Evaluation of the Provincial-Territorial Base Funding Program – November 2012

Table of Contents

• Executive Summary
• 1. Background
  • 1.1. Introduction
  • 1.2. Summary Program Profile
    • 1.2.1 History and context
    • 1.2.2 Program Objectives and Outcomes
    • 1.2.3 Program Delivery
    • 1.2.4 Eligible Investements and Recipients
    • 1.2.5 Roles and Responsibilities
    • 1.2.6 Financial Resources
• 2. Methodology
  • 2.1. Evalutation Approach
  • 2.2. Lines of Evidence
  • 2.3. Considerations and Limitations
• 3. Findings
  • 3.1. Performance
  • 3.2. Efficiency and Economy
• 4. Conclusions and Recommendations
• Appendix A - List of Documents Reviewed

List of Abbreviations

ARAF

Accountability, Risk and Audit Framework

BCF

Building Canada Fund

BCP

Building Canada Plan

DPR

Departmental Performance Report

EAP

Economic Action Plan

IFC

Infrastructure Framework Committee

INFC

Infrastructure Canada

PT Base

Provincial-Territorial Infrastructure Base Funding Program

RPP

Reports on Plans and Priorities

TB

Treasury Board

Executive Summary

Introduction

This report presents the results of the evaluation of the Provincial-Territorial Infrastructure Base Funding Program (PT Base ). The evaluation was conducted between October 2011 and January 2012 by the Evaluation Directorate of Infrastructure Canada (INFC).

PT Base is one of a suite of initiatives making up the Building Canada Plan (BCP) that comprises program funding and base funding programs supporting infrastructure development and improvement. In addition to being one of the intended complementary mechanisms to the traditional infrastructure contribution programs included within the BCP, the PT Base is also part of the federal response to the concerns and needs raised by the provinces and territories during consultations on fiscal balance that took place during 2006.

PT Base committed to equally providing each province and territory $25 million per year for seven years, from 2007/08 to 2013/14, for their core infrastructure priorities. Each jurisdiction would receive $175 million over the seven years of the program. In the three territories, the total allocations are slightly higher as their relatively small per-capita allocations under the Building Canada Fund (BCF) were rolled into the PT Base funding agreements; and therefore, funding would flow under the terms of PT Base.

PT Base is unique in its design in that it is not a contribution program but more of a transfer. Under this program, federal funding is committed and flowed on the basis of federal acceptance of provincial or territorial Capital Plans and not on the basis of the individual eligible initiatives within the Capital Plans. There is no requirement for incrementality for the proposed initiatives. Funding is provided upfront and jurisdictions have the flexibility to pool, bank, borrow against, and cash manage these financial resources to help them fund their infrastructure priorities. As well, the PT Base does not use traditional accountability protocols found in other federal infrastructure contributions programs. The accountability mechanisms established are built on existing public reporting requirements of the provinces and territories.

In 2009, when the Government of Canada offered to provinces and territories the option of accelerating funding under the PT Base Fund as part of the Economic Action Plan (EAP), eight jurisdictions opted to do so. As a result, federal commitments and funding were accelerated under the program in certain jurisdictions, particularly in fiscal years 2009-2010 and 2010-2011, although their funding allocations as a whole remained unchanged.

The PT Base shares a governance structure with other BCP programs through Infrastructure Framework Committees (IFCs) established in each province and territory. The IFCs act as the principal forum where federal, provincial and territorial parties can discuss, and coordinate issues and priorities related to federal funding of infrastructure in the provinces and territories.

The questions addressed by the evaluation include:

• To what extent has the PT Base contributed to the development of sustainable infrastructure through successful completion of infrastructure building and improvement initiatives?
• To what extent has the PT Base contributed to enhanced collaborative partnerships between federal government, provinces and territories for infrastructure projects?
• To what extent has the PT Base led to enhanced capacity-building abilities in territories?
• To what extent has the PT Base been delivered in cost-effective and efficient way?

There were four lines of evidence sourced during the study including document review, program data review, secondary data review, and key informant interviews.

Study Conclusions

The study findings indicate that the PT Base is meeting the dual purpose set out for its design in that the fund has contributed to the development and improvement of Canada's infrastructure base as well as delivering on the response to fiscal balance consultations.

Capital Plans are in place and funded initiatives are being launched and completed for all provinces and territories (except Ontario) under various eligible areas of investment.¹ As of March 31, 2011, approved Capital Plans have resulted in federal funding commitments of $1.868 billion² with another $2.507 billion leveraged from provinces, territories and other partners, including local governments. Of the 539 Capital Plan initiatives that jurisdictions had reported on as of that date, 79 initiatives were completed and 118 were underway, valued together at $1.626 billion (37.17 per cent of the total value of the 539 initiatives). Initiatives relating to roads and highways represented the largest proportion of the total value of all accepted provincial and territorial Capital Plans (67.07 per cent).

