Indigenous and Northern Affairs Committee on March 20th, 2007

[The Chair, Conservative, Colin Mayes]

I open this Standing Committee on Aboriginal Affairs and Northern Development of Tuesday, March 20, 2007.

Committee members, you have the orders of the day before you. The business of the day, pursuant to Standing Order 108(2), is the supplementary estimates (B), 2006-07: votes 1b, 10b, 20b, 45b, 52b, and 54b, under Indian Affairs and Northern Development.

The witnesses before us today, committee members, are from the Department of Indian and Northern Affairs: Michael Wernick, deputy minister; Peter Harrison, senior associate deputy minister; Gina Wilson, assistant deputy minister, Indian Residential Schools Resolution Canada; and Peter Traversy, acting chief financial officer.

Welcome to the witnesses, and thank you for your attendance. We'll begin with the presentation and then we'll go on to questions from the committee members.

Mr. Wernick, were you going to begin?

[Michael Wernick, Deputy Minister, Department of Indian Affairs and Northern Development]

Yes, thank you, Mr. Chair. We've provided the clerk with copies of my remarks, which I promise will be brief. I'll move through them quickly to maximize the question time for the committee.

You've introduced my colleagues, but let me just note that Peter Harrison has joined the departmental management team and wears two hats. One is that of my associate deputy minister for the purposes of running INAC, and he is also deputy head in his own right for the purposes of the Indian residential schools organization and, therefore, would be happy to take questions related to the residential schools program and organization.

Mr. Chairman, I appreciate the opportunity, as always, to come before the committee, this time to discuss the supplementary estimates (B) of the department. Today I would like to begin by acknowledging that this is my first appearance before this committee, or any parliamentary committee, as the accounting officer of the department, designated by the Federal Accountability Act, which came into force earlier this year. Under the act I am the official personally responsible for efficient management of the department's resources, and as such, I am accountable before parliamentary committees such as this one to answer questions pertaining to those responsibilities.

As I'm sure you know, under the act, my responsibilities as chief accounting officer in this respect are fourfold: to ensure resources are organized to deliver departmental objectives in accordance with government priorities, to ensure there are effective systems of internal control, to sign departmental accounts, and to perform other specific duties assigned by law or regulation in relation to the administration of the department.

In response to initiatives undertaken by the Office of the Comptroller General in the theme of stronger management, the department has implemented a new approach to financial planning, financial management, and financial reporting, based on a chief financial officer model. This new model is designed to strengthen accountability, which is crucial for a department that manages more than $6 billion in parliamentary appropriations each year.

My colleague Peter is acting CFO for the purposes of today's appearance. We have created a permanent ADM-level position as chief financial officer, and I expect to be announcing the staffing of that position within the next couple of weeks. Earlier this year, I also created a new position of chief audit and evaluation executive, a position that will report directly to me as accounting officer and deputy minister.

I'm also proud to say that Indian and Northern Affairs Canada has actively supported the accountability work of the blue ribbon panel on grants and contributions, and has been active on a number of fronts that will contribute to a government-wide action plan targeted for late fall 2007.

As you know, promoting greater accountability is one of the Government of Canada's top priorities. This committee's scrutiny of the department's financial plans is a vital link in the accountability chain and I fully support the important work that members do.

The supplementary estimates (B), now before you, represent the final step in the supply cycle for the department for the current fiscal year. The cycle began last year, as you know, with the tabling of the main estimates of $6.3 billion, which included an increase of spending from the previous year of approximately 6.2%—or $366 million, to be more precise—over the previous year's main estimates.

The next step in the process was the 2006 federal budget, followed by supplementary estimates. Part A of the supplementary estimates requested a further $196 million from Parliament. Minister Prentice appeared before the committee last November to describe how the funds were to be invested and, in particular, described how they have helped first nations communities address urgent and critical needs brought on by floods, fires, and evacuations. The resources in the supplementary estimates also assisted residents of remote and isolated communities who suffer undue hardship as a result of rising fuel costs.

In the last phase of the supplementary estimates, tabled last month, Indian and Northern Affairs Canada requested approval for $70.3 million for various initiatives. These investments support the government's overall commitment to make tangible, measurable progress on the challenges that face so many aboriginal communities.

