Proceedings of the Standing Senate Committee on
Aboriginal Peoples
Issue 13 - Evidence - Meeting of October 27, 2005 (afternoon meeting)
TSUU T'INA, Alberta, Thursday, October 27, 2005
The Standing Senate Committee on Aboriginal Peoples met this day at 1:02 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: We have with us Alden Armstrong, President of the Metis Settlement General Council, who will make a presentation on economic development.
Alden Armstrong, President, Metis Settlement General Council: Thank you, Mr. Chairman.
I would like to thank you folks for inviting us here today. We have no idea of the proper protocol if any, in this particular meeting, but we will do our best. I say "we" because I represent 7,000 Metis members 18 years and older, and we have a unique set of circumstances in relation to economic development in relation to our lands and to our particular governing system.
In order to set the context for the short time we have I will give you a brief history. Within your pamphlets, we have a PowerPoint presentation, which is obviously much too long for this setting, so I will skip through it, hit the high points, and try to get the context into the talk.
We have been around since 1938. In 1934, the Ewing Commission began to look at the plight of the Metis within the Province of Alberta. The commission spent a significant amount of time touring and, in 1938, returned to the Alberta Legislature and recommended that lands be set aside for the Métis.
In the beginning, there were 12 pieces of land set aside throughout the province. We have lost four of them over time. We have had to become aggressive, in a sense, as to our dealings with government. That is part of our history.
In 1938, Alberta enacted the Metis Betterment Act, and it set out certain criteria and methods of dealing with the Métis issue at the ground level.
It was very similar to the First Nations process as well. We did not have Indian agents, but we had supervisors and similar issues arose over time because of that particular method.
Moving on, between 1938 and 1961, we lost four of our settlement areas. As a result, in 1975, our leaders got together and made the decision to begin litigation to deal with issues in relation to mismanagement of funds, but as well, to look at securing the land.
Over time, we have established an approach for dealing with governments. The approach is not a legal approach but based on conferences and negotiations. That has been the style of leadership over the last number of years.
In 1982, the MacEwan Joint Metis Government committee went out, had a look at the situation, came back to the legislature, and recommended that the Metis receive more authority over their local economy, governance, lands and a financing package. This resulted in Resolution 18 under the Lougheed government. In 1989, we signed the Metis Settlements Accord. I have included all of this information in your pamphlets.
The accord set the stage for the 1990 legislation. We ended up with what we refer to as three pillars of the accord, which was land tenure, land security, liberal economy as far as governance goes, and a financing package.
The Metis Settlements Act set aside the 1.25 million acres that constitute the eight major settlements under which is referred a fee simple title, which is one of our main challenges.
A fee simple title does not allow you to put any sort of security on your land. As far as doing economic development from a land base perspective, it is extremely challenging because you cannot mortgage your property or your home, simply because of that particular piece of law.
Obviously, the benefit of the law relates to the fact that there is also no ability for lands to be lost in the future. So it is a bit of a paradox and an irony, but it is a good thing as well.
Since 1990, our government has evolved. There is no other Metis land base in the country. There are no other governance packages such as ours. For the last 15 years, everything we have done has broken new ground. We could not look to other reserves for examples to follow because other reserves are very different. We could not look to municipal district functions for the same reason.
We have a different set of rules. There is nothing like our system anywhere in the world, so we broke new ground at every step that we took along the way.
We have had the opportunity to learn some things in the area of economic development.
I think at this point, I will set aside my presentation and spend the last few minutes talking about our main challenges and some of the good things that we have done.
Once enacted, the legislation allowed for the co-management of our natural resources. We have had opportunity to invest in wells drilled within our lands. We participate as partners on those lands and we are able to generate revenues.
We have also had significant success in the area of joint ventures, insofar as some communities have invested in such enterprises as mills. The Paddle Prairie Metis Settlement is a part owner in a mill called the Manning Diversified Forest Products mill that has been around now for almost 15 years and has done extremely well. We are very proud of that project.
We also have a number of communities that have done things like set up their own oil company. We have the Peavine Metis Settlement and Kikino Metis Settlement. Some of our other communities have set up small oil companies to try and take advantage of the resource within their lands.
We also have communities that have joint ventured in hotels. We have one community that has essentially built, bought and operated their own hotel now for a number of years.
We have stock market investments and a diverse economic platform.
We also learned some lessons the hard way, and I think really the only way to talk about this particular situation in relation to economic development is to balance the good with the bad.
We have had some tough experiences with subsidiary companies operating at the government level. The government employs the common practice of establishing and running corporations, and our experience with that practice is not good. I have never seen that system work well.
We had a number of situations where having the politicians run the businesses just did not work. It is extremely difficult to be a politician and a businessman at the same time because, as you are aware, politicians have a responsibility, first of all, to the people. Generally, politicians tend to let the business fall to the side.
We have also had a series of challenges because of the common thought that arises in people's minds of, as soon as a business opportunity is available, why does not the community do it? Why does not the settlement do it?
I have been around politics now for seven years. I am a private entrepreneur. I do not buy that. I have made it very clear that for economic development to grow and thrive at both the community and private level the private entrepreneur must receive more focus.
We have to look at capacity building. We have to look at things like access to dollars for private entrepreneurs. We have to take case studies that have worked and get those out there so people realize that it is possible. During my tenure a chairman, which is the equivalent of a chief, we saw at least one success story. In the Paddle Prairie Metis Settlement, we privatised all of our operations over a three-year period. When we started, we had approximately 12 small businesses on the ground. When we were complete, we had 38, and I think that number is still growing.
We have other examples of successful initiatives. We have a unique set of circumstances in the settlements. We have more advantages in some areas than in others.
I came here today to try to paint a picture, of sorts. I was a little at a loss. I did not really have a clear vision of what you folks were looking for, but really, what I am trying to do this afternoon, is give a general overview of our particular situation. We have had some successes and some failures.
In closing, I believe I can speak on behalf of all Metis and say that we need more access to federal dollars.
Over the years, the Metis have had legal and political battles to access the same services that other Aboriginal people in this country enjoy.
I am a believer in the Constitution of this country and the Constitution recognizes Métis as equal to First Nations Peoples. I believe that the federal government has to make a serious effort to look at the Métis as equal within the context of the Constitution. The government has to make access to programs easier for the Métis and give them equal ground.
We have land, we have law and we have an appeal tribunal. We have formed our own lending institute, which is the Settlement Investment Corporation. Some of our challenges related to our banking system are that we fund it. We have had to refinance and the Western Diversification Fund has helped us with that refinancing. We feel we need to do a lot more work in that area.
We have the people, and we have all the elements necessary to be a government. We are a government in every sense of the word.
We are currently working with the Province of Alberta to look after post-2007, and we are doing a piece of work called the Transition Assessment and Planning Process, TAP. Economic development is a key component of that process. Socio-economics will make us or break us in the long haul.
For what it is worth, that is what I have to say this afternoon. I thank you for your attention, and if you have any questions of any sort, I will do my best to answer them.
The Chairman: Thank you very much. Senator St. Germain?
Senator St. Germain: Mr. Armstrong, we thank you for your interesting presentation. I am Metis.
How do you establish Metis citizenship in Alberta?
Mr. Armstrong: In our particular circumstance, we have a set of legislated rules as to how you apply for and become a member of the Metis settlements. Anyone of Canadian Aboriginal ancestry, mixed with European ancestry, can apply, but you must be a member of the Alberta population for at least five years, and you have to identify with the Metis culture. That is the main platform of the membership.
Senator St. Germain: Does the lineage or the genealogy originate in western Ontario and Manitoba?
Mr. Armstrong: To a large degree, yes, a lot of our population originates in what some people refer to as the Metis homeland. Yes, that is true.
I should have recognized St. Germain as a Metis family. I have a friend who has gone oversees with a contingent to bring back the spirits. He is a St. Germain out of Paddle Prairie and a war veteran. I should have recognized that name.
Senator St. Germain: I was asked to join that contingency.
You are unique here in Alberta in that there are no other Metis settlements anywhere else in the country. You have your land base, your laws and your own lending institution.
Are there any other benefits for the Métis that live on settlement? Where do you get your funding? Do you generate your funds through business taxation?
Mr. Armstrong: The issue of community contributions or taxation is one of the issues related to going forward as a government. Obviously, our people do not feel comfortable with the word "tax." To tell the truth I do not like the word either but the communal benefits come from the community budgets.
We have a financing arrangement with the province where X amount of dollars goes to the central government. There is a yearly budget vote to prioritize the expenditures.
Generally, we divide the money eight ways through the communities, and the communities then have a budgeting formula and their own methodology for spending the funds. They prioritize; go to the community and the community votes on the budget for the different areas of programs.
Senator St. Germain: I have been in Ottawa now for 22 years. I can remember I made my first speech on Riel about 1983, and the non-Aboriginal side of my family went berserk because I exposed myself as a Métis.
The Powley case made a difference and for those of you who do not know about the case concerned a man who was charged by the province for shooting a moose out of season. He was charged at the provincial level, went right to the Supreme Court and won the right to hunt for sustenance.
There was nothing really said and done for Metis until then. Since then, the Métis cause has come to the fore.
Have you noticed a significant difference since then? What positive has come out of this, if anything? Could you tell us, please?
Mr. Armstrong: The most positive thing we have seen here in Alberta is we have two harvesting agreements in place with the province. The Metis Nation of Alberta has executed a harvesting agreement, and the Metis Settlements General Council has executed a harvesting agreement with the province, to recognize that particular ruling.
I think the biggest significant difference I see out there is a slightly different angle shift at the political level.
I believe there is a significant amount of work that needs to be done. I think we need to utilize Powley from a political standpoint to come into accordance with the Constitution. That is very interesting for us, and we are really very excited about that whole opportunity that will evolve, we believe, over the next number of years.
Senator Peterson: You talked about a number of initiatives and projects. Do all of your 7,000 members benefit from these initiatives?
Mr. Armstrong: In some form or another, yes, absolutely all of our people benefit from the initiatives and projects. Obviously, many of our programs relate to need, and in some cases, certain dollars flow to one particular group.
