Transport Committee on May 28th, 2019

[The Chair, Liberal, Judy Sgro]

Mr. Badawey.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Madam Chair.

I'm going to concentrate a bit on what Mr. Doherty was alluding to and where Karen was going, which is sustainability.

Looking through the lens of economic, social and environmental responsibility and attaching investments to those areas, I think was already alluded to with respect to health and safety, but in terms of being very strategic, there's also working with versus handing out.

Are you actually working with our indigenous communities to establish a strategic plan that would attach itself to recognizing, first of all, their capital, the life cycle of their capital, and then ultimate replacement of their capital? With that said, there's putting proper asset management plans in place, including the financing of those asset management plans, that would fiscally impact on their operational as well as their capital investments. It's operational in terms of financing the debt that would occur over time and then, of course, for capital the obvious is the investments that will be made according to that strategic plan.

Are you actually working with them to establish this so their investments become more sustainable, and with that, the returns on those investments lend themselves ultimately to the strategic plan that they—not we—establish?

My last question is with respect to the funding itself. Is that funding actually sustainable through future funding envelopes that then enable them to accrue over time and satisfy the ultimate objectives that are identified within the strategic plan?

[Claudia Ferland]

I'm going to ask my colleague Chad Westmacott to take that question.

[Chad Westmacott]

Thank you very much for the question.

There are just a few points to raise on this one.

First of all, we do work very closely with first nation communities in terms of their plans. As was previously mentioned, the first nations infrastructure investment plan that is developed on an annual basis lays out the five-year needs in every single first nation community. Our regional offices work very closely with every single first nation community to have a sense of what's in there, what's going forward, and then the funding that can be allocated to that based on the national priority ranking framework and the priorities of the first nation community.

Moving forward though as well, we do take a look at what is the longer term in moving into more asset management types of frameworks.

We recognize that asset management is still a work in progress in first nation communities and in non-indigenous communities across the country.

There is a program, a $15 million over five years program, that we support and that is being used to increase the capacity of first nation communities to do asset management and asset management planning. That funding goes out until 2022-23. It is a process that comes in. There's a call for proposals out right now. When that comes in, it will be chosen this summer. This is the second year of their program. It can cover off a number of different things, including awareness planning and actually implementing the asset management plan in there. That allows us to get a sense of working with the first nation community and giving the tools to the first nation community and expertise to the first nation community for them to do their longer-term asset management as well.

[Vance Badawey, Liberal, Niagara Centre, ON]

I'll just jump in there for a second.

Before that happens, are you actually working with them to account for their capital? In Ontario we have the Public Sector Accounting Board that identifies that capital, identifies the life cycle of that capital as well as a replacement. Within a certain amount of time, there are certain reserves that have to be put in place to satisfy the maintenance repair of the life cycle and obviously over time is then financed ahead of time or at least accruing that financing of the replacement of that asset or assets.

[Chad Westmacott]

At this moment, I would say that we are working with the first nation communities and there is a good sense of what are the assets out there. That does vary across first nation communities as it does vary across communities across Canada in terms of their knowledge of the infrastructure that they have. With the first nations infrastructure investment plan, that does give a sense of what the priorities are of the first nation community and the assets that are out there.

There is at this stage of the game some first nations that do build up a reserve, as you've made reference to, but it does vary among first nation communities and the funding that they have available to them whether through the funding that we provide or also own-source revenue that they have.

[Vance Badawey, Liberal, Niagara Centre, ON]

Wonderful.

With respect to my latter question, will these funding envelopes be sustainable over time? The gas tax is a sustainable funding envelope based on per capita, but are there other funding envelopes that will actually be available for indigenous communities so that they can plan, so that they can have this residual plan in place? Equally as important is that the strategic plan will be actually financed over a certain period of time. That enables them to fund per project per year annually, or debenture a project and then have that sustainable funding envelope actually pay for that or finance that debt over time within their annual budgets.

[Chad Westmacott]

A variety of funding mechanisms are available to first nation communities. The gas tax fund is one you also mentioned. We're also working on the new fiscal relationship, which is a 10-year grant. At this stage of the game, I believe that around 83 first nation communities have opted in to use the 10-year grant. That sets a longer-term, sustainable and predictable funding stream for those first nation communities.

