National Summative Evaluation of the Gas Tax Fund and Public Transit Fund - 3.0 Evaluation Findings
3.0 Evaluation Findings
The data supporting the findings of this National Summative Evaluation are included in Appendix 2.
3.1 General Findings
The majority of GTF and PTF stakeholders that were interviewed or responded to a survey in the thirteen joint evaluations expressed overall satisfaction with the programs' scope, delivery and management. The programs are viewed as providing needed funding for infrastructure projects consistent with the objectives of the provinces and territories, the City of Toronto, municipalities and other eligible recipients. The joint evaluations identify flexibility, predictable funding, up-front funding, and collaboration as the most valued assets of the GTF Program.
3.1.1 A demonstrable and continued need
The GTF and PTF fund key municipal infrastructure: water, wastewater, public transit, solid waste, roads and bridges that enhance sustainability outcomes, and community energy systems.
From 1988 to 200811, GTF and PTF project categories have accounted for an average of nearly 63% of all municipal capital expenditures. Expenditures in these categories have risen from $3.9 billion in 1988 to $12.6 billion in 2008; while relatively constant prior to 2000, with the exception of a peak in 1995, municipal capital expenditures for GTF and PTF project categories have more than doubled from 2000 to 2008.
Since 2000, provinces and territories have implemented new programs for municipal infrastructure funding, and even since 2005 when the GTF and PTF Agreements were signed or increased their contribution grants12. The main focus has been on GTF and PTF project categories while there is also funding for recreation, culture, and public safety to name some of the most frequent categories. Provincial and territorial special purpose transfers for GTF and PTF project categories have more than tripled, rising from $649 million to slightly over $2 billion, during the period from 2000 to 2008.
Well known researchers such as Enid Slack, Harry Kitchen, Richard M. Bird, Mario Lefebvre, Jack Mintz, municipal associations, specialized associations such as the Canadian Urban Transportation Association (CUTA), the Canadian Underwriters, the Canadian Water Network, the Canadian Water and Wastewater Association, all agree that there is a so-called municipal infrastructure 'deficit' or 'gap,' though none can agree on the reasons for this or how to measure it. They do agree however that this gap is far from being filled.
The GTF makes funding available to all local and regional governments in Canada as well as to transit corporations, bodies and agencies, some 3,647 eligible recipients, while other programs are application driven and have a more limited scope for clientele. It is worth noting that 93.7% of eligible GTF recipients have populations of less than 20,000 13, a direct reflection of the large number of small municipalities in Canada.
Under the allocation formulas adopted by the provinces and territories, PTF focused on local and regional governments that provided public transit service as well as transit corporations, bodies and agencies. As a consequence, the number of eligible recipients is much smaller, around 189, and their profile is quite different: 60% of PTF eligible recipients have a population of 20,000 or more 14.
Over the first three years, from 2005-2006 to 2007-2008, 90.6% of allocated GTF funds have either been spent or committed 15, which demonstrates a high level of uptake by eligible recipients.
Data show that in some jurisdictions almost all of the 3-year GTF allocation had been spent (Alberta, Prince Edward Island). Nearly three quarters of the GTF allocation had been spent in Manitoba and Ontario.
Project intake has been lower in the territories where issues of capacity have been raised at the territorial and community levels and where limited construction seasons also have a significant impact. In the Yukon, however, the low percentage is linked to the choice made to require that Integrated Community Sustainability Plans (ICSPs) be completed as a condition for funding of projects: while in the short term there is a lag in investments, this choice has been made in order to ensure that investments will follow a sustainable development approach.
Newfoundland and Labrador also show a lower percentage of GTF funds expended which was expected since the Agreement was signed one year later. Newfoundland and Labrador also require as a condition for funding that a Capital Investment Plan (CIP) be submitted and approved as a means of ensuring coherent investment decisions, which might entail a lag in investments.
In other jurisdictions with a slightly lower percentage than the national average, eligible recipients are likely to be banking their allocation to invest in future projects with expected additional GTF funding forthcoming.
Under the GTF program, projects have been undertaken in all GTF project categories. Water and wastewater (41.5%), public transit (29.1%), and roads and bridges (19.0%), are the top 3 categories in terms of dollars spent or committed. Solid waste projects account for 4.2%, active transportation for 1.1%, and community energy systems for 1.0%. Capacity building initiatives, mostly focused on research and planning, account for 4.1% of all funds spent or committed.
As for PTF funds 16, as of March 31, 2008, 61.9% of the funds allocated had been spent for public transit projects. Under the funding agreements, all PTF funds must be expended no later than March 31, 2010.
In Prince Edward Island and the Yukon, all PTF funds have been expended: there were only two recipients in Prince Edward Island, and one in the Yukon. Alberta, Ontario and British Columbia have expended over 80% of the PTF funds. In Quebec, the lower percentage may be linked to large-scale projects that span more than one year.
The Northwest Territories, Nunavut, Newfoundland and Labrador, and Saskatchewan had not reported any expenses for PTF projects as of March 31, 2008.
The GTF and PTF programs respond to a demonstrable need for investment in key municipal infrastructure: water, wastewater, public transit, solid waste, roads and bridges that enhance sustainability outcomes, and community energy systems.
The high level of uptake and the long-range data on GTF and PTF municipal capital expenditures also demonstrate the relevance of the GTF and PTF project categories, as do the increased funding from provinces and territories provided either through their programs or their funding allocations.
The joint evaluations have all stressed the need for continued investment in GTF and PTF project categories.
3.1.2 GTF and PTF program objectives align with federal, provincial, territorial, and municipal investment priorities
Canada's objectives for the GTF and the PTF programs of cleaner air, cleaner water, reduced greenhouse gas (GHG) emissions, long-term sustainability planning and capacity building continue to be priorities as illustrated by the Building Canada Plan suite of programs.
Some jurisdictions have chosen to focus on selected eligible GTF project categories in compliance with their current priorities (Nunavut, Quebec). Quebec also has limited GTF funding for existing infrastructure or for infrastructure in areas already developed, focusing on rehabilitation and renewal, excluding infrastructure required for new developments: this condition applies only to water, wastewater, and roads, not to public transit.
