Proceedings of the Standing Senate Committee on
National Finance
Issue No. 10 - Evidence - May 31, 2016 (Morning Meeting)
OTTAWA, Tuesday, May 31, 2016
The Standing Senate Committee on National Finance met this day at 9:30 a.m. to examine Supplementary Estimates (A) for the fiscal year ending March 31, 2017.
Senator Larry W. Smith (Chair) in the chair.
[English]
The Chair: Good morning, everyone. Welcome to the Standing Senate Committee on National Finance, colleagues and members of the viewing public. The mandate of this committee is to examine matters relating to federal estimates generally as well government finance.
My name is Larry Smith, senator from Quebec, and I chair the committee. Let me briefly introduce the other members of our committee: To my left, from La Presse, André Pratte.
Senator Pratte: Formerly.
The Chair: I know, but it's a great subtitle to have. It scares all the people coming in.
To my right, from the Yukon, is Senator Dan Lang; from New Brunswick, long-time stalwart of politics of that region, Senator Percy Mockler; former Auditor General from Newfoundland, Senator Beth Marshall; and from British Columbia, Senator Richard Neufeld. Colleagues, welcome, and welcome to everyone here.
[Translation]
Today, we continue our study of Supplementary Estimates (A) for the fiscal year ending March 31, 2017.
[English]
Today we welcome the officials of three departments.
[Translation]
First, from Infrastructure Canada, we welcome Darlene Boileau, Assistant Deputy Minister, Corporate Services, and Marc Fortin, Assistant Deputy Minister, Program Operations.
[English]
Second, from Innovation, Science and Economic Development Canada, we welcome David Enns, Chief Financial Officer, Corporate Management Sector; and Lawrence Hanson, Assistant Deputy Minister, Science and Innovation Sector.
Finally, from the Canada Mortgage and Housing Corporation, or the CMHC, we welcome Charles MacArthur, Senior Vice President, Regional Operations and Assisted Housing; and Laura Smith, Director, Finance - Assisted Housing.
The CMHC has brought some colleagues. We've got the whole crew. Those individuals will be called on if we have specific questions to ask.
We thank you all for being here with us. Each organization has five minutes to make an opening statement and will be followed by a question period.
Ms. Boileau, the floor is yours.
Darlene Boileau, Assistant Deputy Minister, Corporate Services, Infrastructure Canada: Good morning and thank you for inviting us to speak before you. As you've noted, I'm here today with my colleague Marc Fortin, ADM of Program Operations Branch. We have been invited here today to speak to you about Infrastructure Canada's Supplementary Estimates (A), which were tabled in the House of Commons on May 10.
[Translation]
Before I get into the details of the funds we are requesting, I would like to talk a bit about the work the department has done to date. The work that will be supported by the funds we are requesting.
[English]
Through Budget 2016, the federal government announced that phase 1 of its infrastructure plan will provide immediate investments of $11.9 billion, including $3.4 billion to upgrade and improve public transit systems; $5 billion for investments in water, waste water and green infrastructure projects; and 3.4 billion —
[Translation]
— for social infrastructure, including affordable housing, early learning and child care, cultural and recreational infrastructure, and community health care facilities in First Nations communities.
[English]
As a department, we've moved very quickly to get as much information as we could out to our provincial, territorial, municipal and stakeholder partners. As part of our department's commitment to transparency, the letters that Minister Sohi sent to his provincial and territorial counterparts, which included the details of their allocations under the Public Transit Infrastructure Fund and the Clean Water and Wastewater Fund, were made available on Infrastructure Canada's website.
More recently, on May 4, Minister Sohi reached out to members of Parliament and asked them to be involved in the development of phase 2, which is the long-term strategy. Phase 2 will also include some of the larger transformative projects that are needed across the country, such as major transit and water projects.
[Translation]
The minister asked parliamentarians to indicate to him what areas of investment were important to their communities and their constituents. This will help identify what areas require federal involvement, and what kind of funding or programming needs to be developed.
[English]
This feedback will be invaluable in designing the long-term, 10-year infrastructure plan.
Returning to phase 1, as you see before you, the department has requested close to $1.4 billion in increased funding through the Supplementary Estimates (A). This will provide funding through our programs as follows: over $844 million for the Public Transit Infrastructure Fund; nearly $500 million for the Clean Water and Wastewater Fund; nearly $24 million as a top-up to the existing New Building Canada Fund; and nearly $19 million for transfer programs that will support municipalities in their asset management planning and capacity-building for climate change challenges.
[Translation]
In addition, the department is requesting approximately $14.7 million for operating funding, which includes $10.2 million for operating, including personnel costs; $0.5 million for a data initiative with Statistics Canada; and $4 million for developing codes, guides and specifications for climate-resilient infrastructure with the National Research Council of Canada.
[English]
I would like to note that in support of our department's mandate to transparency, we will be reporting back on the results of our investments as we move forward in delivering these funds.
Finally, I would like to address some of the questions that were submitted to the department following Minister Sohi's appearance on May 4. We provided written responses to the committee on May 27, and I want to highlight the areas that we followed up on.
[Translation]
Senator Marshall, in response to your question about cleanup of contaminated sites, I am happy to confirm for you that Environment and Climate Change Canada is the lead department for the file. There are 14 departments, agencies and Crown corporations that are receiving funding through Budget 2016 to accelerate the cleanup of contaminated sites. The complete list of these departments, agencies and Crown corporations can be found in the response that we have submitted to you.
[English]
Senator Smith and Senator Pratte, you had asked for clarification around the responsible departments associated with the new infrastructure investments announced in Budget 2016. The department has compiled a chart that outlines the various infrastructure investments and the lead departments responsible for each item. I hope this will clarify the issue.
Senator Pratte, you had also asked about how unspent money would be addressed, and Senator Smith, you asked who was going to spend it. The department has produced a chart that outlines how much funding has been approved, paid out and is left unspent in the contribution programs we managed from 2002 until May 9 of this year. I think, senator, you had asked for 2007; we had gone back into our archives a bit further.
Another senator asked about the lapsing of our funds. These funds remain committed to infrastructure projects and the jurisdictions. I'd like to note that due to the nature of infrastructure projects, as we've highlighted previously, factors outside of the control of funding recipients can result in lower spending than forecasted, such as weather, technical issues and construction-related complexities. All of these can delay construction, but they also delay the expenditures for those projects.
[Translation]
As well, the actual flow of funding lags behind the actual rate of construction of the projects because recipients are only reimbursed once claims are submitted, even though eligible costs may have already been incurred.
[English]
The department reprofiles funds to future years to match the construction needs of our partners; therefore, the funds remain committed to the projects and the jurisdictions.
Senator Smith, you had also requested a list of projects that have been approved, announced or that are under review under the national infrastructure component of the New Building Canada Fund. Those six projects are the following: The Fort McMurray International Airport expansion and the southwest Calgary Ring Road in Alberta; the optimization of the Port of Montreal; the Port of Quebec expansion, also known as phase 1 of Beauport 2020; the phase 3 of Highway 85 twinning in Quebec; and the Port Saint John West Side Terminals Modernization in New Brunswick.
The department is also responsible for the Gordie Howe International Bridge in Detroit between Michigan and Windsor, and the new Champlain Bridge project in Montreal. We consider these nationally significant.
[Translation]
And finally, Senator Smith, you had asked about the multiplier effects with regard to projects. I would like to confirm that Finance Canada is the lead on measuring the economic impact of budget measures and would be best placed to provide further information, although we have contacted our colleagues to provide you with information that was included in the budget.
[English]
Infrastructure Canada has been tasked with delivering programs and funding that are key to the future of the country.
We welcome any of your questions, and we are very happy and pleased to be here today. Thank you.
The Chair: Thank you very much, Ms. Boileau.
Next up is Mr. Enns.
David Enns, Chief Financial Officer, Corporate Management Sector, Innovation, Science and Economic Development Canada: Thank you, Mr. Chair. Hello to you and the committee members. Joining me today is my colleague Lawrence Hanson, who is the Assistant Deputy Minister of Science and Innovation in the department. We're pleased to be here this morning to provide you with an overview of our Supplementary Estimates (A) for 2016-17.
First, the department is requesting $604.1 million in the supplementary estimates. The majority of that funding was announced in Budget 2016 for infrastructure investments, which I'll speak about in a moment. The remaining portion of our Supplementary Estimates (A) request is for a number of items to support research, as well as our department's new responsibilities for Sustainable Development Technology Canada.
To begin with infrastructure, the single largest item being requested through Supplementary Estimates (A) this year is $500 million under the new Post-Secondary Institutions Strategic Investment Fund. This program will provide up to $2 billion over the next three years to accelerate infrastructure projects at universities to enhance and modernize research and commercialization facilities, as well as industry-relevant training facilities at colleges and polytechnic institutions.
The program was launched in late March, and ISED has already received over 600 applications, totalling $4.2 billion. The applications are being reviewed as we speak, and project decisions will begin to be made in June.
The department is also requesting $9.6 million in 2016 out of a total of 15.2 million over two years announced in Budget 2016, to maintain and upgrade federal laboratories and other federal assets at the Communications Research Centre Canada, which we call the CRC. The funding will be used for seven projects, although two of them are large.
[Translation]
This year, $4 million will go towards renovating an existing building at the CRC, in order to make it a modern, collaborative and innovative workplace, to support the CRC's research mandate. In addition, $3.5 million will be invested this year in modernizing laboratories at the Communications Research Centre in Shirley's Bay, Ontario.
