PACC Committee Report
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HOUSE OF COMMONS
Pursuant to Standing Order 108(3)(e), the Standing Committee on Public Accounts has the honour to present its
The Standing Committee on Public Accounts has considered Chapter 6 of the April 2003 Report of the Auditor General of Canada (Federal Government Support to First Nations — Housing on Reserves), and has agreed to table the following report.
According to Indian and Northern Affairs Canada (INAC), there are 612 First Nations communities across Canada. Most First Nations communities have fewer than 500 residents. In 2001, about 423,000 people were living on reserves (about 146,500 on reserves located in urban areas, 189,000 in rural areas, 15,500 in remote regions and 72,000 in special access areas).
In 2001, INAC estimated there were about 89,000 housing units on reserves to accommodate about 97,500 households — a shortage of 8,500 units. In addition, around 44% of existing units require renovations. In general, the housing stock deteriorates more rapidly on reserves; this is attributed mainly to substandard construction practices or materials, lack of proper maintenance, and overcrowding. Numerous studies over the last 20 years have noted that poor housing conditions negatively affect the health, education, and overall social conditions of individuals and communities on reserves.
Based on current First Nations demographic trends, about 4,500 new households are expected to be formed every year for at least the next 10 years. At current levels, federal support for on-reserve housing is expected to provide funding for the construction of about 2,600 new housing units per year and the renovation of about 3,300 existing housing units per year. If current demographic trends persist and federal assistance remains unchanged, high levels of overcrowding and substandard housing are expected to persist, given a combination of factors that include a growing population, rising construction and maintenance costs, limited access to non-government resources, and growing debt levels.
Socio-economic factors in First Nations communities also contribute to poor housing. Based on INAC data, the population growth rate is more than twice the national average, with more than half the population under 25 years of age. The unemployment rate is twice the national average rate, and on-reserve income levels stand at about 60% of Canadian norms. Alcohol and drug abuse, family violence, and suicide are also linked with poor housing conditions. Furthermore, increasing debt levels are impeding First Nations communities’ ability to build and renovate on-reserve housing. Housing-related debt, guaranteed by the Minister of Indian and Northern Affairs, has increased from $806 million in 1992-1993 to $1.25 billion in 2001-2002. 
Moreover, the legal status of on-reserve populations and unclear rules governing housing tenure, ownership and responsibilities impedes progress in improving housing conditions. Under the Indian Act, the Crown has title to the land, and collective ownership of land and housing is the most prevalent form of tenure on reserves. Mortgage and seizure of land and property located on reserves can be done only in favour of, or by, an individual Indian or Indian band. Access to private financing is limited, since mortgage financing cannot be secured by collateral under the provisions of the Indian Act. Thus, government subsidies are critical to assist in improving housing conditions on reserves.
INAC and Canada Mortgage and Housing Corporation (CMHC) are the two main federal organizations that assist First Nations in meeting their on-reserve housing needs. The Auditor General estimates that both organizations have provided about $3.8 billion for on-reserve housing over the last 10 years and both have contributed to the construction of about 29,000 new units and the renovation of 33,000 existing units, as well as delivering other forms of housing assistance.
In July 1996, the federal government implemented a new on-reserve housing policy. Its goal was to increase local accountability and control for on-reserve housing, improve program flexibility, and encourage more use of non-governmental resources to improve housing conditions. Under this new policy, First Nations are required to prepare and implement community-based housing programs and multi-year housing plans. These plans are to be used as the main instrument for coordinating resources, measuring progress, and strengthening accountability to the government and the community. They are also to provide the basis for obtaining federal financial assistance. By March 2001, about 400 First Nations communities had adopted the new policy and received a one-time contribution totalling about $240 million that was made available through a reallocation of funds within INAC. The communities that did not adopt the 1996 policy continue to operate under the old policy.
