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National Finance

 

Proceedings of the Standing Senate Committee on
National Finance

Issue No. 34 - Evidence - May 31, 2017


OTTAWA, Wednesday, May 31, 2017

The Standing Senate Committee on National Finance met this day at 1:47 p.m. to study on Supplementary Estimates (A) for the fiscal year ending March 31, 2018.

Senator Anne C. Cools (Deputy Chair) in the chair.

[English]

The Deputy Chair: For those of you who do not know me, my name is Senator Cools. I am the deputy chair of this committee. It's a position I have held for a long time in previous years.

We should do a quick round table to identify ourselves to our panellists and to the viewing public, if we are being televised, which I believe we are. So why don't you lead in this noble role?

Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.

[Translation]

Senator Forest: Senator Éric Forest, from the gulf region, in Quebec.

Senator Moncion: Senator Lucie Moncion from Ontario.

Senator Pratte: Senator André Pratte from Quebec.

[English]

The Deputy Chair: Let us welcome here before us the Treasury Board of Canada Secretariat people, as we used to call them for many moons. They are today Brian Pagan, Assistant Secretary, Expenditure Management Sector; Darryl Sprecher, Director, Expenditure Management Portfolio; and Renée LaFontaine, Assistant Secretary and Chief Financial Officer, Corporate Services Sector.

A force of three is mightier than one, so perhaps Mr. Pagan you could lead off and instruct us and inform us of these mammoth tasks.

[Translation]

Brian Pagan, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat: Thank you, Madam Deputy Chair. I'm pleased to be here again to explain 2017-18 Supplementary Estimates (A). First, I'll provide an overview of the document. My colleagues and I will then answer your questions.

To start, I'll briefly describe the government's spending cycle. We'll then look at how the supplementary estimates are organized, along with the total amount of the supplementary estimates and the amount for the fiscal year.

[English]

Finally, we will look at how these estimates reflect the priorities and the fiscal framework set out in Budget 2017.

I'm speaking to a presentation here which I believe has been shared with you. On slide 3, we see an illustration of the supply cycle. The point here is simply to remind the committee and the viewing audience that the parliamentary calendar is organized according to three supply periods, ending June 23, December 10 and March 26, and that supplementary estimates are a normal part of this supply process.

Within this supply period, ending June 23, you can anticipate seeing two appropriation bills. The first is to provide full supply for Main Estimates that were tabled at the end of February and the second is for these Supplementary Estimates (A) that were tabled on May 11.

Turning to slide, it is an overview of the document that was tabled by the president. As you read through the first few pages, I'm hoping that you will notice some changes and greater detail in terms of information provided.

The new highlighted section on the first page includes some high level info such as amounts related to Budget 2016 and Budget 2017, as well as the organizations presenting the largest funding requirements in these supplementary estimates, including $651.4 million to the Treasury Board Secretariat and $584.6 million for our colleagues at the Department of Employment and Social Development.

On the second page of the intro we added explanations and a glossary of commonly used terms to help new readers, including a glossary of terms such as non-budgetary expenditures and a listing of supplemental information available online, including planned expenditures by program, by purpose and statutory expenditures.

I would also highlight that this document includes a reconciliation to Budget 2017, which is presented on an accrual basis. It reconciles the budget on accrual with the cash funding presented in this year's estimates. This reconciliation is provided on page 5 of the tabled document.

As usual, the largest section of the document details requirements by departments and agencies, starting on page 2- 1. Each organization seeking authority from Parliament will display its requirements by vote and by initiative. We have tagged these initiatives to the appropriate budget year as applicable. The tabled document ends with the proposed schedules to the appropriation bill, which is found on page A-2 of the tabled document, and these are based on the amounts presented in these estimates.

Finally, I must mention that the TBS InfoBase is also available to provide more information on authorities and expenditures, including full-time equivalents, personnel information and planned results. You will recall that my colleague Andrew Gibson and I appeared before this committee in March to provide a demonstration of InfoBase.

Turning to slide 5 of my presentation, we'll see here that Supplementary Estimates (A) provide information on $3.7 billion in voted budgetary appropriations for 33 organizations. The funding supports many initiatives announced in Budget 2017 as well as spending set out in prior budgets. These estimates also provide an update on forecast statutory spending that has already been approved by Parliament. The proposed schedule to the appropriation bill found in the annex to this supplementary estimates represents the proposed appropriations of $3.7 billion.

On slide 6, we see a comparative view of estimate authorities over recent years, including these Supplementary Estimates (A), authorities sought from Parliament for 2017-2018, total $261.7 billion, compared to $257.2 billion for all of 2016-2017.

Of this amount, $105.9 billion is voted through the Appropriation Act, representing roughly 40 per cent of the total. Planned expenditures for both voted and statutory are higher than in previous years, reflecting investments in areas such as Aboriginal programs, infrastructure, and early childhood learning and development as set out in Budget 2016 and Budget 2017.

Turning to slide 7 and also on page 7 of the tabled document, we find information on the largest voted amounts in these Supplementary Estimates (A). In these estimates we have highlighted nine initiatives of $150 million or more. The nine initiatives total approximately $2.6 billion or about 7 per cent of the total voted requirements in these supplementary estimates.

The largest item on the list is $625 million under the Treasury Board Secretariat. This funding will be allocated across governments upon ratification of a number of collective agreements recently signed with bargaining agents. You may recall that funding for the same purpose was presented in 2016-2017 Supplementary Estimates (C) to conclude the previous fiscal year. This funding was not accessed. It was not allocated, as agreements were anticipated but were not ratified before the conclusion of the fiscal year.

The second largest item is $446.5 million for specific claim settlements which have been negotiated with First Nations. Next is $400 million in funding for provinces and territories to support early learning and child care. This funding was announced in Budget 2016.

The remaining six items on this list of items totalling $150 million or greater cover a wide variety of programs and initiatives, such as passenger rail service, marine safety and environmental protection, immigration, flood remediation, Coast Guard and fisheries, and border operations.

[Translation]

Slide 8 concerns the implementation of Budget 2017. As you know, the supplementary estimates are the first opportunity to obtain parliamentary approval of the funding for the programs and initiatives announced in the budget tabled in late March 2017. These programs account for approximately $1 billion of the $3.7 billion to be voted by Parliament.

[English]

On slide 9, and this is the penultimate slide in this deck, are the details of the reconciliation between the estimates and the budget included in the tabled Supplementary Estimates (A) document.

The chart begins with the $261.7 billion in proposed authorities from the main and supplementary estimates to be approved by Parliament. From there it shows four additions and one subtraction necessary to reconcile to the budget, which is presented on an accrual basis. The prime difference constituting just over $66 billion represents spending that is included in the budget, which provides a comprehensive view of all planned federal spending but is not presented in the estimates because of the differing scope and universe of the two documents.

For instance, forecast spending on employment insurance is $22 billion. There is a consolidated specified purpose account that administers the employment insurance account and therefore is not presented in the estimates. There is also $23 billion for the new Canada Child Benefit, which is delivered by our colleagues at Canada Revenue Agency as a tax expenditure. Details on that expenditure are provided by the Department of Finance in their annual tax expenditure report.

Other items in this category are expenses of Crown corporations as they spend the revenues they generate, as well as revenues credited to departmental appropriations, which are not appropriated by Parliament.