We have elders' programs that receive certain program dollars. We have housing programs for single mothers and for folks who are in need of extra assistance. We handle most of our distribution of funds on a needs basis.
Senator Peterson: Are all 7,000 members registered? Do all 7,000 live on settlements?
Mr. Armstrong: Our resident census count was 6,900 plus. If we talk about where we all are, I believe that that would be a much higher figure. We are everywhere all over the world. We are within federal government. We are within provincial governments. I would estimate that it could be as many as 10,000 folks associated to the settlements, and, as I say, that is not counting the children.
We are growing at four times the national average. I would expect us to be a fairly sizable political force within a very short period of time.
The Chairman: Mr. Armstrong, I think it would be of benefit to our committee for you to expound on the situation of the Métis as regards to the First Nations.
Historically, the Metis people in the West, and I know the North, where I come from, is a very proud people. There is a sense of European and Aboriginal people. They have a history that has been very good and very independent. In various stages of our history, we have been the go-between for Europeans and the Aboriginal people. The Metis history includes people at the forefront as traders, riverboat pilots, interpreters and so forth. Historically, Metis people have been half-breed, and now Métis people are very independent.
The Metis people in Alberta are in many ways like First Nations, where we live on tracts of land that contain many communities.
Are you having more success than the First Nations, or is your situation similar to the First Nations people who live on reserve where life is a struggle? It is very tough to make progress, but despite some of these difficulties, are you still making progress?
Could you just comment on that? How are you faring? Is your situation in Alberta better than the First Nations?
Mr. Armstrong: I do not like to insult anybody. I do not like to compare the Metis settlement to any other Aboriginal organization, simply because I think it is unfair. It is extremely difficult to draw a proper comparison.
I will say that in certain areas we have much better freedom of movement when it comes to business. We do not have to go through a bureaucracy, other than our own.
We have direct transfer fund allocated to the settlements each year and as it is very fluid as long as we follow our particular budget process.
My experience with First Nations groups informs me that they do not deal with the same set of circumstances. They have a lot more difficult row to hoe insofar as trying to get through a set of hurdles to look at an economic venture. They have a different bureaucracy and a different system of dealing with the situation. They have many challenges.
I think in some ways, they also have advantages that we do not have. As an example, in our particular situation, there is an end to our particular funding regime, and unless we are able to negotiate something beyond that, we will be standing alone. We have that set of circumstances to consider.
I believe, from what I see going on throughout the country, that there is some headway being made on the Metis file. I think what I see going on in the First Nations community, as well, in some instances and in some locations, is exciting. I think there is real opportunity out there, but I think there has to be a completely fresh look at how people look at this whole issue of Aboriginal economic development.
I think capacity is one of the single biggest factors in economic development, whether you are a First Nations community or a Metis community. You need to have folks who know what they are doing, and if they do not know what they are doing, they have to have access to the necessary information.
One of the methodologies we employ when we cannot do the development on our own is go into partnerships with folks that have that capacity. The example that comes to mind is the mill project. We bought into the mill at its inception, placed a non-political director on the board, and let that person do his job. That really was the whole idea and it has done extremely well.
I hope that answers your question.
I think our communities are faring well. We are only 15 years old and we have a lot of work to do in the future.
I see a similarity with First Nations in land tenure, where the federal government holds the reserve lands and they, in turn, cannot use their land as collateral. We have that same situation in settlements where we cannot put up the land as collateral. In many ways, we have very similar problems.
The Chairman: Mr. Armstrong, we thank you very much for your presentation.
Karen Collins, Minister of Economic Development, Metis Nation of Alberta: Thank you very much, Mr. Chairman, and good afternoon, everyone.
Before I proceed, I want to advise you that we have brought along another package that includes a copy of the Canada-Metis Nation Framework Agreement and a copy of the Canada-Aboriginal Peoples Roundtable.
We have included our policy paper as well as a copy of the Métis National Council magazine that speaks to some of our activities and three publications from the Metis Nation of Alberta, Otipemisiwak: The Voice of the Metis Nation in Alberta.
As most of you are aware, the Metis Nation of Alberta is one of the five governing members of the Metis National Council. The Metis National Council, of course, represents and speaks for the Metis from Northwest Ontario to British Columbia. The council has five members and Alberta is one of those members.
I am an elected official from Alberta. We just went through elections, so as of September, I have been re-elected for my second term as the president for Region 2, which is in northeastern Alberta, our central office being in Bonnyville.
Our region and the region that I represent is smack dab in the middle of all the oil and gas activity that happens in Alberta, so we have somewhat of a hands-on and ground-level approach to the economic growth in this province. Of course, John Parkins, who is with me here today, does some work for us through our sector agreement through the Province of Alberta.
By way of introduction, the Metis people are recognized as one of Canada's three Aboriginal people in the Constitution Act. The Metis are the descendants of the children of First Nations people and early European adventurers, explorers and fur traders who came to Canada in the 17th and 18th Centuries. The Métis have developed their own rich and vibrant culture and society that continues to flourish to this day.
The cornerstone of the Metis culture is the Michif language, the structure of which is unique among the world's languages, and which is being actively preserved as we speak.
Some of our First Nation cousins also knew the Metis as Otipemisiwak, just like the name of our magazine. I suppose the favourite definition is, "the independent ones," due to our strong entrepreneurial spirit, as evidenced by our prominent role in Canada's early economy.
Statistics Canada's released revised Aboriginal population data from the 2001 states that there were 1,066,500 Aboriginal people in Canada in 2001 and of this population 29 per cent or 305,500 Canadians self-identified as Metis.
Most Metis reside in the Metis Nation Homeland that extends from northwestern Ontario, westward to British Columbia. Alberta has the greatest number of Métis people. Statistics Canada has just revised this number to 65,500, or about 22 per cent of Canada's Metis.
The Metis Nation of Alberta, which celebrated its 75th anniversary in 2003 represents Alberta's Métis. It is one of the five provincial Metis governing members spanning from Ontario westward to B.C., that make up our national political and representative body known as the Metis National Council. The Metis Nation of Alberta currently has a membership of over 31,000 lifetime members.
In June, our past president Audrey Poitras spoke of how the Metis played a major role in extending commerce into the Great Lakes and the historic Northwest prior to Canada becoming a nation.
The presentation pointed out that the Metis identity was nurtured by the fur trade and that the Metis, as proponents of free trade, were instrumental in breaking the Hudson's Bay fur trade monopoly.
The presentation went on to say that, the Metis desire fair trade in addition to free trade, and that action needs to be taken to create a level economic playing field for the Metis. Ms. Poitras stated that the lack of land and an insufficient resource base were the greatest impediments to Métis economic self-sufficiency.
As the issues of Metis land and Metis access to resources continued to be the key priority, we asked this committee to encourage the Government of Canada to uphold its commitments under the Canada-Metis Nation Framework Agreement, to begin to address the land-related issues.
Other commitments that were drawn to your attention were numbers:
3(e) - to examine the opportunities of programs and services which may be suitable for devolution to the Metis National Councils' governing members
and item
3(j) - explore options for establishing economic development initiatives to assist the Metis Nation in becoming self-sufficient and self-sustaining.
These two provisions reflect the long-standing Metis desire to regain the economic independence that our forefathers once enjoyed, as well as our desire to establish economic development initiatives of our own choice and design.
The committee received a copy of the Metis Nation's Economic Opportunities Policy Paper that was developed as part of the Canada-Aboriginal Roundtable process. The policy paper outlined the economic development realities, aspirations and strategies of the Metis Nation and focussed on Metis-specific solutions, rather than pan-Aboriginal approaches.
The presentation pointed out that the Metis do not seek handouts but seek strategic investment in our communities, enabling our own governments to improve the socio-economic situation of the Metis people.
We believe that the way to Metis self-sufficiency is to engage more Metis in Canada's economy. Ms. Poitras pointed out that proven Metis Nation infrastructure and institutions can deliver federal economic development programs and services to Metis people. The Metis Nation recommended building upon these bodies and devolving programs and services to them.
The policy paper recommends a wide variety of market interventions and specific developmental tools based on practises and proven approaches in Métis communities.
Our last presentation concluded with an expression of the belief that, through these types of strategic interventions, the Metis, who were once known as the "brokers of the fur trade," will be able to reclaim a fair and just place in Canada's economy.
While the previous presentation and the economic opportunities policy paper deal with both these subjects, I would like to address the specific focus of your current enquiry.
As to large-scale non-renewable resource development projects some resource development companies have demonstrated their willingness to provide opportunities to Metis. An excellent example is the partnership between the Metis Nation of Alberta, EnCana Corporation and the Western Lakota Energy Services Limited. This partnership has enabled the Metis Nation to become the owner of a state-of-the-art drilling rig. The partnership trains and employs Metis rig workers and managers have the reputation as one of the EnCana's safest and most productive rigs. We are very proud of that initiative.
Other companies seem willing only to deal with Aboriginal organizations that have a land base and that may influence the proposed development project proposals. While progress is being made in bringing some of these companies to the table to discuss the socio-economic impacts of their proposed developments in our communities, a valuable tool to have, would be traditional land use and occupancy studies. These studies would clearly illustrate the direct impacts of our communities, especially in the socio-economic area. The policy paper speaks to the need for resources to enable the Metis to undertake this type of research.
Another issue is that, while some companies may appear willing to extend business opportunities, they have rigorous contracting requirements and even when met, contract decisions are often based on past relationships with existing contractors, rather than on providing an opportunity for an Aboriginal business to prove itself.
Another obstacle is lack of capacity, both human and financial. We certainly heard that from the previous speaker as well.
Another obstacle is a lack of capacity to handle large jobs. There are few Aboriginal businesses that have the capacity in terms of manpower and equipment.
A potential solution is to enable a number of smaller Aboriginal contractors to come together in a joint venture to take on this body of work. Resource development companies need to develop the flexibility to consider these alternatives.
As pointed out in the preceding section, the absence of documented traditional land use and occupancy studies is also a factor in obstructing involvement in renewable resource development projects. Resource companies appear to be much more open to developing work relationships if they can see the potential for subsequent access to resources on Aboriginal lands.
