Proceedings of the Standing Senate Committee on
Aboriginal Peoples
Issue 6 - Evidence - Meeting of May 4, 2005
OTTAWA, Wednesday, May 4, 2005
The Standing Senate Committee on Aboriginal Peoples met this day at 6:20 p.m. to examine and report on the involvement of Aboriginal communities and businesses in economic development activities in Canada.
Senator Nick G. Sibbeston (Chairman) in the chair.
[English]
The Chairman: I call the meeting to order and welcome all senators, including three senators not usually here: Senator Johnson, a former member of the committee, and Senator Ruth and Senator Tardif.
The committee is continuing its examination on the involvement of Aboriginal communities and businesses in economic development activities in Canada. A number of witnesses have appeared before the committee here and in our travels to the Northwest Territories. Additional trips are planned to Alberta and British Columbia this spring.
We are honoured to have with us this evening Ms. Sheila Fraser, Auditor General of Canada, and Mr. Jerome Berthelette and Mr. Jeff Greenberg, principals in her office. Ms. Fraser, please proceed.
Ms. Sheila Fraser, Auditor General, Office of the Auditor General of Canada: Thank you for inviting me to make a presentation for your study of the involvement of Aboriginal communities and businesses in economic development activities in Canada. With me are Mr. Berthelette and Mr. Greenberg, the principals responsible for three chapters that relate to the issue of economic development of First Nations communities, institutional arrangements, tabled in our November 2003 report; development of non-renewable resources in the Northwest Territories, tabled in our April 2005 report; and transferring federal responsibilities to the North, tabled in our November 2003 report.
The first chapter on economic development is focused on First Nations south of the 60th parallel and the other two on the First Nations north of the 60th and, consequently, on the North in general. I would like to provide a little background on my interest in Aboriginal issues and the methodology we use to incorporate the First Nations and Aboriginal prospectus in our work.
Aboriginal issues are one of my five areas of focus for my term as Auditor General. This means that we will place an emphasis on this area and look for measurable change over time. That being said, I recognize that the issues are many and complex, and that the solutions are seldom simple.
While I am not an auditor of First Nations, I believe that their perspective is vital to our work and we engage them in several ways. I receive guidance from panels of advisers on First Nations and Inuit issues and from separate advisory committees established for each chapter. The majority of participants are representatives of the First Nations and Aboriginal communities with a wealth of experience. This guidance has enabled me to engage in discussions with First Nations and Aboriginal leaders at a strategic level on the broader issues and, more specifically, on an issue-by-issue basis.
In addition, our methodology includes visiting the communities to learn firsthand about the issues they face. This community input helps to ensure that the findings are based on the communities' experiences.
[Translation]
Mr. Chairman, I will speak to the issues concerning economic development that I reported on in the chapter on institutional arrangements in three parts: what the First Nations told us; our findings; and our recommendations.
For the institutional study, we visited thirteen First Nations and four Tribal Councils or governments in five provinces. These First Nations are generally considered to be well governed and proactive about their economic development.
Their experiences helped to identify good practices but perhaps more importantly the barriers to economic development that First Nations across Canada face.
First Nations told us that they face many barriers to economic development. Among these are restricted access to natural resources, difficulty accessing capital, and complex federal programming and resource management processes.
They told us that these barriers increase the cost of doing business and impede their economic development. Consequently, First Nations have developed institutional arrangements to overcome these barriers. These arrangements take a number of different forms, such as development corporations, joint ventures, tribunals, economic development committees, and economic development policies.
They can also have different goals. For instance, they promote openness and transparency at the community level, help resolve disputes, and set clear rules for development and governance.
We made two general findings. First, the federal government's Aboriginal support programs had increased in number and complexity since 1989, resulting in administrative burdens for First Nations and federal agencies, and increased risks of inconsistent treatment and lost opportunities.
Second, the federal support for institutional development was not yet sufficient to help First Nations overcome the barriers and take control of their economic development. This includes gaps in the support for institutional arrangements and a lack of strategic coordination among the federal agencies.
[English]
We recommended that the federal agencies consolidate their administrative requirements in reporting; improve the adaptability of their business support programs for First Nations so they can respond to large and multi-purpose projects; support First Nations in identifying, planning and implementing institutional arrangements that are appropriate to their economic development circumstances; and support economic development programs that are focused on outcomes and are relevant to the needs of First Nations.
Mr. Chairman, the First Nations that we visited were compelling examples of how effective institutional development supports effective economic development. In the other two chapters that focused on the North, we found that institutions were important as well.
In the chapter dealing with non-renewable resource development in the Northwest Territories, we examined how Indian and Northern Affairs Canada were managing their responsibilities under the Mackenzie Valley Resource Management Act. That act created a series of boards to deal with applications for non-renewable resource development in the Mackenzie Valley by regulating the use of land and water and by protecting the environment.
Those boards were to be co-managed by the federal government, territorial government and the Aboriginal communities with land claims. Non-renewable resources offer enormous potential for economic development in the Northwest Territories. Yet we found that the investment climate for this development is uncertain, in part because the department has not adequately managed its role in the process that considers development projects. This includes, for example, providing appropriate guidance to the co-management boards that are critical to this development. We made recommendations in a number of areas, including consulting with these boards and the Aboriginal people of the Northwest Territories to ensure that there is a clear understanding of the roles and responsibilities of the boards and their accountability. We are happy to say that the department agreed with our findings and recommendations and provided a timetable for how it will proceed to implement them.
