Proceedings of the Standing Senate Committee on
National Finance
Issue 3 - Evidence - June 21, 2011
OTTAWA, Tuesday, June 21, 2011
The Standing Senate Committee on National Finance met this day at 9:30 a.m. to examine the Supplementary Estimates (A) for the fiscal year ending March 31, 2012.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourable senators, this morning we are going to continue our review of the Supplementary Estimates (A) 2011-2012, which were referred to our committee.
[English]
This will be our final meeting on Supplementary Estimates (A) for this fiscal year but we will continue to study the government's expenditure plans over the course of the fiscal year, as we are entitled to do in this committee.
Last Wednesday evening officials from Treasury Board Secretariat provided us with an overview of the supplementary estimates, but we will now turn our attention to two of the larger appropriations contained in Supplementary Estimates (A).
In the first half of the meeting, we will hear from Canada Mortgage and Housing Corporation, and in the second half, we will hear from Natural Resources Canada with a particular focus on AECL and remediation expenditures for contaminated sites.
We are pleased to welcome from Canada Mortgage and Housing Corporation, Karen Kinsley, President; Marc Joyal, Vice-President and Chief Financial Officer; and Sharon Matthews, Vice-President, Assisted Housing.
Karen Kinsley, President, Canada Mortgage and Housing Corporation: It is a pleasure to be here to discuss CMHC's request under Supplementary Estimates (A).
[Translation]
CMHC's objective, on behalf of the federal government, is to improve housing quality, choice and affordability for Canadians. It is a mandate that involves the entire scope of housing — from ensuring that Canadians have access to cost-effective housing financing, to undertaking leading-edge research and analysis, and providing direct housing assistance.
[English]
About 80 per cent of Canadians are able to meet their housing needs through the marketplace. For those Canadians who need more of a hand up, CMHC works closely with our provincial and territorial partners, as well as other stakeholders, to help ensure access to safe, affordable housing.
Those in need include some of the most vulnerable in society: low-income Canadians, seniors and people with disabilities, women fleeing domestic violence and Aboriginal people.
As Canada's national housing agency, a core part of CMHC's public policy mandate is to support affordable housing for low-income Canadians and First Nation communities. We do this through a number of programs funded by appropriations included in the Main Estimates. This includes $1.7 billion, for example, in the form of ongoing subsidies provided by CMHC so that close to 615,000 families living in existing social housing can continue to afford their homes. Most of these subsidies are committed under social housing programs that were active until 1993.
The committee may recall that, in 2008, the government committed $1.9 billion over five years to improve and build new, affordable homes and to help the homeless.
The $253.1 million we are requesting through supplementary estimates is the current portion of that five-year commitment to fund federal investments in affordable housing and renovation programs.
[Translation]
Our 2011-12 Main Estimates do not reflect this funding, as CMHC received its authorities for the remaining three years after the Main Estimates were finalized. For this reason, they are now included in these Supplementary Estimates.
[English]
With regard to this affordable housing funding, CMHC has been working with provinces and territories on delivery arrangements to best meet the diverse housing needs of low-income Canadians.
As mentioned earlier, funding has been committed through to 2014, and with the approval of this funding request, funds will flow once bilateral agreements are signed with provinces and territories.
The other adjustment we are seeking through the Supplementary Estimates (A) is to re-profile a relatively small amount of the close to $2 billion in funding CMHC delivered for social housing investments under Canada's Economic Action Plan.
As you will recall, Canada's Economic Action Plan included $1 billion to renovate and retrofit existing social housing, $400 million to build new housing for low-income seniors, $75 million for new housing for people with disabilities, $200 million for northern housing and $400 million for on-reserve housing.
As a result of this one-time funding, more than 14,000 social housing and First Nation housing projects have been completed or are under way across Canada. However, because of last-minute, project-specific work delays driven by weather conditions and unforeseen installation problems, a small amount of the work was not fully completed prior to the March 31, 2011 deadline.
We are therefore seeking a re-profiling of funds from 2010-11 to 2011-12: specifically, a re-profiling of $908,000 for the First Nations housing Retrofit Initiative and a re-profiling of $1.4 million for the off-reserve renovation and retrofit of existing social housing. This funding is necessary to ensure that First Nations and other project proponents can complete the planned work and provide Canadians in need with access to new and improved housing and, of course, all the benefits that come with it.
[Translation]
Thank you again for the opportunity to meet with the committee. I would be pleased to answer any questions you may have at this time.
[English]
The Chair: Thank you, Ms. Kinsley. The schedule that will be attached to the supply bill appears at page 61 of the supplementary estimates. I see the $254 million to which you referred. Is the re-profiling part of that?
Ms. Kinsley: Of the $254.5 million, $253 million is for new funding for affordable housing and renovation programs. The re-profiling is $1.4 million in relation to the off-reserve retrofit of the existing stock. I also referred to $908,000, in statutory programs. That amount is shown separately in the bill.
The Chair: For information purposes, the statutory is here but would not be part of the supply bill.
Ms. Kinsley: It would not. It would not be a voted appropriation.
The Chair: Thank you.
Senator Callbeck: Welcome. Thank you for coming this morning.
In Supplementary Estimates (A), you are asking for $253 million. Are the funds for the provincial agreements included?
Ms. Kinsley: Yes.
Senator Callbeck: Are all those agreements signed? I take from what you said that they are not all signed.
Ms. Kinsley: No, in fact, we are in negotiations, and we expect the announcement of first agreements.
Senator Callbeck: When the agreements are completed, could you provide the committee with the amount that each province will receive?
Ms. Kinsley: Yes.
Senator Callbeck: Could you compare it with the agreement five years ago? The committee would like to know whether there is an increase or a decrease.
Ms. Kinsley: I can give you the percentages because the provincial percentage allocation has not changed. The allocation methodology and percentages under the existing affordable housing agreements to which you referred, were signed in two phases a number of years ago. They will remain unchanged.
Senator Callbeck: What about the total amount?
Ms. Kinsley: The total amount is the same as the funding that we previously had. If you think of our Affordable Housing Initiative, it was $125 million a year; our renovation programs were $128 million roughly, and that adds up to the $253 million that we are seeking through the Supplementary Estimates (A). Therefore, the absolute pot is unchanged and the allocation is unchanged.
Senator Callbeck: The funding is the same as in the agreement that was signed five years ago?
Ms. Kinsley: The funding is the same on an annual basis as we were spending through those other agreements.
Senator Callbeck: Can I take from that that there will not be any further money in the RRAP, the Residential Rehabilitation Assistance Program, or the Emergency Repair Program?
Ms. Kinsley: That is correct. There will be no increased funding.
Senator Callbeck: There is a tremendous demand for those two programs in my province. Last year, I looked into the Emergency Repair Program and learned that there is a two-year waiting list for assistance. The RRAP had a long waiting list as well. I am concerned that there is not any extra money for those programs.
Ms. Kinsley: The money is the same as what we have had historically.
Senator Callbeck: Many people will not be served by these programs or will have to wait years.
In 2003, the CMHC, INAC and Health Canada committed to addressing the mould problems in houses on reserves. In 2006, the Auditor General indicated that three departments or agencies had not acted. In fact, they did not even have a plan to do anything. In 2011, the Auditor General said there had been some progress but it certainly was not satisfactory.
I am wondering what you are doing about this. The Auditor General detected this problem in 2003, which is eight years ago.
Ms. Kinsley: Senator, you are right with the observations made. To give you background on what we have done, in 2006, we worked with First Nation communities as well as our federal colleagues to come up with a comprehensive plan to try to deal with the question of mould in on-reserve housing. We have since then done a number of things, including providing training to households to try to help them understand what leads to mould and how to remediate it. Through the renovation program you referred to a moment ago, we have an ability for qualifying communities and individuals to use that RRAP funding to help remediate mould.
However, it is a very difficult issue to get a handle on because it requires the occupant of the unit to be responsible in terms of maintenance; it requires the local First Nation community to oversee the maintenance of the stock; and, CMHC is required to provide the tools to help both parties deal with this issue.
Part of the issue that arises with mould can also be exasperated by overcrowding conditions. This is something that we see in many First Nation communities, where there are more people in a home than suggested by the National Occupancy Standards. That creates added moisture and added deterioration.
Therefore, it is a very difficult issue to solve once and for all. I think we have made, perhaps not enough, great gains in educating and providing the necessary tools to the communities to understand what causes the issues, how to remediate it, and in some cases, financial assistance to do the remediation.
Senator Callbeck: How much financial assistance?
Ms. Kinsley: We have not increased the financial assistance, so within the RRAP program today, the amount that is dedicated for on-reserve housing can be allocated at the choice of the First Nation communities to deal with remediation of mould in their communities, if they so choose.
Senator Callbeck: The Auditor General also talked about housing that needed to be replaced and renovations needed for health and safety for reserve housing. When I look at the figures for on-reserve housing programs that are in this budget, you are down roughly $59 million. The Auditor General has pointed out these problems since 2003, and here we are coming in with a budget that has allocated less money to this issue.
