Proceedings of the Standing Senate Committee on
Aboriginal Peoples
Issue 14 - Evidence - Meeting of November 22, 2005
OTTAWA, Tuesday, November 22, 2005
The Standing Senate Committee on Aboriginal Peoples met this day at 9:32 a.m. to examine and report on the involvement of Aboriginal communities and businesses in economic development activities in Canada.
Senator Nick G. Sibbeston (Chairman) in the chair.
[English]
The Chairman: Honourable senators, our committee is continuing its study on the involvement of Aboriginal communities and businesses in economic development activities in Canada. It is interesting being back in Ottawa. We have been out in the field seeing people in British Columbia and Alberta.
We are privileged to have representatives from Aboriginal Tourism Canada here this morning.
Please proceed, sir.
Allan Luby, Chair, Aboriginal Tourism Canada: Thank you.
[Mr. Luby spoke in his native language.]
I have introduced my Indian name. I am from the Caribou clan. We are situated 10 miles north of Kenora, Ontario. I wish to thank everyone here for taking the time to address this important issue.
I will deal specifically with Aboriginal tourism. I have been a chief for a number of years and on council for 20 years, so I am more than comfortable to stray off topic if the need is there.
I wish to recognize Aboriginal Tourism British Columbia — ATBC — for supplying many of the pictures we have here today.
The mission of Aboriginal Tourism Canada is to influence and develop tourism policies and programs to benefit Aboriginal peoples in Canada. Our objectives are to increase the profile and legitimacy of the Aboriginal tourism industry and to demonstrate the value of Aboriginal tourism as a driver within the broader Aboriginal economic development picture. Our objectives also include increasing the priority of the Aboriginal tourism industry within other Aboriginal economic drivers and generating long-term sustainable investments in Aboriginal tourism with the federal government. This would leverage provincial governments.
There is huge opportunity. There have been several studies done over the last few years. Right now, cultural tourism is growing at a rate of 15 per cent per year. The untapped potential is huge. The Aboriginal tourism industry accounts for only 0.5 percent of the entire industry. The majority of our people are 25 years and under, thereby allowing for increased employment. The workforce is there; it is huge and ready to go to work.
We have a unique and diverse market. There is a huge demand from Japan and European countries for the Aboriginal cultures across Canada. There is a very broad market and we need to build a national and international presence. We are starting to focus, like much of the country, on the 2010 Olympics.
We do have challenges. There is limited awareness of the potential economic benefit, both within the industry, at the community level and within the various levels of government. Our communities are severely restricted in their infrastructure. Right now, under Indian Affairs, many of the towns and cities over the last 20 years have developed their waterfront and want to improve their infrastructure. In the communities, we are not allowed to invest dollars in those areas for a number of very important reasons. We have limitations to the infrastructure in our development issues. We have limited government investment toward programs that would support the Aboriginal tourism industry.
The reality is that Aboriginal tourism is 40 years behind the rest of the tourism industry in Canada. We need to move to catch up quickly. Our youth are eager and willing to start down the road of self-sufficiency. We are not looking for government handouts; we are looking for jobs in the communities.
There are funding challenges. A five-year proposed investment by the federal government of $23.2 million is required and would be directed as follows. Our Aboriginal Tourism Canada organization is made up of regional Aboriginal tourism associations, which are membership driven. The investment of these regional associations is required to be $16.9 million over a five-year period. The investment in the national body is $1,266,500 for 2005-06 and $1.275 million for several years thereafter.
The provincial governments would be very encouraged to match these dollars and we have had a significant amount of success in Northern Ontario. I believe last year we had $250,000 investment from the Ontario government, which has actually exceeded federal contributions.
We have a long-term goal of decreased dependency on government funding, and funding support is necessary in the interim. On the economic impact side, we will see huge gains by these investments. We will see a decrease in our social costs, an increase in our employment opportunities, development of new business opportunities and increased new money through foreign visitation. In the tourism industry, it is actually termed an export market when we bring in out of Canada new dollars. Correspondingly, there will be an increase in tax revenues.
The social impact is important and critical to keep in mind. We will be able to maintain the land and the language skills, which is very important on the cultural side. We will be able to bring together the youth and the elders. The elders are the keepers of the tradition in the culture and they will be heavily involved in this cultural tourism industry.
I will now turn to the subject of diversified product lines. In my case, I run a 200-passenger cruise ship in Kenora on Lake of the Woods. Virginia Mackenzie runs a tepee village without any power and does a significant amount of business with academics. Product lines run the full gamut.
We will enhance the Canadian experience. Much of the marketing that you see of Canada does depict Aboriginal peoples. We will maintain the authenticity of the cultural experiences.
A huge request would be to reinstate economic development funding cancelled by the federal government. Several years ago, we had an investment of $179 million per year through the Department of Indian Affairs and Northern Development, and those dollars were cancelled and not replaced or increased through Industry Canada. These dollars were a huge stimulus to the economies of our First Nations. Again, these investments will stimulate provincial investments, which have yet to be determined.
Our key message is that Aboriginal tourism is an untapped key economic driver that will support increased expansion. Aboriginal Tourism Canada is the only organization in Canada positioned and connected to support this goal.
The basic framework for Aboriginal economic tourism already exists. By supporting this infrastructure, the industry can grow. A healthy Aboriginal tourism industry can significantly contribute towards the goal of increased economic development as a whole.
We have some packages that are available. We also have a wealth of studies and information available to the committee, if required. We would be more than happy to supply them. We did not want to bring eight inches worth of paper today. The material is available. Most of it is on the website. We have our strategic business plan; we have a communication plan; and we are working on our government outreach strategy in order to have an increased knowledge and awareness brought forward.