The largest amount proposed in supplementary estimates (B)—$27.4 million—relates to the organizational transfer of Aboriginal Business Canada to Indian and Northern Affairs. Given that the spending authorities had already been granted to Industry Canada earlier in the cycle, this transfer actually involves no new expenses to the government.

The exercise of organizational change consolidated into one department with an aboriginal focus the economic development programs that benefit aboriginal peoples. This should promote efficiency and improve the effectiveness of the existing programs. By pooling the expertise of staff and bringing them together, I'm confident the transfer will have a positive effect as we develop future programs and strategies.

These supplementary estimates also include $21 million for some out-of-court settlements. In order to avoid unnecessary and costly litigation, the department will, from time to time, settle out of court where there's a recognized legal obligation, and of course on advice from our lawyers at the Department of Justice. Settlements for this fiscal year include three significant cases: O'Chiese, Testawich, and Tsuu T'ina.

Another large investment included in the supplementary estimates would see $9.3 million spent on the aboriginal people's survey conducted by Statistics Canada. This survey will gather information about socio-economic conditions, among other data. The findings will help establish a clear baseline and enable governments and aboriginal organizations to measure the impacts of various policies and programs. Current, relevant, accurate data is fundamental to accountability.

There is one more item in the supplementary estimates that I would like to draw to your attention, and that's the transfer of First Nations SchoolNet. Again this is a transfer from one department to another, and the estimates call for $6 million to fund the program through to the end of the current fiscal year. First Nations SchoolNet enables hundreds of classrooms across the country to access the wealth of learning opportunities available to students and teachers via the Internet.

Mr. Chairman, the Government of Canada is determined to ensure that all Canadians—aboriginal and non-aboriginal alike—enjoy the prosperity of this country. Indian and Northern Affairs Canada will continue to identify and implement lasting solutions to the issues facing aboriginal peoples. The spending authorities now under consideration will enable us to take one more step towards this goal.

That concludes my opening remarks. With your permission, Mr. Chair, I'll ask Dr. Peter Harrison, who is not only my senior associate deputy but is deputy head of Indian Residential Schools Resolution Canada, to talk briefly about his department's estimates.

Perhaps after Dr. Harrison's presentation the four of us will be able to answer any questions committee members have.

[The Chair, Conservative, Colin Mayes]

Thank you very much.

Mr. Harrison.

[Peter Harrison, Senior Associate Deputy Minister, Department of Indian Affairs and Northern Development]

Thank you, Mr. Chairman.

My comments on the supplementary estimates (B) will be brief because they are comprised of only two items.

There are two items in supplementary estimates (B), and both of them are transfers from one organization to another. A remaining transfer of $50.5 million was made from the Department of Canadian Heritage for the control and supervision of the office of Indian Residential Schools Resolution Canada. This transfer was made necessary by government restructuring, which saw control of the department transferred from the Minister of Canadian Heritage to the Minister of Indian Affairs and Northern Development on May 16, 2006.

The second item is a transfer made between our department, Indian Residential Schools Resolution Canada and Service Canada.

We have transferred these funds through an agreement with Service Canada in order for them to prepare for the common experience payment. This preparation will entail substantial information technology development work. Service Canada will receive all applications under the common experience payment, conduct a screening of the application, authenticate the identity of the applicant, and transfer the data electronically to residential schools to validate residency. The applicants will be informed of the decision by Service Canada, and if appropriate, Service Canada will issue payment.

Thank you, Mr. Chairman.

[The Chair, Conservative, Colin Mayes]

Thank you, Mr. Harrison.

We'll start with Madam Neville, please.

[Anita Neville, Liberal, Winnipeg South Centre, MB]

Thank you very much. Let me say thank you to all of you for appearing today.

Mr. Wernick, while I appreciate very much that you are responsible under the Federal Accountability Act for the management of the fund, l am very sorry that the minister hasn't been able to find time to attend today, because he is responsible for setting the direction of the department. I know you will make every effort to answer the questions, but we would like to speak to him and it's unfortunate that he's not here.

I have a number of questions and I suspect the time doesn't allow me to ask them all, but I'm going to start on three particular areas. I want to ask you about the funding for the Mackenzie Valley environmental impact review. I want to ask you about Aboriginal Business, which was at Industry Canada, being transferred to the department. And I want to ask about the changes in capital grants, where they are going and where not.

Let me start with the funding that's in the estimates for the Mackenzie Valley Environmental Impact Review Board's participation in the hearings of the Joint Review Panel for the Mackenzie Gas Project. I wonder if you could speak to the purpose of it, what in fact is taking place, and how your department operates in terms of the Mackenzie Valley initiative and how you operate with first nations communities in the area and reconcile the two.

I'll start with that.

[Michael Wernick]

I'll try to give you a first approximation answer, Ms. Neville, and I may have to turn to my colleague the assistant deputy minister, who follows this more day to day, if I don't do a good job of it.

As you know, the Mackenzie Valley pipeline is a private sector project going through regulatory processes at the NEB and the joint review process. There are many parts of government involved: Natural Resources Canada, Department of Finance on tax issues, and so on.

What we do in Indian and Northern Affairs is that we have a coordination role and we have a secretariat dedicated to keeping track of all the moving parts, working with other departments, keeping an eye on the regulatory process and supporting the minister in his role as the quarterback and coordinator for the pipeline project. So as I understand it, and my colleague will correct me, essentially the estimates are to provide that secretariat support, and there's a very small staff unit that works with other departments and the regulators.

In terms of the first nations, there are a couple of involvements. First, there's been a significant effort over several years to deal with unresolved land claims up and down the Mackenzie Valley, and that continues to be the case. Settlements have been reached with several of the first nations groups, and implementation is more the issue. And we are in active discussions with Deh Cho to try to resolve their claim in a satisfactory manner, and we have a negotiator on that. It's one of those arduous claim negotiation processes that are managed by the Comprehensive Claims Group, which my colleague Michel Roy heads.

There's ongoing consultation going on with first nations communities and organizations up and down the valley, and we do provide some funding to support their activities. There are also some funds that flow through out-of-court settlements that have been reached over previous years, where the courts awarded amounts to first nations groups and so on. So there are several moving pieces.

That's a broad brush overview. I'm hoping I've got that mostly right. If there's anything in more detail, I'd be—

[Anita Neville, Liberal, Winnipeg South Centre, MB]

I appreciate your comments that it is your responsibility to—my words, not yours—quarterback the development of the Mackenzie Valley pipeline, but what I am questioning is how you reconcile that with the fiduciary responsibility to aboriginal peoples.

[Michael Wernick]

I'm not quite sure how to answer that. The project is a private sector project. It that will be decided on a commercial basis by the proponents as to whether they want to build it. They are going through the regulatory processes and environmental and social impacts and so on, and those processes are going to go well into the rest of this year and probably early 2008 before those regulatory permits are issued under whatever conditions the regulator provides.

First nations groups and organizations have been intervenors and active participants in all of those processes. Our role, I think, is in part to make sure there is a level playing field, and that those voices are heard and those messages are heard, and that those processes are as open and transparent as possible to first nations peoples up and down.... We also have ongoing relationships, of course, with the territorial governments and with the bodies that were created under the various land claims agreements.

So as to the fiduciary responsibilities, I'm not quite sure what the underlying question is. In terms of the possible impacts of the pipeline, should it be built—which is still a question to be determined by the proponents and the regulators—the government set aside in last year's budget the socio-economic fund of $500 million, which will be drawn down by the communities, if there is a pipeline, to deal with mitigating social and economic impacts. We've gone to some trouble to create the structures and the governance around that fund. There's first nations participation in it. As you know, there's also first nations participation in the pipeline itself through the Aboriginal Pipeline Group, who would actually be equity partners in the project should it come to pass.

It's a lot of communication and coordination and trying to make sure that it's a level playing field. That would be my attempt at an answer.

[Anita Neville, Liberal, Winnipeg South Centre, MB]

Okay. I'll follow up on this at another time and another place.

[Michael Wernick]

Sure.

