Proceedings of the Standing Senate Committee on
Aboriginal Peoples
Issue 5 - Evidence - April 12, 2016
OTTAWA, Tuesday, April 12, 2016
The Standing Senate Committee on Aboriginal Peoples met this day at 9:35 a.m. to study best practices and on- going challenges relating to housing in First Nation and Inuit communities in Nunavut, Nunavik, Nunatsiavut and the Northwest Territories.
Senator Dennis Glen Patterson (Deputy Chair) in the chair.
[English]
The Deputy Chair: I would like to welcome everyone watching today on CPAC, the web and in this room. My name is Dennis Patterson. I have the honour of acting as the chair today for the Standing Senate Committee on Aboriginal Peoples.
Our committee's mandate is to exam issues relating to First Nations, Inuit and Metis peoples in Canada. Today we're continuing our study on best practices and on-going challenges relating to housing in First Nation and Inuit communities in Nunavut, Nunavik, Nunatsiavut and the Northwest Territories.
I would ask all senators to introduce themselves.
Senator Moore: Good morning. Wilfred Moore, Nova Scotia.
Senator Watt: Charlie Watt, Nunavik.
[Translation]
Senator Dagenais: Jean-Guy Dagenais from Quebec.
[English]
Senator Beyak: Lynn Beyak, Ontario.
Senator Enverga: Tobias Enverga, Ontario.
Senator Raine: Nancy Greene Raine, British Columbia.
The Deputy Chair: Colleagues, our first panel today has Mr. Revi Lau-a, Manager, Strategic Planning Policy and Communications, Northwest Territories Housing Corporation, as well as Jeff Anderson, President and CEO, Northwest Territories Housing Corporation.
Jeff Anderson, President and CEO, Northwest Territories Housing Corporation: Thank you. Senators, we certainly appreciate the opportunity to provide our perspectives on housing challenges in the Northwest Territories. I would like to start by providing some context about our northern territory.
In the N.W.T., we have 33 communities spread out over a vast area of 1.3 million square kilometres, and that represents about 14 per cent of the total area of Canada. Our population is about 44,000 persons, half of which are Aboriginal, and we have 11 official languages in the N.W.T.
We have complex and varied Aboriginal governance structures from regional self-governments, like the Tlicho and Inuvialuit, to community-based Aboriginal self-governments, like the Sahtu Dene and Metis government of Déline. There are already many settled agreements between Aboriginal governments, the federal government and the Government of the Northwest Territories and several more are under negotiation. Many, if not all, of the Aboriginal governments may seek to draw down jurisdiction in the area of housing.
For the time being, the Northwest Territories has a mandate to provide opportunities for suitable, adequate and affordable housing to all residents in the N.W.T. One way we measure progress in our housing efforts for residents is through the level of core housing need. "Core need" means that a household is living in a dwelling that is substandard or overcrowded or pays excessive shelter costs and has low-to-moderate income.
Our GNWT, which is the Government of the Northwest Territories Bureau of Statistics, conducts a comprehensive community survey every five years, and these surveys are a tool used to measure our performance in addressing core need.
The latest survey conducted in 2014 indicates that the N.W.T. has 2,919 households in core need or 19.8 per cent of all N.W.T. households. In Canada this is second only to Nunavut, and in comparison the national core need is 12.5 per cent.
The level of core need in the N.W.T. has remained relatively unchanged since 2000 when it was 20.3 per cent. This is despite steady and significant investment by the GNWT and periodically large capital investments in partnership with the federal government. This speaks very much to the condition of the housing stock, which was mostly built 30 to 40 years ago, with less rigourous building standards and was not necessarily designed for longevity under harsh Arctic conditions.
Core need is directly correlated with income and the state of the economy. Downturns in the economy increase core need, especially in the resource sector, which comprises a significant portion of the N.W.T.'s GDP. Improvements in core need are also dependent on better educational outcomes, addressing social ills, labour market and economic development and improved infrastructure to support economic growth.
Despite the territorial rate remaining relatively unchanged, the N.W.T. Housing Corporation has made gains in bringing down the urgent core need levels in rural and remote communities from 42 per cent in 2009 to 32 per cent in 2014. That's still a very high level, but the improvements in these smaller communities, which largely experience housing problems related to substandard conditions or adequacy, are partly attributable to partnerships with the federal government.
Unfortunately, these gains were offset by an increase in core need in the N.W.T.'s capital city, Yellowknife, which has a mature rental market and is experiencing core need issues of affordability similar to what Southern cities face.
Nearly 1 in 5 households in the N.W.T. live in deep-subsidized, rent-geared-to-income public housing. The majority of these residents have very low incomes. The GNWT considers the public housing program as one of the fundamental supports in its social safety net. In a jurisdiction that has several times the national average in rates of addiction, infectious disease, low educational attainment and suicide, among other social ills, our government understands that no other social challenges can begin to be addressed without the stability of safe, secure and quality housing. That is why the GNWT spends seven times more per capita on housing than the national average. Very important issue to the N.W.T.
I previously noted the vast geographic expanse of the N.W.T. Our communities are spread out all across this huge area, this huge land. This has a direct effect on the cost of housing due to the cost of materials, freight and labour. Many communities are inaccessible by road and are resupplied through barge or temporary winter roads. The timing of seasonal transportation methods always needs to be incorporated in any project plan as logistical windows can be short.
Often contractors are challenged with a lack of capacity and unavailability of skilled trades.
To meet the challenges of a harsh Arctic climate, buildings are often designed and constructed to higher building standards to ensure their buildings are appropriate for Northern conditions. Extreme weather itself places worker safety limitations on work sites and work schedules.
Additionally the NWTHC has had to consider the effects of climate change on construction, ensuring that buildings are not built on known vulnerable permafrost areas, conducting geotechnical surveys where warranted and incorporating foundations such as space frames that are more suited to permafrost degradation.
Consistent with all jurisdictions, we have taken steps to control costs by maximizing energy efficiency, understanding that it is important for the sustainability and longevity of the housing portfolio.
Several years ago, the N.W.T. Housing Corporation incorporated an EnerGuide 80 minimum standard for construction of new homes and for renovation projects.
The NWTHC also monitors energy consumption at the unit level, which helps us to identify buildings that may require energy retrofits. The ability to report on a per unit basis also gives us an idea on the value of incorporating new and alternative energy solutions.
We have tried to foster the growth of skilled trades, especially in our smaller rural and remote communities, by supporting apprenticeships within our community housing agents, in jobs such as carpenters, housing maintainers and oil burner mechanics.
Much of the social housing stock that was built between the 1970s and 2000 were single detached dwellings. In recent times, nearly all new social housing replacement is in multi-family configuration. This has resulted in gains in economies of scale through shared mechanical systems and energy efficiency through incorporation of technologies such as solar panels and biomass.
Nearly 70 per cent of units in the public housing program are now in a multi-family building, and we continue to move in that direction.
In partnership with the federal government, we designed and built a high-energy efficiency duplex — EnerGuide 87 is the reference on that — in Inuvik, Northwest Territories, where we incorporated several different energy efficiency technologies. Results to date indicate that the duplex is consuming 40 per cent less energy than a house built under EnerGuide 80 standard, and it consumed 50 per cent less gas for space and water heating compared to a conventional unit. Monitoring of the systems and results is ongoing.
The federal government was our partner decades ago in the construction of new social housing in the N.W.T, which continues to be a valuable resource to N.W.T. residents to achieve their aspirations, whether they involve going back to school, participating in the labour force, caring for an elder or children or working through challenges such as addictions or mental health.
Unfortunately, financial support for this important segment of housing is declining and will eventually expire. Large declines in funding have already been experienced. The N.W.T. was receiving $33 million annually, and, currently, we receive $20 million a year. On a per unit basis, public housing operating costs average $20,000 per year and over 30,000 in Northern coastal communities. This is partially offset by average tenant rent payments of $2,000 per year based on household income.
