This account describes the annual use of energy products by industry, governments, institutions and households. It covers the following energy sources: coal, natural gas, motor gasoline, diesel, aviation fuel, light fuel oil (including kerosene), heavy fuel oil, refinery fuel gas, coke oven gas, liquefied petroleum gases (including natural gas liquids), electricity, coke, steam, wood, and spent pulping liquor. The unit of measure is terajoules. Only uses of energy products for their energy content are published – the use of energy products as material inputs is not included in the energy use account (e.g. oil products used to produce plastics) but is available on request.

In general, energy surveys provide the data for large energy consumers. Where consumption data in physical units is not available, estimates are made based on expenditure data in the Input-Output Accounts.

Statistics Canada’s Report on Energy Supply-Demand in Canada (RESD) provides the control totals for the consumption of the fuel types. It also provides the basic data for producer consumption and non-energy use of fuels. Statistics Canada’s Industrial Consumption of Energy Survey provides detailed fuel consumption data for the manufacturing industries. This is combined with the RESD data to yield the estimates for manufacturing industries.

Data for mining, oil and gas extraction are benchmarked to the RESD totals with additional data added for energy transformation and producer consumption. Detailed fuel consumption data for the mining industries are taken from the Census of Mines produced by Natural Resources Canada.

Data for agriculture and construction are taken directly from the RESD and distributed across the various sub-industries according to the fuel expenditure data contained in the Input-Output Accounts.

Transportation surveys provide fuel consumption data for airlines. This covers international use of aviation fuel by Canadian carriers in accordance with SEEA guidelines. Transportation surveys also provide fuel consumption data for rail and passenger bus and urban transit industries.

Motor gasoline and diesel purchases are benchmarked to the RESD but are distributed across industries according to expenditure data in the provincial Input-Output Accounts. The use of provincial accounts controls for price variations across provinces. This is done to distribute retail pump sales which are not disaggregated by purchasing industry in the RESD and for which detailed physical consumption data by industry do not exist.

Data for household use of energy is taken directly from the RESD residential category, except for motor gasoline and diesel consumption, which is part of the retail pump sales distribution above.

Consumption of wood and spent pulping liquor is taken directly from the Industrial Consumption of Energy Survey.

Date: December 1, 2016

To: Mr. Michael Wernick, Clerk of the Privy Council and Secretary to the Cabinet

From: Anil Arora, Chief Statistician of Canada

Subject: Statistics Canada's Public Service Renewal Results 2016

It is my pleasure to share Statistics Canada's Public Service renewal story. Statistics Canada's raison d'être is to ensure that Canadians have access to a trusted source of statistics on Canada to meet their highest-priority needs.

The key ingredient in meeting this commitment has always been, and will always be, an innovative, motivated, representative, and professional workforce deployed in a strong and supportive corporate environment. Innovation is a key driver behind Statistics Canada's efforts to modernize and renew the public service as part of Blueprint 2020. The Innovation Channel, our crowdsourcing tool, continues to foster employee engagement and creativity.

Highlights:

• Respectful workplace: Award-winning Mental Health Passport implemented as a best practice. Positive results from the Public Service Employee Survey that indicate StatCan is a great place to work. Work continues to enhance the agency's reputation as a harassment-free workplace that promotes wellbeing.
• Recruitment and onboarding: Simplified recruitment processes. Targeted talent outreach including a new video for attracting economists and sociologists. Streamlined onboarding process for new employees.
• Greater consultation, more openness and collaboration: The groundbreaking communications campaign for the 2016 Census of Population helped to make this one of the most efficient censuses ever.

Public Service Renewal Results 2016: Statistics Canada
Results and impact of our work in our organizations and in serving government and Canadians

Respectful workplace

Progress and impacts of the Mental Health Action Plan

In recent years, mental health has played an increasing role in our understanding of overall health and wellness. At Statistics Canada, employees' general wellness remains a core priority, and the agency has adjusted its focus to better address issues of mental health among StatCan employees.

According to results from the 2014 Public Service Employee Survey (PSES), StatCan employees are very satisfied with the agency as a workplace. However, we believe we can do even better; the agency must continue to provide employees with a workplace environment that fosters well-being, supports a healthy work–life balance, and prevents harassment and discrimination.

At the agency, the Workplace Wellness Committee (WWC) continues to make progress. The WWC communicates wellness initiatives to staff, and explores, monitors and promotes wellness programs and best practices throughout the organization.

