Proceedings of the Standing Senate Committee on
Aboriginal Peoples
Issue 14 - Evidence - Meeting of November 23, 2005
OTTAWA, Wednesday, November 23, 2005
The Standing Senate Committee on Aboriginal Peoples, to which was referred Bill C-54, to provide First Nations with the option of managing and regulating oil and gas exploration and exploitation and of receiving moneys otherwise held for them by Canada, met this day at 6:23 p.m. to give consideration to the bill; and to examine and report on the involvement of Aboriginal communities and businesses in economic development activities in Canada.
Senator Nick G. Sibbeston (Chairman) in the chair.
[English]
The Chairman: Honourable senators, I wish to welcome everyone to the Standing Senate Committee on Aboriginal Peoples. Tonight we have a busy schedule. We will deal first with Bill C-54, which is the First Nations oil and gas bill, and we have, initially, the Honourable Susan Barnes prepared to make a presentation.
The Honourable Susan Barnes, Parliamentary Secretary to the Minister of Indian Affairs and Northern Development and Federal Interlocutor for Métis and Non-Status Indians: Honourable senators, I am very pleased to have this opportunity to address the Standing Senate Committee on Aboriginal Peoples as it reviews Bill C-54, the First Nations oil and gas moneys management act, a First Nations-led initiative, and to be here with Chief Crowfoot, Mr. Standingready, Mr. Manyfingers and their colleagues. I know you look forward to their presentation, so I will be brief.
This bill has two elements. The first deals with the management by the First Nations of the oil and gas riches that lie beneath their lands. This bill will enable any First Nation to assume the complete management and control of all monies derived from any activity on reserve lands that would otherwise be collected and held by Her Majesty pursuant to the Indian Act.
This bill may be useful even for First Nations who are not involved in managing oil and gas development. Communities could access the monies held in their name to support other aspects of governance and broader opportunities for economic development.
[Translation]
Bill C-54 comes at the right moment, since your committee has just studied the issue of aboriginal businesses and communities' involvement in economic development.
During the hearings held last month on the Tsuu T'ina reserve in Alberta, committee members had the opportunity to hear from representatives of the three first nations who took part in the pilot project that resulted from Bill C-54.
The testimony emphasized the overall objective of this new piece of legislation, that is to allow the first nations to promote economic development in their own communities.
[English]
The Blood Tribe, Siksika and White Bear First Nations have all seen exponential growth in the development of oil and gas reserves on their lands. Employment levels in communities have risen and royalties flowing from resource development have helped to fund improvements in physical infrastructure.
The proposed legislation would facilitate the involvement of First Nations in the management and administration of oil and gas resources. Members of First Nations will participate at each stage of development, from exploration to drilling; from extraction to refining; and from delivery to site remediation. The experience acquired through resource development will enable First Nations to capitalize on other opportunities to create jobs and secure brighter futures for their young people.
Besides promoting capacity building, Bill C-54 effectively balances powers with responsibilities. Any First Nation that seeks to avail itself of the additional powers granted under this proposed legislation must first demonstrate an ability to manage and administer oil and gas resources, or their monies, responsibly.
A First Nation must develop and ratify procedures on collection and expenditures of revenues, for instance, and install regimes to manage and regulate gas and oil exploration and exploitation. All processes and regulations must respect all relevant provincial and federal laws, such as those governing environmental assessments. Furthermore, a band council must have accountability and transparency rules in place to prevent conflicts of interest.
I would like to reiterate that Bill C-54 is the result of an initiative led and championed by First Nations. Indeed, First Nations undertook and completed virtually all the leg work involved in getting the proposed legislation to this stage. In addition, they consulted with and gained the support of their memberships even as they launched businesses and secured partnerships with private sector groups.
Bill C-54 is completely optional. It grants powers and assigns responsibilities only to those First Nations who seek them. I fully expect the potential benefits of Bill C-54 will invite more First Nations to develop the capacity needed to qualify for the powers available through this bill.
[Translation]
Honourable senators, Bill C-54 will allow the first nations to ensure the prosperity and survival of their communities. This piece of legislation will give them the necessary tools to realize their full economic potential and will create significant advantages for all Canadians.
[English]
I want to add that I am grateful to the honourable members of this committee for agreeing to give such expeditious consideration to this important bill.
Strater Crowfoot, Chief, Siksika First Nation: Honourable senators, I am the Deputy Chairman of the Indian Taxation Advisory Board. I have been involved with the oil and gas sector for over 20 years and have spent seven years as Executive Director and Chief Executive Officer of Indian Oil and Gas Canada.
This act is about giving our First Nations the skills and tools to achieve greater economic self-reliance. It is a policy direction supported by the Government of Canada.
The pilot First Nation oil and gas initiative represents an important step in the governance continuum. This pilot initiative took over a decade to realize and is a direct response to the request of our three First Nations to Canada in 1994 to create a process for us to be able to take advantage of the value-added opportunities associated with oil and gas development.