Mr. Chairman, before I conclude, I would like to bring to the committee's attention the chapter that we did in November 2003 on transferring federal responsibilities to the North. That chapter dealt with implementing land claim agreements. While our focus was on implementing two land claim agreements, with the Gwich'in in the Northwest Territories and the Inuit in Nunavut, the issue of settling and implementing land claims is relevant not only to the North but also to British Columbia, parts of Quebec and Labrador.
[Translation]
Land claims agreements are about clarifying the rights of Aboriginal groups to lands and resources in a way that contributes to their economic growth and self-sufficiency, an issue this committee wishes to consider. One of the key issues that a land claim enables the beneficiaries and the government to resolve is land use plans. Without agreements on the use of land, uncertainty can develop, which makes development all that more uncertain.
When we did that audit, we discovered that there was a fundamental difference of opinion between us and the department on what the Government of Canada viewed as its responsibilities in implementing the claims. For example, the department seems more focussed on fulfilling the letter, rather than the spirit, of the agreements.
Today, however, it appears that the objectives of the claims are important for the Department, and we have noted some progress in that direction.
[English]
Mr. Chairman, I have raised these three chapters because they all have a common thread. If Aboriginal economic development is to be sustainable, there is a need for institutions that work. That requires the government to work in the background, helping Aboriginal communities establish the institutions and develop them in a sustainable way.
Mr. Chairman, that concludes my opening statement. My colleagues and I would be pleased to answer any questions your committee may have.
[Translation]
Senator Léger: Will it take 150 years to understand the difference between the letter and the spirit? Oftentimes, the only way to create is to understand the spirit of the text. According to your presentation, this is a problem. The institution applies the agreement to the letter. It is very difficult, if not impossible, to grasp the spirit of things. And I believe that, according to your presentation, this is critical to Aboriginals. How can the spirit of the agreements be changed?
Ms. Fraser: When we did our audit on the agreements and the spirit of the agreements, we noted an example. In one of the agreements, one of the objectives was to increase Aboriginal employment in a given sector. Objectives were determined over a certain number of years. In the agreement, it was indicated that measures needed to be taken to meet the objectives. For example, a meeting was to be held annually. During the audit, we asked how close they were to meeting the objectives? What was the rate of Aboriginal participation in labour? What was the progress? Did their actions need changes? The department even indicated in its written answer that this was not part of their responsibilities, that they were required to hold a meeting, and they held the meeting. Of course, we disagreed with the department's approach. It was said that the objectives needed to be looked at, and that the specific measures were only possible measures to meet the objective. It was necessary to determine during the process whether things were all right or needed to be changed. I must say that we had excellent discussions with the minister. According to me, the current minister disagrees with the position that was adopted when the report was submitted. He even pointed out to the department that they had a responsibility in meeting the objective.
Leadership on the part of the department and senior officials is required for attitudes to change and people to clearly understand that the target is the objective, not the specific measures.
Senator Léger: I often arrive at the conclusion that we associate ministers with political will. This minister has many deputy ministers and a whole team behind him. The machine's mentality has time to change.
Ms. Fraser: I attended a Committee on Public Accounts at the other place where Aboriginal education programs on reserves were discussed, and the question as to how many deputy ministers they had since the report was published in 2000 was asked. In four years, there were four deputy ministers. I would say that deputy ministers seem to change faster than ministers.
A question needs to be asked: How can there be continuity in the programs, in the visions, when senior officials change so quickly?
[English]
Senator Christensen: I will speak in generalities and perhaps you can shed some light. I am from the North, the Yukon, where we have the umbrella final agreement and 14 First Nations that are able to take portions of that agreement and become independent First Nations in their own right.
Of the ones that have done that, some have been quite successful in developing economically and others have not. It is based very much on the First Nations' traditional backgrounds and history. Those in the southern part of the Yukon, who have had contact not just with European culture, but also, through trade, with other Aboriginal groups from the coast, have certainly been able to develop much faster and to make better economic decisions.
The majority of economic development undertakings, in whatever culture, do not succeed. There are not many successful entrepreneurs around. It is difficult. It is even more difficult in a culture in which the kind of entrepreneurship is totally different. First Nations have a different type of culture, where the total society is involved, as opposed to just one person going out there and doing his thing and becoming very successful, perhaps even at the expense of others.
I can see economic development happening through joint venturing, which has worked well, and through mentoring, helping people come along. Often, especially when there are land claims involving a large amount of money, many people are happy to tell them how to spend it. The mentoring and the joint venturing are not necessarily happening because there is another kind of entrepreneur in there. How do we overcome this, even if we have the best of federal programs to help?
The round tables might learn what is needed from the First Nations. It must come from the First Nations' side, as they see the best way to get government programs and access to capital and investment funding. It would have to be solved in those types of round-table discussions, where they indicate their cultural needs, which are different.
It is not the way we do it, but it is different and it achieves the same kind of results. Do you have any comments on that?
Ms. Fraser: What our study was trying to point out was the need for institutions in the broad sense to be able to support economic development and the need to build capacity. In many cases when you deal with First Nations or Aboriginal issues, there is a question of building capacity within those communities to be able to deal with some of these issues that, for many of them, are relatively new.
We saw in our study many communities that were extremely successful. We need to learn from them what works. Obviously it may not apply to all communities because, depending on what their resource base is and whatever, they may have to use different avenues. It is to learn from them how they made it work and why they were successful. I will make a couple of comments. First, it obviously comes back in every case to leadership, be it in an Aboriginal community or any community. The success comes down to the people who are leading it, in most cases. It is to use the talent that is there to help others. The federal government can certainly help by supporting those kinds of initiatives. What we saw here is way too many programs. It was too confusing and difficult to access the programs. We see, in many of the audits that we do in First Nations programming, that there are too many programs that are too confusing. There needs to be much more streamlining to make it simpler. That would relieve the burden on the communities as well. There are other challenges about access to resources, access to funding. Perhaps Mr. Berthelette may have more to add.