[English]
The last infrastructure item included in Supplementary Estimates (A) is $2.6 million out of a total of $5.2 million over two years again announced in Budget 2016 for the Federal Economic Development Organization for Northern Ontario, referred to as FedNor. These funds will be to support community infrastructure projects for the celebration of Canada's one-hundred-and-fiftieth anniversary.
[Translation]
To support research, the department is also seeking $24.9 million for two Mitacs programs: the Accelerate program for industrial research internships for graduate and post-doctoral students, and the Globalink program, which provides support for international research internships and fellowships. Of that amount, $7 million is, in fact, a transfer from the Natural Sciences and Engineering Research Council; it comes from a commitment in Budget 2015 to consolidate federal support for industrial research internships for graduate students, as part of a one-time contribution administered by the Department of Innovation, Science and Economic Development.
[English]
The department is also requesting $6 million to support Stem Cell Network's research, training and outreach activities, and to strengthen Canada's international leadership in stem cell research, as set out in Budget 2016.
One of the final items I will highlight comes from the realignment of responsibilities for Sustainable Development Technology Canada. Effective November 4, 2015, the Minister of Innovation, Science and Economic Development was designated the minister for the purpose of the Canada Foundation for Sustainable Development Technology Act. This is the legislation that governs Sustainable Development Technology Canada. As such, $57.8 million is being transferred to ISED this year from the two departments that previously managed the program, those being Environment and Climate Change Canada and Natural Resources Canada.
[Translation]
Lastly, the department is seeking $2.5 million to increase the analytical capacity needed to support the Defence Procurement Strategy and $1 million for the expansion of the Computers for Schools Program, both of which were announced in last year's budget.
[English]
That concludes my introductory remarks. My colleagues and I would be pleased to answer any questions you may have. Thank you.
The Chair: Thank you very much, Mr. Enns.
Next is CMHC.
[Translation]
Laura Smith, Director, Finance — Assisted Housing, Canada Mortgage and Housing Corporation: Thank you, Mr. Chair. It's a pleasure to be here on behalf of Canada Mortgage and Housing Corporation, or CMHC. I am joined today by my colleague, Charles MacArthur, Senior Vice-President, Regional Operations and Assisted Housing at CMHC.
[English]
CMHC has met with the committee on previous occasions to review CMHC's Main Estimates. Today, we are here to discuss our Supplementary Estimates (A) for the 2016-17 fiscal year.
To put the supplementary estimates into context, let me talk briefly about our Main Estimates for the current fiscal year. When the mains were tabled, CMHC estimated budgetary expenditures of $2 billion in 2016-17. Most of this funding will be used to provide assistance to Canadians in housing need, including low-income families, seniors, people with disabilities, Aboriginal people and victims of family violence. The balance will be used to support our market analysis, and policy research and information transfer activities.
However, as the committee is aware, Budget 2016 provided significant new investments in housing that were not included in the Main Estimates. For this reason, we are seeking parliamentary approval for additional expenditures of $1.07 billion in 2016-17 through these supplementary estimates.
As part of the government's planned investments in social infrastructure, Budget 2016 includes new funding of $2.3 billion over two years, starting this year, to improve access to affordable housing for Canadians. Most of this funding will be delivered through CMHC. I will quickly outline the new spending plans for the committee's benefit.
First, Budget 2016 will double the current federal spending under Investment in Affordable Housing, providing an additional commitment of $504 million over the next two years. This means an additional $262 million in the current fiscal year. This funding will be matched by provinces and territories. It will be used to build and renovate affordable housing, and to provide rent supplements to support housing affordability.
Budget 2016 also includes the following federal funding to be provided under Investment in Affordable Housing, which does not require cost-matching by the provinces and territories: $201 million over two years to build or renovate affordable housing for low-income seniors, half of which will be provided this fiscal year; and $90 million over two years to build or renovate shelter spaces for victims of domestic violence, including $60 million to be delivered this year. There is also $574 million over two years to repair and improve the energy and water efficiency of existing social housing units. The bulk of this investment — $500 million — is included in the supplementary estimates for 2016-17. CMHC will directly deliver $82.7 million of this funding over the next two years to federally administered social housing and $178 million to address unique housing challenges in the North and Inuit communities, including $75 million to be delivered this fiscal year.
To address urgent housing needs on reserve, Budget 2016 included $544 million over two years, beginning in 2016- 17. Of this amount, $138 million will be delivered by CMHC, with the remainder being provided to Indigenous and Northern Affairs Canada. CMHC's portion would mostly support the renovation and retrofit of existing housing on reserve, with half being provided in 2016-17.
Finally, Budget 2016 provided $10.4 million over three years to build and renovate shelters for victims of family violence in First Nations communities, and $3.5 million of this amount is included in our supplementary estimates.
These investments will address the most pressing housing needs in communities across Canada. In addition to improving living conditions for thousands of households, they will spur short-term economic growth.
Looking to the longer term, CMHC will support our minister, the Honourable Jean-Yves Duclos, in the development of a national housing strategy that will include innovative approaches to improving housing outcomes for all Canadians.
As a Crown corporation with the sacred trust of managing public resources, CMHC is determined to be a high performing organization — accountable, transparent and efficient — in order to serve the housing needs of tomorrow.
Thank you again for the opportunity to be here. My colleague and I would be pleased to answer any questions the committee may have.
The Chair: Thank you very much, Ms. Smith.
Maybe just to start off the discussion, if we could go to Mr. Enns, you asked for $604.1 million for infrastructure research, of which $500 million is headed for post-secondary research.
Mr. Enns: Research institutions, yes.
The Chair: Right. So, if I understand correctly, universities in Canada. You've had $4.2 billion worth of applications so far for that program, and you're going to invest up to $2 billion over a period of time. You're going to have to pick who's going to win and who's going to lose.
Major fundraising programs have taken place over the last 15 to 20 years because universities found themselves in a situation where their facilities were crumbling and they had to move forward, and they weren't necessarily getting the government support they felt they should get.
Mr. Enns: Right.
The Chair: How are you coordinating this in terms of having $4.2 billion worth of requests and $2 billion in the kitty to dole out? Could you give us an idea of how you are going to do this? How do you pick the winners and the losers?
Mr. Enns: I'll let my colleague Lawrence answer that, as he's responsible for going through those applications right now. He can tell you a bit about that.
Lawrence Hanson, Assistant Deputy Minister, Science and Innovation Sector, Innovation, Science and Economic Development Canada: Thank you very much. I think there are a couple of things.
First, it is important to remember that this is a cost-shared program, so the Government of Canada will fund generally only 50 per cent of any proposal. The other 50 per cent will need to come from provincial governments or other sources. The $4.2 billion represents the total proposals from all institutions. That's not to say, though, that they all have their matching funding in place. In other words, proposals where there's no matching funding in and of themselves would ultimately not be able to be funded if they can't reach that 50 per cent target. That would obviously remove a meaningful number of those projects.
Second, there will likely be some projects that are ultimately deemed ineligible because they don't meet the terms and conditions of the program.
Finally, within those that pass the threshold of being both eligible for the program and having the necessary financial commitment, ultimately we'll be assessing them against the various elements such as the criteria of the program in terms of improving the scale and quality of innovation and research capacity, industry-relevant training space, environmental sustainability objectives, and other merit criteria in terms of readiness and the extent to which they might benefit Aboriginal Canadians, et cetera. Again, the $4.2 billion is an ask from all institutions, but the absence of things like matching funding and the overall judging of them against one another will position us to ultimately make final decisions for the $2 billion available.
The Chair: In listening to your feedback, I'm wondering how much time it will take to do this?
Mr. Hanson: The actual application process and going through the applications is nearing completion. The applications came in several weeks ago, and we've had a large team of people going through all the applications for the last several weeks. Our intent is to move toward project approvals over the course of the month of June.
The Chair: Senator Pratte, you had a question.
Senator Pratte: It's a follow up to yours, Mr. Chair. When were the criteria of this program ready and sent to institutions?
Mr. Hanson: The information was made available immediately after the budget, and then they had a few weeks to prepare their applications.
This was similar to the timing of the predecessor program for this, the Knowledge Infrastructure Program, and this is something that post-secondary institutions had been asking for. It had been identified as a priority by Universities Canada, by the U15, which is the research at universities. They had been asking for a program similar to the 2009 program and had likely been developing proposals in the hope, I think, that there would be a positive budget announcement.
Senator Pratte: They must have been because this is really fast, so the projects must have been ready already.
Mr. Hanson: Obviously, provinces and territories and universities have capital expenditure plans that they're developing. From our perspective, the important thing was for them to be able to demonstrate, among other things, how funding from this program would be able to accelerate and advance these projects.
The Chair: Plus, there is a pecking order too. When the former government was in a position of handing out money for research and development in the university system, there is a ranking of the universities that get this type of funding. Now I understand there's an issue of infrastructure versus actual research funding, but it would appear that the biggest players in research and development — and if there are going to be facilities built that will continue to promote research and development — would probably have an advantage in terms of submissions if they submitted half decent documents. I'm just wondering how objective this is. Do you have a committee deciding who gets the dough? How is this done?
Mr. Hanson: I'll note a couple things.