It is important for members of this committee to understand that under the current regime, First Nations are seriously limited in what they can do with oil and gas revenue. We cannot invest oil and gas revenue in further developing our own oil and gas sector. This bill will change that. We would be responsible for managing our own affairs. We are ready and up to taking on the task. Our First Nations have developed a strict financial code for the management of moneys from oil and gas and/or held for us by Canada.
First Nations chiefs are here with you today to speak about this proposed legislation and the impact it will have on our communities specifically. However, there are positive impacts on the rest of Canada as well. With the need for fossil fuels on the rise in Canada, First Nation communities may be able to assist in securing supply of this critical resource in the future.
Currently, there are over 250 First Nations with oil and gas potential and approximately 55 with active petroleum leases or permits. As this industry grows, it will continue to be a powerful engine for generating economic development opportunities on reserve by providing a solid and sustainable foundation for other major industry or commercial enterprises.
Through this proposed legislation, we will have jurisdiction and law-making authority to make all decisions relating to management of oil and gas resources and related revenues generated within our lands. This bill recognizes our inherent right to make laws in regard to resources on our lands. In other words, we will have sectoral self-governance over the resource.
We will also have the responsibility of ensuring environmental standards meet or exceed federal and provincial regulations. The bill will establish a comprehensive First Nation regime relating to the regulation of oil and gas resources as well as provide us with the option of exercising full authority over the management of all monies held by Canada in the Consolidated Revenue Fund for each First Nation.
Our involvement in this process with Indian Affairs and Indian Oil and Gas Canada has been significant. The fundamentals of the bill have been established by us and will be taken to our membership in the near future for ratification by way of referendum in each of our communities.
It is important to note that this proposed legislation is optional. It will not preclude any other First Nation from using this model or negotiating a different arrangement with Canada, nor will it impact any existing arrangements that may be in effect.
One of our guiding principles in the development of this bill was that it would not be a generic and a one-size-fits-all approach. It will be applied to all First Nations that have shown an interest. We are confident this has been achieved.
We need your support for this bill and our communities. Even more importantly, it is a step in the right direction towards First Nations self-reliance and economic independence.
Kirby Manyfingers, Councillor, Blood Tribe: I am pleased to be here with you today. I am a member of council of the Blood Tribe.
We are very pleased with the introduction of the First Nations oil and gas moneys management act. We are especially pleased because the process leading up to this bill has been First Nation led, and as such, we are largely responsible for the contents and design. This is an important point.
This project has taken over a decade to realize and is a direct response to our request to Canada in 1994 to put in place a process that would enable us to take advantage of the many value-added opportunities associated with oil and gas development.
The results of the past 10 years have been impressive. We have seen a sharp increase in oil and gas activities on our lands. We have seen millions of dollars in additional revenues, and we have also seen our people develop the skills required to control and manage the resources for ourselves. Most importantly, as a result of the increased economic activity and job creation in our communities, there has been an improved quality of life for our people.
I will say a few words about what increased activity in oil and gas has meant for my tribe and our community. Since the launch of the pilot project in 1995, we have seen the following developments: Prior to 1995 we had only five gas wells on the reserve. Through the First Nations pilot project and promotion by the Blood Tribe, oil and gas activity has increased to 137 producing oil and gas wells today.
To put this in the context of money value, 10 years ago the tribe was receiving in the neighbourhood of $1 million annually from oil and gas revenues. This year we are expecting to exceed $10 million.
These royalties, along with other revenues, are currently held in trust in the CRF. The monies provision of Bill C-54 will allow us to provide true economic and social benefits to the members of our communities. These are impressive statistics, but more impressive is what this increased revenue has done for our community.
Increased activity has allowed the tribe to invest in our community to increase awareness of the numerous opportunities that result from oil and gas activities and revenues.
The tribe has focused on encouraging our young people to take advantage of the many careers available in the sector. This is being accomplished in several ways, beginning with our elementary students through science fairs, financial incentives for academic achievement for high school students and scholarships for post-secondary students pursuing science-related careers.
From the perspective of the Blood Tribe, the pilot initiative has been a success. Our continued success is not guaranteed. That hinges on the passage of this bill. Without this bill, we will continue to rely on outside sources to invest in our oil and gas sector. The First Nations oil and gas moneys management act allows us to invest in our oil and gas sector and to reap the rewards of that investment.
In closing, if you want First Nations people to achieve economic self-reliance, you should lend your support to this bill.
Bruce Standingready, White Bear First Nations: Good evening, honourable senators. I am a former councillor of the White Bear First Nations. I extend to you the chief's apologies for not being able to be present tonight. There are fires at home that he must take care of tonight. This is an unscheduled event; therefore, he has taken the councillors with him as well.