Mr. Jerome Berthelette, Principal, Office of the Auditor General of Canada: I will pick up on the point about the capacity building. There are probably two areas the committee may wish to look at in terms of capacity building: First, at what the government does in terms of supporting capacity building, supporting institutional development. When you look at that, you may see that the government is very reactive in terms of building institutions. Many of the institutional arrangements that are being looked at right now have been proposed by the First Nations that have found themselves unable to proceed any further, given their institutional development. Thus, they end up pushing against the system. You see that with the oil and gas and First Nations in Alberta, the work that is going on around the changes in oil and gas regulations. You see that in the push-back of the land management act and First Nations wanting to take control of the land. The First Nations and the government need to sit down and start to develop these institutions more proactively. The First Nations need to be able to identify them more proactively and the government needs to help them out so the institutions are in place before the economic development happens and before the pressures that come with the economic development start to impact on the communities.
It is easier to deal with economic development once the institutions are in place. You have a means to resolve disputes, structure relationships and work with other parties because the institutions provide the certainty that both sides need in order to define how they want to work together.
On the other side, you have private industry, and the committee, Mr. Chairman, may wish to consider talking to organizations that provide this type of support, CESO, for instance, the Canadian Executive Service Organization. These are retired executives who have done a significant amount of work in First Nations communities and Aboriginal communities in general. They may have a fair amount to offer the committee from what they have seen in terms of capacity development and what is needed in the community to prepare them to take on economic development successfully. There are probably other private sector people that you would want to talk to. You might want to talk to banks, for instance, and the Aboriginal economic development and capital corporations that are out there. They can talk about what they have seen in terms of capacity development and how they go about ensuring that their investments succeed.
These are the types of initiatives that I think would help First Nations and Aboriginal communities be better prepared to take on economic development projects, to work with private industry, to be more successful.
Senator Christensen: Funding is critical, but in my opinion, it is not the most critical part. Anybody can become successful economically if funding is always available. You want to establish something that will be sustainable and ongoing.
In your studies and reviews, did you see any non-traditional, unorthodox methods being used that we would not consider as the way to go, but that were very successful?
Mr. Berthelette: We visited with 13 First Nations when we conducted this study. I am trying to think if what we saw could be considered somewhat non-traditional or unorthodox.
Senator Christensen: I am talking legitimately.
Mr. Berthelette: I take it that way, senator.
We saw communities who were clearly committed to their economic development. They had clearly articulated a vision of what they wanted to accomplish. They separated the politics from the administration and from the business, and they went about ensuring that the politics were supportive of both the administration and the business.
They also focused on trying to sustain the business. When communities go into business, often there is considerable pressure to put the money that is being made into the social programs and the other community issues. We saw that these successful businesses kept the money in the business to sustain it. There was no sharing of the profits until the business was successful. That was tied into their vision, which was they wanted to be economically successful.
They also set goals and measured their progress toward those goals. Essentially, we saw that in every community we visited. I cannot say that is unorthodox. Any successful business does it that way. I cannot really, senator, think of an unorthodox way in which they have done business. Mind you, I can say that they were also always committed to their community. They were always committed to their culture and to their spirituality, and they integrated that into what they were doing. The resource development, the manufacturing, whatever was going on, was always informed by and supported by their culture and spirituality.
While they were successful in what we would call Western terms, I think we also saw that they successfully integrated their economic development into their community life and their lifestyle.
Senator Christensen: The whole community was part of the development, but it was departmentalized and kept separate so there was not a significant amount of crossover and one was not leading at the other's expense.
Mr. Berthelette: It was integrated and supportive all the way around the circle, so to speak.
[Translation]
Senator Tardif: In one of your reports, you pointed to the uncertainty of the investment climate surrounding development, partly because the Department of Indian Affairs and Northern Development did not fully meet its responsibilities in reviewing development projects.
Could you specify in which situations projects were postponed or reduced because the Department of Indian Affairs and Northern Development did not fully meet its responsibilities?
Ms. Fraser: We did not mention any specific cases in the report itself. It was a little delicate, because councils in the North have regulation authority. If we did not want to question their decision, that is, mentioning cases, we might have led them to believe that we doubted their decision, and we didn't want to do that.
We certainly saw cases where there was no consistency in the decisions. For example, no standards are established for water quality. The standards can vary from one project to another, and a project can even be approved and extended, and in the meantime the standard would change.
It is important for the companies carrying out development projects to be clear about the obligations they must meet. According to me, the minister has the authority to establish water quality standards. He should help councils to be more clear on certain rather ambiguous terms. The department accepted the recommendations, that is, they will work with the councils to get more consistency in the decisions. So it is about establishing a climate of certainty for meeting standards and obligations.
Senator Tardif: What would be the obstacles to meeting this objective, according to you?
Ms. Fraser: I think this is a planned decision on the part of the department. In the beginning, when the councils were established, the department's approach was not to interfere. They wanted to leave it up to the councils, to give them full power. This was a relationship between the federal government, Aboriginal groups, and the community. We suggested that the department play a more active role in supporting these councils, that they provide more training and help them clarify ambiguous legal terms. We also suggested to help them establish water quality standards and improve the accountability of the councils.
Councils say they are independent because they have a regulatory role. They should, indeed, be independent, at both the decisional and regulatory levels, but they should be accountable for their administration.
We believe the federal government should play a more active role and help them build these skills.
Senator Tardif: Would this be perceived as interference by the Aboriginal people?