By the year 2038, there will be no federal O&M investment in existing N.W.T. social housing. I cannot stress enough that, as governments, as a society, we need find a way to protect the sustainability of this important resource that supports the aspirations of 600,000 families across this country.
With respect to the recent housing investment announced in the federal budget, the N.W.T. is very encouraged and appreciative that the uniqueness of the challenges of Northern areas was acknowledged.
The areas of focus include improving and replacing the housing stock and supporting seniors' housing and homeless shelters, and these areas align well with the priorities of the GN.W.T.
These federal investments span the next two years. I look forward to continued discussions with the federal government toward more long-term, predictable, significant and sustainable support to achieve housing outcomes in the North that are, at a minimum, on par with the rest of Canada.
Thank you for allowing me to present to you today.
The Deputy Chair: Thank you very much, Mr. Anderson.
Maybe I'll start off with a question. I note, from your presentation, that you've made significant progress, between 2009 and 2014, in bringing down the urgent core levels in rural and remote communities from 42 per cent to 32 per cent. It's still high, of course, but this seems significant.
Could you outline for the committee how this was accomplished?
Mr. Anderson: Yes. It's quite interesting when you look at it over the 5 year period from 2009 to 2014. Overall, we basically sustained the level that we're at at about 20 per cent. In the rural and remote communities where we received the gain and improvement in core need, it was primarily because of the investments we received from the federal government on the Canada Economic Action Plan and the Northern Housing Trust. So there was $100 million over five years that we received from the federal government, and it was cost-shared with the government of the Northwest Territories. Most of this money has gone into renovation, not only on the public housing side but also in private homeownership and improving the quality of our housing units.
I will caution you a little bit on the numbers because, when you make small improvements in a small community with not too many units, the percentages can swing fairly broadly, but we're certainly pleased with the improvement in that area.
Senator Enverga: Thank you for your presentation.
In it, you made a statement saying you have tried to foster the growth of skilled trades, especially in smaller communities, by supporting apprenticeships with the community housing project. What happened to that? How come it was not successful? Can you let us know? Maybe we can build on it.
Mr. Anderson: Thank you for the question. I didn't say it wasn't successful; It has been successful. Just to give you a bit of an idea, we have 24 local housing organizations. Those are our community agents that provide property management services on behalf of the Northwest Territories Housing Corporation. They're in most of the communities across the Northwest Territories; not all, but most of them.
We have about 130 staff at that community level that provide property management and maintenance services, so we add to that: We have money set aside to support about 12 apprentices across the N.W.T. and we fund the organization so they can get people into the system. The workforce is aging, for example, so we have people cycling through the housing program to get certification under those different categories that I mentioned.
So, it is successful, but we need to do more because of the age of the workforce.
Senator Enverga: When you have skilled workers, are these the ones sustaining the growth or maintenance of the housing in the Northwest Territories? Are they are the ones who are really building it up and maintaining everything?
Mr. Anderson: The community workers are more involved in preventive maintenance on housing stock and demand maintenance, so that's the prime area that they work in at the community level. We hire contractors primarily to do renovations on projects and to build replacement units. It's done through that process. We try to encourage the growth of the private market and build construction capacity in our communities to deal with that requirement.
Senator Moore: I want to thank the witnesses for being here.
I want to follow up on the chair's question with regard to the decrease in the urgent core need levels. First of all, the definition of a core need means that a household is living in a dwelling, and so on. How many people do you consider to be a household?
Mr. Anderson: Thank you for the question. It can be any number. It can be a single person in a single unit, or it can be any size of family. For any person in the household that's 19 years of age or older, what we do is include their income in terms of calculating whether or not the household pays more than 30 per cent of their income towards shelter, and that's the criteria for affordability.
Senator Moore: Yes, but how many people?
Mr. Anderson: It depends on the house. You could have family unit with several members. It can be extended family living in a house, or it could be a single individual as well, like a single senior, for example.
Senator Moore: Let me ask you this: What is the maximum number of people that you would consider to be a healthy household?
Mr. Anderson: In the N.W.T., if you go back about 15 or 20 years, we did have significant overcrowding problems and now we're down to an average of three people per household. That is where we're at, so we've been able to address a lot of the overcrowding situation.
In our rural and remote communities the problem is adequacy, meaning repairs are needed on the units.
Senator Moore: Thank you. I was interested in your comment to the chair that you have to look at the number of units because that can play with the percentages. In the urgent core needs and that work, you dropped the level by 10 per cent in five years and you said it came mostly through funding from the action plan and the Northern Housing Trust. What is the Northern Housing Trust?
Mr. Anderson: In 2007, we got two years of funding through the Northern Housing Trust to support northern housing from the federal government. It was funded over three years, sorry. It was funded over three years, cost-shared by the government of the Northwest Territories, and we got two years through the Canada Economic Action Plan of $50 million which, as I said, was over two years and that was cost-shared by the GNWT. So essentially, we put pretty close to $200 million worth of money — federal and territorial — into improving the housing stock in the N.W.T. during that period.
Senator Moore: So, you got $50 million from the action plan for over two years; and how much from the Northern Housing Trust?
Mr. Anderson: It was the same: $50 million, as well, over three years.
Senator Moore: Three years. Okay.
Mr. Anderson: There was a five-year window of federal and territorial support.
Senator Moore: So you've got $100 million. The Northern Housing Trust: What is that and who runs that?
Mr. Anderson: It was funds set aside. It was a one-time fund that was put in place, I'd say, more to stimulate economic activity and to try to help get the economy going in the housing sector, and that was done before the Economic Action Plan. It was a precursor to that initiative.
Senator Moore: Is this within the department of Indian and Northern Affairs? Where is it based? Where is it housed?
Mr. Anderson: The Northern Housing Trust money was between the Treasury Board and the Government of Northwest Territories finance. It flowed through that organization and it was accessed by the N.W.T. housing corporation through a supplementary appropriation process.
Senator Moore: Has it wound up now?
Mr. Anderson: It was a one-time contribution, yes.
Senator Moore: When you said monies came forward and there was a sharing of funding by the N.W.T. government, if you had $100 million, did you match that or did you put in a percentage of that?
Mr. Anderson: Right. The N.W.T. matched those resources.
Senator Moore: So that's where you got the $200 million?
Mr. Anderson: That's correct.
Senator Sibbeston: I spent a lot of my early years as an MLA, beginning in 1970-91, dealing with housing in the communities. Up to 1970, the housing that had been provided to people in the communities was provided through Indian Affairs, through the Indian agent, and in many communities' log houses were provided. Slowly, through devolution and so forth, the territorial government began taking over the housing from the federal government. We always used to say that for the money that the federal government bills for one house, we in the North can build three. That was generally the way things were, because federal government was remote and they did things in a kind of lavish, or different, way from the territorial government who was closer to the people and on the ground.
Housing in the North has evolved over the years. It began with log housing, using local resources with a lot of training and a lot of sweat equity provided by people to build their own houses. That was the way that housing for people began. Eventually, there were housing organizations and committees established in most of the communities which helped deal with the housing situation.
I think in the Northwest Territories we have a relatively good housing situation. I've been in northern parts of the provinces of Ontario, Manitoba and Quebec, and you hear about communities like Attawapiskat where they have such housing problems, and I felt that we in the North had done better. I think we maybe got off on a better start and got trained people and local involvement of people in housing committees, and so forth.
I don't know how many years you have been in the North, but would you like to comment on that? I think it would be of interest to our committee, because people have seen just how horrible the housing situation is for First Nations people in the more remote parts of our country. In the Northwest Territories, I think that we've done relatively well, and maybe we need to just point out why it is that we in the North have done better than other areas of our country.
