CHAPTER III
THE HOUSING CRISIS

INTRODUCTION

As soon as our study began, it became quite clear that the Canadian military is facing a housing crisis. Military personnel who live on bases in single quarters or in Permanent Married Quarters (PMQs) must contend with old and deteriorating accommodations that are among the worst to be found in this country. Millions of dollars will be needed to repair or replace this housing and further delays in finding solutions will only make the problem worse. Other personnel find accommodation on their own outside of bases, but like those living in single quarters and PMQs, they have to deal with not only steadily increasing housing costs, but also dramatic differences in rents and in the price of homes from one region of the country to another. Their disposable income, not to mention their quality of life, can be significantly reduced simply because they have to move to another region.

Efforts have been made in recent years to cut costs and provide more stability for families by reducing the number of times military personnel have to move during their careers. However, the training and operational requirements of military life still make it necessary for them to move more often than most Canadians. Indeed, unlike other citizens, they have little choice as to when or where they move. When posted, they have to leave for a new base and failure to do so has important repercussions for their careers. In short, frequent moves are an inevitable part of military life, but they still generate considerable stress, especially for growing families that are uprooted again and again. When in addition to this, military personnel and their families must deal with deteriorating housing on bases and high housing costs in some regions and isolated bases, they are not surprisingly very frustrated with the situation. This report and other initiatives will not resolve every problem associated with the housing issue, but the major ones, especially those concerning housing on bases, have been clearly identified and the need now is for quick and decisive action.

IMPROVEMENTS IN SINGLE QUARTERS

The value of providing housing on bases has been the subject of debate for many years. Some maintain that because military personnel move frequently from one base to another and can be absent for long periods of time while on peacekeeping or training missions, housing must be available on bases for those who have little time to find housing in the surrounding community or who cannot afford it. Many prefer to live on a base with other members of the military in a close-knit community that can help their families if the necessity arises. Others argue that military personnel should not isolate themselves from the rest of Canadian society by living on bases and should instead live in the surrounding community. Indeed, many in the military prefer to find their own housing in the community and provide a different environment for their families.

However, there will always be a need for some housing on the site of a base such as transient quarters for personnel during exercises or training operations lasting a few weeks or months. There are also barracks or single quarters for single members of the military who have to or prefer to live close to their units. Many of the single members in these quarters are young recruits who in most cases are new to the region to which they are posted. When they arrive at the new base, they may have little time to find rental accommodation outside the base and may have difficulty finding affordable rents in high cost regions. The problems created by the absence of single quarters, especially for Non-Commissioned Members, are already evident in places like Ottawa where all single quarters have been demolished and Toronto where they hardly meet the demand. People who would prefer to live in such quarters do not have the option to do so or must find other accommodation while waiting for space to become available. In short, there is still a need to provide single quarters on or near bases, but in a period of reductions in the defence budget, this fact can be overlooked or ignored. The Committee believes that there must be a commitment to provide single quarters, so we recommend:

21. That the Department develop and adopt a policy to ensure that personnel at all bases and major facilities have access to well-maintained single quarters. An annual progress report should be made to SCONDVA.

It is essential to properly maintain the single quarters because neglect in the past explains to a large extent the bad condition of most of the existing quarters. Some of the shortcomings have already been addressed by the construction of completely new facilities at some bases such as Edmonton and Petawawa. Although not without problems, the facilities we visited are a major improvement compared to the old single quarters still in place in Kingston and Esquimalt which by today's standards can only be called dilapidated. The Committee also toured the quarters of the cadets at the Royal Military College in Kingston where some renovations have recently been completed. However, there is still considerable work to be done not only at the College, but also at military bases across Canada to ensure that single quarters are modern, comfortable, and well maintained. Comments from personnel concerning leaky roofs and cramped space confirm the impression that some single quarters have been neglected for too long and need more than cosmetic repairs.

The disparities in the quality and condition of single quarters from one base to another should also be eliminated so that all members of the Forces can have clean, well-designed, and efficiently operated single quarters whether they are in the navy, army, or air force. Indeed, the days when only army units were stationed on an army base or only naval personnel served on naval bases have long gone. Today, some air force personnel serve on army bases and cooks can be at a naval base one year and at an air force base the next. Personnel should have good quality accommodation no matter what kind of base they are posted to. With this in mind, the Committee recommends:

22. That a common standard for the design and operation of modern single quarters at all bases and stations of the Canadian Forces be established and that facilities not meeting this standard should be upgraded or replaced as soon as possible. SCONDVA should receive a progress report within a year.