Ms. Fraser: It depends on how it's done. I do not think so. They have already had one or two meetings with the councils. We are optimistic. We believe this could be done in an appropriate way if the federal government does not impose itself on the councils.
[English]
The Chairman: I am very glad that the Auditor General and her staff have been to the Northwest Territories. It is heartening to see people from Ottawa go north.
I think you would have seen a North that is completely different from the way it was 23 years ago. We have a long history of colonial administration from Ottawa. Through the course of the last few decades, we have struggled to achieve responsible government.
The North that you see today is quite different from what was in existence a number of years ago, when the federal government had a massive hand in every aspect of people's lives. We as Northerners have struggled to get away from the tight control of the federal government.
What you see is very positive. We have been fortunate in creating a society in the north that is very exciting, bubbly and active in many ways. Aboriginal people are involved, as are all people, in society, government and industry.
The boards that the Auditor General and her staff have studied are the result of land claims that have been settled in the North, beginning in 1980 with Inuvialuit, through the early 1980s with the Gwich'in and Sahtu and, more recently, the Dogrib people. These people are exercising control through the McKenzie Valley Resource Management Act and the boards that have been set up under it.
While on the one hand you may find some weaknesses in these boards, in coming north, are you attempting to adopt an Ottawa standard of what you think boards should be? Could you have been more sensitive to the advancements and the progress that people in the North have made in becoming involved with these boards?
We do not have people in the North with decades of experience on entities such as these boards. We have Aboriginal people who emerged from the bush or from the ice floes 20, 30 or 40 years ago and are becoming involved in the industrial age. I would like to think what you have seen is progress. Aboriginal people make up at least 50 per cent of some of these boards, and they are doing their best.
In looking at this situation from the viewpoint of Ottawa, did you overlook the fact that the North does things differently?
In our negotiations with the federal government in the past, we found that we could do better than they did. We could do things more efficiently, effectively and much more cheaply than the federal government.
If the government were to build a house in the North, they would spend $200,000 or $300,000. We in the North have always prided ourselves that as a government, and through the local housing association, we could do it for one third of that price. That has been our experience.
There are emerging people in the North who are lending their culture, attitudes, traditional skills and knowledge to the work they do on these boards. Did you overlook that reality and not given them enough credit? Are you insisting on a federal or southern standard that may not be appropriate, workable or desired?
I noticed one of the things you recommend is that chairmen of boards under the act meet and consult with the senior officials of the department.
In one respect, I do not know if the people of the North want to consult with federal officials here in Ottawa. Do you have any comment on that?
Ms. Fraser: I would hope that we have been sensitive to the North. As information, I am not sure if the committee is aware that we act as auditors for the legislative assemblies in each one of the territories. Certain members of my staff do spend a great deal of time in the North because we audit the governments as well as all the territorial corporations. We have, in a way, two roles — the auditors of the territories as well as of the responsibilities of Indian and Northern Affairs Canada in the North.
In this audit, we were looking at the responsibilities that are given to Indian and Northern Affairs Canada in the legislation, so the roles that we are talking about as being clearly in the law are the responsibility of the minister.
When we do our audits, we take great care to consult with the people involved, even though, obviously, we do not necessarily have a specific role vis-à-vis the boards. We did consult a great deal with the chairs of the boards, with the members of the boards and with the members of the community at large in an attempt to ensure that what we recommend will resonate with them and is not just the work of some auditor coming in and trying to propose something that is not realistic. The items that we have dealt with are those responsibilities that have been given to the minister in the act. The issue of the boards consulting with the department is in fact one of the complaints or concerns that the chairs raised with us.
While we can agree that each community in each area will have a different way of approaching things, these are very large, complex investment development projects that are going on in the North. Developers will all tell you, I think, that they want clarity around the conditions that they are being asked to meet. When there is no clarity, when they feel that standards will change arbitrarily and they are not quite sure why, it does not help the investment climate. That is not to say the standards have to be lowered or increased; it is just that they would like to see more clarity.
One responsibility the minister has under the act is to help establish these things. The department and the minister have taken a hands-off approach since the boards were created. We are saying they need to become more involved with the boards to help build their capacity, bring more clarity and try to define certain terms in the legislation that are ambiguous and can be interpreted in different ways by board members. Board members themselves are asking for the intervention.
Mr. Jeff Greenberg, Principal, Office of the Auditor General of Canada: Senators, we consulted widely with the people in the North, including the board chairs, proponents and Aboriginal communities. Everyone was looking for some kind of clarity, certainty and consistency in the process. Whether they are proponents for development or people concerned about the environment or the traditional use of land, everyone was looking for certainty, to know that this is the way the process works and that they could have confidence that that is the way it would work.
This is not to suggest that consultation was limited or in some way truncated in an Ottawa or southern style. The concept of consultation was understood to be much different from how I might view it as a southerner. There was a great deal of respect in that regard.
As Ms. Fraser indicated, the board chairs felt the boards themselves were important to the North, the people of the north and all Canada. They felt that department officials should respect their importance by at least meeting with them regularly rather than having lower-level officials dealing directly with the boards. It was on their advice that we made this recommendation, which the department fully accepted as an important element in treating those areas with respect.
When the act was put into place, the intention was to give the boards time, to step back and allow them the opportunity to go through their growing pains. Everyone understood, though, that what happened in the North was something they did not quite expect. Diamonds appeared. There was the pipeline, and the price of gas rose dramatically. The pipeline became an issue. This put pressure on the boards to start meeting a different kind of timetable than they might have expected. For example, the Northwest Territories Land and Water Board up in Inuvialuit Settlement Region had been around for a long time and had had the opportunity to develop the kind of expertise it has. These boards under the Mackenzie Valley Resource Management Act needed that growing time and to be allowed to make mistakes — my language — and they did not have that kind of time. There was a need for certainty, and everyone in the North expected that also. That is why we made the comments we did, recognizing that being active did not mean being interventionist. It did not mean in some way or another being underhanded. It meant providing more direct support.
