Public Accounts Committee on April 27th, 2026

[Michelle Kovacevic]

No, we haven't offered any funding to Yänonhchia’, but we still support this approach, which aims to enable first nations to operate within the market itself, rather than just on the reserve. My team and I, as deputy minister, remain open not just to reviewing these projects, but to supporting them in the future. We agree with you that we still need to try new approaches to truly achieve results.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

With all due respect, I would remind you that we are in a situation where the Indian Act is still in force and where first nations are still required to live on reserves if they want to enjoy the minimum rights guaranteed by the Indian Act. That is the reality. You are telling us that Canada's strategy is now to ensure that first nations are stripped of their rights to live off-reserve and that local initiatives will not be supported.

Tomorrow, there will be an economic statement, which will include an update accompanied by a bill and the ability to provide additional funding to first nations. You are therefore confirming that Yänonhchia' will not be among the projects being funded by the government tomorrow.

[Michelle Kovacevic]

I can't speak for the government and tell you what its intentions are. I can only add that, at this point, I don't have any funding for this project. That's all I can say.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

[The Chair, Conservative, John Williamson]

Thank you very much, Mr. Lemire.

Up next is Mr. Kuruc.

You have the floor for five minutes, please.

[Ned Kuruc, Conservative, Hamilton East—Stoney Creek, ON]

I want to say thank you to all the witnesses for coming today.

My line of questioning will focus on the taxpayer dollar and the value for money, as I often tend to do.

Ms. Kovacevic, the Auditor General found that your department failed to implement over 50% of their recommendations. Her office gave recommendations, I believe between 2015 and 2022, to improve barriers in health; dental care; the big issue of safe drinking water, which has been in the news and headlines for the Canadian public for quite some time; and emergency services. All have not been successfully implemented, and yet, in that same period, your department increased its spending or budget by 84%.

On behalf of the taxpayer footing this bill, what was the money spent on, since it didn't provide the safe drinking water to communities that this Liberal government has made promises on for years?

[Michelle Kovacevic]

As I said earlier, I acknowledge that the targets in the reports were not fully met, but there has been improvement. The money that has been spent includes some significant increases in certain areas—infrastructure, child and family services, kindergarten to grade 12 education and non-insured health benefits. These programs have grown fairly impressively over the last 10 years, in large part because there's been huge demand. The non-insured health benefits program has grown over 10 years. I'm not sure what the baseline would have been, but today it's at over 983,000. There's a bigger draw on the program.

New programs have come into place. Jordan's principle, which is not a program but an initiative, has had enormous demands—over $2 billion a year, historically—in addressing services for first nations children on and off reserve who are falling through the gaps for certain health and social services. I mentioned children's services earlier in terms of the child welfare bucket, an enormous amount today. We're spending four times the amount, basically. Are we seeing results? Perhaps not as quickly as we'd like, but we are. Although there's still a significant number of first nations children in care, we're seeing that when they are in care, they are far more in the care of kinship, with family, as opposed to other homes. We're starting to see things like that.

For education, we co-developed with first nations a new formula in 2019. It was significantly more rich than the previous formula, which I don't think had been touched for 20 years before that. Meanwhile, that cohort of children has grown and is growing the fastest in Canada, so it's a catch-up, if you will, to what is actually needed. As I said earlier, this education program now is not just about paying the fee for teaching and for teachers; it's also about wraparound supports, language, after-school care, and now, for the first time since 2019, full-day kindergarten.

We've talked a lot about water today. Even there, 10,000 more homes are now connected to water systems because of the investments that have been made, and 670 public buildings now have clean drinking water.

There are results. The money has been well spent. There are all kinds of measures for auditing. All contribution agreements to first nations recipients do need to have audited financial statements. Those are posted, transparently, on the Internet website to ensure that the money goes where it needs to go.

Of course, for everybody in Canada, there have been inflationary pressures since COVID and the pandemic. A lot of money went to indigenous people and first nations on reserve; $600 billion went to all Canadians during the pandemic, similarly. Although inflation has come down today to normal levels, for many years it was at 5%, 4.9% or 7%. You will see that in the expenditures the department has posted.

So there are results, sir, and I would be happy to submit something to show that, but yes, we still need to go a fair way to demonstrate that the money will actually get to the targets put before us in the previous audits.

[The Chair, Conservative, John Williamson]

Unless you have a quick one, that's your time, Mr. Kuruc. I will come back to you or one of your colleagues shortly.

Now we're going to Mr. Osborne.

You have the floor for five minutes, please.

