THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Tuesday, May 7, 2019
The Standing Senate Committee on National Finance met this day at 1:30 p.m. to examine Main Estimates for the fiscal year ending March 31, 2020.
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: My name is Percy Mockler, senator from New Brunswick and chair of the committee. I wish to welcome all those who are with us in the room and viewers across the country who may be watching on television or online.
[Translation]
As a reminder to those watching, the committee proceedings are open to the public and also available online at sencanada.ca.
[English]
Now I would ask senators, please, to introduce themselves.
Senator Klyne: Marty Klyne from Saskatchewan.
[Translation]
Senator Forest: I am Éric Forest from the Gulf region in Quebec. Welcome.
Senator Pratte: I am André Pratte from Quebec.
[English]
Senator Duncan: Pat Duncan from Yukon.
Senator M. Deacon: Marty Deacon from Ontario.
Senator Boehm: Peter Boehm from Ontario.
Senator Neufeld: Richard Neufeld from British Columbia.
Senator Marshall: Elizabeth Marshall from Newfoundland and Labrador.
[Translation]
The Chair: I would like to recognize the clerk of the committee, Gaëtane Lemay, and our two analysts, Alex Smith and Shaowei Pu, who team up to support the work of the committee.
[English]
Honourable senators and members of the viewing public, the mandate of this committee is to examine matters relating to federal estimates generally as well as government finance.
Today we continue our consideration of the expenditures set out in the Main Estimates for the fiscal year ending March 31, 2020.
[Translation]
We have witnesses from three federal organizations with us this afternoon to discuss their requests for funding in the Main Estimates.
[English]
To the witnesses, thank you very much for accepting our invitation and for being here.
First, from Indigenous Services Canada, we welcome Mr. Paul Thoppil, Chief Finances, Results and Delivery Officer.
[Translation]
We also have Paul Pelletier, Director General, Education Branch. Thank you for accepting our invitation.
[English]
Then, from Infrastructure Canada, we have before us Nathalie Bertrand, Assistant Deputy Minister and Chief Financial Officer, Corporate Services; and also Nathalie Lechasseur, Director General, Programs Integration, Program Operations. From Canada Mortgage and Housing Corporation, Evan Siddall, President and Chief Executive Officer accompanied by Lisa Williams, Chief Financial Officer.
Thank you for accepting our invitation. We will ask Mr. Thoppil to make his presentation. After your presentation, we will have questions from the senators.
[Translation]
Mr. Thoppil, you may go ahead.
Paul Thoppil, Chief, Finances, Results and Delivery Officer, Indigenous Services Canada: Mr. Chair and honourable senators, thank you for the invitation to appear here today on the 2019-20 Main Estimates for Indigenous Services Canada, or ISC. This committee has an important role in reviewing the department’s expenditures, and my colleague and I welcome the opportunity to discuss these estimates. I am pleased to report that legislation has now been introduced to establish Indigenous Services Canada as a department. This proposed legislation serves to define the powers, duties and functions of the minister, as well as repeal the Department of Indian Affairs and Northern Development Act in order to formally dissolve Indigenous and Northern Affairs Canada.
[English]
Before we look more closely at the 2019-20 Main Estimates, I would like to start by providing some highlights on the results that Indigenous Services Canada has achieved over the life of this government.
First, for infrastructure, since November 2015, a total of 83 — now 85 — long-term drinking water advisories have been lifted. Also, as of December 31, 2018, a total of 6,842 housing units and lots, for which the department is responsible, are being built, renovated or serviced, of which 3,883 are now complete.
Second, under education, for kindergarten to Grade 12, more than 180 First Nations are now benefiting from First Nations-led control over their education; and the British Columbia Tripartite Education Agreement has been successfully initiated.
Third, through Jordan’s Principle, Canada is now ensuring that First Nations children receive the services they need, when they need them. Since July 2016, the department has approved more than 216,000 service requests.
Lastly, on February 28, 2019, Bill C-92, An Act respecting First Nations, Inuit and Metis children, youth and families, was introduced in Parliament. This proposed legislation sets out national principles to guide how services should be provided to Indigenous children and families and provides clear affirmation of the inherent right of First Nations, Inuit and Metis to exercise their jurisdiction in relation to child and family services.
Now I would like to draw the attention of senators to a presentation before you entitled “2019-20 Main Estimates,” which was distributed to you earlier. The deck starts with an overview of the 2019-20 Main Estimates and ends with expenditure information and trends for major program areas.
[Translation]
Slide 2 shows that the department’s 2019-20 Main Estimates will be about $12.3 billion, a net increase of approximately $2.9 billion, or 32 per cent, compared to last year’s Main Estimates. Part of the increase can be explained by the exclusion of the budget implementation vote for each of the Budget 2019 investments, totalling $700 million, primarily for the continuation of Jordan’s principle. The inclusion of Budget 2019 initiatives in the Main Estimates allows for greater alignment between the federal budget and estimate cycles. As well, it allows the department to have access to the funding as soon as Treasury Board approves the initiative. Slide 3 provides an explanation of other major items that contribute to the increase in the Main Estimates, such as $481.5 million for the First Nations Water and Wastewater Enhanced Program and to improve monitoring and testing of on-reserve community drinking water; $357.9 million related to non-insured health benefits for First Nations and Inuit; and $324.8 million for infrastructure projects in Indigenous communities. As shown on slide 4, the expenditures in the 2019-20 Main Estimates for Indigenous Services Canada are composed of about $9.6 billion or 78 per cent in transfer payments, about $2 billion or 16 per cent in operating expenditures, about $700 million or 6 per cent in the budget implementation votes, and about $5.6 million for capital requirements.
[English]
Slide 5 aligns this funding with the Departmental Results Framework.
On slide 6 I would like to note that starting in 2019-20, Indigenous Services Canada is implementing a new grant titled “Grant to support the new fiscal relationship for First Nations under the Indian Act.” This new grant will advance self-determination by enhancing predictability and flexibility of funding for First Nations that qualify based on co-developed eligibility criteria. More than 80 First Nations are now currently receiving funding through this new mechanism.
Finally, starting on slide 7, we have provided information on expenditure trends in major program areas for your benefit. These major program areas — namely, education, social development, infrastructure and First Nations and Inuit health — account for about $10.9 billion, or 89 per cent, of the overall $12.3 billion in the Main Estimates.
Honourable chair, these estimates will enable us to continue to make concrete steps to address the needs of Indigenous peoples.
In 2019-20, Indigenous Services Canada will focus, in partnership with Indigenous peoples, on the following five interconnected priority areas: children and families, education, health, infrastructure and economic prosperity.
I look forward to discussing these estimates, together with my colleagues, with you and welcome your questions regarding my presentation. Thank you.
[Translation]
The Chair: Thank you, Mr. Thoppil.
Nathalie Bertrand, Assistant Deputy Minister and Chief Financial Officer, Corporate Services, Infrastructure Canada: Thank you, Mr. Chair, for inviting Infrastructure Canada to address the committee today. My name is Nathalie Bertrand, and I am the Chief Financial Officer and Assistant Deputy Minister of Corporate Services for the department. I am joined today by Nathalie Lechasseur, Director General of Program Integration.
I am here today to speak to you about our department’s Main Estimates, which were tabled in the House of Commons on April 11, 2019. To support Infrastructure Canada’s program delivery, including under the Investing in Canada plan, the department is requesting $10.7 billion in total budgetary authorities in its 2019-20 Main Estimates.
The Investing in Canada plan was designed to flow funds through two phases. The first phase, which focused on the repair and rehabilitation of existing public transit, water, wastewater and social housing infrastructure, is well under way across the country. The next phase is the long-term phase, under which all 36 programs have launched.
Investments under the plan are being administered by 14 federal departments and agencies, each responsible for delivering programs and funding to address the challenges and opportunities facing communities across the country. At Infrastructure Canada, all provinces and territories have officially signed their bilateral agreements, and approved projects are being announced regularly. To date, nearly $20 billion in funding has been committed through the Investing in Canada plan and thousands of projects are under way from coast to coast to coast.