The Chairman: Reference was made to the diamond mines. We in the Northwest Territories are very fortunate to have two active diamond mines that are producing a great deal of revenue through royalties for the federal government and also giving many opportunities to the Aboriginal people in the area. I have to say it is a credit to the Tlicho, the Aboriginal people in the Yellowknife and Dogrib area, because they were the most traditional of all the Aboriginal groups in the North. Yet, when the diamond mine came and there was a need to have all the regulatory processes in place, with the mining companies having to meet all the environmental issues, the construction and getting the permits and licences, the entities, the boards in place, eventually agreed; there was an accommodation, and these mines came into existence without a great deal of delay.
The gas pipeline is another large project — $7 billion — that is being considered, to go from the Inuvialuit area up in the delta to the south through a number of areas, the Inuvialuit, the Gwich'in. That comprises 40 per cent of the area the pipeline has to go through. Just a week or so ago, Esso announced it will cease its environmental efforts. They said it was in part because of the complexity of the regulatory process, I think is the way they put it. I am wondering whether that is maybe just the result of the fact that there are problems, and the people on these regulatory boards see that the populace in the area are not unanimous that the project should go through. I am wondering if these regulatory boards, in a sense, reflect the population of the Mackenzie Valley and are taking more time and being more rigorous in granting the required permits.
Would you comment on that as an accurate analysis of what may be happening, and what may be seen as deficiencies in these regulatory boards may really be just people on these boards who make decisions wanting to take more time and not automatically giving the licences and permits that these companies require?
Ms. Fraser: We did not look at that project in this audit per se, so I would be very hesitant to make any kind of comment on it. That project is, of course, subject to the boards that we looked at and their regulatory framework.
It is my understanding that a coordinating body has been set up, that all of the regulatory bodies will come together in this coordinating body so that the developer does not have to go from board to board. Some coordination has already been established, but Mr. Greenberg will have more information.
Mr. Greenberg: I believe you are aware that a cooperation plan was worked out amongst all the proponents and all the boards, and a timetable established as to how it would work.
A timetable was provided to all of the proponents, the pipeline group and Esso, and the difficulty, of course, is Esso, being a large company, is looking at it and saying the timetable is not being met. ``Everyone agreed to a timetable and we are not meeting it. What happened?'' That may be a southern view. It may be just an issue of looking for certainty, but I think the other aspect is impact/benefit agreements have to be negotiated too, and that is a slow, lengthy process that each of the communities would want to ensure is done as well as possible. Those happen to be commercial questions that we are not party to, and that may be part of what is causing the delay. There is probably an element of that and I think you are probably right. From my perspective, it is probably more that there is need to be cautious and ensure that they do things right. As you know, the Dogrib were very careful when they worked out those deals on the diamond mines and the benefits they got through the impact/benefit agreement — we have not seen them because they are commercial — appear to have been well thought through. I am sure that is happening in the valley also. That is separate, of course, from the hearings themselves.
Senator Johnson: The government agreed to the report in terms of the institutional arrangements for the First Nations communities, those arrangements whereby they design the community economic development program and evaluate the resource access negotiations program and the resource partnership program. I am on the Fisheries Committee of the Senate so I know that Fisheries and Oceans has just begun an Aboriginal aquatic resource and oceans management program using the community-driven approach. Now the government said it would review these reporting requirements under all programs with a view to simplifying First Nations reporting. I am wondering how things have evolved and whether you were satisfied with the response of the government to your recommendations.
Then I have two further questions about the report.
Ms. Fraser: We have not done a follow-up on the audit. We generally will go back to check after a period of time that we think is reasonable to allow the government time to put in place the commitments that they have made. This was only done a year and a half or so ago and we have not gone back yet to look at it, so I do not think we have any information.
Senator Johnson: Do you have any information from the government departments on whether there is any progress in any of the directions?
Ms. Fraser: No, nothing. I would be reluctant to comment on it if we have not actually looked to see if what they are saying is accurate.
Senator Johnson: You do not know the extent to which the recommendations are being carried out. When would this kind of information be available to get some idea if this has been coming into line? I do not know about the fisheries program and I have not checked on that myself in our committee, but it is always frustrating to review such excellent work and then not know what is going on afterwards.
Ms. Fraser: The committee could certainly ask the department for an update on what they have done, a progress report, and more and more we are asking committees to help us by asking for action plans and doing regular follow-up with the department. We do not have any immediate plans to do a follow-up. It probably would not be for another few years before we would re-audit.
Senator Johnson: We would not know of any evaluation of the progress until then.
Ms. Fraser: The department could certainly say what they have done.
Senator Johnson: My frustration is that I have been on this committee for about 11 years and there is a certain lack of follow-up and accountability on so many fronts. I never seem to be able to find out where things are at. I see constant repetition and there is never enough progress, as far as I am concerned. You are zeroing in more now. Your reports are very specific compared to others I have seen in the past on this committee and others. I am curious about some time frames because I come from Manitoba, with a very large Aboriginal population in economically very difficult situations. I do not know if you did anything in Manitoba. I cannot remember. That is a province where Aboriginal people are trying to build on reserve and develop their reserves. It is just not happening much, except for bingo halls and that kind of thing.