The needs, attitudes, and lifestyles of many of the residents of single quarters, especially young recruits, are in many ways different from those of people who joined three or four decades ago. The number of female members in the Forces has also increased over the years. These factors have influenced the way single quarters are designed and administered, but there are still improvements to be made. Although military life still implies some constraints, individuals expect a certain level of privacy and personal security just like any other Canadians and the design and administration of single quarters must reflect this. The Committee therefore recommends:

23. That departmental planners and contractors must give a high priority to the protection of the dignity, privacy, and safety of individuals in the design and administration of single quarters. SCONDVA should receive a progress report within a year.

THE POOR CONDITION OF PERMANENT MARRIED QUARTERS (PMQs)

For other members of the Forces, especially those with families, the choice is between living on a military base in rented PMQs or off the base in accommodations they buy or rent on their own. Indeed, in 1996, the Armed Forces Council reaffirmed the principle that the Canadian Forces will ensure access to housing for all military families. At present, however, only about one-third of all military families actually choose to live on bases in PMQs. For personnel posted to isolated bases, PMQs may be the only option available while at other locations, the high costs of buying or renting housing off base, the distances between the base and neighbouring communities, or uncertainty about the length of a posting make some families opt for living in PMQs. Whatever the reasons for staying in PMQs, it is by no means a pleasant experience for most of the residents.

Committee members saw first hand the very poor condition of the PMQs during visits to military bases across Canada and heard countless horror stories from the people who live in them. We are very grateful to all the individuals who welcomed us into their PMQs and who graciously answered all our questions. Only a small sample of the PMQs were actually visited, but the candid views of the residents both during our tours and at the meetings made the extent of the problem quite clear. The poor condition of some PMQs is obvious just from their exterior appearance, but as was pointed out by many witnesses, even those with nice exteriors are by no means in good condition inside. There were numerous complaints about the poor quality of the windows because they let the wind and often the rain in and because they offer little or no protection in freezing temperatures. Even when windows and doors are replaced with new ones, poor workmanship and bureaucratic problems sometimes resulted in little improvement.

Most of the approximately 20,000 PMQs across the country were built in the 1940s and 1950s and, except for a few cases, Treasury Board policies have not allowed the construction of new ones since the 1960s. In a majority of cases, the PMQs do not meet modern housing standards in terms of size, electrical wiring, and insulation. Some of the PMQs are very small and offer very little room for growing families. Because there is so little protection against fall and winter cold, even the smallest PMQs are difficult to heat and the residents end up with high heating bills. The heating has to be on at full blast, but many families still have trouble keeping warm. In other PMQs, like some in Halifax, the heating is good, but it is difficult to shut off once the winter months have passed. The heating problems are very troubling not only because of the uncomfortable conditions the residents have to endure, but also because of the environmental impact of such an inefficient use of heating fuels.

The lack of insulation and poor quality windows combined with leaky roofs and crumbling foundations result in damp conditions during spring and major rain storms. The resulting problems with moulds and flooded basements, besides damaging furniture and other possessions, create an unhealthy environment which is simply not acceptable in this day and age, especially for families with small children. Military personnel deployed on long and dangerous operations overseas or training exercises in Canada are understandably angry and frustrated when they return home only to find their spouses and their children dealing with unhealthy and disgraceful conditions. If only a few PMQs had flooded basements every spring or so little insulation that food can be kept in the cupboards instead of in the fridge during winter, the problem would still be significant. However, given the number of similar stories heard at bases across Canada, it is evident that the Department's entire housing portfolio is in crisis.

The poor condition of PMQs across the country is to a large extent the result of years of neglect. Priority was given to the operational requirements of the army, navy and air force and the remaining funds for the upkeep of the PMQs were often quite limited. Similar mistakes were made in other countries such as the United States and the United Kingdom, but the lack of maintenance combined with our climatic conditions resulted in Canadian military housing deteriorating even more. Nevertheless, the 1994 report of the Auditor General, while noting the poor condition of the housing, recommended urgent action by the Department of National Defence to reduce the significant operating losses due to the administration of the PMQs. The report also questioned the efficiency of having five different sections of National Defence Headquarters involved in the administration of the PMQs. The Auditor General therefore welcomed the Department's decision to establish a Special Operating Agency to take over responsibility for providing family accommodation, the Canadian Forces Housing Agency (CFHA). Before making recommendations on what to do with the housing, it is necessary to examine the role of the Agency and the rents charged for the PMQs.

THE ROLE OF THE CANADIAN FORCES HOUSING AGENCY (CFHA)

The CFHA started operating on 1 April 1996 with responsibility for the operations and maintenance of some 8,000 of the approximately 20,000 PMQs across Canada and took over all the remaining PMQs the following year. The CFHA collects the rents for the PMQs and uses this revenue to maintain the housing while ensuring that there are no operating losses. Given the condition of many PMQs, the distinction between routine maintenance and emergency patchwork is not always clear. The Agency is also responsible for the development of a housing strategy for each base, although the Agency's mandate as approved by Treasury Board currently limits action on some of the options it is considering. The task facing the CFHA is a daunting one.