Mr. Anderson: I have been with the housing corporation for 32 years so I've seen the growth in the field. I agree that we've done a pretty good job with the quality of housing. There are still challenges in our rural and remote communities that you can see from the core need numbers that we have laid out. There are affordability problems all over the place. The two areas are adequacy, which is repairs required in remote communities, and affordability in our bigger centres like Yellowknife.
As I touched on earlier, the Government of the Northwest Territories recognizes the importance of good-quality housing. The three northern territories spend more money on housing than any of the other jurisdictions on a percent- of-expenditure basis of the available resources. This is an important area for the N.W.T.
Based on my somewhat limited knowledge on-reserve in the south, I agree that our housing is better than that. The problem is we have 2,900 households, and we have about 60 per cent of the households in the N.W.T. that have the resources to manage their housing situations. There is another 20 per cent that we support through the public housing program and programs on home ownership and repairs, and there is another 20 per cent need we are not addressing.
I'm suggesting, given that the average across the country is about 12.5 per cent, we should have a plan in place for the northern areas, either through the long-term housing strategy that may come up in the third-year mandate of this government that we can work toward getting those numbers down to the same level as the rest of the country. That's our goal here.
Senator Sibbeston: Interestingly, one of the things I had to stress and work on when I was an MLA and dealing with housing for government was to put houses on the ground. That's one thing that seems commonsensical. When people in the south build a house, they start with a good foundation, usually a cement basement or with treated plywood. It seemed as if the government was on a course, maybe because of their Arctic experience, of building houses off the ground.
I have pictures of some of the houses that the government built in Simpson up on little narrow steel beams, reinforced criss-cross, and when there was a strong wind the house would move. I had a hard time getting government to build houses on the ground.
I suspect this is still a problem. I understand in the Arctic you need to build it off the ground because of permafrost. You need some distance between the ground and the houses. In our part of the country, it is like here, you ought to build on the ground, and houses with proper foundations last a lot longer.
There were a few houses that the federal government was involved in that were built on cement basements, and those houses still exist in Simpson. They have had improvement over the years, but the foundation is so good that that house will last forever. I have seen Triodetic houses recently, which a system that puts the house about four or five feet off the ground.
Recently I believe that the housing corporation has been bringing in prebuilt, fabricated houses from the South, and it seemed to us in the era when I was in government and involved, there was such an emphasis on people building their own houses, using local material. It may have been more costly, but people had a sense of ownership and many of those houses are still here.
There seems to be a movement toward getting prefabricated houses from the South into the North. Is it just simply because of costs or lack of interest in local communities in building houses?
Mr. Anderson: You made some very valid points regarding foundations, and as you had mentioned, particularly in the more northern part of the territory, it's important to get the house off the ground so you have air circulation between the house and the ground to deal with the melting permafrost issue.
The Triodetic foundation system you mentioned is a web structure. We actually buy it out of Ontario. When you get shifting or unstable ground surfaces the whole building moves so you don't get the cracks in it and you can fix it.
What we do is get geotechnical evaluations done of the ground area, and that defines the type of foundation we use. We haven't done much in the cement basement approach you mentioned. We had done some in previous years; I know that. We have also had problems with some of those. It really depends on the area where you're building and trying to get the best foundation because, as you mentioned, the foundation is the key to having a long life on that unit.
You make an interesting point on the modular housing. The N.W.T. put a three-year strategy in place to build market housing units in the N.W.T. for rural and remote communities. That is so we can have housing to support devolution, decentralization, making sure teachers and nurses and community workers have places to live, and fill those vacant jobs we have in some remote communities. Because those costs are not subsidized, we have been through the first two years of this initiative where we are using southern modular. And you are right, it is a balance between using northern or bringing them up from the South where you save up to 30 per cent in costs because those costs are passed on to the tenants in those units because they're not subsidized. We have struggled a little with that from some of the points you had raised.
Our third year of that is just coming out now, and what we are really looking for is innovation in our units, the more innovation the better. That could be through stick-built, because we have several communities where we have the contracting capacity to do the work. There are other communities where you fly in the workforce to do it, and that's not really very cost-effective. We are also looking at trying to engage a little more in the northern manufacturing side of the business and see if we can provide support to that.
At the end of the day, it's still related to costs. You pay a bit of a premium for northern, because we would prefer to get them out of the North, either through the community itself through stick-built or insulated panels or there is some interest in the northern manufacturing development of that capacity, and so we would be supportive of that as well, more so than the southern.
Senator Raine: I don't know the geography and the supply of trees and wood as well as I should in the Northwest Territories, but is there an availability of local trees for building log homes in parts of the Northwest Territories?
Mr. Anderson: There are a few areas where that can be done in the Mackenzie Valley. We haven't had much discussion with our communities and political discussions around log housing in the last several years, I would say. The higher energy efficiency we get out of our EnerGuide 80, good-quality housing, it keeps your fuel costs down. As I said, we have significantly swayed more toward multi- family dwellings to try to get our costs down as low as we can and be as efficient as we can. In terms of the building materials for housing, though, most of that comes out of the South, out of Alberta or other provinces.
Senator Raine: The reason I'm asking is because I've lived in a log home, and they are very unique in that, the colder the weather gets, the higher the efficiencies in terms of heat. I know that going to the energy 80 program probably eliminated the ability to build homes out of log, and, from the little bit I've seen, log homes are still standing 100 years later. So the longevity of the house needs to be considered, not just the energy efficiency, and I'm wondering if, in our rush to become energy efficient, we haven't eliminated a very good solution for private dwellings. I've always been interested in Senator Sibbeston, and I would like him to maybe comment on this. The ability for people to put their sweat equity into their homes and learn how to look after them as they build them is something that is very important. We should maybe take a second look at log homes as a solution. If people want to build a log house themselves they are still allowed to, obviously, but, in terms of subsidized housing, they are not allowed. Is that how it works?
Mr. Anderson: We do have a program, on the home ownership side of our business, where we'll subsidize up to 55 per cent of the cost of building a house. It's 55 per cent in the Northern part, and it goes down to about 40 per cent in the South. In the market communities, it's just 5 per cent, a small amount of subsidy to provide support on that.
We are not adverse to log housing for home ownership. We certainly would be for public housing. Our experience to date has been that the costs of construction have been high in some that we have done. We haven't done any in the last few years. But, in the last 8 to 10 years, we have done some, and the costs were significant. Insurance is an issue as well in the North for log housing. We are not adverse to it, but the people who have most of the need for housing right now are low income families in the communities. We have about 800 family households on the waiting list for public housing right now, and our prime focus right now is to try to figure out a way to get the cost profile down as low as we possibly can in public housing so that we can support the construction of some new units to help to deal with those families who are still struggling. That is probably our biggest priority right now, but we are always open to innovation on the home ownership side. People can apply for support for these programs.
I would suggest, though, that, for some of the folks who want to get into home ownership, we have situations of very high consumer debt. So they can't qualify for the money to meet their side of the cost of construction, and so we haven't had much success in that area in the last several years.
Senator Raine: When you say the cost has been high when you look at log versus typical stick houses, is that cost considered over the lifetime of the home or just the cost to actually get it ready for occupancy?
Mr. Anderson: On the home ownership side, it would be more just the cost to get it up, the construction cost, because, if it's a home ownership unit, the ongoing operating costs would become the responsibility of the home owner, of course, so less cost to government.
Senator Raine: The issue I see is, when we are building with that frame of mind, we are not really investing in housing. We're investing in a housing crisis, and the long-term solution just sort of dissipates because you are not building a house to last. You are building a house for now. Somehow, we have to start to think about housing in terms of building a house that will last 100 years.
Is there any experience in your corporation or any authority on that?
Mr. Anderson: The ones that we build are designed for a 50-year life cycle, and that includes one, possibly two, renovations during that period. Our goal is to get 50 years of life out of our units that we build in the Northwest Territories.
Senator Raine: When you look at the cost of that house, you include in it the cost of the two renovations and divide by 50 and come up with a cost per year of the housing?