The PT Base Funding Agreements have been signed with all provinces and territories that reflect the intent of the streamlined program design and partners are satisfied with the delivery and governance mechanisms supporting the program. Fulfillment of Funding Agreement commitments in areas of financial reporting and joint communications has been observed.

Capacity Building initiatives are eligible undertakings for the territories, but only one initiative has been proposed by a territory under this category to date. There is insufficient data at the time of the evaluation to assess program contributions to capacity building.

In relation to efficient and cost-effectively delivery, the PT Base program is supported by a very small number of federal staff with no dedicated overhead costs currently allocated to the program. Provinces and territories find the program design to be efficient and cost effective.

1. Background

1.1. Introduction

This report presents the results of the evaluation of the Provincial-Territorial Infrastructure Base Funding Program. The evaluation was conducted between October 2011 and January 2012 by the Evaluation Directorate at Infrastructure Canada (INFC).

The evaluation has been undertaken to comply with the Treasury Board of Canada's Evaluation Policy (2009) and its associated directives.

1.2. Summary Program Profile

1.2.1 History and context

In Budget 2006, infrastructure was identified as one of the priorities in restoring the fiscal balance and the Government of Canada announced it was going to engage provinces and territories in consultations on this issue, including addressing the role of federal government in infrastructure. During the ensuing consultations, all provinces and territories expressed a desire for long-term, predictable funding supported by long-term plans, with allocations that coincide with the provincial and territorial capital funding cycles. In addition, provinces called for more flexible program design within and among programs to address regional and local priorities.

Consultations during the summer of 2006 helped inform the development of the Building Canada Plan (BCP), announced in Budget 2007. The BCP is a suite of infrastructure initiatives consisting of program funding and base funding that aimed to respond to provincial and territorial concerns and needs expressed during consultations on fiscal balance as well as promote national infrastructure interests and priorities.The BCP totals $33 billion over seven years.

As a first step, Infrastructure Framework Agreements (IFAs) were established between the Government of Canada and the provinces and territories to set out the general parameters for federal-provincial/territorial cooperation on the BCP overall. IFAs have been signed between INFC and all 13 provinces and territories. Through these Framework Agreements Infrastructure Framework Committees (IFCs) were established in each province and territory, with each IFC led by a federal co-chair and a provincial or territorial co-chair. The IFCs act as the principal forum where federal, provincial and territorial parties can discuss and coordinate issues and priorities related to federal funding of infrastructure, and in particular under BCP's programs, including the PT Base .

Actual funding under the Building Canada Plan's various programs flows from the terms of the separate funding or contribution agreements signed with recipients for each program.

PT Base is one program of the BCP, described in foundational documents as "one of a holistic suite of instruments to address Canada's public infrastructure deficit in a coherent manner…designed to provide maximum flexibility to provinces and territories in respect of the management of cash flow and the selection of projects, and by balancing other BCP funding programs through the provision of a minimum level of funding for the smallest jurisdictions."

The PT Base committed to equally providing each province and territory $25 million per year for seven years, from 2007/08 to 2013/14, for a total of $175 million for each jurisdiction. Of note, these cashflows changed when the Government of Canada allowed jurisdictions to opt to accelerate some, or all of their PT Base funding under the 2009 Economic Action Plan (EAP) for "ready-to-go" infrastructure initiatives. Eight of the 13 provinces and territories chose to accelerate funding. The EAP also made PT Base funding even more flexible, allowing provinces and territories to use their funding to address infrastructure needs on all highways and roads, regardless of location, status or ownership. In addition to being one of the intended complementary mechanisms to the traditional infrastructure contribution programs included within the BCP, the PT Base is also part of the federal response to the concerns and needs raised by the provinces and territories during consultations on the fiscal balance.

It is clearly stated in the foundational documents that:

"it is important to reiterate that one of the fundamental purposes of the PT Infrastructure Base Fund is to address the fiscal balance. To that end, flexibility and respect for the jurisdictional capabilities is one of the paramount program design considerations."

As such, PT Base is quite unique in its design. Some of the key attributes exclusive to PT Base include:

• It is a base funding program and closer to a transfer. Funding is committed and flowed to jurisdictions upfront upon acceptance by the Minister of Transport, Infrastructure and Communities of provincial/territorial Capital Plans that provide a list of the infrastructure initiatives to be undertaken through the program. The Minister must accept or reject the Plans in their entirety.
• The proposed federal share toward a Capital Plan's overall eligible cost is not linked to specific initiatives (components) listed within the Plan, nor to actual or expected expenditures in a given year.
• Provinces and territories are able to carry forward unspent funds from one year to the next.
• There is no requirement for incrementality with respect to the funding. Provinces and territories that have planned capital expenditures are able to use the PT Base funding to help finance these projects by including them as initiatives within their proposed Capital Plans.
• The Government of Canada did not establish traditional accountability protocols found in other federal infrastructure contribution programs. The accountability mechanisms were established building on existing public reporting requirements of the provinces and territories.

