3rd Session - 43rd Legislature, Public Accounts Vol. 7, May 15, 2026

TIME – 4 p.m.

LOCATION – Winnipeg, Manitoba

CHAIRPERSON – Mr. Kelvin Goertzen (Steinbach)

VICE‑CHAIRPERSON – MLA Jim Maloway (Elmwood)

ATTENDANCE – 9 — QUORUM – 6

Members of the committee present:

Mr. Brar, MLAs Compton, Dela Cruz, Devgan, Mr. Goertzen, MLA Maloway, Messrs. Oxenham, Schuler, Mrs. Stone

Substitutions:

Mr. Schuler for Mr. Ewasko

APPEARING:

Tyson Shtykalo, Auditor General

WITNESSES:

Ryan Klos, Deputy Minister of Transportation and Infrastructure

MATTERS UNDER CONSIDERATION:

Auditor General's Report – Investigations Report dated August 2021

Shellmouth Dam Compensation Program

Auditor General's Report – Follow Up of Previously Issued Recommendations, dated February 2024

Investigations Report: Shellmouth Dam Compensation Program

Auditor General's Report – Follow Up of Previously Issued Recommendations, dated February 2026

Investigations Report: Shellmouth Dam Compensation Program

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The Chairperson: Good afternoon. Will the Standing Committee on Public Accounts please come to order.

Like to welcome everybody here; thank the departmental staff and staff of the Auditor General's office, the clerks, the page. All those who are working in the Legislature, thank you for being here on this afternoon–this Friday afternoon.

Committee Substitution

The Chairperson: Before we begin our business today, I'd like to inform the committee that we've received the following membership substitution for this meeting only: Mr. Schuler for Mr. Ewasko.

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The Chairperson: This meeting has been called to consider the following reports: the Auditor General's Report, Investigations Report, dated August 2021, Shellmouth Dam Compensation Program; and the Auditor General's Report, Follow Up of the Previously Issued Recommendations, dated February 2024, Investigations Report: Shellmouth Dam Compensation Program; the Auditor General's Report, Follow Up of Previously Issued Recommendations, dated February 2026, Investigations Report: Shellmouth Dam Compensation Program.

Are there any suggestions from committee members as to how long we should sit this afternoon?

MLA Jim Maloway (Elmwood): Mr. Chair, I would suggest we meet for one hour and then revisit at that time.

The Chairperson: MLA Maloway has suggested to the committee that we meet for one hour and then re‑evaluate at that time. Is that agreed? [Agreed]

At this time, I'd also like to ask the committee if there's leave for all the witnesses in attendance to speak and answer questions on the record if desired. Is that agreed? [Agreed]

Leave has been granted.

I would like to remind everyone that questions and comments must be put through the Chair using third‑party language as opposed to directly to members and witnesses.

Before we proceed further, I'd like to also inform all in attendance of the process that is undertaken with regard to outstanding questions. At the end of every meeting, the research clerk reviews the Hansard for any outstanding questions that the witness commits to provide an answer to and will draft a questions-pending-response document to be sent to the deputy minister or other witnesses.

Upon receipt of the answers to those questions, the research clerk then forwards the responses to every PAC member and every other member recorded as attending that meeting.

Does the Auditor General wish to make an opening statement?

Mr. Tyson Shtykalo (Auditor General): I'm joined today by Jeff Gilbert, assistant Auditor General for the consideration of the Shellmouth Dam Compensation Program investigation.

Mr. Chair, the Shellmouth Dam Compensation Program was established to provide financial relief to landowners who experienced artificial flood-related damages caused by the operation of the Shellmouth Dam on the Assiniboine River. This examination was initiated in response to concerns received through our citizen concerns line related to the administration of the program.

Specifically, we sought to determine whether the program was administered in a timely manner, whether requirements in the regulation were consistently followed and whether communication with potential claimants was sufficient.

We concluded that the administration was not done in a timely manner in accordance with the regulation. We also heard from producers in the Assiniboine River valley who experienced financial strain and prolonged disruptions to their operations while waiting for compensation.

We identified several significant issues. First, claimants waited between three and a half to up to almost nine years to receive compensation following flood events. Second, requirements for the regulation were not consistently followed. For example, inspections were rarely conducted in the presence of claimants and supporting evidence to verify claims was not always obtained. Third, communication with affected landowners was insufficient; program eligibility and application requirements were not clearly communicated. As a result, some applicants missed out on appeals and possible eligible compensation.

