The current First Nation infrastructure system is the least effective government infrastructure system in Canada. First Nation infrastructure costs the most to build, takes the longest to develop, and has the shortest operational lives.
Not only is it the least effective system, it is also fiscally unsustainable in its current form. Whenever a new infrastructure project is built, further resources are required for ongoing operation, maintenance, insurance and eventual replacement. In total, these costs are the contingent liability of new infrastructure.
Current federal resources for First Nation infrastructure are increasingly being devoted to operation and maintenance and not new projects. Current projections show that by the end of 2020/21, O&M requirements will be so significant, there will be no funds available for new proposal-based capital projects within the Capital Facilities and Maintenance Program (CFMP) budget.
The projected requirements for new infrastructure are large and growing especially as populations grow, health and safety standards rise, and rules for who is a status member change. In other words, this growing contingent liability associated with infrastructure will soon bankrupt the current First Nation infrastructure system.
Recently, the federal government announced it will be working with First Nations to begin the process of moving beyond the Indian Act and dismantling DISC. With respect to infrastructure, this presents a challenge and an opportunity.
The challenge is assuming a large and potentially unsustainable infrastructure liability but the opportunity is to design a better First Nation infrastructure system that reduces liability, builds sustainable infrastructure.
A Better Infrastructure System
A better First Nation infrastructure system would have more jurisdiction, revenues and capacity at the local level to speed decisions, better manage projects and costs, improve operation and maintenance and generate sufficient revenues to replace infrastructure.
A better system would have tribal, regional and provincial First Nation institutions provide necessary professional support for all parts of the infrastructure cycle, to encourage cost efficiencies through aggregations and standards and to ensure community sustainability through integrated planning and better access to revenues and resources.
A better system would have a national institution to improve access to infrastructure financing capital, encourage and promote innovations, develop standards, support local and regional capacity development, increase revenues available for all parts of the infrastructure cycle and provide insurance options to manage risks.
This better First Nation infrastructure system would reduce time and costs of infrastructure development, increase durability, improve health and social outcomes and support the growth of First Nation economies and revenues to build sustainable communities and nations.
The work towards a better First Nation infrastructure system is well underway. Several First Nations have begun to use long-term financing through the Fiscal Management Act (FMA) to build more sustainable infrastructure. There are several tribal, regional and provincial organizations who have begun to collect information, develop capacity and support aggregation and other infrastructure efficiencies.
It is proposed that First Nations Infrastructure Institution (FNII) be established as an optional FMA institutions as part of this better system. As illustrated it would work with First Nation partners to deliver shorter review times, more efficient procurement, longer infrastructure lifecycles, more innovations, economically and fiscally sustainable infrastructure and improved access to capital.
Principles of FNII
FNII will build on the successful framework used by the FMA institutions to help interested First Nations build more sustainable infrastructure faster based on the following guiding principles:
- FNII’s design will continue to be directed and controlled by
- First Nations;
- FNII will be optional and respect the right of self-determination;
- FNII will work with and support existing First Nation
- infrastructure institutions and other possible partners to
- help First Nations build more sustainable infrastructure.
- FNII will be a national institution;
- FNII will be an FMA institution;
- FNII will support First Nations to implement their infrastructure jurisdiction and support projects that increase economic and fiscal benefits; and
Preliminary Purposes of FNII
FNII’s core mandate will be to help interested First Nations transition from unsustainable infrastructure systems to sustainable infrastructure systems.
Other FNII purposes will include assisting First Nations to build more economically and fiscally sustainable infrastructure; supporting First Nations to exercise their jurisdiction over infrastructure; and working to deliver secure, stable, long-term infrastructure transfers.
Beyond that, FNII will also help develop formulas and processes for effective and efficient infrastructure funding; support long-term infrastructure financing; help transition ownership of infrastructure to First Nations; and support aggregations or nation groupings to achieve economies of scale.
Other aims it is hoped FNII will achieve include promoting an understanding of infrastructure’s linkage with economic and fiscal sustainability; providing support for the implementation of standards and laws; assessing infrastructure project readiness and support infrastructure planning.
FNII will also develop training programs and build capacity and administrative efficiencies; support more integrated infrastructure planning; and will work with the FMA institutions to support improvements throughout the project lifecycle.
Further purposes of FNII include advocating for new revenue streams within an mproved fiscal framework; assessing infrastructure risks and develop risk management strategies; and achieving administrative efficiencies.
How FNII Supports a Better Infrastructure System
FNII will support at least the following improvements in the First Nation infrastructure system:
- Longer Term Federal Transfers – Work with FMA institutions and First Nations to develop a better system of federal contributions and ensure transfers can be monetized;
- New Revenues for Financing – Enable new, more stable revenue sources to enhance infrastructure sustainability;
- Improved Access to Capital – Help participating First Nations access longer-term, lower rate financing through the FNFA, to be combined with improved long-term transfers;
- Standards, Laws and Templates (SLTs) to Reduce Costs and Time – Develop and efficiently implement standards, sample laws and templates required to support all elements of the infrastructure cycle;
- More Efficient Review Processes – Support more cost and time effective review processes through professional certification and other innovations;
- Support Innovations – Provide the opportunity to implement more innovations through regional partnerships and a national data base that enables better research;
- Support Nation Building – Help lower costs through economies of scale and First Nation aggregation that achieve infrastructure system efficiencies;
- Better Insurance Options – Develop affordable options for infrastructure insurance;
- Incorporate Economic and Fiscal Potential – Incorporate economic and fiscal potential into planning to build more economic and sustainable infrastructure and;
- Develop Efficiencies to Support Possible PPP Options – Provide a mechanism to combine smaller projects into a larger vehicle to achieve more favourable financing.
Work on FNII is ongoing as interested First Nations contribute their ideas to the evolution of the proposal. The First Nations Tax Commission looks forward to the discussion of FNII at the upcoming National Meeting.