparable to those of 2021-2022. On the other hand, the other portfolios in this group posted growth of $1 868 million in actual expenditures in 2022-2023, due to higher transfer, remuneration and operating expenses.

34 PUBLIC ACCOUNTS 2022-2023

2. Variance analysis (cont’d)

2.3. Consolidated expenditure (cont’d)

Other portfolios (cont’d)

Transfers

The $696-million increase in transfers in 2022-2023 is the result of several variations spread across the group’s portfolios, including:

● a $101 million-increase related to growth in financial assistance for infrastructure projects administered by the Société de financement des infrastructures locales du Québec (SOFIL), which falls under the Finances portfolio, particularly drinking water projects. The growth is linked to the greater volume of work eligible for subsidies than in 2021-2022;

● $114 million-increase attributable to higher spending under the measure to connect all Quebecers to high-speed Internet, a program administered by the Conseil exécutif portfolio.

Remuneration

The $451-million increase in remuneration expenditures is attributable in particular to salary indexations and increments.

Operating

The $664-million increase in operating expenditures in 2022-2023 is the result of a number of variations across the group’s 16 portfolios, including a $210-million increase in expenditures in the Ressources naturelles et Forêts portfolio, mainly due to the reassessment of estimated costs for the remediation of contaminated sites.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 35

2. Variance analysis (cont’d)

2.3. Consolidated expenditure (cont’d)

Debt service

	Budget 2022-2023		Actual results as at March 31, 2023		Change with 2022-2023 budget		Actual results as at March 31, 2022		Change with 2021-2022 actual results
					M$	%			M$	%
Debt service		8 842		10 058	1 216	13.8		8 640	1 418	16.4

Debt service consists mainly of interest on debt and interest on pension plans and other employee future benefits¹ liabilities for the public and parapublic sectors. The composition of debt service is presented in Note 5 to the consolidated financial statements.

Debt service for 2022-2023 of $10 058 million exceeds the forecast by $1 216 million. This change is mainly due to the higher-than-expected rise in interest rates.

Compared to the 2021-2022 actual results, debt service shows a $1 418-million increase which is mainly due to the growth in the average volume of debt contracted on financial markets and higher interest rates.

This variation is partially offset by a $182-million decrease in debt service relating to pension plans and other employee future benefits, due in particular to higher investment income from the Retirement Plans Sinking Fund and the sinking funds of the plans’ special funds, income which is presented as a reduction in the expense.

¹ This is interests on obligations related to pension plans and other employee future benefits in the public and parapublic sectors, decreased mainly by investment income from the Retirement Plans Sinking Fund (RPSF) and specific pension funds.

36 PUBLIC ACCOUNTS 2022-2023

▌ 3. Balanced Budget Act

Budget balance and stabilization reserve

The purpose of the Balanced Budget Act (the Act) is to balance the budget of the government. It stipulates that the government may not incur a budgetary deficit, which corresponds to the annual operating surplus (deficit) excluding revenues dedicated to the Generations Fund after use of the stabilization reserve. The reserve is allocated to maintaining a balanced budget; its balance is reduced by the amount needed to achieve that balance.

Moreover, the government may, under the conditions it determines, use the reserve to make payments to the Generations Fund. The balance of the reserve is reduced by the amount thus paid into the fund. The amounts allocated annually to the reserve correspond to the amount of the surplus recorded for that fiscal year, that is, a budgetary balance greater than zero. The reserve has no impact on the annual accounting surplus or deficit.

As part of the implementation of the measures presented in the 2023-2024 budget, the Act has been modernized to provide greater flexibility in determining budgetary balance, replace the rules surrounding deficit reduction and abolish the stabilization reserve. This report on budgetary balance is carried out in accordance with the provisions of the Act in effect on March 31, 2023.

Fiscal year 2022-2023

In 2021-2022, in the context of the pandemic and in order to gradually reduce the deficit without adversely affecting services to Quebecers and the sustainable recovery of the economy, the provisions of the Balanced Budget Act prohibiting the recognition or forecasting of a budgetary deficit, and those requiring the elimination of any deficit, were suspended. These suspensions remained in effect until 2022-2023. The lifting of these suspensions, announced in the 2023-2024 budget speech, took effect on April 1, 2023. The budgetary balance representing operations for the fiscal year ended March 31, 2023 is a deficit of $5 635 million after taking into account the allocation of $3 082 million to the Generations Fund and the use of the balance of the stabilization reserve of $449 million.

Budget balance within the meaning of the Balanced Budget Act

Fiscal year ended March 31, 2023

(millions of dollars)

	Budget			Actual results as at
	2022-2023			March  31, 2023
Annual deficit		(3 005	)		(3 002	)
Revenue of the Generations Fund		(3 445	)		(3 082	)
Budget balance before use of the stabilization reserve		(6 450	)		(6 084	)
Use of the stabilization reserve		—			449
Budget balance		(6 450	)		(5 635	)

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 37

3. Balanced Budget Act (cont’d)

Stabilization reserve

(millions of dollars)

	Fiscal year ended March 31
	2023			2022
Opening balance		449			1 221
Use of the reserve to maintain a balanced budget		(449	)		(772	)
Closing balance		—			449

Change in budget balance before use of the stabilization reserve and stabilization reserve balance

(millions of dollars)

Notes:  From an accounting standpoint, this reserve has no impact on the annual surplus (deficit). In accordance with the Balanced Budget Act, the budgetary balance does not include the retroactive effect of a new CPA Canada standard for years prior to its coming into force. Thus, although the annual surpluses (deficits) were restated to reflect the application of the accounting standard relating to asset retirement obligations, these restatements had no impact on the budgetary balance.

 (1) The provisions of the Balanced Budget Act prohibiting budgetary deficits did not apply to these years.

The effects of the financial crisis and global recession that had held sway from 2008-2009 led to a substantial deterioration in the government’s financial balances until 2013-2014. The year 2014-2015 represents a turning point, marking the beginning of a period during which the government’s budgetary balances improved continuously until 2018-2019. Consequently, the stabilization reserve balance increased from 2015-2016 to 2019-2020.

38 PUBLIC ACCOUNTS 2022-2023

3. Balanced Budget Act (cont’d)

On March 13, 2020, the Québec government declared a health emergency due to the global COVID-19 pandemic. Initiatives to address the crisis and stimulate the economy, combined with the impact of the lockdown and temporary institutional closures, significantly affected the government’s financial results for years 2019-2020 to 2021-2022¹. This situation required the use of the stabilization reserve in 2020-2021 and in 2021-2022 to achieve a balanced budget within the meaning of the Act.

In 2022-2023, the balance of the stabilization reserve of $449 million was used in full to reduce the budgetary deficit to $5 635 million. This deficit is mainly due to measures put in place to help Quebecers cope with the cost of living.

Generations Fund

The Generations Fund, created under the Act to reduce the debt and establish the Generations Fund, is used exclusively to repay the government’s gross debt. The statement of change in the balance of the Generations Fund is presented in Note 12 “Generations Fund” of the consolidated financial statements.

Budget 2022-2023 forecast that the revenue of the Generations Fund would amount to $3 445 million. The fund’s actual revenue is $3 082 million, or $363 million less than forecast. The fund’s balance is $18 911 million as at March 31, 2023.

¹ The change in the application of the accounting standard on government transfers also contributed to the budgetary deficit before use of the stabilization reserve for 2020-2021.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 39

▌ 4. Analysis of main trends

The main trends analysis presented in this section uses financial information from the consolidated financial statements of the Gouvernement du Québec.

The data presented put into perspective the trends observed over the past 10 years for the following main items¹:

● the annual surplus (deficit);

● consolidated revenue by source;

● consolidated expenditures by portfolios;

● the net book value of fixed assets;

● the government’s net debt and gross debt.

Change in annual surplus (deficit)

(millions of dollars)

Note:  Annual surpluses (deficits) have been restated to reflect the application of the accounting standard relating to asset retirement obligations.

Between 2013-2014 and 2018-2019, annual results overall improved, which allowed for the return to a surplus starting in 2015-2016. This was driven by, among other things, restrained growth in program spending and a favourable economic environment. Growth in annual results ended in 2019-2020 due to targeted initiatives in the budget and the COVID-19 pandemic, which resulted in lost revenue and additional expenses for the government. However, the government’s finances were more impacted by the negative effects of the pandemic in 2020-2021, which explains the significant deficit of $4 409 million.

¹ Where financial statements have been restated in a subsequent fiscal year, the restated data has been used.

40 PUBLIC ACCOUNTS 2022-2023

4. Analysis of main trends (cont’d)

Despite the impact of the many measures adopted by the government to address the health emergency in 2021-2022, Québec’s finances benefited from the positive effects of the economic rebound and were particularly stimulated by the easing of the health measures, which resulted in a surplus of $2 618 million.

In 2022-2023, the government recorded a deficit of $3 002 million, mainly attributable to the introduction of the Anti-Inflation Shield to help Quebecers cope with the rising cost of living, which led to an increase in the senior assistance amount, the payment of a new one-time cost-of-living amount and the capping of indexation of several government rates at 3% for a four-year period.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 41

4. Analysis of main trends (cont’d)

Change in consolidated revenue

Revenue by source

(millions of dollars)

 

(1) Other revenue includes revenue from duties and permits as well as miscellaneous revenue.

The government’s consolidated revenue rose from $93 273 million to $144 299 million from 2013-2014 to 2022-2023. Over this period, the annual average growth of this revenue was 5.0%, while that of GDP was 4.5%. Since 2013-2014, total revenue has grown constantly.

Following stronger growth of 13.2% between 2020-2021 and 2021-2022 due to the post-pandemic economic recovery, growth in total consolidated revenues slowed by 9.3 percentage points in 2022-2023 to 3.9%. This lower-than-average annual growth is explained by the economic slowdown that began during the year.

Tax revenue – Income and property taxes

Revenue from income and property taxes rose from $39 865 million in 2013-2014 to $64 521 million in 2022-2023. On average, this revenue grew by 5.5% per year over the period, owing in particular to an increase in the average wage and the number of jobs in Québec.

42 PUBLIC ACCOUNTS 2022-2023

4. Analysis of main trends (cont’d)

Change in consolidated revenue (cont’d)

Tax revenue – Consumption taxes

Revenue from consumption taxes has grown regularly since 2013-2014, going from $17 365 million to $26 597 million in 2022-2023. The average annual growth rate for the period was 4.9% owing to sustained growth in retail sales and, particularly for 2022-2023, the high inflation that contributed to the sharp rise in prices of goods and services subject to consumption taxes.

Federal government transfers

Federal government transfer revenue rose from $18 550 million in 2013-2014 to $28 737 million in 2022-2023, which represents an average growth of 5.0% per year. With the exception of 2014-2015, when federal transfers remained relatively stable, this revenue has been growing steadily up to and including 2020-2021.

Between 2014-2015 and 2020-2021, this growth is due to the increase in all categories of federal transfers and more specifically for 2020-2021, to federal government transfers made to support the implementation by the provinces of pandemic-related measures and to partly compensate Québec’s efforts to mitigate the financial impact of the COVID-19 pandemic. The one-time nature of several of these support measures account for the decrease in transfer revenue in 2021-2022 and 2022-2023.

Government enterprises

Revenue from government enterprises, which consists mainly of the results of Hydro-Québec, Loto-Québec, the Société des alcools du Québec and Investissement Québec, went from $5 242 million in 2013-2014 to $6 620 million in 2022-2023, which corresponds to an average growth of 2.6% per year.

Revenue from government enterprises decreased significantly in 2019-2020, due in particular to the effect of the weather and given Hydro-Québec’s exceptional gain in 2018-2019 from the partial sale of the TM4 subsidiary. This revenue then remained at the same level in 2020-2021 due to the impact of the pandemic and started to grow again in 2021-2022 following the gradual resumption of activities, combined with the post-pandemic economic recovery. Lastly, growth in revenue in 2022-2023 is essentially attributable to higher energy prices, which have increased the value of Hydro-Québec’s exports.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 43

4. Analysis of main trends (cont’d)

Change in consolidated revenue (cont’d)

Other revenue

Other revenue increased from $12 251 million in 2013-2014 to $17 824 million in 2022-2023. The average annual growth in other revenue was 4.3% for this period. With the exception of 2019-2020 and 2020-2021, which show a decline, the change in other revenue reflects a relatively steady upward trend.

Among the factors explaining this growth since 2013-2014 are:

● growth of the auction of greenhouse gas emission allowances under Québec’s cap-and-trade system for greenhouse gas emission allowances;

● growth in the income of the Generations Fund, in particular income from portfolio investments;

● growth in revenue from registration fees;

● growth in revenue from mining resources;

● an increase in revenue related to user contributions in the health and social services, education and higher education networks.

44 PUBLIC ACCOUNTS 2022-2023

4. Analysis of main trends (cont’d)

Change in consolidated expenditure

Expenditure by portfolios

(millions of dollars)

 

Note:  Expenditures by portfolios have been restated to reflect the application of the accounting standard relating to asset retirement obligations.

Expenditure by portfolios

(percentage of consolidated expenditures)

Portfolios	2013-2014		2014-2015		2015-2016		2016-2017		2017-2018		2018-2019		2019-2020		2020-2021		2021-2022		2022-2023
Santé et Services sociaux		37.5		38.3		38.9		39.2		38.3		39.1		38.7		42.3		41.6		40.3
Éducation		13.4		13.6		13.5		14.0		13.5		13.9		13.7		13.0		12.8		13.2
Enseignement supérieur		7.6		7.0		7.3		7.2		7.2		7.4		7.2		6.6		6.4		6.6
Other portfolios		30.4		30.5		30.0		30.0		32.3		31.5		33.7		32.0		32.9		33.1
Debt service		11.1		10.6		10.3		9.6		8.7		8.1		6.7		6.1		6.3		6.8

The government’s consolidated expenditure level increased by $51 769 million from 2013-2014 to 2022-2023, from $95 532 million to $147 301 million. The average annual growth was 4.9%. Moreover, the share of consolidated expenditure devoted to the Santé et Services sociaux portfolio rose by 2.8 percentage points over the reference period, while the share devoted to debt service fell by 4.3 percentage points.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 45

4. Analysis of main trends (cont’d)

Change in consolidated expenditure (cont’d)

Santé et Services sociaux portfolio

Expenditure in the Santé et Services sociaux portfolio has been rising steadily since 2013-2014, with average annual growth of 5.8% between 2013-2014 and 2022-2023, compared with 4.9% for consolidated expenditure. This reflects the growing importance of spending in this portfolio, which rose from 37.5% in 2013-2014 to 40.3% in 2022-2023. Growth was more pronounced in the period from 2019-2020 to 2022-2023, mainly due to additional spending on the health care system to manage the pandemic. During this period, spending grew at an average annual rate of 9.2%, compared to 8.3% for total consolidated expenditure.

Éducation and Enseignement supérieur portfolios

Expenditure in the Éducation and Enseignement supérieur portfolios shows average annual growth of 4.8% and 3.3% respectively over the reference period, which is lower than the 4.9% growth in total consolidated expenditure. Consequently, the proportion of spending devoted to these portfolios fell slightly between 2013-2014 and 2022-2023, from 13.4% to 13.2% for education and from 7.6% to 6.6% for higher education.

Nevertheless, from 2021-2022 to 2022-2023, growth in spending on these two portfolios, namely 12.0% in education and 10.4% in higher education, was more pronounced than the average annual growth in consolidated expenditure of 8.1%. In the case of the Éducation portfolio, this was due in particular to salary indexations, increments, salary provisions, an increase in the number of teachers due to the rise in the number of students, and the rising cost of school transportation. For the Enseignement supérieur portfolio, growth is attributable, among other things, to salary indexations, increments, salary provisions and an increase in subsidies to private universities to improve higher education graduation rates, and to the Perspective Québec scholarship program in effect since fall 2022.

Overall, the change in proportions shows that the level of spending on the Éducation and Enseignement supérieur portfolios has remained relatively stable over the years.

46 PUBLIC ACCOUNTS 2022-2023

4. Analysis of main trends (cont’d)

Change in consolidated expenditure (cont’d)

Other portfolios

Expenditure in other portfolios, of which there are 22, grew at an average annual rate of 5.9% over the reference period, almost equivalent to that in the Santé et Services sociaux portfolio (5.8%), and higher than that in the Éducation and Enseignement supérieur portfolios (4.8% and 3.3%). The increase of 2.7 percentage points in expenditures in other portfolios in recent years can be explained by the following factors in particular:

● the implementation, in 2021-2022 and 2022-2023, of measures to help Quebecers cope with the rising cost of living, including one-time payments and an increase in the senior assistance amount (Emploi et Solidarité sociale portfolio);

● the increase in spending related to investments in road network improvement, development and maintenance, and in transportation systems (Transports et Mobilité durable portfolio);

● growth in spending on municipal affairs and housing, particularly to improve access to housing and to contribute to the repair and construction of water supply and sewer systems and the treatment of municipal wastewater in all regions of Québec (Affaires municipals et Habitation portfolio);

● growth in financial support for childcare centres and other day care services (Famille portfolio);

● increased action on environmental protection, sustainable development and climate change (Environnement, Lutte contre les changements climatiques, Faune et Parcs portfolio).

Debt service

Between 2013-2014 and 2019-2020, debt service has declined steadily before showing a slight increase of 0.2% in 2020-2021 followed by sharp increases of 12.4% in 2021-2022 and 16.4% in 2022-2023. These increases are primarily due to higher interest rates. Despite these increases, the average annual decline in debt service is 0.6% for the entire reference period and the share of expenditure devoted to debt service fell from 11.1% in 2013-2014 to 6.8% in 2022-2023.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 47

4. Analysis of main trends (cont’d)

Change in the net book value of fixed assets

(millions of dollars)

Note:  Net book values have been restated to reflect the application of the accounting standard relating to asset retirement obligations.

Fixed assets can be broken down into several different categories, including complex networks, which consist mainly of net investments in road infrastructure. Such investments accounted for 33.5% of the total net book value of fixed assets as at March 31, 2023.

The net book value of fixed assets increased by $6 500 million over the past year, from $85 299 million as at March 31, 2022 to $91 799 million as at March 31, 2023. This increase shows that investments in fixed assets outstrip the related depreciation of the government’s fixed assets as a whole.

48 PUBLIC ACCOUNTS 2022-2023

4. Analysis of main trends (cont’d)

As part of the implementation of the measures presented in the 2023-2024 budget, certain provisions of the Act to reduce the debt and establish the Generations Fund have been amended in order for Québec to focus its reporting on net debt as of April 1, 2023 (see indicator 5 on page 57). This reporting on gross debt is carried out in accordance with the provisions of the law in force on March 31, 2023.

Government’s gross debt

(millions of dollars)

		As at March 31
		2023			2022
					(reclassified data)
Debts			257 111			237 351
Plus:	Self-held securities by the Quebec government		15 573			20 841
	Liabilities related to derivative instruments		10 684			3 831
	Pension plans and other employee future benefits liabilities		6 785			9 457
Less:	Generations Fund		(18 911	)		(15 829	)
	Sinking funds relatin g to borrowings (balance before co mpensation of self-held securities)		(31 735	)		(32 134	)
	Assets related to derivative instruments		(11 209	)		(5 418	)
Gross debt including advance borrowings			228 298			218 099
Less:	Advance borrowings		(2 233	)		(7 147	)
Gross debt			226 065			210 952
As a % of nominal GDP			41.4	%		41.9	%

Note:  The calculation of gross debt as at March 31, 2023 takes into account the prospective application of accounting changes relating to the treatment of financial instruments (see Note 3 to the consolidated financial statements). Thus, as at March 31, 2022, the value of gross debt calculated before deferred foreign exchange gains (losses) remains unchanged, but its composition has been modified to reflect changes in the presentation in the consolidated statement of financial position.

Change in the government’s gross debt

(millions of dollars)

(1) The gross debt as at March 31, 2020 and March 31, 2021 was increased by $1 138 million and $1 156 million respectively to exclude from advance borrowings certain amounts held for entities not included in the government’s reporting entity.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 49

4. Analysis of main trends (cont’d)

Increase of the gross debt from March 31, 2013 to March 31, 2023

Gross debt as at March 31, 2013 stood at $191 866 million. It amounted to $226 065 million as at March 31, 2023. Accordingly, for fiscal 2013-2014 to 2022-2023, the government’s gross debt rose by $34 199 million. This increase is due to:

● investments of $35 917 million by the government in its fixed assets;

● investments, loans and advances totalling $15 413 million, some of which were made to government enterprises;

● accumulated budgetary deficits of $12 263 million.

The increase in the gross debt is offset by:

● deposits in the Generations Fund, which reduced the gross debt by $24 673 million;

● change in other factors which decreased the gross debt by $4 721 million.

Factors responsible for growth in the government’s gross debt from March 31, 2013 to March 31, 2023

(millions of dollars)

(1) For the purpose of establishing the factors responsible for growth in the government’s gross debt, the budget deficits (surpluses) were established based on the restated annual deficits (surpluses) established on page 40, minus the Generations Fund’s revenues.

(2) Other factors include, in particular, the change in other items such as accounts receivable and accounts payable, accrued expenses and other allowances.

50 PUBLIC ACCOUNTS 2022-2023

4. Analysis of main trends (cont’d)

Net financial surpluses (requirements) and financing transactions

Net financial surpluses or requirements represent the gap between the government’s cash receipts and cash payments. More specifically, they mark the government’s available or required cash flow levels after it has conducted all its activities during a given fiscal year. They take into account:

● changes in annual surpluses (deficits);

● resources or requirements arising from, among other things, the acquisition or disposal of fixed assets, investments, loans and advances, as well as other activities such as the payment of accounts payable and accrued expenses and the collection of accounts receivable.

The primary objective of determining net financial surpluses or requirements is to provide the Ministère des Finances with the most accurate information so that it can make decisions about changes in government borrowing.

Generally, the impact of net financial surpluses or requirements will have a corresponding impact on gross debt, i.e. increases in net financial requirements will entail borrowing, thereby increasing gross debt, while net financial surpluses lead to loan repayments, thereby reducing gross debt.

Financing transactions show the loans contracted (repaid) and the cash flow generated (used) for all government activities during the fiscal year.

Net financial surpluses (requirements) and financing transactions

(millions of dollars)

	Fiscal year ended March 31
	2023			2022
				(restated data)
Cash flow provided by operating activities		(4 698	)		3 487
Cash flow used for investments activities(1)		5 011			(2 892	)
Cash flow used for fixed asset investment activities		(11 445	)		(9 584	)
Net financial surplus (requirements)		(11 132	)		(8 989	)
Cash flow provided by financing activities(1)		11 146			7 161
Change in cash flow during the fiscal year		(14	)		1 828
Financing transactions		11 132			8 989

Note:  These financial data take into account the prospective application of accounting changes relating to the treatment of financial instruments (see Note 3 to the consolidated financial statements). Thus, some information have been modified to reflect changes in the presentation of the consolidated statement of cash flows.

(1) Cash flows used for investment activities included anticipated titles repurchasings totalling $6 250 M as at March 31, 2023 (no anticipated titles repurchasings as at March 31, 2022) as well as investment activities related to cash management of $28 million as at March 31, 2023 ($1 592 million as at March 31, 2022), with maturities ranging from 3 to 12 months at acquisition. This last item has been restated as at March 31, 2022. For the purposes of the net financial surpluses (requirements) and financing transactions, those transactions are presented in the cash flows used for financing activities.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 51

▌ 5. Results of the indicator analysis

The financial indicator analysis aims primarily to clarify and explain the information contained in the government’s consolidated financial statements.¹

The Gouvernement du Québec presents 11 indicators based on those established by the Public Sector Accounting Board in a Statement of Recommended Practice. These indicators are intended to measure a government’s sustainability, flexibility and vulnerability.

● Sustainability refers to the degree to which the government can meet its existing financial obligations without increasing, in relative terms, the debt or tax burden on the economy.

● Flexibility is the extent to which the government can change its debt burden or the tax burden of its citizens to meet its existing financial obligations without compromising its ability to meet its future obligations.

● Vulnerability is the degree to which the government is dependent on sources of funding outside its control or influence.

¹ Where financial statements have been restated in a subsequent financial year, the restated data has been used.

52 PUBLIC ACCOUNTS 2022-2023

5.  Results of the indicator analysis (cont’d)

Indicator’s evolution over the past 5 years

(percent)

			2017-2018	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023	5 years evolution(1)
Sustainability
1.	Assets / Liabilities		57.9	59.2	61.9	63.8	65.7	66.5
2.	Gross debt / Total revenue		185.5	173.5	170.9	172.3	151.9	156.7
3.	Expenditures by portfolio / Consolidated expenditure
	3a.	Expenditure for the Santé et Services sociaux portfolio / Consolidated expenditure	38.3	39.1	38.7	42.3	41.6	40.3		n/a
	3b.	Expenditure for the Éducation portfolio / Consolidated expenditure	13.5	13.9	13.7	13.0	12.8	13.2		n/a
	3c.	Expenditure for the Enseignement supérieur portfolio / Consolidated expenditure	7.2	7.4	7.2	6.6	6.4	6.6		n/a
	3d.	Expenditure for the Debt service / Consolidated expenditure	8.7	8.1	6.7	6.1	6.3	6.8		n/a
	3e.	Expenditure for the other portfolios / Consolidated expenditure	32.3	31.5	33.7	32.0	32.9	33.1		n/a
4.	Gross debt / GDP		48.0	45.3	43.5	46.8	41.9	41.4
5.	Net debt / GDP		45.9	42.9	40.9	43.1	39.1	38.3
6.	Debt representing accumulated deficits / GDP		29.2	26.3	24.2	24.9	21.6	21.1
7.	Consolidated expenditure / GDP		23.0	22.4	23.4	26.4	25.3	25.2
Flexibility
8.	Debt service / Total revenue		8.5	7.6	6.6	6.3	6.2	7.0
9.	NBV of fixed assets / Cost of fixed assets		56.0	55.9	55.9	56.3	56.6	57.1
10.	Own-source revenue / GDP		20.5	20.8	20.0	20.4	21.8	21.2
Vulnerability
11.	Federal government transfers / Total revenue		20.7	20.1	21.6	25.1	21.0	19.9

Upward trend in the indicator Downward trend in the indicator Positive evolution Negative evolution

(1) The trend (upward or downward) is determined by comparing the values furthest away from the reference period, namely those for 2022-2023 and those for 2017-2018.

In this section, gross domestic products (GDP) used correspond to nominal GDPs as of November 8, 2023. Where applicable, GDPs for the reference years are adjusted for the purpose of calculating the indicators.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 53

5. Results of the indicator analysis (cont’d)

Indicator 1: Assets to total liabilities

This indicator illustrates the extent to which the government finances its current operations through liabilities. A ratio of over 100% indicates that a surplus was accumulated in the past and that the value of the government’s financial and non-financial assets is higher than that of its liabilities. A ratio of less than 100% indicates that a deficit was accumulated in the past and that the value of the government’s financial and non-financial assets is lower than that of its liabilities. An upward ratio illustrates a favourable trend.

Financial and non-financial assets

(percentage of total liabilities)

Note:  Ratios have been restated to reflect the application of the accounting standard relating to asset retirement obligations and changes in the presentation of items in the consolidated statement of financial position following the application of the new accounting standards relating to financial instruments.

The ratio of financial and non-financial assets to total liabilities was 49.5% in 2013-2014. The ratio stood at 66.5% as at March 31, 2023. Taking the accumulated deficit into account, the value of assets is still lower than that of liabilities. In addition, an improvement can be observed in the ratio, showing that assets have climbed at a faster rate than liabilities. Moreover, over the past years, borrowings have been used mainly to finance fixed asset acquisitions.

54 PUBLIC ACCOUNTS 2022-2023

5. Results of the indicator analysis (cont’d)

Indicator 2: Gross debt to total revenue

This indicator is intended to put the size of the government’s gross debt into perspective by comparing it with the government’s revenue. A declining ratio indicates a decrease in the relative weight of the gross debt.

Gross debt

(percentage of total revenue)

(1) The gross debt as at March 31, 2020 and March 31, 2021 was increased by $1 138 million and $1 156 million respectively so that certain amounts held for entities not included in the government’s reporting entity are excluded from advance borrowings.

Between 2013-2014 and 2022-2023, the change in the ratio shows a steady decline from 212.1% to 151.9%. This decline means that revenue is growing at a faster rate than debt. The more pronounced decline in the ratio in 2021-2022 is explained by a significant growth of 13.2% in total revenue, resulting mainly from the effects of the economic rebound, compared to a 0.1% decline in the gross debt for the same period.

In 2022-2023, the ratio rose by 4.8 percentage points, due to a 7.2% increase in gross debt, while total revenues increased less significantly over the same period, by 3.9%. This more pronounced change in gross debt can be explained in particular by the impact of the annual deficit, influenced by the measures implemented to combat inflation, and by the growth in capital investments, notably in the health and education networks.

Indicator 3: Expenditures by portfolios to consolidated expenditure

This indicator, presented in section 4, Analysis of main trends (page 45), illustrates the evolution of the distribution of consolidated government expenditure between portfolios.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 55

5. Results of the indicator analysis (cont’d)

Indicator 4: Gross debt to GDP

This indicator puts the government’s gross debt and its ability to pay into perspective, as measured by GDP. A downward trend in this ratio reflects a decline in the relative weight of the gross debt.

Gross debt

(percentage of GDP)

(1) The gross debt as at March 31, 2020 and March 31, 2021 was increased by $1 138 million and $1 156 million respectively so that certain amounts held for entities not included in the government’s reporting entity are excluded from advance borrowings.

The ratio of gross debt to GDP was maintained for 2013-2014 and 2014-2015, and then gradually declined until 2019-2020, reaching a low of 43.5%. The 3.3-percentage-point increase in the ratio in 2020-2021, making it reach 46.8%, is attributable to an increase in the debt to confront the pandemic and a decrease in GDP stemming from the confinement measures, including the temporary closing of certain economic sectors. Then, strong GDP growth in 2021-2022, due primarily to the economic rebound following the easing of the health measures, has allowed this ratio to decline to a lower level than before the pandemic. The ratio continued to fall in 2022-2023 despite a 7.2% increase in gross debt, as GDP grew by 8.4% due to sustained economic vigour since the recovery started in 2021-2022. The ratio reached 41.4% for 2022-2023, the lowest level over the reference period.

56 PUBLIC ACCOUNTS 2022-2023

5. Results of the indicator analysis (cont’d)

Indicator 5: Net debt to GDP

This indicator puts the government’s net debt into perspective with its ability to pay, as measured by GDP. A downward trend in this ratio means that government debt is becoming less of a burden on the economy. Conversely, an increase in the ratio may lead the government to take measures to reduce the debt burden, such as raising taxes or reducing portfolio expenditures to cover interest costs.