Another obstacle to Aboriginal involvement is the degree of mechanization that is now common in resource development industries. To become a participant, it is often necessary to make substantial capital investment in expensive and complex equipment. Obtaining this equipment is difficult for many Metis businesses that do not have access to millions of dollars in Aboriginal economic funding which is often available to the First Nations and Inuit people. Métis access to an equitable share of federal economic development funding would help level the playing field for Metis businesses.
The Metis Nation of Alberta has developed a strategic economic development plan that identifies twelve sectors of the Alberta economy in which it sees opportunity for great Métis involvement. One of the most important of these sectors is tourism. The Metis see tremendous opportunity in the tourism sector and, given their unique history and culture, believe the cultural tourism sector holds great promise.
The Metis Nation has begun a bold tourism initiative with its Metis Crossing project. This project is a 512-acre property that will become the hub of Métis cultural tourism in Alberta and will link to some 60 Metis cultural and historic sites throughout the province.
As is the case with most other economic development projects, the major obstacle in the development of Metis Crossing was the lack of capital. Had it not been for a timely contribution from a successful Metis business, both this property and opportunity could have been lost.
An ongoing challenge will be to raise the funding necessary to further develop this property in order to realize its tourism potential.
The obstacle to large-scale Metis involvement in providing business services to mainstream companies is the difficulty in breaking into the market, given the number of large national and multi-national companies that currently provide these services.
While efforts have been made to develop joint venture relationships with smaller service providers, it is difficult to be price competitive with larger businesses that enjoy greater economies of scale.
There is also a need for Metis institutions to provide business services and funding to the small Metis-owned businesses that provide employment to Metis people.
The policy paper refers to the need to strengthen Metis financial institutions and to create a Métis venture capital corporation and a Metis Nation equity fund.
The Métis need an equity-matching program to assist Metis entrepreneurs to pursue their business deals in cases where they do not have the necessary equity to take advantage of Aboriginal Business Canada and Aboriginal Capital Corporation programs.
The Metis need small business training for both aspiring and existing Metis entrepreneurs. The Metis Nation of Alberta was making progress in delivering a Metis small business training program across Alberta, and the funding agreement expired.
The lack of long-term funding sources to ensure the continuation of the innovative programming that the Metis Nation has begun is another major obstacle to progress.
Both John and I were part of an economic development officer initiative that began in 2002 that saw economic development officers stationed in each of the six regional offices. This was an integral part of the nine-member economic development technical staff. Today, we are the only remaining economic development officers in the MNA. This drastic reduction in technical capacity due to a lack of continuity and funding is another obstacle to economic development of the Metis Nation.
While the Metis Nation is often able to develop innovative approaches and begin pilot projects, it is necessary to be able to continue to build on these programs and to be able to carry them forward for sufficient time to make real, rather than token, progress.
The difficulty and costs of obtaining bonding and insurance is sometimes an obstacle to our businesses.
The expense of meeting corporate safety policy requirements is certainly another example of an obstacle to small entrepreneurs.
In conclusion, as outlined in previous Metis Nation submissions, the Metis are an entrepreneurial, independent people who wish to become economically self-sufficient. The Métis Nation sees economic development as the key to self-sufficiency.
The economic opportunities policy paper describes some of the Metis significant successes and outlines what is needed for the Metis to continue to build upon these successes.
Given a level playing field, equitable access to programs and services, together with the ability to deliver these in our own innovative Metis-specific solutions, through our own institutions, the Metis will be able to continue to contribute to Canada.
I would be pleased to answer any questions you may have, and would like to take this opportunity to thank you for allowing us to make this presentation.
Senator Zimmer: I thank you, Ms. Collins for your very innovative and impressive presentation.
On page 6, you indicate,
Another issue is that, while some companies may appear willing to extend business opportunities, they have rigorous contracting requirements and even when met, contract decisions are often based on past relationships with existing contractors, rather than on providing an opportunity for an Aboriginal business to prove itself.
On page 7 you talk about renewable resource development and say,
Resource companies appear to be much more open to developing work relationships if they can see the potential for subsequent access to resources on Aboriginal lands.
It almost looks like a Catch-22 situation. If you want to do a joint venture with a company, they seem to have some restrictions or requirements, but on the other hand, you need to develop your economic developments, you need resources. To get the resources, you go to the joint venture, but if you go to the joint venture, they have requirements and restrictions. Therefore, it is sort of another agenda.
I guess my question is can you expand on the requirements that are coming from these joint venture organizations that restrict you to be able to do it on your own?
Ms. Collins: The relationship with different players in industry, certainly in the oil and gas industry varies from one part of the province to the other.
Part of my answer will concern the relationship that we have with the particular people in our area. We encourage our small entrepreneurs to get subcontracts for the large projects, or try to get their own contracts or partnerships with other small businesses. It seems however, that as quickly as we bring those groups together we fund more hoops to jump through.
The Metis Nation of Alberta has embarked upon a joint venture agreement with two existing non-Aboriginal contractors and we thought we met all the safety requirements, the insurance, the liability issues, all of the prerequisites. We thought we jumped through all of the hoops. We are still in that same Catch-22 situation. We now have some partners, and we still have difficulty in getting on the bid lists. We can get the work but not the bids.
I referred to some companies coming to the table now, and I suppose some of it results from court decisions in other provinces as well as Supreme Court of Canada decisions. We are coming to a time when absolute consultation with Aboriginal people will be part of the process.
We at Region 2 are sitting at many of the tables. When we sit there, we need to participate not as a traditional land use study in our whole environment, but just in that particular proposed project area.
Right now, when we need to talk about Metis issues, because we do not have this larger ability to say here is where we travelled in this greater triangle, for example, we are invited to go and talk about that particular little spot. So, in my instance, I need to find out, where are the trappers, who are the Metis that were directly affected by this project. We bring those bodies to the table, and, yes, whether or not we are just the trap line holders, it directly affects that particular Metis person. Rather than being able to take the approach of how it affects us socio-economically in the greater region, we start out by just that directly affected process. Sometimes we are, indeed, chasing around the block in a Catch-22 situation.
Senator St. Germain: When you speak of Metis, Ms. Collins, you are really speaking of Alberta Métis more than the rest because where I come from, there was nothing; the white community did not like us, the Indians did not like us. We sort of floated around in no man's land.
Alberta seems to be the only province to have shown any respect for the Metis Nation. My father was a trapper and a part-time construction worker. The Metis situation economically diversified. I know this because I am originally from Manitoba although I live in British Columbia now.
Do you see any economic growth in the Métis communities?
Maybe I am naive and maybe you can educate me a bit on that subject.
Ms. Collins: I will try.
I need to clarify that I am here on behalf of the Metis Nation of Alberta, which is the like the MMF in Manitoba. Mr. Alden represents the Metis Settlements General Council. During this presentation, even though we are all within this jurisdiction and this boundary of Alberta, he represents a particular land base population of Metis.
The Métis that I am speaking to, about and for today are the Métis that do not live on the Metis settlements. They live in towns and cities, they live in municipalities, and they live in neighbouring communities surrounding reserves. They are like the Manitoba Metis.
Some of the struggles that I speak of are, indeed, different struggles and the obstacles are different from the ones to which Alden referred.
I need to clarify that I am speaking on behalf of the Metis who moved from Manitoba to Alberta as well.
I suppose we do have an advantage in Alberta. Our organization is 77 years old. It is older than some of our colleagues across the Metis Nation Homeland. I am grateful for the progress that we have made over the last 77 years. During those years, we have intertwined with the same Metis settlements to which Alden referred.
Over time, we grew apart because we have different focus. We had a land base government that needed to do that, and we have the Metis Nation of Alberta that needs to provide and represent the non-settlement Metis.
In respect to your question concerning Metis benefits in other parts of the homeland, I like to think of it as a greater collective.
What Mr. Powley did was about a greater collective. We benefit from it here in Alberta for what he did in Sault Ste. Marie. Therefore, I like to look at it in that way.
The Manitoba Metis may not directly benefit by dividend: however, any advancement that we make in Alberta has a rippling effect across the country.
In Alberta, for example, they are now talking about building a road from Fort McMurray that will benefit the local Metis communities. Instead of a 12 hour drive to Fort McMurray it will take only two hours to get to work.
There are patches of success here and there and I certainly hope and believe that the Metis in British Columbia to Ontario will stand up and be proud of that same thing.
Senator St. Germain: Is there an historical explanation why this traditionally Conservative province dealt better with the Métis people? Was it as a result of the way they just ended up in communities?
It is not consistent with the general thought process, yet here in Alberta under Premier Lougheed, who had an excellent grasp of Aboriginal issues, and his successor, seem to have dealt with the issue differently than Manitoba.
There is a court case in Manitoba, and yet there does not seem to be the same resolve as in Alberta.
Have you any idea of why there is a difference in the mindset and the way that they government deals with Metis issues?
I am not trying to go put you on the spot, Ms. Collins, but maybe I am trying to figure out my roots and what has happened.
Ms. Collins: I do not know the full answer to your question, but I certainly have my own opinion.
I believe that our age has a lot to do with it. We have been waving that Metis Nation flag for 77 years. During that period, we have had the Ewing commission that studied the well-being of the half-breeds in this province, and resulted in land for the Metis.
I like to believe that the government of that day set the path or the footprints for future governments to remember the Metis and the land that was set aside for them.
We have had sound relationship building which is reflected in the short time that it took the Alberta Government to come to the table and implement an interim harvesting agreement around Powley. That indicates a good relationship between the province and the Metis.
Senator St. Germain: Are there many people who still trap in Alberta?
Ms. Collins: I would have to say yes, especially northern Alberta.
Senator St. Germain: Aboriginal Business Canada is available to Metis people; is it?
Ms. Collins: Yes, it is.
The Chairman: Thank you both, Ms. Collins and Mr. Parkins, for being here today.
Richard Kappo, Grand Chief, Western Cree Tribal Council: Thank you and good afternoon, Senators, ladies and gentlemen and elders in the crowd.
I have three different presentations I want to make. I belong to three different organizations: my band, my tribal council, and the Treaty 8 First Nations of Alberta.
First, I want to thank Chief Sanford Big Plume and the chiefs of Treaty 7 for allowing me to enter their territory and visit them here. Thank you to the Senate committee for allowing me this time.