These considerations took into account the results of the Report of the Independent Blue Ribbon Panel on Grant and Contribution Programs, by simplifying the reporting and accountability requirements on provinces and territories.

1.2.2 Program Objectives and Outcomes

One of the main objectives of this program is to demonstrate federal responsiveness to the concerns and needs raised by the provinces and territories during consultations on the fiscal balance, in particular:

• Provincial and territorial desire for long term, predictable funding;
• More flexible program design to address regional priorities;
• Streamlined and simplified program structure and criteria; and
• Simplified reporting and auditing mechanisms, with a greater reliance on existing provincial accountability regimes.

The PT Base Funding Agreements all specify the following outcomes:

• Enhanced competitiveness and productivity of the economy;
• Cleaner air, water and land; and,
• Stronger and healthier communities.

1.2.3 Program Delivery

The PT Base program is executed through a Funding Agreement negotiated between the Government of Canada (through INFC) and each province and territory. The funding Agreements set out: funding provisions (i.e., federal share of any given Capital Plan cannot exceed 50 per cent, 75 per cent in territories); the use of funds (i.e., specified investment categories and eligible expenditures) and the Capital Plan submission process; eligible recipients and investments; compliance with environmental legislation; and reporting, audit and evaluation requirements. The PT Base Funding Agreement must be signed before the PT Base fund can be implemented in any jurisdiction.

Once a Funding Agreement is in place, program implementation begins with the submission of a Capital Plan by each province and territory, the plans set out the funding priorities in infrastructure investment categories and are submitted to the federal co-chair of the IFC for review and ultimate acceptance by INFC's Minister. Before the acceleration of the program through the EAP, Capital Plans were to be submitted on an annual basis. Jurisdictions are now only required to submit one Capital Plan under the program to receive funding.

Reporting requirements are outlined in the Funding Agreements and are limited to the submission of Annual Expenditure Reports by the provinces and territories. The Annual Expenditure Reports are to include: details on opening and closing balances; expenditures and interest earned (where applicable) on amounts received from Canada; total expenditures by all partners per initiative within a Capital Plan; and overall amounts expended per partner. This data would be provided for both the fiscal year being covered by the expenditure report, and on a cumulative basis starting from 2007/08.

As such, federal payments to the provinces and territories are made when specific requirements are met as per the Funding Agreements, including acceptance of Capital Plans and Expenditure Reports. Funding may flow before the recipients' or ultimate recipients' expenditures are incurred. This was intended to provide provinces and territories the flexibility to pool, bank, borrow against and cash manage these financial resources in a manner that would afford them greater flexibility in carrying out their Capital Plans. Payments under this program are made to provinces and territories, who may also flow funding to an eligible ultimate recipient such as municipalities or private sector bodies.

Under the initial design of the program, each fiscal year, the first half of a jurisdiction's $25 million annual allocation would flow upon federal acceptance of a submitted Annual Capital Plan, committing the entire $25 million federal share for that year. The second half of the $25M flowed upon submission of an audited Annual Expenditure Report.

During the economic downturn in Canada in 2008-2009, the original terms and conditions of the program were amended to allow the acceleration of infrastructure investments in jurisdictions that could demonstrate their ability to put the funds to use quickly in order to stimulate the economy. Provinces and territories that were able to accelerate their spending could potentially receive up to their entire $175 million allocation as early as fiscal year 2010-2011, subject to matching contributions. Eight of the 13 jurisdictions accepted Canada's offer and opted to accelerate their funding. In these jurisdictions, the number of required Capital Plans and audited expenditure reports as well as cashflows and payment schedules were revised under amended Funding Agreements.

1.2.4 Eligible Investments and Recipients

In accordance with the Terms and Conditions of the program, provinces and territories have the flexibility to use the federal funding to support infrastructure initiatives related to eligible infrastructure categories. Eligible areas of investment under the program include:

• Water Infrastructure
• Wastewater Infrastructure
• Public Transit Infrastructure
• Highway Infrastructure
• Green Energy Infrastructure
• Disaster Mitigation Infrastructure
• Solid Waste Management Infrastructure
• Brownfield Redevelopment Infrastructure
• Cultural Infrastructure
• Sport Infrastructure
• Connectivity and Broadband Infrastructure
• Local Road Infrastructure
• Shortline Rail Infrastructure
• Short Sea Shipping Infrastructure
• Tourism Infrastructure
• Regional and Local Airport Infrastructure
• Northern Infrastructure (in the three territories only)
• Safety related rehabilitation under all eligible categories

Funding flows to provincial and territorial governments who have signed a Funding Agreement with the Government of Canada. In turn, provinces and territories may flow funding to eligible ultimate recipients including a local or regional government, a public sector body established by or under a provincial/territorial statute, and a private sector body (which includes First Nations).

