Proceedings of the Standing Senate Committee on
National Finance
Issue No. 29 - Evidence - April 4, 2017
OTTAWA, Tuesday, April 4, 2017
The Standing Senate Committee on National Finance met this day at 9:30 a.m. to study Main Estimates for the fiscal year ending March 31, 2018; and election of the chair.
[English]
Gaëtane Lemay, Clerk of the Committee: Honourable senators, as you know, the position of chair is currently vacant so, as clerk of your committee, it is my duty to preside over the election of a chair. I'm ready to receive a motion to that effect. Is there a motion to propose the name of a chair?
Senator Cools: I move that the new chair of our committee be Percy Mockler.
Ms. Lemay: Are there any other nominations? Therefore, it is moved by the Honourable Senator Cools that the Honourable Senator Mockler do take the chair of this committee. Is it your pleasure, honourable senators, to adopt the motion?
Hon. Senators: Agreed.
Senator Percy Mockler (Chair) in the chair.
[Translation]
The Chair: If I may, as chair of the committee, I would like to say that it is an honour for me to accept this position.
[English]
I want to take this opportunity to say thank you very much for the confidence you have shown in me. I have big shoes to fill. Leader Smith, thank you for the confidence you have always shown in me. We have a common denominator, and the common denominator — I'm a bit nervous.
[Translation]
I am a bit shy and nervous. That said, we senators, the Parliament and the public service all have a common objective, which is that public finances be transparent and accountable.
That being said, Senator Smith, I thank you; we have some big shoes to fill, but I have no doubt that together we can succeed.
[English]
Honourable senators and witnesses, welcome to the Standing Senate Committee on National Finance. My name is Percy Mockler, a senator from New Brunswick, and I chair the committee.
Colleagues and members of the viewing public, the mandate of this committee is to examine matters relating to federal estimates generally as well as government finance.
At this time, I would like to ask honourable senators to introduce themselves, starting on my left.
Senator Woo: Good morning. Yuen Pau Woo from British Columbia.
Senator Mitchell: Grant Mitchell from Alberta.
Senator Moncion: Lucie Moncion from Ontario.
[Translation]
Senator Forest: Eric Forest, from Quebec, Gulf region.
[English]
Senator Cools: My name is Anne Cools from Toronto, Ontario.
Senator Tannas: Scott Tannas from Alberta.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
Senator Eaton: Nicky Eaton, Ontario.
Senator Neufeld: Richard Neufeld, British Columbia.
[Translation]
The Chair: Honourable Senators, this morning we are continuing our study of the main estimates for the fiscal year ending March 31, 2018.
As you know, we already tabled an interim report on this topic last week. Before the adoption of the corresponding appropriation bill, this week we are receiving representatives from other departments and government agencies in order to continue our study.
[English]
This morning we continue our study of the Main Estimates, 2017-18, and we are pleased to welcome officials from Health Canada: Randy Larkin, Assistant Deputy Minister and Chief Financial Officer, Chief Financial Officer Branch; Sony Perron, Senior Assistant Deputy Minister, First Nations and Inuit Health Branch; and from Canada Mortgage and Housing Corporation, Wojo Zielonka, Chief Financial Officer and Senior Vice President, Capital Markets; and Charles MacArthur, Senior Vice President, Regional Operations and Assisted Housing.
[Translation]
Finally, from Canadian Heritage, we welcome Guylaine F. Roy, Assistant Deputy Minister, Cultural Affairs, as well as Andrew Francis, Chief Financial Officer.
[English]
I understand that each department will make opening remarks, and we will now listen to those remarks, to be followed by questions from senators. We will start with Mr. Larkin.
Randy Larkin, Assistant Deputy Minister and Chief Financial Officer, Chief Financial Officer Branch, Health Canada: Good morning, committee members. Thank you for inviting me today to discuss proposed spending based on what is outlined in Health Canada's 2017-18 Main Estimates.
As was indicated by the chair, attending with me today is my colleague Sony Perron, Senior Assistant Deputy Minister, First Nations and Inuit Health Branch.
[Translation]
In the 2017-2018 main estimates, Health Canada announced several governmental priority initiatives that will represent expenditures of approximately $4 billion in 2017-2018. This is a net increase of $512 million over 2016-2017.
[English]
In addition to the information included in the 2017-18 Main Estimates, significant investments were identified in Budget 2017. It is important to note that the Budget 2017 investments are not reflected within the numbers being discussed today but will be identified through future supplementary and Main Estimates exercises.
Health Canada remains focused on providing services that are important to Canadians, including improved access to quality health services and programs that are responsive to the needs of First Nations and Inuit communities. The departmental funding for First Nations and Inuit health programs at Health Canada will increase by approximately $440 million this year.
Some significant areas of investment are as follows: The well-being of First Nations children and families is a top priority of this government. To this end, we strongly believe that First Nations children should have access to the same publicly funded health and social services as other Canadians. The department is providing $138 million for the interim reforms of Jordan's Principle. This funding will ensure that health and social needs of First Nations children are being met and that no child falls through the cracks.
[Translation]
In addition, the department will make an $82-million contribution to support health services and programs for first nations on reserves, and will do so by investing in repairs and the development of large-scale capital assets, as well as in the new construction of community infrastructure for health facilities, including nursing stations, health centres, short-term care centres, and drug and alcohol dependency treatment centres.
[English]
In order for the department to fulfill its obligations through the Resolution Health Support Program, which makes mental health and emotional and cultural supports available to eligible former Indian residential school students and their family members, the department is allocating $58 million to continue implementing Canada's legal obligations under the Indian Residential Schools Settlement Agreement.
The department is also allocating $27 million to support the First Nations Water and Wastewater Action Plan. This funding will continue to assist First Nations communities on reserve by providing their residents with access to safe, reliable and effectively managed water and wastewater services.
[Translation]
Another high-priority initiative for first nations and Inuit communities is the amount of $25 million that will be invested in supporting immediate mental health interventions, and improvements to services. Mental health and drug dependency issues are among the highest priorities. This new funding seeks to meet the urgent need for support for mental health crises, in addition to furthering the prevention of health crises in communities.
[English]
Significant investments in other areas include the following: In Budget 2016, the government announced a plan to invest in infrastructure and is providing $33 million to the health portfolio to support a variety of improvements, including assessment activities to support remediation of contaminated sites, upgrades to the security infrastructure of federal buildings, major upgrades to federal laboratories to address structural, electrical, mechanical, plumbing, ventilation and fire systems that are approaching the end of their service lives as well as upgrades to Health Canada's office accommodation footprint.
Health Canada has committed to meeting the challenges of tomorrow by supporting research and fostering partnerships with researchers across Canada. As such, the department is providing $29 million to Canada Health Infoway to develop a multi-jurisdiction e-prescribing solution that will enable community-based prescribers to electronically transmit prescriptions to a patient's pharmacy of choice and to scale and expand the tele-home market as a patient-centred solution to further support care in a home setting.
The department has also designated $21 million to support research to advance knowledge of the brain through the Canada Brain Research Fund and to establish a focal point for private investment in brain research by attracting private and charitable donations to match federal funding.
[Translation]
Finally, the department is investing $24 million to continue to protect the health of Canadians against the repercussions of climate change, to assess the risks related to extreme heat, and to assess the particular health needs of first nations and Inuit communities in connection with climate change.
[English]
In conclusion, this proposed spending will ensure the government can continue to focus on important health priorities that are designed to result in better health outcomes for all Canadians.
Thank you once again for inviting me before the committee today. I'm pleased to answer any questions that you may have.
The Chair: Thank you Mr. Larkin.
[Translation]
Mr. Zielonka now has the floor.
Wojo Zielonka, Chief Financial Officer and Senior Vice-President, Capital Markets, Canada Mortgage and Housing Corporation: Thank you, Mr. Chair. It is a pleasure to be here on behalf of Canada Mortgage and Housing Corporation. I am joined today by my colleague Charles MacArthur, senior vice-president, Regional Operations and Assisted Housing.
[English]
Many committee members are familiar with CMHC from our previous appearances here. As Canada's authority on housing, we contribute to the stability of housing markets in the financial system, provide support for Canadians in housing need and offer unbiased housing research and advice to Canadian governments, consumers and the housing industry.
CMHC's commercial activities, mortgage loan insurance and securitization do not require appropriations as voted by Parliament. We do, however, receive funding through appropriations for our assisted housing and research and market analysis activities.
As there have been a number of changes in multiple programs, for the ease of the committee, we have provided a deck to facilitate the understanding of our Main Estimates. I will now refer to elements of that deck.