While there were a number of complaints about the way some routine maintenance work is done, notably the replacement of windows, many people who live in PMQs are especially concerned about the way the Agency responds to emergency situations like flooding in the basement, the presence of rodents, and heating problems. In the past, Base Commanders responded as best as they could to problems that arose, but now, most bases have a CFHA office which responds to calls during regular office hours. After 5:00 p.m., people have to call a 1-800 number to reach the Ottawa office. Once alerted, the Ottawa office notifies its contractors on or near each base to deal with the problem.

The Committee heard differing opinions on the way the Agency deals with emergency situations. For example, military families at CFB Bagotville reported few problems with the Agency's response while individuals at CFB Valcartier a short distance away expressed frustration with the service provided after office hours. (One caller to the 1-800 line was asked where Valcartier was.) Some of the problems are possibly due to teething problems in the first months of CFHA's operations, but at some bases, the Agency may have underestimated the number or nature of emergency situations that can occur. In order for the Agency to take full advantage of the lessons learned during its first months of operation, the Committee recommends:

24. That the Canadian Forces Housing Agency must review its policies and its arrangements with contractors at all bases to ensure that efficient and appropriate repairs are made to PMQs at the earliest possible time when emergencies occur.

In a number of emergency situations, it is evident that there was a breakdown in communications between CFHA staff and PMQs residents. Given the condition of most PMQs, it is not surprising that some people become agitated when the basement floods or a floor starts to collapse. CFHA officials often felt the brunt of the anger of PMQs residents and responded professionally. In other cases, they did not appear to handle the situation well. Whatever the reasons for the delays in repairing PMQs when emergencies arise, it is important to ensure that military personnel and their families receive prompt and courteous service because, after all, they sometimes have little choice but to live in PMQs. Besides, when one spouse is away for many months on a peacekeeping or training mission, the other spouse is already preoccupied taking care of the family and should be able to get help quickly when the PMQ needs repairs. With this in mind, the Committee recommends:

25. That the Housing Agency must ensure that its officials at all bases are properly trained to provide fast and courteous service to PMQs residents, especially in emergencies.

The CFHA does face a dilemma on many bases where military units are slated to be moved or where facilities are expected to be closed in the near future. The Agency perhaps hesitates to spend too much money repairing PMQs knowing that they will be vacated or even demolished in a few years. In Edmonton, for example, the Land Forces have taken over the airbase at Namao north of the city and are leaving the original army base at Griesbach where PMQs residents voiced many complaints about the conditions of their housing. Indeed, the CFHA announced in June 1998 that it has decided to abandon the 757 PMQs in Griesbach because they are not worth repairing and is offering various options to the residents who will have to vacate in the next two to five years. In the meantime, however, people living in Griesbach and other places where dilapidated PMQs are slated to be vacated or replaced must not be left to fend for themselves, so the Committee recommends:

26. That the Housing Agency must provide adequate and efficient services, including emergency repairs, for PMQs slated or likely to be abandoned in the next few years because of the closure of a base, the transfer of military units or other reasons until alternative housing becomes available.

It would be disappointing if some of the delays in fixing the PMQs were the result of too much emphasis on eliminating the yearly operating losses and not enough on the need to have sufficient funds for maintenance and repair. While the preoccupation with operating losses is in keeping with the desire to cut government costs and to ensure good financial management, it should be remembered that the other goal of the Agency is to improve the quality of military housing. After all, military personnel and their families pay rents for their PMQs and have every right to expect a satisfactory level of services and living conditions. However, the way PMQs rents are set is also a source of dissatisfaction.

RENTS: WHY DO THEY VARY SO MUCH?

A major portion of the revenues the Housing Agency obtains from the rents paid by PMQs residents are spent on maintenance and repairs, but the Agency does not have the only say on what rents people pay. In keeping with Treasury Board policies, the Agency must set rents for PMQs that are comparable to those in the housing market around the base, as determined by Canada Mortgage and Housing Corporation (CHMC). CMHC appraises the rental value of PMQs as if they were houses outside the base leased by private landlords, but since they are in such poor condition, their assessed value and thus the rents charged can be slightly less than for similar homes in better condition on the private market. However, this is of little comfort for people who live in or near cities like Victoria, B.C., where housing costs are among the highest in the country. Since PMQs rents must reflect local prices, they are therefore much higher at CFB Esquimalt than at CFB Halifax and many other bases. To make matters worse, PMQs rents go up whenever the local housing costs do so. As a result, many military families have to deal with not only high rents, but also frequent increases, including another one in August 1998.