We did, however, find that the public consultation requirements related to dam operations were met. Our original report included five recommendations aimed at improving the administration of the program, focusing on timelines, inspections, documentation and communication.

We have followed up on this examination twice, with the most recent follow‑up included in our February 2026 report. As of that follow-up, all five recommendations have been reported as implemented.

I'd like to thank the landowners and the officials from the department we met with during the examination for their co-operation and assistance. I would also like to thank my audit staff for their professionalism and diligence in completing this work.

This concludes my opening remarks, and I look forward to today's discussion.

The Chairperson: Thank the Auditor General and their staff.

Does the Deputy Minister of Transportation and Infrastructure have an opening statement?

Mr. Ryan Klos (Deputy Minister of Transportation and Infrastructure): Good afternoon, I'm Ryan Klos. I'm Deputy Minister for Manitoba Transportation and Infrastructure.

I'd like to start with an introduction of staff I'm joined with today. I'm joined with Christine Stevens, assistant deputy minister with our Emergency Management Division, as well as Jason Senyk behind me, our executive director as well, with our Emergency Management Division.

I'm pleased to be here today to provide an update on Manitoba Transportation and Infrastructure's progress on the office of the Auditor General's 2021 recommendations on the Shellmouth Dam Compensation Program.

To provide a bit of context to all members here today, Shellmouth Dam is a Provincial water-control asset located on the Assiniboine River in western Manitoba. The dam is an important part of Manitoba's network of flood mitigation infrastructure, reducing flooding in downstream communities and providing significant water supply, ecological and recreational benefits. While operation of the dam often reduces or eliminates flooding, in some circumstances, operation of the dam can extend flooding on land downstream in the Assiniboine River valley. This is known as artificial flooding and it can cause damage and losses for those who live, work or farm on land in the valley.

The Shellmouth Dam Compensation Program is a statutory program that requires government to provide compensation to landowners affected by artificial flooding. It was modelled on a similar statutory program prescribed in The Red River Floodway Act. The Shellmouth Dam Compensation Program has only been triggered three times: in 2011, 2012 and 2014. But the applicants to the program experienced significant delays and other challenges that resulted in the office of the Auditor General initiating an investigation.

The 2021 report contained five recommendations for the Shellmouth Dam Compensation Program. I'm pleased to report that the department has implemented a new Shellmouth Dam Compensation Program, which includes regulatory, policy and procedural changes in order to address all five of the recommendations from the office of the Auditor General's 2021 report.

For your information, the amendments to the Shellmouth Dam Compensation Regulation, which were critical to enable many of the program improvements, came into effect in June of 2024.

I would now like to take a few minutes to provide a brief overview of how the department addressed each of the five recommendations from the report.

The first recommendation was for the department to determine what skills and experience were required to perform inspections and evaluate claims. Of note, this recommendation required regulatory amendments to implement, as the original regulation prescribed that licensed insurance adjusters must be used to evaluate claims.

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Prompted by the recommendation, the department has developed a compensation program, inspection skills and a guidelines document that identifies the experience and knowledge required by inspectors to identify and document damages for the program. The first requirement listed is experience working in agriculture, as most claims relate to agricultural activities. The guideline also identifies that, in instances of property damage, that licensed insurance adjusters will continue to be utilized for inspections.

The second recommendation was for the department to place time limits on key milestones in the program, including inspections and payments. Past programs took a long time to be established and to accept and process claims. This was in part due to inefficiencies in the process prescribed in the regulation. Ultimately, this meant it took years for applicants to see their claims processed and to receive payment.

The original version of the Shellmouth Dam Compensation Regulation was quite prescriptive in terms of how the program was sequenced and administered, and regulatory amendments were necessary in order to streamline how a program is initiated and delivered. As part of the new streamlined program, the department has established benchmarks for each stage of the program that will see applications processed and paid in months instead of years.

The third recommendation was for the department to produce guidelines for what inspectors are required to document when conducting inspections. To meet this recommendation, the department has developed inspection guidelines and integrated them into a mobile app in order to assist inspectors to complete their work quickly, accurately and efficiently.

The fourth recommendation was for the department to produce guidelines for what information must be included in the files for applicants. To fulfill this recommendation, the department has developed a guideline document. The guideline includes not only the types of information and documents that should be present in a file. It also identifies who will typically provide the information, for example, the claimant, the inspector or the department.

