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Proceedings of the Standing Senate Committee on
National Finance

Issue 11 - Evidence - Meeting of May 7, 2008

OTTAWA, Wednesday, May 7, 2008

The Standing Senate Committee on National Finance met this day at 6:17 p.m. to study the estimates laid before Parliament for the fiscal year ending March 31, 2009.

Senator Joseph A. Day (Chair) in the chair.


The Chair: Good evening, everyone, and welcome to this meeting of the Standing Senate Committee on National Finance. My name is Joseph Day, and I represent the Province of New Brunswick in the Senate.


The committee's field of interest is government spending and operations. We do this through estimates of expenditures and funds made available to various offices and officers of Parliament to perform their functions and through budget implementation legislation and other matters referred to this committee by the Senate as a whole.

Today, as part of our committee's review of the 2008-09 estimates, we are examining federal expenditures on infrastructure and related activities, including the participation of federal regional development agencies in the delivery of infrastructure funding.

I am pleased to welcome, as our witnesses this evening, from Canada Economic Development, and we are particularly interested in the province of Quebec, Ms. Manon Brassard, Vice-President, Operations; Mr. Pierre Bordeleau, Director General, Corporate Services; and Mr. Gilles Pelletier, Director General, Business Development and Infrastructure.

From Indian and Northern Affairs Canada, which looks after the territories, we have Mr. Marc Brooks, Director General, Community Development Branch, Socio-Economic Policy and Regional Operations; Ms. Danielle Labonté, Director General, Northern Strategic Policy Branch; and Mr. James Mack, Director, Northern Economic Development Directorate, Northern Affairs.

We are particularly interested in the aspects of Industry Canada relating to Northern Ontario, and we have Mr. Jeff Moore, Director General, Sector Governance and Infrastructure Programs; and Mr. Carmen DeMarco, Manager, Program Delivery, Northeastern Ontario.

We will begin with opening remarks. I understand that Canada Economic Development Quebec Regions will begin, followed by Indian and Northern Affairs Canada, and finally Industry Canada.


Manon Brassard, Vice-President, Operations, Canada Economic Development: Mr. Chairman, we thank you for inviting us to speak to you today about Canada Economic Development's 2008-09 estimates, and, more specifically, about the spending associated with the delivery of the infrastructure programs under CED's responsibility.

During my appearance, I will present a brief overview of Canada Economic Development's mandate and programs; I will speak to you about the agency's role in the delivery of infrastructure programs; and I will conclude by discussing our Main Estimates.


We hope our appearance will meet with your expectations and answer any questions you may have with respect to Canada Economic Development's programs, as well as the initiatives that it manages on behalf of the government, such as the Infrastructure Canada Program.


Let me start by telling you a little about the Economic Development Agency of Canada for the Regions of Quebec and what it is that we do.


The agency's mission is to promote the long-term economic development of Quebec's regions by giving special attention to those where slow economic growth is prevalent or opportunities for productive employment are inadequate.

As part of that mission, the agency works in cooperation with and in complement to the province of Quebec and its communities. We provide direct assistance to Quebec's small- and medium-sized enterprises, SMEs, by offering them advisory services and financial support. We also assist regional business communities and the organizations that support them.

By virtue of its network of 14 business offices, Canada Economic Development is present and active in all corners of the province.


The agency's actions revolve around two main programs. These programs are: Community Diversification and Business and Regional Growth. The Community Diversification program aims to help the regions of Quebec maintain and develop their economic activity base. Its objectives are threefold: to foster the development of communities and increase their mobilization through the development of a collective vision and large-scale local and regional projects; to assist communities through support for entrepreneurship and the creation or maintenance of viable enterprises; and to increase communities' capabilities for attracting tourists and skilled individuals.


The Business and Regional Growth program, for its part, has two main components; namely, SME Competitiveness and Sectoral and Regional Growth. This program is intended to strengthen the conditions conducive to the sustainable growth of Quebec's regions and SMEs. Its aims are to help enterprises improve their performance, become more competitive and engage in more innovation to facilitate their sustainable growth; support the transfer of technology and research outputs to enterprises; and create the right conditions to attract foreign investment and international organizations.


Let us now take a look at CED's responsibilities as they relate to infrastructure programs. Managing infrastructure programs in Quebec involves, most notably, the Infrastructure Canada Program (ICP), the Municipal Rural Infrastructure Fund (MRIF) and the Canada Strategic Infrastructure Fund (CSIF). In October 2000, the Government of Canada signed an agreement with the Government of Quebec — the Canada-Quebec Infrastructure Agreement — regarding implementation of the Infrastructure Canada Program. Under the terms of this program, which came into effect in October 2000 and terminates at the end of March 2011, Quebec was allocated $515.5 million.

In July 2005, a new program was put in place, the Municipal Rural Infrastructure Fund (MRIF). Under this program, which extends until March 2012, Quebec was granted $195 million.


Our agency was given the mandate and the credits by the federal government to manage the Infrastructure Canada Program, ICP, the first program I talked about. As I mentioned, the Municipal Rural Infrastructure Fund, MRIF, was created in 2005. Canada Economic Development was entrusted with managing the federal portion of this program, and Infrastructure Canada was allocated the budgets by decision of Treasury Board.

In both cases, these programs are run in partnership with the Government of Quebec, with said acting on behalf of the federal government.


It is important to remember that Quebec is the lead player in both of these programs. In practice, this means that promoters must first appeal to Quebec, and that it is Quebec that decides which projects will be given priority.

The Agency also administers certain projects within the framework of the Canada Strategic Infrastructure Fund. This program is for funding large-scale projects whose total eligible costs must be of $75 million or more.


You have heard of the Building Canada Plan. Negotiations are currently underway between Infrastructure Canada and the Government of Quebec. Canada Economic Development for Quebec Regions, CEDQ, is expected to manage the community portion of that program.


The agency's Main Estimates for 2008-09 stand at $287.4 million. This is $107 million less than the Main Estimates for 2007-08, which were $394.7 million. Most of the decrease is due to two particular initiatives coming to an end, the 400th anniversary of Quebec City and the Infrastructure Canada Program. Only a small portion comes from our regular programs. In other words, this gap is explained by a $73 million increase in funding dedicated to the Infrastructure Canada Program.

Remember that this is a program with a finite term and a specific budget included in CED's funding allocations. As the program continues to follow its natural course and we issue contributions as the projects advance, it is normal to see this budget allocation gradually diminishing. This is therefore an anticipated decline.

In addition to this $73 million is another $20 million allocated for the execution of three projects to mark the 400th anniversary of the founding of Quebec City. These were one-time projects for which we received dedicated funding. Here again, as these projects near completion, it is natural that our funding allocation would diminish. These two amounts, which taken together total $93 million, account in large part for the budget variance of $107 million. These two amounts are not part of the amounts allocated to our regular programs.

The agency's regular programming budget also dropped by more than $17 million between fiscal years 2007-08 and 2008-09. This reflects the agency's efforts to contribute to the $1 billion government-wide fiscal restraint announced in the 2006 federal budget. This $17 million must therefore be added to the $93 million I just mentioned, for a total of $110 million.

Conversely, various adjustments stemming, most notably, from a reduction in transfers to other departments have left $3 million in our budget for a total of $107 million.

To summarize, $73 million from Infrastructure Canada, $20 million for the 400th anniversary, $17 million, which is our share of the budget reallocations and $3 million in transfers not made, for a variance of $107 million.


I hope these facts were of interest to you and useful.

The Chair: Thank you. I am sure there will be questions, but we will go on with the next presentation from Indian and Northern Affairs Canada.

Marc Brooks, Director General, Community Development Branch, Socio-Economic Policy and Regional Operations, Indian and Northern Affairs Canada: Good evening. Thank you for the invitation and opportunity for my colleagues and me to provide some information on our department's role related to infrastructure in the North and in First Nation communities.

My formal comments will briefly touch on Indian and Northern Affairs Canada's Capital Facilities and Maintenance Program and focus primarily on our relationship with Infrastructure Canada.

Indian and Northern Affairs Canada, INAC, provides infrastructure funding to First Nation communities via contributions from our Capital Facilities and Maintenance Program. Annual spending on community infrastructure is approximately $1.1 billion per year.


INAC strives to provide First Nations communities with public facilities that are soundly managed, well maintained and that meet current health and safety standards, that is to say facilities similar to those available to neighbouring communities and communities in comparable locations.


Under the Capital Facilities and Maintenance Program, First Nations, similar to any other level of government, are responsible for the development of their community; that is, determining their major and minor infrastructure needs and managing within their budgets. Currently, the majority of on-reserve infrastructure projects are financially assisted by INAC through transfer payments. First Nation communities are fully responsible for the associated project design, planning, acquisition and construction.

The majority of our infrastructure funding is administered using a decentralized approach to the delivery. Project proposals are ranked using our national priority funding evaluation and measurement index and are approved at the regional level. Only in extraordinary situations will projects be assessed at a national level. Major capital projects, those greater than $1.5 million, are identified in the five-year rolling Long Term Capital Plan.

I will now turn to the Main Estimates. Although the total amount of funding allocated to INAC for community infrastructure has decreased from $1.265 billion in 2007-08 to $1.03 billion this fiscal year, year-over-year changes must be interpreted in the context of the budgetary process. As the first step in the fiscal cycle, the Main Estimates do not include resources to be acquired through supplementary estimates. The primary causes for the decrease in this year's Main Estimates are the sunsetting of the First Nation Water Management Strategy, FNWMS, as well as the First Nations water plan of action. Funding for both these programs is expected to be returned to INAC's reference levels via Supplementary Estimates (A).