I am the chief of the Sturgeon Lake Cree Nation and Treaty 8 First Nations of Alberta, and the Grand Chief of the Western Cree Tribal Council, which includes my band, the Horse Lake Cree Nation, and the Duncan's First Nation, located in south and north Peace districts of Alberta. I am a descendant of the signatories who adhere to Treaty 8.
My mother is Mary Kappo, and my father Dave Kappo, spent his lifetime working towards the betterment of our people. I serve our community as a band councillor and a chief, responsibilities that I carry with pride and honour.
I have been lucky also in my life to have known Dr. Harold Cardinal, both as a leader and a member of my family. His children are my nieces and nephews.
Despite our limited success in economic development and our ongoing challenges, Dr. Cardinal once said, "Our strength is in our elders, our traditions and our spirituality."
Many times I look to that strength and I can see it and, at times, actually feel it.
Sturgeon Lake Cree Nation is one of many nations across Canada struggling to meet the demands of the communities and its members, while trying to look ahead to secure economic opportunities now and for the growing youth population.
For generations we have been trappers and sellers of furs, the original Canadian economic entrepreneurs.
The challenges we faced then are similar to the challenges of today: competition with big business with more money and political power. We deal with little equity, not only start-up, but also equity to expand to meet the demands of the day.
Sturgeon Lake Cree Nation has seen a large hog operation, a chopstick factory, a campground and a park, but all have been short-lived successes. We have explored major proposals as well: A marina and a hotel complex with a golf course. These plans and studies gather dust on our shelves somewhere in our band office.
Even though we hear from many non-natives, we cannot enter into joint ventures or partnerships with them because we do not have the equity to enter into a partnership. They offer joint ventures and partnerships because they see our community's potential. We have nothing to offer to a partner because a true partner needs at least 50 per cent equity to enter into a partnership. We cannot afford to participate.
We struggle each day to meet the demands of a growing community. All governments, all nations must face the challenges of working with decisions and past directives. My council has instituted a voluntary remedial management plan to try to overcome some of our financial difficulties. It is a tough task.
Seven years ago, we received equity funding from INAC to purchase heavy equipment, and as a result, our construction company achieved a measure of success. Oil work contracts and road construction keep the equipment operators going steady. Not only has this equipment brought in some revenues, created employment and training opportunities, it has established us as a respectable and successful, albeit small successful business. We are in dire need of expansion. Today, that equity funding is no longer available.
We understand that any economic development faces certain challenges and risks. As First Nations, we are most familiar with obstacles, including ever-changing government policies at both the federal and provincial levels.
With limited outright nonexistent lack of input from First Nations, lack of information or consultation from municipal districts, town councils and local decision makers at all levels, the strong influence of the industry can make or break an initiative.
In closing, I can offer my advice to others, some advice I received from my father and my elders, "Work hard, finish what you start, and remember where you came from."
As a good friend of mine and a successful businessman once said to me — incidentally, a Caucasian person — he told me, "Richard, it takes money to make money."
With that, I will say thank you for allowing me the opportunity to participate in this process.
I will go on to read a couple of documents I have from my tribal council and from Treaty 8 First Nations of Alberta, if you allow me.
This is from my CEO Kevin Tootoosis. These are his briefing notes on economic development. He says the main federal government program available to the First Nations of the Western Cree Tribal Council is Indian and Northern Affairs Canada. The program is the Community Economic Opportunities Program.
Although the criterion is broad in scope, it is limited in its effectiveness due to the lack of a budget. This year, there is $1.5 million available on an Alberta regional base. Apparently, $1 million is committed to infrastructure-type projects. This amount is not adequate for one tribal council, let alone the entire region.
The federal government needs to make more financial resources available to the Alberta region.
The economic development opportunities in the province of Alberta have been well documented. The Treaty 8 area has one of the fastest growing economies in the country. The First Nations from the Western Cree Tribal Council want to be a part of the business growth in the province.
Partnerships are an integral part of business development in Alberta. The funding available in the Alberta region is simply not adequate for our First Nations to take part in any new business partnerships.
The CEOP approval process should be faster. This year, for example, the guidelines for the program were revised in April. INAC did not start accepting proposals until June. Proposal review did not get underway until late August, due to staff going on annual leave.
Western Cree Tribal Council finally had an opportunity to meet in September, to get feedback on their proposal. The INAC Alberta Regional Committee will review the proposal in November. Once approved, Western Cree Tribal Council will be under pressure to extend the financial resources before March 31, 2006. Timely approval of proposal submissions can make the difference between participation and non-participation.
Another problem that plagues the approval process for the CEOP proposal is the approval limits in the Alberta region. Each proposal has to go through a two-tier approval process. The Alberta region has authority up to $100,000. Projects that exceed $100,000 have to go to INAC headquarters for final approval. It is recommended that the INAC Alberta region receive higher approval limits so that the First Nations can capitalize on immediate business opportunities within the province.
By virtue of my chief status, I sit as a member on the Treaty 8 First Nations of Alberta Economic Development Commission. The purpose of these briefing notes is to bring focus back to INAC's operational plan on economic development.
Economic development programs, policies, and guidelines have changed and the overall program funding has been cut. Program-funding responsibilities have been transferred to Industry Canada with little or no First Nations political response. This shift in responsibility to Industry Canada's Aboriginal Business Canada program should be a major concern for all economic development related personnel at First Nations level.
The requests are for support to the Treaty 8 First Nations of Alberta Economic Development Commission to take certain actions towards an increase in economic development funding and to support Treaty 8 First Nations of Alberta Economic Development Commission to prepare policies and guidelines. We request governance models for First Nations, for specific economic development funding, and ask for the support in the concept of having a Treaty 8 First Nations economic development representative at the INAC planning table so Treaty 8 can advance its own economic development agenda.
The Chairman: Thank you. Is that the extent of your presentation?
Mr. Kappo: That is the extent of it.
Senator St. Germain: Thank you very much for coming. Thank you for making your presentation in the manner that you did. It was excellent.
So in a nutshell, the stumbling block is INAC?
Mr. Kappo: Yes, the obstacle is the rules that govern INAC, which, in turn, govern us.
Senator St. Germain: We have heard presentations from other regions, and we were in British Columbia yesterday, where some groups have been able just to bulldoze their way through and get over the hurdles.
Do you have any recommendations as to how we might expedite this process within the process?
Is there a solution or do we have to dismantle the process and re-establish another process?
Mr. Kappo: The process must be refined to fit the needs of First Nations communities.
The last speaker spoke of having to jump through hoops. I have twice as many to jump through in terms trying to access federal government programs. To justify funding for any program, education, health, I have to prove the need. As everybody knows, the need is there every day.
If we could just reduce the bureaucracy and the reporting mechanisms, the process would be much easier to access. We are expected to report on year-end projects, anything, including economic development. Nobody ever reads the reports.
Senator St. Germain: You say there is no equity funding anymore, anyway.
Mr. Kappo: They took it out. It is one of the programs they have changed.
Senator St. Germain: How do you source funding if there is no equity funding? Do you do it through Aboriginal Business Canada?
Mr. Kappo: We have tried to, yes. It is more of a lending agency, but even the rules there are stringent.
With any band that is lacking funds, even banks will not look at you, so it does not matter how many funding programs there are within the government. If a bank does not trust you enough, you are just wasting your time.
Senator St. Germain: Those banks did not get big for nothing. They do not take any risk at all for non-Aboriginal or Aboriginal, it does not matter.
Mr. Kappo: We have tried different ways. We are working on joint ventures right now through our tribal council, which in turn helps the bands. There are some companies willing to joint venture with us, with big projects, but again, we are equity poor, so we are starting from the back door and trying to work to the front.
Senator St. Germain: Does it expedite the process if you have a joint venture with a private industry?
Mr. Kappo: Yes, it does help move the process along more quickly.
Senator St. Germain: Would it help you if INAC moved faster?
Mr. Kappo: Yes, it helps a great deal, depending on the name of the company.
I will give you an example right now of my band. Ainsworth Engineered Canada LP out of Vancouver is doing a major expansion to an OSB mill in Grande Prairie. I cannot remember the amount of the total expansion. They have offered to build a sawmill four miles away from my reserve. The cost is $3 million as a side deal for the town. They have come to me to talk to me and offer a proposition. If I put down $1 million dollars, I could be a partner in that sawmill.
These are false hopes and wishes; they just want to use me to secure wood. Therefore, I have told them, even if I had $1 million, I would not invest in that mill. Since that discussion they have had a change of attitude and now they are talking about the possibility of building the sawmill on my reserve. That would result in a land base.
At times, that is what it takes; you have to fight with people before you get anywhere. I am not a fighter. I try and reconcile issues and problems. I consider myself a people person. I do not like to fight.
Senator St. Germain: You are just a good businessman, you are negotiating for position. That is what you have to do.
Mr. Kappo: I am a poor businessman, I have no money. As my friend said, "You have to have money to make money."
Senator St. Germain: Short of making major changes at INAC, your plight continues on the same way? Nothing changes? The more they change, the more they stay the same, type of thing?
Mr. Kappo: The whole thing is that it does not matter what program it is at band level, they are all interconnected. We are all answerable to INAC for housing education; you name it.
The only major source of economic development I have on my reserve right now, other than just a small company, is housing. So we use CMHC to do rental housing and create employment for people to build houses.
Senator St. Germain: So everything is tied into the social side of things, as opposed to being purely economic?
Mr. Kappo: Correct. I am just regenerating money I currently have and putting my band further and further in deficit because I have to provide housing and provide work for my people. There is just no other way to do it.
Senator Lovelace Nicholas: I have a question about the joint venture in your community. What percentage would the community make off this joint venture?
Mr. Kappo: Do you mean the percentage of profit?
Senator Lovelace Nicholas: Yes.
Mr. Kappo: I do not know the exact percentage, but it would be quite a bonus to us because it has a certain number of employment positions and when you own something you have more say in it, versus just working for them.
Senator Lovelace Nicholas: I just thought you might have a ballpark number.
Mr. Kappo: I have not really started seriously considering it yet, so I have not looked at their numbers.
The Chairman: I would like to ask you about the people in your area and their attitude toward resource development.