[Anita Neville, Liberal, Winnipeg South Centre, MB]

Let me ask you about reallocation of capital dollars targeted to schools that has not materialized. Can you speak to that? We see here, and I don't know where it is the case, that there is an allocation of funding for school construction on reserves in Newfoundland and Labrador, Nova Scotia, and Alberta.

We hear anecdotally about moneys that have been committed for school capital projects that have been diverted for other funding. Can you speak to that at all?

[Michael Wernick]

Well, if you have a specific case, I'd be happy to drill into it.

The capital program is essentially a pot of money that is available to be sent to first nations groups to build capital projects. It isn't actually managed as capital. It's essentially a contribution program. The number is somewhere in the ballpark of a billion dollars each year, and it's divided up into sub-envelopes for each of our regions for planning purposes. It's almost a waiting list or queueing issue between the readiness of the communities, the work that has to go on on design or architectural studies or procurement or getting the contractors and so on. You're constantly moving projects up and down the list in each region, and what we try to do is balance an enormous set of needs against the available dollars in each region. That's what happens.

The capital program covers everything from water and waste water systems, electrical grids, schools, community halls, and so on. I'm not aware of cases where capital would have been diverted to other needs. We have an overall contribution pot of about $5 billion. We try to move money around so that we don't leave anything on the table at the end of the fiscal year, given the needs that are out there.

[Anita Neville, Liberal, Winnipeg South Centre, MB]

Can I have one quick—

[The Chair, Conservative, Colin Mayes]

No, you've had eight minutes and you're only supposed to have seven.

Mr. Lemay.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

Good day. I want to commend you for being able to find your way through all those documents. I myself still have difficulty doing so, even though I had suggested last year that we try to simplify things.

Mr. Chairman, I would like the time it takes to find the exact place to not be counted as my speaking time, because it might take some time. Thank you.

On page 110 of the French version of the supplementary estimates (B), under the heading “Explanation of Funds Available (dollars)”, it states that:

$32,594,362 in total authorities is available: $5,103,000 within the Vote due to reduced requirements related to the deferral [...]

Have you found the paragraph, so that we can talk about the same thing? Are we on the same page, Mr. Deputy Minister? Very well.

[The Chair, Conservative, Colin Mayes]

Mr. Lemay, could you just tell us what page you are on in the French?

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

In the French version, it is on page 110. However, I do not know what page it is on in the English version.

[The Chair, Conservative, Colin Mayes]

We can refer to it, if you want to continue with your question.

It's page 143 in English.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

Can I have an extra minute please?

Thank you, Mr. Chairman.

[The Chair, Conservative, Colin Mayes]

I'm very understanding.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

Mr. Deputy Minister, I would like to ask you or your assistants to clarify something for me. If $32,594,362 are available for first nations, given that they have truly crying needs, if only in terms of water and housing, could there be a way to use some of that money to address those needs? Am I being clear? Is my question too simple?

Mr. Traversy can respond.

[Michael Wernick]

No, no, it is just that I do not know exactly where to start.

The structure of the resource allocation process contains a number of votes. You have to distinguish between the funds that you, as members, allocate to us for operational costs—I am referring here to vote 1—and those funds that you allocate for contributions to first nations, which correspond to vote 10, so far, so good?

We use this structure in compliance with the Financial Administration Act.

Treasury Board gives us some flexibility in that it allows us to reallocate funds within a vote. Occasionally, we can ask for permission to transfer funds from one vote to another, but that in some way is done with parliamentary approval. It is by approving these votes and estimates that you approve the type of transfer that you want to see.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

Okay. That's fine.

I am still on the same page. Vote 10 concerns funds that can be allocated to first nations. There are $4,880,906 in total authorities available within the vote due to reduced requirements related to the deferral of payments.

My understanding, Mr. Wernick, is that funds are set aside for the settlement of aboriginal claims, but because not enough claims are settled, money is left over in the envelope.

Given the budget transfers that we are doing today and which we will approve, I would like to know whether such aboriginal communities as Kitcisakik, Kangiqsujuaq and Pikangikum can expect funds to be reallocated to help them address their crying needs.

[Michael Wernick]

There is a difference between settling a claim on March 29 and settling it on April 3. We are talking about two different fiscal years.