The WWC's Mental Health Working Group continues to make its award-winning Mental Health Passport available to employees and the passport has been adopted as a best practice by other departments and agencies. During Mental Illness Awareness Week in October, the Mental Health Working Group offered two days of events aimed at teaching employees techniques to manage stress, reduce anxiety and find ways to relax in their daily lives.

In 2016, the agency also worked to create a workplace that prevents harassment and discrimination by offering information sessions and materials on the Employee Assistance Program and Informal Conflict Management Services to employees. It also made the Canada School of Public Service course, "Creating a Respectful Workplace," mandatory for all employees beginning in September 2016.

To assess the results of these endeavours and to further identify areas for improvement, the Chief Statistician invited all employees to participate in a short mental health survey in October 2016. Overall, 58% of StatCan employees participated in the survey. Once the results have been analyzed, the survey will give us a comprehensive and accurate perspective of mental health in our workplace and will help us determine what we can do to further promote good mental health in the workplace.

Management is also looking at ways to improve mental wellbeing in the workplace. Managers have cited the need to develop effective tools and strategies to intervene appropriately in crisis situations and to support employees with mental health issues. Their concerns, along with results from the short mental health survey, will form the basis for developing an action plan to address mental health-related situations.

In 2016, the agency took steps to provide a more comprehensive understanding of mental health in Canada by publishing meaningful statistics on mental healthThese included data on life satisfaction, mood disorders, perceived life stress, and perceived mental health.

The agency also published a number of in-depth analytical studies on mental health, covering different aspects of mental health and the impact of mental health issues on communities in Canada. Study topics included suicidal thoughts among Indigenous people, the impact of mental health on family members, and mental health and contact with police.

Satistics Canada continues its work to further examine issues of mental health in the public service and in Canada. Additional questions on mental health are being tested for inclusion in the 2017 PSES, on behalf of Treasury Board Secretariat. The agency is also currently developing the Canadian Health Survey on Children and Youth, which will address relevant topics such as mental health issues in younger age groups. The pilot version of this survey is ongoing and national results are expected to be published in 2017.

Recruitment and onboarding

Recruiting new and diverse employees

At the agency, most new employees in the core groups (EC, MA, CS, PE and FI) join the workforce through postsecondary recruitment programs, student bridging mechanisms, and collective staffing processes.

Statistics Canada continued in its efforts to attract new talent to its workforce by launching several initiatives to simplify the recruitment process. We created larger pre-qualified pools of candidates to give managers faster access to qualified staff. Student bridging is becoming more common, allowing managers to quickly appoint students who show promise. We also updated education and competency requirements to align the agency with the Public Service Performance Agreements. This will allow Statistics Canada to recruit candidates with the right skills and background for the work, and to facilitate career progression.

Statistics Canada also conducts targeted outreach activities to recruit new staff. These activities include annual visits to postsecondary institutions, regular participation in university career fairs and establishing partnerships with postsecondary institutions to influence program development. We also updated our web recruitment content to attract millennials, including a new video promoting work for economists and sociologists. We are actively searching for new regional talent, encouraging managers to staff positions in the regions, and expanding opportunities for existing employees to work remotely.

In addition, our corporate approach to talent outreach targets specific shortage areas. Most recently, we focused on hiring people with data science skills. In summer 2016, we conducted a pilot student-hiring project, which is now being evaluated and expanded as part of an agency-wide hiring strategy to recruit more data scientists. We are also analyzing skills gaps to identify key areas of risk.

In 2016, the agency continued to work toward creating an inclusive and diverse workforce, by ensuring that inclusiveness and diversity are key components of all staffing activities at Statistics Canada. The Employment Equity and Diversity Section regularly monitors collective processes and makes recommendations to promote inclusiveness. In addition, candidates are referred to managers in a way that reflects the diversity of the candidate pools. Statistics Canada has recently updated its staffing approval framework in light of the New Direction in Staffing to appoint members of employment equity groups using non-advertised appointment processes.

We have also benefited from Immigration, Refugees and Citizenship Canada's Federal Internships for Newcomers program. To date, several appointments have been made and feedback from clients indicates that the quality of candidates is excellent. We continue to promote this as a staffing option.

While we have made progress in increasing the diversity of our workforce, we are addressing areas in need of further improvement. This year, we placed particular emphasis on increasing the representation of Indigenous peoples and members of visible minority groups within the EX, EC and CS groups. Strategies for equitable hiring include outreach activities at selected postsecondary institutions, analyzing mandatory candidate pools for EX to EX minus 2 positions, reviewing selection process tools, ensuring diversity among selection board members and consulting members of designated groups on ways to further improve the processes.

