How the Private Sector can Boost Indigenous Water Infrastructure

Torys Quarterly: Sector Influences

Drinking water quality on Indigenous reserves stands to improve thanks to recently announced federal funding, but money alone won’t impel a solution.*

Success in resolving this intractable infrastructure deficit requires we look at a holistic reform of the challenges that have made poor drinking water quality in Indigenous communities a chronic problem.

Earlier this year, Minister of Indigenous Services Jane Philpott announced Ottawa’s goal to eliminate more than 100 long-term boil water advisories in Indigenous communities by 2021, with part of the plan including distribution of 10-year grants to communities with proven financial track records.

While the extended funding commitment is better suited to the long-term nature of water assets, this marks the 10th time since 1983 that the federal government has revamped its fiscal approach in relation to Indigenous peoples. Despite previous efforts, the latest data show approximately 75% of on-reserve water systems pose medium to high health and safety risks—roughly the same percentage listed in a 2001 government assessment.

Private sector involvement is one logical way to assist Indigenous peoples in the design, build, operation, maintenance and even financing of their own water infrastructure.

And while the government lifted 62 long-term drinking water advisories over the past two and a half years, it also added 33 new advisories, suggesting that a durable solution will need additional resources beyond government funding.

Given Ottawa’s three-year deadline to demonstrably improve on-reserve water quality by lifting all water advisories, key questions emerge: What will it take to build on the new federal funding to achieve the announced goals? And what will it take to restructure the approach to water infrastructure management that maintains water quality in the long term?

A Few Ideas on How to Accelerate Recent Progress

A Role for the Private Sector

Private sector involvement is one logical way to assist Indigenous peoples in the design, build, operation, maintenance and even financing of their own water infrastructure. Concession contracts typically span decades, where private service providers can train community members before stepping out of the picture. This transition approach is common under the Public Private Partnership model, with government agencies increasingly requiring companies bidding on projects to submit plans that demonstrate how they intend to spur local training and employment opportunities.

Concession contracts also effectively tie payment to long-term service quality performance, where operators are motivated to achieve maintenance and service delivery discipline, which is key to getting the most out of large capital investments. While the new federal grants on their own will likely resolve many shorter-term water quality issues, a longer-term, performance-based contract would better align incentives to ensure new assets stay up and running, and that communities consistently receive high-quality drinking water in the long term.

Bundling Projects

Another possibility is bundling smaller-sized projects together to create the scale needed to attract private sector expertise.

Indigenous-led coalitions such as the First Nations Major Projects Coalition or the Atlantic Policy Congress of First Nations Chiefs Secretariat could play a major role as a single interface for multiple Indigenous peoples. Such a strategy could greatly improve efficiency, as private sector partners and the government would be dealing with either a single or small number of intermediaries, which in turn represent the needs and nuances of constituent communities.

Alternatively, existing government procurement agencies such as Infrastructure Ontario or Partnerships BC, or the new Canadian Infrastructure Bank, could be called on to bundle on-reserve projects on behalf of communities.

Reconfigure Governance and Control

Better clarity as to who is responsible for on-reserve water quality is needed. At present, Indigenous infrastructure is funded and managed under a confusing model of shared responsibility, with onus split among government departments and local community representatives. Despite an ambitious training program, there is also a shortage of local system operators. Ultimately, too often this leads to ineffective service delivery.

Longer-term, performance-based contracts would better align incentives to ensure new assets stay up and running, and that communities get high-quality drinking water for the long term.

Tellingly, Ms. Philpott publicly declared last fall that her department’s mandate is to make itself “obsolete” by empowering Indigenous groups to gain long-asked-for independence in providing services to their own communities. It’s clear that the goal is to assist Indigenous peoples to expand their role in operating and maintaining their own water systems.

Local independence is a strong policy imperative, but it likely won’t happen overnight, and a thoughtful transition plan is essential to turn this vision into a reality. While circumstances vary by community, resources and logistics—such as training more local operators and administering reporting and monitoring regimes—still need to be sorted out on a policy-wide level. We need to ensure communities have sufficient ramp-up time and support, possibly including third-party resources, as well as the ability to tailor approaches to meet their unique needs.

The federal government’s initiatives on this longstanding issue are positive. But it’s worth the effort to harness additional resources and structural reforms to finally find a sustainable solution. We may be headed in the right direction, but the work is far from over.

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* Partner Mark Bain and Associate Jessica Earle co-authored this opinion piece on progressing Indigenous infrastructure, published in the Globe and Mail on June 5, 2018.

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