Proceedings of the Standing Senate Committee on
Aboriginal Peoples
Issue 7 - Evidence - Meeting of May 10, 2005
OTTAWA, Tuesday, May 10, 2005
The Standing Senate Committee on Aboriginal Peoples met this day at 9:32 a.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: Honourable senators, I call the committee to order. We have today a number of officials from Industry Canada. Mr. Moore, please begin by introducing your colleagues and proceed with your presentation.
Mr. Jeff Moore, Executive Director, Aboriginal Business Canada, Industry Canada: Honourable senators, Aboriginal Business Canada is a part of Industry Canada. On my left is Mr. Freiheit, our Senior Research Economist for Aboriginal Business Canada. On my right is Mr. Heubner, our Manager, Program Services for Aboriginal Business Canada.
I have a short presentation. First, I would like to say that I am happy to be here as a witness for the study, given that we feel that economic development is very important for Aboriginal people. What I would like to do is give you a brief profile of economic participation by Aboriginal people as well as talk about some of the quality of life gaps, and some of the success stories, and then speak briefly to Aboriginal Business Canada and what it does and some of the future directions that we are taking.
I will start with the good news: Aboriginal participation in the economy is growing. The number of working age Aboriginal people is actually on the rise. When I speak about working age people, I am talking about individuals from 15 years to 64 years of age. As of 2001, almost two thirds of the Aboriginal population was of working age. There was a 25 per cent increase in the working age of Aboriginal people between 1996-01, compared to 5 per cent for the overall Canadian population. The working age segment is increasing significantly.
Statistics Canada indicates that the Aboriginal workforce, as a proportion of the Canadian workforce, will grow from 2.9 per cent to 3.6 per cent by 2016. Those increases are much more dramatic when you look at certain areas of the country like Saskatchewan and Nunavut. The number of working age Aboriginal people entering the labour force is also on the rise. Between 1996-01, the rate of growth in the Aboriginal workforce was more than four times of that of the Canadian labour force. This has resulted in an increase in the Aboriginal labour force participation rate to 61.4 per cent.
This growing participation has led to some general economic improvements. Aboriginal employment has increased. Between 1996-01, Aboriginal employment grew four times faster than Canadian employment levels, and as a result, the Aboriginal employment rate was just under 50 per cent in 2001. Likewise, Aboriginal unemployment has decreased; between 1996-01, the Aboriginal unemployment rate dropped from 24 per cent to 19.1 per cent, which is a decrease of more than 20 per cent.
Progress is also being made in other areas. When you look at development itself, Aboriginal participation in major resource sectors continues to develop. Partnering opportunities such as Voisey's Bay, forestry projects, and diamond mining projects are growing for Aboriginal peoples. There is also measured increase in the business sector. There are over 27,000 self-employed Aboriginal people in Canada. The rate of growth of Aboriginal self-employment is nine times the national rate. There is particular promise for Aboriginal tourism as a multibillion-dollar sector for Aboriginal people in this country, and Olympics 2010 can be a key driver for that sector's growth.
Infrastructure progress includes the Internet and broadband access to Inuit and First Nation communities. In terms of financing, we continue to make improvements in access to capital, availability of interest rate buy downs, and we are seeing a maturation of Aboriginal financial institutions as well.
Aboriginal entrepreneurs are performing increasingly well. From responses to the 2002 Aboriginal Entrepreneurs Survey that we conducted with Statistics Canada, we found that approximately two thirds of businesses had operated for over five years and nearly two thirds of business owners expected their businesses to grow in the next two years. Seven out of 10 Aboriginal businesses reported profits in 2002, which is up 11 percentage points since 1996 and which is comparable to Canadian businesses. Thirty-five per cent of small Aboriginal businesses had at least one full-time employee, while 30 per cent employed at least one part-time employee. Over the next two years, 72 per cent of export businesses plan to increase their exports, and one fifth of Aboriginal businesses not exporting in 2002 plan to start exporting in the next two years.
Despite all this happy news there are still some major quality of life gaps that persist among Aboriginal people. For example, labour force participation rates still lag behind the Canadian participation rates. The unemployment rate remains two and one half times higher than the national rate. The incidence of low income is two times more common amongst the Aboriginal population with average income levels one and a one-half times lower than the Canadian national level.
There is also still a lack of critical infrastructure which is important to economic development, including broadband and other key infrastructure projects. Aboriginal people are three and one half times more likely to be on social assistance than other Canadians. Despite increasing educational attainment rates, there are still significant gaps and still higher rates of poverty, illness and so on.