I know in the North where I come from that there is sensitivity, a concern about the land and the resources. Often, when interested parties suggest developing the land and the resources they are looked upon with suspicion. Some people do not want to see that development. Some people are content to leave the land and resources alone, whereas others see such a venture as an opportunity to make some money, provide employment and so forth.
What would you say is the dominant attitude of the people in your area?
Are they really interested in business, or are they just holding back, as it were, just a little bit suspicious and not totally convinced that economic development is necessarily the way to go for the future?
Mr. Kappo: In our area, what we have done is we have informed our people by virtue of community meetings. If there is a major corporation, oil company, pulp mill, whatever comes in our area, we make sure that the corporation visits each member of our tribal council and explains their project. Then from there, people ask the questions: Is there an environmental assessment, how many trees are you going to take, et cetera. They get the information right from the horse's mouth, instead of speaking through the council.
Many times people want to support these projects because they see a light at the end of the tunnel. When we work with certain companies, where our band members agree, we try to negotiate with those people to work within our traditional area. It seems to work out. We are starting to get places. There is a big pipeline coming through our area, not as big as the Mackenzie Valley pipeline, but something similar, and it would be quite a boom to our economy to put people to work and generate some income.
People support projects like that because they see a direct benefit in the end. It is a slow process sometimes.
The Chairman: I notice that you say that there are many non-native persons or corporations that get in touch with your band and offer you opportunities to take part in partnerships but you cannot afford to participate because you do not have the capital.
Mr. Kappo: There are some unreliable people. We are known as "Brown Gold." That is common in the oil patch. Grande Prairie is 60 miles from my community. Certain companies need us for First Nations content in their contracts.
Senator St. Germain: How big your land base and what is your population?
Mr. Kappo: My population is 2,500 people. Horse Lake is around 800, and Duncan is around 400. It is probably about 3,500 altogether, somewhere in there.
Senator St. Germain: The land base is how huge?
Mr. Kappo: It is huge; 100 square miles of traditional area recognized by the Province of Alberta.
In terms of the consultation process, we are supposed to receive notification of anything that develops in our area.
The Chairman: Thank very much, Grand Chief Kappo. Thank you for coming here and thinking that we might be a body that could help you with your problems. We have listened to you and perhaps something good can come out of our meeting today.
We will certainly do our best to take what you have said and incorporate it into our findings.
Mr. Kappo: I want to thank you. I truly appreciate being involved.
Larry Hutchinson, Senior Administrative Officer, Little Red River Cree Nation: Thank you, senator.
I would like to thank the committee for inviting Little Red River Cree Nation to participate in the economic development study. It is usually a job done by a chief or one of our councillors, but they are in community meetings right now, so they have requested that I come down here and participate in this committee.
I am the Senior Administrative Officer for Little Red River Cree Nation, LRRCN. Accompanying me here today is Patrick Clearly, a socio-economic advisor to LRRCN.
Little Red River Cree Nation is located in northern Alberta, near Wood Buffalo National Park. It is comprised of three communities: Fox Lake, with a population of about 2,125; John D'or Prairie with a population of 1,265; and Garden River, population approximately 485. The total population is about 3,875 members. We employ about 300 staff.
It is also worth noting that approximately 90 per cent of the membership resides on reserve in one of the nation's three communities.
Little Red River Cree Nation owns and operates a number of businesses, including two on-reserve stores, Caribou Mountain Wilderness fishing resort, Little Red Air Service Ltd. and Little Red River Wildland Firefighters Inc.
Little Red Air Service Ltd. provides air transportation to northern Canada and has developed and expanded considerably over the past two decades. We now operate a diverse fleet of multi-engine turbine aircraft and several single-engine multi-powered aircraft.
During the presentation, we will refer to two case studies designed by Little Red River Cree Nation that contribute toward the achievement of economic self-sufficiency and community well-being.
The first case is a product of a formal agreement between Ainsworth Lumber Company Limited. The second case is one that continues to work its way through the approval process and has been chosen for this presentation because of the obstacles LRRCN has encountered in its effort to improve the road infrastructure connecting the nation's community.
While you are listening to the presentation, I would like you to keep three related ideas in mind. The first idea comes from Henry Thoreau, after he "went Indian" and left teaching to experiment while living in nature at Walden Pond. Thoreau's insight is this: "A man sits as many risks as he runs."
The second idea comes from Max Weber's The Protestant Work Ethic and the Spirit of Capitalism. Max Weber's insight into the spirit of capitalism is this: "Time is money."
This brings me to the third idea in our modern concept of economic opportunity cost. The term, as it is used in economics, means the cost of something in terms of an opportunity foregone, and the benefits that could be received from that opportunity, or the most valuable foregone alternative. For example, if a town decides to build a hospital on vacant land that it owns, the opportunity cost is some other thing that might have been done with the land and construction funds instead.
Merging these three ideas, all of us can appreciate that while sitting in this room, it is inevitable that we will realize the risk that other valuable opportunities in which we can invest our time are lost; that is unless, of course, while we are sitting here, our attention is not diverted to items other than those on the committee's agenda.
The first case that I would like to refer to is the result of an agreement reached in April of this year between Askee Development Corporation, a wholly owned company by Little Red River Cree Nation and Ainsworth Lumber Company Ltd.
This agreement obligates Askee to provide significant quantities of timber to Ainsworth over a 20-year period, and provides LRRCN with related economic opportunities for the provisions of services such as forest management planning and reforestation, harvesting, merchandising and loading and hauling.
The annual revenue generated by this agreement is in the millions of dollars; the value-added employment opportunities for LLRC band members are expected to be significant. Currently, over 180 members of Little Red River Cree Nation are engaged in forest industry operations.
The significant factor leading to LRRCN's success in realizing the economic benefits resulting from its participation in the forest industry is the vision of our leadership to gain greater control over as much of our traditional land as possible. One way to do this was to secure timber tenders to enable the nation to contribute to the enhanced sustainable resource management practises. Without this vision, it is highly unlikely that we would enjoy the attendant economic opportunities today.
The second contributing factor to LRRCN's success in securing the Ainsworth agreement was a policy background within which Little Red River Cree Nation advanced its vision to resource management and community development. Some relevant policies included the following: The National Forest Strategy, the Alberta Forest Conservation Strategy, Red Book commitments, the Council of Chiefs Political Accord with Alberta, the DIAND Treaty 8 Cooperative Management strategy and the Alberta Waste Water Management Legislation Initiative, among others.
The third important contributing factor was LRRCN's ability to enter into partnerships with parties with a shared economic vision. In 1995, Little Red River Cree Nation and the Tallcree First Nation signed a cooperative management agreement, CMA, which included both the Province of Alberta and industry. The new CMA was negotiated and involves a memorandum of understanding that expands the geographic area to include seven forest management units.
The Cooperative Management Planning Board memberships were expanded to include, as voting members, the Province of Alberta; Little Red River Cree Nation; Tallcree First Nation; Municipal District of Mackenzie; Daishowa International Ltd., now Tolko; Footner Forest Products; Askee Development Corporation; and Netaskinan Development Corporation.
In May 2002, the National Forest Association published a review of Little Red River Cree and Tallcree First Nations forest initiatives. The author of the report commented on the federal government's role in supporting the CMA. This comment might be of interest to the committee:
(The Federal Government) has been able to provide the capital support necessary for the communities to increase their participation in the forest industry by securing equity participation in the Footner mill (an Ainsworth joint venture) or by implementing the business incubator... First Nation representatives have attempted, unsuccessfully, to negotiate support based on pending specific claims with the federal government. This was done by estimating the value of claims to the government and seeking a portion of this compensation in the form of capital financing for the aforementioned initiative.
Little Red River Cree Nation hopes that the Government of Canada and the Province of Alberta will soon support our desire to create a forum within which matters related to both self-government and outstanding specific claims might be resolved, thereby contributing to LRRCN'S objectives of achieving a healthy and prosperous future.
The second case I would like to bring to the committee's attention involves Little Red River Cree Nation's efforts to link the communities of John D'or Prairie, Garden River and Fox Lake by an all-weather road.
In 1958, Little Red River Cree Nation tried to achieve all-weather road access to the communities of Garden River and Fox Lake for a variety of social and economic reasons and in that year, a road right-of-way was established from the terminus of Highway 58, to the communities of Garden River and Peace Point within Wood Buffalo National Park. The right-of-way was cleared and used for a winter haul road in the 1960s. The portion of road in Wood Buffalo National Park from Garden River to Peace Point was taken out of use when road access to Peace Point was established from Fort Smith.
During the 1980s, Alberta extended Highway 58, providing all-season access to the community of John D'or Prairie. A winter access road to the community of Fox Lake was constructed and the road to Garden River remained the winter road.
The condition of the Garden River road is so poor in the spring that during the rainy season access is limited to walking. Access to the community of Fox Lake is not only limited to winter or dry periods, but there is also the Peace River, which functions as a barrier limiting access and isolating the community.
In 2001, Robert Nault, the Minister of DIAND, visited Fox Lake and committed to providing year-round access roads to Garden River and Fox Lake. Later that year, the terms of reference and environmental impact assessment were developed, and INAC retained an engineering firm to conduct a feasibility study.
In May of 2003, Minister Nault, along with provincial and municipal district representatives, announced their intentions to invest in the construction of a permanent, all-season road. The estimated cost was $18 million with the two governments sharing in the cost of its construction. The estimated employment was 258 persons of which 78 would be local residents and 180 would be provincial employees.
When announcing the project, Minister Nault stressed developing successful partnerships between First Nations and other governments as one of the major goals of DIAND's economic development strategy.
Alberta's Minister of Transportation, Ed Stelmach, emphasized that,
Safe and efficient roads are vital to Alberta's economic success, and enhance of our quality of life.
To date, Little Red River Cree Nation has encountered a number of significant obstacles in achieving its vision of a permanent all-weather road joining the nation's community to Canada's economic infrastructure. These obstacles have resulted in LRRCN needing to return to both Canada and Alberta's ministers to refresh the ministerial direction provided in 2001 and 2003.
I will now turn to a discussion of the obstacles encountered by LRRCN in achieving this important contribution to the nation's infrastructure.
