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On Reserve Operations and Maintenance Policy: The Case for Reform

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The current Indigenous Services Canada (ISC) operations and maintenance (O&M) policy and funding allocation framework and is significantly flawed. The discrepancy between actual O&M costs First Nations experience and ISC contributions (which are based on project costs rather than life-cycle costs), in addition to the lack of a structured asset management policy, leads to higher costs and prevents First Nations infrastructure and community assets from achieving their full life cycles. This situation represents the case of many First Nations in Ontario and illustrates the need for significant policy change. The funding shortfalls experienced by First Nations prevent both the necessary operations and maintenance work and the protection and prolonging of critical community infrastructure. This leads to physical and financial maintenance deficits, which accumulate and compound.

O&M policy must meet the needs of First Nations communities and must ensure that safeguards and proper training are in place to mitigate risks to the life-cycle of critical infrastructure. In its current form, O&M policy fails to achieve this for First Nations. The following section will outline OFNTSC’s position with respect to the need for O&M reform.

The problems with the current O&M funding formula, unit prices, and cost indices as defined by the CRM, in addition to problems with the gross/net funding requirements, are well-documented both in government and First Nations publications. The issue is two-fold: on one hand, funding provided for O&M has not increased in spite of increasing O&M costs; and on the other, the funding formula methodology, which determines O&M funding levels is founded upon flawed and dated calculations which do not compare to other data sources employed for off-reserve O&M calculations (e.g. Statistics Canada or RS Means datasets). Additionally, the “net funding requirement” (NFR) is an arbitrary number that has no relationship to reality: if First Nations are without means to supplement O&M funding received by ISC, the O&M simply does not occur.

Evidence exists that supports asset management plans (AMP) as a tool to save costs, prolong infrastructure life-cycles, and overall, improve processes related to O&M. A goal of asset management is to consider full life-cycles of infrastructure assets and extend them by making informed decisions regarding the building, operating, maintaining, renovating, replacing, and disposing of assets. Asset management plans will provide evidence-based needs for the capital, operations, and maintenance investments to achieve and maintain a desired levels of service in First Nations communities.

Asset management systems could further assist First Nations in facilitating better data governance which will result in positive institutional changes to community asset management, improved services and performances, more accurate financial planning, and ultimately reduced life cycle expenditures and premature replacements.

Operator training, and salaries levels remain outstanding issues in the broader O&M reform discussions. There is a clear need for proper training dollars and fair operator compensation commensurate with off-reserve O&M professionals. Indeed, O&M reform must also provide greater resources for the costs associated with primary and secondary operator training and succession planning to ensure gaps in O&M personnel are mitigated in advance of potential vacancies. In addition to this, and there is a need to address the wage disparity between on5 of 30 reserve and off-reserve O&M personnel salaries and benefits. It is also understood that increasing O&M to allow an increased salary will help in reducing operator turn-over.

Decisions about maintaining, replacing and repairing on reserve infrastructure have significant consequences not only for a First Nation’s bottom line, but also for community health and wellness, and the natural environment. Many First Nations communities experience complex challenges in the management of infrastructure assets. These challenges include not only a perpetual shortage of housing, infrastructure, and funding to operate and maintain assets, but also the lack of tools and capacity to effectively manage assets. To contrast, municipalities enjoy consistent expenditures from year to year, assumed to be a result of predictable budgets, and a focus on asset management strategies.

The following report makes four key recommendations, which include the following, and are fleshed out further in the report:

  • Recommendation #1: Move Away from Existing O&M Policy Framework Towards Asset Management Plans
  • Recommendation #2: Update Cost Reference Manual as Interim Measure Towards Development of Asset Management Plan
  • Recommendation #3: Develop and Implement First Nations Infrastructure Report Card
  • Recommendation #4: Ensure Fair Wages, Salaries & Benefits for O&M Operators

OFNTSC is ideally suited to provide advisory services to First Nations for whole life cycle of infrastructure assets including both capital and O&M funding. OFNTSC envisions a future where First Nations have the capacity and resources to maximize the lifespan of their community assets, are able to plan and respond to climate change risks, and where asset management planning strategies characterize the operations and maintenance of critical community infrastructure and are inclusive of a cultural component. To this end, OFNTSC has been working on asset management planning for Ontario First Nations, including the development of the First Nations Infrastructure Resilience Toolkit.

As a technical service provider, an opportunity exists for OFNTSC to become a centre of excellence for the provision of sustainable asset management planning for First Nation Communities in Ontario. OFNTSC will also be working with AFN on the development of a new O&M policy framework, and is currently designing an Ontario-based AMP pilot.

View the Full Report