Some of the barriers that we see or conditions that impede the pre-conditions to sustainable economic development and business development for Aboriginal people include lack of education, lack of employment opportunities, underdeveloped infrastructure, remoteness from and lack of access to markets and financial services. Other barriers include the lack of availability of information, limited capital and equity, perceptions of being a high credit risk, inability to access commercial financing, inability to pledge land on reserve as security and limited business experience and training. In terms of the federal policy and program responses to these issues, in 1984 we introduced the Native Economic Development program, which cost close to $100 million per year. Over time, the Native Economic Development program has morphed into Aboriginal Business Canada, which is a grants and contributions program that runs about $39 million per year.
With the current state of Aboriginal development, there seems to be a greater emphasis on social development than on economic development. We are not saying that is wrong but perhaps we need a better balance between the two. The federal government invests approximately $300 million per year on Aboriginal economic development, which is a small sum compared to the $9 billion that is invested in Aboriginal people. There is a lack of integration between social and economic development policies. We need to do more to link key social opportunities, such as housing, to economic development.
Industry Canada has Aboriginal Business Canada, of course, and also provides support to Aboriginal financial institutions. The department has First Nations SchoolNet, which connects First Nations schools to the Internet. There are general applications programs with Aboriginal take up, for example, FedNor, which is the regional agency for Northern Ontario, through its Community Futures Program. There is the broadband program that connects Aboriginal and other communities to broadband on the Internet.
The mandate of ABC is to work with Aboriginal entrepreneurs and businesses and financial organizations to promote the development, competitiveness and success of Aboriginal businesses in Canadian and world markets. We are a successful delivery model with $37 million for grants and contributions from the national program. ABC provides eligible Aboriginal entrepreneurs and organizations with financial assistance information and advice. The program is available to all Aboriginal heritage groups regardless of residency. The average contribution is about $38,000, which is primarily a non-repayable contribution, to establish or acquire a business or to expand a business. The maximum contribution to an individual entrepreneur is $75,000 and $500,000 if it is a community project. ABC provides non- repayable contributions and support for business planning, start-ups, expansions and marketing.
There are 100 people across Canada at ABC headquarters and in 10 offices. We also have 15 third-party service delivery arrangements with Aboriginal institutions to deliver our program on our behalf. We have a network of 30 Aboriginal capital corporations that we helped to establish.
I will speak to some successes within our program. The survival rate for ABC-assisted businesses is 70 per cent compared to 65 per cent survival for Canadian businesses overall. We leverage $2 to $3 for every $1 contributed. Since April 2003, we have assisted in the creation of 575 new businesses, in the expansion of 270 businesses and in the acquisition of 67 existing businesses.
Through our access to the capital interest rate buy-down program, we have spent $1.2 million and leveraged $16.5 million for mainstream financial institutions. This has resulted in over $46 million in Aboriginal business activity and the creation of over 1,600 jobs. We have assisted in the creation and expansion of Aboriginal capital corporations over the past 20 years. Combined with a number of other institutions, this has surpassed the $1 billion mark in terms of loans to Aboriginal businesses. Aboriginal capital corporations currently loan out $40 million to $50 million per year to about 1,300 Aboriginal businesses.
We have the National Aboriginal Economic Development Board that provides advice to us and to other ministers. The mandate of the NAEDB is to provide advice to the Minister of Industry and other federal ministers with respect to coordinating programs, policies and procedures within their department related to Aboriginal economic development. An Order in Council established the board in 1990 and it has up to 20 members. All of the members are Governor-in- Council appointments and represent all Aboriginal heritage groups in all regions of Canada. There are senior ex officio representations provided by Industry Canada, Indian affairs, Human Resources Development Canada and Western Economic Diversification Canada. The board is about to add other regional agencies, as well.
Aboriginal Business Canada provides secretariat services to the NAEDB. Some of the key activities this fiscal year include planning and hosting a national business summit to try to twin Aboriginal businesses with large, mainstream Canadian corporations, and develop a corporate benchmark report card on Aboriginal economic development.
Some future approaches include adopting a more balanced approach to social and economic development and encouraging self-reliance in Aboriginal people. We plan to utilize economic development as a tool to address social and other issues while addressing the needs of a large and growing off-reserve population. We plan to rely on and use mainstream programming to support Aboriginal people. We recognize that the economic cost of not succeeding influences all Canadians, not only Aboriginal people.