Ms. Kinsley: Actually, there is not any less funding for Aboriginal housing. I think perhaps some of the confusion has come up — we have heard this in the last little while. Depending on what years you are comparing, we spend approximately $145 million a year in building new affordable on-reserve housing. In addition, we provide about $156 million annually to subsidize the existing stock. There in fact has been no decrease in that funding over the last number of years.
Where people have seen a decrease in the numbers is if they were perhaps comparing them to the 2008-09 fiscal year and looking at our current budget requests. The reason there is a decline is because in 2007-08, the federal government authorized a one-time set of expenditures of $300 million to be set aside in what is called the First Nations Market Housing Fund. This money was given to us in two tranches, $150 million in 2007-08 and $150 million in 2008-09. This was over and above the ongoing funding I spoke of, the $130 million new funding as well as $156 million for existing housing.
If you are looking at any budget number, in the current budget or previous years, and compare it to 2008-09, you will see a significant drop just because that one-time payment is no longer there. However, it should not be confused with a decline in core funding.
Senator Callbeck: If we look at the figure for 2007-08, it is $148 million and you are asking for $156 million, which is only $8 million over four or five years.
Ms. Kinsley: Yes. We commit our on-reserve funding up front but we subsidize those houses over a 25-year period. Each year we are committed to building approximately 1,000 new units, but the amount that we actually disperse of that total commitment in a year is relatively small because we disperse it over the lifetime of that unit. We make significant commitments each year to build new housing, but the actual cost or expenditure related to that will in fact be dispersed over a long period of time.
Senator Gerstein: On page 8 it states, "This funding will support a broad range of provincial and territorial housing programs." Who administers the distribution of the funds?
Ms. Kinsley: Do you mean on the ground?
Senator Gerstein: Yes.
Ms. Kinsley: The provinces and territories administer the distribution of the funds. We distribute the renovation program funds in five jurisdictions: P.E.I., Ontario, Alberta, B.C. and the Yukon. In all other jurisdictions, provinces and territories administer all programs, and in those five jurisdictions, the province administers the affordable housing program.
Senator Gerstein: How do you know that you are getting value for money, that what you are dispensing actually is seeing itself on the ground?
Ms. Kinsley: We have a very clear and robust accountability regime with our provinces and territories through multilateral and bilateral agreements.
For instance, we have outcome objectives in terms of the targeted nature of the assistance. We have plans around how they expect to disperse it up front. We approve those plans. We actually determine through the provincial and territorial auditors' report that those monies have been spent and been spent according to the terms of the agreement, and we match that against the plan given to us at the outset of the year.
We have an accountability framework that talks about the principles the federal government wants to achieve, we have operational agreements that talk about the specific tactics they will deploy and we have an auditing certification regime at the end of the year to say that it was done.
Senator Gerstein: To follow up on that, in terms of how you look to accountability, what is the timeliness of it? In other words, for a program that you are dispensing this year, how far in the future are you doing this accountability exercise?
Ms. Kinsley: Annually.
Senator Gerstein: Annually for the funds that are dispersed?
Ms. Kinsley: Correct.
Senator Gerstein: It is current.
Ms. Kinsley: It is current.
Senator Murray: I must confess I have not read the Auditor General's latest report with regard to Aboriginal housing, housing on reserves. I have, I guess like most of us, seen the media reports and I believe I have a fair grasp of what she had to say.
When it comes to the condition of existing housing on reserves and the need for additional housing, which is the lead federal department? Is it the Department of Aboriginal Affairs, as it is now, or CMHC?
Ms. Kinsley: We have joint responsibility, so CMHC has housing programs on reserve and Aboriginal Affairs Canada has funding that they set aside to First Nation communities for housing. The main distinction between our two approaches is CMHC commits funding for the construction of homes. If a home costs $100,000, that is the commitment. The home would have to be built according to building standards and we would subsidize that home or its occupant over the next 25 years.
In the case of our colleagues in Aboriginal Affairs, they provide funding to the First Nation community through a funding agreement. In that funding there is money tagged for housing, but it is up to the First Nation community to determine how that funding is allocated on the ground.
Senator Murray: It is you might say tripartite, involving the First Nations community and the two federal —
Ms. Kinsley: Yes, and the two federal agencies.
Senator Murray: I am sure you can guess at my concern, which is that some of this might be falling between departmental or bureaucratic stools and that this may explain some of the problems that have been identified by the Auditor General and others, regarding the inadequacy of the progress that has been made to date.
In answer to Senator Gerstein, you described how it works with the provinces. That is a bilateral arrangement essentially and, from your testimony, it seems to work in terms of accountability.
Describe the process, though, in terms of a need to improve existing housing or to add additional housing on a reserve. How does the process start? Who goes to Treasury Board and the cabinet for the money and explains the rationale for proposed expenditures? Address the question of whether there is a danger of falling between the two stools — three stools.
Ms. Kinsley: I will do my best.
Both CMHC and Aboriginal Affairs Canada have responsibility for housing. We run very different housing programs, as I have described. We are responsible for our respective budgets and therefore go to Treasury Board. However, when it comes to policy, housing policy as an example, that is normally done through the lead of Aboriginal Affairs in consultation with us, so that would normally be a joint discussion around policy issues because, of course, housing overlaps our delivery methods, the policy related to housing.
When it comes to operationalizing these two programs, we work in a tripartite way with First Nations regional councils, Aboriginal Affairs and ourselves. We take our money, they take their money and the regional First Nations will determine the allocation of those funds to the various communities in that region. We very much do it in a cooperative way, recognizing the priorities as have been set by the First Nation communities.
The communities are allocated the funds through this tripartite process and are responsible, in our case, to build the housing that we have allocated funds for. There is an accountability regime between us that is similar to what I have described, to give us audited statements to indicate that the housing has been built and funds spent accordingly.
With respect to your question about falling between the chairs, I would like to refer to a comment made by the Auditor General in this last report. There is a need for clarity amongst the First Nation communities with respect to the roles and responsibilities as between the two federal agencies.
In the Auditor General's report — if I am perhaps putting some words in the report — the clarity between the two agencies is there but the recipients, or the beneficiaries, the First Nation communities, the auditor's report notes, are sometimes confused between the two federal agencies and the two programs.
Senator Murray: That is important though, is it not?
Ms. Kinsley: It is.
Senator Murray: It is fine if there is clarity between CMHC and Aboriginal Affairs but what if the clients, the people whom this is intended to benefit, do not quite understand where they should go or what they should do?
Ms. Kinsley: We will work with these regional councils. I think it is another layer of involvement that the First Nation communities themselves may not understand the role of the regional First Nations council. I think there is opportunity for improvement and we will take that to heart.
Senator Murray: Thank you very much. I guess the question is the extent to which the process is part of the problem.
Ms. Kinsley: Understood.
Senator Murray: I will leave it at that.
The Chair: That is a point we may want to reflect in our report, namely, that this should be looked into in some more detail.
Senator Marshall: Does the $254 million go out as grants or as loans? Will you get that money back or is it a straightforward expenditure?
Ms. Kinsley: No, it is a contribution; it is a grant.
Senator Marshall: It is a grant, so it will not come back?
Ms. Kinsley: No.
Senator Marshall: Do you track the monies you are owed for mortgages? How are the bad debts or your write-offs compared to previous years, given the problems in the United States concerning mortgages?
Ms. Kinsley: You might be referring to our commercial activities in terms of mortgage loan insurance.
Senator Marshall: Yes.
Ms. Kinsley: Our level of arrears in accounts that are 90 days or more overdue, currently tracks the industry average as published by the Canadian Bankers Association. The Canadian Bankers Association shows arrears at less than one- half of 1 per cent, and our arrears track that same level at .44 per cent. Those are historically good numbers, to put it in context. Perhaps the highest level we have seen in arrears would be a little less than 1 per cent — 0.7 per cent, I believe.
While we have gone through the downturn, it is important to clarify that while Canada was impacted by what happened around the world, the impact in Canada was more around liquidity issues — in other words, a lack of funding in the housing market. It was not driven by a credit quality issue in Canada. the way it was in the United States.
Senator Marshall: How does your funding work? You go to the federal government for appropriations. Some of that money goes out as grants but some is repaid to the corporation.
Do you repay the federal government? How does the money flow out and back?
Ms. Kinsley: We have a number of arrangements. Let me put our commercial activities aside because there is no appropriation or any government borrowing associated with those. They are commercially based; fees and premiums come in from homebuyers. Simply put, those get pooled and, in turn, are used to pay claims. I will put those to one side.
If we look at our appropriation-based activity, which is really assisted or social housing based, there are two things that we do. First, we provide, as noted here, appropriations, grants, for the construction of new housing or the renovation of existing housing. We also provide annual subsidies. I referred to this $1.7 billion in my opening statement. This subsidy helps support the existing stock of social housing. That stock was built over many years. As I have mentioned, it can run for 35 years.