For our next steps, we need to increase our market share of international tourism. We need to increase the ATC profile within the federal government and to increase general public relations activities.
In summary, and just off text a little, as I stated earlier, I have been involved at the community level and with the politics for close to 20 years. Over this last 20 years, I have watched our youth take over the majority of our people. When I look into the eyes of our young people nowadays, I see a passion. They want to move ahead, but they are also becoming very impatient with things. They want to see these social and economic drivers there for the communities, to raise the level of the communities to that of the rest of Canada. The commitment made by the provinces and the federal government over a 10-year period was welcome and we are looking forward to seeing the results.
The Chairman: Thank you very much, Chief Luby. I wanted to comment. I come from the Northwest Territories. Before I became a senator, my wife and I ran a bed and breakfast establishment. We had the good fortune to receive many guests from all over Canada and the world as they were travelling into the Nahanni National Park. One of the things that I understand from people is that in coming to a different part of the country, coming North, they wanted to see something different. They wanted to see the land and the people. I have heard people say that they were interested in coming to our part of the country to see something different. Many of them come from big cities and urban settings, so they were very delighted any time they could see local things, particularly with regard to Aboriginal peoples and things of their culture. There is a real eagerness, a hunger and an interest in seeing things of Aboriginal people. You alluded to the fact that there is a market and an interest in that. It is good to hear from you and it is interesting to know that there are people like you who are promoting that aspect.
I want to note that a new senator has joined our committee. Senator Champagne, welcome to our committee. I hope you stay with us for a long time. I hope you have a fruitful time with our committee.
Senator Champagne: I must admit this is a new subject for me. I will do my best to get up to date and try to be a helpful member of this committee. Thank you for accepting me, Mr. Chairman.
Senator St. Germain: I, too, am encouraged to see my colleague Senator Champagne here. Other new senators have joined the committee, including Senator Zimmer, Senator Peterson and Senator Lovelace Nicholas, who have contributed already. It is encouraging to be working with a good group of people, not the least being my colleague from the East Coast, Senator Buchanan.
Thank you, Chief Luby and Ms. Webber, for attending here this morning. As the chairman said, we have done some travelling. We are trying to establish what makes some of our Aboriginal communities so successful while others are so challenged and cannot seem to experience success.
I had the privilege, Chief Luby, of travelling this summer to the Crow Nation in Montana. In my view of our Aboriginal peoples, there is no border. Our North American Aboriginal peoples existed on both sides of the border. What I found interesting was the way people responded to what you are suggesting. I was at a huge gathering of the Crow Nation as well as all other nations in the area. I believe it is the largest grouping of teepees in the world, and it takes place just outside of where the battle of Little Bighorn took place. Why is it that we have not been able to capture that tourist trade, in the same way as our colleagues to the South have done? They have tremendous facilities, where visitors can experience the traditions and culture of the peoples down there. I am not sure that we have capitalized on that in the same manner. As the head of this organization, have you any explanation for that? This is certainly a tourism draw.
I was in England three or four years ago, golfing. I happened to be in St. Andrews in Scotland as well. I was asked many times on that trip where in Canada people could visit to have an Aboriginal experience, to see Aboriginal people wearing their headdress, to see teepees and what have you. Have you any idea as to why we have not capitalized on this?
Mr. Luby: Yes. When I respond to your questions, I wear two hats. I am the chief, and I am also chief responsible in Treaty 3 for lands and resources. I also work very closely with the national chief on a number of issues. I will speak from a broader range because the subject is not just specific to tourism.
I think one of the answers to your question can be found in the Harvard study on Aboriginal peoples, a study that determined and speaks to the fact that self-determination is critical. The people need self-determination.
Another important issue is that we need to have accountability. Accountability cannot come through the Indian Act. The Indian Act does not allow for accountability at the First Nations level. We need to have it worked around a little bit to allow the people at the community level to hold the accountability card and not the Department of Indian Affairs. Then, as the chiefs and the leadership in our organizations, we would then answer to our people directly, which allow for us to move ahead and have longer term stability in government and projects.
Senator St. Germain: Do our Aboriginal youth in Canada possess the understanding of the culture and the traditions the way they should, to really present in future the actual romance and the glory of our Aboriginal peoples? Is this being passed on in a manner that will sustain the ability to make these presentations? You spoke of authenticity, which is a huge question in the sale of handmade crafts by our Aboriginal peoples. Is this being passed on, and are we cognizant, are we attempting to maintain this type of transfer of culture and tradition?
Mr. Luby: Yes and no. Yes, in many of the tribes that are large that knowledge is being assed on. For example, the language of the Ojibwa people will in no way be threatened over the foreseeable future, but there are a number of languages in this culture that are threatening to be lost within a generation or two. Since much of the culture is based on the language, language and education are critical. In terms of culture, it is not just what you might see on the television; it is a way of life that is taught and handed on, values and principles. Those things are intact. Those things are not lost. Those things cross language barriers. They are in place.
In terms of culture, the value system, 150 years ago we did not have an economic society. The people who were highly valued were the hunters, the best fishers, the medicine men, the artists. A person's value came from what he or she contributed to the community. In today's world, possessions seem to be important; 150 years ago, if I had had a couple of canoes, a ton of rice, a few moose and three or four teepees, by the time I got to where the blueberries were the lakes would be frozen, so there was no value in that. It is the value system that is critical.
