2021-2022 Main Estimates – Increase to Funding under the Disaster Financial Assistance Arrangements (DFAA)
Date: February 4, 2021
Classification: Unclassified
Branch / Agency: EMPB / PS
Proposed Response:
- The increased scope and severity of disasters has led to significant increases in post-disaster, cost-shared, federal assistance to provinces and territories through the DFAA.
- The rise in disaster events, particularly flood events, highlights the need to find innovative and sustainable ways to mitigate against disasters and to strike a better balance of responsibility for disaster costs. Currently, there are 60 active events with an estimated federal liability of $2.6 billion approved under the DFAA.
- In light of the increase in the magnitude of this federal liability, Public Safety continues to work with Finance Canada and the Treasury Board Secretariat to identify ways to effectively manage funding requirements under the DFAA in the future.
Financial Implications:
In 2021-22, the main estimate for the program is $445.75 million. This includes the Department’s annual appropriation of $100 million, as well as $345.75 million in funds re-profiled from 2018-19 to 2021-22.
- Based on estimates provided by the provinces and territories in fall 2020, the forecasted expenditures for the DFAA in 2021-22 total $499.47 million. Examples of anticipated expenses in this fiscal year include payments of ~$211 million to the province of British Columbia for a 2017 wildfire event, and ~$68.78 million to the province of Manitoba for a 2014 rainstorm event.
- It is worth noting that unforeseen circumstances, for example a new disaster or a last minute amendment to the timing and amount of a province’s payment request, can drastically impact the DFAA’s budget envelope.
Background:
In the event of a large-scale natural disaster, the Government of Canada provides financial assistance to provincial and territorial governments through the Disaster Financial Assistance Arrangements (DFAA), administered by Public Safety Canada. When response and recovery costs exceed what individual provinces or territories could reasonably be expected to bear on their own, the DFAA provides the Government of Canada with a fair and equitable means of assisting provincial and territorial governments.
Since the inception of the program in 1970, the Government of Canada has contributed more than $5.967 billion in post-disaster assistance to help provinces and territories with the costs of response and of returning public infrastructure and personal property to pre-disaster condition.
The provincial or territorial governments design, develop and deliver disaster financial assistance, deciding the amounts and types of assistance that will be provided to those that have experienced losses. The DFAA place no restrictions on provincial or territorial governments in this regard. However, the DFAA also set out what costs will be eligible for cost-sharing with the federal government.
A province or territory may request Government of Canada disaster financial assistance when eligible expenditures exceed $3.27 per capita, effective January 1, 2021 (based on provincial or territorial population). Eligible expenses include, but are not limited to, rescue operations, restoring public works and infrastructure to their pre-disaster condition, as well as replacing or repairing basic, essential personal property of individuals, small businesses and farmsteads.
The percentage of eligible costs reimbursed under the DFAA is determined by the cost-sharing formula clearly outlined in the arrangements and is up to 90% of eligible expenditures.
The Government of Canada may provide advance, interim and/or final payments to provincial and territorial governments as the reconstruction of major infrastructure proceeds and funds are expended under the provincial/territorial disaster assistance program. All provincial or territorial requests for advance and interim payments are subject to risk assessments and final payments are subject to federal audit to ensure that cost sharing is provided for eligible expenditures according to the DFAA guidelines.
Financial Implications
In 2019 the Treasury Board of Canada Secretariat approved Public Safety Canada’s request to re-profile $345,750,181 from fiscal year 2018-19 funding to fiscal year 2021-22. This amount would help offset the forecasted liability in that year, which at the time the program estimated a budget deficit of $434 million. The request to re-profile funds was primarily the result of a province that was forecast to submit a request for a final payment in 2018-19, but without much notice submitted a request for an interim payment instead.
Contacts:
Prepared by: Douglas May, Senior Director, Emergency Management Programs, 613-990-3110
Approved by: Trevor Bhupsingh, Assistant Deputy Minister, Emergency Management and Programs Branch, 613-993-4325
- Date modified: