THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Wednesday, June 18, 2025
The Standing Senate Committee on National Finance met with videoconference this day at 6:01 p.m. [ET] to consider the Main Estimates for the fiscal year ending March 31, 2026, with the exception of Library of Parliament Vote 1, and the Supplementary Estimates (A) for the fiscal year ending March 31, 2026.
Senator Claude Carignan (Chair) in the chair.
[Translation]
The Chair: Before we begin, I would like to ask all senators and other in-person participants to consult the cards on the table for guidelines to prevent audio feedback incidents. Please make sure to keep your earpiece away from all microphones at all times. Do not touch the microphone. It will be turned on and off by the console operator. Please avoid handling your earpiece while your microphone is on; you may either keep it on your ear or place it on the designated sticker. Thank you all for your cooperation.
I wish to welcome all of the senators as well as the viewers across the country who are watching us on sencanada.ca.
My name is Claude Carignan. I am a senator from Quebec and the chair of the Standing Senate Committee on National Finance. Now, I would like to ask my colleagues to introduce themselves.
Senator Forest: Welcome. I am Éric Forest, representing the Gulf senatorial division, in Quebec.
Senator Pupatello: Sandra Pupatello from Windsor, Ontario.
Senator Galvez: Good afternoon. I am Rosa Galvez, representing the senatorial division of Bedford, in Quebec.
[English]
Senator Duncan: Good evening. Pat Duncan. I’m a senator for the Yukon.
Senator Pate: Kim Pate, and I live here in the unceded, unsurrendered, unreturned territory of the Algonquin Anishinaabe. Welcome.
Senator Kingston: Joan Kingston, New Brunswick.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
[Translation]
Senator Moreau: I am Pierre Moreau, representing The Laurentides senatorial division, in Quebec.
The Chair: Honourable senators, today, we will resume our study on the Main Estimates for the fiscal year ending March 31, 2026 and the Supplementary Estimates (A) for 2025-26, which were referred to this committee on May 29, 2025 and June 11, 2025, respectively, by the Senate of Canada.
For our first panel, we are pleased to have with us today Philippe Thompson, Chief Finances, Results and Delivery Officer, who has missed us, but not as much as he’s missed the supplementary estimates that come with us. Also with us are Lisa Smylie, Assistant Deputy Minister, Strategic Policy and Partnerships; Manon Nadeau-Beaulieu, Chief Finances, Results and Delivery Officer, who is the Chief of Finance; and Georgina Lloyd, Assistant Deputy Minister, Northern Affairs Organization.
Welcome, everyone. You are regulars, so you’re starting to know how we do things here. Mr. Thompson and Ms. Nadeau-Beaulieu will each have five minutes for their opening remarks, and then we will proceed with questions. We have one hour for this panel of witnesses.
Mr. Thompson, the floor is yours.
Philippe Thompson, Chief Finances, Results and Delivery Officer, Indigenous Services Canada: Good evening, Mr. Chair and honourable senators. Thank you for the invitation to appear before you to discuss the 2025-26 Main Estimates for Indigenous Services Canada, or ISC.
I would like to begin by acknowledging that we come together on the unceded traditional territory of the Algonquin Anishinaabeg people.
Before we begin, I’d like to introduce Lisa Smylie, Assistant Deputy Minister, Strategic Policy and Partnerships, as well as other sector colleagues who are here tonight for additional support on specific topics.
For 2025-26, ISC’s Main Estimates are $25.3 billion, which reflects a net increase of $4.3 billion, or an increase of 20.4% compared with last year’s Main Estimates. The increase is primarily due to a net increase of $1.9 billion for the health service area, which is mainly attributable to a net increase in funding for public health promotion and disease prevention, supplementary health benefits, Jordan’s Principle and the Inuit Child First Initiative, as well as health systems support; and $1.3 billion for the children and families service area, which is mainly attributable to a net increase in funding for child and family services and income assistance.
[English]
With the total amount of $25.3 billion in its Main Estimates, Indigenous Services Canada will continue to make meaningful progress on our objectives and, in particular, address some key priorities, such as improving clients access to supplementary health benefits by continuing to engage with our Indigenous partners; continuing to ensure Indigenous children get the care and support they need to thrive; addressing gaps in service by fully implementing Jordan’s Principle for First Nations children; and working with Inuit partners to co-develop a new model for the Inuit Child First Initiative.
We are continuing to invest in distinctions-based mental health and wellness approaches to meet the needs of First Nations, Inuit and the Métis Nation, including culturally appropriate substance use prevention and treatment services and trauma-informed cultural and emotional supports.
We are continuing co-development work with Indigenous organizations on long-term, distinctions-based funding frameworks, and we are continuing work on the first five-year legislative review of the provisions and operations of an act respecting First Nations, Inuit and Métis children, youth and families in collaboration with Indigenous peoples.
We are aiming to close the infrastructure gap by 2030 by supporting community-led decision making on First Nations infrastructure projects, including high-priority repairs and renovations, education facilities, housing, multi-year capital projects, with over 12,000 projects underway or completed across 613 communities and serving approximately 481,000 people.
We are working to ensure clean water access in First Nations communities by eliminating long-term drinking water advisories on reserves.
We are continuing to support First Nations’ control of First Nations elementary and secondary education and increasing educational attainment for First Nations, Inuit and Métis Nation learners through ongoing investment in post‑secondary education.
[Translation]
Mr. Chair, please rest assured that our primary goal, through collaboration with Indigenous partners, is to advance their priorities while holistically supporting their well-being and self‑determination. We sincerely hope that our combined efforts will help change how all Canadians see Indigenous peoples and how we can all move forward in the spirit of reconciliation.
I look forward to discussing any aspects of these estimates with you and welcome your questions regarding my presentation.
Meegwetch. Qujannamiik. Marsee. Thank you.
Manon Nadeau-Beaulieu, Chief Finances, Results and Delivery Officer, Crown-Indigenous Relations and Northern Affairs Canada: Good evening and thank you, Mr. Chair and honourable senators, for the invitation to discuss the 2025-26 Main Estimates for Crown-Indigenous Relations and Northern Affairs Canada, or CIRNAC.
[English]
Let me begin by recognizing that we are coming together here today on the unceded traditional territory of the Algonquin Anishinaabe people.
As the Chief Finances, Results and Delivery Officer for this department, it is a pleasure to present and answer any questions you may have on these estimates, along with my colleague, namely Georgina Lloyd, Assistant Deputy Minister, Northern Affairs.
Alongside the two new ministers of Crown-Indigenous Relations and of Northern and Arctic Affairs, we remain committed to renewing the relationship with Indigenous people, as well as enabling prosperity in the North and in the Arctic.
[Translation]
The 2025-26 Main Estimates will provide the department with a total of $13.1 billion in investments, which reflects a net increase of approximately $2.1 billion compared with last year’s Main Estimates, mainly attributable to a higher level of funding received for the settlement of claims and litigation.
[English]
I welcome the opportunity to outline some of the work these Main Estimates will allow the department to further in 2025-26. Specifically, a total of $8.6 billion in funding will allow the department to manage litigation and negotiate the settlement of claims. Of that total, $4.9 billion will support the resolution of specific claims, where the department expects to resolve at least 35 of them by the end of the fiscal year. These concrete gestures of reconciliation not only create healing opportunities, but contribute to rebuilding trust with Indigenous peoples, as well as support social wellness and stimulate economic growth within communities.
[Translation]
Additionally, $2.4 billion in funding will support the management and implementation of agreements and treaties, as well as enable an increase in the number of arrangements concluded. These joint efforts, which lead to tangible agreements with partners, ensure that the Government of Canada can meet its obligations towards addressing Indigenous rights, priorities and interests.
A portion of these Main Estimates, totalling $345 million, will be allocated to Indigenous organizations to deliver a range of individual and community services, in order to enhance Métis, Inuit and First Nations peoples’ access to culturally competent and Indigenous-led services, such as housing infrastructure and cultural programming, youth leadership development, as well as wellness and healing services.
[English]
In collaboration with territorial, Indigenous and provincial partners, Crown-Indigenous Relations and Northern Affairs Canada will continue to advance the pursuit of a strong and prosperous Northern and Arctic region through investments of over $1.3 billion this fiscal year.
Of this funding, $818 million will be provided to continue remediation of northern contaminated sites to ensure northern lands, waters, and natural resources are sustainably managed.
Support will also be provided toward clean energy and climate monitoring projects through $76 million in funding in order for Northern and Indigenous communities to build resiliency to changing environmental conditions.
[Translation]
Of course, food security remains one of the top priorities of the department, which is why $208 million in funding will be allocated to support improved access and affordability of retail and locally produced nutritious food, and other essential items for residents of 125 eligible isolated northern communities. Results of some of this funding will materialize as part of the Food Security Research Grant by enabling the department, through engagement with Indigenous partners and academics, to co-develop as well as implement recommendations on alternative models and opportunities for improved access and subsidy adjustments.
Finally, $148 million will support strong northern and Arctic governance and partnerships, to develop solutions to challenges and ensure that regional capacity, needs and priorities are addressed. For example, part of these funds will allow the advancement of the devolution of responsibilities for lands and natural resources to the Government of Nunavut, as well as help to further regional governance approaches to close the housing gap.
Mr. Chair, these Main Estimates will allow the Government of Canada to continue the concrete work to renew the relationships between Canada and First Nations, Inuit and Métis people; and to further advance the work in the North and in the Arctic.
I’m pleased to answer your questions.
Thank you. Meegwetch. Marsee.
The Chair: Thank you. We will now proceed to questions, starting with Senator Marshall.
[English]
Senator Marshall: My questions are for the Crown-Indigenous Relations Department, specifically on lapsed funds and the contingent liability that shows up on the balance sheet of the government.
The funds that were lapsed in 2023-24, there’s $26 billion available for use, but $10 billion lapsed. That was the biggest percentage amount of lapsed funds of all the government departments. Why would it have lapsed $10 billion?
Ms. Nadeau-Beaulieu: I can answer. In 2024, we had lapsed $169 million for Sixties Scoop settlements. Part of that funding was reprofiled to 2024-25, for which you haven’t received the financial statement. This program is currently winding down, and we will probably lapse a little bit and ask for another reprofile in order really finalize the program.
In terms of contingent liability, we no longer have anything booked toward one. It’s a liability because we have been settling everything, so we are just finishing up.
Senator Marshall: If you didn’t spend the $26 billion, and the $10 billion that you lapsed, was all that set up as a liability on the balance sheet of the government? Is there some correlation or relationship between your lapsed money and also what shows up as a contingent liability on the balance sheet of the government?
Ms. Nadeau-Beaulieu: When we’re assessing that there’s a new liability, it’s not necessarily linked with a lapse. When we have the funding on our books, it’s usually because we’re close to settlement, so the contingency would have been booked prior to get the funding in. For Crown-Indigenous, there’s no relationship between how we are booking contingent liability and what we are lapsing.
Senator Marshall: There’s no correlation, and no correlation between the lapsed funding and your contingent liabilities, but there is a relationship with straight liability?
Ms. Nadeau-Beaulieu: Yes.
Senator Marshall: It would have to be. Okay.
Two years ago, in 2022-23, there was a $26 billion increase in your contingent liability, and it was disclosed on the balance sheet of the government, and nobody ever referenced it. I think I was the only who spoke of it.
Last year, there was a lesser-contingent liability of $16 billion. That drove the deficit up to over $16 billion, so that was quite a story.
The Parliamentary Budget Officer or PBO testified the other night, and he was telling us what he thought the deficit would be for this year. He was saying what is unknown is whether there will be an increase in the contingent liabilities for Crown-Indigenous Relations. Is that something you can share with us tonight?
It seems like every year, there’s an adjustment to contingent liabilities. I’m expecting one this year too. Am I right or am I wrong? I’m just trying to get a handle on the deficit of the government, which is unknown.
Ms. Nadeau-Beaulieu: You are right, there will be an adjustment on the contingent liability. We’re reassessing the contingent liability balance every year based on the price index, like the inflation on new claims that has been received throughout the years. This will reduce by the number of claims we’ve been settling and paying off.
