Evidence of meeting #24 for Environment and Sustainable Development in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was housing.
A recording is available from Parliament.
Conservative
David Bexte Conservative Bow River, AB
Thank you very much, Mr. Chair. I appreciate the opportunity.
Thank you, witnesses, for attending here today for this very important study.
As I said in the previous session, I want to drive the conversation towards understanding the root cause and the root mechanisms so that we make the best decisions on mitigation and managing risk. I'm not sure $1.8 billion a year, which is a lot of money, is sustainable.
Mr. Jacques, can you comment at all about the sustainability of that projected forward?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Certainly, $1.8 billion a year—as I mentioned in the opening statement—is a doubling of what we've seen in the past. Based on our forecast, we do have an upward trend in the overall expenses. In the context of the government's current spending of $600 billion a year, it's a small but substantial and quickly increasing amount of money.
Conservative
David Bexte Conservative Bow River, AB
Thank you.
In your report, you mentioned that it shows that flood frequency has remained relatively flat and fire frequency is increasing. Can you comment on what the thresholds are to categorize something as “severe” that would be captured in your data, in that report and those trends?
Zachary Vrhovsek Analyst, Office of the Parliamentary Budget Officer
Yes. I can touch on that.
For something to be considered severe enough to be in the DFAA program, it has to have provincial or territorial costs that exceed, in 2025, more than $3.84 per person in the province.
The actual dollar value would change depending on the size of the province or territory in terms of population, and it would depend on whether the province or territory decides to raise it to the federal level. They need to put in a formal request.
Conservative
David Bexte Conservative Bow River, AB
Okay. How does that change over time? Compare that to one, two or three decades ago. How does that threshold change?
Analyst, Office of the Parliamentary Budget Officer
At the start of the program, initially, the threshold was not indexed to inflation, but since 2015 it has been indexed to the consumer price index. It has been going up since 2015, but the costs of disasters have been going up faster than the threshold has been.
Conservative
David Bexte Conservative Bow River, AB
Could you comment on the cost of those disasters related to the value of the property versus the density? What I'm trying to get at here, ultimately, is the density and the relative value. We used to live in small, modest houses 20, 30 and 40 years ago. Now the trend is much larger.
I don't think we accurately capture the more affluent circumstances we have here in many cases, especially in flood-prone areas and in the urban environment.
Analyst, Office of the Parliamentary Budget Officer
When creating the report, we took into account the effect of inflation for non-residential construction, but we aren't able to comment or break it down deeper than listing some factors that could cause it. For example, more people or more valuable assets in disaster-prone areas would increase the cost, but we aren't able to break down the specific causes of the increase. We only looked at it in a general sense of the cost per disaster over time.
Conservative
David Bexte Conservative Bow River, AB
Based on your analysis, how much of the projected spending against a typical disaster is going towards rebuilding in the same high-risk locations versus investments that would reduce the risk, those that would move the infrastructure, residences or commercial activity someplace else?
Analyst, Office of the Parliamentary Budget Officer
That likely would be something to be determined by the province or territory involved in the rebuilding. There are some eligibility requirements set by the federal government to be eligible for it. Ultimately, that's not something that I would have the answer to.
What I can say is that the majority of costs under the DFAA to date have been for provincial or municipal infrastructure and not necessarily for rebuilding individual homes. For example, if a highway is destroyed, it's unlikely that the highway would be rebuilt in a new location.
Conservative
Conservative
David Bexte Conservative Bow River, AB
In the interest of protecting taxpayers' dollars, we can argue a shell game of paying for disaster recovery directly or increased insurance premiums for residential. It is a bit of a shell game, but there is a sweet spot and an optimum track, and that's what we need to direct this at.
What I want to know is this: How do you suggest the government manage the municipal development, redevelopment or infrastructure construction in high-risk areas to ensure the programs don't just become a backstop for short-term planning realities? Do you get the gist of what I'm saying?
Analyst, Office of the Parliamentary Budget Officer
I understand the question. I'm not sure if it's within the mandate of the PBO to make recommendations on how the government should be dealing with it.
In our conversations with Public Safety Canada in creating this report, they're very aware and they are working towards it.
Conservative
David Bexte Conservative Bow River, AB
Okay. You see that they're aware enough that there's probably some evidence of that already—
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I don't think we'd want to comment on the level of awareness among public servants within Public Safety Canada.
I don't know them well enough.
Conservative
David Bexte Conservative Bow River, AB
It's not naming names, but it's society. Are we inclined to just rely on government to save us and immunize us from making better decisions for ourselves?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Again, to your earlier point, the very fact that the government is moving on this, implementing policies and moving forward on it, I think, is indicative of the fact that people are taking it seriously.
Liberal
The Chair Liberal Angelo Iacono
Thank you very much.
Mrs. Miedema, the floor is yours for six minutes.
Liberal
Shannon Miedema Liberal Halifax, NS
Through you, Chair.
Thank you, everyone, for being here.
I'm very excited about this study that I've brought forward. My riding is Halifax. We've had a lot of extreme weather events in recent years. In 2023, we had a flash flood, a hurricane and a wildfire.
Starting with the PBO, when you're doing your modelling and the future forecasting, how are you doing that when the past no longer dictates the future when it comes to extreme weather events? We can't go by rainfall from the last hundred years because it's not in the same intensity pattern as it is tomorrow. How are you incorporating that into your modelling, if at all?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes, that's a really good question.
As a lot of people are aware, the United Nations publishes, on a periodic basis, a forecast with respect to the global impacts of climate change. On that basis, within the PBO, we've actually taken that modelling and mapped it to ECCC's modelling of rainfall and temperature levels at a very granular basis across the country. On that basis, in turn, we've used it to feed into our macroeconomic model.
We published a paper in 2022 based upon this micro-information, again drawing from the UN and from the government's own data from ECCC on a very granular basis to update our macroeconomic modelling. That, in turn, feeds into our fiscal modelling and our other models because, of course, the predictions that we're making are based on other people's predictions. At the same time, it's important to have something on the table so that people can plan around it.
Liberal
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
For the DFAA, that's correct.
Liberal
Shannon Miedema Liberal Halifax, NS
It's for the DFAA. Okay.
I have a quick question.
I wasn't aware of the dollars per person for provinces and territories and how that rolls out. Is that the best measure? I'm just thinking about rural Newfoundland after a hurricane and the dollars it may need versus a denser area in a different province or territory. Has that always been the metric, and does that make sense for future purposes?
Analyst, Office of the Parliamentary Budget Officer
It's my understanding that it's always been the metric, but I'm not sure. Someone from Public Safety Canada might know more about the history of the program. I'm not sure if I have an opinion on whether it's the best way. There are a lot of ways it could be done. This one serves as a deductible, where the federal government doesn't step in until it's sufficiently severe to impact the finances or the fiscal capacity of the province or territory. I understand that it could be severe locally but not severe enough provincially or territorially to trigger the disaster financial assistance.