Other causes for the overall decrease in the community infrastructure budget include the end of $24.9 million in Budget 2005 funding for the renovation and construction of housing units, and an additional $16.5 million for specific school projects in Labrador, Nova Scotia and Alberta.


These decreases have been partially offset by the two per cent annual increase to accommodate inflation and the $52.1 million that has been added for the First Nations Infrastructure Fund.


INAC has a long history of working in lockstep with Infrastructure Canada on the delivery of infrastructure programming, starting with the original Infrastructure Canada Program. This relationship continues today with the First Nations Infrastructure Fund.

The First Nations Infrastructure Fund is a joint program between INAC and Infrastructure Canada that provides support for infrastructure projects that often get left behind as the majority of our infrastructure funding is consumed by projects that address immediate health and safety needs. The program was developed by merging the Municipal Rural Infrastructure Program and the Gas Tax Fund, as well as putting in an inclusion through our Capital Facilities and Maintenance Program into a single application-based program. Eligible project categories include solid waste management, roads, bridges, energy systems, connectivity, community planning and skills development. Over a five-year period, it is anticipated that $131 million will be made available to First Nations for these priorities.


Five principles guided the development of this program, and they were: flexibility, complementarity, regional decision-making and delivery, leveraging other funding sources and minimal administrative burden.


In September of each year from 2007 to 2011, First Nations will be invited to submit proposals to their respective INAC regional office. The proposals will be forwarded to a regional investment committee, which is comprised of regional representatives from the First Nations and INAC, as well as applicable municipal, federal, provincial and private sector representatives. This committee will be responsible for analyzing and assessing project applications against established screening and selection criteria and providing funding recommendations to the regional director general.

In conclusion, INAC has and continues to rely upon a decentralized approach to infrastructure program delivery. The unique characteristics and needs of our regions often require a local perspective that cannot always be provided from Ottawa. As stated earlier, INAC strives to provide First Nation communities with infrastructure that is similar to that available in neighbouring non-Aboriginal communities or comparable locations while maintaining a local perspective, which is essential to meeting this goal.


Now I would like to turn it over to Danielle Labonté to discuss the delivery of infrastructure programming in the north.

Danielle Labonté, Director General, Northern Strategic Policy Branch, Indian and Northern Affairs: Mr. Chair, we are very pleased this evening to have the opportunity to speak with you regarding the role of Indian and Northern Affairs Canada in the delivery of infrastructure programs in the territories.

The Minister of Indian and Northern Affairs is the federal minister responsible for regional development in Yukon, the Northwest Territories and Nunavut. At Indian and Northern Affairs Canada, it is the Northern Affairs Organization that delivers on this mandate and, as such, is considered the Federal Delivery Partner for certain Infrastructure Canada programs in the territories.


As noted to this committee in Infrastructure Canada's presentation earlier, the previous Infrastructure Canada Program was delivered directly by the regional development agencies, which included the Northern Affairs Organization. Under this program, $9.1 million was allocated for infrastructure projects in the three territories, and these projects are now all completed.

With the establishment of the Municipal Rural Infrastructure Fund in 2004, approximately $57.5 million over seven years was identified in total for the three territories. These funds, and overall responsibility for the program, were established with Infrastructure Canada. Consistent with the approach taken with regional development agencies elsewhere in Canada, full responsibility for the federal delivery of the program was transferred to the Northern Affairs Organization in November 2007.

Under this arrangement, the Northern Affairs Organization is now the federal co-chair for the Municipal Rural Infrastructure Fund Management Committee in each of the three territories. On recommendation of the management committee, funding decisions are made both by the territorial minister and the Minister of Indian Affairs and Northern Development. Proposals for federal funding over $5 million require the decision of the Minister of Transport, Infrastructure and Communities; and proposals for amounts over $15 million require a decision from the Treasury Board of Canada Secretatriat.

In regard to the funding levels of the Northern Affairs Organization, $300,000 per year is currently provided to the department's reference levels for the administration of the Municipal Rural Infrastructure Fund. The actual contribution funds remain in Infrastructure Canada's reference levels and are accessed by our department to pay for projects as needed.

In addition to the Municipal Rural Infrastructure Fund, $120 million was provided to the territories through the Canada Strategic Infrastructure Fund, with some additional funds available on a merit basis from a national component of this fund. The Northern Affairs Organization does act as a federal delivery partner for some of these projects when appropriate. However, as with the Municipal Rural Infrastructure Fund, the contribution funding for these projects will appear again in Infrastructure Canada's reference levels.


The decision-making process for project funding through the Municipal Rural Infrastructure Fund and the Canada Strategic Infrastructure Fund is going well. We expect that projects will be completed on time, that is by the end of the programs in 2011.

I hope this overview has helped clearly explain the role of the Organization of Northern Affairs in the delivery of infrastructure programs in the territories. I thank you for your time and attention to this matter and would be pleased to receive your questions or to elaborate on any of the financial matters I have presented for your consideration.


Jeff Moore, Director General, Sector Governance and Infrastructure Programs, Industry Canada: Thank you for the opportunity to appear before you this evening. I, along with my colleague Carmen DeMarco, will be speaking to Industry Canada's role in delivering infrastructure programming as well as funding for regional economic development in Ontario. The delivery of this programming is done through our offices in Toronto, Ottawa and across Northern Ontario.

As the committee may know, the responsibility for overall national infrastructure policy design and development rests with Infrastructure Canada. The delivery of funding for most national infrastructure programs is done via federal regional development agencies, RDAs. In the province of Ontario, Industry Canada fulfills this role.

In partnership with the Province of Ontario, the department delivers infrastructure funding to Ontario municipalities under the $680-million Canada-Ontario Infrastructure Program, COIP, as well as under the $298-million Canada-Ontario Municipal Rural Infrastructure Fund, COMRIF. Both COIP and COMRIF are competitive, merit-based programs managed by Industry Canada.

In addition, Industry Canada delivers funding in Ontario under the $5.2-billion Canada Strategic Infrastructure Fund, a program that funds large-scale infrastructure projects nationally and is managed by Infrastructure Canada. Industry Canada will also soon deliver $64 million in funding to Ontario communities on behalf of Infrastructure Canada as part of a top-up to the national Municipal Rural Infrastructure Fund.

Looking forward, Industry Canada will eventually deliver funding in Ontario on behalf of Infrastructure Canada under the national $8.8-billion Building Canada Fund, BCF. Industry Canada's participation in this program will begin after the required framework agreement between the Government of Canada and the Province of Ontario is signed.

As mentioned earlier, Industry Canada also delivers regional economic development programming in Ontario. As an example, the department is delivering $50 million in funding under the Ontario Potable Water Program, OPWP. While having links to the COIP, this is a one-time Industry Canada program that provides funding to eligible Ontario municipalities for economic development.

To further discuss Industry Canada's role in delivering economic development funding in Ontario, I will now turn to my colleague, Carmen DeMarco. Mr. DeMarco is the manager of program delivery for Northeastern Ontario at FedNor, an organization situated within the Regional Operations Sector of Industry Canada.

Carmen DeMarco, Manager, Program Delivery, Northeastern Ontario, Industry Canada: Thank you for the opportunity to speak to you today about the delivery of economic development funding in Ontario. More specifically, I will be speaking briefly about FedNor programming, as well as the regions that the programs serve.

FedNor is an organization within Industry Canada whose mandate is to promote economic development, diversification and job creation in those parts of Ontario where the programs operate. The goal is to encourage sustainable, self-reliant communities.

In terms of programming, let me begin with the Northern Ontario Development Program, NODP, which FedNor delivers exclusively in Northern Ontario. NODP is a contributions-based program that serves over 850,000 people in an area representing approximately 90 per cent of the province's land mass stretching from Muskoka to James Bay, and from the Manitoba border to Quebec. The NODP budget is ongoing at approximately $47 million per year.

FedNor also supports a network of 61 Community Futures Development Corporations, CFDCs, throughout rural Ontario via a $22-million Community Futures Program.

In addition, FedNor manages the Eastern Ontario Development Program, EODP. This $10-million contributions-based program is delivered by FedNor through CFDCs in rural Southeastern Ontario. The geographic area extends east from the Durham Region and Algonquin Provincial Park to the Quebec border, excluding the cities of Kingston and Ottawa.

With that brief overview, Mr. Moore and I would be pleased to answer any questions you may have about Industry Canada's role with respect to infrastructure and economic development programs in Ontario.

The Chair: I thank you all for your presentations. We will proceed as we gather our thoughts together on your various presentations. There is a different approach for us, so we will try to delve in. There may be some general questions from senators.

We had the opportunity to speak with Atlantic Canada Opportunities Agency and Western Economic Diversification Canada yesterday and previously, so we are beginning to develop an overview of economic development, particularly with respect to infrastructure. That is where we are trying to focus, but of course it is important to understand those other programs too because of the good work you are doing across the country, and we appreciate that very much.


We will begin with Senator Biron of Mille Isle, Quebec.

Senator Biron: In the budget, we note budget cuts in the order of $107 million. Are any budget cuts planned in the various development programs in Quebec?

Ms. Brassard: The budget cuts of $107 million are divided into three parts. These are mainly credits that are expiring, since payments are continuing for the Infrastructure Canada Program, the ICP. The work associated with the 400th anniversary of the City of Quebec is coming to an end, and very fortunately, since the celebrations will take place this year. The grant that we had to spend is coming to an end with the completion of this program.

