Question Period Note: Disaster Financial Assistance Arrangements Modernization

o The Disaster Financial Assistance Arrangements (DFAA) helps provinces and territories manage large-scale natural disasters by cost-sharing eligible recovery expenses. Since 1970, Canada has contributed $9.6 billion, with $5 billion in outstanding liabilities. Provinces administer their own aid programs and may request federal support. A modernized DFAA launched April 1, 2025.

 For over 50 years, the Disaster Financial Assistance Arrangements program has supported provinces and territories in managing large-scale natural disasters.

 On April 1, 2025, Public Safety Canada launched a modernized Disaster Financial Assistance Arrangements after extensive collaboration with partners and an expert review.

 The updated program enhances recovery outcomes, resilience, and risk reduction, empowering provinces and territories to develop more flexible funding and tailored solutions for impacted communities. It also expands post-disaster supports, including mental health services and small business aid.

 This forward-looking initiative aims to reduce long-term disaster costs and impacts, ensuring Canadians have access to the help they need.

 Public Safety Canada continues working closely with partners to ensure a smooth transition and a safer, more resilient future for all. 

Comprehensive Review (2020–2023)
o Most extensive review in DFAA history, involving internal research, external expert panel, and province or territory (PT) engagement.
o PTs contributed through reports, interviews, surveys, and direct input to the expert panel.
o Final report of the DFAA expert Panel “Building Forward Together” released in April 2023.

Consultation with Provinces and Territories
o Spring 2023: Federal, Provincial and Territorial (FPT) and Ministerial meetings introduced new expense-based program format; no objections raised.
o Fall 2023: Draft cost-share levels shared—response (high), reconstruction (medium), support (highest), mitigation (variable); PTs did not object.
o April 2024: Final cost-share percentages released with new Terms and Conditions.

Program Modernization
o Announced in Budget 2023 to incentivize mitigation and risk reduction.
o Extensive PT engagement from 2023–2024 via online platforms, workshops, bilateral meetings, and written feedback.
o Modernized program launched April 1, 2025.

Key Changes
o Shift to objectives-based framework with 5 funding streams:
o Response
o Homes & Small Business
o Resilient Infrastructure
o Relief & Recovery Supports
o Disaster Mitigation

o Greater flexibility for PTs to design inclusive, cost-effective recovery programs.
o Expanded mitigation funding for structural and non-structural projects.
o Enhanced support for individuals post-disaster, including mental health, non-profit delivery, and updated small business criteria.

Transition Support
o New centralized IM/IT system launched to streamline administration and eliminate paper-based processes.
o In-person training (Oct 2024–present) delivered to 340+ recovery professionals; Nunavut pending.
o Ongoing invitations for bilateral meetings and customized training.

Next Steps: Canadian Centre of Recovery Excellence
o Established to guide communities in integrating resilience into recovery.
o Supports PTs with policy, data standardization, and best practices.
o Offers tailored assistance, especially for smaller jurisdictions.

If Pressed
Q1- Why was the Disaster Financial Assistance Arrangements review undertaken?
 Since 1970, the Disaster Financial Assistance Arrangements has paid out more than $9.6 billion, with over 60% of these costs paid out in the last 10 years. The average costs of disasters in Canada have also risen more than 1,250% since the creation of the program.

 Recognizing this trend, in 2021, the Minister of Emergency Preparedness was tasked with leading a comprehensive review of the Disaster Financial Assistance Arrangements and proposing amendments to ensure the program remains responsive to the evolving risk landscape and better invest in resilience to reduce the impacts of repeated disasters on Canadians.

 To support this effort, the Minister convened an expert Advisory Panel in early 2022 to provide recommendations on how the Disaster Financial Assistance Arrangements could remain a relevant, effective, and sustainable tool for recovery, risk reduction, and resilience in the face of increasingly frequent and severe disasters.

Q2- How were provinces and territories engaged in the Disaster Financial Assistance Arrangements modernization process?
• Provincial and Territorial partners have been actively engaged throughout the Disaster Financial Assistance Arrangements modernization process, contributing to policy development, program design, and multiple rounds of feedback.

• In 2023, the Canadian Council of Emergency Management Organizations recognized this engagement as an excellent model of collaborative consultation.