1.2.5 Roles and Responsibilities

Given the PT Base is a collaborative arrangement, its administration and management is a shared responsibility between INFC and provinces and territories:

Entity	Responsibilities
INFC	Responsible for overall coordination and administration of the PT Base Leads negotiation with provinces and territories Reviews Annual Capital Plans and amendments, as well as Annual Expenditure Reports Co-chairs IFC in each jurisdiction, which can act as forum for discussion regarding issues related to PT Base Agreement, Annual Capital Plans and amendments thereto, and Annual Expenditure Reports IFC federal co-chair has delegated authority to accept audited PT Base expenditure reports Accounts for and reports on the use of PT Base to Parliament Provides project management support and information to the stakeholders and to the public on performance measurement Takes a lead role in broad PT Base communications Takes a lead role in program evaluations and conducts internal audits Ensures that effective financial and management controls are in place
Deputy Head of Infrastructure Canada	Makes recommendations to the Minister regarding acceptance of Annual Capital Plans Ensures departments that have a regional or substantive interest are consulted as appropriate with respect to Annual Capital Plans prior to recommendations to the Minister
Provinces and Territories	Act as Co-Chair of IFC Implement relevant elements of the communications protocol Participate in joint audit and evaluation processes Make payments to ultimate recipients Prepare and submit Capital Plan(s) for acceptance by the federal Minister that lists eligible public infrastructure initiatives to be undertaken under the Plan, including an overall cost-sharing breakdown and confirmation that federal funding will not support ineligible costs nor exceed 50 per cent of a Plan's total costs Provide required audited and unaudited Expenditure Reports to ensure the program objectives are met and the program terms and conditions are respected Ensure that any sub-funding agreements with Eligible Recipients other than the Province/Territory respect obligations under the PT Base Funding Agreement

1.2.6 Financial Resources

The federal government allocated $2.275 billion to the PT Base to support provincial and territorial infrastructure priorities. Each province and territory would receive $25 million per year for seven years, for a total of $175 million per jurisdiction. In addition, the three territories would receive their Building Canada Fund (another component under the BCP) allocations totaling $26,390,000 as part of their PT Base allocations and delivered under its terms and conditions. This brings the total PT Base envelope to $2.301 billion. Program operating costs are supported by provinces and territories.

2. Methodology

The evaluation of the PT Base focused on issues of performance (effectiveness, efficiency and economy) of the program by assessing two core issues outlined in the Directive on the Evaluation Function. The two issues evaluated under performance were:

• Achievement of expected outcomes; and
• Demonstration of efficiency and economy.

More specifically the evaluation addressed the following questions:

1. To what extent has the PT Base contributed to the development of sustainable infrastructure through successful completion of infrastructure building and improvement initiatives?
2. To what extent has the PT Base contributed to enhanced collaborative partnerships between federal government, provinces and territories for infrastructure projects?
3. To what extent has the PT Base led to enhanced capacity-building abilities in territories?
4. To what extent has the PT Base been delivered in cost-effective and efficient way?

The core issue of relevance was not addressed. See Evaluation Approach below for the rationale for its exclusion.

2.1. Evaluation approach

The PT Base evaluation focused on program activities implemented from its inception in 2007-2008 through to March 31, 2011. The evaluation focused only on the federal commitment of $2.301 billion to support provincial and territorial infrastructure priorities.

The evaluation undertook a basic and straightforward approach to reflect the streamlined and simplified structure of the PT Base program:

• a condensed, focused approach to data collection and method selection was employed;
• standard Treasury Board evaluation issues related to relevance were not addressed.

Specifically influencing the approach were the following considerations:

• PT Base is still operating in the current cycle of infrastructure programming and reflects the priorities of the federal government; therefore a discussion on relevance is not warranted.
• Sound evidence was provided in the initial Cabinet documents (2007) such that there is low risk to any significant change taking place to the then documented rationale and research identifying estimates of infrastructure needs across the country. The $2.301 billion earmarked to PT Base is small part of the overall identified need.
• The evaluation took place at an early stage of the program, four years following implementation, driving the evaluation to consider the context of the program at mid-term. Therefore, a larger focus on early efforts such as program activities and short term outcomes was applied.
• The PT Base Fund encompasses a very small community of key players. The audit of the PT Base Fund took place from January through May 2011 immediately preceding the evaluation timing of October through January 2012. The evaluation leveraged audit data and findings with a view to minimize the demands on these key stakeholders.