Shown on slide 2 of the deck, CMHC is estimating budgetary expenditures of just over $2.7 billion in 2017-18. This represents a total budgetary increase of $707 million from the previous year's Main Estimates, most of which is related to new funding announcements in Budget 2016. As the committee will recall, Budget 2016 included new investments of $2.3 billion over two years to improve access to affordable housing to Canadians with most of this funding allotted to CMHC.
Slide 3 provides a more detailed breakdown of our 2016-17 total budgetary expenditures. The impact of Budget 2016 measures is clear, with spending increases across our housing programs. Most notably, expenditures for new commitments of affordable housing increased by more than $1 billion. This is due to the year 1 portion of the social infrastructure funding as provided through Supplementary Estimates (A).
During our previous appearance before the committee in November, we discussed the four additional measures for which funding was provided through Supplementary Estimates (B). One of these measures is the prepayment flexibility announced in Budget 2015, which allows cooperatives and non-profit housing providers to prepay long-term, non-renewable mortgages held with CMHC without penalty. Details of all four measures are provided on the final slide.
The next slide compares our spending plans this fiscal year against the 2016-17 Main Estimates, providing a breakdown of the $707 million year-over-year increase I mentioned a moment ago. The increases are primarily related to the second-year funding for the initiatives approved in 2016. This includes $576.5 million for social infrastructure investments, $72.6 million dollars for the affordable rental housing innovation fund and $50 million for the prepayment flexibility initiative. The final two slides provide further information on these measures.
Mr. Chair, my colleague and I would be pleased to answer the committee's questions and provide more details on any aspect of the Main Estimates.
The Chair: Now from Canadian Heritage, Ms. Roy.
Guylaine F. Roy, Assistant Deputy Minister, Cultural Affairs, Canadian Heritage: Thank you, Mr. Chair. I'm pleased to be here today. I'm joined by Andrew Francis, Chief Financial Officer, Department of Canadian Heritage.
As you know, 2017 is a historic year as we celebrate the one hundred and fiftieth anniversary of Confederation. Through the Canada 150 Fund, the department is supporting numerous community and national activities throughout the year that will bring Canadians together to show their pride in our diverse and welcoming society.
We are also moving ahead in several priority areas. Following successful national consultations on Canadian content in a digital world and official languages, we are looking at next steps to help Canadian creators innovate and compete on the international stage to enhance the vitality of official language minority communities, and to foster the full recognition and use of English and French in our society.
We will work to celebrate and preserve indigenous culture and languages, and to promote diversity and inclusion through the multiculturalism program and other initiatives. We are also focused on increasing sport participation and inclusivity through a harmonized national approach to preventing and managing concussions and improved access to quality sport and recreation experiences for all Canadians.
[Translation]
I will turn now to the mains estimates 2017-2018 for Canadian Heritage.
The department is seeking $1.4 billion — an increase of $150.2 million, or 11.6 per cent, from the previous fiscal year. This amount includes: $1.2 billion in grants and contributions; $208.8 million in operating expenditures; and $25.8 million in statutory authorities.
The main estimates propose to allocate an increase of $84.1 million through the Canada Cultural Spaces Fund toward renovations and renewal of our cultural institutions, such as museums, performance spaces and galleries. The main estimates also propose to allocate an increase of $5 million toward promoting Canadian artists and cultural industries abroad, and an increase of $2.4 million for the modernized Court Challenges Program. Funds of $14.2 million included in these main estimates were transferred from Immigration, Refugees and Citizenship Canada effective November 2015 to support the Multiculturalism Program.
The portfolio organizations are included separately in the main estimates. It is proposed that they receive $2.4 billion in appropriations this fiscal year — an increase of $421 million — or 21.7 per cent — over the previous fiscal year.
[English]
Of note, there are funds to help the Canada Council for the Arts, CBC/Radio-Canada, the National Film Board and Telefilm Canada to carry out their vital work, including supporting Canadian content, development and dissemination; providing Canadians with better access to programs and services in the digital realm; and pursing opportunities for audiovisual coproductions. There are also funds to support the financial sustainability of our six national museums, including significant projects to renew and renovate the Canada Science and Technology Museum and to modernize the National Arts Centre.
In sum, the 2017-18 Main Estimates would allow the Canadian Heritage portfolio to continue to support creativity and innovation, and help build diverse and inclusive communities. Budget 2017 also proposes new funds to support arts and culture, advance reconciliation and foster inclusion. It proposes $1.8 billion over 10 years to strengthen cultural and recreational infrastructure starting in 2018-19, including more than $1.3 billion for integrated bilateral agreements with provinces and territories, and $300 million over 10 years to the Canada Cultural Spaces Fund. There is also $18 million over 10 years toward the construction of community educational infrastructure in official language minority communities, $69 million over three years to enhance the Aboriginal languages initiative, and $14.9 million for Library and Archives to support the digitization of existing Aboriginal language and cultural materials.
The new budget also proposes to invest $18.9 million over five years, starting in 2017-18, and ongoing funding of $5.5 million every four years thereafter, to support indigenous young people in sport. It also proposes to support our high-performance athletes by providing $25 million over five years to the Athlete Assistance Program.
[Translation]
And, to expand the number of new employment opportunities for young people, Budget 2017 proposes $395.5 million in new funding for the youth employment strategy over three years beginning in 2017-2018. Of these funds, $17 million will be directed toward Young Canada Works initiatives that will increase the number of new employment opportunities for young people in the heritage sector and official languages communities.
[English]
We will be seeking additional funding through supplementary estimates once these funds are approved by the Treasury Board. These investments will allow Canadian Heritage to continue to play a vital role in the cultural, recreational, civic and economic lives of all Canadians.
[Translation]
I will be pleased to answer your questions.
The Chair: Given the number of senators who want to ask questions, I'm going to ask each senator to ask two questions during the first round.
[English]
I will ask each senator, because of the number we have, to ask two questions each, and then we will go to the second round to continue with questions to the officials.
Senator Woo: My first question is for Health Canada. It's a broad question and has to do with the high level objective of the department, which is to improve Canada's standing as one of the most healthy populations in the world. Can you tell us how we are doing in that measure?
Mr. Larkin: We have a number of measures that are put forward in our departmental plans each year, and we measure across all of our program areas. So if we were able to actually talk about how we were doing, we would have to look at the various programs, for example the First Nations and Inuit Health program, and then look at the different programs we have for health risks and benefits associated with food, products, substances and environmental factors — the health system. Finally, then we have our internal services, which support all of those other programs.
I think how we are doing depends on which indicators you are looking at. Overall, we are doing quite well. We have made significant advances, and Sony may be able to talk to some of those, in First Nations and Inuit health. With regard to health system, you are aware of some of the health accord work underway with the provinces signing on to the health accord. And with risks to health and benefits, we have investments in health products, environmental risks to health, substance use and abuse, food safety and nutrition, pesticides, climate change protection, consumer products and workplace hazardous safety.
I think that these investments we are making right now will help to continue to improve our results.
Senator Woo: I was hoping for a slightly more condensed explanation. I appreciate that there are many health indicators, but what I read in the brief is that the three specific measures the department uses are longevity, lifestyle and effective use of the public health care system. Can you shed some more light on how we're doing in terms of longevity and lifestyle, at least?
Mr. Larkin: I guess as the chief financial officer, that's not my area of expertise.
I can say, as I mentioned earlier, that we have a number of indicators that line up to each of these three core responsibilities, which are First Nations and Inuit health, the health system and health promotion and protection. Within health promotion and protection, we have indicators that support longevity of life, as well as within First Nations and Inuit health, which I guess as an amalgamation of each of these indicators supports what you are asking for. I can't really point to one single indicator that says that is an indicator of longer life, unless you are looking at things like tuberculosis or diabetes reductions.
Senator Woo: Thank you for that.
My second question for CMHC is about the budget allocation for market analysis and research. Can you say a bit more about funds allocated for the purpose of better understanding the challenge of housing unaffordability, particularly in our major metropolitan areas?
Mr. Zielonka: There are a number of measures that we are constantly trying to maintain in terms of providing better information to Canadians. There are a couple of things we do.
We have been publishing our Housing Market Assessment for a few years now. We publish it every few months. That gives a snapshot of the health of the various housing markets across Canada. It provides insights into markets that are in what we would consider red territory, that is, markets that are overheated. There are a number of those across Canada. That is available on our website.
We also have a number of other programs where we work on providing better information in terms of research into various factors around, for example, escalating housing prices. There is some potential funding allocation in that area. We have been trying to help the government get a better understanding of what some of the drivers are in terms of both the supply side and the demand side.