This year, I cannot tell you what the number will be, because we’re still in the subsequent period, so we’re still accounting for it until the end of August. The financial statement will be out. We are trying hard for October, this is what we’ve committed to, so by that time we’ll be able to tell you what the number is, but if we are receiving more claims until the end of the subsequent even period, the amount of contingent liability may actually increase, so I cannot tell you a number.
Senator Marshall: Put me down for round two, just in case.
[Translation]
Senator Forest: Welcome, everyone; it’s always nice to have you here. My first question is for you, Mr. Thompson.
I note that Indigenous Services Canada is being allocated $783 million to support coordination agreements and First Nations Child and Family Services. Last year, the main estimates were only $311 million, and the year before that, the actual cost was $200 million. How do you explain this substantial increase between the actual cost two years ago and a budget of $783 million this year?
Mr. Thompson: Thank you for the question, senator.
There is a difference between the two amounts, the $783 million and the $3.4 billion. The first pays for grants to support communities that want to exercise their jurisdiction under the new law that was passed. It is funding provided to these communities to make coordination agreements and to prepare them to adopt their own child services programs.
The $3.4 billion will be used to continue offering services under the previous program.
Every year since the law was passed, an increasing number of communities want to exercise their jurisdiction. The funding we use to provide the service directly is transferred to communities that are starting to exercise their jurisdiction.
What you’re seeing is that movement of funds, which increase every year based on needs. There is a formula related to prevention and the number of children in the child services program.
Decisions have been made concerning CHRT 41 capital funding to support communities for their infrastructure needs and the child services program.
The program has been constantly expanding over the past few years, which shows that the increased spending is related to the fact that historical anti-discrimination cases have been settled.
Senator Forest: If I understand correctly, that means that as the communities gain more autonomy in delivering child and family support services, the amount should increase correspondingly?
Mr. Thompson: That’s correct. Personally, I see that as good news. Increasing grant amounts are an indication that more communities are exercising their jurisdiction.
Senator Forest: How are they being supported? At first, the government took almost total responsibility. How are the communities being supported as they take over, which is a good thing for the communities?
Mr. Thompson: Thank you for the question. I will ask my colleague from the program to respond. I think she can provide a better answer about the support offered and the way we work with the communities.
Senator Forest: I’m sure she can.
Kirsten Mattison, Director General, Child and Family Services Reform Sector, Indigenous Services Canada: Thank you for the question.
My name is Kirsten Mattison and I am the Director General of Strategic and Fiscal Coordination for the Child and Family Services Reform Sector at Indigenous Services Canada. It’s exactly as Mr. Thompson just explained. This year, we submitted the figures for 15 grants to 15 communities. Last year, only seven communities exercised their right to manage their own child and family services.
We support them through the coordination agreements, a process that begins with a grant to build capacity and continues with requests for negotiations. That can take a year or more. Indigenous Services Canada, the First Nations government that wants to apply its own law and the province that delivers the service under the old regime arrive at a negotiated agreement, the agreement is signed and then the balance of the funds becomes a grant.
Senator Forest: Is the model proposed to them or is it developed with them? Is it a top-down management model or do you work with the communities to develop self-governing models based on their own reality?
Ms. Mattison: We provide them with funding to build the capacity to develop their own laws. They can hire lawyers and get legal advice. They certainly talk to the department, but also to the province and the other Indigenous governments that have drafted laws and gone through these steps to exercise control over their families and children.
Senator Forest: Thank you.
Senator Moreau: Thank you for being with us today. I have two sets of questions, and I’m not sure who they’re for. I’m fairly new to the vocabulary, between Crown-Indigenous Relations and Indigenous Services Canada, so you will decide who can answer my questions.
The main concern of Inuit communities has to do with infrastructure issues caused by thawing permafrost. This is becoming a major issue for housing, but also for the services provided. In the budget submitted to us, could we see an increase in the funding for maintaining, upgrading or replacing infrastructure, first of all, and do you foresee an increase in the coming years? There are now short periods of thaw, but it seems that with climate change, these periods will get longer and risk doing considerable damage to existing infrastructure.
Ms. Nadeau-Beaulieu: That question is for Crown-Indigenous Relations and Northern Affairs Canada. We have a budget for renovating housing infrastructure. That said, I will defer to my colleague, Ms. Lloyd, who will give you more details about construction materials.
Georgina Lloyd, Assistant Deputy Minister, Northern Affairs Organization, Crown-Indigenous Relations and Northern Affairs Canada: There are funds for infrastructure, but also funds to address climate change. They are separate components.
Senator Moreau: If a house starts to tilt and the pipes burst due to thawing, what is your procedure? What funding applies to that?
Ms. Lloyd: Our work with the community is based on their needs. In terms of infrastructure, there is an Indigenous Services program that provides funding for houses. Crown-Indigenous Relations provides the funding for climate change to plan for the future and determine the risks.
Senator Moreau: Do they pass the cost on to you? What do they have to do to get those credits?
Ms. Lloyd: It depends on the community’s intention. A request to replace a house is an infrastructure program. However, if a request is related to the planning for climate change in the future, for instance, there are climate change programs in the north where communities can plan for changes in the permafrost. We plan with communities and provide funding to develop plans to move houses, for example.
Senator Moreau: Does the program provide compensation equivalent to 100% of the costs incurred?
Ms. Lloyd: Not necessarily. For the climate change program, we provide funding to develop plans. Then, we need to work with other infrastructure programs to identify funding for replacement. That could be Indigenous Services Canada’s infrastructure program, but also a program from other departments, such as infrastructure and housing.
Senator Moreau: Are there any plans to increase funding, given that you have statistics showing whether they are increasingly using these programs?
Ms. Lloyd: I would say that the need for housing is high, and that this need is particularly acute for our Indigenous partners.
In general, the needs are great, and in particular, there are risks associated with climate change.
Senator Moreau: In your budget, how much money is currently allocated to the two programs you mentioned?
Ms. Nadeau-Beaulieu: In the 2025-26 budget, $23 million is earmarked exclusively for infrastructure and housing in the North. Mr. Thompson, do you also have funds for infrastructure?
Mr. Thompson: Yes, but I don’t have the figures by region. For housing across the country as a whole, it is $1.2 billion in funding.
Senator Moreau: Is that specific to northern communities?
Mr. Thompson: No, it is for the entire country.
Senator Moreau: Are you able to provide us with data for communities in Northern Canada?
Mr. Thompson: Yes, absolutely.
Senator Moreau: Can you send that to us? I don’t think I have much time left, do I?
The Chair: You have more. I did not want to interrupt the answer.
[English]
Senator Pupatello: Good evening, everybody. I wanted to ask you about boil water orders. I think that’s for you, Mr. Thompson. If you could give me a quick thumbnail of the amount that was spent this year, what communities were impacted and how, and what the plan is for this year with the amount that would be designated, and what is that amount this year designated specifically for that project of, obviously, eliminating boil water orders? Can we start with that?
Mr. Thompson: Thank you very much for the question. As you can see, I didn’t even have to ask my colleague to join, she knew. I’ll turn it to my colleague.
Paula Hadden-Jokiel, Assistant Deputy Minister, Indigenous Services Canada: Good evening. Thank you, Mr. Chair, for the question. Let me start with where we’re at in terms of status. Currently, there are 37 long-term drinking water advisories in 35 communities. Since 2016, 148 long-term drinking water advisories have been lifted. For those that remain, there are very detailed action plans in place and close working with the communities to identify action plans to be able to lift the drinking water advisories.
As you know, the responsibility to declare a lift is with the chief of the community. There are a number of reasons for existing long-term drinking water advisories, including infrastructure requirements, so the building of new plants or the renovations of plants, operational challenges. There is quite a bit of funding we dedicate to operator capacity and development. Then there are other complicating factors around environmental challenges or supply chain and things like that. But there are dedicated action plans in place for all of those.
Budget 2023 announced two years of additional funding for water, which is a total of $1.5 billion over two years. There was an additional $700 million spent last year, 2024-25, and $700 million again this year in addition to our regular A-base funding.
Senator Pupatello: So $1.5 billion over two years and an additional $700 million over that? Did I get that right?
Ms. Hadden-Jokiel: No. The $1.5 billion over two is $750 million each year of targeted investments for water.
Senator Pupatello: Super. Is it 37 long term still remaining then? Is that what’s left?
Ms. Hadden-Jokiel: Thirty-seven remaining long-term drinking water in 35 communities.
Senator Pupatello: Tell me where they mostly are. Are they all batched in certain parts of the country?
Ms. Hadden-Jokiel: No. There are 26 in Ontario, 3 in Quebec, 6 in Manitoba, 5 in Saskatchewan, 4 — sorry, those are the lifts. The remaining, the clusters are Saskatchewan, Manitoba and Ontario for where the drinking water advisories remain. The last drinking water advisory that was lifted was in Saskatchewan, Sweetgrass First Nation, at the end of May.
Senator Pupatello: Is there an average of the amount assigned to each one? How do you determine what you’re spending where?
Ms. Hadden-Jokiel: There’s no average cost because, obviously, the needs of the community differ significantly across the country. A big determinant is population, but also the location of the community, what the distribution system needs to look like, what the geography of the community is, how the water has to transfer across the community.
In some cases, we’re able to do renovations to existing water treatment plants, so again, the costs vary from renovation to major replacement.
Senator Pupatello: What’s the plan? When will the 37 remaining be finished? Do you have a notion of that?
Ms. Hadden-Jokiel: I do not have an end date of those. Currently, they’re all in different stages of their solution. Some of them are at the feasibility stage, so if they need a new water treatment plan as part of their solution to lift the drinking water advisory, they would have to do a major project. That would be feasibility, design and construction.
The timelines are very hard to determine because each of these stages has their own timeline.
There are 2 in the feasibility stage, 2 in design, 17 are in active construction, 15 constructions are completed, and there are operator challenges around that. I’m happy to provide that in writing.
[Translation]
The Chair: I know that you are very organized, because you have already provided us with tables showing the progress of the projects. Would it be possible to send them to us again?
Ms. Hadden-Jokiel: Absolutely.
The Chair: While you’re here, I’m going to take the liberty of asking a question. In the community of Puvirnituq, Nunavut, a five-kilometre-long pipeline froze. The community asked Ottawa for help and was told that it was not the government’s responsibility to subsidize or repair these infrastructures, but rather the Government of Quebec’s. Can we find out why it’s Quebec’s responsibility and what the nature of the agreement is? Are you familiar with this matter?
[English]
Ms. Hadden-Jokiel: No. I’m not familiar with that. I don’t know if my colleagues on —
[Translation]
The Chair: It involves a five-kilometre pipeline freeze, and the community is running out of water. Water is transported by tanker trucks, and this is creating significant issues. Carolanne Gratton, spokesperson for Indigenous Services Canada, noted that the department does not provide funding to the Kativik Regional Government (KRG) for its water and waste water services. That comes under provincial jurisdiction, according to the Sanarrutik agreement. Does that ring a bell? It didn’t ring a bell for me.
Ms. Hadden-Jokiel: It is Caroline Garon, the director of the Quebec region. The Indigenous Services Canada program provides funding for communities on reserves.
[English]
Our funding is targeted for on-reserve First Nations communities. The other communities in Quebec would be funded either under modern treaty arrangements or through the provincial government.
Senator Pate: Welcome to all of you again. Mr. Thompson, according to the 2025 Auditor General Report 1, Registration Under the Indian Act, the funding model for community-based registration has remained the same for 30 years, resulting in minimum amounts of compensation that do not represent minimum wage of a person working for one day a week.
The Auditor General noted that this lack of funding puts at risk your statutory obligations to transfer departmental responsibilities to First Nations.
Given that statutory obligation and the importance of timely access to registration, particularly for women and their descendants who have experienced discrimination in this respect, what steps have your department taken so far? What are the concrete plans to secure necessary funding, one, to fully fund and support adequate community-based registration services and, two, to ensure more broadly that communities have sufficient funding to provide necessary services and supports, both to existing and newly registered community members?
Mr. Thompson: Thank you very much for the question. I will refer to my colleague.
Lisa Smylie, Assistant Deputy Minister, Strategic Policy and Partnerships, Indigenous Services Canada: Thank you very much. The Auditor General report was really valuable in guiding us on how to improve registration service, service delivery, how to enhance fairness, efficiency and responsiveness of the registration process. If you allow me, I’ll go through the recommendations. We agreed with all of them, and I can talk about what we’re doing in response.