[Tom Osborne, Liberal, Cape Spear, NL]

Thank you, Mr. Chair.

I'd like to thank the AG. These reports are always valuable. They point to departments where improvements can happen. We can never underestimate the value of these reports.

I would like to thank the department as well. While these reports are not always easy on departments and staff, they don't always capture some of what's happening behind the scenes. They don't always highlight the work that's being done and the improvements that are about to happen. I'm going to give you an opportunity to speak to what's happening, which may not have been captured in the report, where improvements are under way. What can we expect?

[Michelle Kovacevic]

I won't repeat what I've said already for children's services and for education for first nations from kindergarten to grade 12, but perhaps there are some other things.

The Auditor General did note some deficiencies in our medical transportation reporting for non-insured health benefits. Since that time, we have in fact recognized that the data we were collecting wasn't enough, particularly in oral health and dental health stuff, but for medical transportation in general. We worked to correct that. Now, we have Treasury Board guidelines on how we're supposed to collect data and how we're supposed to report data so that the medical transportation policies are justified and validated by the data.

We also took that opportunity to look at the medical transportation data we were collecting. Realizing that it was largely manual, with all kinds of data input errors and clearly not fit for the time, and given that, out of the $2.3 billion we spend annually in non-insured health benefits, medical transportation at $800 million a year is a big one and is growing at 11%, we knew that “you know what, we need to make this automatic”. We put out an RFP, which we're currently in the process of doing, so that we can put in place a new medical transportation system that will be automatic. Folks will be able to see online in real time where their appointment and their medical transportation are, which obviously will lead to a more efficient spending of the taxpayer dollar, but much better care for the people using medical transportation to access needed health services.

We've made a lot of changes in health as well, particularly on nursing. Nursing is always under siege, especially in the 50 communities where the department delivers primary health care, nursing care. There's a nursing shortage in Canada. Almost half of those we hire are agency nurses.

That's just the stark reality, but subsequent to the Auditor General's recommendations, we have changed our workforce and who's working in these communities. It used to be registered nurses. Now, we have licensed practitioner nurses. We have nurse practitioners, and we have paramedics. Obviously, a multidisciplinary team approach makes hiring a little easier, in that there's more to choose from, but it also delivers better care. The last I checked, I think that of all our remote communities, around 76% of them, now have access to multidisciplinary care.

I could go on, but maybe I'll stop there.

[Tom Osborne, Liberal, Cape Spear, NL]

The 84% increase in the budget has been talked about. You did identify some of the tangible improvements we're seeing in health care—emergency management infrastructure, for example—as a result of that.

What else needs to happen outside of the increase? We can't just keep throwing money at a problem. What else needs to happen within the department? Talk about some of the gaps that are there and the focus the department is having on addressing some of those gaps.

[Michelle Kovacevic]

I would say that the biggest gap is, again, we, too, fall victim, even in our accountability structure, field by field. Medical transportation is so much money. What's the outcome? Water is so much money. What's the outcome? What's the outcome for children's services?

At the end of the day, most chiefs or leaders will say they're responsible and interested in the overall health, well-being and success of all the members of their community, and all these are but components. Let's have a social determinants' approach to health, if you will.

One of the things is how we measure—and I think we need to do more of it. We have lots of indicators. In fact, in some contribution agreements, there are as many as 4,000 data fields that potentially could be sought or required. One thing for sure is we have to look at what we're asking for via all our contribution agreements and reports, and whether it makes sense. It might be more useful to have fewer reports and 10 good indicators, so that we can validate what we're doing as opposed to this murky spot check that we're doing well on this tiny, isolated thing or so many indicators that we can't correlate to anything.

One of the things that the chief financial officer and I are implementing this next year is a process, and we're going to engage partners on how we can seriously look at streamlining the reporting that we're seeking from communities.

Then the other thing I would say is that where we have good examples, where we can compare what's happening and the public dollars that are going on reserve to other like communities, we should really look at continuing that data. We have something called the community well-being index that uses 2021 census data. It measures community well-being on four axes—education, income, labour activity and housing. They're pretty core—you would think that those are our four keys areas. It allows us to compare those measures on reserve to non-indigenous communities. The gap obviously between the two is large, but since 2021, we are already seeing that gap narrowing a little bit. We know something is working.

I also think that having the reporting at a level of, overall, “what this money is buying in this community” is pretty impressive. I hope in the next census that we continue so that we have a longitudinal pattern of the albeit step-wise successes, but the progress we are making on affecting outcomes for the people we serve.

[The Chair, Conservative, John Williamson]

Thank you. That is your time.