We had two roles to play in the development of that stock. The first was to provide mortgage funding for the actual construction of the unit. We did that, as you described, through loans. We borrowed from the federal government, then we went out to the capital markets, and now we are back borrowing from the federal government.
Those capital funds were given to non-profit co-op groups and the provinces to build subsidized housing. Those monies come back to us in the form of repayment. That is one role we have.
The second reason was that this housing was not market-based and it needed subsidies in order to maintain it. For that reason, we call on the government annually for appropriations or subsidies to help support that housing. That is the $1.7 billion that I talked about earlier. The $253 million that we are looking for today will be grants to help for the construction of those homes. With the exception of on-reserve housing, we no longer do the loans. Those programs ended in about 1993. We do not do that any longer, but those loans are still outstanding and are being repaid, as one would expect on an annual basis.
The approach we take now is to provide a grant upfront to help reduce the cost of construction to make it affordable, but we are not in there over the long haul.
Senator Marshall: The grants are gone. Once you disburse them, they are gone.
Ms. Kinsley: That is correct.
Senator Marshall: How do the loans work? Each year, do you remit so much to the federal government?
Ms. Kinsley: We do.
Senator Marshall: Do they tell you the amount or are you tracking?
Ms. Kinsley: No, we have a large loan portfolio and we track it. If you think of us perhaps as any financial institution, we have a mortgage portfolio that includes all of the mortgages for these social housing units. We know, based on the amortization of those mortgages, how much is expected to be returned in principal and interest. We can forecast that, and we therefore tell the Department of Finance through our non-budgetary portion of the Main Estimates how much they can expect to have by way of return payments.
Senator Marshall: Is the amount owed to the federal government growing or declining?
Ms. Kinsley: It is declining because, as I mentioned, with the exception of on-reserve housing, the whole loan program or that approach to support affordable housing ended in about 1993. Those loans are gradually winding down. Ultimately, at the end of their amortization, they will be paid off.
The new approach we have adopted to support affordable housing is, as you have described, upfront capital grants disbursed at the time of the construction. That is the end of the engagement at that point.
Senator Neufeld: You listed a number of provinces that administer some of the funding to build the units and some that do not. Is that by agreement?
Ms. Kinsley: I mentioned that we are directly involved in five jurisdictions. All the other jurisdictions look after it themselves.
The arrangement is that the provinces can administer these programs if they are prepared to cost match the federal investment, it is a bit of a quid pro quo. If they put up provincial funding then they, in turn, have the ability and responsibility to deliver the programs on the ground.
In four of the five jurisdictions that I mentioned for the renovation program, those jurisdictions have chosen not to cost-share. Therefore, we remain responsible. One jurisdiction, Prince Edward Island, has cost-shared but they have asked us to continue to do the delivery because of infrastructure issues in the jurisdiction.
Senator Neufeld: You said there is a strict process on how those funds are spent and what you expect from the provinces that actually spend that money. Do the provinces that spend the federal government's money do a relatively good job or are there discrepancies? How does their spending compare to provinces where CMHC administers the program?
Ms. Kinsley: If it is a measure of success, I can say that we get clean audit opinions every year. In my recent memory, we have not had any auditor qualify the opinion to suggest that monies were not spent according to the agreements. That is true of CMHC's delivery as well.
Senator Neufeld: You said that the First Nations community is responsible once funds are transferred. You noted that they must operate under strict rules. Who audits their procedures?
Ms. Kinsley: The First Nation communities are responsible to appoint auditors similar to non-profits or co-ops. They must get a third party auditor.
Senator Neufeld: Will they appoint an auditor just for the housing that you provide?
Ms. Kinsley: That is highly unlikely. They will appoint an auditor for the affairs of the First Nation community. The auditor will be asked, as part of his or her engagement, to specifically address the compliance questions with respect to our program.
Senator Neufeld: What is the record?
Ms. Kinsley: The record is a bit more mixed in terms of timeliness — that is, getting those audit reports in. It is a bit more of a struggle. However, in the scheme of the funding we have spent, we have seen few instances of issues. There have been a couple, but not significant. Timeliness is the main issue.
Senator Neufeld: Is the maintenance, then, between on-reserve homes and off-reserve social housing about the same? Do you find mould in off-reserve housing as you would on the on-reserve housing?
Ms. Kinsley: No, I would say the incidence is likely higher on reserve. As I mentioned earlier, it is not just an issue around the maintenance of the homes, which is an issue in and of itself, but you also have the problem of overcrowding on reserve, which adds to the issue of mould in First Nation communities relative to off-reserve housing, which does not generally have the same degree of overcrowding.
Senator Neufeld: You spoke about regional councils for First Nations. I assume that is across Canada.
Ms. Kinsley: Yes.
Senator Neufeld: Are those regional councils chosen by the First Nations themselves, or is there input from Aboriginal Affairs or from CMHC in those regional councils to decide how this money is dispersed into different regions?
I am from British Columbia, where there are over 200 bands. One third of all bands in Canada reside in British Columbia. I do not know how many regional councils there are for the bands in British Columbia. Perhaps you can explain that a bit.
Ms. Kinsley: You are asking about how the regional councils are chosen.
Senator Neufeld: Yes.
Sharon Matthews, Vice-President, Assisted Housing, Canada Mortgage and Housing Corporation: We call them regional liaison committees. We have a national liaison committee that works with the Assembly of First Nations, Aboriginal Affairs, ourselves, and often Health Canada. We meet regularly. Funds are allocated. Each region has a different composition but each is composed with the input of the local First Nations. Sometimes they are chosen through elections; sometimes the main group appoints different members. It is a mixed bag, which is not a bad thing because every region is different in terms of their politics. We work with the local circumstances and set up those liaison committees.
Senator Neufeld: Thank you. Would you provide the committee with a list of the regional councils in British Columbia?
Ms. Matthews: There is one regional council per region. There is one in British Columbia and one in Ontario. Yes, I can get you that information.
Senator Neufeld: There is one regional council for over 200 bands in British Columbia and one regional council for not nearly that many in another province?
Ms. Matthews: That is correct. The allocations would come from the national liaison committee, and it would be allocated based on a needs formula agreed to years ago. It is allocated to each region, and each region, based on how this liaison committee works, will do the allocation. In some regions, they will allocate the funding on the basis of every First Nation gets one or two units, whatever it is. In other regions, they have a waiting list and will say, "For this year, this First Nation has not had housing for four years in terms of allocation, so they will get a lump sum, because of economies of scale." Each regional committee has decided they will do those allocations differently.
Senator Neufeld: Are there 13 regional committees across Canada? Maybe I am misunderstanding you. You said one per province and territory.
Ms. Matthews: It is one per region, and it matches the Indian Affairs regions.
The Chair: If you would just provide us with a list, it would be helpful.
Senator Cordy: Thank you for being here today. I would like to go back to the new housing built on reserve. You said in response to a question that there are 1,000 new units built a year. That would be, if we are talking about provinces and territories — and I know it is not divided evenly — about 76 new units. Yet, the fastest growing population is the First Nations population. We hear so often about the overcrowding and the poor housing. Are the 1,000 units a year sufficient, or are there plans to increase that number due to the growing population?
Ms. Kinsley: As I think I mentioned, our budget for housing on reserve has remained constant.
Senator Cordy: Dollar wise, not percentage wise. Dollar wise, it has remained constant.
Ms. Kinsley: Dollar wise, it has remained relatively constant; we have had some increases.
The other thing the committee might be interested in hearing is that we are trying to find ways to close this gap on reserve. Many First Nation communities are able to afford market housing, but because of some of the security issues around land tenure on reserve, it is difficult to get mortgages from a financial institution. That was the genesis of the $300 million I spoke of in response to a question that the federal government put aside in the First Nations Market Housing Fund. The idea was that if we could get those First Nation communities that are able to afford market-based housing and we could facilitate that market-based housing by working with lenders in communities to overcome this land tenure security issue, then it might take some pressure off the subsidy budget that, as you have described, has a limited amount. We would then be able to, hopefully, provide more housing on reserve and use the limited subsidy funding for those communities that would not have market alternatives.
Senator Cordy: Are there plans in place now to look at market-based housing and land tenure?
Ms. Kinsley: Yes.
Senator Cordy: This happens in mobile home parks, where people own the mobile home but not the land underneath it.
Ms. Kinsley: In those cases, it is easier because they probably lease the land, and leasing is a relatively easy tenure form with which to provide security. The First Nations Market Housing Fund has been operational for just over two years. A number of First Nations have already qualified to participate. We have over eight major financial institutions in the country willing to participate. It is now up to the First Nation communities who qualify to work with their individual members to access the funding that is available.
Senator Cordy: However, there are no plans in place to increase the number of units built each year.
