Public Accounts Committee on June 14th, 2022

[The Chair, Conservative, John Williamson]

I call this meeting to order.

Good day. It's great to see everyone here.

Ms. Hogan, on Zoom, it's nice to see you as well.

Welcome to meeting number 25 of the House of Commons Standing Committee on Public Accounts. Pursuant to Standing Order 108(3)(g), the committee is meeting today to undertake a follow-up study on “Report 3: Access to Safe Drinking Water in First Nations Communities—Indigenous Services Canada” in the Auditor General of Canada's 2021 report.

Today's meeting is taking place in a hybrid format, pursuant to the House order of November 25, 2021. Members are attending in person in the room and remotely using the Zoom application.

Pursuant to the directive of the Board of Internal Economy of March 10, 2022, all those attending the meeting in person must wear a mask, except for members when they are seated during parliamentary proceedings.

To ensure an orderly meeting, I would like to outline a few rules for witnesses and members to follow.

Before speaking, please wait until I recognize you by name. If you are participating by video conference, click on the microphone to unmute yourself and please keep your microphone muted when you are not speaking.

For interpretation, those on Zoom have the choice, at the bottom of their screen, of floor, English or French. Those in the room can use the earpiece and select the desired channel.

I remind you that all comments should be addressed through the chair.

Members in the room who wish to speak must raise their hand. Members participating via Zoom must use the “raise hand” function. The committee clerk and I will do our best to maintain a consolidated order of speaking. Thank you for your patience and understanding.

In accordance with the routine motion, I am informing the committee that all witnesses have completed the required connection test in advance of the meeting.

Before we begin the meeting and go to the witnesses, I'd like to mention that, if there's agreement and members feel we have exhausted all of our questions, I'd like to reserve the last 20 to 30 minutes of the meeting to discuss the report on the public accounts. We will certainly get through the first three rounds and, if there's agreement on letting the fourth round go—it's a shorter round—we'll turn to a discussion on the public accounts report. I will check with everyone when we get to that time in the meeting, probably at half past 12.

I'd like to welcome our witnesses. From the Office of the Auditor General, we have Karen Hogan, the Auditor General of Canada, and Glenn Wheeler, principal. From the indigenous services department, we're welcoming back Christiane Fox, the deputy minister—it's very nice to see you today—and Nelson Barbosa, acting director general, community infrastructure branch, regional operations.

I will now turn to Ms. Hogan. You have the floor for five minutes.

[Karen Hogan, Auditor General of Canada, Office of the Auditor General]

Mr. Chair, thank you for this opportunity to discuss the access to safe drinking water in First Nations communities. I would like to acknowledge that this hearing is taking place on the traditional unceded territory of the Algonquin Anishinaabe people. Joining me today is Glenn Wheeler, the principal who was responsible for the audit.

As we have not conducted any new audit work since we presented our report to Parliament in February 2021, I will provide today a brief overview of last year's audit findings.

Reliable access to safe drinking water is vital to the health and well‑being of all, including the people living in the more than 600 first nations communities across Canada. A key component of reconciliation is eliminating long‑term drinking water advisories on public water systems on first nations reserves and addressing community infrastructure needs.

In 2015, the federal government committed to eliminating all long‑term drinking water advisories on public water systems on first nations reserves by March 31, 2021. We reported that 60 remained in effect in 41 first nations communities as of November 1, 2020. Almost half had been in effect for over a decade.

In addition, we found that some long-term advisories were lifted only as a result of interim measures that did not fully address the underlying deficiencies. For some of these water systems, long-term solutions were not expected to be completed until 2025.

We also found that Indigenous Services Canada's efforts had been constrained by an outdated policy and formula for funding the operation and maintenance of public water systems. The department had not amended the funding formula since it was first developed 30 years ago. Until the formula is updated, it is unclear whether funding increases will be sufficient to meet first nations' water infrastructure needs.

Following the tabling of our report, the department presented this committee with a detailed action plan that addressed our recommendations. Many of the milestones that the department had set have passed.

I am pleased to see that the committee is revisiting this report. As I said last week, this is an example of results being slow to follow the department's original commitments. To improve the situation for first nations communities, actions have to catch up to words. The committee's ongoing follow-up is critically important.

The committee may wish to ask the department what progress it has made to eliminate all long-term drinking water advisories. As well, it may wish to inquire about progress on codeveloping a legislative framework for safe drinking water and a long-term strategy for water infrastructure.

Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have.

Thank you.

[The Chair, Conservative, John Williamson]

Thank you very much, Ms. Hogan.

Turning now to Ms. Fox, you have the floor for five minutes, please.

[Christiane Fox, Deputy Minister, Department of Indigenous Services]

Thank you very much, Mr. Chair.

Kwe kwe. Ullukkut. Tansi. Hello.

Thank you for inviting me here today.

I would like to begin by acknowledging that we come together on the unceded traditional territory of the Algonquin Anishnaabeg people.

I am pleased to give an update on the department's progress regarding the recommendations made by the Auditor General in Report 3, Access to Safe Drinking Water in First Nations Communities.

The department continues to work with and support first nations as the owners and operators of their water systems to address all remaining long‑term drinking water advisories as soon as possible.

Since our department last appeared before this committee in April 2021, 43 short‑term drinking water advisories have been lifted, preventing them from becoming long‑term. In addition, 26 long‑term drinking water advisories have been lifted.

As of May 31, 2022, 132 long‑term drinking water advisories have been lifted in first nations communities since 2015. In addition, 219 short‑term drinking water advisories have been prevented from becoming long term.

Work is under way to lift all 34 remaining long‑term drinking water advisories, affecting 29 communities, on public systems on reserves.

The department continues to work with first nations to implement projects that address the long-term needs of communities affected by long-term drinking water advisories. Where interim measures have been implemented to lift drinking water advisories, long-term solutions are at various stages of implementation. We continue to advocate for a continuation of program funding that ensures support for water and waste-water services in first nations, with the objective of obtaining long-term, stable funding, including targeted funding to enhance capacity training measures and retain water operators.

Since 2016, the Government of Canada has committed over $5.6 billion to upgrade water and waste-water infrastructure on first nations reserves, better support the operation and maintenance of these systems, improve the monitoring and testing of community drinking water, and support ongoing efforts to eliminate and prevent long-term drinking water advisories. We continue to work with first nations to help with annual performance inspections of water systems.

We also undertook a pilot program for a new asset inspection process, which is now being rolled out on a three-year cycle. In addition to providing a more comprehensive review of asset deficiencies, this new inspection process identifies future capital requirements, allowing communities to proactively plan and undertake major maintenance and asset replacement activities before assets fail. We will continue to proactively work with communities to prevent recurring advisories.

One of the OAG recommendations related to the department identifying how much funding is needed by first nations to operate and maintain drinking water infrastructure, and amending the existing funding formula to provide sufficient operations and maintenance funding in future years. I'm pleased to say the department implemented this recommendation in July 2021. The existing O and M funding formula has been updated to better reflect actual costs. That increase in funding has already started flowing directly to first nations. ISC will continue to cover 100%—up from 80%—of the O and M funding formula for water and waste-water systems.

Another recommendation was that the department work with first nations to develop and implement a regulatory regime for safe drinking water. The recent court-approved class action settlement agreement for safe drinking water in first nations commits Canada to making all reasonable efforts to introduce legislation that repeals the Safe Drinking Water for First Nations Act by March 31, 2022, and to develop and introduce replacement legislation, in consultation with first nations, by December 31, 2022.

Canada and the Assembly of First Nations are advancing co‑development of a draft framework to inform the development of proposed legislation to replace the Safe Drinking Water for First Nations Act.

Finally, Budget 2022 proposes $173.2 million over 10 years, starting in 2022‑23, to support the transfer of water and wastewater services in 17 communities to the Atlantic First Nations Water Authority.

By putting service delivery into the hands of communities themselves, this first‑of‑its‑kind, first nations‑led initiative will help chart the path to self‑determination, while strengthening the management of water and wastewater infrastructure on reserves.

I look forward to answering your questions. Meegwetch. Qujannamiik. Marsee.

Thank you.

[The Chair, Conservative, John Williamson]

Thank you very much.

This committee hearing is a little unusual. We're calling witnesses back, as well as members, to review a previous report because of the importance members around this table give this study. We think this issue is deserving.

I'm going to begin the first round of questions.

MP Schmale, you have the floor for six minutes.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Thank you, Chair.

Thank you to our witnesses.

Ms. Fox, it's good to see you again.

