THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Wednesday, November 29, 2023
The Standing Senate Committee on National Finance met with videoconference this day at 6:45 p.m. [ET] to study Supplementary Estimates (B) for the fiscal year ending March 31, 2024; and Bill C-241, An Act to amend the Income Tax Act (deduction of travel expenses for tradespersons).
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: I wish to welcome all of the senators as well as viewers across the country who are watching us on sencanada.ca.
[Translation]
My name is Percy Mockler. I’m a senator from New Brunswick and the chair of the Standing Senate Committee on National Finance. I’d now like to ask my colleagues to introduce themselves, starting from my left.
Senator Forest: Good evening, everyone. Éric Forest, independent senator from the Gulf senatorial division, Quebec.
Senator Gignac: Good evening. Clément Gignac, independent senator from Quebec.
[English]
Senator MacAdam: Jane MacAdam from Prince Edward Island.
[Translation]
Senator Loffreda: Senator Tony Loffreda from Montreal, Quebec. Welcome.
[English]
Senator Kingston: Joan Kingston from New Brunswick.
Senator Pate: I’m Kim Pate, and I live here in the unceded, unsurrendered territory of the Algonquin Anishinaabeg.
[Translation]
Senator Smith: Larry Smith from Montreal, the city that won the Grey Cup. This is for Mr. Thompson, a Montreal Alouettes fan.
[English]
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
Senator Martin: Yonah Martin from British Columbia.
The Chair: Thank you, honourable senators.
Today we resume our study on the expenditures set out in the Supplementary Estimates (B) for the fiscal year ending March 31, 2024, which was referred to this committee by the Senate of Canada on November 21, 2023.
Honourable senators, we have the pleasure of welcoming senior officials from Crown-Indigenous Relations and Northern Affairs Canada, or CIRNAC, and from Indigenous Services Canada, or ISC. Since there are so many of you here, I’ll introduce the two officials who will offer their opening remarks and ask the others to please introduce yourselves if you are called to the table to answer a question.
From Crown-Indigenous Relations and Northern Affairs Canada, we welcome Darlene Bess, Chief Finances, Results and Delivery Officer. From Indigenous Services Canada, we have Philippe Thompson, Chief Finances, Results and Delivery Officer.
Welcome and thank you for accepting our invitation to appear so that you can defend your budgets. We will start with opening remarks from Ms. Bess, followed by Mr. Thompson.
Ms. Bess, the floor is yours, please.
Darlene Bess, Chief Finances, Results and Delivery Officer, Crown-Indigenous Relations and Northern Affairs Canada: Thank you, Mr. Chair and honourable senators, for the invitation to discuss the 2023-24 Supplementary Estimates (B) for Crown-Indigenous Relations and Northern Affairs Canada. I would also like to thank you for adjusting our appearance date today, which has allowed our Assistant Deputy Ministers to attend to provide you with meaningful information in relation to these estimates.
Before we begin, I would like to recognize that we come together here today on the unceded traditional territory of the Algonquin Anishnaabe people.
[Translation]
I’m joined today by senior officials from my organization to better address your comments or questions, if necessary.
[English]
With me today are Martin Reiher, Senior Assistant Deputy Minister, Treaties and Aboriginal Government; Georgina Lloyd, Assistant Deputy Minister, Northern Affairs Organization; Mary-Luisa Kapelus, Senior Assistant Deputy Minister of Policy and Strategic Direction; Garima Dwivedi, Assistant Deputy Minister, Resolution and Partnerships; and Jake Kennedy, Director General, Implementation Sector.
Today, we are here to discuss the Supplementary Estimates (B) for Crown-Indigenous Relations and Northern Affairs Canada, which represent investments totalling $9.1 billion, including $5.8 billion in operating funds and $3.3 billion in grants and contributions. This will bring the total budgetary authorities for the department to $26.5 billion for fiscal year 2023-24.
As you know, this summer we welcomed a new minister, the Honourable Gary Anandasangaree, and since I last joined you, we welcomed a new deputy minister, Valerie Gideon, who joined Crown-Indigenous Relations and Northern Affairs Canada from Indigenous Services Canada.
Our government is committed to recognizing and resolving past injustices through the just, timely and lasting resolution of claims. In reviewing Supplementary Estimates (B), you will notice that approximately 96% of these estimates, or $8.7 billion, is related to funding for various settlement agreements and specific claims. This funding will enable our department to continue to work on addressing past wrongs and to resolve claims through negotiation in order to further advance reconciliation with Indigenous peoples.
The $8.7 billion included in these estimates is for the settlement of claims and litigation, which includes $5 billion in new funding to settle past damages related to claims advanced by 21 Robinson-Huron First Nations in the Restoule litigation. With this amount, an additional $5 billion from the Province of Ontario brings the total settlement to $10 billion for past losses and is a key step towards a renewed treaty relationship that is rooted in mutual respect, cooperation and partnership.
These estimates also include $651.2 million to support the ongoing compensation and administration costs related to the Federal Indian Day Schools Settlement Agreement. The $651.2 million includes $643 million in new funding and $8.2 million in funding carried forward from previous fiscal years. This funding will continue to provide compensation to survivors, funding for claims administration and funding to support the additional work of class counsel pursuant to our legal obligations under the Federal Indian Day Schools Settlement Agreement.
These estimates also include grants and contributions funding for the settlement of specific claims. The specific claims process remains a viable alternative dispute resolution option for addressing First Nations’ historical grievances with respect to historical treaties and the management of lands and other assets.
In 2022-23, compensation totalling $3.5 billion was paid to settle 56 claims. This represents the highest value and number of settlements in one year to date. A total of 18 specific claims have been resolved thus far in 2022-23, for a total value of $1.2 billion. The department continues to accelerate specific claims resolution in support of reconciliation between First Nations and Canada and is on track to reach its goal of resolving 35 claims this fiscal year.
[Translation]
Three additional amounts for high-value claims are included in these supplementary estimates.
[English]
The first is $1.6 billion to settle a land-related specific claim and litigation. The proposed settlement will resolve a high-risk litigation for Canada, while addressing historical injustices and renewing nation-to-nation relationships.
Second, these estimates include $593.2 million in new funding related to losses incurred through the diminishing purchasing power of annuity payments with Treaty 8 First Nations. The recognition and resolution of past injustices with regard to annuity losses will strengthen Canada’s relationship with First Nations and support better outcomes for partners.
The third and last specific claim I will highlight as part of these estimates is $204 million to resolve the Lac Seul First Nation’s Treaty 3 flooding specific claim and associated litigation. This funding will compensate the Lac Seul First Nation for their losses as well as their lost opportunities in relation to their lands.
Finally, I would like to highlight that our department continues to work on reducing the risk to human health, the environment and the associated financial liability at federal contaminated sites, while also contributing to socio-economic benefits for affected Indigenous communities towards reconciliation efforts. These estimates include $42.2 million for the Northern Abandoned Mine Reclamation Program and $5.7 million for the Federal Contaminated Sites Action Plan. These items were carried over from the previous year to complete the construction activities that were deferred to 2023-24.
[Translation]
These supplementary estimates will help the department continue the vital work of renewing Canada’s relationship with First Nations, Inuit and Métis people, and keep making progress in the North.
I’m pleased to be taking part in the committee’s discussion on the estimates. I look forward to answering your questions.
Thank you.
The Chair: Thank you, Ms. Bess.
[English]
Philippe Thompson, Chief Finances, Results and Delivery Officer, Indigenous Services Canada: Thank you, Mr. Chair and honourable senators, for the invitation to discuss 2023-24 Supplementary Estimates (B) for Indigenous Services Canada. I would like to begin by acknowledging that we are on the unceded traditional territory of the Algonquin Anishinaabeg.
It is a great pleasure to join you today to discuss these estimates and share with you some of the progress achieved by the organization. With me tonight are Paula Hadden-Jokiel, Associate Assistant Deputy Minister, Regional Operations Sector; Candice St-Aubin, Senior Assistant Deputy Minister, First Nations and Inuit Health Branch; Keith Conn, Assistant Deputy Minister, Lands and Economic Development Sector; and Marc Sanderson, Assistant Deputy Minister, Education and Social Development Programs and Partnerships Sector.
[Translation]
When consulting Indigenous Services Canada’s 2023-24 departmental plan, you may have noticed that the department introduced a new departmental results framework this year. The framework is organized into six services areas that reflect the organizational commitment to advancing the well-being and self‑determination of Indigenous people. These areas are health; children and families; education; infrastructure and environments; economic development; and governance.
Building upon the efforts to develop our new departmental results framework, the department is now working with partners on further refining key performance indicators and ensuring that we’ve established clear targets to properly measure the achievement of our outcomes in a culturally appropriate way.
In terms of priorities, we’re continuing to make significant progress on every commitment described in our plan.
In the area of health services, the engagement process around Indigenous health legislation with First Nations, Inuit and Métis partners wrapped up in fall 2022. The goal was to introduce a new bill by winter 2024. A report entitled What We Heard was released in January 2023 following engagements with partners. The report summarized what distinction-based health legislation could entail. Indigenous partners identified the implementation of Joyce’s Principle into a rights-based framework as a way to respond to historical and chronic systemic racism in health care.