The next difference is about $4.7 billion and this is due to the differing accounting concepts. Again, the budget is on an accrual accounting basis. The estimates are the cash required by departments within the fiscal year. The difference between cash and accrual accounting is about $4.7 billion.

Next we have $2.2 billion, which are items that have been forecast in the framework, included in the budget, but have not yet been brought forward to Treasury Board for program approval. This amount of $2.2 billion represents that which you can anticipate will be presented in future supplementary estimates later this year.

Finally, we have a subtraction. The budget forecast includes a forecast of spending that is planned but may not materialize, lapsed spending. Again, we ourselves presented this information to you in the final supplementary estimates of the year. Our friends at finance are forecasting a planned lapse of $5.8 billion. We'll update you on that toward the end of the fiscal year.

[Translation]

This concludes my presentation with regard to the next steps. The government will table the bill for these supplementary estimates in the next few days. The President of the Treasury Board Secretariat will then table Supplementary Estimates (B) in November. If you have any questions about Supplementary Estimates (A), I would be pleased to answer them.

[English]

The Deputy Chair: Thank you very much, Mr. Pagan.

Next we will be pleased to hear from Mr. Perlman.

Mark Perlman, Chief Financial Officer, Chief Financial Officer Branch, Employment and Social Development Canada: Members of the committee, I am pleased to appear before you in my capacity as Chief Financial Officer of Employment and Social Development Canada, ESDC. Senior executives from key areas of ESDC are also in attendance and may be coming forward to help me answer some of your questions. We're always pleased to answer them, so thank you.

As part of our Supplementary Estimates (A) you will note that ESDC is seeking an additional $584.6 million in voted appropriations, which include under vote 5 grants and contributions a total of $580.4 million.

The Government of Canada recognizes that Canadian families need support and that all Canadian children deserve a fair chance to succeed. Budget 2016 and Budget 2017 announced multi-year funding commitments for early learning and child care. Budget 2016 announced $500 million in 2017-2018 to support early learning and child care. Of this amount, $400 million is for provinces and territories and $100 million is for indigenous early learning and child care.

Budget 2017 proposed to invest $7 billion over 10 years, starting in 2018-19, to continue efforts to create more high- quality affordable child care spaces across the country.

The $400 million announced in Budget 2016 will support the establishment of a federal-provincial-territorial early learning and child care framework.

The Deputy Chair: Mr. Perlman, the interpreters are asking if you could speak a bit more slowly.

Mr. Perlman: My apologies to the interpreters and to the committee.

Of the $400 million, $399.7 million, which is being requested in these estimates, will be transferred to the provinces and territories to implement the federal-provincial-territorial early learning and child care framework. The framework is currently being developed in collaboration with provinces and territories, and the funding will be provided through three-year bilateral agreements. Discussions on the development of the framework are fairly well advanced, and the framework is expected to be publicly released in coming weeks. While the federal-provincial-territorial early learning and child care framework guides the overall investments in ELCC, the bilateral agreements provide implementation details, including three-year action plans for each province and territory.

To implement its portion of the $100 million announced in Budget 2016 for indigenous early learning and child care, ESDC is requesting $44.4 million for the First Nations and Inuit Child Care Initiative. This funding will be used to further address immediate repair, rehabilitation and equipment needs of existing facilities; support increased training for early learning and child care workers; and enhance the quality of programming for First Nations and Inuit children.

ESDC is engaging with indigenous communities, organizations and experts to determine the best approach to implementing future investments, as well as delivering high-quality early learning and child care as part of a new indigenous framework on early learning and child care. In April 2016, as part of the first phrase of social infrastructure funding, an additional $16 million in contributions in 2016-2017 was approved through ESDC Supplementary Estimates (A) to address immediate needs of child care facilities under the First Nations and Inuit Child Care Initiative. With this $16 million, ESDC was able to fund 209 child care facilities to undertake urgent repairs and renovations.

Budget 2017 also committed to investing an additional $900 million over the next six years, starting in 2017-2018, in new workforce development agreements. These new workforce development agreements will consolidate the Canada job fund agreements, labour market agreements for persons with disabilities, and the targeted initiative for older workers. In Supplementary Estimates (A), ESDC is requesting additional funding of $75 million for these new workforce development agreements.

The Government of Canada will work with provinces and territories to negotiate new agreements in coming months. Once signed, their share of the additional $75 million in funding will be transferred to individual provinces and territories. This work will support the efforts of provinces, territories and employers to reduce barriers to access, avoid duplication and promote better outcomes for workers who need help.

Through Budget 2017 the Government of Canada proposed an additional investment of $395.5 million over three years, starting in 2017-2018, to further expand employment opportunities for young Canadians. These investments, combined with Budget 2016 measures, will help more than 33,000 vulnerable youth develop the skills they need to find work or go back to school, create 15,000 new green jobs for young Canadians, and provide over 1,600 new employment opportunities for youth in the heritage sector.

As part of the initiative, ESDC is requesting $53.6 million in additional funding in 2017-2018 to increase the number of youth who access the Skills Link program, thus helping more young Canadians, including among others indigenous and disabled youth, make a more successful transition to the workforce, as well as to create new green jobs for youth under the Career Focus Program.

[Translation]

The Skills Link program grants funding to employers and organizations to run eligible activities to help vulnerable youth overcome barriers to employment, develop a broad range of skills and knowledge in order to participate in the current and future labour market, and promote education and skills as being key to labour market participation.

Green jobs help reduce the consumption of energy and raw materials, limit greenhouse gas emissions, minimize waste and pollution, and protect and restore ecosystems.

[English]

In addition, ESDC is seeking $7.8 million for the new Union Training and Innovation Program that will support two streams of union-based investments, such as cost-shared purchase of training equipment materials and innovative approaches to improve apprenticeship outcomes. The program will focus on greater participation and success in the trades for key groups such as women and indigenous people.

This program implements the government's Budget 2016 announcement to support union-based apprenticeship training, innovation and enhanced partnerships. The department is investing $109 million over five years, starting in 2017-2018, and $25 million per year ongoing to implement the Union Training and Innovation Program. This new program will strengthen apprenticeship training systems to better support a skilled, inclusive, certified and productive trades workforce.

Finally, ESDC is requesting under vote 1 operating expenditures of $4.2 million in operating funding to support the delivery of these programs.

[Translation]

I hope this overview will help you better understand Supplementary Estimates (A), for which our department is responsible.

[English]

My colleagues and I would be pleased to answer your questions, as always.

The Deputy Chair: Thank you, Mr. Perlman.

Senator Marshall: I'm glad Treasury Board is here with Employment and Social Development Canada because my question links up the two. I'll start with Mr. Perlman.

The briefing notes we have indicate that most of the funding you're looking for in Supplementary Estimates (A) was referenced in Budget 2016. Is that correct?

Mr. Perlman: Yes, I would say a lot of it is in Budget 2016.

Senator Marshall: There's $455 million relating to 2016. This question is for Mr. Pagan from Treasury Board.

When you talked about the reconciliation during your opening remarks, and you're reconciling the 2017-2018 estimates with the Budget 2017 number, the $261 billion with the $330 billion, is Mr. Perlman's $455 million in Budget 2017?

It's not in the 2017-2018 estimates because it's in Supplementary Estimates (A). Is it in the Budget 2017 number?

Mr. Pagan: Senator, there are two parts to my answer. When we talk about reconciliation between the estimates and the budget, it means different things to different people. There are accounting reconciliations. There are programs and there are issues of timing.