Implementing action to advance progress on a design and environmental assessment of the proposed road has involved numerous parties, including representatives from INAC, Public Works and Government Services Canada, Fisheries and Oceans Canada, Alberta's Ministry of Transportation, LRRCN, and three engineering firms: EXH Engineering Services Ltd., Stewart Weir and Co., and AMEC Infrastructure Ltd.
We encountered communication obstacles on the two important issues of project design and environmental assessment. With regard to project design, EXH Engineering Services proposed a roadway to accommodate crossing the Peace River by ferry, rather than by bridge. Design features initially proposed the river crossing include modification of a vessel designed for barge purposes. EXH Engineering proposed this design feature to the Government of Canada but DFO and Environment Canada opposed the design based on obvious environmental reasons.
To advance the project, INAC assigned Public Works and Government Services Canada the task of completing the project's environmental impact assessment and comprehensive study record. The person to whom the task was assigned was apparently unfamiliar with the assessment process and demanded an assessment format unsatisfactory to the Department of Fisheries and Oceans Canada, Transport Canada and Environment Canada. Consequently, the project experienced significant delays and additional costs resulting from unnecessary environmental impact statement formatting problems.
These previously mentioned obstacles bring us to the consideration of organizational obstacles. In LRRCN's view, the three topics regarding project organizations are important. The first is with regard to regional and headquarters operational capacity and/or roles within INAC. The second relates to the need for continuity and personnel assigned to the project. The third relates to a need for stewardship of the project by government to ensure that the ministerial directions are followed up in a cost effective and timely manner.
I will discuss the issues related to continuity of personnel and project stewardship together. It appears that INAC's regional and headquarters' operation in Edmonton is limited by a lack of capacity to expedite the completion of this project. The role of regional office seems to have been limited to administering financing allocated by headquarters, to enable LRRCN to participate in the process.
It would seem desirable for INAC to review the scope of regional headquarters' participation in a project, having regard for the desirability of a designated federal project steward described below.
Because of the duration of this project, INAC has experienced significant personnel changes and loss the loss of this corporate memory has a tendency to complicate project dynamics; consequently, it is important that an economic development project proceed through its various phases, such that corporate and intercorporate memory is not lost. The effect of losing this memory is further delay, while new participants are learning about the project and overall institutional framework within which they need to interact.
In our experience, the Fox Lake and Garden River road project, at various times, has seemed like an institutional orphan, alone and left to flounder through the system without guidance.
Little Red River Cree Nation believes that it is important that government performs a stewardship role in seeing that a project like this moves through the system in a timely, efficient manner.
In my introduction, I referred to the concepts of risk and opportunity cost and I would like to make a number of observations concerning the Garden River and Fox Lake access road project in light of those concepts.
First, in Little Red River Cree Nation's view, to unnecessarily delay a project is, in effect, to sit on a project. I will remind you of Henry Thoreau's remark, "A man sits as many risks as he runs."
In the case of our road access project, the degree to which delaying the project realizes risk is evident by the fact that a project that, in 2003, was estimated at a cost of $18 million, is now estimated at a cost in excess of $75 million, for an increase of about 75 per cent.
Second, because LRRCN has found itself in a position of functioning as a steward for the project to advance it through the approval process, Little Red has needed to expend scarce resources to achieve what most communities in Canada have taken for granted; safe, reliable road transportation linking LRRCN communities to the economic lifelines of Canada.
Third, as a result of LRRCN having to expend what seems like an inordinate amount of effort to overcome the obstacles it appears that LRRCN, more than any other participant in this project is exposed to significant opportunity costs. We are incurring the cost because we are foregoing the ability to allocate our time and resources to achieve other opportunities for economic development consistent with our goal of economic self-sufficiency.
Once again, on behalf of Little Red River Cree Nation, I would like to thank the committee for inviting me here to present these thoughts to you here today.
I would also like to thank my associate, Mr. Pat Cleary, for the late-night collaborations in preparing the preparation of this brief.
Senator St. Germain: So that we can better understand, you are just west of the Mikisew Cree First Nations and the Fort McKay First Nation.
Mr. Hutchinson: We are north of Fort McKay. Garden River is within the Wood Buffalo National Park boundary. We are about two hours from Hay River.
Senator St. Germain: Do you have road access to Fort McMurray?
Mr. Hutchinson: No.
Senator St. Germain: So you have to go through Hay River?
Mr. Hutchinson: No, we would go the other way, down through High Level.
Senator St. Germain: A new road would link you and become an economic generator. This road would allow you to move natural resources back and forth. Is this it?
Mr. Hutchinson: If you have been to the northern Alberta area, if you go west of High Level, there is a lot of oil and gas exploration. There is a lot of activity in that area
The Dene Tha', east of Alberta, are part of the Mackenzie gas project, for example. In the east, where we are, we are more involved in the forestry sector.
The lack of exploration relates to the lack of infrastructure. The thinking is that once we have the road there will be oil and gas exploration.
We are not complaining about the timber; it has been very good for our economy.
The lack of infrastructure sets limits on our community of almost 2,200 people. They are locked in because of non-existent road access.
Senator St. Germain: So what is the economic base? Is it trapping and hunting?
Mr. Hutchinson: I am not going to sit here and tell you that they are out trapping, no. There are some traditional trap lines, but I do not believe that it is a way to earn a living. The forestry sector is big for us.
Senator St. Germain: The nation you represent is seeking to establish an economy based on the forestry resources.
Mr. Hutchinson: I think we have established that economy. I think they are looking to try to gain access to the rest of the world by a commitment made back in 1958.
Minister Nault visited in 2001, made the fiscal commitment through an economic development initiative, and somehow it got lost in the system. We have been waiting for another four years for the construction to begin.
Senator St. Germain: What do you think your chances are, now that the estimate has gone from $18 million to $75 million? Do you think there is still a light at the end of the tunnel?
Mr. Hutchinson: Minister Scott says there may be a chance, maybe not for INAC alone, but a combined effort from the federal government. The provincial government has made the commitment, even with the increase, but the provincial government needs to declare Highway 58 a secondary provincial highway, rather than a municipal road.
I believe that now that we have figured out how to move it through the environmental process, we have a good chance for the project to be completed.
Senator Peterson: You are not the only group to have encountered obstacles created by environmental impact assessments. I have been involved in some assessments that have gone on for three or more years.
It is very difficult and rather unfortunate when you get these different jurisdictions overlapping and each one wants its own report.
Maybe we can streamline that one area a little bit, because you do lose the history. Thank you.
Mr. Hutchinson: I would like to make a quick comment that relates to communication within intergovernmental departments and stewardship of the project.
This is a good example of the breakdown in communication that exists within the federal government and the intergovernmental communication that does not exist.
Senator Christensen: Thank you, and thank you for being here and for your presentation.
Although it is obvious that getting the road started is creating many difficulties, quite obviously your band and group have been very successful in creating economic development within your territory.
You say that 90 per cent of your members reside in one of the three communities. You have two stores, the fishing resort and you have the air service.
How did your communities develop these enterprises?
What are some of the challenges that you faced?
We have heard of lack of capacity and education. Please give us a short history of the three communities. How many people work in the different enterprises? How did you start those enterprises, and what sort of a difference have they made to your communities?
Mr. Hutchinson: They started to depend on Indian affairs for the economic portion of their program funding 16 years ago.
The biggest difference in Little Red River Cree Nation's case came when they began to branch into forest management planning, reforestation, and then, of course, the securing of the timber tenure. The management of the timber tenure created many opportunities to expand into the communities.
Now, we have a corporate office in High Level, and we employ some professional people, mainly foresters. Our members are restricted to reforestation and the logging and hauling aspect.
Like most other First Nations, we have not developed a suitable amount of professional people. I am sure you have heard the same comment from other groups. Some day we hope that they will replace the people that are working for us now in professional designations. The on-reserve stores are there to serve a lack of the ability of getting out of the community and are more of a service provider.
Senator Christensen: Are your people running those stores?
Mr. Hutchinson: Our people are running those stores. Our involvement in the forest sector has given us the capital to do that.
Senator Christensen: What about the fishing lodge and resort?
Mr. Hutchinson: The fishing lodge runs about four months of the year.
Senator Christensen: Are your people running that enterprise?
Mr. Hutchinson: Yes, our people are running the fishing lodge. We were not able to rely on economic development from the federal government for these activities.
Senator Christensen: You did it yourself?
Mr. Hutchinson: These are initiatives we took on and did ourselves.
Senator Christensen: Did you take the same initiative to start the airline?
Mr. Hutchinson: Yes, we did the same thing with the airline.
Senator Christensen: Do you have First Nations pilots?
Mr. Hutchinson: We have some pilots who are training right now. We have service people who are going through the training process as well.
The success of the airline depends on our location and partially on our ability to secure the air ambulance contracts. We also transport First Nations people on a medical service basis.
Again, we have gone a couple of times to the federal government and asked for support to expand the airline, but the airline business right now is not very popular.
Senator Christensen: How would the road affect that airline business?
Mr. Hutchinson: It will affect the number of people we move out of Fox Lake to High Level or Fort Vermilion, but the air ambulance aspect will always be there.
Even with a road, it is about three-hour drive, if you were to drive a road, even a good road, to take a patient to the hospital. There will still be a need for an air ambulance contract.
Will the airline be as successful moving membership out of the smaller communities? Probably not, but it is a three-year planning process.
Senator Christensen: What sort of schools are there in your communities?
Mr. Hutchinson: All three of our communities have grades kindergarten to grade 12.
Senator Christensen: Since you have had all this development over the last 18 years, have you seen an improvement of children staying in school and graduating?
Mr. Hutchinson: This year, Garden River, Fox Lake and John D'or Prairie all had high Grade 12 graduation statistics.
We could talk for a considerable amount of time about the infrastructure; the condition of our schools is a different issue. It is a constant battle to keep the facilities up to date.
The community of Fox Lake has 687 students and the school's capacity is about 375 students. Therefore, there are program delivery issues, but the Little Red River Cree People are stay-at-home people.
Senator Christensen: I do not know if you were here during the early presentation on e-schooling. Perhaps e-schooling is a good alternative for your children.