However, the joint evaluations have brought to light that smaller recipients may find that the scope of eligible projects is too limited. The most frequently identified project categories that recipients would like to include are recreational and cultural facilities, fire departments, and other municipal buildings not included under the GTF project list. The GTF eligible project categories respond to a need and the relevance of the program objectives have not been put into question. Thus, adding these project categories may be a difficult fit with the GTF program objectives.
The issue is often linked in the joint evaluations to the amount allocated to these smaller recipients. Small amounts significantly limit the projects that can be undertaken.
Over the first three years, from 2005-2006 to 2007-2008, for 255 municipalities with a population smaller than 500, each received a total three-year GTF allocation of less than $10,000; for 2,111 municipalities with a population lower than 5,000, each received a total of less than $100,000. The issue is more often raised in jurisdictions where a strict per capita allocation formula has been retained to distribute the GTF funds. There are a few documented cases of eligible recipients returning the monies to the provinces because of the small amount.
Some joint evaluations have also suggested that municipalities may be unsure as to what projects are eligible for GTF funding. In jurisdictions where there is a prior approval of either a CIP or an equivalent, or an application submission, this does not appear to be a significant issue since the recipient, once the plans or applications are approved has a clear indication of the projects to be carried out. Provinces and territories, as well as the two associations, have offered support to recipients to help them understand the program parameters and it is likely that as the program matures, this issue will subside.
In summary, the GTF and PTF program objectives are relevant in that they align with federal, provincial, territorial, and municipal investment priorities. The joint evaluation reports concur with this and most stakeholders agree that the GTF and PTF programs have contributed to provincial, territorial and municipal infrastructure and sustainability objectives. The joint evaluations have indicated that overall the program objectives and specifically eligible project categories are in line with provincial and territorial objectives. The programs address a demonstrable need for funding in the GTF and PTF project categories.
Some have voiced the desire for additional project categories. Recognizing that eligible recipients are voicing legitimate needs, other project categories could be considered insofar as they can satisfy the program's objectives. Other programs such as the Communities Component of the Building Canada Fund are addressing some of these needs as are provincial and territorial funding programs.
3.1.3 Program flexibility is a valued asset for all stakeholders
Flexibility is one of the six key principles recognized under both the GTF and PTF Agreements. The detailed review of the GTF Agreements has shown many variations while complying with the terms and conditions of the program:
- Different allocation formulas, both nationally and at the provincial/territorial levels17;
- Different funding conditions18, such as prior approval of a CIP or an equivalent (New Brunswick, Newfoundland and Labrador, Northwest Territories, Prince Edward Island, Quebec, and Saskatchewan), or an ICSP (Yukon) as a condition for project funding;
- Different funding mechanisms, from up-front annual or semi-annual payments, to funding for expenses incurred;
- Different accountability and reporting frameworks for eligible recipients.
The joint evaluations have also highlighted the unique advantage of the GTF program whereby eligible recipients can bank funds to undertake projects in line with their priorities. This feature is likely to offer an even greater advantage with the extension of funding to 2014 and beyond. Recipients that have not spent funds up until now or have only spent a portion of the funds would appear to be banking the GTF funds. The sample data analysis has shown that this is the case for recipients of all sizes though there is greater representation of small recipients.
Some joint evaluations have suggested that banking might be a means of addressing the issues raised by smaller recipients. More information on banking of the funds might be helpful. Different models have been proposed that could be pursued further, including banking by a province or territory for the eligible recipients, such as in the case Yukon; setting up a dedicated reserve fund by the eligible recipient for GTF funding which allows for easy tracking of the funds and of the interest earned, such as in Manitoba, the Northwest Territories, and in Ontario.
It has also been suggested that pooling of funds might also be a means to allow for more significant projects to be undertaken. Some GTF Agreements presently have specific provisions for pooling of funds. Examples include the Strategic Priorities and Regionally Significant Funds in British Columbia; regional opportunities in Alberta; a requirement that 20% of monies allocated to municipalities in Saskatchewan be used for projects that produce regional benefits; the allocation of funding both to upper and lower-tier municipalities in Ontario; and the development of regional ICSPs in New Brunswick.
Another distinctive feature of the flexibility of both the GTF and PTF programs is that eligible recipients can use the funds to pay up to 100% of the eligible costs of a project. If the recipient is receiving money under another Canada Infrastructure Program, the maximum federal contribution limitation set out under the specific program continues to apply, and GTF or PTF funds are deemed to be federal. The purpose of this provision was to facilitate leveraging of funds in order to contribute to more significant projects. This provision does not appear to have been fully understood or put to use. Though the reporting requirements include reporting on all other sources of funding, reporting has been inconsistent: most jurisdictions do not report on this, others report a total amount for other sources while very few report in detail. It is not possible in this evaluation to conclude as to the amount of monies leveraged through the GTF or PTF programs.
Flexibility is demonstrated by the many variations in the GTF and PTF Agreements and the distinctive features such as banking, pooling, and leveraging of funds. These have been identified in the joint evaluations as key factors considered beneficial by all parties.
3.1.4 Funding predictability is a key component for sustainable infrastructure investment
Funding from Canada to the provinces, territories, UBCM, AMO and the City of Toronto follows a set calendar. Similarly, the agreements with eligible recipients also follow a funding schedule and conditions. Funding is provided to the initial recipients before any expenditure is incurred, and in most jurisdictions the money flows to the eligible recipients in the same manner. As noted previously, second and subsequent payments are subject to compliance with the terms and conditions of the agreements including submission of annual expenditure reports.
In British Columbia, under the Innovations Fund and the Strategic Priorities Fund, eligible recipients are reimbursed for expenses incurred. In the Yukon, all eligible projects except ICSPs, will receive a first payment up-front with claim-based subsequent payments. In Quebec, eligible recipients for public transit projects funded either through GTF or PTF funds are reimbursed for expenses incurred.
Over the first three years, the sample data analyzed shows that some recipients have spent more than their 3-year allocation, some even spending their total five-year allocation. This is an indication that these recipients are counting on the predictability of funding. They are likely to be borrowing on future GTF installments.
The sample data analyzed has also shown that some recipients are undertaking multi-year projects which can also be linked to funding predictability.
Funding predictability is a distinctive feature of the GTF program. All joint evaluations point to predictability as a key factor contributing to increased capacities to plan and undertake relevant projects.