[English]
Included in the department’s request is over $9.5 billion in transfer payments through the department’s programs.
Many of the department’s programs flow funds according to claims submitted for reimbursement by the provinces and territories. This provides oversight and ensures that taxpayer dollars are protected.
Included in the department’s request is $5.2 billion for grants and contributions, such as nearly $1.5 billion in funding for the Public Transit Infrastructure Fund; over $1 billion in funding for the National and Regional Projects component of the New Building Canada Fund, one of the department’s legacy programs; over $854 million from the Clean Water and Wastewater Fund; and nearly $100 million for funding from the Disaster Mitigation and Adaptation Fund.
[Translation]
The department is also seeking to provide provinces and territories with over $572 million for projects submitted for funding under the long-term phase of its plan and over $289 million in funding for commitments made by PPP Canada, which have been assumed by Infrastructure Canada.
A further statutory item that is requested through the 2019-20 Main Estimates is $4.3 billion for the federal Gas Tax Fund. The Gas Tax Fund provides municipalities with a permanent, predictable and indexed source of long-term funding, enabling construction and rehabilitation of core public infrastructure. Under the fund, over $2.2 billion in funding is provided through two payments per year to provinces, territories and municipal associations, which in turn flow this funding to municipalities to support local infrastructure priorities.
Budget 2019 included a commitment from the Government of Canada of a one-time $2.2 billion top-up to the federal Gas Tax Fund, which is reflected in the 2019-20 Main Estimates.
[English]
The department is committed to regularly updating Canadians on the results of our investments. We do this through several means. Our online geo-map provides information on projects that have been announced across the federal government under the Investing in Canada plan. Our data table shows the funds reimbursed to our project partners to date. The Open Data portal provides information on the progress of the projects INFC has supported through our programs. We have posted the signed bilateral agreements with the minister’s mandate letter on our website. Our funding decisions are announced through local events and social media. Signs are posted at federally funded project sites to show Canadians where we are investing in their community.
The department will continue to report back on the results of our investments as we deliver the programming and funding that are key to the future of Canada.
In addition, the Minister of Infrastructure and Communities is scheduled to present an update on the progress of the Investing in Canada plan to the media in the coming days. The progress report will be presented to Canadians at the same time and available on the department’s website.
[Translation]
I would like to close by speaking briefly about the flow of federal funding to our partners. Infrastructure Canada has been working closely with our partners to explore how we can improve the timeliness of the flow of funds to ensure payments are made as construction work takes place, otherwise known as progress billing.
Progress billing means that we will make payments to provinces and territories based on project progress information provided to the department. It will result in payments that better align the flow of funds to construction activities. By changing to a progress billing payment model, the initial payment will be made sooner. Over time, progress billing is expected to provide better alignment of federal investments and accounting to economic activities taking place in real time.
Thank you for inviting us to speak with you today about the important work Infrastructure Canada is doing on behalf of Canadians. We would be happy to answer any questions you have.
The Chair: Thank you, Ms. Bertrand.
[English]
Evan Siddall, President and Chief Executive Officer, Canada Mortgage and Housing Corporation: Thank you. It is my pleasure to be with Lisa Williams, our CFO, and to respond to your questions and give you these few opening comments.
As you are aware, CMHC is leading the implementation of Canada’s National Housing Strategy, which aims to remove more than 530,000 Canadian households from housing need and reduce homelessness by half. As Canada’s national housing agency, we would like to aim higher. We recently announced a bold aspirational goal that by 2030, our aim is that everyone in Canada has a home that they can afford and that meets their needs.
Housing affordability is a preoccupation for Canadians. Economic prosperity has increased demand in this country for housing, and some Canadians are being left behind. Were another financial crisis to arise, housing markets would worry many more of us. As Matthew Desmond said in his Pulitzer prizewinning book Evicted, “Without stable shelter, everything falls apart.”
[Translation]
Canadians depend on CMHC, and we’ve made housing affordability a priority. We’ve developed a comprehensive strategy that includes using information technology to automate rote tasks; working with new, non-traditional partners; driving disruptive innovation in the housing sector; and acting as a national convenor to help connect the dots between housing challenges and solutions.
We’ve also restructured CHMC to break down silos that have stifled collaboration and innovation for too long, and to improve the commercial and not-for-profit services we provide to our Canadian clients. I believe that our company is now better positioned than ever to deliver results and achieve our aspirations.
The National Housing Strategy, with its long-term commitment of federal funding, is a critical component of our affordability strategy.
The National Housing Strategy is funded by appropriations from Parliament, and includes new investments announced in Budget 2019. Ms. Williams will provide details of our funding requests for 2019-20 in a few minutes.
[English]
First, however, I would like to update the committee on recent measures to further strengthen the National Housing Strategy and provide new tools to support community housing providers.
Last month, our minister, the Honourable Jean-Yves Duclos, announced the proposed National Housing Strategy act that will further the progressive realization of the right to adequate housing as recognized under International Covenant on Economic, Social and Cultural Rights, to which Canada is a signatory.
As the government’s policy adviser on housing, CMHC played a key role in drafting this proposed legislation, which is part of the Budget 2019 implementation act and adopts a human rights-based approach to housing. Enshrining the need for a national housing strategy in law inherently acknowledges the value of a coordinated approach, a shared vision and true accountability. It is a way to bring housing and rights closer together.
To that end, the proposed legislation would require that future governments adopt and maintain a National Housing Strategy that prioritizes the needs of the most vulnerable, with regular reporting to Parliament on progress toward the strategy’s goals and outcomes. It would also establish a national housing council with diverse representation, including persons with lived experience of housing need and homelessness, to advise the minister on issues related to the National Housing Strategy, with an aim of improving housing outcomes.
Finally, it would create a federal housing advocate, supported by the Canadian Human Rights Commission, to identify systemic housing issues facing individuals and households belonging to vulnerable groups. This advocate would provide an annual report and recommendations to the minister, to be tabled in Parliament.
Separately, the Budget 2019 implementation act will create the first-time home-buyer incentive, which will directly help the core group of Canadians I mentioned earlier who are being left behind. As was the case with the proposed National Housing Strategy act, CMHC played a key role in advising the government on this incentive and are finalizing program details even as we speak.
This program has been carefully targeted to provide some help to young home-buyers without undoing the progress we, the Department of Finance Canada and the Office of the Superintendent of Financial Institutions have made through measures that prevent excessive borrowing and limit house price inflation.
The focused scope and size of the program, at $1.25 billion, means there will be essentially no impact on housing prices. We do not expect the first-time home-buyer incentive’s inflation effect to be beyond 0.02 to 0.04 per cent on average across the country. Limiting house price inflation will keep housing more affordable, far more so than some of the other policy and regulatory changes that have been put forth by advocates, such as easing the mortgage insurance stress test or extending the maximum amortization period from 25 to 30 years.
Before turning over to Ms. Williams, I would like to remind the committee that CMHC also delivers important mortgage funding through mortgage loan insurance programs and securitization. Although these activities do not require appropriations from Parliament, they are nevertheless central to our role as a systematically important financial institution with a mandate to support Canada’s financial stability.
Thank you for the opportunity to make these brief opening remarks, Mr. Chair. I’ll now turn things over to Ms. Williams.
Lisa Williams, Chief Financial Officer, Canada Mortgage and Housing Corporation: I would like to take a few minutes of the committee’s time to outline CMHC’s funding requests for each of the three corresponding responsibilities under our Departmental Results Framework.
Beginning with the Assistance for Housing Needs, a core responsibility, CMHC provides funding to improve access to affordable housing for Canadians in housing need, including Indigenous peoples, people with special or distinct needs, and certain vulnerable groups.
As the Main Estimates show, CMHC is estimating budgetary expenditures of just over $2 billion for this work in 2019-20. This figure represents a total budgetary decrease of approximately $48 million, or 2.3 per cent, from the previous year’s Main Estimates. Most of the decrease is due to the expiry of Social Infrastructure Fund initiatives announced as part of Budget 2016. The Investments in Affordable Housing program has also come to an end, as have a number of long-term funding agreements for social housing.