With respect to the most recent forecast of expenditures that was presented in Budget 2017, that totalled $330.2 billion. That's the number at the bottom of the reconciliation on page 5 of the document. That forecast from Finance included the forecast of expenditures from Budget 2016, Budget 2015, or any other priority of the government that is in the framework but has not yet been presented to Parliament or is approved and departments are spending the money, just to be clear on that.

There's another dimension to reconciliation, and that is the timing issue, when we're presenting information to Parliament. In this case, the commitment was made in Budget 2016. As Mr. Perlman explained, the department engaged in considerable consultation with partners and provinces to stand up the program, so it was just recently brought forth for Treasury Board approval and is now finding itself in the estimates.

Senator Marshall: What's indicated there as Budget 2017 for the $330 billion, it includes the $455 million that was announced in 2016. Am I correct?

Mr. Pagan: It does, right.

Senator Marshall: I understand that. Perhaps, Mr. Pagan, you can give us a couple of updates because you've been here many times before.

First, what's the status of the project? You talked about aligning the budget and the estimates. It is confusing, because you had to present a reconciliation and we relate the two to two different numbers.

Can you tell us the status of the project, just briefly? Perhaps you can give us an example. You can probably use Marine Atlantic because you've used that one as an example in the past. Could you give us an update on that?

After that, I would like an update on the pilot project for grants you had at Transport Canada, which was anticipated to be moved to other departments.

Mr. Pagan: There will be three parts to my response, senator.

The government remains committed to improving information to Parliament and aligning the budget and the estimates process. There was a very clear statement in the fall economic update about intention to move forward in this regard.

The president has engaged this committee and the government operations committee in the house. The house leader is also engaged with parliamentary committees and her counterparts in the other parties. I expect there will be some developments on this front in the very near future. It remains a key priority of the president.

Senator Marshall: For that project, is there a new deadline, or is the old deadline still the same?

Mr. Pagan: It's very difficult to establish deadlines on this, senator, simply because it's Parliament ultimately that will decide how to make certain changes and there is a process of consultation. We are driven by certain timelines related to the tabling of documents, so our next best opportunity to align this will be next winter, in the February/ March period, when we have the budget and estimates again. Ideally, we would be tabling the estimates after the budget.

You did ask for an example. Maybe for the benefit of this committee I could turn your attention to Marine Atlantic organization, which is on page 29 of the tabled document.

We have a challenge with respect to alignment when we present the estimates before the budget and there is funding out there. Mr. Perlman just explained the new initiative on child care. That was a budget commitment that needs to be brought forward in the estimates.

There are other programs that are regular features of departmental budgets, but the approval for those sunsets is time limited and needs to be renewed periodically throughout the budget process. Marine Atlantic provides us with a good example of this, because funding had been provided in Budget 2013, I believe it was, for a three-year period, and it sunsetted at the end of last year.

In the Main Estimates, tabled in February, we presented authorities for Marine Atlantic of $76.5 million for this year. Last year, in 2016-2017, they had authorities of $140.1 million, so it's almost a 50 per cent reduction. In the supplementary estimates, because the budget reconfirmed the funding, we're introducing new funding of $135.9 million, so the total authorities go to $211.5 million. We've gone from $140 million, down to $76 million, and back up to $211 million. That's simply a question of timing.

Had the budget been presented before the estimates, we could have taken that budget decision, reflected it in the Main Estimates, and we would not have had the appearance of a reduction in funding.

Senator Marshall: It presents a challenge for parliamentarians because we're hoping, at some point in time, that the budget will align with the estimates. My recollection is that we had looked at the possibility of an eight-year time frame, so we were thinking at least in eight years' time it would be aligned and we wouldn't have this going-back and trying to reconcile our numbers. I'm getting the impression it might be a little longer than that.

Mr. Pagan: As I said, there is very active engagement on the part of the president and the house leader on questions of standing orders, parliamentary procedure and timing. There are extensive consultations required to forge consensus in this area. I think we are making progress. It remains a priority, both of the president and the government, and I expect we'll see some developments on that front in the very near future.

Senator Marshall: I was interested in the pilot project on the grants at Transport Canada because there's a significant amount of money paid out in grants. I think last year there might have been a significant increase.

I'm wondering what is the status of that pilot project. Where are you at with it and what's the intention? Is it going to be moved to other departments?

Mr. Pagan: For the benefit of the committee, in last year's estimate process, 2016-2017, we took a single vote at Transport Canada, a monolithic grants and contributions vote, and we disaggregated it by three programs: their border program, their gateways program and a small amount for some other odds and sods. We did that to test whether the department would be able to manage in a more purpose-based approach rather than an aggregate for operating grants and contributions.

The department experienced no particular trouble this year being able to manage money in this new way and being able to present information to Parliament, so we consider this to be very promising. The pilot remains in effect for this year, so if you have an opportunity to hear from Transport officials, you will want to ask them directly their experience. It is the president's intention to build on this pilot and in fact to expand it into more votes, if not all votes.

As an example, at the Treasury Board Secretariat, where we have a new results framework, based on our role as employer, as expenditure authority, and as regulatory authority, rather than having a single operating vote there would be the potential to seek funds from Parliament according to those specific purposes and to manage in that way.

This is something that we see, again, as consistent with the idea of improving information to Parliament and providing clear line of sight between the purpose of a dollar provided and the actual use of that dollar.

Senator Marshall: One of the objectives is to improve the reporting to Parliament, is it not?

Mr. Pagan: This has been discussed for some years now. There was a recommendation from a house committee back in 2012 that we look at what they call program-based votes. This pilot at Transport Canada is our first attempt at that purpose-based view. We believe it can be expanded. We look forward to working with parliamentary committees to try to make some progress in this area.

Senator Marshall: Thank you.

[Translation]

Senator Forest: I have two simple questions. Mr. Pagan, regarding the major voted items, when I checked the document, I was surprised that the Department of Fisheries and Oceans needed $166.7 million in funding for core services for Canadians. I can't understand why, in its initial budget planning, the department didn't assess this funding. Was it for an exceptional one-time expense? I can't understand why core services for Canadians weren't reviewed in the initial budget.

Mr. Pagan: This item was included in Budget 2017. It refers to a program review process that will end.

[English]

The issue for us is that many years ago certain decisions were taken by previous governments with respect to forecasts of revenue and commitments to provide services. Over the years, some of those forecasts and plans either did not materialize or circumstances changed.

For instance, in respect of ice breaking, the idea was that the Coast Guard would charge commercial industry for full costs of their service. This proved to be problematic for the department and for industry because to do so would increase costs for the consumers, for instance, up north in the Arctic. Using that very specific example, the department was not able to generate the revenue they had committed to generate many years ago.

As a result of that and some other dynamics in the department, core services were being underfunded. We undertook a review, ourselves, our colleagues at Finance Canada and the department, to examine all their programs in the votes presented here to Parliament. The executive was satisfied that these programs are core to the department. They remain consistent with the government's priorities and there were certain funding gaps.

The amounts that we see here of $166.7 million represent the government's decision to reinvest additional funds in DFO in order to support the core services of the department.

[Translation]

It is not a matter of money or votes. It's a matter of reviewing programs and complying with the conditions of the Department of Fisheries and Oceans and the Treasury Board so that all the programs provided are valid and relevant and meet the needs of Canadians. Therefore, more funding is required.