In the area of children and families, the department continues to work with partners to fully implement An Act respecting First Nations, Inuit and Métis children, youth and families. Since 2020, six coordination agreements and one bilateral agreement have been concluded and another 18 coordination agreements have been under discussion. In addition, 71 notices of intent to exercise jurisdiction in terms of child services, representing over 90 Indigenous communities, were received. Ten Indigenous governing bodies have brought their laws into force.
[English]
In education, nine regional education agreements were concluded, enabling First Nations to lead the process of administering their own schools and, as of March 2023, a total of 206 First Nations were covered by transformational education agreements.
With regard to infrastructure and the environment, ISC continues to work to eliminate all remaining long-term drinking water advisories on-reserve and to ensure that long-term resources are in place to prevent new ones. As of October 17, 2023, 143 long-term drinking water advisories have been lifted; however, 28 remain in effect in 26 communities.
Since 2016 and as of June 30, 2023, ISC has funded over 9,457 community infrastructure projects for a total of $9.2 billion.
In economic development, ISC is leading the Procurement Strategy for Indigenous Businesses, which includes the minimum 5% target for the total value of federal government contracts held by Indigenous businesses. In 2023-24, ISC awarded 17.68% of its procurement contracts to Indigenous businesses. Since 2020 and as of March 2023, over 800 Indigenous businesses have been registered in the Indigenous Business Directory.
The Aboriginal Entrepreneurship Program, which is administered by the National Aboriginal Capital Corporations Association and the five Métis capital corporations, supported the delivery of 964 loans to Indigenous businesses. This included funding to support Indigenous entrepreneurship, Indigenous tourism and capacity for Inuit businesses in the Nunavut Settlement Area.
Under the governance service area, we are pleased to report that a total of 143 First Nations are now operating under the New Fiscal Relationship grant, an increase of 13 First Nations compared to last year. In 2023-24, a minimum 2% annual growth funding escalator was applied to reflect inflation and population growth for eligible First Nations communities. We are currently working with our key partners to make sure that additional communities will be in a position to join the grant in fiscal year 2024-25. So far, an additional 47 First Nations have formally expressed interest in opting into the grant next fiscal year.
[Translation]
I’ll now turn to the topic of today’s meeting, which is the presentation of Supplementary Estimates (B), 2023-24 for Indigenous Services Canada, or ISC. These supplementary estimates reflect a net increase of $962.3 million, of which $800.4 million is new funding. With this increase, ISC’s total authorities for 2023-24 will be $45.6 billion.
The following are the main key initiatives of these supplementary estimates.
For the health services area, we’re seeking an additional $458.6 million for non-insured health benefits for First Nations. The funding primarily seeks to maintain supplementary health benefits coverage, such as dental and vision care; medical supplies and equipment; mental health counselling; and medical transportation. It also aims to close a long-standing coverage gap for diabetic clients through the expanded coverage of continuous glucose monitoring systems.
In education, ISC is seeking an additional $109.6 million for on-reserve First Nations elementary and secondary education. This funding will provide direct support to elementary and secondary school students living on reserves and will allow First Nations to keep ensuring that their programs address their own specific realities and priorities. These include geographical remoteness factors; culturally-grounded programming; land-based learning; and traditional knowledge incorporation.
The department is also securing an additional $103.5 million for urban, rural and northern Indigenous housing projects. The ultimate outcome is that Indigenous peoples will have reliable and sustainable infrastructure and will receive social services that meet their community needs.
Lastly, while the department continues to work on modernizing Canada’s support for First Nations governance, $76.3 million will be provided to support the administrative capacity of First Nations governments and tribal councils that deliver critical programs and services to their members.
First Nations governments need resources to meet the needs of their communities and to deliver the services and programs that their communities rely on. Supporting First Nations governments is an essential part of supporting self-determination.
[English]
I look forward to discussing any aspects of these estimates with you, and I welcome your questions regarding my presentation. Thank you, meegwetch, qujannamiik.
The Chair: Thank you, Mr. Thompson.
Honourable senators, we will go to the first round of questions. You will have five minutes each.
Senator Marshall: I’ll start with Crown-Indigenous Relations and Northern Affairs Canada. Welcome to all of our witnesses.
Ms. Bess, the largest item in Supplementary Estimates (B) is the $5 billion for the Restoule settlement agreement. When I add up all of the amounts of the claims, I was trying to match it up with what’s in the Public Accounts. The Public Accounts say that last year there was $26 billion related to Indigenous claims.
Would that $5 billion be part of that?
Ms. Bess: Thanks for the question, senator. I’m trying to remember if we had accrued that in that amount. I might have to get back to you on that.
Senator Marshall: Could you tell us or send in information as to what exactly is in that $26 billion? It’s possible it’s not just your department; Indigenous Services Canada could also have some claims in that. I’m happy that both of you are here tonight. Between the two of you, could you let us know what’s in the $26 billion so we can match it up? It’s a bit confusing when the cash is in one year and the accruals are in the other year.
Are you expecting to pay out the $5 billion this year?
Ms. Bess: That’s right.
Senator Marshall: But if it’s not paid out, will we see it again next year in the estimates?
Ms. Bess: We would have to carry forward the funding for the following year if the settlement is not reached.
But I will pass it over to my colleague Martin Reiher to provide more information on the agreement.
Senator Marshall: Thank you. Tell us about how it will lapse and whether it will show up again. My recollection is that it could show up again.
Martin Reiher, Assistant Deputy Minister, Resolution and Individual Affairs Sector, Crown-Indigenous Relations and Northern Affairs Canada: We anticipate that we will be successful in reaching the settlement agreement. It has been ratified by the communities, so, hopefully, with the vote of this money, we’ll be able to make the payment.
That being said, if it were delayed, it would indeed reappear.
Senator Marshall: Is it paid out in a lump sum, or is it paid out to an independent party to administer?
Mr. Reiher: It is paid out in a lump sum to a trust fund.
Senator Marshall: And then the trust fund will administer?
Mr. Reiher: For the First Nations.
Senator Marshall: Mr. Thompson, for your department, we’ve spoken on a number occasions about the $20 billion for the Canadian Human Rights Tribunal. Could you bring us up to speed? It will be more than $20 billion; we talked about that before. I thought it was about $3 billion more.
Please give us an update. Is the $20 billion now in the estimates again? It’s almost like we’re recycling some things. Could you explain that?
Mr. Thompson: Thank you very much for the question. I’m very pleased to report that we are making progress on compensation. We have reached an agreement on compensation for an amount of $23.34 billion. It has been announced. It covers more than 300,000 children and their relatives.
The decision was supported by the Federal Court on October 24, so we have a decision. Now, we have to wait for the 60-day period for appeal. Once the appeal period is over — let’s hope there’s no appeal to it — we will be in a position to proceed with the payments. The money is still in our reference level, so it’s part of the $46.7 billion.
Senator Marshall: I noticed in the supplementary estimates that your proposed authorities to date amount to $45 billion. Is the $20 billion part of that?
Mr. Thompson: Yes, the $23.34 billion is part of that.
Senator Marshall: But the $20 billion was in a previous year, wasn’t it, and it lapsed?
Mr. Thompson: You are correct. It has been reprofiled to this fiscal year.
Senator Marshall: Okay. So some of that money could be what’s in the Public Accounts; that could be part of that $26 billion.
Mr. Thompson: It’s part of our budget, and we are expecting that we will be able to disburse the funding this fiscal year. Once the 60-day period is over, the money will be put into a trust fund for administration of the compensation payments.
Senator Marshall: Okay.
Going back to the Public Accounts, the provision for contingent losses went from $53 billion last year to $75 billion. Would some of that be related to either CIRNAC or ISC? Ms. Bess, you seem to know what I’m asking; you’re looking for something there. Are you able to give me some information on that? It’s quite a significant amount of money — $20 billion.
Ms. Bess: It is. To go back to your previous question regarding Restoule, it was already booked as a contingent liability and hit the fiscal framework. Now, this funding is just for the actual payment.
Senator Marshall: Right. So the $5 billion for the Restoule settlement agreement — is it part of that $26 billion?
Ms. Bess: That’s right.
Senator Marshall: Okay, so if you give me a breakdown, I’ll see the $5 billion there?
Ms. Bess: Yes.
But to answer your question, the bulk of the contingent liabilities for the Government of Canada is mostly CIRNAC and partly ISC. I think we’ve accounted for a large portion of the increase in the contingent liabilities for this past fiscal year.
Senator Marshall: Is it possible to get some sort of a breakdown of that increase of $20 billion? I understand that the $20 billion flows into the deficit.
Ms. Bess: That’s right.
Senator Marshall: When you look at the Public Accounts, every other number has a table where you can look at the breakdown, but for the contingent losses, there’s no breakdown.
Ms. Bess: That’s right. You would be happy to know the Parliamentary Budget Officer, or PBO, is also looking at that and has made the same request.
Senator Marshall: Okay. It could stem from our meeting the other day. That’s good. Thank you.