Senator Pate: I have read the recommendations. I’m interested in what the concrete plans of the department are to actually address those recommendations.
Ms. Smylie: I’ll turn to my colleague here for a detailed plan.
Senator Pate: Is there another chart?
Ms. Hadden-Jokiel: No more charts, no, sorry.
Thank you for the question. As many of you may know, the Auditor General presented just last week or the week before the audit on registration service, which touched on a number of key areas, including what the senator said in terms of support for our community-based workforce.
As you’ve indicated in your question, it is really important that those communities have the capacity and the funding necessary. They’re key in terms of our service transfer strategy that they have the capacity to deliver the services.
The trusted source partnerships are a fairly new service offering within the department. We are building on the program that has existed in First Nations communities for 30 years. We know that there is a requirement and a desire by communities to review the model.
We will work with partners in terms of identifying the funding model, and we’ve committed to developing a discussion paper to inform the review of the compensation model in relation to current responsibilities. There’s no identified source of funds for increasing salaries right now, but we are committed to working with the partners to identify an action plan to move forward.
Senator Pate: If it’s left to your department, where would you come up with the resources for that?
Ms. Hadden-Jokiel: Well, we don’t have dedicated resources for that activity.
Senator Pate: I’m interested in what the implications of Bill S-2 will be. In particular, that all levels of discrimination will not be — I’m not sure if I should be looking back to you, Mr. Thompson. Given that there will be heightened registration, this issue will be ongoing.
Mr. Thompson: Thank you for the question. The number of requests has been increasing year after year. The workload and volume have been increasing as well. To Ms. Hadden-Jokiel’s point, we haven’t had an increase in resources. The budget is fairly stable in the organization.
One of the important elements will be investing in the technology to facilitate the registration process. It requires investment as well. That’s why I think we welcome the Auditor General report, because it gives the department a solid base to make good requests for obtaining the funding required in order to make those improvements and respond to the report.
Senator Galvez: Mr. Thompson, under contributions for emergency management assistance for activities on reserve, wildfire management services fall under type and nature of eligible expenses. How much of the $200 million is allocated to wildfire management? How effective is this program? How will Indigenous people access these funds?
Mr. Thompson: Thank you for the question. I’m going to ask Ms. Hadden-Jokiel to join us at the table again. She’s very popular tonight.
Ms. Hadden-Jokiel: Thank you for the question on emergency management. As you know, we’re off to a very fast and intense start to the season this year. We are tracking, unfortunately, to have a similar experience to the wildfires in 2023.
Currently, we have over 27,000 evacuees from First Nations evacuated. Since the beginning of April, we’ve been notified of 80 wildfire events impacting 73 First Nations resulting in 52 evacuations. Just for comparison, for all of last year, there were 91 wildfire events impacting 84 First Nations, with 15,000 evacuees from 26 First Nations. We’ve already evacuated more First Nations this year than all of last season for wildfires.
It’s very early in the season. We’re still in active evacuation mode. We have 27,000 people evacuated, so it’s very hard to determine the cost because those bills are still very active.
What I would like to point out is the scale of these events now, they’re really multi-year costs. We have the active response base, and hopefully we can return these evacuees to their home communities as quickly as possible and repatriate as quickly as possible.
Senator Galvez: We are discussing Bill C-5, and we are discussing a lot of oil pipeline projects that might be proposed to be constructed on these lands where the potential for forest fires has increased by as much as five times. What do you think about that?
Ms. Hadden-Jokiel: I don’t have an opinion on that. What I will offer is that part of the program is providing funding to support emergency management coordinators in local First Nations communities. We have over 290 in place now. We’re prioritizing communities at high risk for emergency events. One of their main priorities and objectives is to develop an emergency plan that is specific to their community with their partners, to consider the environment around their community and what the risks are, how to mitigate those risks and who their partners are.
Senator Galvez: Today, we had Public Safety, and they also have funds for this. Is there an overlap of activities and funds with Public Safety with respect to forest fires?
Ms. Hadden-Jokiel: I wouldn’t say there’s overlap. We work on a daily basis closely with our colleagues at Public Safety and with NRCan and with Environment and Climate Change Canada on all aspects of emergency preparedness and management including forecasting, weather forecasts and ensuring resources are in place.
On the prevention side, the FireSmart program that ISC is a recipient of, we are responsible for providing the funds on reserve. There’s a complementary program at Public Safety. We work very closely with all levels of the organization.
Senator Galvez: Thank you.
Senator Loffreda: Thank you for being here. You’re requesting a total of approximately $25.3 billion in voting and statutory expenditures. That’s approximately a 20% increase from the previous year.
Could you elaborate further on the necessity of these increased resources and share with us what hasn’t already been covered and discussed?
Mr. Thompson: Thank you for the question.
One particularity is that, this year, because of the situation with prorogation, we had delays in the estimates process. As you know, we are also receiving the Supplementary Estimates (A) as part of the Main Estimates. We have discussed supplementary estimates on a number of occasions around this table. Usually, you would invite me to come and discuss Supplementary Estimates (A). A lot of the changes this year in the increase in funding is related to the fact that the Supplementary Estimates (A) and the Main Estimates have been grouped together.
In addition to that as well, we have a number of pressures on different programs, increases in eligibility for some of our programs — so the coverage on uninsured health benefits is increasing each year — and we have additional requests under Jordan’s Principle. The cost of constructing and maintaining infrastructure is increasing, year after year. We also discussed the increase in the First Nations Child and Family Services Program. We are delivering province-like services at ISC.
The Indigenous population is increasing, as well. So because we are delivering those services, and it’s based on eligibility, if the eligibility and the number of people eligible increase, that adds pressure to the budget for the organization. Of course, because we are in the world of the maintenance of infrastructure, construction, repairs and all of that, inflation has just been increasing our costs.
Honestly, if we were increasing the funding more, the needs would be there to spend the funds as well. That’s part of it.
Senator Loffreda: Are there any new initiatives you’re looking at that you feel are necessary with respect to your resources?
Mr. Thompson: Our existing programs are already under a lot of pressure; maintaining the integrity of our programs is already a challenge for us. We are going through a period of fiscal restraint, as well. I would say that, at the moment, the focus is making sure we are able to maintain the integrity of the programs, and we can deliver our services. Of course, we are always working with partners to identify ways that we can be better and have a greater impact, but I speak as a CFO right now: I would say my concern is more with just maintaining the integrity of existing programs and being able to deliver upon them.
Senator Loffreda: Which ones are under the pressure the most?
Mr. Thompson: Infrastructure is under a lot of pressure, but I would say health services, support for mental health, and child and family services. It is difficult to say. Income assistance would be a situation right now.
It’s almost like all the programs, because they are direct services. We are maintaining a level of service equal to the provinces, so we’re trying to keep pace with investments made in the provinces. We’re trying to close the gap.
Senator Loffreda: Good luck with all of that.
Mr. Thompson: Thank you very much.
[Translation]
Senator Dalphond: I have some quick questions. I see, for Crown-Indigenous Relations —
[English]
— transfer payments to the Yukon for the care, maintenance, remediation and management of the closure of contaminated sites in Yukon. It says $18 million. That’s your department. The other department has a similar charge for the contribution to First Nations for the management of contaminated sites at $85 million.
What are these two programs? Are they similar programs for different groups? What are these contaminated sites — abandoned mines or something like that?
Ms. Nadeau-Beaulieu: Thank you for the question. My colleagues have more details around what is included —
Ms. Lloyd: Thank you for the question.
The remediation of contaminated sites — I’ll speak directly to the North; I know my colleagues at Indigenous Services Canada manage similar, but in some ways, different scoped projects south of 60.
The line you’re referring to is under the contributions, so that would be vote 10 funding. That’s funding that we provide directly to the Government of Yukon in the shared management of a number of sites. There’s a portfolio of 150 contaminated sites across the North for which Canada is the owner of last resort. You will see, in other parts of the budget, there is $818 million that is coming to CIRNAC as part of CIRNAC’s allocation for this fiscal year to manage those 150 sites across the North. The portion that you’ve referred to — the $18 million of that $800 million — is direct funding that will go to the Government of Yukon in shared management.
The sites are a mix but are largely the result of policies that were in place in Canada before we had “polluter pay.” Today, should a mine open, there are polluter pay policies that would enable a mine to secure a bond or provide a security. Should that mine or that company go bankrupt, that security would be applied against the remediation. These sites across the North for which we’re remediating were all abandoned, or the companies went bankrupt, before those policies were in place; they are legacy sites that would have gone bankrupt prior to 2000, for example.
Senator Dalphond: These are mostly mines?
Ms. Lloyd: The majority of them are mines. Of the 150 sites, the top 8 sites that pose the most amount of risk and costs for remediation are all mines. You might be familiar mostly with Giant Mine, five kilometres outside of Yellowknife, and Faro Mine in the Yukon, which represents more than 90% of that budget I referenced.
There are also quite a few sites that relate to federal lands. In Nunavut, for example, we do have some sites that were former military sites that are much smaller scale in terms of what needs to be cleaned up, but they’re numerous. You can have really old oil cans that have been there for some time that are remote and requires cleanup. They are not nearly the scale of the two mines I mentioned.
Senator Dalphond: — sites that would be cleaned at one point, and we will stop paying, or is that maintenance in order to prevent spreading and contaminating water? Will those be recurring expenses forever?
Ms. Lloyd: It depends upon the site. For some sites, it will be possible to clean up and, as per remediation standards, we’ll be able to designate as fully cleaned up and remove them from Canada’s inventory. Other sites will require ongoing monitoring. As Canada is the owner of last resort, we will be present into the future to be able to monitor those.
Senator Dalphond: Maybe you can send me a reply in writing — contributions to support the negotiation and implementation of treaties — half a billion dollars. There is also a grant to implement comprehensive land claims settlement agreements and those things.
What are all these programs? Are we here providing legal services, and people who are doing research and working on these negotiations? Half a billion dollars is a lot of money. It will keep a lot of people busy, even lawyers.
[Translation]
The Chair: Could you send those to us in writing? Great. Thank you.
[English]
Senator Duncan: Thank you, Senator Dalphond. That led nicely into my question.
It’s been some time since I’ve had the opportunity to serve on the National Finance Committee. Thank you for being here, and thanks to Senator MacAdam, who has given me her time tonight.
I’d like to talk about the umbrella final agreement and the implementation of final agreements, building upon what Senator Dalphond said. Eleven of 14 Yukon First Nations are settled under the Umbrella Final Agreement Between The Government of Canada, The Council for Yukon Indians and The Government of the Yukon. They each have individual final agreements. When the agreements were signed, there were implementation plans. Part of those plans were a significant number of boards, committees and councils. Some of the councils have adjudicative responsibilities; some of them provide advice. There are three governments involved in funding these boards and committees: the Yukon, Canada and the Council of Yukon First Nations. They are all signatories to the implementation plans.
These boards and committees — it’s been brought to my attention — there’s a 10-year funding agreement that’s signed by the three governments. The last 10-year agreement expired in March 2024.
There is paid staff for these boards, and there are honorariums given to the people who serve on them. However, there haven’t been any increases to the honorariums, other than some minor ones. Therefore, the boards’ ability to finance and do their tasks is severely limited, so I went looking to see how they might be funded because I need to write to you and ask for more money on behalf of these boards. I need to write to all three governments.
So I went looking for the money. And on page 288 of the Main Estimates for Indigenous Services Canada you have contributions to support Indigenous governments and institutions and to build strong governance and board training. Then, on page 65 of the Main Estimates for CIRNAC, there are contributions to support Indigenous governments and institutions and to build strong governance.
These boards are so important. They need the appropriate funding to do their tasks, so there seems to be two pots here, which one are they looking for, for more money?
Ms. Nadeau-Beaulieu: Thank you for the question, and I invite my colleague Heather McLean who is responsible for implementation at CIRNAC to come forward and provide more detail.
Heather McLean, Assistant Deputy Minister, Modern Treaties, Consultation and Intergovernmental Relations, Crown-Indigenous Relations and Northern Affairs Canada: I’ll do my best. I’m Heather McLean, and I’m the Assistant Deputy Minister of Modern Treaties, Consultation and Intergovernmental Relations.