Mr. Anderson: And add the operating cost of it. You end up with a lifetime cost. To build a public housing unit, as an example, with a low income person in that unit, it would cost the government about $1.5 million for that unit. That's why we struggle with that ability to increase the public housing stock. We haven't had any increase in public housing — we've had a few little changes — in the last 15 years in the number of units that we offer to households. That's because of the high cost to run public housing.
Senator Raine: Just let me get this straight. It costs $1.5 million for 50 years for one family.
Mr. Anderson: That's correct.
Senator Raine: And then you start from scratch because what you have left is not worth it.
Mr. Anderson: Yes. We are working in a harsh environment and —
Senator Raine: Yes, it is a very difficult challenge. I have to go back to seeing 100 year-old log homes still habitable, loved by the third generation living in them, and thinking that maybe we should look at that again. Is that possible?
Mr. Anderson: Absolutely. We are certainly interested in innovation, and anything that we can do to support local capacity building and self-reliance is something that we're always interested in doing as well. So, if we could get a cottage industry of something in that area, we would be interested in that for sure.
Senator Raine: You mentioned insurance. I don't know if you've tried to burn down a log house, but it's very difficult. You would pretty well have to have a blowtorch to set it on fire.
Senator Moore: Mr. Anderson, I just want to go back to that nice decrease in the urgent core need that you were able to achieve. You talked about the $200 million that was spent, and it was mostly spent on renovations. How many homes were you able to improve or positively impact on?
Mr. Anderson: When we get these investments of federal resources and cost share with the GNWT, we normally split it up. About half of it goes to public housing replacement, so we are replacing old, single-family public housing units with multi- family configured housing. The other half of the resources normally goes to renovation, and that can be renovation of public housing units but also renovations on homeownership units.
We have a program where a low- to moderate-income family that is a homeowner can qualify for up to $100,000 of renovation on their home. There is a co-pay portion that goes along with that, but we try to put those resources to improving the housing quality as best we can. I'm not sure if that answered your question.
Senator Moore: Sure. You said earlier that there has been no increase in the public housing stock for the past 15 years, so I would assume then that that $200 million was spent on renovations of existing housing. Is that right?
Mr. Anderson: We would have been renovating existing housing that still has some life left in it, and the rest of it would be replacement. We would replace older stock with new stock in order to try to increase energy efficiency, for example, and have a general increase in the quality of housing in the North.
Senator Moore: So, some existing public housing units were, I guess, replaced and you did some renovations, but in all of that there was no numerical increase in the total public housing stock?
Mr. Anderson: That's a key point you just made. The issue around public housing, which I have mentioned a couple of times, is that we need at least some more public housing investment for new units, and it's the operating costs that we can't sustain on our own. That's the issue.
The federal government supports 600,000 public housing units across the country and that funding is all declining as the agreements expire. That causes a major problem for the North because the rents just can't cover the operating costs and that's the problem we are faced with in the North, primarily.
Senator Moore: On page 2 of your brief, in the last bullet you say that nearly one in five households — that's 2,400 units in the N.W.T. — "live in deep, subsidized rent-geared-to-income public housing." I'm interested in the "deep subsidized" part: Are we talking about something approaching 100 per cent? What are the numbers here, Mr. Anderson?
Mr. Anderson: If you look at it on a total portfolio basis, we spend about $55 million a year to run our rental housing portfolio. That includes about 2,400 public housing units, and then we have about 200 affordable housing units. Of that roughly $50 million we collect about $6 million in rent which works out to about $2,000 per year in rental income.
Senator Moore: So, just a bit more than 10 per cent?
Mr. Anderson: These are low-income households across the N.W.T.
Senator Moore: The other 90 per cent is made up from the money you are getting from the federal government and from the territory?
Mr. Anderson: That's correct. And with the decline right now we've been reduced already by about $12 million on an annual basis. We started at $33 million, and we're down to about $20 million now from the federal government. Every year, the Government of the Northwest Territories has had to pick up that extra cost.
Senator Moore: The dollars are going down and the conditions of the homes are deteriorating.
Mr. Anderson: The conditions are deteriorating, and the demand is increasing.
The Deputy Chair: I would like to ask a couple of questions as we draw to the end of this, with thanks for you being here.
I understand with support from CMHC the Northwest Territories Housing Corporation designed and built a northern sustainable house in Inuvik, N.W.T., in the Far North. It was completed in 2011, is currently operated by the Inuvik Housing Authority and I understand that home was going to be monitored for a minimum of one year to examine how the building operates. I would like to pose some questions that don't need to be answered necessarily here and now, but it would be useful for the committee to get information about that project.
As we talked about this morning, did it address challenges associated with adequacy, affordability and suitability of housing in the North? How much did it cost to build? How do these costs compare with the construction costs for other comparable home in the N.W.T.? What innovative technologies were used? How did they address the challenges we know about of constructing homes in northern communities? Would you use these same technologies for the construction of other homes in other communities in the N.W.T.? Why, or why not? What were the results of one-year monitoring period? And, could this model be used to construct homes in other communities?
Since the completion of this project has the corporation worked on other innovative housing projects? If so, please explain.
That's quite a list, but we would be grateful, since we're looking at innovations in our study, if you could kindly provide that information to the committee.
Mr. Anderson: We'd certainly be happy to do that. I guess and we can write back to the committee and outline. Will we get the questions sent to us?
The Deputy Chair: Yes, you can communicate with us through the clerk. That would be much appreciated.
And, if I may, as well, I'd like to ask for more detail on home ownership programs and services. We understand that you offer repair and home ownership assistance and courses and education programs to prepare individuals for successful home ownership.
We'd like to know — and again I don't expect answers necessarily now — how those education programs and courses prepare individuals for home ownership, what specific skills might participants develop through education programs, and how would the skills assist individuals to become homeowners. Are the education courses required for all individuals who participate in N.W.T. housing corporation home ownership programs? Why, or why not? I'm sorry I'm giving you a bunch of questions, but we'll make sure you'll get them in writing.
What tools and resources if any are provided to support homeowners following the completion of these education programs and courses? And finally, have the education program and courses led to increase in home ownership in indigenous communities in the N.W.T.? Why, or why not?
Sorry for that blizzard of questions, but your assistance would be greatly appreciated. I see Senator Beyak has a question.
Senator Beyak: It's a quick clarification. Thank you very much, gentlemen. In your presentation you mentioned that decades ago you partnered with the federal government on social housing and that that funding is declining. Then you mention that 600,000 families across the country rely on that: That's all families, and not just those in the Northwest Territories and indigenous and Aboriginal, correct?
Mr. Anderson: Thank you for the question. That's correct. The 600,000 are households that are in public housing right across the country.
Senator Beyak: Thank you, chair.
The Deputy Chair: Mr. Anderson, our committee will be making a report with recommendations to the federal government. Could you give us some advice about what we should recommend to the federal government to deal with the challenges that you've outlined, and maybe to support the Northwest Territories in some of the successes that you have explained. If you had a chance to bend Mr. Morneau's ear or have inputs into our recommendations, what would be the key things you would like to see from a federal government that has been a partner over many years? What should we recommend?
Mr. Anderson: We certainly appreciate the capital investments that come from the federal government, as they are very helpful, but the key issue for us is the operating costs on public housing. We need to grow our public housing. As I said, we have another 800 families that were not served through the public housing program, and now have significant affordability problems.
Our government can possibly address some of that if we can get a moratorium on the reductions. If they were able to stop the reductions now we could make headway in improving our housing conditions for our residents, and that would be huge for us in the N.W.T. and the rest of the North.
The Deputy Chair: Those reductions are part of, I understand, a long-standing agreement that goes on until 2038. You have been around for a good number of years. Can you tell us the providence of that agreement and how the moratorium, as you describe it, could be put in place?
Right now in the N.W.T. we just started our 18th legislative assembly. We're going to lose another $1.7 million during this government, and then under the next government, we're going to lose another $2.7 million. That's on an annual basis to run the portfolio.