Net debt

(percentage of GDP)

Note: Ratios have been restated to reflect the application of the accounting standard relating to asset retirement obligations.

The net debt-to-GDP ratio declined between 2013-2014 and 2019-2020, reaching a low of 40.9%. The increase in the ratio of 2.2 percentage points in 2020-2021, bringing it to 43.1% is explained by an increase in debt to cope with the pandemic and a decline in GDP caused by confinement measures, including temporary closures of certain economic sectors. Strong GDP growth in 2021-2022, driven mainly by the economic recovery following the easing of health measures, has reduced this ratio to below pre-pandemic levels. The ratio continued to fall in 2022-2023, despite a 6.1% rise in net debt due to a 8.4% increase in GDP, driven by sustained economic vigour since the 2021-2022 recovery. The ratio has therefore reached 38.3% for 2022-2023, the lowest level for the reference period. Lastly, the government has set itself the target of reducing net debt to 30% of GDP by 2037-2038.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 57

5. Results of the indicator analysis (cont’d)

Indicator 6: Debt representing accumulated deficits to GDP

This indicator relates the debt representing accumulated deficits, or the debt not used to finance assets, with the government’s ability to pay, as measured by GDP. A downward trend in this ratio means a reduction in the relative weight of the debt representing accumulated deficits.

Debt representing accumulated deficits

(percentage of GDP)

Note: Debt representing accumulated deficits corresponds to accumulated deficits before taking into account the stabilization reserve. Ratios have been restated to reflect the application of the accounting standard relating to asset retirement obligations.

The ratio of the debt representing accumulated deficits to GDP gradually declined from 2013-2014 to 2019-2020, from 36.3% to 24.2%. It then increased by 0.7-percentage-point to reach 24.9% as at March 31, 2021. This increase in the ratio in relation to 2019-2020 is attributable to the deficit in the 2020-2021 fiscal year and a downturn in GDP stemming from the confinement measures, including the temporary closing of certain economic sectors. The strong GDP growth in 2021-2022, due primarily to the economic rebound following the easing of the health measures, has allowed this ratio to decline to a lower level than before the pandemic. Lastly, in 2022-2023, strong GDP growth of 8.4% brought this ratio down to 21.1%, thus reaching the lowest level of the reference period.

58 PUBLIC ACCOUNTS 2022-2023

5. Results of the indicator analysis (cont’d)

Indicator 7: Consolidated expenditure (excluding debt service) to GDP

This indicator makes it possible to compare the growth of government spending with that of the economy over the years. A decline (increase) in this indicator means that spending is growing less (more) rapidly than the economy. The indicator shows the change in the relative weight of the cost of public services in the economy.

Consolidated expenditures (excluding debt service)

(percentage of GDP)

Between 2013-2014 and 2019-2020, the consolidated expenditure-to-GDP ratio was maintained, fluctuating between 22.4% and 23.4%. In 2020-2021, this ratio jumped significantly to a high of 26.4% due to high expenditure growth. This growth is primarily due to one-time costs related to the COVID-19 pandemic combined with the decline in GDP caused by confinement measures, including the temporary shutdowns of certain economic sectors.

From 2021-2022 to 2022-2023, the ratio decreased by 0.1-percentage-point, reaching 25.2%. For these two years, the decrease was due to a growth in GDP that was higher than the increase in expenditure. The growth in GDP is related to the rebound in the economy which began in 2021-2022, following the lifting of the health emergency. The increase in expenditure is explained by the one-time costs associated with the health emergency, including the costs to support the health system, and by the support measures implemented to help the population cope with to the rising cost of living.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 59

5. Results of the indicator analysis (cont’d)

Indicator 8: Debt service to total revenue

This indicator illustrates the share of government revenue that must be allocated to debt service. A decline in this ratio over time means that a larger share of revenue can be devoted to other portfolio expenditures.

Debt service

(percentage of total revenue)

Overall, the proportion of revenue devoted to debt service has fallen since 2013-2014, from 11.4% to 6.2% in 2021-2022, but has rebounded in 2022-2023 to 7.0%. This increase is due in particular to a 16.4% growth in debt service higher than the 3.9% increase in total revenues. The growth in debt service stems from the rise in interest rates and the 7.2% increase in gross debt over the past fiscal year.

60 PUBLIC ACCOUNTS 2022-2023

5. Results of the indicator analysis (cont’d)

Indicator 9: Net book value of fixed assets to their cost

This indicator shows the extent to which the estimated remaining useful life of tangible assets will enable the government to supply products and services in the future. An increase in this ratio indicates that on average the age of fixed assets is lower, and thus that their remaining useful life is longer. The fixed assets can thus be used for a longer period of time before they need to be replaced.

Net book value of fixed assets

(percentage of the cost of fixed assets)

Note: Ratios have been restated to reflect the application of the accounting standard relating to asset retirement obligations.

The net book value to the cost of fixed assets indicator has gradually declined between 2013-2014 and 2018-2019 to a low of 55.9% at March 31, 2019. Following this decline, the ratio remained steady in 2019-2020 then increased to reach 57.1% in 2022-2023. Despite the variations observed, this ratio remains relatively stable, fluctuating between 55.9% and 57.3% over the 10-year reference period.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 61

5. Results of the indicator analysis (cont’d)

Indicator 10: Own-source revenue to GDP

This indicator shows the proportion of collective wealth that the government must collect in order to fund public services. The government’s own-source revenue consists of income tax and other taxes, user fees and other revenue derived from its enterprises in particular. This revenue includes all of the government’s revenue, apart from transfers received from the federal government. A decline in this ratio over time tends to indicate that more created wealth is directly available to taxpayers, while an increase suggests reduced government flexibility regarding future revenues.

Own-source revenue

(percentage of GDP)

From 2013-2014 to 2015-2016, the ratio of own-source revenue to GDP has slighty increased from 20.4% to 21.0%. This increase contributed to a return to a balanced budget in 2015-2016. The ratio has trended downward over the subsequent five-year period to reach 20.0% in 2019-2020, mainly because of the measures to reduce the tax burden implemented by the government and the growth of the economy. The 2018-2019 rebound is primarily explained by income from portfolio investments of the Generations Fund resulting from withdrawals totalling $8 billion, as well as an exceptional gain in Hydro-Québec’s income related to the partial sale of a subsidiary. In 2020-2021, the ratio increased to 20.4% mainly because of the drop in GDP stemming from the confinement measures, including the temporary closing of certain economic sectors. The economic recovery has caused the ratio of own-source revenue to GDP to jump to 21.8% in 2021-2022 owing to a growth in own-source revenue exceeding that of GDP. Lastly, the ratio fell to 21.2% in 2022-2023, as the 5.4% growth in own-source revenue was less than the 8.4% increase in GDP.

62 PUBLIC ACCOUNTS 2022-2023

5. Results of the indicator analysis (cont’d)

Indicator 11: Transfers from the federal government to total revenue

Transfers received from the federal government comprise equalization payments, payments from transfers for health care, and for post-secondary education and other social programs, and amounts transferred under various agreements. This indicator measures the proportion of the Québec government’s revenue that comes from the federal government.

Federal government transfers

(percentage of total revenue)

The proportion of federal government transfers in total revenue was 19.9% in 2013-2014. The proportion fell slightly in 2014-2015 to 19.3%, due to the end of payments of compensation for harmonization of the QST with the GST. Between 2015-2016 and 2020-2021, the ratio shows an upward trend, to 25.1%, which is due in particular to the continued increase in equalization revenue and health transfers. The more pronounced change in the ratio in 2020-2021 is explained by a significant increase in federal government transfers, which aimed to support the implementation by the provinces of COVID-19 pandemic-related measures. In 2021-2022, the ratio fell sharply reaching 21.0% following the decrease in federal transfers related to the management of the pandemic and significant growth in total revenues of 13.2% in the context of economic recovery. Finally, the ratio fell by 1.1 percentage point in 2022-2023 to 19.9%, due in particular to the end of certain health transfers in the context of the pandemic and a slight increase in total revenues of 3.9%.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 63

▌ 6. Additional information

Financial statistics

These tables present certain financial information published in the government’s consolidated financial statements¹.

Table 1.1 – Historical data for consolidated financial statement items

Fiscal year ended March 31

(millions of dollars)

Fiscal year	Revenue	Expenditure	Surplus (deficit)(1)	Financial assets	Liabilities	Net debt	Non-Financial assets	Accumulated deficit(2)
2022-2023	144 299	147 301	(3 002)	134 609	(343 321)	(208 712)	93 833	(114 879)
2021-2022	138 831	136 213	2 618	120 565	(317 365)	(196 800)	87 831	(108 969)
2020-2021	122 611	127 020	(4 409)	115 128	(309 774)	(194 646)	82 366	(112 280)
2019-2020	116 974	115 071	1 903	103 614	(291 687)	(188 073)	76 996	(111 077)
2018-2019	114 746	107 031	7 715	94 557	(283 204)	(188 647)	73 035	(115 612)
2017-2018	108 404	105 561	2 843	98 004	(290 109)	(192 105)	70 037	(122 068)
2016-2017	103 082	99 104	3 978	89 102	(284 386)	(195 284)	69 910	(125 374)
2015-2016	100 123	96 834	3 289	80 928	(279 140)	(198 212)	68 141	(130 071)
2014-2015	95 937	96 634	(697)	77 369	(275 930)	(198 561)	65 505	(133 056)
2013-2014	93 273	95 532	(2 259)	67 651	(262 989)	(195 338)	62 537	(132 801)

Note: Certain financial information has been restated to reflect the application of the accounting standard relating to asset retirement obligations and other information has been reclassified to account for changes in the presentation of items in the consolidated statement of financial position following the application of the new accounting standards relating to financial instruments.

(1) The budget balance within the meaning of the Balanced Budget Act is presented in Table 1.3 (page 66).

(2) Table 1.2 (page 65) presents the breakdown of the annual change in accumulated operating deficit attributable to the comprehensive income of government enterprises and to accounting changes.

¹ Where financial statements have been restated in a subsequent financial year, the restated data has been used.

64 PUBLIC ACCOUNTS 2022-2023

6. Additional information (cont’d)

Financial statistics (cont’d)

Table 1.2 – Breakdown of the annual change in accumulated operating deficits attributable to accounting changes

Fiscal year ended March 31

(millions of dollars)

Fiscal year	Restatements of operating accumulated deficits		Total	Details of adjustments
	Government enterprises	Departments and bodies
2022-2023	—	(3 777)	(3 777)	Application of the accounting standard relating to asset retirement obligations ($3 777 M).
2021-2022	—	—	—
2020-2021	—	(12 504)	(12 504)	Change in the application of the accounting standard on government transfers in order to account for transfer expenditures according to the completion progress of eligible work by transfer recipients ($12 504 M).
2019-2020	—	—	—
2018-2019	45	—	45	Hydro-Québec’s adoption of new guidance of the Financial Accounting Standards Board (FASB) on leases ($10 M). Accounting changes made by other government enterprises to comply with new International Reporting Standards (IFRS) on financial instruments ($35 M).
2017-2018	—	—	—
2016-2017	—	—	—
2015-2016	(107)	—	(107)	Finalization of the adjustments made in 2014-2015 to comply with IFRS ($107 M).
2014-2015	(2 252)	294	(1 958)	Departments and bodies: adjustment to revenue for previous years, in respect of the sale tax, collected by Canada Revenue Agency from selected listed financial institutions ($294 M). Government enterprises: adjustment to comply with IFRS ($2 252 M).
2013-2014	(11)	—	(11)	Accounting change to comply with IFRS IAS 19, Employee Benefits ($11 M).

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 65

6. Additional information (cont’d)

Financial statistics (cont’d)

Table 1.3 – Budget balance within the meaning of the Balanced Budget Act

Fiscal year ended March 31

(millions of dollars)

Fiscal Year	Restated surplus (deficit)	Generations Fund	Sub-total	Adjustments(1)	Use of the stabilization reserve	Budget balance(2)	Allocation to the stabilization reserve
2022-2023	(3 002)	(3 082)	(6 084)		449	(5 635)
2021-2022	2 618	(3 617)	(999)	227	772	—
2020-2021	(4 409)	(3 313)	(7 722)	(3 038)	10 760	—
2019-2020	1 903	(2 606)	(703)	707		4	(4)
2018-2019	7 715	(3 477)	4 238	565		4 803	(4 803)
2017-2018	2 843	(2 293)	550	2 072		2 622	(2 622)
2016-2017	3 978	(2 001)	1 977	384		2 361	(2 361)
2015-2016	3 289	(1 453)	1 836	355		2 191	(2 191)
2014-2015	(697)	(1 279)	(1 976)	1 251		(725)
2013-2014	(2 259)	(1 121)	(3 380)	556		(2 824)

(1) In order to comply with the Budget Balance Act’s provisions, it is necessary to make adjustements to the adjusted annual surpluses and deficits are required to establish the budgetary balance. Among those adjustments, accounting changes that require affecting the accumulated deficits must be considered in the fiscal year in which the change is made. Thus, adjustments have notably been made to take into account the fact that restatements arising from the application of the new accounting standard relating to asset retirement obligations are not to be taken into account in establishing budget balances, and due to the fact that the change in application of the accounting standard respecting transfer payments must only affect the establishement of the 2020-2021 budget balance.

(2) The budget balance shows the achievement of a balanced budget in accordance with section 6 of the Act, which stipulates that the government may not incur a budgetary deficit. This section does not apply to the years 2009-2010 to 2014-2015 nor to the years 2021-2022 and 2022-2023.

66 PUBLIC ACCOUNTS 2022-2023

6. Additional information (cont’d)

Financial statistics (cont’d)

Table 1.4 – Stabilization reserve

Fiscal year ended March 31

(millions of dollars)

Fiscal Year	Opening balance	Amounts allocated to the reserve	Amounts used to maintain a balanced budget	Deposits in the Generations Fund	Closing balance
2022-2023	449		(449)		—
2021-2022	1 221		(772)		449
2020-2021	11 981		(10 760)		1 221
2019-2020	11 977	4			11 981
2018-2019	7 174	4 803			11 977
2017-2018	4 552	2 622			7 174
2016-2017	2 191	2 361			4 552
2015-2016	—	2 191			2 191
2014-2015	—				—
2013-2014	—				—

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 67

Appendix 1

Risks and uncertainties

The following factors are elements of risk and uncertainty that are not directly dependent on the government but that can cause actual results to differ from forecast results, particularly:

● the economic forecasts the government uses to determine its annual budgetary revenue, particularly those concerning changes in economic growth, employment and the Consumer Price Index. For example, a 1-percentage-point difference in nominal GDP has an impact of about $1 billion on own-source revenue excluding revenue from government enterprises;

● the level of spending, whose cost is related to the economic situation. For example, changes in the labour market affect the cost of employment assistance and income security programs, and inflation increases the cost of service contracts. Similarly, in the health sector, changes in the clientele raises the risk of cost overruns for medication and public services. To this must be added the public capital investment completion rate which affects expenditures related to the depreciation of fixed assets;

● revenue from government enterprises which varies according to assumptions concerning such things as weather conditions, which are hard to predict. For example, a variation of 1ºC in winter temperatures compared to normal temperatures has a nearly $85-million impact on Hydro-Québec’s net earnings;

● the economic, taxation and population data the government uses to determine revenue from federal government transfers, as well as the negotiations carried out regularly with the federal government. These data and negotiations can both affect federal government transfer revenue;

● unforeseen situations such as a pandemic, natural catastrophes or work stoppages;

● the change in interest rates and in returns of the Retirement Plans Sinking Fund (RPSF), which have an impact on debt service;

● the risk that a financial intermediary will default on its contractual obligations (credit risk);

● the settlement of certain claims and lawsuits pending against the government before the courts.

The consolidated financial statements also set forth in its notes the uncertainties to which the estimates needed to prepare these statements are subject.

68 PUBLIC ACCOUNTS 2022-2023

Appendix 1

Risks and uncertainties (cont’d)

To reduce its exposure to risk, the government develops management strategies for some of these variables. With the help of economic, fiscal and budgetary policies, the government can influence its revenue and expenditure, other than debt service, by:

● using economic forecasts that do not anticipate overly high or overly low revenue–a situation that could lead to inappropriate policy decisions;

● monitoring economic, budgetary and financial indicators, including the monitoring of its consolidated revenue and expenditure;

● implementing economic support measures.

A government cannot prevent a recession or an economic slowdown single-handedly. However, it has the necessary means to play a stabilizing role in order to offset the effects of an economic slowdown and speed up the recovery.

In addition, financing policies lead the government to have an impact on its debt service through various strategies.

ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS 69

CONSOLIDATED

FINANCIAL

STATEMENTS

Fiscal year 2022-2023

Statement of responsibility

The Comptroller of Finance is responsible for preparing the government’s consolidated financial statements for the Minister of Finance in accordance with the provisions of section 86 of the Financial Administration Act (CQLR, chapter A-6.001). The Comptroller of Finance is also responsible for the integrity and objectivity of the consolidated financial statements in accordance with the accounting policies disclosed in the notes and established pursuant to the public sector accounting standards.

To fulfill their accounting and financial reporting responsibilities, the Comptroller of Finance and the entities making up the government’s reporting entity maintain financial management systems and internal controls that take costs, benefits and risks into account. These systems are designed to provide reasonable assurance that transactions are duly authorized by Parliament, carried out based on the adopted regulations, and properly recognized in order to account for the use of public funds.

The Comptroller of Finance obtains all the information needed to meet the accounting requirements from government departments, bodies, enterprises and funds and implements processes to ensure that this information is reliable. The Comptroller of Finance submits the government’s consolidated financial statements for audit to the Auditor General of Québec which states the nature and scope of its audit and expresses its opinion in its independent auditor’s report to the National Assembly.

The consolidated financial statements are part of the Public Accounts and are tabled annually in the National Assembly by the Minister of Finance.

On behalf of the Gouvernement du Québec,

Julie Gingras	Lucie Pageau, CPA
Deputy Minister of Finance	Comptroller of Finance

Québec, December 11, 2023

CONSOLIDATED FINANCIAL STATEMENTS 73

INDEPENDENT AUDITOR’S REPORT

To the National Assembly

Report on the Audit of the Consolidated Financial Statements

Opinion

I have audited the consolidated financial statements of the Gouvernement du Québec (the Government), which comprise the consolidated statement of financial position as at March 31, 2023, and the consolidated statement of operations and accumulated operating deficit, consolidated statement of change in net debt, consolidated statement of remeasurement gains and losses and consolidated statement of cash flow for the year then ended, and notes and appendices to the consolidated financial statements, including a summary of significant accounting policies.

In my opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Government as at March 31, 2023, and its consolidated results of operations, its consolidated remeasurement gains and losses, its consolidated changes in net debt and its consolidated cash flow for the year then ended in accordance with Canadian public sector accounting standards.

Basis for Opinion

I conducted my audit in accordance with Canadian generally accepted auditing standards. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of my report. I am independent of the Government in accordance with the ethical requirements that are relevant to my audit of the consolidated financial statements in Canada, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Key Audit Matters

Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the consolidated financial statements of the current period. These matters were addressed in the context of my audit of the consolidated financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters.

CONSOLIDATED FINANCIAL STATEMENTS 75

Key audit matter	How the matter was addressed in the audit
Asset retirement obligations
During the current period, the government adopted the new public sector accounting standard PS 3280 – Asset retirement obligations, which became effective on April 1, 2022. It elected to use the modified retroactive approach as described in Note 3 Accounting changes and reclassifications. In addition, as mentioned in note 15 Environmental liability and asset retirement obligations of the government’s consolidated financial statements, these obligations amounted to $4,390 million as at March 31, 2023, and mainly concern the removal of asbestos from government buildings. The government made several assumptions and exercised a significant degree of judgment in determining the discount and inflation rates, the cost of asset retirement activities, and the timetable for completing those activities. As a result, the amounts recorded in the consolidated financial statements may vary significantly over the coming years as these assumptions are revised in response to new information. It is due to the magnitude of the amount of obligations and the significant degree of judgment exercised by the government in setting the various assumptions that the valuation of asset retirement obligations is considered a key audit matter.	My approach to addressing this matter included the following procedures: ●   validating the completeness of management’s identification of legal obligations associated with asset retirement; ●   analyzing the reasonableness of management’s main assumptions, namely: - the cost of asset retirement activities, - the timetable for completing those activities, - the discount rate, - the indexation rate for estimated costs; ●   assessing the competence of specialists selected by management; ●   validating the discount and accretion calculations leading to asset retirement obligation balances in the consolidated financial statements; ●    assessing presentation and disclosure in the consolidated financial statements, particularly the application of the transitional provisions adopted. I used the services of an engineering firm and valuation experts to assist me in my audit.
Obligations relating to accrued benefits under the pension plans
As mentioned in Note 16 Assets and liabilities regarding pension plans and other employee future benefits of the government’s consolidated financial statements, the obligations relating to accrued benefits under the pension plans amounted to $120,845 million as at March 31, 2023. Obligations relating to accrued benefits under the defined-benefit pension plans are recognized using the projected benefit method prorated on years of service and the most probable assumptions set by the government. The government has exercised a significant degree of judgment in determining the discount rates and making the assumptions required to estimate these amounts. As a result, the amounts recorded in the consolidated financial statements may vary significantly as these assumptions are realized or revised. It is due to the magnitude of the amount of obligations and the significant degree of judgment exercised by the government in setting the actuarial assumptions that the valuation of obligations relating to accrued benefits under the pension plans is considered a key audit matter.	My approach to addressing this matter included the following procedures: ●   gaining an understanding of the systems, processes and controls used to value the liability; ●   assessing the reasonableness of assumptions, particularly the discount rate, salary growth rate and life expectancy, and of the method used; ●   validating the completeness and accuracy of the underlying data used to establish the actuarial valuations; ●   testing the calculation of obligations relating to accrued benefits under the pension plans; ●   assessing the competence of specialists selected by management; ●   assessing presentation and disclosure in the consolidated financial statements. I used the services of an actuarial consulting firm to assist me in my audit.

76 PUBLIC ACCOUNTS 2022-2023

Key audit matter How the matter was addressed in the audit

Personal income tax
The government recognized an adjustment to its personal income tax revenues as at the date of the consolidated financial statements to account for revenue not collected and refunds not issued before the end of the year. These adjustments are recorded on the basis of estimates established according to transactions that took place after the end of the fiscal year. Moreover, the government recognizes the income taxes receivable at realizable value, that is, an amount equivalent to what the government expects to receive. These accounts receivable are then brought down to net recoverable value by means of an allowance for doubtful accounts. The realizable value of revenue is estimated based on the settlement rates of similar files in the past, while the allowance for doubtful accounts rate is calculated on the basis of a statistical sample of accounts receivable representative of the population as a whole. It is due to the magnitude of the amounts estimated and the significant degree of judgment exercised by the government in setting the assumptions that the establishment of these estimates is considered a key audit matter. Information on personal income tax is provided in the following notes: ●   Note 4 – Revenue; ●   Note 8 – Accounts receivable; ●   Note 13 – Accounts payable, accrued expenses and other allowances.	My approach to addressing this matter included the following procedures: ●   auditing the adjustments related to personal income tax not collected and refunds not issued at the end of the year, and the supporting audit evidence; ●   gaining an understanding of the systems, processes and controls used to establish these estimates; ●   assessing the reasonableness of the methods, assumptions, data and calculations used to establish estimates to ensure that they are appropriate; ●   conducting testing to audit accounts subject to an allowance for non-realization of revenue and allowance rates; ●   assessing presentation and disclosure in the consolidated financial statements. I used external statistical consulting services to assist me in my audit.
Financial instruments
During the current period, the government prospectively adopted the new requirements of the public sector accounting standards concerning financial instruments (PS 3450) and financial statement presentation (PS 1201). The impact of adopting these requirements, described in Note 3 Accounting changes and reclassifications of the consolidated financial statements, was to recognize derivative financial instruments at fair value. In addition, they have had several repercussions on the consolidated financial statements and accompanying notes.	My approach to addressing this matter included the following procedures: ●   assessing the proper application of the new requirements, in particular the assessment of data, assumptions and models used to determine the fair value of derivative financial instruments; ●   assessing presentation and disclosure in the consolidated financial statements, including the application of the transitional provisions; ●   conducting testing to verify the completeness of derivative financial instruments;

CONSOLIDATED FINANCIAL STATEMENTS 77

Key audit matter How the matter was addressed in the audit

The consolidated financial statements now include a new statement—the consolidated statement of remeasurement gains and losses—and new information on risk management.   It is due to the significance of the changes to the government’s consolidated financial statements that the adoption of these requirements is considered a key audit matter.   Information on financial instruments is presented in the following notes in particular:   ●   Note 6 – Financial instruments;   ●   Note 17 – Assets and liabilities related to derivative financial instruments.   ● validating, on a test basis, the adjusted opening accumulated remeasurement gains and losses and new items of the year in the consolidated statement of remeasurement gains and losses.   I used the services of a valuation expert to assist me in my audit.  

Other Information

Management is responsible for the other information. The other information comprises the information included in Volume 1 of the 2022-2023 Public Accounts, but does not include the consolidated financial statements and my auditor’s report thereon.

My opinion on the consolidated financial statements does not cover the other information and I do not express any form of assurance conclusion thereon.

In connection with my audit of the consolidated financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated.

I obtained Volume 1 of the 2022-2023 Public Accounts prior to the date of this auditor’s report. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact in this auditor’s report. I have nothing to report in this regard.

Responsibilities of Management for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Government’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting. Management believes the Government has the ability to continue its operations.

78 PUBLIC ACCOUNTS 2022-2023

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

My objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, I exercise professional judgment and maintain professional skepticism throughout the audit. I also :

● Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Government’s internal control.

● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

● Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Government’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the Government to cease to continue as a going concern.

● Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

● Obtain sufficient appropriate audit evidence regarding the financial information of the entities or activities within the Government to express an opinion on the consolidated financial statements. I am responsible for the direction, supervision and performance of the group audit. I remain solely responsible for my audit opinion.

I communicate with management regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

CONSOLIDATED FINANCIAL STATEMENTS 79

I also provide management with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards.

From the matters communicated with management, I determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. I describe these matters in my auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

As required by the Auditor General Act (CQLR, chapter V-5.01), I report that, in my opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Governement as at March 31, 2023, and the consolidated results of its operations and the changes in its consolidated financial position for the year then ended in accordance with the accounting policies of the Governement as stated in the notes to the consolidated financial statements.

As required by the Auditor General Act (CQLR, chapter V-5.01), I report that, in my opinion, these standards have been applied, except for the changes in accounting policies for financial instruments and after giving retroactive effect to the change in accounting policies for asset retirement obligations as explained in Note 3, on a basis consistent with that of the preceding year.

Guylaine Leclerc, FCPA auditor

Auditor General of Québec

Québec, December 11, 2023

80 PUBLIC ACCOUNTS 2022-2023

Consolidated statement of operations and accumulated operating deficit

FISCAL YEAR ENDED MARCH 31, 2023

(millions of dollars)

		2023				2022
	Notes	Budget		Actual results		Actual results
		(Note 3)				(restated – Note 3)
REVENUE	4
Income and property taxes		60 506		64 521		62 328
Consumption taxes		26 706		26 597		24 597
Duties and permits		5 171		5 741		6 057
Miscellaneous revenue		11 680		12 083		10 705
Revenue from government enterprises	10	5 628		6 620		5 960
Own-source revenue		109 691		115 562		109 647
Federal government transfers		28 790		28 737		29 184
Total revenue		138 481		144 299		138 831
EXPENDITURE	5
Santé et services sociaux		54 459		59 406		56 668
Éducation		18 689		19 499		17 405
Enseignement supérieur		10 010		9 655		8 747
Famille		7 893		7 835		7 277
Transports et Mobilité durable		7 115		6 451		7 017
Emploi et Solidarité sociale		5 390		8 983		8 385
Affaires municipales et Habitation		3 929		4 928		3 541
Économie, Innovation et Énergie		3 656		3 205		3 064
Environnement, Lutte contre les changements climatiques, Faune et Parcs		1 859		1 673		1 730
Other portfolios		17 144		15 608		13 739
Portfolio expenditure		130 144		137 243		127 573
Debt service		8 842		10 058		8 640
Total expenditure		138 986		147 301		136 213
Provision for economic risks and other support and recovery measures		2 500
ANNUAL OPERATING (DEFICIT) SURPLUS		(3 005	)	(3 002	)	2 618
ACCUMULATED OPERATING DEFICIT
RESTATED OPENING BALANCE	3			(108 969	)	(112 278	)
Reclassification to accumulated remeasurement gains (losses)	3			(5 557	)
ADJUSTED OPENING BALANCE				(114 526	)	(112 278	)
Other comprehensive income items of government enterprises	10					691
CLOSING BALANCE				(117 528	)	(108 969	)

The notes to the financial statements and the appendices are an integral part of the consolidated financial statements.

CONSOLIDATED FINANCIAL STATEMENTS 81

Consolidated statement of financial position

AS AT MARCH 31, 2023

(millions of dollars)

	Notes		2023			2022
						(restated – Note 3)
FINANCIAL ASSETS
Cash and cash equivalents		7		9 981			9 967
Accounts receivable		8		25 114			23 232
Investments		9		7 804			6 318
Investment in government enterprises		10		36 815			34 877
Loans		11		5 875			5 356
Generations Fund		12		18 911			15 829
Sinking funds relating to borrowings		18		18 249			18 355
Assets related to derivative financial instruments		17		11 209			5 292
Assets regarding other employee future benefits		16		452			431
Other financial assets				199			908
Total financial assets				134 609			120 565
LIABILITIES
Accounts payable, accrued expenses and other allowances		13		51 621			50 146
Deferred revenue		14		9 151			9 116
Environmental liability and asset retirement obligations		15		7 517			7 404
Liabilities regarding pension plans and other employee future benefits		16		7 237			9 888
Liabilities related to derivative financial instruments		17		10 684			1 274
Debts		18		257 111			239 537
Total liabilities				343 321			317 365
NET DEBT				(208 712	)		(196 800	)
NON-FINANCIAL ASSETS
Fixed assets		19		91 799			85 299
Other non-financial assets		20		2 034			2 532
Total non-financial assets				93 833			87 831
ACCUMULATED DEFICIT				(114 879	)		(108 969	)
Accumulated operating deficit				(117 528	)		(108 969	)
Accumulated remeasurement gains				2 649
				(114 879	)		(108 969	)
Contractual obligations and contractual rights		21
Contingencies		22

The notes to the financial statements and the appendices are an integral part of the consolidated financial statements.