It's important to remember that the program is not solely designed to fund projects at large research universities. Indeed, there is a requirement that a minimum of 30 per cent of the funding actually go to the college sector. The predecessor Knowledge Infrastructure Program funded infrastructure projects at both large and small universities and colleges. I think, ultimately, about 35 per cent of the funding went to colleges in round one.
In terms of the actual decision-making process, the department is going through the applications. Ultimately, provinces and territories will identify their priorities, i.e., the projects they're prepared to fund. Minister Bains, who is the minister responsible for the program, will be in consultation, working with provinces and territories, to reach contribution agreements with each province and territory. The list of agreed upon projects will be a schedule to those agreements.
Senator Marshall: I'd like a little bit more information, too, on the selection process. How is it arranged? Is a deadline established and then you go out and ask the universities and colleges for proposals, and then they have to come in by a certain deadline? Or are these requests for proposals coming in over a period of time?
Mr. Hanson: That's a good question. It was a single intake process. When the program was announced shortly after the budget, a date of May 9 was established for project submissions. There certain extensions have been granted as necessary, but generally it was a single intake process, with all applications due on May 9.
Senator Marshall: When the proposals are reviewed — I understand it's done by a committee — is the ranking all qualitative or is it quantitative? For example, sometimes when requests go out for proposals, there are 10 criteria. Each criterion is assigned a number of points, for example 1 to 10, and then whoever gets the highest points are the successful people for whatever. Is it done like that? Is it quantitative, qualitative or a mixture?
Mr. Hanson: I would say it's a mixture. We look at the various criteria that the project proposal is assessed against. We look at issues surrounding its overall readiness, the sense that it's prepared to proceed on time, and the extent to which it can demonstrate the capacity to drive innovation or to drive more industry-relevant training. I would say it's a combination of the two in terms of the assessment process.
Senator Marshall: Do all projects go through that process, or would some be singled out by saying, "We will approve this one, anyway,'' and it doesn't go through the process?
Mr. Hanson: No, there is no automatic approval for any project. Right now we're just in the assessment stage, which is ultimately to determine whether or not it meets the actual individual program criteria and the extent to which it suggests it can drive various benefits. Ultimately, there is a decision-making stage that is, in significant part, demonstrated by provincial priorities. The intent of this is to deliver this program in partnership with provinces and territories, as was done in the predecessor program.
Some things obviously don't go as far in the process as others. The process ends earlier for those that are deemed ineligible for the program based on its terms and conditions.
Senator Marshall: Is the committee's decision the final decision, or is it just a recommended decision?
Mr. Hanson: To be clear, there is a group of people analyzing all of the projects. They will fill up project assessments for each of the individual projects. They are not really constituted as a committee; it's an evaluation by multiple people who go through and indicate which of the criteria have been met and provide a bit of an assessment of the project. Then ultimately it goes forward for consideration by the minister, who in turn will discuss it with his provincial and territorial counterparts.
Senator Marshall: So the final decision is made at the ministerial level?
Mr. Hanson: That is correct.
Senator Lang: I want to follow up on a couple of issues here.
First, there is the question of the $178 million for housing challenges in the North. That would be directed to CMHC, I believe. Do you have a breakdown of how that $178 million is to be allocated?
Second, I have a general question. One of the areas of concern is the question of the actual decision-making timing for these projects in the North, not unlike a lot of places in the South as well. The later the decisions are taken, the less chance there is of those projects getting under way over the course of the year.
Going forward, recognizing that this year is half over, what steps are being taken to ensure these decision-making bodies are taking the decisions early in the fall or very early in the winter so that the green light can be given to get the contracts out and we can take full advantage of the building seasons?
Charles MacArthur, Senior Vice President, Regional Operations and Assisted Housing, Canada Mortgage and Housing Corporation: With regard to the $178 million under northern housing, 8 million additional dollars will go to the Yukon, $12 million will go to the Northwest Territories and $76.7 million will go to Nunavut.
In terms of Inuit housing, Nunavik will receive $50 million, Inuvialuit will receive $15 million and Nunatsiavut will receive an additional $15 million.
In addition, there was a doubling of Investment in Affordable Housing, which is outside of that, so the numbers on that would be Nunavut will receive an extra $1.59 million, the Northwest Territories $2 million and Yukon $1.7 million in addition to the —
The Chair: It's a fantastic presentation, but it's the old "baffling us with stats.'' What would each group get when you total them all together?
Mr. MacArthur: There would be an extra $5.5 million doubling under the IAH for the three territories in addition to the $178 million that I described.
The Chair: How much does Yukon get, all in? How much does Nunavik get, all in? It makes it easier to understand.
Mr. MacArthur: All in this year, Yukon would get $7.2 million, the Northwest Territories, including the northern and Inuit, would get $16.6 million, and Nunavut this year would get $40.1 million.
Next year, Yukon would get $6.4 million, the Northwest Territories would get $18.7 million, and Nunavut would get $43.9 million. Nunavik would get $50 million and Nunatsiavut would get $15 million.
The Chair: Senator Lang, are you ready to ask more questions?
Senator Lang: I wanted to follow up on the question about the timing.
I have is a general question on these capital projects. I know we're going into a Canada infrastructure strategy over a 10-year period. The federal government will be making long-term commitments so that the territories and the provinces can make long-term decisions. I'll use the Yukon, where I come, from as an example. Let's say $100 million is made available over five years, and the territory knows that and they can program themselves accordingly. Is that the intent of these projects going forward?
Mr. MacArthur: There are a couple of questions in there. I'll start with the first one, the decision-making process to ensure dollars can flow in a timely manner.
These monies will flow through Investments in Affordable Housing, which is a well-established mechanism we've used with all of the provinces and territories over time, including during Canada's Economic Action Plan in 2009. Our partners are used to dealing with this. We have talked to them. We are in the negotiation process, which is going very well. Nobody has indicated issues with spending any of the money. In fact, some provinces and territories have indicated, "Yes, let us know if additional funds are available.''
With regard to the North, a couple of times we have had additional funding; for example, an extra $100 million a couple of years ago with regard to Nunavut. We timed it so they were able to make the sea lift and so all of the dollars are able to flow over time. Depending on the territory and the conditions, it might involve getting the lots ready in the first year, and if it's a sea lift situation, it would maybe be next spring they do the sea lift and the construction. It's a matter of the provinces and territories making the local decisions.
The additional supplementary funding is two years in nature. As indicated, a national housing strategy will be developed, and that would be an opportunity to discuss the larger question that you raise.
Investments in Affordable Housing, the other dollars we spoke of, that's until 2019. It was a five-year agreement, so our provincial and territorial partners are able to plan in that time frame.
Senator Lang: Thank you.
The Chair: I have a supplementary to Senator Lang's questions for the CMHC. In relation to Yukon, Northwest Territories and Nunavut, which have $40.1 million and then $43.9 million next year, is that a priority area for you folks?
Mr. MacArthur: To the North? Absolutely.
The Chair: I know they are all priorities, but is Nunavut the number one target you're trying to address?
Mr. MacArthur: There is extra for the North and then there are extra dollars for the Inuit populations, which have a higher level of core need than other populations. The costs of just doing business in the North — whether it's labour, transportation or material — are all exponentially higher. It costs more in Nunavut to build a house than it does in Toronto.
Senator Lang: I'm not on the Senate Aboriginal Committee, but I do know they did quite an all-encompassing study of housing in the North. Are you taking into consideration the recommendations from that Senate committee?
I mainly refer to issues such as whether these homes being built are being inspected to ensure they meet the building code, and various other aspects of how this money can be spent in a better way than it has in the past. In some cases, the houses hardly even get built and millions of dollars have been spent, yet the people who those units were supposed to assist don't necessarily get the full benefit of what you and me as taxpayers are providing.
Mr. MacArthur: With regard to the North, we work with our partner housing agencies in those communities. For example, we work with Yukon Housing. Yukon Housing would be responsible for assuring that the municipal codes — or I'm not sure how it works in the territory, but the municipality would be the one that would be responsible for ensuring that what is constructed is to code. It's like here: When we build a home, the municipality ensures it's up to the municipal code.
Senator Lang: I'm more specifically referring to reserves. That's a totally federal responsibility. In our case, in Yukon Housing or BC Housing, I believe all those things are followed, but I want to talk about the expenditures in the past. What are we doing to rectify that?
Mr. MacArthur: I'll go back to the code question for a second. We don't have the mandate to do inspections. In the nation-to-nation relationship with First Nations, they are the ones responsible for ensuring that buildings are built to Part 9 of the building code, as adapted across the country; what would be the case in Newfoundland is different than in British Columbia, et cetera.
As part of our programs, inspections are a covered cost, so the First Nations are able to bring in inspectors to do that. In our new construction program, we require three inspections by professional, qualified engineers and inspectors at various stages of the building process, and to have that certified and signed off.
At the time that the home is turned over, we require that it's meeting the appropriate building code. As I say, the building codes vary according to where we're at in the country, but we have put in the checks and balances required to assure ourselves that that is happening.
After the fact, we do inspections and we work with First Nations to ensure that they have the skills and talents to manage the housing portfolio in their community to a better degree. We have capacity development, where we will work with a First Nation on anything from rent collection to how to live in the home or how to manage the portfolio as an asset, and the like. So we work after the fact as well to help folks maintain those houses in a way that is acceptable.
I acknowledge what you're saying with regards to the need.
The Chair: It seems to vary depending upon which nation it is. There are nations that are highly sophisticated and advanced, and there are those who are less so.