By having Aboriginal cultural tourism, the elders are the keepers of the traditions in the culture, which will teach and maintain that value using tourism as the driver, because you cannot charge to pass that on. It has to be part of the world in which you live.
Senator St. Germain: The Harvard study on Aboriginal peoples, the self-determination concept, is really a consistent message. Mr. Chairman, we are hearing that right across the country. I think it is encouraging that you in the leadership role recognize and are accepting what Stephen Cornell and others have come up with on their studies at Harvard. The accountability factor is the one that I think concerns Canadians at large the most. You have put it quite right, that INAC cannot provide that guide for accountability. It has to come from the heart and soul of our Aboriginal people.
Senator Zimmer: Thank you for your presentation, especially for your focus on tourism and Aboriginal youth. That is one of my causes. Mr. Chairman, I am always delighted and humbled to follow my honourable friend, Senator St. Germain, who always sets the stage for me. As well, I am pleased to see Senator Champagne here, an individual with a strong background in art and culture. I am looking forward to working with her on that. I have some background in that too.
My question is in the Aboriginal area of youth, with the Olympics. I was involved with the Pan Am Games as vice- president for the festivals for the Pan Am Games Society Inc. As well, I am co-chairing fundraising for the Olympics in Vancouver for the athletes. In terms of Aboriginal youth and the Olympics, there is a tremendous opportunity here to showcase your culture, your art, your way of life, your values, your youth and your elders.
Have you made any contact with the Olympic committee vis-à-vis getting involved in the 2010 Olympics, especially in the area of opening and closing ceremonies and festivals with your Aboriginal youth and your elders?
Mr. Luby: We have worked on two areas. There is a national committee of tourism and sport focused on the Olympics. On the other tier, working with the Olympic committee directly, we do have some strong advocates from B.C. that are on the committee. Chief Gibby Jacobs is part of the overall committee. We are hoping to have a direct link through him to the committee to do many of the things of which you speak.
Senator Zimmer: If I may offer, I do know a fellow who worked on the Pan Am Games in Winnipeg; he is the key guy that is organizing it in Vancouver, and his name is Terry Wright. He will be directing the whole thing administratively. If it would be of any help, I can give you his coordinates.
In the 1997 Vancouver Commonwealth Games, the Aboriginal people did not get as involved as they should have, partly because there was some dispute between youth and elders, and the committee did not get that involved. In 1999, in Winnipeg, we got more involved and insured that the Aboriginal component was into that.
Again, if I can be of any help to give you some leads on that and put you in directly in touch with my contact, I would be pleased to do so.
Mr. Luby: That would be very useful. Thank you.
Senator Peterson: I take it that Aboriginal Tourism Canada is the national umbrella group. In doing this, do you set a certain standard of how this would be developed? If we are talking about cultural centres and that sort of thing, would each area just do whatever they wanted? Do you set some kind of a parameter to develop this? How does that work?
Mr. Luby: I believe there are over 600 First Nations in Canada. If you try to compare that to 10 provinces, it may give you some idea of my answer. However, we look at it from the Aboriginal tourism side. Each area has a unique culture and diversity. We, as a national board, cannot dictate what is acceptable in one area and may not be acceptable in another area. At the national level, we have an Aboriginal tourism-related marketing focus — a promotion and development focus. Each area has to take those basics, and they can add to them and broaden them. Some act as economic development offices. We cannot dictate what is right, and within the region they cannot dictate what is right.
In Ontario, which is a vast region and where there are a number of treaty areas, there are different interpretations and different ideas. It boils down to the specific area, the people who need to be involved, along with the elders, with the business.
It is a good way of running things from a national level because there is no way we could ever dictate what is acceptable and what is not. It is up to the keepers of the traditions to determine what is sacred and what is not.
Senator Lovelace Nicholas: Chief Luby, do you think the basis of success in each community depends on the location of the First Nations communities? I am from a small community. I am not sure where you live.
Mr. Luby: I live about three hours by car from Winnipeg, which is the closest international airport. I live near Kenora, Ontario, just a short distance north of Lake of the Woods.
Yes and no would be my answer to your question about location. When you look at studies done by tourism agencies, they often focus on number of hours from international airports. These will be the biggest drivers. You cannot get away from the transportation issue. I received a telephone call from someone north of Yellowknife who is crying for people to come north because he has increased his tourism trade from 3,000 to 5,000 Japanese tourists at Aurora Village. That is an example of someone who is highly successful in Moose Factory in the Far North. The chief told me that their Cree village had recently received an award for their eco-lodge in a fly-in community. The train takes 36 hours to reach the community. To hit it big in such a business and attract the thousands of tourists that would require, you need to be close to those centres. There is a large niche market available to tourism. For my business, I have been reaching a niche market overseas. They advised me that it would be three to five years before I would see any return on that effort. It is year three and I am being picked up by a wholesaler in Europe. I attended a wholesalers' trade show this week, where I marketed my program, which is 25 maximum. There is an opportunity across the spectrum in this area.
Senator Lovelace Nicholas: What is the ratio of women to men who own businesses in your community?
Mr. Luby: At the national board, we have more women than men in business, I believe. They are very productive and successful. At the local level on Treaty 3 land, we are struggling. There are many issues and it is difficult to get people to move into the tourism industry. They have many concerns and questions.
I do not want to get into a long debate, but we are still feeling the severe effects left by the residential schools, although I understand we are close to putting that behind us, which will be a major step to moving ahead. I would like to thank the Government of Canada for proceeding with that. That point will go a long way.
Senator Lovelace Nicholas: I am happy to hear that there are more women in business than there are men.