My frustration, Madam Auditor General, is I cannot see any accountability at all, and we find that in a lot of other areas as well.
Ms. Fraser: We try to assist in that. One of the four reports we table each year we call a status report, and we go back and re-audit issues to see if government has lived up to its commitments. We have done a fair amount of work on Aboriginal issues. We have done work on Aboriginal education, drug benefit programs, housing, so we have done a number of audits and we are actually now into our second and third follow-ups on some where progress is less than stellar. We will keep coming back with those issues and will certainly come back with the economic development issue.
Senator Watt: I will cover an area that you did not cover on your last trip. I am from Nunavik. I will be covering issues under columns 16, 17 and 18, knowing that you said in your presentation regarding the example, the department seems to focus more on fulfilling the letter rather than the spirit of the agreement. That seems to be the experience of all the Aboriginal people across the country in regard to the people who have been administering modern treaties.
I wonder at times whether the government actually understood when they signed the agreement with the Aboriginal people that we did not sign an agreement with the government, we signed an agreement with the Crown. I believe you have stated that in your report at one point.
Nevertheless, that is the problem that we go through every time. The James Bay and Northern Quebec Agreement was signed in 1975, so many years have passed. There are successful stories in terms of implementation, and also some unsuccessful stories.
One area I would like to ask you about, and I am not sure whether this is your role as the Auditor General — it may be stepping into the provincial jurisdiction — there are two components to the agreement: an ethnic component and a public component.
The public component includes health, education, social issues such as housing, and municipal needs. The ethnic component includes mainly the areas of hunting, fishing, the environment, and the business sector. In respect of the public component, we never know for certain whether we are getting our dollar value. There is a funding formula attached to the agreement such that a certain percentage comes from the federal government and a certain percentage comes from the provinces for education, health, housing and other social issues. Depending on the jurisdiction, it is usually 75 per cent from the federal government and 25 per cent from the provincial government, or vice versa. With such a funding formula, it can be difficult to monitor whether we are receiving the dollar from the Government of Canada when it has to be channelled through the provincial government. Do you have a role in the monitoring of funds released by the federal government to see where the dollar goes and whether Aboriginal people on the receiving end are getting the dollar value?
Ms. Fraser: That is an excellent question. Our role is to audit the expenditures within the federal government, and so we cannot go beyond the federal government. Once the cheque leaves the federal door, we cannot look further, except to see what accountability information the government is receiving.
We have done some projects with provincial auditors general. For example, we did work on an infrastructure program where there were federal, provincial and municipal components. We worked collaboratively with them and that gave us a much better audit because we were able to see the larger picture and not only the federal share.
We have never considered doing the kind of work that you are suggesting. It would probably be difficult for us to do that. We have something of a dilemma now because increasingly, the federal government is transferring money to the provinces, which then carry out programs or do collaborative work. How do you get the accountability back to the federal legislature? Often in those agreements there is no condition that the money be used in a certain way.
I do not know whether it is a condition in the kinds of agreements that you are talking about that the funds have to go to a specific area. The one that comes up all the time is medical equipment funds. The federal government gave a considerable amount of money a few years ago to the provinces that was announced as a fund for medical equipment. We made a comment in the public accounts that in the agreement there is no requirement that the money be spent on medical equipment.
I will note that concern, senator, to see if there is some way that we could at least look at the accountability back to the federal government and know whether the money is getting through to the communities.
Senator Watt: That is important because I sensed that this area is not being monitored to know what happens to the dollars. I would appreciate further information on the matter and possible solutions to monitor that better.
Although it is in the agreement that it has to be renegotiated every five years or so, it has come to the point where we have to negotiate with the federal and provincial governments every year; and the conditions are laid out at that time.
At the end of the negotiations, when the time comes to deliver the funds from the federal government through the provincial government, that is when we are not sure what happens to the dollars and who is receiving the true dollar's worth.
The other aspect that concerns us is the bureaucracy surrounding the process. Perhaps as much as 50 per cent of the dollars that should be going north is landing in Quebec City to support the provincial bureaucracy. I think we need to have some understanding of what is truly happening. I would appreciate your looking into the issue.
Senator Buchanan: I will move into another area. For many years at the provincial level, we watched and did what we could with the Mi'kmaq communities and other communities in Nova Scotia. I watched something happen over the last decade that is truly incredible. Basically, three communities have moved dramatically from great economic problems to success. Much of it is due to the leadership of the people involved, such as Bernd Christmas, Lawrence Paul, Dan Paul and others who, in Cape Breton, developed the Membertou Development Corporation and, on the mainland, the Millbrook Power Centre. They are very successful corporations.
That is beyond your bailiwick, in a way, but you have audited the Enterprise Cape Breton Corporation, the Cape Breton Development Corporation and the Atlantic Canada Opportunities Agency. Have you audited them with respect to the amount of money that they have put into these communities? Has that money gone into the communities in the proper way as far as you are concerned?
Ms. Fraser: We are the financial auditors of those Crown corporations, but unfortunately, I do not know. We would have done the audit of the financial statements and likely some of the monies that would have gone into those projects. Unfortunately, I do not know, although I could obtain more information from my staff on what we would have looked at and send that to the committee. I presume that we would have looked at it. Beyond that, I am unable to answer that this evening.
Senator Christensen: It has been suggested that perhaps the development of the North has been hindered by the regulatory overlaps in that area. I speak specifically to the Yukon, where we have many First Nations with settlement agreements. Under the umbrella final agreement there was a requirement for a large number of boards on which First Nations would have at least one half of the membership. Capacity is a major problem. There are not many people in the Yukon to begin with, 30,000, and only one third of those are First Nations. They have to staff all these boards, so many people are sitting on two or three boards and do not have the hours in the day to do it well. Often, people are put on the boards because there is a vacancy and not because they have the background or the training, and they are not effective because they feel intimidated.