[Translation]
Senator Forest: We know that, initially, in 1875, the basis of the Restoule agreement was calculated on a pro rata scale at $4 per person for the 21 First Nations. We know that Ontario has secured the $5 billion. Will Ontario’s portion be deposited in the same trust fund? How will it be distributed? Will targets be set for disbursements? Will the disbursements be made on a pro rata basis for the 21 nations? How will the substantial amount of $10 billion be disbursed?
Mr. Reiher: The $10 billion will be paid to a trust that will administer it on behalf of the First Nations. Canada hasn’t given any directives. The First Nations will determine how the money will be spent, on a completely independent basis. Rules will be discussed, including the proportion for each First Nation. The matter is in their hands.
Senator Forest: We’re talking about 21 nations. How many people are concerned? Was the settlement result determined on the basis of $4 per person, an amount updated from 1875 to 2023?
Mr. Reiher: It’s more complicated than that. According to the Ontario Court of Justice decision, it actually depends on the natural resources extracted from the land. Experts make these complicated calculations to determine a reasonable amount under the circumstances. It’s for the past. The parties will then also negotiate an approach to determine an amount for the future.
Senator Forest: Is the management entrusted to a steering committee representing each of these 21 nations?
Mr. Reiher: For the past, when the amount is paid to the trust, it will be managed by them. All spending and disbursements will be managed by the trust, at the request of the First Nations. For the future, once an agreement has been reached, the Government of Canada will pay compensation to individuals.
Senator Forest: This means disbursements.
Mr. Reiher: To communities, depending on the agreement reached, because it hasn’t yet been negotiated.
Senator Forest: Is the plan to disburse $5 billion when it comes to Canada’s portion in the 2023-24 budget?
Mr. Reiher: Quickly, in the coming weeks and months.
Senator Forest: I’m concerned about an issue. We know that, right now in Canada, this issue doesn’t only affect First Nations, Métis people and Inuit. Ten per cent of the Canadian population doesn’t file income tax returns. It’s impossible to reach these groups when establishing assistance programs, and they’re often the most vulnerable groups. Do the additional amounts in the budget for health or education concern any programs specifically for Métis and Indigenous people, to show the importance of filing a tax return so that they can access all the assistance and support programs that the government makes available to Canadians, including Indigenous peoples?
Mr. Thompson: Many of Indigenous Services Canada’s programs are transferred to the communities, which administer them. That way, the communities have more control over how funding is distributed. The people have direct access to certain programs. I’m thinking of non-insured health benefits, or Jordan’s Principle. However, I know that the Canada Revenue Agency is working to show communities the importance of filing income tax returns. I know that community administrations are also doing this work. The issue is the subject of a number of discussions with partners. Yes, work is being done.
Senator Forest: Targeted efforts with local organizations, such as band councils or community organizations.
The Chair: You’ll have time in the second round.
Senator Gignac: I want to welcome the witnesses. My first question is for Mr. Thompson, from Indigenous Services Canada. On behalf of my new colleague Senator White, who has joined us and whom you know, I’ll ask my question in English.
[English]
Feel free to answer in the language that you want. As you may know, Senator White is a former assistant deputy minister of Indigenous Affairs and Reconciliation in the Government of Labrador and Newfoundland, a colleague of Senator Marshall. Her question is this: The Federal Housing Advocate released a report on Monday focusing on housing. The report painted a devastating picture of the living conditions in Nunatsiavut and Nunavut, including homelessness, severe overcrowding and homes without adequate water and sanitation or reliable access to heat and energy. Furthermore, the conditions are only worsening over time. What is the Government of Canada doing to address the severe challenges and immediate needs of Inuit housing? Are any meaningful actions being taken to ensure Inuit rights to housing?
Mr. Thompson: Thank you for the question. I know it’s not always obvious to see the difference between the work that Indigenous Services Canada and our colleagues in Crown‑Indigenous Relations are doing in terms of housing with regard to Inuit. I will refer this question to my colleague.
Ms. Bess: Thank you, Senator Gignac. I’ll ask my colleague Ms. Kapelus to come to the table to speak about the housing.
Senator Gignac: Thank you.
Mary-Luisa Kapelus, Senior Assistant Deputy Minister, Policy and Strategic Direction, Crown-Indigenous Relations and Northern Affairs Canada: Thank you. That is a very good question. In terms of what is being done, a lot has been done. I can quickly go over some of the recent investments and then give you some of the results of where things are at.
Let me start with Budget 2016 with $80 million over two years for Inuit-led housing delivery in three of the four regions in Inuit Nunangat. Budget 2018 followed up with another $400 million over 10 years to support additional housing in these areas, and then Budget 2022 announced $845.1 million for all four regions. In the first couple of budgets we had three regions, and then in 2022 we had the fourth region in Inuit Nunangat to add to the Inuit Nunangat Housing Strategy.
For the results, since 2016, Inuit have constructed over 500 new housing units, repaired close to 200 existing units and enhanced their overall program that includes land acquisition and distinctions-based investments.
Within the different areas, such as Makkovik, 444 units have been constructed. In the Inuvialuit region, we have a number of projects ranging from 117 units being repaired to 36 new construction units; and then lastly, Nunatsiavut has had 38 units constructed.
The most important thing with all that I have just shared with you is this is by Inuit for Inuit. Inuit make the decisions. It’s all self-determined. We pretty much just get out of the way and support them in realizing and meeting their needs.
The Chair: Could you introduce yourself for the record?
Ms. Kapelus: Yes, I’m sorry. I’m Senior Assistant Deputy Minister for Crown-Indigenous Relations and Northern Affairs Canada.
The Chair: Thank you.
[Translation]
Senator Gignac: As Senator Marshall pointed out, the latest Public Accounts of Canada for 2022-23 show that the government has earmarked $26 billion in compensation for past injustices. To be honest, this was my first time seeing the following in the Department of Finance’s documents. The 2022-23 budget deficit would have been less than $10 billion if all the compensation and resolution measures had been excluded. No one is disputing these amounts. However, it’s still worth noting that the deficit would have been $26 billion less in 2022-23. That’s close to a balanced budget. When the Parliamentary Budget Officer was here... I’m looking at the liabilities, and they amount to $75 million.
The people listening must understand that, according to public sector accounting standards, a liability is recorded when the likelihood of payment is estimated at over 70%. At least, that’s what I gather.
My question is the following. What are the estimates for the next three years for reconciliation, litigation and negotiated settlements? We have liability figures. However, we don’t know how much will be spent each year for the next three years. Thank you.
Ms. Bess: Thank you for the question.
[English]
Part of the reconciliation effort is addressing past wrongdoings, and every time a claim is filed, we assess the likelihood of whether the claim will be successful. If we can measure it, we record it as a contingent liability by accounting standards. But that does not mean we will pay for it at that time. Similar to the Restoule, it was accrued last year because we thought there was a likelihood this would happen.
This is increasing the government’s deficits, but we have close relationships with the Department of Finance and central agencies within the Government of Canada to monitor these situations and to flag what is coming and what could possibly hit the fiscal framework and to address the higher-risk and higher-priority files. That’s work that we’re constantly doing.
There is governance at the deputy minister level within government. There are cabinet committees on litigation management, and there are “four corners” meetings with the Privy Council Office, Department of Finance and Treasury Board to discuss these things on an ongoing basis. As you said, the increase in contingent liabilities is growing quite a bit. It is alarming, which is why we are paying more attention and making sure that we are communicating and having these ongoing discussions to address the wrongdoings of the past and, at the same time, trying to balance it with the fiscal prudence with the government in power. It’s a very difficult thing to be trying to do right, but at the same time, we know that it costs a lot of money.
Senator Gignac: We tried to figure it out because the finance minister, for the first time in a while now, has a fiscal anchor, requiring that starting 2025-26, the deficit will not exceed 1% of GDP. I just tried to figure out where that came from and what the numbers are.
Senator Smith: Mr. Thompson, your Departmental Results Report 2022-23 notes that your department “took a wrap-around approach to eliminating all remaining long-term water advisories . . . .” You and I have had this discussion over time. However, in 2022-23, there are still 32 long-term drinking water advisories on-reserve. Can you please explain what the “wrap-around approach to eliminating long-term water advisories” is? Is this a new strategy?
Mr. Thompson: Thank you for the question. I will refer to my colleague Paula Hadden-Jokiel to answer the question.
Paula Hadden-Jokiel, Associate Assistant Deputy Minister, Regional Operations Sector, Indigenous Services Canada: Good evening, senators. I’m the Associate Assistant Deputy Minister in Regional Operations at ISC with responsibility for infrastructure, among other things. I’m very pleased to be joining you here today from the traditional unceded territory of the Algonquin Anishinaabeg.
Thank you for the question related to long-term drinking water advisories and our approach.
As Mr. Thompson mentioned in his remarks, since 2016, there have been 143 long-term drinking water advisory lifts. There are still 28 long-term drinking water advisories remaining that affect 26 communities, and we have developed, in partnership with those communities, comprehensive action plans to address the issues that are outstanding in those communities to make sure there is a planned, comprehensive, active approach to making sure that we move toward having the community lift those advisories as soon as possible.