That work is still ongoing. We are expanding our surveys to try to provide more timely and more accurate information, but that information is often difficult to obtain because of the nature of the market. Not all information is publicly available or clearly accessible. That's an ongoing process that we are undertaking and trying to get better information in the public domain.
Senator Woo: Thank you.
Senator Marshall: My question is for CMHC. Could you give us some information on government-backed mortgage insurance? I am asking because there seems to have been a bit of attention given to this over the last six months or so. For example, there was an article in one of the papers that said CMHC's mortgage business is vulnerable to sharply rising interest rates. I notice that the Department of Finance recently launched consultations on lender risk sharing for government-backed insured mortgages.
Could you give us an overview as to exactly what the status is now with regard to that situation?
Mr. Zielonka: Absolutely. Our mortgage loan insurance business is run on a commercial basis. There are two private competitors in the marketplace. Those private competitors are regulated by OSFI, the Office of the Superintendent of Financial Institutions. OSFI also provides oversight of us. We are not regulated by them, but they do oversee us.
Like any other large financial institution, we follow all the guidelines that OSFI expects of other financial institutions, which includes stress testing that we do on an annual basis. Every year, we look at a variety of scenarios as part of our stress-testing program, and that changes every year.
Our stress testing program is designed to understand the impacts of changes in the economy as well as other types of circumstances that could impact CMHC, and they include significant stress scenarios that would be what we would consider normally in the tail; they are not events we would normally expect. There would be extreme tail events, not impossible but not something that we would readily expect.
The way CMHC has approached its capitalization has been to ensure that we can withstand those scenarios and continue to operate and be solvent. That is something that we believe we are well able to weather.
In terms of your other question around lender risk sharing, that is a consultation process that has been undertaken by the Department of Finance. The Department of Finance has been consulting the industry, so they are probably much better equipped to answer that question.
In essence, the question at hand in terms of the path they are exploring is, right now, with mortgage loan insurance, there is no deductible in the repayment if there is a claim under the mortgage loan insurance. One of the elements that the Department of Finance is exploring is the possibility of implementing some kind of deductible. That process is ongoing. I'm not sure of the timeline.
Senator Marshall: So you are not party to the consultations, but would any changes affect that?
Mr. Zielonka: We are not running the consultation. We are like any other party; we are participating in the consultation in terms of being consulted and offering advice as Canada's housing agency.
If there were changes that the Department of Finance were to enact, those would change how our business would essentially provide — if there was a deductible, we would apply that. We would follow any direction.
Senator Marshall: But if there were changes made in that regard, that would reduce your risk, would it not?
Mr. Zielonka: It all depends on how it would be implemented. We don't have clarity, because if there was a reduction in terms of the amount of claim you would pay, you would have less risk. Presumably, there may be an adjustment in pricing as well.
In terms of a return on the government's capital, presumably we would still have the same return. It would highly depend on how lender risk sharing were to be implemented. It's difficult at this time to really speculate on that.
Senator Marshall: Right. So if something adverse does happen in the housing market — and I am just looking at your relationship with the Government of Canada because I think your financing is arranged through the Government of Canada. I think there are contingent liabilities or certain amounts on the government's books. I am trying to get a handle that if something negative does happen, how would that affect the government and the government's funding? Would they be susceptible to billion-dollar losses? I know I am talking hypothetically, but when I see the articles where they are interviewing people from CMHC and then I notice that the government has initiated these consultations and it's happening in a short period of time, and then the insurance premiums are going up, it sort of gives the impression to an outsider that someone is getting very nervous about what's happening in the housing market.
The question I am asking is if something does happen in the housing market. I know CMHC is our housing corporation but it is linked up to the Government of Canada and there are large amounts of money on the books of the Government of Canada relating to CMHC. I am wondering how anything negative would filter through to the Government of Canada. Even if it is a $1 billion loss, if you think that our deficit is almost $30 billion, an extra $1 billion loss raises that to $31 billion. I am trying to get a handle on what exposure is to CMHC and how that will relate back to the Government of Canada.
Mr. Zielonka: Our results are consolidated with the Government of Canada. Both our annual profits in terms of both net income and taxes we have paid over the last 10 years, for example, is around $20 billion. That reduces the government deficit by that amount.
Similarly, if we were to suffer a loss, that loss would flow through to the government's deficit, as you indicated.
The other piece that is important to note is that in a time of crisis, when we have an economy that is under duress, CMHC also serves the purpose of actually being a stabilizer in the economy. That was an important factor in 2008 and 2009 when the private mortgage insurers were under stress and reduced their participation in the marketplace significantly. In that case, CMHC stepped up and we helped keep the housing market going and ensured stability in that sector, which was one of the factors that helped Canada weather the economic downturn.
We also had the Insured Mortgage Purchase Program, which was something that the Government of Canada instituted at that point in time to provide liquidity to the financial sector for lending for mortgages, which was another element of how we contributed.
In terms of the different stress scenarios and how we would see those impact, we look at a number of them. I don't have the exact numbers of the bottom line, but I can give you a bit of perspective. We look at global deflation scenarios.
Senator Marshall: And you look at a range, don't you?
Mr. Zielonka: We do. We look at quite severe scenarios, and this year we are in the process of looking at the scenarios we would be planning. Because there have been significantly increasing house prices in a variety of markets, Toronto and Vancouver in particular, we try to tailor those stress scenarios to the actual reality of the market. For example, last year we looked at a U.S.-style housing correction. That was a 5 percentage point increase in the unemployment rate and a 30 per cent decline in house prices. This year we are looking at a more severe house price decline just because house prices have continued to elevate. Rather than staying still and assuming it is all even, we do look at more stress scenarios to try to have a realistic view of how that would impact us.
Senator Marshall: There is an amount in the Public Accounts of Canada that refers to the Canada Mortgage and Housing Corporation, and it is a balance of $217 billion and it is borrowings by enterprise Crown corporations. Is that the figure you referred to earlier, the borrowings? You increase your borrowings and then you repay some of it. I notice there were additional borrowings and then there were repayments. Is that accumulated borrowings over the life of the corporation?
Mr. Zielonka: Yes.
The Chair: That was a third question, so could we have a short answer, please?
Mr. Zielonka: We have a couple of programs. One of them is the Canada Mortgage Bonds Program. Because of the accounting rules, there are market borrowings and lending to the financial institutions, so the two offset but because of the accounting rules they come on to our books. That is a bit misleading. It would have to be an extreme tail scenario where homeowners default, mortgage insurers default and financial institutions default, where those would become a liability for the Government of Canada.
Senator Marshall: Thank you.
Senator Eaton: I will keep on with Mr. Zielonka.
In your deck, at page 5, it reads, "northern housing Budget 2016 included $97.7 million in new investments to support pressing housing needs in northern communities.'' Then you have the renovation and retrofit on reserve. Can you tell me how much of that money has gone out the door in 2016, now?
Charles MacArthur, Senior Vice President, Regional Operations and Assisted Housing, Canada Mortgage and Housing Corporation: I can answer that. All of that money has gone out the door in 2016, so $40 million of the northern housing budget was what was allocated for 2016, and that has gone out, and the reno/retrofits on reserve was $63 million, and that has all gone out. On reserve, it has renovated 2,800 houses, and because we are working with our provincial partners, we received our final claims last week, at the end of the fiscal year.
Senator Eaton: You know I always ask you this question, so here it comes: Are they being built to code? How do you check up? We give the money, but how do we know that our First Nations brothers on reserves are getting what they should?
Mr. MacArthur: I will take some time to answer that today.
There are three things I would like to touch on.
First, CMHC has about 26,000 units or homes on reserve. That is about 23 per cent of all housing on reserve. There is band-owned housing as well as some other tenures.
When we build a house, and we do between 700 and 800 a year on an ongoing basis, we require four inspections by a qualified inspector during the construction process, including when the foundation is in and at the appropriate places. We pay for that and then we get a declaration from the chief and council certifying that this was done. We make sure.
Senator Eaton: That is good, because last year when we were giving $70 million for Innu housing, they had no inspections. They said, "We have photographs.'' So do you have more than photographs now? Do you have inspections?
Mr. MacArthur: No, we didn't do Inuit housing; that would be our colleagues in Indigenous and Northern Affairs Canada.
That is our first stage, and there is a final inspection at handover. When it is there, the chief and council have been implicated. We have ensured that that house was built to the standard.
With these houses, we are also involved in mortgaging those houses over a period of time. At CMHC, we stay with the program in two ways over the 15- or 25-year life of the program.