These and other decreases are partly offset by almost $357 million in funding for new partnership agreements with provinces and territories under the National Housing Strategy. We are also requesting increased funding of $6 million to maintain the affordability of federally administered community housing.
Our second core responsibility is financing for housing, under which CMHC makes financing available for a range of housing-related initiatives. Requested funding for these activities continues to grow, more than doubling this fiscal year to a total of more than $502 million. Close to $180 million of this increase is for the National Housing Co-Investment Fund, which makes loans and grants available to help other levels of government, and private and not-for-profit organizations, build new and repair existing affordable homes.
As well, the Rental Construction Financing initiative will receive an additional $58 million this fiscal year, which includes new funding announced in Budget 2019. The RCFI offers low-cost loans to municipalities and housing developers during the earliest and riskiest phases of development.
CMHC is also requesting more than $14 million for year one of the first-time home-buyer incentive Mr. Siddall alluded to in his remarks. Beginning in September, eligible buyers who have the minimum down payment required for an insured mortgage will be able to finance a portion of their home purchase through a shared equity mortgage with CMHC.
[Translation]
The Main Estimates also include funding for the Shared Equity Mortgage Provider Fund, which will help existing providers scale-up their business and encourage new players to enter the market. Under our third core responsibility, housing expertise and capacity development, we’re seeking about $136 million through these Main Estimates, an increase of about 14 per cent over the previous fiscal year. This funding will enable CMHC to continue to expand its research, data analysis and policy development activities.
[English]
In 2019-20, we will invest an additional $4.4 million in housing research and $14 million in other NHS initiatives, including CMHC’s housing research and data initiatives and the human rights-based approach to housing.
Mr. Siddall and I would be pleased to answer any of the committee’s questions. Thank you.
The Chair: Thank you.
Honourable senators, before we move onto the first questions, we had tremendous cooperation this morning with the five-minute rule, so we will again look at the five-minute rule. There’s no doubt you will be asking for the second round.
Senator Marshall: Thank you very much to all of our witnesses for being here today.
My first question is for CMHC. I was interested in the first-time home buyer program, given the cost it will be to the government over the next three years. I know you are in the planning stages, but I see from your opening remarks that you’ve done some work on that.
Could you tell us a little bit about it? I’m interested in it from the perspective of the area of risk, because it is a substantial amount of money, and you will be depending upon home-buyers to repay it at some point in the future.
Could you talk a little bit about that program?
Mr. Siddall: Certainly. If you’d like me to respond, I’ll go ahead.
The particular terms and conditions of the program are still with the Minister of Finance for final decision, but I can tell that the program will involve, through CMHC, the Government of Canada effectively investing alongside a homeowner, and that homeowner does not have the financial burden of a loan for that amount. In the case of a resale home, it would be 5 per cent of the value of the property. In the case of a new home, it would be 10 per cent or up to 10 per cent. That’s to stimulate new construction, because we want supply to help moderate housing prices.
The amount is repaid either when the home is sold or, at the option of the homeowner, when he or she would like to prepay the mortgage. That’s basically what happens. It’s not like a loan, where there’s a date by which they have to pay it off. We’re working out the term of the loan, but that’s effectively how it would work.
Senator Marshall: So all of those items will effectively be almost like a receivable from the homeowner. Is that the way that will be recorded by the CMHC?
Mr. Siddall: That’s again something we’re working out. It may be a second mortgage and be registered on title as such, but it won’t be a mortgage or a loan in the sense of a forced repayment.
Senator Marshall: So when the homeowner sells, what happens if the value of the house goes down?
Mr. Siddall: Then we share in the loss.
Senator Marshall: You share in the loss with the homeowner. These funds have to be borrowed by the corporation, I assume, but will there be interest charged to the homeowner on the program?
Mr. Siddall: There will be no interest charged.
Senator Marshall: I have a couple of areas I was interested in. Speak about the risk assessment. My recollection could be wrong, but I thought I read that maybe it was the Auditor General had looked at the risk assessment carried out by Canada Mortgage and Housing Corporation, and I thought he said that it should be more robust. Would this go through some sort of risk assessment, this program?
Mr. Siddall: In fact, I was at a committee of the House of Commons last week, with the Auditor General, and they did not see significant deficiencies in our risk management practices. They made some recommendations for improvement and we’re making those improvements, senator. With this particular program, CMHC is operating as agent on behalf of the Government of Canada. So any losses that we take would be reimbursed through parliamentary appropriations. So there is no risk to the corporation, per se. There is risk inherent in the program, to the extent prices go down and, of course, the program has a cost that the Government of Canada will bear.
Senator Marshall: So will the program have gone through some sort of risk assessment process? It would have, correct?
Mr. Siddall: Sure.
Senator Marshall: What about oversight of the corporation? I read a while back that the IMF suggested that the corporation have independent oversight. Do you have a comment on that?
Mr. Siddall: There is independent oversight for CMHC, and every year the minister responsible for CMHC — in this case, the Honourable Jean-Yves Duclos — receives a report from the Office of the Superintendent of Financial Institutions. The overseer in law is the Minister of Finance. And in fact, the Minister of Finance and the minister responsible for CMHC rely on a supervisory report from OSFI.
Senator Marshall: And could you give us information on the rental construction financing initiative? I think it started back in Budget 2017 or 2018. But the minister, in his budget, provided some sort of update and he indicated that the objective was to build 14,000 new units. But the impression given was that there were only 500 built to date. Could you speak to that also?
Mr. Siddall: We believe we are going to be on target. In fact, the Government of Canada has recommitted in Budget 2019 to expanding that program substantially, by extending it nine years and also by an additional $10 billion. You can imagine that the time it takes to build a rental building is not day one. And so there is a bit of a lag between when we start the program and take applications and fund it.
So what you are seeing, senator, is just a timing difference. We believe we will still meet those targets.
Senator Marshall: Okay. And also in the budget document, the minister indicated that there was going to be an expert panel on housing established. Could you give us an update on that?
Mr. Siddall: I think that’s with the Minister of Finance. That’s his panel with the Province of B.C. I am aware that there are discussions going on.
Senator Marshall: Would CMHC participate in that?
Mr. Siddall: CMHC will be giving administrative support to that group and I may participate, if the minister asks me to, but the decision is with him.
Senator Marshall: I am finished. I would like to go on round two, please.
Senator Pratte: I have a follow-up question for CMHC about the first-time home buyer incentive. I understand that you have looked at the impact of the program on the housing market. You mentioned earlier that the corporation of the government wants to stimulate the construction of new homes, new houses, right?
Mr. Siddall: Yes, sir.
Senator Pratte: So this program will have as an effect to increase both supply and demand, am I correct?
Mr. Siddall: I would say that’s true, yes.
Senator Pratte: So how do you come to the estimation that the impact on prices will be extremely limited?
Mr. Siddall: It is a function of a few factors, senator. The first is the size of the program relative to the size of the mortgage market and the housing market in general; $1.25 billion sounds like a lot of money over two and a half years and it is a significant help for those people at the margin. But in the context of a large real-estate market, it is a very surgical approach to a particular problem. It is also limited by not only the size of the program, but also limited by income.
Household income cannot exceed $120,000. And loan to income — the size of the loan relative to that income — cannot be more than four times. There are a number of reasons why the demand is somewhat curtailed by the program design.
Senator Pratte: Is there an example of a similar program elsewhere?
Mr. Siddall: Not perfectly comparable. The U.K. had a program some years ago, but it was different. While our terms and conditions are not yet decided by the Minister of Finance, it had an asymmetric payoff. I can’t remember the numbers, senator, but let’s say that the authority took 10 per cent of the value of the home, it would receive more than 10 per cent of the proceeds if the price went up. And that, of course, is a very different design; that’s a design feature that could substantially vary the impact and demand for the program itself.
Senator Pratte: Thank you very much.
[Translation]
My next question is for the Infrastructure Canada representatives. First, I would like an update on the Champlain Bridge, if you can provide one.