The Chairman: My question is for Ms. Webber. How large is your organization? Where is your national office?
Linda Webber, Acting Executive Director, Aboriginal Tourism Canada: The ATC office is on Slater Street in Ottawa. Currently, I am the only full-time employee, but I have two part-time employees. We represent a national volunteer board.
Senator Buchanan: Mr. Luby, what is the involvement of the Atlantic provinces in your organization?
Mr. Luby: Charlie Sark is our board representative there, and Joel Denny is our elder.
The Chairman: I want to thank our witnesses from Aboriginal Tourism Canada for appearing today. The information that you have provided will be useful to the committee's study.
Mr. Luby: Thank you for this opportunity. I have been involved in tourism for my entire life. In the early days of tourism, when Canada wanted to develop the industry, a substantial investment was made by the federal and provincial governments in feasibility studies, marketing and the bricks and mortar infrastructure. If we are to develop the Aboriginal sector of the tourism industry, it will take a new look at how things are done. To date, government has looked only at aspects of marketing partnerships, which is fine for a mature industry because the feasibility has proven itself. When an industry is unproven because it has not received the kind of investment that would allow it to mature, then there is nothing in which to invest.
However, do not get me wrong. There are many pockets of successful Aboriginal businesses in Canada. Overall, when you look at the big picture, you can see that it will not develop the industry to the potential identified in the studies to the tune of $2.7 billion in the year 2010, up from $400 million in 2002. The potential is huge.
It will take direct action and many people working together to achieve such potential.
The Chairman: Next, we have representatives from the National Aboriginal Capital Corporation Association. With us this morning are Robert Ballantyne and Dan Brant. Welcome to our committee. If you wish, you may begin your presentation.
Robert Ballantyne, Chair of the Board, National Aboriginal Capital Corporation Association: Good morning, ladies and gentlemen, distinguished members of the Standing Senate Committee on Aboriginal Peoples, and Chairman Sibbeston. I currently reside in The Pas, and I am happy to be here today.
On behalf of the National Aboriginal Capital Corporation Association, or NACCA, I am honoured to be invited here to speak to you today and to be part of your investigation as to what makes Aboriginal businesses and communities succeed economically. I will take this opportunity to table the paper — I believe you have a copy in front of you — that NACCA has written precisely on this question in the hope that we may inform the debate further.
The NACCA network has a lot to say about this topic and has some very specific recommendations to overcoming obstacles on economic development in our communities. We are well positioned to make such recommendations. As a community-based lending network that has existed and succeeded for almost two decades now, our network of Aboriginal financial institutions, or AFIs, started out modestly in the late eighties and early nineties with the aim of providing capital to aspiring Aboriginal entrepreneurs who had no other financing options. The challenges were enormous — high-risk clientele, huge geographic areas to cover and the difficulties of working in remote locations, not to mention the scores of lending programs that have failed us before.
Nevertheless, I sit here before you today, the chairman of a network of 60 Aboriginal financial institutions who have loaned out over $1 billion in the past two decades. We have supported the creation of over 25,000 businesses and over 30,000 jobs. The businesses we support have a success rate almost double the Canadian average.
The AFIs are set up so they are owned and governed by their communities, which they are meant to serve. Much of the local staff is drawn from these communities as well. Present in every province and territory, the network is both Aboriginal-owned and community-based. I am confident when I say that the AFI staff have intimate knowledge of what life is like in our communities. We all know the general poverty and social decay that is a fact for many of our people. Recent tragedies making the headlines in Kashechewan are more the rule than the exception in some communities. All social indicators are dire. Life expectancy for First Nations is five to 10 times shorter, infant mortality rates are two to three times higher, and suicide for First Nations youth are at least five times that of the rest of the country.
The AFI staff will also know that Canada's economy is not the Aboriginal economy. Unemployment figures range from close to the Canadian average of around 7 per cent to a staggering 90 per cent and are three to four times the national average. Aboriginal income per capita averages a mere 54 per cent of the Canadian average. Dependent and disenfranchisement are consummate.
A way out of this socioeconomic challenge is through business enterprise development and growth. We at NACCA are not the only ones who think so. There is growing understanding and consensus amongst Aboriginal leaders that business ventures, either private or community-based, lift communities out of poverty by increasing employment, generating income, growing wealth and building investment and equity in our communities. One has to look no further than the Truro Power Centre, owned and operated by the Millbrook Mi'kmaq First Nation in Nova Scotia, or the St. Eugene Mission Resort by the Ktunaxa bands in British Columbia, or the community of the Opaskwayak Cree Nation in Manitoba, where I work, where they are celebrating the thirtieth anniversary of the Otineka Mall. You can see the positive impact of business ventures on our community.
When you take a business-oriented approach to our development based on economic principles, the return on investment to the whole community can be great, economically and socially, and not just to shareholders and investors. NACCA wholeheartedly embraces an approach to economic development that is rooted in economic principles. Our governance structure and lending activity shows how market forces can be harnessed without compromising local culture and values.
In terms of governance, NACCA members are owned and governed by the communities they serve, largely staffed by individuals from those communities, and have relationships with political and community leaders built up over years of collaboration. In terms of business, NACCA members strive to be profitable and solvent while never forgetting we are providing a community service.
Unfortunately, our network NACCA is not reaching economies of scale. We are not reaching economies of scale on an individual microeconomic level. The size of our asset base of many of our members cannot support their huge operating costs. We aim to be self-sustaining but we were undercapitalized at the start and continue to be so. Moreover, despite our unprecedented success, we are also not reaching economies of scale on a macroeconomic level. Rough estimates have us reaching less than 10 per cent of the Aboriginal need for capital. More generally, the potential of the network as a tool for development and growth is not being fully reached. We have a remarkable national infrastructure and we have proven that our model works. We stand ready and willing to take on a bigger role in Aboriginal economic development.
