Proceedings of the Standing Senate Committee on
National Finance
Issue 42 - Evidence - June 5, 2013 (Evening meeting)
OTTAWA, Wednesday, June 5, 2013
The Standing Senate Committee on National Finance met, in public, this day at 6:45 p.m. to study the expenditures set out in Supplementary Estimates (A) for 2013-14.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourable senators, this evening, we will spend the first half of our meeting continuing our study of Supplementary Estimates (A) for the fiscal year ending March 31, 2014.
[English]
Appearing this evening from Aboriginal Affairs and Northern Development Canada are Ms. Susan McGowan, Chief Financial Officer; Ms. Pamela D'Eon, Director General, Planning and Resource Management; and Ms. Anik DuPont, Director General, Specific Claims Branch. From Industry Canada, we welcome Ms. Susan Bincoletto, Chief Financial Officer; and Ms. Johanne Bernard, Director General, Resource Planning and Investments Branch. Mr. Stewart has not arrived yet.
Ms. MacGowan, please proceed.
[Translation]
Susan MacGowan, Chief Financial Officer, Aboriginal Affairs and Northern Development Canada: Mr. Chair, thank you for the opportunity to discuss Supplementary Estimates (A) for fiscal year 2013-14 for Aboriginal Affairs and Northern Development Canada. I appreciate the valuable role that the committee plays in reviewing the department's expenditures.
The investments in Supplementary Estimates (A) are an integral part of the Government of Canada's overall strategy to address the needs of First Nations, northerners, Metis and Non-Status Indians.
[English]
These supplementary estimates give the department the resources necessary to help improve the quality of life for Aboriginal peoples and northerners. The supplementary estimates seek authority for revised spending levels during the fiscal year that Parliament will be asked to approve in a proposed appropriation act. Access to the supplementary estimates by the department is a regular process, and for this fiscal year, Aboriginal Affairs and Northern Development Canada seeks an authority for an increase of $165.8 million in Supplementary Estimates (A).
To begin, I would like to provide you with a high-level overview of the department's activities and resources in an effort to provide you with some context. AANDC supports Aboriginal peoples, First Nations, Inuit and Metis and northerners in their efforts to improve social well-being and economic prosperity, to develop healthier more sustainable communities and to participate in Canada's political, social and economic development. AANDC is the federal government department primarily responsible for meeting the Government of Canada's obligations and commitments to First Nations, Inuit and Metis and for fulfilling the federal government's constitutional responsibilities in the North.
The department's legal and operating environments are complex and continually evolving. AANDC delivers or funds programs and services to diverse groups of people who have varied and distinct priorities and needs and who live in a vast range of communities throughout the country from remote settlements with extreme climates to metropolitan urban areas. Most of the department's programs representing a majority of its spending are delivered through partnerships with Aboriginal communities and federal-provincial or federal-territorial agreements. AANDC is one of numerous federal departments and agencies delivering Aboriginal and northern programs and services.
On behalf of the Government of Canada, AANDC is the lead department responsible for the negotiations and implementation of self-government, land claim and specific claim agreements. By continuing to negotiate and implement claims and self-government agreements, the government improves Aboriginal-Crown relations and provides Aboriginal groups with the opportunity to make meaningful changes in their communities.
The department is also responsible for the promotion of economic development and the continuation of the administration of the Indian Residential Schools Settlement Agreement as it seeks further reconciliation with former student residents of Indian residential schools, their families and communities.
The department's financial resources for the 2013-14 Main Estimates tabled on February 25 included approximately $8 billion. Of this, approximately 85 per cent goes directly to recipients through transfer payments. Much of this funding ensures that Aboriginal people have access to basic services comparable to those provided to other Canadians through provincial, territorial or municipal governments. These services include education, housing, community infrastructure, water and waste water systems, social services and other benefits.
As mentioned, these Supplementary Estimates (A) tabled in Parliament include an increase of $165.8 million in initiatives in addition to the $8 billion approved in Main Estimates, bringing the total investments to approximately $8.1 billion. Specifically, Supplementary Estimates (A) will provide the financial resources to take action on a number of key initiatives, and I will briefly describe the major items.
The majority of these supplementary estimates, $167 million, offset by a transfer of $1.2 million to the Registry of the Specific Claims Tribunal, will go to fund the settlement of specific claims. Specific claims are claims made by a First Nation against the federal government which relate to the administration of land or other First Nation assets and to the fulfillment of Indian treaties. As members of this committee understand, negotiated settlements discharge outstanding legal obligations of the Government of Canada.
Also included in these supplementary estimates is $1.2 million to be temporarily provided to the Registry of the Specific Claims Tribunal as bridge financing for their operational requirements for the start of the new fiscal year until their Budget 2013 funding is approved by Treasury Board. This was necessary to continue operations beyond the sunset funding date of March 31, 2013. This bridge financing will be repaid through the fall supplementary estimates 2013-14.
The last item in these supplementary estimates is the $2 million internally funded grant increase related to the Manitoba Northern Flood Agreement Claim 138 Settlement Agreement. These funds will be used to enable the five First Nations signatories to the Claim 138 Settlement Agreement, who are Cross Lake First Nation, Nisichawayasihk Cree Nation, Tataskweyak Cree Nation, York Factory First Nation and Norway House Cree Nation, to acquire sewer and water infrastructure management skills.
In closing, I would like to thank you, Mr. Chair, and your colleagues for inviting the department to appear before the committee today and permitting me the time to share the information on the supplementary estimates. My colleagues and I would be happy to respond to questions and comments.
The Chair: Thank you.
We will hear from Industry Canada and then go to questions and answers.
Ms. Bincoletto, you have the floor.
[Translation]
Susan Bincoletto, Chief Financial Officer, Industry Canada: Thank you very much. I am joined by my colleague, Johanne Bernard. Mr. Stewart has been delayed as he was with the cabinet committee; he will join us as soon as he can.
As you might recall, when we were here in April, I provided an overview of Industry Canada's 2013-14 Main Estimates. I also covered some of the department's key priorities for the year and the associated spending amounts. As I explained at that time, the Main Estimates for 2013-14 total $1.16 billion, of which $945.4 million required approval by Parliament. The remaining $214.8 million is statutory spending.
[English]
In 2013-14 we will be focusing our efforts and resources on a number of priority areas in support of the department's three strategic objectives. First, to ensure that we have the basic marketplace conditions to promote economic growth, help our businesses respond to market changes and maintain public confidence, we will be focusing on initiatives such as the upcoming auction of the 700 megahertz spectrum and the foreign investment review process. Second, we will be focusing on generating sustained prosperity by helping Canadian businesses be at the forefront of global innovation and scientific development. Support for this important area of the economy continues through Budget 2013 announcements, such as the $225 million for the Canada Foundation for Innovation; $165 million for Genome Canada; $13 million for Mitacs, to which I will refer later; and $250 million for the Automotive Innovation Fund. Third, we will be working to help make Canadian businesses and communities competitive through initiatives such as the Canada Small Business Financing Program.
[Translation]
Turning to the purpose of our visit today, I will now review what exactly our Supplementary Estimates (A) cover. You have no doubt noticed that the list is short. Most of our supplementary estimates requirements will actually come forward in the fall as part of our Supplementary Estimates (B), following Treasury Board approval of Budget 2013 items. I believe Bill Matthews was here yesterday and mentioned the fact that Supplementary Estimates (A) are actually less for the entire government than what is expected to come in Supplementary Estimates (B).