As senators are aware, the Prime Minister has a round table process that highlights economic opportunities as a priority. The Minister of Industry, David Emerson, met with the private sector, provinces, territories and Aboriginal groups to develop recommendations on how to move forward on this important file. The minister is very keen to move ahead on this process.
We have to look at how we will deal with the $30-million decrease in economic development funding from Indian and Northern Affairs Canada. Their annual business development budget has decreased, so there is more pressure on our program to try to manage the opportunities coming forward on business development.
Included in our submission is a copy of The Daily, which is Statistics Canada's publication that will give senators a better idea of the Aboriginal Entrepreneurship Survey findings. Also included in our submission is the background paper that Minister Emerson used for his economic opportunity sectoral session event and the informative evaluation of the ABC program. You will also find a copy of a copy of a package called ``Services to Business for Aboriginal Entrepreneurs,'' which is a quick reference guide for Aboriginal people looking at business or related support. We will leave with the committee a list of ABC success stories.
When the analysis is completed, we will provide the committee with provincial and thematic fact sheets based on the Aboriginal Entrepreneurship Survey that we conducted. Senators will have information on Aboriginal businesses not only by province and sector but also by territory.
Senator St. Germain: Mr. Moore, my first question relates to what you said about the lack of education. Your statistics sound quite good and I see that there are no significant changes in certain areas. The successes form, I am sure, the basis of your statistics. There is clearly a line of delineation between those that are not successful and those that are. In my province of British Columbia, areas such as Osoyoos, Westbank and others are success stories that add to the percentages. However, there are stories that are unsuccessful. You also talked about the North, which is a unique area.
This committee travelled to the North and found a resource based economy. Certainly, the people have taken advantage of the situation and capitalized on it since the settlement of land claims. It is the number of native nations that are below 60 degrees latitude that are truly suffering.
Concerning education, what I see and hear is that many of our native people want to become lawyers; I do not know why that is but they seem to want to gravitate to a career in law. Some go to education. What are we doing in the way of training tradesmen?
On the non-Aboriginal side of things, many of your building contractors and many of the successful business people came up through the trades as qualified plumbers, and carpenters.
Is DIAND or your department doing anything to try to encourage people to become qualified tradespeople, which I think is a more honourable profession than a lawyer is?
Mr. Moore: I could not agree with you more, senator. The focus of our program is more on the business development side. If there are tradespeople who are interested in starting or expanding a business, we will certainly support them in that endeavour. In terms of getting them to that level where they are skilled to undertake this work, that is more under the purview of Human Resources Development Canada, and to a certain extent, Indian affairs as well.
I am aware of some of the activities and pilot projects in Vancouver, and a recent announcement concerning construction training. There are a number of other examples in and around Fort McMurray and other areas of the country as well. HRDC would be in a better position to comment on those types of programs.
Senator St. Germain: How long have you been in your job, Mr. Moore?
Mr. Moore: Three years.
Senator St. Germain: Were you in the industry department before that time?
Mr. Moore: Prior to that, I was at HRDC managing the skills program.
Senator St. Germain: In my experience as a cabinet minister, I know that problems can fall though the cracks when so many departments are involved. The thing is that you have so many departments. You said there was HRDC, DIAND, yourselves and you mentioned another one department.
Mr. Moore: There are regional agencies involved as well. An interesting statistic is that 11 federal departments are involved in Aboriginal economic development, delivering approximately 26 programs.
Senator St. Germain: How can anyone really focus on the work at hand? By the time you have meetings, you end up having meetings to have meetings. This is a concern of mine. The thing is that I can see that if there is a strong resource like diamonds, pipelines, oil wells or gas wells, it is relatively easy for an Aboriginal nation to dig itself out of the morass of welfare and get into an economic development stage.
When Aboriginal people live close to the larger cities in Manitoba, Ontario or parts of Quebec, they find few opportunities for employment. The only way to dig their way out is through education.
You began your submission with education and it is encouraging to know that the department is cognizant of the problems that Aboriginal peoples face. I worry that because so many departments and agencies are involved that nothing will be accomplished. These people are 20-some years behind in their educational levels compared to the rest of society. It will take them 25 years, I think somebody said, at the present rate of improvement to catch up to the non- Aboriginal educational level in this country.