In some cases, there are short-term approaches. If it’s a longer-term infrastructure build that is required that is going to take a number of years, we work on a short-term solution while we’re also working on the long-term approach.
Senator Smith: If I could just interject, how many are new and how many are old in terms of these water advisories? Mr. Thompson and I have jousted about that over time in terms of what the government is actually doing to come to some conclusion or at least to find some finality with the process.
Ms. Hadden-Jokiel: On the 28 that are remaining right now, I’ll have to get you the exact numbers in writing, senator. Over time, we have had seven recurring long-term drinking water advisories. I believe four of those are in place right now. But the majority of the 28 are a one-time long-term drinking water advisory. We work with the community to address those issues to alleviate the advisory.
Senator Smith: One thing we always discussed in terms of the water advisories is whether you have competent people doing the maintenance. Are the maintenance programs actually working to make sure that you have consistency in delivering the quality of water to the folks living in these particular areas?
Ms. Hadden-Jokiel: That’s an excellent point, senator. It is a very critical part of the comprehensive wraparound approaches: the construction, whether it’s new infrastructure or repairing existing infrastructure, the operator training and support, second-level services. Sometimes we have supports at a tribal council level or a water hub in Ontario that supports those operators to ensure that they have a call line to call if they want advice or have questions around something that is happening at their water treatment plant.
Senator Smith: Are local residents handling these problems, or are they brought in from out of town to have consistency in terms of the delivery of clean water for your members living there?
Ms. Hadden-Jokiel: Certainly it’s still a mix. There is an increasing number of local water operators, and there is a lot of effort by First Nations to recruit, retain and train local operators. That’s not always possible. In some cases, it is other service providers who are providing those services. But we are seeing an increasing number of local operators being recruited and retained in those positions.
Senator Smith: Do you have an estimated time of when these water advisory problems will be rectified, or is it just ongoing?
Ms. Hadden-Jokiel: Each one has a dedicated plan and target date. We can provide that to you in writing in terms of the estimated dates of when we expect those to be lifted. There are sometimes intervening factors, such as construction delays and supply chain challenges. All of those affect the time delays, but the lifts are dependent on a number of factors, including appropriate infrastructure, sustainable operator training and capacity and operations and maintenance plans.
Senator Smith: Mr. Thompson, in your Departmental Results Report 2022-23, the number of on-reserve First Nations communities that rely on ISC-funded diesel for electricity generation continues to grow well beyond the target set by your department. Could you talk about why more and more on-reserve communities rely on diesel for their electricity generation? What plans are in place to move these communities away from diesel to more sustainable sources?
Mr. Thompson: Thank you for the question, Mr. Chair. I will refer to my colleague for the answer.
Senator Smith: You’re going to be busy tonight.
Ms. Hadden-Jokiel: Thank you. Sorry, senator, I don’t have the details on the number of communities that are currently on diesel, so we’ll have to follow up with you in writing on that.
But we are working with communities around alternate sources and having plans in place where that’s possible. A number of communities in Ontario have moved toward a large electricity grid. Sometimes there are aggregate levels of community that we can work toward on those large projects. Sometimes it’s individual communities.
Senator Smith: Do you have specific numbers on how many people or how many communities have moved away from diesel to electricity or some varying form of electrical generation?
Ms. Hadden-Jokiel: We’ll have to provide that to the committee after the meeting.
Senator Smith: That would be great because then we can see what the definition of progress really is in terms of your results. Thank you.
The Chair: Ms. Bess, I see you want to make a comment.
Ms. Bess: Senator Smith, for Crown-Indigenous Relations and Northern Affairs Canada, we have some targets as well for reductions in the consumption of diesel fuel. I think we spoke about this at our last committee meeting. We have a Northern REACHE Program that invested $16 million in 59 clean energy projects across the North, and this represents an estimated reduction of 830,000 litres in the consumption of diesel in 2022-23 and 2.6 million litres since 2016.
Our target was to reduce the consumption of diesel fuel for electricity and heating in northern communities resulting from renewable energy and energy efficiency products. That target was 2 million litres by March 31, 2023, and we’ve reduced it by 2.6 million litres.
Senator Smith: That’s grid consumption, so those numbers that you just gave us could be —
Ms. Bess: Comparative? I don’t have that handy, but we can come back.
Senator Smith: Could you get back to us in writing so that we can get a real picture?
Ms. Bess: Yes.
Senator Pate: Welcome to all of you.
A number of colleagues have talked about the PBO supplementary estimates report. Given that the PBO has highlighted the need for us to look at how the ongoing litigation impacts anticipated contingent liabilities as well as future potential costs, I’m curious as to what the process is. You mentioned the meetings with deputy ministers and the like. Can you provide concrete examples of the measures that each of your departments are taking to avoid potential litigation in the first place by ensuring obligations to Indigenous peoples are fulfilled?
When providing those examples, perhaps one of them that you could use is the one you’ve already spoken about, the Robinson-Huron plaintiffs. I noted that when lead counsel David Nahwegahbow was speaking about this, he talked about the settlement as a precedent with a lot of implications for other treaties. Although Ontario appealed, the federal government didn’t. I’m curious as to what the approach will be now in terms of future similar litigation to try to streamline the settlement and negotiation process and minimize the hurdles for other claims while also minimizing the costs. As you know, a fair degree of these costs have also been the cost of mounting those cases and fighting Indigenous peoples in court.
Ms. Bess: Thank you for the question. I think I’ll start and then pass it over to my colleague.
In terms of general strategy, there’s litigation and negotiation. Our specific claims are usually through negotiations. We try our best to negotiate because when they go to court, it’s significantly more costly and time-consuming. In the spirit of reconciliation, we’re trying our best to get through some of these things so that we’re not creating more hurdles for the Indigenous peoples. That’s one aspect in terms of the strategy.
We are obviously aware and working with our Justice colleagues to understand where there are implications and precedent-setting situations. That is closely monitored. I’ll pass it over to my colleague Martin Reiher to speak about the Restoule case specifically.
Senator Pate: Also, are there other examples to show how you’re actually addressing those and assessing contingent liabilities?
Mr. Reiher: Thank you. Indeed, for the Restoule situation, in particular, we opened a table to discuss with the First Nations in order to find a resolution. Similarly, we have a number of claims with respect to historical Numbered Treaties. For example, Treaty 8 First Nations have brought forward claims for an increase in the amount of treaty annuities. We are in negotiation with 40 First Nations under Treaty 8 to try to find a solution. Wherever possible, we open a rights-recognition and self-determination table to engage and look for a negotiated resolution.
In terms of contingent liability, when it’s negotiated, if a claim is in court at some point, we can book liability. If it’s too early and we are able to resolve earlier, the amount in contingent liability is entered into when we get a financial mandate to resolve.
Ms. Bess: In terms of financial mandate, none of these decisions are made on our own independently as a department. They go through a rigorous cabinet process to discuss the claims and see if there’s an opportunity to provide funding for the settlement. We cannot negotiate any of these settlements without agreement from cabinet. It goes through that process, but obviously a lot is coming in the pipe.
Mr. Thompson: In the context of Indigenous Services Canada, we are delivering services to citizens. As was recognized in the context of child and family services, underfunding of the programs was the reason why the government ended up in litigation and had to compensate for the underfunding that existed in the past. The organization is ensuring that we do all representation required to ensure we have sufficient funding to deliver the services. A lot of our programs are now using formulas to make sure that the funding is comparable to provincial or municipal services or sometimes enhanced services — there, I’m thinking of education — and transferring the responsibilities to the communities, as I discussed in the context of the health legislation and the child and family services legislation. Transferring the responsibility is a way to make sure that the services are culturally appropriate and are reaching the citizens they are supposed to reach. That’s the best way to avoid having to compensate.
Senator Pate: In terms of the massive increase, do you have particular explanations for the increase in contingent liabilities over the last five years — both departments?
Ms. Bess: I can speak for last year. For Crown-Indigenous Relations and Northern Affairs Canada, our contingent liabilities increased by almost $18 billion. A big portion was the Restoule case. We also had the Gottfriedson Band class settlement. I think you recall that at the beginning, we had to reprofile funding last year to this year for residential schools. That was a band class settlement of about $2.9 billion. In our specific claims sets of contingent liabilities dealing with past grievances related to Canada’s obligations under historical treaties, from an accounting perspective, we record a liability when we know what the amount is and it’s measurable. Those get revalued as the negotiations take place and as we get more information.
There was a big increase of $8.2 billion in the specific claims liabilities as a result of new information coming to light and as the negotiations went under way. Those are probably the biggest parts of our increases for last year for Crown-Indigenous Relations and Northern Affairs.
Senator Pate: Thank you.
[Translation]
Senator Loffreda: I’d like to extend my greetings to everyone here this evening.
[English]
I want to continue on the housing issue. My question is for Indigenous Services Canada.
Canada is in the middle of a housing affordability crisis. We know that housing for Indigenous Canadians has been seriously neglected. You may recall that the Senate Indigenous Peoples Committee studied this issue in 2015 and concluded that there was a significant housing shortage on reserves across Canada that has led to high levels of overcrowding and advanced that much of the existing housing stock was poorly built and in serious disrepair.