So for now, our list is limited to the most urgently required authorities — those that cannot be cash-managed over the short term. The result is that Industry Canada is requesting a total of $29.1 million for two main reasons.
[English]
First, we are requesting access to $22.1 million in royalties collected in 2012-13 under the Technology Partnerships Canada agreements, or TPC. Of this amount, $18.6 million will go to the Strategic Aerospace and Defence Initiative, SADI, which provides repayable contributions to companies in the aerospace, defence, space and security industries for research and development projects. The remaining $3.5 million will go to disbursements under the TPC portfolio.
Second, we are requesting access to $7 million for Mitacs Inc. to support the delivery of industrial research and development internships to graduate students and post-doctoral fellows. The funding is part of a Budget 2012 commitment of $35 million over five years.
[Translation]
The department is also hoping to use Supplementary Estimates (A) to reallocate some resources between votes in order to undertake capital investments for leasehold improvements and space optimization. Of these, the most significant — to the tune of $3.1 million — is Industry Canada's National Accommodation Strategy, or NAS. It is a seven-year project, the main purpose of which is reducing the amount of office space being occupied by the department, in compliance with new limits being mandated across government.
We would now be pleased to take any questions you may have.
[English]
The Chair: Thank you. Before I go to my list of senators who wish to ask question, would you explain the Technology Partnerships Canada fund? I am looking at Supplementary Estimates (A) pages 2-11 and 2-12 for Industry Canada. It looks like a voted appropriation of $22 million, but it should be in the portion above, I assume, in the shaded portion. Is that included in something else?
Johanne Bernard, Director General, Resource Planning and Investments Branch, Industry Canada: Do you see the $29 million in the shaded portion above?
The Chair: Yes.
Ms. Bernard: The $29 million consists of the $22 million underneath and the $7 million.
The Chair: We have to go down to the bottom to get the breakdown, and the $29 million is further broken down as you have just described.
Ms. Bernard: That is correct.
The Chair: That is fine. Thank you.
[Translation]
Senator Hervieux-Payette: I understand what in-house training and all that is, but what is Mitacs? I heard about it in the news not that long ago, but I must admit I cannot remember what type of industry it related to.
Ms. Bincoletto: It is a non-profit organization, a centre of excellence that was set up in 1982 to bring together interdisciplinary teams in order to pursue long-term scientific research on social and economic issues. The program seeks to partner researchers with companies to help businesses with their research and development needs.
Senator Hervieux-Payette: In what sector? All sectors?
Ms. Bincoletto: All sectors, in research and development.
Senator Hervieux-Payette: It could be the automotive sector, forestry, manufacturing, chemistry and so on? That is what I would like to know. Thirty-five million does not strike me as very much over five years. Training is very important to me.
Ms. Bincoletto: My colleague is able to answer that.
[English]
Iain Stewart, Assistant Deputy Minister, Strategic Policy Sector, Industry Canada: Mitacs is active in many sectors. It is a non-profit organization that provides internships for research and development for young graduate students. They started out placing the students only in mathematics. The original motivation was that they were graduating students with masters and doctorates in mathematics and then seeing them leave the country, so in response to that, the professors in this math research network began to try to find industrial jobs for their students. They started out with internships and had so much success in mathematics and computer sciences that, over time, they began to branch out. Now they offer a large number nationally. They set up a specialized organization just to do this matchmaking between students and companies.
They now do it from coast to coast. They do several hundred a year. In the last budget, they were awarded funding to do international internship exchanges. It is called the Globalink program.
[Translation]
Senator Hervieux-Payette: The other amount in these estimates is $18,614,000 for aerospace and defence. I see a significant difference between aerospace and defence. Defence is a federal responsibility and aerospace comes under the private sector.
What is the difference? How will that $18 million be spent? This does not tell me who will get what. In one case, it is the government itself, and in the other case, it is the private sector.
Ms. Bincoletto: I will speak to that first, and then my colleague may have something to add. The $18 million comes from repayments under an old program now being used to fund this new program, the Strategic Aerospace Defence Initiative. That money, in addition to the funding approved for the initiative, will allow the federal government to provide repayable contributions to the aerospace and defence sectors. The program has existed since 2007. The federal government has been supporting both of those sectors for a number of years. CAE and Pratt & Whitney are two of the companies that have received the contributions in order to undertake research that will make them more competitive internationally.
Senator Hervieux-Payette: Is it the program that has been around for a while, the one where the government gets back a certain amount once an innovative solution becomes commercially viable?
Ms. Bincoletto: Precisely. They are repayable contributions negotiated on a case-by-case basis, money that eventually comes back and replenishes the federal government's coffers to fund other programs or that goes back to the tax authorities.
Senator Hervieux-Payette: Of the invested amounts, what is the return on the investment? If a $50 million investment was made in 2007, we would get $18 million today. How does that cycle work? You are back asking for funds. How do you record that so we can see how the program is performing?
Ms. Bincoletto: My colleague will answer that.
Ms. Bernard: They are long-term programs. We have agreements with those companies. Normally, we pay them over a five-year period so they can carry out their research, and then we pay them for another five-year period to give them time to market what they have developed. It often takes ten years before the money starts coming back.
The SADI program is still a bit too new to have collected any royalties yet. Money is only beginning to come in but for the TPC, the previous program, we had invested a total of $3 billion. So far, $876 million has been repaid and money is continuing to flow in, with payments expected until 2035. About a third, then, has been repaid.
Senator Hervieux-Payette: I have a question about the budget for Aboriginal Affairs and Northern Development. For a few days now, we have been seeing articles about $70 million going to the relocation of Aboriginals in Winnipeg for two years now. They live in a hotel, they are fed and so forth. First of all, why has it taken two years? That seems quite long for 2,000 people.
Second, it may not appear in the figures I have in front of me, but it is $70 million regardless, so which budget would I find that in? Apparently, your department intervened because of wrongdoing. Will these people spend five years in a hotel? I am trying to wrap my head around this. If I had to explain this to a taxpayer, I would need some serious information on this expenditure, which seems to have gone on for two years. Thirty-five million per year, then. Seems to me we could have bought each one of them a house for that amount.
[English]
Ms. MacGowan: It has taken some time since the flood, and a large number of First Nations community members did need to be evacuated. The rebuilding is significant in terms of that particular community, and, of course, the department is interested in moving people back to safe homes as quickly as possible.
A large number of people needed to be housed, and certain kinds of arrangements were made to be able to do that. At the earliest possible moment that the department is able to help them move back into safe lodgings, that will take place.
Senator Hervieux-Payette: Under which item in the budget should this go? I do not know. This was a flood, and, of course, we know that this is something that you cannot predict. I would like to know how long it will take to relocate these people and make sure they have a future.
Ms. MacGowan: Certainly, the department is interested and is actively planning with First Nations communities to move back to safe lodgings. The money to be able to do this has come from the Treasury Board Management Reserve, and is also sourced from the department's infrastructure budgets.
Senator Hervieux-Payette: There is not much there. In today's budget, there is no money.
Ms. MacGowan: In today's supplementary estimates, we are not seeking funding for the relocation.
Senator Wells: Ms. Bincoletto, I know it is a small amount, but can you tell me about the program for the reduction of office space? Is this for consolidation and paying out leases? Is it linked with an adjustment of human resources, or is it gathering efficiencies? Can you tell me about that, please?
Ms. Bincoletto: Over the next six years, we will have to invest approximately $16 million, including staff costs, in order to comply with Public Works and Government Services Canada's space reduction and space recapture initiatives. As the size of the government is reducing, its need for space is also going down.