The boards are an important part of the work we do with our partners. Boards have a very important function, and the funding for the boards is captured under the contribution portion of the —. I’m just looking for that. I can’t find the number quickly enough right now. Can I get back to you in writing?
Senator Duncan: Yes. Are you looking under Crown-Indigenous Relations and Northern Affairs or Indigenous Services Canada?
Ms. McLean: Crown-Indigenous Relations. Is that where you were looking?
Senator Duncan: They both have the line item. Both departments.
Ms. McLean: I can speak to what the board’s part is for Crown-Indigenous Relations. It’s both for board remuneration and Northern boards commissions and institutions of public government for resource and land management obligations. There have been several engagements recently in the North around remuneration rates, and we will be able to advance information around that shortly.
Senator Duncan: Okay.
Mr. Thompson: What you see in Indigenous Services Canada is for support for administration on reserve. It’s on reserve for us.
Senator Duncan: So it’s on reserve there and Yukon wants it to be under this one. Okay.
Senator Kingston: Nice to see you again. I’ve seen most of you before. It’ll be no surprise to you that I’m still interested in Jordan’s Principle. I noticed in 2023-24, you talked about the continued implementation of Jordan’s Principle. This time, you’ve said you want to provide greater consistency of Jordan’s Principle in 2025-26, so I assume we’re still at it.
I’m interested in what you’re doing around the $2 billion in grants that you’re requesting to support the new fiscal relationship for First Nations under the Indian Act. According to you, this is intended to provide increased predictability and facilitate greater flexibility for First Nations to address local needs.
That all sounds really good, but what I’m wondering is: How does that fit in with the management of Jordan’s Principle and continuing to roll that out? How does it knit together with the Indigenous Health Equity Fund that you talk about, as well as Indigenous well-being and self-determination? My last question is: How does what you’re trying to do with this $2 billion going to provide a nicely coordinated effort with all these other things that sound very good as well?
Mr. Thompson: Thank you very much for the question. With regard to the 10-year grant, it’s a funding mechanism. Currently, we have 160 communities under the grant, and that includes a number of programs we deliver to the organizations. Rather than providing them with contribution funding where there are a lot of requirements in terms of reporting, the grant provides them with more flexibility in the way they administer their programs. There are less reporting requirements. It’s a grant that we’re providing.
In order to access the grant, the communities need to qualify, so there’s a process that exists, which we do in collaboration with the communities and First Nations Financial Management Board, or FMB, to ensure they have a financial administration law and can report on the progress of the program to their communities.
We want to get more communities using the grant so they have more control of their programs and its design and so they have more flexibility in the way they manage their funding as well. They can achieve better results with their communities.
Not all the programs are available, so even if you have communities that fall under the grant, they still have access to a number of programs in a more traditional way. Jordan’s Principle, for instance, wouldn’t be available under the grant. It would be managed separately.
Senator Kingston: Can the Indigenous Health Equity Fund, which sounds a bit like the Canada Health Transfer in that it tops up capabilities in the community, I assume, for primary care and so on, be part of this other grant, or is that something separate as well?
Mr. Thompson: It’s separate from the grant.
Julien Castonguay, Acting Assistant Deputy Minister, First Nations and Inuit Health Branch, Indigenous Services Canada: Thank you for the question. I’m Julien Castonguay. I’m the Acting Assistant Deputy Minister for Jordan’s Principle and the Inuit Child First Initiative, and I’m also here for the First Nations and Inuit Health Branch.
On the Indigenous Health Equity Fund, it’s also eligible under the grant but not under the New Fiscal Relationship Grant. The one we’re working on closely with CIRNAC colleagues is for the Inuit treaty organization. It is part of the grant mechanism within CIRNAC but not part of the new fiscal relationship mechanism in ISC.
Senator Kingston: I wanted to talk about the Auditor General’s audit on housing and how that was going because in your Departmental Plan, it says that you’re disbursing funds from Budgets 2022 and 2024, and I thought, “How do they do that?”
Mr. Thompson: Like with infrastructure project costs, those projects will be delivered in many fiscal years, so the year we received the funding for the budget may not be necessarily the year that we will be spending it.
Senator Kingston: Do you keep it?
Mr. Thompson: We don’t keep it. We transfer it to communities once they are ready to go forward with their plans.
We would lapse the funding and reprofile it to a future year. The vast majority of the funding that we receive at ISC is reprofiled for future years because of the reality that, with infrastructure projects, when we receive the funds, it doesn’t mean that the community will be ready to do the infrastructure project. There’s that recognition from the government. Most of the funding we ask to be reprofiled under infrastructure is accepted because there’s that recognition that it cannot be all done in one fiscal year.
[Translation]
The Chair: Thank you very much for your answers. We have to move on to the next panel. It’s always a pleasure to have you here, and I’m impressed by the quality of your answers and follow-ups. I’m suspending the meeting, and I’m going to pass the chair over to the deputy chair, Éric Forest.
The Honourable Éric Forest (Deputy Chair) in the chair.
The Deputy Chair: For our second panel, from Employment and Social Development Canada, we have Wojo Zielonka, Senior Assistant Deputy Minister and Chief Financial Officer, Jane Qin, Director General for Corporate Financial Planning and Deputy Chief Financial Officer; and Elisha Ram, Senior Assistant Deputy Minister, Income Security and Social Development Branch.
[English]
Wojo Zielonka, Senior Assistant Deputy Minister and Chief Financial Officer, Employment and Social Development Canada: Mr. Chair and members of the committee, it is my pleasure to be here today to discuss the 2025-26 Main Estimates for Employment and Social Development Canada, or ESDC.
First I’d like to acknowledge that the land on which we gather is the traditional unceded territory of the Algonquin Anishinaabe people.
Today marks my final appearance because I’ll be retiring immediately after this meeting. I want to express my sincere gratitude for your continued support and interest.
I’m joined today by a number of my departmental colleagues, who are here to help provide additional details and perspective on the items included in the department’s Main Estimates.
Employment and Social Development Canada delivers a wide range of programs and services that support Canadians throughout their lives. For example, the department assists parents with more affordable daycare through the Canada-wide Early Learning and Child Care program, helps students finance their post-secondary education, delivers programs that support labour market participation and provides basic income security to more than seven million seniors.
[Translation]
Service Canada operates over 300 Service Canada centres across the country and other in-person points of service, as well as call centres and online platforms for Canadians to access the programs, services and benefits they need.
Through the Labour Program, ESDC also has the mandate to maintain a strong, productive, healthy and competitive workplace within federal jurisdiction.
ESDC’s priorities include, among others, continuing building and maintaining a Canada-wide early learning and child care system, implementing Feeding the future today: Canada’s National School Food Program and helping seniors afford retirement through delivery of the Old Age Security Program and the Canada Pension Plan.
[English]
To deliver these priorities and services, ESDC is requesting $105.7 billion in the 2025-26 Main Estimates, representing an increase of $7 billion when compared to last year.
Almost 98% of the planned budget included in the Main Estimates will benefit Canadians through statutory and voted transfer payment programs. Statutory items which include programs such as Old Age Security, Canada Student Financial Assistance, the Canada Education Savings Grant, the Canada Disability Savings Program, and the new Canada Disability Benefit total $92.6 billion, indicating a $5.3 billion increase from the 2024-25 Main Estimates.
This is primarily attributable to a $4.4 billion planned increase in Old Age Security, Guaranteed Income Supplement and allowance payments, due to the indexation of benefits and an expected increase in the number of beneficiaries. It is also explained by $750 million planned spending for the new Canada Disability Benefit, scheduled to start in July.
The total of ESDC’s Vote 5 – Grants and Contributions presented in the Main Estimates is $11.6 billion, which represents an increase of $1.5 billion from the 2024-25 Main Estimates.
This is primarily due to an increase in payments to provinces and territories in support of the Early Learning and Child Care system and the new National School Food Program.
[Translation]
Also included in the 2025-26 Main Estimates is $197 million in vote 10 to write off Canada student loans and Canada apprentice loans for unrecoverable debts that have reached the statutory limit of six years. This amounts to less than 1% of the $26 billion loans portfolio. The planned spending for this write-off is included in the Main Estimates this year due to the absence of Supplementary Estimates (C) last fiscal year.
Lastly, ESDC’s total vote 1 — the operating budget — is $1.3 billion in 2025-26, an increase of $3 million from the 2024-25 Main Estimates. This is to support the delivery of programs and services, as well as transformational initiatives, such as the Benefits Delivery Modernization.
[English]
I also want to note that Employment Insurance and Canada Pension Plan benefits and related operating costs are not included in the Main Estimates. However, they are reflected in ESDC’s Departmental Plan. Those expenditures are charged to the Employment Insurance operation account and the Canada Pension Plan.
I hope this overview has given you a better understanding of the Main Estimates for our department. My colleagues and I would be pleased to answer your questions. We have a number of colleagues behind us as well, so if there are any specific questions on certain topics, we will endeavour to provide the requested information.
[Translation]
Thank you very much. It is a pleasure to be with you this evening.
[English]
The Deputy Chair: Thank you very much for your statement.
[Translation]
I would also like to acknowledge the presence of Mr. Ram, who is with you. We are now ready to begin the question period. I would like to remind my colleagues that you have up to five minutes for the first round. If there’s a second round, we’ll let you know, as we are tight on time.
[English]
Senator Marshall: My question is on the child care program, and it’s the $8.4 billion that is in the Main Estimates for payments to provinces and territories for the purpose of early learning and child care. This was the program that was launched in, I think, 2021.
I’m reading from the Departmental Plan that was tabled yesterday, I think. The minister says:
We are on track to meet the goal of delivering regulated child care for an average of $10-a-day and creating 250,000 new spaces by March 2026.
So March of 2026, that’s going to be less than a year from now. When I read that, I remembered seeing in the Fall Economic Statement, which was released in December, there was actually a chart on the creation of child care spaces, so this is only six or seven months ago.
I was looking at it, and it says the new spaces to be created by 2026 — they’ve actually used the figure of 283,000, not 250,000 but I’ll go with the 250,000. But then there’s a column that says new spaces created or in progress, and it doesn’t even add up to 60,000 spaces. So for the minister to say that they’re on track to create 250,000 new spaces by 2026, when just last December, there wasn’t even 60,000 spaces created — and it doesn’t even say new spaces created. It’s new spaces created or in the progress of being created.
So what is in your Departmental Plan doesn’t seem to connect up with what is in the fiscal economic statement last December. Can somebody explain that? There’s a big discrepancy there. Can somebody reconcile those two numbers, because there’s quite a discrepancy there.
Elisha Ram, Senior Assistant Deputy Minister, Income Security and Social Development Branch, Employment and Social Development Canada: Thank you, senator, for the question. I will do my best to respond. As you know, the actual creation of child care spaces takes place at the provincial and territorial levels supported by the funding that the federal government provides. As part of the agreement, provinces have to share their action plan with the federal government that shows when spaces will be created, where they’ll be created, whether they’re in for-profit or not-for-profit centres and so on. As it stands now, provinces have announced more than 150,000 spaces using funds supported through the agreements.
Now, not all of those spaces are operational. In some cases it’s because the centres are still being built. In other cases the spaces are technically available but, for example, the providers are looking for staff in order to be able to actually offer the spaces. So at any given time, it’s challenging to say exactly how many spaces are created, but the provincial action plans and what provinces have already put on the table adds up to more than 150,000 spaces.
With the additional funding the government is providing, our expectation is that they will meet those targets.
Senator Marshall: Why is the government putting out different information to the public? Because your Departmental Plan says you’re on track, and then a couple of months ago, there’s a big schedule in the Fall Economic Statement that shows something not even close. I went back and read that and I thought to myself, is somebody reading this before it goes into the Fall Economic Statement? But what you’re saying there — that column says it reflects provincial or territorial total spaces created since the program — as per 2021 — as per provincial and territorial annual reports.
Somebody should correct that. Based on what you’re saying, that’s inaccurate.
