7.1       Health and Cost of Living

The federal government does need to recognize that children cannot learn effectively when they are crammed into over-crowded houses, lack basic health and dental services, and have no access to affordable, nutritious foods.[129]

Mary Lou Cherwaty, Northwest Territories Federation of Labour

According to witness testimony, the health and well-being of Aboriginal northerners is generally poorer than that of non-Aboriginal Canadians, especially in territories with large Aboriginal populations such as Nunavut. This view is supported by a wide body of literature and statistics on the subject. For example, as shown in Table 7.1, the life expectancy of those living in Nunavut, in which 85% of its population is Inuit, was more than 10 years lower than for the general Canadian population. Similarly, Nunavut has a much higher incidence of infectious diseases, such as tuberculosis, infant and adult mortality, and suicide.

Table 7.1: Selected Health Indicators

Source: Adapted from T. Kue Young and Peter Bjerregard, editors, Health Transitions in Arctic Populations, 2008, Table 3.2.

Although the various health inequalities experienced by Aboriginal northerners are likely due to a range of factors, many witnesses noted that socio-economic conditions play an important role in health status. For example, witnesses mentioned that, along with poor health outcomes, there are significant inequalities in terms of personal incomes and educational attainment, as presented in section 6.

Mary-Lou Cherwaty, of the Northern Territories Federation of Labour, drew specific links among poor health and the state of northern housing:

One of the most disastrous outcomes of [the] lack of housing is poor health. Nationally, eight out of ten Canadians had contact with a medical doctor in 2008. In NWT it was one half of that, and in Nunavut only one out of ten residents had access to a doctor. In both of the territories the infant mortality rates are far greater and the life expectancy of those who do live is much less than the national averages. Northerners, especially our aboriginal and Inuit peoples, are plagued with health problems that put them on a par with some of the poorest parts of the world.[130]

Overcrowded housing in the North can lead to a cycle of dependency, as it can impact health outcomes and social conditions, which then prevent participation in the economy. As stated by Thomas Berger in his 2006 Conciliator’s Final Report on The Nunavut Project:

Imagine the odds faced by a student attempting to do homework with 12 or 13 other people in the house (on average, half of them children), perhaps sleeping two, three or four to a room. Nunavut's climate dictates that these tiny homes will be shut tight against the weather for possibly eight months of the year; virtually every home has at least one resident smoker, and usually more; oil heating, particularly from poorly-constructed or maintained systems, may produce carbon monoxide and other pollutants.[131]

For the reasons expressed above, the Committee believes that the issue of northern housing, especially in Nunavut, warrants further consideration.

7.1.1   Housing

According to Statistics Canada, the incidence of dwellings with greater than one person per room, a generally accepted measure of overcrowding, is highest in more remote northern communities, where the proportion of the Aboriginal population tends to be higher. As shown in Table 7.2, regions outside the capital cities of the northern territories, as well as Nunavut in its entirety had by far the highest incidence of overcrowding.

Table 7.2: Incidence of Dwellings with >1 person/room

Source: Statistics Canada, 2006 Census.

The Canada Mortgage and Housing Corporation (CMHC) provides more comprehensive indicators of core housing need, based on Statistics Canada data from the 2006 Census. As shown in Table 7.3, core housing need is characterized by three factors: affordability (i.e. cost relative to before-tax household income), suitability (i.e. number of cohabitants per room), and adequacy (i.e. lack of need for major repairs).[132]

Table 7.3: Incidence of Core Housing Need, Yukon, 2006

Source: CMHC, Housing Conditions and Core Housing Need.[133]

Nunavut exhibits the poorest results among the territories in terms of overall core housing need, although this need is derived mainly from the suitability standard—i.e. overcrowding—rather than from affordability or adequacy. In fact, Nunavut actually ranks better than Yukon or NWT, or even Canada overall, in terms of affordability.

According to CMHC estimates, as shown in Table 7.4, over half of all housing in Nunavut is provided through subsidized, publicly-owned housing. In comparison, only 15% of housing in NWT is publicly owned, on average.[134] As median income per capita in Nunavut, including transfers from government, is lower than in other territories (see Table 7.4), it can be concluded that the relative affordability of housing in Nunavut is due to the high incidence of low-cost, publicly-funded housing. In Nunavut, public housing is managed by the Government of Nunavut through the Nunavut Housing Corporation (NHC).