We have something called Plans to Improve Operation. These are agreements between us and the First Nations to improve the operation of their housing. We are specifically interested in the CMHC housing, but we are hopeful this will be a broader piece. That includes us looking at a model that we look at to identify the highest risk items and what we need to do with this First Nation. Then we go in and we sit down and sign agreements with the First Nation, and then we invest in those areas and work with the First Nation in those areas that are most at risk. We do periodic inspections of the home on a cyclical basis. Our folks go in and they look, and then we work with them to make the repairs on the CMHC houses.
Broader than that, we have Aboriginal Capacity Development, where we work with First Nations and tribal councils to provide a variety of training. That could be financial training or technical training and the like. That is the packet of things that CMHC does.
Senator Eaton: You have a reference here that $35 million was transferred to INAC. When you transfer money to INAC, do you still apply the same standards of accountability?
Mr. MacArthur: That was a decision the government made that there should be nation-to-nation with the three Inuit regions. The Inuit governments wanted a government-to-government relationship, therefore that was done by INAC. We transferred the $35 million; I will get my accountants to help me with the accounting.
Senator Eaton: So they are not subject to the same standards that they would be if it came directly from you?
Mr. MacArthur: They would be subject to the standards that INAC would apply, and I am sorry but I can't answer what their process was.
Senator Mitchell: Chair, congratulations. You are doing a great job so far, and I am sure you will continue.
I am interested, first, in CMHC. The point was made in your presentation concerning mortgage loans and securitization. Can you explain to us what "securitization'' means, how it contributes to the liquidity of the banking system and, because securitization was at the basis of the subprime mortgage crisis, how we avoid that in securitizing Canadian mortgages?
Mr. Zielonka: First, securitization in Canada is very different than securitization especially in the United States. They have changed their securitization model since the financial crisis, but our securitization model is still unique. I will go into that in a moment.
Essentially, securitization is taking mortgages, bundling them together and then selling them as a security to essentially be able to raise funds so you can do more lending. We facilitate that.
The difference in our model of securitization is that the lender ultimately is still responsible on those mortgages. When we securitize a mortgage, if that mortgage goes bad, we will still look to the lender to recover 100 per cent of those funds. They will have mortgage insurance, because we will only securitize insured mortgages. They will have mortgage insurance as a backstop. However, if, for whatever reason, mortgage insurance doesn't pay or doesn't pay promptly, that lender is on the hook to provide the funds right away.
We have designed the securitization program in such a way that essentially we can go in and take those mortgages and securities away if they are not meeting the requirements of the program. We did that last year. We had one issuer that ran into trouble. It was a branch of a German bank that was operating here in Canada called Maple Bank. In that circumstance, we issued a notice of default and found a replacement issuer over a number of months. There was absolutely no cost to the Government of Canada in that circumstance, and it essentially worked the way it should.
If we were to have a bad situation happen in Canada similar to what happened in the United States, the first thing that one would expect is that homeowners would start defaulting. We have mortgage insurance as a backstop, as I mentioned earlier, for securitization. That is the first backstop.
In the U.S., mortgage insurance was sometimes available; sometimes not. But the mortgage insurers were not as well capitalized or as well regulated as they are here in Canada. That is one critical difference.
Mortgage insurance also makes sure that only people who are able to carry mortgages are actually given mortgage insurance. That is another significant difference, which wasn't the case in all other jurisdictions.
If that doesn't happen, then we would look to the mortgage insurer to pay the claim. Before that, if the issuer doesn't pay the claim because the issuer has defaulted and there aren't sufficient funds in the estate, then we would go to the mortgage insurer. You would also have to look to see a failure of the mortgage insurer, and only then would be there a potential exposure.
Another difference we have in Canada is between the mortgages we securitize and the investors buying those pools of mortgages, there is a minimum spread required. That spread is essentially there to ensure that if some of the mortgages go bad, in a tail scenario, there is sufficient cushion in there to compensate for the mortgages that go bad. That is something we monitor. Right now, based on the performance of the mortgages and that differential, you would have to see a very severe tail event for there to be any exposure to the Government of Canada to the securitization program.
Senator Mitchell: My second question concerns climate change adaptation programs mentioned in the presentation on health by Mr. Larkin.
First, I am interested in that and I am pleased to see that in this budget. Could you give us an idea of what those programs entail? Are they research programs? If so, will they be generated or structured through academic or other external kinds of research? What kind of health risk will they be looking at? Will it be injury from violent storms or disease because of warming conditions? Finally, will it assess the level or the potential of increased health care costs due to climate change, because not fixing climate change costs money.
Mr. Larkin: I don't know if I have a lot of detailed information on what we are doing there.
Budget 2016 announced, under addressing climate change and air pollution, in order to access actions to address air pollution for health of Canadians, $73 million over four years and $15 million ongoing. That is specifically more related to air pollution.
With respect to the adaptation with First Nations and Inuit, Sony, can you comment on that?
Sony Perron, Senior Assistant Deputy Minister, First Nations and Inuit Health Branch, Health Canada: We have a program that was on climate change that focused on the North of Canada, the territorial area, the Inuit population or First Nations in the territories. The funding is going toward communities themselves to conduct climate change adaptation studies. What are the threats and risks? It could be vector-borne diseases that were not present that will be present, so we need to adapt the care and service in that context. It can be about flooding or access to food and food safety. We are funding communities or organizations in the North to study what the threats are, and then trying to develop an adaptation plan. With that program, we are funding some initiatives to adapt.
The expansion of the program starting this new fiscal year is about doing the same thing in southern First Nation communities. That is, in the provinces and territories, we will have this program that will be proposal-driven to support communities to undertake these kinds of studies and adaptations. A lot of the focus has been around food security in the North, because harvesting and hunting is at risk because of climate change. What are the strategies that will support the communities to adapt to this?
Some work is being done on climate change through our colleagues at Indigenous and Northern Affairs as well, which is more geared toward infrastructure. Maybe you can talk to them about that. However, with these two components, we are focusing on the public health aspect of the climate change adaptation and our colleagues at INAC are doing a focus more on the infrastructure dimension.
Senator Neufeld: I was also going to ask the question on the adaptation to climate change. Further to what Senator Mitchell has asked, I would like a written report on exactly what is taking place, the dollars that are spent and what you expect to achieve within the next year. That is not a question; that is an addition, chair.
The funding to renew and enhance public health services related to water and wastewater on reserve I think you said was $38 million, if I am correct. Is that the total amount that will be spent across Canada, or is there more? What does it mean? How much will you fix with that amount of dollars?
Mr. Perron: The investment in water quality across Canada has two dimensions. There is a public health dimension and there is the water distribution systems.
At Health Canada, we are supporting water testing, water monitoring and training of water monitors in communities so any public health threat related to water is being detected, similar standards that you will have in southern or non-First Nations communities.
Over the last five years, we have made a lot of progress to make sure that in each community across the country, First Nations communities, there is water monitor training supported with laboratory testing to be able to detect any threat in the quality of water. This can lead to long-term boil water advisories to protect the health of residents or short term when there is a disruption in the quality of the water, similar to what we will have here in the Ottawa region or any city across the country. That is the focus of Health Canada.
You were asking about the total funding. There is more funding than that through Indigenous and Northern Affairs to fund the replacement of infrastructure. But in several cases where we detect a problem in the quality of water, it's not about changing infrastructure; it's simply about dealing with a time-limited water quality issue that we need to address to protect public health and safety.
Senator Neufeld: So if I listen to the news, I would think you are not doing well. Tell me how well you are doing in getting the water quality up, especially on reserves.
Mr. Perron: What I can tell you is that now we went really far from the quality of testing; the communities are around 80 per cent of testing compliance with the normal guidelines. That means water tests are taken regularly to make sure we detect any problem early.
Now, the investment in terms of changing the infrastructure where the infrastructure is the problem is taking some time this year. There have been a number of long-term boil water advisory notices that had been lifted because there was investment in infrastructure. I can't give you the number exactly, but we are supplying the data. Every month we report on how many issues there are across the country to make sure that our colleagues at INAC working with First Nations can undertake the work in the communities to renovate or replace the water facilities.
Senator Neufeld: Thank you.
My second question is to Heritage Canada. You say the Main Estimates propose to allocate an increase of $84.1 million through the Canada Cultural Spaces Fund for renovations or renewal of our cultural institutions, such as museums, performance spaces and galleries. Where are you spending the $84.1 million? I don't expect you will have that in your back pocket. If you don't, could you provide that to us so I know where that $84.1 million is being spent Canada-wide?