We had this question before, Mr. MacArthur, in previous debates with the CMHC about jurisdictional responsibility, transparency and accountability. There still seem to be issues in terms of getting the accountability and transparency that you require. With anyone outside of the special, unique circumstances the indigenous people face and how their systems work, the rest of people that you deal with throughout the country, you're very strict in terms of mortgages, processes, rules and regulations. We're not saying that you're not strict in this case, but maybe there is an issue of how the process works and how you can tighten that up so that you can maximize your return.
Mr. MacArthur: As I say, we ensure the chief and council or the chief signs off that the inspections have been done by a certified person. After the fact, when we have all of those pieces, we work with the First Nations community to try and improve the overall management of the portfolio. We have a risk model where we assess the financial viability and the viability of the project.
We currently deal with 480 First Nations of the 617. We have individualized plans in place with 380, I believe, to improve the operation of their housing. We're very focused on helping First Nations help themselves through the deployment of our tools.
Since we have been doing that over the last three or four years, we have seen improvement. It's a plan where we work with the First Nation and that the First Nation agrees to. That guides us, to a certain extent. It's a discussion in that if we believe this is what's required first and that is what's required second, we'll have that discussion.
But it's a partnership with the First Nation to try and improve the overall housing stock, their management of the stock and the management of the asset.
Senator Marshall: In response to Senator Lang, you indicated the funding in Yukon. How is the decision made with regard to how much is assigned to each jurisdiction?
Mr. MacArthur: Primarily based on population.
Senator Marshall: It is per capita?
Mr. MacArthur: There is a little adjustment for the North. That was agreed to by all the province and territories. There is an established formula primarily based on population, with some slight adjustments for northern regions.
Senator Marshall: Okay. Then the programs would be delivered through provincial housing; for example, Newfoundland and Labrador Housing Corporation?
Mr. MacArthur: Yes.
I will make one point. There is funding for social housing of $573 million, and that's based on the number of social housing projects in the jurisdiction.
Senator Marshall: The number of units?
Mr. MacArthur: The number of units. So that one's a little different.
Senator Marshall: For the program you referred to earlier, the additional investments in housing for First Nations, Inuit and Northern communities, would Newfoundland and Labrador also be included in that program?
Mr. MacArthur: Yes, Newfoundland. For Nunatsiavut, there is an additional $15 million there with regards to First Nations housing, which is separate from that. We work with the First Nations and our colleagues in Indigenous and Northern Affairs and allocate the dollars. There is an established methodology.
Senator Marshall: For each of the programs, I'm interested probably in the top four. Is this for renovations? We get into this issue where we're building new units, but we also have to maintain them. For supporting energy and water efficiency retrofits, that's all renovations; that's not new units, is it?
Mr. MacArthur: That's renovation of existing social housing, yes.
Senator Marshall: What about the one for First Nations, Inuit and northern communities?
Mr. MacArthur: With the Inuit and northern communities, that can be increasing the supply, so construction —
Senator Marshall: It will be new units.
Mr. MacArthur: It can be new units. It can be renovation. It can also be rent supplements given to help people with affordability. It can also be for renovations or fostering safe environments for folks, such as victims of family violence.
Senator Marshall: So doubling the Investment in Affordable Housing, is that all new units?
Mr. MacArthur: No. Decision making is made at the local level. What is required in Vancouver may be different than what is required in northern Manitoba. The provinces and territories design and deliver the actual program within those four broad categories that I have described.
Senator Marshall: Housing for seniors, is that for renovations or new units?
Mr. MacArthur: Renovations and construction of new units. That doesn't have to be cost-matched.
Senator Marshall: Would you know how many new units are going to be constructed in the upcoming year with the amount of funding that you have been provided? Have you developed a program to that extent?
Mr. MacArthur: We can estimate how many we believe can be built, based on the past. Maybe we can give you that number, because I don't want to overwhelm you with —
Senator Marshall: I would expect, from year to year, that we're on an upward trend with regard to units. I would think there would be some units that you can't repair and they come off the total number. But am I correct in assuming that the number of units that fall under your jurisdiction or the provincial or territorial housing associations or corporations are continually rising?
Mr. MacArthur: We look at the number of folks served by it or folks who are no longer on a social housing waiting list. That's the number we track. It could be rent supplements, which is not new units, and that could be a large number, which it is in some jurisdictions, or it could be new construction. So I don't have an answer. I would have to come back to you with an answer.
Senator Marshall: I would be interested in knowing. I'm not interested in the subsidies; I'm interested in the units. I read somewhere that the number of units is increasing, and therefore the demand for renovation dollars will also be increasing. Will it continue to grow forever? Is it infinite? I would be interested in seeing the number of units.
The Chair: Could you follow up and get that information to us, Mr. MacArthur.
Mr. MacArthur: Yes.
Senator Neufeld: I want to get more clarification on the building codes. You say you have agreements with many of the First Nations across Canada. So if we're in British Columbia, there is the federal building code and then the BC Building Code. Which code do they follow when you're building new housing on reserve? Is it the federal code or the provincial code? I got a bit mixed up with your previous answer.
Mr. MacArthur: We require that it follows at least Part 9 of the building code. I'm being technical. The National Research Council establishes that in consultation with the provinces and territories. Provinces, territories and municipalities adapt that to meet the local conditions. For example, rainscreen requirements in British Columbia would be significantly different than that of New Brunswick and the like. We require that the First Nations build to that standard or a similar standard and have it certified that the unit was built to that standard by a professional engineer, a professional inspector and the like. It's their obligation to have an inspector come in.
Our process for new construction requires that when the basement is put in, I believe when the walls are up and prior to final occupancy, there is certification that it was built to the code. The First Nation, like a municipality, may adapt it. Westbank may have its own building codes or it could use Kelowna's. I'm not sure, but we require that we get that certification from professionals that it has been built to that code.
Senator Neufeld: Prior to any money being released, a certificate is signed by an engineer or someone with the authority to say, "This building has been built to this code''? There will be something that says that before any funds are released?
Mr. MacArthur: We will flow funds throughout the process because First Nations may have cash flow challenges, but we ensure at those three points that we get the certification and in the final stage that it has been built to code.
Senator Neufeld: So you flow the money and you expect that you'll get those certificates back. Is that what you're saying?
Mr. MacArthur: No. Throughout the process, there are three — just like a bank. I built in Nova Scotia and didn't have the money to put up front, so the municipal inspectors come in over time. Then the bank allows me to draw on what's there based on yes, the work is in place and yes, it is meeting the codes. It's a similar process to what would happen here in Ottawa with construction.
Senator Neufeld: You've qualified with Part 9 of the building code. I don't have the building code in front of me and I don't know what Part 9 is. What is Part 9?
Mr. MacArthur: Part 9 is the national standard upon which many of the building codes across the country jump off of. I would have to get my colleagues from NRC to get into the technical pieces of it, but it is home construction. It's the piece of the building code that deals with single family construction.
Senator Neufeld: With respect to the new housing Senator Marshall just asked about, you must have an idea of how many new houses are going to be built in Nunavut. Pretty well all of that is sea lift. If the sea lift will happen in July, you can't call them in June and say, "Listen, I have to send 40 houses up there.'' You must have made that decision a long time ago to actually garner the space on the ships in order to get the goods there to be able to build a house. Is that right?
Mr. MacArthur: Let me give some context and not speculate on how this would work.
When Parliament voted $100 million, I think it was for either 256 or 286 units. In the case of Nunavut, the Nunavut Housing Corporation would be thinking about this now. They will be determining where they have lots. Do we have lots in Pangnirtung? Do we have lots in Dorset? Do we have lots in other communities? They will be doing the planning. They will be doing the thinking around it. We don't do the delivery; our provincial or territorial partners do. They do the planning and delivery.
Senator Neufeld: Thank you.
Senator Lang: There are two areas I want to follow up on further. For clarification, I appreciate the candour with which you're responding to our questions, Mr. MacArthur. You obviously know the file.
I do want to get this clear on the building inspection. This is what has happened in the North, especially the isolated areas. I'm not telling you a story that you don't already know, where the commitment has been made by the Government of Canada, money has been allocated and, quite frankly, in many cases — not just a few — the structures were not built to code. In some cases they weren't even built. So this is of concern.
Now, when we asked about the building inspector, you indicated to us in one of your responses that it was signed off by the chief. What I don't quite understand is that when somebody inspects my house, it's not signed off by the mayor; it is signed off by the building inspector, it goes CMHC and I get the necessary authorization to proceed further with the building of my home.
Can you clarify this? As Senator Neufeld asked, is it clearly the building inspector who says, "Yes, you have met the standard and you can proceed to the next phase of building''? CMHC, the financier, receive that and that gives them the authorization to proceed. Is that correct?
Mr. MacArthur: We receive that through the chief and council. That's who we deal with on the construction of the social housing.
Senator Lang: They are buying the house. I understand that.
Mr. MacArthur: Yes. So an engineer, a building inspector, a qualified individual provides the certification that it has been built to code at those three points during the construction.
Senator Lang: You're satisfied that in the future we won't ever have to ask this question again, then?
Mr. MacArthur: I can say that we have put in place processes to provide ourselves with assurance that at the time the homes are being handed over, they do meet code.