As you know, in early February the indigenous and northern affairs committee requested that the PBO do a comparative study based on how much money is being spent. As we know, it's more than ever, but the results are not the same. As I mentioned, the spending has gone up but the analysis showed that it did not result in an improvement in the ability of first nations, themselves, but also the department to achieve the goals it set for itself. The Parliamentary Budget Officer specifically said this:

This was partly driven by the volatility in the departmental result indicators. Many were added or removed over the course of the period preventing results from being collected due to data collection lags. Some indicators lack target values and completion dates altogether.

Because of that, it was hard to actually locate when these targets would be completed. Going on from that, we have the Auditor General's report showing that as of March 31, all remaining boil water advisories were to be lifted. That was not the case.

Based on this moving of the goalposts, so to speak, which I know we've talked about in the INAN committee quite often, how confident are you that we will be able to achieve these new targets?

[Christiane Fox]

Thank you for the question. I would have a few comments on that. First, I think it's important to note that the Parliamentary Budget Officer did indicate that on the capital side the funding was there. I think that's an important part of that report.

What I would say is that we have put a lot of emphasis on operations and maintenance, because in order to ensure the long-term sustainability of these water infrastructure systems, that O and M is absolutely fundamental. The shift we made was that we actually moved to an industry standard of how we did the O and M formula. What actual asset is being purchased? What equipment is linked to it? What are some of the factors, like remoteness or proximity to a city, that determine what the appropriate O and M cost is? I would say that a lot of these changes have led to, I think, better supports with 100% funding that is actually more accurate to the asset of a particular community.

I would also say that we have built in some flexibility. If there is a particular asset that falls above the formula base that we have indicated, there is flexibility for us to work with the community and adjust that formula to give them the funding they require.

On the results themselves, we have enormous activity in the department around infrastructure at large and assets, whether it's education, health or water. We have definitely put an emphasis on tracking the results of the long-term drinking water advisories that exist, the 34, but it is not unique to that. In terms of results, we have an action plan for every single community that is on a long-term and short-term drinking water advisory. Beyond that, through the work with communities on their broader infrastructure needs, we are tracking it. What does the community prioritize in terms of their infrastructure needs, and then how do we track builds, completions and homes? I think there is a more rigorous process around results and indicators.

Particular to the water advisory, for every single one of them that exists, we have an analysis of engagement with the community and the work that's being done, some of the short-term measures to address some of the urgent needs, and what the long-term plan is.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Great. Thank you.

I'm short on time, so I might have to interrupt, unfortunately.

As we pointed out, we talked about your action plans. We talked about increased funding. However, in fiscal year 2019-20, 306 out of 718 water systems were still rated as high or medium risk. Judging by exactly what you said—new strategies, new money—why?

[Christiane Fox]

Why are they still...?

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Yes.

[Christiane Fox]

These new strategies and new systems don't turn over overnight. A lot of operation and capacity needs exist in communities now. Obviously, we are starting to see the benefits of investments and the benefits of the changes we have made, but I do believe it will take a number of years.

I would say that a key consideration is water operators. I was up in Cat Lake and I met with their water operator. There's one person in Cat Lake doing the water operations of their plant. He took me through the plant. The biggest risk he has in his community is that he is the sole water operator. If something happens to him, the system is at risk.

Those are the types of things we have to address. There is training. There is funding. I think through the Atlantic water authority, part of what we're trying to build is that capacity to transform systems.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

I'm just asking. I'm not trying to be combative in any way.

[Christiane Fox]

No. Absolutely.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

The number of medium- to high-risk systems has remained the same, relatively, for the past almost 10 years now, but all these new things have been put in place. We're not seeing the results here. I'm very concerned that we're not going to meet those targets.

[Christiane Fox]

I think some of the results we are seeing.... There are 7,000 homes that have access to water that didn't before. There are 528 community buildings. There are shifts. There are new treatment plants that are operational.

The long-term funding and the additional investments in O and M are going to address some of the new systems that come into play. To be fair, as we build more housing and we build health infrastructure, we need water plants to support these new builds. I think we are seeing some progress, but there is a lot of work left to do.

[The Chair, Conservative, John Williamson]

Thank you very much, Mr. Schmale. I'm afraid your time is exhausted.

We are turning now to Mr. Fragiskatos.

You have the floor for six minutes, please.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Chair.

Thank you, Ms. Fox and Mr. Barbosa, for being here and for your work, again.

