Canada's 'last resort' recovery fund should make communities more disaster-resistant, critics say
CBC
In the wake of Canada's worst wildfire season on record, provincial and territorial governments are turning to the federal government for help with covering the costs of rebuilding.
The federal Disaster Financial Assistance Arrangement program (DFAA) is a decades-old cost-sharing program which helps fund disaster recovery. But with climate change making natural disasters more frequent, the government is looking to overhaul the program.
The program covers damage done to private homes that isn't covered under private insurance, along with damage to public buildings and infrastructure and evacuation costs. Ottawa provides the money but it's administered by provincial and territorial governments.
The federal government's share of payments issued under the DFAA is determined by a formula that sees it pay a larger portion as expenses increase. Ottawa bears no burden if the damage amounts to less than $3.61 per capita in the affected province. The federal government's share can rise as high as 90 per cent for events causing damage amounting to more than $18 per capita.
Since 1970, Ottawa has contributed nearly $8 billion to disaster recovery through the DFAA. According to Public Safety Canada, 73 per cent of that money was paid out in the last decade.
Ottawa provided more than $1 billion to B.C. to deal with the aftermath of the 2021 floods that displaced thousands of people and destroyed farmland in the province's Lower Mainland.
The federal government is also providing DFAA funding to Quebec and the Atlantic provinces to cope with the effects of post-tropical storm Fiona. A spokesperson for Public Safety Canada said those cost estimates are still being assessed.
Ralph Pentland, a retired federal public servant who worked on programs similar to the DFAA, said that unless Ottawa leverages the program to encourage the construction of more resilient infrastructure, it should expect to pay higher bills following future disasters.
"We could just go on and we could let these things increase and increase forever and we could have the federal government bail everybody out as a means of last resort, [but] that's going to be very expensive," he said.
Pentland's comments echo concerns flagged by an expert panel report on the DFAA written last year. The panel said the DFAA does little to discourage building in high-risk areas — particularly those prone to flooding.
"Municipalities may be disincentivized to provide adequate risk information to property owners or developers, especially for high-yield taxable properties such as those on waterfronts, because the financial responsibility for damages falls to the DFAA when insurance is not available," the panel's report reads.
"It's really a perverse incentive in a way," Pentland said. "Why do they bother building in the right place if somebody's going to come and bail them out?"
Residents are set to start returning to Yellowknife on Wednesday and attention will soon shift to assessing the damage caused by fires that forced thousands to flee the territorial capital weeks ago.
The Insurance Bureau of Canada (IBC) says standard homeowner and tenant insurance policies cover damage caused by fires. But last month, Prime Minister Justin Trudeau said that Canadians likely will find it harder to get insurance in future due to climate change.
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