The last recommendation was for the department to develop and follow a communication strategy to ensure that stakeholders are aware of the program and understand how it operates, including eligibility and what needs to be documented.

Working with communications and engagement, the department developed a communication strategy that can be implemented, as soon as artificial flooding occurs, and which will provide key information to stakeholders as a program is launched and while it is being delivered.

Shellmouth Dam is an important provincial asset that provides flood mitigation, water supply and recreational benefits for many Manitobans. Ultimately, the Office of the Auditor General's 2021 Investigation Report was a catalyst for significant and much needed improvements to the Shellmouth Dam Compensation Program.

My department is confident that a Shellmouth Dam Compensation Program can be initiated, administered and delivered quickly and efficiently to fulfill the intent of the legislation in the rare instance that Shellmouth Dam causes artificial flooding that affects downstream landowners.

Thank you for the opportunity to speak to the committee about the Office of the Auditor General's Investigation Report and the department's improvements to the Shellmouth Dam Compensation Program.

Thank you.

The Chairperson: I thank the deputy minister for their opening statement and for their comments.

The floor is now open for questions.

MLA JD Devgan (McPhillips): So the information I have in front of me says that there were three–number of floods–three, 275 claimants and the compensation total paid out was $76 million. However, of the 275 claimants over the period of those three floods, only six inspections were completed in compliance with the compensation regulation.

Does that mean that the $7.6 million was paid out to just those six, if you could clarify that?

Mr. Klos: Yes, to clarify: In the past programs for 2011 and 2012, there were 75 applicants that received payment of a total of $3.65 million for those two programs. For the 2014 program, I can confirm that there were 79 applicants that received payment of a total of $3.78 million for that year as well.

MLA Carla Compton (Tuxedo): My question is maybe more in the theoretical. As we know, there had been three years of flood years, and the last few years have maybe been a little bit more on the dry side, lower side. But then this year, again, we have higher water levels. And I was just looking on a map to kind of gain context of where the Shellmouth Dam is.

But are there predictions or estimations of how often this may be something that needs to happen? Or with climate change and the unpredictability of precipitation, annual precipitation numbers and stuff, becoming maybe more erratic and such, that it is in a more uncertain territory? I'm just wondering. It's great all the recommendations have been fulfilled, but what's the likelihood of the next time this–of this happening?

Mr. Klos: Yes, I can confirm we obviously operate the structure in a way where we're–we try to avoid any types of artificial flooding. We operate based on the guidelines, the operating guidelines, that are approved and available.

We also work closely with the Shellmouth Dam liaison committee, which includes a number of local stakeholders and producers and landowners in the area as well. So we operate the structure, you know, within those guidelines with the intent to obviously minimize any artificial flooding downstream.

The–you know, we're fortunate in Manitoba we have world-class hydrological forecasting, you know, expertise within the department that is monitoring flood preparations, water levels and conditions all across the province, including for the Shellmouth Dam area. For this–as part of our program we collect significant data annually, which includes monitoring, you know, ground level moisture levels, snow levels that received during the snow and, obviously, closely monitor weather conditions as we approach spring so that we can forecast, you know, what runoff we're expecting and operate the dam in a structure, in a way to, again, to try and minimize any impacts.

For this year we're seeing, you know, very significant inflows, particularly from out west, into Lake of the Prairies, which is a reservoir for the Shellmouth Dam. The department has operated within the operating guidelines and has opened up the gated conduit to try and draw down the reservoir as much as we can, you know, in line with the operating guidelines to try and prepare for that inflow, which we have. At this point, we're closely monitoring. The Shellmouth Dam liaison committee is meeting on a very regular basis, so we are staying in contact with impacted stakeholders and are–at this point, we haven't seen any impact of artificial flooding, but we're obviously closely monitoring the situation.

The Chairperson: Follow-up, MLA Compton?

MLA Compton: I would also like to take a moment to actually express my gratitude and appreciation for the work of the–especially the emergency measures or emergency preparedness folks. I know, more and more, every year, things become a little bit more unpredictable, so I really appreciate the work that you do.