Senator Forest: I understand the logic. Perhaps it's because I haven't completely mastered the budget cycle, since I come from a different world. We tabled a budget in early April, and within two months, we end up with additional funding totalling $166.7 million. I may not have mastered the budget cycle, but I'm quite surprised about this budget process. The Treasury Board isn't the only department concerned. The Department of Fisheries and Oceans also didn't plan for it. The icebreaker cycle runs from January to March. I'll understand one day.

My other question is for Mr. Perlman. It concerns your decision regarding a $109 million training program, plus a subsequent $25 million a year for union-based training and innovation. In terms of equity, for people who aren't unionized, why focus only on union members for this type of program instead of offering it to all Canadians?

Paul Thompson, Senior Assistant Deputy Minister, Skills and Employment Branch, Employment and Social Development Canada: I can answer your question. This program has two expense components. The first is for the union training centres, the program's main goal. The second is for the other partners. Not all regions in Canada have union training centres. As a result, we're being flexible to meet various needs across the country. I want to add that other training programs provide grants and support to clients who aren't unionized, for example, through transfers to the provinces. The program focuses specifically on union-based training. We have many programs that are easier to access.

[English]

Senator Pratte: My question is related to the Treasury Board $625 million requirement. It is mentioned that this is related to pay list requirements. This is in relation to collective agreements that have been, if I understand correctly, signed but not put into effect.

In the PBO report on the Supplementary Estimates (A), they make a link, in part, to the problems with the Phoenix system. Can you go into more detail on that?

Mr. Pagan: There are two dimensions here: to explain the amount and then to talk about some of the implications of Phoenix.

I referenced in my opening that certain amounts for collective bargaining were also forecast in 2016-2017 Supplementary Estimates (C). The PBO also commented on that and seemed to infer that the money was not used because of Phoenix.

That's not quite true. The issue with all of our estimates is that these are up to authorities. We seek parliamentary approval in advance of an expenditure so that if something is triggered, a contract is signed or a delivery comes due, the department has the authorities and the means available to make the payment.

When we were preparing Supplementary Estimates (C) early in January 2017, there had been a flurry of developments around collective bargaining. Tentative agreements had been reached. They need to be ratified by both the bargaining agent and the executive. We had no ability to control the timing of that, so we presented an up-to amount in anticipation that agreements would be ratified, signed, and payments made. That did not happen at the end of the fiscal year. It had nothing to do with Phoenix. It was a question of the two parties coordinating the finalization of the agreement.

Where we are now is that we have 19 of 27 tables that have signed collective agreements representing about 86 per cent of the core public administration. We're seeking Parliament's authority to make the funds available so that the retroactive pay that goes back to 2013-14 will be available for departments to make their payments.

With respect to Phoenix, as part of the ratification of the agreements there has been discussion between the government and the unions about the timeline to make these retroactive payments, so that the Phoenix system can adapt to it. There are specific deadlines, specific durations established in each agreement specifying that retroactive pay will be made within X days of signature.

There has been close co-operation among the government, the unions, and PSPC to give this priority so that these payments can be made without interruption or without any difficulties. To my knowledge, three agreements have now been ratified and processed through the Phoenix system. My understanding is that well over 90 per cent of those first three agreements were processed without issue.

Senator Pratte: If I may, just as a supplementary question, the amount of $625 million is based on the tentative agreements reached until now.

Is that it, or is that based on each union reaching an agreement during the period we are at?

Mr. Pagan: It's based on best forecasts of the costs involved for agreements up to this point. As I said, that's about 19 agreements, or 86 per cent, totalling approximately $625 million. The PBO has a forecast but I do not have it at hand. If the pattern holds across the core public administration, our forecast is a total increase of about $850 million. We're seeking $625 million now, based on that 85 per cent or so.

Senator Pratte: Is that the increment over four years?

Mr. Pagan: No, it's the aggregate of the pattern which is 5 per cent over four years. The aggregate of that amount is an increase in salary expenses of $850 million or so.

Senator Pratte: The PBO's estimate is something like $2.3 billion. They're either way off or you're not counting the same beans.

Mr. Pagan: I would never say that PBO is way off. I don't have the report. There may be issues of the time frame.

Senator Pratte: The Treasury Board's estimate is an aggregate of the amount that, for the whole of government, would be $850 million. Is that it?

Mr. Pagan: In March 2017, on a cash basis we spent $16.7 billion on wages and salaries. With the pattern in place at the end of this fiscal year, March 2018 it will be something in the area of $17.6 billion, so $850 million.

Senator Pratte: Thank you.

The Deputy Chair: I would like to ask a very brief question and then we will come to Senator Eaton and then Senator Marshall.

As we will recall, leading up to March 31, this committee, myself included, had voiced some concern about the payment of ministers' salaries through the estimates. At the time I think our report on Supplementary Estimates (C) said the following:

However the supplementary estimates are not intended to be a convenient mechanism for the temporary funding of needs that were foreseeable and could have been planned, particularly in the case where such needs had their own source of authority in an Act of Parliament. The Salaries Act for ministers, like the Parliament of Canada Act for MPs and Senators, authorizes the payment of ministers' salaries out of the Consolidated Revenue Fund and also fixes the amounts of those salaries. The Government has a bill in the House to amend the Salaries Act which on adoption will provide for the salaries of an additional group of ministers.

Colleagues and witnesses, I very quickly opened up the new supply cycles supplementary estimates and went to the annex. Lo and behold, I perceived no change.

Maybe my question is a difficult one. Maybe it is not answerable, I'm not sure, but we could find out. Why are we continuing to fund ministers' salaries through the supps? Certainly those costs are foreseeable.

Mr. Pagan: Senator, thank you for the question. I think in theory it simply might be perhaps a misunderstanding of some legislation currently before the house in terms of the Salaries Act.

The Deputy Chair: We would all love to have it explained if you have an answer.

Mr. Pagan: The estimates provide up-to amounts in terms of dollars available, so we have a maximum authority available. The vote wording tries to take into account possible scenarios into the future. We're tabling the estimates at a certain point in time, but we have no knowledge of how the prime minister may change his or her ministry next week, next month or next year.

This wording has been in place going back many, many years. We used similar wording since 1995. It is a permissive wording that exists for each ministry. It allows the payment to each member of the Queen's Privy Council. The point here is that if the department today does not have a minister of state or parliamentary secretary but they do tomorrow, they have the ability to make the payment until the Salaries Act catches up and takes precedence.

It is a permissive authority but it's a general provision that exists to allow for changes by the prime minister in his or her ministry.

The Deputy Chair: Are you sure there is not something of an indulgence in this?

Mr. Pagan: I'm sorry, I missed that.

The Deputy Chair: Are you sure there is not a bit of an indulgence in this?

Mr. Pagan: Senator, I'm quite sure.

Senator Eaton: Nice to see you again. This is something we've worked on for several years now in this committee, trying to find a clear line between the money that is being spent and being authorized and the finished program, i.e., performance standards of some kind.

I see here $400 million is transferred to the provinces and territories to support early learning and child care. I understand it's difficult to follow the money when you're giving money to the provinces and the territories, but do you follow the money? Do you follow up on agreements to check the agreements?

When you come back here next year and say you're allocating $600 million, do you have some performance standards where you go back and look to make sure the money is actually doing what we think it's doing?