This is an investment now in order to reduce our space footprint and to avoid cost over the long term. We are hoping that the cost avoidance would be about $10 million a year, so it is an initial investment to avoid the cost.
We currently have about 30,000 rentable square metres that we are looking to reduce and to release to Public Works, so that they can then rent out that space to some other tenant, non-governmental, hopefully. That will take Industry Canada about seven years to do.
Senator Wells: At the beginning of this seven-year program, and I think we are in year 2, you mapped out the strategy with reduction of human resources and planning for future needs, so that was all mapped out and budgeted. This year, it is $3.1 million. Am I reading that right?
Ms. Bincoletto: That is correct. We are really in in the hands of Public Works. They have a methodology to match our needs with our FTE, our employee count, and then with that, we map out a seven-year profile to figure out how much we can reduce every year.
Senator Wells: It makes you look at budgeting a little differently as well.
Ms. Bincoletto: Yes.
Senator Wells: Ms. MacGowan, I do not know a lot about the jurisdictional aspect with respect to Aboriginal Affairs or the affairs of Aboriginals, but many of the things you mentioned in your presentation, such as housing, education, community, infrastructure and social support services, are normally provincial jurisdiction. Is it different for Aboriginal Affairs?
Ms. MacGowan: It is different with respect to the provision of services for our Indian population resident on- reserve. It is federal jurisdiction with respect to those kinds of services.
Most of those are delivered through transfer payments to First Nation communities that then provide services to their community members. That is why you will see in our estimates documents so much money in grants and contributions — they are transfers in that regard. We do not generally provide direct services. It is done through transfers to the communities, which provide services to their members.
Senator Wells: Is there any jurisdictional overlap with what the provinces might provide that they would provide normally for community infrastructure, et cetera?
Ms. MacGowan: Any time there is an opportunity for partnering with provincial or territorial governments, we like to do that. For example, Manitoba is interested in partnering in the construction of schools. Where there is potential for jurisdictional overlap, the department works those things out with the provincial governments.
For example, in the case of child and family services where there might be potential for overlap, we make sure that we work those things out. In jurisdictional disputes, we apply the Jordan's Principle so that we make sure that any of our First Nations folks do not fall through the cracks. We look for service first and then sort things out after.
Senator Wells: It is not necessarily tied to a reservation or a piece of land that may be granted?
Ms. MacGowan: Most of our services are provided to residents normally on-reserve. There are other options in terms of economic development. Some of our programs focus on creating economic opportunity on-reserve. It is mostly focused around that. Of course, the department also provides funding to northern communities where there are no reserves. We provide services as well or grants and contributions to Metis organizations. It is not completely tied to land.
Senator Wells: In Newfoundland, there is the Federation of Newfoundland Indians, which is a landless band.
Ms. MacGowan: Yes.
Senator Wells: Is there interaction with that group in your programs?
Ms. MacGowan: We are in the process of working through an agreement on membership and access to services with the Qalipu Mi'kmaq First Nation.
Senator Wells: It is a difficult file for you for sure.
[Translation]
Senator Chaput: I want to come back to the Aboriginal situation in Manitoba that Senator Hervieux-Payette brought up.
The flood happened a couple of years ago, and since then, these Aboriginals have been living in hotels. Their homes have yet to be rebuilt, repaired or what have you. I find that unacceptable, but I want to get a handle on how the process works. Did the funding provided for that disaster come out of the flood or disaster relief fund?
[English]
Where does the money come from?
Pamela D'Eon, Director General, Planning and Resource Management, Aboriginal Affairs and Northern Development Canada: With regard to the flooding and the emergency, the flooding over the last couple of years has been excessive. It is not something that the department can fund on an ongoing basis. In that regard, the department had access to the management reserve for the evacuation and the emergency.
Now, the department is rebuilding the communities, but evacuees still remain in hotels. There are issues about the infrastructure, so there have been negotiations to assure the community that when they are moved, they will not be put in the same state. It has taken some time.
[Translation]
Senator Chaput: Who administers the money?
[English]
Is it the federal government?
Ms. D'Eon: The money is provided to the organizations that provide the emergency services.
Senator Chaput: Who are those organizations?
Ms. MacGowan: In the case of Manitoba, it is the Manitoba Association of Native Firefighters.
Senator Chaput: They received the money to take care of this problem.
Ms. MacGowan: They started off with looking after the immediate issues associated with the evacuation. Since then, recovery work has started on First Nations roads, critical infrastructure and some of the operational stuff that would be required before people are able to move back.
Also, AANDC works closely with the provinces affected by flooding. There is a relationship with the Province of Manitoba in this case to ensure that work plans are developed and that all the appropriate reimbursements of funding happen.
We are pretty clear that only eligible expenses under the Disaster Financial Assistance Arrangements are reimbursed. There are three prongs: AANDC, the Province of Manitoba, and the Manitoba Association of Native Firefighters MANFF.
Senator Chaput: Who ensures that the monies are spent the way they should be spent?
Ms. MacGowan: In terms of making sure that federal dollars are used only for intended purposes, it is our responsibility. That is how it works.
Senator Chaput: I find it worrisome that many families have spent so much time in hotels, and the costs have escalated for the hotel owners.
Can the money that was given to the firefighters be spent on hotel costs while the people are waiting to go back to their homes? It is not clear who will pay for that.
Ms. MacGowan: Certainly, the federal government is supporting the costs associated with the evacuees through transfers. It is unfortunate that the flood was so significant that it has taken this long to get people back to their homes.
Some of the evacuees have moved back, but still a large number have not returned.
Senator Chaput: What happens if there is not enough money, after we have paid the hotel bills and done the rebuilding?
Ms. MacGowan: We negotiated access to funding with the Treasury Board Secretariat for the immediate disaster relief. Certainly, a long-term plan for moving people back needs to be developed and costed.
Senator Black: I apologize for being a few minutes late. If my question has been addressed, just yank the chain.
The Chair: I will do that.
Senator Black: I am interested in learning about the Strategic Aerospace and Defence Initiative. I want to understand this. You indicated that this program was launched in 2006. Correct? In language that I have seen, we talk about launching the Strategic Aerospace and Defence Initiative. Is that a subset of the larger program? How does the launch relate to 2006?
Ms. Bincoletto: The Strategic Aerospace and Defence Initiative is the successor of Technology Partnerships Canada. Its terms and conditions were slightly modified and modernized, but it was born, in a sense, in 2006-07. The TPC ended when SADI was launching. It provides contributions to help support, as I mentioned earlier, the Canadian aerospace and defence companies so that they can undertake R&D and become more innovative and competitive around the world.
If you would be interested in some statistics, I would be happy to provide some.
Senator Black: I would be interested. Maybe you could file that with the clerk. I have a couple of questions and we have a tough chairman. I can feel the clock running and the whip getting ready to go.
Does this launch relate to the work that David Emerson did for the Government of Canada in contemplating how to position ourselves in aerospace and defence?
Ms. Bincoletto: It does indeed. My colleague can speak more to the Emerson report. The federal government's contribution in aerospace and defence space was reviewed by the panel with which former minister Emerson was tasked.
Senator Black: This flows out of his work?
Ms. Bincoletto: No, no. Minister Emerson's work was to review the government's contribution in aerospace, and so they reviewed SADI.
Senator Black: I see. What did his commission say in respect of this initiative?