Differences in the costs of housing from one region to another are a fact of life in Canada. However, for military personnel who have to move a number of times from one region to another for operational reasons rather than by choice, significant differences in PMQs rents can dramatically affect the financial well-being of their families. For example, a Corporal's family can have some disposable income in Halifax and then face economic hardship when posted to the Victoria area where rents are twice as high. To add insult to injury, the PMQs with the much higher rent might be in worse shape than the one the family just left. In a region with high housing costs, the only affordable alternative to PMQs might be rental accommodation some distance away from the base. The cost of commuting between the home and the base, including the wear and tear on the family car and sometimes the purchase of a second car, can more than offset the advantages of finding a home with lower rent off the base.

Most members of the military will, at one time or another during their careers, be posted to a region with much higher accommodation costs than others, so this is not a problem which affects only a few individuals. Indeed, the number of people affected is quite significant when family members are taken into account. However, regional differences in accommodation costs have an impact not only on the quality of life of military families, but also on Canada's military capabilities. Military personnel who constantly worry about being posted to areas with significantly higher housing costs are not in the best frame of mind to do dangerous and demanding jobs. Others simply become fed-up seeing their families suffer economic hardships in high cost regions and leave the Forces at the first opportunity. As a result, the Forces and taxpayers do not get full advantage of the time and money invested in training these individuals.

The ideal solution is to make PMQs rents identical at every base in the country. Military personnel get the same pay and benefits regardless of which part of the country they are in and many asked the Committee why the same could not be true for their PMQs rents. However, standardizing rents has to be done carefully to avoid creating other problems. If the Housing Agency was instructed to standardize rents across the country, it could lose revenues it needs to repair and maintain the PMQs. Furthermore, if a national average was used as a benchmark to standardize rents, this might reduce the rents for personnel in high price regions, but it could also mean rent increases for those living in low cost regions where the rents are below the national average. Given the dissatisfaction with pay and the condition of the PMQs, little would be gained if the standardization of rents by the Housing Agency resulted in rent increases for a number of people.

In any case, if it collected the same PMQs rents at every base, the Housing Agency would contravene Treasury Board policy calling for the rents paid by public servants, members of the RCMP, and military personnel to be comparable to those found in the area where they are posted. It might be possible to convince Treasury Board to change its policy, but this could take months or even years and thus delay relief for military personnel and their families. Other options are available, but have drawbacks. For example, instead of having the Housing Agency standardize rents, the Department could give it a subsidy which would in effect ensure a standardized rent structure at all the bases. The subsidy would cover the gap between the PMQs rents set according to the regional housing costs and the standardized rents as determined by the Department. This would allow the Housing Agency to keep the same rent structure and revenues, but it would be up to the Department to ensure that its personnel paid the same rents no matter which base they were posted to.

However, it would be unfair to set a standard rent for PMQs residents and leave personnel who find their own rental accommodation outside bases to fend for themselves. After all, only a third of military families live on bases, so any assistance provided in order to standardize rents should be available to all personnel, whether they live on base or not. Thus, while the Department can easily give a subsidy to the Housing Agency to help people living in PMQs, providing a similar subsidy to private landlords of individuals renting accommodations off base would create complex administrative problems. In short, the simplest way to ensure that military personnel will pay the same rents throughout the country whether they live on or off a base is to give them an accommodation allowance to close the gap, if any, between the standardized rents they must pay and the ones in the region where they are serving.

Such assistance already exists in the form of the Accommodation Assistance Allowance (AAA) usually referred to as triple A. We heard many complaints about the inadequacy of triple A which only partially compensates for the higher housing costs of one region compared to another, but which, to add insult to injury, is taxable income. Triple A was created in the early 1980s precisely to help renters deal with differences in regional housing costs, but eligibility and the amounts provided are determined through a complex formula based on a weighted national average for accommodation costs as determined by CMHC and other factors, including rank. Nothing better illustrates the limitations of this formula than the fact that in some situations, individuals actually receive less triple A even when rents in their region are going up. In other words, triple A was a good idea, but the way it was implemented has significantly blunted its effectiveness.

