Business Plan - Canadian Coast Guard

Although CCG’s assets carry a replacement value of$11.6 billion, the depreciated book value of the entireasset base is $600M. This is the most resolute indicationof the age of our deteriorating asset base. CCG’sassets are divided into two categories for planning andmanagement:• Approximately $10 billion in Fleet assets with a netbook value of $463 million; and• $1.6 billion in Equipment and Other Moveable Assetswith a net book value of $137M.In recent years it has become apparent that the inadequaterecapitalization of our Fleet assets would result inthe eventual inability of CCG to sustain its requiredlevels of service. As such, there have been a number offinancial infusions in recent Federal Budgets, such asthe Mid-Shore Patrol Vessels and Polar Icebreaker, whichwill ensure that the book value of our Fleet asset baseincreases with time.Unfortunately, the pace of recapitalization for our shorebasedassets has not kept up with that of our Fleet. Thisis despite of an annual funding increase of $47.3M whichwas received in 2003 through the National CapitalSpending Plan. While there have been improvements,there is still a continued reliance on outdated and fullydepreciated shore-based infrastructure as recapitalizationhas not kept up with the rate of depreciation. As such,the condition of our shore assets continues to deteriorateand technological advances have rendered much of ourexisting equipment obsolete and more costly to maintain.In order to better communicate our asset managementand investment planning picture in a more holisticand integrated manner, CCG has embarked upon aninitiative to update its overall planning process for capitalinvestments. The new Integrated Investment Planningprocess will ensure that our investment decisionsare based on a full assessment of risk, priority andcapability requirements.Section 5: Financial InformationImpact of Recent Funding InjectionsAs previously referenced, the last three Federal budgetshave brought forth significant increases to our capitalbudget, resulting in supplementary Governmentinvestments in the Coast Guard of $1.7 billionsince 2005.The most recent capital infusion was a result of theBudget 2009 - Federal Economic Action Plan which willbring $175M to the Coast Guard between 2009-2010and 2010-2011.The additional funding for our Fleet assets will producevery tangible results for the programs we support andensure that we are able to maintain the maritime serviceexcellence that our clients rely upon.ConclusionThe Coast Guard has implemented a number of financialmanagement initiatives which have helped us organizeour operations in a more business-like and rationalmanner. The improved financial management frameworkhas helped us better communicate our capacity andfunding deficiencies, resulting in significant infusions ofcapital funding. The new funding will help stabilize ourFleet infrastructure; however, it is becoming increasinglyevident that our shore-based infrastructure should also beaddressed in the near term.CCG has taken several measures to ensure a more prioritybased allocation process, delivered through a strengthenedplanning, budgeting and reporting framework. Thisbeing said, we must continue to effectively manage ouroperating and investment budgets, ensuring that the mostpertinent programs are properly funded. By continuing toimprove our financial management processes, CCG willensure that it remains strong now and into the future.61BUSINESS PLAN 2009-2012