I have been with the pilot project for the full 10 years. I was there from the start as a technician, and I would like to say that I am in complete agreement with both Chief Strater Crowfoot and Councillor Kirby Manyfingers. There is a lot I can tell you about this, but they have summed it up already.
We have had dramatic increases in oil exploration and development on White Bear Reserve since the introduction of the pilot project, and the numbers have been great in the last 10 years. We have gone from four older wells that were depleting to over 107 wells drilled. Today, over 50 per cent of those wells are producing oil.
With that, I want to inform you that Chief Allan Maxie sends word that we are hoping the passage of this bill will move quickly.
In closing, on behalf of myself and my colleagues, we hope that the members of the Senate will realize the importance of this bill to our First Nations. It is an important first step towards greater economic self-reliance, and it will support our nations as we design and implement ways to stimulate economic growth in our communities.
Senator St. Germain: I have one question, and it is directed to Mr. Beynon. Senator Watt is present, and he is most likely in a better position to pursue this.
The matter of the non-derogation clause in this particular bill has been a topic of controversy, so possibly we could have your view of it in a nutshell.
Andrew Beynon, General Counsel/Manager, Department of Justice Canada: The formulation of the non-derogation clause is found in paragraph 3(e) of the proposed legislation. It specifies that nothing will derogate from the protection of Aboriginal and treaty rights, which is found in section 35 of the Constitution Act, 1982. This particular formulation of the non-derogation clause has been used in previous legislation.
One of the challenges with the non-derogation clauses is that a multiplicity of formulations has been used over the years in different statutes. In this particular case, the formulation indicates that nothing abrogates or derogates from the protection of those rights in the Constitution Act, 1982. This would not alter the normal rules for interpretation of the Constitution and of federal legislation as they interact with Aboriginal and treaty rights.
Mr. Crowfoot: We have been around the table several times on this non-derogation clause, and we have concluded that our three First Nations are satisfied with it. It protects our interests at this time. We are comfortable with it, and we want to get this process done as quickly as possible.
Senator Peterson: I am new to the committee, so I would like some clarification. You indicated, Chief Crowfoot, you are seriously limited in what you can do with your oil and gas revenue. What does that mean?
Mr. Crowfoot: The system we have today is that the money is collected from our resources, oil and gas, and is deposited into the hands of IOGC and then into our capital trust accounts here in Ottawa. First Nations have to go through a lengthy process to access this money. It is for certain purposes, according to the Indian Act. It does not allow us the opportunity to invest some of our oil and gas revenues in our own activities. We have a lot of activity on our reserve, about 500 wells, and we are limited in accessing capital to further develop that and participate as partners in the oil and gas sector. Through a referendum vote of our membership under this bill, we are hoping to be able to use some of our money for investment purposes in our own oil and gas sector.
Senator Peterson: It is your money.
Chief Crowfoot: Yes, it is our money.
Senator Peterson: You say it is held in trust. What interest do you get?
Mr. Crowfoot: It is the average 10-year bond rate paid out by the Government of Canada.
Senator Christensen: Clause 4 of the bill does not apply to reserve lands in the Yukon. I would like you to enlarge on that. I am presuming it is because of the Umbrella Final Agreement, but we still have three First Nations that are not signatories to that at the moment and have not ratified their claims.
Mr. Beynon: Your suspicion is right. It is partly because of the land claims arrangements and self-government arrangements in the Yukon and anticipated further development of those. This provision limits the application of the bill in the Yukon, Northwest Territories and Nunavut. Another reason for that, apart from the particular arrangements that apply north of 60, is that there is also specialized federal legislation in respect of oil and gas resources north of 60 and it is anticipated that development would occur in accordance with that legislation rather than the regime provided for here.
Senator Christensen: It does not specify Northwest Territories and Nunavut.
Mr. Beynon: That is correct, but the reference in clause 4 is to the Yukon or the frontier lands within the meaning of the Canada Petroleum Resources Act, and its definition achieves that.
Senator Christensen: Even though those three First Nations have not and may not ratify and, I believe, are currently challenging the Umbrella Final Agreement in court?
Mr. Beynon: I am not sure if there is a legal challenge in court.
Senator Christensen: I believe it is quite recent.
Mr. Beynon: This proposed legislation would not have application. They would have to pursue it through self- government or perhaps pursuant to the other federal legislation that applies north of 60.
Senator Christensen: My other question might be self-evident, but I would like it clarified. I am familiar with the Umbrella Final Agreement. Where votes are taken of all band members on the band list, there is always a requirement in the legislation that all band members have to receive written notice. I note here that 25 per cent of all eligible voters have to vote, so I assume from that that they would have to be notified.
Mr. Beynon: There will be regulations provided under this proposed legislation that would deal, in part, with the voting procedures. I will double-check the provisions, but I believe that notice is one of the requirements to be provided for in the regulations.