Ms. Bertrand: The Champlain Bridge is scheduled to open to traffic at the end of June, as planned. We’ve been having talks with our partner, SSL, concerning the latest discussions on penalties and delays. However, the bridge is still scheduled to open to traffic at the end of June.
Senator Pratte: There won’t be any further delays?
Ms. Bertrand: No further delay is anticipated at this time.
Senator Pratte: Given the floods in Ontario, Quebec and New Brunswick, there have been a number of statements regarding the availability of federal funding, including funding from Infrastructure Canada and other sources. This funding could be used by the affected municipalities or to prevent future damage. There’s some confusion about the availability of this funding, particularly in the case of Quebec, because the Government of Quebec hasn’t reached an agreement on natural disaster funding. Could you provide an overview of the funding available for municipalities that have specific needs following recent events or to prevent future floods?
Nathalie Lechasseur, Director General, Programs Integration, Program Operations, Infrastructure Canada: The Disaster Mitigation and Adaptation Fund has 26 projects to date. The department is in contact with the affected provinces to see how it can help them submit their projects for consideration as soon as possible.
Senator Pratte: This program is designed for repair or prevention initiatives?
Ms. Lechasseur: Prevention programs.
Senator Pratte: Would a municipality that has sustained significant damage and that wants funding to repair a dike meet the program’s criteria?
Ms. Lechasseur: The situation would require further study.
Senator Pratte: What’s the position of the Government of Quebec, which hasn’t signed an agreement?
Ms. Lechasseur: Since the program is based on merit, each participant proposes a project. There’s no need for a specific agreement. Once the project has been selected, an agreement can be reached with the Government of Quebec.
Senator Pratte: Thank you.
[English]
Senator Eaton: My question is to Canada Mortgage and Housing Corporation and to Indigenous Services Canada. I see in your speech that by 2030, everyone in Canada has a home they can afford and that meets their needs and that this is a right to adequate housing as recognized under the International Covenant on Economic, Social and Cultural Rights.
My worry is that when I look north of 60 in Canada, between July 2016 and March 2019, 280,000 requests — there is still an acute shortage of housing in the Arctic, in Nunavut, Iqaluit, Nunavik. And I was wondering, because Indigenous Services Canada, your estimates have gone from $12 billion to $14 billion. That is, for building 300 houses a year, when you probably need to build closer to 3,000 in a very quick time. It doesn’t seem to change or to move. Every year you come before us, and it is the same old answer. With this new International Covenant on Economic, Social and Cultural Rights, ICESCR, and your new aspirational goal that everyone in Canada has a home they can afford by 2030, will that follow for our Inuit brothers in the North? Will they have adequate housing by 2030 in the North? At the pace we’re going now, they won’t.
Mr. Siddall: With your reference to “our” aspirational goal, that’s Canada Mortgage and Housing Corporation’s aspirational goal. It doesn’t implicate Indigenous Services Canada.
Senator Eaton: Doesn’t it implicate all Canadians? Aren’t Inuit Canadians?
Mr. Siddall: That’s certainly our objective, senator.
Senator Eaton: That’s what I am asking you.
Mr. Siddall: I want to respond on behalf of CMHC. I just want to ensure that the question, to the extent that it pertains to Indigenous services, may be properly directed toward us. It is absolutely an aspirational goal and a bit of a moonshot, senator.
Senator Eaton: It has been a moon shot since 2016 but nothing seems to move or change.
Mr. Siddall: I understand. At CMHC, with respect to folks in the North, we have effectively doubled the money but we have only a small program that supports folks on-reserve.
Senator Eaton: I’m not talking about Indigenous on-reserve. I’m talking about Inuit communities.
Mr. Siddall: I understand that. In our agreements with provinces and territories, we made accommodation for folks in the North. We prioritized northern spending. I’m not telling you we have all the tools to do this —
Senator Eaton: Nor all the money.
Mr. Siddall: Nor all the money. I am acknowledging to you that our goal is an unfunded goal. But if we don’t shoot for it and if we don’t work on it, it won’t happen. That’s exactly in response to the legitimate concern that you have about folks north of 60.
Senator Eaton: Do you have anything to add from Indigenous Services Canada?
Mr. Thoppil: Senator Eaton, Inuit housing is under the responsibility of Crown Indigenous Relations and not Indigenous Services Canada. That being said, the allocation that is there, to my understanding, for Inuit housing is based on the Inuit land claim holders’ capacity in order to be able to effectively deliver. The rationale for the 300-limit capacity is essentially their capacity in order to deliver in any one period of time.
Senator Eaton: May I suggest, very respectfully, that you read our Senate report when it comes out. Because that’s not what we heard when we travelled across the Arctic. They get no help from the South. Thank you.
Senator Klyne: Welcome to the panel. My question is to Indigenous Services Canada. If we have time, I will come back to the safe drinking water for First Nations act. My question right now is with regard to a total of 83, now 85, long-term drinking water advisories that have been lifted. That’s apparently on track to eliminate the boil-water advisories on-reserve.
How many other on-reserves are under boil-water advisories and when will you have that completed?
Mr. Thoppil: Thank you, senator, for the question. We have another 50 or 51 left to go and we are on track. We meet periodically. We have a dashboard where we track the construction of all the LTWAs across the country, and we periodically meet with the Prime Minister to see where we are on the track. The latest assessment is that we will fulfill the government’s vision of completing all the LTWAs by 2021.
The government has also made investment, in Budget 2019, for additional money for water projects to ensure that those that we don’t know, that are probably high-risk, vulnerable systems, are also attacked as well, to ensure that the government would make that target.
Senator Klyne: Okay. That’s good to hear. When a system is beyond repair — that is, when there needs to be a new system — has a system been settled upon that is transferable across the jurisdictions of Canada? There are 600-some reserves out there. I have heard probably 10 different versions of systems that work. Which ones do you guys use?
Mr. Thoppil: The interesting thing about the gravity of the situation is that the water solution is not the same throughout the country, because the water quality and the solution to address that particular water quality is differential, depending upon the territory of the region where that is. So you may need a different solution, depending on what are the components or the elements inside that water source. It is hard to standardize when you may have different levels of whatever ingredient, whether it is low levels of mercury or something like that. That’s where you need a calibration. It is really a locally defined situation with experts.
Some are easy wins, depending on the location of a First Nation Reserve, it may be near a municipality, for example, where we may not need to take advantage of that local water resource but just extend from the municipality that already has a pipeline. We’ve done that in certain locations. Others require very complex systems. Others are just trying to recruit and retain a water expert who is willing to stay within a remote community to keep the system running. It really depends on the issue that is causing the long-term water advisory.
Senator Klyne: I totally understand that and I think that’s probably an accurate assessment. There are a couple out there that say they could even clean the effluent from a fracking system, or any other situation that you could throw at them. Maybe I will refer them over to your department.
Mr. Thoppil: Sure, you are welcome to do that.
Senator Andreychuk: I have a number of questions but I’m going to restrict them. Unfortunately, I have to be in the Senate for an obligation, so I want to restrict it.
Regarding your CMHC program, you say in your bullets that it was carefully targeted to provide some help to young home-buyers without undoing the progress we and our federal partners have made through measures that prevent excessive borrowing and limit house price inflation.
We hear reports that young home-buyers now feel they can’t get into the market. We hear that they are not excessively borrowing because they can’t get their hands on it, and that price inflation was going down but now we’re hearing it is coming back up. It seems like you’ve got this program, but the market factors are not just young home-buyers. It is foreign buyers, what kind of housing you build, et cetera. How did you build the program that’s going to create this balance for young home-buyers because one of the aspirations of Canadians is to own a home in one form or another.
Mr. Siddall: It is hard to buy a home because house prices are high. That’s the approximate problem.
The Bank of Canada did some work, as did we, but the Bank of Canada published some work about how high levels of borrowing above four times income were happening across the country and how that was alleviated by the mortgage stress test.