Nearly $17 million is mainly associated with our programs. That is what constitutes the credits.

Senator Biron: So we are talking about a reduction of $14 million.

Ms. Brassard: Indeed.

Senator Biron: Of the budgeted amounts, how much has been allocated?

Ms. Brassard: You are talking about the budgets allocated for 2008-09?

Senator Biron: Yes.

Pierre Bordeleau, Director General, Corporate Services, Canada Economic Development: Nearly 71 per cent of the budgets are allocated to our regular programs. Historically, that is a normal rate.

Ms. Brassard: Most of our agreements are multi-year agreements.

Senator Biron: Like the CFDCs?

Ms. Brassard: We have a four-year contract with the CFDCs. So we are committed for the coming years until the end of the contract. We have agreements with SMEs that are spread over more than one year. The projects are carried out over a period of more than one year. We pay the amounts when we receive the invoices, but also when the work is completed. We are consistent with the historical average.

Senator Biron: In the Major Economic and Tourism Facilities programs, only seven regions and 21 RCMs are eligible. What happens in regions like the Beauce, which is going through tough economic times?

Ms. Brassard: A number of our programs hinge on what we call 7/21, seven particularly declining regions and 21 RCMs. They were selected on the basis of a number of socio-economic criteria indicating their decline. That is why we target them more particularly, pursuant to our mandate, which requires that we pay special attention to regions in trouble and/or where jobs are hard to create. That explains the creation of 7/21. Our regular programs apply to the territory as a whole.

Senator Biron: Historically, these RCMs and seven regions have always been in trouble. Beauce is currently going through a particularly difficult period as a result of its declining industries. Are you planning something for the Beauce in particular?

Ms. Brassard: We are open to projects to promote the region. We will be pleased to consider them to the extent they are consistent with the agency's regular program.

Senator Biron: In the area of regional economic development, what has been planned for the forest industry? Have budgets been allocated for that industry in particular?

Ms. Brassard: A number of the 7/21 regions are affected by the forest crisis. They are receiving specific measures that have been put forward to assist them, including CEDI-Vitality.

The Chair: We will go on to Senator Fox, from Victoria, Quebec.

Senator Fox: My questions will be for the representatives of Canada Economic Development, to whom I want to wish a special welcome to our committee.

Canada Economic Development has played and continues to play an important role in Quebec's economic development. When I was president of Montréal International, I had occasion to work closely with that team, which was always full of vitality and commitment. It has a sense of innovation and is dedicated to measure regional economic development success. It is a pleasure for me to see you.

My questions will mainly concern the program from which Montréal International benefited, particularly the support program for non-profit organizations. What was the total budget allocated last year to non-profit organizations, and what is it for this year?

Mr. Bordeleau: We do not have any specific figures on that.

Ms. Brassard: Our two programs could have NPO applications. However, there is no program dedicated to NPOs. We could send you some more specific information on the share of the budget. However, I would say that a large share of the budget went to NPOs.

Senator Fox: We read in the newspapers that a decision was made that will cut funding to organizations such as Montréal International in the next few years. So I was wondering how much was allocated last year and over what period of time that budget would decline then ultimately one day disappear.

Ms. Brassard: Perhaps I could explain some of the background to the NPO policy to you?

Senator Fox: Yes.

Ms. Brassard: Perhaps you will have other questions arising from my remarks, or my explanations will answer your question in part. The agency's policy on NPOs is as follows. We would like to continue working with the NPOs and to help them. The idea is not to completely stop the work we are doing with the NPOs.

However, we are tending to change the way we will be working with the NPOs and to make fewer and fewer recurring operational contributions, which, as a general rule, would go for wages, rent and so on, in order to put greater emphasis on one-time NPO projects. So a project with a specific term, objectives and specific results to be achieved and an amount that is allocated to it. Currently, some NPOs are receiving recurring funding from us. In many cases, we will not be suddenly terminating that funding. We are working with each of them to establish a transition period to March 31, 2010 in order to lead them gradually to find a portion of the funding elsewhere.

Senator Fox: Would you be able to give us a list of the NPOs that will be financially affected in the next few years?

Ms. Brassard: For the moment, we know our current clients, without having a complete list of those we will be dealing with, since not all our agreements have expired. We still have a lot of things to negotiate. However, what is already negotiated is on our website, since our contributions are posted.

Senator Fox: Could you send us the list?

Ms. Brassard: Of what is on the website, no problem.

Senator Fox: Is anything missing from your website?

Ms. Brassard: What we have not yet negotiated does not appear on the website.

Senator Fox: Has the impact of this decision on an organization like Montréal International, for example, on investment in Montreal, been evaluated? Has a study been conducted to assess the impact of this gradual withdrawal of operating resources, or does it remain in place?

Ms. Brassard: The wish behind this position is to be able to lead the organizations to rely less on recurring funding and to go get other sources of funding or to redevelop, reprioritize the projects they have. When we work with them, either during the transition period or on one-time projects, we agree with them on lists, on a Schedule E that will produce the results we want to achieve with them. In that way, we are still able to ensure there is a return.

Senator Fox: I understand ad hoc assistance. However, unless you can fund a stable organization with a team of canvassers in the case of Montréal International, it gets a little difficult, unless you find funding that will replace what the federal government has eliminated.

Ms. Brassard: Indeed, their task is to find another funding source.

Senator Fox: Was this change of policy on the funding of non-profit organizations done in consultation with the Quebec government?

Ms. Brassard: To my knowledge, we definitely informed them of that decision.

Senator Fox: You say "informed," whereas I asked you whether they had been consulted.

Ms. Brassard: I will have to get back to you with something more specific.

Senator Fox: You did not attend the consultation sessions?

Ms. Brassard: Personally no, but, as you will understand, I am responsible for program delivery. That does not mean that it did not happen because I was not there.

Senator Fox: On page 6 of your brief, I see the Business and Regional Growth Program. You talk about two components with two different objectives. You say that the purpose of the program is to create the right kind of conditions to attract foreign investment and international organizations. Who in Quebec is able to do that kind of work unless they have ongoing funding? There are the Quebec government Crown corporations perhaps, but does that mean that the federal government is withdrawing, except for one-time projects in that sector?

Ms. Brassard: The question is probably: can we still achieve that kind of result? I think so. We are going to continue working on a one-time basis with those organizations. The term "one-time" does not necessarily mean a three-week or three-month project. That may mean a project of a certain scope.

Senator Fox: Indeed, unless the NPOs find a way to replace the funding that they can no longer access, it will be useful for them to do some canvassing and to attract international organizations. I thought that the Montréal International model was quite unique in Canada since it brought together representatives of three levels of government around the table. The mayors of Montreal, Longueuil and Laval were there, as well as the deputy ministers of each, plus the private sector, which gave the federal government a window that it often does not have on everything that goes on at the municipal level in a given region.

I am afraid that, with this change of direction, an organization like Montréal International cannot survive unless the provincial government replaces the federal government's share.


Senator Peterson: My questions are directed toward the representatives from INAC. In your presentation you indicated that you have a global budget of around a billion dollars. Does that include emergency funding?

Mr. Brooks: No, it does not, senator. In terms of a catastrophe, such as the one in Northern Ontario in Kashechewan, we go to the central reserve for emergency funding held by Treasury Board on an emergency Treasury Board submission.

Senator Peterson: Would that be over and above regular funding then?

Mr. Brooks: That would be over and above, yes.

Senator Peterson: We are all aware that there is a housing crisis with the First Nations. Do you have a dollar figure for that. and is it included in your budget figures here?

Mr. Brooks: It is included. The dollar figure is $138 million from our department. I did not break it down in my speech, but there is $138 million. There is also Canada Mortgage and Housing Corporation. They have approximately $123 million that they provide toward First Nations housing.

Senator Peterson: Do you have a sense of whether that is close to being adequate? In talking to some First Nations people, I understand the budgets have not changed in 15 years.

Mr. Brooks: We are in the process of going through a complete evaluation of our housing program. We know many issues have to be resolved; there are many problems. Earlier this week you may have noticed that Minister Strahl announced the First Nations Market Housing Fund. We understand this will only involve a small segment of the population, but it will start to encourage more private home ownership. It does occur in certain communities. In Saskatchewan, the Meadow Lake Tribal Council is progressive and active.

Housing is seen by many First Nation members as a treaty right. We do not have universal rental regimes or occupancy fees going into housing, so the housing stock is often not maintained. They may not have the stated life one would expect out of a reserve. We are replacing housing often, maybe more often than we should.

We are looking to come up with a better, more robust housing plan that will focus not only on social housing but also on housing for those who are employed, who are not paying any rent, to encourage them to move toward private sector and private ownership of housing.

Senator Peterson: You indicated that First Nation communities are totally responsible for all their planning, design, acquisition and construction. Do you provide any guidance? Do they have the technical capability to do this?

Mr. Brooks: We do provide guidance. That is a fairly global statement. Some communities have the technical capabilities. Certain technical groups are around. The First Nations Technical Services Advisory Group, TSAG, in Alberta, which does provide some engineering services.

We do have technical services, engineering services now in our own shop that we provide. Quite often, outside consultants are brought in. We also have a tendering policy, referred to as a First Nations tendering policy, which is quite prescriptive on how tendering should be done for activities over a certain dollar value, over a threshold of $100,000.