Table 7.4: Gross Household Income and Public Housing by Territory, 2005

1.     Source: Statistics Canada, 2006 Census.

2.     Source: Yukon and NWT Bureau of Statistics, CMHC, Renting in Nunavut, Provincial/Territorial Fact Sheets; excludes government staff housing; “n.a.”—not available.

In May 2008, the Office of the Auditor General (OAG) of Canada released a report on the operations of the NHC. The report specifically examined the state of overcrowded housing in Nunavut, noting that:

• Through the Northern Housing Agreement, the federal government provided Nunavut with $200 million through Budget 2006 for new, affordable housing. According to the Agreement, the Government of Nunavut plans to use this investment to build about 725 affordable units across Nunavut by 2010-2011. This investment represents about 10 percent of the $1.9 billion that the Housing Plan identified as necessary.[135]

The federal government provided an additional $100 million to NHC through Budget 2009, which according to Lori Kimball, Chief Financial Officer of NHC, will be used to build 285 units. Ms. Kimball further stated:

• The NHC estimated in November 2009 that, based on the existing rate of population growth at that time, there is a need for 300 units a year to maintain status quo with the population; further stating that “at the rate of construction right now, we’re not even keeping up with the population growth, let alone the shortfall [of 3,000 units as identified under the Nunavut Ten-Year Housing Action Plan].”[136]

The May 2008 OAG report also identifies the issue of on-going maintenance of existing social housing as a matter of concern.[137] According to testimony by the NHC, some 60% of its base budget of about $180 million per year, funded through the Government of Nunavut, the Northern Housing Trust, and CMHC, is provided to the 25 Local Housing Organizations (LHOs) for the operation and maintenance of existing social housing stock in Nunavut. The NHC, in its testimony before the Committee, states that this includes some 4,200 housing units, which cost approximately $22,000 per unit to maintain annually. Given these costs, along with increasing housing supply and limited or decreasing annual funding,[138] Patsy Owlijoot, Acting President of the NHC notes that it will become increasingly difficult to maintain and accommodate affordable public housing in Nunavut:

[U]nprecedented construction is taking place across the territory; however, limited investments have been made to enhance the infrastructure of the community at the community level.[139]

A key concern highlighted in the May 2008 OAG report was the lack of coordinated systems in place through the NHC to ensure timely and effective delivery of social housing in Nunavut. To overcome this issue, the OAG recommended the following:

The Nunavut Housing Corporation should finalize its overall housing strategy as soon as possible. In the strategy, the Corporation should clearly describe how it plans to meet all Nunavummiut housing needs over the long term, through the delivery of existing programs and services. It should also incorporate these plans in its business plan.[140]

This OAG recommendation for housing need in Nunavut mirrors those provided in similar OAG audits for the housing corporations in NWT and Yukon. Although housing need shortages in NWT and Yukon are not as severe in comparison with Nunavut, they remain a concern for the Committee in relation to enabling economic development across the northern territories. The Committee therefore believes that the fulfillment of a coordinated housing strategy across the North is warranted. Therefore, the Committee recommends:

Recommendation 19:

To meet the continuing needs of housing in the North, the Government of Canada should consider extending new funding to the territorial and Aboriginal governments to significantly close the gap in core housing needs in the North.

7.2       Cost of Living

[The cost of living… forces residents to] make a choice between a poorer standard of living in their community here in Nunavut and a higher standard of living they can have by moving to southern Canada

Robert Long, Government of Nunavut

The cost of living refers to the monetary cost of sustaining a given standard of living in a given time and place. These costs tend to be higher for communities that are dispersed and isolated in comparison with compact, urban populations—measured by the cost of living differential.[141] As shown in Table 7.5, relative to Edmonton (a city generally used as a basis for cost-of-living comparisons with other regions across Canada), the cost of living differential indicates that it costs 1.5 times more to purchase a given basket of goods and services in Nunavut, 1.3 times more in Yukon and 1.2 times more in Northwest Territories. As well, per capita spending on transportation and communication is four to six times higher in the territories than the provincial average.

