Projects under the Infrastructure Stimulus Fund (ISF) and the other dozen or so programs at the national or regional levels will be in the tens of thousands over the next few years. But they won’t contribute to the sustainability of infrastructure services without proper risk assessment.
Whether ISF money is flowing fast enough for projects to be completed by March 2011 or completion deadlines should be extended as requested by the Association of Canadian Engineering Companies (ACEC) is an issue policymakers and elected leaders will have to debate. What we do know is that the various funds have generated lists upon lists of “shovel-ready” projects that are being evaluated for approvals, with a few already underway. Eventually however, some of the country’s existing assets will need to be repaired or renewed, some will be improved or expanded and, in many cases, local governments will have this new infrastructure to manage.
Accelerated programs like the ISF are complex and difficult to manage. In a March 5, 2009 letter to the secretary of the Treasury Board, Canada’s Auditor General (AG) Sheila Fraser said, “They [managers] will need to balance the government’s wish to move quickly with the requirement to exercise due regard; this will require sound analysis of risk, and appropriate delivery mechanisms commensurate with those risks.” The expectations from the AG relate to selection criteria, clearly defined objectives, accountability and performance measures.
Assuming those requirements are met, what will the results be in terms of the long-term sustainability of the infrastructure being repaired, renewed or newly acquired by Canadian communities?
There’s no need to get into exactly how large the infrastructure deficit is—it’s big. Programs like the ISF pay for capital projects, inherently considering the proponent will have enough resources, over the life cycle of the assets, to properly operate, maintain and repair them. But this isn’t part of what will be audited.
Construction activity over the next 18 to 24 months will be high. In Ontario alone, sources indicate there are 2,746 applications, for example, 312 from Chatham-Kent, 302 from Mississauga, 269 from Ottawa (although the list on the Infrastructure Canada website indicates only 91 projects totalling $376 million), 150 from Hamilton, one from Toronto (there has been enough press about that one, so no need to provide details).
Considering Ottawa only-kudos to the city for posting their list of projects for public reference-in relation to the 91 projects listed, 21 are “new” and nine are “expansions or extensions,” which will add to the City’s asset stock and thus require additional operations and maintenance (O&M) funding. These projects represent close to $290 million of new or expanded assets—78 per cent of the total ask. Considering a minimum of one per cent of asset value required for O&M, the City will have to add nearly $3 million a year to maintain the stimulus-funded projects alone. Maria McRae, councillor and chair of the City’s transportation committee, says that for every project on the list, life-cycle costs were discussed. All projects are part of City master plans, and the new O&M pressures will be part of the next budget cycle.
So what does that mean in terms of long-term impacts? Sustainable infrastructure, even though the term is used by many in a wide spectrum of contexts, is never properly defined. For practitioners, the focus is on the root causes that result in un-sustainable infrastructure: if it isn’t adequately funded to provide the required service over its life cycle, if it doesn’t meet the needs (note: that’s needs, not wants) of the users and population in general. And if it does irreversible damage to the environment, the infrastructure is not sustainable.
Many of these criteria will be addressed by the ISF projects. The adequacy of funding over the life cycle of the infrastructure remains an issue. The ISF project applications don’t ask about the capacity of the proponent to operate and maintain the infrastructure. Should this question have been included?
In a few months from now, various auditors may start work on reviewing these programs. In Ontario, the AG’s office indicated that because it’s a new program, and considering the large amounts of money involved, it’s on a priority list for future audits. The Ontario AG has a precedent in doing value-for-money audits for municipal programs and long-term impacts on municipalities. In 2001, they looked at the Community Reinvestment Fund. Neither offices of the AG (Canada or Ontario) would say whether they would look at the service life funding for the ISF assets in future audits. The push for asset management in Australia widely originated from the AG in the states and territories-will this happen in Canada as well?
For now, all we can hope is that every community in Canada that has proposed ISF projects duly considered the life-cycle O&M costs before submitting their requests, so that in the end, the net result will be a reduction of Canada’s infrastructure debt.
Guy Félio works with public and private agencies on strategies for infrastructure engineering and policy. He is also a researcher and professor at Carleton University and a special advisor to the director of the Centre of Infrastructure Management at BCIT.
This article appears in our July-August 2009 Issue