Is there any way that the federal government could become involved in funding for the colleges in the territories to train First Nations people as effective board members? Could that approach be looked at?
Ms. Fraser: That is an interesting idea. We said in the report that the federal government should help with more training of people, but we were thinking mainly of the people who had been named to roles and responsibilities so that they could feel more comfortable and be better able to carry out those roles. There are various ways to do education and training, and through the local educational institutions would be a good idea.
Senator Christensen: Perhaps specific funding could be allocated for that type of training and a six-month course or something could be put on. Then it would be the communities offering the courses and not the federal government.
Ms. Fraser: Perhaps Mr. Greenberg could respond.
Mr. Greenberg: One of the issues we mentioned in the chapter is Indian and Northern Affairs should work with the boards under the Mackenzie Valley Resource Management Act to identify best practices, assess training needs and provide training where appropriate. We discovered that when the boards were first created in 1988 and 1990 there was no systematic process in place for providing training, sharing best practices, how things were done in Nunavut, for example, or in other boards like the National Energy Board, or even an opportunity for the chairs of the boards to sit down and share experiences independently of the federal government or officials. They allowed the boards to determine on their own what training they needed as opposed to providing upfront guidance. We have noted in the Yukon, for example, under the Yukon Environmental and Socio-economic Assessment Act, the new YESA Act, there is a new board. It is unusual that, despite devolution, this board was kept federal. We had some recent discussions with them about maybe going up there and explaining some of the things we found in the Northwest Territories, and they have asked us to do that.
Senator Christensen: Although that is a federal board, it was a requirement under the UFA.
The Chairman: If there are no other questions, I wish to thank you, Ms. Fraser, and your officials, Mr. Berthelette and Mr. Greenberg. I want to take the opportunity to thank you for your interest, particularly in Aboriginal issues. You have done studies over the years that have brought to light some of the problems. This would have created a consciousness and concerns amongst government and our entire society about Aboriginal issues. In this way, you are helping the Aboriginal peoples of the country. I want to thank you and encourage to you continue.
Ms. Fraser: Thank you, honourable senators, for your interest in our work. We will certainly continue to look at Aboriginal issues. As I mentioned, it is one of the priorities of the office. We would always be pleased to appear before the committee should you be interested in any of the other audits we do.
The Chairman: Before we break, I want to tell honourable senators that there are people in the audience who wish to make a presentation before us. They are unannounced. It is not something that was arranged beforehand. They basically arrived in our meeting room wanting to make a presentation. The persons are Grand Chief Dennis Whitebird, from the Assembly of Manitoba Chiefs; and Louis Harper, his special assistant. If senators are agreeable, we could hear from them. If not, that would be fine too.
Senator Christensen: May I ask what their presentation is on?
The Chairman: Their presentation is on lack of economic development in their area and their recommendations in this regard.
For the record, would you state your names and make your presentation.
Mr. Louis Harper, Special Assistant to the Grand Chief of the Assembly of Manitoba Chiefs: I am the special assistant to the Grand Chief of the Assembly of Manitoba Chiefs. I am here just to listen to the presentations. Thank you for this opportunity.
Mr. Dennis Whitebird, Grand Chief of the Assembly of Manitoba Chiefs: Thank you, senators, for giving us this opportunity. I am the Grand Chief of the Assembly of Manitoba Chiefs. The presentation that I will make will be oral, but we do have some papers that we will table with you, sir.
First, I want to thank you for the opportunity, and I will not take too much of your time here. I just want to state that we have a mission; we want to have some economic development in our communities and in our province. We represent 64 First Nation communities throughout the province of Manitoba, with a total population of 115,000. We are the fastest-growing population in Manitoba, as well as the youngest. Within 15 years, one-quarter of the labour force in Manitoba will be of Aboriginal descent. We need to prepare our people and Manitobans for this future.
We have made every effort to develop capacity amongst our people. We have provided education. We have a much- needed resource for training as well as career development and business development. Recently, we established one of the first Aboriginal chambers of commerce in Canada, and we have the fastest-growing number of businesses in Manitoba. Our First Nation people were right upfront in the development of the chamber. The First Nations that are in business in Manitoba are making every effort to provide employment as well as capacity.
I want to speak about the employment rates. Right now, the unemployment rate in First Nation communities is at approximately 90 per cent. First Nation communities are basically totally reliant on federal funding. What you have heard from the Auditor General of Canada is something that we need to address. We need to create opportunities, perhaps through economic development corporations. In Manitoba we have seven tribal areas, and each has a development corporation.
To give you an example, in 1990 the seven tribal councils put $25,000 each toward the development of a tribal council investment group. Today that tribal council development group has an approximate value of $12 million to $13 million through investments they have made as well as major ownership in companies. There is opportunity that can be derived in terms of creating employment. The statistics for Canada, the unemployment rates within our province, are not relevant in our communities, particularly the unemployment statistics.
There is a major difference in income levels within our province, our communities, and the First Nation reserves. The annual income in some of the First Nation reserves is approximately $10,000, as opposed to $21,000 off reserve. In the city of Winnipeg the annual income may be about $14,000 for a First Nation person, while another person would receive approximately $23,000. There is a difference of perhaps $10,000 from one community to another.
The reality is clear and has been summed up in the 2001 report from the Canadian Human Rights Commission, which said that Aboriginal people remain amongst the most disadvantaged in the country. We can see that through income, life expectancy and education statistics.