We'll begin our third and final round, consisting of five members with various times.

Ms. Kusie, you'll begin for five minutes, please.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much, Mr. Chair.

Madam Hogan, I'm wondering what prompted you to conduct a follow-up study on these audits.

[Karen Hogan]

This report was issued last year, which marked the middle of my mandate. I felt it was important to take a step back and see if any progress had been made on something that my predecessors had really spent a lot of time talking about.

Sheila Fraser had found, at the end of her 10-year mandate, that the progress made on indigenous matters was unacceptable. Then Mike Ferguson, partway through his mandate, said it was “beyond unacceptable”.

I didn't want to get to the end of 10 years and find another word to add in front of “unacceptable”. I felt it was important to change the dialogue and talk about really having a change and fundamentally taking a different approach, because strong words weren't driving that change.

One of the things I found throughout this follow-up was that there's been a lot of activity, and I know there have been many questions today about progress. There absolutely has been progress, and there's been a lot of activity, but it's about taking it all the way through. Designing policies around medical transportation, so you know how to store and collect data is great, but during our audit we found that the department couldn't show us that they were actually following their own policies.

There is a lot of activity around what dental services should be added to the dental care program, but there are no real changes to the services in the program. It's about taking it all the way to the end. I think that's linked to one of our barriers, which is about making sure you define what service levels are, and then following through on that commitment. We've only held the department to commitments it has made over the years, not to perfection.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

This is what I find repeatedly astounding. In any corporate measure, someone is put against the expectations when it comes time for their evaluation. There are real, serious consequences, in other sectors, if they do not meet the objectives their entity set out for them. We see this continually as a theme of this government. As someone who has passionately studied your reports for four years now, there is a continued theme of your report recommendations not being followed, prompting another evaluation from you. I keep hearing the words in my mind from the most recent ArriveCAN report about how the government need only follow and apply the recommendations. However, here we are seeing another occurrence where this did not happen.

What advice would you give this government?

More specifically, I have always had such compassion for the bureaucrats—having spent 15 years at Global Affairs Canada—because it's their masters the ministers who are fundamentally responsible, yet these seem to be incapable of following through on a long-term mandate to successfully deliver services for Canadians, or to hear from our most valuable and most vulnerable.

What advice do you have for the ministers and the government on a global scale?

[Karen Hogan]

That's a very broad question. I will bring it back to what we're studying: programs for first nations.

One area we highlighted was sustained management attention. I would say that this needs both the political and the public service being sustained on this. It is about making sure there is funding long term and that everything is followed through to the end.

I want to acknowledge that the department has done lots of activities and made lots of progress in certain areas, but it's about taking it all the way through to improving outcomes. That is where we're always seeing things fall short. Many drinking water advisories were lifted, but, while they ebb and flow, there are at least nine communities that have had drinking water advisories for over a decade. Most communities would not stand for that. We see this in many urban centres when a water main breaks. There's a very quick fix to make sure a community or a large city centre gets access to safe drinking water quickly.

We should be seeing that same sustained focus and attention in first nations communities.

[The Chair, Conservative, John Williamson]

Thank you very much.

Next, we have Ms. Yip.

Go ahead, please, for five minutes.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Thank you.

Thank you, Ms. Hogan, for this important follow-up report.

This is for Ms. Kovacevic.

Has the funding formula been updated for the maintenance of water infrastructure?

[Michelle Kovacevic]

I'm going to turn that directly over to Mr. Bergeron.

[Curtis Bergeron]

It was updated in 2022-23 based on successive budgets in 2019 and 2020. The formula now reflects 100% of costs for operating and maintaining water and waste-water facilities.

This formula also takes into consideration modernized indices, including city centre or remoteness. It takes into consideration all the needs of and requirements for operating a water treatment plant, including operator salary, electricity, parts, chemicals and everything required throughout the whole water treatment plant and distribution system.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Does it also include future investments in water infrastructure?

[Curtis Bergeron]

This is specifically around operations and maintenance.

The upgrading of assets condition is done through successive targeted budgets, as the deputy mentioned regarding budget 2025. There is $749 million this fiscal year to upgrade, expand and build new water treatment plants, extend distribution systems and ensure that they're meeting Health Canada guidelines for clean drinking water.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Bill C-61, the first nations clean water act, was halted by prorogation. Does the department have a commitment to clean water legislation for this session?

[Curtis Bergeron]

The Prime Minister announced at the Assembly of First Nations general assembly back in December the intention of the government to introduce first nations clean water legislation this spring.