Mr. Hutchinson: We received our connection to high-speed internet just this year.
Senator Christensen: Have you seen an improvement in the quality of life and the social standings in your community regarding alcohol, drug abuse and things like that?
Mr. Hutchinson: The isolation factor has protected Fox Lake from drugs but alcohol problems exist, of course.
We have social issues, just like any other First Nation community. I think the council's vision, though, is that if we prosper economically, we will look after our own social problems because we cannot appear to depend on the various federal agencies. Self-sufficiency, self-government and resource-based negotiations have always been their preference.
Senator Christensen: It is a long process. Economic development is essential, and you need the tools to succeed. It is not an overnight process.
Mr. Hutchinson: No, it is not an overnight process.
Senator Lovelace Nicholas: If the project is delayed, will education and employment needs be delayed as well?
Mr. Hutchinson: The delay in the road project makes it more difficult to move people to employment, yes. The nations' vision is that someday the road will be finished. We work around the bureaucracy, I guess.
The delay in the road project limits the economic opportunities within the community itself. I think they are striving to offer more within the communities by virtue of access to the community.
Senator Lovelace Nicholas: You have answered my question. Thank you, Mr. Chair.
Senator St. Germain: Can you cut down trees in the park?
Mr. Hutchinson: No, we cannot, but Canfor did in 1960.
Senator St. Germain: Was it a park in 1960?
Mr. Hutchinson: Yes.
Senator St. Germain: I am looking at the map and everything is west of the park boundary.
Mr. Hutchinson: Parks Canada is in possession of a document that will soon arrive at INAC in Edmonton. Little Red River Cree Nation has been trying to get recognition of that reserve within that park boundary. That has been a slow process.
Senator St. Germain: Are any of your traditional lands within the park boundaries?
Mr. Hutchinson: The whole community of Garden River is within the park boundary, and within the next three years, it will be recognized as a reserve within the park boundary. The survey will be done; we will go out and do the assessments. They tell us it will take about three more years for that to happen.
Senator St. Germain: Will you be able to source the resources that are there?
Mr. Hutchinson: Within the whole park?
Senator St. Germain: No, within the area that is designated reserve.
Mr. Hutchinson: I believe there will be some. I do not know whether there will be a lot of mineral exploration done within the park boundary. Right now, they are talking a co-management regime similar to what is done in the Territories, through their land and water boards and their impact review boards. If you have the map demographics, if you go from Fort Smith all the way down to Garden River you will see that it covers a considerable chunk of land. It is huge.
Senator Christensen: Does Garden River have any input or jobs created because of the park and management.
Mr. Hutchinson: We believe we should.
Senator Christensen: But you do not?
Mr. Hutchinson: That is part of the present negotiations.
Senator Christensen: Senator Sibbeston and I were in the three Territories developing policies and helping to develop policies for First Nations who are next to or part of the national parks. They are getting joint agreements with Parks Canada. It is working quite well.
Mr. Hutchinson: We hope to be part of those agreements.
The Chairman: With that, I thank you very much for appearing before our committee.
I think it should be noted that you are from a very remote part of the province. I know from Edmonton to High Level, it is about a seven-or eight-hour drive, and then probably two or three more hours to your area. It is a very far away location.
Mr. Hutchinson: I would like to thank the committee again for inviting us. It was nice to see you again, Senator Sibbeston. Thank you very much.
The Chairman: Mr. Roy Fox, welcome to our committee. I notice you have two gentlemen with you. I see their names here and what they do, but maybe you are in a better position to describe how they are involved with your council.
Roy Fox, President, Indian Resource Council:
[Mr. Fox spoke in his native language.]
Mr. Chairman, members of the Senate, it is an honour for us to be before you to discuss some important issues that may help you solve some of the problems that First Nations and Aboriginal people encounter in Canada.
With me today, I have my assistant Larry Kaida, as well as our business partner Kirk Purdy from the Overlord Financial Group.
The Indian Resource Council is a representative organization of about 130 First Nations tribes and nations in Canada. Our mandate is to represent our member tribes on their reserve lands and their traditional lands.
The matter that you are researching, and have been for the last little while, is an issue that affects our member tribes and nations throughout Canada.
People may think that because we are in the oil and gas sector, that we are better off than other First Nations and Aboriginal people in Canada. Well, once I go through my presentation, I believe, you will begin to see some of the inequities and some of the things that prevent First Nations and Aboriginal people from acquiring the same kind of returns from the energy sector as other Canadians and other North Americans do.
Perhaps I will go right into my summary presentation at this time.
There is a link between wealth creation and access to capital, and there are barriers that impede the flow of capital to First Nations communities. In lieu of participating in the mainstream economy, First Nations, with the support of public statutes and policy, have withdrawn into their communities to defend their autonomy and Aboriginal rights.
First Nations will have to look outside of their communities to create jobs, increase incomes and generate wealth. They must work and partner with mainstream players in order to access, participate in and benefit from the Canadian economy.
Conventional capital markets circulate capital resources through a developed financial market infrastructure. This infrastructure brings together the suppliers and users of capital through a network of intermediaries that facilitate the flow and allocation of capital. Lenders, investment bankers, venture capitalists and other intermediaries are the frontline providers of mainstream capital. These institutions assess and advance capital based on risk/reward profiles. They determine the profile of the user and source capital from investors with similar needs.
Mainstream intermediaries, for the most part, do not rate the profiles of First Nations communities. Stability, capacity, security and cultural issues, whether real or perceived, represent risks that cannot be readily quantified nor mitigated using conventional risk management tools.
First Nation access to mainstream financial markets is limited to primary market transactions where mainstream intermediaries provide conventional debt products to those users with the capacity to put forward guarantees and/or other assurances sufficient to mitigate the issues.
As First Nations have had little or no access to equity products through mainstream intermediaries, such as venture capitalists and investment bankers, they make little use of secondary financial markets.
The federal and provincial governments have and do engage in intervention measures to improve First Nation access to capital, but there are shortcomings. The intervention is, for the most part, direct. The Government of Canada has become a financial intermediary.
This does little to connect First Nations with mainstream financial markets. In fact, direct intervention encourages dependency, supports isolation, and does little to enhance the risk/reward profiles of First Nations.
The source of capital is largely government funding. As the source is finite, access to the conventional financial markets is essential to meeting the longer-term capital needs of the First Nations community.
The Aboriginal financial network has demonstrated the benefits of community-based institutions. The AFI developmental lending institutions are now engaging mainstream intermediaries to confront the issue of First Nations risk. The AFI network should continue to focus its intervention initiatives on risk mitigation to further engage and lever mainstream debt capital sources.
Equity intervention is primarily in the form of contributions. Equity is essential to accessing debt, as public contributions are a finite source of funding.
New and larger sources of equity capital are required to grow the First Nations capital pool. A new and innovative approach is required to attract mainstream investment sources. First, it must increase the amount of equity capital available to the First Nations community. Second, it must engage the mainstream financial markets, mitigate the First Nations risk issues, and foster a new relationship that will improve the flow of capital. Third, more equity capital results in more leverage. This means more debt capital and, where the mainstream markets participate in both products, a risk/reward profile should emerge.
The current equity intervention policy needs some rethinking. Medium-sized growth phase entities and large regional resource-driven partnering opportunities require investment that exceeds the purpose and capacity of the current contribution sources.
With the rapid formation and growth of First Nations businesses and the recent boom in regional resource-driven opportunities, there is a need for new intervention policy that will support access to mainstream equity capital sources.
Within Canada the solitary fund, QFL, has led the way in creating community-based risk capital pools. Government intervention takes the form of direct investment and tax credits through labour-sponsored venture capital fund legislation.
At the First Nations level, equity capital pilot projects are in process. In Quebec, we have the First Nations Venture Capital Corporation of Quebec, in the Yukon, we have the Dana Naye Ventures and in the rest of Canada, we have the Indian Resource Capital Fund.
Two of these pilot initiatives are regional funds, targeting all industries in a specific geographic area. The Indian Resource Capital Fund is a sectoral fund that will finance oil, gas and energy-related activities across Canada. This pilot initiative is designed to create equity capital pools with First Nations, public and private, quasi-private participation.
The Department of Indian Affairs and Northern Development has provided seed capital to lever First Nation and mainstream investment into the funds. The Quebec and Yukon projects are up and running and the Alberta project is currently in the process of levering private capital to complement the First Nations investment.
Canada is not alone in recognizing the access to capital issue. The existence of developed and sophisticated financial markets does not guarantee ready capital to all in need. Mainstream financial intermediaries are reluctant to recommend and/or provide capital where the risk/return profile is at odds with investor expectations.
Governments in most developed countries have put forward intervention measures to improve the flow of capital to low-wealth communities.
While Canada has largely used public delivery mechanisms to address the access to capital issue, other jurisdictions have adopted policies to bridge the gaps between mainstream, financial institutions and targeted communities.
Equity is the glue that attracts and creates financial leverage. Lenders look to mitigate risk, and proponent equity is fundamental in determining risk. As there is minimal wealth in the First Nations community, so goes proponent investment capacity.
Government intervention in the form of grants and contributions is also limited and is targeted to achieve specific goals. As such, the current sources of business capital are sweat equity and contributions with leverage provided by developmental lenders.
As this capital pool is small, it focuses on providing financing to small business at start-up or in the very early growth stages.
The current equity pool has limited capacity to assist mid-sized growth stage enterprises needing larger amounts of capital, or to support regional resource partnering opportunities that can generate meaningful contributions to the First Nations' economy and their labour markets.
If the goal is to expand the total capital available, more equity is needed. The equity capital pool would be controlled through a First Nations institution or institutions and serve as an intervention intermediary, linking First Nations users with mainstream financial markets.
The stakeholders would engage through entities that understand the needs and concerns of all parties. The sources of capital would include First Nations proponents, government and mainstream investors.
Leverage to mainstream sources is essential to meeting the longer-term capital needs of the First Nations community. Public funds would be used to mitigate First Nation risks and/or to enhance returns to investors.
The intervention would level the playing field, creating acceptable risk/reward profiles while supporting double bottom-line objectives. The intervention policy would focus on levering mainstream investment into a revolving equity capital pool. The equity capital pool would be managed and invested using mainstream invest criteria.