So one question I do have for the deputy minister, I think, or appropriate person, is with where we're at now. Have relationships been strengthened or repaired? Because I can imagine that folks that were impacted and have been waiting–had been waiting years for compensation, and we know, whether it's producers, the various types of producers and such, like, that impacts their family income and how they're able to run their farms and households. Has confidence been rebuilt, relationships repaired, that should artificial flooding need to happen again, that they trust the system is going to respond and support them in a much more timely manner now?

Mr. Klos: Yes, thanks for that question. The–I would say, obviously, there's always a level of emotion and frustration when it comes to flooding and impacts on livelihood and personal property. I think when it comes to the Shellmouth Dam, obviously, there's a large range of stakeholders and landowners that are involved and potentially impacted. The department has made a concerted effort, especially with our technical folks, to build relationships on an ongoing basis with those stakeholders, to share information and to take a transparent approach in terms of sharing information and, you know, how we're operating the structure on a regular basis.

I think when it comes to compensation–the compensation program–and particularly for artificial flooding, obviously, we haven't had an opportunity, fortunately, obviously, to administer that program.

I think, as a department, based on the changes that we've made to improve the program, we're hopeful that we will minimize a lot of that frustration that was observed with past programs based on the improvements and hopefully we'll be able to demonstrate that level of trust to those landowners when we have an, you know, a situation that warrants it, so.

Mrs. Lauren Stone (Midland): Perhaps this question is a follow-up to MLA Compton's first question, but for the Auditor General, if the Auditor General could just tell us if he plans, and his office plans, to be following up again if there are artificial floods in the future that have been caused by the operation of the Shellmouth Dam and if there's any built-in mechanisms to ensure previous recommendations continue to be followed in future follow-up years.

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Mr. Shtykalo: So we have followed up twice and we are in agreement that the recommendations as we had intended have been implemented. Of course, there hasn't been an artificial flooding event to this point.

We don't have anything scheduled for further follow-up in the event of artificial flooding. Certainly, we are always working on our audit plan and our upcoming audits. In the event of any extensive artificial flooding, we would factor that into our risk analysis in determining where we're going to spend our audit resources.

The Chairperson: MLA Stone, do you have a follow-up?

Mrs. Stone: Yes, I guess. Are there–for the Auditor General again–are there additional recommendations that you would recommend, that were perhaps missed in previous reports, that could be utilized in future reports?

Mr. Shtykalo: No, we're satisfied with the recommendations that we made in this report with respect to this examination.

The Chairperson: In terms of time frames–and the deputy minister referenced through policy guidelines that the department now has–my guess is that for folks who are victims of artificial flooding, for lack of a better term, they're most interested in the report on artificial flooding to see what impact they may be able to claim for. And then, their individual claim and whether or not that gets approved, and if it does, when are they getting their money.

Can you provide details to the committee in terms of time frame for providing an 'artificiar' flooding report after an event has happened: how long an individual should expect to have a termination on their claim; and if it's successful, how long until they receive the funds that they've claimed for?

Mr. Klos: Yes, so we've definitely established, you know, clear internal timelines for administering a program. Based on the regulatory changes, our artificial flooding report officially being produced or released is no longer necessary to trigger or initiate a program. As I mentioned, the department is constantly monitoring conditions based on inflows into the reservoir and outflows from–into the river system to assess if artificial flooding has been triggered.

If we–if that event ever does get triggered, where we do, you know, hit a point of an artificial flooding event, the minister can issue a public notice to indicate–to notify and indicate that that artificial flooding event has occurred and to start officially a Shellmouth Dam compensation program. At the end of artificial flooding event, there will be a secondary notice that will be provided by the minister to notify that the artificial flooding event has concluded.

Applicants–or landowners that are impacted can submit a claim as soon as a program is announced at the beginning and up to 20 days following the conclusion of an artificial flooding event. You know, once the water recedes–and that is critical–once the water recedes so that inspections and assessments can be done, inspections will be done within 20 days of the water receding. And then, inspection report will be provided within 10 days of that inspection being completed, at which point payment–an assessment and accordingly payment will be processed for eligible landowners.

The Chairperson: So, if my math is correct, it's about 30 days or so–about a month, right–twenty days for the inspection after somebody put in their claim and then 10 days for a payment–or, sorry–for a resolution and then the payment would follow.

Is there–that hasn't been stress tested, right? Because there hasn't actually been an event since these policies have come into place. How confident is the department that if there was an artificial flood, that these timelines–which I think are helpful to know for sure, and I thank you for providing them for those who are living in that area–how confident are you that they would be met if an event happened?

