Public Accounts Committee on March 19th, 2024

[The Chair, Conservative, John Williamson]

I call this meeting to order.

Welcome to meeting number 108 of the House of Commons Standing Committee on Public Accounts.

Today’s meeting is taking place in a hybrid format, pursuant to the Standing Orders. Members are attending in person in the room and remotely using the Zoom application.

Pursuant to Standing Order 108(3)(g), the committee is meeting today for its study of the 2024 reports 2 to 4 of the Auditor General of Canada.

I would now like to welcome our witnesses. From the Office of the Auditor General, we have Karen Hogan, Auditor General of Canada; Mélanie Joanisse, director; David Normand, principal; and Glenn Wheeler, principal.

I appreciate you all coming here today.

I know, Ms. Hogan, that you have opening remarks. The floor is now yours. Thank you.

[Karen Hogan, Auditor General of Canada, Office of the Auditor General]

Thank you, Mr. Chair.

I am pleased to be here today to discuss three reports that were just tabled in the House of Commons.

I want to begin by acknowledging that we are gathered on the traditional, unceded territory of the Algonquin Anishinabe people.

This area is also known as Ottawa. I express my gratitude and respect to all indigenous peoples who have contributed to shaping and safeguarding the beautiful lands they call home throughout Canada.

With me today are Glenn Wheeler, David Normand and Mélanie Joanisse, who were responsible for the three audits.

Two of the audits I will be discussing today focus on programs supporting Canada's indigenous peoples. The third, which I will cover first, examined the design and implementation of the national trade corridors fund. This fund is intended to improve the movement of goods across the country by strengthening the network of roads, rails, airports and seaports. Fluid and resilient transportation systems help foster trade through imports and exports, and contribute to Canada's economic health.

We found that Transport Canada did a good job of designing and implementing the fund. The department gathered and used evidence on the status and performance of transportation corridors to identify bottlenecks and other fluidity constraints. This evidence-based approach supported the selection of projects that would address known gaps in infrastructure.

However, because of weaknesses in Transport Canada's monitoring and reporting on performance, it was unclear whether projects were having the intended impact. Infrastructure programs like the national trade corridors fund take years to produce results. This time factor makes it all the more important to have a robust system to track performance so that Transport Canada can show the extent to which the funds have contributed to improving the fluidity of Canada's transportation infrastructure.

Turning now to our audits of programs intended to support Canada's indigenous peoples.

The first focused on housing in first nations communities. We found that Indigenous Services Canada and the Canada Mortgage and Housing Corporation had made little progress in supporting first nations to improve housing conditions in their communities.

ISC and the CMHC are responsible for working with first nations to meet their housing needs by 2030. Over the past five years, they have spent close to $4 billion to build new homes, repair existing ones and increase first nations' capacity to manage housing.

We found that in 2023, 80% of needs were still not met. The percentage of homes that need major repairs or replacement remains largely unchanged, despite the effort that has gone into building and repairing homes.

In 2021, the Assembly of First Nations estimated that $44 billion was needed to improve housing in first nations communities, and the needs continue to grow.

We found that the department and the corporation had not prioritized communities with the greatest needs. First nations communities with the poorest housing conditions received less funding than communities of the same size with better housing conditions.

Mould in first nations homes is a long-standing health hazard, and we found that Indigenous Services Canada and the Canada Mortgage and Housing Corporation still do not know the magnitude of the problem. In fact, the department and the corporation are currently not following the strategy they developed in 2008 to address this problem, and neither could explain why the strategy was no longer in use. There is no plan in place to tackle this issue.

This is the fourth time since 2003 that we are raising the alarm about unsafe and unsuitable housing in first nations communities. Adequate housing is a basic human need. After four audit reports, I can honestly say that I am completely discouraged that so little has changed and that so many first nations individuals and families continue to live in substandard homes.

The findings in our last audit report on the first nations and Inuit policing program are equally concerning. Overall, we found that neither Public Safety Canada nor the Royal Canadian Mounted Police, RCMP, worked in partnership with indigenous communities to provide community-based proactive policing services. They did not collect enough information to know whether the program was achieving its intended results, including whether the requirements set out in policing agreements were being met.