When we talk about the North and First Nations, there is overcrowding. There are lots of challenges. I was in a community last week talking with somebody, and as we were walking away with the gentleman responsible for the building, he said, "There are a couple of families living in that house. They are unemployed so they are there all day.'' So there are different challenges. I acknowledge that we need to build these houses to code. The communities need to ensure there are recovery ventilators and the like. There are challenges besides the physical construction that we have to take into account.
Senator Lang: Sorry to belabour this, Mr. Chairman. I just want to go into one other area.
I referred to the Senate Aboriginal Committee's report on housing. Have you read it? Have you responded to the Aboriginal Committee with respect to the recommendations in that report?
Mr. MacArthur: Yes, and we're in the process of working with our colleagues at Indigenous and Northern Affairs to provide our formal response. I'm not sure whether it has gone forward.
Yes, I did read it. I read it when it came out — the first portion on housing and then the subsequent one.
Senator Lang: Can you provide us with a copy of that formal response so that we're aware of that as well?
Mr. MacArthur: I assume we can. I'm not sure of our —
Senator Lang: Thank you.
The Chair: Thank you very much, senator.
You'll notice that a sensitivity has been raised because of articles in newspapers across the country of people in the indigenous population complaining about the quality of homes. We have had CMHC here before, and the question was asked: Who has the jurisdiction? We were told that the jurisdiction rests in the hands of the chief of the nation. We respect that, but the reality is that issues stem from that in terms of executional issues.
I guess you're trying your best to establish checks and balances so that the right work will be done. When we met with the people who are going to set up the Arctic research centre up, I guess, in Nunavut, they stress that it's really important to get local people who understand the earth and the climate, who would tell you how to build houses in terms of the construction. Hopefully these types of things will fall into place as you progress in terms of the relationships.
But it's hard to take when you read some of the feedback that people have these issues. So how do we involve the people not only from a jurisdictional issue but from an actual construction issue so that people who know the land will be able to really contribute to the people that are the builders?
Mr. MacArthur: We're involved in the Arctic research initiative. We've got people on the ground across the country. The national housing strategy is an opportunity to bring that in.
Just to clarify with regard to codes and in-community codes, our colleagues at INAC have the lead on the housing piece. They would the ones who would bring that.
We do our best. I talked about our portfolio management initiatives, our signing of actual agreements with the First Nations to try to drive things. We focus on the building. We make sure the building is there. We do the follow-up after the fact. We have in-place things to make that building as good as it can be, but it would be our colleagues in Indigenous and Northern Affairs that would take on the overall code responsibility.
The Chair: But, with respect, that's not necessarily the right answer to give publicly because what we expect from you folks is that, with your horizontal relationships, if you identify an issue, you're going to step up and deal with the department who has responsibility for that issue because you're responsible also. I took two hours on the plane reading about CMHC. It's a fantastic organization, the way that you fund and create vehicles and sell debt to people, which is somebody else's debt. It's a fantastic story, but key issues in many of the regional areas are all about accountability and transparency. It's not that we just want to try to go after your department, but your department is tied in with infrastructure. If infrastructure has X billion dollars that you, as a horizontal player, are going to be involved with, and then you have a third party who's involved with actual jurisdiction on coding, it's not just your responsibility; it's all of our responsibilities to make sure that it gets handled.
Mr. MacArthur: Yes.
The Chair: I'm not trying to lecture you; I know you know better.
Mr. MacArthur: I acknowledge that.
We're involved in the training of inspectors, the portfolio management. It extends long beyond the house being built. We're with it for 20 or 25 years, depending on the length of the mortgage, 15 to 25 years. On a cyclical basis, we're there. We're looking at the house. We're working with the community. We work with them when there are changes in housing managers, and the like, because we are a housing organization. We believe it's an asset and that, if you manage it right, it's an investment in people's lives. If you're in a warm, safe place tonight, it can change the outcome of your day at school tomorrow. So we get it at a very profound and fundamental level.
The Chair: Thank you very much.
Moving forward, Senator Mockler, did you have a question? Ms. Boileau gave me a little sign that said she wanted some questions for Infrastructure, too. The last time Infrastructure came, she read the report to us. She had all our names written in terms of all the responses. She's looking at me with those sad eyes and saying, "We need to have some questions, too.'' Do you have something for Infrastructure?
Senator Mockler: Absolutely.
The Chair: Like phase 1? Where are we with phase 1? Have we completed it, and how much money has been moved out?
Senator Mockler: Ms. Boileau, can you give us the breakdown for the Atlantic provinces — and I'll start with New Brunswick — when it comes to public transit infrastructure, subject to the letter?
[Translation]
I'm referring to the letter Minister Sohi sent to the Government of New Brunswick.
[English]
In the water/wastewater fund, the New Building Canada Fund.
This will permit me to continue with a few other questions, Mr. Chair.
[Translation]
Ms. Boileau: If we start with New Brunswick, the total envelope the province is to receive as part of the program, which is calculated on a per-capita basis, is $481.826 million.
Here are the details. Under the Clean Water and Wastewater Fund, the amount is $79.5 million. For the New Building Canada Fund, the regional component is $354 million. For the Public Transit Infrastructure Fund, the amount is $8.740 million, based on the number of transit users. This is information that was provided to us by one of our partners. For small communities, an envelope of $39.363 million has been set aside. All in all, there is $481 million earmarked for New Brunswick.
Senator Mockler: With respect to the Public Transit Infrastructure Fund, there is one city — Moncton, I believe — and other regions that have made requests that far exceed the $8.7 million allocated by your department.
Ms. Boileau: I will hand off to my colleague, Mr. Fortin, who is head of operations.
Marc Fortin, Assistant Deputy Minister, Program Operations, Infrastructure Canada: Moncton is a really nice city. I used to live there, actually.
As far as money for new funding goes, right now, we are in discussions with the province so that it can provide us with its list. On its end, the province is holding talks with the municipality, so the full list has yet to be established. They will have to come up with an order of priorities, to determine the major priorities of the city of Moncton.
Senator Mockler: It's not only the city of Moncton; there are other places in New Brunswick.
Mr. Fortin: Indeed, such as Fredericton.
Senator Mockler: And Saint John. They need far more than the $8.7 million allocated.
Mr. Fortin: In that case, there will be a list of priorities. However, other funds are available that the province, as part of its agreements with municipalities, can use. It is not tied solely to the two-year program.
Senator Mockler: It's the same with the Clean Water and Wastewater Fund, which is about $80 million. Have you received a list from New Brunswick setting out its priorities?
Mr. Fortin: No, not in the case of the two new programs thus far. The impetus was the budget announcement that was made. In the hours that followed, we were in discussions with our provincial and territorial counterparts to explain the parameters of the programs. So, they are doing their homework now.
Senator Mockler: You are clearly intelligent, but when you look at the amounts, it is obvious that it is a fraction of what is requested.
Yet, your minister talked about shovel ready versus shovel worthy. Did you divide up your money based on these types of projects? The time of year also needs to be taken into account. You just can't build that kind of infrastructure in January where I come from.
Mr. Fortin: I totally understand your question, which was actually raised in our discussions with the provinces and territories. Weather and timing must also be taken into consideration when priorities are established.
A few weeks ago, you undoubtedly recall that Minister Sohi was quite determined in his request to the provinces to conclude agreements as quickly as possible. He even specified a timeline so that agreements could be signed this year. You may have noticed that I turned as white as a sheet at the time.
Provinces need to be aware of the importance of setting priorities. We are hoping that the minister will be able to sign bilateral agreements with his counterparts in the coming weeks.
Senator Mockler: You're telling me that New Brunswick has not signed an agreement yet.
Mr. Fortin: Actually, no provinces or territories have signed agreements yet.
The Chair: That means that no funds have been allocated as of yet.
Mr. Fortin: As far as new programming is concerned, no money has been released. A bilateral agreement will be the impetus.
The Chair: For phase 1, the budget for which is $3.9 billion, has any funding been granted?
Mr. Fortin: For phase 1 of new programming, no funds have been released.
[English]
Senator Mockler: I think it's very important, Mr. Chair. If you look at Atlantic Canada, and I can say the same for Northern Canada — and, to a lesser degree, Southern Canada, if I can use that phrase — because of the climate we have, a lot more emphasis should be put on the table in order to identify those projects ASAP.
The Chair: But in fairness to Infrastructure Canada, there's an issue in Quebec where a lot of the municipalities — and I know it was through the Gas Tax Fund — have not submitted their projects over the past period of a year or two. That was quite shocking when we heard from some of the MPs in Quebec. We asked them, "What's the status of your municipalities?'' We had 12 elected officials, and they said that most of these municipalities had not submitted. When we asked why, there were all sorts of different answers.
It's not just the Infrastructure Canada folks. Let's give them a break. It's a combination of timing and making sure we get things done.
Please continue, Senator Mockler.
Senator Mockler: You're absolutely right. We can miss a whole year before we get — and I'll take an estimate — 25 per cent of those funds being shuffled and directed to those communities.
There's another area of concern, and it's when the federal government says on infrastructure that the federal government will contribute up to 50 per cent of eligible costs. What percentage will municipalities be expected to contribute? I think that's a fair question vis-à-vis there's nothing signed.
Mr. Fortin: That's a good question. We put that provision there as a department to be the partner up to 50 per cent. The percentage from the municipality has not been designated. This is something that we will be looking at with regard to the bilateral agreement with the provinces. But I think Minister Sohi did state that he's expecting that the provinces will be strong partners in terms of making sure the municipalities are not the sole players in this. This is something we are going to look at during the negotiations, when we will see the last year.