We either have to try to put a cap on reductions for the existing stock, as an example, or GNWT will have to come up with the resources to offset those amounts. They have done that to date, but we're under a lot of pressure to figure out another way to deal with it. We're looking at revenue initiatives, for example, and that's more to try to make a bit of money on the market rental side so that we can offset some of the reductions. It's eventually going to get to the point where we may have to make some tough decisions about reducing the number of units that we offer people because we can't afford to incur those high costs.
The Deputy Chair: Mr. Anderson, is that declining O&M contribution part of a written agreement?
Mr. Anderson: Yes. Those agreements were built in the 1970s and 1980s. Some were 50-year agreements, some of them were 35-year agreements, and that's where you renovated old — you may recall the term — northern rental housing. There was a renovation program for that, and those were 35-year agreements. We also have some agreements that are 20 years. As those agreements expire, the debt is paid off at that point so there is no debt associated with it, but the operating dollars to run those units also fall off the table at the same time. That's how that works.
The Deputy Chair: I don't want to put you to a lot of work, but Senator Moore has just suggested what I was going to ask, which is: Would it be difficult for us to see those agreements? Are they public documents?
Mr. Anderson: We'd be happy to give you copies or examples of the different types, if you want. We can give you the table on how the money comes off the table so you can see it by year, down to 2038. We would be happy to provide that information.
The Deputy Chair: Okay. The debt is gone, so that means that the government of Northwest Territories, through the housing corporation, has paid back of capital cost of units, almost like a mortgage?
Mr. Anderson: It's like that.
The Deputy Chair: Is that too simplistic?
Mr. Anderson: There are two scenarios. There are agreements that were done and supported through debentures where we would pay 90 per cent of the capital costs — let me rephrase that.
We have some agreements where we would put 10 per cent into the capital costing of the project, the federal government would lend us 90 per cent and they would cost-share 50 per cent of the repayment on that debt.
We have other programs where the territorial governments pay 25 per cent, the federal government contributed 75 per cent and then we both pay that off in that same proportionate share.
When the agreements expire, the thinking at the time, I believe, was that, "Well, the debt is paid off, and the rent will be able to pay for the ongoing operating costs." That may work on that little strip of land across the southern border, but it doesn't work in the North. It's too expensive to operate these units and provide the programs in these isolated areas.
The Deputy Chair: Now, the recent budget tabled weeks ago in the House of Commons gave the Northwest Territories a capital contribution to build new houses, and you can outline that number if you didn't. Was there anything in that budget for the operating and maintenance issue?
Mr. Anderson: We received $35 million over two years, and we're very appreciative. It's the amount of money based on capacity in the N.W.T. that we think we can legitimately spend in the time frame of the agreements that apply to that.
We spend about $15 million to $20 million ourselves, so we're doubling up our application for two years, which is great.
There is no money set aside for operating costs in the budget, though, to deal with any of the operating costs of any new units or existing units where the funds are still declining.
Senator Moore: The operating costs seem to be the big obstacle here. What does that include, Mr. Anderson?
Mr. Anderson: Thank you for the question. In most of the communities we use diesel heating fuel, so that's all shipped up either by barge, normally, to the communities. You have small communities, so you're putting diesel generated power in most of our communities. We have some hydro in the southern part of the territory, but you've got small communities where you have high costs to deliver power, water and sewer services in these communities, simply because you're not serving that many people, but you have to have the same rigour and safety in those services that are provided.
You're basically talking power, fuel, water, sanitation, maintenance and administration costs. We have local community organizations that do the maintenance and the administration of the program in the communities, and as I said earlier, it costs us, on average, about $20,000 an unit per year to run that public housing unit in terms of straight operating costs, with no financing.
Senator Moore: Just in rough percentages, what would the diesel heating cost? What would the water supply and maintenance and admin break down in approximate percentages?
Mr. Anderson: About 60 per cent.
Senator Moore: Sixty per cent on the diesel?
Mr. Anderson: No, on the utilities. We spend about $7 million to $8 million for all of our units. As I said, there are 2,400 public housing units.
Senator Moore: Yes.
Mr. Anderson: We spend $7 million to $8 million on power, and we spend about the same for both fuel and for water. You've got high costs, as an example, on power. In some small communities power costs up to 60 cents or 70 cents a kilowatt per hour. It's an expensive business.
The Deputy Chair: One last question, if I may. We're going to ask this question, I think, of federal finance officials that we're going to hear following you, and you're welcome to stay if you wish. I noted that Budget 2016 proposes to invest $1.2 billion over the next five years in support of social infrastructure in First Nations, Inuit and northern communities. I'm sure that got your attention. Would you have any hopes or expectations that some of these funds may be available to deal with some of the pressures that you've discussed today? Have you had some discussions about that yet or are you hopeful?
Mr. Anderson: We're certainly hopeful. We certainly appreciate what we have and what has been put in place for the N.W.T. for the next two years. There is a lot of discussion about a national housing strategy, and hopefully that will dovetail into that discussion, but that hasn't started yet. I don't have a clear sense where we're going after these two years. My focus right now is to get this delivery done on these two years and we'll work forward from there.
The Deputy Chair: How many houses do you think you can build for those funds, roughly?
Mr. Anderson: It's certainly a significant amount. It costs us about $300,000 to $400,000 per house, depending on where you're building it. That's the cost to put a unit in place.
One of the things we're looking at, and it's more a pilot project right now so I'll touch on it quickly, is on the homelessness side. Homelessness issues are getting to be a significant problem in our capital city, so we're trying to figure out a way to move forward on that.
We also have three pilot projects under development in our more remote communities. People who don't have housing are couch surfing, living with extended families, and those types of things. We're looking at building these little four-plexes that are about 325 square feet each and basically the footprint of a single unit, so your operating costs are going to be low. We're trying to gauge whether we get any acceptance of that type of approach in our communities, and maybe it's something we could do in the future on a larger scale at a reasonable cost in terms of capital and operating.
The Chair: Any details you can give us on that would be most appreciated.
Mr. Anderson: Sure.
Senator Moore: Going back to those numbers, you're saying that it cost 7 to $8,000 of the $20,000 that you spent per year. It couldn't be more than 7 or 8, because you're into more than 20. You didn't tell me anything about the cost for maintenance and admin. Could you be a bit more exact with those numbers?
Mr. Anderson: Sure. We can include that in writing.
Senator Moore: Can you give that to the clerk?
Mr. Anderson: It's about $2,000 average cost per unit for administration and about $4,500 to $5,000 for maintenance.
The Deputy Chair: Thank you for your presentation and your offer to provide us with further information.
The representatives on our second panel are from the Department of Finance Canada. I'm pleased to welcome Diane Lafleur, Assistant Deputy Minister, Federal-Provincial Relations and Social Policy Branch; and Mr. Roger Charland, Director, Federal-Provincial Relations Division, Federal-Provincial Relations and Social Policy Branch.
[Translation]
Diane Lafleur, Assistant Deputy Minister of Federal-Provincial Relations and Social Policy, Department of Finance Canada: Thank you. As you mentioned, my name is Diane Lafleur and I am the Assistant Deputy Minister of Federal- Provincial Relations and Social Policy at the Department of Finance Canada. With me is Roger Charland, Director of Federal-Provincial Relations, who is responsible for federal transfers to the provinces and territories.
I would like to start by thanking the committee for the opportunity to speak about the Territorial Formula Financing program as part of the committee's study on northern housing.
[English]
I would like to acknowledge that the need for affordable housing is particularly high in northern and Inuit communities, a situation that can have wide-ranging effects on the health and well-being of northerners.
In recognition of this, Budget 2016 provided $177.7 million over two years, starting in 2016-17, to address urgent housing needs in northern and Inuit communities.