Mr. Ram: It’s not inaccurate but it is confusing, and I appreciate the question. Annual reports are, by their nature, backwards-looking. So that is, basically, spaces that had been created at the time the annual reports were produced. Action plans are, by their nature, forward-looking and they talk about what provinces will be doing with the funding they’re getting. So by that timing issue, action plans will always show higher numbers than what annual plans would have produced.
Senator Marshall: The 250,000 is forward-looking, but when you read this chart, it reflects at this point in time, and I’m just saying that between December of 2024 and 2026, I don’t know if there’s going to be enough time for the various provincial and territorial governments to create 200,000 child care spaces. That’s what it is saying. So somebody needs to look at it, because it’s very confusing, and given the cost of the program, there’s very little confidence now in the program.
[Translation]
Senator Moreau: Mr. Deputy Chair, I wish you a happy retirement. I probably won’t have time in the second round, because we usually don’t. I won’t ask you what your plans are.
When I look at the Canada Emergency Response Benefit Program, CERB, I understand that it was used during the COVID-19 pandemic and that actual spending for 2023-24 has been reduced to $4 million. I see that in the main estimates, $43 million was allocated and that it is being carried forward again this year. I was under the impression that the COVID issue had been resolved, but with the amounts you have here…. Is there any reason to restore a $43 million budget for this program? Is it related to tariff concerns? Can you tell me what the purpose of the program is now?
Mr. Zielonka: Thank you for the question. My colleague may have something to add to my answer.
There may still be some outstanding cases. We need to have the capacity to pay those expenses, should there be any. That provision is there for that reason alone.
[English]
Senator Moreau: How is it possible to still have claims when COVID has been finished for two years?
Mr. Zielonka: There are cases that are still languishing and still in process and going back and forth.
[Translation]
Yes, it’s a bit strange, but I know of a few such cases. For that reason, and for that reason only, we need to have the capacity to pay those expenses. We don’t believe—
[English]
— that we will reach this amount. It’s a declining balance right now, and we do think that most of them will disappear. But it’s just a carry forward until all of those are settled.
Senator Moreau: So would you say it’s the last time that we see $43 million for this?
Mr. Zielonka: I don’t want to commit my successor.
Senator Moreau: Tell me the truth. You are retiring. Who will be here next year?
Mr. Zielonka: I don’t think it’s the last time because I think some of these cases may take time. In some cases, they’re going through legal proceedings, and they will drag on until they are finalized through all of the legal appeals and so on. You will have a hangover there. For that reason, it’s prudent to leave an amount to make sure you cover it.
But what impact the fiscal framework is only your actual expenses. We do need the appropriation to give us the capacity to make a payment if there is a call on that. If we remove that and then we have an expense, then we have a problem.
It’s a continuation, essentially, of this budgetary item to give us the capacity to make the payment.
[Translation]
Senator Moreau: The government also claimed back amounts from the CERB program, because it considered that it had paid out too much. Do you have an estimate of the amounts that have been recovered so far in relation to the amounts paid out to recipients who were not entitled to them?
Mr. Zielonka: I know that process is not over. Every year, we assess our expenditures and our amounts to recover. I don’t remember the exact amount for last year.
[English]
But there was a significant write-off as a result of a provision. It wasn’t a write-off yet, but there was a provision for claims of people who collected benefits who were not entitled to those benefits.
That process is ongoing. We’re trying to exhaust all possible manners of recovery and are looking at different ways of doing that. We work very closely with CRA on that process. They do the recoveries on our behalf, including tax setoffs. That is one of the key mechanisms.
[Translation]
Senator Moreau: My time is almost up. I’ll ask you to provide a table of the amounts you have paid out, the amounts that you estimate will be paid back, and the amounts you have had to write off over the past few years.
The Deputy Chair: Could you please provide that information to the clerk? Thank you.
[English]
Senator Galvez: The labour program of your department is responsible for labour laws and policies in federally regulated workplaces.
We know that with extreme heat and heat domes, people are asking more and more for holidays or sick leave. In British Columbia, 618 people died during the heat dome in 2018. How are you preparing for this? Are you tracking how these heat domes are affecting the workforce?
Mr. Zielonka: I am not aware of any specific things we’re doing. We’ll look into it, and we’ll provide a written answer.
Generally, climate change is affecting our economy in many ways. We are seeing a massive transformation of our economy as a result of climate change. In many ways, there’s a broader policy response that the government is working on in terms of transforming our economy as a result of that.
In some of the situations you mentioned in B.C., where unfortunately people passed away as a result, they tended to be seniors and so on, who were not directly involved in the labour force per se. That tends to be a provincial jurisdiction in many situations. From a labour perspective, we tend to focus on federally regulated workplaces, so the correlation and the linkage are much more tenuous. The impacts on seniors and vulnerable people I think —
Senator Galvez: It seems to be construction workers and manufacturing workers.
Mr. Zielonka: Yes, and a lot of those are provincially regulated workplaces. They’re not federally regulated workplaces. But we will confirm that. We will get back to the committee, but I believe most cases would be under provincial jurisdiction. It wouldn’t be something in which we would be directly involved.
Senator Galvez: Thank you.
I request information on that $4 million for sustainable development goals funding program. Can you tell me what this program does?
Mr. Zielonka: Give me one moment to try to find something on that program. As you can appreciate, with a department as large as we are, we have many programs. Let me see if we can pull it up. I do have a note here.
This is to support the United Nations 2030 Agenda. We do that through supporting not-for-profit organizations. This is something that started in Budget 2018. There was a 13-year commitment at that point in time. It was $49.4 million back in 2018, over 13 years. It was to coordinate our international domestic efforts on that.
On top of that, there was an additional $59.8 million over 13 years and $4.6 million annually in existing resources, which were allocated to fund that program. Essentially, there were six departments involved. Their resources were all pooled into ESDC for that program. It’s basically a funding program. From the information we have, it provided funding to 162 organizations so far; $32 million in investments that foster new partnerships for innovative approaches to drive progress on Sustainable Development Goals. It’s really a program to try to support that effort.
Senator Loffreda: Thank you for being here.
With Bill C-5, the One Canadian Economy Act, the government aims to launch its significant infrastructure building campaign, something Canada urgently needs.
Given that Employment and Social Development Canada is responsible for the Canadian Apprenticeship Strategy, your department is poised to play a critical role in supporting this initiative. As outlined in your Departmental Plan, ESDC is working to improve labour mobility through the development of national standards and exams, an effort that clearly aligns with the objectives of Bill C-5. I was encouraged to see a proposed increase in funding for the Canadian Apprenticeship Strategy from $84 million 2023-24 to $107 million in the current Main Estimates.
Could you provide more detail on the current objectives of this strategy in light of Bill C-5? Will ESDC need to pivot or adjust its approach to better align with the act’s goals?
Mr. Zielonka: Thank you for the question. I’ll ask my colleague, Ms. Kaminsky, to come to the table and she will be able to provide details.
It has been the apprenticeship strategy and trying to make sure we have a labour force that is geared toward the future is a significant topic that the senior management at ESDC has been very much engaged in. It’s something we’re all familiar with, but Ms. Kaminsky has been at the leading edge of that. I’ll pass it on to her.
Colette Kaminsky, Senior Assistant Deputy Minister, Skills and Employment Branch, Employment and Social Development Canada: Thank you for the question. I can confirm that our department is working closely with colleagues who are leading the One Economy legislation, and the Canadian Apprenticeship Strategy we expect will continue to play an extremely important role in mobilizing the labour force needed to build various projects in infrastructure, including “Build Canada Homes” and other related infrastructure projects.
The One Economy legislation has two different parts; one around labour mobility, which we are also involved in, which includes commitments to help mobilize the labour market and reduce any barriers to labour mobility in federally regulated occupations. We also in the department work very closely with the provinces and territories as part of the broader internal trade barriers efforts to reduce administrative barriers for certified workers across Canada, and we’re working closely in support of first minister’s leadership around labour mobility there. That links to the One Economy legislation too.
With respect to the project’s part and the new infrastructure, the Canadian Apprenticeship Strategy has a multiple-pronged approach that will help enable entrance into the skilled trades, advancement of apprenticeship through to journey person status. It also helps individuals navigate that system through their apprenticeship, for example, receiving financial supports through the EI program, apprenticeship loans and other financial supports to help them through their journey person periods of training.
It includes innovative projects that help, for example, improve the training infrastructure for the Red Seal trades in Canada. We would make investments into union facilities as well as non‑union facilities to ensure our tradespersons in their training periods can have best in class, most efficient, new leading-edge technologies when they’re learning their trades.
Of course, you mentioned labour mobility. We also run the Red Seal trades program through the Canadian Apprenticeship Strategy. This creates a national system of licensing and standardization of testing across Canada across the Red Seal trade occupations.
[Translation]
Senator Dalphond: My questions are about your last line on page 69: payments to provinces and territories for the National School Food Program. It was announced in the last budget we obtained. It’s starting to be implemented in the current fiscal year.
You’ve budgeted $140 million. Could you tell us exactly what the $50 million represents? Is it the agreements signed with the provinces? Do you have an agreement with each province, or does this amount represent 50% of the program that was planned?
Hugues Vaillancourt, Director General, Social Policy Directorate, Strategic and Service Policy Branch, Employment and Social Development Canada: Thank you for the question. To answer one of your questions on the agreements, I can tell you that there were indeed 13 agreements signed before the end of last fiscal year, so until March.
The $140 million is the amount that will be transferred to the provinces through the bilateral agreements we have.
Senator Dalphond: What types of measures or provisions are in the agreements so that you can assess whether the program is effective and how it meets needs that were not already covered?
Mr. Vaillancourt: That’s a very relevant question. We were guided to some extent by the approach to child care and the way we work with the provinces on that.
Earlier, I mentioned that three-year agreements had been signed. Through these agreements, each province develops action plans for how the funds will be spent. They must produce an annual report on how the funds were used. The agreements were just signed, so there are no annual reports on program results yet. We’ll be able to obtain information on the number of schools that have food programs and the number of children who will be fed through these programs, for example.
Senator Dalphond: Do you advance the money or is it paid out after the reports are produced?
Mr. Vaillancourt: There are two payments planned: the first is made as soon as the project is accepted, when there is agreement on the action plan, and the second is made once the annual reports have been submitted.
Senator Dalphond: Will efficiency measures be in place to determine whether things have changed? You could get a bill saying that 20,000 meals were served in 12 or 200 schools. What does that mean? I’ve seen schools that serve breakfast to kids who don’t get one at home, schools that get funding from community organizations, for example. If federal funding replaces that kind of initiative, it does not mean that more needs are being met; it simply means that who pays for the food is changing.
Mr. Vaillancourt: One of the important aspects of the agreements with the provinces ensures that existing funding is not displaced. The whole aim is to improve the system and increase the number of schools and children who can access it. This is an integral part of the agreements to ensure that the funding does not replace money already allocated to existing programs.
[English]
Senator Kingston: I wanted to continue on with what Senator Dalphond was talking about, which is the National School Food Program. I just wanted to know if the federal government talked to the provinces about any set of standards that there would be. Now, you said that they started with schools that didn’t have any program, and some do. I’m going to talk about one school that hasn’t received any funding yet because they’ve been working on funds that are philanthropy or whatever at this point. But it’s not just that. They have a universal breakfast type of thing because they find that it’s not just kids whose parents don’t have enough money for breakfast, but it’s the kids who come to school without breakfast because it’s busy at home and things are going on. There are some kids they send food home with for the weekend because there’s just not enough food there, and then this lunch program.
When you talked to each province about this money that you were going to be giving them, did you discuss any standards or any kind of where they should get to?
Mr. Vaillancourt: Thank you for the question. It speaks to the very nature of the existing school food programs across the country where it very much varies across each province but even within a province.
The approach that we took is to work in close collaboration with the province to have them identify their own ways as to how they want to build. You’ve alluded to it. There are jurisdictions that already have a universal breakfast. So it doesn’t make sense to focus on implementing school breakfast across the board because some have already done that.