Mr. Klos: So, as a department we are very confident in terms of, you know, the new program criteria and requirements being able to meet the timelines and expectations that have been set. We've–in advance of a program being established, we have–we already have established an agreement with Manitoba Agricultural Services Corporation so that we can leverage their inspectors on an as-needed basis quickly and readily, and have them deployed to do inspections as needed.

So we've done–you know, we've developed standard documents, guidelines, checklists for inspectors, as well as standardized the application process and files that will be necessary to complement a complete application. So, based on what we've put together, the department is fairly confident that we can meet these timelines.

Obviously, you know, when we do have an art–the next artificial flooding event, this will be something that, as a department, we're closely monitoring, and we will be assessing the timelines to ensure that we meet those expectations and make any improvements as necessary as we administer the next program.

Mr. Diljeet Brar (Burrows): My question is regarding inspections of the flood damage. Quoting the same example as six out of 275 inspections were done in presence of the claimant.

So, as per the revised rules or as per after the recommendations have been followed, is it mandatory to have the claimant for every single inspection to be done in future?

Mr. Klos: Yes, under the new program, the claimant is required to be on site and to accompany the inspection, as it's done. Obviously, that was something that was not a requirement as part of the past program, as you mentioned, you know, which led to a lot of frustration on landowners and so, as part of the new process–a new program going forward, the claimant will be required to be present during–at the time of the inspection.

The Chairperson: Follow-up, MLA Brar?

Mr. Brar: Any exceptions?

Mr. Klos: No exceptions.

MLA Devgan: So, when this program was first initiated, the funding for the compensation, was that originally a set pot of money or is this an ad hoc basis that these payouts were made?

Mr. Klos: Yes, so the department doesn't have an established budget line for a compensation program. Obviously, it's not something that we're–you know, if a program is triggered and does happen, similar to disaster financial assistance programs, typically, funding comes out of business area 27, emergency expenditures appropriation for any funding requirements.

The Chairperson: In terms of relaying this information to those who might be affected by a future artificial plot–I know we've talked about a new communication strategy–how would that be employed?

So maybe there's already been proactive communication provided to residents who might be impacted as these are sort of the new regime requirements if they're impacted down the road or do you wait for a reactive sort of response if it looks like there's an artificial flood event and if there is, how do you communicate this information to those–so they know how to apply, when to apply and what the expectations for the timelines are that you described before?

Mr. Klos: Yes, so in the event that we have an event of artificial flooding, we're always having regular contact with stakeholders through the Shellmouth Dam liaison committee. Obviously, if we're getting to a point where, you know, where we're concerned with artificial flooding, there's a lot of discussions and pre-emptive meetings with the committee.

As I mentioned, this year's a good example. We're meeting–the committee is meeting on a fairly regular basis, just because of how wet conditions are in that area.

As part of our communication strategy, you know, in the event that a–that artificial flooding happens, our communication strategy will include communication, obviously a public notice, like as I mentioned, through minister, but also communications through the Shellmouth Dam liaison committee.

We've already put together a list of landowners and stakeholders that, you know, that are potentially impacted, that we would use that distribution list to communicate to those that could potentially be impacted. We would use local media to announce and provide information around the impacts and availability of a program. And then, we would provide a number of resources on department's website, in terms of information of the event, but also application information, frequently asked questions and resources and information that could be available to those that are impacted.

The Chairperson: And I suppose that frequently asked questions might contain the answers–maybe it already does on your website–about that 10 days and 20 days that you described earlier. I'm sure that there are tens of thousands of people listening to the committee online, although I can't see the numbers, but presumably you'll find a way to ensure that those who might be impacted know what the expectations on the timeline as well, right?

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It's not just an internal goal for the department; you're communicating that externally to determine what the expectation is?

Mr. Klos: Correct. We'll be communicating those timelines and ensuring that we are–we're meeting those timelines and shaping those expectations of landlords that are impacted in the event of artificial flooding.

The Chairperson: Thank you. Okay–[interjection] Sorry, Deputy Minister?

Mr. Klos: Right. I just wanted to come back to a previous question just around the claimant being on site during an inspection and if that's a requirement–or if there was any exceptions. I–just to clarify, if the claimant or landowner was not available for inspection, they could make arrangements for a designate to be available on site on their behalf during the inspection.

The Chairperson: Thank you for the clarification.