3.2 Findings on GTF and PTF Outcomes
The Results-based Management and Accountability Framework and Risk-based Audit Framework (RMAF-RBAF) identified intermediate and ultimate outcomes for the GTF and PTF programs. The key components are reviewed in the following.
3.2.1 Intermediate Outcomes
The intermediate outcomes can be grouped under four performance areas: inter-governmental collaboration, capital spending commitments, municipal planning capacity, and communications.
126.96.36.199 Intergovernmental collaboration has been fostered
Both the GTF and PTF programs acknowledge the need for collaboration in order to support the sustainability and prosperity of communities in Canada. Three levels of collaboration are considered: collaboration between Canada, the provinces and territories, UBCM, AMO and the City of Toronto; collaboration between provinces and territories and local governments; collaboration between local governments, and between local governments and First Nations.
Collaboration between Canada and the Signatories to the Agreements
The joint evaluations generally agree that collaboration under the GTF and PTF programs has been fruitful and has taken different forms.
The Agreements provide for the establishment of Oversight or Partnership Committees in each jurisdiction that include federal and provincial or territorial representatives, and in some instances, representatives or observers from municipal associations, as well as UBCM, AMO and the City of Toronto representatives who are signatories to the Agreements.
The role of these Committees varies across the country; some have a relatively greater role to play and they approve agreement templates for local governments, methodologies and definitions for measuring capital investment commitments, criteria, size and guidelines for selection of projects, or for the content of capital investment plans or ICSPs. Others focus more on the overall progress of the programs and are a forum to discuss amendments to the Agreements. It should be noted that under the GTF and PTF sharing of responsibility, the federal representatives have no role in project selection or approval.
In addition to these committees, Management or Technical Committees have also been set up in 3 jurisdictions, namely, British Columbia, Ontario and Prince Edward Island - these committees examine specific issues and/or make recommendations to the Oversight or Partnership Committees.
From 2006 to March 31, 2009, the Oversight or Partnership Committees met a total of 35 times. The three Management or Technical Committees met 16 times.
Discussions at Oversight Committees have led to fourteen amendments to the GTF Agreements in 8 of 13 jurisdictions, with only one amendment requiring a change to the terms and conditions for the program. The amendments either clarify provisions of the Agreements, such as changes to the eligibility criteria for specific local or regional governments, the addition of an ultimate recipient and relevant conditions (Ontario on behalf of Unincorporated Areas), to provide for use of funds for administrative costs, and to allow for the use of interest earned to support capacity building initiatives of municipal associations.
Workshops are another feature of the GTF program that foster collaboration. Organized by Infrastructure Canada, the subjects for these workshops stem from a consultation of the provinces, territories, associations and the City of Toronto, and these often actively participate in the preparation of material and presentations.
Since 2006, and including a workshop held in April 2009, 8 one or two-day workshops have been held, addressing the following issues: the joint evaluation process, communication strategies, reporting requirements, performance measurement and reporting framework, information sharing, shared accountability, implementation issues, Public Service Accounting Board (PSAB) standards, ICSPs, national summative evaluation, outcomes reporting, and municipal reporting and audits. The evaluation reports from these workshops indicate that all participants were very satisfied or satisfied (30%, 64% respectively).
Some joint evaluations have pointed out the benefit of sharing information and discussing issues with provincial, territorial or association counterparts during these workshop sessions.
Collaboration between the Provinces, Territories, Associations and Local Governments
Joint evaluations indicate that provinces and territories generally have a good relationship with their local governments and municipal associations, and the GTF program is noted for having created opportunities for greater collaboration and cooperation between different orders of government.
Though no systematic review of all initiatives could be carried out in the course of this evaluation, there are indications that provinces, territories and the two associations have implemented initiatives in support of local governments in relation to the GTF program.
Provinces and territories, and the two associations, have developed guides, toolkits and templates, for annual expenditure reports and audits (all thirteen), capital or infrastructure investment plans (five of thirteen – others rely on existing capital investment plan guides and forms), integrated community sustainability plans (seven out of thirteen), measurement of capital spending commitments, and outcomes identification and measurement (all thirteen)19. This information has been made available on the Internet and municipal associations have been also involved with either the development of these tools or their dissemination. Training and support for the implementation of the Public Sector Accounting Board (PSAB) requirements relating to tangible capital assets has also been provided in all jurisdictions. Some jurisdictions hold annual meetings with local government representatives to update them on the GTF program and requirements such as in the case of Prince Edward Island.
Some joint evaluations indicate that smaller recipients need greater support and these jurisdictions are seeking means to offer this support, in some cases with the collaboration of municipal associations.
Collaboration between Local Governments and between Local Governments and First Nations
The joint evaluations focus on the relationships between Canada and signatories to the agreements. The Infrastructure Canada project database does not allow the identification of joint projects.
As stated previously, some GTF Agreements have a built-in regional component which should foster collaboration between and amongst local governments. Under the Canada-Nunavut Agreement, the establishment of the Nunavut Community Infrastructure Advisory Committee (NCIAC) with representatives of the Nunavut Association of Municipalities, community representatives, and Government of Nunavut representatives, is highlighted in the joint evaluation report as a means of fostering increased collaboration between all parties. The Manitoba joint evaluation survey indicates that some municipalities have or are considering undertaking joint projects.
It appears as though collaboration with First Nations has been limited. The joint evaluation in the Yukon documented one case study where the development of the ICSP was done collaboratively between a local government and First Nation.
In summary, both the GTF and PTF programs were designed to promote purposeful partnerships between stakeholders and foster collaboration and cooperation. Transparency in a spirit of collaboration is one of the six principles included in the agreements.
Intergovernmental collaboration has been fostered at all levels and the joint evaluations have pointed out that: there is an appreciation for the support and collaboration between Infrastructure Canada and the Signatories; new opportunities for collaboration between the Signatories and local governments; collaboration between local governments, particularly where pooling of funds and regional initiatives have been encouraged; and collaboration albeit limited, between local governments and First Nations.
Benefits of information-sharing have been identified by the joint evaluations between the provinces, territories and associations fostered through workshops and technical committees.