Julie Gingras	Lucie Pageau, CPA
Deputy Minister of Finance	Comptroller of Finance

82 PUBLIC ACCOUNTS 2022-2023

Consolidated statement of change in net debt

FISCAL YEAR ENDED MARCH 31, 2023

(millions of dollars)

			2023						2022
	Notes		Budget(1)			Actual results			Actual results
									(restated – Note 3)
Annual operating (deficit) surplus				(3 005	)		(3 002	)		2 618
Change due to fixed assets		19
Acquisition and work in progress				(9 511	)		(11 869	)		(9 894	)
Depreciation				4 832			4 880			4 617
Disposals, reductions in value and other							489			233
				(4 679	)		(6 500	)		(5 044	)
Change due to other non-financial assets							498			(419	)
Other comprehensive income items of government enterprises		10					947			691
Net remeasurement losses							(3 150	)
Increase in the net debt				(7 684	)		(11 207	)		(2 154	)
NET DEBT
PREVIOUSLY ESTABLISHED OPENING BALANCE				(198 988	)		(192 208	)		(190 245	)
Accounting changes		3					(5 297	)		(4 401	)
ADJUSTED OPENING BALANCE				(198 988	)		(197 505	)		(194 646	)
CLOSING BALANCE				(206 672	)		(208 712	)		(196 800	)

The notes to the financial statements and the appendices are an integral part of the consolidated financial statements.

(1) According to data presented in Budget 2022-2023 of the Ministère des Finances tabled on March 22, 2022.

CONSOLIDATED FINANCIAL STATEMENTS 83

Consolidated statement of remeasurement gains and losses

FISCAL YEAR ENDED MARCH 31, 2023

(millions of dollars)

	Notes		2023
ACCUMULATED REMEASUREMENT GAINS (LOSSES), BEGINNING OF YEAR			—
Accounting changes		3
Accumulated other comprehensive income items of government enterprises				5 557
Adjustments for accumulated unrealized remeasurement losses				(705	)
ADJUSTED ACCUMULATED REMEASUREMENT GAINS, BEGINNING OF YEAR				4 852
Unrealized gains (losses):
Foreign exchange				(3 723	)
Deriative financial instruments(1)				650
Investments at fair value				(76	)
Amounts reclassified to consolidated statement of operations:
Foreign exchange				485
Deriative financial instruments(2)				(508	)
Investments at fair value				22
Net remeasurement losses				(3 150	)
Other comprehensive income items of government enterprises		10		947
ACCUMULATED REMEASUREMENT GAINS, END OF YEAR				2 649

The notes to the financial statements and the appendices are an integral part of the consolidated financial statements.

(1) Net unrealized gains of $650 M consist of $3 761 M in foreign exchange gains and $3 111 M in fair value losses.

(2) The amounts reclassified in income of $508 M consist of $512 M in foreign exchange gains and $4 M in fair value losses.

84 PUBLIC ACCOUNTS 2022-2023

Consolidated statement of cash flow

FISCAL YEAR ENDED MARCH 31, 2023

(millions of dollars)

	Notes		2023			2022
						(restated – Note 3)
OPERATING ACTIVITIES
Annual operating (deficit) surplus				(3 002	)		2 618
Items not affecting cash flow		23		5 968			3 866
Change in assets and liabilities related to operations		23		(35	)		3 997
Benefits paid for pension plans and other employee future benefits				(7 629	)		(7 386	)
Cash flow (used for) from operating activities				(4 698	)		3 095
INVESTMENT ACTIVITIES
Investments made				(6 833	)		(5 266	)
Investments received				3 782			3 415
Loans made				(1 478	)		(1 294	)
Loans received				661			834
Government enterprises
Equity related operations				(163	)		(35	)
Loans and advances made				(1 847	)		(831	)
Loans and advances received				1 105			321
Dividends received				6 364			5 193
Investments in the Generations Fund				(2 802	)		(3 125	)
Cash flow used for investment activities				(1 211	)		(788	)
FIXED ASSET INVESTMENT ACTIVITIES
Fixed assets acquired and work in progress				(11 502	)		(9 652	)
Fixed assets disposed of				57			68
Cash flow used for fixed assets investment activities				(11 445	)		(9 584	)

CONSOLIDATED FINANCIAL STATEMENTS 85

Consolidated statement of cash flow (cont’d)

FISCAL YEAR ENDED MARCH 31, 2023

(millions of dollars)

	Notes	2023			2022
					(restated – Note 3)
FINANCING ACTIVITIES
Debt issued			28 861			25 018
Debt repaid			(11 125	)		(17 747	)
Investments in sinking funds relating to borrowings			(4 237	)		(4 388	)
Withdrawals from sinking funds relating to borrowings for repayment of debts			3 591			2 500
Pension plans and other employee future benefits
Reimbursements to depositors			155			170
Deposits to funds			(9	)		(244	)
Contributions deposited net of benefits paid			132			140
Cash flow from financing activities			17 368			5 449
Increase (decrease) in cash and cash equivalents			14			(1 828	)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR			9 967			11 795
CASH AND CASH EQUIVALENTS, END OF YEAR			9 981			9 967

The notes to the financial statements and the appendices are an integral part of the consolidated financial statements.

86 PUBLIC ACCOUNTS 2022-2023

Notes to the consolidated financial statements

▌ 1.  Summary of significant accounting policies

Accounting framework

The Gouvernement du Québec accounts for its financial transactions in accordance with the accounting policies adopted by the Conseil du trésor. The primary source of reference for establishing these policies are the Canadian public sector accounting standards.

Reporting entity

The government’s reporting entity encompasses the financial transactions of the National Assembly and persons appointed by the National Assembly, departments and all the bodies, funds and enterprises under the government’s control, that is, entities for which the government has the power to direct their financial and administrative policies, such that their activities will provide the government with anticipated benefits or expose it to a risk of loss.

All of the entities in the government’s reporting entity over which the government exercises control are listed in Appendix 1. Property held and fiduciary activities carried out by government departments and bodies on behalf of the designated beneficiaries mentioned in Appendix 3 are not included in the government’s reporting entity.

Consolidation methods

The assets, liabilities, revenues and expenditures of entities included in the government’s reporting entity, with the exception of government enterprises, are consolidated line by line in the financial statements. Prior to consolidation, the accounts of each entity are harmonized according to the government’s accounting policies. Inter-entity transactions and balances as well as unrealized gains and losses relating to transactions on assets and liabilities that remain within the government’s reporting entity are eliminated.

Investments in government enterprises

Investments in government enterprises represent a financial asset for the government and, given their commercial orientation, management autonomy and financial self-sufficiency, they are accounted for using the modified equity method.

According to this method, which does not require that accounting policies be harmonized with those of the government, investments and interests are accounted for at cost. Every year, the cost is adjusted based on the government’s share in the results of these enterprises, the counterpart being recognized in income. Cost is also adjusted based on the government’s share of other comprehensive income items, with an offsetting entry in accumulated remeasurement gains and losses. The value of the investments is reduced by declared dividends and adjusted by the amount of the elimination of unrealized inter-entity gains and losses pertaining to assets and liabilities that remain within the government’s reporting entity.
 

CONSOLIDATED FINANCIAL STATEMENTS 87

1.  Summary of significant accounting policies (cont’d)

Translation of foreign currency

On the date a foreign currency transaction is entered into, all assets, liabilities and amounts reported in the statement of operations are translated into Canadian dollars at the exchange rate prevailing on that date. At the end of the fiscal year, monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the exchange rate in effect at that date. For certain designated financial instruments, foreign exchange gains and losses are recognized directly to results, and not through the statement of remeasurement gains and losses.

Remeasurement gains and losses

Unrealized gains and losses attributable to financial instruments recognized at fair value and due to changes in foreign exchange rates are recognized in consolidated statement of remeasurement gains and losses until the settlement date of the financial instrument. At that date, the accumulated balance of remeasurement gains and losses relating to these instruments is reclassified to results.

Government enterprises recognize some unrealized gains or losses on financial instruments and the actuarial gains or losses on future benefits among the other items of comprehensive income, in accordance with International Financial Reporting Standards (IFRS). Those other items are not included in the government’s results and are recognized in the accumulated remeasurement gains (losses). When these gains or losses on financial instruments are realized, they will be reclassified in revenue from government enterprises and recognized as such in the government’s result. Actuarial gains and losses on future benefits will never be reclassified among the government’s results.

Measurement uncertainty

Measurement uncertainty exists when there is a difference between the amount recognized or disclosed in the consolidated financial statements and another reasonably possible amount. Some uncertainties are called “material” when the range of reasonably possible amounts is wide and when the situation could influence decisions made by the users of the consolidated financial statements. The impact of the resolution of the uncertainties may be felt in the short term or in a longer term.

The government has determined that material measurement uncertainty in the short term was attributable to the assumptions used to determine the allowances for contingencies (Note 22) pertaining to lawsuits and disputes. Investment in government enterprises (Note 10), environmental liability and asset retirement obligations (Note 15), and pension plans obligations (Note 16) present a long-term material measurement uncertainty due to the assumptions used to determine their value.

88 PUBLIC ACCOUNTS 2022-2023

1.  Summary of significant accounting policies (cont’d)

Other measurement uncertainties are attributable to the estimates made in the course of the governmnent’s regular operations. New events, experience acquired or the information available to the government may lead to short-term revision of the allowances for doubtful accounts in accounts receivable (Note 8), tax revenue and the corresponding receivable and payable amounts (Notes 8 and 13), long-term declines in investments (Note 9), the fair value of derivative financial instruments (Note 17), allowances for loan declines (Note 11), grants to be paid at the rate of repayment of the loans contracted by the recipients (Note 13), transfer revenue from the federal government receivable or deferred (Notes 8 and 14), and provisions for losses on guaranteed financial initiatives (Note 13).

Moreover, the useful life of fixed assets is estimated based on the period during which they should be of use to the government. The length of some contracts presented in the contractual obligations and contractual rights is also estimated.

The estimates and assumptions the government uses to recognize or disclose some items in the consolidated financial statements are based on the most reliable data and the most likely assumptions available, and require the application of professional judgment.

It is reasonably possible that the amounts will change after the annual revision of the estimates and assumptions. Accounting estimates are revised during the estimate revision period if they concern only that period, or during that revision period and the next ones if they concern several periods. Further information about the nature and circumstances giving rise to measurement uncertainty is disclosed in the appropriate Notes.

CONSOLIDATED FINANCIAL STATEMENTS 89

1.  Summary of significant accounting policies (cont’d) 

Significant accounting policies by component

To increase the consolidated financial statements’ understandability, significant accounting policies by component are detailed in the following notes:

Notes	Components
Note 4	Revenue
Note 5	Expenditure
Note 6	Financial instruments
Note 7	Cash and cash equivalents
Note 8	Accounts receivable
Note 9	Investments
Note 10	Investments in government enterprises
Note 11	Loans
Note 12	Generations Fund
Note 13	Accounts payable, accrued expenses and other allowances
Note 14	Deferred revenue
Note 15	Environmental liability and asset retirement obligations
Note 16	Assets and liabilities regarding pension plans and other employee future benefits
Note 17	Assets and liabilities related to derivative financial instruments
Note 18	Debts
Note 19	Fixed assets
Note 20	Other non-financial assets
Note 21	Contractual obligations and contractual rights
Note 22	Contingencies

90 PUBLIC ACCOUNTS 2022-2023

1.  Summary of significant accounting policies (cont’d)

Upcoming accounting standards

The Public Sector Accounting Board has issued new accounting standards effective April 1, 2023.

Accounting standards effective April 1, 2023

PS 3400, Revenue

This standard provides guidance for the recognition, measurement and disclosure of revenue that are not dealt with in another standard. It distinguishes revenue arising from transactions that include performance obligations, which are those for which there is an enforceable promise to provide specific goods or services to a specific payor, and revenue arising from transactions that do not have performance obligations, which are referred to as non-exchange transactions.

Based on this standard, some revenues from duties and permits will no longer be available for deferral to a future year. This change will have no material impact on the consolidated financial statements. The government plans to apply the standard retroactively.

PS 3160, Public Private Partnerships

This standard provides guidance on the recognition, measurement and disclosure of infrastructure procured by the government as a public private partnership (PPP). In particular, it identifies what constitutes a PPP infrastructure asset and specifies that an asset and a liability should be recognized when the public sector entity acquires control.

This standard will result in a change in the rate used, notably to calculate interest on financial liabilities, which will correspond to the implicit rate for each contract rather than the average government borrowing rate. This change will have no material impact on the consolidated financial statements. The government plans to apply the standard retroactively.

Guideline PSG-8, Purchased intangibles

This guideline addresses purchased intangibles, other than software, that will now be recognized if they meet the definition of an asset.

The adoption of this standard will have no material impact on the consolidated financial statements. The government plans to apply this standard prospectively.

CONSOLIDATED FINANCIAL STATEMENTS 91

▌2.  Compliance with legislative authorizations

The government must be authorized by Parliament to draw money from the Consolidated Revenue Fund. Parliament grants this authorization by annually passing laws on appropriations or by adopting specific laws authorizing appropriations, which authorize departments and budget-funded bodies to make expenditures, capital acquisitions, loans, and investments, and bear other costs out of the general fund. For special funds, the annual expenditure and investment forecasts are approved by Parliament in the context of the adoption of appropriation acts or special acts, in particular when a special fund is established.

In accordance with section 86 of the Financial Administration Act (CQLR, chapter A-6.001), Volume 2 of the public accounts reports on the annual use of legislative authorizations for investments and expenditures for each of the departmental portfolios and special funds.

For the fiscal year ended March 31, 2023, no surpluses of expenditures and other costs over annual appropriations were recognized. Surpluses of expenditures and investments of special funds over approved amounts of $446 million and $961 million respectively were recognized.

▌ 3.  Accounting changes and reclassifications

Adoption of new accounting standards

Asset retirement obligations

On April 1, 2022, the government applied accounting standard PS 3280, Asset Retirement Obligations (AROs), on a modified retroactive basis¹.

Under this standard, a liability must now be recognized as soon as the government acquires or constructs an asset for which it has a legal obligation to incur costs to permanently retire it. Previously, these costs were recognized in the fiscal year in which they were retired.

The legal obligations recognized as a result of the application of this standard mainly concern the removal of asbestos from government buildings. Upon initial recognition of the liability, an equivalent asset is recognized. This asset is then amortized over the useful life of the asset affected by the retirement obligation.

¹ A modified retroactive application means that the provisions of the standard were applied to events and transactions from the date on which the obligations arose, namely 1999 for buildings containing asbestos. It also means that the amounts recognized reflect the assumptions in effect on April 1, 2022.

92 PUBLIC ACCOUNTS 2022-2023

3. Accounting changes and reclassifications (cont’d)

Financial statement presentation

On April 1, 2022, the government adopted, on a prospective basis, accounting standard PS 1201, Financial Statement Presentation. A new statement of remeasurement gains and losses is presented for the fiscal year ended March 31, 2023. This financial statement shows remeasurement gains and losses arising from foreign currency transactions, derivative financial instruments, investments measured at fair value, and other revenue from government enterprises.

The accumulated deficit presented in the consolidated statement of financial position now comprises two components: the accumulated operating deficit and accumulated remeasurement gains. The cumulative other comprehensive income items of government enterprises, previously presented directly in the government’s accumulated deficit, is now presented in the component of accumulated remeasurement gains and losses.

Foreign currency translation, portfolio investments, and financial instruments

On April 1, 2022, the government applied accounting standards PS 2601, Foreign Currency Translation, PS 3041, Portfolio Investments, and PS 3450, Financial Instruments, on a prospective basis. These new standards set out requirements for the recognition, measurement, and presentation of foreign currency transactions, portfolio investments, and other financial instruments.

Recognition and measurement

The implementation of these standards has resulted in the following changes:

● derivative financial instruments and investments in equity instruments quoted in an active market are now measured at fair value. Previously, they were recognized at cost. Other financial assets and liabilities are measured at cost or at amortized cost;

● unrealized gains or losses arising from fair value or currency fluctuations are presented in the new statement of remeasurement gains and losses until the financial instrument in question is derecognized. Previously, foreign exchange gains and losses on financial instruments denominated in foreign currencies were presented as deferred foreign exchange gains (losses) as a component of debt, and were amortized on a straight-line basis;

● transaction costs related to debts are now included in their book value, as well as in the determination of the effective interest rate used to recognize debts at amortized cost. Previously, these components were recognized as deferred expenses related to debts and amortized on a straight-line basis over the term of the corresponding debts.

CONSOLIDATED FINANCIAL STATEMENTS 93

3. Accounting changes and reclassifications (cont’d)

Presentation

The implementation of these standards has resulted in the following changes:

● investments previously classified as short-term investments are now presented under Investments;

● sinking funds relating to borrowings, previously presented as a deduction from debt, are now presented separately in financial assets;

● sums receivable from (payable to) counterparties as well as derivative financial instruments, previously presented with debts, are now presented separately as assets or liabilities related to derivative financial instruments;

● when the government makes an investment by acquiring its own securities (treasury securities), the investment and the corresponding debt are now offset in the consolidated statement of financial position. These offsets have reduced the balances of cash equivalents, investments, sinking funds relating to borrowings, and debts;

● additional financial information on exposure to risks associated with financial instruments, and on the management of these risks, is provided in the notes, notably in Note 6 concerning financial instruments.

94 PUBLIC ACCOUNTS 2022-2023

3. Accounting changes and reclassifications (cont’d)

Impacts of the adoption of new accounting standards

For the four new standards relating to financial instruments whose application is prospective, the financial information as at March 31, 2022 have not been restated. However, to enhance comparability between fiscal years, the changes listed on the previous page that have an impact on the presentation have been applied to the financial information as at March 31, 2022, that is, they have been reclassified according to the new presentation.

These accounting changes and the reclassifications have resulted in changes in the following components of the consolidated financial statements:

	Fiscal year ended
	March 31, 2022
	ARO
CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED OPERATING DEFICIT
(millions of dollars)
Increase (decrease) in expenditure
Santé et Services sociaux		108
Éducation		103
Enseignement supérieur		9
Affaires municipales et Habitation		5
Other portfolios		2
Increase in portfolio expenditures		227
Decrease in annual operating surplus		227
Increase in opening accumulated operating deficit		3 550
Increase in closing accumulated operating deficit		3 777

CONSOLIDATED FINANCIAL STATEMENTS 95

3. Accounting changes and reclassifications (cont’d)

	As at April 1, 2022			As at March 31, 2022
	Financial instruments			ARO			Reclassification Financial instruments
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(millions of dollars)
Increase (decrease) in assets and liabilities
Cash equivalents								(390	)
Short-term investments								(6 391	)
Accounts receivable								(45	)
Investments		292						(230	)
Loans		(10	)
Sinking funds relating to borrowings		(151	)					18 355
Assets related to derivative financial instruments		2 241						5 292
Other financial assets								(547	)
Increase in financial assets		2 372			—			16 044
Accounts payable, accrued expenses and other allowances		6						(145	)
Environmental liability and asset retirement obligations					4 592
Liabilities related to derivative financial instruments		5 805						1 274
Debts		(2 734)						14 915
Increase in liabilities		3 077			4 592			16 044
Increase in the net debt		705			4 592			—
Fixed assets					815
Increase in non-financial assets					815			—
Increase in accumulated deficit					3 777			—
CONSOLIDATED STATEMENT OF CHANGE IN NET DEBT
(millions of dollars)
Decrease in annual operating surplus					227
Increase in depreciation of fixed assets					(36	)
Increase in the net debt, beggining of year		705	(1)		4 401
Increase in the net debt, end of year					4 592	(1)		—

(1) The increase in net debt as at April 1, 2022 is $5 297 M, of which $4 592 M results from the application of the standard relating to AROs and $705 M results from the application of the standards relating to financial instruments.

96 PUBLIC ACCOUNTS 2022-2023

3. Accounting changes and reclassifications (cont’d)

Reclassification of budget forecasts

Budget forecasts for expenditures by portfolios have been reclassified to ensure comparability with actual expenditures as at March 31, 2023. Their composition has been adjusted in the fall of 2022 to reflect changes in ministers’ responsibilities. In addition, the forecast related to the change in application of the accounting standard respecting transfer payments, as well as certain components that had been presented differently when the budget was prepared, have been reclassified in the various portfolios.

Reconciliation of forecasts between the 2022-2023 budget and the consolidated financial statements

(millions of dollars)

						Budget after
	Budget (1)		Reclassifications			reclassifications
EXPENDITURE
Santé et Services sociaux		54 132		327			54 459
Éducation		18 444		245			18 689
Enseignement supérieur		9 971		39			10 010
Famille		7 869		24			7 893
Transports et Mobilité durable		6 311		804			7 115
Emploi et Solidarité sociale		5 171		219			5 390
Affaires municipales et Habitation		3 833		96			3 929
Économie, Innovation et Énergie		3 384		272			3 656
Environnement, Lutte contre les changements climatiques, Faune et Parcs		1 611		248			1 859
Other portfolios		19 418		(2 274	)		17 144
Total		130 144		―			130 144

(1) According to data presented in Budget 2022-2023 of the Ministère des finances tabled on March 22, 2022.

Reclassification of comparative financial data

In addition to the reclassifications presented above, other 2021-2022 financial data have been reclassified to comply with the 2022-2023 presentation method.

CONSOLIDATED FINANCIAL STATEMENTS 97

▌ 4. Revenue

Significant accounting policies

Tax revenue (income and property taxes and consumption taxes)

Once the tax measures have been authorized by Parliament, tax revenue is recognized in the following manner:

¾Personal income tax revenue and contributions dedicated to health services are recognized when the taxpayer earned the income subject to tax. Revenue not collected at the end of the fiscal year and refunds not yet issued are recognized on the basis of estimates established according to transactions that took place after the end of the fiscal year.

¾Corporate income tax revenue is recognized at the time the funds are received. Receipts are primarily comprised of instalment payments the companies calculate based on estimates of their taxable earnings. These revenues are adjusted to take amounts in notices of assessment issued before the end of the fiscal year into account. The receivable or refundable amounts resulting from the variation between the estimated taxable income and the income actually earned by the companies during the fiscal year are not recognized because they cannot be accurately estimated.

¾Revenue from school property taxes is recognized over the period in which such taxes are levied.

¾Revenue from consumption taxes is recognized at the time of the sale of the products or the delivery of the services, after deducting tax credits.

Tax revenue does not take into account estimates concerning taxes due on unreported revenue within the time prescribed. These amounts are recognized when notices of assessments are issued or following tax check activities or after the filing of tax returns by taxpayers.

Duties and permits

Revenue from duties and permits is recognized when receivable. Where revenue is refundable on demand and is linked to clearly identifiable goods and services that must be rendered by the government to the holder of the duty or the permit, the revenue is recognized over the reference period of that duty or permit.

Miscellaneous revenue

Revenue from the sale of goods or services and from user contributions is recognized when the goods are sold or the services are provided.

Income from interest on accounts receivable and loans as well as income from portfolio investments are recognized as they are earned. They cease to be recognized when the recovery of interest or principal is not reasonably assured.

98 PUBLIC ACCOUNTS 2022-2023

4. Revenue (cont’d)

Significant accounting policies (cont’d)

Revenue from donors other than governments is recognized in the year of its donation when such revenue is not designated for a specific purpose. When, on the contrary, such revenue is designated for a specific purpose, it is recognized in revenue according to the conditions of the designation. In the case of donations related to land, the revenue is recognized in the year of acquisition.

Revenue from tuition fees is recognized over the duration of the training in question.

Transfers from governments

Transfers from the federal government and other governments are recognized in revenue for the fiscal year in which they are authorized by the transferring government and in which the eligibility criteria are met, except if the stipulations create an obligation that meets the definition of a liability. In such situations, the transfer is recognized in revenue as the liabilitiy is paid.

Measurement uncertainty

The measurement uncertainties that affect revenue are presented in Note 8 on accounts receivable, Note 10 on investment in government enterprises, Note 13 on accounts payable, accrued expenses and other allowances related to income taxes and other taxes refundable and Note 14 on deferred revenue.

CONSOLIDATED FINANCIAL STATEMENTS 99

4. Revenue (cont’d)

Revenue by source

(millions of dollars)

	Fiscal year ended March 31
	2023			2022
Own-source revenue
Income and property taxes
Personal income tax		42 251			40 924
Contributions for health services		7 914			7 402
Corporate taxes		13 243			12 926
School property tax		1 113			1 076
		64 521			62 328
Consumption taxes
Sales(1)		22 911			20 894
Fuel		2 157			2 090
Tobacco		817			893
Alcoholic beverages		635			638
Cannabis		77			82
		26 597			24 597
Duties and permits
Motor vehicles		1 562			1 525
Natural resources		2 014			2 371
Greenhouse gas emissions		1 267			1 299
Other		898			862
		5 741			6 057
Miscellaneous revenue
Sales of goods and services		5 741			5 311
User contributions		1 977			1 781
Income on accounts receivable and loans		1 052			541
Income on investments		525			636
Fines, forfeitures and recoveries		1 228			934
Third-party donations		1 003			966
Tuition fees		451			410
Transfers from entities other than the federal government		106			126
		12 083			10 705
Revenue from government enterprises
Hydro-Québec		3 665			3 059
Société des alcools du Québec		1 427			1 349
Loto-Québec		1 597			1 118
Investissement Québec		(226	)		341
Other		157			93
		6 620			5 960
Total own-source revenue		115 562			109 647
Federal government transfers
Equalization		13 666			13 119
Health transfers		7 082			8 203
Transfers for post-secondary education and other social programs		1 294			1 529
Other programs		6 695			6 333
Total federal government transfers		28 737			29 184
Total revenue		144 299			138 831

(1) The solidarity tax credit, worth $1 650 M ($1 637 M in 2021-2022), is an abatement since it is designed to refund certain taxes to low-income households. It is presented as a reduction of consumption tax revenue on sales.

100 PUBLIC ACCOUNTS 2022-2023

4. Revenue (cont’d)

Income and property taxes – Additional information on refundable tax credits

In accordance with the applicable tax legislation, refundable tax credits reduce related tax revenue. However, Canadian public sector accounting standards require that these credits be presented in expenditure when they represent transfers funded by the tax system, that is, when they confer on a taxpayer a financial benefit other than a reduction of the income or other taxes that the taxpayer would otherwise have had to pay the government.

The refundable tax credits of $13 115 million ($11 335 million in 2021-2022) have been reclassified in transfer expenditures meaning that revenue derived from income and property taxes amount to $64 521 million ($62 328 million in 2021-2022).

Income and property taxes – Reclassification of refundable tax credits

(millions of dollars)

	Fiscal year ended March 31
	2023			2022
	Tax revenue
	net of
	refundable	Refundable
	tax credits	tax credits	Total	Total
Income and property taxes
Personal income tax	31 427	10 824	42 251	40 924
Contributions for health services	7 914		7 914	7 402
Corporate taxes	10 952	2 291	13 243	12 926
School property tax	1 113		1 113	1 076
	51 406	13 115	64 521	62 328

CONSOLIDATED FINANCIAL STATEMENTS 101

4. Revenue (cont’d)

Additional information – Tax-funded transfer expenditures by portfolios

(millions of dollars)

	Fiscal year ended March 31
	2023														2022
	Santé et Services sociaux		Famille		Emploi et Solidarité sociale		Économie, Innovation et Énergie		Culture et Communi- cations		Other		Total		Total
Income and property taxes
Personal income tax
Refundable tax credits
Increase in the cost of living						3 440								3 440		3 675
Family Allowance				3 403										3 403		3 281
Senior assistance		1 661												1 661		217
Childcare expenses				936										936		854
Home-support services for seniors		650												650		589
Work premium						259								259		182
Caregivers		187												187		162
Québec education savings incentive												140		140		136
Other		75				28						45		148		134
		2 573		4 339		3 727		—		—		185		10 824		9 230
Corporate taxes
Refundable tax credits
Film production										463				463		500
E-business development								433						433		432
Scientific research and experimental development								386						386		358
Multimedia titles								334						334		301
Investments								294						294		193
Resources												113		113		75
Other						27		86		45		110		268		246
		—		—		27		1 533		508		223		2 291		2 105
		2 573		4 339		3 754		1 533		508		408		13 115		11 335

102 PUBLIC ACCOUNTS 2022-2023

▌ 5. Expenditure

Significant accounting policies

Transfer expenditures

Transfer expenditures are recognized in the fiscal year during which they are duly authorized and in which the recipients satisfied the eligibility criteria.

Remuneration and operating expenses

Remuneration and operating expenses are recognized in the fiscal year during which the goods are consumed or the services are delivered.

Debt service expenditure

Debt service expenses are comprised mainly of interest on debt recognized using the effective interest method.

Measurement uncertainty

Measurement uncertainties that affect expenditures are presented in Note 8 on accounts receivable, Note 9 on investments, Note 11 on loans, Note 13 on accounts payable, accrued expenses and other allowances, Note 15 on environmental liability and asset retirement obligations, Note 16 on pension plans and other future benefits and Note 22 on contingencies.

CONSOLIDATED FINANCIAL STATEMENTS 103

5. Expenditure (cont’d)

Expenditure by supercategories

(millions of dollars)

	Fiscal year ended March 31
	2023		2022
			(restated – Note 3)
Portfolio expenditure
Transfers		46 876		42 580
Remuneration		62 396		59 665
Operating(1)		27 247		25 027
Doubtful accounts and other allowances		724		301
Sub-total		137 243		127 573
Debt service(2)		10 058		8 640
Total expenditure		147 301		136 213

(1) Operating expenditure include equipment and procurement (for example, drugs and medical and surgical supplies), professional fees, private sector services to individuals in private long-term care centres, maintenance and repairs, transportation services, advertising and communication services, as well as depreciation of fixed assets (Note 19).

(2) Debt service expenditure is comprised of the following elements:

	Fiscal year ended March 31
	2023			2022
Interest on debts		8 902			7 548
Net expenditure on assets and liabilities related to deriatives financial instruments		559			356
Losses on investment of the sinking funds relating to borrowings		637			173
Revenue on cash equivalents and on investments		(428	)		(7	)
		9 670	(1)		8 070
Interest on obligations relating to accrued benefits under the pension plans and employee future benefits		7 650			7 331
Investment income of the Retirement Plans Sinking Fund, the specific pension funds and the other employee future benefits funds		(7 262	)		(6 761	)
		388			570
		10 058			8 640

(1) Expenditures of $9 670 M are presented net of revenues totalling $2 065 M, namely $812 M on assets and liabilities related to derivative financial instruments, $782 M on investments of sinking funds relating to borrowings, and $471 M on cash equivalents and on investments.

104 PUBLIC ACCOUNTS 2022-2023

▌ 6. Financial instruments

Significant accounting policies

Classification and recognition of financial instruments

On initial recognition, financial instruments are classified as either financial instruments recognized at cost or at amortized cost, or as financial instruments recognized at fair value.