I noted in your plan that ISC intends to assess housing needs on reserves by measuring the percentage of First Nations households living in overcrowded housing, as well as the percentage of reported adequate housing to determine the effectiveness of investments made. Furthermore, you hoped to complete this assessment by March 2024.
I want to have your thoughts. Does the department already have a full picture of the housing needs for Indigenous peoples, considering the billions of dollars that have already been invested over the years? We have invested billions of dollars. Can you comment on that?
Second, can you further elaborate on the work you’re doing with partners toward the establishment of a national network of Indigenous housing lenders? I’m quite interested in this initiative. What are the implications for involvement of our financial institutions?
Mr. Thompson: Thank you very much for your questions. You will have noticed that in our supplementary estimates, we have a few amounts that have been requested for housing. There is $103 million for urban, rural and Indigenous housing projects and a $65-million transfer in those estimates which will bring the total funding for the year to $717 million for housing.
In terms of the needs and the approaches that are being taken, I will refer to my colleagues.
Ms. Hadden-Jokiel: Thank you for the question. As we know, there’s a housing crisis all across this country, and it’s very stark in First Nations on-reserve communities. There have been significant investments since 2016. To date, $1.7 billion has been invested in housing, but there has been chronic underfunding of housing and operation and maintenance of housing for many years.
There are a number of efforts to improve the housing stock. We have those investments. To give you an idea, our annual budget for housing is about $650 million, with a large majority of that being targeted investments from Budget 2021 and Budget 2022.
Mr. Thompson also talked about $65 million that has been reallocated within the department given what we see is a very high need across the country.
I’ll start with the $65 million. We have disbursed that across the regional offices. To date, over 90% of those are already in funding agreements with recipients, and we anticipate that 301 units will be built with the additional money that is in there.
With the funds that we’ve invested to date, over 17,000 new homes have been built, renovated or retrofitted. Similar to the discussion on water, with the comprehensive approach, we’re also working closely around increasing the capacity of housing managers. We’re working on the operation and maintenance investments to support housing, to manage the life cycle of housing and not just look at the replacements.
We work closely with our First Nations partners in trying to identify the strategy and the activities for moving forward. We have worked with First Nations on the co-development of the National First Nations Housing and Related Infrastructure Strategy that was endorsed back in 2018. That does guide a lot of the decision making around housing investments.
We have also been working with partners on estimating the gap, and many of you will be familiar with the work that the Assembly of First Nations has done on the cost analysis of current housing gaps. They’ve projected the 2021 on-reserve infrastructure gap for housing to be about $43.7 billion, $22 billion in current on-reserve housing needs and $21.7 billion looking for First Nations who are currently living off-reserve who would like to move on-reserve.
There is a lot of work with communities around identifying the need. There’s also significant work with partners around increasing their direct role in managing housing. There was a recent announcement in October with the Confederacy of Mainland Mi’kmaq around the transfer and delivery of housing and infrastructure services to 12 communities in Nova Scotia around that.
There’s work on a number of areas to improve housing, to improve the management of housing and to increase the funding that supports housing across the country.
Senator Loffreda: For the second round, I’ll have a quick question about targets and where you are at, where you’re coming with the report, the assessment — not just numbers; I have the numbers that have been invested, and the numbers are in front of me — just targets, assessment. Thank you, that’s for the second round. I just wanted to get ready.
Senator MacAdam: These questions are for the Department of Indigenous Services. Approximately $464 million of the proposed spending in the supplementary estimates is targeted towards Indigenous health care priorities. Additional funding to provide health care to Indigenous communities has become a perennial issue in the appropriation cycle. Could you explain some of the difficulties you face in providing health care services in these communities and why additional funding is routinely sought to prop up existing reference levels? Is there a need to have a review of this sector to ensure that there’s adequate base funding for health care on a go-forward basis?
Mr. Thompson: Thank you very much for the question. With regard to the health care, a lot of the programs we administer are on-demand programs. We have to ensure on a yearly basis that we have sufficient funding to serve the demand. Every year, we make additional requests for additional funding, almost on a yearly basis, for non-insured health benefits. You see that we have requested $458 million. It’s mostly for program integrity funding. Of that amount, there’s also $10 million for glucose monitoring systems that was announced in Budget 2023.
In this budget we also have some funding that is reprofiled from the previous fiscal year. That refers to the amount you were referring to. Because of the budget cycle, we have to ensure that we have sufficient funding to cover the demand. If we have surpluses at the end of the year, we have to make sure those surpluses can be reprofiled to the next year so they can be used to meet the demand.
In terms of the challenges, we have a number of challenges, health and human resources being one of the big challenges, of course, recruiting nurses to support the program. I don’t know if I have a colleague from the health program who can provide more details. I’m not sure whether they have joined us tonight.
Basically, health and human resources would be one of the big challenges right now that we are dealing with in the organization — having the personnel that we need to be able to administer those programs, coping with technology with regard to the funding that we have, modernizing the operations, working in remote environments. Medical travel is also always a big challenge and the availability of the travel, the cost of travel.
We serve so many remote communities that the challenge with travel and inflation, providing the personnel — those are among the biggest challenges that we are dealing with. That contributes to the funding pressures that we have on a yearly basis. We always have to make sure we anticipate the demand. We are using historical figures to be able to come up with our numbers and provisions. That’s basically the situation with regard to health resources.
Senator MacAdam: Thank you.
The Chair: To follow up on what Senator MacAdam asked, when we talk about health services and especially health professionals and employees, could you provide a clearer answer in writing, please, Mr. Thompson?
[Translation]
Mr. Thompson: We would be pleased to provide more information.
Senator Dagenais: My questions are for Ms. Bess.
Ms. Bess, you’ll find that I often focus on budget items that are unclear to anyone trying to keep track of the funding allocated to certain programs. Sometimes, it’s a bit vague.
I can see $596 million for the Specific Claims settlement fund. Obviously, that’s over half a billion dollars. I’d like to know what “specific claims” means. Is this an initial amount for this budget item? Since it’s a large amount, could you tell us how it will be spent?
[English]
Ms. Bess: Thank you for the question. The Specific Claims settlement fund is a fund that we use to provide compensation to First Nations to address outstanding legal obligations of the federal government through negotiated settlement agreements. I’d like to ask my colleague Garima Dwivedi to come to the floor to explain a bit more about how that Specific Claims fund works. This is a replenishment of the fund that’s used to pay out for negotiated settlements.
Garima Dwivedi, Assistant Deputy Minister, Resolution and Partnerships, Crown-Indigenous Relations and Northern Affairs Canada: I’m Garima Dwivedi, Assistant Deputy Minister, Resolution and Partnerships. Thank you very much for that question. It is one of those items in terms of what exactly that $596 million means in supplementary estimates.
As my colleague Darlene Bess mentioned, it is for the Specific Claims settlement fund. This is to resolve the historical obligations of government. The negotiation environment is very highly dynamic. The pace of negotiations can be affected by factors often outside the control or influence of Canada’s negotiation teams, which can lead to claims settling later or sometimes earlier than what we had planned.
In this context, the $596 million in grants in vote 10 is actually $346 million that was reprofiled from 2022-23. We thought negotiations would be settled and payments would be made, but because of different factors, that didn’t happen, so it was reprofiled to this year.
Further, there’s $250 million from 2025-26 that is like a reverse reprofile: We’re bringing money from the future into this fiscal year because we anticipate settling and paying out more claims. That’s what this amount is. It is the Specific Claims settlement fund.
Again, we try to anticipate what we’re going to pay out in a year, but due to how negotiations unfold and some factors outside of our control — for example, ratification votes in the communities — the payment can be delayed, or the payment can be earlier. This fiscal year, we anticipate more payments.
[Translation]
Senator Dagenais: Just so that I understand, can you give me an example of a specific claim?
[English]
Ms. Dwivedi: For example, in a treaty, there might have been a clause with regard to tools for a transition to agriculture for a community. That might have been part of the treaty; there would be a clause that the Crown would supply those implements. They’re often referred to as “agricultural benefits,” or the communities refer to them as “cows and plows.” But for different reasons, the Crown did not actually abide by its obligation.
That would be a specific example.
[Translation]
Senator Dagenais: I suppose that my question is for you. We can see almost $54 million for what you call “addressing the legacy of residential schools.” How will this money be spent? Who is responsible for the budget? What will you be looking for? What is the ultimate goal of this expenditure?
Ms. Dwivedi: Could you repeat the question?
Senator Dagenais: How will the $54 million be spent? Who is responsible for the budget? Someone must be in charge. What do you plan to achieve with the $54 million? What is the ultimate goal of this expenditure? Is it to resolve the entire residential school case, or is it for legal proceedings?
Ms. Dwivedi: Thank you. That’s a good question.
[English]
That $54 million is related to the support to communities for their work, whether it’s knowledge gathering, research, commemoration or other activities related to unmarked graves in communities across the country.
If you give me a moment, I can give you some information about that. We hope that, through that amount, communities will be able to use those funds to do that research — it could be ground-penetrating radar, for example — to look at sites related to former residential schools. It’s to do that research. This is funding. This program was put in place subsequent to the findings of the more than 200 unmarked graves in Tk’emlúps.