Let's follow up on that point of things that have improved and achievements that you would point to, Ms. Fox, that really stand out. Let's get it on the record for our awareness and understanding. You've mentioned a few things. If you care to repeat them that's fine, or you can add anything you wish to that.

[Christiane Fox]

I would say it's important to not lose sight of the fact that since 2015, 132 long-term drinking water advisories have been lifted and 219 were also lifted before they became long term. There's been a lot of work to address some of those crisis situations. Yes, some of the results are around 7,000 homes and 528 community buildings.

What is fundamentally a shift and a really important point to make is around the settlement. There are huge trust issues with the government and communities with respect to water, and rightfully so, after all these years.

What does the water settlement do? It allows us to, first of all, compensate. There's $1.5 billion to compensate those who have been harmed by long-term drinking advisories. We created a $400-million first nations economic and cultural restoration fund. There is a commitment to lifting the remaining long-term drinking water advisories. We now have a first nations advisory committee that will look at safe drinking water. We have a commitment to support first nations and their bylaws with respect to water. Six billion dollars in forward investment is committed under this settlement, so that gives certainty of longevity in terms of the government's commitment. Repealing the legislation is also part of what first nations have been asking for, which is to replace it with something that has more rigour and respects rights and long-term funding.

That's part of the success. I would say the final piece around success is around transformation. What the department is doing to get away from and out of the business of managing this asset by asset is investing in water authorities, water hubs and community tribal councils that are running the water services for communities. The government is stepping away from that by providing the funding. Part of the success is to transform the capacity in communities.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you for that.

In that vein, if I could point to one of the key recommendations in the report in question, it relates to.... I'll read it. This is recommendation 3.61 on page 13:

Indigenous Services Canada should work with First Nations to proactively identify and address underlying deficiencies in water systems to prevent recurring advisories.

That's about collaboration and working together. Of course, the department agreed. I wonder where you would say that recommendation lies in terms of its unfolding.

[Christiane Fox]

It unfolds in many situations. It unfolds with rights holders and individual communities in terms of the work that we need to do together to train operators to manage the O and M, as well as to forward plan around their capital plans and what the community sees in terms of its needs with respect to water. That's one element of partnership. It's also about the ongoing prioritization of communities and the department, and working very closely with them.

Where the partnerships will bear fruit is with the upcoming legislation. We have a commitment to codevelop with first nations partners, and we have started that. We have been working with the AFN for over three years. We know what the core issues are around rights and legislating that right to safe water. We know about funding, long-term needs, sustainability and source-water protection.

These are all issues that we are going to codevelop, not just with the AFN but with water authorities, first nations-led, tribal councils and individual chiefs. That partnership and that work together allows us to continue this work and show greater results.

What the settlement also did was to recognize the harm and now there is the ability to rebuild that trust and partnership, because there were people who were never at the table with us who are now at the table looking to see how we can collaborate. The challenges remain. I don't want to give the impression that there's still not work to be done, and it's work which we will continue, but these are some examples of progress.

[Peter Fragiskatos, Liberal, London North Centre, ON]

That is encouraging.

Finally, with my last question, recommendation 3.77 on page 15 of the report says, “Indigenous Services Canada, in consultation with First Nations, should make it a priority to”. My focus is the second bullet point:

amend the existing policy and funding formula to provide First Nations with sufficient funding to operate and maintain drinking water infrastructure

What would you say to that recommendation in terms of progress?

[Christiane Fox]

As of July 2021, we have updated our formula and that we are making progress. When I speak about operations and maintenance, there are a number of activities, such as water, waste-water systems and equipment. It's the water mains, plants, sewer mains, booster stations and lift stations. These are all part of what it takes to successfully operate a water treatment plant, but it's also the operator, salaries, daily cleaning, testing and inspections.

One of the big commitments is that we now have a formula. I would also note that in addition to being industry standard, it does have consideration for remoteness. It also has an adjustment for inflation that's built into the O and M formula structure to allow for growth. Any sort of new asset that is constructed would also be subject to an update in the formula.

As I mentioned earlier, if there are complexities due to a particular system, or solution, there's flexibility for us to work with first nations to increase that funding, if and when that is required.

[The Chair, Conservative, John Williamson]

Thank you, Ms. Fox.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thanks very much.

[The Chair, Conservative, John Williamson]

I always like to think the “and” is the last point, but members and witnesses are good at adding “and” as well.

Go ahead, Ms. Sinclair‑Desgagné. You have six minutes.