In the area of housing loans and mortgage finance in particular, we are ready for a major initiative that will allow Aboriginal people to own their own homes, to build their wealth, to grow community equity and to start developing a housing market.
This willingness may be supported by announcement at the first ministers meeting this week, if that takes place. We hope to pursue that initiative, regardless, to its logical end. However, we do need help. We need more capital, and we need capacity building to take on and augment our role. We look to the private sector to help with some of our needs, and we also see government partnerships. We may run on economic principles, but even an economist will admit that economies in distress need help from time to time.
If I may be so bold, the great economist Keynes made a case for us with his words of wisdom to governments everywhere: Spend in recession, save in a boom. That idea was good enough for Franklin Roosevelt in the Great Depression, and I think it is good enough for us. The Aboriginal economy has been in recession for too long, and it is time to give us a boost.
On behalf of the Aboriginal financial institutions of NACCA, I thank you very much for consideration.
The Chairman: Thank you very much, Mr. Ballantyne. I do appreciate, in this whole matter and this whole area of Aboriginal people getting into business, your provincial bodies — and I am aware of capital investment bodies throughout the country. In the Northwest Territories and in Alberta, there are a number. Obviously, they are very important to Aboriginal people getting into business.
What has been your experience in terms of funding or capitalizing Aboriginal businesses? Most people would normally go to a bank. In business, it does not really matter in terms of whether it is for an Aboriginal or a non- aboriginal person. You just need money, and so you go to the closest place from which you can borrow money. That is still probably the general rule.
What is your experience in terms of helping or focussing on Aboriginal business? Do you play a large part, or is your role still a minor role in our country?
Mr. Ballantyne: With respect to the significance of our role, we were capitalized at a rate of some $200 million as a network, and turned that over five times since our inception. This past year, we have reached $1 billion in loans out in the community, which I consider to be a success.
When we were set up, we were referred to as Aboriginal capital corporations and community futures organizations. We were meant to be developmental lenders. The idea was that clients who were not creditworthy and needed extra support would come to us. We would lend them money, and as they developed their track record, they would automatically migrate to a financial institution.
We find that that is not happening. Rather than calling ourselves ``developmental lenders,'' I believe the more appropriate term is ``community lenders.'' We are finding our clients returning to our various organizations time and time again.
As all of us know, when you build a credit relationship with an organization, there is value in that. Perhaps you cannot find that value at the next financial institution. That is not a problem unique to Aboriginal people, although it is certainly a challenge for us.
For my last point, I will speak on behalf of the Aboriginal financial institution in Manitoba, where I sit on the board. We have a current loan portfolio of some $7 million. Ninety to 95 per cent of those loans are provided on- reserve. Again, there will be sections of the Indian Act that say we cannot do that, but we are doing it right now. I trust that answers your question.
The Chairman: Yes.
Senator St. Germain: One of the aspects of dealing with economic development in our Aboriginal communities and First Nations is the size of some of them — where they are just not really viable. Take a nation where there are 80 people. Half of them are youth — this is just a rough approximation — and out of the other half, half of them would be elders, so your capacity is really restricted. Has there been any thought of putting programs in place where there would be an amalgamation of these communities to give them strength?
There is strength in numbers — and it is one of the issues that came up during our hearings. I think it was in northern British Columbia where we heard about a small, particular band that was reasonably successful but that its capacity to continue was restricted because of the number of people. The ability to build capacity just was not there because of the small number of people in the band population. Has there been any thought by your organization as to how we could deal with that? Is there a recommendation you could make, because it is something that we are going to try and deal with as we put together our report?
Mr. Ballantyne: It is a challenge, I will be honest. However, my response would be that, first of all, we have to respect the local authority and autonomy of each First Nation, or Aboriginal community.
There are systems in place. If I may change hats and step back from my role as chairman of NACCA, my day job is as an executive director of Swampy Cree Tribal Council in Manitoba. The tribal councils are a means of grouping. For us, it is a grouping of eight First Nations in northwestern Manitoba, and we have taken steps with respect to economic development.
In Manitoba, you also see groups like Tribal Councils Investment Group of Manitoba Ltd., which have taken it a step further. Not only do you have business at the tribal level, but the seven tribal councils in Manitoba have grouped to take another step forward — so there are some models that exist there.
However, our people have lived in their communities and their territories since the beginning of time. For us to think that we are going to move people or ask them to go somewhere else — it has not worked in the past and I trust it will not work in the future.
I think a lot of opportunity, and where the Aboriginal financial institutions throughout Canada play a significant role, is in primary industry. Let me define ``primary industry'' for you. This is the convenience stores, the grocery stores, the gas stations, the gas bars — the things that all of us take for granted but that Aboriginal people have not had a chance to own in the past. It has just been over the past 10 years — or in the case of the Opaskwayak Cree Nation, 30 years — that they are creating that primary industry. Even if it is 80 people, 80 people have to eat somewhere; 80 people have to fill up their cars somewhere. I still think they can have that primary industry, and then, as you say, for further development, perhaps look at grouping. There are models that exist that have shown and demonstrated success.
Senator St. Germain: Let us not get this wrong. I am not promoting this — I am asking the question.
Mr. Ballantyne: That is fine.
Senator St. Germain: The thing is that assimilation has not worked. That has been tried, along with various other initiatives. However, I think that there are nations out there that would like to do something.