Mr. Stewart: Industry had been asking for federal support for aerospace R&D to have a technology demonstration program. That was a recommendation he made that was relevant to this pre-existing SADI program.
He wanted to encourage more research partnerships, and so in the budget there is an announcement of an initiative to create a national aerospace research network.
Senator Black: I see, and that flowed from one of his recommendations?
Mr. Stewart: Yes, sir. Another consideration that would be relevant for this program was that industry, in their representations to him, talked to him about the importance of having stable funding for the program, so that was addressed. The budget announced that there would be stable funding over the coming five years for SADI.
Senator Black: Industry has agreed to that?
Mr. Stewart: It was announced in the budget that there would be stable funding.
Senator Black: Thank you.
Senator Buth: Thank you for being here this evening. I have a follow-up question to Ms. MacGowan about the issue in Manitoba.
Clearly, it is important that First Nations agree on where they should be located. Are those agreements finalized with regard to where the infrastructure building is happening?
Ms. MacGowan: I do not have that information. I would have to get back to the committee on that.
As I indicated in my earlier comments about MANFF in Manitoba, they were clearly struggling with a longer-term evacuation. The department is now focused on working with the Canadian Red Cross to manage the longer-term issues associated with those 2011 flood evacuees, and MANFF will continue to focus on any shorter-term immediate flooding and other disasters. I can get back to the committee with respect to whether there have been site selections or changes.
Senator Buth: It would be great if you could send that to the clerk.
Just to confirm, the switch has been made from MANFF to the Red Cross for some of the longer-term issues surrounding the evacuees?
Ms. MacGowan: MANFF will continue to manage short-term evacuations.
Senator Buth: I am interested in the federal-provincial or federal-territorial partnerships that you have. How would these be negotiated?
Ms. MacGowan: I do not have specific details on how they are negotiated, but areas of common interest, be it child and family services or education with respect to students moving on- and off-reserve would be handled with the specific departments in each jurisdiction.
Senator Buth: It is fairly specific in terms of the issues that you would face in each of the First Nations in the provinces?
Ms. MacGowan: Precisely. Not all provinces have the same kind of service delivery mechanisms or approaches in place, so those are handled on a bilateral basis, if you will, with the federal government and the province, not necessarily pan-Canadian.
Senator Buth: Let us get back to the estimates in terms of where most of the money you are requesting will go, and that is to specific claim settlements. How many claims are outstanding, and where we are at in the process?
Ms. MacGowan: I have those details. In progress at the moment there are 332 claims, 101 of which are under assessment and 231 of which are in negotiation. That would be the group that has not been concluded.
A number have been concluded as well over the years. In fact, 1,131 claims have been concluded in some fashion, and some are outside the process at the moment and in litigation.
Senator Buth: Do you expect to have more claims in the future?
Ms. MacGowan: It is not impossible that there would be future claims, but these claims are generally related to historic treaties. The claims need to be for issues that are at least 15 years in the past, so there could be additional claims.
Anik Dupont, Director General, Specific Claims Branch, Aboriginal Affairs and Northern Development Canada: On average, we have received 30 to 40 claims per year since 2007 for examination. The focus is on trying to settle the inventory of claims that we have in the department.
Senator Buth: You do an assessment and if you believe there is a legitimate claim you go into negotiation; is that the process?
Ms. Dupont: Yes. The First Nation submits its claim to the department and an assessment is done. We look at the claim with minimum standards. Once we establish that the documentation is there, it goes into a review process and assessment. We then determine whether there is an outstanding lawful obligation. If there is, we inform the First Nation that we are prepared to accept their claim to settle it.
Senator Buth: How do you budget for this?
Ms. MacGowan: In 2007, when the Specific Claims Action Plan was announced through Justice At Last, $2.5 billion was set aside, $250 million a year for 10 years. It is difficult to identify exactly when a negotiation will come to a successful conclusion, so the money was spread out over 10 years. The amount varies a bit from year to year, and the mechanism that was set up in consultation with the Department of Finance is to be able to move the money within that fund to the year in which the settlements are likely to take place.
We do this through reprofiling, and that is what you see in these Supplementary Estimates (A).
Senator Buth: That is a reprofiling of the $250 million that would be allocated on a per-year basis. You have $250 million plus you are asking for the $167 million?
Ms. MacGowan: That is right.
Senator Buth: So this year you expect to pay out around $400 million; is that correct?
Ms. MacGowan: Yes, it is the $250 million plus the $167 million.
Senator Buth: I have one last question related to planning for the future. I do not know if you can answer this.
We had the recent Supreme Court decision regarding the Metis settlement when the province of Manitoba was formed, indicating that we did not fulfill the obligation we had in terms of allocation of land to the Metis.
Has that process started to determine what the federal government will do in terms of that issue?
Ms. MacGowan: There is nothing that I am personally involved in or aware of. No doubt the department is reviewing the decision and will move forward based on whatever analysis it completes, but it has not been completed at this time.
Senator Buth: Maybe we can ask that during Main Estimates or at another meeting.
Senator Callbeck: I want to ask you about the internships with Mitacs. It is $35 million over five years, right? How many years has it been in existence?
Mr. Stewart: How many years has Mitacs been in existence?
Senator Callbeck: I am referring to this internship program.
Mr. Stewart: They started out as a network of centres of excellence and were funded through that program, which has a funding model of seven years and then a seven-year renewal, if I remember correctly. It was over the life of this network of centres of excellence in the first term that they began to do these internships. It was around about 2006 that they came up with this idea of getting into a larger scale internship program. I believe it was Budget 2007 that got them started in this regard, in this line of being a national deliverer of internships.
They subsequently have received additional funding, so it makes it maybe a complex story to talk about the specific money. Then there was an award in the last budget, which I think off the top of my head was around $27 million over two years, but I may have that figure wrong.
It was $13 million for 2013. Excuse me.
Senator Callbeck: This $35 million over five years is a new commitment?
Ms. Bincoletto: This is a 2012 Budget announcement. This is the second year into that five-year period. In addition, this last budget, Budget 2013, included an additional $13 million over two years for Mitacs but for something slightly different. It was the Globalink program, which links foreign university students who are interested to come and study here and the other way around, Canadian students who want to go and study abroad. It is a separate program, but still under the same organization.
Senator Callbeck: That is above and beyond, then, for the international students.
Ms. Bincoletto: Correct.
Senator Callbeck: That is only for two years?
Ms. Bincoletto: Correct. They do not appear here because they were not approved in time to appear in Supplementary Estimates (A).
Senator Callbeck: The $7 million it says is to support delivery of industrial research and development of internships. The whole $7 million is spent on that. How many students are involved? You said hundreds, but is it 100 or 500?
Ms. Bernard: About 960 is what is planned for 2013-14.
Senator Callbeck: Do all universities get an opportunity to place students in this? How does this thing work?
Mr. Stewart: These arrangements are often co-funded. In particular, an intern receives support from Mitacs but they also receive support from the private sector partner where the internship will take place.
Second, regional entities provide funding for the administration of the Mitacs program. For instance, provinces may contribute funding to the Mitacs organization to support the delivery of the internship program in their region. Of course, the main funding comes through the money we are discussing now, which is delivered in part through NSERC and in part directly.
Senator Callbeck: I am sure you do not have the figure here, but of the 960, could you get me the figure as to how many of those would be from Atlantic Canada? Is it possible to get that?
Ms. Bincoletto: If we can, we will.