The audit found that both INAC and CMHC have not clearly defined what their assistance to First Nations is intended to achieve in terms of addressing the critical housing shortage; nor have they defined a time frame in which to achieve it. Furthermore, the housing programs and funding mechanisms are complex and need to be streamlined, with a clear assignment of responsibility for results. All parties involved need to reach broad agreement on their respective roles and responsibilities for on-reserve housing. Nor is Parliament receiving complete information about the housing situation on reserves and what is actually being achieved with departmental and CMHC funds. Better and more complete information on housing conditions, program performance and results is needed to assist INAC, CMHC and First Nations to make funding allocation decisions and to strengthen accountability to Parliament and First Nations communities.
The continuing crisis of on-reserve housing is a source of great concern for the Committee. Current efforts by the federal government to deal with the housing shortage on reserves have not met with the hoped-for success, nor have they been sufficient to contain the continuing deterioration of housing conditions found in First Nations communities. Regardless of the efforts and resources devoted to dealing with the long-standing housing problems, actual results have fallen short of expectations and progress remains elusive. Thus the Committee decided to meet on 5 May 2003 to consider the relevant issues concerning on-reserve housing and explore possible solutions. Mrs. Maria Barrados (Assistant Auditor General), Mr. Joe Martire (Principal) and Mr. André Côté (Director) were present for the Office of the Auditor General of Canada. Representing Indian and Northern Affairs Canada were Mrs. Joan Atkinson (Assistant Deputy Minister, Socio-Economic Policy and Programs Sector) and Mr. Gilles Rochon (Director General, Community Development Branch, Socio-Economic Policy and Programs Sector). Present for Canada Mortgage and Housing Corporation were Mr. Douglas Stewart (Vice-President, Policy and Programs) and Mrs. Deborah Taylor (Director, Assisted Housing Division).
There were many elements of on-reserve housing program performance that attracted the Committee’s attention. Most prominent was the question about assurances that on-reserve housing meets National Building Code standards. Government policy requires that all federally assisted housing built on reserves meet, as a minimum requirement, the National Building Code. Yet, according to the audit, both INAC and CMHC were unable to provide assurances that federally assisted units do comply with the Code.
According to the audit report, officials from INAC and CMHC claimed that First Nations are responsible for ensuring that new on-reserve housing complies with the National Building Code. While a number of processes already exist to provide inspection services, it is unclear to what extent these inspection services ensure that new units built on reserves do indeed meet the Code. Specifically, CMHC’s own position is the following: “CMHC is not a regulatory agency and has no mandate or authority to enforce building codes or standards. The responsibility to implement quality assurance measures and ensure code compliance rests with the First Nations. This is similar to off-reserve housing where local authorities such as municipalities, and sometimes provinces, are responsible for enforcement of building codes and standards. CMHC will continue to work to develop the capacity of the First Nations technical services industry. CMHC’s Native Inspection Services Initiative currently provides training, support, and job opportunities to strengthen the First Nations inspection capacity.”
However, when Committee members enquired which organization was ultimately responsible for inspections, Mr. Douglas Stewart stated the following: “With respect to new housing, during the construction period it is necessary for these houses to be inspected a number of times to ensure that they are meeting the requirements of the code. After they are built we periodically visit the band to look at the quality of those houses again. So we are always keeping track of the conditions of those houses. As well, we require financial statements from the band on a yearly basis. So we monitor the capacity of the band to maintain those houses regularly. So there is a fairly comprehensive monitoring program in place for the houses that we have funded as well as an inspection process for ensuring that they’re built properly in the first place.” According to the audit report, inspections are indeed being carried out; they are not intended, however, to certify compliance with the National Building Code but rather to assess the progress of housing projects for payment purposes.