Mr. Crowfoot: What is laid out in the proposed legislation is a minimum for us as First Nations. We are looking for a lot of input from our membership, ensuring they have been apprised of what we have been doing over the years, but in regards to the vote, we are looking for a higher standard for ratification.
Senator Christensen: It does say that the majority of those who vote have to be in favour, and also the vote is not affirmative unless more than 25 per cent of all eligible voters vote.
I have another question that fits more into our study, and perhaps you could enlarge on it. You said the pilot project has been running for 10 years. Over those years, what have you seen in terms of the development of young persons graduating from high school, going into post-secondary education, taking trades, et cetera? How has that been affected and been of benefit to your bands?
Mr. Manyfingers: I believe we have seen new opportunities for our young people. Until recently, most of our post- secondary students pursued the areas of social science. We have seven lawyers. We are pretty much self-sufficient in teachers, social workers and so on. However, our community was lacking in students involved in the hard sciences. As a result of this process, we now have students working directly with the oil companies on the reserve. A number of our members are also working with Indian Oil and Gas and in downtown Calgary, as well as starting to lean toward some of the hard science fields like geology and engineering. That is being promoted. We are fairly proud of our success rate with our young people, but this has opened up a new world that our students were not even looking at 10 years ago.
Senator Christensen: Do you have any idea what percentage of all the persons presently working with the oil and gas companies on your lands are First Nations?
Mr. Crowfoot: In our case, at Siksika, all the people working in our office are from our First Nation, and there are eight of them.
Senator Christensen: In the oil and gas industry?
Mr. Crowfoot: In our office working on this project specifically. We have other people involved in the oil and gas sector in terms of building sites, servicing and so forth.
Mr. Standingready: I am proud to say that 100 per cent of our office staff are graduates of the White Bear education complex. It is 100 per cent White Bear graduates in the field.
As far as the more hands-on construction of sites and so forth goes, we are probably around the 50 per cent range, and some may not be graduates. It seems to be more of a working man's trade, driving the cats. With the trades and the seismic activities, we have a good 50 per cent ratio. In the office, we have 100 per cent of graduates coming out of the schools.
Senator Christensen: Have you seen an increase in band members getting involved since the project started?
Mr. Standingready: There was no work on the band lands before that.
Mr. Manyfingers: We are starting to see a lot of activity off reserve. In our case, we have an interest in a rig, and rigs work primarily up North.
As I mentioned earlier, a number of our people are working in downtown Calgary with the big companies. That has all been a spinoff of the initiative. We have talked about our oil and gas entities, which are 100 per cent run by our members. We also have entrepreneurs who are contracting directly with oil and gas companies. We have people maintaining the gathering systems and so on.
It is tough to quantify the percentage because there are indirect and direct jobs out there.
Ms. Barnes: I want to add one more point on the regulations in response to the senator's question, just to clarify something.
Mr. Beynon: Regarding the question on the voting regulations, I draw your attention to clause 62(a). This provision sets out the regulation-making power under the bill, and there is a provision for dealing with votes. There is a series of matters dealing with voting, and 62(a)(ii) deals, in part, with the information that must be provided to First Nation members and other persons before a vote and the period during which it must be provided.
Senator St. Germain: I hope we are successful in passing this bill because I believe it is important for the three nations that are here. With that, I have to take my leave.
Senator Zimmer: Before Senator St. Germain gets out the door, I want to make this comment. I appreciated his support on the bill yesterday. It was very important, and I appreciate the support he gave us, so have a happy trip.
I did have these three nations in my office this afternoon and had an opportunity to talk with them then and over the last couple of days. I have had the opportunity to have the department and the officials answer all my questions.
However, I do wish to add that I was honoured and humbled to present this bill yesterday and look forward to passing it. I do want to thank Ms. Susan Barnes, a member of Parliament, who was extremely helpful. She spent hours with me to ensure I was fully briefed, answered all my questions and has been a champion of this cause for a long time. I wish to commend her for her diligent work in making sure this passes.
The Chairman: I will say thank you to the witnesses. We have had an opportunity to discuss issues. I do not want to give the public the impression that our Senate committee is not dealing thoroughly with this matter. Over the past weeks and months, we have had opportunities to meet with officials and the various chiefs involved in this. I had one meeting with representatives in Calgary this spring, and I have had the opportunity to read the material and the all the detail provided over the course of the last few weeks and months. Therefore, I am satisfied that our committee has dealt with the bill thoroughly.
Are we now prepared as a committee to deal with this bill clause by clause?
Hon. Senators: Agreed.
Senator Watt: Just to clarify certain things, the issue of the non-derogation clause has been around for quite some time, as most people are aware, especially those at the Department of Justice, Indian Affairs and so on.
