1. Non-Public Property Briefing to Deputy Minister Ottawa 30 September 2013 Commodore Mark B. Watson Director General Morale and Welfare Services

2. Non-Public Property Public Support to Morale and Welfare Services Self Help Housing Organization Military Family Medical Care 2 Agenda

3. Established in National Defence Act – a unique type of Crown property Governance assigned to Chief of the Defence Staff Purpose is to provide benefit to serving and former members of the Canadian Armed Forces, and their families, or for any other purpose designated by the Chief of Defence Staff Money component known as Non-Public Funds Revenues from Non-Public Property operations retained as Non-Public Funds Financial Administration Act does not apply Non-Public Property – General 3

4. Trust-like relationship between the Chief of Defence Staff and serving and former Canadian Armed Forces personnel and their families, with the Chief of Defence Staff having fiduciary responsibility Overall functioning is much like a cooperative: income of revenue-producing activities (CANEX, SISIP Financial Services, Canadian Forces Central Fund) retained within Non-Public Property and used to finance other programs and activities 4 General

5. Non-Public Property at Canadian Armed Forces Bases/Wings Support Our Troops Programs and Funds Recreation and Social Opportunities Community Recreation, Specialty Interest Activities (e.g. golf, curling, marinas, etc.), Mess Membership, Canadian Forces Appreciation Program Recreation and Social Opportunities Community Recreation, Specialty Interest Activities (e.g. golf, curling, marinas, etc.), Mess Membership, Canadian Forces Appreciation Program Finance and Banking SISIP Financial Services, Home and Auto Insurance, Canadian Defence Community Banking Finance and Banking SISIP Financial Services, Home and Auto Insurance, Canadian Defence Community Banking Family Health and Fitness Retail Services CANEX (Rewards, concessions, e-commerce), Home Heating Oil Program, CANEX Credit Plan Retail Services CANEX (Rewards, concessions, e-commerce), Home Heating Oil Program, CANEX Credit Plan Deployment Support

6. They are “administrative constructs” created by either the Chief of Defence Staff or by Base, Wing, or Unit Commanders at the local level, not juridical persons Chief of Defence Staff/Commanding Officer-created Non-Public Property orgs are legally, “Her Majesty in right of Canada, as represented by the Chief of Defence Staff/Commanding Officer in his/her Non-Public Property capacity through (name of organization) Not part of Department of National Defence, but are also not private, not non-defence agencies, and not statutory or special operating agencies. The Provision of Service to Non-Defence Agencies policy does not apply to Non-Public Property Implications – deal with the private sector as Her Majesty; deal with the Crown through Memoranda of Undertanding or Service Level Agreements; cannot enter into a contract with the Crown “public” 6 Legal Status – Non-Public Property Organizations

7. National Chief of Defence Staff responsible for governance Non-Public Property Board Minutes/Records of Decision not effectual until signed by the Chief of Defence Staff Local Base/Wing/Station/Ship Commanding Officers responsible and accountable for governance and administration of their respective funds Base/Wing Commanders must establish a Base/Wing Fund with a Chair (Base/Wing Commander or representative), Secretary, Chair of Base/Wing Recreation Council, Personnel Support Programs Manager, Base/Wing Non-Public Funds Accounting Manager/Regional Accounting Manager and additional members as required. Must issue detailed Terms of Reference Meet quarterly, require annual budget Base/Wing Comptroller should be providing a robust and informed challenge and advisory function 7 Governance

8. To have the right, relevant Public morale and welfare programs and support services in place that both contribute to the operational effectiveness of the Canadian Armed Forces and to the quality of life of Canadian Armed Forces personnel and their families. To have Non-Public Property programs and activities at all Canadian Armed Forces locations that provide a value proposition unique to the military community that enhances the morale and welfare benefit to Canadian Armed Forces personnel, former members and their families and reflects their ‘ownership’. 8 Strategic Effect

9. Responsibilities Delegated authority directly from Chief of Defence Staff to Managing Director Non-Public Property for the conduct of Non-Public Property operations and to act as the Chief Executive Officer of the Staff of Non-Public Funds, Canadian Forces Has L2 Public Authority for Casualty Support Management and Military Family Services Director General Morale and Welfare Services 9