The Chair: If someone new arrives in your department and you want them to get out there to start doing their job for your agency, do you have a sheet with all the programs, who is involved and how much has to be contributed by the participant? I see you indicating that you may have something that would help us. Consider us as new people in your office; we would really like to have that sheet so that we can understand the various programs that you administer. Could you help us with that? You may not have it tonight, but if you could send it to our clerk, we would distribute it to everyone. That would be very helpful if each of you could do that.

Senator Nancy Ruth: Tell us which programs are $5 million, which programs are over that and who they go to for approvals. Tell us stories about what you do; just do not give us numbers.

The Chair: Different programs have different parameters, and it is not easy for someone coming into this to know that. You must be in a position to promote your programs in your regions, so surely you could provide us with the type of information that would help us know all of the programs.


Senator Ringuette: In the same vein, I would like to know whether, in each of your organizations, you have a strategic plan for the various infrastructure programs that you manage.

Ms. Brassard: As I tried earlier to explain after a fashion, the two main infrastructure programs that we manage are ICP and MRIF, which is the Municipal Rural Infrastructure Fund, and they are managed with Quebec, which supervises them. That means that they decide first and foremost on the project. That is how the two agreements were negotiated by Infrastructure Canada.

Mr. Pelletier is our specialist in that program. The Quebec government very definitely has a strategic plan, and it is entirely consistent with the agreement negotiated, that is to say with the infrastructure priorities that the federal government has set for those two programs.

Senator Ringuette: Before handing over to the other organizations, I would like some clarification. You administer two infrastructure programs.

Ms. Brassard: Mainly.

Senator Ringuette: For those two programs, have you previously seen a strategic plan or a list of priorities from the provincial government?

Gilles Pelletier, Director General, Business Development and Infrastructure, Canada Economic Development: Yes. In fact, the framework agreement signed with the Quebec government contains an appendix in which the priorities have been identified for the infrastructure program managed for Quebec. Those components are the same across Canada: drinking water, wastewater — that is what we call the green infrastructure — transportation in the case of the first program, regional and local economic development.

These are the same priorities for all of Canada and that translates at the Quebec level into infrastructure objectives negotiated and included in the appendix to the framework agreement signed by the ministers. It is first and foremost that framework agreement that governs project selection and prioritization in Quebec.

Quebec also has a national water policy, for example. It also has drinking water quality regulations and a standards and equipment upgrade. That is what has been guiding it in project selection, particularly since 2000. It prioritizes public sanitation, improved drinking water quality and treatment of sewage discharge. It also has a list of criteria for the other components, which are mainly economic development, job creation, encouraging citizens to participate in sports and cultural activities. That is what guides it in project selection, and that is consistent with national criteria.

Senator Ringuette: Does that mean that you play no role in the other six infrastructure programs, either in negotiations or communications?

Mr. Pelletier: We play a role in the Infrastructure Canada Program and the MRIF in delivering on the communities component, as well as in the management of certain projects in the context of the Canada Strategic Infrastructure Fund. These are big projects like Mont-Tremblant, for example. These are programs that we delivery on behalf of the Government of Canada, in cooperation with Quebec.

Senator Ringuette: Who prepared the strategic plan for the region you serve?

Mr. Pelletier: The framework agreements are negotiated by Infrastructure Canada, which consults us directly with the Government of Quebec.

Senator Ringuette: I come from New Brunswick, on the Quebec border, and I travel by road from Ottawa to Edmundston, New Brunswick at least once every two weeks.

All that to say that I listen to the radio a lot. Recently, I believe it was in November, I heard on the radio that the water in 27 lakes in Quebec was suitable for drinking. In your water program — your green program, as you identified it — are the people or municipalities around those lakes eligible for that green program?

Mr. Pelletier: Yes, in fact it is the municipalities that are the applicants when the time comes to file assistance applications for the infrastructure programs. Those programs cover water supply systems, drinking water treatment plants, well water quality, in short everything pertaining to water supply and water discharge. Indeed, if we improve the quality of water discharged into the rivers and lakes, that helps improve water quality.

Senator Ringuette: Do you have a lot of money left in that program?

Mr. Pelletier: In the Canada Infrastructure Program, we have spent 85 per cent to date; in fact, all funding is committed, except $6 million out of a total of $510 million. As you will understand, it has been underway since 2000. All the funding has therefore been allocated, and we have spent 85 per cent of it, that is $433 million.

In the MRIF program, which is the wastewater and drinking water component, we have about $40 million left to commit. Obviously, as you know, Infrastructure Canada told you about the Building Canada plan yesterday.

Senator Ringuette: Is Kamouraska part of the region you serve?

Mr. Pelletier: Yes. In the context of Building Canada, there will be a component for communities as well. We expect to deliver it. There will also be continuing work under that component. The Quebec government also has its own infrastructure programs, which supplement those of the Government of Canada. They also have water improvement programs.

Senator Ringuette: If I am not mistaken, the infrastructure programs are shared-cost programs.

Mr. Pelletier: Yes, it is one-third each, for the municipalities, the Quebec government and the Government of Canada.

Senator Ringuette: There are also other ranges of programs.

Mr. Pelletier: Yes, yes. They have the Quebec Infrastructure Program. There are the shared-cost programs: MRIF and ICP; that is one-third for the municipalities, the Quebec government and the Government of Canada. In addition to the programs that we administer, Quebec has its own programs. Earlier I referred to the blue algae in lakes in Quebec. That is a problem that I believe was handled by the Quebec government.


I am very interested to know about the three other components. What type of strategic plan do you have in regard to infrastructure?


Ms. Labonté: The main program is really the municipal infrastructure program, and our response is identical to that of Ms. Brassard and Mr. Pelletier. There are priorities that are established jointly. We have a management committee with the territory and we are co-chairs. It is through that committee that priorities are identified.

Senator Ringuette: What is your participation and what does it consist of?

James Mack, Director, Northern Economic Development Directorate, Northern Affairs, Indian and Northern Affairs Canada: It is different in the territories. Infrastructure Canada and Building Canada conduct all the negotiations for the new program. It is usually different in the provinces; it is the Building Canada Fund that is in effect. In the territories, that fund is very small. It was combined with another fund that is a basic fund for each jurisdiction.

There is a fund that is given to the territories. Building Canada conducts the negotiations for that fund. There are no new programs for Northern Affairs in the administration of funds. That is given directly to the territories to assist the territorial committee. At Northern Affairs, we advise Building Canada at a strategic level, in analyzing priorities, but the administration is done by the territories. That is a unique situation in Canada because that previously did not work in the territories. So now there are two funds.

Senator Ringuette: It is the territories that will advertise the program, receive applications, evaluate them and accept the projects? Infrastructure Canada will have no other roles?

Mr. Mack: The Provincial/Territorial-Based Fund is a fund of $25 million a year for each province or territory. The purpose of the program is to be flexible and to give a lot of priority to the other jurisdiction to manage the program.

In the provinces, it is small. On the other hand, the Building Canada Fund, in the territories, is really enormous. For the entire program, it is $19 million for seven years. Now, with the new program, it is a little more than $25 million a year, per territory. That is really a big investment in the territories. Building Canada will provide the program criteria. They have objectives to achieve in terms of the committees and the environment. The territories will conduct consultations with the committee to determine which project will be done with the $25 million a year. There is no study on a case-by-case basis; there is only a strategic overall plan. That is what makes the program unique in Canada.

Senator Ringuette: You are telling me that the committees that take part in the programs that you currently manage will be the same committees invited to participate?

Mr. Mack: What is different now is that this is a federal-territorial program. There are two major players on the committee, Northern Affairs and the territorial government. The decisions are taken on a project-by-project basis, after each project is evaluated by the federal and territorial governments.

The new program is a lot more flexible for the territories. Building Canada will negotiate the funding, the framework agreement, and, at that point, there is no administrative role for Northern Affairs. Program management is not under my authority. From what I know, it is Building Canada that will manage the process, but at a more strategic level, instead of a project-by-project administration. The role of Northern Affairs will change. It will be a more strategic than administrative role, to analyze priorities based on the strategy of the plans.

Mr. Brooks: It is two combined components that belong strictly to Indian Affairs and Infrastructure Canada. With the first component, we have a five-year investment plan, a long-term structure. This is a five-year plan that rolls over every year. We are doing it in close cooperation with the First Nations, at our regional offices. We have seven across Canada south of the 60th parallel.

We do that every year, but our investment plan has three components: major projects with more than $1.5 million, minor projects worth less than $1.5 million and maintenance and operational funding.

Senator Ringuette: And as regards the other program with Infrastructure Canada?

Mr. Brooks: We have negotiated something a little different than the other regional agencies; that is to say that the Gas Tax Fund and the MRIF have negotiated an approach under which Indian Affairs and Infrastructure Canada have been told that they have granted us funding and we have put in 28 per cent of the amount. They have paid 72 per cent, which comes up to a total of $131 million. We have added 28 per cent of our budget. That is a kind of lever. Jointly with Infrastructure Canada and the Assembly of First Nations, we have developed the criteria based on the types of projects that will be eligible for the program and also how that will take place in each region. We have established investment committees that consist of people from the First Nations and people from the provinces. The provinces are invited, but that can also be municipalities, depending on where the project is located, and occasionally private institutes. In British Columbia, for example, we have a committee on communities, like in isolated regions, where they do not have access to broadband Internet.

We are working with British Columbia, the First Nations, the province and the private sector. All parties are bringing money and their outlook to the table in order to move forward with a project.

Senator Ringuette: Who will make the final decision on the projects?