I do not know. I think a lot of good work has been done. I do not want to be critical. Since in the early 1980s, things have changed. I was in government through part of the 1980s and I could see the change then. There have been improvements made.
With all these departments and all these agencies how we can really focus on the little guy that really needs help on an Indian reserve in southern Manitoba where the only way he can dig his way out is to become a skilled tradesperson or improve his education.
I am not saying that university is bad, but the fact is that I do not think it is a be all and end all, even though many people tend to gravitate to them. If a kid is not smart enough to go to university, he falls through the cracks.
Have you done any studies in that area that would give us guidance in our report? Can you offer us any positive recommendations?
Mr. Moore: From an education point of view, no. I am sure if you ask Indian affairs, they might have something. As I said, our focus is more on the business development side of things.
The Chairman: You are obviously involved with Aboriginal businesses throughout the country. Do you see a definite change?
Have we reached a stage in our society where with increased education, with opportunities and a social consciousness, there is a real mushrooming of Aboriginal businesses?
Is that a fair view or is that just an idealistic view on my part?
Mr. Moore: That is fair. When we look at some of the statistics in terms of the growing workforce and growing labour force, we see that there will be greater opportunities for Aboriginals to become entrepreneurs.
Concerning education, while we are still lagging behind, there are still some opportunities for better education. As my colleague Mr. Freiheit pointed out, part of the reason why we see the rate of entrepreneurship increasing nine times more than the Canadian average, might be an artefact of this issue of education. Mr. Freiheit surmises that they are trying to create these opportunities for themselves, perhaps under the condition that they do not have the education or the experience either to become tradespeople or to leave their community to get a job somewhere else or even to get a job in their community. There could be a link there between the lack of opportunity and the lack of education and the self-employment trend that is dramatically higher than the Canadian average.
Senator St. Germain: Are you doing anything to assist off-reserve people?
Mr. Moore: We are a pan-Aboriginal program, which means that we provide support and assistance to Inuit, Metis and First Nations people, status and non-status, on- and off-reserve — urban, rural, and northern areas. We are comprehensive, whereas if you look at Indian affairs and their previous business development programming, their focus was for on-reserve status Indians.
Senator Peterson: You talked about the challenges of Aboriginal employment, and the related issue of education. A major employer in Regina is thinking of lowering its grade requirement in order to include more people in its employment opportunities. Their present requirement is grade 12.
Do you have any statistics to indicate whether that is a good direction to follow in the meantime?
An employment strategy study in Regina found the same thing; that education is the driving factor for Aboriginal youth. A lot of this is to get them moved along so they can become entrepreneurs and become self-sustaining. We have the First Nations University, but first they have to get through high school. It seems that we should put a significant amount of effort into the development of these budding business people.
How important is it to reinstate that economic development funding? You said you are trying to backfill it. It seems to me that it has had a dramatic impact on trying to move forward. They cannot make strategic alliances anymore; they do not have the funding. Where are we on that problem?
Mr. Moore: On the youth side, we do not have any statistics related to education, but we do find it very important to concentrate on Aboriginal youth. Certainly, Indian affairs could find those statistics.
We find that Aboriginal youth are more interested than Canadian youth in becoming self-employed or becoming entrepreneurs, based on some of the reasons to which I referred in my submission. Maybe there are other reasons as well.
We reduce our equity requirements for Aboriginal youth to make it easier for them to access funding through our program. We recognize that they have limited or no experience and we want to make it easier for them.
In terms of reinstating funding for INAC, it has had an adverse impact on business development overall. We are trying to do is to lessen some of our requirements and to change our program policies to address the gap left by Indian affairs. That being said, their funding has been reduced without a parallel increase in our funding. Whether or not we will be able to meet the demand is uncertain, but we will determine that as we adjust program priorities.
Given the point I have already made about so many programs being out there, I am not sure if the answer is to have both Indian affairs and Industry Canada delivering a business development program. Perhaps we should look at some kind of consolidation where there is one program for Aboriginal people to access funding for business development.
Senator Peterson: I would certainly support that type of consolidation. The other problem they find is they are running around in circles trying to find out where they can get the help. There must be a one-stop shop. That would be a good move.
Mr. Moore: That is one aspect that we are looking at and not just for business development. We need to look at it from a broader economic development point of view in terms of rationalizing some of the programs to make them more like a one-stop shop for communities and individuals who are looking for support.
Senator Gill: I have three or four points.