[The Chair, Liberal, Judy Sgro]

Mr. Liepert.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Thank you, Madam Chair.

I just need to ask a couple of questions for clarity, and then I'm going to let my colleague finish his earlier line of questioning.

Is it laid out in legislation somewhere that this is the funding model? I look back at municipalities. The gas tax, if I'm correct, automatically flows to municipalities. They don't have to apply for it. It's based on per capita that goes to municipalities.

Why is there not a similar process with first nations? Is it in legislation, or is it something that your department feels is more appropriate?

[Claudia Ferland]

Thank you for the question.

The determination made early on, I understand—and I can verify that it was circa 2005—would be that the money would flow into the department as per other infrastructure monies that were coming in, which would allow us, with 600 first nations across the country, to provide the funding to the first nation communities based on an in aggregate model.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

If I understand that answer, it's a process that has been adopted, unlike the municipal funding that automatically flows. If a community does not apply for a specific project, or does not get approved for a specific project by the department, then those gas tax funds do not flow to that first nations community. Is that correct?

[Claudia Ferland]

With regard to the overall infrastructure dollars, the first nation communities will make their funding plans every year, and say, “This is where we need assistance; this is where...”

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Let's assume they don't.

[Claudia Ferland]

A capital facilities and maintenance program has been established to oversee the infrastructure program associated with on-reserve infrastructure projects. This enables the first nations to work with the regions. We work very closely with the regions. We have infrastructure managers in every single region who visit with the first nations communities in order to get a sense of—

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

I understand all of that, but I'm just trying to get a sense of how this flows. A municipality can actually bank its dollars. They don't necessarily have to spend every dollar they receive on a semi-annual basis for the gas tax flowing through. If I'm correct on this, and tell me if I'm wrong, first nations communities cannot do that, because that's not the way the system is set up. The system is set up so that they have to apply, and then your department determines whether that application is accepted or not.

Am I missing something here, or is that incorrect?

[Claudia Ferland]

That is correct.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Do you know if that's based in legislation or not?

[Claudia Ferland]

It's not based in legislation.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

That was a determination, I think, to use your words.

I'm going to turn it over to my colleague.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

I'm going back to the conversation we had. Our colleagues, Mr. Sikand and Mr. Badawey, summed it up very accurately.

I'm going to give you an example. Perhaps you're familiar with Semiahmoo First Nation. They have a population of 98. They have no natural resource development. They have no source of development because of where they're situated. Regarding our colleague Mr. Sikand's comment, is it equitable that the funding be based on a population of 98, or should it be based on the economic opportunity that this infrastructure could potentially bring to the community?

To that point, as Mr. Badawey mentioned—this is where I was going, and he said it far more eloquently than I did; unfortunately, that will be a good video clip for him—ultimately, when you are providing funding for assets or infrastructure, at some point there's a cost to that first nation to manage that facility or infrastructure, whether that capacity is there or not to manage the project along the way.

That infrastructure could all of a sudden be seen not as an asset, but as something that will fall into disrepair. Again, going back to whether it is equitable, population versus opportunity.... I don't think I got the department's exact program that could provide the resources to ensure that whatever investment is being done on the first nations, there is sufficient support to help build the capacity to manage that asset as you move forward.

[Claudia Ferland]

Thank you for the question. I will take the first part and my colleague may have something to add.

When we provide infrastructure funding to first nations, we tackle it through three lenses: minor capital, major capital and operations and maintenance funds.

Operations and maintenance funds are allocated based on the day-to-day cost of the life cycle of the infrastructure, routine operations and maintenance, which are carried out through the first nation—

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

I'll stop you for one second and go to Mr. Liepert's question.

There's no consistent funding. We've already established that there's no consistent funding. On an annual basis, they have to apply continually to get that funding.

[The Chair, Liberal, Judy Sgro]

I will have to ask for a short answer, or maybe we could come back to you.

[Claudia Ferland]

With regard to targeted funding versus the operations and maintenance funding, there are two flows. The operations and maintenance funding is provided for the operations and maintenance of their assets. The targeted infrastructure funding, which we received through budget 2016 and other sources is application-based through the department.