Thus, the problems created by regional differences in housing costs can be resolved quickly and effectively simply by creating a new accommodation allowance similar to the triple A, but using a new formula. The new allowance should cover any gap between the housing costs in a region and the standardized rents determined by the Department for all the bases. Instead of using a national average, the standard rents should be determined by using the housing costs at some of the major bases like Edmonton, Valcartier, and Halifax. The benchmark should be established according to the average of the housing costs at three or four bases. As a result, military personnel renting, for example, a two-bedroom home in Halifax will pay the same rent for an equivalent home if they are posted to bases like Esquimalt where rents are higher. The new accommodation expense allowance will simply cover the difference between the standard rent and the higher rent required by the local market. The costs of providing this new accommodation expense allowance will no doubt be high. However, the Department is already spending significant amounts of money for triple A and judging from all the complaints we heard, all it is accomplishing is providing inadequate help to personnel dealing with high rents and creating considerable frustration in the process. The new allowance will cost more, but it will be more effective in dealing with the regional disparity in housing costs from one region to another and helping personnel maintain the same level of disposable income no matter where they are posted. It could be blended into the Cost-of-Living Allowance (COLA) we recommend in Chapter II to provide a global cost-of-living benefit, because, after all, accommodation costs usually represent a sizeable portion of living costs. The Department can only benefit because the new allowance will improve the well-being of military families and significantly help to restore morale in the Forces. With this in mind, we recommend:

27. That to ensure that military personnel pay the same rents regardless of the base to which they are posted, the Accommodation Assistance Allowance should be replaced by an accommodation expense allowance to compensate for the difference, if any, between regional housing costs and standardized rents determined by using the average housing costs of a number of major bases.

The value of a revised accommodation expense allowance would be significantly reduced if like triple A, it was taxable. The point of the new allowance is simply to cover the difference between standard rents applied to all bases and higher rents found in some regions, so the whole purpose would be defeated if the sums were considered taxable. As a consequence, we recommend:

28. That the accommodation expense allowance should not be considered taxable income.

While most military personnel have the option of living on or outside a base, some have no choice but to live off base often in areas with high housing costs. This is the situation faced by personnel posted to Ottawa where the National Defence Headquarters are located, but where all single quarters have been demolished and some PMQs areas are slated to be sold. Some personnel in Toronto where the housing costs are very high have a similar problem because the number of PMQs and rooms available in single quarters are very limited. The new accommodation expense allowance will help military families deal with the high rents, but it should also assist single personnel, especially Non-Commissioned Members, who with limited income have to find rental accommodations in high cost areas when single quarters are not available. Indeed, the problems faced by junior rank single personnel who are posted to an area where housing costs are high and where single quarters are not even provided highlights the need for a more effective accommodation allowance than triple A. If the Department cannot provide single quarters or enough rooms to meet the demand, it must be able to help people afford accommodation.

PERMANENT MARRIED QUARTERS: A TIME TO ACT

Allowances can be changed or replaced fairly quickly, but transforming the shoddy substandard housing on bases into safe, comfortable, and environmentally efficient PMQs will take much more time and money. A number of PMQs are currently being repaired, some as a result of the complaints we heard during our visits to bases. However, there have been too many band-aid measures in the past and there is now an opportunity to find a long-term solution to the PMQs problem.

Indeed, since many of the PMQs are in such poor condition, it is questionable if it would be worthwhile to spend millions of dollars to renovate them only to produce slightly nicer but still cramped and substandard PMQs. Thus, in some situations, it may be more cost-effective simply to demolish most of the PMQs and build new ones. If old PMQs are abandoned, the Housing Agency can choose from a wide variety of options ranging from the construction of new PMQs on the site of the old units to the construction or leasing of PMQs anywhere outside the base. As noted earlier, the Housing Agency has already decided to abandon the Griesbach PMQs at CFB Edmonton because it would be uneconomical to renovate them and is considering other options including building or leasing homes in the surrounding community. There are many other bases where similar action could be taken.

Locating PMQs outside a base in a new or existing community would have some advantages including more pleasant and quieter surroundings for the residents. The costs of repairing or modernizing the sewer system and other services now serving PMQs sites could be avoided if homes were constructed or leased off the base in an area already equipped with modern municipal services. The Housing Agency would have more flexibility since it could concentrate new PMQs in one area of a community or it could buy or lease housing here and there and offer military personnel greater choice of locale and design of homes. Military personnel might have to spend more time commuting to the base, but the members of their families could be closer to the schools and health care centres in the community. Indeed, some people living in PMQs expressed to us their concerns that some bases are too far away from nearby communities and that this often hampers the ability of young children and teenagers to participate in school, sport, and other organized activities. In short, building or leasing new PMQs outside the bases and integrating them into the surrounding communities might help to resolve more than just the housing problems.

Of course, there are bases where it would not make sense to get rid of existing PMQs. Bases in isolated regions must have PMQs because the surrounding communities are too far away or cannot support a large housing development. At other bases, some of the PMQs can be repaired and brought up to modern standards at reasonable cost while more recently built units likely only need regular maintenance. In any case, it may be necessary to keep a few PMQs on bases for personnel who cannot live too far away because of their duties or for other reasons. It might also be a good idea to use some PMQs as rented transient quarters for families staying only a short time at a base or who need some temporary accommodation for one reason or another.