[Translation]
Senator Gill: You said that approximately 100 employees work for Aboriginal Business Canada. FedNor is also involved, as well as SOCA in Quebec and probably some other Band Councils. Do you have any idea of the number of employees dedicated to the delivery of services within that 38 million dollar budget? I have other questions for you but would you prefer to answer this one?
[English]
Mr. Moore: We have approximately 100 employees at Aboriginal Business Canada although not all of those employees are necessarily involved in the program delivery business. We have other aspects about which Senator Gill is probably aware in terms of providing secretariat support to the National Aboriginal Economic Development Board. Some of our employees provide policy and research support for the program and for the department from an Aboriginal economic development point of view.
At the end of the day, we have 75 or 80 individuals who are responsible for delivering the program. We also have third party arrangements with entities like SourceCAN that delivers the program on behalf of ABC.
We recently evaluated the third party service delivery structure involved in ABC, and we want to move forward to give more support to Aboriginal institutions, not only in delivering our program, but also in terms of doing more to support their membership.
Senator Gill: Is it not possible to know what the cost overheads are to manage this program?
There are so many people involved, not only at the government level, but also at the band council and the provincial level. With your 100 employees, that is 12 per cent or 13 per cent of the budget.
How much money do you invest in employment to manage this program?
Mr. Moore: In terms of salaries, operating and maintenance dollars, the total for ABC is about $10 million. A significant portion of that money is used not necessarily for program delivery. You would have to set that apart. I do not know what the numbers are off the top of my head. A significant amount of those dollars is for the operation of our private sector board as well as for providing policy and research advice, activities and research projects, and so on.
Senator Gill: I have been involved from the beginning of this program. I was on the board on the provincial and the national scene. I spent enough time there to know that according to the statistics, all the Indians must have been working.
If you add the statistics and the employment created each year, there is supposed to be 100 per cent employment. You must be serious about that. It guides you for the future, for the money that you should invest and where you should invest.
I do not know if that has changed, but you can count the heads and you count the businesses that are supposed to be there and working. I do not know the basis you are using.
If you look at economic development and you look at social assistance, which is increasing, your program is increasing by the creation of employment. I am talking about on-reserve, because off-reserve it is different. It is difficult to know. On-reserve social assistance is increasing and employment is increasing. This is difficult to explain. Could you explain that to me?
Mr. Moore: That is a good question. I do not think I can explain it.
Senator Gill: I know that you are working seriously and trying to do your best. Would you try to convince your boss — I do not know who he is — to analyze this situation and to give good statistics to create a good program and a program that will settle something? I am not saying that you are not doing anything to help Aboriginal people. There is some progress on-reserve, but it is still difficult.
When you talk about Aboriginal people, you talk about on-reserve, off-reserve, First Nation, Metis and Inuit. I think everyone agrees that the geographic, economic and social situations are different for each group. We should have something special for all of those groups. For example, if you invest money and you want a guarantee, Indians on- reserve cannot give a guarantee. Off-reserve they can give those guarantees. Right from the beginning that is very important.
It is important to make a distinction between those two groups, and I will include that in my recommendations. I know that people are inclined to put all of the groups in the same basket. It is easier for the administration, but it does not give you a real picture or help to find an adequate solution.
I know that you do your best. That is a comment. Perhaps you would care to respond.
Mr. Moore: There is a significant difference between on-reserve and off-reserve. On-reserve is a different legislative and regulatory regime, and they create barriers to economic development. You were alluding to one which is the whole issue of pledging security of assets on reserves. When your normal entrepreneur goes into a bank, they will pledge their house or land as collateral to secure a loan. It is difficult to do that on reserves.
Some communities have found innovative ways to get around that problem. We want to look at how we can replicate that across the country. I do not think it is a simple matter of ensuring land on reserve is fee simple. You will find a lot of resistance to that plan. It is more about finding innovative ways around the current legislative and regulatory regime to ensure that securitization can happen for Aboriginal people on reserve who would like to start or expand a business.
Senator Gill: I know people try to get together: Indian affairs, economic development, Aboriginal Economic Development and others are involved in the economy. To your knowledge, are there problems between those institutions?
Mr. Moore: There has been a lot of progress. We have a very good relationship with our colleagues at Indian affairs, as well as with regional agencies. In some cases, we have project review committees and other types of committees where we get together to discuss projects of mutual interest. In some areas, we have the provinces involved.