10. Financial Administration Act - Schedule V, Separate Agency Approximately 5,600 employees of the “Staff of the Non-Public Funds, Canadian Forces” – Number varies due to casual employment, especially in summer – 2,125 full time, 1,066 part time, 2,395 casual – 40% Canadian Armed Forces affiliation (Retired and/or Family) 253 Canadian Armed Forces members 153 National Defence public servants 375 at Military Family Resource Centres (locally employed) Plus many, many volunteers Defence Team – Canadian Forces Morale and Welfare Services 10

11. Canadian Forces Morale and Welfare Services 5,600 to 6,000 Employees Canadian Coast Guard Canadian Security Intelligence Service (CSIS) Citi Bank Nav Canada 4,500 3,311 5,000 Defence Team – Morale & Welfare 11

12. Fiscal Resources Non-Public Property net worth / publicly funded expenditures FY 2012-13 Public Funds

13. Non-Public Property accountability framework is distinctly separate from the Public. Examples include: – Human Resources Policy – Financial Policy – Travel Policy – Contracting Policy Provides flexibility for the Chief of Defence Staff to dynamically respond to Morale and Welfare Services requirements while maintaining rigorous accountability Non-Public Property is not intended to backfill Public funding shortfalls Non-Public Property Accountability Framework 13

14. Public Support to Morale and Welfare and Non-Public Property – Canadian Forces Morale and Welfare Services Principle reasons for the use of Public funds in support of Morale and Welfare and Non-Public Property – Canadian Forces Morale and Welfare Services – Chief of Defence Staff responsibilities for good governance of Non-Public Property – Treasury Board Secretariat authorized Department of National Defence good employer responsibilities of Non-Public Property Public Morale and Welfare Programs delivered by Non-Public Property – Non-Public Property is reimbursed from Public Funds for the delivery of Public Morale and Welfare programs on a cost recovery basis (no profit). Non-Public Property is not to be used for Public responsibility purposes – It was confirmed by the Non-Public Property Board and Chief of Defence Staff in December 2007 that there is no authority for Non-Public Property to make up for any shortfall in Public Support. 14

15. Non-Public Property Residential Housing Shortage of contemporary “public” Residential Housing Units at some locations; Non-Public Property already operating Self Help Housing Organization in Ottawa; At the request of the Royal Canadian Air Force, prepared a business case for Non-Public Property to build one and two-bedroom units off base in Cold Lake; [Non-Public Property Board decision] 15

16. Self Help Housing (SHHO) Created in 1961 under Order in Council (OIC) Public/Department of National Defence land at Uplands, operated completely as a non-public entity (Self Help Housing Organization even pays its own Payment In Lieu of Taxes (last year $323K)) Rent currently $852/month, plus tenants pay their utilities (gas & electric) 544 units (all 3 bedroom) Current occupancy: 345 units occupied (63%) 2012-13 actual Operating Income (Rev minus Exp) = $2.1M 2013-14 budget Operating Income (Rev minus Exp) = $1.4M Current Bank Account (as at 31 Jul 2013) = $11.5M Bank Account / Cash used to fund leasehold improvements and repairs/renovations to the units. 16

17. Military Family Medical Care Provincial Problem – National Community Medical care for military families is a provincial responsibility NATIONAL INITIATIVES – Information and Outreach Director General Morale and Welfare Services – Facilitate good choices Family health care deemed a Morale and Welfare activity Military Family Resource Centres funded to provide information and referral services Canadian Forces Morale and Welfare Services / Director General Health Services – Outreach and Awareness Work with professional associations and service providers in Canadian Armed Forces communities College of Family Physicians, Canadian Medical Association Academic institutions Military Family Initiative with the Vanier Institute for the Family Examining potential for a third party contractor to extend access for military families in their network of civilian clinics across Canada 17

18. Military Family Medical Care Provincial Problem – National Community Local Initiatives – Community-Based Solutions Military Family Resource Centres maintain info on local health care resources Some bases have established family medical clinics on their own, no consistent model, varying levels of risk and sustainability Other bases have established partnerships with local and regional service providers Op Family Doc – National Capital Region Travel For Family Medical Care Families with financial need can apply for reimbursement from the Military Families Fund (outside the public framework financed by private donations), as there is no authority to use public funds for family medical travel expenses Income Tax Act has provisions to claim medical expenses, including travel 18

19. QUESTIONS 19