Ms. Kinsley: No, not through subsidized appropriated funding, but we are trying to do the additional units largely through the market-based approach.
Senator Cordy: That would fit with some people but not with everyone.
Ms. Kinsley: With some bands but not others, that is correct.
Senator Cordy: It seems that when we heard about H1N1, for example, all we heard about was the overcrowding. What are the waiting lists for housing on reserve?
Ms. Kinsley: There are no accurate numbers. The Auditor General talks about a shortfall in the report. Both CMHC and our federal colleagues try to gather numbers, but First Nation communities themselves do not keep records of it is difficult to get a precise number. We say 25,000 is the shortage that we see. The Assembly of First Nations and others might suggest that number is higher.
Senator Cordy: That would take 25 years, with no increase in population.
Ms. Kinsley: Again, we have to look at other solutions as well, because in that shortfall there are many communities that can afford housing. We are trying to tackle the issue on multiple fronts. The solutions are not applicable to all communities, but the more tools we have, the better off we will be.
Senator Cordy: Do you deal with housing for Aboriginal First Nations seniors? Is that a responsibility of yours?
Ms. Kinsley: On reserve?
Senator Cordy: Yes, on reserve.
Ms. Kinsley: Yes, it includes all community members on reserve, but there is not anything specifically targeted on reserve to elders or seniors. That, again, is a community priority.
Senator Cordy: By 2026, in 15 years, the percentage of Aboriginal seniors is expected to triple. How much senior housing do we have on reserve in Canada?
Ms. Kinsley: I could not give you that number off the top of my head, but there have been many elder residences built with the funding that we have allocated. Again, that is a priority determined by the First Nations communities.
Senator Runciman: Going back to process and the accountability agreement you have, is there a requirement with respect to administrative costs? Of the $130 million that you mentioned earlier, how much is taken up by administrative costs?
Ms. Kinsley: There is a cap on administrative costs. Of the $253 million, $239 million is available to provinces and territories. The balance is spent for administration on our part.
Senator Runciman: Is it a percentage cap?
Ms. Kinsley: There is an amount taken off the top for administration. The difference between the $253 million and the $239 million is administrative cost. The remaining money goes to the provinces. In order to deliver, they use various agents, and there are strict rules for how much those agents are paid.
Senator Runciman: I am trying to determine how much of the $130 million that you said flows each year on reserve is devoted to administrative fees.
Ms. Kinsley: I am sorry; I was dealing with provinces and territories. We deliver the on-reserve funds ourselves.
Ms. Matthews: Our cost to deliver on reserve is 9 per cent to 10 per cent, which is very low.
Senator Runciman: Provinces play no role in on-reserve administration?
Ms. Kinsley: They do not. That is a federal responsibility only.
Senator Runciman: The off-reserve reference is to First Nations? When you talk about off reserve, are you talking about the general population?
Ms. Kinsley: That is correct. It will include Aboriginal people, but living off reserve.
Senator Runciman: I had the opportunity in my past life to visit a number of communities in northern and north- western Ontario to look at the housing stock. You touched on the maintenance challenges in some of these communities.
Is there an average life expectancy for the housing stock? Is there an assessment of the homes five years, for example, after we make the investment?
Ms. Kinsley: That varies depending on the living conditions in a given community. Some are no different than off reserve, so a 25- or 30-year amortization of a mortgage would be reasonable.
When we do look at this, it is typically through the evaluations of our programs. I believe that in the last on-reserve evaluation report it was 15 years on average. That statistics exist and I would be happy to get a more accurate figure for you, but it does vary by community.
Senator Runciman: It would be nice to know how that compares with off-reserve housing.
Ms. Kinsley: That was part of the evaluation.
Senator Runciman: I would appreciate getting that information.
In terms of a breakdown of the funds, how much is government owned, municipally owned, private and non-profit?
Ms. Kinsley: Of the close to 615,000 households that the $1.7 billion supports, there are about 25,000 units of public housing. In addition, there are cooperatives and non-profits. On reserve there is rent assistance, which is different.
Senator Runciman: To save time, will you send us a breakdown of the figures for the public housing?
Ms. Kinsley: Yes.
Senator Eggleton: The amount of money in Supplementary Estimates (A) is small. The real story is in the Main Estimates, where you were cut by 40 per cent, a severe cut.
In the recent budget, the assisted housing initiative and the affordable housing program were sunsetted. Yet, over 3 million Canadians are looking for decent, affordable housing. We have very long waiting lists with people waiting for years.
What is happening? You are not meeting your mandate. How will you meet this mandate of increasing the availability of safe, affordable housing for Canadians?
Ms. Kinsley: I will address those comments and make some corrections.
In the Main Estimates, there has been a reduction, but one must remember that the reduction is about $1.2 billion. Almost $1 billion of that is the sunsetting of Canada's Economic Action Plan. This was one-time funding of $2 billion over two years that was provided on top of our core funding for additional social housing investments. As you know, that funding ended on March 31 of this year, so our Main Estimates for the current fiscal year would show a decline, as one would expect, of over $1 billion, due to the end of Canada's Economic Action Plan.
The other component of the reduction to which you referred, I believe, was the end of the affordable housing and the renovation programs. In fact, those programs did not end. The purpose of the supplementary estimates today is to have that funding continue. We were given five year's worth of funding in 2008. We were given it in our budget for two years, hence the end of the funding in our Main Estimates. We are now seeking the remaining three years of that funding to continue those programs.
The $253 million, which is affordable housing and RRAP, continues at exactly the same funding level as we have had in previous years, so that would reinstate the decline to which you pointed. The balance of the decline in our Main Estimates was really the scheduled expiry of the additional economic action plan funding. Our core funding has not been reduced.
Senator Eggleton: We still have a large number of Canadians waiting a long time for decent, affordable housing. Keeping the funding at the same level, as you are suggesting, is obviously not doing the job. What about getting the job done?
Ms. Kinsley: There is no question that we have Canadians in need of housing. We track that need. Since the last census we have had some improvement in that number, but over 12 per cent of Canadians are still in need of core housing.
Senator Eggleton: You are not doing anything to close that gap; you are just marking time with the same amount of money?
Ms. Kinsley: Well, we thought that Canada's Economic Action Plan was a good approach. It was a $2 billion one- time investment, a significant sum, in social housing. When the opportunity arose, we suggested that this was a good place to invest that funding because of the need you described and also because of the jobs that housing creates.
Senator Eggleton: I understand that, but you have just admitted that it is not doing the job, that 12 percent of or over 3 million Canadians are still in need. We are not doing the job.
Senator Nancy Ruth: That is our job, I think, senator, not the job of the civil service.
Senator Eggleton: I am just pointing out that the government is not giving the necessary resources to allow CMHC to do the job. I have no complaint about CMHC's history in terms of trying to develop affordable housing in this country. It has a great history, but the government is not giving it the funds it needs to house Canadians.
The Chair: That point has been made. There is no point in commenting further. You are doing a fine job with what you have.
Senator Dickson: Thank you for appearing this morning.
My question relates to taking a macro, new approach to the First Nations or Aboriginal housing problem. As I understand it, the government is moving forward to accelerate the settlement of the Aboriginal land claims.
This approach focuses on new methods of funding. Are you at the table in those negotiations so conditions are attached to some of that money to address this need insofar as housing is concerned? In other words, money is coming from the government to settle land claims. Why are conditions not attached to that money so some of it can be used to satisfy this need?
Ms. Kinsley: The short answer is no, that would be the responsibility of Aboriginal Affairs and Northern Development Canada.
Senator Dickson: Probably you would like to follow up with Aboriginal Affairs and Northern Development Canada. I am confused myself. There are so many programs.
The Chair: Thank you, Senator Dickson.
Ms. Kinsley, you anticipated this comment where you indicate why you are in Supplementary Estimates (A) with respect to this affordable housing at $253 million. We have a habit of comparing Main Estimates to Main Estimates. The point that Senator Eggleton made of reduction with respect to affordable housing is as a result of you not having that appropriation in the Main Estimates for this year.
Ms. Kinsley: That is correct.
The Chair: Therefore, we have to look for it somewhere else, which we do not always have a chance to do.
If this program is a five-year program and you are in the middle of it, why would you not be ready with an appropriation request in the Main Estimates, and why would the request appear in the supplementary estimates?
Ms. Kinsley: When the five-year funding was announced, it was announced with two years of policy approval, with the intent that the government would consult stakeholders, provinces and territories on the best way to deliver the remaining three years of funding. Those two years expired in March 2011.
As I mentioned earlier, we have been in those discussions with provinces, territories and stakeholders. Of course, we had the federal election, which created a hiatus in terms of those discussions. However, the reason there was a break in the funding was to have discussions with our partners about what the best way is to deliver the funding. The funding was there; it was only the policy approval that was in two tranches.