We last audited this program in 2014, 10 years ago, and again this time, we found critical shortcomings in how it is being managed. While funding has significantly increased over the last 10 years, we found that $13 million of funds related to the 2022-23 fiscal year went unspent. This is concerning in the context of a program intended to support the safety of indigenous communities.

We found that Public Safety Canada did not have an approach to allocate funds equitably to communities. The department told us that it relied on the provinces' or territories' readiness to fund their share of the program and on past funding received by communities to determine the amounts allocated.

We found a lack of consistent engagement and partnership with communities. For example, many agreements are automatically renewed with terms of 10 to 15 years. This means that engagement with communities can be deferred for a very long time.

We also found that because of staffing shortages over the past five years, the RCMP has been unable to fully staff the positions for which it receives funding under the program's agreements. This leaves first nations and Inuit communities without the level of proactive and community-focused policing services they should receive.

Time after time, whether in housing, policing, safe drinking water or other critical areas, our audits of federal programs to support Canada's indigenous peoples reveal a distressing and persistent pattern of failure. The lack of progress clearly demonstrates that the government's passive, siloed approach is ineffective and in fact contradicts the spirit of true reconciliation. A fundamental shift is urgently needed to drive significant progress in providing proper support to indigenous families and communities across the country, especially those most in need, which currently are too often left behind.

By failing to take meaningful action to achieve a full transfer of authority and determination of first nations, the federal government's approach is not aligned with delivering on its commitments to support the self‑determination of Canada's indigenous peoples. It is important to understand that these are not legacy issues that live in the past. They are ongoing and perpetual, with direct consequences that people experience on a daily basis, and they stand in contradiction to Canada's commitments to truth and reconciliation.

This concludes my opening remarks. We will be pleased to answer any questions the committee members may have.

[The Chair, Conservative, John Williamson]

Thank you.

You've given us, again, a lot to consider, Ms. Hogan.

We will turn now to our first round, with Mr. Nater for six minutes, please.

[John Nater, Conservative, Perth—Wellington, ON]

Thank you, Chair.

Thank you, Auditor General Hogan and your team, for joining us this morning and for these audits.

I want to pick up on something you mentioned in your opening comments and in the report about the 2008 mould strategy, which is apparently no longer being followed. You mentioned that neither department could indicate for what reason that stopped being followed. Do you have an indication of when that seemed to occur? Do you have any speculation as to why that simply ceased to happen?

[Karen Hogan]

As I mentioned, we've done four audits on housing in first nations communities, and a recommendation to develop a strategy to address mould issues came from our 2006 audit. When we did a follow-up in 2011, we saw that the mould strategy wasn't being completely followed, so it has been like this since then.

Our audit started in 2018. You need this strategy and a plan to know how to address the problem, but what's even more concerning is that neither the department nor the Crown corporation could tell us the magnitude of the problem. If you want to properly finance, fund and support communities to address it, you first need to understand the magnitude, gather that information and then have a plan to fund it and tackle it.

[John Nater, Conservative, Perth—Wellington, ON]

To follow up on that exact point, you noted in paragraph 2.29 that only one of the regional offices was collecting data on this matter. Going beyond that, how much of a concern is there about data collection more generally? Is there a concern that data, not just on mould but also on other issues, isn't being collected from communities across the country?

[Karen Hogan]

A common finding in both the policing report and the housing report is that data isn't being gathered. When you contrast it with the national trade corridors fund report, which we also released today, you will see data was used to make well-informed decisions. That's really what's needed to help support first nations communities.

Capacity is another place where Indigenous Services Canada had not been gathering data. It was only recently that they surveyed many communities to find out if they had a housing manager who could help them to understand and manage their housing issues across their community. Very few communities responded, and even then it was clear that smaller communities were less likely to have a dedicated resource or the capacity to apply for funding, even to help identify the extent of problems like houses in need of repair or mould in those communities.

[John Nater, Conservative, Perth—Wellington, ON]

To that end, paragraph 2.37 notes, “Overall, we found that, among communities of similar sizes, communities with the poorest housing conditions received less targeted funding than those with better housing.” That certainly seems contradictory to what one might expect or hope to see in that situation.

Would you attribute how funding gets allocated to the lack of capacity, the lack of a housing manager and the lack of infrastructure on the ground?

[Karen Hogan]

The way the program is structured is that a first nations community has to apply for funding. If you're less likely to have a housing manager or have awareness of funding programs, you're not going to apply and you're going to receive less.