The Office of the Superintendent of Financial Institutions has famously extended the mortgage stress test through B-20 guidelines, to uninsured mortgages, effective January 2017. The Minister of Finance extended that application — it previously applied to mortgages under five years — to five years in October 2016.
There was a moderation in activity and a substantial moderation in highly leveraged activity among young home buyers. There is an inclination on the part of the real-estate sector to blame the stress test for that. In fact, it is high house prices. Of course, the folks in the real-estate industry complained about it because they will lose fees. However, homeowners are exposed to serious financial circumstances and risk in borrowing over 80 times their down payment effectively through the ensured mortgage program.
The stress test had its desired effect in constraining underwriting of highly leveraged borrowers. We wanted to provide a program that did not reintroduce that leverage but allowed people to get into the marketplace. The way that is done is by the Government of Canada taking a little bit of risk at the margin on house prices through an investment in shared equity. That’s how it was designed and conceived.
Senator Andreychuk: It was all based on the fact that house price inflation would not continue at the rate it was. It did slow down but appears to be accelerating again. How will you take that into account in your program?
Mr. Siddall: We are agnostic on whether prices increase or fall. The program is not driven by the momentum of house prices up or down. What has happened since not only the stress test but a number of provincial activities as well — the Governor of the Bank of Canada made a speech yesterday where he said, in addition to regulatory changes, a change in sentiment or psychology in the markets had a significant impact, and house prices have moderated substantially in Vancouver and in Toronto.
I’m not aware of evidence of the re-acceleration that you refer to, senator, but it doesn’t govern our decision around the first-time home buyers incentive. The fact is, the growth in house prices has outpaced the growth in income and in CPI for a long time, and we’re just trying to bridge that gap a little bit.
Senator Andreychuk: I won’t go on except for this point, that all of the planning seems to be for Toronto, Vancouver and these large centres, but it is hitting young home buyers in other places, and it seems that you need to look at that. They are not under the same pressures, expectations or incomes, yet somehow or other, they are feeling the fallout of a program that seems to have been made for large, urban centres.
Mr. Siddall: Let me reassure you, senator —
Senator Andreychuk: I may get cut off and you might get cut off.
The Chair: Please provide an answer in 20 seconds.
Mr. Siddall: The program was designed for all housing markets in Canada, senator, not just Toronto and Vancouver, I can assure you.
[Translation]
Senator Forest: As part of your social rental housing program, which is capitalized at $18 million, I understand that there’s the first-time home purchase aspect. However, there’s a phenomenon with respect to seniors. When we build rental housing, the costs set aside for the door become significant. CMHC is involved, but the municipalities, provinces and community must also contribute quite a lot.
We must deal with the reality that needs are often calculated for a senior who lives alone. However, it’s becoming increasingly difficult to make a project cost-effective with one-bedroom units, for example. If we decide to build a rental building with two-bedroom units, so units for two people, we can lower the cost of the door slightly.
Are there any compensatory measures in place? In an elderly couple, when one of the two people dies, the other person is often unable to keep the home. There are considerable needs for these clients.
Does your social rental housing program include any mitigation measures?
[English]
Mr. Siddall: If I may respond in English, I could be a little quicker, senator, with apologies.
I assume are you are referring to the Rental Construction Financing initiative when you refer to the “program.” Is that correct, sir? Okay.
That program is meant to stimulate the supply of rental housing across the market. It is not targeted to vulnerable populations. On the other hand, we have, through the National Housing Strategy, a 13 and change billion dollar program called the National Housing Co-Investment Fund, which receives applications from people in particular who want to assist vulnerable populations, and we would prioritize those vulnerable populations, including seniors, and make accommodations for it. I think it would be more pertinent to that program.
[Translation]
Senator Forest: CMHC used to be very active in the social housing projects sector. It has since taken a step back. With respect to your $18 million initiative fund, is CMHC once again becoming more active in helping communities and municipalities build this type of housing, which is very difficult to make viable? If we want to ensure a balance between the needs and the housing built, the smaller housing units become very difficult to make viable. Will this new funding give CMHC the opportunity to help communities?
[English]
Mr. Siddall: Indeed, we are working very much more closely with provinces, territories and municipalities concerning new supply. Through the National Housing Co-Investment Fund, that actually requires the participation of either a province or a municipality in order for the project to qualify. What we’re trying to do is build more coordination across the country through this program.
[Translation]
Senator Forest: That’s fairly brief information. If you could provide more information on the provincial, territorial and municipal assistance program for this type of need, I would appreciate it.
[English]
Mr. Siddall: We can do that.
[Translation]
Senator Forest: I have a quick question about disasters. A total of $50 million has been allocated to the Disaster Mitigation and Adaptation Fund. However, at the same time, the relocation of entire communities is prohibited.
How do you define an entire community? Can this fund be used if only part of a neighbourhood is relocated?
Ms. Lechasseur: The fund is accessible for preventive measures. In this case, the population couldn’t be moved. Other programs are available, even if they aren’t Infrastructure Canada programs. I think that some provinces have already implemented programs of this nature.
Senator Forest: Even though the Parliamentary Budget Officer said that we can’t use the available funding to help these communities with prevention, doesn’t Infrastructure Canada have a program to ensure that the communities are less affected in the event of future disasters?
Ms. Lechasseur: Our programs are results-oriented, and the desired result is prevention. You were told about the Disaster Mitigation and Adaptation Fund. There’s also the Investing in Canada Plan, where the agreement has already been signed. The provinces can prioritize their projects over the agreement.
[English]
Senator Boehm: Thank you to all of the witnesses today. I wanted to quickly follow up on a question asked by Senator Klyne, and that is on the long-term drinking water advisories. This is for you, Mr. Thoppil.
I am wondering if current climactic developments, such as flooding and other concerns, are being factored into your timelines as you are looking to achieving the goal by 2021.
Mr. Thoppil: Thank you, senator, for the question. As I mentioned earlier in answer to Senator Klyne’s question, we do acknowledge that there are a number of water systems that are not currently long-term drinking water boil advisory status that have the potential to be. That number may increase due to climate change, depending upon the impacts on the territory. Again, it is the reason why the government decided to double down on its bet to make sure that it adhered to the target by allocating over $100 million for additional funds for the water.
Senator Boehm: Thank you. I have a question for Ms. Bertrand. With respect to the $5.2 billion you are asking for, I would be very interested in knowing what your burn rate is. I listened carefully to your comments on progress billing in terms of the construction work that would take place, but also, there are delays in provincial approvals for infrastructure projects. There might be a lack of interest in some provinces for some of the projects being proposed.
How are you planning that? And what, in fact, is the timeline? Or are you looking, in fact, at lapsing significant amounts of funding?
Ms. Bertrand: Thank you for the question, senator.
I’m happy to report that for 2018-19, the year that has just closed, we will be landing at 97 per cent of our appropriations in terms of contribution funding. We will have spent just about every single dollar that was attributed to contributions in infrastructure. That is due to several initiatives: increased oversight from our part, increased collaboration with the provinces and it’s slightly due to the introduction of progress billing. We have three provinces that have signed up for progress billing: Alberta, Saskatchewan and Nova Scotia. We’ve disbursed $5.2 million so far under that new approach.
We already have signed contribution agreements for next year that account for a large portion of the money that is attributed to infrastructure. We continue to work closely with our provincial colleagues to ensure that all the money will be spent as allocated to infrastructure.
Senator Boehm: So no significant lapses?
Ms. Bertrand: We are not planning significant lapses, no.
Senator Duncan: Thank you to the panel for being here today.
I’d like to draw the attention of Indigenous Services Canada to Anna Banerji’s presentation at the open caucus of senators on April 14. The issue is the RSV vaccination for Inuit children. There are 400 babies in Nunavut who would benefit from receiving this vaccination.
The issue is that the cost of the vaccination is $3 million. That, of course, is the Health Minister’s issue. However, when these babies get sick, they are medevaced — medical transportation — out of the territory to hospitals in Quebec, Manitoba or Ontario. That medevac transportation cost is yours and is part of that $357.9 million in your department.
