INAC Community Infrastructure Overview Financial Management Institute of Canada Capital Chapter Professional Development Day January 19, 2017 Karl Carisse Senior Director Strategic Policy, Planning and Innovation Directorate Community Infrastructure Branch

Agenda To outline the roles and responsibilities of Indigenous and Northern Affairs Canada (INAC) regarding its investments in infrastructure Context and Infrastructure Funding at a Glance Capital Facilities and Maintenance Program Ministerial Loan Guarantees Infrastructure Investment Landscape and Challenges Measuring Performance Compliance Budget 2016 Engagement

Context Infrastructure funding (for construction and operation and maintenance) is provided to some 617 eligible First Nations located south of 60o and the Yukon. First Nations are faced with the unique on-reserve realities that create challenges for communities and for program delivery. Authorities for Grants and Contribution programs: Capital Facilities & Maintenance Program (CFMP): funds on-reserve community infrastructure; and Ministerial Loan Guarantees: provides loan security required by lenders who are financing housing loans on-reserve. Budget 2016 allocated approximately $4 billion, 2016–2021, to INAC for new infrastructure investments. INAC provides financial supports to enable First National to procure essential community services and build and maintain assets comparable to these available in non-First Nations communities of similar size and circumstances. First Nation communities often have limited financial capacity to construct, operate and maintain public infrastructure on reserve resulting in communities that may not have access to infrastructure comparable to Canadians living off reserve. On-reserve unique realities and challenges: In comparison to off-reserve municipalities, many First Nation communities are remote and may be difficult or impossible to access at different points throughout the year. This means that the construction window on reserve can be very short, and supplies can be difficult to obtain and more expensive than off reserve. Additionally, the remote and rural locations of First Nation communities challenge First Nations to hire and retain trained personnel to operate and maintain infrastructure. More than 600 communities (comprising a national population of about 418,000 people) each with independent infrastructure needs, INAC infrastructure funding approach cannot be tailored as a one size fits all. With the objective to see well-planned and effectively managed infrastructure on reserve, INAC provides different programming streams to support the construction, operation and maintenance of community infrastructure which consider these unique operating realities.

Details at a Glance Infrastructure funding Community infrastructure funding to First Nations is based on social policy and set funding allocations. Funding streams Proposal-based funding : Major capital (over $1.5 million) and minor capital (under $1.5 million) projects. Formula-based funding: Operations and maintenance projects. Funding sources A-Base funding: Recurring set of funds for the ongoing delivery of existing programs. Targeted funding: Individual budget authorities for specific projects (e.g., Canada’s Economic Action Plans, Budgets 2014 and 2016). Bottom line Assets may be funded through a variety of programs with increasing file complexity for recipients and programs delivery. Some First Nations consider investments in infrastructure as a treaty right flowing from Crown obligations under pre-1975 treaties (specifically, the numbered treaties). Proposal-based funding ─ Provides financial support to invest in capital infrastructure assets. Construction of new/renovation of existing assets are determined by INAC’s regional offices on the basis of proposals submitted by First Nation recipients. Capital funding is allocated on a project-by-project basis, based on merit and according to a National Priority Ranking Framework, which determines which projects get funded and in what order, in line with applicable program authorities and Government priorities Formula-based funding ─ Provides financial support to operate and maintain infrastructure to ensure that assets funded under the program reach their full service life cycle and mitigate the health and safety concerns they were designed to address. Contribution are determined on the basis of nationally applied formulas, and then supplemented at the regional level through additional funding allocation criteria. The formula considers multiple variables such as: population, geographic remoteness, and actual costs of operating and maintenance of assets. To note: First nations may also receive infrastructure funding from other sources such as for provinces, neighboring municipalities or private, public partnerships.

Details at a Glance (cont’d) Allocated Funds The CFMP provides approximately $1B (in targeted and A-base funding) in programming annually. Budget 2016 allocated an additional ≈$4B in targeted CFMP funding over five years to the Department for new infrastructure investments. 2016-17: $740.3M 2017-18: $1,005.2M 2018-19: $598.2M 2019-20: $588.9M 2020-21: $618.3M Ownership First Nations have ownership over infrastructure built on reserve and are responsible for its operation and maintenance. To note: the Federal Government is the primary source of funding for the majority of major assets but First Nations can contribute funds for initiative.

Capital Facilities & Maintenance Program (CFMP) The legal and policy authorities are rooted in: Department of Indian Affairs and Northern Development Act, R.S.C. 1985; Terms and conditions of Federal Government budgets; Treasury Board and Cabinet decisions; and Departmental Control Framework for Grants and Contributions. Investment decisions aim to: Maximize the life cycle of physical assets; Mitigate health and safety risks; Ensure assets meet applicable codes and standards; and Enable assets to be managed in a cost-effective and efficient manner.