A good example is New Brunswick, which is part of the Joint Economic Development Initiative or JEDI. It brings to the table the Province of Nova Scotia, Indian affairs, Industry Canada, ACOA, and the Aboriginal groups. We have broad discussions about economic development in New Brunswick but also specific discussions about individual projects. That model seems to work well in Nova Scotia. We will have to see whether it would work well in other provinces. Perhaps it is a model that can be replicated elsewhere.
Senator Christensen: It is difficult to get everything together in statistics. How do you determine the 70 per cent survival rate? Is that financial self-sufficiency?
Mr. Freiheit: The study that statistic was cited from included businesses that were in business at the time the survey was taken.
Senator Christensen: Whoever is still in business falls into that category?
Mr. Freiheit: Correct. We are starting to create a baseline with the information we have been collecting. We are collecting data that will support a calculation of the survivability rate on a regular basis.
Senator Christensen: When that statistic was given, it was higher than the rest of the country. If you are looking at the percentage for the rest of the country, what are they basing that on?
Mr. Freiheit: The 65 per cent for the rest of the Canadian population is based on a study that is becoming dated. It was a Statistics Canada study, and it was a rigorous attempt at coming up with a survivability rate for Aboriginal- owned businesses. It is something we need to improve, and we are trying to make those improvements.
Senator Christensen: When taken as a comparison, it is artificially high. You would have to look at the rest of the country and see what sort of assistance they had in achieving what they were achieving. You would have to have an equal comparison in order to come to that conclusion.
Mr. Freiheit: There is broad acknowledgment of the data limitations out there with respect to Aboriginal peoples.
Senator Christensen: What is the uptake in the program? Is it fully subscribed, or is there room for growth?
Mr. Moore: We are fully subscribed by the end of every year. In some years, we have spent more than our allocation, but we manage that problem from year to year.
This year and future years will be a test for us because of the decrease in funding to Indian affairs and the lack of increase in funding to Aboriginal Business Canada. We are going to see many clients coming through our doors looking for support for projects that we did not support in the past. It is important that we open our doors more and take the risk. We do not want people to slip between the cracks because one program has been shut down.
There are a number of clients that we reject on an annual basis. This is because they are not eligible or they have changed their minds or they do not fit our criteria. I hope that with a change in our criteria we will get more people into the program this year.
We fund about 1,000 projects each year. The contribution of $38,000 per client is fairly low. We provide anywhere from $2,000 to $5,000 to help someone develop a business plan. We provide up to $50,000 to assist someone in buying a vehicle for their business.
Senator Christensen: Of the 1,000 clients you are dealing with each year, what is the on-reserve and off-reserve percentage?
Mr. Moore: I am fairly certain that our statistics match up with the geographic distribution and that 70 per cent of the Aboriginal population lives off reserve. In terms of our funding, about 66 per cent live off reserve, so it almost matches up.
Senator Christensen: What would the uptake be between north of the Territories and south of the Territories? What is the percentage?
Mr. Moore: Three per cent of our applicants are from the Territories. I do not know if that matches the proportion of the population.
We opened an office in Yellowknife last year to alleviate that problem. We did not have an office there, but we had a third party service delivery arrangement in place, and that did not work out. We took it upon ourselves to open an office in Yellowknife for the Northwest Territories, and we have seen the demand for our program increase by 300 per cent.
Senator Christensen: Are First Nations that have land claim agreements eligible?
Mr. Moore: Absolutely.
Senator Christensen: There must be repetition of the types of businesses that you fund. Are they restaurants, road maintenance or construction businesses?
Mr. Moore: We provide support to the natural resources sector, and to the tourism sector.
We are starting to see a ramp-up in terms of professional and technical services support: doctors, dentists, consultants, and lawyers. We are providing more support to professionals starting businesses.
Retail is starting to pick up as well, and that seems to coincide with what we see in the census data.
Senator St. Germain: You put $38 million into this per year?
Mr. Moore: Yes. Our grants and contributions budget is $38 million per year.
Senator Christensen: What securities are required if they are off reserve as opposed to those that are on reserve and have some arrangement within their structure for security?
Mr. Moore: Any applicant who wants to access our program has to bring 15 per cent of their own equity to the table. Youth have to bring 10 per cent, and we have defined youth as 36 years of age minus one day. I just missed that mark. We do not take securities.
Senator Peterson: Many new urban reserves are created to take over an existing business or to create an industry. Are there different procedures and rules for securing assets in that event?