Senator Mockler: What role will the regional economic development agencies across Canada play in assisting in infrastructure programs?
Mr. Fortin: In terms of the new programming on phase 1, Infrastructure Canada is the main partner. Our colleagues at the original agencies are very involved in the activity around Canada 150 itself, but these are a different set of programs.
Senator Mockler: Yes, a different set of programs. I just wanted to know, because they do play an important role in our regions.
Mr. Fortin: They do.
The Chair: To follow up on that, Senator Mockler, in my reading I was lucky enough to look at the Innovation, Science and Economic Development Canada group here. The Innovation, Science and Economic Development portfolio includes the Atlantic Canada Opportunities Agency, the Business Development Bank of Canada, Canada Economic Development for Quebec Regions, the Canadian Northern Economic Development Agency that we've talked about, the Canadian Space Agency and the Competition Tribunal. There's a whole list of groups that are tied to these folks.
It just goes to explain the huge bureaucracy involved in looking at people's needs and projects, and getting execution. It's not to be negative; it's just to say it is a big operation in terms of coordination. Maybe, Mr. Enns, you can talk about that after, but let's go on to other senators.
Senator Neufeld: I see that the Canada Border Services Agency is getting $20 million, at least according to the notes I've been given. Is that a surprise?
Ms. Boileau: I couldn't speak to the Canada Border Services Agency.
Senator Neufeld: It's getting it out of the money that's going to infrastructure spending.
Ms. Boileau: Okay.
The Chair: Maybe in defence of Ms. Boileau, you said the last time we got together that there's like 12 departments horizontally tied into you. Has that $20 million already been given to Canada Border Services Agency and are they executing it?
Senator Neufeld: I just want to know what it's for.
Ms. Boileau: I can check, but in the follow-up that we provided on the 2016 investments in transit, green and social infrastructure, on the list of departments that I have in front of me, CBSA is not one of those listed. But I'd be more than happy to follow up and give you the information you're looking for.
Senator Neufeld: If you would. I want to know what it's for because I thought it was more or less self-funding with the extra money that you pay on tickets.
I'll move on. You said your department is requesting approximately $14.7 million for operating funding, which includes $10.2 million for operating, including personnel costs. Is that just for wage increases? What is that?
Ms. Boileau: Infrastructure Canada is funded from carve-outs of our programs. We've had new programming identified for infrastructure this year through Budget 2016. Part of that, with regard to personnel costs, represents about $4.5 million. We're going to be hiring 20 FTEs to help support the work that we need to deliver.
The balance of that will be for other operating — as you may have seen on our website, we are looking to automate some of our information around our contribution programs, our transactions with our recipients and with provinces and territories. We're looking to doing different things. Those will include some costs for IT and some fixed assets that we've needed to do.
Senator Neufeld: Okay.
Ms. Boileau: But our overall budget, just so you know, on our spending on a yearly basis, our operations cost about 1.2 per cent of our total programming, so we're a very lean organization, I'm pleased to report.
Senator Neufeld: That's very good.
Again with this $14.7 million, you stated that $4 million is for developing codes, guides and specifications for climate-resilient infrastructure with the National Research Council. Could you expand on that, please? We've been talking about codes and all these kind of things for a while.
Ms. Boileau: Yes. I'm not quite sure if it relates to Part 9 that our colleague at CMHC was referring to, but we are working with the National Research Council to develop a memorandum of understanding. It was identified in the budget. They will be getting a total of around $40 million over a number of years, which is part of our operating. They'll be getting $4 million this year as part of our supplementary estimates. It is to update their codes, guidelines and various areas linked to climate change and other factors that impact on infrastructure. That's about as much as I can give you right now.
Senator Neufeld: All right, that's fine.
And my last question: When I looked through the funding items, I was looking for something that would help me on the West Coast, because I read in the news about moving a lot more crude oil through Vancouver, and Prince Rupert LNG facilities. But the Province of British Columbia has been asking for a world-class spill response for the West Coast. I couldn't find anything in the infrastructure spending for the next two years that told me that there was actually funding to do that so we can actually live up to that commitment the government has made. Maybe I just haven't read the fine print enough and someone could enlighten me about what is being spent to bring a world-class spill response program to the West Coast of British Columbia.
Mr. Fortin: In terms of Infrastructure allocation, we can provide you the breakdown for British Columbia and also Vancouver in terms of the gas tax allocation. What you're referring to I think is more in the domain of Transport Canada, which is looking at the response capacity in place. And probably the Coast Guard as well.
Senator Neufeld: I know what the gas tax is for, and that's got nothing to do with spill response, to be perfectly frank.
I'm looking for money in Infrastructure Canada because this is not just a $25 million expenditure. This is a huge amount of dollars, and I appreciate it's always someone else's department. I'm asking whether there is anything, anywhere that I've missed in Infrastructure Canada's spending that you've got in here for the next couple of years that will actually be devoted to spill response — not the gas tax but spill response?
Mr. Fortin: The way the program design is made in Infrastructure Canada, if that is the case, it would have to be prioritized by the province first because this is the trigger for us to be able to look at any project of that nature. Again, it would be a question if they are eligible under our terms and conditions. And quite frankly, since I am with the department, we will probably be directing that kind of project to the regulatory type of department.
Senator Neufeld: Well, I'm sorry it hasn't reached you yet, but in the province of British Columbia the premier has been saying that constantly. That's one of the five conditions that the Province of British Columbia has put up for Northern Gateway, and also for the Kinder Morgan pipeline expansion to Vancouver. This is not new news. The province has brought this forward many times in the last number of years, and I'm surprised that you would say the province would first have to bring it forward.
It's obvious to me, then, that there is absolutely nothing in infrastructure spending in the next two years, in the billions of dollars that the federal government is going to spend, that will go to a spill response program for the West Coast. I guess I would be correct in thinking that.
Mr. Fortin: Well, it's not a question just of Infrastructure Canada. We will have to be looking at Canada as a whole in terms of government investment here, and there are programs in other departments to address that particular issue.
Senator Neufeld: So you're telling me that other departments are actually doing it?
Mr. Fortin: That has a mandate to be looking at this.
Senator Neufeld: If you're saying that, then tell me which departments and where I can find it.
Mr. Fortin: We can certainly provide you the list.
Senator Neufeld: You'll just provide me a list, but you're sure about it, so you must know something.
Mr. Fortin: Well, I can tell you from the programs that we are administering at Infrastructure Canada, these types of project and the way we are working, these types of projects will have to be triggered by the province itself and then they would have to meet our list of eligibility in terms of criteria.
Senator Neufeld: I think I've laid out that the province has initiated it a lot. Hopefully that message gets to Infrastructure Canada at some point in time. But I will tell the premier, who has been very vocal about it. This is not just something that happens in closed rooms. She's been very vocal about it, and so they certainly have brought it forward as a major issue. And it's not just a major issue for British Columbia; it's a major issue for Canada as a whole. So thank you.
Senator Pratte: I have two questions. Hopefully I can make them short.
One is to CMHC about the $262 million for the initiative on affordable housing. Some of it we discussed already will be to build and renovate affordable housing, and another part of it will be to provide rent supplements. Can you tell me how much will be for rent supplements out of the $262 million?
Mr. MacArthur: It will be determined by the province and territory, the actual breakdown. There are broad parameters in which the province or the territory can make the determination as to what it needs in terms of rent supplements or renovation or construction, so it varies.
Senator Pratte: That money therefore, however it is used by the province, for your purposes, would be accounted for in the same way; it would be a transfer to the province; is that correct?
Mr. MacArthur: Yes, we transfer it based on claims. They claim. If there's a construction project, of course, we have that on an individual basis. If it's rent supplements, of course, it would be going to an actual individual. We get it at the program level from our provincial partner. They would say, "We've done this amount of rent supplement,'' and Quebec does a lot of rent supplements.
Senator Pratte: I'm new at this so forgive my ignorance, but, to me, a construction expense is a capital expense and a rent supplement is just an ordinary expense, so it's totally different. Infrastructure expense is a capital expense usually and a rent subsidy is very different, but in your accounting it's the same thing, right?
Mr. MacArthur: For the investments in affordable housing, yes. I understand the difference between capital and —
Senator Pratte: I'm sure you do. If I do, you certainly do.
Mr. MacArthur: — in the ground. I don't have it right in front of me, but we have a breakdown of the individuals helped. The vast majority of the dollars go into renovation and construction. However, because an individual rent supplement is a smaller number, a large number of folks are helped by that.
There are smart people here. Thank you.
Senator Pratte: Here comes the answer.
Mr. MacArthur: Here comes the answer.
So new supply and renovation account for 65 per cent to 70 per cent of the actual expenditure; 75 per cent goes into bricks and mortar. However, in terms of the number of folks helped, it's probably the opposite in terms of 25 per cent being spread probably around 70 per cent of recipients, if you look at it the other way.
Senator Pratte: I want to go back briefly to the Post-Secondary Institutions Strategic Investment Fund. I don't know if you can reassure me. I'm a bit worried that the requests or the applications have been coming in so fast because that means those projects were shovel ready, obviously, or nearly shovel ready. To what extent can you reassure Canadians? It's a lot of money, $500 million, and it will be $2 billion over the three years of the program. That's a lot of money. Obviously research is very important for Canada, but still, is there a process by which you can make sure that those projects are really worthy, are the best ones for Canada and for research, and not simply the ones that were ready in time for that program?