I would like a breakdown of that somewhere — some more information. I want to draw this to your attention, because I brought it to the attention of Health Canada, and with whose department is responsible, people go, “It’s you. It’s them.” It’s an important issue, and it’s part of the budgetary expenditures.
My specific question is this: Health and education are provincial responsibilities, but there’s federal funding under Indigenous Services Canada. Another priority of your department is education. You’ve outlined that more than 180 First Nations are benefiting from First Nations-led control over their education. Is the education funding strictly for on-reserve or does it apply to those First Nations who have umbrella final agreements, such as in the Yukon, where they have the ability to draw down education, but it’s a very complicated negotiation?
My specific question is this: Is the education funding strictly for on-reserve, or is it able to be accessed by other First Nations — those who have settled land claims agreements?
Mr. Thoppil: I’m going to ask my colleague, Paul Pelletier, the Director General for Education, to respond to your question, senator.
Paul Pelletier, Director General, Education Branch, Indigenous Services Canada: Thank you for the question. There is a small amount of money. Self-governing First Nations that have this provision in there can access this fund. It’s a limited number, and as those discussions and negotiations continue, we will need to monitor that as we go forward with the implementation of the new elementary and secondary funding.
Senator Duncan: What I heard you say, if I’m correct, is that, yes, that money is able to flow. Can I just have the understanding or acceptance of bringing this issue of the RSV vaccination to your attention, please?
Mr. Pelletier: Yes.
Senator Duncan: Thank you.
[Translation]
Senator Forest-Niesing: My question is for the Indigenous Services Canada representative and is partly related to the topic that you just addressed, specifically access to post-secondary education for Indigenous people, Inuit and Métis people.
My question will be a long one, because the context is important. I’ll use my time to talk about a specific example. At the very end, I’ll ask whether you’re open to the possibility of looking at the issue from a different perspective.
When I was the chair of the Board of Regents at the University of Sudbury, we were looking for ways to reach more Indigenous youth in the region, particularly the youth in the far north of Ontario, near James Bay. The president at the time had the wonderful idea of recognizing that, too often and for a long time, we had been dealing with the issue of access to post-secondary education for Indigenous peoples from a strictly financial perspective. In doing so, by providing scholarships or additional funding, we thought that we were addressing the significant shortcomings that affect Indigenous people in our post-secondary institutions.
His brilliant idea was to recognize that the issue was more fundamental and more about the retention of these young people. Even though some young people could receive a scholarship to attend university, they ended up living in an urban environment for the first time in their lives, leaving their land and community for the first time, seeing a city bus for the first time, seeing an ATM, and so on. This constitutes a significant culture shock for a young Indigenous person. This could explain why these youth were having more difficulty meeting the requirements of post-secondary education, which are already a challenge for all our young Canadians.
After this shortcoming was identified, a wonderful program, of which I’m very proud, was created in the Moose Factory community. The purpose of the program was to provide in-person courses—not lower quality courses over the Internet or by other means—but in-person courses, in a classroom. The courses were delivered in the Moose Factory community and resulted in some absolutely outstanding successes.
The university had access to a grant that, unfortunately, wasn’t renewed. The courses had to be discontinued, much to the dismay of the people who were on their way to obtaining a university degree. It’s a terrible outcome.
My question is as follows. When developing your programs and measures for the retention of Indigenous youth in our post-secondary institutions, do you take into account the possibility of delivering programs that will ensure greater success for these young students, who have such different needs?
Mr. Thoppil: Thank you for the question. I fully agree with you. The solution is more complex than simply providing funding. It’s much more complex, given the factors that you mentioned.
[English]
We have a program that provides what I would call wraparound support services for exactly that reason. Because it’s not just the ability to pay the tuition, but it’s the cultural supports, the fact that you’re away from your family, all those — the remote community, urban settings, access to an Indigenous healer, potentially, at the university, or a lodge. Those are all very important in order to ensure that that student feels comforted and feels welcomed and will stay. That is a problem.
I’m going to ask Paul to extrapolate a bit more on what we do.
Mr. Pelletier: You’re absolutely right. The opportunity to provide post-secondary experiences in the community in a manner that is culturally appropriate is very supportive and successful for students.
Our particular funding here is focused more on students who are going to school but, as my colleague mentioned, in working with the Inuit, Metis and First Nations and sort of designing the rollout of these post-secondary funds, there’s a big interest in providing wraparound support services, responding to the unique needs of those students while they’re in school, even working with students before they get to school to prepare them for what they will encounter; arranging navigator services, so simply they will know where to go for groceries, how it works, how you get funding, how you find your classes; providing Indigenous-appropriate interventions to try to recruit and retain those students.
So it’s not only about tuition and books; it’s all of these other supports. That’s the orientation of the program going forward.
Senator Marshall: My question is for Indigenous Services Canada, Mr. Thoppil. If you could speak to the fact that this year, in your budget —
The Chair: Senator Marshall, can I interrupt, please?
Senator Marshall: Yes.
The Chair: Again, I did a miscue on my part, and I will recognize first Senator Neufeld.
Senator Neufeld: Actually, I just have one question, or maybe there will be another question.
Funding for First Nations on-reserve for K to 12. I’m going to use British Columbia as an example. There are lots of First Nations that have their own schooling on-reserve, but they don’t get the same amount of funding per student that you would in the public school system off-reserve. Are we anywhere close? Maybe we are. Maybe we are even now. I don’t know. But are we anywhere close and are we intending to get closer to what’s done in the public school system off-reserve?
Mr. Pelletier: Thank you for your question. Following Budget 2016 investments on elementary and secondary we worked with the Assembly of First Nations on a new policy framework that was very much founded on sustainable, predictable and comparable funding.
Based on this framework, we have, as of April 1, rolled out an interim funding formula that provides First Nations schools with comparable levels of funding across all the dimensions that provinces use so that students who attend First Nations schools on-reserve are supported by the same level of funding as they would be if they were off-reserve.
Having said that, some First Nations are looking at this more closely because they have unique needs and circumstances where the level of provincial comparability may not align with where they see their priorities and we’ll continue with those discussions.
Additionally, beyond the provincial comparability we’re funding full-time kindergarten. It’s something that not every province does. We’re also providing additional investments for language and culture.
Senator Neufeld: I guess I can take from that if I go to Fort Nelson First Nation and ask them are they getting comparable funding that the public school system in that community, Fort Nelson — and those places that are a bit remote — they would say, “Yes, we are getting the same funding”?
Mr. Pelletier: I wouldn’t say that. When you look at what a province funds, in some instances the First Nation may rightly think that level of funding is not sufficient or the ways in which a province determines, for example, isolation, that may not be in their view entirely comparable, but you can actually use the formula and sort of spit out a dollar figure that aligns with their particular geographic location, even though there are provincial schools that may be in the same band. So you will not see every First Nation necessarily agree that they have a comparable level of funding because of those technical details.
We continue to talk. Going forward, we’re very much encouraging regional education agreements that allow for communities to identify what their priorities are. If there are gaps, how they can work with ourselves and provincial school boards on setting out accountabilities, roles and responsibilities and setting a foundation for further looking at how to address gaps.
Senator Marshall: This is for Indigenous Services Canada, Mr. Thoppil. I know when you’ve been a witness at previous meetings we’ve talked about performance indicators. Your department is requesting a significant increase in funding this year. Especially when you compare it to two years ago, 2017-18, it’s almost three times as much.
Could you give us some insight into how you’re going to track performance? Have you got your performance indicators all established now for all of these new programs? Because I know when we look at some of the other departments, a lot of departments and agencies don’t even get up to meeting 50 per cent of their performance indicators, and in some cases the results aren’t available. There are all sorts of problems.
How are you going to ensure that you’re going to meet the objectives of your programs? We’re talking about the boil water advisories as an example. How far along are you with establishing your indicators, and how will you make sure you will meet them?
Mr. Thoppil: Thank you, senator, for the question. Given the fact that the socio-economic gap is so large between Indigenous and non-Indigenous, the performance indicators have been somewhat embedded in the department in terms of the measurement of it in order to try to demonstrate that gap.