Welcoming and integrating new employees to help them contribute from the start

In June 2016, Statistics Canada launched an innovative process that helps integrate new employees more efficiently. The process aims to give new employees all the tools they need to start working on their first day. The new approach makes the onboarding process more efficient for supervisors and hiring managers, who can now give just one rather than several approvals. This new process benefits employees at head office and in the regions, as well as call centre interviewers, contractors and deemed employees. Moreover, we can now measure performance against established service delivery standards.

New employees are often overwhelmed with information on their first day at Statistics Canada. This year, we worked to make their first day less intense. On their first day, employees receive a welcome email with a link to the New Employee Handbook, which contains information about working at Statistics Canada. Statistics Canada's Young Professionals Network (SYPN) also plays an important role in onboarding new employees. New employees receive the SYPN's contact information in their letters of offer, and are encouraged by their supervisors to sign up for the SYPN's mailing list. SYPN members then offer to meet with them to answer questions that they may have, to provide them with information on resources, contacts and networking events, and to help them adapt to the agency's corporate culture.

Statistics Canada plans on further improving how it welcomes new employees. The agency is currently revamping its online orientation course, which complements the New Employee Handbook, to provide new employees with key organizational information. We are enhancing current content (the history of Statistics Canada, the agency's role in the national and international scenes, etc.) and developing new content to cover topics such as Statistics Canada's key principles and values, social media presence and current challenges.

Knowledge transfer to the next generation of leaders

Learning and professional development have always been one of Statistics Canada's corporate priorities, but ensuring that employees receive the training they need can be a challenge. In the 2014 PSES, 3 of 10 StatCan employees indicated that they did not receive the training they need to do their job. To address this gap, Statistics Canada developed resources and hosted activities to promote the use of products and services from the Canada School of Public Service (CSPS), and to support employee development in 2016.

In January 2016, Statistics Canada held its first Learning and Development Week in partnership with CSPS. During this week, CSPS representatives gave an overview of their new approach to learning and the many resources and activities that they offer. As a complement to the school's presentation, Statistics Canada provided an information booth to promote its new learning support resources. These resources include:

• Accessing the CSPS learning products: A guide to browsing and registration
• Frequently asked questions: Everything you need to know about learning.

Learning and Development Week also featured the inauguration of the Virtual Learning Room. This is a space for Statistics Canada employees in the national capital region to access self-paced online resources and learning tools, including the "Orientation to the Public Service" course and the "Essential Series." This room also provides employees with a location to complete online learning programs if they do not have Internet access at their workstation or prefer to complete their training away from their workstation.

Throughout the year, Statistics Canada used its Internal Communications Network to promote the Virtual Learning Room, upcoming events at the CSPS and internal courses.

Talent management, mentoring and knowledge transfer

In 2016, Statistics Canada piloted a talent mapping process to identify appropriate talent development strategies for its assistant directors. Directors were provided with training, tools and guidance to identify employees based on their performance and potential, and to determine appropriate career-broadening and development activities. The goal of this process was to help employees excel and to provide managers with a concrete approach for identifying potential upcoming leaders and developing talent. This process can also help facilitate succession planning.

After reviewing the pilot process, Statistics Canada decided to integrate it into its talent management process. This process will be used as a current practice for assistant directors.

Mentoring is also an essential element in nurturing learning and promoting knowledge sharing within the organization. It is a role assumed by experienced managers outside the functional line of hierarchy and has been a fundamental element in the agency's development programs for many years.

In 2016, Statistics Canada implemented phase two of the three-year Leadership Mentoring pilot program, initiated in 2014/2015. The program's goal is to support a professional, qualified and sustainable workforce that helps the agency achieve its strategic objectives. The program, which targets members from the executive feeder groups, contributes to Statistics Canada's succession planning strategies. Mentees meet with their mentors on a monthly basis for one year to improve their knowledge of the organization's operations and culture, to discuss the realities of life as an EX, to explore career options and to perfect their transferable leadership skills (e.g. influence, management and decision making).

The mentees that participated in the program's first phase reported that their mentors encouraged them to leave their comfort zone and to examine new ways to approach work-related challenges. Mentors shared lessons learned and rules for success. Some mentors recommended specific training to their mentees, while others encouraged them to take stock of their professional strengths and areas of improvement. All mentees reported that the mentoring relationship contributed to an increase in self-confidence.

The program is currently in its second phase. Preliminary results from mid-term evaluations indicate positive feedback. Mentees reported establishing trusting relationships with their mentors and indicated that they have become more open to their mentors' viewpoints, advice and suggestions since the beginning of the program.