[Translation]
Senator Dagenais: Thank you.
[English]
The Chair: Honourable senators, I am looking at a time frame before we go to clause by clause of Bill C-241, and two senators are requesting a second round. I will allow two minutes each so we can then move on to the next part of our meeting.
Senator Marshall: Mr. Thompson, I’ll get you to go over the Canadian Human Rights Tribunal decision again to make sure I understand it. It’s $23 billion. Is that in vote 1? It is. Okay. Does that mean that next year it should be significantly reduced — by $20 billion — unless something else is added in?
Mr. Thompson: I sincerely hope it will be gone next fiscal year.
Senator Marshall: It was in last year and it lapsed.
Mr. Thompson: That is correct.
Senator Marshall: In addition to that tribunal decision, there was also a commitment for $20 billion for long-term reform. How is that funded?
Mr. Thompson: That would be funded through our normal reference levels. It would be part of our grants and contributions funding. We are currently negotiating the long-term reform agreement. Some of the existing funding that we have for child and family services would contribute to that, and the delta would have to be funded in addition.
Senator Marshall: So that $20 billion will be spread over several years, won’t it?
Mr. Thompson: This is correct. It’s expected it would be over five years at the moment.
Senator Marshall: So we’ll see maybe $4 billion next year. Okay, I understand. Thank you.
Senator Loffreda: To get back to my first question to which I didn’t get the answer regarding the work you’re doing with partners toward the establishment of a national network of Indigenous housing lenders. Finance is always an important issue when it comes to housing. We have a housing affordability crisis, and we’re talking about billions. It’s always nice if we can get the capital required to complete that housing.
Thank you for your first answer. I appreciate that. I know it’s not an easy question. But you did mention how much you invested, how much was asked, how much is in the budget and how much is in the estimates. I know all that. What I’d like to know is this: Where are you at with respect to targets? When will you get to the results you’d like to achieve? When will we have the March 2024 assessments, and how does the situation look thus far? Because from what I do hear, there are still a lot of needs, but every time I come here, I listen and hear about billions going out the door. I’d like to have some comfort this evening that something is being done with those billions of dollars and that we are improving the process, housing is being built and we are moving in the right direction. How much more do we need to get to 100%?
Ms. Hadden-Jokiel: Thank you for the question.
In terms of the need, the need is significant. Regarding the amount that we’re funding right now, we are going to have to continue to do that for quite a while to replace the units that are in demand.
We’re also changing how we work because the financial investments alone will not be sufficient to close the gap. One of the areas we’re exploring with partners is how to modernize our approach to infrastructure. That includes exploring what additional financial tools we could use. That’s where the partnerships with potential lenders come in. Our colleague in Lands and Economic Development is also working closely with lenders around economic reconciliation.
We are exploring with partners and with First Nations institutions what new financial tools could look like to help First Nations individuals and communities advance their infrastructure projects, including housing and others.
In terms of the results, among the ones we have proposed in our departmental plan for this year, two of them are new. We don’t have a historical trend on those yet, but we feel they will better reflect progress on the housing needs. The one that you identified, namely, the percentage of First Nations households living in a dwelling that contained more than one person, is a new result that we haven’t track before. We will be reporting that in our next Departmental Results Report.
The percentage of First Nations housing that is adequate as assessed and reported by First Nations is a target that we had set at 75%. Our latest Departmental Results Report determined that at 72.6%. That’s close to the target, but there are still improvements to be made.
The other new target that we have introduced in this departmental plan was the percentage of on-reserve Indigenous services funded or other community infrastructure assets with a condition rating of “good” or “new.” We previously did that only for education facilities, I believe. That will be a new target that we will be reporting as of March 2026.
We are trying to improve the results. We are trying to better reflect the results over a number of factors.
Senator Loffreda: With respect to the lenders, I guess there are no Indigenous housing lenders or the network you’re trying to create?
Ms. Hadden-Jokiel: There are some, but right now, the department has limited authorities on what financial tools we can use. We have Ministerial Loan Guarantees, which are a way we can support communities to expand their housing stock. That is an issue that we are currently engaging with communities on. I think the consultation period is through to the end of this calendar year. We will be coming back to this committee with an update on that work.
Senator Loffreda: Thank you.
The Chair: Thank you.
[Translation]
Senator Dagenais: Obviously, we couldn’t let Mr. Thompson leave without asking him a question. I have a question for both departments. It has been openly stated that large budgets earmarked for First Nations aren’t administered by government officials, but rather by trusts, if I understand correctly. I have a simple question for both departments. Given that trusts don’t work for nothing, can you tell us how much tax money your departments are spending on management by the trusts to which you allocate the funding earmarked for Indigenous people?
[English]
Ms. Bess: Thank you for the question. I’ll have to get back to you in writing on that. I don’t have that information handy.
[Translation]
Senator Dagenais: Excellent. Thank you. A written response?
Mr. Thompson: We would be pleased to provide a written response.
Senator Dagenais: Thank you.
The Chair: You’ll provide a written response then.
[English]
To Ms. Bess and your team and to Mr. Thompson and your team, thank you for sharing your information. You have been very enlightening and informative. We always look at making sure that we will receive our answers in writing on time or before the deadline. Send them directly to the clerk of the committee by the end of the day on Wednesday, December 13, 2023. Do we have an agreement that you will respect our requirement?
Ms. Bess: Yes, Mr. Chair.
The Chair: Thank you. To the officials, thank you.
We will now go through the sections of Bill C-241 clause by clause.
Is it agreed, honourable senators, that the committee proceed to clause-by-clause consideration of Bill C-241, An Act to amend the Income Tax Act (deduction of travel expenses for tradespersons). Is that agreed, honourable senators?
Hon. Senators: Agreed.
The Chair: Thank you. Shall clause 1 carry? Agreed or not?
Hon. Senators: Agreed.
The Chair: Shall the title stand postponed?
Hon. Senators: Agreed.
The Chair: Agreed.
Are there any amendments that senators would like to present? I see that there are no amendments.
Shall the title carry, honourable senators?
Hon. Senators: Agreed.
The Chair: Carried.
Shall the bill carry, honourable senators?
Hon. Senators: Agreed.
The Chair: Agreed.
[Translation]
Senator Smith: There’s a question, Mr. Chair.
Senator Gignac: I don’t know when to speak.
Senator Forest: The senator wants to ask for a vote on the bill. He was wondering when he should ask for it.
Senator Gignac: I wanted to express my opposition, but I didn’t know when it would be appropriate.
[English]
The Chair: The guidelines and instructions would be that when it comes to “Shall the bill carry?,” and we said, “Carried,” I can give the floor to Senator Gignac for comments on the bill. Senator Gignac, I will now recognize you for your comments.
[Translation]
Senator Gignac: I wanted to make sure that I understood properly. I gathered that the bill was passed. However, I’m opposed to the adoption of the bill. I’ll give you the reasons for my decision. I’ll even ask for a recorded vote when I’ve finished. Other colleagues may also want to comment on this matter.
The Chair: The floor is yours, Senator Gignac.
Senator Gignac: This is a bill with good intentions. I’m not questioning the good intentions of the bill’s sponsor. That’s not the point I wanted to make. I feel very uncomfortable about this bill.
Bear in mind that this bill was passed in the House of Commons after 90 minutes of debate and that this government was opposed to it. Furthermore, no external witnesses were invited to the House of Commons committee. The Parliamentary Budget Officer did not appear before the committee. This bill was passed without the consent of the Minister of Finance. I’ve done my research and my homework, Mr. Chair, and I’ve wondered how many times a bill has amended the Income Tax Act without the approval of the current Minister of Finance. It’s pretty rare. It’s only happened once in 20 years, and that was in 2020. At the time, it was for business transfers. Even the government members were divided.
First, this bill amends the Income Tax Act without the approval of the Minister of Finance. This is extremely rare.
Second, we heard from witnesses here in committee, including the Parliamentary Budget Officer. I won’t read all the testimony we heard. I’ll limit myself to two comments.
When we heard from the Parliamentary Budget Officer, Mr. Giroux, on October 24, he mentioned that it’s quite rare to have a bill that bears a striking resemblance to a measure that was already been adopted in the 2022 budget, namely, the mobility deduction. We’re very close. He said:
In conclusion, I’d like to highlight potential issues associated with Bill C-241. It could cause confusion for taxpayers forced to choose between two nearly identical deductions that serve the same purpose.
That’s what the Parliamentary Budget Officer said.
Other witnesses, senior officials from the Department of Finance, have not reassured me. I will quote Mr. LeBlanc, who appeared before the committee and repeated here what he said to the Finance Committee in the other place:
Bill C-241 also requires no minimum travel period of relocation, places no limit on the number of trips or the amount of expenses that could be deducted in the year, does not require that the travel be away from the area where the taxpayer is ordinarily employed, and does not require that the individual have earned any amount of income from the job for which they travel.
I would also say that he doesn’t have to sleep anywhere else, because there’s a 36-hour minimum.