• The modernized program addresses 35 of 36 provincial and territorial recommendations for the Disaster Financial Assistance Arrangements from 2021. Recent endorsements from Manitoba and the Northwest Territories further highlight the positive reception of these efforts.

Q3- If pressed on overall funding levels in the modernized Disaster Financial Assistance Arrangements:
• The modernized Disaster Financial Assistance Arrangements has a net projected increase in federal funding of approximately 3-5% per year.

• The net increase in overall funding comes from the program’s significant increased funding for building back better, risk reduction, and strategic mitigation. Jurisdictions that choose not to build back better or mitigate their highest risks will leave federal funding on the table that is intended to increase the resiliency for the whole-of-society and, over time, to reduce the costs and impacts of future disasters for all levels of government.

• Estimates show that with full uptake of mitigation and resilience funding following a disaster, a subsequent disaster could be expected to cost 65% less.

Q4- If pressed on wildfire coverage under the Disaster Financial Assistance Arrangements:
 When disaster costs exceed what a province or territory can reasonably bear on their own, the modernized Disaster Financial Assistance Arrangements covers costs for wildfires which directly threaten communities, also known as wildland urban interface fires.

 Under the modernized program, response costs such as repairing, restoring and rebuilding uninsurable infrastructure, improvements to damaged infrastructure or new community or region-wide mitigation projects, costs related to recovery and resilience planning, and recovery supports like legal, financial, or mental health counselling can be cost shared under the Disaster Financial Assistance Arrangements to improve the resilience of communities that have suffered a disaster.

 With this new program, mitigation funding is available for any eligible disaster type under the Disaster Financial Assistance Arrangements. Therefore, a provinces or territory that suffers a disaster stemming from a natural hazard, such as a wildfire, and is eligible for Disaster Financial Assistance Arrangements funding, can use the Disaster Financial Assistance Arrangements to increase the resilience of the affected communities.

Q5- If pressed on the interplay between the Disaster Financial Assistance Arrangements and Flood Insurance:
 The Disaster Financial Assistance Arrangements program provides federal cost sharing to provinces and territories for uninsurable costs from large-scale natural disasters, including evacuations, emergency response, and infrastructure repairs.

 While Canada develops a national flood insurance program, residential flood damages in high-risk areas remain eligible under Disaster Financial Assistance Arrangements.

 Once affordable flood insurance becomes available, these residential damages will no longer qualify for federal cost sharing. However, other supports—such as cleanup, restoration of transportation routes, psychosocial services, and emergency aid—will continue to be eligible.

 Provinces and territories will decide whether to continue offering assistance for insurable flood damages without federal support.

 This transition ensures continued support for Canadians while encouraging long-term resilience and risk reduction through insurance and improved disaster recovery systems.

Q6- If pressed on how will this affect current provinces and territories that are currently waiting for funding/approval:
 For disasters which occurred before April 1, 2025: provinces and territories awaiting funding or approval for these events will continue under the old Disaster Financial Assistance Arrangements terms, with no changes to cost-sharing or eligibility.

 For disasters which occurred on or after April 1, 2025: These will be assessed under the modernized Disaster Financial Assistance Arrangements, and be subject to the new modalities and terms and conditions of the program.

 Transition support: Public Safety Canada is actively assisting provinces and territories with training, tools, and bilateral meetings to ensure a smooth shift to the new program, especially for lower-capacity jurisdictions.
Q7 - If pressed regarding the Parliamentary Budget Officer report projecting the federal costs of Disaster Financial Assistance Arrangements over the next decade.
 Natural hazard disasters are increasing in frequency, cost and severity affecting more people and communities across the country, as we see reflected in the cost analysis in the Parliamentary Budget Officer report.

 The Parliamentary Budget Officer report provides insight into some of the realities of Canada's changing disaster landscape, however, there remains a great deal of uncertainty when forecasting the costs of disasters into the future.

 There is an opportunity to address the rising costs of disasters through investments in risk reduction and resilience, and the federal government remains committed to making these critical investments. The modernized Disaster Financial Assistance Arrangements program is one way the federal government will provide more funding for disaster risk reduction, community resilience, and supports for disasters survivors.