In short, the situation varies so much from one base to another that we cannot arbitrarily recommend that all PMQs be rebuilt or that they all be replaced with new ones located outside bases. At some bases, it will be more cost-effective to repair existing PMQs while at others, especially those near large urban centres, all options should be considered including arrangements with developers to construct new PMQs or to lease homes already in place. Of course, it could also be possible at some bases to demolish the old PMQs and not replace them at all, leaving it up to personnel to find housing on the private market with some assistance from the Housing Agency. After all, two-thirds of the military families already find housing on their own and if a new accommodation allowance is established or if home ownership is encouraged, it might not be necessary to have PMQs at some locations. The Committee was asked to consider, among other things, if the Department should remain committed to providing affordable housing for military families and if it should continue to provide military family housing on or near a base. Given the nature of military life and the frequent moves, it is important for the Department to ensure that suitable and affordable housing is available, but it may not always be necessary to have PMQs on or off a base in order to do this. Over the years, however, the availability of housing in the area around a base can vary so much because of the ebb and flow of the local economy and other factors, so it may be prudent to keep a certain number of PMQs instead of relying entirely on the local housing market.

Because of all these variables, a housing strategy for each base has to be developed carefully. The Housing Agency already has the mandate to do this and has the expertise required to determine the requirements of each base, the nature of the local housing market and the condition of the PMQs. Therefore, it should be up to the Agency to determine whether to renovate old PMQs or to make new ones available on or off the base, so we recommend:

29. That the Housing Agency should proceed with the task of determining the best way of providing modern and environmentally efficient Permanent Married Quarters, in consultation with Base Commanders and the Department, which should report on an annual basis to SCONDVA. The Agency should keep in mind the need to:

a. tailor the housing to the specific requirements of each base;

b. select the most cost-effective option available even if this involves the construction or leasing of homes off the bases and arrangements with private developers; and

c. ensure that the housing remains suitable and affordable regardless of the options selected.

If it is up to the Housing Agency to find the best solution for the PMQs situation at each base, then we must ensure that it has the tools necessary to carry out its task. The Agency must have the mandate to do whatever is necessary to construct, buy or lease PMQs if this is the way to proceed at certain bases. In order to find the most cost-effective solution, it must be able to consider all the options. If there are any constraints on the type of options it can consider, including any restriction of the construction or purchase of PMQs outside military bases, it will be hamstrung and both PMQs residents and taxpayers will miss out on an opportunity to resolve this element of the housing problem. The Housing Agency was somewhat hobbled from the start when the mandate approved by Treasury Board proved to be more restrictive than what had been proposed. We therefore recommend:

30. That the Housing Agency be given an expanded mandate in order to undertake any option it determines to be the most cost-efficient to provide housing and housing services for military bases.

If the Housing Agency determines that at some locations a large number of new PMQs must be constructed or leased while at others, major renovations of PMQs are required, it will be necessary to find the capital with which to do this or to enter in financing arrangements with private developers. Part of the financing arrangements could involve the swapping or long-term leasing of lands owned by the Department for land or services offered by developers for the construction of PMQs. Current Treasury Board policies prevent the Department of National Defence from using the funds produced by the sale of land. The Canada Lands Company handles the sale and the funds are directed to the Government's general revenues. Given the urgency of resolving the PMQs situation, it is essential for the Department of National Defence to be able to use the funds produced by the sale of land and facilities to finance the construction or leasing of PMQs. At the 19 March 1998 meeting, officials from the Treasury Board indicated that it recognized that National Defence was dealing with a serious housing problem and that it was committed to working with the Department to find creative solutions. We cannot emphasize enough how important it is for the Department to resolve its housing problems and we welcome Treasury Board's commitment to help as much as possible. However, we expect action to be taken quickly on these issues, especially when the Housing Agency's proposal, supported by a solid business case, is accepted. Indeed, an important precedent was established when the Department of Foreign Affairs won approval for the sale of some of its properties overseas and kept the funds for its budget rather than funnelling them to the Government's general revenues. We therefore recommend:

31. That the Department of National Defence be allowed to use the funds generated by the sale or long-term leasing of departmental lands and facilities or to swap land with private developers primarily to help the Canadian Forces Housing Agency finance the construction or leasing of Permanent Married Quarters.

32. That the Department be empowered to use the proceeds from the sale of capital assets primarily to help the Housing Agency finance the construction or leasing of PMQs. Indeed, we further recommend that revenues generated by the sale of departmental assets be retained by the department in order to enable it to meet other requirements as well.