If we are going to make recommendations as a committee, there is no point in worrying about Clarence Louis in Osoyoos, or Robert Louis in Westbank or the group in Squamish. These people are successful. What we are trying to figure out in the study is how we can help those communities — and I will use an extreme — like Davis Inlet get on their feet. They may not have the opportunity to become a Squamish band and have a major shopping centre like Park Royal in West Vancouver, but at least they would have some semblance of economic development.
Whether it is a hunter or a fisher, one of my former bosses used to say that the best social program in the world is a job because it keeps you occupied. I do not want you to get the idea that we are promoting grouping. However, if grouping is necessary, how do we provide the vehicle or make the recommendation that the vehicle is there?
That is from my perspective, speaking on my own behalf. The chairman and I have discussed this and I think we concur on this.
Mr. Ballantyne: Do not get me wrong. I agree completely with the principles of economics and the notion of grouping; that is valid. I have given you some examples that exist in the First Nations community and certainly exist within the NACCA network.
The communities that belong to the 60 Aboriginal financial institutions do just that. They group; they provide board members. These organizations are not a function of one individual community, so you see that grouping already. Our message today is that we have a network that is available to assist in economic development, and we trust that that we will be utilized further to assist in the things that you want to accomplish as a committee.
Senator St. Germain: What is your position on partnering with non-Aboriginal organizations?
It comes to mind because I have something in front of me here that one of the communities in the Haida Nation is trying to do something. Do you have a position on that, as an organization?
Mr. Ballantyne: As an organization, I would not be so bold. I could speak to it personally — and that is how I would prefer to do it today. I believe that partnering with non-Aboriginal business is appropriate. It goes without saying that we need to know how to run businesses. A lot of the success models that you find in our communities have done just that, have utilized the expertise of others to show us the way with respect to what needs to be done.
We have many bright and smart people in our communities. However, they are not experts in specific areas. At NACCA, we have signed memoranda of understanding with major financial institutions such as the Canadian Imperial Bank of Commerce. We recognized that, contemplated bringing in an interchange of expertise from that bank to help us refine the business that we do and to do it better. Certainly we are believers in that.
Senator Buchanan: I was sitting here thinking back through the late 1970s, the 1980s and early 1990s, during my 13- year term as premier of the greatest province in Canada, Nova Scotia. Looking back over that period, Aboriginal businesses during that era were pretty well confined in our area to fishing, oyster farming, trout farming and that type of thing. Some were successful, some were not too successful. Oyster farming was very successful in the Bras D'Or Lakes from time to time. We started trout farming in Cape Breton, but it did not work out.
I am so pleased to hear you mention how successful Lawrence Paul and the Millbrook power centre have been. Any of you who go to Nova Scotia, make sure you drive from Truro to Halifax and on the right-hand side of the road just outside Truro you will see probably one of the most successful business ventures in Canada right now for its size. It is not growing every year; it is growing every month. When you drive by there, you see new buildings. Every month, there are new buildings going up, thanks to Lawrence Paul and other entrepreneurs through Millbrook. You mentioned partnership with non-Aboriginal businesses. There is a good example of it. I think you know that. Lawrence Paul and his group have been able to partner with businesses in that whole area and to work very successfully. The number of new jobs in that power centre is just phenomenal for Aboriginal youth.
I will mention one other concern that has been discussed as a success. We have a young man in Nova Scotia who graduated from Dalhousie Law School, the finest law school in Canada, by the way. I am a graduate from there myself. Mr. Christmas graduated from law school and came to Toronto. Over a very short period of time he became a successful lawyer on Bay Street. He gave it all up. He came back to Cape Breton. He, along with others, formed the Membertou Development Corporation. That is starting to move nicely, not as quickly as the power centre in Millbrook, but it is moving along nicely.
If you are in Cape Breton, in the Sydney area, go to the Membertou Convention Centre, which was completed two years ago, where they have probably one of the finest restaurants you will find anywhere in Atlantic Canada, run by the Membertou group. The CEO and president is Bernd Christmas.
There are two examples of the kind of new thrust by Aboriginal groups in our small province to get into businesses other than fishing, trout or salmon farming, that type of thing. We are very pleased with them, and very pleased with your involvement with some of these ventures.
The Chairman: Was that a question or a comment?
Senator Buchanan: That is my speech.
Mr. Ballantyne: He was making us hungry there. The mention of oysters and restaurants, I think I might have to excuse myself and grab a breakfast.
Senator Watt: I noticed looking at this map that you have Nunavik Investment Corporation as a member of your national network, if I understand it correctly; is that the case?
Mr. Ballantyne: Yes.
Senator Watt: I will be leaning more towards whether you have sufficient funds, the capital that you obtain from the government, I would imagine.
Mr. Ballantyne: Yes.
Senator Watt: That is where you got the capital, from the government. In that capital — and I would imagine there are certain restrictions as to how you can use and invest those funds; is that correct?
Mr. Ballantyne: That is correct.
Senator Watt: Do you have any freedom in terms of allowing that capital to grow before you lend it out to? Do you have a portfolio management within the corporation that can deal with stocks, bonds and securities by way of growing that capital to give you more independence so that you will not have to be as dependent on the government for handouts? Can you explain how that works and how you would like to see it work, if you have sufficient funds to lend out and make those businesses successful?