Mr. Hanson: That's a very good question.
I think one of the things that distinguishes this program from its predecessor is that we did seek to put a greater focus on things that were genuinely driven towards driving innovation and commercialization outcomes. For example, certain things that were allowed under the previous program, like classroom rehabilitation, health and safety, sort of structural issues, although important were not really things directed toward innovation. So they have been excluded in this one.
I think the reality is that for universities, because of their need for infrastructure funding to do things, to some extent this is an element of self-interest. Within the capital plans of universities, provinces and territories, they have identified those things in the innovation space that can have the most impact on their own economies. That fact, coupled with the fact that they will obviously have skin in the game because they are paying for half of it, plus a rigorous competitive process, does give us significant confidence that we are going to be funding good projects.
Senator Pratte: Is there some kind of learning process since this is a program over three years? This is phase 1 out of three phases, I suppose. Is that right?
Mr. Hanson: Not really. There is only one intake stage for proposals. We will make all the decisions on allocations and projects within the next month or so. The actual construction will take place over a period of the three years of the program, but the actual process of assessment and selection really all happens up front.
Senator Marshall: My questions are for Infrastructure Canada.
Did I understand, Mr. Fortin, that projects haven't been approved yet for the Public Transit Infrastructure Fund and the Clean Water and Wastewater Fund?
Mr. Fortin: I referred to the two new programs that were announced in the budget, but there have been projects, under other programs, that the department has been partnering with the provinces on regarding the transit front and wastewater.
Senator Marshall: In the budget book, when they announced those programs, public transit was so much over three years and clean water over four years. But the amounts in the supplementary estimates are pretty precise — 816 and 184 for clean water. How do you decide how much you request in Supplementary Estimates (A)?
The Chair: Talking millions of dollars, right Senator Marshall?
Senator Marshall: I'm talking about the final $844,414,816. It gives the impression that the projects are already approved and that that's what they add up to. But I understand from Mr. Fortin that, no, that's not the case.
Ms. Boileau: The money is allocated over a period of years, so the first year of allocation is based on averages or trends from previous programming.
Senator Marshall: Okay.
Ms. Boileau: So, in the fiscal framework, we are booked with regard to a number of dollars per year that is accessible for infrastructure spending. It can be more or less depending on the number of projects that come in. As we said before, the money would be reprofiled to the next year if it is not all committed in the first year or second year.
Senator Marshall: Okay, but the Public Transit Infrastructure Fund and the Clean Water and Wastewater Fund are new programs, aren't they?
Ms. Boileau: Yes.
Senator Marshall: So there is no reprofiling of money for those programs, is there?
Ms. Boileau: This is new money that we are allocating in the Supplementary Estimates (A). This is money we are seeing for the first time. But, at the end of the year, or what we lovingly call during our ARLU period, so in October, November, depending on the commitments and the spending that has occurred, if recipients have submitted claims or the number of expenditures, we can discuss that money with central agencies, with Finance and with Treasury Board counterparts and colleagues, to have it pushed out to the next year.
Senator Marshall: So how about the New Building Canada Fund, because that's associated with an earlier program, is it not?
Ms. Boileau: Yes, the New Building Canada Fund is a program that was announced in 2013-14. What we're looking for here is a top up, as you see on the supplementary estimates page, of $23.7 million. These are for two marquee projects that were announced in the budget. One is the Lionsgate wastewater treatment centre in B.C. The other one is for the Manitoba Lake Mitigation Fund, which is an area that has a lot of flooding, so we will be helping on that front. That's the breakdown for the top up.
Senator Marshall: The total for the New Building Canada Fund for 2016-17 is $547 million. Is part of that money reprofiled from a previous year?
Ms. Boileau: The $23 million is new, but the $547 million, yes, has been reprofiled from previous years. It has been reprofiled from the year prior. It was depending on how much was expended last year and the year before.
Senator Marshall: Okay, so that's not new money.
Ms. Boileau: No.
Senator Marshall: On the fourth program, the Capacity Building for Climate Change Challenges Fund, what kind of projects would fall under that program?
Ms. Boileau: This fund was announced in the budget. It's $75 million over five years. This is a fund for which we'll be working in partnership with the FCM, the Federation of Canadian Municipalities. It's for them to work with municipalities to help for capacity building.
Senator Marshall: Yes, okay. Thank you. I remember that one.
For the provinces and municipalities, our notes say that the federal government will contribute up to 50 per cent, and I think Senator Mockler asked a question on that. But municipalities can use their gas tax money, can't they, for their share?
Ms. Boileau: Yes.
Senator Marshall: They can. Okay, thank you very much.
Senator Lang: I would like to go back to housing. I want to hear from CMHC with respect to looking forward and talking about the national housing strategy. There are multimillions of dollars being invested, in one manner or another, in housing, whether it be social housing, whether it be indigenous housing, yet when you start looking at the number of houses that are being built, it's actually not a lot of houses. You talk about $40 million. You're basically maybe talking 160 houses across the country in real terms, at say $300,000.
The Chair: Mr. MacArthur is trying to get us a number on number of units.
Senator Lang: I am just doing some quick math here.
Looking at the social housing aspect of the portfolio, in conjunction with the provinces and the territories and their housing corporations, I have a question with respect to the long-term objectives of the individuals in those homes. Back where I come from, in some cases we're looking at maybe the second or third generation in social housing, and they stay in social housing. The result has not, in my judgment, been that positive for families that have had to stay in that housing and have decided to stay in that housing. Is serious consideration going to be given to looking at how these individuals can purchase these homes — although we recognize that they are low wage earners — and to make adjustments so that at the end of the day they have some hope and can own a home and have some pride in home ownership as opposed to this constant treadmill that we're on where we're subsidizing? We think we're doing the right thing, but at the end day that young boy or girl who is going to school is in a situation where there is no hope for his or her parents to have something that we all take for granted around this table, private homeownership.
Mr. MacArthur: I wouldn't want to prejudge the outcome of the national housing strategy. I think the short-term funding was to be the interim step. As the consultations unfold, there is an opportunity to put all the good ideas on the table and have them taken into consideration. I just really wouldn't want to prejudge the possibilities. There are some short-term significant investments while the national housing strategy consultations take place. So I really couldn't comment on what the outcome would be, sir.
Senator Lang: I want to put one other idea on the table here. I want to specifically go into senior housing. I know that where I come from again — and others can speak for the regions they come from — we're building, in many cases, apartment blocks for senior citizens. I know they are well intended and are meant to provide for a demographic that is growing every day. There is no way that, quite frankly, the taxpayer is going to be able to build everybody their own accommodation because the demographics tell you exactly the opposite. There is just not enough money in the treasury.
That being said, in building these structures, I would recommend that when those buildings are being built, they be built to meet a condominium code standard so that at some given time, if a decision is made, they could be sold as individual units like any other complex. If they are not built to that standard, which is not that much higher, then it's very difficult to make a decision to turn that into private ownership.
I just want to leave that on the table as a recommendation for the long term, looking at these future buildings that will be constructed.
Mr. MacArthur: To acknowledge what you said — and thank you very much for that — in the Yukon, for example, Yukon Housing would be making the decision as to the quality of what goes in.
With regard to non-assisted housing, we also have our mortgage insurance programs out there. We do market housing, and we support that in all regions of the country in terms of senior's housing. So we have a multiunit product that helps with that.
Senator Lang: I want to go back to Senator Smith's point that you are the financier. You can put down guidelines in conjunction with the provinces and the territories with respect to how you expect this money to be spent. Yes, Yukon Housing may make the decision, but you are the financier, so there are two people at the dance here.
Mr. MacArthur: Yes.
The Chair: We have talked a lot about the indigenous folks and trying to address their needs in terms of infrastructure, housing and clean water. Between CMHC, Infrastructure Canada and Indigenous and Northern Affairs, is there a chunk of money over and above what CMHC is working with that has been allocated to Indigenous and Northern Affairs? They have money that they are spending on housing, too.
I'm trying to get a better understanding of the various horizontal relationships that exist between the departments to see, if there is that chunk of money, where is that program going through Indigenous and Northern Affairs? I know you might say we ought to check with Indigenous and Northern Affairs, but since the ball initiates with you, Ms. Boileau, and you work with the other departments, I would assume there is an oversight committee or a management committee to follow what the other people are doing. Could you give me insight into that?
Mr. Fortin: You're talking about a vehicle for sharing the information or doing oversight? There is something that exists between the departments.
The Chair: The two of them, yes.
Mr. Fortin: In that case, we do have committees among departments to make sure that the programs are aligned.
We are talking about infrastructure money that goes to other departments, so it's a question of efficiency for us to have to use existing programs instead of rebuilding new programs, which takes time. We want to benefit of those channels that are existing and the expertise in place.
The Chair: Are there any other questions from our colleagues?
Senator Marshall: There is one question I had forgotten about when I was talking about infrastructure.
In your opening remarks you mentioned the Fort McMurray International Airport expansion. What is the status of that now?
Ms. Boileau: We are in the process of signing a contribution agreement; the minister will be signing a contribution agreement for Fort McMurray. It is a $25 million expansion that will hopefully help the community with some of the rebuilding that they need to do.
Senator Marshall: Is it anticipated that the timelines will shift?
Ms. Boileau: It is anticipated that the timelines will shift due to the unfortunate situation they are in, but they are working very actively with us on that file.