188.8.131.52 Progress toward meeting the capital spending commitments has been made
The GTF and PTF programs include a condition that provinces, territories and municipalities do not reduce their capital spending on municipal infrastructure below an agreed upon base, calculated on recent and current spending. This condition was introduced in a context where there was a real concern that additional funding from the federal government would allow provincial, territorial and local governments to reduce their overall funding efforts for municipal infrastructure. The concern was heightened by the fact that the GTF and PTF programs were not cost-shared programs, and flowed money up-front as opposed to a reimbursement of project costs. The federal government's contribution was designed to be used in addition to the funds already allocated by the other levels of government for municipal infrastructure.
Many joint evaluations raised issues in relation to this commitment, mostly in regards to how it is to be measured. In part, the issues raised seem linked to a misunderstanding of the requirement as defined in the agreements.
Three levels of commitment were defined:
- Canada committed to honour existing contribution agreements with provinces and territories concerning infrastructure; ensure that GTF and PTF funding provide additional revenues for municipal governments rather than displacing other federal infrastructure funding; and, to renew and extend into the future the Canada Strategic Infrastructure Fund (CSIF), Municipal Rural Infrastructure Fund (MRIF), and the Border Infrastructure Fund (BIF), as they expire.
- The Provinces and Territories are not to clawback existing infrastructure spending.
- Municipalities under the agreements also committed not to reduce or clawback any capital infrastructure spending which is currently made available for infrastructure by them.
All the agreements with Canada define provincial, territorial and municipal commitments differently, while complying with the terms and conditions of the program. The differences reflect the particular conditions in each province and territory and pertain to the following characteristics: base amount, the methodology to establish the base amount, the infrastructure categories included in the calculation, the reference period for the base amount, and the eligible recipients required to report on this matter.
The capital spending commitments are defined for a five-year period ending March 31, 2010 or December 31, 2010, except for BC Transit and Newfoundland, where the commitment is for a four-year period starting on April 1, 2006. At this point in time, there has been limited reporting, with the exception of the data provided in the Manitoba, Nunavut and City of Toronto joint evaluation reports, partial data in the UBCM joint evaluation, as well as partial data in for New Brunswick, Nova Scotia, and Nunavut included in Annual Expenditure Reports.
Due to the many varied schemes, a detailed review of the capital spending commitments and progress to date was prepared as a separate technical report and the findings presented in the National Summative Evaluation are based on this report20.
- Canada's Commitment
In addition to the Gas Tax Fund and Public Transit Fund, Canada's commitment includes $2.94 billion from the three sunsetting programs (CSIF, BIF and MRIF) and a minimum of $1.6 billion from the Communities Component of the Building Canada Fund, totalling $4.54 billion from 2005 to 2014. This amount does not include commitments made by Canada in Budget 2009 under the Infrastructure Stimulus Fund (ISF). Based on these commitments, it is likely that Canada's commitment will be met for the 2005-2010 period.
- Provincial and Territorial Commitments
A review of programs and initiatives has shown that since 2005, all provinces and territories have either implemented new programs for municipal infrastructure funding, in addition to programs already in place when the agreements were signed, or increased their capital contribution formulas to local governments. The review focused on new programs and initiatives identified in provincial and territorial budgets from 2005 to 2009: in the course of this review, no sunsetting programs or initiatives were identified. All provinces and territories have also committed to additional funding for municipalities under the Building Canada Fund.
In British Columbia, as noted in the Joint Evaluation, TransLink has already met the capital spending commitment. It was required to spend more than $591.2 million between January 1, 2006 and December 31, 2010, and had spent $840 million of own-source funding by September, 2008. BC Transit's commitment was to spend more than $80.6 million by March 2010, and as of September 2008, it had spent $53.3 million or 66% of this amount.
In Alberta, the Municipal Sustainability Initiative (MSI) was introduced in 2007. It is a ten-year funding commitment (2007-2008 to 2016-2017) to assist municipalities in meeting growth-related challenges and enhancing long-term sustainability. MSI funding is provided to all municipalities in Alberta in addition to other provincial grant programs. MSI provides funding for capital expenditures as well as operating expenditures. For capital expenditures alone, MSI provided $250 million in 2007, $452 million in 2008 and will provide $350 million in 2009.
In 2008, Saskatchewan established the Saskatchewan Infrastructure Growth Initiative (SIGI) to provide municipalities with interest rate subsidies for up to five years on $300 million of municipal borrowing, spread over four years (2008-2009 to 2011-2012). The program aims to fund municipal infrastructure related to lot development. In Budget 2009, Saskatchewan announced the creation of a new fund to strengthen the provincial economy. The $100 million Municipal Economic Enhancement Program (MEEP) will provide per capita funding to municipalities to invest in local infrastructure improvements.
In Manitoba, the provincial commitment was to maintain provincial funding for municipal infrastructure above the 2004-2005 annual base amount of $125.2 million. Data provided in the Joint Evaluation shows that Manitoba grants for municipal infrastructure have increased over the first three years of the GTF and PTF programs, rising from $142.7 million, to $146.8 million, and to $175.2 million.
In Ontario, in Budget 2006, the Province introduced Move Ontario for additional investment in public transit ($838 million) and for municipal roads and bridges mostly in rural and northern communities ($400 million). From 2005-2006 to 2009-2010, the Province has committed to providing $1.6 billion for public transit infrastructure from the transfer of a portion of the provincial gasoline sales tax. Through ReNew Ontario, the Province has committed to invest almost $1 billion for initiatives to support clean water and the environment.
Quebec and New Brunswick provide a top-up to the GTF. In addition to the total federal contribution of $928.1 million, Quebec provides $383.6 million to municipal projects for water, wastewater and roads. For the public transit component of the GTF, in addition to the Federal Gas Tax Transfer of $222 million, Quebec provides $92.9 million for public transit projects. In Budget 2009, Quebec announced a new $700 million program, PRECO (Programme de renouvellement des conduites d'eau et d'eaux usées) for the renewal of water and wastewater networks.
New Brunswick provides a top-up to the Federal Gas Tax Transfer entitled the Provincial Gas Tax Transfer Top-Up Fund. Over the five-year period from 2005-2006 to 2009-2010, New Brunswick commits $30 million in addition to the $116 million committed by Canada under the Gas Tax Agreement. According to the 2006-2007 GTF Annual Expenditure Report, New Brunswick grants for municipal capital expenditures exceeded the provincial annual base amount of $11.2 million by over $4 million.