The Housing Agency has to be on a sound financial footing in order to carry out its tasks effectively. Revenues from rents are used for maintaining and repairing PMQs and some of these funds can help finance the construction or leasing of new PMQs. However, these revenues may not be sufficient to cover all the costs the Housing Agency will face as it pursues its development of a housing strategy for each base. To ensure that the Agency is on sound financial grounds as it proceeds with the planning for the repair or replacement of PMQs and the negotiation of financing arrangements for the construction or leasing of PMQs, it should have the budget necessary to carry on with its work. With this in mind, we recommend:

33. That the Government grant the Housing Agency a repayable low-interest loan to help it proceed with its business. The Housing Agency should obtain other revenues through long-term lease arrangements with contractors.

Fixing or replacing PMQs will resolve most of the housing problems, but there is a related issue that the Department and the Housing Agency have to examine together with municipal and other officials. No matter how extensive the renovations made to old PMQs or the quality of newly built PMQs, the residents will understandably be unhappy if the water coming out of the taps still has a strange colour and odour. The Committee was given samples of the water from PMQs at CFB Valcartier which was anything but clear and we heard complaints about the quality of water at a number of other bases. In some places, the water may be safe to drink, but it stains clothing washed in it. The old infrastructure including conduits, which are often the source of water contamination, at some bases is at fault in some cases while at other locations, the problem is with the regional water supply. In short, there is no easy answer to the problem because of the different circumstances at each base. Nevertheless, it is a problem that must be addressed quickly and we recommend:

34. That the Department and the Housing Agency together with municipal officials, where necessary, coordinate their efforts to improve as quickly as possible the quality of water supplied to PMQs at bases where problems with the colour and odour have been documented.

ENCOURAGE HOME OWNERSHIP

Military personnel who own their homes instead of renting accommodations on or off military bases also face many problems. Like other Canadian homeowners, they have to deal with the needs of growing families, the long-term financial implications of ownership, and the complexities of the real estate market. However, unlike most Canadians, they also have to move more frequently, have to sell and buy homes more often, and, not by choice, have to contend with significant differences in housing prices from one region to another. If real estate values in their region are on a downward trend when a posting comes, they may have to sell their homes at a loss. If they move to an area where homes are much more expensive, they may only be able to afford less expensive and smaller homes than the one sold at the previous location. Some may even abandon their dream of homeownership because they lost too much money on the sale of their home at the old location.

Encouraging homeownership can benefit not only military personnel, but the Department as well. If more people buy homes, the Department will have to build and maintain fewer PMQs and help a smaller number of renters deal with regional differences in housing costs. The quality of life of individuals is improved because homeownership remains a viable option to them despite their frequent moves and because with good financial planning, they will own a home when they retire from the military. Some measures are already in place to help homeowners and some improvements can help make them more effective.

The Guaranteed Home Sale Plan is a pilot project approved by Treasury Board which was adopted by a number of federal departments including National Defence a few years ago. The Committee did hear a few complaints about how it is implemented, but there is also evidence that the plan has been very helpful to many members of the military who have to sell their homes on short notice whenever they are posted. Most public servants do not have to move and deal with the vagaries of the real estate markets as often as military personnel do, so the special requirements of the latter must be taken into consideration. The pilot project is currently slated to end in March 1999, but it should be continued and perhaps made permanent at least for military personnel given the significant help it provides to them. We therefore recommend:

35. That the Guaranteed Home Sale Plan be continued beyond March 1999, at least for military personnel.

The Home Equity Assistance Program (HEAP) was established to help homeowners who have to leave an area when the real estate market is depressed. Homeowners can be reimbursed up to 90% for any difference between the price at which they sell their homes and the adjusted purchase price which includes the value of certain improvements made to the home as well as the original purchase price. To be eligible, homeowners have to demonstrate that the home prices in the area have declined by 10% or more between the time of purchase and the time of sale. This is not always easy to do because of conflicting information and other factors. Delays in determining eligibility for assistance has also been a problem and revised application procedures were introduced in 1996 to deal with this.

However, given the number of complaints we heard, the way eligibility is determined still creates problems. Some people suffered significant financial losses when they sold their homes in a depressed real estate market, but could not get assistance because the price of houses in their area dropped by only 8 or 9% or because of the way the adjusted purchase price was determined. Losing assistance because of one or two percentages is of course disappointing, but it is even more difficult to accept if people do not have confidence that their eligibility is determined fairly. Some questions were raised about the way appraisals are carried out to determine the adjusted purchase price. Two appraisals of a home are usually carried out, but the Department sometimes orders a third appraisal when there is a significant difference in the first two. While the way appraisals are carried out should be reviewed, other factors in determining eligibility also need attention. It should be sufficient to demonstrate that the local real estate market is depressed rather than trying to determine as well if the price of homes has dropped by 10% or not. In short, procedures should be simplified and the 10% rule should be abandoned. We therefore recommend:

36. That the Home Equity Assistance Program be revised, notably by eliminating the 10% rule, to ensure that homeowners have access to fair and equitable assistance when, because of a new posting, they have to sell their home while the local real estate market is depressed.