Ms. Roy: Of course we will provide that detailed information, but I'd like to provide you further, broader information.
In Budget 2016, the government had allocated more funding for cultural infrastructure. Out of Budget 2016, there was about $168.2 million provided to the Canada Cultural Spaces Fund over two years. That fund is administered by Canadian Heritage. It has about $25 million permanent funding for cultural spaces. What happened in Budget 2016 is that the government invested a significant amount, $168 million over two years.
As of February 28, 2017, there is about $136.8 million that has already been approved in support of 62 projects in 100 communities across the country. Through Budget 2017, the government has proposed an additional investment of $300 million over 10 years, again to top up the Canada Cultural Spaces Fund starting in 2018-19.
So the point is that we had $168 million over two years. We were very committed in the department to ensure that that money would be allocated and spent, and we are in a very good position. We are able to provide you with detailed information about where exactly the money has gone. We have done very well. We were very keen about getting that funding and making sure communities would benefit from it.
Senator Neufeld: Thank you.
Senator Tannas: I was just chuckling about Senator Neufeld's question around the $38 million and your response. Essentially, we are getting very good at knowing how badly we are doing in managing drinking water and wastewater on reserves. I think that's important because you can't solve a problem until you really know how bad it is, so I'm glad the investment is being made.
I've got a question for each one of you that won't take long to answer. I'm a Conservative, but I'm in favour of the increases in spending that are going on here. I'm also very concerned because in each case you've talked about that money going out. I'd like to know from each of you how much of your increase is actually going to leave Ottawa. What head count are you anticipating in each one of your departments as a result of this increase, if any? Hopefully not any, but if any, what kind of head count or frictional costs for head office costs, if you will — the increases — will not leave Ottawa and will in fact not get to the deliveries of whatever services it is? We can start with Mr. Larkin.
Mr. Larkin: It's a difficult question to give you an exact number of what we think the FTE increase might be across the country or where the money would land.
However, if you look at the actual envelopes of funding the departments receive, we have an operating budget that we receive, as well as a capital funding envelope and a grants and contributions envelope. The operating fund's envelope goes to cover our staff and other operating costs that take place across the country. So in fact, in Sony's First Nations and Inuit health branch, he has a large regional presence that sits right across the country. So if those monies are going to increase programs and services in his area, then he would be ramping up and hiring FTEs in Alberta or Manitoba or in the East or wherever those programs exist because they are very much delivered out in the programs.
If you go down into the capital envelope, again, that could be spent on reserves or departmental laboratories. And again, those are spread out across the country as well as there are some in the National Capital Region.
Then finally, when you look at our grants and contributions, the lion's share of grants and contributions again go to the First Nations and Inuit health branch, and they are going to direct program and service delivery onto First Nations and Inuit communities that are across the country.
I can't really give you a number in terms of the FTEs that will result, but I can give you some level of comfort perhaps that the FTEs would be spread out across the country consistent with where the delivery of the programs are.
Mr. Perron: I think because a large portion of the increase is within the First Nations and Inuit health branch, I owe you an answer on that.
Most of the money that comes from our program goes to communities through grants and contribution money. Where we would have an increase of staff, if we are able to do so, is in the nursing area and Aboriginal health officers. We can recruit and add more resources. Those are for the front-line services. We are not building office-type jobs with this money. This money is about increasing services in the communities or paying for the services received in the communities because sometimes we pay the providers directly.
I want to reassure you that this growth is not about growing the public service or the institution; it's being geared toward community services. When we invest in infrastructure, it is being done through contributions — so the bands are receiving the money — to build a nursing station with a frame around it to ensure the quality is there and the inspection is produced. It's not about building more public service.
Senator Tannas: So zero or near zero head count increase in Ottawa?
Mr. Perron: I would say yes in our First Nations and Inuit health branch because our business is mostly devolved in the First Nations. There is no value to increase the head count in Ottawa.
Senator Tannas: Thank you.
Mr. Zielonka: Senator, we will split the answer in two ways and I'll let my colleague Charles MacArthur give some detail because he actually runs the area that is very much involved in terms of delivering.
One comment I would like to make just overall is that it has been something that over the last few years CMHC has been much focused on in terms of trying to run similarly to the way the private sector would run.
Senator Tannas: You have to be comparable, right, to compete in the same business?
Mr. Zielonka: Right. The challenge is always that you can do that easily on the commercial side because you do have comparables. It's harder on the noncommercial side. But we do try and take lessons learned from the commercial side and apply them on the noncommercial side.
On the commercial side, we are actually more efficient than the private sector. In fairness, we do have a slightly larger book than the private sector so we do get some economies of scale, but it is something we are constantly focused on in terms of looking at our head count and in terms of looking at our program costs. One of our efforts in the finance organization that I lead this year is very much around driving more analytics to ensure that we are operating as efficiently as possible.
Perhaps I'll turn it over to Mr. MacArthur.
Charles MacArthur, Senior Vice President, Regional Operations and Assisted Housing, Canada Mortgage and Housing Corporation: Similarly, and I'll get you some exact numbers, the vast majority are in our regions where the delivery happens. This year, particularly with the First Nations, we had to commit and actually do the renovations this year, so we work closely with First Nations. Across the country is where we needed the hands, but we'll get that. As Mr. Zielonka says, even though there is the commercial and appropriations business, in our business the commercial side bleeds across, and every staff here matters, and we get that one person may mean a renovation. I'll get you the exact distribution.
Senator Tannas: If you would, that would be great. Would it be fair to say you are also zero, or near zero, in terms of increases in Ottawa where the services are not delivered?
Mr. MacArthur: There is probably 10 per cent there because we administer large pieces of it, like the provincial relationships where we had a doubling of the dollars and the like, and we also did some direct delivery.
Senator Tannas: So you would have a 10 per cent increase in your head count here in Ottawa?
Mr. MacArthur: I would have to get the exact numbers, but I'm thinking about programs and the programs that were being done. For example, prepayment — it was actually running a program nationally from here. We did renovation and retrofit actually running the program from here.
Senator Tannas: It's a little different. Your services are financial services, and you can deliver them from a call centre in a head office for the most part.
Mr. MacArthur: They were delivery staff in terms of plus-plus.
Senator Tannas: Not what others would call Ottawa staff that are having meetings.
Mr. MacArthur: No, it would depend on the program and how we chose to build, because of the speed of delivery.
Senator Tannas: This is my only question, and we have just got one more to go.
Mr. Zielonka: If you would permit me to add, because of the complexity of programs being financial services, for example, like the prepayment program that Charlie mentioned, what happens is that to deliver some of these programs, we actually borrow from the Government of Canada. The Government of Canada essentially matches those borrowings from the marketplace. When we get a repayment early, all of a sudden we have money that we have to pay off debt and it doesn't always match. It gets quite complex in terms of making sure we do that as efficiently as possible without a cost. That's done in a central treasury group, as an example. It is a little bit different than some of the other programs.
Senator Tannas: Thank you.
Ms. Roy: At Canadian Heritage, there is a mix of programs delivered in the regions and some that are delivered in Ottawa. As a broad principle, when we get funding for programs, there is a process by which you go through the Treasury Board. The approach is that you want the maximum amount of money to go under Vote 5 that goes into the hands of those you are to serve, and you are very careful in terms of more FTEs in Ottawa or in the department.
I would like to give examples of what I mentioned. I talked about the Cultural Infrastructure Spaces Program, and that's an example I can use because that's a program in my area. The funding allocated was $168 million, and I can tell you there are zero resources that came to Ottawa. The FTEs went to the regions to deliver those programs. For some programs, the regions are closer to the communities. They can have better conversations and better links to the communities. In that case, we really wanted the money to go into the communities for infrastructure building. There was no money in Ottawa and FTEs were assigned to the regions.
I would like to make a point about what we are doing at Canadian Heritage about what we call the Grants and Contributions Modernization initiative. We are a department that has a lot of grants and contributions, and we have launched this process by which we want to modernize the way we manage grants and contributions to be more efficient in the way we do the backward work in the department but also vis-à-vis the client.
For example, in the department, we manage a tax credit program and we have an online service. We would like to be able to move to online services for grants and contributions. We would like to streamline our processes so that you don't have too much paperwork that people have to fill out. We would like to be more efficient in terms of our backward offices, and we are in the middle of this process and the Estimates provide funding to do this. We are working with partner departments because, in 2017, there are better ways to manage grants and contributions, and we are moving toward that goal.
Senator Tannas: That's music to my ears. Thank you.
The Chair: If there is any additional information, please forward it to the clerk.