Senator Marshall: So that's going to proceed, and the timelines are probably the only things that will change? Okay, thank you.
The Chair: Before we terminate our meeting — and we have had excellent questions and feedback — to the three groups, could you take a minute and give us, in terms of closing statements, where you are at in terms of your responsibilities this year for infrastructure? You folks are asking for $3.9 billion out of the $7 billion for supplementary estimates. Where are you with phase 1? You don't have to say it now. I'd like you to think about it for a couple of minutes. I would like to give you folks a chance to sum up exactly where you're at.
We are very interested in learning about horizontal relationships, productivity and the plans that will create jobs and help our economy. But there is a sense of urgency from our perspective: Where are you at? How much progress have you made? It's the same for the Innovation department. One question that comes up: Is it innovation, or is it just money for universities and educational institutions to renew some of their own infrastructure? If you're talking about innovation, why aren't we talking about venture capital? You can't have innovation, because the problem with innovation is that you will get science to develop stuff and then you don't have any money. They need venture capital to get this thing to go. That's been a thorn in our side in Canada for years.
As we look at the CMHC, you have a $600 billion portfolio, which is well managed and your lapses are infinitesimal. It's 0.34 per cent, a very low number. You're a highly successful organization, but at the same time, you can sense the sensitivity we have, especially for the indigenous folks who want to make sure that they can move forward.
I'd just like to see where you folks are at. Give us a two- to three-minute summary. What challenges do you face as you move forward? We expect there will be innovation, productivity and multiplier effects. Jobs will be created. We just want to make sure that money is going to be spent in the right places so that we can have the returns, because part of the budget is based on the fact that we're going to create jobs, we will move forward, we will have multipliers and we will build our economy. That's why we're going into a big deficit. We are very sensitive to that, all of us around the table, no matter what our stripes are.
Do you want to have a thirty-second or a one-minute timeout to come back to this? Are you ready to talk? Who wants go first?
Mr. MacArthur: Let me break it down into a couple of things.
First of all, with regard to the funding that will flow through the provinces and territories, we're well advanced. Although nothing is out there publicly, I can tell you we're well advanced. We're very confident that that will flow, and we'll see something in the not-too-distant future about that. Good response — our partners, provinces and territories know what to do. It's going well.
The Chair: What is the definition of "not-too-distant future''?
Mr. MacArthur: I can't talk publicly, but folks are —
The Chair: If you could, without giving us exact time frame, give us an idea so we can understand and help you move forward.
Mr. MacArthur: Imminently there should be some public — I'm trying to not —
Senator Neufeld: That's as good as you'll get.
The Chair: So you have good news; good news is forthcoming.
Mr. MacArthur: Absolutely. I'm confident of that. I was talking with one of my colleagues as we were walking through the door: Do we have something else? It's going very well on that side. We're really comfortable and confident, and the back-and-forth and the partnerships have been great.
With regard to First Nations housing, we have had hundreds and hundreds of applications. We went out the door quickly after the budget. We had information sessions for our First Nation communities across the country so that they would understand the parameters and be ready.
We're ready to go. We'll have to make sure that the communities we're dealing with have the capacity to do the job, because we have to commit it and spend it in each of the two years, but we're working with that.
As I said before, we have on going working relationships with 480, so we know the communities. We know their capacities. That's going well.
The Chair: You have 480 out of the 617 nations?
Mr. MacArthur: That we do regular business with, yes.
The Chair: A simple question: What happens with the rest of the folks?
Mr. MacArthur: They may not want to work with our program. Some of them may have advanced from social housing.
The Chair: Or self-sufficient?
Mr. MacArthur: Or self-sufficient. Or it could be that we're not dealing with them at the moment because they are under third-party management and are not ready to receive it.
The Chair: So there are issues in terms of their —
Mr. MacArthur: Their capacity and the like.
You touched on innovation. We also received funding for innovation. We see it as a fund to try to do things differently — things we may not have seen, things that may come up from the ground. We're advancing on that piece as well.
The other piece out of the budget is that we were given affordable rental housing lending. That will be a little later, but we're advancing that quite well.
I'm confident we have good people who know how to do this. We're trying to move the bureaucracy out of the way so that we get the money flowing, but we also have strong risk mitigations. We're working with our chief risk officer and with our audit folks. We have an internal committee. We have an affordable housing committee, which is a committee of our executive committee. We go before them and say, "These are the risks, the mitigations and the controls we have in place so that we do it well and have the right things in place.''
We are very cognizant of the Auditor General's letter and have taken it into consideration. We know it is a lot of money to flow, and we take the stewardship of that very seriously.
The clients we serve, we see them every day. Somebody mentioned that when you see a child who has a warm place to stay, it makes a big difference. We see that on a regular basis when we're dealing with the clients.
We are ready and we're appreciative of the opportunity, and we understand the responsibility we have been given.
The Chairman: Thank you very much, sir.
Mr. Enns: I'll speak to the Canada 150 Community Infrastructure Program and the work that's going on with the CRC, and then I'll let Lawrence tell you where things stand with the Strategic Investment Fund.
In terms of the Canada 150 Community Infrastructure Program, things are going well. Eighty-four projects have been approved for the FedNor component, which is the part of it that resides in the department. You alluded to the fact that the arrangements in terms of how the portfolio is governed are different. FedNor was always with the department. The other agencies now are part of our portfolio, but they retain their own deputy heads and CFOs. They remain as independent organizations in order to capitalize on their community efforts and the years of experience they have out in the regions.
So things are going well; 84 projects approved. It's not surprising, because the Budget 2016 additional funding of $150 million builds on Budget 2015. There is nothing new to invent, if you will. Things are rolling, and more projects can be achieved.
It's a bit of a similar story for the Communications Research Centre. They have a plan that was developed a few years ago to upgrade those facilities, many of which are in bad repair. So they do have a health and safety plan. Many of these projects are addressing the most serious problems in that plan. I regularly see my colleague, the President of the CRC. We talked about where they are going on this. This is a very welcome injection of funds for them in order to accelerate bringing the facilities there to an adequate state. They are doing things like consolidating laboratory spaces into one building, which will enable them to divest of other buildings and not have to make the investment in repairs, and really with a health and safety focus for a lot of this stuff.
Other projects are things like roof replacements, water supply, that kind of thing, to bring things up to the appropriate code and to ensure that employees are protected. So things are going well there. We don't anticipate any problems.
Again, this was an add-on. They did receive funding last year in Budget 2015, a smaller proportion. It's part of a process that they are already familiar with and have well in hand.
Mr. Hanson: On the Strategic Investment Fund, we are in a good position. Senator Pratte, I believe, asked the question about drawing lessons. We have had the benefit of a similar program from 2009 and have drawn lessons from that.
We're working closely with provinces and territories, and have throughout, since the day of the announcement. We are completing our project assessments and developing draft contribution agreements. We're positioning ourselves to be signing contribution agreements, which will include approved projects, during the month of June. A couple may follow a little bit further behind, and that's for the simple reason that two provinces had elections during the application process. We obviously wanted to accommodate them. Also, the Government of Alberta needs a little bit of extra time given the unique challenges they have faced of late.
By and large, our intent is to conclude agreements this June so that the projects can take advantage of the 2016 construction season.
Ms. Boileau: I'll talk about some of the existing programs that we continue to work on and then I'll turn the floor over to my colleague to talk about phase 1 but, more importantly, also phase 2.
We have been working actively with the provinces and territories on the New Building Canada Fund as well, recognizing, as my colleague has said, that there have been elections in some areas. We have also had engaged conversations with our northern counterparts with regard to projects and priorities.
We have a committee that goes through a review of projects, assesses those and puts forward recommendations for the minister. We have had two or three meetings a week, making sure that we are active in terms of not missing any of the construction seasons or deadlines that our counterparts may have. On the whole, we are confident that we can make things happen for this year with the existing funding that we have.
Mr. Fortin: I referred earlier to the bilateral agreement we are quickly trying to set with our partners at the provincial and territorial level. At the same time, parallel to that, our minister is going to engage provinces, but Canada in general, in terms of the elements of phase 2. We are talking about transit, green and social infrastructure. This is going to take place in the next few weeks and the early stage of the summer so that we are prepared for phase 2.
I want to return to your fundamental question in terms of alignment among departments and organizations. All the departments are working hard right now, when launching these new programs, in terms of the results — the outcome and output of those programs. That is done at the early stage, not later in the program.
Right now we are talking amongst ourselves in terms how we are going to measure our success. We are embedded in the bilateral agreements, the results-based element that we want the provinces and the territories to report on in order that we can declare success in those programs. This is one of the platforms that we are using to align ourselves with the department itself.
The Chair: As a final comment, we have a high degree of sensitivity to the indigenous folks in terms of making sure these programs are successfully implemented. We're interested in knowing not just about how much money is being put in but what the results are going to be, particularly understanding priorities.
One of the priorities that irritates me but which is important to me as a person is making sure that people have clean water to drink. We haven't talked a lot about clean water, but if you folks can understand from our perspective, as a committee, one of those follow-ups that we truly want to understand is the prioritization of the implementation of the clean water projects and where they are at.
I'm not sure which department can provide that information. If it's your department, fantastic; if it's another department, that would be great. For this committee, we want to make sure that people will have clean water to drink.
It's 11:30. We promised we would end. We thank you very much. It has been a very informative morning. Thank you again for your participation.
(The committee adjourned.)