Mr. Brooks: It will be our regional directors general. In our department, compared with my counterparts, they have the right to approve projects of up to $15 million. That is a lot. We are looking at that. However, for the program we have with Infrastructure Canada, the amount for Canada is a total of $131 million for a three-year period.

Senator Ringuette: Infrastructure Canada has agreed to approval of decisions for up to $15 million at the regional level?

Mr. Brooks: I cannot tell you that.

Senator Ringuette: In the context of the program, we are talking about more than $100 million, of which you have put in 28 per cent of funding, and 72 per cent comes from Infrastructure Canada. I assume that, if Infrastructure Canada puts in 72 per cent of the funding, it must want the final say on project approval?

Mr. Brooks: We have negotiated. We are going to give the approval. However, there is an oversight committee.

Senator Ringuette: Where?

Mr. Brooks: Here in Ottawa. It is chaired by two assistant deputy ministers of Indian and Northern Affairs Canada and Infrastructure Canada. They look at the projects to ensure everything is fine.


Senator Ringuette: There is a supervising committee?

Mr. Brooks: For reason of oversight, yes.


Senator Ringuette: Gentlemen from Industry Canada, what about Ontario?


Mr. Moore: In Ontario, we have three key programs. The first I mentioned was the Canada-Ontario Infrastructure Program, COIP. That is probably our oldest program; it started in 2000. The governance around that program is such that we have a management committee, similar to what you have already heard, in terms of having me and one of my colleagues from the province co-chair the management committee. The management committee will determine, based on input from ministers and so on, what the priorities will be for that program.

In the case of COIP, the priorities were determined to be green infrastructure, which includes potable water, waste water, solid waste and so on. As a second priority, we would look at such areas as culture, recreational infrastructure, tourism, telecommunications, high-speed Internet and so on. It is broader than some of the current programs.

The Canada-Ontario Infrastructure Program was launched at the same time as and purposely mirrored with programs being delivered by Ontario. Ontario was delivering three programs: the Ontario Small Town and Rural Development Infrastructure Initiative; the Sports, Culture and Tourism Partnerships Initiative; and the Public Infrastructure Renewal Millennium Partnerships.

Under COIP, applications would be submitted to the federal government through the Ontario government, through those three programs. They would actually do their due diligence and propose or submit those projects to the federal government for our consideration. We would go through our due diligence and consider whether or not there would be eligible expenses that we could support through the federal government. That is COIP.

The Canada-Ontario Municipal Rural Infrastructure Fund, COMRIF, a later program launched in 2005, was managed similarly in terms of governance structure. We had a management committee chaired by me and also one of my counterparts from the province. Again, we determined the priorities through that governance structure. In this case, they were determined to be water, waste water, solid waste, roads and bridges. That was the framework under which we were operating.

COMRIF was done by intake; we would launch an intake that would start on a certain date and close on a certain date. We did three intakes under COMRIF, which allowed us to spend all the money we had.

The governance and approval process was slightly different in that, in the case of COMRIF, we actually had a joint secretariat; that is, a federal-provincial secretariat that did the due diligence jointly and made recommendations to the management committee. It was not like COIP where the province was submitting something to the federal government for consideration. We were actually doing the work together and making the recommendations to the management committee for support.

The third program we support is the Canada Strategic Infrastructure Fund, which you have already heard about. This again is a little different in the sense that Infrastructure Canada will actually conduct negotiations with the recipient, and they develop the Treasury Board submission that will go to Treasury Board. We will be consulted through the process, but afterwards, the handoff is to Industry Canada as the federal delivery partner that monitors the agreement and ensures that when claims come in they are paid on time.

Senator Ringuette: Thank you for that explanation.


The Government of Quebec appears to have a strategic plan for the programs you administer. On the whole, I must tell you that there does not appear to be a strategic plan, a little like what we heard for the Atlantic and western diversification agencies. There is $33 billion, but there does not appear to be a strategic plan. We are looking at an enormous amount of money for investment.


Mr. Moore, you indicated that Industry Canada will soon deliver $64 million in funding to Ontario communities on behalf of Infrastructure Canada as part of a top-up of the Municipal Rural Infrastructure Fund.

I must admit, we have had a few meetings of this committee in which we have been looking for answers, and this is the first time that I remember hearing of topping up the Municipal Rural Infrastructure Fund, MRIF.

Can you explain to me what that means? Do you know whether the other groups have received top-ups as well?

Mr. Moore: I cannot speak to the other groups, but I can tell you that I believe it was Budget 2006 in which cabinet approved a top-up to the MRIF of $200 million. The Ontario share of that was $64 million. When this was announced, negotiations were undertaken with the province with respect to what the delivery mechanism would be and how we would invest the money.

A decision was taken after many months and over a year of discussion with the province that the federal government would deliver the $64 million unilaterally. We are actually dealing directly with municipalities as opposed to the province.

Senator Ringuette: That means it is not the same situation. Usually, when there is a top-up in a program, it is an extension of the existing program. That is the normal flow.

However, you are telling us that the federal government alone will distribute without consultation with the Province of Ontario. In 20 years of looking at governmental budgets, this is the first time that I have heard of a top-up program completely sidetracking the existing agreement. Usually it is an extension, 99.99 per cent of the time. What has happened here?

Mr. Moore: As I said, there were discussions between the federal government and the province with respect to the best way to deliver the funding, whether through an additional intake of the program or looking at other methods of getting the money out to municipalities.

Many discussions and negotiations between the federal government and the provincial government did not result in any consensus with respect to how to deliver this. At the end of the day, the federal government decided to actually create a program with its own set of terms and conditions, which would be the mechanism by which we would deliver the $64 million directly to municipalities.

Senator Ringuette: How much money do you have left of that $64 million?

Mr. Moore: Announcements have been made, but disbursements have not been made. Some conditions are attached to the funding in terms of environmental assessments and ensuring that municipalities can come up with their two-thirds of the funding to go toward the project. While announcements have been made for almost a totality of the $64 million, we are waiting for the municipalities to respond to us indicating that they can meet the conditions related to the funding before funding is disbursed.

Senator Ringuette: Could you provide to this committee the list of projects for the $64 million; that is, the list of projects that have been announced and the list of projects that have started and been completed? I imagine that is a regular spread sheet on projects that you would have.

Mr. Moore: To confirm, if a municipality has started a project, it would not be eligible under the program. That is one of the criteria.

Senator Ringuette: I mean projects started that meet the conditions that you just mentioned.

Mr. Moore: Yes, absolutely.

Senator Ringuette: With respect to economic development, which is another page, I understand that your organization has economic development for businesses and Industry Canada; that is for sure. Do you have economic development for small- and medium-sized businesses and INAC?


Mr. Brooks: I am laughing a little. That is because, in another life, Jeff and I were responsible for the Economic Development Division, he with Industry Canada and I with the Department of Indian and Northern Affairs Canada.

Today, our section is responsible for Economic Development for Aboriginal People. There is a program in place called Aboriginal Business Canada. That program is intended for SMEs.

Senator Ringuette: My question is now for you three. Is it true that the programs for SMEs that you administer through Canada Economic Development are non-refundable contributions?

Ms. Brassard: At the Agency, most of the contributions directed to the SMEs are refundable. It is occasionally possible for us to make non-refundable contributions, but they are smaller and intended to be fewer.

As a general rule, for business, they are refundable conditions and the refund conditions are relatively flexible. By that I mean that, when we make a contribution, the refund starts two years after the end of the project, and, as long as the refund is made in accordance with the schedule on which CED and the entrepreneur agreed, that refund is interest-free.

So these are good conditions that promote economic development.


Mr. DeMarco: For FedNor, in Ontario, all of the small business loans are refundable contributions. We do little direct support to businesses. Most of the support to small- and medium-sized businesses is through the Community Futures Development Corporations, of which there are 61 in Ontario; 24 in Northern Ontario. In those organizations, it is all repayable contributions; that is, loans.

Senator Ringuette: Should I dare to venture into Industry Canada, the big economic player?

Mr. Moore: I must put my thinking cap on here.

Senator Ringuette: I do not expect you to know. For small- and medium sized businesses, I imagine you would have a portion that is non-refundable loans or direct contributions.

Mr. Moore: At one point, we did. When Aboriginal Business Canada was within the purview of Industry Canada, most if not all of the contributions were non-repayable. Under Industry Canada, the only program that we have that provides support to small- and medium-sized enterprises, whether for growth or for creation, is through FedNor. I think you got your response from Mr. DeMarco; that is all repayable.

Senator Ringuette: If I heard you correctly, you would have programs for big industries, then. Would they have non-refundable contributions?

Mr. Moore: I will put on my previous hat when I used to be the executive director of Technology Partnerships Canada, which is now known as the Industrial Technologies Office. Under Technology Partnerships Canada, we provided repayable contributions to aerospace and defence firms. In that context, yes, we do have programs that provide support to larger businesses that are repayable, whether under aerospace and defence. We also have a ship-building program where those contributions are repayable also.

Senator Ringuette: You are telling me that Industry Canada is out of non-refundable contributions?

Mr. Moore: Yes; with the exception of FedNor. FedNor is part of Industry Canada.

Senator Ringuette: You indicated a small portion. I gather that it is roughly the same for all the different agencies, then, in that respect.


The Chair: Senator Ringuette, I can put you on the list for the second round of questions, if you want.


Now a senator from Toronto, Ontario. There is no program there, but he would be interested in what is happening in Ontario, I am sure.