The Chair: Is there anything further on that point? Everyone saw that it was Supplementary Estimates (A) rather than the Main Estimates for this particular initiative?
Honourable senators, on your behalf I want to thank Ms. Kinsley and her team for being here to help us. I know there are many other areas of CMHC that we might like to explore, but we wanted to focus on Supplementary Estimates (A) in this particular session. We may see you again with respect to some of the many worthwhile initiatives you are leading.
In the second session this morning, we will turn our attention to Natural Resources Canada, and in particular with respect to appropriations requested under Supplementary Estimates (A). We are pleased to welcome, on behalf of the department, Mark Corey, Assistant Deputy Minister, Energy Sector; Brian Gray, Assistant Deputy Minister, Earth Science Sector; Dave McCauley, Director, Uranium and Radioactive Waste Division; Martin Bergmann, Director, Polar Continental Shelf Program; and Doug Metcalfe, Senior Manager, Nuclear Legacy Liabilities.
We have one hour for this session, and five witnesses. We will try to get through it and do our best.
We have two presentations, and I understand Mr. Gray will start.
Brian Gray, Assistant Deputy Minister, Earth Science Sector, Natural Resources Canada: Thank you very much. We have a deck that I will walk honourable senators through.
On page 1, I want to recognize Martin Bergmann, Director of the Polar Continental Shelf Program. I am pleased to be here today to speak to this program at a reasonably high level, but Mr. Bergmann is here for questions I am not capable of answering at a greater level of detail.
If we can turn to page 2, this picture is to situate our facility in Resolute Bay, so you are hovering over the North Pole looking south. There are a couple of things we want to show you here. It is hard to see from the scale, but distributed across the Arctic here you can see various field camps. Every year we have about 160-some odd research projects in about 70 to 80 different field camps.
In these activities, about 1,100 Arctic scientists are supported. Notable projects we are supporting this year include the United Nations Convention on the Law of the Sea, the Geo-mapping for Energy and Minerals program and ArcticNet.
The Polar Continental Shelf Program provides safe, cost-effective and efficient air transport to field camps throughout the entire Canadian Arctic. As you can see from this slide, that transport is no small task.
We provide specialized and rugged field equipment to remote research camps, operate the largest science and technology facility in the Arctic, providing Canadian researchers with modern accommodations, offices, a warehouse and a laboratory at our facility in Resolute Bay.
We are the lifeline to Arctic researchers. We are the hub of the activities. Our program ensures the health and safety of folks in these rugged field camps, so every day, twice a day, we check in to make sure things are okay in the camps. We have protocol to follow if individuals are not in contact with us on a daily basis. This terrain is remote, rugged and dangerous, so we take the lifeline aspect seriously.
Slide 3 is a look at the Polar Continental Shelf Program facility, and I will walk quickly through the various colour phases. Looking first at the red — and if you do not have colour, it is labelled the PCSP living accommodations building, the existing storage and our operations centre — these are existing facilities, and collectively they are about 3,800 metres square.
This April, we finished off the funding from the Arctic Research Infrastructure Fund that enabled the addition to our facilities. If you look at the blue colouring on slide 3, you will see we have a new dining and recreation area. We have new accommodations, so essentially we have established another facility for about 35 to 40 staff. Collectively now, at this moment, we can house and bed about 75 scientists, and we have a dining facility that can accommodate about 100 individuals.
We are here today to talk about the expansion of the Canadian Forces Arctic Training Centre, which is depicted in green. There are two additions; one is an additional suite for lodging, and the other is a future training centre. I will talk about those additions in more detail on a subsequent slide.
Looking quickly at the expansion that we recently completed, I have not been able to travel there and see that expansion yet because it was completed only at the end of March, but we have three components there. As I indicated in the previous slide, these pictures show you the dining and recreation facility, the accommodations wing and the laboratory building.
Senator Runciman: I have a point of order, chair. I thought we were here to discuss the Nuclear Legacy Liabilities Program.
The Chair: Yes; you will note in Supplementary Estimates (A), page 42, there are two items under voted appropriations. One is funding to support the Nuclear Legacy Liabilities Program, and we have that debt coming up next, and the other is the funding for the construction of the Canadian Forces Arctic Training Centre.
Senator Runciman: We were not provided with any background material on that item.
The Chair: No, you are right. We are trying to move quickly on these matters. We understand that it is sometimes difficult for the Library of Parliament to provide us with background material, but this background material is forthcoming.
Senator Nancy Ruth: Is that the Department of Fisheries and Oceans, DFO, storage space?
The Chair: We will go to questions shortly, but is this question a clarification for presentation purposes? Can you clarify that point for us?
Mr. Gray: Yes, it is Department of Fisheries and Oceans.
The Chair: Thank you. There may be questions on that space later.
Mr. Gray: My point here is that as part of Canada's Economic Action Plan, the Arctic Research Infrastructure Fund was a competitive fund wherein our department was able to acquire $11 million to build the expansion that you see on this page, and we are proud of the new facilities.
Moving to slide 5, we have recently started a strong collaboration with the Department of National Defence. Starting in 2008, we have been involved in an Arctic Operations Advisor course at the Resolute Bay facility, Operation Nunalivut in 2011 and then Operation Nanook last year and this year that we hosted at our existing facilities.
In July 2007, the Prime Minister announced that the Department of National Defence would build the Canadian Forces Arctic Training Centre in Resolute Bay. I am happy to report that the Department of National Defence and our department, Natural Resources Canada, have developed a memorandum of understanding that was signed in December of 2010 to work collaboratively on the expansion to the facilities. That is the Supplementary Estimates (A) item I am here in front of you to talk about.
If we can move to slide 6, a contract was awarded in April of this year to Sanaqatiit Construction Limited. Awarding this contract followed the standard federal government request for proposal process. We had a specific service agreement with Public Works and Government Services Canada for the management of this contract. The total cost of the project, as I will describe in the next slide, is estimated to be $18 million.
The project at this point is in the design and permit phase, with preliminary on-site work expected to begin in July of this year. The whole project is scheduled for completion in July of 2013.
The next slide, page 7, shows the estimated costs by year. The first column, estimated cost, FY 2011-12 is the supplementary estimate of $6 million. It was a timing thing. The MOU was not signed until December of 2010, so that is why the estimate is in the supplementary package, as I understand it.
For the breakdown, you can see the lion's share of the cost is to the contractor for the design and construction of this project. There is the fee and other disbursements that Public Works and Government Services Canada is managing, and then we as a department, NRCan, have project management costs. We have tried to lay out those costs for you on slide 7.
If we move to slide 8, we can look at the footprint of the proposed Canadian Forces Arctic Training Centre facilities. You can see in green here, if you have colour — if not, the upper left building indicates future CFATC accommodation wing, and on the far right, you will see the future training centre, CFATC. The accommodations wing will have 35 rooms and each room, in my understanding, is able to handle up to four people in a bunk layout. My understanding is the Department of National Defence needs facilities for an additional 100 people, so this wing will be adequate for that need.
The other large facility is the training and storage centre, and this will be connected to our existing operations centre.
Moving on to slide 9, we feel this project is a good-news story. As I mentioned at the outset, the Polar Continental Shelf Program has been a lifeline to Arctic researchers. This cooperation between federal departments builds on Canada's Northern Strategy. I remind the committee that Canada's Northern Strategy has four priority areas: exercising Arctic sovereignty, protecting our environmental heritage, promoting economic development and improving and devolving Northern governance. We feel this collaborative arrangement with the Department of National Defence will maximize the use of limited Arctic facilities and provide significant savings to Canadian taxpayers.
Finally, on the last slide, we believe this collaborative arrangement will allow the Polar Continental Shelf Program to extend the facility operating season. Normally, we run the facility for scientists from early April until the end of September. This project will enable the facility to be open year-round.
The project will increase capacity and our level of support to Arctic science in the future. It demonstrates Canadian public value, a cost-effective operation by the government departments. We feel it strengthens the positive relationship between the federal government and the community of Resolute Bay, and provides direct benefits such as more demand for services jobs on the project and environmental improvements.
On August 5, we are having our fourth open house at Resolute Bay where we invite the community, the locals, scientists and dignitaries to attend, so I am happy to extend the invitation to senators to visit the site in early August.
The Chair: That was August 5?
Mr. Gray: Yes, August 5. We have brochures on the Polar Continental Shelf Program as well as a few DVDs. If senators are interested, we have materials available.
The Chair: Thank you. We are interested but we are also pressed for time, so I will go to Mr. Corey before taking questions on your matter.
Mark Corey, Assistant Deputy Minister, Energy Sector, Natural Resources Canada: We have a deck as well on the Nuclear Legacy Liabilities Program. I will go through it quickly.
The overview is to provide supporting information on the Nuclear Legacy Liabilities Program, the funding requested in the Supplementary Estimates (A). There is the actual wording.