Mr. Stewart: It is possible to get the breakout regionally. They are provided in Atlantic Canada. ACOA has supported and encouraged the program, and the universities there do make use of the program. I myself worked at Dalhousie University as assistant vice president, research. We certainly used the Mitacs program and were supporters of it when I was there at that time.
Senator Callbeck: Do you have any idea what per cent of these internships might be for Atlantic Canada?
Mr. Stewart: We will come back to you with the specific numbers, but I believe they attract what you would expect they would attract if you think of the proportion of population in the region. It will roughly follow that kind of proportion of the total envelope of students.
Senator Callbeck: How many students would apply?
Mr. Stewart: I think the challenge is matching up good students with good internships.
The one thing that I have always been impressed with about Mitacs is that they try to go for quality of experience, so great care is taken to ensure that a student will have a rewarding experience that will be relevant for their development.
I do not know off the top of my head a success rate of how many applications end up getting funded. I think more care is put into ensuring that good, quality students are lined up with good opportunities. The core value added of Mitacs is doing that matchmaking.
Senator Callbeck: Yes, there may be 960 students of good quality, but are there 3,000 of good quality that are applying?
Mr. Stewart: The number of people doing advance degrees at the graduate level in the sciences, for instance, is probably limited in a way. If you think of how many advanced scholarships the granting councils are funding, it is in the order of magnitude of probably 12,000 to 15,000, of which a large part are social scientists. It is actually a pretty large program. I think it is pretty comprehensive, the number of people who are getting support in this way.
We owe it to you to come back with some statistics so that you are reassured about this.
Senator Callbeck: Thank you.
Technology Partnerships Canada, TPC, I notice here you are requesting $3.5 million, yet I thought I heard it said tonight that that program ended in 2006.
Ms. Bernard: We stopped signing new agreements in 2006 but, as I have mentioned, those agreements go over 30 years, so we are still paying off some of the agreements that were signed in the beginning.
Last time, I believe you are the one who asked the question about the $5 million that we had on Main Estimates on that. This is an extra $3 million. There are only 12 projects remaining that are still in the payment phase, and the last payments are scheduled to be made next fiscal year. There will be no more payments in that program, but it is never completely over until they have repaid that money and that goes into 2035-36. It is a long project.
Senator Callbeck: It is a long way down the road.
I think my questions about Aboriginal Affairs have been answered.
Senator Gerstein: Thank you to the committee for your indulgence in putting up with my repetitive question, because I have become somewhat fascinated, if not fixated, on this comment on how one moves monies from operating to capital to grants and back and forth.
I think I have absorbed to this point that if it takes place within a year, it is a transfer; if it takes place over a year, it is a reprofiling.
Ms. Bincoletto, if I could refer you to page 2-11, I am interested in the transfers that you are asking for in Supplementary Estimates (A).
As I understand it, on April 13, you came with Main Estimates requesting $945 million. We come along now to the transfers in Supplementary Estimates (A), and I focus on the $3.1 million that is required for workplace renewal requirements under the National Accommodation Strategy. You will fund that by taking $2.659 million from operating and $450,000 — that is less than 0.01 per cent of the $622 million that was approved for grants and contributions.
Could you give this committee some idea of what the process is? How do you get $450,000 out of a $622 million pot? Why is it not $900,000 or $1 million and a little less out of operating? What is the concept of how this money gets shuffled around?
Ms. Bincoletto: I will ask Ms. Bernard.
Senator Gerstein: I am sure it is not complicated.
Ms. Bincoletto: Believe me, it is. That is why she is here to explain it to you.
Ms. Bernard: First, there are two different transactions for two different purposes. The one for the $3.1 million is specifically to pay for the reduction of our space that my colleague talked about earlier. The reason we are doing it in supplementary estimates is as follows.
Senator Gerstein: I am not questioning that you have to do that. That is not an issue. The question is how you came to exactly $3.1 million by taking $2.659 million out of operating and $450,000 out of grants.
Ms. Bernard: It is not quite that. The $3.1 million does come out of operating, so that is one transaction: $3.1 million comes out of operating and into capital.
The second transaction is $450,000 that comes out of grants and contributions and goes into operating. The operating is an offset of two different transactions. That is where you see the $2.6 million.
Senator Gerstein: It is more complicated than I thought. How do you come to those numbers, though?
Ms. Bernard: Maybe I can speak a bit to the $450,000.
Senator Gerstein: I am more interested in the process. How do you come up with the number $450,000? Why would you not have taken $3 million out of grants? Is it so precise?
Ms. Bernard: There are rather strict limitations on how much money you can take out of grants and contributions to put into operating, first of all. I am sure parliamentarians do not want to take money away from recipients to pay for public servants.
Senator Gerstein: How strict is it? You are taking 0.01 per cent — $450,000.
Ms. Bernard: The reason we are doing that is this is a component of TPC that we manage; it is called TPC-IRAP. Treasury Board decided the funding would not come from our regular operating budget. They said these are the folks that collect their royalties. They said, "You collect the royalties, and from what you collect in royalties, we will give you back some money to pay for those folks.''
Last fiscal year, we collected $126 million in royalties. We have a few folks that work on these re-collections. This is the amount that Treasury Board allows us to take from those royalties in order to pay the salaries of those folks.
Senator Gerstein: I am not questioning that. I understand the $126 million. I do not understand how you get down to something like $450,000. Is this a netted number?
Ms. Bernard: No. It is a small team of people.
Senator Gerstein: You actually picked out $450,000 out of a $622-million budget? That is what you can take out?
Ms. Bernard: It is specifically coming out of the $29 million, the amount next to it, so it is the $29 million that we are accessing of the repayable contributions from last year. The $450,000 is simply the amount it costs us to pay the folks who do these recoveries.
Senator Gerstein: I thank you, Mr. Chair, for indulging me. I am sure that my colleagues on the committee will help me along off-line.
The Chair: Thank you, Ms. Bernard, for trying to explain this to us. We are getting better at it, thanks to the help of Senator Gerstein.
[Translation]
Senator Bellemare: I have a short little question having to do with the Mitacs funding again. If I understood correctly, the money for the program comes from the federal government, the provinces and the private sector. Is the private funding provided by businesses or individuals?
Mr. Stewart: Businesses.
Senator Bellemare: Very good. The program is a bit like the Canada Job Grant program, an initiative that appears in the budget but targets a very large number of users. This program, here, however, is more for science students.
[English]
Mr. Stewart: I am not an expert on the Canada grants program.
[Translation]
Senator Bellemare: Simply put, it is a program that is also funded by the federal and provincial governments, as well as private businesses. My question is this. Do the interns usually continue working for the business where they did their placement, or do they go back to school?
[English]
Mr. Stewart: The intent of the program is to try to create opportunities and connections so that the students stay in Canada. However, it is not intended to be linear in that it is not a subsidy to an employer to hire a mathematics graduate. It is meant to provide them with an internship where they learn skills and apply in a real-world application their knowledge of mathematics, physics or whatever their subject of study was.
I remember one intern talking about working for a trucking company in New Brunswick, and the intern was a mathematics student, had a degree in math, and worked on algorithms in order to improve the efficiency of the shipping of the trucking.
Sometimes they do end up getting hired on. They demonstrate their value and the employers decide to keep them, but that is not the intent. I am sure the student is quite happy with that, but I think the intent is that they develop their ability to apply themselves to real-world problems in the business sector.
[Translation]
Senator Bellemare: Do you happen to know the percentage of young people who end up getting hired on by the internship employer? I imagine you do not have those numbers.