Specifically, $8 million would be provided to Yukon, $12 million to the Northwest Territories and $76.7 million to Nunavut. Additional investments would be earmarked for the three Inuit regions outside of Nunavut, with $50 million for Nunavik, $15 million for Nunatsiavut and $15 million for the Inuvialuit Settlement Region.
Northern and Inuit regions will also benefit from the proposed Budget 2016 investments of $1.5 billion over two years, starting in 2016-17, in affordable and social housing across the country.
These Budget 2016 investments are part of the first phase of the government's commitment to expand social infrastructure across the country over the next ten years.
The government has also committed to engaging in broad consultations over the coming year in order to develop a national housing strategy. This will guide how additional investments in affordable housing would be made, including in the North.
As the committee knows, these and other targeted programs to support housing in the North fall under the responsibility of the Canada Mortgage and Housing Corporation and the Department of Indigenous and Northern Affairs.
I understand that some of my colleagues from CMHC and Indigenous and Northern Affairs have already appeared before the committee.
[Translation]
The Department of Finance, on the other hand, does not have a direct role in programming. We do, however, manage the four main federal transfers to the provinces and territories: the Canada Health Transfer, Canada Social Transfer, Equalization and Territorial Formula Funding. These transfers provide support to provinces and territories to help support essential public services and programs, including support for health care and social programs such as housing, within their jurisdiction.
[English]
In 2016-17, the government will provide almost $70.9 billion in transfer payments to the provinces and territories. This represents roughly a quarter of all federal government spending.
Nearly $3.8 billion in federal transfers will be provided to the territories. Of this amount, $947 million will be provided to the Yukon, $1.3 billion will be provided to the Northwest Territories, and $1.5 billion will be provided to Nunavut.
Taken together, major transfers to the territories represent an average of over $31,000 per capita. This is significantly larger, on a per capita basis, than the transfers to the provinces. For instance, federal transfers represent $3,940 per capita in Prince Edward Island, which is the province that receives the most per capita of any province.
For the territories, the most important transfer by far is the Territorial Formula Financing, which we call the TFF for short, and it amounted to $3.6 billion in 2016-17.
It is the most important source of revenue for territorial governments, with TFF payments representing 72 per cent of the total revenues of combined territorial governments in 2015-16.
The comparatively larger TFF amounts on a per capita basis are recognition of the high cost of providing public services in the North as well as the challenges that territorial governments face in providing these services to a large number of small and isolated communities.
What is Territorial Formula Financing? TFF is an annual transfer from the federal government to each territorial government that provides funding to the territories to assist with their spending needs while taking into account their unique circumstances. Its purpose is to enable territorial governments to provide their residents a range of public services comparable to those offered by provinces at a comparable level of taxation.
TFF helps to fund essential public services in the North, such as hospitals, schools, infrastructure and social services, including social housing.
[Translation]
It is important to note that the TFF is an unconditional transfer, which means that territorial governments are free to spend the money according to their own priorities, including funding for housing. They are accountable to their residents for how they use these funds. There are no obligations on the territories to report back to the federal government.
The legislation governing TFF is typically renewed every five years to account for evolving territorial circumstances, changing taxing practices and ensuring the most appropriate data sources. The last renewal was in 2014, and we are currently working with territorial officials to improve the program as we approach the next renewal in 2019.
[English]
How is the TFF calculated? In general, TFF payments for each territory are calculated using two metrics: the territory's gross expenditure base, and its fiscal capacity.
In accordance with the legislative formula, we first calculate the territory's gross expenditure base, which is a proxy for how much a territory needs to spend to deliver programs and services such as hospitals, schools and housing support that would be comparable to those offered by provinces.
Second, we calculate the territory's eligible revenues, a measure of each territory's capacity to raise own-source revenues by applying a national average tax rate to representative tax bases that reflect the economic activity of each territory. The calculation of eligible revenues in TFF mirrors a similar calculation in the equalization program.
Essentially, a territory's Territorial Financing Formula payment is equal to the gap between its gross expenditure base and its eligible revenues. Stated another way, it's the gap between what it needs to spend to provide comparable services, and what it's able to raise in tax revenues. From year to year, the gross expenditure base is adjusted based on the growth in spending by provincial and local governments and shifts in territorial population growth relative to the national average based on the latest statistics from Statistics Canada. Meanwhile growth in eligible revenues largely reflects changes in the territorial economic circumstances.
As the committee may be aware, Budget 2016 is proposing an immediate improvement to the TFF program in light of a recent data revision by Statistics Canada. For a bit of context, on December 1, 2015, Statistics Canada released revised public sector statistics that better conformed to international standards and benefited from improved methodologies. As a result, there was a downward revision to the estimate of growth in provincial and local government spending between 2011-12 and 2014-15.
Even though there were no changes to the actual TFF program, these statistics factored directly into the legislated formula to calculate payments to the territories.
The impact of the revised data and the legislative requirement to recalculate each territory's gross expenditure base for every year going back to 2013-14 resulted in payment amounts being calculated for 2016-17 that were lower than territorial expectations.
Budget 2016 proposes to remove this legislative requirement and introduce amendments that will result in improvements to the stability and predictability of TFF payments while ensuring that the formula continues to reflect the most accurate and reliable data. These amendments will provide an additional $67 million to the territories compared to the amounts that were calculated back in December 2015.
More precisely, the Yukon will receive an additional $17 million, the Northwest Territories an additional $248 million and Nunavut an additional $26 million.
In conclusion, I would just note that in addition to the support provided by the federal government for housing in the North through programs such as the Investment in Affordable Housing and incremental budget investments, the TFF provides annual funding to the territories to assist them with all expenditure requirements including housing needs.
We would be happy to take any questions you have.
The Deputy Chair: Thank you for your presentation. I would just like to ask for a little elaboration on the territorial funding formula changes this year.
You've outlined at the end of your presentation the amounts that Yukon, N.W.T. and Nunavut will receive as a result of this problem that emerged. I understand it originated with Statistics Canada formulae. I don't think you clarified what those territories would have received had the change in Statistics Canada not occurred.
As I understand it, while the N.W.T. is getting an additional $24 million, it would have received $34 million had this new formula for growth not been put in place. I understand that, while Nunavut is getting $26 million additional this year as a response to this problem, it would have gotten $33.6 million had this not happened, which represents about a $10 million shortfall for the N.W.T. and about a 6-$7 million shortfall for Nunavut. I'm not sure what the numbers are in Yukon. Am I correct in stating those figures?
Ms. Lafleur: Had there been no change whatsoever made to the formula but the statistical revision applied, as it normally does when there is a revision to the statistics, the territories would have collectively experienced a decline of $88 million in transfers. The government's proposed change would reinstate $67 million of that decline, if you will, which is not quite the full amount. The reason for that is that the changes that are proposed deal with the — if I can call it that — going backwards problem that was in the formula. Under the current legislation, the gross expenditure base is set in the legislation for the year 2013-14. All of the following year's calculations are driven off of that original base. Every year, when new data comes out, the legislation requires the government to recalculate the amounts for all of the preceding years, going back to 2013-14.
That was the main source of the problem and the shortfall going forward, and what is being proposed now is that the government would no longer have to go back and recalculate for all of those prior years so that the data revision will only apply on a going forward basis.
So yes, it does have impact on 2016-17 and forward because the legislation requires that the government always use the best and most up-to-date data available, but the government is proposing to address the issue of this unpredictability. Data revisions will always come, from time to time, from statistical organizations, and leaving those prior years open exposes the territories to changes that are unforeseen. So the proposal is to actually close that so that the impact is only felt on a going forward basis.
The Deputy Chair: That will take a legislative change, I understand. I wonder if you could give us the status of those proposed legislative amendments. Where are they at? When will they be introduced?
Ms. Lafleur: The government included this as part of their budget plan, so one would expect these changes to be part of a budget implementation act.
The Deputy Chair: Okay, we'll have to look for that. Thank you.