Table 7.5: Selected Measures of Dispersion, Transportation Costs, and Household Median After-Tax Income in the Territories, compared with the Provincial Average

Sources: Expert Panel on Equalization and Territorial Formula Financing, “Annex 2: Some Evidence of Expenditure Needs and the Costs of Providing Public Services in the Territories,” in Achieving a National Purpose: Improving Territorial Formula Financing and Strengthening Canada’s Territories, May 2006; and Statistics Canada, 2006 Census (note: numbers in brackets for median after-tax income denote ratio of income in territory relative to provincial average (* i.e. Edmonton, as the cost of living differential is based on that city)).

Comparing the cost of living with household median after-tax income in each territory, as shown in Table 7.5, it is found that the higher cost of living in the North is compensated through higher disposable incomes only in NWT, mainly for those living in Yellowknife,[142] while persons in Yukon and Nunavut tend to have somewhat lower after-tax incomes than in the comparator city of Edmonton.[143]

The following sections describe some of the major incentives offered by the Government of Canada to increase northern economic development by reducing the cost of living for northern residents, which can also address skills shortages in the North by facilitating labour mobility across provincial-territorial regions.

7.2.1   Northern Residents Tax Deduction

The Northern Residents Tax Deduction (NRTD) is included in Section 110.7 of the Income Tax Act, which is meant to attract skilled labour to northern and isolated communities by compensating for the additional costs of living in these areas. There are two income tax deductions available to residents who live in the northern zone, which includes the territories, for at least six months:

• A basic residency reduction of $8.25 per day per person;[144]
• An additional residency reduction of $8.25 per day for a person who maintained and lived in a dwelling,[145] if the person is the only one claiming the basic residency reduction for living in that same dwelling; and
• A deduction for employer-paid travel expenses for any number of trips made to obtain medical services, and up to two trips per household member per year for other reasons.

An economic development argument in favour of offering incentives for living and working in northern and isolated areas is provided by Marc-André Pigeon, of the Parliamentary Information and Research Service:

Employment in northern and isolated areas tends to be concentrated in... sectors of the economy... [that are] either seasonal or subject to cyclical fluctuations... Special tax treatment (i.e., tax incentives) relative to southern, populated areas can help the private sector in these areas recruit and retain skilled workers... The tax incentives may also encourage less skilled workers to continue living in these areas during the off-season or in an economic downturn.[146]

Although witnesses were generally in support of efforts to increase benefits under the NRTD in 2008, in which the federal government increased the residency deduction by 10%, from $7.50 to $8.25 in 2008, most agreed that more needs to be done to sufficiently address cost of living issues faced by people living and working in the North. In particular, witnesses who appeared before the Committee stated that the NRTD residency deduction rate should be increased.

For example, Mary Lou Cherwaty, of the Northern Territories Federation of Labour suggested that the NRTD be increased by at least 50% to counteract the effect of having to pay GST on the basics of life, which generally cost more in the North than in the rest of Canada.[147]

Various other organizations made similar suggestions on how to modify the NRTD to better reflect northern realities. The Nunavut Economic Forum, for example, proposed the following adjustments:[148]

• Provide a lump-sum adjustment for the cumulative effects of inflation since the introduction of the NRTD in 1987, with full indexation in future years;
• For work in Canada’s extreme northern regions, in recognition of the added costs of living, provide a top-up to the NRTD commensurate with the Isolated Post Allowance provided to federal government employees.[149]
• Provide enhanced NRTD benefits for low-income earners who receive less than the maximum residency reduction,[150] and to compensate those who do not receive employer-paid travel benefits,[151]
• Raise eligibility ceilings for federal government programs (e.g. GST Credit, Child Tax Benefit, etc.) for workers in the North to ensure low-income earners, who earn relatively more than workers elsewhere in Canada, continue to receive these benefits.
• Provide added NRTD benefits to equalize net earnings across north and south regions, as the progressive tax system leads to proportionately more taxes paid for northern workers, who have relatively higher incomes than for the rest of Canada.

The Committee believes that enhancements to the NRTD are required to more accurately compensate for the full costs of living and working in the North. Therefore, the Committee recommends:

Recommendation 20:

That the Government of Canada, to facilitate the development of the northern economy by attracting and retaining more skilled workers, consider enhancing the Northern Residents Tax Deduction to more fully compensate for the costs of living faced by individuals in the North, and consider a policy that provides universality to the travel portion of the Northern Residents Tax Deduction.

