Public Accounts Committee on March 22nd, 2016

[Dominique Francoeur]

It will depend on the operational requirements. The adjustment that we continue to do right now is based also on the vacancy. We look at that and if there are surplus units that are not worth investing in, we continue to do that. For the future, it will depend on operational requirements.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much.

I would like to ask a few questions. Mr. Godin gave me the opportunity to do that.

What is the vacancy rate right now?

Mr. Christopherson asked, in regard to the kind of smoking gun, if you will, about people who are living in poor conditions. On the other side of that, do we have a high vacancy rate right now? What is the vacancy rate?

[Dominique Francoeur]

It depends on the site.

[The Chair, Conservative, Kevin Sorenson]

Let's say basically overall. In the report somewhere I read that you can bank on a 15% vacancy rate only because of renovations, fixing up, and repairs.

[Dominique Francoeur]

I probably have between 1,000 and 1,200 houses out of the 12,000 houses.

[The Chair, Conservative, Kevin Sorenson]

How many of them would be in the private sector?

[Dominique Francoeur]

None.

[The Chair, Conservative, Kevin Sorenson]

None?

[Dominique Francoeur]

This is just crown housing. The 12,000 units are managed by our crown housing.

[The Chair, Conservative, Kevin Sorenson]

But do we have right now housing out there owned by the private—

[Dominique Francoeur]

No.

[The Chair, Conservative, Kevin Sorenson]

All right.

You're trying, though, to understand what the housing is valued at based on the free market, based on the private sector. Is that correct?

[Dominique Francoeur]

Based on the economy, that's right, the private sector market in close proximity to whatever base.

[The Chair, Conservative, Kevin Sorenson]

So we're at 12,000. Why the big difference between the Leigh Fisher report? He comes out with this report saying 5,800; the brass in the military go crazy, and no, no, we need 12,000.

Was it a poor job directing those who were doing the study on exactly what was needed? It seems that it was such a massive difference.

[MGen Derek Joyce]

Thank you for the question.

I think that you hit on it there. One of the key issues, I believe, is that the underlying principles that were used in the Leigh Fisher report were not socialized, were not completely agreed to by the commanders of the army, navy, and air force. The actual study itself was not as scientifically rigorous as we're undertaking right now. As a result of that, when the report was presented to the commanders, there was a significant amount of hesitation, of concern, that we'd be reducing the portfolio too much. As a result of that we went out, as I mentioned, and consulted with the grassroots, with the base commanders of the army, navy, air force, and wing commanders to determine what their operational need is.

This time around, we're taking a rigorous scientific approach to it. We have agreed-upon principles that I referred to earlier so that we have a solid framework to move forward with the army, navy, and air force so that, when we come out of it, we're going to have a recommendation that we can develop a portfolio based on operational requirements, based on our succession planning needs, and based on other obligations we have to foreign militaries and to our ill and injured members. When we have this framework that we can move forward on, we're going to have a much better product, and a product that's going to instill confidence in the commanders of the army, navy, and air force that we're going to be able to take care of the families that we need to.

[The Chair, Conservative, Kevin Sorenson]

Part of the mandate of this committee is to make sure that the department, the bureaucrats, or whoever else there is delivering on the policy objectives are doing that. Our Auditor General stated it today. These are long range. I am thankful to the deputy minister who sent us a detailed action plan on the Auditor General's report, but it seems to me that some of these are so far down the road. As a committee what we're mandated to do is make sure that there is follow-through. That's why you're here today. If we were to ask you back here in six months.... I don't know if there would be any reason to ask you back in six months because the first report strategy is going to be the winter of 2016 into 2017, and then, depending on that, there's another one. It's going up to 2019. You're confident that it's going forward now, but the dates are so far in advance.

What are the benchmarks along the way that we can follow up on and say, “Okay, yes, they appeared before committee. They were there with the Auditor General. They gave us an action plan, but they basically said that they can't really do anything until they see that plan in spring of 2017”? There must be some way, though, that we can determine whether you're reaching certain short-term goals before then.

[Bill Jones]

Chair, thank you, and it's a great question.