Mr. Ballantyne: As I said, we have 60 different Aboriginal financial institutions across the country. What may hold for one may not hold for the other. Generally speaking, there are two things affecting the ability to invest. First, there are criteria that state what you can do. They are limited to secure instruments. You cannot be speculative in nature. There are limitations by virtue of our funding agreement or contribution agreement from Industry Canada. Second, there is the expressed need. It is difficult when you have clients knocking on your door saying, ``I need money,'' you need to provide that money. If something is in a fund, it does not give you that flexibility.
When we were initially capitalized as Aboriginal financial institutions the group referred to as the Aboriginal Capital Corporations did not get operating funding. They had to support their operations by virtue of the interest earned on their portfolio. Clients paid back the interest as well as any potential interest they received through secure investments.
In terms of a preference, I believe we would like to avail ourselves as any other financial institution would. We would like to take advantage of every opportunity that we have to stretch the money that is currently provided to us; that would be our goal. We are facing some challenges when we are successful. When we do lend out money to our clients, that is less money we have for the next one. Sometimes success is a challenge in our network. That underscores the need for recapitalization within the network.
Senator Peterson: I note here that with your 60 financial institutions you are mandated to provide loans to high-risk businesses.
Mr. Ballantyne: Yes, that is correct.
Senator Peterson: Within that and the small geographic spectrum that you are working in, do you have trouble maintaining liquidity; is there difficulty in that?
Mr. Ballantyne: Certainly liquidity is a challenge, such as the strain on operations that we have that I mentioned earlier. Our success in lending out to clients will further strain liquidity. I wanted to give you what our loan-loss provisions are right now as a network, which is also a strain. We are lending in a riskier environment. We have been tracking statistics recently and our loan-loss provisions have been about 15 per cent of the portfolio, so it is higher than average. I would still think it is not unmanageable.
Again, the challenge is to have the proper resources. We recently were funded business support officers by Industry Canada. Unfortunately, it was not right across the network, it was just a select few within the network; but that type of support is what we need in order to support our clients, to make sure they are successful in repaying their loans, to prepare the way for the next generation of borrowers.
Senator Peterson: Are you self-regulated in that area? When you hit a certain level, do you have to either stop lending or replenish it with assets? Is there any national institution that regulates these 60 individual institutions?
Mr. Ballantyne: Primarily, each of the Aboriginal financial institutions will have a funding arrangement with Industry Canada and through that process will have certain benchmarks and hurdles through which they have to jump. Are we regulating ourselves at NACCA? Right now, the answer is no. We are tracking statistics with respect to best practices. We want to show our network what everyone is doing and doing well, and share that information. In fact, we are currently engaging a specialist team that will go out within the network to gather that data, showing people what works in other jurisdictions and providing it to them to consider.
The comment around First Nations also applies within the network. The authority and autonomy exist within the 60 Aboriginal financial institutions of the network. The main purpose of our network is to lobby on behalf of the network, to appear in front of groups like you and to provide a means of sharing that information within the network.
Senator Peterson: Are you satisfied then that it is working?
Mr. Ballantyne: It needs to get better. It goes without saying that with anything we do, we seek to improve what we have done in the past.
Senator Lovelace Nicholas: Does the success of the people you lend to depend on location of the communities?
Mr. Ballantyne: Certainly, if we are to talk about the economy or business principles, location is always a primary driver. However, our Aboriginal financial institution network is a broad network. We are seeing success throughout Canada, and it is not confined to major cities and major centres. If you look at the map — and I have to apologize that we do not have all of our members on the map right now as we are currently updating it — my sense would be that it is not confined to major urban centres. We are seeing success in, again, as I mentioned, the AFI in Manitoba, wherein 90 to 95 per cent of our business is on reserve. Many of those communities exist in more rural and remote settings.
Senator Lovelace Nicholas: If I were to try to get a loan as a native woman, as a person on social assistance, would it be almost impossible?
Mr. Ballantyne: That is still a challenge facing our community, yes. However, the entrepreneurs that we do support are community members, men, women and youth throughout Aboriginal Canada. It goes without saying that there is some individual initiative, but there are the support networks. We are saying we need more support. The statistics and social indicators suggest and compel us to be better, but we have done some things over the past 20 years that I think are worthy of note. Certainly, it is an ability to utilize this network that we have to do more of what has been done in the past.
Senator Lovelace Nicholas: I appreciate that. I am glad to see there is one in Atlantic Canada. I have been trying to get hold of them so I will talk to you after.
Senator Zimmer: Thank you for your presentation. It was very impressive. Senator Buchanan mentioned that he has success stories in his province. We do in Manitoba also. As you are, I am from Manitoba. One of the success stories is the mall in The Pas, Otineka Mall. Have you used the model for that mall or tried to implement that model in other areas, tied in with the issue of urban reserves? What is your opinion on that? Again, it is a very successful model that has done extremely well. It would be beneficial to use that model in other locations and/or possibly tie it in with urban reserves.
Mr. Ballantyne: Certainly, the success of the Opaskwayak Cree Nation and the Otineka Mall is worthy of study and being repeated. I belong to the tribal council with Opaskwayak Cree Nation — OCN — being part of it.
Yes, we have used it. Have we necessarily utilized it at NACCA? Perhaps we have. Again, we have a board. I am from Manitoba; we have representation from right across the country. I think the most compelling thought, though, with respect to the Otineka Mall development, was the vision. The chief was the late Gordon Lathlin, who had the vision to construct a mall to service their own people. Aboriginal people are their own market; they should build on the success there. At one time, 31 years ago, there was no development on OCN. There was a community that perhaps many people said at that time just would not succeed. The people were on welfare. There was housing and a band office but that was it.