Just a little supplementary, Senator Marshall.
Senator Marshall: I want to make sure I understand what is going to be provided by the three organizations. Are you going to give us the full-time equivalents by program? That's what it is? Thank you.
Mr. Larkin: For a point of clarity, I was not clear that we were being asked to provide detail on full-time equivalents with respect to these increases. Are you requesting that from all of us?
The Chair: Yes, we will.
Senator Tannas: You already said zero.
Mr. Larkin: Yes.
The Chair: We will recognize that you will provide additional information from the three groups.
[Translation]
Senator Forest: Mr. Chair, congratulations; we wish you an excellent experience at the head of our committee.
My first question is for Mr. Zielonka. Your organization has put in place measures to slow down the real estate bubble, particularly in Vancouver and Toronto, but also to some extent in Montreal and Calgary. It did so by increasing the minimum down payment to 20 per cent, and by reducing the amortization period to a maximum term of 25 years. At the same time as these new standards are being brought in, the government is implementing major programs with very large budgets, such as the infrastructure program, in order to stimulate the Canadian economy and give it a boost.
Have you measured the impact of these new standards, particularly in less urban Canadian regions? Has there been a slowdown in housing starts? This could ultimately run counter to the government's objective of injecting enormous sums to develop infrastructure in Canada in order to revitalize the economy.
Mr. Zielonka: I can comment on two aspects. We made a change in our insurance program. That change is due to variations regarding the capital rate to be required by passive regulators — like us — which sets a new capital level. That change is separate from the changes in the budget, and it is not easy to see how the facts are linked. However, it is true that there has been an increase in activity in the housing area because of the programs in the budget. However, the opposite is true when it comes to the impact of the increase in insurance rates. It is not easy to determine a net amount.
Senator Forest: You do have statistics on single-family housing starts, multi-unit property construction starts, and so on. Have you done an analysis on the impact of the increase in the prime rate, especially as regards the down payment for a first home?
[English]
Mr. Zielonka: I'm looking for some information that we have, but if I recall correctly, the increase in premiums did have an overall impact on the marketplace, but the impact was mostly on home buyers or potential home buyers who were on the periphery of people who were essentially marginal at best.
There were a couple of changes. One of the main changes was that they imposed a stress test — we're in a record low interest rate environment — that essentially looked to ensure that homeowners, if they were to experience a higher interest rate, would be able to continue to make payments on their mortgages. That was one of the significant changes that were imposed, and that obviously did have an impact on the housing market.
That change only came into effect fairly recently so we're still looking at the impact. Usually, there are two impacts. You have an initial impact where you have a bump up in activity, which we saw; it was there. And then you will usually have a trough immediately afterwards, and then over time it stabilizes.
Nevertheless, I think we have historically seen that that stabilization has been at a slightly lower level as the homeowners who were potentially about to purchase a home in the marketplace may have to wait a little bit longer to either save more money to ensure they have a higher down payment, or essentially a look at a smaller house, which is another possibility.
I think the impacts are still being felt. There are a number of figures that have been kicked around the marketplace, but the problem is we're still in that peak and trough, so we're still not seeing the stability. It will be six months after the summer season when we have a better understanding of how significant it has been.
[Translation]
Senator Forest: Thank you. I am reassured by the fact that you will evaluate the impact of all this on the situation as a whole.
My second question is for Ms. Roy. Welcome to the committee. You mentioned an increase of $84.1 million for the Cultural Spaces Fund; this is a fund dedicated to the support of cultural spaces. You also indicated that a $300-million budget over 10 years will be allocated to the Cultural Spaces Fund, which means that an additional $30 million a year will be available. Is that amount in addition to the global budget?
There are also some peripheral programs. For instance there are funds to assist small communities in the context of the infrastructure program. By "small communities'' we mean communities of 100,000 inhabitants or less; in several cases this can mean important communities, depending on the regions. For certain programs these are dedicated funds, and for others the costs will be shared according to the merits of the projects. You spoke of a sum of $1.3 billion over 10 years in the context of a bilateral agreement; I imagine that that too is a part of the infrastructure program.
Do we have an overall picture of the amounts and budgets allocated to our cultural infrastructure in the context of the dedicated funds programs? Also, what are the budgets and funds granted under the cost-shared programs?
Before you answer, I would like to make a comparison in connection with the last part of my question. Under the former Infrastructure Canada program, communities did not have access to funds for cultural infrastructure projects. The projects could only involve aqueducts, sewers and drinking water treatment. Today they have access to funds for cultural infrastructure projects.
How much money can be made available for cultural infrastructure projects, aside from programming, animation or programs to encourage cultural activities and expression?
Ms. Roy: The Department of Canadian Heritage has put in place a program devoted to cultural spaces that essentially focuses on cultural infrastructures; this represents contributions of approximately $25 million. It is a permanent program.
In the 2016 budget, the government decided to increase investment in infrastructure significantly, and this led to the government's global infrastructure plan. In the context of the major governmental infrastructure program, part of the 2016 investment added funds to the program we administer, that is the cultural spaces program, to the tune of approximately $168.2 million over two years, in 2016-2017 and 2017-2018. The purpose of that investment is to inject money into our economy while supporting cultural spaces. I should say, with regard to the program we administer, that every year, submissions far outpaced the available funds. An important amount has been added over two years for the cultural spaces managed by the department. As I was saying earlier, we have begun spending those funds.
In the 2017 budget, the government announced phase 2 of the project, with more details on the government's global infrastructure program. What is the status of the government project to invest $300 million over 10 years into cultural spaces? We will keep our base budget of approximately $25 million, but the government is adding funds that will begin to be available in 2018-2019, for a 10-year period. This concerns the cultural spaces program we manage.
In addition, Infrastructure Canada has major funds to inject into infrastructure, and approximately $1.3 billion over 10 years will be allocated to cultural and recreational spaces. However, according to the way this program works at Infrastructure Canada, the projects follow upon requests from the provinces and territories. We will have to see what the provinces and territories propose, but the envelope is supposed to be $1.3 billion. My colleagues from Infrastructure Canada can provide more detail on that.
I would also like to add that in Budget 2016 — and you mentioned this — in the past there was a period during which cultural spaces were not eligible for Infrastructure Canada programs. This was changed in the 2016 budget so that there is a type of complementarity. Sometimes the provinces and territories present larger-scale projects, and that change was made so that those projects could be eligible. In short, more funds have been made available for cultural spaces.
Senator Forest: Considerably more.
Ms. Roy: Yes, considerably more funds are now available for cultural spaces. We recognize that there is a greater need. In addition, we try to see if we can fund projects we call "creative centres'', as, increasingly, creators try to get together in centres in order to optimize their resources and expertise. It is not only about money and funds, but also about knowledge and expertise to further creation. The creative centres will focus on optimizing investments so that buildings can be used for multiple purposes, and creators can share their resources. We see this more and more in the area of videos and music; people work together and this leads to more creative products.
Senator Forest: If I understand correctly, there was a base budget for cultural spaces of $25 million a year, and $300 million over 10 years has been added to this.
Ms. Roy: That is what is proposed in Budget 2017.
Senator Forest: But for 2017-2018, we are looking at a sum of $30 million and not $300 million.
Ms. Roy: The amounts will total $300 million over 10 years, starting in 2018-2019. The first infrastructure phase was in the 2016 budget. There was an additional $168.2 million for cultural spaces in 2016-2017 and 2017-2018. In phase 2, starting in 2018-2019, $300 million will be allocated to the cultural spaces fund over 10 years. In fact, the amount allocated to cultural spaces over 10 years has more than doubled.
Senator Forest: Mr. Chair, it would be interesting to have a table, for visual types like myself, in order to see the starting point and the programs with dedicated funds and the funds that are available.
The Chair: Could you provide that table to the clerk, please?
Ms. Roy: Certainly, with pleasure.
[English]
Senator Marshall: My question is for Canadian Heritage. I found the information on cultural infrastructure very informative, so thank you very much for that.
When I look at the Main Estimates, most of your funding is going out by grants and contributions. Is it publicly disclosed what organizations are receiving the funding? It doesn't specify the organization; it just says it's for a certain purpose. If I went onto your website, could I get a list? How is it provided? Is it provided by programs? For example, grants in support of the Celebration and Commemoration Program, $44 million. If I go into that item, will I be able to see all the organizations that receive money totalling that $44 million? That is already disclosed on your website, is it?
Ms. Roy: Yes. It's by program. Once the projects are approved, they are put on the website. I don't have all the details about how it goes, but I think it goes by batches or by cycles. It's very transparent; it's put on the website.