Mr. Pagan: Senator, I will start and then I will allow my colleague at ESDC to speak specifically to the program you're mentioning. There are two aspects to this from the Treasury Board perspective. One is the existence of a new results policy. I know the president is keen to meet with the committee and explain the results policy. It is aimed at that very question, being able to better relate the priority of government, the resources allocated to that priority and the results achieved.

Just as an example of that, we have new departmental result frameworks that will better explain what departments are trying to achieve and what their responsibilities are, with very specific reference to the results performance indicators. You can find some of this information already in InfoBase, which I presented to this committee back in March.

Second, we've made some changes in terms of how we approve documents. I know you heard from Matthew Mendelsohn at the Privy Council Office recently about the work they're doing to better order the results objectives of government and to make sure cabinet has a clear line on the results.

We're doing that ourselves at the Treasury Board Secretariat and at Treasury Board, so when departments come forward now with a program proposal there is a results annex in the Treasury Board submission that specifies what they're trying to achieve, with whom they will be working, how they will measure it and how they will report on the result.

Senator Eaton: Will you grade it, do you think? Will they end up grading it "satisfactory'' or "not satisfactory''?

Mr. Pagan: That's a very interesting question and something we're grappling with now in real time. Senator Forest asked about the review at Fisheries and Oceans and the inclusion of new money as a result of that review. Our intention is to use the results policy to more regularly review existing programs. We do, in all modesty, a bang-up job working with departments on all the new spending. We take them through their paces and challenge the new spending, and that's about $5 billion or $7 billion a year.

The other amounts that have been approved in the past and are out there, we don't look at consistently enough. We acknowledge that. It's a specific feature of the results policy to do reviews more regularly I think the idea of grading or otherwise assessing will be an important feature of reviews going forward: "You said you were going to do this. You've achieved this. How do we adjust?''

Senator Eaton: It's very challenging. We heard when you are dealing with infrastructure how the municipalities do over 50 per cent, provinces do over 40 per cent and federal does just over 2 per cent, but how the money mostly comes from the federal government.

I know it's difficult because you have to track it down and they might not be philosophically aligned with what you're trying to do. I realize it is not an easy task, but I think that we'd feel better on this committee if there was some place we could, in the next year or two years from now, look at the estimates and see "satisfactory,'' "not satisfactory'' or "terminated.''

Mr. Pagan: If I may remind you, when we were here in March and presented InfoBase, it was a perspective. We told you that we were planning to load in results indicators. We have now gone and done that for the departments that have a departmental results framework.

What you see now are the results they are striving for. You don't see their actual yet because we're in-year, but the idea of using InfoBase and having a dashboard of green, yellow or red, is something my colleague Andrew Gibson spoke of in terms of some way of tracking progress against what a department said they were going to do.

Senator Eaton: It could be very helpful to us on this committee.

Senator Marshall: Mr. Perlman, this is a continuation of our earlier discussion. The $455 million, earmarked as originating in Budget 2016, why wouldn't have that been put into the Main Estimates? We knew in Budget 2016 that it was going to be in this year.

Why would it not show up in Main Estimates? Why does it show up in Supplementary Estimates (A)? Why couldn't it have been put in earlier?

Mr. Perlman: This actually links to a lot of what Mr. Pagan was saying. It goes into the estimates once a Treasury Board submission is put through and approved through the process. A lot of consultation was done, but the Treasury Board submission had not gone in and had not been approved until after the Main Estimates had been published. That's why it came in through Supplementary Estimates (A).

Senator Marshall: The way the numbers are presented, it's very confusing to parliamentarians because when you check the numbers it requires going back to the 2016 budget, looking at the 2017 budget, and then you have the Main Estimates and supplementaries. You're trying to cross-reference all these documents. It's very confusing.

The Deputy Chair: Mr. Pagan, I have in my hands a copy of the report of the PBO, the Parliamentary Budget Officer, on Supplementary Estimates (A), 2017-2018. I'll read this to you because I would like to afford you the opportunity to respond or to make a comment, if you so desire. He says:

In its 2017-2018 Departmental Plan, the Treasury Board of Canada Secretariat committed, by May 31, 2018, to include 100 per cent of budget initiatives in the next available estimates.

Then you drop down a few lines and he says:

However, Table 2-2 demonstrates that the Secretariat is further away from its goal in 2017-2018, rather than closer to it. This raises a significant question of whether the Government's proposal to delay the Main Estimates would result in meaningful alignment with the budget.

Perhaps you have seen this, but I thought you might like an opportunity to comment on it.

Mr. Pagan: I found that observation from the PBO actually to be quite helpful in terms of reminding parliamentarians of our intentions with respect to estimates alignments.

It's very clear in my mind. Regardless of when the government table their budget, if they are forecasting expenditures in a fiscal year, then we should be at Treasury Board Secretariat aspiring to reflect 100 per cent of what the government planned to do in the estimates. Otherwise, we shouldn't be planning to spend it. That sort of ambition is what we hope will inspire all departments to set targets that reflect what we aspire to do.

In InfoBase, which I mentioned, you'll see that very commitment that the PBO references reflected in InfoBase. If you go to the Treasury Board Secretariat, you will see our core responsibilities in expenditure oversight. You'll see a commitment to include 100 per cent of the budget in the estimates, and we will report on that at the conclusion of the fiscal year.

With respect to Supplementary Estimates (A) this year, what I would underline is that we have $1 billion of Budget 2017 in the supplementary estimates. That's 26 initiatives, which compares to as few as six initiatives just two or three years ago. We have more initiatives. We have a reasonable sum of money there. It's almost 40 per cent. I think 39 per cent of the forecast cash expenditures in the budget are in the Supplementary Estimates (A). We've highlighted in the reconciliation the amounts to come. There's about $2.2 billion in the framework that we will expect to draw in.

We will work hard with departments to bring that money to Parliament's attention and for approval as soon as we can. The earlier departments get the money, the earlier they can implement and the better their odds of achieving results.

It is all connected and, again, we welcome the PBO's observation on this as maybe a spur to parliamentarians and all stakeholders to line up the documents and processes.

The Deputy Chair: Wonderful. I would like to thank you all for appearing before us today and to remind you at all times that there are large numbers of us who hold our public service personnel, our public servants, in high regard, because the work is really quite grinding and quite difficult. I thank you all again for that.

Before us now we have officials from one department and from one agency. First, from Indigenous and Northern Affairs Canada we have Paul Thoppil, Chief Finances, Results and Delivery Officer, and Stephen Gagnon, Director General, Specific Claims Branch, Treaties and Aboriginal Government.

Second, from Canada Mortgage and Housing Corporation, and nice to see you again; it has been a whole day, we welcome Wojo Zielonka, Chief Financial Officer and Senior Vice President, Capital Markets; and Charles MacArthur, Senior Vice President, Regional Operations and Assisted Housing.

We will proceed with Indigenous and Northern Affairs Canada first.

[Translation]

Paul Thoppil, Chief Finances, Results and Delivery Officer, Chief Finances, Results and Delivery Officer Sector, Indigenous and Northern Affairs Canada: Thank you, Madam Deputy Chair and honourable senators, for the invitation to discuss the Supplementary Estimates (A) of Indigenous and Northern Affairs Canada, or INAC, for fiscal year 2017-18. I would like to draw the members' attention to a deck entitled 2017-18 Supplementary Estimates (A), which I have tabled.

[English]

Supplementary Estimates (A) includes initiatives totalling $750.1 million and will bring total investment for the department to approximately $10.8 billion for 2017-2018 to address the needs of indigenous peoples and Northerners.