Some military personnel would not have to make use of the Guaranteed Home Sale Plan or the Home Equity Assistance Programme if they did not have to sell their homes every time they got a new posting. They might want to keep a home in one location while posted elsewhere because it is a good investment or because they wish to return there in a few years, for example, upon retirement. If the Housing Agency opts for the construction or leasing of PMQs off bases in some areas, it could assist these individuals by leasing or administering their homes and renting them as PMQs. The Housing Agency would gain extra units for its pool of PMQs and offer a choice of locales without having to build new homes. Meanwhile, owners would be able to keep a favourite home or avoid the stress of trying to sell a home on short notice or in unfavourable conditions when posted elsewhere. Of course, the Housing Agency would be free to refuse to lease a home because of its condition, location or other reasons and the number of homes individuals could lease to the Agency would be limited. However, making such a leasing arrangement possible would give homeowners another option while helping both the Housing Agency and military personnel trying to find suitable rental accommodation close to their base. Since both PMQs residents and homeowners can be helped by such an initiative, we recommend:

37. That a program be developed to facilitate the leasing by the Housing Agency of homes owned by military personnel for use as PMQs when homeowners are posted to another region of the country or overseas. The status of the program should be reported to SCONDVA on an annual basis.

DEALING WITH MOVERS

Military personnel and their families move frequently and therefore have numerous encounters with moving companies. Given many of the comments we heard, the experience has not always been a pleasant one. Many complaints centred on the damage done to possessions during moves and the problems encountered trying to obtain compensation, but there was also a feeling that individuals have been more or less abandoned by the Department of National Defence. Indeed, recent changes in the administration of moves may have simplified matters for the Department, but they have also complicated the lives of many members of the military and their families.

In the past, the Department moved a family and its possessions using a moving company under contract. Every step of the process was monitored and any claims for damages were made by the Department to the moving company. Now, the family deals directly with the moving company and is on its own to pursue damage claims. This may explain to some extent reports of indifferent movers who apparently took little care moving a family's possessions and placing them into their new home. Another complication is the fact that the people being moved must report damages in the first 24 hours after arriving at the new home.

In the hectic atmosphere of the first day moving into a new home, it is not always easy to do this quickly and in detail, especially for families with small children. Indeed, in some situations, one spouse and the children have to deal with the move while the other spouse is away on a peacekeeping or training mission. Moves are stressful events for everybody, but military families should not be burdened with additional administrative details and interminable discussions with movers on compensation. There clearly needs to be more time for individuals to report damages caused by a move. Furthermore, the Department or if necessary some other agent like, for example, the Housing Authority, should be involved in the compensation process to ensure that members of the military are fairly and quickly compensated for such damages. We therefore recommend:

38. That the contracts with moving companies be modified to allow much more time for individuals to report and document damages to possessions resulting from a move. These contracts should be reviewed on an annual basis.

39. That the Department of National Defence or some other agent such as the Canadian Forces Housing Agency, assist members of the Forces in making claims for compensation of damages caused by movers during a move. A report to SCONDVA should be made on an annual basis.

40. That the time allowed for taking possession or vacating a domicile be increased.

POSTING ALLOWANCE

Since personnel have to move frequently because of operational or training requirements, the Department goes to great lengths to facilitate moves, including providing a posting allowance. Nevertheless, as mentioned in the chapter on pay, the posting allowance has created considerable frustration for military personnel. The allowance compensates personnel for all the turbulence associated with postings including the move to a new region and the uprooting of families perhaps only two years after a similar upheaval. It also helps to deal with the loss of income families face when spouses have to leave their jobs in one location and face delays finding new jobs at the new one. The current posting allowance is equivalent to one month's pay for married members and one-half month's pay for single members. Since it is given according to one's pay, the allowance for a senior officer will be much more than for a Corporal. We heard many complaints about this situation which is no doubt exacerbated by the fact that the allowance is taxable.

In short, the posting allowance is not very successful in what it was designed to do, help personnel relocate and compensate them for the turbulence which accompanies postings. In some cases, the amount is too small, after taxes, to cover all the expenses related to a new posting while in others, it is large enough to put some people in a higher tax bracket. What is needed is a new posting benefit which will give all personnel an adequate amount to compensate for all the changes a new posting implies. To ensure that it is adequate, the benefit should be non-taxable. The recommendations concerning pay and the standardization of rents through the new accommodation expense allowance will improve the situation for all personnel. However, when they must move and deal with all the changes and problems this entails, they should get extra compensation through a posting benefit. With this in mind, we recommend:

41. That the posting allowance be replaced with a new non-taxable posting benefit which will adequately compensate all personnel for the turbulence associated with new postings. The allowance should be uniform and not tied to rank.