I am hearing you say loudly that you would like to see this bill passed and you do not want anyone to put any hurdles in the way. You would like to have it done smoothly and not include anything that might put some doubts into it, whether it is passed or not.
That is not what I am here for. I support wholeheartedly the people who will benefit from this bill, but I have been having some problems with the non-derogation issue, which goes back to, I believe, 1996. There are approximately six clauses with respect legislation that has been passed that have been subject to interpretation, and which need to be revisited at some point down the road. Maybe the best way of dealing with it at this point is to allow this bill to go through, because I do feel that I am close enough to you people — especially having a close friend that will benefit from this bill — that I cannot and will not make an attempt to deal with it other than by supporting it.
I would like to say that the Standing Senate Committee on Legal and Constitutional Affairs has received a mandate from the Senate to examine this particular argument that I have been putting forward at every opportunity. That is part of my job. I am here to protect the Aboriginal people, if I can. My job is to say certain things that the various departments or the Aboriginal people may not necessarily like.
Let me get into the issue of what troubles me. I had a draft of an amendment that would eliminate the protection provided for because those words that were added were very new. It does not reflect the Constitution under section 25. That is all I am doing. It does not take anything away. At the same time, I will say again that this not the place to try to make the amendments if you are in agreement with me that this is a matter that we have to revisit down the road. It will not have an impact on you as a beneficiary down the road, but we need to clarify this matter because we cannot let it remain as a subject of interpretation. Otherwise, you might think that one day you have the rights, but they become not absolute rights. How will the courts deal with that? That is my concern.
It is not my concern today because you will be the beneficiaries. When they start interpreting things down the road, a possible dilution could take place. That is what I am looking at. Please understand that I am not trying to disturb anything brought forward now. If you are in agreement with it as a beneficiary, can we put into the observations that the matter needs to be looked at? We need some clearances from the Standing Senate Committee on Legal and Constitutional Affairs on that.
If the departments have no problem with that, I would be prepared to leave it at that.
The Chairman: Did anyone want to respond to that?
Ms. Barnes: I just want to say that I understand the senator's thoughts. We have had discussions on this previous to this bill, and I think that it would be helpful. We understand that the Senate committee has the mandate to study this and has, I know, been actively engaged in studies on economic development. I would look forward to that discussion and I appreciate the input.
Sometimes I think that it is appropriate that there are no non-derogation clauses, but I know many First Nations would like the addition. We have the Sparrow case and we also know that, in reality, we have no clear legal interpretation by the courts. I think that the senator is correct in saying that we should have this discussion at another time. In the meantime, I know there are other bills now referred to the Senate that need your attention, so I am grateful to the committee for dealing with this critical matter in this very professional manner.
Senator Christensen: I would just like to add that this is something that our First Nations senators have been working on for two years. There was a promise a couple of years ago that this matter would be rectified, and that an acceptable non-derogation clause would be developed that could be included in all legislation. That was two years ago and they are still waiting.
I think that an observation would certainly be in order so that we keep it on the front page and people understand that it has to be dealt with.
Senator Watt: It would have been better, in my interpretation of what it means, if there was no non-derogation clause at all. Nevertheless, it is in there and we will deal with it. The beneficiaries of this bill are in agreement with it; then let us deal with it through an observation.
The Chairman: With that, are senators prepared to consider this bill clause by clause?
If so, then I will just state that the normal procedure is to postpone consideration of the long title, the preamble and the short title contained in clause 1. Shall the committee proceed in the normal way?
Hon. Senators: Agreed.
The Chairman: Shall clauses 2 to 5 carry?
Hon. Senators: Agreed.
The Chairman: Shall clauses 6 to 9 carry?
Hon. Senators: Agreed.
The Chairman: Shall clauses 10 to 16 carry?
Hon. Senators: Agreed.
The Chairman: Shall clauses 17 to 21 carry?
Hon. Senators: Agreed.
The Chairman: Shall clauses 22 to 33 carry?
Hon. Senators: Agreed.
The Chairman: Shall clauses 34 to 53 carry?
Hon. Senators: Agreed.
The Chairman: Shall clauses 54 to 61 carry?
Hon, Senators: Agreed.
The Chairman: Shall clauses 62 to 64 carry?
Hon. Senators: Agreed.
The Chairman: Shall schedule 1 carry?
Hon. Senators: Agreed.
The Chairman: Shall schedule 2 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 1, which contains the short title, carry?
Hon. Senators: Agreed.
The Chairman: Shall the preamble carry?
Hon. Senators: Agreed.
The Chairman: Shall the title carry?
Hon. Senators: Agreed.
The Chairman: Is it agreed, senators, that this bill be adopted without amendment?
Hon. Senators: Agreed.
The Chairman: Is it agreed that I report this bill to the Senate?
Hon. Senators: Agreed.
Senator Watt: With observations.
The Chairman: On this point, Senator Watt, you are the one proposing the observation. Do you have that available now?
Senator Watt: Not at this point.
The Chairman: Then are we in a position where we can have these observations dealt with tomorrow, whenever the bill is reported?
Senator Christensen: It should be forwarded from here when it is reported into the Senate, with observations.
The Chairman: We are in a situation where the written observations are not prepared. Do we just simply, at this stage, agree to report the bill and perhaps, Senator Watt, you can deal with the matter of the observations or comments on third reading?
If not, are you in a position to quickly prepare these observations in the next few minutes so that we can have them available?
Senator Christensen: Perhaps it could be done before we adjourn tonight?
The Chairman: Are you in a position to prepare these observations quickly and make them available later this evening?
Senator Watt: I do not have legal advice at my disposal at this time, but I can certainly try my best, yes.
The Chairman: With that then, we will —
Senator Watt: There is a cancellation required too, I believe.
The Chairman: We are now in a position where we have dealt with the bill, except for the observations to be attached. Ms. Barnes?
Ms. Barnes: I just wanted to make a clarification. I was under the understanding that the Senate already had the mandate to do this study. I do not know your procedures well enough to know whether the addition of an observation in any way affects the possibility of the carriage of this bill. That is in your hands; it is not in our hands to do that. I am just saying that we would be happy to have input into your study, but it is not within our control; it is in your hands.
The Chairman: Thank you for that. We will just leave this matter for now and wait for the observations to be written up, translated and provided to the members here. Before the evening is over, we will come back to that. It will be the last remaining matter on this bill.
I want to thank all of you for your presentations here tonight.
The committee suspended.
The committee resumed.
The Chairman: Honourable senators, we have the wording of the observation about which Senator Watt was concerned. It is wording with which Senator Watt agrees. The observation would read as follows:
Over the last number of years, a variety of non-derogation clauses has appeared in federal legislation. This has created uncertainty and concerns for Aboriginal people that need to be resolved. On the matter of non-derogation, the committee strongly recommends that a thorough study of non-derogations clauses be completed by the Senate Standing Committee on Legal and Constitutional Affairs as soon as possible, but no later than June 30, 2006.
Is it agreed that I report this bill to the Senate with the observation that I just read?
Hon. Senators: Agreed.
The Chairman: With that, the bill is concluded. I will report the same to the Senate tomorrow.
Thank you for your attendance and work on this matter.
We will now move into our study concerning the involvement of Aboriginal communities and businesses in economic development in Canada. This is a study that we started last fall. We have been going across the country.
A number of weeks ago we were in B.C. and Alberta. This ongoing study is examining the phenomenon of Aboriginal involvement in business. The committee will prepare a report of its findings. We are fortunate tonight to have representatives from the Arctic. When I see Bill Lyall here in Ottawa, it reminds me that the Arctic is not so far away. I welcome our witnesses from the North: Mary Nirlungayuk, Carol Hunter, Lou Hammond Ketilson and Bill Lyall.
Carol Hunter, Executive Director, Canadian Co-operative Association: Thank you and good evening. Honourable senators, we are pleased to bring you information on co-operatives as one of the business models that can help Aboriginal communities develop their economies. We hope that our presentation will be useful to your study on Aboriginal economic development. We will use our time this evening to talk about co-ops in Aboriginal communities and their benefits. We will tell you about the success story of Arctic Co-ops Limited and the co-op network in the Northwest Territories and Nunavut. We will focus on some of areas of your study, the key success factors and barriers for Aboriginal co-ops, as well as what is needed to enable more communities to use the co-op model.
We have five recommendations involving increased promotion of cooperatives, better access to development resources, dedicated capital resources, capacity building through education and training, and the need for co-op networks to provide ongoing support and the pooling of resources. Before we go much further, I would like to briefly summarize what a cooperative is.
A cooperative is an organization owned by the members who use its services. Cooperatives are driven by both economic and social concerns. They are community-based organizations that care not only about the bottom line of their businesses, but also about the needs of their members and the quality of life in their communities. Cooperatives differ from other businesses in three key ways: First, co-ops have a different purpose. The primary purpose of cooperatives is to meet the common needs of their members, whereas the primary purpose of most investor-owned businesses is to maximize profit for shareholders. Second, co-ops have a different control structure. Cooperatives use the one-member, one-vote system, not the one-vote-per-share system used by most businesses. This helps the cooperative serve the common need rather than the individual need and is a way to ensure that people, not capital, control the organization. Third is a different allocation of profit. Cooperatives share profits among their member owners on the basis of how much they use the co-op, not on the basis of how many shares they hold. Cooperatives also tend to invest their profits in improving service to members and promoting the well-being of their communities. Cooperatives recognize the importance of people and communities defining their own needs and working together to meet those needs. Co-ops are about collective entrepreneurship. They are a powerful and democratic way to put decision making into the hands of people, and they are an effective way to empower Aboriginal people and their communities wherever they live. Canada has more than 9,200 cooperatives and credit unions that provide products and services to more than 10 million Canadians.