In an effort to further expand access to mentoring to all employees across the agency, Statistics Canada is developing a "self-serve" mentoring application that will automate the matching process for all employees interested in a mentoring relationship, either as mentors or mentees.

As part of their knowledge transfer activities, several of the agency's programs are using on-the-job coaching to develop employees and recruits. Senior employees provide coaching sessions to new employees and to recruits who are new to their divisions. This practice was recently adopted as a recommended practice in the PE Recruitment and Development program.

Statistics Canada offers many other opportunities for sharing information within the organization, such as the Brown Bag Lunch meetings held by the Finance Branch to share information among the FI community every three weeks. The Macroeconomic Accounts Branch also launched several knowledge-transfer initiatives this year, including a seminar series featuring employees from other parts of the branch, employees who are retiring soon and retired employees with specialized knowledge.

Other actions to renew the Public Service

A culture of innovation

Innovation is a key part of Statistics Canada's Blueprint 2020. The Innovation Channel, our crowdsourcing tool, continues to foster employee engagement and creativity. Since the channel's inception in April 2013, a total of 679 ideas have been submitted and all of them have been assigned to a facilitator who guides the submitting employee through a phased review and implementation process.

In October 2016, the Statistics Canada Young Professionals Network (SYPN) launched an Innovation Blog on GCCONNEX. Blog posts highlight innovative work at the agency and encourage information sharing, best practices and dialogue among Statistics Canada employees.

Statistics Canada is leveraging the government-wide GCCOLLAB pilot project to promote collaboration among head office employees and employees working in university research data centres across Canada. This pilot project will give employees access to crowdsourcing tools that are currently not available (because of incompatible IT networks) to promote communication and idea generation.

In the national capital region, Statistics Canada employee have access to the Innovation Centre, which opened its doors in 2015. This centre is a space that fosters brainstorming sessions and helps employees explore technologies that are not yet widely available at the agency.

Every two years, Statistics Canada holds a Big Ideas Conference, encouraging employees to present to their peers and to management new innovative approaches to their work at the agency. The second Big Ideas Conference, held in November 2015, focused on "Meeting Canadians' needs for local data." Several ideas selected at the conference are now moving toward implementation:

• In spring 2016, a Data Visualization Working Group composed of Big Ideas Conference winners was formed to explore data visualization techniques and technology. The group has a one-year mandate to research and make recommendations on measures to integrate more data visualization into everyday work. New visualization tools have already been adopted, and were well received by Canadians.
• In October 2016, Statistics Canada initiated a pilot project aimed at understanding the potential of crowdsourcing for statistical purposes. The project is using the platform OpenStreetMap to crowdsource information on buildings. The pilot project began with the Ottawa–Gatineau region.
• Development of a smartphone app to support household survey respondents has also made considerable progress since the idea was first proposed during the Big Ideas 2 Conference App-a-thon. This app will move from development to testing in fall 2016.

The third Big Ideas Conference is planned for fall 2017. The theme will be "Pace: How can Statistics Canada respond faster to Canadians' information needs?" In an era where evidence-based decision making is more important than ever, Statistics Canada will launch a grassroots exercise to gather employees' ideas for more efficient ways to collect, process, analyze and disseminate information. We will explore new tools to identify and remove roadblocks in projects and processes, and identify opportunities to enhance risk management and accelerate responsiveness. We will also continue to explore the use of new innovative data sources, such as satellite images and smart meter information.

Greater consultation, more openness and collaboration

Communications campaign for Census 2016

The innovative communications campaign for the 2016 Census of Population was highly successful. It was designed as a social marketing campaign, emphasizing research, segmentation, targeting and positioning. The overall targeting strategy consisted of full market coverage, with the use of differentiated marketing, including videos, Facebook posts, tweets and posters, to reach audiences that are typically more difficult to enumerate.

The design, implementation and monitoring of census communications activities was guided by statistical analyses. The strategy employed behavioural and sociodemographic segmentation to identify which areas are more or less predisposed to self-respond (complete the census questionnaire without help), and what key sociodemographic characteristics had to be considered when organizing communication activities.

The overarching objective of all marketing activities was to maximize engagement. Social media content, in particular, was designed to be topical, timely and targeted.

Outreach activities were proactive, systemized and targeted. A Community Support Toolkit was developed and distributed to over 4,000 community-based organizations, associations and municipalities across Canada, while 600 organizations and municipalities used social media calendars provided by Statistics Canada.