Financial instruments recognized at cost or at amortized cost

After initial recognition, the government measures financial assets and liabilities at amortized cost, taking into account the following adjustments:

●   repayments or receipts;

●   accumulated depreciation calculated using the effective interest method. For the purposes of calculating the effective interest rate, transaction costs, discounts and premiums are included in the cash flows considered;

●   reduction for impairment or uncollectibility, directly or through the use of an allowance account.

Cash and cash equivalents, accounts receivable (excluding taxes receivable and certain receivables from duties and permits and miscellaneous revenues), investments other than those made up of equity instruments quoted in an active market, loans, the Generations Fund, sinking funds relating to borrowings and sums receivable from counterparties included in assets related to derivative financial instruments are classified as financial assets recognized at cost or at amortized cost.

Accounts payable, accrued expenses and other allowances (excluding income taxes and other taxes refundable, accrued compensation benefits, advances from trust funds and clearing accounts for collected taxes), sums payable to counterparties included in derivative financial instrument liabilities, and debts (excluding public-private partnership agreements and capital leases) are classified as liabilities at cost or at amortized cost.

Financial instruments recognized at fair value

Investments in equity instruments quoted in an active market, and assets and liabilities associated with derivative financial instruments, other than sums receivable from (payable to) counterparties, are classified as financial instruments recognized at fair value.

Transaction costs

Transaction costs relating to financial instruments recognized at fair value are recognized in expenses at the transaction date, while those relating to financial instruments recognized at cost or at amortized cost are added to their book value.

Offsetting of financial instruments

Treasury securities

In the course of its operations, the government may repurchase its own debt securities on the financial markets without cancelling, extinguishing or discharging the corresponding debts. These securities constitute assets for the government, and the corresponding debts are offset in the consolidated statement of financial position. Interest income and expense relating to these shares and debts are also presented net in the consolidated statement of operations and accumulated operating deficit.

CONSOLIDATED FINANCIAL STATEMENTS 105

6. Financial instruments (cont’d)

Significant accounting policies (cont’d)

Offsetting of financial instruments (cont’d)

Other offset financial assets and financial liabilities

A financial asset and a financial liability are offset and the net balance presented in the consolidated statement of financial position only if the following conditions are met:

●there is a legally enforceable right of offset of the recognized amounts;

●the government intends to settle on a net basis, or to realize the asset and settle the liability simultaneously.

106 PUBLIC ACCOUNTS 2022-2023

6. Financial instruments (cont’d)

Risk related to financial instruments

In the normal course of operations, the government is exposed to various types of risk, such as credit risk, liquidity risk and market risk. Control and management policies and procedures are in place to manage the risks inherent in financial instruments and reduce their potential impact.

For each of the components identified as financial instruments, the following table shows exposure to the various risks.

Financial instruments	Risk exposure					Note
	Credit risk	Liquidity risk	Market risk
			Currency	Interest rate	Price
Cash and cash equivalents						7
Accounts receivable						8
Investments						9
Loans						11
Generations Fund						12
Accounts payable, accrued expenses and other allowances						13
Assets related to derivative financial instruments						17
Liabilities related to derivative financial instruments						17
Debts						18
Sinking funds relating to borrowings						18

CONSOLIDATED FINANCIAL STATEMENTS 107

6. Financial instruments (cont’d)

Credit risk

Credit risk is the risk that the counterparty to a financial instrument will fail to meet an obligation and cause the government to incur a financial loss.

All financial instruments recognized as financial assets expose the government to credit risk, with the exception of investments in equity instruments.

At fiscal year-end, the government’s maximum exposure to credit risk corresponds to the book value of financial assets which are financial instruments, without taking into account guarantees held or any other credit enhancements. The government is also exposed to credit risk associated with guarantees totalling $16 950 million granted on financing initiatives, net of the allowance for losses on guaranteed financing initiatives (Note 13), as well as on loan pledges (Note 21).

Liquidity risk

Liquidity risk is the risk that the government will encounter difficulties in meeting its financial liabilities. At fiscal year-end, undiscounted contractual cash flows are detailed as follows:

Schedule of cash flows

(millions of dollars)

	Maturing on March 31(1)
	2024			2025 and 2026			2027 and 2028			2029 and thereafter			Total
Grants to be paid at the rate of repayment of the loans contracted by the recipients(2)		800			1 475			1 281			4 919			8 475
Debts contracted on financial markets		34 931			52 939			40 833			247 827			376 530
Debts arising from agreements and contracts		298			596			598			5 469			6 961
Assets related to derivative financial instruments		(7 213	)		(2 727	)		(1 118	)		(2 131	)		(13 189	)
Liabilities related to derivative financial instruments		4 542			5 136			3 032			5 069			17 779
		33 358	(3)		57 419			44 626			261 153			396 556

(1) Amounts shown include interest and amounts related to debt whose securities are held in treasury.

(2) With the exception of liabilities arising from transfers related to subsidies payable at the same rate as the repayment of borrowings by beneficiaries, almost all accounts payable, accrued expenses and other allowances are due in the short term and settled in the following fiscal year.

(3) In addition to this amount, liabilities in the sinking funds relating to borrowings totalling $7 808 M will be settled in fiscal 2023-2024.

108 PUBLIC ACCOUNTS 2022-2023

6. Financial instruments (cont’d)

Overall liquidity risk management

To meet its financial requirements arising from its operations and investment activities, as well as those related to repayments of borrowings that are maturing, the government has provided itself with an annual financing and debt management program based on Canadian and international financial markets.

Day-to-day cash management is based on regularly updated cash forecasts and enables the government to manage the desynchronization of cash inflows and outflows. This liquidity management relies on various tools, such as short-term borrowing programs, credit facilities and sound management of cash and short-term investments.

In addition, the government has set up sinking funds relating to borrowings (Note 18) to provide for the repayment of debts contracted on financial markets, in accordance with the Financial Administration Act (CQLR, chapter A-6.001). The government makes annual contributions to these funds.

The government has also created the Generations Fund (Note 12), whose purpose is to reduce the government’s debt. The government makes annual payments, which are deposited with the Caisse de dépôt et placement du Québec in accordance with the Act to reduce the debt and establish the Generations Fund (CQLR, chapter R 2.2.0.1). The government may withdraw sums to repay the gross debt.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market conditions. Market risk includes currency risk, interest rate risk and price risk. The government is exposed to all of these risks.

CONSOLIDATED FINANCIAL STATEMENTS 109

6. Financial instruments (cont’d)

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. At fiscal year-end, the components in the consolidated financial statements with exposure to currency risk are as follows:

Exposure to currency risk

(millions of dollars)

	As at March 31, 2023
	Equivalent in Canadien dollars
	US dollars			Euros			Other currencies(1)
Sinking funds relating to borrowings(2)		2 047			1 480
Assets and liabilities related to derivative financial instruments		25 583			27 949			5 829
Debts(2)		(27 445	)		(29 418	)		(5 830	)
Net exposure		185			11			(1	)

(1) Other currencies include the Australian dollar, pound sterling, Swiss franc, yen, Swedish krona and New Zealand dollar.

(2) Amounts shown include treasury securities.

Overall currency risk management

The government uses several strategies to manage currency risk, including the use of derivative financial instruments and the acquisition of assets denominated in foreign currencies as part of its sinking funds relating to borrowings. The government’s objective is to achieve zero exposure to foreign currency debt.

As at March 31, 2023, a 10% rise or fall in the Canadian dollar against foreign currencies would have had a negligible impact on the government’s operating results.

110 PUBLIC ACCOUNTS 2022-2023

6. Financial instruments (cont’d)

Intetest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. At fiscal year-end, the components in the consolidated financial statements with exposure to interest rate risk are as follows:

Exposure to interest rate risk

(millions of dollars)

	As at March 31, 2023
Cash and cash equivalents	9 981
Loans	1 614
Generations Fund	1 786
Sinking funds relating to borrowings(1)	16 064
Assets and liabilities related to derivative financial instruments	(22 218	)
Debts(1)	(28 540	)
Net exposure	(21 313	)

(1) Amounts shown include treasury securities.

Overall interest rate risk management

The government uses several strategies to manage interest rate risk, including the use of derivative financial instruments.

As at March 31, 2023, a 1% rise or fall in interest rates would have had an impact of nearly $200 million on the government’s operating results.

Price risk

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices other than those arising from interest rate risk or currency risk, whether those changes are caused by factors specific to the individual instrument or its issuer, or by factors affecting all similar financial instruments traded in the market.

At fiscal year-end, the components of the consolidated financial statements with exposure to price risk are limited to investments in equity instruments quoted in an active market, with a book value of $512 million.

As at March 31, 2023, a 10% rise or fall in stock market prices would have had a negligible impact on the government’s operating results.

CONSOLIDATED FINANCIAL STATEMENTS 111

6. Financial instruments (cont’d)

Among the financial instruments recognized at cost or at amortized cost, investments in equity instruments not quoted in an active market or in the form of participation deposits in a particular fund of the Caisse de dépôt et placement du Québec are not exposed to price risk. Although their fair value may fluctuate due to changes in market prices, they affect the government’s consolidated financial statements only when they are disposed of, or in the event of an other-than-temporary decline in value.

▌ 7. Cash and cash equivalents

Significant accounting policy

Cash and cash equivalents are comprised of cash and investments which are held for the purpose of meeting short-term cash commitments. These investments, highly liquid, are easily convertible into a known amount of cash and unlikely to change significantly in value.

Cash and cash equivalents

(millions of dollars)

	As at March 31
	2023	2022
Cash(1)	4 555	6 246
Cash equivalents(2)	5 426	3 721
	9 981	9 967

(1) Cash and cash equivalents are shown net of a $970 M bank overdraft arising from outstanding cheques.

(2) The government did not hold any of its own securities in cash equivalents ($390 M as at March 31, 2022). As at March 31, 2022, these securities are offset against the corresponding debts.

Credit risk management

The credit risk associated with cash and cash equivalents is low. The government has adopted a management framework that limits the risks associated with its investments, including cash equivalents. This framework sets out criteria such as the minimum credit rating required for the selection of authorized issuers, that are mainly financial institutions and governments.

Interest rate risk management

Some cash equivalents bear interest. However, the interest rate risk associated with these transactions is limited, since the maturities of these securities are very short and the government may use derivative financial instruments, in accordance with its management policies.

112 PUBLIC ACCOUNTS 2022-2023

▌8. Accounts receivable

Significant accounting policies

Income taxes and other taxes receivable are recognized at realizable value, that is, an amount equivalent to what the government expects to receive. These accounts receivable are subsequently brought down to the net recoverable value by means of an allowance for doubtful accounts.

Revenue from personal income tax, contributions for health services and consumption taxes uncollected at the end of the fiscal year are recognized as income taxes and other taxes receivable; the amounts are estimated based on the transactions carried out after the end of the fiscal year.

Revenue from corporate income taxes uncollected at the end of the fiscal year is recognized as taxes receivable; the amounts are based on notices of assessment issued before the end of the fiscal year.

Other accounts receivable are recognized at cost or amortized cost. The annual change in the allowance for doubtful accounts is recognized as an expense.

Measurement uncertainty

Initial assessment of income taxes and other taxes receivable

Income taxes and other taxes receivable stemming from notices of assessment issued after tax checks and contested taxpayer notices are based on estimates that may be hard to measure. The initial evaluation of the amounts the government expects to collect with regard to such notices is based on the settlement rates of similar files in the past. Adjustments resulting from new information obtained after checks or court rulings are recognized in the fiscal year when they become known.

Estimate of the allowance for doubtful accounts

The value of the allowance for doubtful accounts relating to taxes receivable is uncertain due to the fact that it is estimated on the basis of a statistical sample of accounts receivable representative of the population as a whole. The accounts receivable’s potential recoverable amount in the sample is determined primarily by considering the financial position of taxpayers.

Federal government transfers

Transfers from the federal government receivable for cost-sharing programs to provide financial assistance to third parties are subject to measurement uncertainty due to possible discrepancies between the estimate of eligible expenditures made by third parties and the work actually performed.

CONSOLIDATED FINANCIAL STATEMENTS 113

8. Accounts receivable (cont’d)

Details of accounts receivable

(millions of dollars)

	As at March 31
	2023			2022
Income taxes and other taxes receivable
Income and property taxes		11 114			10 552
Consumption taxes		5 479			5 196
Allowance for doubtful accounts		(1 754	)		(1 716	)
		14 839			14 032
Other
Duties and permits		696			577
Miscellaneous revenue		6 456			5 803
Allowance for doubtful accounts		(967	)		(893	)
		6 185			5 487
Revenue from government enterprises – dividends		617			447
Federal government transfers		3 473			3 266
		10 275			9 200
		25 114			23 232

Managing credit risk associated with tax receivables

The government is exposed to credit risk arising from the inability of certain receivables to settle their obligations, which could result in a financial loss for the government. These accounts mainly consist of receivables and tax revenues not collected as at March 31.

However, the credit risk associated with tax receivables is low. On the one hand, amounts receivable totalling $16 593 million were mainly received in the first months of fiscal 2023-2024. On the other hand, in order to reduce the credit risk associated with unreceived tax receivables, the government uses a legal offsetting mechanism before issuing a refund to a creditor. Moreover, it recognizes receivables at their net recoverable value through an allowance for doubtful accounts. In the government’s opinion, the allowance of $1 754 million is sufficient to considerer credit risk.

114 PUBLIC ACCOUNTS 2022-2023

8. Accounts receivable (cont’d)

Credit risk management associated with other receivables

The government is exposed to credit risk in respect of other receivables. To protect itself against this risk, the government has established control and management policies and procedures. These policies include provisions relating to credit risk assessment, acceptable risk levels, periodic monitoring and collection measures, and the assessment of the allowance for doubtful accounts. The government periodically assesses the practices in place and, if necessary, adjusts them based on the observations and results obtained.

The aging trial balance of other accounts receivable, net of the allowance for doubtful accounts, is as follows:

Credit risk – Age of other accounts receivable

(millions of dollars)

	As at March 31, 2023
	Financial instruments			Other			Total
Receivables not past due		7 588			2 120			9 708
Past-due receivables
Less than 3 months		228						228
3 months to less than 6 months		135			17			152
6 months to less than 9 months		96			15			111
9 months to less than 12 months		41			16			57
12 months and more		253			733			986
		753			781			1 534
Allowance for doubtful accounts		(548	)		(419	)		(967	)
		7 793			2 482			10 275

The credit quality of other accounts receivable that are neither past due nor impaired is deemed adequate.

CONSOLIDATED FINANCIAL STATEMENTS 115

▌9. Investments

Significant accounting policies

Investments are recognized at cost or amortized cost, with the exception of investments in equity instruments quoted on an active market, which are recognized at fair value.

When investments have significant concessionary terms, that is, if there is a significant difference between their nominal value and their present value using the weighted average rate for government’s debt, the investments are recognized at their present value when they take effect. This difference constitutes a grant component, which is recognized as a transfer expenditure. Subsequently, investment income is recognized and added to the book value of the investment until their maturity date, using the effective interest method.

When an investment experiences a loss in value that is other than a temporary decline, its book value is reduced to reflect the decline in value. Any reduction in the book value of an investment recognized at cost or amortized cost is recognized as an expense and cannot be reversed. Where applicable, the subsequent recovery of a written-off investment is recognized in income. When the book value of an investment recognized at fair value has been reduced to reflect an other-than-temporary decline in value, the accumulated balance of unrealized losses recognized under remeasurement gains and losses is reclassified to results.

Measurement uncertainty

Investments in equity instruments in the form of shares and equity are subject to measurement uncertainty because assumptions are used to estimate their recoverable value. The factors the government relies on for determining whether there is a loss in value that is other than a temporary decline in these investments include their length and how sharply the fair value declined compared to cost. For investments in private equity instruments, the government estimates the recoverable value with the help of experts and approaches based on models that take into account current economic conditions, the financial situation and the profitability outlook for each issuing entity.

116 PUBLIC ACCOUNTS 2022-2023

9. Investments (cont’d)

Investments by nature of securities held by maturity at acquisition

(millions of dollars)

	As at March 31
	2023									2022
	3 to 12 months		More than 12 months		No maturity		Total			Total
Recorded at cost or at amortized cost
Equity instruments not quoted in an active market						3 799		3 799			2 842
Participation deposits(1)						2 191		2 191			1 983
Bonds(2),(3)
Federal and provincial governments		7		442				449			472
Municipalities and municipal bodies		39		408				447			456
Enterprises		19		80				99			186
Other		1		2				3			32
Term deposits		106		58				164			25
Other(2),(3)		121		19				140			92
		293		1 009		5 990		7 292			6 088
Recorded at fair value
Equity instruments quoted in an active market(4)						512		512			230
		293		1 009		6 502		7 804	(5)		6 318	(5)

(1)	The government holds participation units in specific funds entrusted to the Caisse de dépôt et placement du Québec.
(2)	The government also held $2 215 M ($6 620 M as at March 31, 2022) of its own securities in bonds and Treasury bills. These securities are offset against the corresponding debts.
(3)	As at March 31, 2023, the quoted market value of marketable securities in active markets was $1 031 M and their book value was $1 047 M.
(4)	Fair value measurements for these financial instruments are based on level 1 of the fair value hierarchy, that is, on observable prices (unadjusted) in active markets available at the measurement date for identical assets. As at March 31, 2022, these financial instruments were recognized at cost.
(5)	The value of the investments was reduced by $141 M ($126 M as at March 31, 2022), which represents the impact of the significantly advantageous terms of some of those investments.

Policies governing investment activities

The government has established policies governing long-term investment activities. These investment policies aim to optimize investment returns while maintaining the degree of risk at a level deemed appropriate by the government.

CONSOLIDATED FINANCIAL STATEMENTS 117

9. Investments (cont’d)

Investment deposits

Investment deposits are held in six specific funds of the Caisse de dépôt et placement du Québec (the Caisse). For each of these funds, an investment policy has been established based on a number of factors, including 10-year return forecasts, the long-term target allocation of asset classes that make up the benchmark portfolio and the permitted deviations from the target portfolio. These policies also take into account positions taken in derivative financial instruments and determine the level of exposure to market risk.

The Caisse manages all market risks on an integrated basis for all specialized portfolios. The main elements contributing to risk, such as industry sectors, geographic regions and issuers, are taken into account.

Credit risk management

All investments expose the government to credit risk, with the exception of investments in equity instruments.

With regard to investment deposits with the Caisse, the government partly manages credit risk by setting its investment policies so as to reduce its exposure to risk to a level it deems acceptable. Credit risk analyses are carried out globally by the Caisse for all the portfolios it manages. Since the net assets of the government’s special funds are invested in underlying portfolios, the funds are indirectly exposed to credit risk. The Caisse’s exposure is described in detail in its own financial statements.

Moreover, all financial instruments held directly by the special funds are traded with the Caisse, which benefits from an AAA credit rating.

With regard to other investments, credit risk is considered low, since counterparties enjoy high credit ratings from rating agencies and funds are safely invested in authorized investments, in accordance with the Financial Administration Act (CQLR, chapter A-6.001) and the Regulation respecting investments made by a body (CQLR, chapter A-6.001, r. 8).

Price risk

The government is exposed to price risk with respect to equity instruments quoted in an active market, whose fair value fluctuates due to changes in stock market prices. As a result, a decline in stock market prices could generate unrealized losses in the consolidated statement of remeasurement gains and losses, or losses in the consolidated statement of operations and accumulated operating deficit to reflect an other-than-temporary decline.

118 PUBLIC ACCOUNTS 2022-2023

▌10. Investment in government enterprises

Significant accounting policies

Investment in government enterprises is recognized using the modified equity method based on the government’s proportionate share of each enterprise.

The financial information from government enterprises is based on the IFRS, except for information from Hydro-Québec, which is based on generally accepted accounting principles (GAAP) in the United States. Adjustments are made to Hydro-Québec’s financial information to bring it in line with the IFRS standards; such adjustments mainly concern employee future benefits, financial instruments and asset retirement obligations.

Material measurement uncertainty

Each government enterprise is subject to specific measurement uncertainties inherent to its own activities. These uncertainties are mainly with respect to revenue, other liabilities, including pension plans and other future benefits, fixed assets and financial instruments.

CONSOLIDATED FINANCIAL STATEMENTS 119

10. Investment in government enterprises (cont’d)

Financial information on government enterprises

(millions of dollars)

	As at March 31
	2023																	2022
									Investis-				Société des
									sement		Loto-		alcools du
	Hydro-Québec								Québec		Québec		Québec		Other		Total	Total
	(US GAAP)				(IFRS)
			Adjustments for
	December 31,		the three-month		Adjustments –		March 31,
	2022		periods		IFRS (1)		2023
STATEMENT OF OPERATIONS
Revenue	16 567		333		26		16 926		934		3 013		4 133		757		25 763	23 575
Expenditure	12 010		164		1 085		13 259		1 158		1 413		2 706		626		19 162	17 585
Annual (deficit) surplus	4 557		169		(1 059	)	3 667		(224	)	1 600		1 427		131		6 601	5 990
Consolidation adjustments							(2	)	(2	)	(3	)			26		19	(30	)
Revenue from government enterprises							3 665		(226	)	1 597		1 427		157		6 620	5 960
Other comprehensive income items	2 478		527		(2 116	)	889		60		11		―		(13	)	947	691
STATEMENT OF FINANCIAL POSITION
Fixed assets	71 080		3 249		992		75 321		284		670		212		479		76 966	72 377
Other assets	18 294		804		(9	)	19 089		10 042		571		1 105		449		31 256	29 861
Total assets	89 374		4 053		983		94 410		10 326		1 241		1 317		928		108 222	102 238
Debts and advances	51 545		5 695		134		57 374		5 272		299		318		86		63 349	59 100
Other liabilities	10 952		(4 160	)	1 468		8 260	(2)	488		675		961		442		10 826	10 261
Total liabilities	62 497		1 535		1 602		65 634		5 760		974		1 279		528		74 175	69 361
Accumulated other comprehensive income items	415		287		5 598		6 300		21		180		(7	)	(13	)	6 481	5 545
Other shareholders’ equity items	26 462		2 231		(6 217	)	22 476		4 545		87		45		413		27 566	27 332
Total shareholders’ equity	26 877		2 518		(619	)	28 776		4 566		267		38		400		34 047	32 877
Consolidation adjustments							20		23						27		70	44
Equity value (modified method)							28 796		4 589		267		38		427		34 117	32 921
Loans									2 412		246				40		2 698	1 956
Investment in government enterprises							28 796		7 001		513		38		467		36 815	34 877
Dividends and other contributions paid	3 418								―		1 600		1 427		95		6 540	5 242
Main contractual obligations	103 994								1 504		69		―		25		105 592	64 545
Main contingent liabilities	6 374	(3)							456		―		3		―		6 833	4 573

(1) The adjustments to bring Hydro-Québec’s financial information in line with the IFRS resulted in a decrease in the government’s share in this enterprise of $3 175 M, as these adjustments led to a $1 059 M reduction in the income from government enterprises and a $2 116 M decrease in the other items of the comprehensive income. The combined adjustments to IFRS had the effect of decreasing the government’s share by $619 M (increasing it by $2 558 M as at March 31, 2022).

(2) The government granted a financial guarantee of $685 M ($685 M as at March 31, 2022) for the Gentilly-2 nuclear generating station. In order to finance the costs related to long-term nuclear fuel waste management, Hydro-Québec set up a trust of $178 M ($172 M as at March 31, 2022).

(3) This sum is pertaining mainly to two lawsuits for damages and interest totalling $6 200 M filed by Innu Nation inc and Innus de Uashat mak Mani-utenam. Joint lawsuits have also been instituted against Hydro-Québec and the government. Those lawsuits are disclosed in Note 22 on contingencies.

120 PUBLIC ACCOUNTS 2022-2023

10. Investment in government enterprises (cont’d)

Accumulated other comprehensive income items of government enterprises

(millions of dollars)

	Fiscal year ended March 31
	2023											2022
	Actuarial gains (losses) on employee future benefits			Unrealized gains (losses) on financial instruments			Other		Total			Total
Opening balance		6 517			(1 025	)		51		5 543			4 864
Other comprehensive income items of government enterprises		(558	)		1 418			87		947			691
		5 959			393			138		6 490			5 555
Items reclassified in other shareholders’ equity items		(9	)							(9	)		(12	)
Closing balance		5 950			393			138		6 481			5 543

Inter-entity operations and operations with third-parties not included in the reporting entity

(millions of dollars)

	As at March 31
	2023							2022
	Inter- entities			Third parties not included in the reporting entity		Total		Inter- entities			Third parties not included in the reporting entity		Total
STATEMENT OF OPERATIONS
Revenue		1 031			24 732		25 763		1 089			22 486		23 575
Expenditure		1 795			17 367		19 162		1 666			15 919		17 585
Annual (deficit) surplus		(764	)		7 365		6 601		(577	)		6 567		5 990
STATEMENT OF FINANCIAL POSITION
Fixed assets					76 966		76 966					72 377		72 377
Other assets		3 383			27 873		31 256		4 320			25 541		29 861
Total assets		3 383			104 839		108 222		4 320			97 918		102 238
Debts and advances		2 729			60 620		63 349		1 969			57 131		59 100
Other liabilities		1 019			9 807		10 826		864			9 397		10 261
Total liabilities		3 748			70 427		74 175		2 833			66 528		69 361
Loans granted to government enterprises		2 698							1 956
Dividends and other contributions paid		6 540							5 242

CONSOLIDATED FINANCIAL STATEMENTS 121

10. Investment in government enterprises (cont’d)

Repayment schedule for debts and advances contracted with third parties and with the government

(millions of dollars)

	2024		2025		2026		2027		2028		2029 and thereafter		Total
Hydro-Québec
Third parties not included in the reporting entity		4 573		1 547		453		733		67		49 999		57 372
Investissement Québec
Third parties not included in the reporting entity		1 186		440		604		328		346		27		2 931
Government		1 103		629		416		144		68		99		2 459
		2 289		1 069		1 020		472		414		126		5 390
Loto-Québec
Third parties not included in the reporting entity		26		8		7		5		4		10		60
Government		39		16		16		17		17		141		246
		65		24		23		22		21		151		306
Société des alcools du Québec
Third parties not included in the reporting entity		55		50		45		38		32		124		344
Other
Third parties not included in the reporting entity		6		5		5		5		6		17		44
Government		28						4				6		38
		34		5		5		9		6		23		82
Total debt and advances
Third parties not included in the reporting entity		5 846		2 050		1 114		1 109		455		50 177		60 751
Government		1 170		645		432		165		85		246		2 743
		7 016		2 695		1 546		1 274		540		50 423		63 494

Note:  The government guarantees borrowings contracted by Hydro-Québec and Investissement Québec in different currencies. The net value of these guaranteed borrowings stood at $53 782 M ($50 273 M as at March 31, 2022) for Hydro-Québec and at $2 753 M ($3 665 M as at March 31, 2022) for Investissement Québec.

122 PUBLIC ACCOUNTS 2022-2023

▌11. Loans

Significant accounting policies

Loans are recognized at cost.

When loans have significant concessionary terms, that is, there is a significant difference between their nominal value and their present value using the weighted average rate for government’s debt, the loans are recognized at their present value when they take effect. This difference constitutes a grant component, which is recognized as a transfer expenditure. Subsequently, interest income is recognized and added to the book value of the loan until its maturity date, using the effective interest method.

When a direct link can be established between government transfers and the repayment of a loan, the latter is recognized as a transfer expenditure.

When the facts or circumstances point to the risk of a loss, a valuation allowance is recognized as a reduction in loans in order to reflect their net recoverable value. The annual change in this allowance is recognized as an expenditure and, where applicable, the subsequent recovery of a written-off loan is recognized in income.

Measurement uncertainty

Loans are subject to measurement uncertainty because estimates and assumptions are used to determine the valuation allowance and the net recovery value of the loans. The valuation allowance estimate is revised regularly and adjusted to take several factors into account, including the rate of past losses, sector risks and the borrower’s financial situation.

CONSOLIDATED FINANCIAL STATEMENTS 123

11. Loans (cont’d)

Loans granted and weighted average rate by category of borrower

			As at March 31
			2023								2022
	Weighted				Valuation			Net book					Valuation			Net book
	average rate		Cost		allowances			value			Cost		allowances			value
	(percent)				(millions								(millions
					of dollars)								of dollars)
Local administrations
Municipalities		3.07		432		(41	)		391			571		(48	)		523
Municipal bodies		2.91		1 909		(64	)		1 845			1 492		(70	)		1 422
		2.94		2 341		(105	)		2 236			2 063		(118	)		1 945
Enterprises(1),(2)		2.21		3 960		(894	)		3 066	(3)		3 603		(785	)		2 818	(3)
Non-profit and fiduciary organizations		4.61		169		(15	)		154			170					170
Students		5.39		576		(206	)		370			591		(218	)		373
Other				51		(2	)		49			50					50
				4 756		(1 117	)		3 639			4 414		(1 003	)		3 411
		2.77		7 097		(1 222	)		5 875			6 477		(1 121	)		5 356

(1) Loans with repayment clauses based on royalties are included in the loans to enterprises. The conditions associated with these loans are such that the entire amount advanced is more similar to a subsidy. Therefore, these loans have a zero value.

(2) Loans to enterprises include US$61 million (US$53 million as at March 31, 2022) in loans, whose equivalent value is CAN$82 million (CAN$66 million as at March 31, 2022), and €81 million (€73 million as at March 31, 2022) in loans whose equivalent value is CAN$119 million (CAN$100 million as at March 31, 2022).

(3) The value of loans has been reduced by $101 M ($106 M as at March 31, 2022), which represents the impact of the significantly advantageous terms of some of these loans.

124 PUBLIC ACCOUNTS 2022-2023

11. Loans (cont’d)

Schedule of loan payments receivable by category of borrower

(millions of dollars)

Maturing on March 31	Municipalities and municipal bodies		Enterprises			Non-profit and fiduciary organizations		Students		Other		Total
2024		577		429			47		48		4		1 105
2025		120		421			6		48				595
2026		132		392			7		48				579
2027		125		385			5		48				563
2028		109		363			5		48				525
		1 063		1 990			70		240		4		3 367
2029-2033		535		842			32		130				1 539
2034-2038		221		261			38						520
2039-2043		113		14									127
2044-2048		40		15									55
2049 and thereafter		24		5			1						30
		1 996		3 127			141		370		4		5 638
No fixed maturity date		240		40			13				45		338
		2 236		3 167			154		370		49		5 976
Reduction of the value related to loans with significant advantageous terms				(101	)								(101	)
		2 236		3 066			154		370		49		5 875

Credit risk management

As part of its operations, the government grants loans and receives assets as collateral. The majority of loans are granted by the Economic Development Fund. Decisions to grant these loans are based primarily on a risk assessment that takes into account such factors as the creditworthiness of the third party, available guarantees, and the transaction’s compliance with policies, standards and procedures in effect. A systematic follow-up of interventions is then carried out.