It’s really about the provinces and territories identifying their own priorities going forward and to help with the identification of priorities. In the agreement, the government released a National School Food Policy last June, a year ago. In the agreements, the policy objectives outlined in the policy are reflected in the agreements. The provinces have to articulate, essentially, how they are going to meet some of the key policy objectives around the National School Food Policy. For example, you mentioned or implied the question around stigma and access and something we’ve heard loud and clear about. There are multiple reasons why someone doesn’t eat breakfast in the morning, sometimes it’s financial, sometimes it’s something else. Being able to have a program that allows them to access it without feeling the stigma associated with that is part of one of the objectives of the policy. It’s certainly something we’ve heard from the provinces and territories as well as our goal in getting it right.
Senator Kingston: Is this policy available?
Mr. Vaillancourt: Absolutely.
Senator Kingston: I would really like to —
Mr. Vaillancourt: It’s a great document. If you Google National School Food Policy, it will come up first.
Senator Kingston: I would also like to know, do you plan an expansion of this or are you focusing on getting each province to agree to the policies and to take money that’s being offered right now? Do you plan on making the program more fulsome with federal dollars, or is it always going to be a collaboration between the feds, the provinces and the school itself?
Mr. Vaillancourt: The collaboration is at the heart of how we’ve been working with provinces and territories. It’s important to acknowledge that many provinces in the last few years have increased their funding level toward school food programming. Many provinces, whether it’s British Columbia and others, have made significant advancements in that space. We’re adding, we’re building on top of what many recent initiatives that provinces have put in place themselves.
Senator Pate: Senator Duncan asked me to ask a question for her as well.
Your Departmental Plan for this year, 2025-26, refers to continued work on Opportunities for All — Canada’s first Poverty Reduction Strategy. The target is to reduce poverty in Canada in half by 2030, compared to 2015 levels. In its latest annual report, the government’s own Advisory Council on Poverty sounded an urgent alarm that poverty is rising currently at almost 10%, 9.9%, with at least 1.4 million more Canadians in poverty in 2022, the last year data was available, compared to 2020. The council notes:
If this trend continues, the Government will not only fail to meet its 2030 target of a 50% decrease in poverty compared to 2015, but may also fall back below its 2020 target of a 20% decrease.
I also note that the government recommitted in its election platform to implementing the Calls for Justice of the National Inquiry into Missing and Murdered Indigenous Women and Girls and that Action Plan highlights as an urgent priority for implementation Calls for Justice 4.5 and 16.20 for a national guaranteed livable basic income.
You are, no doubt, aware that the National Advisory Council on Poverty’s number one recommendation was to work across governments to introduce a basic income floor indexed to the cost of living that would provide adequate resources above Canada’s official poverty line for people to be able to meet their basic needs, thrive and make choices with dignity.
What concrete steps have the department taken to achieve that goal? If you could please provide details.
Mr. Vaillancourt: Thank you for the question. Yes, we are certainly aware of the latest statistics and we work with the council. We are supporting the council in their work and look forward to their next report that’s coming this fall.
In terms of the work, the statistics, when you look at the last few years, the pandemic certainly had an impact on affordability and the challenges that followed have impacted the trend in terms of the poverty going forward.
Senator Pate: The PBO has also costed the basic income. Have you looked at basic income in particular and the recommendations about that?
Mr. Vaillancourt: Yes. We have been monitoring. There certainly has been increased interest in issues around basic income, guaranteed livable income since the beginning. The increased interest about these issues since the outset of the pandemic —
Senator Pate: It’s an easy bill for you to get behind.
Mr. Vaillancourt: Yes, we are certainly aware of the work of the PBO and some of the work that has taken place as well in the provinces and territories around that issue and we are working with them.
Senator Pate: If you could provide any analysis you have of the idea of the national framework for basic income, that would be extremely useful.
Senator Duncan asked me to ask you if the provisions in the Main Estimates, line items on 11-88 where it says: Grants to provide income support to on-reserve residents and contributions to provide income support. Is that a basic income? She knows better than I do that this kind of initiative is also being looked at in particular by the Yukon Territory.
Mr. Vaillancourt: We are aware of some of the work, but I don’t think the funding in the mains would be related to those conversations.
Senator Pate: Her next question I’m sure would be: What is that related to then?
Mr. Zielonka: That may be an ISC item, but we will look it up. It may not be us.
Maybe just on a side comment, in terms of the basic income question, there’s always a lot of policy work that goes on as a department, and we’re constantly looking at alternatives. It’s something that we, in general, try to look at what other countries are doing, what options exist. Then there’s the fiscal reality as well that any government looks at. It is a very challenging file, and it is something that will continue to evolve over time.
Senator Pate: If it’s any help, I have an entire advisory body that’s doing research on this, and we can help provide the way in which you can cut poverty and invest in Canadians, which I believe is the theme of this government.
[Translation]
The Deputy Chair: I’m going to take this opportunity to ask a question. For the student loan portfolio, year over year, is the percentage of unpaid loans increasing or is the number of our young friends accessing student loans decreasing?
Atiq Rahman, Assistant Deputy Minister, Learning Branch, Employment and Social Development Canada: I can try to answer that question.
[English]
For example, you see the recommended write-off here is $197 million, which is quite a bit less than what it was before, $212 million. So yes, the trend is actually quite positive, and it has been improving over time.
Now, there are a number of reasons for that. Some policy enhancements, for example, and interest on student loans have been eliminated since 2021, and it was made permanent last year. What that did is not only make it easier for students to repay their loans, but the amount of actual interest is also going down. Part of the write-off is the principal amount, and part of it is the interest amount. The interest amount is significantly less now because there is no interest.
The Deputy Chair: That’s good news. Thank you very much. We have reached the end of our time for this panel.
[Translation]
We wish you a great retirement. Your presence has always been appreciated. You’ve excelled until the last minute. I commend you. Thank you.
We are pleased to welcome this evening officials from the Department of Finance Canada: Christopher Veilleux, Director General and Chief Financial Officer, Financial Management Directorate; Maude Lavoie, Assistant Deputy Minister, Tax Policy Branch; and Julie Turcotte, Associate Assistant Deputy Minister, Economic and Fiscal Policy Branch. Welcome and thank you for accepting our invitation to appear before us today. We will now hear Mr. Veilleux’s opening remarks. You have five minutes to share your perspective with us. After that, we will move on to questions.
Christopher Veilleux, Director General and Chief Financial Officer, Financial Management Directorate, Department of Finance Canada: Good evening Mr. Chair and members of the committee. Thank you for the opportunity to present the 2025-26 Main Estimates on behalf of the Department of Finance.
I would like to begin by acknowledging that I am speaking to you from the traditional, unceded territory of the Anishinaabe Algonquin peoples. Joining me today are other departmental officials to assist in providing a more in-depth perspective on the rationale and policies supporting the numbers within these estimates.
Allow me to introduce my colleagues here with me: Samuel Millar, Assistant Deputy Minister, Economic Development and Corporate Finance Branch; Julie Turcotte, Associate Assistant Deputy Minister, Economic and Fiscal Policy Branch; Mallika Nanduri Bhatt, Associate Assistant Deputy Minister, Federal‑Provincial Relations Division and Social Policy Branch; and Galen Countryman, Director General, Federal-Provincial Relations Division and Social Policy Branch.
Also with me are Julien Brazeau, Assistant Deputy Minister, Financial Sector Policy Branch; Steven Kuhn, Associate Assistant Deputy Minister, International Trade and Finance Branch; and Maude Lavoie, Assistant Deputy Minister, Tax Policy Branch.
As you know, the department supports the Minister of Finance and National Revenue by developing policies and providing advice to the government with the goal of creating a healthy and resilient economy for all Canadians.
[English]
The 2025-26 Main Estimates outline a total budgetary requirement of $149.8 billion for the Department of Finance Canada. Of this amount, 99%, or $149.5 billion, pertains to statutory items already approved by Parliament through enabling legislation.
There is a net increase of $6.6 billion in budgetary statutory payments from 2025-26 compared to the 2024-25 Main Estimates. This increase is primarily attributable to the following items:
A $2.6 billion, or 5%, increase in the Canada Health Transfer, representing the 5% minimum growth rate guaranteed by the federal government in February 2023; a $1.9 billion increase in interest on unmatured debt, reflecting the revised projections, as noted in the 2024 Fall Economic Statement; a $916.9 million increase in fiscal equalization payments, which reflects the 3.6% GDP-based escalator applied to the 2024-25 level, and these payments evolve annually, based on a three-year moving average of nominal GDP; a $612 million increase in Other Interest Costs, reflecting updated modelling and revised interest rate assumptions, as provided in the 2024 Fall Economic Statement; a $507.3 million increase in the Canada Social Transfer, aligning with the legislatively mandated 3% annual growth in funding; a $329.9 million increase in Territorial Financing, reflective of the integration of new and updated data for territorial expenditure requirements and revenue capacities into the program’s legislated formula; a $200 million payment to the International Bank for Reconstruction and Development —Financial Intermediary Fund for Ukraine. This new item is part of Canada’s contribution through the G7 leaders’ Extraordinary Revenue Acceleration Loan Initiative to be used to support projects, programs and activities that address Ukraine’s budget, recovery, and reconstruction needs. Finally, the voted program expenditures of $354.8 million cover the day-to-day operations of the Department of Finance and includes salaries and goods and services.
The 2025-26 Main Estimates reflect a net increase of $209.6 million in voted budgetary expenditures since the 2024-25 Main Estimates. This is primarily attributable to the $193.8 million non-recurring transfer payment to Newfoundland and Labrador.
Mr. Chair, this concludes my overview of these estimates for the Department of Finance. My colleagues and I stand ready to address any questions that the committee members may have.
The Deputy Chair: Thank you very much for your statement.
[Translation]
Senator Moreau: Thank you for being with us this evening. I have a question about the Hibernia dividend backed annuity agreement. What is in the agreement? What is its objective? I’ll probably have more questions once I get some details.
Mr. Veilleux: I’ll ask Samuel Millar to answer the question.
Samuel Millar, Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance Canada: For clarification, are you asking about the amounts?
Senator Moreau: There are payments of $232 million to Newfoundland and Labrador related to the Hibernia project.
Mr. Millar: I will continue in English to be more specific.
[English]
The agreement that Canada has with Newfoundland and Labrador to transfer the Hibernia Dividend Backed Annuity Agreement relates to a fiscal transfer to the province of Newfoundland and Labrador. It is multi-year in nature and is to support the fiscal stability of the province of Newfoundland and Labrador.
[Translation]
Senator Moreau: Are there similar agreements on energy resources with other Canadian provinces?
Mr. Millar: No, to my knowledge, this is an agreement that is unique to Newfoundland and Labrador.
Senator Moreau: Hibernia will extract natural resources, which, I imagine, brings in revenue for the federal government. That revenue will be used to pay back the money, and the funding is provided to Newfoundland and Labrador. Is that correct?
[English]
Mr. Millar: The asset that underlies the agreement is the federal ownership in the Hibernia project through the Canada Hibernia Holding Corporation.
[Translation]
Senator Moreau: It’s therefore the federal government’s participation through its own infrastructure and royalties paid to Newfoundland and Labrador, correct? Is there other federal government infrastructure, in provinces other than Newfoundland and Labrador — you said there weren’t any similar agreements — for which the federal government gets revenue without redistributing it to the provinces in the form of grants?
Mr. Millar: It’s difficult to give you a complete answer at this time; there aren’t many similar assets, but Trans Mountain comes to mind.
Senator Moreau: You don’t pay a contribution to the provinces from Trans Mountain?
Mr. Millar: No, not at this time.
Senator Moreau: Thank you.
[English]
Senator Pupatello: Good evening. I was hoping to ask you about the splitting up of the capital and operating spending, and if you could describe for me in layman’s terms the benefit, ultimately, to the statements when it is expressed in that fashion? Is there anywhere else in Canada at other levels of government that use this same method? When did they start, and how did those statements change as a result of this new methodology?
Maybe start with the overall thought. How did it start? How was that thought process, and what is the thought process behind doing that?
Julie Turcotte, Associate Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance Canada: Thank you for your question.
Maybe just to clarify first, this is not about altering the expenses that are recorded in the Public Accounts of Canada, because everything is already on a full-accrual basis.
In terms of the benefits, you could think about offering benefits in terms of policy and management transparency to Canadians.