What we have evolved since 2016 is moving away from the department sort of establishing the performance indicators to respond to the Auditor General’s report’s comments on indicators related to the socio-economic outcomes of co-developing those indicators with Indigenous peoples.
So we are going through, much like Paul talked about in terms of the education side, co-development of those performance indicators program by program, as we go through program reform.
Senator Marshall: Has that been done or are you in the process of doing it? Because next year you’re going to have to report on your performance indicators. Are they established or is it just something in the works now?
Mr. Thoppil: For example, in B.C., where we’ve just signed the B.C. Tripartite Education Agreement, in fact, it’s a very robust set of performance indicators, more so than what was there before, notwithstanding the fact that First Nation peoples were talking about the reporting burden. But when they understood that they were going to now have control over education in the B.C. context, in fact, they responded by actually upping the performance indicator inventory accordingly so that they can — that’s part of taking that accountability and advancing self-determination is to see the commensurate rise in the performance indicator.
We’re now in discussions with other provinces in replicating that B.C. model across the country, so that’s an example of a work-in-progress based on the precedent. That is what’s transpiring as every program unfolds.
We had tabled — I think I may have tabled here or was it at the house committee — also what we’re doing beyond at the programmatic level, but we have developed a draft national outcomes framework that is consistent with the UN SDGs and ensuring we can meet Canada’s obligations with regard to Indigenous peoples in terms of how we are tracking for Indigenous peoples as part of Canada’s overall commitment for the UN SDGs as well. That is also at a top level in consultation with First Nations as well.
Senator Marshall: But those indicators — they’re numerical or something — it’s not just a subjective. It’s something that’s quantitative, is it?
Mr. Thoppil: They’re hard targets. You’ll see some of that in the department’s recently tabled departmental plan in Parliament.
Senator Marshall: So we should see something next year relating to the funding that’s approved this year, or will it be the year after?
Mr. Thoppil: It depends upon the cycle of when we collect the data. Some aren’t within a year; some are multi-year, depending upon the data source.
Senator Marshall: Thank you.
Senator Pratte: This is more of a technical question. I’m looking at these graphs where you show the evolution of expenses for education, infrastructure and social development. For 2019-20, there’s an amount related to the new fiscal relationship. Could you explain how that works? Apparently you know or it’s been agreed to that within this new fiscal relationship, some monies would go to education; other monies would go to infrastructure. Could you explain how this new fiscal relationship fits in?
Mr. Thoppil: Sure, senator. Thank you for the question.
Under the tenets of the new fiscal relationship, three things we’ve been addressing are sufficiency, flexibility and predictability. That’s what First Nations have been demanding.
On the sufficiency pillar, you will see, in response to Senator Marshall’s comments about the significant increase in the budget of Indigenous Services Canada, ISC is trying to head on the sufficiency agenda through the federal budget cycle. For federal budgets now, $21.3 billion are allocated to Indigenous peoples.
On the flexibility and predictability pillars, First Nations wanted a planning horizon that was more than one-year or five-year, so we provided a 10-year window.
Then, on the flexibility, we said we wouldn’t hamstring those First Nations that were able to demonstrate an appropriate financial standard of governance. If they achieved that appropriate standard of governance, as defined by an Indigenous financial institution, they would move from contribution or block funding to grant; thus, the 10-year grant offer that has been offered to more than 100 qualified First Nations, for which about 80 or 82 are now taking it. That grant is being offered for core program services, not everything. For example, certain targeted and cause-for-proposal funding — so targeted infrastructure is not in there — but education, a number of health programs, infrastructure, O&M — year-over-year elements are part of that.
Other the years, when you look at Indigenous Services Canada’s Main Estimates, as we hope to see First Nations increasingly take up the grant offer, you will see a conversion in the transfer payment section of the Main Estimates section of the amounts under contributions increasingly into this line item. That will happen as First Nations demonstrate their ability to govern, much like any municipality at the same level. They, therefore, should be given the same flexibility as that type of government in terms of allocating their funding based on local priorities.
Senator Pratte: Does that mean that, for instance, if I look at $554 million in 2019-20 for education that First Nations under the new fiscal relationship — actually, this amount would be more notional, because the First Nations could decide that their priority is more infrastructure or social development than education, and they could use the money for such purposes?
Mr. Thoppil: That’s much like any other level of government in this country. If they decide, based on their constituency, that that is their priority, then they should have the same level of ability to invest more in education if that is the desire of the community and less in infrastructure, as they determine, as opposed to pre-reconciliation, which is bureaucrats and the department defining what they should spend and how they should spend it.
Senator Pratte: And they’re accountable to their people?
Mr. Thoppil: They’re accountable to their citizens, based on the community plan that developed where that money would be spent based on their targets. Then, at the end of the year, demonstrating to their community what they did with the money and what targets were achieved.
Senator Klyne: Senator Boehm has set me up if I want to go back to the Safe Drinking Water for First Nations Act, but I’ll come back there if we have time.
On the infrastructure and housing side, where you have 6,800 plus units and lots — you’ve made some significant strides with that, completing 57 per cent of them. Are those all on-reserve?
Mr. Thoppil: Our authorities are on-reserve.
Senator Klyne: In doing that — and you have probably close to another 3,000 yet to go — is there a skills development or capacity-building strategy attached to that?
Mr. Thoppil: Thank you for the question. We are moving in lockstep with the Assembly of First Nations in the development of a housing strategy that is sustainable and that will also look at how communities can take advantage of their local skill sets as part of that sustainability.
Certain First Nations have demonstrated some degree of progression in terms of utilizing projects as a means to train their youth so that when the next project comes around, they’re not dependent upon the contractor.
So we see a number of elements of positive economic development, I would call it — youth job skill training — as part of the infrastructure program. I think the objective is to try to make that more pervasive across the country.
Senator Klyne: I’m glad to hear that. Thank you.
[Translation]
Senator Forest: I have a somewhat existential question. I spent 25 years at the other end of the pipeline. We submitted applications for programs and projects. All communities across Canada have considerable needs.
For example, when I look at the Small Communities Fund and I see that the Parliamentary Budget Officer’s report states that 40 per cent of the allocated funding hasn’t been spent, I have difficulty understanding this. I see a difference of almost 60 per cent between the $212 million allocated under the much sought-after New Building Canada Fund—Provincial-Territorial Infrastructure Component—Small Communities Fund, and a reduced budget of almost $200 million this year.
Is it because the program is too restrictive? How do you explain that the reverse is true and that there’s a lack of funding? With the New Building Canada Fund, and particularly with the Small Communities Fund, there appears to be too much money in relation to the needs. My instincts tell me that the needs are considerable. Are there too many restrictions in terms of the objectives or the type of project that must be submitted? Is the process complex because of the three levels of government, which are municipal, provincial or territorial and federal? I know that there have been delays. However, for once, Quebec wasn’t too late when it came to signing its agreement. How do you explain the outcome, based on your experience?
Ms. Bertrand: Thank you for the question. The figures provided are based on programs. The governments announce the implementation of certain programs with a certain funding limit, and these programs are established for a certain period. What you’re seeing here doesn’t necessarily concern the demand, but the total amount of money available.
With regard to my previous comment, all the funds received for the year 2018-19 have been spent. The funds are available. Does the demand surpass some of the programs? In some cases, possibly. We’re nevertheless limited by a certain set amount of available funds, which are allocated differently according to the program. Sometimes the programs are merit-based, and sometimes the programs are implemented according to the population.
Senator Forest: Is the Small Communities Fund merit-based?
Ms. Bertrand: No.
Senator Forest: If a project is submitted and approved by the province, is it automatically funded?
Ms. Lechasseur: I must point out that the Small Communities Fund consists of allocations identified by the provinces and territories. The provinces and territories prioritize their projects and submit them to us, and we approve them. In the Small Communities Fund, you can see the expenses. The money has been allocated to projects.