[English]
Mr. Stewart: The person who runs Mitacs is Dr. Arvind Gupta. I remember him telling me the number, but I worry that it is out of date and I will mislead you. I thought he said around 30 per cent or so, but I could be misremembering it. We will come back, and that could be one of the statistics.
[Translation]
Senator Bellemare: Thank you. It is quite interesting.
[English]
The Chair: Ms. Bernard, I would like to go back to thinking about the technology partnership and the $450,000 in salaries that you are paying people to get out there and shake the bushes for you. You are not keeping that money in a separate pot. It goes into general revenue, and then you have to apply to get the money out again. Is there a fictional account in which you know how much there is that you keep dipping into?
Ms. Bernard: I would not call it "fictional.'' These are my staff, by the way, the folks that do these collections. They work for me. I have a bigger team than that which does recovery. A team of 20 people does recovery. There are five in particular that do recoveries against the TPC-IRAP, which was a subcomponent delivered by the NRC at the time, which was aimed at small and medium-sized enterprises, sort of a subcomponent of TPC, more regional in focus and more small companies involved. Those files, because they are now in the repayment phase, have recently been transferred to Industry Canada. I have inherited five people that can now do the recoveries of these. It costs me about $450,000, but there is nothing in my budget to cover that. The agreement with Treasury Board is if they collect, you get the salaries to pay them. They collected last year; I get the money this year to pay for their salary. They will collect more for next year, and, again, next year we will be back asking to pay for their salaries again.
The Chair: From our point of view this is not a separate pot of money, this is just money that is collected that is owed to the government. It has gone into general revenue. Your words threw me off when you said "royalties.'' "Requesting access to the money'' suggests that there is a little pot here, but in effect you are just reflecting an agreement that you had with Treasury Board. From our point of view, however, you are just requesting money out of general revenue to do whatever you are saying you want to do here.
Ms. Bernard: All the money goes to the Consolidated Revenue Fund. We collected, as I have mentioned, $120-some- odd million, and $100 million stays with the Consolidated Revenue Fund. We have asked that about $20 million come back to us partly to pay for new SADI programs and partly to pay for old TPC programs still in the repayment phase, and, finally, the $450,000 to pay for the few folks who try to shake down those recipients, as you have said.
The Chair: Are you keeping a book in your office saying this is how much we have collected?
Ms. Bernard: Oh, yes. It is a big book.
The Chair: You have a bit of a claim to that amount of money.
Ms. Bernard: Yes.
The Chair: I know you have to come to us to approve it, but you feel we are more likely to approve it if you tell us that this is money we collected and put in there.
Ms. Bernard: I think this was part of Treasury Board's strategy to ensure that we kept on those companies because it would have been easy to let go, especially if it was paid. I am still collecting things that were paid out in the 1960s. They make sure that we have an incentive to collect those revenues.
The Chair: For 30 more years, then.
Ms. Bincoletto: Maybe not us.
Ms. Bernard: Yes.
The Chair: Maybe not us, either. Someone else will ask these same questions of someone else.
For the other point of clarification in your presentation, Ms. Bincoletto, you say that of this account, $18.6 million is to go to the SADI program, which provides repayable contributions to companies. That wording immediately made me think in terms of non-budgetary. It is voted non-budgetary, but you are showing it as budgetary here. If it is repayable, it is a loan. We have been led to believe by Treasury Board that this is a non-budgetary item. Help me out here.
Ms. Bincoletto: My colleague will tell you the difference is between a loan and a repayable contribution. That being said, this is not a loan. That is why it is itemized in this fashion. As we said before, out of the $22.1 million, $18 million goes toward funding new SADI projects and $3.5 goes to pay out the TPC old projects.
My colleague will tell you what the difference is in terms of the loans.
The Chair: It is not just loans; it is other items as well in this group called "non-budgetary.''
Ms. Bincoletto: Correct.
Ms. Bernard: The most obvious distinction between the two is that these are normally conditionally repayable contributions.
The Chair: There is the word!
Ms. Bernard: There is a certain requirement that the project be successful. First, when you do research and development, sometimes you fail. If you fail there is no obligation to repay. If you succeed on the R&D but fail on the commercialization aspect of it, again, depending on the agreement, there would not be an obligation to repay. For those that are successful, usually we ask them not only to repay what we gave them but to keep paying royalties after that up to something like 150 per cent of what we gave them originally. The successful ones, in some respects, shoulder the amount that we lost on those that were not successful. It is not really a loan because it has that condition on it.
The Chair: I understand. It is quite different from a straight loan and it is quite different from a repayable contribution. These are royalties and repayment of the contribution under certain conditions.
Ms. Bernard: Yes. It gets more complicated, but we are limited with time.
The Chair: I think you have made it complicated enough.
Ms. Bernard: Thank you; I try.
The Chair: Thank you very much for that distinction because Treasury Board had not warned us about these subtle differences. That is helpful for us to know.
I think sometime we would be interested in knowing, because this is getting a bit away from this particular matter tonight, how successful either of these programs has been in terms of the royalties you get back and the contributions that you get back over time for the money that you put into it. Some analysis must have been done of that.
Ms. Bernard: There is. In fact, it is three different programs now that we have gone through, and every time we make the rules a little tighter. Every time it increases our odds of recovering the revenues. We learned from past mistakes.
The Chair: Do you have that analysis that you could make available to the committee?
Ms. Bincoletto: We will talk to our colleagues as well who are responsible for the program itself and we will compile some statistics for you in terms of the benefits.
The Chair: I think that would be helpful. Thank you.
Well, Industry Canada, Indian and Northern Affairs, you have not changed your name yet. We are looking forward to that piece of legislation to help you through this because half the material we get is with Aboriginal Affairs and the other half with Indian and Northern Affairs. We do notice this and we are waiting.
I want to thank both teams very much for being here. We appreciate your helping us out. We will probably see some of you back for Supplementary Estimates (B).
[Translation]
We will spend the second half of our meeting this evening continuing our study of the subject-matter of Bill C-60, An Act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures, introduced in the House of Commons on April 29, 2013.
[English]
Tonight we will be looking at Part 3, Division 18, clause 233 beginning at page 111 of the bill, and that deals with the Gas Tax Fund. We welcome Judy Dezell, Manager, Gas Tax Implementation Project, Association of Municipalities of Ontario.
Ms. Dezell, I would ask you to give a brief overview of the role that you play and then help us with this clause. Your association is one of the entities that will be impacted by this clause, and we are trying to understand it.
Judy Dezell, Manager, Gas Tax Implementation Project, Association of Municipalities of Ontario: Thank you very much. The Association of Municipalities of Ontario is pleased to be able to comment on your study of Bill C-60. As you mentioned, we are here to talk about the indexing of Canada's Gas Tax Fund.
The Association of Municipalities of Ontario administers the Gas Fax Fund in Ontario to all municipalities except the City of Toronto. We distribute the fund twice a year on a per capita basis. Municipalities count on this stable, predictable administration model and invest the fund where they need it the most. Between 2005 and 2011, Ontario municipalities invested more than $2.1 billion gas tax dollars in 3,800 projects. These investments produced 3,900 kilometres of safer roads, over 240 new bridges and culverts, 230 new public transit buses, 106,000 tonnes of waste diverted from landfills, and 136,000 metres of new rehabilitated water, storm and waste water pipes, among many other positive outcomes. Canada's Gas Tax Fund improves the lives of Canadians by making communities safer, more efficient and prosperous.