In short, when I hear witnesses as credible as Mr. LeBlanc, from the Department of Finance, and Mr. Giroux, the Parliamentary Budget Officer, talk to about this bill with some confusion, referring to the risk of exaggeration or difficulties…. This measure is very similar to the one already in place, except that there’s no $4,000 ceiling, and it’s being introduced without the approval of the Minister of Finance, which is very rare. So I conclude that I’m very uncomfortable with this measure. I am very uncomfortable. I can’t support this bill. Ultimately, it’s a matter of principle. I’m going to vote against this bill.
That said, once everyone has made their comments, I would like to request a recorded division, if possible. Thank you.
[English]
The Chair: Senator Marshall, would you like to make a comment?
Senator Marshall: I would like to make the point that there is only one clause in the bill, and we have already dealt with that clause. You did ask, “Will clause 1 carry?,” and there was no disagreement. Everybody I heard said, “Carried.” I think you got as far as, “Shall the title carry?” That carried, so now we’re at, “Shall the bill carry?” We’re almost through without any intervention.
The Chair: Thank you, Senator Marshall. Do any other senators have comments?
Senator Gignac: If I may, rather than propose amendments, Senator Marshall — because I realize this bill creates so much duplication — so rather than try to improve the bill, I’ve decided it just does not make the cut, from my point of view. That’s the reason I’ve not intervened with amendments, but at the end of the day, I’m not comfortable enough to support the bill.
Senator Marshall: You don’t like the bill.
The Chair: Thank you.
Senator Marshall: I’ll leave it in the hands of the chair.
The Chair: Thank you. Yes, please. I would like senators to give me their comments so I can make a decision as chair.
[Translation]
Senator Forest: I fully understand our colleague’s position.
I would be in favour of the bill, but I’m wondering if it’s technically possible to add a comment.
I’d like to refer the bill back to the Senate for third reading. The Senate will dispose of the bill. That’s why I would vote for this bill. Ideally, I would bring it to the Senate with one comment, which is that it’s a bill with laudable objectives, but that it pursues objectives that are consistent with existing Canadian taxation rules, which may cause some confusion, and that this needs to be clarified. I’m prepared to vote in favour of the bill so that it can be submitted to the Senate as a whole, and not debated here in the Finance Committee, because that seems to me to be a little abusive on our part.
I would like to add this comment that reflects the discomfort we feel, which is that we agree with the objective of the bill, but that the wording is an objective that is already in the Income Tax Act, in the Canadian tax system.
[English]
Senator MacAdam: First of all, I agree that the bill has good intentions, but I’m uncomfortable with the bill. So many issues were raised by the Parliamentary Budget Officer and during our discussions here at the committee. There are many administrative issues. It’s similar to the other mobility deduction under the Income Tax Act. It has been raised a number of times: Why not amend the existing act rather than create confusion and create a complex income tax system. The other thing is no limits on the travel expenses.
I have a number of issues with the bill. I’m not comfortable with it.
[Translation]
Senator Dagenais: I listened to my colleague Senator Gignac, and I understand that, in the past, there was a measure similar to this one. In this bill, there is no longer a $4,000 ceiling. I think that’s an advantage, because we don’t know where people are going to work, and they may sometimes need more than $4,000.
I have a great deal of respect for Mr. Giroux. He’s a very competent analyst. However, he’s not a parliamentarian, and I think it’s up to parliamentarians to decide. A majority of parliamentarians in the other place voted in favour of the bill. Things are different in the Senate. There are independent senators who belong to different groups. However, our primary role is to take a second look.
Still, I’m going to vote in favour of this bill. Of course, we can ask questions. However, this is a tax measure. Whether or not the Minister of Finance is aware of it or has approved it isn’t the issue. She sometimes approves things that she shouldn’t — we’ll discuss that later. We still have a $540-billion deficit, and I don’t care whether she approves those measures or not. I’m thinking more about the worker who will have to haul his tools and truck. I’m puzzled by the $4,000 maximum. When you leave Quebec to work in Alberta in the oil sector, that’s a very small amount.
Senator Gignac, I very much appreciate your bringing these arguments to the table. They lead us to take another look. I will nevertheless vote in favour of the bill.
[English]
The Chair: Before going to the sponsor of the bill, I want to hear all the senators.
Senator Smith: My understanding, having been here for a little while in the Senate, is sometimes you have to look at a bill that benefits society.
[Translation]
You’ll recall that the witness was a union leader.
[English]
What was his name? The benefit to tradespeople, the person who was the witness —
[Translation]
How many members were in his group?
[English]
I think it was 65,000 or 650,000. There is a large number of tradespeople who need to have some form of coverage. This is the type of bill that is not perfect, but should we hold our nose and pass it through, hoping and putting pressure on the government itself and the Minister of Finance to make adjustments moving forward if the end result is for the public good? Because tradespeople do not have any coverage right now; unless they are in specific situations where the originator is going to pay them expense money, they don’t have expense money.
The question is this: Do we need our tradespeople, who are responsible for building, doing construction and building more houses — do we trust that this will be at some point in time corrected so that there aren’t any mistakes in the legislation? But the actual public good is at hand here. This is about public good.
In my mind, I would vote for it on the basis that the benefit will be for Canadians and Canadian tradespeople. It’s not without its weaknesses, but it’s a step in the right direction. Maybe it puts pressure on the government and the Minister of Finance to step in and say, “We need to straighten this thing out and get it working properly.”
Otherwise, it goes back on the shelf, and, all of a sudden, we don’t have a solution to address tradespeople. It again delays a situation that needs to be addressed.
I understand, Senator Gignac.
[Translation]
I understand what you’re saying, and you’re right. However, in good faith to the public, is this something we should be doing? So I’m going to vote in favour of the bill.
[English]
Senator Loffreda: Thank you to all my colleagues for their comments.
We do have a housing affordability crisis. We all know that. We discussed it in detail. This bill has many shortcomings; I agree with Senator Smith. I do echo Senator Gignac’s comments. We discussed it before. There are many weaknesses to the bill.
I feel that, with Bill C-241, the Labour Mobility Deduction achieves most of the objectives of Bill C-241 without the risks or shortcomings of the bill itself. I’m borderline. It’s a very difficult decision. But the Canada’s Building Trades Unions, the CBTU, stated that Budget 2022 was a historical win for Canada’s skilled trades workers with the inclusion of the Labour Mobility Deduction for Tradespeople. They feel they already have everything they wanted to have.
I do understand, though, Senator Forest’s comment saying that it is borderline, and maybe the right thing to do is put it back and send it back to the chamber, see what most senators think about it and take a deeper look at this bill. We have to get this right. We have to send the right message to Canada’s tradespeople. We have to send the right message to workers, and we have to send the right message in correcting our housing affordability crisis.
The Chair: Thank you. Now we go to the sponsor of the bill, Senator Martin, for comments.
Senator Martin: Thank you, chair. My comments will be very brief in that I think my colleagues around the table have all made some very good points.
But I wanted to reiterate that we have adopted clause 1, which is the bill itself, so I think Senator Gignac is asking for a recorded vote for the final adoption of the bill. Is that correct?
[Translation]
Senator Gignac: In fact, I think it was done fairly quickly. I had no amendments to make to clause 1. I was just wondering when I was going to mention that I would be voting against the bill. I think it was done fairly quickly.
If I have to oppose clause 1 in order to oppose the bill, since there’s only one clause, I ask permission to go back to clause 1 to indicate my opposition to clause 1, since I’m opposed to the bill anyway. I’m sorry, but I’m not really used to passing bills clause by clause, especially in a case like that.
[English]
Senator Pate: I would be most comfortable if what Senator Forest suggested went along with a strong observation, including the fact that, yes, the union said they were happy with what exists, as Senator Loffreda said, but when the sponsor arrived, and I went back to the folks he said he had consulted with, there was nothing about it on their page. Of course, they accepted it because it was something positive, and we want to see tradespeople encouraged to be able to travel to do their work. It strikes me that we need some increase. I don’t know if this is the right one, because the PBO told us quite the opposite. I would very much like to see more discussion and debate about it from those of you who have more knowledge of these issues.
The Chair: Honourable senators, with our experience, I believe that we have done our due diligence in listening to comments from all the senators. I would like to remind us that the democratic side of it, for any bill, is that you can comment, and it’s in the transcript.
[Translation]
I heard Senator Gignac make some comments when I asked, as chair, whether the bill had passed.
As for your comments, Senator Gignac, they will be entered into the transcript of tonight’s meeting.
Senator Gignac: When you said, “Shall this bill carry?”, I raised my hand. The others said, “Carried,” but not me.
The Chair: Okay. Your comments will be entered into the transcript of our meeting on the clause-by-clause study.
Senator Gignac: So there won’t be a recorded division?
The Chair: No; I’ll come back to that.
When I listen to the senators around the table, you said that no amendments were proposed, but you said that Senator Forest talked about a possible comment, and Senator Pate’s comment also talks about a comment. So for the next step, I’m going to ask a question as chair.
[English]
Does the committee wish to consider appending an observation to the report? I believe that’s the due diligence and opportunity that we can append an observation to this report.
