Parliamentary Committee Notes: Status of the Disaster Financial Assistance Arrangements, Including its Mitigation Provisions
Date: May 9, 2022
Classification: Unclassified
Fully releasable (ATIP)? Yes
Branch / Agency: EMPB / PS
Proposed Response:
- The increased scope and severity of disasters have led to significant increases in post-disaster, cost-shared, federal assistance to provinces and territories through the Disaster Financial Assistance Arrangements (DFAA).
- Currently, there are 64 open event files with an estimated federal liability of $7.23 billion approved under the DFAA.
- The rise in disaster events highlights the need to find innovative and sustainable ways to mitigate against disasters and to strike a better balance of responsibility for costs.
- To this end, the DFAA program offers build back options to reduce the vulnerability of damaged structures to future natural disasters. These can include, for example, mitigation measures undertaken within specific repair projects, as well as relocation projects and innovative recovery solutions.
- The Government of Canada is committed to enhancing infrastructure so as to improve its disaster resilience. For this reason, together with other government departments, Public Safety Canada is supporting the Deputy Minister Committee on Rebuilding Public Infrastructure. This work is responsive to the Atmospheric Flooding event in British Columbia last Fall, but will enable findings and lessons to permeate our future programs nationwide.
- Public Safety Canada is currently undertaking a review of the DFAA program’s terms and conditions and exploring mechanisms that would further reduce disaster risks, including measures to promote the use of the mitigation enhancements as part of the DFAA
Financial Implications
- In 2022-23, main estimates funding for the DFAA is $100 million.
- Budget 2021 provisioned $1.9 billion over 5 years, starting in 2021-22, to Public Safety Canada to support provincial and territorial disaster response and recover efforts.
- Furthermore, through the Economic and Fiscal Update 2021, the Government of Canada provisioned $5 billion, for its share of British Columbia’s recent natural disaster response and recovery costs under the DFAA, e.g., the wildfires, flooding and landslides that occurred in 2020 and 2021.
- It is worth noting that unforeseen circumstances, for example a new disaster, 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 $6 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 government 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 places 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 $3.38 per capita, effective January 1, 2022 (based on the 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 DFAA also includes cost-share components for mitigative activities undertaken to reduce vulnerability to future emergencies:
- Mitigation Enhancements: Any measure undertaken within specific repair or reconstruction projects of damaged infrastructure that will reduce the vulnerability of the infrastructure to future natural disasters (e.g., elevating structures, using water-resistant building materials instead of drywall, etc.) The maximum amount eligible for cost sharing under this provision is limited to 15% of an event's total eligible recovery costs associated with repairs and reconstruction of damaged infrastructure.
- Innovative Recovery Solutions: Any solution aimed at reducing and preventing damages from recurring to the impacted infrastructure (e.g., buyout and permanent removal of a structure on vulnerable properties, constructing a new bridge in a different location, relocating a road, etc.). The maximum amount eligible for cost sharing under the DFAA is limited to the cost to repair or replace the infrastructure. In addition, any portion of the event's unused 15% mitigation enhancement amount may be used to cover costs above the maximum amount.
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.
A review of the program is being undertaken and aims to ensure that the program remains effective for the coming years.
Contacts:
Prepared by: Douglas May, Senior Director, Emergency Management Programs, 613-697-0526
Approved by: Trevor Bhupsingh, Assistant Deputy Minister, Emergency Management and Programs Branch, 613-993-4325
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