The fund has helped communities keep construction-related jobs in the face of economic uncertainty. In response, Ontario municipalities are transparent in reporting and sharing project benefits with their communities. The way the fund is administered in Ontario is unique and has proven to be effective, efficient and accountable. A number of third- party evaluations have confirmed this fact.
Despite the direct benefits of Canada's Gas Tax Fund, it is no secret that Ontario's infrastructure, not unlike the rest of the country, is under pressure. Much of it was first built in the 1950s and 1960s and needs to be upgraded or replaced. In some communities, population growth is increasing the burden and fueling demand for new investments. Other municipalities have lots of assets to maintain, but face a shrinking population base and declining tax revenues.
In 2008, a joint provincial-municipal study determined that Ontario's municipalities face a $60-billion infrastructure gap that will take close to 10 years to close. This means communities in Ontario need $6 billion per year every year for the next 10 years. This is a gap in our core critical infrastructure, such as transit, water, waste water, storm water, solid waste, and roads and bridges. It does not include other key areas of municipal infrastructure like recreation, culture and, unique to Ontario, social housing. The infrastructure gap exists in all Ontario municipalities no matter the size or location. While we are working to address this need, we are very pleased that Parliament made the Gas Tax Fund permanent in 2011.
We are also pleased that Budget 2013 committed to expanding the list of project categories and to indexing the funds starting in 2014-15. Expanding the list of project categories makes the fund even more flexible and allows municipalities to address the needs that are unique to their community. Division 18 of Bill C-60 seeks to implement indexing, and we applaud this. Indexing is absolutely essential so that the fund grows over time to meet inflation and the rising costs of construction. Indexing ensures that municipalities can rely on Canada's Gas Tax Fund as a stable, predictable and long-term source of funding to address the infrastructure gap felt in all communities.
However, under the formula proposed in the bill, municipalities will have to wait three years before they experience the positive outcomes of indexation. The impact of rounding will be felt beyond this delay as it will reduce the amount invested in Canada's municipal infrastructure and our economy by approximately $500 million over the next 10 years. We predict that Ontario's share of this will be approximately $185 million. Over the next decade, this reduced investment is expected to cost Ontario's economy over $210 million and almost 3,100 person-years of employment.
The need for investment is now, not only because of the infrastructure gap but also because investment drives the economy. In the short term, investment creates jobs and in the long term it lays the foundation for growth and prosperity. Municipal infrastructure provides the support to social, cultural and commercial activity that leads to a dynamic Canadian economy.
We hope that the Senate considers the immediate need for safe, efficient and sustainable communities when it implements Gas Tax Fund indexing in Bill C-60 and enables membership to applaud the inclusion of Gas Tax Fund indexing; and we hope this policy can benefit municipal governments soon. Thank you.
The Chair: Ms. Dezell, thank you very much. We appreciate hearing your overview. You gave us statistics from 2005 to 2011.
Ms. Dezell: Yes.
The Chair: Did the program start in 2005?
Ms. Dezell: Correct.
Senator Day: The figures are from its inception until 2011.
Ms. Dezell: Yes, that is the most current data.
The Chair: You talked about the Ontario model and you described Ontario as being unique. Have you told us enough about what makes Ontario unique? Should we suggest to all the other provinces that they take a look at Ontario and the work that you are doing?
Ms. Dezell: What makes Ontario unique is the direct federal-municipal relationship. In 2005, the province did not want to play a role in delivering the program, so they stepped aside and allowed AMO to step up to deliver the program on behalf of the federal government.
In B.C., we have a model where the Union of British Columbia Municipalities is involved. It is a different relationship in B.C. where the province still has a very big role to play in terms of the eligibility of projects. In Ontario, there is a more direct relationship between the AMO and the federal government.
The Chair: That explains that. It is Ontario and a little bit in B.C.
Ms. Dezell: Correct.
The Chair: For the rest, it is through the province to the municipalities.
Ms. Dezell: Some provinces are deciding on the priorities at the local level.
The Chair: The province decides what municipalities get and what their priorities are.
Ms. Dezell: Correct, and what they will fund it for.
[Translation]
Senator Bellemare: I would like to continue along the same lines. The Province of Quebec is quite involved in the allocation. If the Association of Municipalities allocates the funding, without the province's partnership, what are the priorities?
[English]
Ms. Dezell: The allocation is based on a per capita methodology, which is how the Gas Tax Fund is allocated nationally. That is flowed straight through at the provincial level in Ontario.
[Translation]
Senator Bellemare: As I understand it, then, there is a bit of provincial involvement. It is done on a per capita basis? It is done by municipality?
[English]
Ms. Dezell: Correct.
[Translation]
Senator Bellemare: Are there no choices to be made between waste water infrastructure or bridges and roads? It really works on a per capita basis, and the municipality is the one that decides whether it will spend its money on fixing a bridge or a road, as opposed to overhauling a water purification system? Is my understanding correct?
[English]
Ms. Dezell: It is different in every province. In Ontario municipalities are paid twice a year; and they have to report. Based on that payment, they have to meet eligibility criteria to spend the money. There are seven eligible project categories under the program: critical infrastructure, roads, bridges, water, waste water, solid waste, and public transit. Those are the key categories. It is up to the local council to decide which of those is the local priority at the time. In 2013 it might be roads, but in 2014 it might be a water project. It is completely up to a local council to decide.
[Translation]
Senator Bellemare: How many employees does your association have administering the program? Since you need money to administer the program, how do you fund all that?
[English]
Ms. Dezell: We have administration dollars that come straight off the top of the fund. I am proud to say that we administer this fund within less than half a percentage point of the money. We have three FTEs that run the program across the province.
[Translation]
Senator Bellemare: If I understand your brief correctly, you want the indexation for mula to result in annual payments, instead of relying on a $100-million threshold. Is that right?
[English]
Ms. Dezell: Correct. We would like to get rid of the rounding requirement. We would like to have a straight indexing so the fund can flow to municipalities to do the kinds of investments they need to do on their critical infrastructure.
The Chair: You would like to get your 2 per cent increase for next year by next year instead of waiting for three years.
Ms. Dezell: That is right.
The Chair: I understood that from the letter by the president that we received from you.
Ms. Dezell: Yes.
The Chair: It has not been circulated to everybody, but that was the point that was made in that letter. The letter is dated June 3.
Senator Callbeck: Thank you for being here tonight. You mentioned about the indexing. You also mention a broader scope of investment categories.
I do not know how many categories you said there are, but does the federal government set the categories? Are they the same in every province?
Ms. Dezell: The categories are determined by the federal government; they are consistent across the country. What may change across the country is where the priorities lie at the provincial or territorial level.
Senator Callbeck: You would like to see a broader scope. What would you like to see included?
Ms. Dezell: Budget 2013 announced they were going to expand the number of categories that were eligible under the program, which we applaud. We are looking forward to that. It will help us address our critical infrastructure as well as everything Canadians enjoy at their community level, such as their cultural and recreational facilities. They will now be eligible as of 2014.
Senator Callbeck: They were not before?
Ms. Dezell: No, they were not.
Senator Callbeck: I thought recreation was.
Ms. Dezell: Not under The Gas Tax Fund.
Senator Callbeck: You have 443 municipal governments that you give money to twice a year. Does a municipality have to be a certain size to participate?
Ms. Dezell: No. According to Statistics Canada, as long as they have a permanent population, they receive a payment. It is about $60 per capita that we pay out.
Senator Callbeck: What would your smallest municipality be?
Ms. Dezell: Our smallest municipality has three people.
Senator Callbeck: Is that right?
Ms. Dezell: Yes.
Senator Callbeck: You do not do Toronto, so the money comes directly from the federal government to the City of Toronto?
Ms. Dezell: Correct. That is a unique relationship.
Senator Callbeck: They have the same eligibility criteria.
Ms. Dezell: The City of Toronto is different. When the agreement was originally negotiated, it was agreed they would focus strictly on transit. They do not invest in any other categories.
Senator Callbeck: Thank you.
The Chair: Prince Edward Island is not a per capita distribution. Will Prince Edward Island be entitled to the 2 per cent per year increase? Do we know that?
Ms. Dezell: You would have to ask Infrastructure Canada. I am not sure how they are going to do that. I know that Prince Edward Island and the territories receive a base allocation.
The Chair: We do not see anything in here about increasing that base.
Ms. Dezell: That is a conversation you would have to have with Infrastructure Canada.
The Chair: The expanded categories are probably an executive action, because we do not see that in the legislation either. You are satisfied that that is going to happen.
Ms. Dezell: Yes. It was a commitment in the budget that they were going to expand the categories. I expect it will be implemented through a Treasury Board submission of some sort.
The Chair: Probably an executive ministerial order.
Ms. Dezell: Correct.
Senator Black: Thank you very much for your presentation. It is wonderful to have somebody before us who is half happy. It is a nice way to end the day.
Did you make representations to the government in regard to indexing? Was there consultation with you?
Ms. Dezell: There is consultation. As an administrator of the program, we have constant and consistent conversations with the staff at Infrastructure Canada. We work with the Federation of Canadian Municipalities, which you may be more familiar with in terms of the national focus of municipal governments.
Senator Black: They would be aware of the issues you shared with us.
Ms. Dezell: Yes.
Senator Black: What is the source of funds for a municipality in Ontario?
Ms. Dezell: Its primary source of funds is property tax. After that, they receive grants related to operational costs, for example, policing. Ontario is a little unique. We also provide social services in the province at the municipal level. We do receive grants from the province to offset some of those costs.
Senator Black: Policing, social services, fire, housing?
Ms. Dezell: Correct.
Senator Black: Then there is the gas tax.
Ms. Dezell: Correct.
Senator Black: Anything else?
Ms. Dezell: There is another provincial gas tax that is shared with municipalities that have transit services only. Those are the only funds that are consistent year over year in terms of availability to municipalities.
Senator Black: Anything to do with lotteries or gambling?
Ms. Dezell: They have a little bit of lottery revenue. It is not as big as you would think, and it is not every community.
Senator Black: That is helpful to me. Thank you, Mr. Chairman.
Senator Callbeck: You say your smallest municipality is three. Where do you get the numbers for your municipalities?
Ms. Dezell: Statistics Canada.
Senator Callbeck: What happens when the long census form is gone and some municipalities are no longer covered?
Ms. Dezell: I am not intimately familiar with Statistics Canada as far as how they collect data. I do not think population counts are part of the long-form census. That is the short form, I believe.
Senator Callbeck: You may be right.
Senator Wells: I want to applaud you on the administration cost for the program. Did you say it was 0.5 per cent?
Ms. Dezell: Yes, 0.5 per cent. It is actually a little less than that. We are looking to return some money to municipal governments.
Senator Wells: That is good. I know in our circles, administration of programs can be very high. I will not say a number, but I have heard 15 per cent. Well done.
Is the $60 per capita national?
Ms. Dezell: That is Ontario's number. It depends on your population. It depends on how the fund is directed within each province.
The one I am most familiar with is B.C. They actually have three different pots of money. They do not allocate based on per capita. They allocate based on your population threshold and the types of projects you will be doing.
Senator Wells: It is mentioned in the note from Mr. Powers, the president, that the rounding issue costs Ontario's economy $210.9 million. I suggest that is probably an opportunity cost. There is no money extracted from them; it is just money that they are not getting because of the rounding.
According to my calculations, through the magic of compounding, initially it would be $11.8 million in year one of the indexing benefit, and that would compound. The opportunity cost on the negative ledger would soon be outweighed by the compounding of the indexing on the positive side of the ledger.
I wanted to make that comment, because it did show up as a cost for Ontario; I am not sure that it is. I did not have any other questions.
The Chair: Have you access to other provinces in terms of the cost? I have heard a figure similar to Senator Wells' figure where the province receives the money from the federal government and then distributes it, and there is a 15 per cent cost for just sending it out.
Have you any information in that regard?
Ms. Dezell: Not outside of Ontario, unfortunately.
The Chair: You said that B.C. does not distribute on a per capita basis but rather on a threshold basis.
Ms. Dezell: That is right.
The Chair: Are there other provinces, other than Prince Edward Island, that are different?
Ms. Dezell: There are different focuses in every province. In some provinces you have to apply to access the fund, and they are funded based on the highest priorities or on whatever the provincial priorities are.
The main point is that in Ontario it is just a straight per capita, and that is not a model used across the country.
The Chair: But the distribution by the federal government to the provinces is on a per capita basis?
Ms. Dezell: Yes.
The Chair: And whatever they do after that —
Ms. Dezell: Is a provincial or a territorial decision.
The Chair: I understand. There being no other questions, Ms. Dezell, thank you very much, and congratulations on the fine work that you are doing.
Ms. Dezell: Thank you.
The Chair: We will talk to all of our friends and see if we can get that rounding done away with.
Ms. Dezell: Thank you.
The Chair: Honourable senators, would someone consider moving that the clerk be authorized to email password- protected copies of the draft report on Supplementary Estimates (A) 2013-14 to those committee members who so desire? Others may receive hard copies in their offices on Monday, June 10, for the purpose of its consideration on Tuesday morning at our 9:30 meeting.
Senator L. Smith: So moved.
The Chair: Thank you, Senator Smith.
Does everyone understand why we are doing this? Normally reports are confidential until adopted by the committee. You may not be here on Monday and we want you to have it in your hands, so we will email it to you if that is a convenient way to get it.
Senator Black: Mr. Chairman, will that be password-protected to our staff? I would prefer that.
The Chair: You could let our clerk know where you want your copy sent and how. If you want it to go to staff here, we will deliver it. Normally it is delivered in a sealed envelope.
We do not have the other report yet. This is just the Supplementary Estimates (A) report.
We will also have a very brief report on Bill C-60 that will just be statistical. It will not have any of the discussion or conclusions; that is for us to draw. We will have two reports that we hope to be in a position to file on Tuesday of next week when the Senate sits. The time will start running on those, and they support the bills that come along.
Ms. Turner has been working hard trying to get witnesses, but in certain instances it is difficult to get people on short notice. She has done a great job, and we appreciate that very much.
I have three letters that I want to make sure everyone receives. These are people who were invited or who asked to appear as witnesses but could not come in the available time slots.
One was from Bauer, who makes hockey equipment. That letter that will be sent to you. It was not translated. You have all received the letter from the Canadian Broadcasting Corporation, and there is one from the Canadian Bar Association. The CBC letter was with respect to the Crown corporation issue, and the Canadian Bar Association was dealing with the Investment Canada changes.
We should all have those because they would be reflected in the report that we do. The letters that we receive form part of the evidence.
That is all the evidence we are planning to have on Supplementary Estimates (A).
From two o'clock to four o'clock tomorrow afternoon we will be dealing with two subjects under Bill C-60: credit unions and Crown corporations. Those are the two outstanding subjects that we will be dealing with.
(The committee adjourned.)