CONSOLIDATED FINANCIAL STATEMENTS 125

11. Loans (cont’d)

The cost of the loans granted by the Economic Development Fund was $3 775 million ($3 498 million as at March 31, 2022). These loans are mainly granted to businesses operating in the secondary sector.

Proportion of Economic Development Fund loans with significant securities and sureties by loan categories

	As at March 31
	2023				2022
	Cost		Proportion of the nominal balance of loans		Cost		Proportion of the nominal balance of loans
	(millions of dollars)		(percent)		(millions of dollars)		(percent)
Loans – fixed rate		1 779		32		1 766		26
Loans – variable rate		498		54		487		49
Loans – no interest		1 498		43		1 245		42

As for loans granted by other entities within the reporting entity, the cost of which was $3 322 million ($2 979 million as at March 31, 2022), the guarantees received totalled $183 million ($194 million as at March 31, 2022).

The credit quality of loans that are neither past due nor impaired is deemed adequate.

Interest rate risk management

The majority of loans are fixed-rate. For variable-rate loans, changes in interest rates lead to fluctuations in the interest income earned. However, this interest rate risk is limited by contracting debt with substantially the same terms as the loans. If necessary, financial derivative instruments may be used.

126 PUBLIC ACCOUNTS 2022-2023

▌12. Generations Fund

The purpose of the Generations Fund, created under the Act to reduce the debt and establish the Generations Fund (CQLR, chapter R-2.2.0.1), is to reduce the government’s debt. In accordance with this Act, the fund’s assets are used exclusively to repay the government’s gross debt.

Significant accounting policies

Demand and participation deposits in a particular fund of the Caisse de dépôt et placement du Québec (the Caisse) are recognized at cost.

Where participation deposits suffer a loss in value that is other than a temporary decline, their book value is reduced to reflect this decline and the resulting reduction in value is recognized to expenditure. At the time of disposition of participation deposits, the difference between the amount received and the book value of these units established using the average cost method is recognized to results.

Statement of financial position

(millions of dollars)

	As at March 31
	2023		2022
Sums managed by the Caisse de dépôt et placement du Québec
Demand deposits		1 786		1 942
Income receivable on investments		46		25
Participation deposits(1)		16 998		13 778
		18 830		15 745
Accounts receivable		81		84
Fund balance		18 911		15 829

(1) The Generations Fund holds participation units in a specific fund at the Caisse. These units are repaid with prior notice according to the Caisse’s settlement terms and conditions at the fair value of the fund’s net equity at the end of each month. The Generations Fund had 14 108 127 participation units with a total fair value of $18 629 M (11 642 767 participation units with a total fair value of $15 541 M as at March 31, 2022).

CONSOLIDATED FINANCIAL STATEMENTS 127

12. Generations Fund (cont’d)

Statement of change in the balance of the Generations Fund

(millions of dollars)

	Fiscal year ended March 31
	2023				2022
	Budget (1)		Actual results		Actual results
Opening balance		15 669		15 829		12 212
Own-source revenue
Consumption taxes
Specific tax on alcoholic beverages		500		500		500
Duties and permits
Water-power royalties		870		888		867
Mining revenues		484		578		1 032
Miscellaneous revenue
Unclaimed property		55		74		31
Revenue on investments		786		283		484
Revenue from government enterprises, taken out of dividends
Hydro-Québec
Indexation of the average cost of heritage pool electricity		535		544		488
Additional contribution from Hydro-Québec(2)		215		215		215
Total own-source revenue		3 445		3 082		3 617
Closing balance		19 114		18 911		15 829

(1) According to data presented in Budget 2022-2023 of the Ministère des Finances tabled on March 22, 2022.

(2) Under the Hydro-Québec Act (CQLR, chapter H-5), a sum of $215 M is taken annually out of Hydro-Québec’s dividends and will be deposited in the Generations Fund until 2043.

Credit risk management

The government partly manages the credit risk associated with participation deposits at the Caisse by determining the composition of the benchmark portfolio, thereby reducing exposure to risk to a level deemed acceptable by the government.

Credit risk analyses are carried out globally by the Caisse for all the portfolios it manages. Since the net assets of the Generations Fund special fund are invested in underlying portfolios, the fund is indirectly exposed to credit risk. The Caisse’s exposure is detailed in its own financial statements.

Moreover, all financial instruments held directly by the special fund are transacted with the Caisse, which benefits from an AAA credit rating.

128 PUBLIC ACCOUNTS 2022-2023

12. Generations Fund (cont’d)

Interest rate risk management

Demand deposits bear interest. However, the interest rate risk associated with this financial asset is limited, since the demand deposit account represents the equivalent of the government’s bank balance deposited with the Caisse. In general, sums deposited in this account are reinvested in the purchase of participation units (participation deposits) the following month.

Investment policy

The Generations Fund is administered according to an investment policy determined by the Ministère des Finances in collaboration with the managers of the Caisse. This investment policy aims to optimize rates of return on investments while maintaining the degree of risk at a level deemed appropriate by the government.

This policy is based on a number of factors, including 10-year return forecasts, the long-term target allocation of asset classes making up the benchmark portfolio, and permitted deviations from the target portfolio. It also takes into account positions taken in derivative financial instruments and determines the level of exposure to market risk, including the target level of currency exposure.

The investment policy for the benchmark portfolio of the specific fund is as follows:

Investment policy

(percentage of net assets of special funds)

Specialized portfolios

Short-term equities	1.00
Rate	10.00
Credit	28.00
Total – Fixed revenue	39.00
Infrastructure	8.00
Real estate	8.00
Total – Real assets	16.00
Stock markets	36.00
Private equities	9.00
Total – Equities	45.00
Asset breakdown	—
Total	100.00

The Caisse manages all market risks on an integrated basis for all specialized portfolios. The main elements contributing to risk, such as industry sectors, geographic regions and issuers, are taken into account.

CONSOLIDATED FINANCIAL STATEMENTS 129

▌13. Accounts payable, accrued expenses and other allowances

Significant accounting policies

Refunds of income and other taxes

The amounts of refunds of income and other taxes are based on notices of assessment issued before the end of the fiscal year. Refunds of individual income taxes and consumption taxes that have not yet been made at the fiscal year end are recognized as accounts payable and accrued expenses per estimates based on transactions carried out after the end of the fiscal year.

Liabilities stemming from transfers

Liabilities stemming from transfers are recognized in the fiscal year during which the transfers were duly authorized and during which the recipients met the eligibility criteria.

Allowance for losses on guaranteed financial initiatives

Obligations resulting from financial initiatives guaranteed by the government, mainly loan guarantees, are recognized on the basis of probable losses. The allowance is established on the balance of the guaranteed financial initiatives reduced by the estimated realizable value of the security and surety obtained. The annual change in the allowance is recognized in expenditure.

Probable losses are annually estimated by grouping financial initiatives into various risk classes and applying an average loss rate to each class. In the case of enterprises whose government-guaranteed financial initiatives show an exceptionally high cumulative balance or are characterized by specific features, the estimate of probable losses relating to these initiatives is made using case-by-case analysis, regardless of risk class. The authorized guarantees in effect that are not subject to an allowance constitute a contingent liability for the government.

Measurement uncertainty

Initial valuation of income and other taxes to be refunded

Income and other tax refunds stemming from disputed taxpayer notices of assessment are based on estimates for which measurement may be uncertain. The initial valuation of the amounts the government expects to pay with regard to such disputes is based mainly on the settlement rates of similar files in the past.

Estimation of liabilities stemming from transfers

Grants to be paid at the rate of repayment of the loans contracted by the recipients are recognized as work progresses on the basis of information held by the government These liabilities are subject to measurement uncertainty due to possible differences between the estimate of the government’s expenditures or work progress and actual expenditures or work performed, as the case may be.

Allowance for losses on guaranteed financial initiatives

The allowance for losses on financial guarantees is subject to measurement uncertainty because of the assumptions used to assess the likelihood of a borrower defaulting on one of his obligations and forcing the government to make good on the financial guarantee. Financial guarantees are grouped into different hazard classes with an average rate applied for each one. The allowance rate is based on past experience, the type of guarantee and past losses. When the allowances are taken individually, the main considerations are the sector risks and the borrower’s financial situation.

130 PUBLIC ACCOUNTS 2022-2023

13. Accounts payable, accrued expenses and other allowances (cont’d)

Details of accounts payable, accrued expenses and other allowances

(millions of dollars)

	As at March 31
	2023		2022
Remuneration		13 989		13 810
Liabilities stemming from transfers
Grants to be paid at the rate of repayment of the loans contracted by the recipients(1)		7 078		6 162
Other grants to be paid		7 923		7 064
Income taxes and other taxes refundable
Income and property taxes		6 328		7 746
Consumption taxes		3 060		2 695
Suppliers		7 405		6 639
Accrued interest on debts		3 232		3 122
Advances from trust funds		1 212		1 194
Clearing accounts for collected taxes		830		1 141
Allowance for losses on guaranteed financial initiatives		564		573
		51 621		50 146

(1) In addition to the sums payable as a part of its transfer programs, the government subsidizes the interest that will be borne by the recipients in subsequent years.

CONSOLIDATED FINANCIAL STATEMENTS 131

13. Accounts payable, accrued expenses and other allowances (cont’d)

Guaranteed loans and other guaranteed financial initiatives by third party category

(millions of dollars)

	As at March 31
	2023										2022
	Authorized limit		Authorized guarantees in effect			Allowance for losses on guaranteed financial initiatives			Net risk under guarantees		Authorized limit		Authorized guarantees in effect			Allowance for losses on guaranteed financial initiatives			Net risk under guarantees
Enterprises		532		472	(1)		(129	)		343		873		772	(1)		(105	)		667
Non-profit organizations and cooperatives		2 613		2 609	(2)		(137	)		2 472		2 487		2 484	(2)		(135	)		2 349
Forest, farm and fisheries’ sector producer		7 715		6 851	(3)		(66	)		6 785		7 313		6 437	(3)		(62	)		6 375
Students
Borrowings for which the Government pays interest as long as the borrower is a student(4)		1 404		1 404	(5)					1 404		1 468		1 468	(5)					1 468
Borrowings for which borrowers are responsible for paying principal and interest		2 442		2 442	(5)		(232	)		2 210		2 616		2 616	(5)		(271	)		2 345
				13 778			(564	)		13 214				13 777			(573	)		13 204

(1) Guarantees of $459 M ($759 M as at March 31, 2022) were granted by the government under the Act respecting Investissement Québec (CQLR, chapter I-16.0.1). In addition to loan guarantees, the guarantees include loss and payment guarantees introduced to facilitate the funding of aircraft purchasers. As at March 31, 2023, the government has received significant securities and sureties for 48% of the nominal balance of its guarantee portfolio (64% of the nominal balance as at March 31, 2022).

(2) Guarantees of $2 581 M ($2 455 M as at March 31, 2022) are granted by the government under the Act respecting the Société d’habitation du Québec (CQLR, chapter S-8). The government guarantees borrowings with financial institutions contracted by non-profit organizations and cooperatives for periods of 25 or 35 years following its approval of an extension. The principal and interest associated with these borrowings are covered by the non-profit organization or the cooperative. These borrowings finance the acquiring of buildings. These guarantees totalled $2 509 M ($2 364 M as at March 31, 2022).

(3) Guarantees of $6 673 M ($6 279 M as at March 31, 2022) are granted by the government under the Act respecting La Financière agricole du Québec (CQLR, chapter L-0.1). This amount corresponds to balances of principal and interest on borrowings for which La Financière agricole du Québec reimburses the lenders’ residual losses and related charges. The producers’ assets are held as securities by the lenders; they consist particularly of farm or forest production units, milk quotas and surety.

(4) These borrowings bear interest at the banker’s acceptance rate plus 150 basis points.

(5) The guarantees are granted by the government under the Act respecting financial assistance for education expenses (CQLR, chapter A-13.3). It guarantees the reimbursement of losses of principal and interest to lending institutions.

132 PUBLIC ACCOUNTS 2022-2023

▌ 14. Deferred revenue

Significant accounting policies

Amounts received or receivable in regard to revenue that will be earned in a subsequent year are deferred and presented as deferred revenue. More precisely:

—   revenue from government transfers is deferred when the stipulations as to the use of the transferred or received resources or as to the actions to be taken in order to keep them create an obligation that meets the definition of a liability. When these stipulations are of a general nature, the actions or communications of the government that establish those stipulations up to the date of the financial statements may also create a liability. When transfer revenue is deferred, it is recognized as revenue as the liabilities are paid;

—   revenue from donors other than governments that is designated for a specific purpose is deferred and recognized as revenue when the resources are used for their prescribed purposes. Donations in the form of fixed assets or cash to acquire those resources will be deferred and recognized in revenue at the same pace as fixed asset depreciation;

—   revenue from duties and permits refundable on demand that is linked to clearly identifiable goods and services to be rendered by the government to the right or permit holder is deferred and recognized as revenue during the reference period of such right or permit;

—   revenue from school taxes is deferred and recognized in revenue for the period during which it is levied.

Measurement uncertainty

Deferred transfer revenue from the federal government is subject to measurement uncertainty due to possible differences between the estimate of the government’s expenditures or work progress and actual expenditures or work performed.

CONSOLIDATED FINANCIAL STATEMENTS 133

14. Deferred revenue (cont’d)

Deferred revenue by source or by nature

(millions of dollars)

	As at March 31
	2023		2022
Federal government transfers		5 016		5 169
Third-party donations(1)		2 153		2 014
Transfers from entities other than the federal government		144		106
Registration and drivers licence fees		856		903
School property tax		288		279
Guarantee fees for Hydro-Québec borrowings		184		177
Other		510		468
		9 151		9 116

(1) The third-party donations are mainly from non-profit organizations, including foundations that provide financial support to public institutions in the health and social services network.

Deferred revenue – Stipulations of federal government transfers

(millions of dollars)

	As at March 31
	2023		2022
For acquisition or construction of fixed assets		2 892		2 531
For other purposes
Financing of municipal and local infrastructures		1 136		1 425
Financing of research and other projects		988		1 213
		2 124		2 638
		5 016		5 169

Deferred revenue – Third-party donation restriction and variations

(millions of dollars)

	Fiscal year ended March 31, 2023
	Opening balance		New donations		Recognition in revenue		Closing balance		Balance as at March 31, 2022
For acquisition of fixed assets		1 228		187		104		1 311		1 228
For other purposes		786		754		698		842		786
		2 014		941		802		2 153		2 014

134 PUBLIC ACCOUNTS 2022-2023

▌ 15. Environmental liability and asset retirement obligations

The environmental liability represents the government’s obligation to remediate contaminated sites resulting from current or past activities of various kinds, such as mining, industrial, commercial or institutional activities carried out by the government or by third parties. These activities may have taken place on a third person’s private property that was abandoned.

Asset retirement obligations mainly concern the removal of asbestos from buildings. In accordance with current laws and regulations, the government will fulfill these obligations when these fixed assets are demolished or renovated.

Significant accounting policies

Environmental liability

An obligation arising from the remediation of a contaminated site is recognized as an environmental liability when all the following conditions are met:

—   the contamination exceeds an existing environmental standard;

—   the obligation to carry out remediation falls or is likely to fall under the direct responsibility of the government;

—   it is expected that the site can be remediated;

—   a reasonable estimate of the costs associated with this obligation can be made.

Sites the government does not plan to remediate are those that do not pose a danger to public health and safety or those where the contamination is hardly likely to have a significant environmental impact.

The environmental liability includes the estimated costs of contaminated sites management and remediation, which are increased to reflect the degree of precision associated with the estimation method used. This measurement represents the government’s best estimate of the costs required to settle the obligation.

The liability recognized is adjusted each year based on new contaminated sites to be remediated, actual costs incurred and revisions to estimates.

Asset retirement obligations

An asset retirement obligation is recognized when all the following conditions are met:

—   there is a legally enforceable obligation for the government to perform specific activities associated with the permanent retirement of a fixed asset that requires an outflow of economic resources;

—   the obligation arises from the acquisition, construction, development or normal use of the asset;

—   it is expected that the specific asset retirement activities will be carried out;

—   a reasonable estimate of the costs relating to this obligation can be made.

Asset retirement costs are capitalized as part of the cost of the assets concerned and amortized on a straight-line basis from the date of the legal obligation until the planned completion of the asset retirement activities.

CONSOLIDATED FINANCIAL STATEMENTS 135

15. Environmental liability and asset retirement obligations (cont’d)

Significant accounting policies (cont’d)

Asset retirement obligations (cont’d)

The initial measurement of the liability is made by discounting the estimated cash flows required to perform the asset retirement activities. Cash flows are adjusted for inflation and discounted using a discount rate that represents the government’s best estimate of the cost of funds required to settle the obligation at maturity.

The recorded liability is adjusted annually for new obligations, actual costs incurred, revised estimates and accretion expense. These adjustments are recognized as an increase or decrease in the book value of the asset concerned. The adjusted book value of the asset is amortized prospectively.

Liabilities relating to the retirement of heritage buildings are not presented in the financial statements, because the government is required to maintain the integrity of these buildings under the Cultural Heritage Act. Therefore, the probable retirement date of these buildings is so far in the future that the present value of the obligation is negligible.

Material measurement uncertainty

Environmental liability

Environmental liability is subject to measurement uncertainty and may vary because different methods are used to estimate the remediation and management costs, which are increased according to the degree of precision deployed. It is also subject to measurement uncertainty due to the constantly evolving technology used for remediation and due to the inherent limitations of measurement of the extent and nature of the remediation required.

The main assumptions used to estimate the liability are related to the contaminated areas, labour and material costs and the choice of technologies available to eliminate or control contamination. Changes to those assumptions and the regulations could entail significant changes to the recorded liabilities.

Assets retirement obligations

The liability relating to asset retirement obligations is subject to measurement uncertainty and may vary due to the continually evolving technologies used in asset retirement activities, and to differences between the assumptions used in measuring the liability and actual results. The main assumptions used include the estimated costs of asset retirement, the indexation rate for these costs, the discount rate and the discount period. In addition, the obligation to safely dispose of asbestos in buildings is subject to measurement uncertainty due to the inherent limitations in assessing the quantities of asbestos contained therein, as well as the estimated cash flow schedule to carry out the work.

Changes in the key assumptions, in the technology used or in regulations could result in significant changes to the measurement of recorded asset retirement obligations.

136 PUBLIC ACCOUNTS 2022-2023

15. Environmental liability and asset retirement obligations (cont’d)

Summary

(millions of dollars)

	As at March 31
	2023	2022
Environmental liability	3 127	2 812
Asset retirement obligations	4 390	4 592
	7 517	7 404

Environmental liability

Number of sites inventoried

	As at March 31
	2023					2022
	Number of sites		Liability			Number of sites		Liability
			(millions of dollars)					(millions of dollars)
Direct responsibility		1 498		2 401			1 529		2 087
Likely responsibility		192		726			145		725
		1 690		3 127	(1)		1 674		2 812	(1)

(1) The environmental liability takes into account a cost increase of $693 M, representing an average rate of 29% ($662 and 31% as at March 31, 2022).

Changes in environmental liability

(millions of dollars)

	Fiscal year ended March 31
	2023			2022
Opening balance		2 812			2 838
New contaminated sites to be remediated		90			52
Remediation work carried out		(48	)		(56	)
Revision of the estimates		273			(22	)
Closing balance		3 127			2 812

CONSOLIDATED FINANCIAL STATEMENTS 137

15. Environmental liability and asset retirement obligations (cont’d)

Asset retirement obligations

Changes in asset retirement obligations

(millions of dollars)

	Fiscal year ended March 31
	2023			2022
Opening balance		4 592			4 401
Accretion expense		218			191
Revision of the estimates		(420	)
Closing balance		4 390			4 592

Main assumptions used

	As at March 31
	2023		2022
Indexation rate for estimated costs (percent)		2.21 to 11.17		2.21 to  11.17
Discount rate, including inflation (percent)		3.52 to 5.54		2.15 to 5.54
Discount period (years)(1)		1 to 101		1 to 102

(1) The discounting period shown takes into account the estimated duration of asset retirement work, which is generally less than one year.

The estimated costs of carrying out asset retirement activities as at March 31, 2023 total $8 671 million ($7 821 million as at March 31, 2022).

Impact of a change in the main assumptions on the value of asset retirement obligations

Assumptions	Change	Impact on the value of obligations as at March 31, 2023
		(millions of dollars)	(percent)
– Estimated costs	– Increase of 10.00%	439	+10.00
	– Decrease of 10.00%	(439)	-10.00
– Indexation rate for estimated costs	– Increase of 0.25%	282	+6.42
	– Decrease of 0.25%	(258)	-5.88
– Discount rate, including inflation	– Increase of 0.25%	(242)	-5.51
	– Decrease of 0.25%	266	+6.06
– Discount period	– Increase of 5 years	(569)	-12.96
	– Decrease of 5 years	597	+13.60

138 PUBLIC ACCOUNTS 2022-2023

▌ 16. Assets and liabilities regarding pension plans and other employee future benefits

Significant accounting policies

Assets and liabilities of pension plans and other employee future benefits consist of the Retirement Plans Sinking Fund (RPSF), the specific pension funds and other employee future benefit programs funds as well as the obligations relating to accrued benefits under the pension plans and other employee future benefits.

When the book value of a fund exceeds the value of the corresponding liability and the government can benefit from the excess, its net value is shown as an asset. Conversely, when the liability exceeds the book value of the established asset, its net value is shown as a liability.

Retirement Plans Sinking Fund and specific pension funds

The investments of the RPSF, specific pension funds and employee future benefit programs funds are recognized at an adjusted market value. With this valuation method, the difference between the real return based on market value and the forecast return is amortized over five years.

When the adjusted market value of a pension plan fund is higher than that of its obligations, the resulting surplus is capped through a valuation allowance so that the pension plans asset reflects only the future benefit that the government expects to derive from this surplus. The annual change in the allowance is charged to expenditure.

Actuarial gains and losses attributable to the use of the forecast rate of return are amortized using the straight-line method. The amortization period corresponds to the expected average remaining service life (EARSL) of plan or program.

The annual return of a fund is obtained by applying the rate of return stipulated in the actuarial valuations of the obligations of each pension plan or the employee future benefit program to the average balance of the plan in question.

Obligations relating to the pension plans and other employee future benefits

Obligations relating to defined-benefit pension plans and employee future benefit programs are recognized using the projected benefit method prorated on years of service and the most probable assumptions set by the government. The method used takes into account the way in which benefits payable by the government are accrued by participants. The Survivor’s Pension Plan’s obligations are recognized using an actuarial method that determines the present value of the pensions accrued by beneficiaries as a result of the eligible person’s death.

Actuarial gains and losses determined during the remeasurement of obligations stem from experience adjustments to forecasts and from changes to assumptions. They are recognized in expenditure using the straight-line method, as of the fiscal year following the year in which they are taken into account in the value of obligations relating to accrued benefits. The amortization period corresponds to the EARSL of plan or program participants. For the Survivor’s Pension Plan, the amortization period corresponds to the average remaining life expectancy of beneficiaries.

Annual interest is determined by applying the discount rate of the obligation relating to accrued benefits to each program or plan to the average value of the related obligation.

CONSOLIDATED FINANCIAL STATEMENTS 139

16. Assets and liabilities regarding pension plans and other employee future benefits (cont’d)

Material measurement uncertainty

Obligations relating to pension plans may vary because of differences between the economic and demographic assumptions made for actuarial valuation purposes and the actual results. The impact of a change in the main assumptions on the value of obligations relating to accrued benefits under the four main pension plans is shown after the table “Main economic assumptions used”.

Assets and liabilities regarding pension plans and other employee future benefits

(millions of dollars)

	As at March 31
	2023							2022
	Assets		Liabilities		Net assets (net liabilities)			Assets		Liabilities		Net assets (net liabilities)
Pension plans		113 903		120 845		(6 942	)		106 963		116 569		(9 606	)
Université du Québec programs				295		(295	)				282		(282	)
Accumulated Sick Leave		1 042		612		430			1 106		699		407
Survivor's Pension Plan		459		437		22			459		435		24
		115 404		122 189		(6 785	)		108 528		117 985		(9 457	)

The government put in place employee future benefits programs that provide for the accumulation of sick leave and the payment of survivors’ pensions. These programs result in long-term obligations for the government, which assumes the full cost of these programs.

Accumulated sick leave

Certain public service employees subject to the Public Service Act (CQLR, chapter F-3.1.1) can accumulate, in a reserve, the unused sick leave days they are entitled to annually.

For non-management employees, the number of unused sick leave days that may be accumulated in a reserve is limited to 20. This reserve is convertible into cash in its entirety in the event of termination of the employment relationship and may not be used during preretirement leave. Sick leave days accumulated before those agreements limiting the reserve to 20 days come into effect, minus the days originally transferred to this reserve, can be used as preretirement leave up to the expiry date prescribed in the agreements. The balance of these unused days at the expiry date will be convertible into cash at the rate of 70% no later than 60 days following that date. In accordance with the agreements, the sick leave days accumulated prior to their coming into force, unused as at March 31, 2022, and exceeding the 20-day reserve, were paid out at 70% during the 2022-2023 fiscal year for public service employees. For other non-management employees, the unused days of leave will be payable at 70% on March 31, 2024.

140 PUBLIC ACCOUNTS 2022-2023

16. Assets and liabilities regarding pension plans and other employee future benefits (cont’d)

Accumulated sick leave (cont’d)

For non-unionized employees who are members of the Pension Plan of Management Personnel (PPMP) and Retirement Plan for Seniors Officials (RPSO), mainly management, the days accumulated in the reserve can be utilized as fully paid leave days in certain situations provided for in the different labour agreements or for preretirement leave. In case of termination of employment, retirement or death, the employees receive in money 50% of the value of these accumulated days, up to an amount representing the equivalent of 66 days’ salary.

The Financial Administration Act (CQLR, chapter A-6.001) authorizes the Minister of Finance to deposit money with the Caisse de dépôt et placement du Québec (the Caisse), up to an amount equal to the value of its obligation relating to accumulated sick leave in order to build up the Accumulated Sick Leave Fund. The purpose of this fund is to provide for the payment of some or all of the benefits due to employees for accumulated sick leave.

Actuarial gains and losses are amortized over the EARSL, which ranges from 14 to 15 years.

Survivor’s Pension Plan

The Survivor’s Pension Plan stipulates that a pension is paid to the spouse and dependent children following the death of an eligible person. The plan chiefly covers management and similar personnel in the public and parapublic sectors. The government pays amounts into a fund at the Caisse, reserved exclusively for the payment of benefits earned by plan beneficiaries.

Actuarial gains and losses are amortized over the average remaining life expectancy of the beneficiaries, which is 18 years.

Assets regarding other employee future benefits

(millions of dollars)

	As at March 31
	Accumulated			Survivor's
	Sick Leave			Pension Plan		2023			2022
Other employee future benefits funds		1 160			477		1 637			1 714
Less:
Obligations relating to accrued benefits		609			455		1 064			1 166
		551			22		573			548
Plus:
Unamortized actuarial gains		(121	)				(121	)		(117	)
		430			22		452			431

CONSOLIDATED FINANCIAL STATEMENTS 141

16. Assets and liabilities regarding pension plans and other employee future benefits (cont’d)

Change in the adjusted market value of other employee future benefit funds

(millions of dollars)

	Fiscal year ended March 31
	2023									2022
	Accumulated Sick Leave Fund			Survivor's Pension Plan Fund			Total			Total
Adjusted market value, beginning of year		1 236			478			1 714			1 776
Anticipated investment income(1)		77			29			106			109
Deposits from the general fund of the Consolidated Revenue Fund					9			9			17
Repayments to depositors(2)		(155	)					(155	)		(170	)
Benefits paid					(38	)		(38	)		(38	)
Actuarial gains (losses)		2			(1	)		1			20
Adjusted market value, end of year(3)		1 160			477			1 637			1 714

(1) The forecast returns on the assets of the Accumulated Sick Leave Fund and the Survivor’s Pension Plan Fund both amount to 6.35% (6.35% in 2021-2022); the realized returns, based on the market value of investments, were 2.18% and 2.14%, respectively (9.89% and 9.00% in 2021-2022).

(2) Under the Financial Administration Act (CQLR, chapter A-6.001), the payment of any benefit that affects the liabilities of the obligation relating to accumulated sick leave may be repaid to depositors out of the Accumulated Sick Leave Fund.

(3) The market values of the Accumulated Sick Leave Fund and the Survivor’s Pension Plan Fund were $1 179 M and $479 M respectively ($1 306 M and $498 M as at March 31, 2022).

Change in obligations relating to accrued other employee future benefits

(millions of dollars)

	Fiscal year ended March 31
	2023									2022
	Accumulated sick leave			Survivor's Pension Plan			Total			Total
Obligations, beginning of year		716			450			1 166			1 187
Cost of accrued benefits		26			12			38			63
Interest on obligations		41			27			68			69
Benefits paid		(164	)		(38	)		(202	)		(174	)
Actuarial (gains) losses		(10	)		4			(6	)		21
Obligations, end of year		609			455			1 064			1 166

142 PUBLIC ACCOUNTS 2022-2023

16. Assets and liabilities regarding pension plans and other employee future benefits (cont’d)

Actuarial valuations

Every three years, the value of obligations relating to accrued benefits of the accumulated sick leave and survivors’ pension plan is determined by actuarial valuations. The value of these obligations is extrapolated for the period between two actuarial valuations.

Date of the most recent actuarial valuations used to determine the value of obligations related to vested benefits

March 31, 2022	December 31, 2021
(filed in 2021-2022)	(filed in 2021-2022)
Accumulated sick leave	Survivor’s Pension Plan

Note: The filing year corresponds to the government’s fiscal year for which an actuarial valuation of the plan is required based on the production schedule of the valuation.

Main long-term economic assumptions used

(per cent)

	Accumulated		Survivor's
	sick leave		Pension Plan
Rate of return, net of inflation		4.35		4.35
Inflation rate		2.00		2.00
Discount rate for obligations relating to accrued benefits		6.35		6.35
Salary growth rate, net of inflation		0.50		—

Accrued benefits expense relating to other employee future benefits

(millions of dollars)

	Fiscal year ended March 31
	2023						2022
	Accumulated sick leave		Survivor's Pension Plan		Total		Total
Cost of accrued benefits		26		12		38		63
Amortization of actuarial losses		11				11		4
		37		12		49		67

CONSOLIDATED FINANCIAL STATEMENTS 143

16. Assets and liabilities regarding pension plans and other employee future benefits (cont’d)

Debt service expense (revenue) relating to other employee future benefits

(millions of dollars)

	Fiscal year ended March 31
	2023									2022
	Accumulated			Survivor’s
	sick leave			Pension Plan			Total			Total
Interest on obligations relating to accrued benefits		41			27			68			69
Investment income of the funds		(92	)		(28	)		(120	)		(122	)
		(51	)		(1	)		(52	)		(53	)

Pension plans

Several defined-benefit pension plans have been put in place by the government for its employees, for the Members of the National Assembly and for the judges. The government and participants contribute to the funding of all of these plans.