Infrastructure Investment Landscape Water and Wastewater Housing Schools Other Infrastructure Based on the 2009-2011 National Assessment of First Nations Water and Wastewater Systems, INAC estimates the cost to address shortfalls in meeting existing standards and future growth needs over ten years at approximately $4.7B. Budget 2016 provided $1.8B over five years for new water and wastewater infrastructure investments. Provision and management of housing on reserve is the responsibility of First Nations; federal funding is not intended to cover the full cost of housing. In addition to INAC, funding is also provided by the Canadian Mortgage and Housing Corporation. Budget 2016 provided $416.6M over two years for new housing investments. The Education Infrastructure Fund provided a 7-year $675M investment (began in 2015-16). Budget 2016 provided an additional $924.8M over five years (began in 2016-17). The First Nations Infrastructure Fund (FNIF) is a targeted fund under the Other Community Infrastructure to support projects in eligible categories such as fire protection and connectivity. FNIF pools funding from multiple targeted sources such as the Gas tax Fund ($139M; 2014-19) and the Building Canada Fund ($155M; 2014-24*). Budget 2016 provided $255M over two years for new community infrastructure investments and $76.9M for cultural and recreational facilities. *Additional $40M was allocated for structural mitigation (2015-20)

First Nations Infrastructure Investment Plan To help strategically plan for investment at the national level, INAC develops an annual First Nations Infrastructure Investment Plan. First Nations are responsible for submitting community infrastructure investment proposals to INAC through its regional offices. Consultation takes place at the community level. Priority is given to projects that have the most impact nationally, with the first concern of being health and safety. Once funded, First Nations communities are responsible to deliver projects and have the capacity to do so in accordance with the terms and conditions of funding agreements. To note: the FNIIP is constraint by the budget cycles. As such, it focuses on the current year planning while providing an overview of planned projects over a five-year cycle Once approved (in principal), capital investments established under the CFMP are provided to First Nations according to project-specific payment schedules through transfer payments that form part of funding agreements that INAC and other federal departments enter into with First Nations. First Nations communities (or third parties acting on their behalf) are then responsible for the design, acquisition, construction, operation, maintenance, monitoring, decommissioning and final disposal of their community and housing infrastructure in accordance with the conditions and accountability requirements of their funding agreement.

Measuring Performance At the corporate level: CFMP is evaluated through its performance objectives outlined in INAC’s Performance Management Framework. At the program level: Assessed through the CFMP Performance Management Strategy. At the project level: Recipient First Nations are responsible to report performance as per funding agreements. INAC has five program reporting templates (also known as Data Collection Instruments) that collect program data to support statutory requirements, resource allocation, performance reporting, accountability, program planning, policy analysis and operational requirements. At the corporate level: the PMF presents, among INAC programs, the CFMP’s expected results, performance indicators and targets that the program is accountable for and must aim at achieving. To note: INAC is currently updating its updating the CFMP’s risk profile At the program level: The PMS expands on the PMF by providing a logic model and a performance measurement matrix that present CFMP’s immediate outcomes, outputs and activities together with performance indicators and associated targets. At the project level: Recipient First Nations are responsible to comply with the reporting requirements (financial and program performance) as set out by their funding agreement, and for providing validated reporting data to INAC.

Compliance Infrastructure funding is audited and evaluated internally by the Department’s audit evaluation branch and externally by the Office of the Auditor General and the Parliamentary Budget Office. To respond to increased compliance requests, INAC will develop over the next two years a: Risk-based Infrastructure Project Audit Regime; and Program Compliance Framework and Plans. INAC will continue to be highly engaged with its regional offices to leverage and expand existing compliance activities. Program Control Framework Serves as the “repository of record” for management controls applicable to the CFMP. Articulates and assigns roles, responsibilities and accountabilities of CFMP program actors and its governance structures. To note: Infrastructure funding is the program that is the most audited and evaluated by the Department’s evaluation branch. An ex-level specialist is leading a dedicated team to develop the Risk-based Infrastructure Project Audit Regime and the Program Compliance Framework and Plans. Program Control Framework This PCF makes explicit the management safeguards and their application to the ongoing management, delivery and oversight of the program; its overriding objective is to ensure that the CFMP maintains its operating integrity and effectiveness and achieves its intended results. This PCF is an evergreen document intended to provide guidance to regional and Headquarters (HQ) staff in the performance of their responsibilities involved in the management of the CFMP. In other words, the PCF explains who does what within the program.

Budget 2016 – Engagement Budget 2016 indicated a focus on engagement with all stakeholders to help inform the Government of Canada’s 10-year infrastructure investment plan. National engagements include monthly joint sessions with the Assembly of First Nations, INAC officials and other government departments. Regional engagements sessions (for each province) will include regional Aboriginal representative organizations, First Nation Chiefs and technicians, INAC officials and other government departments. These discussions may help reform how infrastructure investments are planned and supported.

Questions