Measured in percentage points, the increase in self-response rates was comparatively higher for hard-to-enumerate versus easier-to-enumerate audiences. Compared with May 28, 2011, four of the five harder-to-enumerate audiences showed a marked increase in self-response. Gains in self-response rates for harder-to-enumerate audiences observed on May 28, 2016, ranged from 2.82% to 6.87% (compared with a range of 3.06% to 4.21% for easier to enumerate audiences).

Field collection likely benefitted from the positive tone of the campaign and the targeted outreach activities. Feedback from enumerators in the field suggested a warmer reception from respondents during follow-up activities.

The higher return rates for harder-to-enumerate audiences contributed to achieving cumulative returns that exceeded projections by over 1.2 million on May 28, 2016.

Improving back office processes

Statistics Canada received accolades for the Administrative Processes Review and Automation (APRA) project, an initiative to streamline and standardize the delivery of human resources, finance, procurement and administrative services. The project's main objective was to develop a service delivery model with a larger self‑service component, simplified business processes and more strategic advice.

The APRA project won the 2016 Chartered Professional Accountants (CPA) Canada Innovation Award of Excellence for Public Sector Management. The award honours individuals and teams whose work made a significant contribution to financial management within the Government of Canada. Recipients of this award must:

• Demonstrate innovative thinking or exemplary delivery of financial management services that lead to higher productivity or cost savings in a government department or agency or across the Government of Canada
• Develop best practices in financial management that have been shared within the Government of Canada or other public sector entities
• Show excellent thought leadership in the area of financial management.

Statistics Canada's Informatics Branch was awarded honourable mention at the 2016 Chief Information Officer Council (CIOC) Community Awards for three projects that emerged from APRA. The CIOC Community Awards honour outstanding work in the functional communities under the responsibility of the Chief Information Officer of the Government of Canada.

The APRA projects were part of a shift toward automation and integration of corporate services, service-oriented IT architecture, and the use and re-use of common technologies and processes. Statistics Canada is producing an additional 5 corporate services and 17 statistical services using the APRA approach.

The Finance and Human Resources Branches have embedded business transformation units into their organizational structure. The role of these units is to challenge the status quo, disrupt convention and lead transformational projects to improve and streamline back office processes. Other departments regularly invite us to share lessons from the success of our back office business transformation. We also learn from their lessons learned and successful achievements.

Statistics Canada continues to leverage technology to improve workflow and increase the efficiencies of internal service processes, including travel and managing employee movements within the department. An example is the creation of "My Purchase Requests," an electronic workflow tool that replaced the paper-based Goods and Services Acquisition Form. In 2016, all eligible forms were migrated to the new tool, eliminating 97% of all paper-based processes. This resulted in time savings and efficiencies as approvals are now obtained electronically using smart forms.

Statistics Canada continues to support pay modernization by collaborating regularly with Public Services and Procurement Canada and other departments not yet using PeopleSoft, the standard government human resources system. The non-PeopleSoft departments have jointly developed a web-based application which links compensation information directly to the new Phoenix pay system. Statistics Canada has recently scheduled bi-monthly meetings with these departments to continue providing support, knowledge and improvements to the compensation community by sharing best practices, lessons learned, tools, workarounds, etc.

Open Government

As part of Statistics Canada's Open Government initiative, the OpenMaps tool was launched in June 2016. This tool disseminates geographic data to the public through the federal geospatial portal. Many departments collaborated on this project, which was successful and well received.

The agency also helped develop and release a number of components on the Open Government website. These include Open Information, which provides users with easy access to all of the Government of Canada's information, and Proactive Disclosures, where departments post information on government contracts, travel and hospitality expenses, and grants and contributions.

Statistics Canada launched a consultation module on the Open Government to seek input from Canadians, associations and businesses. This module allows users to vote, comment and subscribe to content updates.

The agency updated the Open Government website's search function, making it easier for Canadians to find what they are looking for through a number of different productions, including data tables, publications and maps.

In addition, Statistics Canada made a number of upgrades to the Open Government website's departmental registration process, making it easier for departments to post information on the website.

What is preventing us from fully implementing the Blueprint 2020 vision?

Since the launch of the Blueprint 2020 initiative, one of the key lessons has been that the timely delivery of IT infrastructure services is critical to advancing our modernization agenda. In October 2016, Statistics Canada and Shared Services Canada agreed on a joint-plan to address our current IT infrastructure challenges and future requirements. This plan is being implemented collaboratively and its phases will be closely monitored with ongoing progress reports at the working and executive levels.