I would like to introduce you to our panel of people with expertise and knowledge of Aboriginal cooperatives. Mary Nirlungayuk is a member of the board of the Canadian Co-operative Association. She works for Arctic Co-operatives as its corporate secretary and is based in Winnipeg. Mary started working in her local co-op in the community of Kugaaruk, Nunavut. Bill Lyall is the President of Arctic Co-operatives Limited and the Arctic Co-operative Development Fund. He has come all the way from Cambridge Bay to be with you this evening. Bill was the manager of the local Ikaluktutiak Co-op in Cambridge Bay, and under his leadership, it has become one of the largest cooperatives in the North. He was made a member of the Order of Canada in August 2003 for his contribution to the expansion of economic development in northern communities.
Finally, Dr. Lou Hammond Ketilson is the Director of the Centre for the Study of Co-operatives at the University of Saskatchewan. Some of the information she will give you today comes from a study she co-authored on Aboriginal co-ops in Canada. This study was undertaken in partnership with the federal government, the Assembly of First Nations and the Canadian Co-operative Association. It is my pleasure to turn you over to Mary.
Mary Nirlungayuk, Board Member, Canadian Co-operative Association: Thank you, Carol. Good evening, honourable senators. I would like to speak to you tonight about how cooperatives have benefited Aboriginal communities across Canada. There are about 133 with a predominantly Aboriginal membership. The largest number can be found across the northern region, in the Arctic, and mostly among the Inuit, Dene and Metis. In a few moments, Mr. Lyall will provide you with a brief overview of the co-op system in the Northwest Territories and Nunavut.
In Northern Quebec, a similar co-op system exists. The FCNQ, or la Fédération des coopératives du Nouveau Québec, provides a wide range of support. Aboriginal co-ops serve many needs, the most common being the provision of food and supplies in remote communities. They are important as marketers of arts and crafts, wild rice, forest products and fish. The cooperative business model has been very successful in the social and economic development of Aboriginal people. There are success stories to be found within the remote communities, reserves, and large urban centres. The cooperative approach uses the value of strength to build capacity among our people. Co-ops provide opportunities in areas where few others exist. Cooperatives contribute to the economics of their communities. Co-ops are consistent with Aboriginal values and traditions. Co-ops have significant impact and are businesses based on real needs. The co-op model has proven to be effective for Aboriginal people.
There are many success stories of Aboriginal-owned cooperative businesses. In my home community of Kugaaruk the co-op system has its own retail store, hotel, cable network, and property rentals. I can go on with more examples, but these are a few that I wanted to mention. They also have a pension plan for people over 55. These businesses have provided employment, education and training. They are highly successful because they are supported by the people of the community. The co-op also gives back to the community. In Winnipeg's inner city, the grocery store called Neechi Foods Co-operative has been in business since 1990. Despite the highly competitive urban grocery retail store industry, the co-op has grown. It has consistently provided employment with decent wages to people who have few opportunities. It provides training and work experiences to its employees. In turn, the workers have a strong sense of ownership and responsibility. Neechi Foods has demonstrated a commitment to positive social development through the healthy food program for customers, schools, youth centres and clinics. It is truly democratic in its decision-making process.
In Quebec, there is a strong history of the cooperative in the form of the caisse or credit union. In 1987 the Caisse populaire Kahnawake was formed. It has had a profound impact on the Kahnawake Reserve at a time when the Mohawk Nation was seeking to revive its culture and regain control of its economy. The caisse populaire and Neechi Foods are two examples that demonstrate how cooperative and Aboriginal values work together. Many Aboriginal cooperatives provide services such as co-op housing, harvesting fish and other traditional food, forestry, art marketing, and hotels; and the list is growing. We believe that the cooperative business model is ideal for Aboriginal communities wishing to achieve economic success and positive social development. I will hand it over to Mr. Lyall.
Bill Lyall, President of the Board of Directors, Arctic Co-operatives Limited: Honourable senators, good evening and thank you for the opportunity to appear before your committee. I will be providing you with a brief overview of the cooperative movement in the Northwest Territories and Nunavut regions of the Canadian Arctic. Cooperatives were one of the very first locally owned and controlled enterprises set up in the North by ordinary people for ordinary people. The first community-owned cooperatives in the Arctic were incorporated in 1959. In the 1960s and 1970s, many other communities developed their own local co-ops. The co-op model of working together was well received in our community because it was considered our traditional way of life. Early on, cooperative leaders began to explore ways to expand this new economic strength. If we gain economic strength by pooling our resources and working together at a local level, what could we accomplish if we pooled our resources on a regional and territorial basis?
