Funding for sustainable municipal infrastructure not meeting objectives

Commissioner of the Environment and Sustainable Development Julie Gelfand

GLOBE-Net, May 31, 2016 – In her 2016 Spring Reports tabled today in Parliament, Commissioner of the Environment and Sustainable Development, Julie Gelfand said  federal programs that are intended to support the sustainability of Canadian communities are failing to meet their objectives.

Infrastructure Canada was not adequately managing the Gas Tax Fund to achieve the Fund’s environmental objectives, said the Commissioner and the Department was not adequately coordinating the key federal infrastructure programs under its responsibility that were intended to improve the environmental performance and sustainability of Canadian communities.

“We also concluded that the Federation of Canadian Municipalities was managing the Green Municipal Fund to achieve part of the Fund’s purpose, but how it was seeking to lever its investments in municipal environmental projects remained to be better defined,” she said.

“With significant and ongoing investments in infrastructure across the country, resilience means a focus not just on building or rebuilding, but on building and rebuilding better. When resiliency is built into infrastructure, it is built into communities,” added Ms. Gelfand.

Gas Tax Fund

Overall, the Audit found that although the Gas Tax Fund has provided predictable funding to municipalities, Infrastructure Canada could not adequately demonstrate that the Fund has resulted in cleaner air, cleaner water, and reduced emissions of greenhouse gases.

Infrastructure Canada could not demonstrate that the Gas Tax Fund achieved the intended environmental benefits

Infrastructure Canada did not implement the performance measurement strategy that it would have needed to determine whether the Fund was meeting its objectives, and to report on results to Parliament and the Canadian public.

The Audit also found that the Department did not consistently manage key accountability and reporting requirements. This makes it difficult for the Department to report back to Parliament about whether the funds have been managed appropriately and used for their intended purposes.

Green Municipal Fund

Overall, the Audit found that the Federation of Canadian Municipalities was managing the Green Municipal Fund to support innovative municipal projects across Canada. The Federation was also demonstrating a good practice in tracking and reporting the environmental benefits of the projects it has funded.

However, the Federation had not set out a clear description of what results it was trying to achieve in terms of how its investments would influence other municipal projects.

Furthermore, mainly because of prevailing economic conditions, the balance in the Fund was at risk of falling below the specified minimum level, thereby putting the achievement of its objectives at risk.

This finding is important, notes the Audit,  because the Green Municipal Fund targets innovative projects intended to improve the environmental performance of Canadian communities—an approach that complements other federal funding programs.

“To be as effective as possible, the Fund needs clear objectives and performance expectations for all of its activities, and long-term threats to its financial sustainability need to be addressed.”

The Federation reported the environmental benefits of projects it funded, but did not clearly define how it expected its investments to lever other municipal projects

The Audit recommended that the Federation of Canadian Municipalities, in consultation with the Green Municipal Fund Council (which includes Natural Resources Canada and Environment and Climate Change Canada as members), should develop specific objectives, performance targets, and indicators for levering its investments in municipal environmental projects.

It also recommended that the Federation of Canadian Municipalities should review the terms and conditions in the funding agreement for the Green Municipal Fund and revise them as needed to address the financial sustainability concerns about the Fund.

A requirement for a regular review of the agreement was also suggested so that it continues to support Fund objectives.

Coordination of federal funding programs lacking

Overall, the Audit found that Infrastructure Canada was working in collaboration with others, but was missing some elements necessary for coordinating the key programs under its responsibility that were intended to improve the environmental performance and sustainability of Canadian municipalities.

The Department was not adequately considering environmental risks, such as climate change, in how it made funding decisions, nor did current programs actively encourage the use of innovative approaches to mitigate those risks.

The Department did not have sufficient information available to it on the state of infrastructure, funding needs, and sustainability challenges to support strategic and coordinated funding decisions.

The Audit noted that Infrastructure Canada had developed a long-term plan for infrastructure funding. However, the resulting New Building Canada Plan only addressed some federal roles and responsibilities, without outlining federal infrastructure priorities, or providing clear objectives and ways to measure and report on results.

Infrastructure Canada did not adequately identify or manage environmental risks for the projects it funds

The Audit recommended that Infrastructure Canada, in collaboration with its federal, provincial, territorial, and municipal partners, should:

• clarify the federal roles and responsibilities in relation to those of the other players making decisions related to municipal infrastructure funding, including identifying and managing environmental risks, such as those linked to climate change;
• address their needs for better information about municipal funding requirements, including nationally consistent asset inventories;
• provide support to municipalities in their adoption of good practices for asset management;
• clarify the federal roles in promoting the use of innovative approaches to municipal infrastructure projects that contribute to environmental and financial sustainability; and
• provide a long-term vision outlining federal infrastructure priorities, with clear objectives, performance measures, and accountability.

The full report is available here