The pool would create risk/reward profiles that conform to mainstream norms. The pool would seek partnering, syndication, and co-investment arrangements. It would offer credibility and security to mainstream business and financial institutions. The pool would foster new opportunities. First Nations will benefit from institution partners that have access to new opportunities. In addition, mainstream investors see opportunities in First Nations areas, and the pool would broker access to these opportunities. The pool would service all sectors and regions.
As a national institution, it would serve as an advocate, a regulator, service provider, standards body, resource sender and a fund of funds. The pool would, when and where appropriate, create regional sectoral pools to target specific areas and specialized industries.
We are proposing the creation of a new financial intermediary that would provide equity capital to finance viable growth stage opportunities in the First Nations community.
Thank you very much, Mr. Chairman and members of the Senate.
I would now like to call upon Mr. Purdy to say a few words as a representative from the investment sector, as well as a few words from Larry, afterwards.
Kirk Purdy, Investment Sector, Indian Resource Council: Thank you, Roy. Thanks for the opportunity to address your group.
Today I think I represent Marcel Tremblay, who was not able to make this meeting. Marcel Tremblay, for some of you who do not know him, is widely known to be the fellow who invented the royalty trust sector in Canada. That sector has blossomed to 10 per cent of the size of the Toronto Stock Exchange, and, of course, it is full of controversy today with your colleagues, our colleague, Mr. Goodale, taking a good, hard look at the sector. There is no arguing its popularity and about the discipline that it does bring to some sectors, highly capital-intensive sectors that needed to attract capital and are getting it broadly across the retail investor pool.
Roy and his team came to our attention through the Indian Resource Council, to Overlord Financial, really to get hold of some of our expertise in the oil and gas sector. Mr. Tremblay sits as a board member on the Indian Resource Council, bringing his expertise to the projects. We are excited about oil and gas focused investment that will develop some of the opportunities that have been sitting on the vine not really developed.
When we met Roy and his colleagues, we also viewed an untapped pool of unfunded projects. Roy identified that pool to be worth close to $500 million dollars today. From that pool, we envisaged the opportunity to attract capital for investment into a selected group of projects that could possibly show a commercial return.
Our plan was to make projects like this available to the mainstream and retail investor through traditional channels and show a return that would attract more and more investors into that intermediary fund. If we were to kick start it with some element of risk mitigation to attract the capital we think we could do with early and good performance is attract more and more capital and bring some discipline to investing. We could bring many projects to fruition in a sector that will not see the capital otherwise. That is our business.
Mr. Tremblay is a very entrepreneurial and innovative thinker, and I am fortunate to be a part of his team and, I guess, assigned to this project here.
Senator St. Germain: Are you talking about income trusts?
Mr. Fox: He is.
Mr. Purdy: A product like this is similar to an income trust or a royalty trust. We think that the transparency and the discipline of the income trust product could attract capital into investment opportunities on First Nations lands, yes.
If you married the uniqueness of the pool of investment opportunities that is untapped, and the size of the retail investor pool that is looking for a yield, you could probably launch a fund with $100 million in a matter of days. It really would not take long to attract that sort of capital into a specialty fund like this, if it is set up with solid managers and a reasonably good business plan.
When we discussed it very generally in these terms with Roy and his colleagues, and bounced the idea off a few of my colleagues in the investment-banking sector, we received strong support.
Really it was a matter of, "Look, you come to us with projects, you come to us with a structure, you come to us with a management team, you give us a sense that somehow the perception of risk can be mitigated and get creative about it, we will find the capital to put into a pool for specific targeted investment on First Nation lands." That was a very strong message we got from our colleagues.
Mr. Kaida, Assistant to the President, Indian Resource Council: Thank you Mr. Chairman. I do not have too much more to add to Roy's presentation. I am here to maybe help clarify or answer questions, if called upon.
I just want to tell the Senators here that the business we are in, which is the oil and gas business is huge. I am sure you know about it. It is getting bigger and bigger by the day.
Unfortunately, First Nations historically have not participated very successfully or effectively in this business. The participation has been passive, extremely passive.
I do not know if you had any other specific presentations on oil and gas, but just for your information, historically, First Nations have been just sort of recipients of royalties, bonuses, that kind of thing and not very much else.
Our organization is an advocate organization. We advocate for greater participation of First Nations in this huge business, not just as recipients of royalties, but as owners, as business people, as equity participants, that kind of thing, because that is where the real money is to be made.
Because of this approach, very many First Nations now are getting into joint ventures with industry, where they might take a working interest or carry an interest in business and make some money, like everyone else.
Unfortunately, that type of participation is also very limited by the reasons that Roy mentioned in his paper. Limited capacity and access to capital are the big problems. Because of regulatory restrictions, First Nations, unlike mainstream society, have problems accessing capital.
What we are trying to do with this approach, this outside the box approach, is find a way to attract private capital, equity capital, so that the growing joint ventures with First Nations can access another tool in order to grow their businesses. Our experience has been that industry is very keen to do this, but they need help.
We find that there is very limited knowledge of First Nations. There is very limited appreciation of some of the unique cultural variables in First Nations. Our responsibility as an organization of First Nations is to help raise this kind of awareness.
It is beginning to bear fruit. Mr. Purdy and his organization are keen to work with our organization to help leverage this capital. What we are asking of governments is not to use their regulatory mechanism to prevent us from raising this capital, but instead, introduce supportive policies to this new approach to business.
Senator Peterson: You seem that you have the vision. You know where you are going, you have identified it, but there seems to be an obstacle here that you are not quite telling us what you need.
You talk about policy. Obviously, you need something to help you along. What do you need?
Mr. Fox: All we have to do is look at the Indian Act, which is very specific in how First Nations people, their governments and their business entities can use their own monies held in Ottawa.
I mean, I was chief of the Blood Tribe before I retired nine years ago. I was not defeated; I retired. I spent 22 years with the Bloods, and during that time, there were countless opportunities, not just in the oil and gas sector, that we should have been able to use our own money in Ottawa, but we were prevented from using it because of policy. The wise people in Ottawa and Edmonton, especially the justice lawyers, felt that we should not use our monies to go into those kinds of business ventures because we may lose money.
I will give you an example of such an opportunity. About 15 years ago, when I was still with the Bloods, Shell Oil was in the process of moving from their smaller fields to their larger fields. One of the smaller fields was at Lookout Butte, which is on the Blood Indian Reservation, on the timber limits bordering Waterton Lakes National Park.
We had the opportunity to acquire the Shell assets. They were extracting sour gas. That field had been there prior; they were extracting crude oil. The crude oil ran out, so they were extracting sour gas. They had something like ten wells or so left.
Of course, we did our due diligence before we went into it and found out the field would still be there, had enough reserves really for another 45 years.
We put a good business plan together, did our due diligence, and had all the facts before them. Still they would not let us use our own money. We could have bought those assets for $4 million bucks. The last time those assets changed hands, a few years ago, they cost $26 million bucks.
That is an example of where we wanted to use our own monies, but because of government policy, regulation, and legislation, we were not able to take advantage of that business opportunity.
Senator Peterson: Which is good because I presume the outside investors are looking for you to have your money on the line as well, before they will come into the game.
Mr. Fox: Our fund with the Indian Resource Council, in conjunction with Overlord has already acquired investment from the Aboriginal community. We have acquired investment from the mainstream investment sector, and plan to start the fund rolling by the end of the calendar year.
Of course, we want to bring up the investment amount a little more because it is a very modest fund, if you compare it to other funds in the oil and gas sector.
We want to be able to prove that, by utilizing this fund, it is entirely possible for First Nations and Aboriginal people to take full advantage of the business opportunities that exist, not just in the oil and gas sector, but also in the whole energy sector because that encompasses a few more things.
Yes, we are accepting investments, not just from the Aboriginal community, but from the mainstream investment community, and we hope to get going next month.
Senator Lovelace Nicholas: Mr. Fox, I have heard all of your business ventures, but not once have I heard anything about the equity going back to the community, back to the people, back to education, back to the elders and other programs.
Mr. Fox: Senator, we have the privilege and the responsibility of taking care of perhaps one or two aspects of this problem as it pertains to First Nations people.
We want to help First Nations governments and their business institutions, their business entities and take advantage of business communities in the energy sector.
In their wisdom, those leaders are going to be bringing that money back to the community so that the elders, their young people, people in greater need, can utilize the profits from these ventures.
I think that is under the responsibility of the specific political and business leaders from our member tribes. We really cannot tell them how they ought to spend their profits.
Senator Lovelace Nicholas: I understand that, but may I mention that that could be part of the negotiations?
Mr. Fox: Yes, of course it could be part of the negotiations.
Mr. Kaida: One of the requirements that we have in this fund is that whatever business we invest in, has to have direct benefits to First Nations. There are all kinds of benefits. You can define benefits any way you want. It could include profits, employment opportunities or business opportunities. The benefits include a whole continuum of things.
The answer to the question is that we expect these benefits, no matter how you define them, to accrue to the communities.
That is not a call that we make because when we co-invest or when we support businesses that are owned by First Nations, those businesses are set up with First Nations Aboriginal membership and obviously, that is a benefit.
Whether those benefits extend to social programs and housing and that kind of thing, I think is a call that somebody else in the community needs to make because their own companies are at the very beginning of business development. They have very limited capacity. They have very little capital. If we can help them grow through these kinds of partnerships, we expect those benefits to accrue to the communities.
The Chairman: Thank you. If there are no further questions, I want to thank you, Mr. Fox, Mr. Kaida and Mr. Purdy, for your presence today. Thank you very much.
Obviously, you are dealing with a matter that is critical to the future of the Aboriginal business, and so thank you very much for your presentation.
Mr. Fox: Thank you very much, Mr. Chairman and senators.
I notice we have a booth over here and I am sure it is translating. I normally like to start my public presentations by utilizing my own language. For purposes of translation, what I said was, "Hello, my friends and relatives.
[Mr. Fox spoke in his native language.]
Thank you.
The Chairman: Thank you very much. With that, senators, we will adjourn our meeting.
The committee adjourned.