The reason the funding request is in Supplementary Estimates (A) is because we are finishing the first five year cycle of the program, and approval of the program came too late to be in Main Estimates. We are asking for only one year of funding, and any further funding will be announced by ministers.
[Translation]
The second page provides some background on Canada's nuclear legacy liabilities. The history of nuclear research and development in Canada dates back to the 1940s. Generally speaking, half of our current liabilities date back to the 1940s. That is to say that, from the 1940s to the 1960s, we did not have enough information to manage waste as we do today. Our liabilities also include buried and stored wastes, the shutdown of research buildings and related infrastructure as well as contaminated lands.
In general, our liabilities are located at the Chalk River Laboratories, which account for 70 per cent of waste, Whiteshell Laboratories in Manitoba, which count for 20 per cent, and are also related to the shutdown of two prototype reactors in Ontario and one in Quebec.
[English]
That is the history of the program. The next slide is a map showing where these wastes are located.
The next slide is to say that in 2005 the government developed a long-term strategy for managing the liabilities related to these sites. It developed a comprehensive 70-year decommissioning site cleanup and managing plan. In my experience, this is probably the longest program that I am aware of. The reason it is so long, again, is that much of the work, for example, at Chalk River, is still ongoing and this plan foresees the eventual close-down and cleanup of those operations.
The program was recognized as a $2.75-billion net present value liability in public accounts in 2005. The view in the program is that dealing with the waste and decommissioning sooner avoids future care and maintenance requirements and reduces costs. This is the program we are dealing with overall. We are talking about the next year of funding for the program.
The government, as I mentioned, launched the program in 2006. Estimates for for the first five years were $520 million. I will ask Dave McCauley, who is the director, to walk through quickly what was accomplished in the first five years and what we propose to do in the next phase.
Dave McCauley, Director, Uranium and Radioactive Waste Division, Natural Resources Canada: As Mr. Corey mentioned, the Nuclear Legacy Liabilities Program was launched in 2006, right after the liability was booked in the Public Accounts of Canada. The government launched the NLLP with the first five years of funding at $520 million. The key priorities for those five years were to focus on specific health, safety and environmental issues at the Atomic Energy of Canada Limited, AECL, sites; to decommission and shut down redundant buildings and infrastructure; to move forward on the planning and establishment of waste management facilities for the longer term; and, finally, to undertake various care and maintenance activities at the sites.
Moving on to the next slide, there has been significant progress over the last five years. I am giving a snapshot here of some things that have been accomplished.
First, many of the buildings have been safely decommissioned. Two of the more challenging ones were the radio chemistry laboratory at Chalk River Laboratories, and a portion of the National Research Experimental, NRX Reactor Fuel Handling Facility, which had high levels of contamination associated with it.
There were many other non-nuclear buildings where there was no radioactive contamination. Those buildings were also decommissioned, particularly at the Whiteshell facility.
Many volumes of buried wastes have been recovered and properly stored: at Chalk River, solvent bunkers, which are storage bunkers for liquid wastes that are heavily contaminated with chemical and radioactive contaminants; buried fuel rods at Chalk River Laboratories that resulted from the accident at the NRX reactor in 1952 where the fuel rods were just buried in the ground; and former Chalk River experimental waste burials that were assessments of how waste would react when buried in the ground to carry out various studies.
Also, waste clearance facilities have been built at both Chalk River labs and at Whiteshell labs, and a waste- handling facility has been built at the Whiteshell labs. This slide follows with a couple of pictures. I mentioned the radio-chemistry lab at Chalk River that has been decommissioned. It was built in the mid-1940s. There is a picture of it with the yellow surrounding.
When AECL goes into decommissioning, they have to characterize the building fully, then establish a plan, then decontaminate the building and then deconstruct it. In the first picture, on slide 8, is the building. Afterward is the site after it had been demolished. You can see the pad, a bit of the foundation in the foreground. Then, slide 10 is after the site has been completely decommissioned and that site is now open for reuse by AECL, should they wish to build on it. In fact, I think they have.
The next slide is recovery of waste from the CRL solvent bunkers and, as I mentioned, these bunkers were chemically and radioactively contaminated liquid wastes. There were some canisters with fissile material in them. That situation is very dangerous. A lot of caution must be taken to remediate these bunkers. This situation is exacerbated by not having all the information in the inventory: when they start the excavation and there is a surprise that can hold them back in terms of their progress.
Slide 12 shows the CRL Waste Analysis Facility that was built in 2007, I believe. At this facility, they can now take waste from the Chalk River site and confirm that it is clean so it can go to municipal or commercial waste facilities instead of having to go to expensive radioactive waste management facilities on site.
Going forward, as Mr. Corey mentioned, we are seeking, through Supplementary Estimates (A), $129.4 million of funding in 2011-12. The program of work was approved after the Main Estimates deadline and that is why we are in Supplementary Estimates (A). The key milestones for this year are, first, we will start operations at a new Whiteshell waste storage facility that was constructed as part of the first five years. This year, we will start operations so we will be able to move a lot of the decommissioning waste into this new facility. It is called a shielded, modular, above-ground storage facility for waste.
Another item I wish to highlight is that we will complete the construction of a fuel packaging and storage facility that takes nuclear fuel that was buried in tile holes, or cylindrical holes, in the ground and has since corroded over the years. We will take out that fuel, move it into this new building, dry it out, and then prepare it for long-term management at a nuclear fuel waste facility that will be sited in Canada at some point.
The next slide shows a breakdown of the funding for this year. Waste management is the lion's share of the funding at $55.3 million. Much of that waste management relates to the fuel packaging and storage facility item that I identified in the previous slide. It is an expensive facility and a lot of that funding is associated with that facility. As well, there are various other waste management activities.
Infrastructure decommissioning: We continue to do a lot of work at Whiteshell because that site is being decommissioned all together and much of the monies associated with infrastructure decommissioning go to the removal of the main research and development lab at Whiteshell.
Environmental restoration: $13.1 million, much of this money relating to groundwater treatment and also removal of contaminated materials at the Chalk River site in particular.
Care and maintenance, $32 million: That amount looks like a large number and it is, but I should also identify that there are monitoring and security activities that take place that are part and parcel of that amount, and required under the Canadian Nuclear Safety Commission, CNSC, licence to AECL. Then we have program management of $5.2 million.
That is all I wanted to point out right now.
Mr. Corey: In conclusion, this program is long-term. We are finishing the first five years of the program. By way of anticipation, I know the AECL's restructuring is in the news a lot. That restructuring is a different part of the department. We do not deal with that restructuring. We deal only with the waste. This particular waste program is what we came to talk to you about today.
You can see a lot was accomplished in the first five years. Again, in the next year the program will continue on with that work.
The Chair: Mr. McCauley, you indicated that point at page 14, care and maintenance, $32 million, is part of a licensing requirement of AECL. Why is that amount not part of their request for appropriations? Licensing surely seems to be part of operations.
Mr. McCauley: No, we have separated out the Nuclear Legacy Liabilities Program from AECL's ongoing operations. The Whiteshell facility, virtually in its entirety, has been put over onto the government's liability in terms of legacy liabilities. We absorb the costs associated with care and maintenance of that site. The faster we decommission it, the better able we are to reduce the care and maintenance costs.
The Chair: To clarify your point, Mr. Corey, with respect to any of the facilities that are likely to be, or may become, part of the sale or the privatization of AECL, there will not be any buildings that you have constructed or any continuing legacy requirements?
Mr. McCauley: The restructuring is addressing another aspect of AECL, the CANDU division. We are associated with the research laboratories — Chalk River, Whiteshell and the prototype reactors. These liabilities are government liabilities and will continue regardless of any restructuring that takes place.
The Chair: I think that answers my question.
Senator Marshall: I will keep my questions short. Will the $129.4 million be paid to AECL or is that amount administered by the department?
Mr. McCauley: Those funds are appropriated to the department and put into a special account that we manage. AECL invoices us on a monthly basis. We review their invoices and ensure that they meet their business plan for that year, and then we make payments once we are satisfied.
Senator Marshall: When the request came in — maybe it was not for $129 million — who challenges the numbers? Is your department a partner with AECL? Do you challenge the numbers, or is that the Treasury Board Secretariat? I ask because we have had numerous meetings regarding AECL. Who would challenge these numbers?
Mr. McCauley: In terms of the proposal for $129 million, we ensured that there was a third party review of all the elements of the business plan that AECL had proposed. Subsequently, as the invoices come in, Mr. Metcalfe's shop performs a rigorous review of them compared to the plan, et cetera, and Mr. Metcalfe's group has an intimate knowledge of the sites.
Senator Marshall: The amount is broken down into five categories. Is it broken down further? For example, is the $55 million for waste management broken down by site?
Mr. McCauley: Yes, it is. Mr. Metcalfe has more details on that breakdown. We could provide it to you. We have specific milestones.
Senator Marshall: How big would that list be? Is it half a dozen sites or 80 or 90 sites?