Evidently, there is a need for all of the participating federal organizations to further clarify their respective roles and strengthen their capacity in guaranteeing that on-reserve housing meets the requirements of the National Building Code. This prompts the Committee to propose the following recommendations:
RECOMMENDATION No. 1
That Indian and Northern Affairs Canada and Canada Mortgage and Housing Corporation, in consultation with First Nations, develop systems, procedures and practices to strengthen their inspection and certification systems on reserves to ensure that federally subsidized units built on reserves do effectively comply with the National Building Code.
RECOMMENDATION No. 2
That Indian and Northern Affairs Canada and Canada Mortgage and Housing Corporation, in consultation with First Nations, prepare action plans to address the weaknesses in their inspection and certification systems and table these documents, with their implementation timetables, to the Public Accounts Committee no later than 31 March 2004.
Another area of concern was the lack of adequate information on spending and results achieved by on-reserve housing assistance. While both INAC and CMHC collect and use information provided by First Nations to manage on-reserve housing programs, they do not share that information with the other organizations, nor do they take necessary steps to ensure the quality of the information they use. INAC and CMHC do not normally use the collected information as a basis for allocating funds to First Nations. Moreover, INAC and CMHC have not defined a common basis for the collection, use and reporting of financial information provided by First Nations. The Committee is very concerned about this state of affairs. INAC and CMHC must take all necessary steps to ensure they have at their disposal quality information to manage and administer housing programs, make informed funding allocation decisions, assess the effectiveness and efficiency of the measures, and report the results achieved. However, there is no need for duplication by First Nations just because departments cannot integrate their informational requirements ( see Auditor General’s chapter on streamlining First Nation’s reporting to Federal organizations). Thus the Committee makes the following recommendations:
RECOMMENDATION No. 3
That Indian and Northern Affairs Canada and Canada Mortgage and Housing Corporation, in consultation with First Nations, develop and implement measures designed to better define, collect, use and share reliable information to manage on-reserve housing assistance.
RECOMMENDATION No. 4
That Indian and Northern Affairs Canada and Canada Mortgage and Housing Corporation prepare Action Plans coordinate their efforts to strengthen systems, procedures and practices involved in data collection, data quality control, retrieval and reporting of results. That these Action Plans be tabled, with their implementation timetables, to the Public Accounts Committee no later than 31 March 2004.
Under the 1996 housing policy, participating First Nations communities are required to prepare multi-year community housing plans that link housing funds with training, employment creation programs and economic development initiatives. These community housing plans were intended to be used to coordinate resources, measure progress achieved and report results to communities and government; they were also intended to support federal decision making on funding. However, it was found that INAC was not adequately reviewing the plans or monitoring their implementation. Moreover, these plans were not being used to coordinate and allocate federal funding. Even though INAC considers these community housing plans as planning tools, it continues to allocate and administer housing assistance based on older planning documents that were in place prior to the 1996 policy. In other words, the government introduced a policy requiring First Nations to develop community housing plans, yet INAC ignores those plans in making coordination and resource allocation decisions. This prompts the Committee to make the following recommendation:
RECOMMENDATION No. 5
That Indian and Northern Affairs Canada and Canada Mortgage and Housing Corporation, in consultation with First Nations, prepare Action Plans designed to strengthen systems, procedures and practices in order to ensure that community housing plans are used as intended. That these Action Plans be tabled, with their implementation timetables, to the Public Accounts Committee no later than 31 March 2004.
Roles and Responsibilities
Since the approval of the 1996 housing policy, there is still no clear agreement amongst participants as to their respective roles, responsibilities and obligations. INAC and CMHC still have not fully and clearly defined their roles, responsibilities and expected results, both for themselves and for the participating First Nations, with regard to addressing the housing needs of people living on reserves. This situation has led to the inconsistent application of housing assistance and caused confusion over which organization is responsible for the allocation of funds to regions. This prompts the Committee to propose the following recommendation:
RECOMMENDATION No. 6
That Indian and Northern Affairs Canada and Canada Mortgage and Housing Corporation, in consultation with First Nations, reach an agreement as to their respective roles, responsibilities and obligations regarding on-reserve housing. That the department and the agency prepare a joint document that outlines each organization’s role and responsibilities and that the document be tabled to the Public Accounts Committee no later than 31 March 2004.