Senator Di Nino: You may be surprised that Senator Nancy Ruth and I are working on one that we think particularly the City of Toronto needs. Is that correct, senator?

Senator Nancy Ruth: That is correct.

Senator Di Nino: It deals with gender balance.

First, let me go back to the comment that you made. We have had some witnesses and obviously some testimony on this. The more we talk about it, the bigger this octopus with tentacles seems to get. It becomes very complex, probably not to those of you who work with this every day but for those of us trying to understand. This is probably designed to be so complex so that no one understands it.

When you provide the information — and all of you provide this information to the clerk so that we can share — I would like to suggest that you share with us not only those programs directly managed by your organizations but also the myriad of organizations involved in your areas that are managed by the different ministries. For example, Transport Canada has some; the Department of Finance has other departments.

This is a question to all of you about the programs that you administer. You would have some joint programs with the province, or maybe another ministry that is a different from the one that provides this, the public sector or even municipalities, such as the MRIF, et cetera. Are the numbers that you gave us on what you have available to distribute and spend only funds that you have authority over, or does it include joint programs where there would be sharing? If so, could you give us an approximate number on that?

Ms. Brassard: If I may, on the MRIF programs, as well as the ICP, we have given you the federal numbers. On an MRIF program, where normally it is a third each, if you multiply it by three, you get the full span of the program for the province of Quebec or the amount of money available for infrastructure under those programs.

Senator Di Nino: That is a great deal more money than you have mentioned. There is a reason I am asking, and we will get to it in a moment.

Mr. Moore: It is the same for Industry Canada. Multiply the numbers we provided by three, and that would give you the overall value. That would be for the Canada-Ontario Infrastructure Program and for the Canada-Ontario Municipal Rural Infrastructure Fund.

Mr. DeMarco: The FedNor programming in Ontario represents anywhere from 30 per cent to 75 per cent of the contribution made to a specific project. Yes, there are many partners.

Mr. Mack: In the territories, our numbers are federal numbers. The federal-provincial-municipal relationships do not exist in the territories, so our cost shares are closer to 50/50 where the territory comes in as the only other partner.

Senator Di Nino: You would not have Yellowknife participating. You would have the territory, but not necessarily the municipality.

Mr. Mack: They participate, but we would have one funder who would be the territory.

Senator Di Nino: They would be a part of that 50 per cent.

Mr. Mack: That is right.

Senator Di Nino: The other question related to this is the role that the other jurisdictions play in the process of identifying the programs up to the point of funding. We can start with the territories or Indian Affairs.

Mr. Mack: Some targets are set in policy under the current round of programming, the Municipal Rural Infrastructure Fund. Infrastructure Canada, in administering the program, has provided us with targets around communities and green projects. Those are national priorities, but they have quite a bit of flexibility. We have established a joint management committee with each territory, and those territories have come forward in consultation with their communities. They have come to the table with a set of priorities for what they would fund. Those may be derived from their own strategies; they may have a highway strategy or a community strategy.

The infrastructure needs are very large in the territories, and the funding will not fund everything, so they set short-term priorities. We also come to the table and provide our own advice on what the priorities should be and what is realistic. For example, how ready is a community to complete a new community hall within a given amount of time? A defined list is agreed upon by both the federal and territorial officials. Approvals are done by both levels of government. Our portion of the funding and the territorial portion come into a management committee, a recommendation is made and our minister would make the decision, as would the territorial minister.

Senator Di Nino: I would like an answer from the others, but just add this component to it. Are the communities consulted? Do they have a role, or is it only through the territories?

Mr. Mack: Largely, the territories represent the communities officially. Each territory has its own process of consulting with communities, and they are slightly different. We do participate in those consultations, generally not face to face, but we monitor the results of those community consultations. It is also possible for communities to bring proposals directly forward to these management committees. The self-governing First Nations in the Yukon can develop proposals for the needs in their communities and bring them in directly. The decisions are joint with the territorial and federal government. We recognize the primary relationship between the territory and the communities, but we have federal interests and can become involved if we feel that those community interests are not done appropriately.

Ms. Brassard: In our process, the municipality will make an application. It will first be looked at by the Quebec government, the regional ministry. If it seems appropriate and they wish to prioritize it, they will select the project. Our joint committee is slightly different. We have a federal co-chair and a provincial co-chair. Once the project is selected by the provincial government, we will look at it to ensure conformity to the program, and if there is, we will submit it to our minister or the appropriate minister, depending on the amount of the project, and Quebec will do the same. That is how the projects are ultimately approved.

Mr. Moore: For Industry Canada, it is virtually the same process, with a little bit of a twist, as I mentioned earlier. Under the Canada-Ontario Infrastructure Program, we have a management committee co-chaired by the federal government and the provincial government. In the case of submission of applications, the municipality will submit their application to the province. The province, through their technical ministries, will do their evaluations and decide whether or not they will submit that application to the federal government for consideration. That gets done through the management committee.

The other point of interest is that while they are not a voting member at management committee, the Association of Municipalities of Ontario is also at the table for all of our management committee meetings. There is somewhat of a voice at the table in terms of the discussions we have about applications and frameworks and so on.

The Canada-Ontario Municipal Rural Infrastructure Fund is slightly different in that the application will actually come in to the joint secretariat. The joint secretariat is composed of federal representatives and provincial representatives. Depending on certain aspects of the project, we will have certain ministries involved from the provincial side. A ministry of transport would be involved if it is a road or a bridge. If it is water, it will be the ministry of environment.

We also lend our expertise in terms of looking at the business case or business plan being brought forward. It gets done jointly by the joint secretariat, and the joint federal-provincial secretariat will submit the proposals to management committee for consideration. If everything is fine, it moves up through the approval processes, through the federal side and the provincial side to the respective ministers for approval.

Senator Ringuette: Except for the $64 million, the top-up.

Senator Di Nino: I think there was a misunderstanding, at least on my part, as to whether the $200 million nationally, or the $64-million Ontario component, was really a top-up or a new program that added to a similar type of program but under different rules. It is really a new program, because you did make a comment that the program was changed, at least to the degree where the federal government unilaterally, without the province, decided to manage and distribute the funds. Therefore, was it a new program or a continuation?

Mr. Moore: I will not speak too much on behalf of my colleagues, but my understanding was the $200 million was a top-up to an existing program to be administered under the existing terms and conditions of the Municipal Rural Infrastructure Fund. The issue is that in Ontario, because we could not come to agreement in terms of the mechanism for delivery of the $64 million, and because there would be a departure from the terms and conditions, we would have to create a new program by going to Treasury Board to create a new set of terms and conditions to deliver the $64 million. Obviously the most significant point of departure for the MRIF is the fact that we would be dealing directly with municipalities as opposed to dealing with provinces with these projects.

Mr. DeMarco: With respect to FedNor, we do not deliver infrastructure, but with all of our various suites of programs we do have network of field officers throughout Northern Ontario who deal with proponents face to face; applications are reviewed. We do have vast consultation, particularly with the provincial government because they have an extensive program as well for Northern Ontario.

Officers work in the field to develop applications, consult with their colleagues, the province, the municipality or other federal departments. Then applications work their way through FedNor for eventual review by the director general of the organization.

Senator Di Nino: The issue that keeps coming up in my mind is that I think these programs are very valuable contributions to needs across the country, and it is still not clear in my mind who is responsible to ensure that the taxpayers of this country receive value for this. Who, in effect, takes the responsibility of saying that they spent a dollar here, and it all went down the drain, or it resulted in something good for that community?

I do not want to pick on Indian and Northern Affairs Canada necessarily, but all we hear — whether it is water, sewage or housing — is nothing but horror stories. I said, "all we hear"; I did not say that is all there was. Obviously, there are a lot of success stories.

Who is responsible once we issue the cheque? Do we walk away, or do we monitor or analyze these projects?

Tell us some of the good things that have happened to enhance the lives of Canadians across the country because of this myriad of programs that we have.

Mr. Brooks: Speaking generally about our capital budget, unfortunately all you hear about are the horror stories. Many capacity issues exist in First Nation communities. There are various types of social and economic issues and many systemic issues. Unfortunately, many of the social issues contribute to some of the conditions you see.

By the same token, we provide our funding on a contribution arrangement basis. This is monitored by financial services officers that have a privileged relationship with each of communities and go in on a regular basis to check various activities.

We can never have enough compliance monitoring to strengthen our own internal monitoring. Many of the communities we deal with are in remote areas that are difficult to get to and very expensive to get to. The monitoring may not be as precise as it should be as a result. Bringing consultants in to do some of the work has been extremely labour-intensive and very expensive, but on occasion this needs to be done.

In terms of the good things that have been done, there have been good things.

Senator Di Nino: I am giving you the chance to put it on the record.

Mr. Brooks: Thank you. As I mentioned, earlier this week Minister Strahl and Minister Solberg announced the First Nations Market Housing Fund that will be administered by the Canada Mortgage and Housing Corporation. Seven out of nine members of the board of directors will be First Nations people, which is quite an interesting approach.

Several communities have private home ownership. In Kahnawake, just outside of Montreal, close to 95 per cent of the community own their own homes. Many of those homes are 50-, 60- and 70-years-old. It can be done. Akwesasne, for example, is starting a significant housing development for private ownership. There are several good things happening.