On slide 3 of the presentation, with respect to financial highlights, the net increase of $750.1 million is comprised of $446.5 million for specific claims settlements; $174.7 million for Operation Return Home: Manitoba Interlake Flood Remediation and Settlement initiative; $98.4 million related to Budget 2017 investments for on-reserve Income Assistance Program, the Youth Employment Strategy and the Specific Claims Program; and $30.4 million for loans to support participation in the British Columbia treaty process.

In terms of voted expenditures, $19.8 million will flow through vote 1 operating expenditures primarily for the Specific Claims Program; $699.1 million through vote 10, grants and contributions primarily for specific claims settlements and Operation Return Home; and $30.4 million as vote L20, loans to First Nations in British Columbia, again loans to support the participation in the British Columbia treaty process.

[Translation]

I will now briefly describe the major items. On slide 4, the largest item in these supplementary estimates is $446.5 million for specific claims settlements. This item will provide the department with sufficient funding — $1.36 billion — in the Specific Claims Settlement Fund for 2017-18 to pay anticipated specific claims settlements and awards from the Specific Claims Tribunal. INAC forecasts up to 60 specific claims settlements in 2017-18.

[English]

The second largest item in these supplementary estimates is $174.7 million for the continued construction of housing and community infrastructure that is required to repair, rebuild and re-establish four Manitoba First Nations that were impacted by severe flooding in 2011.

Funding will also be used to make compensation payments to the impacted First Nations, and you will see on slide 6 some evidence of the progress we're making on infrastructure in those communities.

The third item, which totals $39.2 million from Budget 2017, is related to the on-reserve Income Assistance Program. This funding is to reduce employment barriers for First Nations youth by providing case management services to youth on reserve in receipt of income assistance.

[Translation]

Finally, the last few slides provide information pertaining to additional key initiatives — including objectives, outcomes and status.

Madam Deputy Chair, the supplementary estimates will enable us to continue to make concrete steps to address the needs of northerners.

[English]

I look forward to discussing any aspects of the supplementary estimates with you and welcome your questions regarding my presentation.

[Translation]

Wojo Zielonka, Chief Financial Officer and Senior Vice President, Capital Markets, Canada Mortgage and Housing Corporation: Thank you, Madam Deputy Chair. I welcome the opportunity to discuss the Supplementary Estimates (A) for the 2017-18 fiscal year of Canada Mortgage and Housing Corporation, or CMHC. I am joined today by my colleague Charles MacArthur, Senior Vice President of Regional Operations and Assisted Housing.

[English]

I had the pleasure of reviewing the CMHC Main Estimates with the committee in early April. As shown on slide 2 of the deck we provided yesterday, we're seeking an additional $40.9 million in appropriations through the Supplementary Estimates (A), which bring our total estimates to date to just under $2.8 billion.

Slide 3 provides a more detailed breakdown of our 2017-2018 total budgetary expenditures. The additional funding we're requesting at this time is related to two specific initiatives: The Housing Internship Initiative for First Nation and Inuit Youth, and the Affordable Rental Housing Financing Initiative. The second initiative has implications for our non-budgetary statutory authorities, which are also outlined on slide 3.

The next slide offers a more detailed explanation of these initiatives. Budget 2017 included funding of more than $395 million over three years to top up the Youth Employment Strategy. Almost $13 million of this funding has been allocated to CMHC for our Housing Internship Initiative, which assists First Nation and Inuit youth in obtaining long-term employment in the housing sector.

The $4.1 million included in our Supplementary Estimates (A) represents the first year of this three-year commitment. Of the larger portion of the funding we're requesting at this time, $36.8 million is related to a Budget 2016 initiative that aims to support the construction of affordable rental housing, which is an important option for many Canadian households.

Through this measure, CMHC will provide up to $2.5 billion in low-cost loans over four years to municipalities, non-profit organizations and housing developers during the earliest and riskiest phase of development. We expect these loans to support the construction of more than 10,000 new rental housing units across Canada.

The committee may be wondering why this amount was not included in the Main Estimates. The answer is that the new measure needed approval by the Treasury Board, which was obtained this past February.

The $625 million in non-budgetary spending shown on this slide represents the first year of the loans to be funded by CMHC through the Crown Borrowing Program. Slide 5 provides a comparison of our 2017-2018 Main Estimates and the original Main Estimates for the previous fiscal year. This slide, along with slides 6 and 7, were provided to the committee in April during our appearance to discuss the 2017-2018 Main Estimates. We're providing them again as a recap of the total new investments that have been allocated to CMHC.

The year one portion of the housing investments announced in Budget 2016 were not reflected in the Main Estimates for 2016-2017. Funding was subsequently added through the supplementary estimates process, bringing our total budgetary authorities to approximately $3.1 billion last fiscal year.

The next two slides show the total funding for each of these initiatives, including the year one portion. Slide 6 provides the committee with a detailed breakdown of the housing investments included in the Budget 2016 social infrastructure fund. More than $1 billion of this was provided in 2016-2017, and I am pleased to say that over 115,000 households across Canada will benefit from this funding. Among these are more than 93,000 low-income households whose homes are being renovated, including 3,300 First Nation families. Other beneficiaries of this funding include seniors, Northerners, and victims of family violence off reserve.

Finally, slide 7 provides a breakdown of other housing-related investments in Budget 2016, as well as details of a Budget 2015 measure that allows cooperative and non-profit social housing providers to prepay long-term, non- renewable mortgages held with CMHC without penalty.

Thank you again for the opportunity to provide these brief opening remarks. My colleagues and I would be pleased to answer the committee's questions.

The Deputy Chair: Are senators ready with questions?

Senator Marshall, you're on first.

Senator Marshall: My question is for CMHC. Why is the Youth Employment Strategy in the housing corporation as opposed to Employment and Social Development Canada? It looks to me to be an odd thing in CMHC.

Charles MacArthur, Senior Vice President, Regional Operations and Assisted Housing, Canada Mortgage and Housing Corporation: We work with the communities, specifically in developing employment opportunities the community is interested in as they relate to housing. That could be working to become a housing manager or other things on reserve. Ours is all around housing and trying to leave skills in the community or longer term employment that relates to housing specifically.

Senator Marshall: Is that confined to indigenous communities? Did I pick that up from your response?

Mr. MacArthur: Yes, indigenous communities, including Inuit communities.

Senator Marshall: My other question is more general and stems from a question that Senator Woo asked about a week ago. It was in response to a question regarding research within CMHC.

The mortgage insurance is a big program, and you also have mortgage programs, do you not? What kind of research do you do on your clients? What sort of information do you have on your clients that do business with CMHC? What sort of information is available?

Mr. Zielonka: Through our commercial operations, we have information about the clients we deal with through mortgage insurance. My colleague, Michel Tremblay, runs that area. We also have a policy and research area. As part of that, we do a lot of surveys around housing. We work with the provinces, as well, gathering information on the portfolios that we support through some of the transfers we administer.

We have quite a bit of information, but one of the challenges is that the information is not always as complete and as deep as we would like. That's something that we as an organization are working on to be able to have better information, because that will support better decision making.

Senator Marshall: What would be available to the committee? I'm wondering as to whether we would be able to get information on your clientele, such as age, education and income. I'm also going back to our discussions yesterday on housing.