In Nova Scotia, according to the 2007-2008 Annual Expenditure Report, the province contributed $14.8 million to municipal infrastructure, above the $9.3 million annual base amount.
In November 2008, Prince Edward Island set up a new additional six-year $27.5 million program to address the infrastructure gap and allow local governments and non-for-profit organizations to access funds for projects not eligible under the current suite of infrastructure programs.
In Budget 2008, Newfoundland and Labrador introduced new cost-sharing ratios for all municipal infrastructure which increase the provincial contribution to smaller municipalities.
In 2007, Northwest Territories introduced the Capital Formula Funding which provides support to communities of $28 million, per year, for infrastructure funding.
In Nunavut, according to the 2007-2008 Annual Expenditure Report, average annual capital spending by the territory for municipal infrastructure will be $22.5 million in the first five years of implementation, exceeding the $16 million base amount defined in the agreement.
In addition to the other funding offered to communities, beginning April 1st, 2008, Yukon announced an increase over five years of the Comprehensive Municipal Grant to local governments from $12.538 million to $16.5 million. Under Yukon legislation, 50% of the Comprehensive Municipal Grant must be spent for municipal capital expenditures.
Based on the information to date, including the review of new programs or initiatives by provinces and territories in relation to municipal capital funding, it is likely that the provincial and territorial commitments for capital spending on municipal infrastructure will be met for the 2005-2010 period.
- Municipal Commitments
In Alberta, New Brunswick, the Northwest Territories, Prince Edward Island, Quebec and the Yukon, all municipal recipients must commit to a specific base amount. In five jurisdictions only a limited number of municipal recipients are required to maintain a specific own-source base funding amount for municipal capital infrastructure: Manitoba (Winnipeg), Newfoundland and Labrador (St. John's, Mount Pearl and Corner Brook), Nova Scotia (Halifax Regional Municipality), Ontario (39 municipalities with a population greater than 100,000 including Toronto), and Saskatchewan (Regina, Saskatoon). In four jurisdictions, an aggregate base amount is defined: in British Columbia (for all local governments), in Manitoba (for all municipalities excluding Winnipeg), in Nova Scotia (for all municipalities excluding Halifax Regional Municipality), and in Saskatchewan (for 36 municipalities with a population greater than 2,000).
In British Columbia, according to the Joint Evaluation, as of September 2008, local governments had spent a total of $1.238 billion in own-source funds compared to the $2.483 billion they have committed to for the 5-year period from 2005 to 2010.
In Manitoba, data from the Joint Evaluation show that both the City of Winnipeg and all other municipalities as an aggregate have spent over the annual base amount in the first three years. The City of Winnipeg has spent own-source funds of $161.9 million, $225.3 million, and $322.8 million, from 2005-2006 to 2007-2008, an annual average of $236.7 million compared to the annual base amount of $132.7 million. In aggregate, all other municipalities have spent own-source funds for capital infrastructure of $86 million in 2005-2006 and 2006-2007 and $107.4 million, in 2007-2008, an annual average of $93 million compared to the annual base amount of $86 million.
The City of Toronto committed to an annual base amount of $984.7 million. According the Annual Expenditure Report, for the first two years of the GTF, from 2005 to 2007, the City of Toronto has spent an average of own-source funds of $1.5 billion for infrastructure.
In Quebec, municipalities and eligible recipients must maintain an annual base amount for each of the GTF and PTF funded categories and, in addition, must also contribute a share of total costs for projects undertaken through the GTF and PTF programs.
In the absence of comprehensive data from eligible recipients at this point in time, demonstrating progress toward compliance for local governments has relied on data from Statistics Canada21. While there are some limitations to this data which were documented in the Technical Report, these do not put into question the conclusions of this National Summative Evaluation. The data provide a global overview of capital spending for municipal infrastructure in the five years prior to the GTF program and for the first three years of this program.
The Statistics Canada data indicate that Canada's and the provincial and territorial transfers to local governments have increased since 2005 in comparison with the 2000-2004 prior period. Canada's annual average total specific-purpose transfers to local governments increased from $147 million to $598 million for 2005-2008. Provincial and territorial annual average total specific-purpose transfers increased from $867 million to $1.7 billion.
When comparing net municipal capital expenditures, i.e. net of all federal and provincial or territorial specific-purpose transfers, the data show that annual average net municipal capital expenditures have increased significantly from $9.2 billion to $13.9 billion.
Based on the Statistics Canada data up until December 2008, own-source municipal capital expenditures have been significantly higher than those for the 2000-2004 previous period. If there are no significant reductions for 2009, it would appear likely that in aggregate municipalities will have at the least maintained their own-source capital spending over the term of the Agreements.
The capital spending commitments are to be honoured over the first five years of the agreements, i.e. by March 31, 2010. The review of Canada's commitments and of those of the provinces and territories, and Statistics Canada data for the first four years of the GTF program, indicate that capital funding for municipal infrastructure has been not only maintained, but increased. If there are no significant reductions in funding for 2009, it would appear likely that the commitments not to clawback infrastructure funding will be met.
Statistics Canada data analyzed show net municipal capital expenditures, i.e. net of all special-purpose transfers, have increased from 2005 to 2008, in comparison to the prior period, from 2000 to 2004. If there are no significant reductions for 2009, it would appear likely that in aggregate municipalities will have at the least maintained their own-source capital spending over the term of the Agreements.
184.108.40.206 The GTF program has contributed to improve municipal planning capacity
One of the objectives of the GTF and PTF programs was to increase the capacity of communities to undertake long-term planning: Integrated Community Sustainability Plans (ICSP), Transit Strategies, Capital Investment Plans (CIP), and Public Sector Accounting Board (PSAB) compliance in particular to tangible capital asset reporting requirements, are the key elements to be considered.
These requirements were to be fulfilled over the lifetime of the agreements, except for the Public Transit Strategy requirement, thus the National Summative Evaluation can only address progress toward compliance with these requirements.