Mr. Moore: I am not sure what legislation regulates urban reserves. I assume that, if they are reserves, they would have the same problems as other reserves in terms of pledging land or houses as security. I would have to check with Indian affairs on that question.
Senator Peterson: If you would, please.
Mr. Moore: The Muskeg Lake reserve in Saskatchewan, which is adjacent to Saskatoon, is doing extremely well. There are a number of extremely successful businesses on that reserve. Whether that success can continue in other urban reserves is yet to be seen.
I believe Western Economic Diversification has done a study on urban reserves. We can try to find that for you, if you wish. It was an interesting study. We know that there is a lot of resistance from other urban areas to the creation of urban reserves, for a number of reasons.
Senator Peterson: That would be interesting information. It would enhance your ability to take on new ventures.
Senator Gill: Do you include the Inuit and people living in the territories in ``off-reserve?'' Some of them live on reserve, but the majority live off reserve, including the Dene nation.
Mr. Moore: Our statistics of on reserve versus off reserve include the Inuit, for statistical reasons only.
Senator Léger: Senator St. Germain said that there are so many departments that we get lost. There are 11 departments and 26 programs, as you said.
There is progress on the business side. Is there equivalent progress in diminishing the number of departments and the complications to getting help? As Aboriginals are progressing, is the government slimming down to reduce complication?
Mr. Moore: I have not seen a dramatic change. With regard to what we do for Aboriginal people overall, including social and economic programs, there are about 30 departments delivering over 260 programs. We see some progress in areas like early childhood development where they are working on coordinating and rationalizing the programming. Those are the kinds of steps we want to take in economic development as well. We want to reduce the gap and duplication in order to be able to react at the speed of business and be more effective in delivering programs. That is a challenge we currently face.
Senator Léger: Is this a priority among all of the departments, or is it simply that we know about it but cannot get out of that system?
Mr. Moore: From our own experience and the work we are doing in economic development, it is one of the top priorities right now. We have briefed Minister Emerson on the situation. He is interested in moving forward on a process that will lead to an approach through which we can rationalize all these departments and programs.
Senator Léger: Are there Aboriginals in the top levels of these 11 departments, especially in the 10 offices throughout Canada?
Mr. Moore: You cannot get much higher than my level in Aboriginal Business Canada, and I am Aboriginal from Kitigan Zibi, which is a reserve near Maniwaki. We have five executive positions at Aboriginal Business Canada and three are filled by Aboriginal people, including myself. Within Aboriginal Business Canada, Aboriginal employees are reaching 40 per cent. We would like to get to 50 per cent, if not higher. We have to follow the Public Service Commission rules and regulations, but we do want to reach that mark.
Senator Léger: I do not understand the business side of it. Why are we decreasing $30 million with something that is increasing?
Mr. Moore: I cannot answer that question. The people at Indian affairs would have to answer that, but it certainly does present a challenge for us.
Senator Christensen: Of the projects that you are funding, what percentage would be joint ventures with non- Aboriginal companies?
Mr. Moore: We think it is very small, but we would have to get the number for you.
Senator Christensen: I wonder if it is quite prevalent.
The Chairman: The Auditor General appeared before us last week. As you know, her office did a study on the services provided to First Nations. She was critical of government and particularly bodies that provide services to Aboriginal people, because it takes so long.
Is there a consciousness in your organization of being as business like and efficient as possible? Obviously, working at the normal speed of government it is not good enough for business.
Mr. Moore: Through ABC we hire individuals with B.Coms, MBAs, CPAs, CGAs and so on. These are very qualified people in terms of assessing businesses. We have also instituted service standards that we must meet. Executives and individuals who work in ABC need to meet those standards in order to access performance pay.
We actually judge our employees on how quickly they can turn a project around and responses, and so on. We take service standards seriously at ABC because we realize that when opportunities come up they are time sensitive and clients need to move quickly. Our client satisfaction survey shows that about 75 per cent of our clients were pleased with the service they received. Although, when you looked at the other 25 per cent that were not pleased, their key criticism was timeliness, obviously. It is still something that we need to improve on and try to find innovative ways to improve our process to speed things up. Certainly we take that as a top priority.
Mr. Freiheit: Some of the delivery aspects and the pace of delivery have been criticized, but it is in large part the due diligence that the program imposes on clients that we believe helps make a client, in a business of that client, get off to a better start. It gives them a better fighting chance to survive over time. Through the due diligence and the various support mechanisms that are provided through development officers, often clients' comments through our client satisfaction studies have revealed that it is that personal service and that extra step of making sure all the ducks are in a row to get the business off to a good start that was an important factor in their continued success and ultimate sustainability.
