WT: I have with me today, Yves Giroux, he is the Parliamentary Budget Officer for Canada, thanks for doing this Mr. Giroux. This report is titled “Clean Water for First Nations – Is the Government Spending Enough?” I ask the question, is the government spending enough?
Giroux: Yes and no, is the short answer.
On the one hand, the government seems to be spending enough on the investment part, I mean infrastructure. I say this based on the data supplied to us by Indigenous Service Canada (ISC), and the investment plans of the government in terms of how much money government has spent and plans on spending over the next five years, it seems to be enough to invest in the systems themselves.
The no part of my answer is based on what the government plans on spending and has set aside for operations and maintenance. That’s where there seems to be a gap. Government seems to have enough set aside to upgrade and build water and wastewater systems on reserves, but not enough to properly maintain and securely operate these systems in 550 communities across the country. There is a gap of $138 million per year.
WT: Speaking directly of the $138M per year gap, most of the First Nations I have interviewed, and there’s been many, almost to a person, every interview that comes up, they say “Well yes, we have a water plant, but we don’t now have enough for the ongoing running of the thing or maintenance and we are not really sure when we are going to get that money”, then I read in your report that there is $138 million per year shortfall. What would you say to those First Nations, in that situation?
Giroux: Well, it’s clear that the government needs to correct that situation. Even though you may have proper systems in place, if they are not maintained and there is no one to operate them, it’s the same as having no systems in place at all. A water system is not like a bridge, it cannot be left to its own device and do its job, you need to ensure the water flowing through it is of good quality and water out of it is good quality. It's clear that you need competent persons to operate them as well as the equipment to be replaced, equipment that wears out, filters for example.
I am not a technical expert, but it’s clear that communities need to ensure that the needs of their community are well known to ISC. What we found in our report, there is enough money on the investment side, in fact, more than enough. It’s not there is not enough money overall. It’s more that the money has been poorly allocated or misallocated between the capital investment part and operations and maintenance part. If ISC would transfer some of its funding from capital investments to operating budget, that would probably be sufficient to bridge the gap in operations and maintenance.
WT: I read in your report, “Things were improving until 2014-15, the share of water and wastewater medium to high-level risk has remained unchanged since then. During the same period, annual spending on water and wastewater systems more than doubled.” What I take out of this, is that things were improving until 2015, not they are not improving. I see that spending has more than doubled. Is that what this means? Should First Nations think this is really what is going on?
Giroux: What we looked at was going beyond the simple boil water advisories. We looked at the assessments as provided by the department over time that classifies water and wastewater systems in three buckets. Low risk means things are running relatively smoothly, with no deficiencies to be corrected. Medium and high risk means there are deficiencies to be corrected, so it may not necessarily entail a boil advisory, but there are deficiencies that need to be corrected. We found in our report when asking ISC for that information, the share of low-risk systems has remained stable at around 54% over the last six years, so there has been progress on boil advisories, but the share of systems that are in very good shape has remained constant, 54%. This is a bit surprising considering the number of systems, the amount government has invested in systems.
WT: Another quote from the report, your office indicates spending since 2016-17, and planned spending to 2025-26 will only cover two-thirds of the need.
One, is this right? Two, how does your office figure out, that the feds will only cover two-thirds of the funding required?
Giroux: We used assessments that were done in 2011. These were very thorough and formed the basis of risk assessments in First Nations communities. These were updated and informed by the Department on the risk levels of water and wastewater systems in First Nation communities. We also looked, not only at the current situation, but also looked at the demographic projections, which suggest that the population on reserve will grow in certain areas and grow faster in other areas and so on. Looking at the water system now is one thing, but one also must factor in the future needs, if the population grows, then the system will have to provide a greater quantity of water and treat a higher volume of wastewater. We grew the current needs by population growth, and we looked at two different buckets. In accounting, in real life, there is a distinction to be made between capital investments and the funding for day-to-day operations and maintenance of water and wastewater systems.
On one hand, government has already set aside, has already spent or plans to spend six billion on water and wastewater infrastructure. We find that probably three billion would be sufficient, based on assessments and information supplied to us, and the population growth of the communities. That’s for the capital investment part.
On the O&M side, you need replacement parts, you need chemicals to ensure water is drinkable, and to ensure that whatever goes out is also not harming the environment. You also need persons that are qualified to operate these systems. We assessed the need to operate the water and wastewater systems in these 550 communities. We looked on the other hand, how much government is budgeting for O& M, and that’s where we found the gap of about $140M each year, to properly operate and maintain all these systems, both water and wastewater plants, and systems.
WT: That $140M shortfall per year, is this being included in the statement “will only cover two-thirds of the funding needs” is that correct?
Giroux: Yes, exactly that’s what we refer to. The two-thirds that are funded is the operating budget. That staffing, supplies, spare parts, and so on, is where there is a funding deficiency, based on our research. Of course, we could be wrong, but we determined that based on the information provided to us by the Department as well as prior year assessments of the systems.
WT: When I look at the 1,298 water and wastewater systems in these 550 First Nation communities, on the wastewater side, is that subsection of this report? I know an awful lot of First Nations did not want to go the way of lagoons, they wanted to use something that is going to work in the 21st century. This is something that many Chiefs have told me they truly need, an upgraded wastewater system in their community. Did you look at any of those numbers?
Giroux: We did not do an on-site assessment. We considered water and wastewater, but we did not go into the technical specifications of each and every one of the systems. We relied on the assessments as provided by ISC, and these seemed to be fairly reliable.
WT: When you say there is six billion allocated, is that real cash in the bank? And you are saying only three billion is really needed for water plant hard construction, and what isn’t needed there could go into O& M. This other three billion would cover the $140M a year shortfall, have I got the math right?
Giroux: I think you have the math right. The six billion set aside, it’s not money in the bank per se, because the govt has to fund itself every year. Apart from Statutory Obligations, such as Old Age Security payments which are in legislation, the transfers that federal government does on -reserve or off-reserve has to be funded every single year. It’s not then money in the bank, it’s a government commitment that they have indicated they would spend, and have already spent a good chunk of, but for future years it can be rescinded or changed.
WT: To the First Nations that are hearing this or reading this interview, what do you suggest, as the Parliamentary Budget Officer? What would you say to those First Nations that currently don’t have pipes from their new water plant to their homes, and they are sitting there without an operator for the new plant, and here is the PBO on the phone with WT saying three billion could be thrown into the O& M gap to cover that off? Now that everyone is going to know that this three billion is there, or could be there, if a First Nation is in trouble, and doesn’t have pipes, doesn’t have an operator, what would you say to those communities?
Giroux: I would say, there seems to be enough money in Ottawa for all the First Nations in need, certainly based on the numbers that were provided to us by government. If these funds have not yet reached the communities that need them, there is obviously a big issue of ensuring these funds go where needed. What I would say to the communities that do not yet have access to potable water, they need to push on their MPs, their Minister, and the Department itself to make sure their needs are well known. As I said, based on the assessment we did, there seems to be enough money, even though there may not be enough for O& M, overall the government seems to have set aside enough money. If there are still communities with no pipes and no potable water, drinkable water, there is something really wrong with the planning that’s taking place in the capital city.
WT: Mr. Giroux would you mind if I said that they can quote you?
Giroux: Of course. It's unthinkable, that in 2021 there are still Canadian communities without potable water. I know. I was working in the Department of Finance many years ago. It was an issue then, and it’s still an issue now, it’s unthinkable it still goes on. Feel free to quote me.
WT: Mr. Giroux is the Parliamentary Budget Officer for Canada. Thanks for doing this.
Giroux: It’s a pleasure.