Senator Enverga: Thank you for the presentation. Actually, we got a lot of details from you, and we thank you for that.
My question is about Canada Mortgage and Housing Corporation's Investment in Affordable Housing, or IAH, program. The federal government provides financial support to the provinces and territories to improve access to affordable housing through initiatives such as new construction, renovation, homeownership assistance, rent supplements, shelter allowance, accessibility modifications, and accommodations for victims of family violence.
My question is: When providing money to provinces and territories under the affordable housing initiatives, are the provinces and territories allowed to keep a portion of the allocated money for administration? If yes, how much can they keep for that purpose?
Ms. Lafleur: I'm afraid that's not a question that I know the answer to. I think that's a question for Canada Mortgage and Housing Corporation as they administer the Investment in Affordable Housing agreements.
I know that, under the funding that has been provided in the budget, there are some components that require cost matching from the provinces, but the bulk of the components actually do not require cost matching. In terms of the administrative amount, that's a question for Canada Mortgage and Housing Corporation in terms of the details. I'm afraid I don't have that.
Senator Enverga: So, in your budget, you're not sure if there is an allocation there for money that can be taken away by the territories or the provinces for administrative purposes? You didn't put it anywhere in there?
Ms. Lafleur: The budget tried to focus on making use of existing programming that we know is already working well and leveraging those agreements or mechanisms that are already in place in order to be able to flow the money more quickly to the provinces and municipalities.
Senator Raine: You said in your remarks that you arrive at a bulk figure, and those are transferred to the territories with no strings attached. They can do what they wish with that money. Whether they spend it on a new hospital or more houses, that doesn't matter.
Ms. Lafleur: It's entirely up to them to decide according to their priorities, and they are accountable to the populations of their respective territories in how they spend that. They do not have to report back to the federal government on how they have spent that.
Senator Raine: That's for the territorial transfer funds?
Ms. Lafleur: The territorial formula financing.
Senator Raine: There are other ways that the federal government supports social programs in the North, through other programs like CMHC housing, for instance. Is there any relationship between the territorial financing formula, and the territories drawing down on many other programs?
Ms. Lafleur: They are not linked in any direct way. As you say, there are a number of other ways that the federal government supports the territories. From our perspective, the other two key areas are the Canada Health Transfer and the Canada Social Transfer. The health transfer is to support the principles of the Canada Health Act and ensure universal access to health care in the territories. The Canada Social Transfer is in support of the social programs, such as early learning and child care. It has built into it what we call a "notional allocation," but it is not one that the territories are bound to respect. Again, they can spend the money on priority social programs as they see fit.
Senator Raine: Those two transfer programs would be with matching funds from the territories?
Ms. Lafleur: No, those are transfers from the federal government's general revenues to the territories.
Senator Raine: The object being that there are equal transfers for all Canadians?
Ms. Lafleur: Those are equal per capita transfers. Every province and territory gets their share based on their share of the overall population.
Senator Raine: We have just heard from the previous witnesses that there is an issue with housing funding where they have capital allocations that I guess they take out of the territorial transfer funding formula. So they use some of the territorial funding formula for capital investments in needed new homes for social housing, but there is a decreasing ability to draw out funding for operations and maintenance. I don't quite understand how that works. Do you have any idea, or would we have to ask somewhere else?
Ms. Lafleur: There are a variety of ways that the territory can invest in housing. Part of it is through using some of the territorial formula financing money. Part of it can be from their own-source revenues, i.e. the taxes that they raise, either corporate income tax or personal income tax, in the territories. In addition, there are some programs in place, as I'm sure my colleagues from CMHC might have spoken to you about, things like the investment in affordable housing, which targets the building of new social housing and the maintenance of social housing.
If I can spend just two minutes on some of the budget measures that might be of interest to you, there are a number that the territories could avail themselves of.
There is the doubled investment in affordable housing. That is actually a match, 50-50. For every dollar that the federal government adds to it, the territories that are eligible would have to put fifty cents in as well. However, there are other investments such investments for the construction and repair of an adaptation of affordable housing for seniors, which does not have a cost-match requirement.
There was also significant funding of $574 million over two years for energy and water efficiency retrofits and renovations for the existing stock of social housing. A lot of it is dated and showing its age, so the thinking there is you could use the money for much needed repairs, and at the same time, you would be lowering utilities bills in the long-run because these housing units would become more energy efficient.
There is also money in the shelters, transition homes and tackling homelessness.
There are quite a number of initiatives, all of which the territories could avail themselves of and that would help with the affordable housing situation in the North.
Senator Watt: On the target housing initiative, Budget 2016, I would like to say that whatever the amount that is made available by this budget is very welcome, even though I do believe that some of our leaders have indicated it is not enough. Nevertheless, it was very much appreciated because it makes life a little better than what it is today.
In saying that, I would just like to get back to the point raised by the two senators across from me concerning whether the funds stop being transferred from the federal government to the provincial government. I know you spent a bit of time on elaborating "transfer," the concept, the formula, dealing with the territories, but for the provinces, is that pretty well the same in terms of the formula that will exist?
Ms. Lafleur: The comparator with the provinces is the Equalization program. It is different in the sense that not all provinces get Equalization and all territories do get Territorial Formula Financing. Equalization, however, is unconditional, the same way that Territorial Formula Financing is.
We look at provinces' fiscal capacities and their ability to raise own-source revenues and compare based on the national average tax rate to see which provinces have more fiscal capacity than others. That's the basis on which we determine who receives Equalization and how much. Once the determination is made and the amounts are determined, those amounts are transferred without conditions to the provinces.
Senator Watt: So it's the still the same sort of formula that has been in existence for quite some time that we have not been able to find out. I myself have not been able to find out when I ask the question about how much of it is being held back as administrative cost.
That problem will have to be revisited by the politicians at some point so we can at least have some kind of a control at the receiving end, because right now, we are operating under the mercy of what is being handed down from the provincial government, and we are not even sure if we are getting our money's worth.
Ms. Lafleur: The fundamental principles behind Territorial Formula Financing and Equalization, as far as I can remember, have been that the federal government communicates very publicly. We announce the amounts every December so that every Canadian who is interested in this knows exactly how much money is going to each jurisdiction. It is then each jurisdiction's responsibility, through its own budget processes and other accountability processes, to explain to the populations of their jurisdiction how that money is being spent on programs that people care about. The federal government has not inserted itself into the management of those programs.
Senator Watt: In other words, the federal government is totally blind in that area in terms of how the money that is transferred is being spent at the community level.
Ms. Lafleur: We don't follow dollar for dollar from the transfer through the budget process. We know how much we give, and we know ultimately how much is being spent on things like hospitals and schools because each jurisdiction does report on that through either their budget or public accounts.
Senator Watt: There was an attempt in the early years of setting up a tripartite committee to include the people that are being impacted by whatever is coming from the federal government or whatever is being transferred to the provincial government and to monitor what is happening. That would be a way of knowing whether you are getting your money's worth, but at times that gets to be difficult because the Government of Canada and the provincial governments don't really follow the amending formula that was agreed to under the James Bay and Northern Quebec Agreement.
This is one issue. If it is a matter under federal jurisdiction, then the federal government has an obligation of 75 per cent. If it's under provincial jurisdiction, it's 25 per cent.
We are still wrestling with the issue of where are we at when it comes to dealing with it when the expenditures have to be realized. It is pretty hard to do long-term planning when you are partially blind in terms of what is the capital out there that we can access. That is a problem, and the committee may need to address that issue at some point. I just wanted to point that out.
Ms. Lafleur: From a transfer perspective, the government has legislated long-term growth formulas for each of the transfers so that provinces and territories will at least know the size of the envelopes and how quickly they are expected to grow over the years so there is some level of predictability with the level of transfers.
Senator Watt: That's okay for the provinces, but on the receiving end, it's not okay for us because we don't know whether we are getting our money's worth. That is the problem.