The Department of Indian Affairs did a major survey using these three criteria to develop what is known as the human development index. They found that First Nations people are at the bottom of it. The quality of life for Manitoba First Nations is the lowest in Canada. The index figures demonstrate that Manitoba First Nations not only have the lowest ranking, but the gap between Manitoba First Nations and the rest of Manitoba is the widest in the country. We have a significant amount of work to do in terms of upgrading our First Nation communities to catch up to the rest of Manitoba and Canada. Manitoba also shows the largest gaps in education, income and life expectancy.
There are specific economic issues as identified by the Auditor General. These are revenues, resources, land and access to capital. Those are the barriers we face on a daily basis when trying to promote economies within our First Nation communities.
The Royal Commission on Aboriginal Peoples indicated that transforming Aboriginal economies from dependence to self-reliance will not be easy. The greatest boost will come from access to lands and resources. We see that as a problem in Manitoba.
We have resources in the northern part of our province, north of the 53rd parallel. We have timber, natural resources and minerals. We found titanium in one of our communities. They have not been able to harvest it to date because there is a question of ownership of the land and the minerals. Yet it is part of our land.
We are searching for diamonds in Manitoba and there is a potential for oil in the southwest corner of our province. Our First Nations live in those particular territories as well. They are not able to partner with major companies to gain from their resource.
We see the deal struck in 1930 with respect to land and natural resources as unfinished treaty business. We were not consulted, and we did not consent to a transfer between federal and provincial authorities under the Natural Resources Transfer Act.
We see cuts taking place within our administrations and within the economic development funds that we administer. This year, the economic development funds that are normally managed by our First Nation communities will be cut and transferred to Aboriginal Business Canada. That will undoubtedly cut economic development opportunities for First Nations. This was used, in some cases, as seed money for development purposes and capital research organizational work. That is something we need to look at. The Senate, through their report, could tell the Department of Indian Affairs to reinstate monies to First Nation people.
We know that First Nation people have had some major difficulties. We know that farmers have had major difficulties. In the southern part of our province there is a strong reliance on agriculture. We know the difficulties that farmers have experienced with selling cattle into the U.S. after the closure of that market. That has played a major role in our communities. We were not able to sell our cattle. A person told me that he sold one cow for $89, and he was almost crying while telling me the story.
There were resources set aside for farmers across Canada. The federal government paid them millions of dollars. That money is transferred to the province, and First Nations do not have access to it. We have difficulty with that. They are told that they are a federal responsibility. When farmers' issues are addressed, there should be a separate pot for First Nation people to protect themselves.
There are all kinds of opportunities. A couple of weeks ago we had a major meeting in our province with respect to inland fishing. We are trying to open the market because the entire fishing industry is controlled by a provincial entity. There are provincial regulations on one side and federal regulations, in terms of looking after marine issues, on the other side.
We have First Nation fishermen. We met with approximately 400 fishermen on the inland issue. They are reorganizing. We need support in that respect so we can capitalize on the fishing industry as a way of life.
The recommendations I would like to make relate to access to capital, resources, land, and a significant increase to First Nations specific economic development funding. The new funding must be significant, flexible in criteria and measurable in results. It must be in an organization that is First Nation specific and controlled by the First Nations. The funding must show long-term commitment to improving the standard of living of all First Nation people.
We would further recommend that discussion begin in Manitoba, where the problem is most acute. First Nations should be involved in the development of the program. Finally, as a quick start, INAC should re-establish the economic development equity program immediately, valued at $29 million per year.
Access to private capital: There should be significant tax credit incentives for investors and corporations who invest in on-reserve businesses, which create significant jobs. This will significantly help in the area of access to capital from the private sector. This will certainly complement increased government economic development funding and will reduce social assistance costs. Input from First Nations in the design would be beneficial.
Human resources: Better coordination and an increase in education and training dollars to support the young and fast-growing First Nation population.
Land and resources: Expedite the land claim process in Manitoba. TLE land converted to reserve status to date is 6,000 acres out of a total of 197,000 acres.
Resources: In Manitoba, the federal government must support First Nation positions on access to resources and resource revenue-sharing agreements, the trilateral resource access committee's initiatives among the Assembly of Manitoba Chiefs and Manitoba and Canada and resource revenue sharing in Manitoba as per the RCAP recommendations. This is critical to the economic development of First Nations.
Those are our recommendations. There are all kinds of positive examples that we can look at of successful creation of businesses and opportunities. In Manitoba, our social development dollar far exceeds our economic development dollar. We see millions of dollars being spent on social development to keep people dependent on government funding. We would like to reverse that and have more economic development, more employment and more training so that we can provide capacity to people so that they can create livelihood opportunities for their future.
Mr. Chairman and senators, thank you very much for giving us this opportunity. I know we came unannounced, but I do appreciate you listening to us.
The Chairman: Thank you for your presentation and your recommendations. We will certainly consider what you have said as part of all of the information that we are gathering in our special study on Aboriginal businesses and economic development. In particular, we are looking at the elements that lead to success. We also look at some failures and examine why they fail. This will help us to ensure that governments and First Nations steer away from approaches that do not help businesses.
As part of our study, we will be going on a tour this coming fall to Saskatchewan, Manitoba and Northern Alberta. It may be that we will be coming to your area and will have an opportunity to meet with Aboriginal business people and other leaders who have information on Aboriginal business.
If you have any documentation that you are prepared to give us, is there a motion to accept the document?
Senator Buchanan: I so move.
The Chairman: All in favour?
Hon. Senators: Agreed.
The Chairman: The motion is carried.
That concludes our business for the night. Thank you all for your attendance and your patience.
The committee adjourned.