Senator Marshall: When you say program, give me an example of a program.
Ms. Roy: For example, with the Canada Cultural Spaces Program, projects approved under that program would be put on the website just as a matter of transparency.
Senator Marshall: I am from the province of Newfoundland and Labrador; can I go in and find out all the ones that have been approved for Newfoundland and Labrador?
Ms. Roy: I don't know if it's by province — I would have to check — but I'm going to turn to Andrew, who may have more details about how it's posted on the website.
Senator Marshall: Just briefly, because I am conscious of the time and I want to make sure I get all my questions answered.
Andrew Francis, Chief Financial Officer, Canadian Heritage: Yes, we post every dollar. Once we make an expenditure on any recipient, the details of the recipient go online. We are moving to an open data perspective so you can search by postal code, which would allow you to narrow it down. But if you do go through the list, you can pick out the ones by certain area.
Senator Marshall: I think Infrastructure Canada has a map of the country, and you can just go to your province and click on your province and get it.
Mr. Francis: Yes. They are using open data and linking it to the postal code, which is how the government is doing it.
Senator Marshall: It is something similar?
Mr. Francis: Yes.
Senator Marshall: Okay. Thank you.
Where the money is going out mostly is contributions and grants. You must have some kind of criteria. I am thinking about the performance indicators, and I know that the government is looking for results for the money that is being spent. What is happening with regard to the performance indicators? Last year, I know there was some discussion by the audit committee regarding the quality of the performance indicators. They felt that the performance indicators — this is my terminology — were weak and felt that some attention should be given to them. Where there is so much money going out in grants and contributions, what is happening in the area of performance indicators? Is there some major overhaul of that? Can you give us some information on that?
Ms. Roy: I will use the example of some specific programs, because performance indicators are developed program by program.
In cases where funding is coming into the department for a specific program through the budget, there is a process by which we have to go to Treasury Board in terms of authorities to spend the money and so on. In that process, we really have to indicate what results we are expecting. We are also expected to put very specific performance indicators in terms of what will help us to figure out if we got the results we were expecting or not.
For each program, there is a process to develop performance indicators, and periodically you can review your performance indicators too. That is the extent I can give you in terms of how it works. It is program by program, and we are always aiming at improving our performance indicators and ensuring we get the results we are expecting.
Sometimes the data is available; sometimes the data is more difficult to find in terms of indicators. That is also in some cases a challenge in terms of you can have good indicators, but if you don't have the data to help you, it gets to be difficult. In other cases you have data that can help you.
It's really an approach program by program, but I can say that for whatever funds come through the department, there is a process by which we have to go through Treasury Board submissions. There is rigour attached to the performance indicators and ensuring we have good ones.
Senator Marshall: Okay. I just found the reference there. This was last summer. It says, "Departmental audit committee members expressed strong concerns that some of the performance measures were of questionable value and/ or lacked sufficient ambition.'' If there is anything additional you could provide, could you provide it to the clerk of the committee? That would be very helpful.
Ms. Roy: Of course.
Senator Eaton: I will continue with accountability. The new budget also proposes to invest $18.9 million over five years starting in 2017-18 and an ongoing $5.5 million every four years thereafter to support indigenous young people in sport.
Is that a series of programs? Is it transnational? Can you give me a few more specifics? Are you giving the money to INAC or are you distributing it yourself?
Ms. Roy: No, this is not money that would go to INAC. It is money that would be managed by the department.
Senator Eaton: Because it seems rather broad in your speech, "to support indigenous young people in sport.''
Ms. Roy: Yes. What I can share with you is $18.9 million over five years starting in 2017-18 and ongoing funding of $5.5 million every four years to strengthen indigenous sport leadership, improve availability and access to culturally relevant programming.
Senator Eaton: That sounds lovely, but what does it mean?
Ms. Roy: Well, I think what I can say is that this is new for the department. This is a new program that will be put in place, so the details are not available yet. It has just been announced in the budget.
[Translation]
Senator Eaton: I understand perfectly, but in order to get that money, there were probably requests linked to specific projects.
[English]
Ms. Roy: Yes. I'm going to let Andrew respond to that.
Mr. Francis: One of the key drivers of this funding is the North American Indigenous Games, fully supporting that to a higher extent. Before that, the department had a bit of funding and had to find support for it, so the department is being supportive of that. Also there is the Arctic Winter Games. There is also some youth programming to support ParticipACTION or participation in sport. The ongoing component relates to the indigenous games and then the —
Senator Eaton: Does that happen in Canada or somewhere in North America? Every year? Every other year? Every four years?
Mr. Francis: There are some Aboriginal games that happen inside of Canada, and I also know there are other events that link the northern one, where there is the Innu that touch Greenland and other countries as well. The funding, to my knowledge, is principally in Canada.
In the material that went forward, I can't think of an international component on this funding. However, we can go back and if there is, I can communicate it.
That said, we are in early days, and the program has to be sorted out and figured out exactly which amount goes to what component compared to what was communicated with cabinet and so forth. We will have to go to Treasury Board and dictate how our programming will work. It is still very early days on this stuff.
Senator Eaton: Perhaps I will ask you the question next year.
The Chair: If you can provide the information as per the requests of Senator Eaton, please do.
Ms. Roy: Of course.
Senator Mitchell: My questions are about Canadian Heritage as well. You had a stimulating presentation.
I am interested in the $25 million over five years for the high-performance athletes, of which I am not one, unfortunately, although I am doing my best. This is regarding the Athlete Assistance Program. It is due to the controversy in the States between female and male hockey team support. I am interested in whether we might have a similar concern in the Canadian circumstance with respect to sports generally, with respect to hockey, basketball, although the hockey may be changed because of the decision recently. However, I did see where women hockey players in Canada — at least one — expressed a concern about a differentiation in funding, and clearly that would be inappropriate, it would seem to me.
Mr. Francis: The way this program works is the department supports athletes who are carded by the sport organization that represents a certain sport. There is not a differentiation between the sexes.
One thing that is interesting in this program is you don't solely have a monthly amount to athletes and the carded athletes. There are also other programs where there are what I will refer to as allowances. If an athlete is going to school, there can be support there. If there is a child care issue, there is another support there.
With the new funding that is coming — and the last increase in this programming was in 2004 — there will be an inflationary-type adjustment but also a review by the minister in looking at these other programs to ensure that they are reflecting the values and the priorities that she wants. I am referring to Minister Qualtrough, as there are three ministers within the portfolio.
Senator Mitchell: In the next paragraph, you mention the $395.5 million funding for Youth Employment Strategy over three years.
Does that include Katimavik, and what is the status of Katimavik now? There was some issue about that. That has been a powerful program. I am wondering where that is and whether it is in this funding or somewhere else.
Mr. Francis: Katimavik is not a piece of this funding. This initiative is focused on jobs in the heritage sector. In terms of Katimavik, I would have to follow up.
Senator Mitchell: Could you please?
Mr. Francis: Yes.
Senator Mitchell: I would appreciate it if I could get that, chair.
Senator Woo: Again with Canadian Heritage, of the $160 million that is spent on the program objective Attachment to Canada, do you have an idea if any of that, or how much of it, is spent on Canadians who live abroad? There are roughly 3 million Canadians living outside of Canada. It would seem to me that cultivating their attachment to Canada is as important if not more important than cultivating the attachment of Canadians who are on Canadian soil.
Do you have any idea?
Mr. Francis: I will start. In terms of money spent overseas, it tends to be GAC, Global Affairs Canada, who is the lead in terms of the cultural liaisons or their embassy staff.
A lot of investments involve items, for example, music and culture, which are not border centric and impact more than just Canadians as well.
Ms. Roy: I may add that the government has also decided to invest a bit in export to support our cultural industries at home and abroad, because more and more the markets are not domestic, they are international. There were some programs at Heritage and the former DFAIT that were called Trade Routes and PromArt that were terminated in 2009 and 2010. We are modernizing those programs and, as Andrew said, investing in your artists and interpreters radiates around the world. We are working closely with our GAC colleagues so that the missions are also supporting this agenda to support our own creativity and interpreters.
If you heard about the Junos, it is amazing how the music industry, for example, is doing. We have quite an impact around the world. These programs have repercussions abroad. You look at your initiatives not so much domestically, but also internationally.
Senator Woo: What has happened to funding for multiculturalism? There are references to how there is an increase in funds, both vote 1 and vote 5, for the transfer of responsibilities, but I don't see it showing up in the budgetary line items. Can you explain where that has gone?