Over the years, both INAC and CMHC have introduced a number of housing programs and funding mechanisms for First Nations communities. Despite the introduction of the 1996 housing policy and attempts at simplifying delivery of on-reserve housing, programs and funding have remained complex and cumbersome to administer and manage. When questioned on this matter, Mrs. Joan Atkinson stated that INAC has recently agreed with CMHC to enter into a Memorandum of Understanding to find ways to streamline their respective programming with regard to on-reserve housing, in order to reduce duplication and overlap between the two organizations. Mrs. Atkinson added that the availability of several programs and funding agreements, while complex, also offers a certain amount of flexibility in terms of how First Nations can fulfil their housing needs. Overall, the question remains: what is the right trade-off between achieving simplicity of administration and offering a variety of options in terms of housing assistance? The above prompts the Committee to propose the following recommendation:
RECOMMENDATION No. 7
That Indian and Northern Affairs Canada and Canada Mortgage and Housing Corporation, in consultation with First Nations, develop Action Plans and initiatives aimed at streamlining and simplifying federal on-reserve housing programs and funding mechanisms. That these Action Plans be tabled, with their implementation timetables, to the Public Accounts Committee no later than 31 March 2004.
The audit report found that INAC’s existing authorities governing the 1996 housing program lacked clarity. It found, moreover, that Treasury Board had not approved the program terms and conditions resulting from the new on-reserve housing policy, which differs considerably from the previous program authorities that Treasury Board had originally approved in the 1980s. INAC did not seek approval from the Board before implementing the changes called for in the new policy. For example, INAC decided to expand the range of housing costs eligible for subsidy funding without seeking prior approval from Treasury Board. Moreover, although the terms and conditions approved in the 1980s have not been rescinded, regional offices have received little guidance from INAC on the interpretation and application of these terms and conditions in the context of the new policy. The lack of guidance often results in inconsistent application of the policy and program funding. This situation is a source of serious concern for the Committee, and it urges the Department to take the following action:
RECOMMENDATION No. 8
That Indian and Northern Affairs Canada review and renew the authority structure of its 1996 housing policy and seek approval of its terms and conditions from Treasury Board. That the Department prepare a summary report on the progress of this initiative and present a copy to the Public Accounts Committee no later than 31 March 2004.
Information to Parliament
The audit found a number of important gaps in the information contained in the accountability documents presented to Parliament on program funding, costs, performance and results. A review of INAC’s Estimates documents for the past 10 years suggests that essential information is missing. In terms of reporting total housing expenditures, for example, existing figures contain a number of omissions that significantly understate the total federal contribution to on-reserve housing, which has been estimated by the Office of the Auditor General to be around $3.8 billion over the last 10 years. Even non-financial information, such as the number of housing units being built, does not provide a comprehensive picture of the housing situation on reserves. Moreover, INAC does not state the objectives of its housing activities or how its interventions will address the housing shortage. As a result, parliamentarians are not getting a complete picture of the housing situation on reserves, the amount of funding, and what is actually being achieved with INAC and CMHC funds. Thus the Committee proposes the following recommendation:
RECOMMENDATION No. 9
That Indian and Northern Affairs Canada and Canada Mortgage and Housing Corporation develop Action Plans and initiatives aimed at improving the information content of their accountability documents. That these Action Plans be tabled, with their implementation timetables, to the Public Accounts Committee no later than 31 March 2004.
Property rights and access to financing
Another issue that attracted the Committee’s attention was the question of property rights as these related to on-reserve housing and the financing of new housing. According to the audit report, on-reserve housing is fundamentally different and more complex than off-reserve housing. It is governed by a legal framework defined by the Indian Act, under which many usual housing tenure and financing practices may not be applicable. Activities such as mortgage financing for the acquisition of housing, renting an apartment, and the entire regulatory infrastructure that is taken for granted off reserves, simply do not exist to the same extent — if at all — for on-reserve housing.