Mr. McCauley: With waste management, there are about six sites. Mr. Corey mentioned Whiteshell; there is Chalk River; and there are the three prototype reactors. That is five sites. The bulk of the activity takes place at Chalk River and Whiteshell. Within that activity, we have specific milestones at each site that will be achieved in the fiscal year.
Senator Marshall: For waste management, it is site-specific. Infrastructure decommissioning is site-specific.
Mr. McCauley: That is correct; buildings on the site.
Senator Marshall: Environmental restoration would be site-specific.
Mr. McCauley: Yes.
Senator Marshall: Is care and maintenance site-specific too?
Mr. McCauley: Yes, it is.
Senator Marshall: However, the program management, AECL, is general administration?
Mr. McCauley: That is correct. The reporting, the planning that we require of them, et cetera, is program management.
Senator Marshall: I would appreciate that list broken down by site and the cost linked per site.
Mr. McCauley: Certainly.
Senator Marshall: The $2.75 billion liability that is now booked in the public accounts of Canada, is that also site- specific? It would have to be, would it not?
Mr. McCauley: It is a 70-year strategy that deals with all the liabilities at all the sites. Yes, it would be.
Senator Marshall: There is a big list then?
Mr. McCauley: There would be a very big list.
Senator Marshall: Would it have a matching dollar amount per item?
Mr. McCauley: That is correct.
Senator Marshall: Can we also have that information as well, please?
The Chair: Maybe there is a summary of that information. Any documents that you are able to produce that go to this point can be made available to our clerk, who can circulate them to all our senators.
Mr. Corey: As well, to elaborate on that point, $2.75 billion is the net present value. That figure is the amount of money we would need to have in the bank today to pay out over time. By the time we reach 70 years down the road, the amount we will have spent on the program is closer to about $6 billion.
Senator Marshall: I would be interested in those site-specific amounts.
Senator Neufeld: Were the Chalk River, Whiteshell and the three prototype reactors part of generation for some province? I do not know when they were built. I am trying to determine that.
Mr. McCauley: There are three of them: Gentilly-1, which was built in the 1970s; Nuclear Power Generation, NPD, which was built in the 1960s and is located at Rolphton, northwest of Pembroke; and the Douglas Point reactor, which is in the area of the Bruce Peninsula in southwestern Ontario. Gentilly never produced electricity commercially. I do not believe NPD did either.
Doug Metcalfe, Senior Manager, Nuclear Legacy Liabilities, Natural Resources Canada: Yes, NPD and Douglas Point, the two reactors in Ontario, did produce electricity for the grid, but they were, as the name indicates, prototype reactors. They were built to help AECL develop a design of its CANDU reactor and through agreements over time, all three reactor sites are the responsibility of the federal government.
Senator Neufeld: What happens to the sites when everything is decommissioned? Are they used for something else? I have never been to any of these sites. Is something else planned for those sites?
Mr. McCauley: The waste facilities, for example, at Chalk River, will continue. AECL will make use of vacated lands as necessary. With Whiteshell, we are trying to completely decommission the entire site so that in the long term, areas of the site could be made of use commercially, or would be available.
There are other sites as well that we have not mentioned. For example, there is a site at Glace Bay and a site in Quebec as well where there is no radioactive contamination. The sites were used for heavy water production. These sites could be released and sold commercially.
Senator Neufeld: In a program overview, I read that "in 1952, AECL has safely and cost-effectively managed Canada's nuclear research facilities and the waste generated by their operation."
I assume that what you are looking after and what you are doing in this legacy fund is prior to 1952?
Mr. McCauley: It is prior to March 31, 2006.
Senator Neufeld: Tell me what that paragraph means then.
Mr. McCauley: I expect that they were storing and managing the material from a regulatory perspective. They were doing what was necessary to adhere to their licence but they were not making any advances on the long-term management.
Senator Neufeld: They "cost-effectively managed" it. That is in your paper.
They did not effectively manage it; is that what you are saying?
Mr. Metcalfe: If I might add, they managed it according to the standards of the day. The standards of the day in the 1950s were different from the standards today. There is a need to go in now and clean up the waste.
Senator Neufeld: In 2020, looking at the waste management in your graph in the program overview, does that relate to deep underground storage for this waste? I know there has been lots of talk about deep underground and searching for that storage around Canada. Is that the target? Is that what we are talking about?
Mr. Metcalfe: Can you remind me what the chart says for 2020?
Senator Neufeld: It says, "Waste management facilities in place, strategy implementation under way."
Mr. Metcalfe: That is in the period between 2020 and 2030. It is 2020s with an "s" on the end. The expectation is that, by 2030, we will have all the required waste management facilities in place and operational. Some waste management facilities will come on stream earlier than 2030. Some will come on stream this year and next year. There is a wide variety of wastes at AECL sites after 60 years of research and development and Cold War activities, and there is such a wide variety of facilities — some very complex, and some will take a longer period of time to come on line.
Senator Neufeld: I appreciate that. Does that graph have any connection with the deep underground waste storage that AECL has been looking for and is presently looking for? That is my question. Is that a target, or is this something totally different?
Mr. McCauley: This item is separate. I think you are referring to the Nuclear Waste Management Organization's proposal to site a nuclear fuel waste disposal facility in Canada, and this proposal is totally separate.
Senator Neufeld: Will AECL be responsible for that facility, or are you responsible?
Mr. McCauley: The Nuclear Waste Management Organization, which is an organization of waste producers like the utilities, will be responsible for that facility and will pay for it. The federal government will not pay for it. Some of AECL's nuclear fuel waste will go there, but only a minor element of that waste, and they will pay for that.
Senator Murray: Was there nothing for this program in the Main Estimates for 2011-12?
Mr. McCauley: No, nothing.
Senator Murray: In the Main Estimates it says there was a decrease of $130.7 million related to the Nuclear Legacy Liabilities Program. I presume that is what you are making up with your request for $129.4 million in this supplementary estimate.
Mr. McCauley: That is correct. In 2010-11, there was funding of roughly $131 million for the Nuclear Legacy Liabilities Program. Then, because the program did not make it into the Main Estimates, it looks like funding declined by $130 million.
Senator Murray: There was nothing in the Main Estimates.
Mr. McCauley: Exactly.
Senator Murray: I still do not have a good understanding of what happens with regard to nuclear power plants that reach the end of their life. They are now provincial — Ontario Hydro, New Brunswick Power, et cetera. Are you saying another organization is responsible for waste management?
Mr. McCauley: Yes, that is correct.
Senator Murray: What is this other organization?
Mr. McCauley: It is an organization known as the Nuclear Waste Management Organization. It was established pursuant to federal legislation known as the Nuclear Fuel Waste Act. It is a body that is made up of nuclear energy corporations, meaning Ontario Power Generation, Hydro-Québec and New Brunswick Power. Basically, they have formed an organization, at the federal government's direction. They are responsible for the development and implementation of an approach and funding for that approach for the long-term management of all nuclear fuel waste in Canada.
Senator Murray: Is the organization up and running and doing something now?
Mr. McCauley: They are involved in siting right now. They have developed their conceptual approach. It is known as the Adaptive Phased Management approach to nuclear fuel waste management. They are now in a siting process, where they are looking for a volunteer community to host this material.
Senator Murray: They exist and are governed by federal legislastion, I suppose?
Mr. McCauley: That is correct.
Senator Murray: Are they funded by the provinces concerned?
Mr. McCauley: No, they are funded by the operators, so by the utilities themselves. They are mainly public utilities.
Senator Murray: They are Crown corporations, in all cases. I am sure other questions will occur to people better informed than me.
Senator Nancy Ruth: My question is about all of the above, and the question is unclear. I know since Elizabeth Dowdeswell presented the report of the nuclear industry, they have been looking for a volunteer community, with no success to date; is that correct? Is that your understanding, too?
Mr. McCauley: I would not say that, actually.
Senator Nancy Ruth: You would not? What would you say?
Mr. Corey: I would say you would probably want to have the Nuclear Waste Management Organization come in, because we cannot answer questions on their behalf.
Senator Nancy Ruth: They have not found a community, as far as I have heard. Here we are expanding Highway 407 outside of Toronto so that Pickering can expand and we can still truck stuff around. Nuclear energy is being considered everywhere, perhaps except for Japan at the moment. None of this money here is for the future. It is to tidy up the past from AECL. If AECL is sold off, will those buyers be responsible for the mess that they create, and not you?
Mr. McCauley: The situation is that the facilities that are built under the Nuclear Legacy Liabilities Program may be used by AECL as it produces its ongoing waste, and it pays for access to those facilities. For example, AECL makes use of the waste analysis facility I showed you a picture of, and they pay us for their use of that facility when they have waste that is put through the facility. I cannot remember the second part of your question.
