Indigenous and Northern Affairs Committee on May 28th, 2008

[Sharon Matthews]

There's no mandate for CMHC to be monitoring or managing those funds. I believe the same can be said for INAC, so it would be the Department of Finance that you'd have to raise the question with.

[Tina Keeper, Liberal, Churchill, MB]

The Department of Finance would be accountable for that funding. They would require accounting for that funding.

[Christine Cram]

I suspect that for the trusts that were set up for the transfer of the money from the Department of Finance to those provinces, they would have specified any accountability requirements.

[Sharon Matthews]

I do believe there were some principles and whatnot, but we're just not the right people to answer that question, I'm afraid.

[The Chair, Conservative, Barry Devolin]

Thank you very much.

M. Lemay, six minutes.

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

Actually, I am not very happy. You can explain to me why I am not very happy. I am sick and tired of getting reports; we know where the problem is. You said that the money allocated for repair and for new home construction in the communities is not all spent.

Did I understand correctly?

[Christine Cram]

No.

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

Ms. Matthews, I thought that you had said that there was money left. Is that correct?

[Sharon Matthews]

No, I was referring to the $295 million that came in Budget 2005. All of that budget has been committed, but projects are built over a period of time. All of those projects are under way, advances are under way, so that was what I was referring to in terms of it taking time to get those things actually built and on the ground. But they're all committed.

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

Okay.

I have a problem. In April 2003, the Auditor General said:

...about $750 million would be required annually to meet the increasing housing needs of the growing on-reserve population and that an additional $2.5 billion would be needed to deal with the shortage of adequate houses.

That is not me saying that. In 2005, in 2006, in 2007 and in 2008, how much money did you allocate for housing construction and repair?

[Sharon Matthews]

I wouldn't have that for each and every year, but I could certainly get you the detailed information.

As an illustration for today, for the $295 million budget that we were referring to earlier, the 2005 budget, it was projected that with the dollars it would be allocated, CMHC would be able to deliver 4,400 new units, and it would be able to renovate 1,100 units. As of March 2008 we had delivered 4,498, so we exceeded the target and managed to squeeze a few more out, and on the renovation we went to 1,296, so again, we exceeded the target.

By and large, you will find in our annual report that we're quite clear. We say, “This is what our target is for the year”, and every year we report against it. The information is right there; I can readily get it for you.

By and large, we meet or exceed our targets, but I'll get you the details, sir.

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

Was that money spent in on-reserve or off-reserve communities? When you paid for homes to be repaired, improved or built, were they on-reserve or off-reserve?

[Sharon Matthews]

The numbers I just gave you were solely for on reserve. CMHC has a budget for special on-reserve programs as well; they're designated. For example, that was the $134 million for this year and last year that we had.

In addition, CMHC has off-reserve funding that it provides. That is the annual $1.7 billion for existing projects that we continue to subsidize on an ongoing basis, as well as renovation programs. Most of that, I must say, is administered by the provinces and territories.

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

Okay. That brings me to a subject that interests me a lot. I asked the question last year, when the Auditor General said that key players disagree on their roles and responsibilities.

Specifically, how is it working today? Do you have regular meetings with representatives of Indian and Northern Affairs Canada, with CMHA and with the Assembly of First Nations to determine priority projects and the ways to implement them? Is there a report on that? Can we have it?

[Sharon Matthews]

I'm actually very pleased to say we took the Auditor General's report very seriously. Since then we've had in place national and regional liaison committees. These committees meet regularly. They look at priorities. They are a perfect example of how we actually work very well together. The Assembly of First Nations, by the way, is a member of the national committee. On the regional committees it is the different, more regional associations, aboriginal associations.

I'll speak about the national committee, for example. It is the committee that actually sits down and works through the needs information we have. We have a certain budget allocation. We know we can deliver so many units, we estimate, in a year. With that liaison committee, we work through where those dollars go, to which regions, and how it is split up.

Once that national committee sets the regional splits, it goes to those regional committees. Those regional liaison committees determine which first nations, how the funding will go. They plan; they're into multi-year planning. They're trying to make sure we spend the money we get as efficiently and effectively as we can.

We are working with the first nations hand in hand with this. This is not a bureaucrat in Ottawa deciding that this is the allocation today. We do, to the degree numbers are available, base that as much as possible on the housing needs. So we have a methodology that allows the committee to work with us.

[The Chair, Conservative, Barry Devolin]

Thank you very much, Ms. Matthews.

Mr. Bruinooge, you're next and you have six minutes.

[Rod Bruinooge, Conservative, Winnipeg South, MB]

Thank you. Just due to the fact that I'm taking the New Democratic Party's slot, I surely won't lean in that direction with my questioning. We've moved up one spot.

I'd like to start by thanking both the department and CMHC for being here today, but also for the important work that's done on behalf of all aboriginal people, especially in relation to housing. I think one of the points I personally am very excited about is the market-based solutions that both CMHC and the department are working on.

The first question I would like to ask is in relation to the $300 million. Could you perhaps walk us through how applications would be made for that, how the communities would leverage that asset? At one point would a community have to actually receive funds from that $300 million to correct any sort of default they might have?

[Sharon Matthews]

It's a complicated question. This is an independent fund. It's set up. We have new trustees in place, and they're working through right now exactly how all the logistics of this thing will work. I can conceptually walk you through it in terms of the concepts and how this will work, but the individual rules and terms and conditions are still being finalized by that set of trustees.