In terms of water, we heard the horror stories and they exist. We work closely with First Nation communities and an organization referred to as Circuit Rider Training Program, which conjures images of people on horseback, and that is exactly what they are. They provide on-site oversight and work with operators to help those not necessarily certified or trained on the various water plants. They work in a hands-on approach to help train them to obtain their certification. They provide 24/7 servicing. Therefore, we do not have many incidents of bacteria, such as E. coli, in the water systems.

Minister Strahl recently announced a report on the progress of water. We have recently reduced the number of high-risk water systems, defined as one where if a problem occurs, there is a good chance potable water may not be available. A few years ago, 195 of our systems were considered high-risk. We have reduced it to 85. We would like and are aiming to have it down to zero.

Some significant policy changes are also in the works. I heard my colleagues from Canada Economic Development for Quebec Regions, CEDQ, mentioning that one of the approaches they take on potable water is for wells and septic systems. I am a rural Canadian and I have a well and septic system where I live now. That is true for many in rural Canada.

Our department veered away from that many years ago. The policy was to go toward water treatment systems — water plants, water treatment plants and waste water treatment plants. I spoke about comparability before. We are trying to go back toward comparability. Many communities, despite having a different policy in place, have gone ahead with wells and septic systems that have produced successful results. I can cite many communities in Quebec as perfect examples of where we have not had many water problems.

Senator Di Nino: I have a question specifically for your department.

It seems to me as if the First Nation communities or the municipalities are not playing much of a role in the discussion and negotiations other than making an application. Should we recommend, in doing these programs, that the people who will be involved and who will receive these benefits are involved in the negotiations? It sounds as though they are primarily left out. Maybe they do not have that sense of ownership necessary to want to be responsible for maintaining these projects.

Mr. Brooks: That is an excellent point, senator. It is one that we have made many times; housing is a prime example. There is a lack of rental regimes now. Unfortunately, when you do not pay for something, you do not want to treat it as your own. Therefore, we are looking at going forward with more rental regimes.

I must add that everything we do with First Nation communities involves consultation. With the various Supreme Court decisions that have been made, we have to undertake consultations. I spoke about the First Nations Infrastructure Fund. We did it in close concert with our friends from the Assembly of First Nations and the various regional and provincial-territorial organizations that they represent. We work very closely with the communities to shape the programming and to better deliver the programming.

Ownership is one area that is a more difficult nut to crack. I mentioned in my comments that some communities view infrastructure as a fiduciary obligation of the Government of Canada. Infrastructure, from our perspective, is a matter of good social policy. We appreciate that good infrastructure is needed in a community, but it is not a fiduciary obligation.

Senator Di Nino: I would like a quick response on those questions from the others, if you do not mind, Mr. Chair.

Ms. Brassard: Infrastructure Canada has the overall responsibility. For the most part, they are the ones negotiating the framework agreements with the provinces, and we are the delivery partners. For the programs that we are responsible for delivering, we receive the priority application from Quebec, and there is a first analysis of it. We will look into any environmental issues that may arise. Once a project has been selected, we will monitor throughout its life cycle that it is being done, that the payments are being made accordingly and that we have what it takes to justify those payments. Analysis s done to ensure the money is spent where it should be spent.

We conduct mid-term program evaluations to ensure that the aims or policy objectives of those programs are actually met. We also conduct independent audits every year to ensure the processes we have put in place are followed and that we know where the money is at each step of the way. For those programs for which we have responsibility and accountability, we put in place the structures to ensure that they are met.

Mr. Moore: To build on that without being repetitive, Infrastructure Canada does negotiate memoranda of understanding, MOU, with each of the federal delivery partners; so whether it is Western Economic Diversification Canada, CEDQ, ACOA or Industry Canada, we have an MOU in place with Infrastructure Canada that outlines the roles and responsibilities of the partners.

As my colleague said with respect to what is done at CEDQ, through our management committees and various infrastructure programs, we also have audits. We jointly manage the audit process between the provincial government and the federal government to look at auditing the recipients. We will do an appropriate sample size of recipients and look at how they have spent the money, against what activities and whether they can account for the monies that we provided. Those are the recipient audits.

Senator Di Nino: Is that to determine if the program is delivering the services intended?

Mr. Moore: Yes, exactly. We also conduct program audits as well at the departmental level to look at the integrity of the program being delivered, to ensure appropriate accountability structures are in place; but then the accountability rests with Infrastructure Canada in terms of evaluation purposes. Formative and substantive evaluations of the entire infrastructure program or programs are done through Infrastructure Canada.

Mr. DeMarco: With FedNor, I mentioned earlier the network of officers that we have throughout Northern Ontario. Those officers stay with a project right from the point of taking in the application and evaluating it through to the end of that project, so it is carefully monitored. We identify risk associated with each of the projects when it is started, and the level of monitoring would be dependent on that risk.

With respect to the value of the program, each project has specific performance indicators outlined at the beginning. These performance indicators are assessed throughout the project, certainly when it ends and even after it is concluded. A year or two after completion, we go back and look at the project to see if it has met its objectives. As with the other programs, we have formal evaluation audits on an annual basis.

You asked for examples of some good stories. I can quickly give you three examples, the first being in Thunder Bay. Thunder Bay, of course, is the largest community in Northwestern Ontario and has undergone a fairly significant transformation, primarily because of the shipping and then the forestry industry. We have, with the assistance of other funders, started up a molecular research centre in Thunder Bay with the university, and it is associated with other hospitals in Ontario. This is serving to transform that local economy into a more knowledge-based, high-tech industry. We have had considerable success with that.

I would also mention a project called Discover Abitibi, which is in the Timmins region. About five years ago, we looked at leading-edge, high-tech equipment to try to find new ore bodies because ore bodies were running low throughout that region, and of course, they are dependent on the mining industry. We have been fortunate, now with the prices of metals, that at this point the information that was sought through those discoveries is now finding its way to fruition, and opening new mines in that region is being contemplated.

Finally, the Royal Agricultural Winter Fair, which many of you may have been to in Toronto over the years, has a Northern Ontario exhibit on an annual basis. We bring over 40 companies from Northern Ontario associated with the agricultural industry to Toronto for the 10-day fair where they have an opportunity to showcase their goods. This has proven very successful in developing that industry in parts of Northern Ontario. Those are three examples where we made significant contributions to support industry in the North.

Senator Di Nino: Thank you. That was very useful.

The Chair: I agree. Thank you for those questions.

You mentioned the MOU with respect to programs. If there is a new program, do you have to go through a new MOU each time, or is there a standing MOU that covers everything?

Mr. Moore: For example, with the Building Canada Fund, we would have to negotiate a new MOU.

The Chair: You are in the process of doing that now?

Mr. Moore: Not quite yet. We are waiting for most of the framework agreements to be signed, and then we will probably get into more details with respect to the MOU and respective roles and responsibilities.

The Chair: Some framework agreements are closer to being finished than others, but are you aware of any concluded framework agreements?

Mr. Mack: All three are concluded in the territories.

The Chair: You are moving along in the territories. That is helpful. What about the MOU?

Mr. Mack: The approach in the territories is the MOU is an administrative relationship between Infrastructure Canada and the department. In the case of the territories, because of the unique approach that has been taken, there will not be an administrative role for INAC, so there is no need for a memorandum of understanding.

The Chair: If you could help me with this, is it "Building Canada Fund" or "build Canada fund"? Is there an "I-N-G" on "build"? I have seen it both ways.

Mr. Bordeleau: I believe it is "Building Canada Fund."

The Chair: We will refer to it that way.

Mr. Bordeleau: In French, it is Chantiers Canada.

The Chair: Thank you. Someone mentioned earlier the base fund is $25 million per province or territory. It is the balance based on a per capita distribution?

Mr. Mack: There are two separate components. One is referred to as the provincial-territorial base fund. It is $25 million per year for seven years, which is given to every province and territory. The second component is a Building Canada Fund, which is a per-capita-based allocation. In every province, both programs would be administered. In the territories, effectively, you have the $25-million base fund with around $1 million per year based on the per capita. It did not make sense to have two separate programs, so they were merged.

The Chair: We were made aware of a program when we were asked to rush through Bill C-41 called the Community Development Trust. Will your agencies be involved in administering this particular trust or flowing the money from the trustee to the province?

Mr. Bordeleau: No, we will not.

Ms. Brassard: No, neither will we.

The Chair: This money will flow into your regions presumably, but you are not involved in the decision making or allocation of this at all?

Mr. Mack: No, we are not.

The Chair: Do you know if any money is flowing into your region yet from that particular $1-billion trust?

Mr. Mack: We had an announcement in Nunavut, and the Government of Nunavut had talked about how it intended to spend the fund. I do not believe the actual money has been transferred yet, but the agreement has been reached.

Senator Di Nino: It is part of that big huge tentacle or animal that is out there. It is an octopus.

The Chair: I understand. I do not believe that the trust agreements with the trustee are finished. Agreements must be signed with each of the provinces, and some of the provinces have quickly signed saying, "Sure, send us money." However, they cannot do that until it is set up with the trustee.

Money from the federal government and many programs are coming into your regions. How do you avoid stepping on one another's toes with the other feds coming in with their various programs, such as this trust? How do you periodically get together to avoid that happening?

Mr. Mack: We spoke today about INAC's role in delivering infrastructure programming. Similar to FedNor and CEDQ, we also deliver regional development-type programming, which is of a much smaller scale. Part of that responsibility includes a responsibility around federal coordination.

We have development officers in each of the territories who develop personal networks with other departments and ensure that if we look at a sector such as tourism, we use our funds partnering with any other available funds and coordination with the territories to try to make that happen.