2.2. Lines of Evidence

Multiple lines of evidence were used to address evaluation issues and questions, consisting of the data collection methods below:

• Document review
• Program data review
• Secondary data review
• Key informant interviews

2.2.1 Document Review

Documents reviewed for this evaluation included TB submissions, the program's ARAF, Funding Agreements and Framework Agreements, program terms and conditions, program business model, accepted Capital Plans, accepted Expenditure Reports, IFC meeting minutes, evaluation reports of other INFC programs, Departmental Performance Reports (DPR) and Departmental Reports on Plans and Priorities (RPP), as well as program reporting templates. Evidence gathered from these documents contributed to all evaluation questions. A complete list of all documents reviewed can be found in Appendix A.

2.2.2 Program data

INFC's PT Base program database was analyzed to obtain information on key aspects of the program, including the program resources, activities and outputs. The program database is an Excel spreadsheet containing financial information on initiatives undertaken by each province and territory. Information is entered into INFC's program database by the INFC officer based on the Capital Plans and audited Annual Expenditure Reports submitted by provinces and territories. It is used for tracking payments and commitments at the program level, although overall budget control is also maintained by INFC Corporate Services.

The variables contained in the database included Capital Plan information, expenditure report information, payments, status of federal commitments, and details on all initiatives approved as part of a Capital Plan. The initiative details section consisted of a title, approved total eligible cost as per the Capital Plan ($), initiative status, total expenditures per year, a brief description and to which investment category the initiative aligned. Confirmation of federal funding flowing to individual initiatives is not required under the program and is not tracked, as federal cost-sharing provisions apply to a Capital Plan as a whole.

2.2.3 Secondary data review

The PT Base internal audit was leveraged by the evaluation to the greatest extent possible including early consideration of possible complimentary use of the audit questions when the audit approach was being designed. Key audit questions that were considered relevant to the evaluation included questions 3.1(c) on success in meeting objectives, parts of 9.1(c) on potential implications of accelerated investments, and 12.1(a) related to performance monitoring, data collection and reporting. Results from the internal audit have been included where there is supporting evidence applicable to the evaluation question being addressed.

2.2.4 Key informant interviews

Key informant interviews were conducted directly with PT Base program staff to mainly clarify and validate other lines of evidence.

2.3. Considerations and Limitations

• This evaluation focused on the very explicit and streamlined accountability requirements attached to the PT Base Funding Agreements. Overall accountability for the reporting of longer term outcomes related to specified economic and environmental outcomes (i.e., public good) rests with the IFCs whose mandate is much larger than just the PT Base funds and covers BCP programs.
• There was insufficient data available to rigorously assess cost-effectiveness. Data on salary and non-salary costs the partners incurred to deliver the program were not available.

3. Findings

3.1. Performance

3.1.1 To what extent has the PT Base contributed to the development of sustainable infrastructure through successful completion of infrastructure building and improvement initiatives?

Results from the evaluation conclude that:

• With the exception of Ontario, provinces and territories have approved Capital Plans in place.³
• A corresponding amount of funding has been leveraged from provinces, territories and other funding partners, injecting almost double the $2.301 billion allocation to infrastructure initiatives.
• Progress is being made against provincial and territorial Capital Plans. Initiatives in progress and those completed across Canada make up almost two-thirds of the total value of accepted initiatives as of March 31, 2011.

Capital Plans have been approved and are in place

All provinces and territories have federally-accepted Capital Plans in place, with the exception of Ontario. Canada and Ontario signed a Funding Agreement in March 2011 and formal federal acceptance of Ontario's first Capital Plan is a next step prior to the flowing of funds.

As of March 31, 2011, Funding Agreements with all 13 jurisdictions were in place, for the overall PT Base allocation $2.301 billion. Of this amount, $1.868 billion was committed under federally accepted Capital Plans, with leveraged commitments of $2.507 billion from provinces, territories and other partners. The program data reviewed indicate 539 individual initiatives were accepted as part of these Capital Plans, which are valued at more than $4.375 billion with a total federal commitment of $1.868 billion. Of this federal funding commitment, $1.32 billion had been transferred to provinces and territories as at the end of fiscal year 2010/11.

Infrastructure initiatives have been launched and are progressing to completion across all eligible infrastructure categories

Based on the review of Expenditure Report data received from provinces and territories, as of March 31, 2011, 79 initiatives were completed and 118 initiatives were in progress while eight had not yet begun. The status of 334 initiatives was not identified in the database.⁴ PT Base program interviewees explained this was mainly due to the timing of the reporting cycles (i.e. initiatives are entered into the database upon the acceptance of a Capital Plan but may not be reported on for another year or more, depending on the reporting cycles set out in the Funding Agreements).

As shown in Figure 1, the total value of completed initiatives as of March 31, 2011 is $505,703,296 and the value of initiatives that were reported on as in-progress totaled $1,120,428,344. Together these figures represent 37.17 per cent of the value of all approved initiatives as of that date.