An eligible first nation.... As I said in my opening comments, not every first nation would be eligible for this. Eligibility would be based on things like their record on repayment, how they managed their finances, their financial capacity, much like any corporation, frankly, going to a lender trying to determine whether this is a risk-worthy situation.

A first nation would apply to the fund. If they're approved by the fund, basically what would happen is that first nation would be assigned a certain amount of what we call “credit enhancement”. Think of it as a loan guarantee. As an illustration, say this first nation X gets assigned a $10 million guarantee. That's the backing that fund will give them. What they can do with that guarantee or credit enhancement is they can basically enter into an agreement with a private sector lender and say, “Okay, I want you to make loans to my members on reserve. I have a member, Fred, who wants to renovate or build a new house. I'd like you, lender, to go out and make a loan to that member. I will guarantee, as the first nation, that if that member doesn't pay their loan, as a first nation I'll back that loan up.” The reason the lender is going to be looking for somebody else other than the member to back up that loan is because under the Indian Act a lender can't go on reserve, take the security, and take the normal actions they would for you and I off reserve.

So the first nation will say, “Okay, the first step is, if the member that you ultimately approve through your normal lending practices doesn't pay that loan, as a first nation I will step up and pay.” We're hoping, in most cases, that's the end of it. The member doesn't pay; the first nation will step up.

The problem is, if you're a private sector lender, the first nation saying “I'll pay if the member doesn't pay” still isn't sufficient, because at the end of the day, if the first nation reneged, didn't follow up and pay, that lender still couldn't go and recover any security or anything else. What the fund does is it allows that first nation to say, “If I don't pay, I now have the backing of this fund. I have that $10 million credit enhancement, as an example, that this fund gave me, that I can put up to back me up.” In this way, the way the fund should work and will work, a private sector lender can go on reserve and can deal with normal financing. Individual members can apply for loans like anybody else, and as long as they have this arrangement with the first nation and the fund, it will look on the surface, by and large, like somebody borrowing off reserve.

You asked the question, will the fund actually have to step up and spend money at the end of the day? If the trustees select the right first nations, the first nations aren't going to renege on those obligations. In the ideal world, that fund will continue to grow. The interest is earned on that fund. Those dollars are available, and more and more first nations can get access to the guarantees.

We're also working this fund in terms of capacity development, trying to get first nations ready to be using the fund, in addition to what CMHC does on capacity development. While it's complicated, the real goal here is for a first nation and for first nations members to be able to proxy, by and large, what I could do when I went to my bank off reserve in terms of being able to get a loan. The reason a lender is agreeable to it is because a lender ultimately is going to have the security.

A first nation wants to do it because at the end of the day, unlike a lender off reserve, the first nation has the ability to take action, to take back that property on the reserve, to build the market. If a member reneges, that first nation has the opportunity to take that property back and sell it to another member. So the first nations shouldn't lose as they develop the market.

It's great for the individual borrower, because if you're on reserve today and try to get a loan from a bank, it's unsecured. It's a personal loan; your interest rate is considerably higher than it would be in a secured situation. With this, the individual member is going to get lower financing costs and greater access to the funds. So it's a winning proposition all around.

[Rod Bruinooge, Conservative, Winnipeg South, MB]

Now that I've asked the questions on behalf of the NDP, can I start the Conservative round?

[Voices]

Oh, oh!

[The Chair, Conservative, Barry Devolin]

Thanks, Mr. Bruinooge. Thank you, Ms. Matthews.

We have been joined by Ms. Crowder, so she'll be filling the Conservative slot in this case.

[Voices]

Oh, oh!

[The Chair, Conservative, Barry Devolin]

We're doing six minutes today, Ms. Crowder. Please go ahead.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Thank you.

I appreciate the committee's indulgence. I was speaking to the very important Bill C-21.

And I apologize to the witnesses for missing your presentations. Hopefully I'm not going to ask something that's been duplicated.

I went to the CMHC and INAC websites and took a look at some housing announcements that had been made. I know we're dealing with estimates, and of course in the plans and priorities in the estimates that came out there were not the specific numbers that I would have hoped to have.

In 2005-06, there was a commitment made to build 2,000 new housing units in Canada over three years, to renovate 400 existing housing units over two years, to service 5,400 lots over three years, and that section 95 housing will be available to build 4,400 non-profit rental housing units over three years. The residential rehabilitation assistance program would renovate approximately 1,100 housing units over two years. We know there was money allocated into trust funds.

That's one part of it. The second part of it concerned the money that went into northern housing. When the minister came before the committee, he talked about the fact that Nunavut allocates money on a priority basis, and so on, but a study of women's homelessness north of 60 was highly critical of the vulnerability of women, not just in Nunavut but north of 60 all the way across the country.

I wonder if you could do two things. In the first list of numbers I gave, could you update the committee on exactly how many units have been built since 2005? If you can't do that today, perhaps you could supply the committee with the number later or tell us how we can, on an ongoing basis, find out that information.

The second piece of it is this. Concerning the $300 million allocated to northern housing, my understanding is that it wasn't specifically just for aboriginal housing; it was $300 million for the north. Could you tell the committee how much of that money has been allocated for aboriginal housing? This money sunsets, and we know the housing needs haven't been met, so what's the next plan, for after the time the money sunsets?

That should take up the rest of my time.

[Sharon Matthews]

We can certainly get you the detailed numbers, and I think we can provide them to the committee. I had answered an earlier question, I think in your absence. I believe the numbers you were quoting for CMHC were related to the 2005 budget—