New Shelter Cost Differential (SCD) Methodology - Highlights of Changes - IPGHD – August 1, 2023

Isolated Posts and Government Housing Directive (IPGHD)

On July 8, 2022, the Isolated Post and Government Housing Committee finalized the revised methodology for the calculation of the Shelter Cost Differential (SCD).

This communiqué highlights the changes to the SCD methodology and provides information which will assist employees in gaining a better understanding of the application of this revised methodology that describes how qualifying locations are established and how amounts are calculated for employees renting accommodation or living in government housing.

The SCD was last established by the Canada Mortgage and Housing Corporation (CMHC) in 2012. Since 2013, an interim methodology was used to adjust the rate annually by indexing the SCD rates by the territorial Consumer Price Index (CPI). This interim methodology will continue until July 31, 2023. The revised methodology is explained in this communiqué.

An SCD allowance will be payable at designated isolated posts where the average monthly rent for 3-bedroom accommodation at the isolated post, based on census data on shelter, is higher than the national average threshold. The national average threshold is calculated by adding 15% to the monthly average rent for three-bedroom accommodation at the 12 points of departure as defined in the Isolated Posts and Government Housing Directive (IPGHD).

The Isolated Posts and Government Housing Committee is composed of representatives from Federal Public Service Bargaining Agents, the Employer and departments. The provisions of the IPGHD and the Guide to the NJC Rates & Allowances for the IPGHD will be updated during the upcoming cyclical review ensuring that the necessary changes will be made by the parties to reflect the revised approach which has been approved under the auspices of the NJC.

Implementation Date

The revised SCD methodology is effective August 1, 2023.

Highlights Of Changes

Previous Methodology

For Private Accommodation

The SCD was based on the difference between the Base Shelter Value (BSV) for the 3-bedroom benchmark model at the isolated post and the national average BSV for the 3-bedroom benchmark model at the 12 locations identified as points of departure.

For Government Housing

The SCD was the difference between the average BSV for all 3-bedroom detached government housing units at the isolated post and the national average BSV for the 3-bedroom benchmark model at the locations identified as points of departure.

Interim Methodology

The SCD was last established by the Canada Mortgage and Housing Corporation (CMHC) in 2012. Since 2013, an interim methodology was used to adjust the rate annually by indexing the SCD rates by the territorial Consumer Price Index (CPI). This interim methodology will continue until July 31, 2023.

Revised Methodology

Prior to August 2023, Statistics Canada will follow the steps outlined below to establish the list of qualifying locations and associated rates that will be provided to the NJC Isolated Posts and Government Housing Committee for approval: 

1. The census data on shelter will be used to establish a national average monthly rent for 3-bedroom accommodations based on the average rent for 3-bedroom accommodation at the 12 points of departure identified in the IPGHD. 
2. This average rent for 3-bedroom accommodation at the 12 points of departure shall be multiplied by 15% to achieve the national average threshold which will establish the baseline for SCD eligibility.
3. The isolated post will qualify for SCD if the average monthly rent for 3-bedroom accommodation at the isolated post is higher than the national average threshold.
4. When the average rent at post is not available, Statistics Canada will assign the nearest census division for the purpose of determining the eligibility of an isolated post and calculate the SCD amount should the location qualify.
5. The monthly amount of the SCD for the isolated post shall be established by calculating the difference between the average monthly rent at the isolated post and the national average threshold.
6. This difference multiplied by 12 establishes the annual SCD amount.

For Private Accommodation

A single rate for each qualifying location will be published for employees renting private accommodation (Appendix K-1)

For Government Housing

The SCD rate for employees with dependants in government housing will be the same as employees renting private accommodation. The rate for employees in government housing without dependants will remain at 60% of the employee “with dependants” rate.

Transitional Provisions

The following transitional provisions have been developed for employees who are currently in receipt of the SCD who will be subject to a decrease in the SCD allowance or who are assigned to an isolated post that may no longer qualify for SCD. Employees shall have the amount of the SCD reduced as follows:

1. one-half of the amount of the decrease, on the first day of the fourth calendar month after the month of the effective date; and
2. the balance of the amount of the decrease, on the first day of the 13^th calendar month after the effective date of August 1, 2023.

When a location referred to in Appendices K-1 or K-2 is added or the SCD allowance of a location is increased because of the implementation of the revised SCD methodology, the change in SCD will be effective on August 1, 2023.

Once the transition has been completed, employees will be subject to the relevant sections of the IPGHD which address when locations are deleted (section 2.8.4) or when rates vary (sections 2.12.4 and 2.14.1), after census data is released. The SCD will be indexed annually by the average “all items” territorial CPI (May to May) starting in August 2024 until the next census results on shelter are available.

Enquiries

Enquiries about the IPGHD should be referred to the respective Bargaining Agent or Designated Departmental Coordinator.