Figure 1: Value of initiatives completed and in progress as of March 31, 2011

Initiative type	Total value of intiatives completed ($) A	Total value of initiatives in-progress ($) B	Total (A) + (B) ($)
Roads and highways	422,873,068	573,934,722	996,807,790
Water	2,500,000	91,132,848	93,632,848
Wastewater	0	10,050,000	10,050,000
Solid waste	9,686,200	635,000	10,321,200
Culture	4,516,800	197,714,000	202,230,800
Sport	382,800	63,318,600	63,701,400
Tourism	0	0	0
Green energy	38,000,000	5,750,000	43,750,000
Disaster mitigation	613,000	46,600,000	47,213,000
Connectivity and broadband	15,734,700	0	15,734,700
Northern infrastructure	6,396,728	71,380,254	77,776,982
Research, knowledge, feasibility	0	2,033,000	2,033,000
Regional and local airports	5,000,000	53,545,000	58,545,000
Administration*	0	2,056,536	2,056,536
Other**	0	2,278,384	2,278,384
Total for initiative types	505,703,296	1,120,428,344	1,626,131,640

Source: Most current audited Annual Expenditure Reports received and federally accepted up to March 31, 2011.

^[*] Administration support is provided to territories only in relation to specified eligible administrative costs documented in Funding Agreements related to community-based initiatives. In the territories, Administrative costs are eligible up to a maximum of three per cent of total eligible costs of the community-based initiatives approved in a Capital Plan.

^[**] Includes, for example, individual initiatives that align with more than one eligible category.

By far, the majority of initiatives prioritized by provinces and territories under the PT Base are aligned to roads and highways infrastructure with 285 initiatives or 67.07 per cent of total eligible costs allocated to this category, as shown in Figure 2. This was the case in most jurisdictions, with the exception of Nunavut, which prioritized the majority of funding under the Northern Infrastructure category. This category is available to the three territories only, allowing them to address infrastructure needs particular to the north. Smaller proportions of total initiative eligible costs are found across all other categories.

Figure 2: Value of accepted initiatives by investment category, as of March 31, 2011

Initiative type	Number of initiatives	Total value of initiatives ($)	Percentage in terms of overall value of all accepted Captial Plans
Roads and highways	285	2,934,652,493	67.07
Water	76	366,726,928	8.38
Culture	20	256,189,300	5.86
Wastewater	25	119,727,000	2.74
Disaster mitigation	9	78,385,000	1.79
Tourism	3	39,010,000	0.89
Connectivity and broadband	7	72,013,600	1.65
Green energy	4	56,750,000	1.30
Sport	5	89,686,500	2.05
Solid waste	13	44,234,300	1.01
Regional and local airports	16	109,195,000	2.50
Short sea shipping	1	5,000,000	0.11
Administration	7	6,053,603	0.14
Northern infrastructure	41	125,653,937	2.87
Research, knowledge, feasibility	6	4,983,000	0.11
Other	21	67,103,384	1.53
Total for initiative types	539	4,375,364,045	100.00

Outside of roads and highways, provinces and territories also prioritized initiatives within various other investment categories, among these cultural infrastructure, water, connectivity and broadband, regional or local airports, tourism and sport facilities.

3.1.2 To what extent has the PT Base contributed to enhanced collaborative partnerships between federal government, provinces and territories for infrastructure initiatives?

Results from the evaluation conclude that:

• Funding Agreements are in place with all provinces and territories.
• Roles and responsibilities are clearly documented, communicated and understood.
• INFC and provincial and territorial partners are satisfied with program mechanisms and delivery, and believe IFCs have encouraged good working relationships between the two levels of government.
• Joint federal/provincial/territorial communications activities in support of PT Base have taken place in compliance with the Framework Agreements.
• Provinces and territories have fulfilled commitments related to financial reporting requirements as documented in Funding Agreements; their reports may also contribute to strategic outcome monitoring under the BCP.

Funding Agreements are in place with all provinces and territories; roles and responsibilities are clearly documented, communicated and understood

Funding Agreements are in place for all provinces and territories. The majority were signed throughout 2008 and early 2009, and later amended where jurisdictions opted to accelerate their funding under the program.

Funding Agreements document roles and responsibilities for the parties, namely that provinces and territories are responsible for the day-to-day implementation and management of the program, with the role of INFC defined as focusing on oversight and administration of the program.

The interviews conducted with representatives from INFC and provinces and territories through the recent PT Base internal audit found this allocation of roles and responsibilities between the two levels of government was, on the whole, well defined, clearly communicated and understood.