For First Nation reserves, the Crown holds title to the land, and collective possession of land and housing is the most prevalent form of ownership. Under the Indian Act, properties located on reserves can be mortgaged only in favour of, or by, an individual Indian or Indian band. Since on-reserve properties or lands cannot be transferred to non-Indians, these properties cannot be used as collateral to secure loans and gain access to private financing. The available forms of financing for on-reserve housing are mostly through government subsidies and ministerial loan guarantees.
Considering the limits imposed by the current legal framework upon the financing and tenure options available to First Nations on reserves and that, according to Mrs. Atkinson, INAC funding was never intended to cover the full cost of building on-reserve housing, the Committee wondered how First Nations would ever be able to reverse their growing housing shortage if they were constrained in terms of owning and financing their own homes. Mrs. Atkinson told the Committee that INAC acknowledges the need to help First Nations communities to seek private-sector funding in order to achieve their housing needs. To this end, it makes available the ministerial loan guarantee program to leverage private-sector lending and give First Nations communities opportunities to develop creative lending schemes such as revolving loan funds. Furthermore, Mrs. Atkinson announced that INAC had allocated some limited funding this year to special initiatives that would allow a greater number of First Nations to experiment with developing new procedures and seeking long-term solutions to their housing needs. These measures would promote alternative forms of housing tenure that would, in turn, attract private-sector financing and encourage greater personal responsibility in owning and maintaining housing. The Committee believes that, given the inadequate on-reserve housing conditions, INAC and CMHC should to aggressively pursue initiatives that provide innovative solutions to secure housing financing and explore new tenure options for First Nations; such measures could allow them to alleviate the current housing shortage and ensure a better match between supply and demand in on-reserve housing. Thus the Committee recommends:
RECOMMENDATION No. 10
That Indian and Northern Affairs Canada and Canada Mortgage and Housing Corporation each prepare a document describing the special measures that the organization intends to introduce in order to develop and promote alternative housing tenure and financing options for on-reserve housing. That the document include the following information: annual budgetary allocation for each of these measures, their specific objectives, their expected performance benchmarks (outputs and outcomes) and the time frame within which the objectives are to be achieved. That each organization incorporate the document in its annual Performance Report and begin presenting the information for fiscal year 2003-2004.
Despite years of effort, housing conditions on reserves have shown little improvement and there is still a critical shortage of adequate housing to accommodate a young and growing population. The federal government, through INAC and CMHC, has spent $3.8 billion over a decade to deliver housing and related services to First Nations individuals and communities; yet, as measured by most socio-economic indicators, progress in improving on-reserve housing and living conditions has proved to be stubbornly slow and elusive. The current audit found many shortcomings in both INAC’s and CMHC’s delivery of on-reserve housing programs and services, particularly in the area of program performance, compliance with existing authorities, their respective roles and responsibilities to First Nations, and their reporting of on-reserve housing activities and results to Parliament. If these shortcoming are not addressed in a timely fashion, current housing and living conditions on First Nations reserves will continue to deteriorate, making any subsequent attempt at improving those conditions much more difficult and expensive to undertake. The Committee thus urges both INAC and CMHC to start implementing their respective Action Plans for improving their delivery of on-reserve housing programs. Delay can no longer be tolerated.
Pursuant to Standing Order 109, the Committee requests that the Government table a comprehensive response to this report.
A copy of the relevant Minutes of Proceedings (Meeting Nos. 27 and 36) is tabled.
JOHN WILLIAMS, M.P.
 Special access area — An area where a First Nations community has no year-round road access to supplies and equipment, a pool of labour, at least one financial institution, and government services. Source: Office of the Auditor General of Canada.