We actually targeted and looked at some of the smaller communities with fewer than 100 housing units, and we found that when a community had self-assessed that more than 75% of its homes were in need of repair or replacement, those communities on average received less money than those that had better housing conditions. That kind of analysis of their data is not being done by Indigenous Services Canada, and the department doesn't really understand the needs of all the communities. A well-informed decision starts with gathering data from everyone and then making your funding allocations accordingly.

[John Nater, Conservative, Perth—Wellington, ON]

I certainly think a theme we're seeing throughout the report is the need to gather data.

I want to follow up on using old information and old data. In paragraph 2.33, you note, “We found that the [CMHC] relied on data from Canada’s 2001 Census in its formulas for allocating annual funding to its regional offices for its First Nations new home and repair loan programs.” The year 2001 was certainly a long time ago, and it's somewhat concerning that data from so long ago was being used to inform decisions in 2023 and when this audit was completed in 2024.

This is a two-part question. First, why do you see it as a concern that such old data is being used? Second, could you speculate as to why CMHC may have been using data from over 20 years ago to make its decisions on this matter?

[Karen Hogan]

CMHC uses a funding allocation program to allocate funds to their regional offices and provinces. The 2001 census data hasn't kept up with changes in the population for many years.

When CMHC updated their analysis by using the most current 2021 census data, they discovered that some provinces had been underfunded over the years while other provinces had been overfunded over the years. The Crown corporation couldn't tell us why. One of the likely reasons is that it would mean perhaps removing historical funding given to a community in order to fund another based on population growth or people having moved to different provinces versus others.

I think it's an excellent question to ask the Crown corporation if you have the opportunity.

[The Chair, Conservative, John Williamson]

Thank you. I'm sure we will.

Turning now to Mr. Chen, you have the floor for six minutes, please.

[Shaun Chen, Liberal, Scarborough North, ON]

Thank you, Mr. Chair.

Thank you, Auditor General, for this report.

In your report, you indicate a number of facts and findings, one of which is that there was “no meaningful improvement in housing conditions in First Nations communities.” For the period between 2015 and 2022, you indicated that “the percentage of homes in need of major repairs decreased from 20.8% to 19.7%”, but the homes that “needed to be replaced increased from 5.6% to 6.5%.”

This, to me, would indicate that there are more homes prohibitive to repair than there are those that need general repairs, which are, at least percentage-wise, receiving more repairs.

Can you shed further light on why there are more homes that cannot be replaced, yet there seem to be more homes that are receiving repairs?

[Karen Hogan]

I might ask Mr. Wheeler to add on regarding the split.

What I would offer up first is that back in 2021, the Assembly of First Nations, with Indigenous Services Canada, developed an estimate of what it would cost to repair and replace homes to help close the housing gap in first nations communities. They didn't have a plan, however, over the years to determine how they would fund that.

They've spent $4 billion over the last five years, but without having a plan, you don't know how you're going to finance this investment going forward and make the decision on allocating your funding for repairs and renovations.

I don't know, Glenn, if you'd like to add anything to that.

[Glenn Wheeler, Principal, Office of the Auditor General]

Just as a point of clarification on exhibit 2.4, I think a better way to look at it would be to look at the variation between 5.6% and 6.5% in terms of housing needing to be replaced. Those houses are beyond the point where undertaking repairs would be economically feasible and would allow people to continue to live in the homes. The 20.8% to 19.7% change reflects housing in need of major repair. Those houses can still be lived in, but they need major repairs to roofs, flooring or foundations. It doesn't make sense to compare them. They're two different things.

However, there's a larger issue of why you don't see an improvement, perhaps. Even though, for example, over 11,000 new houses were built or were in the process of being built in the period in which we undertook our audit, as time goes by, houses that are in need of major repairs but are not repaired can no longer be lived in.

There are a bunch of different things happening that lead to the trends you see in our report.

[Shaun Chen, Liberal, Scarborough North, ON]

Thank you.

The Auditor General makes a number of recommendations in this report. I could not help but note in reading the report that the responses from the various departments were in agreement with the Auditor General's recommendations, with the exception of the recommendation found in paragraph 2.39, which reads, “Indigenous Services Canada and the Canada Mortgage and Housing Corporation should work with the First Nations communities with the poorest housing conditions to ensure that they receive the support they need to improve housing conditions.” The report indicates here that the response of each entity was “Partially agreed”.