Mr. Francis: It is new funding for the Department of Canadian Heritage but it derives from a machinery of government change. Multiculturalism was being delivered at IRCC, Citizenship and Immigration Canada. What you see in the documents is a delta. It is part of the $150 million increase to the appropriations of this department.
You will see an equivalent decrease with IRCC's budget. The program was transferred as it was being delivered, in terms of the amount of resources. You won't see a budget announcement. It was technically an order-in-council that took place in November 2015, I believe.
Senator Woo: Why does it not show up — sorry for my ignorance here — in the line item "multiculturalism?'' This is in the Main Estimates volume that we received under expenditures by program or purpose.
Mr. Francis: If I am looking at —
Senator Woo: It is Part II, page 83.
Mr. Francis: Multiculturalism on that page, in that table, is now part of "engagement.'' We moved it over to the department as it is a unique line item in program. It has been combined. In terms of these themes that are listed here, it is not a program breakout. Having multiculturalism listed was specific to the transfer. Part of the increasing engagement is due to that program.
Senator Neufeld: To Health Canada, can you tell me how much money is being spent, or is there money being spent, on AI and robotics as they relate to health care?
Mr. Larkin: I am not aware of anything that the department would be spending specifically on that. The department does fund a number of organizations like Brain Canada and Canada Health Infoway. They may, in fact, be investing in some research that has to do with artificial intelligence, but I would have to get back to you with that information.
Senator Neufeld: That would be helpful. I would think Health Canada should be involved in that. We have been doing a study on that in the Social Affairs Committee and it is amazing what is happening around the world. I hope we are not just floating around and not doing anything with this type of stuff in health care because it seems to me that it is the future. It has been, but it is certainly the future. If you could let me know, I would appreciate that.
Second, I would go to Canadian Heritage. I have a couple of questions. It says that for contributions in support of the Court Challenges Program, in 2015-16 it was $285,000; 2016-17 was $1.4 million; and 2017-18 is $3.3 million. Can you tell me what is making those increases?
Mr. Francis: The Court Challenges Program was discontinued around the year 2008 or 2006, I believe. The program continued on in that it accepted applications and continued through the courts with financing of the federal government. There has been a perpetual amount that continues in that program.
Then in Budget 2016 — so a year ago — there was an announcement to renew the program. In the renewal, there have been some external consultations and some time taken. They're expecting the program covering official languages and the previous court challenges program to get rolling this upcoming fall.
There have been some announcements along the way, with the most recent in January. It's getting to its new iteration.
Senator Neufeld: You say in your notes, "preventing and managing concussions.'' I am a bit surprised. It is great that you do that, but I am surprised that it is in Canadian Heritage and not Health Canada. Maybe it is already in Health Canada and it's also in Canadian Heritage and it is an example of work being done twice. I can't imagine why Canadian Heritage would do concussions.
Mr. Francis: It's not being done twice but in a shared responsibility. Part of Canadian Heritage is Sports Canada. It's our support of Minister Qualtrough. One of the endeavours is on concussions, but there is more than one department involved due to the complexity of the issue and the cross-disciplinary linkages to it.
Senator Neufeld: Maybe you can send us a note on how you are differing from what Health Canada is doing in concussions as compared with your department? Thank you.
[Translation]
The Chair: Before giving the floor to Senator Forest, I would like to mention the presence of Senator André Pratte, from Quebec.
Senator Forest: One of your main health-related objectives is the strategy for the aging population, and the development of a home care strategy in the context of the bilateral agreements. What is your plan for the deployment and implementation of that objective, which is very important for Canada given its demographic reality? And also, what type of measures and performance targets have you developed to evaluate the effectiveness of your efforts?
[English]
Mr. Larkin: Under the negotiations and discussions that the government is having with the provinces and territories on the Health Accord, one of the pillars has been home care. They will be advancing the home care work through those negotiations and ongoing deliberations with the provinces. Right now, what you've heard is announcements around funding, but from that there will continue to be discussions around the performance indicators and the parameters around which the governments will be pursuing to improve home care.
[Translation]
Senator Forest: So I understand that at this point this is an intention. The implementation strategy and the performance indicators are being discussed.
[English]
Mr. Larkin: There may be more than just simply a discussion. But from my understanding of the situation, health care and the delivery of health care services other than non-insured health benefits that we provide to First Nations and Inuit people is the responsibility of the provinces. In these negotiations that are taking place on the Health Accord, once those health accords are signed, it's the provinces' responsibility to advance home care in step with the federal government as per the negotiated agreements.
[Translation]
Senator Forest: However, given the issue, the objective and the bilateral agreement, you will eventually set certain targets to ensure that concrete action is taken. Back home we have a saying: "you have to walk the talk''. You must take action to attain the objectives in those agreements, correct?
[English]
Mr. Larkin: Yes; I agree.
[Translation]
Senator Forest: My last question is for Canadian Heritage. I am admiring your targets that indicate a perfect 5 out of 5 score for the variety of Canadian cultural content in 2014-2015, and again in 2015-2016. For Canadian cultural content accessible in Canada and abroad, your score was 4 for 2014-2015, and 4.5 for 2015-2016. How did you define your targets, and how do you measure your achievements? People say that there is no such thing as perfection in this world, and I find it surprising that you had a perfect score two years in a row.
[English]
Mr. Francis: I'll start. When we do our measures on culture and other aspects, we do a lot of surveys and statistics. I'm not sure which document you're referring to directly, but a lot of time we're asking Canadians to do our surveys right after something that has been enjoyable. As you know, the department runs Canada Day on the Hill and Winterlude and does a number of events. So we do get some fairly positive survey feedback on occasion.
As you pointed out, recently there has been a lot of engagement to support Canadians' experiences at various events and things that the department supports.
I do believe there are other measures that go into this, but a big component is public surveys.
Senator Marshall: My question is similar to Senator Forest's question on the Health Accord. The money for the Health Accord is budgeted under the Department of Finance. What is the involvement of the Department of Health? Would the Department of Health be negotiating the performance indicators?
I'm trying to get a handle on the role of the Department of Health versus the role of the Department of Finance.
Mr. Larkin: The role of the Department of Finance is primarily to provide an instrument for the transfer of the funds. I don't mean to diminish the role of the Minister of Finance in those negotiations with the provinces; however, once the negotiations are finalized between the Ministers of Health and the provinces and the Ministers of Finance, the Department of Finance is in fact just an instrument to transfer, the way they transfer other funds through various mechanisms. The role of Health Canada is to negotiate and work with the provinces and territories on what in fact will be delivered under the various pillars of the Health Accord.
Senator Marshall: So the Department of Health is doing the framework and the performance?
Mr. Larkin: Yes.
Senator Eaton: This question might not be a little one, but you don't have to answer me at this time.
Does B.C. Health look after First Nations health? Do they not have a special agreement?
Mr. Larkin: Yes.
Senator Eaton: Are you not trying to follow that up with other provinces as well?
Mr. Perron: The B.C. tripartite arrangement is the devolution toward First Nations. It has not been devolved through the province of British Columbia; it has been devolved through First Nations in British Columbia by a tripartite arrangement that involved the province. The province is committed to ensure that First Nations in British Columbia receive exactly the same level of service as any other B.C. resident.
We have transferred approximately $400 million a year under a 10-year agreement. They manage that as the health authority. We still have a relationship with them, but they operate all the programs themselves. They have the authority to redesign programs or reorganize programs and deliver programs.
[Translation]
Senator Eaton: Are you in negotiations with the other provinces in order to follow their example?
Mr. Perron: There are service development and transformation processes in place at various levels in the other regions. If I may reframe your question, the discussion must be held first with the first nations before being held with the provinces. With regard to the first nations, we have to support their desire to take over certain programs and services. There has been progress, but I would add that in British Columbia it took 10 years before the 2013 transfer was achieved. These are very slow processes, where we must ensure that the communities endorse what is proposed.
Senator Eaton: So it is really their initiative that moves things forward.
Mr. Perron: We have a small program called the Health Services Integration Fund. We use this fund of approximately $13 million a year to support initiatives to integrate and transform services throughout the country. Some of these initiatives lead to a transfer of responsibility to the first nations.
The Chair: Thank you.
[English]
As chair, I would like to ask Canadian Heritage if you could provide us with information regarding the federal government's estimated total budget for Canada 150 celebrations. You can provide that to the clerk.
Honourable senators, if you have additional witnesses regarding the order of reference that we have on aging, please provide them to the clerk.
To our witnesses, thank you very much.
Tomorrow night, honourable senators, we meet at 6:45 p.m.
(The committee adjourned.)