Mr. Zielonka: We publish three supplements. We publish a supplement on mortgage insurance business and we publish one on the securitization business. We also publish one on our administration function and covered bonds.

As part of those supplements we provide a wealth of information, but the information we provide is actually more at a point in time. It includes things like what the loan to value is of properties. It includes arrears rates around our portfolio. It's very portfolio specific.

Senator Marshall: It's more like financial data as opposed to focused on your clientele.

Mr. Zielonka: It is focused on our clientele, but it's financial data around our clientele. We also have some publications and some research we do around, for example, first-time home buyers. We do very specific surveys around who homeowners are and regional data that we also publish. There is quite a bit of information.

Michel, is there something you want to add on that?

Senator Marshall: Is that on your website?

Mr. Zielonka: It is.

Senator Marshall: Would that show the regional? If I wanted to look at Newfoundland and Labrador, because that's the province I represent, could I compare it to, say, Vancouver? Would that sort of information be available?

Mr. Zielonka: For our mortgage insurance business, we have provincial information, a breakdown by province. We do a housing market assessment, and that's by major metropolitan areas. There is a wealth of information. To the extent that it is meaningful, we provide it either by what we call CMA, which is the Census Metropolitan Area, or by province. There is quite a bit.

Senator Marshall: If I check your website and I'm looking for something in particular, is there a contact number or contact name that would be on your website that I could go to?

Mr. Zielonka: There is. Through the committee, if there's specific information you're looking for, we can always try to assist to the extent that's not readily available.

Senator Marshall: Thank you. I have one question for Indigenous Affairs. The individual projects, are they on your website now? I keep looking but I can't find the individual projects.

Mr. Thoppil: I believe we have tabled with the committee the link that you wanted at my last appearance, senator.

Senator Marshall: I looked and I couldn't find it. I'm will have to approach somebody in the department to provide me with some assistance because I'd really like to look at the individual projects.

Mr. Thoppil: We also provided, besides the link, some hard data breakdown by province and by asset category. That's with me, senator, which I can physically hand over to you if you would like it.

Senator Marshall: It was the individual projects that I was really looking for.

Mr. Thoppil: Oh, the actual description of each one of those.

Senator Marshall: Yes, the individual projects. Is that on your website?

Mr. Thoppil: The list is on the website, but, for the actual description per project there is a one-liner there.

Senator Marshall: I see a contact.

Mr. Thoppil: Yes, we can touch base to make sure we support your efforts to find that out.

Senator Marshall: Thank you.

Senator Eaton: Mr. Thoppil and Mr. Zielonka, nice to see you again. We meet again every day.

Just to follow up on Senator Marshall and the housing internship, I see that in 2016-2017 you were asking for $5 million. Further back in your budget for the next year, 2017-2018, you were asking for another $4.1 million. Is that correct?

Do you evaluate those programs? At the end of last year or at the end of this year, will you look to see how many people you trained and how successful they were in finding jobs in the industry?

Mr. MacArthur: These are student jobs for young people and the like. Last year, we did 537 in total, and we worked with the communities to find them.

In terms of a formal evaluation, formal evaluations of our programs are done every five year. We don't do an annual survey of: Did it lead to a direct employment? It's meant to provide employment in the area of housing.

Senator Eaton: It's a very good idea. It gives people skills.

Mr. MacArthur: Yes. There's anecdotal information. One young gentleman from the Blood Tribe worked and got a licence for driving a forklift. As a result, he was able to get a permanent job in forklift driving.

In one of the northern communities, a young gentleman got his licence as a result of being in a particular job. As a result of that, he was able to get permanent employment or relatively permanent employment with the housing corporation.

Senator Eaton: I hope you consider perhaps doing evaluations on a more timely basis because this is quite a bit of money and it seems like a very good idea.

Mr. MacArthur: For sure. We're evolving the program. We're working closely with the communities to ensure that it's something they need. We're evolving it with the additional money so that we can start to link it together to provide longer internships and internships that are deeper and more meaningful. Our previous funding of $1 million was a lot of money, and we need to be careful with it.

Senator Eaton: Then you can start training them to build to code, and I'll be happy.

Mr. MacArthur: Yes, yes.

The Deputy Chair: I wonder if you would take a question from me as well. There's an astronomically good statement in your notes, and it says:

More than $1 billion of this was provided in 2016-2017, and I am pleased to say that over 115,000 households across Canada will benefit from this funding. Among these are more than many 93,000 low-income households whose homes are being renovated, including 3,300 First Nations families. Other beneficiaries of this funding include seniors, Northerners and victims of family violence off reserve.

You've been speaking largely about households. How many people are we talking about here who were definitely the recipients of this great project?

Mr. MacArthur: It's sometimes difficult because we don't know the number of folks who would be in a particular unit that's renovated. We have to speak in terms of households because we don't know whether there was a mom and two kids or whether there was a family inside the renovated units or the units that were constructed. It's a little bit difficult to get down at that level.

The Deputy Chair: I appreciate that and I understand it, but it sounds so very promising and so very hopeful. It is uplifting to me.

Mr. MacArthur: Having a roof that doesn't leak, a house that's warm or a place that's quiet to study changes lives. For us, it's not just about the unit. It's about the people inside the unit. We get that very fundamentally when we think about what we're doing.

The Deputy Chair: I thank you both very much for that.

Senator Eaton: I'd like to ask Mr. Thoppil a question on your funding for Operation Return Home slide.

Every year, whether it's in Ontario or Manitoba, there seems to be one community that has to move out because it is flooded out. When we do something like funding for Operation Return Home and we rebuild houses, do we also build things like flood barriers? Do we take precautions so that this is not something that will happen again in five years?

Mr. Thoppil: That's definitely clear in the case of Operation Return Home in terms of the potential impact. In fact, this year there was almost that point in terms of the impact on Winnipeg, whereby we were almost going to make the same mistake twice. Ensuring, when we rebuild the communities from the ground up, that we have the structural mitigations embedded in the infrastructure is part of what we do, correct, subject to the fact that we have the cooperation and it is the express wishes of the First Nation communities as well.

Senator Eaton: Have you had their cooperation? Are they on board with that?

Mr. Thoppil: Yes. Sometimes it's even more difficult, senator, just to go further to elaborate, when there is a community that was traditionally given lands in a floodplain. Then there's only so much you can do.

The difficulty is the conversation with the First Nation on relocation and trying to get community buy-in for that. That was the example I was trying to express.

Senator Eaton: I realize that has been difficult in the past; I know. That's all I have to ask.

Senator Oh: It's nice to see you again today.

My question was shared by Senator Eaton, but I want to go further. Do you use all of the $4.1 million for the Youth Employment Strategy? Is it enough for you?

Mr. MacArthur: We use it all. The demand is quite high. We look at the unemployment and we allocate it based on the unemployment rates and levels. We have a methodology to do that, but we use it all.

In our last year budget, as I said, we expended it entirely and were able to provide employment through First Nations and Inuit organizations for the youth, but there's no issue at all in finding good projects and willing youth to participate.

Senator Oh: You are also requesting almost $37 million for additional funding for the Affordable Rental Housing Financing Initiative. Can you tell the committee how many units were utilized and implemented?

Mr. MacArthur: Over the four-year life of the program it will construct some 10,000 new units. It's a lending program, so we would expect that we'll be paid back as we are for other programs.