I can explain that. The approach is to separate the spending that is aimed at stimulating public and private sector capital formation from what is more day-to-day operating spending. Distinction is important, because the first one is aiming at boosting the economic potential and productive capacity of the economy, and we want to ensure we put emphasis on policies and investing more in these measures that really stimulate capital formation.
As you are probably well aware, we have a lot of productivity challenges in Canada. That has been the case for quite some time, so this is an approach to budgeting that would provide more transparency to Canadians on what the day-to-day spending is versus what is aimed at improving capital spending and economy.
Senator Pupatello: That helps a little. Give me an example of something that would have been in one column but is now going to be in the other. Give me an example of what you are moving over?
Ms. Turcotte: That’s a good question. I’m sure we can think about that, many examples. Anything that will build an asset.
Senator Pupatello: For example?
Ms. Turcotte: You can think about different policies.
Senator Pupatello: Typically we think of capital spending as a hard asset.
Ms. Turcotte: Building a pipeline, for instance, that’s an example.
Senator Pupatello: So there would be no operating dollars, like personnel costs associated with the oversight of that bill that would be included in that bill, would there be?
Ms. Turcotte: I want to be careful about providing specific examples, because the government is still working on advice to the government on how to approach this. The government has said that we will update Canadians on this approach in the budget. I don’t want to dig too much right now what it would look like. It’s really in the budget where we’ll present this approach.
Senator Pupatello: Well, I guess we’re understanding from the earlier comments of your colleagues at the start of this process with this committee that this is happening, so there must be something afloat in the background to be moving along this way. It was a commitment in the platform for the government that was elected as well.
Ms. Turcotte: Yes.
Senator Pupatello: You are doing this. Tell me other levels of government that do use this.
Ms. Turcotte: The U.K. is an obvious example.
Senator Pupatello: Is there one in Canada?
Ms. Turcotte: Some provinces have looked into this approach, but I cannot be specific about that.
Senator Pupatello: So the U.K. has always done this, or started doing this.
Ms. Turcotte: They started doing this.
Senator Pupatello: Have they had a year or two under their belt with it yet?
Ms. Turcotte: I would say no.
Senator Pupatello: There’s no example of what the deficit looks like under the new program versus the old one. Do you have a sense of what will happen there?
Ms. Turcotte: We cannot provide specifics. We’ll provide a full detail about it. Like I said, we’re still working on the advice, and so we will provide all the details in the budget.
Senator Pupatello: Is there anyone there that can give me an example of what might have been in one column that will now be moved into the other column? It seems like a simple question. I’m not an accountant, but in my simple way of looking at this, you must know that something will move. Give me an example of what that might be.
Ms. Turcotte: I don’t want to get into the specifics, because the concept is really about what capital spending is, what is building an asset, so you can think about different policies that would —
Senator Pupatello: Let’s give an example, we’re going to build a railway, a fast railway.
[Translation]
The Deputy Chair: Thank you for providing an answer in writing, given that we have gone over the allotted time.
[English]
Ms. Turcotte: I can give an example, any type of asset would be a pipeline, transportation infrastructure.
Senator Loffreda: Thank you for being here. We’ve saved all the difficult questions for last, I hope you’re looking forward to them.
I’d like to shift our focus to Table 7 of your 2025-26 Departmental Plan, which highlights Canada’s efforts to maintain global leadership and deepen our international trade relationships, which at this point in time is of extreme importance, as you might all agree.
I’m particularly interested in performance indicator 7.2, which reads as follows:
Degree to which Canadian priorities are reflected in initiatives at various international financial institutions (IFIs) to which the Department of Finance provided resources.
And as chair of the Canadian Chapter of the Parliamentary Network on the World Bank and the International Monetary Fund Parliamentary Network, this indicator is of special relevance to me. We all hear what is going on with the financial institutions, and the lack of resources because of what we all know, right?
Could you elaborate on how the target for this indicator is established and how the results are assessed? It appears to be a fairly subjective measure. I note from the footnote that the square is based on a 1 to 5 normative performance scale. Can you explain how the scale is applied in practice?
Secondly, can you provide an update on the total value of Canada’s current contributions to international financial institutions, and details there in, if possible, from the World Bank to the IMF?
Steven Kuhn, Associate Assistant Deputy Minister, International Trade and Finance Branch, Department of Finance Canada: Thank you for your question. You asked a number of questions, the first one of which is with respect to how the measures in 7.2 are calculated and applied. Unfortunately, I don’t have that answer with me right now, but I’d be happy, if the chair is willing, to follow up in writing specifically how that is done.
As you follow the World Bank and the IMF closely, you recognize that we do have representatives who are pointed to those institutions who follow on a day-to-day basis the activities and projects that those institutions finance.
With respect to your second question about how much money we are contributing to those institutions, I think that your question is focused specifically on the IMF and the World Bank; there are multiple different ways that we provide financing to those institutions over time.
The primary way, there are several funding mechanisms under the World Bank that I think, as you know, the International Bank for Reconstruction and Development, which operates like a bank, and Canada provides purchases, share capital in that institution from time to time, and there’s no purchase of additional share capital being made in the Main Estimates this year.
But where we do make more regular contributions to the World Bank is through the International Development Association, or IDA, which is the window for the poorest countries that are supported by the World Bank. There you will see we make annual contributions to that in three-year cycles, or replenishments as they’re called. Those contributions are in Main Estimates, resetting in 2025-26 for the first year of the next three-year cycle.
The government has recommitted in this three-year cycle to maintain its contributions to the previous three-year cycle, and you’ll see in those Main Estimates that’s being provided at an amount of $486.9 million per year.
The funding mechanism of the IMF is again different than the World Bank, and Canada does not provide funding to the core of the IMF on an annual basis. Primarily, our financial contributions to or through the IMF in respect of this year are using the IMF as a vehicle for providing contributions to support Ukraine in particular. They have been our conduit through an administered account to be able to do that.
[Translation]
Senator Dalphond: My question is on the Canada Infrastructure Bank. You expect that this year, under section 23 of the act, the minister will transfer $3.5 billion. Section 23 sets out a maximum of $35 billion for transfer payments. Could you tell me exactly where we are right now with the amounts transferred from the Department of Finance to the bank?
Mr. Millar: The bank had invested $15.8 billion as of March 2025.
Senator Dalphond: That means $20 billion is still available.
Mr. Millar: That’s right.
Senator Dalphond: If, under Bill C-5, the minister wanted to help businesses getting into infrastructure, the Canada Infrastructure Bank would have the ability to lend them money?
Mr. Millar: Yes, that’s precisely its role.
Senator Dalphond: That means we could see supplementary estimates of a few billion dollars a few months from now, if needed. As I understand it, how to participate in national infrastructure projects subject to Bill C-5 is being discussed internally. Is that a possibility?
Mr. Millar: It is a possibility, but I would also say that the bank already has that power and that it can be done without additional powers.
Senator Dalphond: It needs to be sent funds if it doesn’t have that authority.
The interest on unmatured debt has increased from $36 billion two years ago to $44 billion today. However, other interest costs went from $6 billion to $5 billion. Why? Is it due to interest rates or the fact that the other debt amounts have decreased?
Ms. Turcotte: Indeed, the portion related to other interest costs has to do with the interest on our liabilities, for example deposits into the Canada Pension Plan. There may be slightly different effective interest rates in that case.
Senator Dalphond: My third question is a follow-up to Senator Moreau’s questions regarding the Hibernia project. I see $232 million in the estimates and another budget item a bit before that for $193 million, under “other transfer payments, relating to a nonrecurring conditional transfer for Hibernia.”
What is the difference between the two types of transfers?
Mr. Millar: If you’ll allow me, I’ll answer in English to be more precise.
[English]
In effect, the purpose of the transfer or the intent of the transfer is common. It’s to support the Government of Newfoundland’s fiscal stability. The source of the revenue to the Government of Canada is slightly different. In the first one that we were discussing, the Hibernia Dividend Backed Annuity Agreement, the source of revenue in that case to the federal government is the partial ownership of the Hibernia project itself by the Canada Hibernia Holding Corporation. The Hibernia Net Profit Interest and Incidental Net Profit Interest, the source of the revenue there is different. It also relates to the Hibernia project, but it pertains to the contractual net profit that Canada earns of about 10% of the net profit of all of the owners of the Hibernia project, so not just the Canada Hibernia Holding Corporation, but Chevron, Mobil and all of the other owners.
That is, as I say, a contractual obligation — those owners have to pay Canada — arising from the very early financial support that Canada provided to the project itself.
Senator Pate: Thank you to all of you for being here. Your Departmental Plan for this year indicates — the one tabled yesterday — as one of its proposed results that “Canada has a fair and competitive tax system” including by ensuring that:
. . . the world’s largest multinational corporations pay a fair and consistent share of tax on the profits they earn in a country.
When we look at the indicators used to measure this result, however, there are only two — that taxes on labour income are lower than the G7 average and that tax rates on new businesses are lower than the G7 average. Particularly given that Canada has yet to confirm recovery of any of the at least $83 million in missing tax revenues revealed by the Panama, Pandora and Paradise Papers while other jurisdictions have recuperated some $2 billion collectively, what indicators will be used to evaluate Canada’s success in ensuring that wealthy individuals and corporations pay their fair share? What concrete results can we expect from the department in this regard?
Maude Lavoie, Assistant Deputy Minister, Tax Policy Branch, Department of Finance Canada: Thank you for your question. It’s a very important question. In terms of tax competitiveness and in terms of making sure everyone pays their fair share, of course, it’s an area of concern not only for the department, but for successive governments who have introduced a number of measures to ensure that multinationals will pay their fair share. There was, at the OECD, a lot of discussion around what is called the BEPS project. Under BEPS actions were taken — not only by Canada but by many countries — to make sure there’s a better exchange of information between tax and administration to get at this kind of international tax planning. Rules that are inconsistent across countries are sometimes used to facilitate those tax-planning transactions and the BEPS project aimed to make sure that these rules would be more coherent at the international levels in order to tackle these kinds of tax strategies.
There are a lot of those actions from the BEPS project that Canada has implemented to try to get at these kinds of tax‑planning strategies by wealthy individuals or multinationals that have been put in place. There’s also work right now on making sure that there’s a minimum tax rate across the world for multinationals. They are referred to in the OECD as the pillar projects, so the Pillar Two would have a minimum tax rate of 15% at the international level.
These discussions are happening at the OECD. We’re active participants in those discussions and trying to make progress in making sure that we have — not only Canada, because when you think about the Panama Papers and tax strategies that involve many countries, it can be very complex. There is a need for international cooperation to get to make sure that each country receives its fair share. We are pursuing those discussions, certainly, at the OECD very actively to try to continue to make progress in that regard.
Senator Pate: One of our colleagues pointed out that even Iceland that has a tiny — like, 350,000 population — was able to get $24 million back in tax from these sources. It strikes me as something that Canada should be able to do, but I’ll look forward to more information.
The other thing your Departmental Plan does use as an indicator of tax fairness is that taxes on labour income are lower than the G7 average, as I mentioned. We’ve seen through the study of Bill C-4 that tax cuts operate at the expense of rather than to the benefit of the lowest-income earners. Under Bill C-4’s proposed cut, one in four Canadians with the lowest incomes are expected to see no benefit at all while 75% of the benefit of the cut will go to 40% of the highest earners.
What other measures will be put in place to ensure that those with the lowest incomes also benefit from a fair tax system, including adequate support with respect to affordability and access to essentials like housing and food?
Ms. Lavoie: Of course, to benefit from a rate reduction, you need to be paying taxes, and those that are the most — the lowest income in the country will not be benefiting from a rate reduction simply because they are not paying taxes. However, they can benefit through the tax system from refundable tax credits like the GST credit or assistance for those who are parents, like the Canada Child Benefit. They can also benefit at the provincial level. The government has also put in place the dental care program and other programs to try to help those that are the most vulnerable. This tax reduction will help those that are taxable, so those that have more than around $16,000 of income, but if your income is below that, then there are other supports. But I would say that the refundable tax credit, if you look only at the tax system — there may be other measures outside — but would be the means by which they are the most affected.
In terms of your statistics, those are not the ones that we have. In terms of the benefit of the rate reduction, that will primarily go to those that are in the lowest tax bracket, not the highest tax bracket.
