Evidence of meeting #51 for Public Accounts in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was communities.
A video is available from Parliament.
4:30 p.m.
Deputy Minister, Department of Indian Affairs and Northern Development
It puts it on a sustainable basis.
4:30 p.m.
Deputy Minister, Department of Indian Affairs and Northern Development
The 5% escalator is an increase that will be compounding year after year.
4:30 p.m.
NDP
Dennis Bevington NDP Northwest Territories, NT
Okay, but you agree that there wasn't a real increase in the amount that was added in November. It didn't amount to a real increase in the program.
4:30 p.m.
Assistant Deputy Minister, Northern Affairs, Department of Indian Affairs and Northern Development
I think it's important to distinguish...and I think the earlier questions help point to the distinctions. The original program was set for grants and contributions and subsidies of $53.9 million. As has been uncovered, we were spending slightly more than $53.9 million on the subsidy component. What the announcement in November pointed to was adjusting that base for the subsidy program up by $11.3 million to capture that and point it on a sustainable path for 5% annually as it moves forward.
The other components of the program—approximately $6 million—that went on were unaffected by that increase and are continuing to operate the program in terms of the claims process, the advisory board, the Health Canada contributions, and the other services.
4:30 p.m.
NDP
Dennis Bevington NDP Northwest Territories, NT
Mr. Ferguson, I know we've been leaving you out of this, but I'm curious.... I've heard this figure of 10% for administration of the program. Could you give me some reality on that?
4:30 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
I think the department can probably give you the more precise numbers. Certainly I think we have identified in paragraph 6.6 that the fixed budget at the time we were quoting those numbers was about $60 million, of which $53.9 was the subsidy component. Therefore, roughly the other $6.1 million would have been for the things that have been mentioned, including the administration.
4:30 p.m.
NDP
The Chair NDP David Christopherson
Thank you, time has expired.
Moving along, we go over to Mr. Falk again.
You have the floor, sir.
4:30 p.m.
Conservative
Ted Falk Conservative Provencher, MB
Thank you, Mr. Chairman.
I neglected before to thank the witnesses for coming to committee today, so thank you.
I'm going to get back to this whole idea of scrutinizing profit levels inside your retailers.
Ms. Swords, I'm going to direct a few questions towards you.
First of all, I see that your department has agreed with the recommendations of the Auditor General. Do you ever disagree?
4:30 p.m.
Deputy Minister, Department of Indian Affairs and Northern Development
I'd have to go back in time to be absolutely accurate about that. Usually the Auditor General has useful refinements and suggestions. The context is one where we're dealing with actually having to manage a program. Their context is different. Their context is looking at it from a different angle.
We agree with the suggestions. It's really a question of the timing of how we'll be able to do it. It will take a lot of public consultation to accomplish many of the things that are being suggested.
4:30 p.m.
Conservative
Ted Falk Conservative Provencher, MB
Okay.
Your submission here today states that from this April 1, in about eight days, the agreements signed with the retailers going forward are going to include clauses of transparency about information on eligible items as to profit margins and all that. Can you tell me and this committee a little bit about some of your conversations with the retailers on that clause? Are you getting some push-back or is there acceptance of that?
4:35 p.m.
Deputy Minister, Department of Indian Affairs and Northern Development
In fact, the existing contribution agreement requires that they provide all financial information and have it available for audit to determine compliance reviews. We always interpreted that to mean that they had to be prepared to provide information on profits. In fact, we did ask auditors to gather that information. It appears that when the auditors went out to gather the information, they didn't get documents that showed something and they weren't able to establish that. The records that some companies had were incomplete.
What we're doing is making our expectations absolutely clear and absolutely specific, which we thought we had before but apparently they need to be reinforced and made more clear. So far the companies that we've talked to have not had a problem with that. Their issue would be from a competitiveness point of view if we were making it all public, but actually telling a professional auditor the amount is not an issue.
4:35 p.m.
Conservative
Ted Falk Conservative Provencher, MB
Okay.
I'll tell you what my concern is. This program's intent is to drive down the cost of nutritional food for northerners. Is that correct?
4:35 p.m.
Deputy Minister, Department of Indian Affairs and Northern Development
That's right.
4:35 p.m.
Conservative
Ted Falk Conservative Provencher, MB
Under the proposed arrangement, as far as monitoring profit levels and so forth is concerned, you're really not creating an incentive for your retailers to drive down the costs. You're creating an environment where they are going to manage the profit, and that doesn't necessarily drive down the cost of the food.
4:35 p.m.
Deputy Minister, Department of Indian Affairs and Northern Development
Except that the information we gather for the revised food basket is based on the way it was under the food mail program, so what we're doing is tracking against what it was in the past.
If it starts going up and we know the subsidy is consistent and we know what hydro rates are and we know all the other factors, it will look like something's going on with profit margins, no question.
4:35 p.m.
Conservative
Ted Falk Conservative Provencher, MB
That was another question I had. Monitoring profit margins over time also means monitoring them from a historical perspective, not just going forward, right?
4:35 p.m.
Deputy Minister, Department of Indian Affairs and Northern Development
That's correct.
4:35 p.m.
Conservative
Ted Falk Conservative Provencher, MB
You're confident this will give you the tools to make sure we can continue to provide low-cost nutritious foods to northerners?
4:35 p.m.
Deputy Minister, Department of Indian Affairs and Northern Development
Northerners are concerned that there is a subsidy that's being paid, and they want to make sure it's being passed on. We're putting in place a way in which there will be compliance reviews that we hope will provide the kind of assurance that will satisfy the Auditor General, the people who are benefiting from nutrition north, and Canadian taxpayers that indeed the subsidy isn't being eaten up by retailers.
Retailers do have a tough time in a lot of the northern communities. It's not an easy environment. Costs are extremely high, and people don't always appreciate why costs have to be so high.
4:35 p.m.
Conservative
Ted Falk Conservative Provencher, MB
I see you also added ice cream, bacon, and Cheez Whiz. Is that due to demand, or is that because there's an element of nutrition in those things?
4:35 p.m.
Deputy Minister, Department of Indian Affairs and Northern Development
I'm smiling because you mentioned bacon. It was originally thought that bacon isn't nutritious and it was going to be taken off the list, and my reaction was that if you want eggs, you want bacon. This is Canada, guys.
I think the sense was that bacon actually is nutritious in some respects, in that it goes with a lot of nutritious food like eggs. Second, it's used a lot in the north apparently with some of the country foods to act as a lard or suet type of thing over your meat. I don't know about you, but my mother used to put bacon on top of cuts of beef that weren't very tender in order to try to get some fat out of it, so it's a complement to food that is nutritious.
The inclusion of Cheese Whiz was because of pure, absolute demand.