Now, for the roll-call vote that Senator Gignac has brought forward, I will also recognize that if we have consensus around the table to permit me as chair to say, “Shall the bill carry?,” then I will go back to that particular question to the committee, and then I will recognize that Senator Gignac has asked for a roll-call vote. I will recognize a roll-call vote, and I will move to ask you, “Does the committee wish to consider appending an observation?” And then we will include an observation to Bill C-241.
Next, if you give me permission, I will report the bill to the Senate, and then there will be third reading of the bill. There will, no doubt, be debate on the bill. Any senator from the Finance Committee or other senators in the Senate can bring amendments to that bill or give an observation also. But at that point in time, it will be a decision from the Senate.
Senator Gignac: May I ask a question to the clerk?
[Translation]
When you went clause by clause a little earlier, I never heard clause 2.
The Chair: There is no clause 2; there’s only clause 1.
Senator Gignac: It’s clause 1, subclause 1 and subclause 2; okay.
[English]
The Chair: “Shall clause 1 . . .,” and it has been carried. Do we agree that we have an observation and that we have a roll-call vote? The question will be, “Shall the bill carry?”
Senator Gignac: No.
An Hon. Senator: Yes.
The Chair: You want a vote.
Senator Gignac: I said no.
The Chair: I will ask the clerk to give us the instructions on the vote, and the question is, “Shall the bill carry?”
Senator Forest: With or without an observation?
The Chair: We will deal with the vote on the bill first, and we will deal with the observation in my next question.
So shall the bill carry? We will have a vote, and the clerk will give us the instructions for the vote.
[Translation]
Mireille K. Aubé, Clerk of the Committee: The Honourable Senator Mockler?
Senator Mockler: Yes.
Ms. Aubé: The Honourable Senator Dagenais?
Senator Dagenais: Yes.
Ms. Aubé: The Honourable Senator Forest?
Senator Forest: No.
Ms. Aubé: The Honourable Senator Gignac?
Senator Gignac: No.
Ms. Aubé: The Honourable Senator Loffreda?
Senator Loffreda: No.
Ms. Aubé: The Honourable Senator MacAdam?
Senator MacAdam: No.
Ms. Aubé: The Honourable Senator Marshall?
Senator Marshall: Yes.
Ms. Aubé: The Honourable Senator Pate?
Senator Pate: Abstain.
Ms. Aubé: The Honourable Senator Smith?
Senator Smith: Yes.
Ms. Aubé: The Honourable Senator Martin?
Senator Martin: Yes.
Ms. Aubé: Yeas, 5; nays, 4; abstentions, 1.
[English]
The Chair: Therefore, it is adopted and it will be moved to the Senate.
The next question, senators, as per the discussions we have had: Does the committee wish to consider appending an observation to the report?
An Hon. Senator: No.
[Translation]
Senator Forest: I fully respect the procedure. The suggestion that a comment be added afterwards…. If the comment had been included, I would have voted in favour, but if we don’t agree to do so…. So I voted against it, because I didn’t know…. We all feel uncomfortable, meaning that there is confusion between what exists and what the bill proposes. If the comment had been added, I would have voted in favour of it, in the conviction that when a bill is debated at third reading, our colleagues would have noticed our discomfort as a committee. I voted against it, because we didn’t have…. I respect that, and you’re all my future best friends.
The Chair: Now I’ll ask the question: Do we want to attach any comments?
Senator Dagenais: I just came from the meeting of the Standing Senate Committee on National Security, Defence and Veterans Affairs, where we did the clause-by-clause study of Bill C-21 and there were 25 amendments. Most were rejected, and at the end of the 25 amendments, there were three comments that were already in the text.
We discussed the comments this morning. Are they going to add the comments to Bill C-21? This is a firearms bill, and we proceeded in the same way. We voted on the recorded amendments. It was quite long; it lasted two days.
In the texts we had — and I still have them with me — there were already written comments at the end. We had to add three comments — I thought we could add comments, but now I understand that we’ll be debating comments in the Senate.
The Chair: When the report is tabled in the Senate, two things will happen: If senators want to debate the bill and if they put comments in an amendment, they will do so there as well.
My next question is, “Does the committee wish to add a comment to the report?” If the committee says yes as a whole, we’ll include it, just like the comments made by Senator Forest about the fact that he probably would have voted for it. We have listened to all the members of the committee, we’ve done our due diligence, and the next question will be asked, but the committee can table its report in the Senate at third reading. That will happen.
Senator Dagenais: After that, if senators want to make amendments in the Senate, we can always do so, even at third reading. That’s when we’ll debate it.
For example, in the case of Bill C-21, if I’m asked to propose amendments, I would prefer to do so at third reading in the Senate.
The Chair: It’s procedural, acceptable and accepted.
[English]
Senator Marshall: I don’t need observations. I’m not in support of observations.
The Chair: Any other senators on observations? My question is this: Does the committee wish to consider appending observations to the report?
[Translation]
Senator Forest: In the context of this question… I respect if someone says they don’t want to add a comment; that means the whole committee doesn’t want it or that we’re going with the majority. My comment is that the Finance Committee works by consensus, and it works very well. In my opinion, the discomfort I’ve indicated in my suggested comment is shared by the vast majority of committee members. However, if someone says that they don’t want to add a comment and if we put the lid on it, I’ll respect that. Otherwise, it’s a matter of seeing what the majority agrees on, to add a comment or not.
The Chair: That’s the question that needs to be asked in both official languages.
[English]
Does the committee wish to consider appending an observation to the report? If the majority says “yes,” we will have an observation. If the majority says “no,” we will not have an observation.
[Translation]
Senator Dagenais: A comment doesn’t change the bill; it’s just a comment.
The Chair: It’s not part of the bill.
[English]
Have you heard the comments made by Senator Dagenais? An observation will be reported, but it is not part of the bill itself.
Senator Pate: But it’s part of the report.
The Chair: But it’s part of the report. There’s a time frame, honourable senators, in looking at the minutes that we have left on this particular item. Does the majority of the committee wish to consider appending an observation to the report? I’d like to see if the majority says “yes” or “no.”
Senator Forest: I say yes.
The Chair: Shall we have a roll-call vote? I’ll ask the clerk to proceed.
The question is this: Does the committee wish to consider appending an observation to the report?
Ms. Aubé: The Honourable Senator Mockler?
Senator Mockler: No.
Ms. Aubé: The Honourable Senator Dagenais?
Senator Dagenais: Yes.
Ms. Aubé: The Honourable Senator Forest?
Senator Forest: Yes.
Ms. Aubé: The Honourable Senator Gignac?
Senator Gignac: No.
Ms. Aubé: The Honourable Senator Loffreda?
Senator Loffreda: As I said, if I was borderline or there was a strong observation, I would probably have voted for the bill. I think I voted against it. I think we should still have a strong observation given the fact that we are adopting this bill. I think there are many weaknesses, and we should have an observation.
Ms. Aubé: The Honourable Senator MacAdam?
Senator MacAdam: Yes.
Ms. Aubé: The Honourable Senator Marshall?
Senator Marshall: No.
Ms. Aubé: The Honourable Senator Pate?
Senator Pate: Yes.
Ms. Aubé: The Honourable Senator Smith?
Senator Smith: Yes.
Ms. Aubé: The Honourable Senator Martin?
Senator Martin: No.
Ms. Aubé: “Yeas,” 6; “nays,” 4.
The Chair: There will be an observation. We have to adjourn, however.
Is it agreed that the Subcommittee on Agenda and Procedure be empowered to approve the final version of the observation being appended to the report in both official languages, taking into consideration today’s discussion and with any necessary editorial, grammatical or translation changes, as required?
Senator Marshall: Since I didn’t support an observation, I would like to see the observation.
The Chair: Then the procedure is that we will need another meeting. Is that fine?
Senator Marshall: I don’t agree with relinquishing it to the steering committee. I’d like to see it.
[Translation]
Senator Forest: I have a text that is intended to convey the spirit of the comment and that simply states that the objectives of the bill are laudable, but that there are similar measures in the current legislation that should be clarified to avoid any confusion. That would be my comment. I have the French text that I can show you.
[English]
The Chair: Okay, to consider at the table the observation put forward by Senator Forest — we could finish this shortly.
Senator Marshall: I would like to see the actual observation.
The Chair: In writing?
Senator Marshall: I’m an auditor by profession; I’d like to see the final product.
[Translation]
Senator Dagenais: Having done the same exercise today, here are the comments we made this morning on Bill C-21. We got them in writing in committee. I think Senator Marshall is right: We need to have the comments in writing. We got some in writing this morning. I suggest that we have an additional meeting, if only to get it all in writing. We had the amendments and the comments, so I think we should have the comments in writing. Senator Forest has some good comments; they should be in writing.
[English]
The Chair: Honourable senators, we are giving it due diligence.
As chair, before we adjourn, I will be asking for the observation in both official languages to be sent to the clerk. There will be a meeting next Tuesday, December 5. At the end of that meeting, we will take 15 minutes to address the observation for the report on Bill C-241. This is one observation. If there are other observations that senators wish to bring forward, I will entertain them as long as they are sent to the clerk in both official languages.
Honourable senators, thank you very much for your comments. They are appreciated. This is the due process of committees. On this, I say to each and every senator, thank you.
(The committee adjourned.)