Senator Kingston: I’d like to ask some questions around the $200 million. It is a new thing for you. It is for the payments to the International Bank of Reconstruction and Development for the Financial Intermediary Fund for Ukraine.
Is this a fund that other countries, say in the G7, are contributing to? You did mention the G7 in your opening remarks.
Mr. Kuhn: Thank you for the question.
The first important part of the answer to your question is that the $200 million contribution to the World Bank trust fund is part of the government’s commitment to provide $5 billion, primarily of lending, to Ukraine. Instead of requiring repayment from Ukraine, it is backed by immobilized Russian sovereign assets that are in Europe. The government has announced that, of that $5 billion, it has made a disbursement of $2.5 billion in March and $2.3 billion this year that the Prime Minister announced at the G7. Then, the $200 million you’re pointing to is the final contribution of that $5 billion envelope. The World Bank fund that’s being used for that was set up specifically to respond to this requirement, and it is being used by the United States and Japan, and Canada is the third contributor to it.
Senator Kingston: What would the requested amount be used for? What mechanism would ensure this amount is used for its intended purpose? Is there a plan for the use of these particular funds?
Mr. Kuhn: There will be a plan for the use of the funds. Right now, the governing framework of that trust fund says that the three participants — Canada, the United States and Japan — that are providing funds into it, as well as the Government of Ukraine, form a governing council. That governing council will meet and make deliberations about the ultimate uses of those funds, which can be used either to sustain the administration and service delivery capacity of the Government of Ukraine during this time and/or to plan and implement recovery, reconstruction and reform activities within the Government of Ukraine.
Senator Kingston: Are the amounts from the United States and Japan larger than that of Canada because of their larger populations?
Mr. Kuhn: Yes, the contributions from the United States and Japan are larger than Canada’s, not because of a difference in the sizes of their populations or economies but just because of the choices that each of our countries have made in respect of the delivery vehicle for our contributions under what is known as the Extraordinary Revenue Acceleration Loan initiative, or ERA.
As I mentioned, Canada has contributed $5 billion toward that mechanism; $4.8 billion will flow through the IMF administrative account, which is a more direct mechanism to provide financing to Ukraine. We have provided $200 million through this mechanism, in part to be able to accomplish some activities with the World Bank that couldn’t be done through the other mechanisms but also in part to facilitate the creation of the mechanism, because the World Bank requires three partners in order to create a trust fund. So regarding the contributions from the United States and Japan, to give you a sense of the order of magnitude, the United States is using this mechanism as the primary vehicle for their ERA lending. They have put $20 billion into that mechanism and nothing through the IMF administrative account. Japan is putting $3 billion through that mechanism. Canada, again, was contributing in part to allow the United States and Japan to be able to do that, because they needed a third partner to open that mechanism.
Senator Kingston: Thank you.
Senator Galvez: Thank you for being here late tonight to answer our questions.
In the 2025-26 Main Estimates, $4.7 million is being requested for contributions for the Made-in-Canada sustainable investment guidelines. In October last year, the previous government announced the details of the Canadian taxonomy. Contributions to make Canada more sustainable, Canadian taxonomy — I would like to know what progress has been made on the taxonomy, particularly because we are reviewing Bill C-4 and Bill C-5. One of the criteria for the infrastructure projects is the money that may come from the Infrastructure Bank, but it also needs to meet climate change, according to the bill. When are we going to have an operational, sustainable taxonomy?
Julien Brazeau, Assistant Deputy Minister, Department of Finance Canada: Thank you.
In regard to your question on a made-in-Canada taxonomy, as you’ve noted, in the Fall Economic Statement, the government announced its intent to move forward with a made-in-Canada taxonomy. I would say that the funds that have been earmarked are for the appointment of an entity that will be responsible for the creation of that taxonomy. The process for the appointment of that firm was suspended as a result of the prorogation of Parliament. We are in the process now of providing advice, now that Parliament is back, regarding immediate next steps. I don’t have a specific timeline at this point. We are providing advice to the government to move forward with it, but we expect there will be updates.
Senator Galvez: There are all these moving pieces, and they all have to be coherent, especially when we know that, according to one witness, if the government promises something, it has to deliver it. Otherwise, it will lose trust of the people. To deliver, it needs the money and needs to know the criteria. We have bills already, and we have the taxonomy. When will it be completed?
Mr. Brazeau: Thank you for the question.
We certainly recognize the value of a taxonomy. Additional measures that were also announced in the Fall Economic Statement included voluntary disclosures around investments in sustainable finance. Certainly, we recognize the value of a taxonomy in creating certainty for entities in terms of their investments and creating a common nomenclature.
This is work that came out of the initiative on the Sustainable Finance Action Council. We’ve taken those recommendations. As we said, the government has announced its intent, and we hope they will be proceeding shortly. We’re providing advice on that to the government at the moment.
I can’t provide clarity in terms of the advice we provide to the minister, because that’s subject to being secret. I can say, again, the government announced in 2024 that it wanted to move forward. The government has put in place the plans to put that into motion. At this point, we need approval by the minister to move forward, and we hope to achieve that shortly.
[Translation]
The Deputy Chair: We have a few minutes for a second round, if you have very quick questions and answers that are just as concise.
Senator Moreau: I have a question that someone should be able to answer quickly. There is a budget item called “debt payments on behalf of poor countries to International Organizations,” pursuant to section 18(1) of the Economic Recovery Act. I would like to get a list of who is part of that program. First, does the list change, and what are the criteria to get on this list of happy people who must be quite unhappy initially?
[English]
Mr. Kuhn: Thank you, senator, for your question.
The payments that you’re referring to are made under a program called the Multilateral Debt Relief Initiative, or MDRI, which was an initiative that was negotiated within the G7 in 2005, so a number of years ago. The basic premise of the initiative at the time was to provide debt relief for a broad number of countries that were requiring it at that point in time. The multilateral part of it being that their debt was owed not to Canada directly but to the World Bank and the African Development Bank.
In 2005, as part of that multilateral initiative, we negotiated that we would provide contributions through the World Bank and the African Development Bank over a 50-year period starting in 2007. That would make those two institutions whole with respect to the debt payments they were owed by the third-party countries. What you’re seeing here is there’s one payment in that schedule over that 50-year period.
What I don’t have in front of me is the specific list of beneficiaries of that program that was negotiated 20 years ago.
Senator Moreau: What are the criteria to be on the list?
Mr. Kuhn: The criteria was countries facing particular debt sustainability issues at that point in time, who had exposures to one or both of those two international institutions.
Senator Moreau: Do I understand that it is a fixed list of countries?
Mr. Kuhn: That’s correct, a fixed list of countries that was negotiated at that point in time.
Senator Moreau: Okay. Would you provide us with the list?
Mr. Kuhn: If the chair is willing, I can provide that in writing.
Senator Moreau: What is the amount over the 50-year period that would be paid by Canada to those two organizations?
Mr. Kuhn: I believe that the contribution over that period is capped at $2.5 billion. The specific amount in each of those years fluctuates to a certain extent. You’ll note in this year’s Main Estimates document, the amount is somewhat larger than last year as a result of the repayment schedule that was negotiated at that point in time, as well as currency fluctuations. In total, Canadian contributions are capped at $2.5 billion over that period.
[Translation]
The Deputy Chair: Please send us the list.
Mr. Kuhn: In writing, yes.
Senator Dalphond: What is it exactly? It’s in parentheses, so it’s negative. Can you explain what it is?
Galen Countryman, Director General, Federal-Provincial Relations Division, Federal-Provincial Relations and Social Policy Branch, Department of Finance Canada: Thank you for the question.
[English]
I am Galen Countryman, Director General for Federal-Provincial Relations. The Youth Allowances Recovery pertains to something called the Quebec Abatement, which there’s an agreement between the federal government and the Government of Quebec. The federal government transferred tax points to — actually, they offered it to everyone, but only Quebec accepted it at the time, in the 1960s, about 3.5 percentage points of personal income tax. What happened is as social transfers continued, the federal government basically recovered while Quebec kept the tax points, but we reduced transfers by that amount.
Senator Dalphond: So that is an adjustment to the transfer to allow for these five points?
Mr. Countryman: Yes. Quebec benefits from tax points —
Senator Dalphond: Of course. They get the direct money instead of the payments. Thank you.
Senator Loffreda: I was pleased to note in your Departmental Plan that the government’s borrowing requirements have been successfully met within the fiscal year for each of the past three years, and I have a couple of follow-up questions.
First, using some of the language from your plan, would you say these borrowing requirements are being met at a low and stable cost, thereby supporting the effective management of the federal debt? What is the basis of comparison?
Second, from a historical perspective, has there ever been a time when the department did not meet its borrowing requirements within the fiscal year? If so, what would have been the implications or consequences of such a shortfall? If you make the statement, we should bring some importance to it.
Mr. Brazeau: Thank you for the question. On the first part, our public debt charges amount to an equivalent of about 1.7% of GDP, and from a historical perspective, that’s actually low. The high point was in the 1990s when we were at a peak of 6.5%, but we think they’re being managed now.
Senator Loffreda: That’s good. I’ll give you a promotion now.
Mr. Brazeau: On your second question, I don’t have the information on that data point, but I’m happy, if the chair allows, to get back to you.
Senator Loffreda: At least we’ll leave on a good note tonight, so thank you.
Senator Kingston: I was wondering about the Canada Disability Benefit. There have been different concerns about this particular credit, but I’m going to ask if you know for sure which territories and provinces will not be clawing back that Disability Tax Credit because that just seems wrong. Do you have any data on that?
Mr. Countryman: Thank you, senator, for the question. I believe it would be Employment and Social Development Canada that manages that, but my understanding is that all provinces and territories, with the exception of Alberta, have agreed to pass along the benefit from the Canada Disability Benefit. My colleagues at Employment and Social Development Canada should be able to verify that.
Senator Kingston: Okay. So do you think Alberta will change its mind?
Mr. Countryman: I don’t know that. I don’t speak for the Government of Alberta.
Senator Kingston: Thank you.
Senator Pate: Your Departmental Plan indicates that you will:
Work with other government departments and central agencies to advance health and social priorities, including in public safety and justice, culture, immigration, diversity and inclusion.
I’m interested in what examples you have of what you will be doing on issues of public safety and justice. In particular, there’s tremendous potential to invest proactively in robust social policy that will pay for themselves if we invest in community and downstream savings.
What steps will you be taking to account for decision making related to social policy for factors like the massive and preventable cost of incarceration of those who have been failed by other systems, from the housing system to health care to social supports? I recognize there are different jurisdictional issues there, but if you’re interacting with those departments, it’s an opportunity to impact the policies and the allocation of resources to other components.
Mallika Nanduri Bhatt, Associate Assistant Deputy Minister, Department of Finance Canada: Thank you for your question. To answer broadly, we work very closely with departments like Corrections, Justice, RCMP, Public Safety, Canada Border Services Agency, to name a few, as well as Immigration because they are also part of the mix. Everything we do is mostly about making sure that their finances are being used efficiently to advance the government’s objectives.
Recently, you would have seen the announcement of the border plan in which Finance worked very closely, in particular, with the RCMP, Canada Border Services Agency, Public Safety, as well as the Communications Security Establishment, to ensure that the envelope for that funding was allocated according to the department’s financial situation and making sure they have the right human resources as well as the right financial resources going toward those new lines of activity. The priorities of the day, as you know, a lot of it is related to combatting illegal trade in fentanyl, for example, as well as looking at changes to asylum.
Senator Pate: Money laundering?
Ms. Nanduri Bhatt: Anti-money laundering, yes. That was a big part of the bill as well.
The Deputy Chair: Thank you. We have reached the end of our time today. I wish to thank you for appearing today. It’s much appreciated.
[Translation]
I would ask the witnesses to provide the clerk with their written responses before the end of the day tomorrow, Thursday, June 19, 2025. We realize this is a very tight deadline.
Before we end, I’ll remind senators that our next meeting will be held tomorrow, June 19, at 1 p.m., to continue our study on the Main Estimates and Supplementary Estimates (A).
I want to thank, before they leave us, the committee’s support team, those you can see in the room, as well as those in the background, whom we don’t see, but who make our work possible. Thank you; you contribute to our successful work as senators.
(The committee adjourned.)