 Office of the Auditor General of Canada, Federal Government Support to First Nations — Housing on Reserves, Ottawa, April 2003, p. 3.
 Ibid., p.13.
 Office of the Auditor General of Canada, December 2002 Report, Chapter 1: Streamlining First Nations Reporting to Federal Organizations, Ottawa, December 2002. The document is also available on the Office of the Auditor General of Canada Web site:
NDP Minority Report — Judy Wasylycia-Leis, MP
April 2003 Report of the Auditor General of Canada, Chapter 4
The New Democratic Party is taking the unusual step of presenting this dissenting opinion because it feels the Committee’s report fails to accurately reflect the body of information pertaining to aboriginal housing presented to the Committee and fails to provide adequate direction for corrective action. The housing problems outlined in the Auditor General’s report are massive and ongoing. Their significance for the lives of the nearly half-million residents of reserve communities across Canada merits the strongest possible response.
From First Nations to the United Nations, only the Canadian government, stubbornly maintains that its housing policy is “working”. It did so again before Committee. That is worrisome and reflects the huge gap between government and First Nations partners which is the underlying theme of the Auditor General’s observations. Bridging that gap is fundamental to moving forward. As with the government’s recent misguided Aboriginal legislative initiatives, a critical examination of its approach to housing and its failure to meet its obligations is needed. The Auditor-General has pointed out that the core INAC housing budget has not increased since the early 1990s.
Substantive issues have not been adequately addressed. While the Committee’s report elaborates some of the issues raised with witnesses, it does not address concerns raised about the diverging views of government and First Nations over the extent of the housing problem. Missing from the Committee’s recommendation to clarify roles and responsibilities is the meaningful direction to reach a mutual understanding of the extent of the housing need as a basis for action. A renewed government commitment is needed to reach a mutual agreement on appropriate funding levels with targets and timeframes. The housing issue is complex and challenging and will remain unresolved without a common understanding of the basics.
The Auditor General also observed that departmental figures do not accurately reflect the severity of the housing situation and that the information currently provided to Parliament is inadequate. That the integrity and effectiveness of Parliament’s decisions are being compromised by this lack of reliable data is intolerable. A stronger Committee recommendation is imperative to underscore the urgency of correcting this situation.
Our minority report is also prompted by New Democrats’ wish to dissociate themselves from the Committee’s focus on property rights and new tenure options as a panacea to the housing shortage.
National Chief Fontaine, speaking in 1998 on the 50th anniversary of the UN Declaration of Human Rights summed up the position of land at the heart of First Nations identity this way:
To us, the land is basic to our existence. Between the land and us there is a relationship of a profoundly spiritual and even religious nature. Our communities have, and uphold, a complete code of rules of various kinds, which are applicable to the tenure, and conservation of land as an important factor in the production process, the foundation of family life, and the territorial basis for the existence of our people. For all these reasons, it is not possible to regard land as a mere possession or still less, as a commodity. The expropriation, improper use and abuse of, and the damage inflicted on our land are tantamount to destroying the cultural and spiritual legacy of our populations. Forcing us to hand over such land is akin to allowing us to be exterminated.
Further, in the extensive work of the Royal Commission on Aboriginal People it was observed that “Aboriginal rights are of a collective, as well as individual, nature. They are of vital importance to the culture and existence of the peoples concerned. Consequently, the Supreme Court has cautioned against the application of traditional common law concepts of property.”
Directing the government to develop “alternative” — and presumably individual — land tenure options is not only inconsistent with the Auditor-General’s report but venturesinto the area of fundamental aboriginal rights. It speaks to an assimilationist agenda not agreed to by the Committee — one that is a non-starter for the kind of trust so desperately needed to kickstart meaningful dialogue on housing.
It is our opinion that the Committee report does not adequately address this urgent social problem and actually diminishes and trivializes the strong tone and content of the Auditor General’s report.