The government’s defined benefits plans are divided into two categories: cost-sharing and cost-balance plans. The distinction lies in the government’s responsibility for funding vested benefits and for paying benefits.

The obligations related to vested benefits borne by the participants and the net assets available for paying those benefits are set out in Appendix 4 entitled “Fiduciary transactions conducted by the government”. Further information can be found in the financial statements of plans published by Retraite Québec.

The government’s pension plans grant a defined benefit to participants when they retire, benefit calculated on the basis of an average for their best paid years, generally five, and their number of years of service. The portion of benefits accrued after July 1, 1982 or, in the case of the Pension Plan of the Université du Québec (PPUQ), after January 1, 2005, is partially indexed to the cost of living; the portion of benefits accrued before those dates is usually indexed.

The government allows its enterprises and organizations not included in the government’s reporting entity¹ to join its pension plans, with the employers making contributions to the plans.

¹ It is mainly organizations that conduct fiduciary transactions for the government or provide services to bodies within the government’s reporting entity.

144 PUBLIC ACCOUNTS 2022-2023

16. Assets and liabilities regarding pension plans and other employee future benefits (cont’d)

Funding and paying benefits

The government established the RPSF to create an asset for paying all or part of the pension plans’ benefits. The RPSF is for plans whose benefits are paid by the general fund of the Consolidated Revenue Fund.

Some pension plans have their own pension funds so that they can pay the benefits required by their provisions. If the amounts in a pension fund are insufficient to pay the benefits payable by the government, or if there is no pension fund, the benefits are paid by the general fund of the Consolidated Revenue Fund. This situation does not apply to the PPUQ.

Université du Québec programs

L’Université du Québec and its constituent universities offer their employees certain lump-sum payments upon early retirement as well as a retiree group insurance plan. These programs give rise to long-term obligations, the costs of which are borne in whole or in part by the government.

CONSOLIDATED FINANCIAL STATEMENTS 145

16. Assets and liabilities regarding pension plans and other employee future benefits (cont’d)

Characteristics of the benefit plans and the other employee future benefits

	Types of plans and programs
							Expected average
					Presence of		remaining service
Benefit plans and other	Cost-		Cost-		a specific		life (EARSL)
employee future benefits	sharing(1)		balance		fund		(in years)(2)
RREGOP(3)							15
– regular service(4)	✓ 50.0%	(5)
– service transferred from the TPP and the CSSP			✓
– pension credits acquired following plan-to-plan transfers			✓		✓
PPMP							11
– regular service - excluding pensioners’ benefits prior to January 1, 2015(4)	✓ 50.0%	(5)
– regular service - pensioners’ benefits prior to January 1, 2015			✓	(6)
– service transferred from the TPP and the CSSP			✓
– RPSO			✓
TPP(3)			✓				15
PPCT(3)			✓				15
CSSP(3)			✓				15
PPUQ			✓		✓		11
SPMSQ							15
– regular service since January 1, 2007	✓50.0%	(7)			✓	(8)
– regular service prior to January 1, 2007			✓
PPPOCS	✓54.0%	(9)					15
PPCJQ			✓				11
PPFEQ			✓		✓		3
PPMNA			✓				6
Université du Québec programs	✓ 50.0%		✓				14

(1) The percentage indicated represents the portion of obligations relating to accrued benefits payable by the government.

(2) The EARSL is used to determine the amortization period for the plan’s actuarial gains and losses.

(3) A common EARSL is used for this group of plans whose continuity is ensured by the Government and Public Employees Retirement Plan (RREGOP).

(4) Contributions paid by employers required to pay contributions are deposited in a transitional fund. This fund is liquidated regularly because the sums deposited in it are used to pay benefits.

(5) The government’s portion is 58.3% in the case of benefits accrued prior to July 1, 1982.

(6) In accordance with the Act to foster the financial health and sustainability of the Pension Plan of Management Personnel and to amend various legislative provisions (S.Q. 2017, chapter 7), the government covers the portion of benefits payable by participants to pensioners who retired before January 1, 2015 or to their assigns. In exchange, a share of the value of the contribution fund of PPMP participants was deposited to the RPSF.

(7) The government’s portion is 50.0% in the case of benefits accrued since January 1, 2022, 55.0% in the case of benefits accrued between January 1, 2021 and January 1, 2022, 61.0% in the case of benefits accrued between January 1, 2020 and January 1^st, 2021 and 66.7% in the case of benefits accrued before January 1^st, 2020.

(8) Every three years at the latest, the government must pay its contributions into the fund, as determined by the actuarial valuation realized for that purpose.

(9) The government’s portion is 46.0% in the case of benefits accrued prior to January 1, 2013.

146 PUBLIC ACCOUNTS 2022-2023

16. Assets and liabilities regarding pension plans and other employee future benefits (cont’d)

Liabilities regarding the pension plans and other employee future benefits

(millions of dollars)

	As at March 31
	Value before unamortized actuarial (losses) gains			Unamortized actuarial (losses) gains			2023			2022
Obligations relating to accrued benefits
RREGOP
– regular service		77 807			(3 522	)		74 285			70 540
– transferred service		2 413			(222	)		2 191			2 258
PPMP
– regular service		18 912			(270	)		18 642			18 116
– transferred service		979			(83	)		896			915
– RPSO		2 399			(132	)		2 267			2 142
TPP		8 407			(820	)		7 587			7 894
PPCT		952			(152	)		800			842
CSSP		2 658			(230	)		2 428			2 556
PPUQ		4 723			97			4 820			4 613
SPMSQ		5 498			(590	)		4 908			4 775
PPPOCS		694			(37	)		657			618
PPCJQ		996			(73	)		923			872
PPFEQ		219			(14	)		205			196
PPMNA		251			(15	)		236			232
		126 908			(6 063	)		120 845			116 569
Less:
Retirement Plans Sinking Fund		110 948			3 889			107 059			100 374
Specific pension plan funds
PPUQ fund		5 499			136			5 363			5 044
SPMSQ fund		1 258			47			1 211			1 166
Other pension plan funds		926			13			913			910
Valluation allowance – PPUQ		(561	)					(561	)		(449	)
Valluation allowance – other funds		(82	)					(82	)		(82	)
		7 040			196			6 844			6 589
		8 920			(1 978	)		6 942			9 606
Université du Québec programs
Obligations relating to accrued benefits		271			24			295			282
		9 191			(1 954	)		7 237			9 888

CONSOLIDATED FINANCIAL STATEMENTS 147

16. Assets and liabilities regarding pension plans and other employee future benefits (cont’d)

Change in obligations relating to accrued pension plan benefits and other employee future benefits

(millions of dollars) 

	Fiscal year ended March 31
	2023						2022
	Pension plans			Université du Québec programs			Pension plans			Université du Québec programs
Obligations, beginning of year		121 942			294			116 681			292
Cost of accrued benefits		3 267			21			2 953			20
Interest on obligations		7 572			10			7 252			10
Compensations(1)		96						146
Benefits paid		(7 437	)		(23	)		(7 178	)		(26	)
Plan-to-plan transfers		33						(8	)
Changes to plans		7						(77	)
Actuarial losses (gains)		1 424			(31	)		2 163			(2	)
Change in obligations relating to certain pension credits(2)		4						10
Obligations, end of year		126 908			271			121 942			294

(1) The government pays an annual amount of compensation into the funds of contributions by RREGOP and PPMP participants in order to finance those plans and limit contribution increases for the participants. For the PPMP, the annual compensation paid up until December 31, 2022, based on services rendered during the fiscal year, must be enough to offset the fund’s loss due to the transfer of RREGOP participants, and is capped at $100 M.

(2) The government’s obligations regarding certain pension credits acquired following the transfer of supplemental pension plans to RREGOP correspond to the actuarial value of these acquired pension credits or to the actuarial value of the fund created to provide for their payment, whichever is higher.

148 PUBLIC ACCOUNTS 2022-2023

16. Assets and liabilities regarding pension plans and other employee future benefits (cont’d)

Actuarial valuations

Every three years, the value of obligations relating to accrued benefits of the pension plans and the Université du Québec programs is determined by actuarial valuations. The value of these obligations is extrapolated for the period between two actuarial valuations.

Date of the most recent actuarial valuations used to determine the value of obligations related to vested benefits

December 31, 2022	December 31, 2021		December 31, 2020		December 31, 2019
(filed in 2022-2023)	(filed in 2022-2023)		(filed in 2021-2022)		(filed in 2020-2021)
PPUQ	RREGOP		RREGOP		RPSO
Université du Québec programs	–	pension credits related to plan-to-plan transfers	–	regular service	PPPOCS
	–	redemption of years of service	–	service transferred from the CSSP and the TPP	PPCJQ PPFEQ
	PPCT		PPMP		PPMNA
	SPMSQ		–	regular service(1)
			–	service transferred from the CSSP and the TPP
			TPP
			CSSP

Note: The filing year corresponds to the government fiscal year for which an actuarial valuation of the plan is required, based on the timetable for preparing the valuation.

(1) PPMP regular service is divided into two categories, as shown previously in the table entitled “Characteristics of the benefit plans and the other employee future benefits”.

Main economic assumptions used

(percent)

	Plans administered by Retraite Québec		PPUQ		Université du Québec programs
	2023 and thereafter		2023 and thereafter		2023 and thereafter
Rate of return, net of inflation		4.35		4.50		―
Inflation rate		2.00		2.00		2.00
Discount rate for obligations relating to accrued benefits		6.35		6.50		3.60
Salary growth rate, net of inflation		0.50		0.50		0.50

CONSOLIDATED FINANCIAL STATEMENTS 149

16. Assets and liabilities regarding pension plans and other employee future benefits (cont’d)

Impact of a change in the main assumptions on the value of obligations relating to accrued benefits under the main pension plans

Assumptions	Change	Impact on the value of obligations as at March 31, 2022
		(millions of dollars)	(percent)
Economic
– Rate of return, net of inflation	- Increase of 0.05%	(710)	- 0.64
	- Decrease of 0.05%	710	+ 0.64
– Inflation rate	- Increase of 0.25%	(1 550)	- 1.41
	- Decrease of 0.25%	1 650	+ 1.50
– Salary growth rate, net of inflation	- Increase of 0.25%	610	+ 0.55
	- Decrease of 0.25%	(590)	- 0.54
Demographic
– Life expectancy(1)	- Increase of 0.5 year	820	+ 0.74
	- Decrease of 0.5 year	(830)	- 0.75

Note: The main pension plans are the RREGOP – regular service, the PPMP – regular service, the Teachers Pension Plan (TPP) and the Superannuation Plan for the Members of the Sûreté du Québec (SPMSQ).

(1) According to current RREGOP assumptions, the life expectancy of recipients aged 60 is 26.7 years for men and 29.7 years for women.

RPSF investment policy as at March 31 of the current year

The sums deposited in the RPSF are entrusted to the Caisse. The Caisse manages these sums according to the investment policy set by the Minister of Finance. This policy provides for investments in a diversified portfolio that includes fixed income securities (for example, bonds), inflation-sensitive investments (for example, actual assets such as real estate assets and infrastructure) and equity.

RPSF portfolio

(percent)

	As at March 31
	2023		2022
Fixed-income securities		33.00		34.00
Actual assets		23.50		22.50
Equity		43.50		43.50
		100.00		100.00

150 PUBLIC ACCOUNTS 2022-2023

16. Assets and liabilities regarding pension plans and other employee future benefits (cont’d)

Change in the adjusted market value of the RPSF and specific pension plan funds

(millions of dollars)

	Fiscal year ended March 31
	2023															2022
	RPSF			PPUQ fund			SPMSQ fund			Other pension plan funds			Total			Total
Adjusted market value, beginning of year		104 450			5 208			1 219			932			111 809			104 194
Anticipated investment income		6 632	(1)		328			76			25			7 061			6 577
Deposit from the general fund of the Consolidated Revenue Fund														—			227
Contributions paid(2)					173						304			477			439
Benefits paid					(201	)		(36	)		(334	)		(571	)		(541	)
Actuarial (losses) gains		(134	)		(9	)		(1	)		(5	)		(149	)		903
Change in the value of assets relating to certain pension credits(3)											4			4			10
Adjusted market value, end of year(4)		110 948			5 499			1 258			926			118 631			111 809

(1) The forecast return on the RPSF was 6.35% (6.35% in 2021-2022); the realized return, based on the market value of investments, was 2.57% (9.14% in 2021-2022).

(2) This item included $231 M ($212 M in 2021-2022) in contributions from participants, government enterprises and organizations not included in the government’s reporting entity.

(3) The government’s obligations regarding certain pension credits acquired following the transfer of supplemental pension plans to RREGOP correspond to the actuarial value of these acquired pension credits or to the actuarial value of the fund created to provide for their payment, whichever is higher.

(4) The market value of the RPSF and the specific pension plan funds totalled $119 087 M ($116 294 M as at March 31, 2022). More precisely, the respective market values of the RPSF, the PPUQ fund, the SPMSQ fund and other specific pension funds were $111 400 M, $5 521 M, $1 260 M and $906 M, respectively ($108 608 M, $5 472 M, $1 255 M and $959 M, respectively, as at March 31, 2022).

CONSOLIDATED FINANCIAL STATEMENTS 151

16. Assets and liabilities regarding pension plans and other employee future benefits (cont’d)

Accrued benefits expense relating to pension plans and other employee future benefits

(millions of dollars)

	Fiscal year ended March 31
	2023								2022
	Pension			Université du Québec					Pension			Université du Québec
	plans			programs		Total			plans			programs		Total
Cost of accrued benefits		3 267			21		3 288			2 953			20		2 973
Compensations(1)		96					96			146					146
Contributions from participants and employers		(231	)				(231	)		(212	)				(212	)
		3 132			21		3 153			2 887			20		2 907
Changes to plans		7					7			(77	)				(77	)
Amortization of actuarial losses		734			5		739			610			5		615
Change in valuation allowances		112					112			115					115
		3 985			26		4 011			3 535			25		3 560

(1) Information on compensations is presented previously in the notes under the table “Change in obligations relating to accrued pension plan benefits and other employee future benefits”.

Debt service expense relating to pension plans and other employee future benefits

(millions of dollars)

	Fiscal year ended March 31
	2023								2022
	Pension			Université du Québec					Pension			Université du Québec
	plans			programs		Total			plans			programs		Total
Interest on obligations relating to accrued benefits		7 572			10		7 582			7 252			10		7 262
Investment income of the funds		(7 142	)				(7 142	)		(6 639	)				(6 639	)
		430			10		440			613			10		623

152 PUBLIC ACCOUNTS 2022-2023

▌ 17. Assets and liabilities related to derivative financial instruments

The government uses derivative financial instruments to manage the financial risks associated with its financial assets and liabilities. Derivative financial instruments such as currency swap contracts and foreign exchange forward contracts are used to manage the foreign exchange risk associated with the repayment of interest and principal on foreign currency debts and the related cash management, as well as for other operations carried out in foreign currencies.

Interest rate swap contracts are used to modify exposure to interest rate risk on long-term financial instruments to meet the target breakdown of fixed-rate and variable-rate debt set by the government in its risk management strategies.

Significant accounting policies

Derivative financial instruments are recognized at fair value. Sums receivable from (payable to) counterparties are recognized at cost or amortized cost.

The government elects to recognize directly in income foreign exchange gains and losses on sums receivable from (payable to) counterparties and on foreign exchange forward contracts to cover these amounts, as well as on foreign currency operations.

Measurement uncertainty

Derivative financial instruments are subject to measurement uncertainty due to the use of assumptions in measuring their fair value. The measurement methods used for these instruments are presented below.

Measurement method for derivative financial instruments

The fair value of these financial instruments is based on Level 2 of the fair value hierarchy, which means that the fair value is calculated using valuation techniques whose significant inputs are observable, either directly or indirectly.

Interest rate swaps and currency swaps are valued by converting future cash flows to present value at the current exchange rates. Variable future cash flows are determined on the basis of forward interest rate structures.

Foreign exchange forward contracts are valued by converting future cash flows to present value at the current exchange rate.

These valuations require the development and use of assumptions that take into account observable inputs such as interest rate curves, yield curves as well as foreign exchange rates. The valuation method for certain swaps and other derivatives may take into account additional observable data, such as underlying prices and volatility.

CONSOLIDATED FINANCIAL STATEMENTS 153

17. Assets and liabilities related to derivative financial instruments (cont’d)

Details of assets and liabilities related to derivative financial instruments

(millions of dollars)

	As at March 31
	2023	2022
ASSETS RELATED TO DERIVATIVE FINANCIAL INSTRUMENTS
Recorded at cost or amortized cost
Sums receivable from counterparties	5 043	3 570
Recorded at fair value(1)
Currency swap contracts	2 971	1 461
Interest rate swap contracts	2 817	368
Other	378	19
	6 166	1 848
Sub-total	11 209	5 418
Deferred foreign exchange gains		(126	)
	11 209	5 292
LIABILITIES RELATED TO DERIVATIVE FINANCIAL INSTRUMENTS
Recorded at cost or amortized cost
Sums payable to counterparties	1 446	384
Recorded at fair value(1)
Currency swap contracts	2 843	3 444
Interest rate swap contracts	6 043
Other	352	3
	9 238	3 447
Sub-total	10 684	3 831
Deferred foreign exchange losses		(2 557	)
	10 684	1 274

(1) As at March 31, 2022, these financial derivative financial instruments were recognized at cost (Note 3).

154 PUBLIC ACCOUNTS 2022-2023

17. Assets and liabilities related to derivative financial instruments (cont’d)

Credit and liquidity risks management

As part of credit risk management for transactions involving derivative financial instruments, the government has adopted a credit risk management policy that limits potential counterparty losses. In accordance with this policy, the government uses over-the-counter derivative financial instruments only with counterparties with which it has concluded framework agreements.

Under framework agreements, a credit support is provided when the fair value of the derivative financial instruments traded exceeds a certain threshold. The excess can then be covered through short-term securities or cash and recognized as sums receivable from (payable to) counterparties. This credit support helps limit the government’s liquidity risk, in addition to its credit risk, with respect to derivative financial instruments transactions. In addition, for certain derivative financial instruments, the government exchanges guarantees with its counterparties.

The government deals with major financial institutions that receive credit ratings from at least two credit rating agencies, one of which must be Standard & Poor’s or Moody’s. When a transaction agreement comes into effect, the institution must have a rating of A or higher from at least one of these agencies. As at March 31, 2023 and 2022, 100% of the transactions in effect met this criterion.

Currency risk management

Certain sums receivable from (payable to) counterparties are denominated in foreign currencies. To limit the currency risk associated with these sums, the government uses foreign exchange forward contracts.

CONSOLIDATED FINANCIAL STATEMENTS 155

▌ 18. Debts

Significant accounting policies

Debts

Debts are recognized at amortized cost using the effective interest method.

Sinking funds relating to borrowings

Financial instruments included in sinking funds relating to borrowings are recognized at cost or amortized cost using the effective interest method.

Moreover, the government conducts purchases and sales of securities, such as Treasury bills and bonds, which it agrees to resell or repurchase from a counterparty at a future date. These transactions are reverse repurchase agreements or repurchase agreements. The government disburses or receives an amount upon conclusion of these transactions.

Securities purchased under reverse repurchase agreements

Under these operations, the counterparty retains the risks and benefits associated with the securities. An amount receivable is recognized under “Securities purchased under reverse repurchase agreements” when the amount is disbursed. Moreover, the government can sell these securities, but must purchase them on terms similar to those sold, in order to deliver them to the counterparty at the time stipulated in the reverse repurchase agreement. In this case, the obligation to deliver securities with similar conditions is recognized in liabilities under “Obligations to deliver securities” until the securities are effectively delivered to the counterparty.

Securities sold under repurchase agreements

Securities sold remain recorded in the consolidated statement of financial position, as the government retains the risks and benefits associated with these securities. An amount receivable is recognized under “Securities sold under repurchase agreements” when the amount is cashed.

156 PUBLIC ACCOUNTS 2022-2023

18. Debts (cont’d)

Debts by category

(millions of dollars)

	As at March 31
	2023										2022
	Equivalent in Canadian dollars
	Canadian dollars		US dollars		Euros		Other currencies (1)		Total		Total
Debts contracted on financial markets
Bonds and notes (2),(3)		185 066		25 609		29 418		5 830		245 923		235 628
Savings products(3)		13 645								13 645		12 388
Treasury bills(2)		6 439								6 439		4 491
Short-term borrowings(4)		619		1 836						2 455		1 007
Mortgage loans		43								43		40
		205 812		27 445		29 418		5 830		268 505		253 554
Less:
Debts whose securities are held in treasury
Bonds and notes		13 397		2 176						15 573		20 569
Short-term borrowings										—		218
Treasury bills										—		54
		13 397		2 176		—		—		15 573		20 841
Sub-total		192 415		25 269		29 418		5 830		252 932		232 713
Debts arising from agreements and contracts
Private-public partnership agreements		3 682								3 682		3 775
Capital leases		497								497		316
		4 179		—		—		—		4 179		4 091
Sub-total		196 594		25 269		29 418		5 830		257 111		236 804
Deferred foreign exchange gains										—		2 733
Total debts		196 594		25 269		29 418		5 830		257 111		239 537

(1) Other currencies included the Australian dollar, the pound sterling, the Swiss franc, the yen, the Swedish krona and the New Zealand dollar.

(2) The Government held $801 M ($746 M as at March 31, 2022) of its own securities through its investments in government enterprises.

(3) These categories included securities issued with a book value of $4 212 M ($2 877 M as at March 31, 2022), the proceeds of which are allocated to specific projects with environmental benefits.

(4) Short-term borrowings are mainly comprised of bank loans and short-term notes.

CONSOLIDATED FINANCIAL STATEMENTS 157

18 Debts (cont’d)

Debts arising from private-public partnership agreements and capital leases

(millions of dollars)

	As at March 31
	2023	2022
	Equivalent in Canadian dollars
Private-public partnership agreements(1)
Hospital centres and residential and long-term care centres	2 547		2 605
Road transportation infrastructure	1 001		1 030
Other	134		140
	3 682		3 775
Capital leases	497		316
	4 179		4 091

(1) Private-public partnership agreements are contracts that provide for the design, construction, financing and maintenance of fixed assets by a private partner and, in some cases, for the operation of those assets by the partner. The debts related to these private-public partnership agreements have a term of 25 to 39 years.

Weighted average rate of debts

(percent)

	As at March 31
	2023		2022
Rate by currency – before consideration of assets and liabilities related to derivative financial instruments
Debts contracted on financial markets
In Canadian dollars		3.49		3.29
In US dollars		3.40		3.24
In euros		1.06		0.78
Other currencies(1)		2.11		1.88
Debts arising from agreements and contracts
In Canadian dollars		4.71		4.74
Weighted average government rate – after consideration of assets and liabilities related to derivative financial instruments		3.67		3.06

Note:  Weighted average rates for debt contracted on financial markets are determined on the basis of effective interest rates prevailing at March 31.

(1) Other currencies included the Australian dollar, the pound sterling, the Swiss franc, the yen, the Swedish krona and the New Zealand dollar.

158 PUBLIC ACCOUNTS 2022-2023

18 Debts (cont’d)

Debt repayment schedule

(millions of dollars)

	Equivalent in Canadian dollars
Maturing on March 31	Debts contracted on financial markets (nominal value) (1)			Debts arising from agreements and contracts	Total
2024		26 317		111	26 428
2025		21 416		115	21 531
2026		19 871		120	19 991
2027		17 835		125	17 960
2028		12 539		137	12 676
		97 978		608	98 586
2029-2033		78 332		750	79 082
2034-2038		9 443		880	10 323
2039-2043		15 291		1 032	16 323
2044-2048		18 001		592	18 593
2049 and thereafter		46 759		317	47 076
Less:		265 804		4 179	269 983
Debts whose securities are held in treasury		15 464			15 464
		250 340	(2)	4 179	254 519

(1) This schedule provides for repayments of $2 078 M in 2024, $481 M in 2025, $348 M in 2026, $249 M in 2027, $199 M in 2028 and $541 M for the years 2029-2033 in respect of demand redeemable savings products of $3 896 M.

(2) The repayment schedule for debts contracted on the financial markets is based on the nominal value of the debts stipulated in the contracts. This basis differs from the book value of debts, which, for the purposes of calculating the effective interest rate, takes into account transaction costs, and discounts and premiums with a net effect of $2 592 M.

CONSOLIDATED FINANCIAL STATEMENTS 159

18. Debts (cont’d)

Risks management relating to debts

In order to meet its financial requirements arising from its operations and investment activities as well as those related to the repayment of borrowings that are maturing, the government has provided itself with an annual financing and debt-management program based on Canadian and international financial markets.

Participation in these markets exposes the government to liquidity risk, interest rate risk and currency risk. Therefore, the government devises risk-management strategies using the different derivative financial instruments at its disposal. Risk management is carried out on debts contracted on the markets, including debts whose securities are held in treasury.

Liquidity risk

In order to limit the liquidity risk, the government has, among other things, lines of credit notably in the general fund of the Consolidated Revenue Fund totalling CAN$1 165 million with various Canadian banking institutions. As at March 31, 2023, the balance of these lines was nil ($3 million as at March 31, 2022).

The government also has a credit agreement totalling US$3 250 million with a Canadian and international banking syndicate. To date, no transactions have been carried out under this credit agreement.

In addition, the government maintains prudential liquid assets in the sinking fund for government borrowings, invested mainly in highly liquid securities of the federal government. In the event of major disruptions in financial markets, these securities can be sold and the liquid assets recovered rapidly, thus enabling the government to honour its financial commitments. As at March 31, 2023, the book value of prudential liquid assets was CAN$13 171 million (CAN$13 215 million as at March 31, 2022).

Currency risk

To manage the currency risk, the government mainly uses derivative financial instruments aimed at exchanging cash flows from one currency to another, such as currency swap contracts and foreign exchange forward contracts. As a complementary measure to the use of derivative financial instruments, the government also acquires assets denominated in foreign currencies within its sinking funds relating to borrowings.

160 PUBLIC ACCOUNTS 2022-2023

18. Debts (cont’d)

After taking into account the effect of the derivative financial instruments used to manage currency risk and assets in foreign currency held in sinking funds relating to borrowings, the net exposure of foreign currency debts contracted on the markets was negligible at March 31, 2023 compared with the nominal value of the debts. It amounts to $143 million, as shown in the table below:

Net exposure after currency risk management on debt in foreign currencies contracted on financial markets

(millions of dollars)

	Equivalent in Canadian dollars
			Foreign exchange risk management
	Debts (nominal value)		Derivative financial instruments (nominal value)			Sinking funds relating to borrowings			Sub-total			Net exposure
In US dollars		27 504		(25 416	)		(2 047	)		(27 463	)		41
In euros		29 531		(27 949	)		(1 480	)		(29 429	)		102
Other currencies		5 829		(5 829	)					(5 829	)		—
		62 864		(59 194	)		(3 527	)		(62 721	)		143

Interest rate risk

To manage its exposure to interest rate risk, the government uses interest rate swap contracts or other types of derivative financial instruments. Interest rate swap contracts make it possible to exchange payments of interest at variable rates for payments of interest at fixed rates, or vice versa, on the basis of a reference par value.

After taking into account derivative financial instruments used to manage interest rate risk and sinking funds relating to borrowings, debt contracted on financial markets consisted of 83% fixed-rate debt and 17% variable-rate debt as at March 31, 2023 (82% at fixed interest rates and 18% at variable interest rates as at March 31, 2022). Fixed-rate debt is debt that will not mature or change interest rate during the next fiscal year.

Sinking funds relating to borrowings

Payments to sinking funds relating to borrowings arise from commitments made by the government to repay its debts. These funds are attached to $106 484 million of debt ($99 266 million as at March 31, 2022).

CONSOLIDATED FINANCIAL STATEMENTS 161

18. Debts (cont’d)

Balance of sinking funds relating to borrowings

(millions of dollars)

	As at March 31
	2023		2022
	Equivalent in Canadian dollars
Assets
Investments(1)
Treasury bills		9 172		6 871
Bonds and notes(2),(3)		9 419		11 785
Other				8
		18 591		18 664
Securities purchased under reverse repurchase agreements		7 407		8 478
Accrued interest and other assets(2)		59		202
		26 057		27 344
Liabilities
Securities sold under repurchase agreements		5 121		6 401
Obligations to deliver securities		2 623		2 588
Other		64
		7 808		8 989
Funds balance		18 249		18 355

(1) As at March 31, 2023, the price of securities quoted in an active market was $18 351 M and their book value was $18 591 M.

(2) The government also held $13 358 M ($13 831 M as at March 31, 2022) of its own securities in bonds and notes and $128 M ($99 M as at March 31, 2022) in accrued interest on these securities. These items are offset against the corresponding debts.

(3) As part of its operations related to risk management, the government gives as security financial securities. The government has given investment securities whose book value was $217 M ($51 M as at March 31, 2022).

162 PUBLIC ACCOUNTS 2022-2023

18. Debts (cont’d)

Change in the balance of sinking funds relating to borrowings

(millions of dollars)

	Fiscal year ended March 31
	2023			2022
		Equivalent in Canadian dollars
Opening balance already established before offsetting securities held in treasury		32 285			31 057
Accounting change (Note 3)		(151	)
Adjusted opening balance before offsetting securities held in treasury		32 134			31 057
Payments from the general fund of the Consolidated Revenue Fund and from other entities included in the government’s reporting entity		3 586			3 901
Net losses on investment		(637	)		(173	)
Net remeasurement gains		243
		35 326			34 785
Sums used to repay debts		(3 591	)		(2 500	)
Balance before offsetting securities held in treasury		31 735			32 285
Less:
Securities held in treasury		13 486			13 930
Closing balance		18 249			18 355

Risks management of sinking funds relating to borrowings

Risk management is carried out on assets and liabilities held in sinking funds relating to borrowings, including those whose securities are held in treasury.

CONSOLIDATED FINANCIAL STATEMENTS 163

18. Debts (cont’d)

Credit and liquidity risks

The credit risk associated with investments held in sinking funds relating to borrowings is limited, due to compliance with the management framework that limits the risks associated with government investments. This framework includes criteria such as the minimum credit rating required for the selection of authorized issuers, which are mainly financial institutions and governments.