Senator Forest: I have one last question. If the question is too complex, you don’t need to answer it today. I imagine that there will be a review, since it was an important strategic component of the current government. These funds are invested by the federal government. However, in terms of the small communities fund, part of the funds are invested by the municipalities, which often start projects, and by the provincial or territorial government. Will you assess the overall impact of the economic activity generated by the various Building Canada Fund programs?
Ms. Bertrand: We’re working closely with Statistics Canada and other organizations to help determine the economic impact of these programs and their impact on job creation.
Senator Forest: That’s important. Our committee produced an excellent report on infrastructure, and it could be an important addition to that report.
The Chair: If you have any further information, Ms. Bertrand, you can send it to our clerk.
[English]
Senator M. Deacon: Thank you for the presentations and for being here today.
Earlier, my colleague Senator Eaton asked a question to Mr. Siddall regarding the ambition of 2030, and I have to say the key word in that statement for me was “everyone.” I understand a little better turf, for lack of any other term, whose work is it. I think that one would be such a great collective ambition to achieve.
As I went through that, something has been resonating with me for the last hour and a half that you talked about earlier, and that was restructuring the work and the intent of your organization to break down silos through maybe duplication and replication. Stifling and innovation was perhaps being a little bit halted.
I would like you to share a little bit more about that. As we meet with different groups representing different but common interests, this seems to be a challenge right now, using the best people efficiently in the best way. What have you done or what are you thinking about doing?
Mr. Siddall: Thank you for the question, senator. We announced a strategy in our corporate plan first through the strategic plan that we released last fall, and then we as a group set out to restructure the company to support that by putting what we call clients, or Canadians, at the heart of what we do.
We used to organize ourselves by function. We had an assisted housing business and a commercial business, which included securitization and insurance. Then we had a policy group. We have broken down this division between our commercial and non-commercial businesses. There is an operations function, a manufacturing function, effectively, small “M” manufacturing, which is meant to deliver more consistent delivery of our services, so more efficient.
We’ve invested significantly in IT; we want to automate more to make it quicker. Then we have what we call a client solutions business, which has different groups of potential counterparties with whom we would deal, such as lenders, housing providers, provinces, territories, et cetera, and they are also responsible for researching and developing a client experience approach.
As a result of this reorganization, two thirds of our people, as of the beginning of April, have new supervisors. It is a very substantial reorganization of the company.
Senator M. Deacon: So it has not been happening for very long. Still in the baby weeks, years and months at this moment, and it sounds like there is more care in the family as the centre that you talked about at the beginning of your response.
Are there any early indicators for you, from your perspective, that this feels right? Or we have this right but we’re not so sure about this over here? I’m curious.
Mr. Siddall: It is rather too early to tell. Literally, people are still trying to drop the bread crumbs and figure out where to find the CFO, for example.
Senator M. Deacon: Here.
Mr. Siddall: Who would love to take a question, I should add.
One indicator, and it is anecdotal. Whereas those silos existed before and operated separately, our client services and operations folks are largely meeting together to run the business. You would imagine that siloization could develop over time between the two, but the collaboration within the company is certainly heightened.
Ms. Williams: I would add that you even see it even in the support functions, which is my sector. You see the walls coming down and collaboration is really focusing on what we can do for Canadians.
Senator M. Deacon: Thank you.
Senator Klyne: I will try to be quick. Going to the Safe Drinking Water for First Nations Act and with regard to access to safe, clean and reliable drinking water, effective treatment of wastewater and the protection of sources of drinking water on First Nations land, in the context or through that perspective of what is happening in climate change and the recent UN report, do you collaborate and consult with Environment and Climate Change Canada and the Canadian Environmental Assessment Agency?
Mr. Thoppil: I will invite my colleague Claudia Ferland, who is in charge or our infrastructure program, to come to the table in order to help better respond to your question, senator.
Senator Klyne: It’s quite a wide-ranging list of priorities you must have to keep up with in that act.
Mr. Thoppil: Under the First Nations and Inuit Health Branch, we do have water monitoring experts, and they are key to whether they are on long-term drinking water boil advisories as well.
Senator Klyne: Where I would like to go with this is are you on track for particularly the protection of sources of drinking water on First Nations land? Or is that yet another agenda for infrastructure?
[Translation]
The Chair: Ms. Ferland, could you introduce yourself please?
[English]
Claudia Ferland, Director General, Regional Infrastructure Delivery Branch, Indigenous Services Canada: My name is Claudia Ferland. I am the Director General for Infrastructure at Indigenous Services Canada.
Unfortunately, I will have to get back to you specifically on your question. That said, on all of our infrastructure projects, we work collaboratively with NRCan, Environment Canada and the Pan-Canadian Framework on Clean Growth and Climate Change. We work with a number of strategic partners on infrastructure projects. I will circle back to you with that, but I can definitely assure you that we work with ECCC.
Senator Klyne: Circling back, how many projects do you have to go forward with and how deep is it, if you have the right budgets for it? Thank you.
Senator Marshall: I have a question for Mr. Siddall. I wanted to carry on with the risk assessment because the first-time home buyer incentive program is costing so much; it is over $1 billion.
So when you do your risk assessment, the risk of the program I guess depends on the design and the administration of the program, does it not? Is the objective to minimize the risk to CMHC and to make sure you get your $1 billion plus back? How do you look at it? What is your objective?
Mr. Siddall: That $1.25 billion would be invested. It would not necessarily be lost as a cost to the extent it is repaid —
Senator Marshall: That’s what I’m wondering.
Mr. Siddall: Right. The policy objective is to substitute this shared equity portion for indebtedness, and then as prices go up or go down, we will make or lose money on it. I should reassure you, senator, there is not an objective return on that investment or loss. That’s not what it is driven by.
Senator Marshall: So it will be a shared risk, will it, with the home buyer?
Mr. Siddall: That’s exactly right.
Senator Marshall: Thank you.
The Chair: Before we conclude, I have a question, please, if you would permit me, with your indulgence, senators. It is for the Canada Mortgage and Housing Corporation.
In crisscrossing Canada in the last couple of months, I had the occasion of asking quite a few ministers, politicians and mayors about homelessness and the homeless on our streets. That is growing. It is growing in New Brunswick. It is growing in Atlantic Canada.
And when you ask CMHC — and I had the opportunity when I was Minister of Health for New Brunswick — you are asking for a vote of $2.6 billion, an increase of 9 per cent over 2018-19. Can you walk us through your programs that you have had in the last two budget years, with the ones that you are recommending to us at the Senate on homelessness?
Your presentation at CMHC was in respect to CMHC’s aspirational goal that all Canadians have a home that they can afford by 2030. Those are long shots. I’ve seen that in the past with provincial governments and federal governments. We announce that we will eradicate poverty. And I’m quite sensitive to that, where I lived it. I want you to tell us, tell Canadians why I should recommend $2.6 billion. Tell me how we are going to help our homeless people.
Mr. Siddall: Thank you, Mr. Chair. I should say that we are not promising that we will achieve this objective. We are saying that’s what we are aiming for. And certainly we don’t make that promise on behalf of the Government of Canada. We make it on behalf of the people of CMHC and why we go to work.
With the $2.6 billion, you will perhaps be happy to know that there is more money on top of that, which is not in our budget, that flows through ESDC Canada for what used to be called the Homelessness Partnering Strategy. And homelessness, which tends to be an income support program, funds through a separate envelope through the ESDC and not through CMHC yet. I don’t know if you want to go through the breakdown of the $2.6 billion.
The Chair: You don’t need to go through the breakdown. We have that. What I want is for you to walk us through — give us some statistics if you can, and you can look at your records and come back to us through the clerk — the impact we have had, CMHC. You’ve been a remarkable agency, corporation. There is no doubt about that. But, there is a growing dilemma that we are facing in our communities, small and big across Canada, and it is homelessness.
Mr. Siddall: We can certainly respond in writing to your question, Mr. Chair.
The Chair: To the witnesses, thank you very much. You’ve been very informative. And if you feel you want to add, when you do look at Hansard, please do so through the clerk.
(The committee adjourned.)