Mr. Moore: The other challenge we find is that in order to access funding you need to develop a business plan. We find that with a number of our clients there are some challenges in terms of how to prepare a business plan. We try to help them out at the front end in terms of providing them with templates and business planning guides, and so on. It can still be a challenge in terms of communicating back and forth and ensuring that clients are aware of the important elements in a business plan. That can delay the process as well, but we try to assist them as much as we can to get the proper information.
The Chairman: I know that the process of borrowing money is a somewhat stressful and involved process. After you have your business plan, you go to see your financial institution. Within a couple of weeks they will give you decision. In terms of your program, I imagine there is a board that makes decisions on the larger sums in particular. How different is it from going to a bank?
Mr. Moore: We have a two-stage process within ABC. In the first stage, the client submits a statement of intent. We will screen the statement of intent to ensure the client is eligible to access funds through the program. We instituted that stage to ensure people did not come in immediately with a business plan, did all this work and then found out they could not get money through ABC. The statement of intent stage is a less labour-intensive process for the client. They fill in a few pages and submit some proof of equity and proof of Aboriginal ancestry, and so on. Once we screen them at the statement of intent stage, we will get back to them in a matter of weeks. Sometimes it could be a few days, sometimes a couple of weeks or so on. We give them an answer saying that they have been screened in and are eligible. They can then proceed to the business plan stage and submit a business plan. That is where it may take longer because sometimes the clients are not aware of how to prepare a business plan, as I said. That can take longer, anywhere between a month to a number of months to get a proper business plan prepared. We are then able to fund them at that stage, once the business plan is accepted.
Senator St. Germain: How many people do you have with practical business experience?
My chartered accountant could not start a business to save his life, but he has kept me afloat all my life in various businesses. I know a lot of his clients and how many he has. Do you actually have people on the ground in your department that have true business experience?
There is risk in all businesses. That calculated risk is what entrepreneurs themselves can assess better than any academic CGA or CA or Bachelor of Commerce or what have you. My business partner could not write a cheque out, but he is worth about $20 million today. He could not write the word ``one hundred.'' The bankers always told him, you have to do this, you have to do that, all he did was go out and make money, and he did it because he had business sense. How many people like that do you have in your departments?
Mr. Moore: We have quite a few actually. We have individuals who have managed their own business and/or have worked for Aboriginal financial institutions or have worked for a bank and so on. We do have, I think, a fairly good mixture.
Senator St. Germain: Do you actually have people on the ground that have gone out and developed a business themselves, started a business from scratch?
Sure, you can work at a bank, here, there and everywhere, but working in a chartered bank would be the worst thing you could bring to the table because they will not take any risk at all.
Mr. Moore: We do have individuals who have experience in terms of starting or managing a business. That is good, as you say. We try to train people as they come into the program as well if they do not have that experience in terms of explaining aspects of risk and so on and to ensure that they are aware of the Aboriginal situation and some of the challenges they face. It is important to have that sensitivity training to be aware of some of the other challenges as well so they can make perhaps different decisions than a financial institution would make. Essentially, we are there to bridge the gap between being able to access debt financing and not being able to access debt financing. We are not there to fund an entire project. If an individual goes to a bank and is having difficulty accessing debt financing, we can bridge that gap in terms of ensuring they have additional equity in their hands to go to a bank or a partner and say that they now have these resources.
Senator Gill: Is it possible to have an organization chart? I would like to know if your organization is evolving. I know you have a national office in Ottawa. You have a big office in Toronto, a small office in Montreal and smaller one all over the country. I would like to know if it is possible to have your organization chart with the number of employees. Is it possible?
Mr. Moore: Sure.
Senator Gill: We would like to know the organizations with which you have a contracting agreement for services.
Mr. Moore: The third-party services?
Senator Gill: For the third party to the clients.
Mr. Moore: We can give you a list of that, too, absolutely.
The Chairman: If there are no further questions, I want to thank you very much.
We need a motion to accept the documentation as exhibits.
Senator St. Germain: I so move.
Senator Léger: Seconded.
The Chairman: All in favour?
Motion carried.
Thank you very much.
We will now proceed to an in camera meeting.
The committee continued in camera.