The credit and liquidity risks associated with reverse repurchase and repurchase agreement transactions are low, since the government has adopted a management policy specific to these financial instruments, which enables it to limit potential losses. Under this policy, agreements are signed with counterparties, providing for the exchange of guarantees based on the net position related to these transactions.

After taking into account derivative financial instruments held for currency risk management purposes and assets held in sinking funds, the debt repayment schedule is as follows:

Debt repayment schedule after effect of derivative financial instruments and amounts accumulated in sinking funds relating to borrowings

(millions of dollars)

	Equivalent in Canadian dollars
	Debts contracted on financial markets after taking into account derivative financial instruments (nominal value)
Maturing on March 31	Canadian dollars		US dollars		Euros		Other currencies		Sub-total			Sinking funds relating to borrowings			Total
2024		24 512		84		1 465				26 061			(5 188	)		20 873
2025		20 943								20 943			(6 205	)		14 738
2026		19 610		377						19 987			(3 034	)		16 953
2027		17 138		303						17 441			(3 152	)		14 289
2028		12 424		138						12 562			(1 355	)		11 207
		94 627		902		1 465		–		96 994			(18 934	)		78 060
2029-2033		76 681		1 186		77				77 944			(9 483	)		68 461
2034-2038		9 337				40				9 377			–			9 377
2039-2043		15 291								15 291			(562	)		14 729
2044-2048		18 002								18 002			(1 399	)		16 603
2049 and thereafter		46 759								46 759			(1 357	)		45 402
		260 697		2 088		1 582		–		264 367	(1)		(31 735	)		232 632

(1) The repayment schedule for debt contracted on financial markets is based on the nominal value of the debt provided for in the contracts, and takes into account the effect of derivative financial instruments. This basis differs from the book value of $268 505 M, as transaction costs, discounts and premiums of $2 701 M are not included in the nominal value, while the net effect of downward derivative financial instruments of $1 437 M is not included in the book value.

164 PUBLIC ACCOUNTS 2022-2023

▌ 19. Fixed assets

Significant accounting policies

Fixed assets

Fixed assets are recognized at cost and depreciated except for land—which is not depreciated—on a straight-line basis over a period corresponding to their useful life. Their cost includes financing charges capitalized during their construction, improvement, development as well as asset retirement costs, where applicable. Fixed assets under construction, development or improvement are not depreciated.

The cost of works of art and historic properties, such as paintings, sculptures, drawings, prints, photographs, films and videos is not recognized as fixed asset, but as expenditure in the fiscal year during which they are acquired.

Fixed assets acquired through government transfer or through donation, including those acquired for a nominal value, are recognized at their fair value at the time of acquisition.

Land in the public domain and natural resources, such as forests, water and mining resources, which the government holds by virtue of the fact that they were devolved to the state and not purchased, are not recorded in the government’s consolidated financial statements. Intangible items do not constitute non-financial assets for the government.

Fixed assets held under capital leases

The cost of fixed assets held under capital leases is equal to the present value of minimum payments due for the rental of such assets, without exceeding the fair value of the leased asset.

Fixed assets acquired under private-public partnership agreements

Some fixed assets are acquired under private-public partnership agreements. These agreements constitute long-term contracts by which the government involves one or more private partners in designing, building, maintaining and operating a public good, with or without funding from these partners. The fixed asset and the debt associated with it are recognized when the risks and advantages associated with the ownership of the public good are devolved to the government, for the most part, in accordance with the terms of the agreement concerned.

The cost of a fixed asset acquired under a private-public partnership agreement is equal to the lower of the present value of the cash flows associated with the fixed asset and the fixed asset’s fair value. If the cash flows associated with the fixed asset cannot be isolated from those related to its operation, the cost of the asset is determined on the basis of its fair value. The fair value of the fixed asset is estimated on the basis of the agreement’s specifications.

CONSOLIDATED FINANCIAL STATEMENTS 165

19. Fixed assets (cont’d)

Categories	Useful life
Buildings (Institutional and operational buildings, leasehold improvements, etc.)	10 to 50 years(1)
Facilities (Organization and development of natural spaces: land, parks, forests, watercourses, etc.)	5 to 20 years
Complex networks (Road, maritime and air transportation infrastructures, natural resource development networks, dams and other large structures, etc.)	10 to 60 years
Equipment (Transport vehicles, machinery, office furniture and equipment, specialized medical, educational, scientific and industrial equipment, etc.)	3 to 30 years
Data processing and office automation equipment (Computers, printers and other peripheral devices, software, telecommunication, radiocommunication and information processing equipment, etc.)	3 to 10 years
Development of data processing systems (Design, production and implementation of data processing systems, including equipment and software acquired for this purpose)	5 to 10 years

(1) Asset retirement costs capitalized in the buildings category are amortized over a period of up to 125 years.

166 PUBLIC ACCOUNTS 2022-2023

19. Fixed assets (cont’d)

Change in fixed assets by category

(millions of dollars)

																Data processing and office			Development of data
										Complex						automation			processing
	Land			Buildings			Facilities			networks			Equipment			equipment			systems			Total
COST
Previously established opening balance		2 973			70 312			2 410			49 714			13 390			3 759			6 202			148 760
Accounting changes (Note 3)					1 928			2						3									1 933
Restated opening balance		2 973			72 240			2 412			49 714			13 393			3 759			6 202			150 693
Acquisitions		163			774			22			34			862			483			86			2 424
Work in progress					5 808			271			2 725			120			99			422			9 445
Impact of disposals and reductions in value		(2	)		(141	)		(7	)		(562	)		(373	)		(289	)		(118	)		(1 492	)
Restatements and other adjustments		2			(371	)					(17	)		8			13						(365	)(1)
Closing balance		3 136			78 310			2 698			51 894			14 010			4 065			6 592			160 705
ACCUMULATED DEPRECIATION
Previously established opening balance		—			27 759			928			20 198			8 554			2 692			4 145			64 276
Accounting changes (Note 3)					1 113			2						3									1 118
Restated opening balance		—			28 872			930			20 198			8 557			2 692			4 145			65 394
Depreciation expenses					1 717			113			1 457			779			508			306			4 880
Impact of disposals					(124	)		(3	)		(553	)		(350	)		(280	)		(113	)		(1 423	)
Restatements and other adjustments					55																		55
Closing balance		—			30 520			1 040			21 102			8 986			2 920			4 338			68 906
Net book value as at March 31, 2023		3 136			47 790			1 658			30 792			5 024			1 145			2 254			91 799
Net book value (restated – Note 3) as at March 31, 2022		2 973			43 368			1 482			29 516			4 836			1 067			2 057			85 299

(1) Restatements and other adjustments include $420 M in downward adjustments to the cost of fixed assets arising from revised estimates of asset retirement obligations (Note 15). These adjustments mainly concern buildings.

CONSOLIDATED FINANCIAL STATEMENTS 167

19. Fixed assets (cont’d)

Fixed assets rented under capital leases
(millions of dollars)

	Buildings		Equipment		Other		Total
Cost		502		54		14		570
Accumulated depreciation		98		9		10		117
Net book value as at March 31, 2023		404		45		4		453
Net book value as at March 31, 2022		263		5		6		274

Fixed assets acquired under private-public partnership agreements

(millions of dollars)

	Buildings		Facilities		Complex networks		Equipment		Total
Cost		5 411		197		2 303		152		8 063
Accumulated depreciation(1)		750		60		612		74		1 496
Net book value as at March 31, 2023		4 661		137		1 691		78		6 567
Net book value as at March 31, 2022		4 764		147		1 749		88		6 748

(1) The depreciation expense for these fixed assets was $189 M ($188 M in 2021-2022).

Fixed assets under construction, development or improvements (work in progress)

(millions of dollars)

	Buildings		Facilities		Complex networks		Equipment		Data processing and office automation equipment		Development of data processing systems		Total
Cost as at March 31, 2023		9 332		336		621		163		113		630		11 195
Cost as at March 31, 2022		6 396		248		398		92		114		889		8 137

Note:  No depreciation expense was recorded for these fixed assets in 2022-2023 and 2021-2022.

168 PUBLIC ACCOUNTS 2022-2023

▌ 20. Other non-financial assets

Significant accounting policy

Inventories

Inventories are recognized at the lower of cost and net realizable value.

Detail of the other non-financial assets
(millions of dollars)

	As at March 31
	2023		2022
Inventories		1 422		2 064
Prepaid expenses		612		468
		2 034		2 532

▌ 21. Contractual obligations and contractual rights

Significant accounting policies

A contractual obligation is presented when all of the following conditions are met:

¾  there is a legally enforceable written document dated March 31 giving the other party the power to take the matter to court for enforcement;

¾  this written document leads to the loss of discretionary power, that is, the government is likely to have little or no opportunity to amend the written terms and conditions or withdraw from them on its own initiative and therefore has no other realistic alternative than to settle the obligation when the transaction or event occurs;

¾  the government will have to sacrifice economic resources in the future to settle the obligation;

¾  the transaction or event giving rise to the obligation or right has not yet occurred.

A contractual right is disclosed under the same circumstances, that is, when there is a legally enforceable written document as at March 31 depriving the other party of discretionary power and will lead to an inflow of economic resources for the government when the transaction or event occurs.

Contractual obligations or rights stemming from agreements of indeterminate length are calculated and presented over a six-year period: each of the first five years of the agreements and an additional year for the balance. Contractual obligations resulting from agreements where the amounts are paid in perpetuity are spread over 30 years.

CONSOLIDATED FINANCIAL STATEMENTS 169

21. Contractual obligations and contractual rights (cont’d)

Contractual obligations by expenditure and investment category
(millions of dollars) 

	Expenditures										Investments
	Transfers				Operating
Maturing on March 31	Capital		Agreements concerning non-capital expenditures		Operating leases		Procurement of goods and services (1)		Other		Acquisitions of fixed assets		Loan and investment pledges		Total
2024		2 953		5 889		723		6 729		843		8 248		2 020		27 405
2025		1 527		1 862		574		3 836		565		2 512		796		11 672
2026		1 867		860		474		2 705		518		1 409		485		8 318
2027		2 024		676		406		2 089		102		811		110		6 218
2028		979		456		350		1 812				482		38		4 117
		9 350		9 743		2 527		17 171		2 028		13 462		3 449		57 730
2029 and thereafter		11 300		5 325		1 682		15 836				389		187		34 719
		20 650		15 068		4 209		33 007		2 028		13 851		3 636		92 449
No fixed maturity date														967		967
		20 650		15 068		4 209		33 007		2 028		13 851		4 603		93 416

(1) Contractual obligations related to the procurement of goods and services included an amount of $7 143 M stemming from private-public partnership agreements.

Contractual rights by revenue source

(millions of dollars) 

Maturing on March 31	Natural resources		Sales of goods and services		Transfers from federal government		Other		Total
2024		369		402		7 393		226		8 390
2025		127		276		5 914		78		6 395
2026		55		268		6 921		51		7 295
2027		53		253		5 494		16		5 816
2028		53		257		4 113		15		4 438
		657		1 456		29 835		386		32 334
2029 and thereafter		96		448		4 993		152		5 689
		753		1 904		34 828		538		38 023

170 PUBLIC ACCOUNTS 2022-2023

▌ 22. Contingencies

Significant accounting policies

Contingent liabilities

Obligations stemming from lawsuits and disputes are recognized as liabilities when a future event is likely to confirm the existence of a liability as at the date of the financial statements and a reasonable estimate of the loss can be made. If it is impossible to determine the probability of the event occurring, or if the event is likely to occur but no reasonable estimate can be made, a contingent liability is presented in an additional note.

The accounting policies used for contingent liabilities relating to environmental liabilites and allowances for losses from guaranteed financial initiatives are presented in Note 13 on accounts payable, accrued expenses and other allowances and in Note 15 on environmental liability and asset retirement obligations, respectively.

Material measurement uncertainty

Contingent liabilities may vary based on the assumptions made to determine the likelihood that an existing situation will be resolved as at the date of the financial statements and the assumptions made to estimate the value of contingent liabilities. Among the assumptions used are past experience, current negotiations, recent settlements and court rulings.

Those forecasts may vary widely in the coming year. Since the disclosure of information could negatively affect the outcomes of lawsuits and disputes, information as to the amounts and extent of related uncertainties is not provided.

The measurement uncertainty with respect to the allowance for losses on guaranteed financial initiatives and environmental liability is presented in Note 13 on accounts payable, accrued expenses and other allowances and in Note 15 on environmental liability and asset retirement obligations, respectively.

CONSOLIDATED FINANCIAL STATEMENTS 171

22. Contingencies (cont’d)

Contingent liabilities

Legal proceedings and disputes

A number of claims have been instituted against the government, which is also involved in legal proceedings before the courts. These different disputes result from breaches of contract and damages suffered by individuals or property. In some cases, the amounts claimed are mentioned, in others, no mention is made of them. Claims for which an amount has been established total $4 862 million, after deducting the allowances taken by the government in this regard.

Some of Québec’s Indigenous communities have instituted legal proceedings involving $10 051 million in damages and interest against the government for land claims, the recognition of certain ancestral rights and other related questions. These proceedings are at different stages (some proceedings being currently suspended or inactive) and should eventually be resolved through negotiations, rulings or the abandonment of proceedings by applicants.

Since the outcome of these legal proceedings and disputes is uncertain, the government cannot determine its potential losses.

With regards to the application of the Pay Equity Act (CQLR, chapter E-12.001), the government makes a provision for a job class when it is likely that this job class will benefit from a salary adjustment as a result of a pay equity audit or a complaint and it can reasonably estimate the amount it will have to pay. In this regard, the government is subject to complaints by some of its employees and some of the unions representing them, particularly within the framework of pay equity audits conducted in 2010 and 2015 for the parapublic sector plan. With regards to the 2020 evaluation of pay equity maintenance, the exercise should be completed during the next fiscal year. The estimation method used to value the liability includes the assumptions deemed most probable by the government.

172 PUBLIC ACCOUNTS 2022-2023

▌ 23. Cash flow information

Items not affecting cash flow

(millions of dollars)

	Fiscal year ended March 31
	2023					2022
						(restated – Note 3)
Doubtful accounts				534					419
Allowances related to loans, investments  and guaranteed financial initiatives				306					(3	)
Reinvestment of the income from Generations Fund investments				(283	)				(484	)
Revenue from government enterprises				(6 620	)				(5 960	)
Losses (gains) on the disposal of assets				1 457					604
Adjustment of debts to the effective interest rate				208					199
Loss in value of assets other than temporary				604					56
Amortization of deferred revenue related to the  acquisition of fixed assets				(252	)				(258	)
Activities related to pension plans and other employee future benefits
Cost of accrued benefits(1)		3 422					3 182
Changes to plans		7					(77	)
Amortization of actuarial losses		750					619
Interest on obligations relating to accrued benefits		7 650					7 331
Change in valuation allowances		112					115
		11 941					11 170
Reinvestment of revenue from fund’s investments		(7 262	)	4 679			(6 761	)	4 409
Depreciation of fixed assets				4 880					4 617
Accretion expenses and others on asset  retirement obligations				218					191
Revision of the estimates and others related to environmental liability				363					30
Other items not affecting cash flow				(126	)				46
				5 968					3 866

(1) This item includes compensations paid by the government into the contribution funds of participants in the government and Public Employees Retirement Plan (RREGOP) and the Pension Plan of Management Personnel (PPMP).

CONSOLIDATED FINANCIAL STATEMENTS 173

23. Cash flow information (cont’d)

Change in assets and liabilities related to operations

(millions of dollars)

	Fiscal year ended March 31
	2023			2022
Assets
Accounts receivable		(2 246	)		(2 185	)
Generations Fund – accounts receivable		3			(8	)
Other financial assets		538			(564	)
Other non-financial assets		92			(426	)
		(1 613	)		(3 183	)
Liabilities
Accounts payable, accrued expenses and other allowances		1 339			5 868
Deferred revenue		287			1 369
Environmental liabilities		(48	)		(57	)
		1 578			7 180
		(35	)		3 997

Additional information

(millions of dollars)

	Fiscal year ended March 31
	2023			2022
Interest paid		8 850			7 645
Dividends receivable from government enterprises		617			447
Fixed asset acquisition included in accounts payable and accrued expenses		(1 746	)		(1 572	)

▌ 24. Related party information

The government is a related party to its key management personnel, their close relatives and entities for which one or more of those people have the power to guide financial and administrative decisions. The government’s main management personnel are ministers, deputy ministers, and presidents and executive directors or their equivalent.

The government concluded no significant transactions with related parties during fiscal 2022-2023, for amounts different from those that would have been established between non-related parties.

174 PUBLIC ACCOUNTS 2022-2023

Appendix 1

Reporting entity by portfolios

The government sets up programs administered directly by government entities, including departments and agencies. All entities under the responsibility of a minister constitute a portfolio. The National Assembly and persons appointed by it also constitute portfolios. This appendix reflects the changes made to the reporting entity as a result of the fall 2022 cabinet reshuffle.

National Assembly

National Assembly

Persons Appointed by the National Assembly

Auditor General

Chief Electoral Officer

French language Commissioner

Lobbyists Commissioner

Public Protector

The Ethics Commissioner

Affaires municipales et Habitation

Department and budget-funded bodies

Affaires municipales et Habitation

Administrative Housing Tribunal

Commission municipale du Québec

Non-budget-funded body

Société d’habitation du Québec

Special fund

Regions and Rurality Fund

Agriculture, Pêcheries et Alimentation

Department and budget-funded bodies

Agriculture, Pêcheries et Alimentation

Commission de protection du territoire agricole du Québec

Régie des marchés agricoles et alimentaires du Québec

Non-budget-funded bodies

Institut de technologie agroalimentaire du Québec (June 30)

La Financière agricole du Québec

Government enterprise¹

Capital Financière agricole inc.

Conseil du trésor et Administration gouvernementale

Department and budget-funded body

Conseil du trésor et Administration gouvernementale

Commission de la fonction publique

CONSOLIDATED FINANCIAL STATEMENTS 175

Appendix 1

Reporting entity by portfolios (cont’d)

Conseil du trésor et Administration gouvernementale (cont’d)

Non-budget-funded bodies

Autorité des marchés publics

Centre d’acquisitions gouvernementales

Commission de la capitale nationale du Québec

Office des professions du Québec

Société québécoise des infrastructures

Special fund

Capitale-Nationale Region Fund

Conseil exécutif

Department and budget-funded body

Conseil exécutif

Commission d’accès à l’information

Non-budget-funded body

Centre de la francophonie des Amériques

Culture et Communications

Department and budget-funded body

Culture et Communications

Conseil du patrimoine culturel du Québec

Non-budget-funded bodies

Bibliothèque et Archives nationales du Québec

Conseil des arts et des lettres du Québec

Conservatoire de musique et d’art dramatique du Québec (June 30)

Musée d’art contemporain de Montréal

Musée de la Civilisation

Musée national des beaux-arts du Québec

Société de développement des entreprises culturelles

Société de la Place des Arts de Montréal

Société de télédiffusion du Québec (Télé-Québec)

Société du Grand Théâtre de Québec (August 31)

Special funds

Avenir Mécénat Culture Fund

Québec Cultural Heritage Fund

Cybersécurité et Numérique

Department

Cybersécurité et Numérique

Special fund

Cybersecurity and Digital Technology Fund

176 PUBLIC ACCOUNTS 2022-2023

Appendix 1

Reporting entity by portfolios (cont’d)

Économie, Innovation et Énergie

Department and budget-funded body

Économie et Innovation

Commission de l’éthique en science et en technologie

Non-budget-funded bodies

Fonds de recherche du Québec–Nature et technologies – Québec Research Fund–Nature and Technology

Fonds de recherche du Québec–Santé – Québec Research Fund–Health

Fonds de recherche du Québec–Société et culture – Québec Research Fund–Society and Culture

Régie de l’énergie

Société portuaire du Bas-Saint-Laurent et de la Gaspésie inc.

Special funds

Economic Development Fund

Natural Resources and Energy Capital Fund

Natural Resources Fund (fossil energy management component)²

Québec Enterprise Growth Fund

Government enterprises¹

Fonds d’investissement Eurêka S.E.C.

Hydro-Québec³ (December 31)

Investissement Québec³

Société du parc industriel et portuaire de Bécancour³

Éducation

Department and budget-funded bodies

Éducation

Commission consultative de l’enseignement privé

Conseil supérieur de l’éducation

Non-budget-funded bodies

Institut national des mines

Société des établissements de plein air du Québec

Société des parcs de sciences naturelles du Québec

Special fund

Sports and Physical Activity Development Fund

Organizations in the government’s education network – School service centres⁴

Centre de services scolaire au Coeur-des-Vallées

Centre de services scolaire de Charlevoix

Centre de services scolaire de Kamouraska–Rivière-du-Loup

Centre de services scolaire de la Baie-James

Centre de services scolaire de la Beauce-Etchemin

Centre de services scolaire de la Capitale

Centre de services scolaire de la Côte-du-Sud

Centre de services scolaire De La Jonquière

Centre de services scolaire de la Moyenne-Côte-Nord

CONSOLIDATED FINANCIAL STATEMENTS 177

Appendix 1

Reporting entity by portfolios (cont’d)

Éducation (cont’d)

Organizations in the government’s education network – School service centres⁴ (cont’d)

Centre de services scolaire de la Pointe-de-l’Île

Centre de services scolaire de la Région-de-Sherbrooke

Centre de services scolaire de la Riveraine

Centre de services scolaire de la Rivière-du-Nord

Centre de services scolaire de Laval

Centre de services scolaire de la Vallée-des-Tisserands

Centre de services scolaire de l’Énergie

Centre de services scolaire de l’Estuaire

Centre de services scolaire de l’Or-et-des-Bois

Centre de services scolaire de Montréal

Centre de services scolaire de Portneuf

Centre de services scolaire de Rouyn-Noranda

Centre de services scolaire des Affluents

Centre de services scolaire de Saint-Hyacinthe

Centre de services scolaire des Appalaches

Centre de services scolaire des Bois-Francs

Centre de services scolaire des Chênes

Centre de services scolaire des Chic-Chocs

Centre de services scolaire des Découvreurs

Centre de services scolaire des Draveurs

Centre de services scolaire des Grandes-Seigneuries

Centre de services scolaire des Hautes-Laurentides

Centre de services scolaire des Hautes-Rivières

Centre de services scolaire des Hauts-Bois-de-l’Outaouais

Centre de services scolaire des Hauts-Cantons

Centre de services scolaire des Îles

Centre de services scolaire des Laurentides

Centre de services scolaire des Mille-Îles

Centre de services scolaire des Monts-et-Marées

Centre de services scolaire des Navigateurs

Centre de services scolaire de Sorel-Tracy

Centre de services scolaire des Patriotes

Centre de services scolaire des Phares

Centre de services scolaire des Portages-de-l’Outaouais

Centre de services scolaire des Premières-Seigneuries

Centre de services scolaire des Rives-du-Saguenay

Centre de services scolaire des Samares

Centre de services scolaire des Sommets

Centre de services scolaire des Trois-Lacs

Centre de services scolaire du Chemin-du-Roy

Centre de services scolaire du Fer

Centre de services scolaire du Fleuve-et-des-Lacs

Centre de services scolaire du Lac-Abitibi
 

178 PUBLIC ACCOUNTS 2022-2023

Appendix 1

Reporting entity by portfolios (cont’d)

Éducation (cont’d)

Organizations in the government’s education network – School service centres⁴ (cont’d)

Centre de services scolaire du Lac-Saint-Jean

Centre de services scolaire du Lac-Témiscamingue

Centre de services scolaire du Littoral

Centre de services scolaire du Pays-des-Bleuets

Centre de services scolaire du Val-des-Cerfs

Centre de services scolaire Harricana

Centre de services scolaire Marguerite-Bourgeoys

Centre de services scolaire Marie-Victorin

Centre de services scolaire René-Lévesque

Organizations in the government’s education network – School boards⁴

Commission scolaire Central Québec – Central Québec School Board

Commission scolaire crie – Cree School Board

Commission scolaire Eastern Shores – Eastern Shores School Board

Commission scolaire Eastern Townships – Eastern Townships School Board

Commission scolaire English-Montréal – English Montreal School Board

Commission scolaire Kativik – Kativik School Board

Commission scolaire Lester-B.-Pearson – Lester B. Pearson School Board

Commission scolaire New Frontiers – New Frontiers School Board

Commission scolaire Riverside – Riverside School Board

Commission scolaire Sir-Wilfrid-Laurier – Sir Wilfrid Laurier School Board

Commission scolaire Western Québec – Western Québec School Board

Comité de gestion de la taxe scolaire de l’île de Montréal

Emploi et Solidarité sociale

Department and budget-funded bodies

Emploi et Solidarité sociale

Commission des partenaires du marché du travail

Non-budget-funded body

Office de la sécurité économique des chasseurs cris – Cree Hunters Economic Security Board (June 30)

Special funds

Assistance Fund for Independent Community Action

Goods and Services Fund

Information Technology Fund of the Ministère de l’Emploi et de la Solidarité sociale

Labour Market Development Fund

Québec Fund for Social Initiatives

Enseignement supérieur

Department and budget-funded bodies

Enseignement supérieur

Comité consultatif sur l’accessibilité financière aux études

Commission d’évaluation de l’enseignement collégial

CONSOLIDATED FINANCIAL STATEMENTS 179

Appendix 1

Reporting entity by portfolios (cont’d)

Enseignement supérieur (cont’d)

Non-budget-funded body

Institut de tourisme et d’hôtellerie du Québec (June 30)

Special fund

University Excellence and Performance Fund

Organizations in the government’s higher education network – General and vocational colleges (CEGEPs)⁴

Cégep André-Laurendeau

Cégep Beauce-Appalaches

Cégep d’Ahuntsic

Cégep de Baie-Comeau

Cégep de Bois-de-Boulogne

Cégep de Chicoutimi

Cégep de Drummondville

Cégep de Granby

Cégep de Jonquière

Cégep de l’Abitibi-Témiscamingue

Cégep de la Gaspésie et des Îles

Cégep de La Pocatière

Cégep de Lévis

Cégep de l’Outaouais

Cégep de Maisonneuve

Cégep de Matane

Cégep de Rimouski

Cégep de Rivière-du-Loup

Cégep de Rosemont

Cégep de Sainte-Foy

Cégep de Saint-Félicien

Cégep de Saint-Hyacinthe

Cégep de Saint-Jérôme

Cégep de Saint-Laurent

Cégep de Sept-Îles

Cégep de Shawinigan

Cégep de Sherbrooke

Cégep de Sorel-Tracy

Cégep de Thetford

Cégep de Trois-Rivières

Cégep de Valleyfield

Cégep de Victoriaville

Cégep du Vieux Montréal

Cégep Édouard-Montpetit

Cégep François-Xavier Garneau

Cégep Gérald-Godin

Cégep Limoilou

Cégep Lionel-Groulx

180 PUBLIC ACCOUNTS 2022-2023

Appendix 1

Reporting entity by portfolios (cont’d)

Enseignement supérieur (cont’d)

Organizations in the government’s higher education network – General and vocational colleges (CEGEPs)⁴ (cont’d)

Cégep Marie-Victorin

Cégep Montmorency

Cégep régional Champlain – Champlain Regional College

Cégep régional de Lanaudière

Cégep Saint-Jean-sur-Richelieu

Collège d’Alma

Dawson College

Heritage College

John Abbott College

Vanier College of General and Vocational Education

Organizations in the government’s higher education network – Université du Québec and its constituent universities⁵

École de technologie supérieure

École nationale d’administration publique

Institut national de la recherche scientifique

Télé-université

Université du Québec

Université du Québec à Chicoutimi

Université du Québec à Montréal

Université du Québec à Rimouski

Université du Québec à Trois-Rivières

Université du Québec en Abitibi-Témiscamingue

Université du Québec en Outaouais

Environnement, Lutte contre les changements climatiques, Faune et Parcs

Department and budget-funded body

Environnement, Lutte contre les changements climatiques, Faune et Parcs

Bureau d’audiences publiques sur l’environnement

Non-budget-funded bodies

Fondation de la faune du Québec

Société québécoise de récupération et de recyclage

Special funds

Electrification and Climate Change Fund

Energy Transition, Innovation and Efficiency Fund

Fund for the Protection of the Environment and the Waters in the Domain of the State

Natural Resources Fund (Wildlife conservation and development component)²

Famille (cont’d)

Department and budget-funded body

Famille

Curateur public

CONSOLIDATED FINANCIAL STATEMENTS 181

Appendix 1

Reporting entity by portfolios (cont’d)

Famille

Special fund

Educational Childcare Services Fund

Finances

Department and budget-funded bodies

Finances⁶

Non-budget-funded bodies

Agence du revenu du Québec⁷

Autorité des marchés financiers

Financement-Québec

Institut de la statistique du Québec

Société de financement des infrastructures locales du Québec

Société nationale de l’amiante⁸

Special funds

Financing Fund

Financial Markets Administrative Tribunal (Fund of the)⁹

Fund to Combat Addiction

Generations Fund

Health Services Fund

IFC Montréal Fund

Northern Plan Fund

Special Contracts and Financial Assistance for Investment Fund

Tax Administration Fund

Government enterprises¹

Loto-Québec

Société des alcools du Québec (fiscal year ended on the last Saturday of March)

Société québécoise du cannabis (fiscal year ended on the last Saturday of March)

Immigration, Francisation et Intégration

Department

Immigration, Francisation et Intégration

Justice

Department and budget-funded bodies

Justice

Commission des droits de la personne et des droits de la jeunesse

Committee on the Remuneration of Criminal and Penal Prosecuting Attorneys

Committee on the remuneration of judges and justices of the peace

Conseil de la justice administrative

Conseil de la magistrature

Directeur des poursuites criminelles et pénales

Human Rights Tribunal

Office de la protection du consommateur

182 PUBLIC ACCOUNTS 2022-2023

Appendix 1

Reporting entity by portfolios (cont’d)

Justice (cont’d)

Non-budget-funded bodies

Commission des services juridiques

Fonds d’aide aux actions collectives

Société québécoise d’information juridique

Special funds

Access to Justice Fund

Administrative Tribunal of Québec (Fund of the)⁹

Fund dedicated to assistance for persons who are victims of criminal offences

Public Contracts Fund

Register Fund of the Ministère de la Justice

Langue française

Department and budget-funded bodies

Langue française

Commission de toponymie

Office québécois de la langue française

Relations internationales et Francophonie

Department and budget-funded body

Relations internationales et Francophonie

Conseil du statut de la femme

Non-budget-funded bodies

Office Québec-Monde pour la jeunesse

Ressources naturelles et Forêts

Department

Ressources naturelles et Forêts

Non-budget-funded bodies

Société de développement de la Baie-James (December 31)

Société du Plan Nord

Special funds

Natural Resources Fund (forestry, sustainable forest development, mining heritage and mining activity management components)²

Territorial Information Fund

Government enterprises¹

Société ferroviaire et portuaire de Pointe-Noire S.E.C.