Chief Lathlin and his people said, ``That is not right. Let us construct a mall.'' In the mid-1970s that was unheard of, but he and his people had a vision and they stuck to that vision, seeing themselves as a worthy marketplace. We have always had an Aboriginal economy but we have not been a part of it. It has been other people's economies.
Yes, certainly that is worthy of repeat and is something we hold close to our hearts in Manitoba. Every chance I get to share that story with my cohorts at NACCA or with the distinguished senators today, I am happy to do so. It is something that I believe more people must be aware of. That mall has bred success. It is doing a million dollars of sales at the local IGA store and employing many of its members there. The Shell station is one of the highest retailing and highest volume retailers of gasoline for Shell in Western Canada. I could I go on and on, but I will refrain.
I am a supporter of urban reserve development. We must allow both the Aboriginal community and the non- Aboriginal community to share together in this development. Let us be honest: Aboriginal economic development and the success of Aboriginal people are good for everyone. Certainly they are good for me and my family but for my neighbours as well. We envision this as growing the pie, as growing the opportunities for all of us. If you were to look at the Truro Power Centre or the Opaskwayak Cree Nation and the Otineka Mall, there many First Nations and Aboriginal people working there, but those are not the only people working there. There are opportunities for all in the local area. I am a big supporter of that.
Senator Watt: I will return to the point that I was raising, to be expanded. The entrepreneur requesting capital comes to you first, I would imagine, and then either gets directed or goes by himself to the normal financial institutions to borrow the difference of what he needs. With regard to the risk, who will take the risk and who will not take the risk? Could you elaborate on that?
Do we have sufficient dealings with our financial institutions such as banks? Are our people being fairly treated? Are they pretty well advanced, or do you have to help them out to make sure they get the money they need in order for the business to grow?
Mr. Ballantyne: Are you asking if they being treated fairly by the major financial institutes?
Senator Watt: After an individual gets the capital from you, what is your association with him when he goes to the financial institutions to seek additional funds that he would need? Who, then, takes the risk? How do you get involved in that?
Mr. Ballantyne: It goes without saying that the 60 members of our network do have banking relationships. They do have relationships with financial institutions because they need the ability to clear cheques, to invest and to borrow money, so it will be a function of that relationship. Some are good, some are bad and some are indifferent.
We have entered into lending arrangements wherein we will share the risk on some of these larger ventures so that we can take advantage of the capital that we have, as well as the leverage of the capital being provided by the financial institutions.
I think that relationship has to grow. There are more opportunities for NACCA as a network and its members to leverage relationships with major financial institutions. I made reference to a memorandum of understanding we had signed with CIBC. There has to be more of that.
I will make an admission. I would like to keep it within the room — although I know in is being recorded. I was a banker for six years — I spent six years with CIBC. At the end I was the regional manager of Aboriginal banking. There has to be a lot more awareness within the financial institutions of the needs of the Aboriginal community. The work we started in the late 1990s as Aboriginal bankers needs to continue. Society needs to understand ourselves as a community and the opportunities and challenges we face. I am happy to see, in the media, that there seems to be more discussion of this as a shared responsibility and not just my responsibility or my leader's responsibility; it is viewed as a Canadian responsibility. We have to meet those challenges jointly.
Senator St. Germain: Talking about the banks, the big six basically treat everyone the same way — unfairly. They will only give you an umbrella when the sun is shining. If you ask for anything when it is raining, forget it. They will take no risk and credit unions have generally filled the gap. Where do credit unions fit in? Historically, a lot of us are successful or reasonably successful, because it was credit unions that helped us to get going especially when the big banks said come back to us in a couple of years when you have a good financial statement. Have you worked with the credit unions at all? I have, personally, had such a negative reaction from the big banks out of Toronto that it is just really sad. They are supposed to be helping specific communities. They set up Aboriginal banking units and they really have not done anything for them.
Can you comment on that, please?
Mr. Ballantyne: As a first comment, I will not step in and talk about my experience with the bank. I will say that I am no longer a banker.
With respect to the credit unions, they are certainly a very interesting model for us. The community-based lending aspect of credit unions is important to the 60 Aboriginal financial institutions that comprise the NACCA network. I cannot speak to what everyone does with the credit unions, but I know there have been discussions and, as I said, the community-based model of the credit unions is very similar to what we see ourselves doing as a network.
The Chairman: With that, I want to thank you, Mr. Ballantyne and Mr. Brant, for appearing before us. You represent bodies that are very important in the scheme and the whole process and movement of Aboriginal people getting into business. I see the list of some of your members. Their titles, investment corporations, trust companies and development corporations throughout the country are the ones that are really helping and promoting Aboriginal people getting into business.
Our Senate committee is undertaking a study to look at this whole phenomenon of movement of Aboriginal people getting into business. It clearly is an exciting undertaking and phenomenon that is happening throughout the country. In looking at it, we have heard from academics, from government and more recently we have had time in British Columbia and Alberta. We plan to travel to the other regions of the countries, Saskatchewan and Manitoba next, then Quebec and Ontario, and eventually we will get to Senator. Buchanan's area in the Maritimes. I am sure you will be there to show us some of the developments that you talked about.
Unfortunately, the political situation is impeding us from continuing our study in the next few weeks and months, but eventually we will get to all the regions of Canada. We will make a report that will be useful for the whole country, government and Aboriginal people, that will focus the successes, and also point out some of the impediments that stand in the way of Aboriginal success in this area.
Thank you very much for your presentation and what have you said to us will help us in our study.
Mr. Ballantyne: Thank you very much. If we can be of any assistance in terms of arranging meetings for the Senate, you have some contact information.
The committee adjourned.