Disaster Financial Assistance Arrangements (DFAA)

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 (PS).

New Guidelines for the DFAA came into effect on January 1, 2008. They will apply to natural disasters which occur on or after that date. The previous Guidelines still apply for events which occurred on or prior to December 31, 2007, and for which Public Safety Canada is currently working with provinces and territories on finalizing payments.

Overview

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 provide the Government of Canada with a fair and equitable means of assisting provincial and territorial governments.

Through the DFAA, assistance is paid to the province or territory – not directly to affected individuals, small businesses or communities. A request for reimbursement under the DFAA is processed immediately following receipt of the required documentation of provincial/territorial expenditures and a review by federal auditors.

Since the inception of the program in 1970, the Government of Canada has paid out more than $3.4 billion in post-disaster assistance to help provinces and territories with the costs of response and of returning infrastructure and personal property to pre-disaster condition.

Examples of recent payments include those for the 2005 Alberta floods, the 2003 British Columbia wildfires, and the 2006 flood in Newfoundland.

Roles and responsibilities

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 - they are free to put in place the disaster financial assistance appropriate to the particular disaster and the circumstances, and the DFAA set out what costs will be eligible for cost-sharing with the federal government.

Public Safety Canada works closely with the province or territory to review provincial/territorial requests for reimbursement of eligible response and recovery costs.

Cost sharing

A province or territory may request Government of Canada disaster financial assistance when eligible expenditures exceed an established initial threshold (based on provincial or territorial population). For more information, please consult Appendix A.

Eligible expenses include, but are not limited to, evacuation 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. For further information on eligible expenses, please consult Appendix B.

The Government of Canada may provide advance and interim payments to provincial and territorial governments as funds are expended under the provincial/territorial disaster assistance program. All provincial or territorial requests for DFAA cost sharing are subject to federal audit to ensure that cost sharing is provided according to the DFAA guidelines.

Appendix A

Effective January 1, 2016, the initial threshold for all new events is defined as $3.03 per capita of the provincial population (as estimated by Statistics Canada to exist on July 1st in the calendar year of the disaster). Once the threshold is exceeded, the federal share of eligible expenses is determined by the formula in Table 3.

Table 3 - Cost-sharing formula for January 1, 2016 to December 31, 2016

Eligible provincial expense thresholds (per capita of population)

Government of Canada share (percentage)

First $3.03

0

Next $6.07

50

Next $6.07

75

Remainder

90

Example: For a disaster in a province with a population of 1 million where the total eligible expenses for responding to and recovering from a disaster are $20 million, the table below shows how eligible expenditures would be cost-shared through the DFAA.

Example for a disaster in a province with a population of 1 million

Eligible Expenditures

Provincial or Territorial Government

Government of Canada

First $3.03 per capita (100% provincial/territorial)

$3,030,000

Nil

Next $6.07 per capita (50%)

$3,035,000

$3,035,000

Next $6.07 per capita (75%)

$1,517,500

$4,552,500

Remainder (90%)

$ 483,000

$4,347,000

TOTAL

$8,065,500

$11,934,500


Effective February 1, 2015, the initial threshold for all new events is defined as $3 per capita of the provincial population (as estimated by Statistics Canada to exist on July 1st in the calendar year of the disaster). Once the threshold is exceeded, the federal share of eligible expenses is determined by the formula in Table 2.

Table 2– Cost-sharing formula post February 1, 2015
Eligible provincial expense thresholds (per capita of population) Government of Canada share (percentage)
First $3 0
Next $6 50
Next $6 75
Remainder 90

Example: For a disaster in a province with a population of 1 million where the total eligible expenses for responding to and recovering from a disaster are $20 million, the table below shows how eligible expenditures would be cost-shared through the DFAA.

Example for a disaster in a province with a population of 1 million
Eligible Expenditures Provincial or Territorial Government Government of Canada
First $3 per capita (100% provincial/territorial) $3 million Nil
Next $6 per capita (50%) $3 million $3 million
Next $6 per capita (75%) $1.5 million $4.5 million
Remainder (90%) $500,000 $4.5 million
TOTAL $8 million $12 million

For all events up to January 31, 2015, the initial threshold is defined as $1 per capita of the provincial population (as estimated by Statistics Canada to exist on July 1st in the calendar year of the disaster). Once the threshold is exceeded, the federal share of eligible expenses is determined by the formula in Table 1.

Table 1– Cost-sharing formula up to January 31, 2015
Eligible provincial expense thresholds (per capita of population) Government of Canada share (percentage)
First $1 0
Next $2 50
Next $2 75
Remainder 90

Example: For a disaster in a province with a population of 1 million where the total eligible expenses for responding to and recovering from a disaster are $20 million, the table below shows how eligible expenditures would be cost-shared through the DFAA.

Example for a disaster in a province with a population of 1 million
Eligible Expenditures Provincial or Territorial Government Government of Canada
First $1 per capita (100% provincial/territorial) $1 million Nil
Next $2 per capita (50%) $1 million $1 million
Next $2 per capita (75%) $500,000 $1.5 million
Remainder (90%) $1.5 million $13.5 million
TOTAL $4 million $16 million

The formulas will be indexed to inflation annually based on the consumer price index published by Statistics Canada. For consistency purposes, national-level data will be used to calculate inflation.

The revised formula, adjusted for inflation, will take effect on January 1 of every subsequent year, starting in 2016. The DFAA Guidelines will be updated annually during the month of February to reflect the revised formula.

Please refer to Interpretation Bulletin 5 for more information regarding the changes to the funding formula.

Appendix B

Examples of provincial/territorial expenses that may be eligible for cost sharing under the DFAA

Examples of expenses that would NOT be eligible for reimbursement



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