Auditor General, are you satisfied that there is only partial agreement with your recommendation, and could you tell us a bit more about what you heard back?

[Karen Hogan]

Obviously, no, I am not satisfied that they have partially agreed. We think our recommendation would improve the situation for first nations communities within the current policy framework.

The department and CMHC disagreed with us because they feel the program is one of applying for funding, so it is up to communities to identify their needs and then submit an application to receive the available funding. It is our view that when you have a capacity issue and some communities are unable to apply, those that are likely in the greatest need or have the poorest housing conditions aren't accessing the funding. Our recommendation was about improving access and creating awareness that funding exists to help support communities to address mould problems or to replace or build homes.

It isn't about being passive. It's about recognizing that some communities need different supports and might need to be aware of a program and apply for it, whereas other communities are more self-sustaining and can apply without the support of the department. It's about tailoring that approach, instead of just saying, “Well, the program is an application one. Please identify your needs and apply.”

[Shaun Chen, Liberal, Scarborough North, ON]

Based on your experience and the expertise you have developed in examining a wide range of different programs across different government departments, what types of initiatives could the departments employ to be more proactive and reach out to communities that don't have the capacity to access funding for housing? Could you elaborate with your knowledge on this area?

[Karen Hogan]

First off, be aware of which communities aren't applying or don't have the capacity. If you look at many of our previous reports—whether they be about water, emergency preparedness or, here, housing and policing—they're all about programs that require communities to apply. For example, the CMHC has 13 different housing programs, so a community has to figure out which of the 13 it may be eligible for and apply individually to each of them. That is very complex if you don't have a dedicated housing manager.

In my view, the approach the government is using is passive and siloed, and it hasn't been working over the last two decades. It's been 20 years that we have been looking at housing. It's time for a fundamental shift in how Indigenous Services Canada approaches these types of programs with communities if the goal is really to support them in self-determination. They need the knowledge, the awareness and the authority to have access to the funding. Some communities just need more help in knowing about the programs that exist.

[The Chair, Conservative, John Williamson]

That is your time, Mr. Chen.

Ms. Sinclair‑Desgagné, you now have the floor for six minutes.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Thank you, Mr. Chair.

I'd like to thank the Office of the Auditor General for its three reports. It's no surprise that two of them are devastating.

Madam Auditor General, as was mentioned a little earlier, we've seen little to no progress for two decades now. However, the situation on reserves is more than alarming. Earlier, you briefly shared your views with us. Basically, what's the problem? Is the federal government incompetent? Is it a lack of will? Is it true that the approach needs to be adapted, but in concrete terms, how can it be adapted to resolve the situation quickly?

[Karen Hogan]

I don't think current policies and practices have kept pace with the evolution of the federal government's commitments. Existing policies predate commitments to reconciliation and self‑determination. Fundamental changes need to be made to the structure of the programs.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

When you talk about policies, are you talking about the Indian Act, which was created in 1876, and the promises that were made at the time of Confederation, or are you talking about more recent policies?

It's true that promises were made more recently, but they're still about 10 years old. In addition, there are strategies dating back to 2008 that have not been followed. People don't even know why.

It integrates a number of things, whether it's public safety or housing construction, and it speaks to a deeper issue, which is what I'm getting at. What is the federal government doing or not doing? What is it deciding not to do when it should be done? Is it lack of competence or lack of will? What's the problem?

[Karen Hogan]

When it comes to the design of the housing programs or the first nations and Inuit policing program, the policy dates back to 1996. Transport Canada said that the policy was outdated and that it wasn't flexible. Departments are aware that their internal processes and policies aren't working. Staying passive by saying that we're going to support communities when it comes to self‑determination, but that we're going to wait for them to make requests when they don't have the capacity or the skills to do so amounts to almost a breakdown in the dialogue aimed at determining the exact needs of the communities.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

You mentioned earlier that there should be a change, because we can see that it's not working. No one here is going to dare say that it's going to end up working. There's a well‑known quote that says only fools do the same thing over and over again, hoping for a different result. That's the case this time.

You talked about the overall change in approach that needs to be made by the federal government. Can you tell us more about that?