Statistics Canada continues to pursue several transformation and modernization initiatives, including projects to transform its corporate business architecture. These include the New Dissemination Model (revamping the organization and presentation of data on our website) and the Integrated Collection and Operations System Project, which developed the data collection modes that now underlie Statistics Canada's electronic collection strategy. These efforts continue in close collaboration with our partners at Shared Services Canada.

Integrated Business Statistics Program (IBSP)

Reporting Guide

This guide is designed to assist you as you complete the Annual Capital Expenditures Survey

Preliminary Estimate for 2016 and Intentions for 2017. If you need more information, please call the Statistics Canada Help Line at the number below.

Help Line: 1-877-604-7828

Table of contents

Reporting period information
Definitions
Industry characteristics

Reporting period information

For the purpose of this survey, please report information for your 12 month fiscal period for which the Final day occurs on or between April 1, 2016 - March 31, 2017.

May 2015 - April 2016
June 2015 - May 2016
July 2015 - June 2016
Aug. 2015 - July 2016
Sept. 2015 - Aug. 2016
Oct. 2015 - Sept. 2016
Nov. 2015 - Oct. 2016
Dec. 2015 - Nov. 2016
Jan. 2016 - Dec. 2016
Feb. 2016 - Jan. 2017
March 2016 - Feb. 2017
April 2016 - March 2017

Here are other examples of fiscal periods that fall within the required dates:

• September 18, 2016 to September 15, 2017 (e.g., floating year-end)
• June 1, 2016 to December 31, 2017 (e.g., a newly opened business)

Definitions

What are Capital Expenditures?

Capital Expenditures are the gross expenditures on fixed assets for use in the operations of your organization or for lease or rent to others.

Include:

• Cost of all new buildings, engineering, machinery and equipment which normally have a life of more than one year and are charged to fixed asset accounts
• Modifications, acquisitions and major renovations
• Capital costs such as feasibility studies, architectural, legal, installation and engineering fees
• Subsidies
• Capitalized interest charges on loans with which capital projects are financed
• Work done by own labour force
• Additions to work in progress

How to Treat Leases

Include:

• assets acquired as a lessee through either a capital or financial lease;
• assets acquired for lease to others as an operating lease.

Exclude

• assets acquired for lease to others, either as a capital or financial lease.

Information for Government Departments

The following applies to government departments only:

Include

• all capital expenditures without taking into account the capitalization threshold of your department;
• Grants and/or subsidies to outside entities (e.g., municipalities, agencies, institutions or businesses) are not to be included;
• Departments are requested to exclude from reported figures budgetary items pertaining to any departmental agency and proprietary crown corporation as they are surveyed separately;
• Federal departments are to report expenditures paid for by the department, regardless of which department awarded the contract;
• Provincial departments are to include any capital expenditures on construction (exclude outlays for land) or machinery and equipment, for use in Canada, financed from revolving funds, loans attached to revolving funds, other loans, the Consolidated Revenue Fund or special accounts.

Industry characteristics

Report the value of the projects expected to be put in place during the year. Include the gross expenditures (including subsidies) on fixed assets for use in the operations of your organization or for lease or rent to others. Include all capital costs such as feasibility studies, architectural, legal, installation and engineering fees as well as work done by your own labour force. Include all additions to work in progress.

New Assets, Renovation, Retrofit, includes both existing assets being upgraded and acquisitions of new assets

The following explanations are Not applicable to government departments:

• include - Capitalized interest charges on loans with which capital projects are financed
• exclude - If you are capitalizing your leased fixed assets as a lessee in accordance with the Canadian Institute of Chartered Accountants’ recommendations, please exclude the total of the capitalization of such leases during the year from capital expenditures

Purchase of Used Canadian Assets

Definition: Used fixed assets may be defined as existing buildings, structures or machinery and equipment which have been previously used by another organization in Canada that you have acquired during the time period being reported on this questionnaire.

Explanation: The objective of our survey is to measure gross annual new acquisitions to fixed assets separately from the acquisition of gross annual used fixed assets in the Canadian economy as a whole.

Hence, the acquisition of a used fixed Canadian asset should be reported separately since such acquisitions would not change the aggregates of our domestic inventory of fixed assets, it would simply mean a transfer of assets within Canada from one organization to another.

Imports of used assets, on the other hand, should be included with the new assets (Column 1) because they are newly acquired for the Canadian economy.

Work in Progress:
Work in progress represents accumulated costs since the start of capital projects which are intended to be capitalized upon completion.

