Thank you, Mr. Chairman. I am grateful for this opportunity to appear before this Committee on behalf of the property and casualty insurance industry, to address the important issue of natural disaster reduction in Canada.

To begin, I would like to acknowledge the leadership this Committee has shown in drawing consistent attention to this issue in your pre-budget reports in recent years and in organizing this day of hearings. Through efforts such as these, the message is being heard. Finance Minister Paul Martin has now identified growing disaster relief payments as an important federal fiscal challenge in the years ahead. In an interview he gave to Policy Options magazine last summer he said, "disaster relief has turned out to be very expensive in the last three or four years. It’s going to be a costly thing."

Canadians rely on their elected officials, and this Committee in particular, to guard Canada’s fiscal position for future generations -- to identify threats to financial and economic well being and to make recommendations to ensure a prosperous and fiscally secure Canada. Our exposure to losses from natural disasters is one such threat.

Mr. Chairman, over the last four years, Canadians have been hit with three very costly and disruptive natural disasters -- flooding in the Saguenay in 1996, flood damage in the Red River Valley in 1997, and a devastating ice storm in January of 1998 affecting Eastern Ontario, Quebec and parts of New Brunswick. Over 4 million Canadians have been directly impacted by severe weather over this period.

Disaster recovery payments by have been doubling every five or 10 years throughout the 1980s and 1990s. Over the past four years governments in Canada, especially the federal government, have spent an average of $500 million a year to repair damages caused by extreme weather. Furthermore, these losses pale in comparison to even larger losses that could lie ahead. There will be a major earthquake in an urban centre like Vancouver and losses will be billions of dollars, to say nothing of the possible loss of human lives.

These are not one-time events, but part of an international trend – a trend that is getting worse.

Scientists around this table and around the world point to an increasing frequency and severity of extreme events as a result of climate change, urbanization, aging infrastructure and population growth. The latest report from the United Nations Environment Program, for example, puts it this way: natural disasters appear to be becoming more frequent and their effects more severe…rising global temperatures are likely to…raise the incidence of extreme weather events, including storms and heavy rainfall, cyclones and drought."

Accordingly, natural disaster relief, as this Committee and the Finance Minister have properly recognized, represents a growing unfunded liability for governments, especially the federal government – and a growing burden to Canadian taxpayers.

This financial liability, to say nothing of the threat to human lives, can be substantially reduced if Canada invests in ways to reduce the vulnerability of communities to nature’s hazards. Investing in critical infrastructure can have a dramatic effect in protecting communities from natural disasters. Witness the Winnipeg Floodway.

In communities across Canada, we need to build projects large and small that can reduce our vulnerability to the ravages of floods, tornadoes, hurricanes, and earthquakes. These kinds of investments, will create jobs, raise incomes and add to our prosperity in the immediate term. In addition, and more to the point of today’s hearings, investments in loss-reducing infrastructure will save taxpayers’ money and lives.

While we’re all in this together by virtue of the federal government’s role in disaster recovery, we do have our particular regional natural hazard threats: hurricanes, sea surge and urban flooding in Atlantic Canada; flooding and earthquakes in Quebec; windstorm and flooding in Ontario; hail and flooding across the Prairies; and earthquake and flooding in the Fraser River Basin in British Columbia.

Mr. Chairman, as a country we have responded well, better than most in fact, in rebuilding communities and Canadians’ lives after disaster strikes. We also often send in experts after the fact to diagnose the factors contributing to the disaster. Where we fall short in this country is in learning from our mistakes and taking action given what we know.

IBC has put forward the idea of setting up a fund of $750 million, financed by all levels of government, that would be used to act on what we know, and to invest in projects designed to make communities more resilient. The infrastructure program announced in the recent federal budget, could lend itself very well to this purpose.

We would urge that the guidelines developed for the new program include natural disaster reduction as one of the objectives under which infrastructure projects could qualify for funding. In particular, we advise that projects should be funded if the benefits, in terms of losses prevented, outweigh the cost of the investment. We hope that your Committee will recommend that natural disaster reduction objectives be included in the new national infrastructure program.

We also believe that the current formula for disaster relief should be changed to allow mitigation investments to be made during the recovery period. This is often when the best ideas are available and public support the strongest. Instead of re-building communities right in harm’s way, we could spend a little extra during the recovery phase, to better protect the community from future natural disasters. Investing in mitigation is not covered by the current formula.

Finally, we all need to work together to promote a culture of preparedness to ensure that governments and citizens alike take the increasing risk of costly natural disasters into account in all planning decisions

Mr. Chairman, we have shared these proposals with provincial and municipal officials, Canadians, and partner organizations across the country. They are being met with resounding support community by community and the support is growing; from the Province of British Columbia, the City of Fredericton, the City of Charlottetown, the City of Mount Pearl, the Town of Truro, Nova Scotia, the Halifax Regional Municipality, the Fraser River Basin Council and back to the Province of New Brunswick. And this is just the start.

As we speak, officials in the federal Treasury Board are meeting with their provincial counterparts to discuss the actual guidelines for the new national infrastructure program. By making a strong recommendation at this critical moment, this Committee’s leadership could help ensure that natural disaster reduction objectives are included in the program.

I urge you as well to support the forthcoming review of disaster financial assistance arrangements to build on the program’s existing strengths and include a role for mitigation during the recovery period.

And, I urge you to support the creation of a national mitigation strategy that includes creating a culture of mitigation by building awareness, bringing parties together for dialogue and incorporating loss reduction into the routine considerations of public policy in this country.

Thank you very much for this opportunity to participate in this round-table hearing. We are grateful that your Committee is giving this issue this kind of attention.