Santé et Services sociaux

Department and budget-funded bodies

Santé et Services sociaux

Commissaire à la santé et au bien-être

Office des personnes handicapées du Québec

CONSOLIDATED FINANCIAL STATEMENTS 183

Appendix 1

Reporting entity by portfolios (cont’d)

Santé et Services sociaux (cont’d)

Non-budget-funded bodies

Corporation d’urgences-santé

Fonds de l’assurance médicaments – Prescription Drug Insurance Fund

Héma-Québec

Institut national de santé publique du Québec

Institut national d’excellence en santé et en services sociaux

Régie de l’assurance maladie du Québec

Special funds

Cannabis Prevention and Research Fund

Health and Social Services Information Resources Fund

Organizations in the government’s health and social services network – Integrated health and social services centres

Centre intégré de santé et de services sociaux de Chaudière-Appalaches

Centre intégré de santé et de services sociaux de l’Abitibi-Témiscamingue

Centre intégré de santé et de services sociaux de la Côte-Nord

Centre intégré de santé et de services sociaux de la Gaspésie

Centre intégré de santé et de services sociaux de la Montérégie-Centre

Centre intégré de santé et de services sociaux de la Montérégie-Est

Centre intégré de santé et de services sociaux de la Montérégie-Ouest

Centre intégré de santé et de services sociaux de Lanaudière

Centre intégré de santé et de services sociaux de Laval

Centre intégré de santé et de services sociaux de l’Outaouais

Centre intégré de santé et de services sociaux des Îles

Centre intégré de santé et de services sociaux des Laurentides

Centre intégré de santé et de services sociaux du Bas-Saint-Laurent

Centre intégré universitaire de santé et de services sociaux de la Capitale-Nationale

Centre intégré universitaire de santé et de services sociaux de la Mauricie-et-du-Centre- du-Québec

Centre intégré universitaire de santé et de services sociaux de l’Est-de-l’Île-de-Montréal

Centre intégré universitaire de santé et de services sociaux de l’Estrie – Centre hospitalier universitaire de Sherbrooke

Centre intégré universitaire de santé et de services sociaux de l’Ouest-de-l’Île-de-Montréal

Centre intégré universitaire de santé et de services sociaux du Centre-Ouest-de-l’Île-de-Montréal

Centre intégré universitaire de santé et de services sociaux du Centre-Sud-de-l’Île-de-Montréal

Centre intégré universitaire de santé et de services sociaux du Nord-de-l’Île-de-Montréal

Centre intégré universitaire de santé et de services sociaux du Saguenay–Lac-Saint-Jean

Organizations in the government’s health and social services network – other public institutions and regional authorities

Centre de santé Inuulitsivik – Inuulitsivik Health Centre

Centre de santé Tulattavik de l’Ungava – Ungava Tulattavik Health Centre

Centre hospitalier de l’Université de Montréal

Centre hospitalier universitaire Sainte-Justine

Centre régional de santé et de services sociaux de la Baie-James

184 PUBLIC ACCOUNTS 2022-2023

Appendix 1

Reporting entity by portfolios (cont’d)

Santé et Services sociaux (cont’d)

Organizations in the government’s health and social services network – other public institutions and regional authorities (cont’d)

Centre universitaire de santé McGill – McGill University Health Centre

CHU de Québec – Université Laval

CLSC Naskapi

Conseil cri de la santé et des services sociaux de la Baie-James – Cree Board of Health and Social Services of James Bay

Institut de cardiologie de Montréal

Institut national de psychiatrie légale Philippe-Pinel

Institut universitaire de cardiologie et de pneumologie de Québec – Université Laval

Régie régionale de la santé et des services sociaux du Nunavik – Nunavik Regional Board of Health and Social Services

Sécurité publique

Department and budget-funded bodies

Sécurité publique

Bureau des enquêtes indépendantes

Bureau du coroner

Comité de déontologie policière

Commissaire à la déontologie policière

Commissaire à la lutte contre la corruption

Commission québécoise des libérations conditionnelles

Régie des alcools, des courses et des jeux

Non-budget-funded bodies

École nationale de police du Québec (June 30)

École nationale des pompiers du Québec (June 30)

Special fund

Police Services Fund

Tourisme

Department

Tourisme

Non-budget-funded bodies

Société de développement et de mise en valeur du Parc olympique

Société du Centre des congrès de Québec

Société du Palais des congrès de Montréal

Special fund

Tourism Partnership Fund

Transports et Mobilité durable

Department and budget-funded body

Transports et Mobilité durable

Commission des transports du Québec

CONSOLIDATED FINANCIAL STATEMENTS 185

Appendix 1

Reporting entity by portfolios (cont’d)

Transports et Mobilité durable (cont’d)

Non-budget-funded bodies

Société de l’assurance automobile du Québec (December 31)

Société des Traversiers du Québec

Special funds

Air Service Fund

Highway Safety Fund

Land Transportation Network Fund

Rolling Stock Management Fund

Travail

Department

Travail

Non-budget-funded body

Régie du bâtiment du Québec

Special fund

Administrative Labour Tribunal (Fund of the)⁹

Note: When an entity’s fiscal year ends on a date other than March 31, the date is indicated in parentheses. For the purposes of consolidation in the government’s financial statements, interim data are then used for the period between the end of the fiscal year and March 31.

1. The government holds a 100% share of those enterprises, except for Capitale Financière agricole inc. where it holds 90.10%.

2. The Natural Resources Fund, established under the Act respecting the Ministère des Ressources naturelles et de la Faune (CQLR, chapter M-25.2), is composed of various components. Financial information on the fossil energy management component is presented in the Économie, Innovation et Énergie portfolio. Financial information for the wildlife conservation and development component is included in the Environnement, Lutte contre les changements climatiques, Faune et Parcs portfolio. Lastly, financial information for all other components is combined and presented in the Ressources naturelles et Forêts portfolio.

3. The Minister of Economy, Innovation and Energy is responsible for the application of the incorporating acts of Hydro-Québec, Investissement Québec and the Société du parc industriel et portuaire de Bécancour. However, their revenues are recognized in the Finances portfolio, since the shares of these government enterprises are held by the Minister of Finance.

4. The fiscal year of the school service centres, school boards and colleges ends on June 30. Interim data are used for the period between the end of their fiscal year and March 31.

5. The financial data of the Université du Québec and its constituent universities that were used for consolidation purposes cover the period from May 1, 2022 to April 30, 2023, the date on which their fiscal year ends. Operations and events relating to these entities that occurred between April 1 and 30, 2023 did not have a material financial impact on the government’s financial position and consolidated results.

6. In accordance with section 9 of the Executive Power Act (CQLR, chapter E-18), Order-in-Council 1689-2022 entrusts the functions and responsibilities of the Minister of Revenue to the Minister of Finance.

7. Transactions of the general fund of the Consolidated Revenue Fund related to the enforcement or administration of any statute under the responsibility of the Minister of Revenue are administered by the Agence du revenu du Québec.

8. The Société nationale de l’amiante has ceased its operations. Since June 1, 2016, this entity has been constituted as a legal person established in the public interest governed by the provisions of the Business Corporations Act (CQLR, chapter S-3.1.1).

9. The financial data for this special fund, which were used for consolidation purposes, also include those pertaining to the body financed by this fund.

186 PUBLIC ACCOUNTS 2022-2023

Appendix 2

Segment disclosures

Consolidated statement of revenue

(millions of dollars)

	Fiscal year ended March 31, 2023
	Income								Revenue
	and				Duties		Miscella-		from		Federal
	property		Consump-		and		neous		government		government
	taxes		tion taxes		permits		revenue		enterprises		transfers		Total
PORTFOLIOS
Assemblée nationale								7						7
Personnes désignées par l’Assemblée nationale								2						2
Affaires municipales et Habitation						6		285				596		887
Agriculture, Pêcheries et Alimentation						27		50				162		239
Conseil du trésor et Administration gouvernementale						1		142						143
Conseil exécutif								5				39		44
Culture et Communications				35		1		124				2		162
Cybersécurité et Numérique								37						37
Économie, Innovation et Énergie(1)						19		278				21		318
Éducation		1 113		90				1 309				422		2 934
Emploi et Solidarité sociale						37		182				954		1 173
Enseignement supérieur								948				243		1 191
Environnement, Lutte contre les changements climatiques, Faune et Parcs				36		1 589		109				118		1 852
Famille						24		3						27
Finances		63 408		24 146		1 840		2 095		6 581		24 058		122 128
Immigration, Francisation et Intégration						62		17				794		873
Justice						4		327				45		376
Langue française
Relations internationales et Francophonie								2				17		19
Ressources naturelles et Forêts						544		254		39		48		885
Santé et Services sociaux						2		4 731				1 091		5 824
Sécurité publique						28		454				35		517
Tourisme				149		2		104						255
Transports et Mobilité durable				2 141		1 467		533				92		4 233
Travail						88		85						173
Total revenue		64 521		26 597		5 741		12 083		6 620		28 737		144 299

(1) The Minister of Economy, Innovation and Energy is responsible for the application of the incorporating acts of Hydro-Québec, Investissement Québec and the Société du parc industriel et portuaire de Bécancour. However, their revenues are recognized in the Finances portfolio, since the shares of these government enterprises are held by the Minister of Finance.

CONSOLIDATED FINANCIAL STATEMENTS 187

Appendix 2

Segment disclosures (cont’d)

Consolidated statement of revenue (cont’d)

(millions of dollars)

	Fiscal year ended March 31, 2022
	Income and				Duties		Miscella-		Revenue from			Federal
	property		Consumption		and		neous		government			government
	taxes		taxes		permits		revenue		enterprises			transfers		Total
PORTFOLIOS
Assemblée nationale								4							4
Personnes désignées par l’Assemblée nationale
Affaires municipales et Habitation						5		266					619		890
Agriculture, Pêcheries et  Alimentation						27		36		(1	)		124		186
Conseil du trésor et Administration gouvernementale						1		119					2		122
Conseil exécutif								1					44		45
Culture et Communications				25		1		97					2		125
Cybersécurité et Numérique								28							28
Économie, Innovation et Énergie(1)						21		235					17		273
Éducation		1 076		90				1 086					327		2 579
Emploi et Solidarité sociale						38		113					1 078		1 229
Enseignement supérieur								787					214		1 001
Environnement, Lutte contre les changements climatiques, Faune et Parcs				12		1 624		40					75		1 751
Famille						22		2							24
Finances		61 252		22 295		2 264		1 798		5 950			24 357		117 916
Immigration, Francisation et Intégration						44		9					697		750
Justice						4		325					39		368
Langue française
Relations internationales et Francophonie								1					24		25
Ressources naturelles et Forêts						470		236		11			73		790
Santé et Services sociaux				9		3		4 454					1 291		5 757
Sécurité publique						25		404					25		454
Tourisme				91				32							123
Transports et Mobilité durable				2 075		1 426		552					176		4 229
Travail						82		80							162
Total revenue		62 328		24 597		6 057		10 705		5 960			29 184		138 831

(1) The Minister of Economy, Innovation and Energy is responsible for the application of the incorporating acts of Hydro-Québec, Investissement Québec and the Société du parc industriel et portuaire de Bécancour. However, their revenues are recognized in the Finances portfolio, since the shares of these government enterprises are held by the Minister of Finance.

188 PUBLIC ACCOUNTS 2022-2023

Appendix 2

Segment disclosures (cont’d)

Consolidated statement of expenditure

(millions of dollars)

	Fiscal year ended March 31, 2023
	Transfers		Remuneration		Operating		Doubtful accounts and other  allowances			Total
PORTFOLIOS
Assemblée nationale				119		47					166
Personnes désignées par l’Assemblée nationale		30		139		56					225
Affaires municipales et Habitation		4 624		117		176		11			4 928
Agriculture, Pêcheries et Alimentation		1 038		208		85		6			1 337
Conseil du trésor et Administration gouvernementale		68		863		195		1			1 127
Conseil exécutif		603		129		42					774
Culture et Communications		1 232		198		256		4			1 690
Cybersécurité et Numérique				63		109					172
Économie, Innovation et Énergie		2 744		83		179		199			3 205
Éducation		1 095		14 194		4 200		10			19 499
Emploi et Solidarité sociale		8 372		442		145		24			8 983
Enseignement supérieur		4 597		3 958		1 119		(19	)		9 655
Environnement, Lutte contre les changements climatiques, Faune et Parcs		1 083		293		293		4			1 673
Famille		7 627		117		91					7 835
Finances		1 263		1 215		542		345			3 365
Immigration, Francisation et Intégration		226		145		74					445
Justice		340		758		388		7			1 493
Langue française		12		28		6					46
Relations internationales et Francophonie		59		81		37					177
Ressources naturelles et Forêts		461		265		753		1			1 480
Santé et Services sociaux		8 168		36 490		14 627		121			59 406
Sécurité publique		192		1 584		614					2 390
Tourisme		324		64		143		1			532
Transports et Mobilité durable		2 699		708		3 035		9			6 451
Travail		19		135		35					189
Expenditure by portfolio		46 876		62 396		27 247		724			137 243
Debt service											10 058
Total expenditure											147 301

CONSOLIDATED FINANCIAL STATEMENTS 189

Appendix 2

Segment disclosures (cont’d)

Consolidated statement of expenditure (cont’d)

(millions of dollars)

	Fiscal year ended March 31, 2022 (restated — Note 3)
							Doubtful accounts
							and other
	Transfers		Remuneration		Operating		allowances			Total
PORTFOLIOS
Assemblée nationale				101		40					141
Personnes désignées par l’Assemblée nationale		13		80		24					117
Affaires municipales et Habitation		3 430		115		163		(167	)		3 541
Agriculture, Pêcheries et Alimentation		969		199		80		5			1 253
Conseil du trésor et Administration gouvernementale		51		843		231		1			1 126
Conseil exécutif		452		122		28					602
Culture et Communications		1 282		182		250		(2	)		1 712
Cybersécurité et Numérique				36		43					79
Économie, Innovation et Énergie		2 763		81		173		47			3 064
Éducation		1 016		12 836		3 548		5			17 405
Emploi et Solidarité sociale		7 811		410		140		24			8 385
Enseignement supérieur		4 095		3 675		981		(4	)		8 747
Environnement, Lutte contre les changements climatiques, Faune et Parcs		1 097		274		356		3			1 730
Famille		7 088		105		84					7 277
Finances		1 129		1 107		446		289			2 971
Immigration, Francisation et Intégration		146		132		61					339
Justice		266		715		357		15			1 353
Langue française		15		27		7					49
Relations internationales et Francophonie		94		72		28					194
Ressources naturelles et Forêts		344		260		542		(2	)		1 144
Santé et Services sociaux		6 626		35 969		13 996		77			56 668
Sécurité publique		127		1 465		483					2 075
Tourisme		242		56		103		1			402
Transports et Mobilité durable		3 500		677		2 832		8			7 017
Travail		24		126		31		1			182
Expenditure by portfolio		42 580		59 665		25 027		301			127 573
Debt service											8 640
Total expenditure											136 213

190 PUBLIC ACCOUNTS 2022-2023

Appendix 3

Properties and fiduciary transactions

Properties held and fiduciary activities are entrusted to a government department or body (the trustee) to administer in accordance with applicable contractual or legal provisions. The trustee holds and administers the property for the benefit of, and on behalf of, designated beneficiaries. The property entrusted to a trustee must be for a specific purpose defined by the donor. Properties held and fiduciary activities are not included in the reporting entity as they are not owned by the government.

Accounts under administration (December 31)

Under administration of the Curateur public

Account under administration of the Educational Childcare Services Fund

under administration of the Ministère de la Famille

Caisse de dépôt et placement du Québec (December 31)

Cautionnements individuels des agents de voyages

under administration of the Office de la protection du consommateur

Comité Entraide – public and parapublic sectors

under administration of the Ministère du Travail, de l’Emploi et de la Solidarité sociale

Commission de la construction du Québec (December 31)

Compensation regime for municipal bodies

under administration of the Société québécoise de récupération et de recyclage

Conseil de gestion de l’assurance parentale (December 31)

Fonds central de soutien à la réinsertion sociale (December 31)

under administration of the Ministère de la Sécurité publique

Fonds d’assurance automobile du Québec (December 31)

under administration of the Société de l’assurance automobile du Québec

Fonds d’assurance-garantie

under administration of the Régie des marchés agricoles et alimentaires du Québec

Fonds d’assurance-récolte

Fonds d’assurance-stabilisation des revenus agricoles

under administration of the La Financière agricole du Québec

Fonds des pensions alimentaires

under administration of the Agence du revenu du Québec

Fonds d’indemnisation des clients des agents de voyages

under administration of the Office de la protection du consommateur

Fonds d’indemnisation des services financiers

under administration of the Autorité des marchés financiers

CONSOLIDATED FINANCIAL STATEMENTS 191

Appendix 3

Properties and fiduciary transactions (cont’d)

Guarantee fund

under administration of the Régie du bâtiment du Québec

Parental Insurance Fund (December 31)

under administration of the Conseil de gestion de l’assurance parentale (December 31)

Retraite Québec (December 31)

Trust fund under administration of the Bureau général de dépôts pour le Québec

under administration of the Ministère des Finances

Unclaimed property (December 31)

under administration of the Agence du revenu du Québec

Workforce Skills Development and Recognition Fund

under administration of the Ministère du Travail, de l’Emploi et de la Solidarité sociale

Note: When a fiscal year ends on a date other than March 31, the date is indicated in parentheses.

192 PUBLIC ACCOUNTS 2022-2023

Appendix 4

Fiduciary transactions conducted by the government

Summary of properties held and fiduciary transactions administered for designated beneficiaries

(millions of dollars)

	As at March 31, 2023
	Assets			Liabilities		Net assets (liabilities)
Account under administration of the Educational Childcare Services Fund		3			3		—
Accounts under administration(1), under administration of the Curateur public		773			121		652
Caisse de dépöt et placement du Québec(1)		473 807			71 920		401 887	(2),(3)
Cautionnements individuels des agents de voyages		8	(2)		5		3
Comité Entraide – public and parapublic sectors		5			5		—
Commission de la construction du Québec
General administration fund(1)		328			195		133
Supplemental Pension Plan(1):
general account		3 445	(2)		1 816		1 629
complementary account		16 136	(2)		16 136		—
pensioners’ account		9 179	(2)		9 486		(307	)
Other funds(1)		2 762			1 821		941
Conseil de gestion de l’assurance parentale(1)		10			10		—
Parental Insurance Fund(1)		467	(2)		93		374
Fonds central de soutien å la réinsertion sociale(1)		2			2		—
Fonds d’assurance automobile du Québec(1)		13 455	(2)		9 368		4 087
Fonds d’assurance-garantie		12	(2)				12
Fonds d’assurance-récolte		292	(2)		15		277
Fonds d’assurance-stabilisation des revenus agricoles		9			117		(108	)
Fonds des pensions alimentaires		180			180		—
Fonds d’indemnisation des clients des agents de voyages		144	(2)		6		138
Fonds d’indemnisation des services financiers		117	(2)		30		87
Guaranty fund		36					36

CONSOLIDATED FINANCIAL STATEMENTS 193

Appendix 4

Fiduciary transactions conducted by the government (cont’d)

Summary of properties held and fiduciary transactions administered for designated beneficiaries (cont’d)

(millions of dollars)

	As at March 31, 2023
	Assets			Liabilities		Net assets (liabilities)
Retraite Québec(1)
Government pension plans – share paid by participants(1):
RREGOP		83 441	(2)		72 692		10 749
PPMP		11 174	(2)		9 383		1 791
PPPOCS		791	(2)		711		80
SPMSQ		882	(2)		792		90
Other pension plans administered by Retraite Québec(1)		428	(2)		342		86
Québec Pension Plan Fund(1)
Québec Pension Plan – Base plan		102 461	(2)		743		101 718
Québec Pension Plan – Additional plan		5 780	(2)		1		5 779
Trust fund under administration of the Bureau général de dépôts pour le Québec		1 218			1 218		—
Unclaimed property(1), under administration of the Agence du revenu du Québec		254			130		124
Workforce Skills Development and Recognition Fund		323			20		303

(1) The data are as at December 31, 2022, that is, the end date of the trust fund’s fiscal year.

(2) The funds of certain trusts are entrusted in whole or in part to the Caisse de dépôt et placement du Québec (the Caisse). The net assets of the Caisse, shown at fair value, included $245 098 M in funds entrusted to it by these trusts.

(3) The net assets of the Caisse include assets taken into account in the government’s consolidated financial statements, particularly those of the Retirement Plans Sinking Fund and the Generations Fund. The fair value of these assets was $138 633 M.

194 PUBLIC ACCOUNTS 2022-2023

GLOSSARY

Glossary

The following terms are used in the sections “Analysis of the consolidated financial statements” and “Consolidated financial statements” contained in this volume.

Accrual basis of accounting

The accrual basis of accounting is an accounting method that involves taking into account, in determining net results of the revenues earned and the expenditures incurred during a fiscal year, without considering the moment the transactions were settled through cash receipts or disbursements or in any other manner.

Advance borrowings

Advance borrowings are borrowings made by the general fund of the Consolidated Revenue Fund in a fiscal year to meet its financial requirements in the next fiscal year.

Budget balance

The budget balance and its calculation method are defined in the Balanced Budget Act (CQLR, chapter E-12.00001).

The budget balance measures the attainment of a balanced budget. For a given fiscal year, it is the result of the difference between the revenue and expenditure determined in accordance with the government’s accounting policies and taking into account the following adjustments:

· items not included in the budget balance:

i) the revenue and expenditure recorded in the Generations Fund,

ii) certain retroactive adjustments to revenue from government enterprises,

iii) for fiscal 2012-2013, the result arising from discontinued operations following the decision to close the Gentilly-2 nuclear generating station, presented in Hydro-Québec’s annual consolidated financial statements;

· items included in the budget balance:

i) entries charged directly to the accumulated deficit, except for those resulting from:

(1) the retroactive effect of any new CPA Canada standard or the years preceding the changeover year proposed by the CPA Canada,

(2) accounting changes resulting from the 2006-2007 accounting reform appearing in the public accounts.

Consolidated Revenue Fund

The Consolidated Revenue Fund consists of all money received or collected from various sources over which the Parliament of Québec has the power of appropriation. It comprises a general fund and special funds.

PUBLIC ACCOUNTS 2022-2023 197

Glossary (cont’d)

Contingency Fund

The Contingency Fund is a provision administered by the Conseil du trésor which is intended in particular to cover unforeseen expenses that may arise in any of the government programs during the fiscal year, as well as the cost of certain measures announced in the budget.

Cost-sharing plans

Cost-sharing pension plans are joint plans for which the government’s responsibility for payment of the benefits granted by the plan is limited to its share of the cost of benefits accrued by employees.

Cost-balance plans

Cost-balance pension plans are plans for which the government covers the total cost of accrued benefits, net of the contributions paid by employees and certain employers.

Debt representing accumulated deficits

The debt representing accumulated deficits consists of the accumulated operating deficits and accumulated remeasurement gains and losses.

Derivative financial instruments

Derivative financial instruments are instruments whose value fluctuates according to an underlying instrument (for example, an interest rate, a foreign exchange rate, an index or the price of a commodity) without requiring the holding or delivery of the underlying instrument itself.

Effective interest method

The effective interest method is used to establish the amortized cost of a financial asset or financial liability (or a group of financial assets or financial liabilities), and to allocate interest income or interest expense appropriately between the fiscal years. The effective interest rate takes into account transaction costs, discounts and premiums.

Fair value

Fair value is the amount of the consideration that would be agreed upon in an arm’s length transaction between knowledgeable, willing parties who are under no compulsion to act.

Financial assets

Financial assets represent assets that are used to repay existing debts or to finance future operations. They are not intended to be used to deliver public services.

Financial instruments

Financial instruments are any contracts that give rise to financial assets, such as investments and loans, and financial liabilities or equity instrument, such as debt, derivatives and equities.

198 PUBLIC ACCOUNTS 2022-2023

Glossary (cont’d)

Financial liabilities

Financial liabilities are liabilities corresponding to an obligation:

· to deliver cash or another financial asset;

· to exchange financial instruments under conditions that are potentially unfavorable to the government.

General fund

The general fund consists of money paid into the Consolidated Revenue Fund that has not been credited to a special fund under legislative provisions.

Generations Fund

Under the Act to reduce the debt and establish the Generations Fund (CQLR, chapter R-2.2.0.1), the Minister of Finance deposits the sums that make up this fund with the Caisse de dépôt et placement du Québec. These sums are used exclusively for repaying the government’s gross debt.

Government enterprises

A government enterprise has all of the following characteristics:

· it is a separate legal entity that has the authority to enter into contracts in its own name and to go before a court;

· it is vested with the financial and administrative power to carry out commercial activities;

· its main activity is the sale of goods or the delivery of services to individuals or to organizations not included in the government’s reporting entity;

· it may, during the normal course of its operations, pursue its activities and settle its debts using revenue from sources not included in the government’s reporting entity.

Gross debt

The gross debt corresponds to the sum of debts (before offsetting treasury securities), liabilities related to derivative financial instruments and the net liability regarding the pension plans and other employee future benefits. The balances of the Generations Fund, sinking funds relating to borrowings (before offsetting treasury securities), assets related to derivative financial instruments and advance borrowings are deducted from this sum.

Gross domestic product (GDP)

GDP is the value of all goods and services produced within the geographical limits of a country or a territory during a given calendar year.

Inventories

Inventories mainly consist of supplies and personal protective equipment (PPE) that are consumed in the normal course of operations during the coming fiscal years.

PUBLIC ACCOUNTS 2022-2023 199

Glossary (cont’d)

Liabilities

Liabilities are obligations of the government toward third parties on the consolidated financial statement date arising from past transactions or events, and whose fulfilment will give rise to an outflow of resources representative of economic benefits in the future.

Net debt

The net debt corresponds to the difference between the government’s financial assets and its liabilities. It consists of accumulated deficits and non-financial assets.

Non-budget-funded bodies

Non-budget-funded bodies depend in whole or in part on departments for their funding. However, non-budget-funded bodies have more autonomy than those funded by budgetary appropriations. Although non-budget-funded bodies also answer to a minister, the legislation grants their management more extensive funding and operating powers.

Non-financial assets

Non financial assets represent assets that are used in the normal course of the government’s activities to deliver public services.

Organizations in the government’s networks

The network bodies are part of three networks:

· the health and social services network includes integrated health and social services centres, as well as other public institutions and regional authorities;

· the education network includes school service centres and school boards;

· the higher education network includes general and vocational colleges (CEGEPs) and the Université du Québec and its constituent universities.

All of these organizations, which are funded largely through budgetary appropriations of their responsible department, are autonomous in regard to the delivery of public services. They are legal entities that are vested with the financial and administrative powers needed to provide public services. In addition, the government’s ability to dispose of their assets is subject to major restrictions.

Own-source revenue

Own-source revenue consists of revenue from income and property taxes, consumption taxes, duties and permits, miscellaneous sources and government enterprises.

200 PUBLIC ACCOUNTS 2022-2023

Glossary (cont’d)

Retirement Plans Sinking Fund (RPSF)

Under the Financial Administration Act (CQLR, chapter A-6.001), the Minister of Finance may make long-term investments by depositing money from the general fund of the Consolidated Revenue Fund with the Caisse de dépôt et placement du Québec, up to an amount equal to the sums recognized as the pension plans liability, in order to create a sinking fund to provide for the payment of all or part of the benefits awarded under these plans.

Revenue from duties and permits

Revenue from duties and permits arises from transactions with consideration for which the Government grants a third party, in exchange for liquid assets, a right of use or an operating permit or issues a third party a certificate.

Sinking Fund relating to government borrowings

Under the Financial Administration Act (CQLR, chapter A-6.001), the Minister of Finance may create a sinking fund to provide for the repayment of any borrowing that is part of the government’s debt. To that end, the Minister may, with the authorization of the government, take out of the general fund of the Consolidated Revenue Fund any sum the Minister pays into the sinking fund. In addition, prudential liquid assets are kept in the sinking fund to enable the government to fulfill its financial commitments in the event of major disruptions in financial markets.

Special fund

A special fund is a fund established by an Act to provide for certain financial commitments of a minister, a budget-funded body or a non-budget-funded body exercising an adjudicative function. Legislative provisions determine which sums paid into the Consolidated Revenue Fund must be credited to a special fund.

Specified purpose account

A specified purpose account is a financial management mechanism created by a government order in council under the Financial Administration Act (CQLR, chapter A-6.001). It allows a department or a budget-funded body to account in a distinct way for funds paid into the general fund of the Consolidated Revenue Fund by a third party under a contract or an agreement that provides for the allocation of the funds to a specific purpose.

Supercategories

Supercategories consist of the categories used to account for expenditures, other than that of the debt service.

Transfer

This supercategory includes expenditures that are paid out to provide beneficiaries with various forms of financial support. For the government, these expenditures do not constitute direct acquisitions of goods or services or funds granted for the purpose of obtaining a return, as in the case of an investment, or amounts for which it expects to be repaid at a later date, as in the case of loans.

PUBLIC ACCOUNTS 2022-2023 201

Glossary (cont’d)

Supercategories (cont’d)

Remuneration

This supercategory includes expenditures incurred for ordinary remuneration, overtime and certain other indemnities paid directly by the government to permanent and part-time employees and to casual employees, including students and seasonal employees. It also includes the remuneration of health professionals as well as salaries and allowances paid to members of the National Assembly, any person appointed or designated by the National Assembly to hold a public office and the personnel directed by that person, judges and members of the Sûreté du Québec. Lastly, it includes all benefits and other contributions paid by the government in its capacity as an employer, particularly, contributions to the pension plans, the Québec Pension Plan, the Québec Parental Insurance Plan and employment insurance.

Operating

This supercategory includes expenditures incurred in the course of administrative activities, apart from remuneration expenses, transfer expenses, doubtful accounts and other allowances, and debt service. In particular, it includes the estimated cost of reassessments and of the government’s new obligations regarding the remediation of contaminated sites, as well as the depreciation of fixed assets and accretion expenses.

Doubtful accounts and other allowances

This supercategory includes expenditures resulting from changes in the allowance for doubtful accounts, the allowance for losses on financial initiatives guaranteed by the government and the valuation allowance for loans, investments and advances.

Transfer expenditures

Transfers are economic benefits granted by a government to a recipient, for no consideration in goods or services and for which the government does not expect to be reimbursed at a later date or to obtain a direct financial return.

202 PUBLIC ACCOUNTS 2022-2023