Typically capital investment includes any expenditure on an asset in which its’ life is greater than one year. Capital items charged to operating expenses are defined as expenditures which could have been capitalized as part of the fixed assets, but for various reasons, have been charged to current expenses.

Land
Capital expenditures for land should include all costs associated with the purchase of the land that are not amortized or depreciated.

Residential Construction
Report the value of residential structures including the housing portion of multi-purpose projects and of townsites with the following Exceptions:

• buildings that have accommodation units without self-contained or exclusive use of bathroom and kitchen facilities (e.g., some student and senior citizen residences)
• the non-residential portion of multi-purpose projects and of townsites
• associated expenditures on services

The exceptions should be included in the appropriate construction (e.g., non-residential) asset.

Non-Residential Building Construction (excluding land purchase and residential construction)
Report the total cost incurred during the year of building and engineering construction (contract and by own employees) whether for your own use or rent to others. Include also:

• the cost of demolition of buildings, land servicing and of site-preparation
• leasehold and land improvements
• townsite facilities, such as streets, sewers, stores, schools

Non-residential engineering construction

Report the total cost incurred during the year of engineering construction (contract and by own employees) whether for your own use or rent to others. Include also:

• the cost of demolition of buildings, land servicing and of site-preparation
• oil or gas pipelines, including pipe and installation costs
• all preconstruction planning and design costs such as engineer and consulting fees and any materials supplied to construction contractors for installation, etc.
• communication engineering, including transmission support structures, cables and lines, etc.
• electric power engineering, including wind and solar plants, nuclear production plants, power distribution networks, etc.

Machinery and Equipment
Report total cost incurred during the year of all new machinery, whether for your own use or for lease or rent to others. Any capitalized tooling should also be included. Include progress payments paid out before delivery in the year in which such payments are made. Receipts from the sale of your own fixed assets or allowance for scrap or trade-in should not be deducted from your total capital expenditures. Any balance owing or holdbacks should be reported in the year the cost is incurred.

Include:

• automobiles, trucks, professional and scientific equipment, office and store furniture and appliances
• computers (hardware and software), broadcasting, telecommunication and other information and communication technology equipment
• motors, generators, transformers
• any capitalized tooling expenses
• progress payments paid out before delivery in the year in which such payments are made
• any balance owing or holdbacks should be reported in the year the cost is incurred

Software

Capital expenditures for software should include all costs associated with the purchase of software.

Include:

• Pre-packaged software
• Custom software developed in-house/own account
• Custom software design and development, contracted out

Research and Development

Research and development (R&D) comprise creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications. Basic and applied research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundation of phenomenon and observable facts. Experimental development is systematic work, drawing on existing knowledge gained from research and/or practical experience, which is directed to producing new materials, products or devices, installing new process, systems and services, or improving substantially those already produced or installed.

• Definitions of the Bank of Canada's preferred measures of core inflation
• Bank of Canada's motivation for the choice of these three measures of core inflation
• Rationale for moving away from a focal measure of core inflation
• How the Bank of Canada is using these measures of core inflation
• Interpreting movements in these measures of core inflation
• Responsibility in regards to the construction and publication of these measures of core inflation
• Notes
• References

Definitions of the Bank of Canada's preferred measures of core inflation

In recent years, the usefulness of CPIX inflation^{Note 2} as an operational guide to monetary policy has deteriorated (Bank of Canada (2016)). Hence, the Bank of Canada has selected three preferred measures of core inflation in Canada: CPI-trim, CPI-median and CPI-common.^{Note 3}

These three measures of core inflation, available on a monthly basis, are expressed as year-over-year percentage change and are constructed from the price indexes of a disaggregation of 55 components of the consumer price index (CPI), which account for 100 per cent of the Canadian CPI basket. These price indexes are adjusted to remove the effect of changes in indirect taxes and in the case of the CPI-trim and the CPI-median, the ones used are also seasonally adjusted.

CPI-trim is a measure of core inflation that excludes CPI components whose rates of change in a given month are located in the tails of the distribution of price changes. This measure helps filter out extreme price movements that might be caused by factors specific to certain components. In particular, CPI-trim excludes 20 per cent of the weighted monthly price variations at both the bottom and top of the distribution of price changes, and thus it always removes 40 per cent of the total CPI basket.^{Note 4} These excluded components can change from month to month, depending on which are extreme at a given time. A good example would be the impact of severe weather on the prices of certain food components. This approach differs from traditional a priori exclusion-based measures (e.g., CPIX), which every month omit a pre-specified list of components from the CPI basket.