Mr. Zielonka: The total size of the program is $2.5 billion, $625 million of which is part of the non-budgetary spending. That's the first year of actual lending we expect to do. The $36.8 million is actually the initial funding to get that going. There's also a risk provision in case there's a portion that doesn't get repaid.

It's a four-year program. We expect to do, in total, the $2.5 billion over the four years and the 10,000 units.

Senator Oh: What size of housing is in demand? Is it one-bedroom, two-bedroom or three-bedroom units, from 500 to 1,000 square feet?

Mr. MacArthur: Depending on the folks who come forward in the non-profits, municipalities, private sector, it will be driven by them and will be meeting the need of the community that it's coming forward from.

I think it would be variable over time, depending on the location, the need in the community and the Canadians they're trying to serve with their product. It would be from that perspective, but typical apartment dwelling would be the program.

Senator Oh: Thank you.

Senator Woo: I have a question for CMHC on the prepayment flexibilities in your budget projections.

First of all, help me understand the fact that you have a funding provision for prepayment. Is this forgone interest?

Mr. MacArthur: Yes.

Senator Woo: I have a second question. Presumably they took on these loans from CMHC at a time when rates were higher, and, of course, market rates are a lot lower now.

Are they taking on any additional risk, though, that might not be obviously apparent? Might they be putting themselves in a more risky situation, even if they are taking on a lower interest repayment on the mortgage? Do you know what I'm getting at?

Mr. MacArthur: Yes. It would depend on the financials. There are some sophisticated non-profits and co-ops out there that understand. As you say, back when the original lending was done I think the average was 7 per cent or 8 per cent, but at that time rates were at 20 per cent so they looked really good.

There's an immediate benefit in that they have a lower payment. Some of the folks are choosing to renovate because it's time; the building may be 20 or 30 years old. They will invest, do the cashflow projections and the analysis of what's happening. Others will not. Others will be availing themselves of the opportunity to have lower payments so that they may be able to provide more rent geared to income within a particular building or just lower the overall costs of it.

It would be paramount to get at the individual projects, the governance structure within the projects and the financial advice they would be getting on an individual basis.

Senator Woo: On the face of it, though, there would be no reason not to take up this offer. What has been the uptake of this prepayment program?

Mr. MacArthur: The take-up has been good. We had $50 million, $50 million, $25 million and $25 million. As far as getting per site how much can we do because of interest rates change and the like, in the first year we had something like a 47 million uptake. We went out with a first tranche and we've another out there now. In the first it was $33 million. We anticipate all of it being used in the tranche that's out there. I think we have another $13 million to go.

We don't anticipate any issues with take-up, but because we have to buy the loan out and match things it would be just around the edges.

Senator Woo: What is roughly the share of the stock of outstanding loans that would apply to the prepayments the recipients have taken up?

Do you understand my question?

Mr. MacArthur: Yes, I understand the question. I'd have to get the exact percentage. That's something we could give. Each year, loans are paid down. The loan gets smaller so the number we can do goes up a little bit. I would suggest it's a large percentage of the particular loans, all those long-term, non-repayable loans. A very high percentage of those borrowers would be able to take advantage of it.

It depends. For the ones you spoke of earlier, if they can't find a banker, because now they need to work with a private banker, they may choose either that they can't do it because of their financial situation or they don't want to do it. That would be a decision that's made. I do know that it's a very high percentage, but I'd have to get some of our folks to work on the percentage.

Mr. Zielonka: It depends, too, how large a balance they have and how much of an impact it makes. If the balance is very small, even a slightly higher interest rate will not make much of a difference. A lot of them look at their particular situations.

Mr. MacArthur: Another piece of it is that we've been at the housing game for a long time. Programs at different times have had different objectives and operating agreements associated with them. I can't remember how many, but we've had some very small payouts of less than $10,000 because folks want the freedom that goes along with being outside of the agreement.

Maybe they have a very valuable lot and they want to redevelop to provide affordable housing for others. What they want to do is outside of the agreement. It gives flexibility to do things that some are taking advantage of. We've also had very large ones where the number just makes sense. That's a big burden taken off.

[Translation]

Senator Forest: Yesterday, we were discussing clients who face housing vulnerability. Do your cooperative and social housing programs allow for the weighted distribution of assistance, according to regional need? I will explain. In certain regions of the country, the vacancy rate has hit the critical threshold. For instance, I have seen regions with vacancy rates of 0.08 per cent, which translates into a major rise in housing prices, and other regions with vacancy rates of 4.5 per cent or 6 per cent, depending on the market conditions. Do your assistance programs take regional housing realities into account?

[English]

Mr. MacArthur: A lot of our programs and a lot of the assistance we provide are under long-term agreements that were signed, some of them as much as 35 years ago, and were tied to a particular building. A large portion of what flows at the moment are long-term agreements.

The new housing is allocated based on a formula of population, with some consideration for areas in the North where there are special needs or special circumstances.

We work with the provinces and territories within broad parameters. The province or the territory on the ground makes a decision as to the best use of the dollars. As we reimagine things through the National Housing Strategy, that will give us an opportunity to look at what the best methodologies are going forward.

[Translation]

Mr. Zielonka: Our criteria for assessing the various options, under the affordable housing programs, do take the situations and needs of the regions into account. All applications undergo an assessment. It is not based on just one criterion. It's more complex than that. Situations like those are hard to define.

Senator Forest: Your programs aren't the same across all regions, then. Are you saying that they take into account specific regional and territorial differences?

Mr. Zielonka: I wouldn't say that exactly, but they are taken into account. Things aren't the same across the country. Vancouver, Montreal and Quebec City, for instance, don't have the same needs. For that reason, we take the different needs into account to make an appropriate decision. If we receive two identical applications, the preference goes to the region in greatest need.

Senator Forest: So the criteria take that into account.

Mr. Thoppil, through the supplementary estimates, you are seeking $446.5 million for the settlement of specific claims, and $2 million in funding had already been announced in Budget 2017 for the specific claims program. Are these the same items?

Mr. Thoppil: No, not at all. I am going to defer to my colleague Stephen Gagnon on that.

Senator Forest: I want to get it straight, because the two items have such similar names.

Stephen Gagnon, Director General, Specific Claims Branch, Treaties and Aboriginal Government, Indigenous and Northern Affairs Canada: The $446.5 million is funding for specific claims settlements or —

Senator Forest: Tribunal awards?

Mr. Gagnon: Yes, thank you. That funding is to cover claims settlements. The $2 million falls under a program that provides funding support to First Nations when they file a claim with the tribunal. It's a separate fund to help with expenses such as legal fees.

Senator Forest: It's not money for settlements. It's funding to support First Nations claimants participating in tribunal or other proceedings.

Mr. Gagnon: The $440 million is for settlements.

Senator Forest: Does the $2 million fund the process leading up to a settlement?

Mr. Gagnon: It's funding provided to support participation in court actions.

Senator Forest: First Nations receive assistance preparing their claims to seek court or out-of-court settlements.

Mr. Gagnon: Yes.

Senator Forest: Is the money mainly for professional fees?

Mr. Gagnon: Yes.

[English]

The Deputy Chair: I do believe that our questions are finished, so I would like to thank the witnesses for being so open with us, for being very careful about the information and for being a little sensitive, especially on what we would all love to see for our indigenous peoples. I thank you all for that. It's a big task but I think you're doing a great job.

To our colleagues, I want to remind senators that this evening's meeting has been cancelled, so you have the night off.

(The committee adjourned.)

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