The report notes:

"Consultations with PT Base Fund representatives confirmed that their respective roles and responsibilities have been clearly communicated as part of their respective job descriptions and role profiles. Factors contributing to the clarity and understanding of roles and responsibilities were attributed to a clear and concise program design, documented procedures via the Program Business Model, streamlined approach to reporting and payments and good working relationships between INFC and provincial-territorial stakeholders."⁵

The PT Base internal audit report also identified that overall, provincial and territorial stakeholders confirmed that the PT Base Fund has been successful in addressing the objectives of more flexible program design, streamlined and simplified program structure and criteria, and simplified reporting and auditing mechanisms.⁶

Under the terms of the Framework Agreements signed with all provinces and territories to provide a framework for the Building Canada plan, the established Infrastructure Framework Committees would "provide a forum to facilitate improved cooperation and coordination between the Parties regarding Public Infrastructure initiatives in <province/territory>." This includes PT Base .

The results of the PT Base internal audit report confirmed that IFCs have helped facilitate the bilateral working relationship between INFC and jurisdictions. This was attributed to a clear role and mandate for the IFC, as well as the nature of the IFC relationship between the federal and provincial-territorial co-chairs.⁷ The audit report also found the IFC has encouraged collaborative discussions between INFC and provinces and territories on matters related to federal funding of provincial and territorial public infrastructure.

Joint federal/provincial/territorial communication activities have been carried out in accordance with Framework Agreements

The Framework Agreements require the federal government and provincial and territorial governments to undertake joint communications activities and collaborate on communication products to ensure open, transparent, proactive and effective communications with Canadians. Efforts have been made by the two levels of government to ensure that this provision was carried out under PT Base in accordance with the requirements of the communication protocol associated with Framework Agreements.

The INFC Communications documents reviewed state that decisions as to the nature of announcements, order of precedence, signage, and cost allocations are jointly taken by communications leads at Infrastructure Canada and the corresponding provincial or territorial ministry with respect to PT Base . It is also noted that to date, no communications disputes or compliance issues have arisen which have required escalation for consideration or discussion at the Infrastructure Framework Committee.

According to documents provided by INFC's Communications Directorate, to date, 66 joint announcements have been made related to PT Base , or funded initiatives, resulting in 77 instances of print and television media coverage across Canada. 133 PT Base initiatives have installed signs indicating the financial participation of all partners.

Provinces and territories have fulfilled commitments related to reporting requirements as documented in Funding Agreements

PT Base reporting accountabilities, as documented in Funding Agreements with provinces and territories, require submission of Capital Plans, Annual Expenditure Reports and Audit Reports, which provide INFC with an assurance-based opinion regarding the jurisdiction's financial and other compliance with the terms and conditions of the PT Base Funding Agreement.

Despite the internal audit finding that, in some instances, reporting was not being completed in a timely manner, the accountability mechanisms were found to be effective, efficient, and sufficient to the extent that they capture information based on the streamlined reporting requirements established by PT Base Fund terms and conditions.⁸

Strategic reporting for PT Base is referenced in the Accountability, Risk and Audit Framework (ARAF) and PT Base business model. This would be part of broader Building Canada Plan high-level reporting and could be coordinated by the Infrastructure Framework Committees. As of March 31, 2011, high-level joint reporting activities have not yet taken place as contemplated outlined in the Framework Agreements.

3.1.3 To what extent has the PT Base led to enhanced capacity-building abilities in territories?

Results from the evaluation conclude that:

• There is insufficient data to properly assess the extent to which the PT Base led to enhanced capacity building abilities in participating territory.

According to PT Base program interviews and the documents review, Research, Knowledge, Feasibility and Capacity-building is an optional investment category for the territories under PT Base (provinces can prioritize such projects under the Building Canada Fund).

Nunavut was the only territory that prioritized an initiative under this investment category. Nunavut's 2010-2011 Capital Plan was accepted with an initiative for the "Renewal Capital Asset Planning Process (ReCAPP) for the conditional assessment of Government of Nunavut assets to track asset lifecycle", with a total eligible cost of $1.8 million. This initiative had not been reported on as of the time of the evaluation, given the territory's reporting cycles under the program.

3.2. Efficiency and Economy

3.2.1 To what extent has the PT Base been delivered in a cost-effective and efficient way?

Results from the evaluation conclude that:

• Provinces and territories find the program design to be efficient and cost effective.
• PT Base is supported by a very small number of INFC program staff.
• No INFC overhead costs are currently being allocated to the program.

PT Base is administered by a very limited number of INFC staff. Currently, there are two staff members in place, a Manager who spends approximately 50 per cent of her time dedicated to PT Base activities and a Policy Analyst who spends approximately 75-80 per cent of his time dedicated to PT Base activities. These resources also support other BCP infrastructure programs and carry out other policy-related activities. The costs of these two staff positions are allocated elsewhere.