7.2.2   Nutrition North Canada Program

On May 21, 2010, the Government of Canada introduced the planned phase-in of Nutrition North Canada program as a replacement to the existing Food Mail program, which will end on March 31, 2011. The purpose of the new program is to make healthy food more accessible and affordable to Canadians living in isolated Northern communities. The new program, which is to commence in stages beginning on October 3, 2010, is being introduced following a review of the Food Mail Program that began in November 2006.

As announced by the federal government, the new program moves to a retail level model from the existing transportation subsidy, the goal of which is to “shorten the supply chain and reduce the handling of fresh foods destined for the North.”[152] The new delivery structure of the program is based mainly on an assessment of options provided through an interim INAC report, released in March 2009.[153]

The federal government plans on providing funding directly to retailers and wholesalers who already ship large volumes of food and goods to the North, based on weight of eligible foods shipped to each eligible community. According to INAC, moving to a retail subsidy “will enable [retailers] to negotiate the best possible prices for their consumers.”[154] In terms of accountability and transparency, INAC states that “the new program will require retailers to demonstrate the subsidy is being passed on to consumers” through a claims processing system to verify shipping invoices and documents, along with audit and financial controls.[155]

According to testimony provided by Patrick Borbey of INAC:

The new program model...will create an environment where market forces and competition will lead to a more effective and efficient means of transporting foods to eligible communities... INAC will provide the subsidy directly to retailers and wholesalers, who will make their own supply chain arrangements to ship food to eligible communities. This improvement will enable retailers and wholesalers to negotiate the best possible prices for their consumers and to maintain better quality control.[156]

According to INAC, the key features of Nutrition North Canada are:

• Revised eligibility list that gives priority to subsidizing the most nutritious perishable food at a higher rate, including commercially-produced country foods, and promotes more cost-efficient transportation methods;
• Retention of personal orders, to preserve a measure of competition for Northern retailers and provide consumers with flexibility related to special dietary needs;
• Cost efficient modes of transportation for non-perishable and non-food items; increased involvement of Health Canada through community-based health promotion initiatives;
• Creation of an Advisory Board to improve program governance; and
• Increased level of transparency for the subsidy resulting in accountability for the parties involved.[157]

In the lead-up to the creation of the new Nutrition North Canada program, various organizations expressed their concerns to the Committee in relation to the impacts that the changes in delivery mechanisms would have on northerners. Retailers such as Edward Kennedy, of the North West Company, stated that the creation of a retail subsidy, and its associated accountability mechanisms, will impose added costs and complexity to their operations due to tracking and reporting requirements.[158]

As well, following the announcement of the new program, some Aboriginal groups expressed the following concerns:

• That isolated northern communities will have less access to affordable nutritious foods due to the elimination of food entry points in larger urban centres. As Vuntut Gwitchin MLA Darius Elias explained: ”we have one retail outlet in Old Crow that provides food products... so access to a variety of foods that come from our capital city is the only realistic option.”[159]
• That the eligibility list of food items for the new retail subsidy is not sensitive to the traditional dietary practices of Aboriginal northerners, as food items that are used to prepare traditional meals such as bannock, which include lard as an ingredient, will not be eligible for the higher subsidy rate. As Jose Kusugak explained: “... foods such as bannock and pilot biscuits are staples of a well-rounded diet for many Inuit, especially while out on the land hunting and camping.”[160]
• As subsidies will only apply to country food produced commercially, traditional practices of Aboriginal northerners will be negatively affected, as any benefits through the direct trade of country foods among Aboriginal families would not be realized. As mentioned by Paul Kaludjak, President of Nunavut Tunngavik Incorporated, “I hope that subsidy will again enhance that possibility and help us get that country food to our relatives, where it's needed.[161]

In response to these concerns, INAC officials stated in general that they would be working with northerners, mainly through the Advisory Board for the Nutrition North program, to resolve any outstanding issues on the introduction of the new program.

As the new Nutrition North Canada program begins its operations, the Committee believes it is important for the Government of Canada to provide regular progress reports on its efforts to resolve outstanding issues expressed by various stakeholders. For this reason, the Committee recommends:

Recommendation 21:

That the Government of Canada, working with its partners and stakeholders, seek to resolve outstanding issues expressed by northerners on the delivery of nutritious foods under the new Nutrition North Canada program in a timely manner. Furthermore, as the new program becomes operational, the Government of Canada should produce a biennial public report that shows the impact of the new program on access to nutritious foods for northerners.