Integrated Community Sustainability Plans (ICSP)
Municipal planning, including financial planning and reporting, is governed by provincial and territorial legislation so that the GTF and PTF requirements, with the exception of ICSPs which are more comprehensive than most local plans, essentially supported planning processes and initiatives by providing funding. In many jurisdictions the agreements recognize existing planning documents. In jurisdictions where planning is not compulsory for all municipalities, the GTF program may have provided an incentive for local governments. The Quebec and Saskatchewan agreements did not include a provision for ICSPs in recognition of their specific provincial planning initiatives and frameworks. Other jurisdictions such as Manitoba have had existing planning documents recognized as complying with the ICSP requirement.
As of March 31, 2009, of the nearly 1,200 recipients required to produce an ICSP or equivalent, one third had already complied with the requirement.
The joint evaluations report mixed findings concerning ICSP indicating that smaller municipalities lack the capacity and resources to complete them, and they question their relevance in view of the small amount of funds they were allocated. Taking this into consideration, in the case of Alberta small municipalities or municipalities with only one or two projects during the five years of funding are not required to produce an ICSP.
Guides, handbooks, templates and toolkits have been prepared to assist municipalities in developing ICSP by UBCM in British Columbia, in Alberta with the Association of Municipal Districts and Counties, in Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, by AMO in Ontario, in Prince Edward Island, and the Yukon where as noted previously an ICSP is a pre-requisite for project funding.
Public Transit Strategies were required under the PTF Agreements and had to be submitted and made public (in most cases) no later than November 1, 2006. Most transit bodies, corporations or agencies already had public transit strategies.
Capital Investment Pans (CIP)
The agreements generally require that a CIP be prepared within the first five years of the agreements. There is no definition of the period to be covered or of the content of the CIP in the agreements, leaving this to be determined by the provinces and territories. Provincial or territorial legislation already required in all jurisdictions that a capital plan be prepared, either for one year, three-years or even, five-years: in some jurisdictions, these documents have been recognized as CIPs such as in British Columbia and Manitoba. In six jurisdictions, a CIP or an equivalent is a pre-requisite for funding as already indicated. New Brunswick, Nova Scotia, Prince Edward Island, and Quebec, have developed specific templates for CIPs for the GTF program.
As of March 31, 2009, of the 2,829 recipients that are required to produce a CIP, a little more than 76% had already complied with this requirement.
Public Service Account Board (PSAB)
Compliance to PSAB standards was included in the Agreements as a means of supporting capital infrastructure planning. Not all Agreements include this provision: however, under provincial and territorial legislation all local governments but those in New Brunswick are required to produce audited annual financial reports that are PSAB compliant.
Provinces and territories have been supportive of local governments, providing training and documentation to assist in this transition. Information to date would indicate that significant progress has been made on this matter.
Capacity building funding has been pointed out in the joint evaluations as beneficial to eligible recipients, and some of the amendments to the agreements as indicated previously, have expanded this by allowing for municipal associations to qualify for funding. Capacity building represents 4.1% of total GTF funds spent or committed as of March 31, 2008.
One of the objectives of the GTF program design was to increase the capacity of communities to undertake long-term planning and thus make better, sustainable, infrastructure investment decisions. All planning related requirements were to be fulfilled over the lifetime of the agreements.
Information collected for this report and the joint evaluations suggest that these requirements will be met and that support for municipal planning capacity was, and continues to be, relevant. The joint evaluations have in many cases highlighted the benefit of funding from the GTF program to improve municipal planning capacity. For smaller jurisdictions, the funds available for capacity building have also been identified as a benefit of the GTF program.
220.127.116.11 Communications of the program's results needs to be improved
A number of joint evaluations indicated that although the GTF is a highly regarded program, communication regarding results needs to be improved to increase public awareness.
The agreements include a communications protocol which sets out the principles and procedures to secure federal visibility for the GTF program. Infrastructure Canada committed to holding periodic communications on payment of funding; to making regular project announcements on a city or regional basis; and to reporting to the public on program outcomes.
Provinces and territories, UBCM and AMO, and the City of Toronto, committed to acknowledging Canada's contribution to projects; providing communications material to recognize the GTF using the Canada wordmark; and to including in all agreements with eligible recipients the terms of the communications protocol. Eligible recipients must ensure permanent signage at project location with Canada's wordmark, and plaques and signage posted must be clearly visible.
Additional conditions include the timing of events which must allow a minimum of 21 days for all parties to plan involvement.
Data22 for the GTF program from 2005-2006 to 2007-2008 indicates that there have been 107 events and 204 news releases, the majority in 2007-2008.
Despite some progress over time, an uneven representation of events and news releases is apparent: Quebec accounts for 40% of events and more than 56% of news releases, with Ontario, New Brunswick and British Columbia following far behind. Quebec adopted its communications strategy early on in the program which might explain the higher number of news releases and events.
AMO has drawn attention to GTF by recognizing noteworthy GTF projects with an award, an initiative that some jurisdictions have indicated they might pursue.
The City of Toronto has set up a web site to communicate how the GTF has contributed to improved public transit, the only investment category for Toronto.
Web sites in 5 provinces and territories, and the AMO and UBCM Websites, provide information on the GTF program including news releases.
Early identification of joint communication opportunities has been challenging. Infrastructure Canada receives project lists only once a year. Provinces, territories, UBCM, and AMO, may not be aware of specific projects or when they will be started, which is a significant difference compared to application-driven programs. Finding convenient times and dates for announcements and events and respecting the 21-day notice have been also been challenging. The very large number of projects has added to this challenge, a factor that is likely to pose an even greater challenge as GTF funding increases to $2 billion a year.
To date, all jurisdictions have developed communications plans. A specific workshop on this issue was held and a network to exchange on communication issues was established.
As for PTF communications, considering the small number of recipients and projects, the number of news releases is significant: there have been 33 news releases across the jurisdictions and no imbalance as has been noted in the case of the GTF. Only 2 events have been held.
The high volume of projects funded through the GTF, very limited federal communications capacity relative to potential workload, some partner capacity issues, and the program business model create challenges for communicating program results. Progress has been made with the adoption of communication strategies between Infrastructure Canada and initial recipients, and an increase in news releases and events in the third year of the program has been noted. Still, more than half of the joint evaluations indicated that while the GTF program was considered successful, communications could be improved to increase public awareness.