In particular, our relationship with the other jurisdiction, the territorial government, is very important because we can often hear from them about their intentions to use something similar to a community development trust, and we work to ensure those are used most effectively.

The Chair: Do you, even though you do not control or participate in delivery, participate in letting people know about these programs?

Mr. Mack: We have that responsibility, and we try our best. It is a little easier in the territories because often we are one of the few federal officials living up there, so we do have a role as the eyes and the single door to other federal departments. We try our best to provide that service.

Mr. DeMarco: Much is the same in Northern Ontario, where our officers tend to be the lead federal officers in these communities. There are not too many other federal programs that we would trip over, if you will. There are a number of provincial programs, and that is probably where most of the coordination is required and takes place.

The Chair: You mentioned Community Futures Development Corporations. The collectivity, or whatever you might call it in French.

Mr. Bordeleau: "Communautés développement des collectivités."

The Chair: Does that exist in each agency? Is this a standard thing, and does the money flow through your agency to them each of them?

Mr. Bordeleau: Yes, that is correct.

The Chair: It is presumably based on who they are serving and such.

Finally, on program envy, do you, in your agency, look to another agency or agencies across Canada that are doing the same type of economic development and say, "I wish I had a program like that? That would be really good to have." If so, can you tell us what programs you would like to have that you do not have in your particular portfolio of programs?

Mr. Mack: It is a dangerous question. However, our program is scheduled to sunset. The vast majority of our funding on economic development is scheduled to sunset on March 31, 2009, so we are in the normal process of having an external evaluation done of our program. We also reached out at a working level to the other regional development agencies, many of whom we partner with on a small operational level. We have good relationships with CEDQ on tourism issues that transcend Quebec and Nunavut, so we have tried to learn from these other organizations. Each one has evolved to be regionally specific. We found some interesting ideas and you will find, as you have heard, that there is a slightly different approach taken in each one but still a bit of logic.

I would say that I am personally envious of all of them. The territories only have 100,000 people, but we have 40 per cent of Canada, so determining the right level of funding and involvement is difficult. That is maybe a vague answer, but that is generally how it is.

The Chair: That is helpful. You are right, with only 100,000 people, you obviously would have a different type of program than Ontario, for example, or Quebec for that matter.

Mr. DeMarco: We in Ontario consider ourselves fortunate. The terms and conditions of our program are very flexible. In fact, as you just mentioned, we look across the country and scan other programs to see if there is something we should try and duplicate within our own programming. We are not that restricted. We can be flexible, and we can change as the economics require us to change.

The Chair: Good. I am glad to hear that.


The Chair: And are you satisfied in Quebec?

Ms. Brassard: We have just completed the first year of our new programming. We are at the start of the cycle, whereas our colleagues seem to be more toward the end. And we have had the opportunity to look at other programs elsewhere and to see what their needs were. Our programming is relatively flexible and enables us to meet a range of needs and get a good range of results. So for the moment, I am not very envious.

Senator Ringuette: In response to that question and to Mr. Mack's comments, I suppose that you are also called upon to work on certain projects with ACOA, as well as with Abitibi-Témiscamingue and FedNor. Do you have any joint tourism development projects in that region?

Ms. Brassard: Our projects are territorial. We intervene in Quebec, as our colleagues intervene in a specific territory. There are very definitely consultations. We regularly talk to each other about specific projects, but also generally about the issues we share. There is a lot of cooperation.

Senator Ringuette: Issues in the forest sectors?

Ms. Brassard: For example, or the mines. Sudbury, Abitibi-Témiscamingue, there is a provincial border, but there are all the same interesting issues that we share. That kind of conversation takes place.

Senator Biron: On December 12, the minister announced in a news release that the Capital Fund for Business Succession and the Venture Capital Fund for Business Start-ups in the Regions would be the subject of a report on March 31. Was that report prepared and what projects are supported by those initiatives?

Ms. Brassard: We said that we were going to evaluate the two programs and I do not think that is completed yet. A certain number of projects have indeed been carried out under the two funds. We now just need to see how things turn out.

Senator Biron: When your analysis is done, could you send us the results?

Mr. Pelletier: The evaluation report is finished. Like every government evaluation report, it will eventually be made public and put on our website as soon as departmental authorities have approved it. That is part of the answer, and the other part is the analysis of the report's findings to see whether there is subsequent action and what subsequent action will be taken on the succession and start-up funds.

Senator Biron: There are no specific measures for the textile and clothing sectors, as for the forest sector, but can they be helped through requests that could be made to the regional office?

Ms. Brassard: For the textile industry, the CANTEX program applies, which we administer for Industry Canada. It is specific to that sector.

Senator Biron: There are 14 regional offices, and approximately 82 per cent, that is $238 million out of the $287 million, has been distributed; so there is approximately $50 million left. Has that money also been distributed in each of the regional offices?

Ms. Brassard: We do not divide the budget by 14. We have a budget allocation formula essentially based on three criteria: first, the population and decline of the regions; second, the unemployment and occupancy rates, as well as the use of government programs; and, third, we look at the development potential and take into account the number of small and medium-size enterprises in the territory. It is a formula that enables us to come up with an amount for each of the business offices.

Senator Biron: Can we have an idea of the number of financial applications accepted and the number of those that are rejected by the regional office? Do you have any statistics on that?

Ms. Brassard: As regards the number of files examined, we did about 500 last year. However, you should know that some take a certain amount of time to develop. Some projects are longer than others. People come and see us with project ideas that are not mature enough for us to include them in our statistics. Occasionally, too, the project simply cannot be received by us. We will not make people work for nothing if it does not really fit with our programming. Without keeping a negative statistic, that is to say without opening a file or saying no, we will take the time with our advisors to provide explanations.

Senator Biron: Minister Blackburn also announced that projects related to broadband access services in the regions would be eligible for financial assistance under the Major Economic and Tourism Facilities Program. There is not already a program for broadband access?

Ms. Brassard: It is possible to look at broadband projects under our present program. We look at those projects from the standpoint of their potential for supporting economic development. This is a form of infrastructure. The standpoint from which we look at it is really its ability to help and support a region in its economic development. We will look at them for the regions in the 7/21, that is to say in the regions in more difficult situations, to the extent that there is reason to intervene.

Senator Biron: That would be in addition to what is already being given by the Department of Industry for broadband?

Ms. Brassard: It might be that program. However, you must know that, in all our rules, there are duplicate financing rules, and we could not wind up in a situation in which federal money would amount to 100 per cent of the contribution and we pay everything.


Senator Peterson: Community leaders tell us that they have to develop and commit to 5- and 10-year capital budgets, but your funding horizon is quite a bit shorter than that. Is it possible to come up with a program of dedicated funding over a larger period of time so that it will balance with what they are trying to do?

Ms. Brassard: If I understand your question correctly, our programs are five-year-based.

Senator Peterson: Would you commit to a municipality for funding in a fixed amount for those five years?

Ms. Brassard: No.

Senator Peterson: Is it possible to do that? They say they cannot commit. They will develop a program that will take four years and cost $25 million, and all the funding can commit to is maybe the first two years of that, and then it could be cancelled. What do they do then? They have a dilemma. A number of community leaders have brought this up. Is there any way you could, in the future, address this to see if it could match so that we can move forward on this in a logical way? Otherwise it is all piecemeal because they do not know.

The Chair: Did you wish to reply to that?

Ms. Brassard: If I understand the question correctly, we have the possibility to make a commitment over years in the infrastructure program, seven years, so we have to work within the terms and conditions of the program.

Senator Peterson: I know you do. I am just asking whether the program matches their needs. A number of them have told me this. You are telling us something different.

Mr. Pelletier: According to our evaluation, when we got the result, in Quebec at least, most municipalities have told our evaluators that we were meeting their needs, that they were pleased with the program the way it is administered. As Ms. Brassard said, they have to submit their application before a certain date, but they can complete the work over a certain number of years. For example, the Infrastructure Canada Program has until March 2010 to complete its work.

The Chair: Senator Peterson would like a different answer. He was wondering whether it is possible for you to commit to a program over a number of years and say: We can give you X million dollars this year and X million dollars next year so you can go ahead with your project.

Ms. Brassard: We can disburse over years. The issue is that the terms and conditions will specify, as in this case, that there is an end date to finish the project and an end date for us to pay. Within those confines, we can be flexible.

The Chair: That can be over a period of seven years, or at least five years?

Ms. Brassard: Yes.

Mr. Moore: The Canada-Ontario Infrastructure Program started in 2000 and ends in 2009-10, so they have nine years within that time period. We do our intake at the beginning of the program, which allows for multiple years for the projects to get done. For example, it would be very difficult to commit to a project in 2008-09 because they might require multiple years in order to get that done. That is why you will see our intakes being done immediately when the program is implemented, with probably a short period of time to complete that intake so that the recipient has sufficient time to complete the project.

Mr. Pelletier: This program was extended twice, once in 2005 and once in 2008, to accommodate the municipalities and their needs. To allow them to complete their work and be able to do what they wanted to do, twice we extended the program, so it is now over 10 years.

The Chair: That is helpful. Thank you very much.

On behalf of the Standing Senate Committee on National Finance, I would like to thank you very much for being here, Industry Canada, the Ontario portion, FedNor and Canada Economic Development for Quebec Regions, and Indian and Northern Affairs Canada. We appreciate your attendance. You have all given us valuable information, and we look forward to receiving the other information to help us draw all of this together. We encourage you to continue the good work you are doing for Canada.

The committee adjourned.

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