Senator Nancy Ruth: The whole thing is a little crazy for me, because this is the Department of Natural Resources, and this nuclear stuff is everywhere in the world. If it is the Department of Natural Resources rather than AECL doing it, why is there not some accountability and responsibility for the future nuclear waste that we are generating? We still have not found a volunteer community that wants to take that waste.
Mr. McCauley: We have a policy in Canada known as the Policy Framework for Radioactive Waste. That requires that all producers of radioactive waste are responsible for the funding and management of radioactive materials. The government is not responsible for the production of new radioactive waste. We step in to situations where there is a legacy liability, for example. This situation is one of those situations where AECL, in the past, did not have the funds. It was not their business line to be looking at long-term management. The government has accepted that responsibility. Any producers of radioactive waste today are absolutely responsible for the management and funding of that waste and looking for solutions for it as well.
Senator Nancy Ruth: To which they have not found a working solution yet. They have theoretical ones.
Mr. McCauley: They are in the siting process now.
Senator Nancy Ruth: I will go to the continental shelf next, not to leave you out, Mr. McCauley. I am interested in the relationship between the Department of National Defence and the continental shelf exploration. My understanding is that the Arctic countries are cooperative in terms of research. There is a lot of give-and-take among all the nations involved. Why is it important for your scientific programs to have this link with DND?
Mr. Gray: I think it is win-win. It does not make a lot of sense to site a location in a remote area that has extraordinarily expensive heating costs. We have to ship fuel there to run generators to power our systems. It does not make sense to have two facilities run by two different organizations. We would have the overhead costs, the people cost, the redundant cost. By putting the two together here, we are able to reduce the overhead costs, the annual maintenance cost and the management cost.
The neat thing about this program is that we can facilitate logistics such that, if we have enough advance notice, the military can have the whole facility in which to operate at certain times of year while at other times the whole facility can be used by scientists. It is a good relationship; it is about efficiencies and effectiveness.
The Chair: I presume that there will be an annual chargeback from one department to the other?
Martin Bergmann, Director, Polar Continental Shelf Program, Natural Resources Canada: Yes; this program is expanding beyond our existing footprint, which was built for a cooperative framework where universities, government departments, and international scientists work together in Canada's Arctic. This new expansion will be fully funded by DND. All costs associated with the expansion and the operation will be billed to them directly. We share a facility that provides better accommodation for more scientists, if that is required, and it allows the government to move forward on its agenda for the military in the North.
Senator Callbeck: The liability fund does not apply to the Point Lepreau Nuclear Generating Station. That liability is up to the Nuclear Waste Management Organization. What is the federal government's responsibility here? What is the total cost of this project estimated to be? As well, what are the indirect costs estimated to be, such as transporting the electricity from the United States? For how much of those costs is the federal government responsible?
Mr. Corey: That is a broader AECL question, and a different part of the department is dealing with the restructuring of AECL. We can comment on the waste side of AECL, but we do not deal with that part of the program.
Senator Callbeck: Is it possible for you to provide that information or to ask them to provide it to the committee?
Mr. Corey: Yes, we will provide what we can.
Senator Callbeck: I want to know the anticipated costs, the indirect costs and what costs the federal government is responsible for.
Mr. Corey: Again, not being responsible for that part, if you can put the question to the department we will see what information we can provide.
Senator Callbeck: I have put the question to you. Will you ask the department?
Mr. Corey: Yes, we will.
Senator Runciman: What is happening with these communities in terms of consultation and public reaction? I am thinking about the Bruce situation where they are trying to clean up some boilers and there has been a negative reaction from certain groups. Are you receiving any negative reaction on this program? What has been happening?
Mr. Corey: Part of the program is local community consultation.
Mr. McCauley: AECL already has committees in place around Whiteshell and Chalk River, and consults regularly with them on their developments. When the program was first announced, Natural Resources Canada undertook public consultation to provide feedback on it. This year, we intend to develop a strategy to obtain further information from the public on how they see the strategy developing for the future.
Public consultation is part of the program, and we have had some public consultation. The response has been positive. There are not a lot of concerns. It would be fair to say that the surrounding communities are fairly comfortable with the activities on the sites now.
Senator Runciman: There is no transportation of waste for significant distances for storage or treatment that might raise alarm bells with certain people?
Mr. McCauley: No; the wastes are dealt with on-site at Chalk River as well as Whiteshell.
Senator Runciman: Similar to what Bruce is doing, there is no need to go offshore for treatment of the equipment?
Mr. McCauley: No; some of the waste is sent to the United States where they have facilities that we do not. It is more economic. They have commercial facilities, for example, to incinerate or compact some waste.
Senator Runciman: What is the average radioactive level on that kind of material?
Mr. McCauley: I think it is fairly low.
Mr. Metcalfe: It varies, but for the most part it is low.
Senator Runciman: How is the waste transported?
Mr. Metcalfe: The transport of radioactive materials is heavily regulated by the Canadian Nuclear Safety Commission. The packages have to be designed, tested and approved. The safety record for transportation of nuclear materials worldwide is good.
Senator Runciman: I support what is happening in Bruce and know that this is happening on a regular basis, which I guess the public is not aware of. They are reacting to Bruce in a way I do not understand, given the radioactive levels of that material.
You talked about almost $6 billion over 70 years, and you have a laundry list of areas. Does it cover an area like Port Hope? There has been much concern over the years about that site.
Mr. McCauley: No; Port Hope is another area of responsibility of the federal government, but there is a different type of waste there. It is radioactive waste, but it is what we call historic waste, as opposed to legacy waste. The issue is the same kind of issue, but historic wastes are radioactive wastes located across Canada for which the owner cannot be held responsible. That situation is the case in Port Hope; the owners of the waste cannot be held responsible. The waste is related to a former Crown corporation, Eldorado Nuclear Limited, and its predecessors.
Senator Runciman: What happens in those instances?
Mr. McCauley: The government steps in and is responsible for finding a long-term management solution. The government has found one and is moving forward on implementation.
Senator Runciman: It is only in the planning process at the moment? No funds have been allocated?
Mr. McCauley: Yes, funds have been allocated and the planning process ends this year. If the government approves both projects, it will move into implementation next year.
The Chair: You say "the government." You are the government. What do you mean "the government"? You are confusing me with Port Hope. Is this someone down the hall from you?
Mr. McCauley: No, it is our division.
Mr. Corey: It is only that it is separate. For example, when Eldorado Nuclear was privatized in the 1980s and merged with Saskatchewan Mining Development Corporation to form Cameco, the waste and the legacy was taken out of the company, and that is part of the Port Hope area initiative currently.
Senator Murray: The waste is the government's responsibility?
Mr. Corey: It is our responsibility, absolutely; yes.
The Chair: Senator Runciman was wondering where we look in the estimates for that item. Is that under Natural Resources Canada?
Mr. Corey: That is ours as well.
The Chair: That is part of your operation?
Mr. McCauley: That is right.
Mr. Corey: You might want to talk about that item as well.
Senator Murray: What is historic?
The Chair: "Historic" as opposed to "legacy."
Mr. McCauley: Most of the historic wastes emanate from the operations of Eldorado Nuclear Limited and its private-sector predecessors. They brought ore from Great Bear Lake in the Northwest Territories down to Port Hope, where it was refined and later converted. Therefore, we have contamination in Port Hope. Ninety-five per cent of historic wastes in Canada are in Port Hope.
Other aspects are along the northern transportation route, from Great Bear Lake and Great Bear River down the Mackenzie River to Fort McMurray. There are pockets of contamination there for which my division is responsible for managing and finding a long-term facility. That is the bulk of the historic waste in Canada.
The Chair: It is your division but it is not part of the $129.4 million?
Mr. McCauley: No; that is for legacy wastes at AECL sites. These are other sites.
The Chair: What kind of budget do you seek for the historic waste sites? It is buried in operations, but can you tell us roughly how much is dedicated to that type of activity?
Mr. McCauley: In 2001, the government provided $260 million for the Port Hope Area Initiative, which is a project to deal with historic wastes in Port Hope and neighbouring Clarington.
That project is now moving to implementation. If cabinet approves the proposal, that project will move to implementation. Currently, we are finishing the planning phase.
Senator Wallace: I believe my question has been answered. Being from New Brunswick, Point Lepreau is uppermost in our minds, especially currently with the work going on there.
I want to be clear that there were no activities at Point Lepreau that could ever give rise to legacy liabilities similar to those AECL sites you are seeking funding for here, which would involve your department.
Mr. McCauley: That is correct. Point Lepreau is all managed by New Brunswick Power.
The Chair: Honourable senators, on your behalf I want to thank our guests.
We did not have too many questions with respect to the continental shelf and the military interplay at Resolute Bay, but I thank Senator Nancy Ruth for giving our guests the opportunity to explain those areas further. Your deck was helpful.
Mr. McCauley, you did most of the fending off of questions, but we thank you for explaining this area to us. We look forward to receiving the follow-up information. We may have an opportunity to talk to you again along the way.
(The committee adjourned.)