3.2.2 Ultimate Outcomes
At this point in time, the National Summative Evaluation can only examine progress toward the attainment of the ultimate outcomes: data on projects is only available for the first 3 years and some of these projects have been undertaken but are not yet completed. Under the GTF and PTF Agreements, reporting on outcomes is scheduled after the date for submission of this National Summative Evaluation. As part of the Annual Expenditure Reports, expected outcomes are identified as part of the list of projects submitted and analysis of projects by category provides an indication of the likelihood of the Outcomes being met.
18.104.22.168 Performance Measurement Framework
The GTF program was designed as an outcomes-based program to contribute to the Government of Canada's environmental objectives of cleaner air, cleaner water, and reduced greenhouse gas (GHG) emissions. The PTF program focuses on the latter.
These agreements include the provision that an outcomes report must be submitted by their signatories, and identify in some instances, the indicators to be used. The challenge resides in collecting relevant data that can be aggregated at the national level in order to measure the GTF and PTF contribution.
Hence, a Performance Measurement Framework (PMF) was developed in collaboration with the signatories of the agreements to allow for a consistent approach across jurisdictions.
In January 2008, a GTF workshop was held to present the development of the PMF methodology. In June 2008, drafts of sample indicators developed by a technical working group, following consultation with provincial, territorial and association representatives and were shared with the provinces and territories including a template for reporting on projects.
All Oversight Committees have approved the PMF funnels and approaches, except for Quebec which did not sign on to this requirement but has provided under its program management that municipalities will report on outcomes. In November 2008, another GTF workshop was held to present and discuss measurements and reporting, followed in April, 2009, by a session at a workshop to assist in preparing for the outcomes reports due later in 2009.
22.214.171.124 Progress has been made toward measuring ultimate outcomes but reporting on these will be limited in 2009
During the course of the joint evaluations, the information collected was qualitative and based primarily on the comments of interviewees and survey participants. The joint evaluations indicate that based on the mix of projects undertaken or to be undertaken, it is likely that these will demonstrate environmental improvements. However, measuring the outcomes may be a challenge for small local governments with limited capacity or even for larger recipients who may be faced with complex measures.
Some joint evaluations have also pointed out that the outcomes might not be observed immediately. In some jurisdictions where very few projects, if any, have been completed, it is unlikely they will be able to report on outcomes as scheduled under the agreements. Finally, some jurisdictions have expressed concerns that it might be difficult for projects with more than one funding source to isolate the specific contribution of the GTF or PTF.
As of February 2009, seven jurisdictions reported that they had started collecting PMF data from eligible recipients while the others had not. As for Quebec, the report by municipalities including outcomes is due in June of 2010.
An examination of data23 of funds expended or committed from 2005-2006 to 2007-2008 confirms that the project mix is likely to produce environmental benefits.
Water, wastewater, and public transit projects account for 70.6% of GTF funds. The roads and bridges projects account for 19.0% of the GTF funds: nearly 94% of the funds for these projects are for upgrading or renewal of existing roads and bridges. Investments in solid waste and community energy systems will result in environmental benefits. The active transportation category may be more challenging to measure.
As for capacity building activities which account for 4.1% of total GTF funds expended or committed as of March 31, 2008, they are not expected to generate environmental benefits, at least not in the short or medium terms.
The qualitative information provided in the joint evaluations and the analysis of the project mix to date lead to the conclusion that the expected outcomes of cleaner air, cleaner water, and reduced GHG emissions, are likely to materialize. The development of quantifiable measures has been completed and progress is being made in the collection of data. The Outcomes Reports are due in most cases by September, 2009, save for British Columbia and New Brunswick where these reports are due by December 31, 2009. It is expected that Outcomes Reports will include measurable results for projects completed to date.
3.3 Findings on Efficiency and Economy
3.3.1 Up-front funding has been efficient
The GTF and PTF funds were designed to flow monies up-front, i.e. before any capital expenditures are incurred. Monies flow from the federal government to the provinces, territories and other signatories, so that these initial recipients can in-turn flow these monies to eligible recipients to allow them to undertake municipal infrastructure projects. Up-front funding is conditional on compliance with the terms and conditions of the agreements. The joint evaluations indicate that this up-front funding mechanism was valued by initial and eligible recipients.
Data24 for the first three years of funding show that of the total money allocated for these three years 98.8% had flowed from Canada to the initial recipients and 92.5% of these monies had then flowed to eligible recipients.
Only three jurisdictions had not received 100% of their allocation during this period: New Brunswick which has requested that it receive GTF funding in drawdown amounts equal to the amounts the province advances to eligible recipients; the Northwest Territories and the Yukon where reporting issues have been encountered slowing down the flow of funding.
As for the flow from the provinces, territories, UBCM and AMO, to eligible recipients, five jurisdictions show much slower rates of transferring funds: Ontario as a recipient for Unincorporated Areas, a provision that was added only in June of 2007; the Yukon where only ICSPs were funded during this period and where monies for eligible recipients are banked by the Yukon on their behalf; Newfoundland and Labrador that started one year later; and the Northwest Territories and Nunavut faced with capacity issues both at the territorial and community levels.
As for the PTF, all monies have flowed from Canada to the signatories in one-payment.
Up-front funding has been an efficient means to enable eligible recipients to undertake sustainable municipal infrastructure projects. In the first 3 years, 93% of program funds reached eligible recipients and a further 91% of these funds were spent or committed to infrastructure projects. Payments are withheld when recipients fail to comply with the terms and conditions of the agreements. Regarding the PTF, 62% of all funds were spent on eligible projects by March 31, 2008.
3.3.2 Shared responsibility and accountability is appropriate
The accountability and reporting framework for the GTF and the PTF recognize Canada's funding contribution, national objectives and the need for accountability to the Canadian public. The framework respects the exclusive jurisdiction of provinces and territories over local governments and assigns the ultimate responsibility of choosing capital investment projects to those who are directly accountable for the provision of services which are local and regional governments and public transit bodies, corporations and agencies.
The logic models25 for the GTF and PTF programs acknowledges that Infrastructure Canada's influence diminishes along the results chain as program activities involve a larger and more diverse group of stakeholders over time.
While there was some need for clarification of the reporting requirements during the first two years of these programs, such issues have been mostly resolved at the provincial, territorial and association levels and reporting has generally been consistent and reliable. When reporting failed to comply with the requirements, funding by Canada was delayed until adequate information could be provided.