CPI-median is a measure of core inflation corresponding to the price change located at the 50th percentile (in terms of the CPI basket weights) of the distribution of price changes in a given month. This measure helps filter out extreme price movements specific to certain components. This approach is similar to CPI-trim as it eliminates all the weighted monthly price variations at both the bottom and top of the distribution of price changes in any given month, except the price change for the component that is the midpoint of that distribution.^{Note 5}

CPI-common is a measure of core inflation that tracks common price changes across categories in the CPI basket. It uses a statistical procedure called a factor model to detect these common variations, which helps filter out price movements that might be caused by factors specific to certain components.^{Note 6}

Bank of Canada's motivation for the choice of these three measures of core inflation

The Bank of Canada aims to keep inflation at the 2 per cent midpoint of an inflation-control range of 1 to 3 per cent. The inflation target is expressed in terms of total CPI inflation. The Bank of Canada uses measures of core inflation as an operational guide to help achieve the total CPI inflation target.^{Note 7}

In October 2016, the Bank of Canada and the Government of Canada renewed Canada's agreement on the inflation-control target. One of the issues the Bank of Canada focused on in preparing for the 2016 renewal was the measurement and use of core inflation.^{Note 8} For that reason, Bank staff conducted an evaluation of different measures of core inflation.^{Note 9} Bank of Canada (2016) states that this exercise uncovered little compelling evidence in favour of continuing to use CPIX inflation as its focal measure of core inflation, and found that CPI-trim, CPI-median and CPI-common performed more favourably across a range of evaluation criteria.

The evaluation of core inflation measures was based on a variety of criteria selected by the Bank, namely, that the selected measures should (i) closely track long-run movements in total CPI inflation, (ii) be less volatile than total CPI inflation and capture persistent movements in inflation, (iii) be related to the underlying drivers of inflation, and (iv) be easy to understand and explain to the public. As explained in Bank of Canada (2016), the three measures of core inflation, CPI-trim, CPI-median and CPI-common, were found to perform favourably across those criteria, in particular because they better capture persistent movements in inflation and tend to move with macroeconomic drivers. However, the Bank further explains that each measure of core inflation was judged to have limitations, thus making the case to consider a set of measures instead of relying on a single focal measure.

Rationale for moving away from a focal measure of core inflation

The Bank uses these measures of core inflation as an operational guide to monetary policy. As explained in Bank of Canada (2016), each measure of core inflation was judged to have limitations, making it necessary to consider a set of measures instead of relying on a single focal measure and reinforcing the point that monetary policy decisions should not be based on the mechanical use of such indicators. Using several indicators helps the Bank transparently manage the risks associated with the shortcomings of any single indicator.

How the Bank of Canada is using these measures of core inflation

The Bank uses these measures as indicators of pressures on inflation associated with excess demand or supply, (i.e., underlying inflationary pressures). Since some of the components in the CPI basket are subject to sharp and often temporary price swings that are unrelated to these underlying trends, the Bank uses this set of core inflation measures that allow it to "look through" temporary changes in total CPI inflation.^{Note 10}

Interpreting movements in these measures of core inflation

The evolution of these measures of core inflation should reflect more persistent and broad-based movements across CPI components. Thus, trying to identify the contribution of specific CPI components to movements of these measures is not advisable. For CPI-trim and CPI-median, since the list of components excluded can vary every month, it might not be possible to compute the contribution of individual CPI components to the evolution of both measures of core inflation. For CPI-common, a rise in one component would affect that measure of core inflation only if the rise occurred in tandem with increases in several other CPI components.

Responsibility in regards to the construction and publication of these measures of core inflation

Beginning on 22 December 2016 with the publication of the November 2016 CPI, Statistics Canada will produce and publish CPI-trim, CPI-median and CPI-common. Accordingly, any questions related to the compilation of these three measures should be addressed to Statistics Canada. Questions related to the specification of their methodologies as well as to their use in the conduct of monetary policy should be addressed to the Bank of Canada.

Notes

References

Bank of Canada. 2016. Renewal of the Inflation-Control Target—Background Information—October 2016. Ottawa. Bank of Canada.

Khan, M., L. Morel and P. Sabourin. 2013. "The Common Component of CPI: An Alternative Measure of Underlying Inflation for Canada." Bank of Canada Staff Working Paper No. 2013-35.

Khan, M., L. Morel and P. Sabourin. 2015. "A Comprehensive Evaluation of Measures of Core inflation for Canada." Bank of Canada Staff Discussion Paper No. 2015-12.

Poloz, S. S. 2016. Letter to the Minister of Finance, 21 September 2016.