As identified in the PT Base internal audit report, stakeholders identified a marked contrast between the program's approach to reporting compared to other INFC / federal government infrastructure programs whose requirements entail a higher frequency and therefore, a more costly level of effort. There was agreement among stakeholders that the reporting approach via the Capital Plan and Annual Expenditure Report submissions is more streamlined compared to other programs as it reduces the frequency of reporting while maintaining an emphasis on compliance over the funding lifecycle.⁹ Provinces and territories support their own operating costs in delivering the program.

4. Conclusions and Recommendations

The study findings indicate that the PT Base is meeting the dual purpose set out for its design in that the fund has contributed to the development and improvement of Canada's infrastructure base as well as delivering on the response to fiscal balance consultations.

Capital Plans are in place and funded initiatives are being launched and completed for all provinces and territories (except Ontario) under various eligible areas of investment.¹⁰ As of March 31, 2011, approved Capital Plans have resulted in federal funding commitments of $1.868 billion and $2.507 billion leveraged from provinces, territories and other partners. Of the 539 initiatives accepted as part of these Capital Plans, 79 initiatives were completed as of that date and 118 were underway, valued together at $1.626 billion (or 37.17 per cent of the value of all initiatives). Roads and highways represent the largest proportion of the total value of all accepted provincial and territorial Capital Plans (67.07 per cent).

The PT Base Funding Agreements have been signed with all provinces and territories that reflect the intent of the streamlined program design and partners are satisfied with the delivery and governance mechanisms supporting the program. Fulfillment of Funding Agreement commitments in areas of financial reporting and joint communications has been observed.

Capacity Building initiatives are optional undertakings for the territories with only one initiative identified by a territory under this investment area to date. There is insufficient data at the time of the evaluation to assess program contributions to capacity building.

In relation to efficient and cost-effectively delivery, the PT Base program is supported by a very small number of federal staff with no overhead costs currently allocated to the program. Provinces and territories find the program design to be efficient and cost effective.

Recommendations: Given the streamlined administration of this program, there are no recommendations included in this evaluation.

Appendix A – List of Documents Reviewed

• Accountability, Risk and Audit Framework (ARAF) for the Provincial and Territorial Base Fund Program (PT Base )
  Infrastructure Canada (December, 2007)
• Departmental Performance Reports (DPR)
  Infrastructure Canada
• Evaluation Report – National Summative Evaluation of the Gas Tax Fund and Public Transit Fund
  Infrastructure Canada (July 2009)
• Federal-Provincial-Territorial Framework Agreements (All)
• Federal-Provincial-Territorial Funding Agreements (All)
• Guideline on Performance Measurement Strategy under the Policy on Transfer Payments Treasury Board of Canada
• Implementation Evaluation of the Gas Tax Fund
  Infrastructure Canada (March 2008)
• Internal Audit Report – Audit of the Provincial-Territorial Infrastructure Base Funding Initiative
  Infrastructure Canada (June 2011)
• Managing for Results: A Management Framework for the Government of Canada
  Treasury Board of Canada Secretariat
• Planning for a Sustainable Future: A Federal Sustainable Development Strategy for Canada
  Environment Canada (October 2010)
• Policy on Transfer Payments and Directive on Transfer Payments
  Treasury Board of Canada
• Provincial and Territorial Annual Capital Plans (ACP)
• Provincial and Territorial Annual Expenditure Reports (AER)
• PT Base – Database
  Infrastructure Canada
• Provincial and Territorial Base Fund – Program Business Model
  Infrastructure Canada (July 2009)
• Program's Treasury Board Submissions (All)
  Treasury Board of Canada
• Reports on Plans and Priorities (RPP)
  Infrastructure Canada

Footnotes

^[1] It should be noted that since the end of the evaluation reporting phase in January 2012, two capital plans submitted by Ontario were approved respectively in August and September 2012.

^[2] This amount may differ slightly from cumulative past Departmental Performance Reports due to Capital Plan amendments.

^[3] It should be noted that since the end of the evaluation reporting phase in January 2012, two capital plans submitted by Ontario were approved respectively in August and September 2012.

^[4]There are variations with regards to the time period covered by the most recently submitted and federally accepted provincial and territorial audited Annual Expenditure Reports. As well, initiative status is not a mandatory reporting requirement in most provincial and territorial Funding Agreements so data is not always provided. Given these limitations, the number of in-progress and completed initiatives and associated value are likely higher than what is identified here.

^[5]INFC, Audit of the Provincial-Territorial Infrastructure Base Funding Initiative, Final Report, June 2011, p. 6.

^[6]Idem, p. 7.

^[7]Idem, p. 10.

^[8]Idem, p. 14.

^[9]Idem, p. 8.

^[10]It should be noted that since the end of the evaluation reporting phase in January 2012, two capital plans submitted by Ontario were approved respectively in August and September 2012.