Signatories of the agreements with Canada are responsible for the quality and reliability of the data provided to Canada, however, a large part of this information is provided to the signatories by the eligible recipients. Signatories have implemented controls to ensure the quality of the information they receive. When reporting has been inadequate, signatories have delayed funding until acceptable reports were submitted, as attested in the audited Annual Expenditure Reports.
The joint evaluations have identified that reporting by eligible recipients is a challenge, particularly for small recipients based on: lack of capacity, additional burden and the cost of complying with the reporting requirements, including auditing. These factors were consistently referenced by smaller-scale recipients who often questioned the relevance of these requirements in relation to the amount of funding allocated to them. The joint evaluation reports have also indicated some concerns as to the impact of additional and permanent funding on the reporting burden both for the signatories and their eligible recipients.
In view of these findings, Infrastructure Canada had an analysis of existing reporting requirements across the jurisdictions carried out. The results were presented and discussed at a workshop in April of 2009, and the information on all of the existing frameworks was shared with the signatories.
This research has shown that provinces and territories, as well the associations, have implemented different reporting models to address their particular circumstances: unaudited statements of revenues and expenditures; audited Annual Expenditure Reports for certain groups of eligible recipients; reporting on revenues and expenditures at the end of the funding period; reporting on the GTF and PTF as part of the annual municipal audited financial statements; and specially designed annual reports that entirely reproduce the requirements made to the signatories of the agreements.
Based on the information reviewed, and on the joint evaluation reports, it can be concluded that the reporting and accountability framework has been supportive of efficient program management and delivery. The requirements under the Agreements with Canada have been clarified and almost all jurisdictions have demonstrated compliance.
Reporting and auditing issues have been raised by eligible recipients and these are linked to the Agreements between initial recipients and eligible recipients. Different models of reporting and auditing requirements implemented under these Agreements reflect attempts to balance compliance to reporting and auditing requirements set out in the Agreements with Canada and the risks linked to the profile of the eligible recipient and the amount of funding.
It appears there is sufficient flexibility under the funding Agreements with Canada to allow for adaptation to specific circumstances, such as those of small eligible recipients. However, there is an increased burden on the provinces and territories that have chosen to upload part of the reporting responsibility, as noted in the case of Saskatchewan, where higher future costs may result for provinces and territories along with the increases in funding.
3.3.3 Administration of the programs has been cost-effective
Though the GTF and PTF are separate and distinct programs, in order to reduce the administrative burden for all parties, the reporting and administration of the PTF was carried out as a part of the management of the GTF. Distinct Annual Expenditure Reports were required for the GTF and the PTF but these follow the same requirements.
At the provincial and territorial levels, there are few cases of separate management for GTF and PTF: Alberta, New Brunswick, and Quebec, are cases where 2 departments are involved in the management of the GTF and PTF, the department responsible for municipal affairs and the other for transportation.
The joint evaluations have generally concluded that the GTF and PTF were cost-effective programs.
At Infrastructure Canada, from 2006-2007 to 2008-2009, total actual expenditures including salaries and non-salary expenditures were approximately $3 million for direct program management costs. Other costs may have been incurred, such as information technology costs, but these are not included in this figure.
Under the agreements with Canada, in recognition of shared responsibility, signatories can incur administration costs on the condition that a business plan be submitted and approved by Canada. Only Alberta, Nova Scotia, Quebec and the City of Toronto have chosen to absorb the administration costs for the GTF within their own cost centres. Nine other signatories have submitted business plans. Two additional signatories will be submitting business plans in the near future (Manitoba and the Northwest Territories).
To date, a total of $16.7 million has been approved for administration expenses by nine signatories that have received a total of 49% of all GTF funds. As of March 31, 2008, seven had reported administration expenses totalling $8.2 million.
Also, in recognition of the shared responsibility, the GTF and PTF programs provide that interest earned on funds that are banked must be used by eligible recipients to pay for eligible costs of eligible projects only or for administration costs.
As of March 31, 2008, eligible recipients in nine jurisdictions reported administration expenses of slightly over $1 million out of a total of $23.3 million in interest earned by them on money banked.
Program management and delivery has been efficient and cost-effective. Total administration costs as reported by Canada, seven of the signatories and by eligible recipients, as of March 31, 2008, represented only 0.6% of the total allocated funds for the 2005-2008 period, while 91% of the GTF funds allocated were either spent or committed, and 62% of PTF funds were spent. Only four signatories have not declared administration expenses for this program, however, it is unlikely that the costs incurred would affect the evaluated cost-effectiveness of the program management and delivery.
The joint evaluations have pointed out that with the increase in funding and the consequent increase in the number of projects, some jurisdictions may require additional funding for administration costs. Additional funding may also be required by these jurisdictions in order to offer better support to smaller recipients faced with capacity issues.
- Statistics Canada, CANSIM Table 385-0024, Local General Government Revenue and Expenditures, Capital Account
- Technical Report, Capital Spending Commitments under the GTF Program, July 2009
- 52.3% of GTF eligible recipients have a population of less than 1,000
- Table 7, GTF and PTF, Number of Eligible Recipients According to Size
- Quebec and Saskatchewan had not reported on expenses as of March 31, 2008, but had reported on funds committed. Table 8 GTF, 2005-2008, Funds Spent or Committed, and Allocation, by Province and Territory
- Table 9, PTF, 2005-2008, Funds Spent and Allocation, by Province and Territory
- Appendix 2, Table 3, GTF, Summary of Allocation Formulas
- Appendix 2, Table 4, GTF, Transfer Conditions from Provinces/Territories/Associations to Eligible Recipients
- Appendix 3, List of Documents
- Technical Report, Capital Spending Commitments under the GTF Program, July 2009
- Statistics Canada, CANSIM Table 385-0024, Local General Government Revenue and Expenditures, Capital Account
- Appendix 2, Table 11, GTF and PTF, 2005-2008, News Releases and Events, by Province and Territory
- Appendix 2, Table 10, GTF 2005-2008, Number and Value of Projects per GTF Project Category, by Nature
- Appendix 2, Table 12, GTF 2005-2008, Allocation of Funds and Flow of Funds, by Province and Territory
- Appendix 1, Figures 1 and 2
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