The other thing I would like to mention is that further investment would be also earmarked on the Inuit regions outside of Nunavut. If we are talking about $50 million for Nunavik, $15 million for Nunatsiavut and $15 million for Inuvialuit Settlement Regions, that's the capital amount available for those regions.
Ms. Lafleur: That's for the next two years. The government is going to be consulting to develop a longer-term housing strategy.
Senator Watt: Those are specific amounts I am talking about. We don't know whether we are going to be receiving those. I know that they will be going to the provinces.
Ms. Lafleur: They will be transferred to the jurisdiction.
Senator Watt: Northern and Inuit regions will also benefit from the proposed Budget 2016 investment of $1.5 billion over two years, starting in 2016-17, in affordable and social housing across the country. This would be additional amounts that never existed before?
Ms. Lafleur: That's right. That's new money.
Senator Watt: But you have no information on the breakdown of which regions are getting what? How will that be dealt with?
Ms. Lafleur: That will be through the existing agreements in place, for the most part, the investment in affordable housing agreements, although some will flow directly from the federal government. The details on that are still very much to be worked out.
Senator Watt: Would it be up to the provinces to make claims, or would it be up to the regions, the housing authorities in the regions? Would they have any control on that?
Ms. Lafleur: I would imagine the housing authorities will be in contact with their respective governments to identify need and put forward proposals.
Senator Watt: Thank you.
The Deputy Chair: That's very helpful.
Senator Sibbeston: The Aboriginal people in the northern territories are treated differently in terms of the way the federal government provides programs to them in that there are public governments that deal with all the people who live in the territories — except for a little reserve in Hay River — most all people in the Northwest Territories live in communities, so the public government provides programs for housing, education, social services and so forth that the federal government would normally provide.
Has there ever been an analysis of this different way of dealing with Aboriginal people in the North and just what it would cost if the federal government were to provide services directly to the Aboriginal people of the North? Have you ever done that?
Ms. Lafleur: To my knowledge the Department of Finance has not done that kind of analysis. I don't know whether Indigenous and Northern Affairs would have done that kind of analysis. I just don't know the answer to that, I'm sorry.
Senator Sibbeston: I think Dennis would attest to the fact that we are fortunate in the territories that we don't have reserves. Also, too, we are fortunate that Aboriginal people are a big part of the population so they're not inundated and overwhelmed as native peoples in the South have been. I think that's the reason that Aboriginal people in the northern territories are generally doing better than Aboriginal people in the South.
I just wanted to state that and I was curious to see whether the government has ever done anything and you certainly recognize that. As far as a federal government department, it's much easier dealing with the whole issue on a territory basis than having to deal with people as a separate group, would you say?
Ms. Lafleur: Yes. The relationship of the federal government is with the territorial government. It's the same thing with the provinces, we deal with the provinces and not directly with the municipalities generally because there is that relationship legally as well in terms of municipalities are creatures of the provinces and so that's where the responsibility lies.
The Deputy Chair: If I may, it is notable, and you mention it in your presentation, that I think for the first time the federal budget did say that investments would be earmarked for the three Inuit regions outside of Nunavut, Nunavik, Nunatsiavut and the Inuvialuit Settlement Region, which are the regions we are actually studying in this study. Although they flow through the public governments of those regions, the federal government I think for the first time has recognized that Inuit are a distinct Aboriginal people in addition to First Nations. As Senator Watt noted, that's notable.
Senator Watt: I understand where you're coming from. I also understand where I'm coming from because I've been involved from the first modern treaty agreement. There is one provision in the agreement that I do feel from time to time is being ignored; that is if it's an ethnic nature when it comes down to point of providing services from the federal government, if it doesn't require going through the public instrument that is sort of a municipal entity, as you described it, because the federal government has no direct relationship with the municipalities but the provincial governments do, but in the area of ethnic nature there is a provision that funds can flow directly into ethnic organizations such as Makivik Corporation. The organizations actually do the construction work and make the designs for the housing and things of that nature.
I would have thought this would be a perfect opportunity as a model that has been set to be able to have the federal government funding flowing directly into the ethnic component. It should be examined to see whether this would be acceptable and workable so we can do long-term planning. Right now, having things being controlled by the outside, they have not improved any accessibility and on the timing and being able to have long-term planning. That's one of our problems.
Ms. Lafleur: As I mentioned earlier, in this phase the government wanted to focus on existing mechanisms that were tried and tested and had even in the last financial crisis of 2008-09, been leveraged to deliver greater economic activity so we knew we could do that fairly quickly, but then there is this longer term strategy that is yet to be developed and will require a great deal of consultation with a variety of stakeholders. I think you have an opportunity there to bring that kind of consideration to table.
Senator Watt: We might, if I do manage to get my ideas across to our committee members in terms of what we should do and I think that should be part of the recommendations that should be coming out of this committee.
The Deputy Chair: There's a hint of where we might be going.
Senator Beyak: Thank you for an excellent presentation. I'm always pleased how many Canadians watch this at home so it's good to have the practical side of it and they always ask me practical questions so mine is this: $31,000 per capita to the territories in the transfer and about $3,000 per capita to the provinces. Who decides that 10 times difference?
The Deputy Chair: That was the lowest province, I believe.
Senator Beyak: But the average would be around $3,000.
The Deputy Chair: No.
Ms. Lafleur: That's to Prince Edward Island.
The Deputy Chair: Sorry, that's the highest.
Senator Beyak: What would the average be then? I would say less than that, so $3,000?
Ms. Lafleur: I'm not sure; I'll ask Roger to look at whether we've got that.
Senator Beyak: That's the first, and the second part of it then is if it's about $3,000, which I'm figuring it is, and $30,000, who decides 10 times more for the territories? Why not five times more? Why not 20 times more?
Ms. Lafleur: We don't do it on the basis of 5 times more or 10 times more, as I mentioned earlier, what we try to do is do a good assessment of what it costs to deliver programs and services in the North that are comparable to what provinces and territories deliver in the South and compare that to the ability of territories to raise revenues from their population. We assess the gap between those measures: how much you need to spend and how much you can actually raise. We describe it as a gap filling formula for that reason. I use that number for comparison but that's not the basis on which the calculation is made. It's really about trying to deliver the same level of service to people who live in the North.
Senator Beyak: Thank you very much.
Senator Moore: You mentioned that the TFF monies are transferred unconditionally and you said the same applies to the equalization monies. The Canada Social Transfer includes monies for social programs and post-secondary education. I'm very interested in post-secondary education, so when you transfer those funds are they unconditional or do you stipulate a certain per cent must be spent on social and a certain per cent must be spent on post-secondary and do you get an accounting afterwards from each province?
Ms. Lafleur: A number of years ago, I believe in 2007, the government decided to put what they called a "notional allocation" on the amount of money that is transferred under the Canada Social Transfer and so there is a notional allocation that is assigned to post-secondary education. However, it is just that, notional, and provinces are not bound to spend that notional allocation entirely or at all on post-secondary education.
Senator Moore: Is that stated on the basis of a percentage and, if so, what is it?
Ms. Lafleur: I believe it was a dollar figure. After this meeting we could send you more information on that.
Senator Moore: I would like to know that because it's a very important item, especially in my province of Nova Scotia. I think it should be a separate, targeted transfer, it shouldn't be lumped in with social programs.
Anyway, that's my rant for today but I would like to know those figures.
Ms. Lafleur: We'll send you some information on the notional allocation and it has grown over time as the transfer has grown so we can give you information on where it's at now.
Senator Moore: Because the new basis of calculating on a per capita basis has been very harmful to us.
The Deputy Chair: Ms. Lafleur and Mr. Charland, thank you very much. If you have that information you could give it to us subsequently because we're going to have to close now.
Ms. Lafleur: Yes.
The Deputy Chair: I would like to thank you very much for being here and, with that, this committee is adjourned.
(The committee adjourned.)