I think, as we've tried to explain there—and I'll reverse the order this time—in terms of the property management issues and so forth, many of those changes are in place, such as the new information management system. I take the good advice from the Auditor General. Now we have to make sure that what we've populated that information management system with is good information, and so forth. We need to work on that. So perhaps in a year's time you could ask us, “Well, how is the information management system? Have you been able to rely on the information? How do you know it's good information, and so forth?” That's one issue.

In terms of the policy, in terms of in a year's time, will you be able to look at us and ask, “Well, have you been getting more funding upfront at the beginning of the year and that's allowed you to plan better? Tell me how you've been allowed to plan better, and so forth”. Those are some of the constraints the Auditor General is talking about. But in terms of the policy, I think in a year's time you'll be able to say, “You're on your way to that policy. Have you got the military operational requirements? Can you talk about those?” I think a member mentioned what are the pillars of this policy. It may not go through all of the government processes, and so forth, but at least you could try to give us some of the pillars or some of the main parts of that policy.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, Mr. Jones.

We'll now move back to Ms. Shanahan.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Thank you very much, Mr. Chair.

I'd like to ask now about the people, the tenants themselves, who they are and how they're chosen. It was mentioned that they come knocking at the door, and yet there's an operational requirement, so there must be some kind of criteria before people can apply for housing.

To make full disclosure, I lived in institutional housing myself, in a completely different operation, but I saw quite a few things, including behaviour that was not always consistent with the goals of the housing program, and that's human nature. If you have solved your housing problem in a way that's satisfying to you, why would you want to move? People tend to nest somewhere and to stay put.

The second thing around that is that I worked on a military base, at Saint-Jean-sur-Richelieu, for six months—actually doing financial education—in 2007-08. It was an honour and a privilege to be there. We were providing education to recruits and to officers. But let me tell you, even though it was not my role to counsel people financially, it became a huge concern and a huge need. It was clear that members had financial problems and were heavily in debt. Supporting a housing need would clearly go a long way towards helping that.

That's what I want to get to a little bit more: the personal aspect. I'm not for or against, but it goes to this pillar. Are the Canadian Forces in the business of providing social housing? That's a big thing, and if it is what's happening, then it needs to be properly provided for.

I want to ask a couple of technical questions. Is it intended to be temporary housing? If so, what is the turnover of tenants? What kinds of arrangements do they have with the agency? How are the market rental rates assessed, if indeed they are?

Again I would like to ask Mr. Ferguson to respond to that risk of a taxable benefit blowback, which could be serious for people who are already in financial difficulty.

[The Chair, Conservative, Kevin Sorenson]

I think there are two questions, one maybe for Ms. Francoeur and then the other for the Auditor General, from what I understood, Ms. Shanahan.

Go ahead.

[Dominique Francoeur]

Thank you, Mr. Chair.

The first question was about the people and how they are selected. They are not selected. This is strictly their choice. They have the option to go live in the economy, as we say, in the private sector, or to come and ask for a house from the agency locally. That's strictly their choice.

In terms of your technical question about how the rent is assessed, up to 2013, the rents were assessed by CMHC. That's not just for DND. It was the appraisal by the official appraiser, if you like, for all crown housing, including the houses owned by the RCMP, or Parks Canada, and so on. There was a whole process for how to assess them. We were working with CMHC identifying benchmarks on some typical houses and adjusting the rest of the portfolio. The rent was established that way, compared with the local market. That was the basis of assessing all the housing. It has to be in accordance with the market rate and according to policy.

Since 2013, when CMHC decided not to provide appraisal services anymore, we've been applying, starting with the values that CMHC provided at the time, the latest. We are now applying the consumer price index, which is the escalation factor that we use. We apply it across all the sites, and other departments are doing the same thing as an interim measure until we are told by Treasury Board—it's a Treasury Board policy—

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

These rental rates would be applied to people who are already in the units, so it's like a rental board type of thing.

[Dominique Francoeur]

Yes.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

What is the turnover? Do people ever leave?

[Dominique Francoeur]

In housing? Yes. Military families move around.