In 1965, co-ops in the Eastern Arctic, in partnership with the federal government, incorporated an organization to market art. A few years later, the cooperatives in what today is the Northwest Territories and Nunavut set up a cooperative service federation to pool our buying power and to develop a wide range of businesses and technical and management support services.
Over the years these organizations were restructured and are now called Arctic Co-operatives Limited. Today our co-op network is made up of three parts: One, local co-ops; two, our service federation, the Arctic Co-operatives Limited; and three, our financial arm, Arctic Co-op Development Fund.
Local co-ops: There are 33 locally owned and controlled multipurpose co-op businesses in our network. These cooperatives provide a wide range of services to our communities, including: one, retail services; two, hotels; three, cable television; four, fuel distribution; art marketing; commercial and residential property rental.
Our 33 local co-ops are owned and controlled by over 19,000 individual owners, residents of the community in which the cooperative is located.
Last year the local co-ops had a combined business volume of $128 million. They have built up community assets with a total value of $112 million. Co-op members have equity in those co-ops of $40 million. Local co-ops employ more than 800 people and last year contributed over $19 million to the economy of the North through wages and benefits.
At our service federation level, our local co-ops own and control our central service co-operative, Arctic Co- operatives Limited. They provide services to the co-ops in accounting, education and training, information technology, management, marketing, and the purchase and transportation of merchandise for co-op retail stores.
In 2004, Arctic Co-operatives had a business volume of $93 million. We have a strong financial base, with assets of $31 million, and the member co-ops have built up equity in these assets of $22 million.
Our financial arm, Arctic Co-operative Development Fund, was set up in 1986 when we partnered with the federal and Northwest Territories governments under the Native Economic Development Program, at that time called NEDP.
Today the organizations that were set up under that program are all called Aboriginal capital corporations. Our financial arm provides financing to our member cooperatives to help them expand, modernize and operate the local businesses.
Arctic Co-op Development Fund is an excellent example of a government program that supports Aboriginal businesses but does not interfere with the day-to-day operations. We have provided more than $300 million in financing to our local co-ops to help build our businesses and our communities.
Honourable senators, ordinary people in our communities across the Arctic have accomplished some extraordinary things. We live in one of the harshest environments in the world. We are isolated from most of Canada. We have had to adapt to great social change in our way of life in a short time. Despite our natural obstacles, we have worked together and built an impressive network of community-owned and controlled economic and social enterprises that are a model for Aboriginal development in Canada.
Through our cooperatives, we have laid the foundation for the future generations of Inuit, Dene and the Metis to participate in a meaningful way in the economic and social affairs of our communities, our territories and our country.
Lou Hammond Ketilson, Director, Centre for the Study of Co-operatives, University of Saskatchewan: Thank you. I will close by providing you with an overview of the factors contributing to the success of Aboriginal cooperative development today, the challenges that are slowing the growth of more Aboriginal cooperatives, and our recommendations as to what is needed to expand Aboriginal co-op development even further.
First, experience has shown that Aboriginal cooperatives are successfully started and sustained when there are a number of factors present. The first one is a need. Cooperatives grow out of the needs of the community. They are most effective and endure the longest when they are community based and not a top-down strategy.
Second, cooperatives are successfully created when there is an active promotion of cooperatives by a variety of agents, whether it is co-op development officers or other individuals who are advocates of the cooperative model, and programs to support and encourage others in pursuing this model.
Co-ops are successful when there are leaders present within the community who are committed to the model, knowledgeable about its potential and have access to the resources needed in order to pursue establishing one.
Cooperatives are successfully created when there is supportive government policy to enable frameworks that make cooperative development possible. They are successful when there is dedicated capital available specifically for Aboriginal co-op start-ups and to support working capital and expansion needs; and finally, when there is support from external agents, whether they are federations or sympathetic developers within government or within the cooperative sector — those who champion the model.
All of these factors, when present, contribute to the successful creation of Aboriginal cooperatives. You have just heard a little about some of our great success stories.
The challenges to greater Aboriginal co-op development include the following: Probably the one we are most aware of is a general lack of awareness and understanding of the cooperative model. What is a cooperative? How do they work? How do they differ from other businesses and what kind of commitment is involved?
Aboriginal development corporations play a central role in controlling decisions on Aboriginal community development. These corporations have been supported as a primary mechanism to dispense and manage federal transfers and settlement of land claims and self-government negotiations.
As non-profit development agencies, they are active in supporting new Aboriginal business and economic ventures. They decide what types of investments and business models to pursue and tend to prefer the collective approach over individual initiative. Yet the cooperative model is not being promoted.
The development corporations play a crucial role in the potential development of cooperative enterprises, but their views regarding the appropriateness of the model are not well known.
By and large, the co-op model is not coming up as an option for Aboriginal economic development or reserve initiatives. Typically, cooperative government units do not deal directly with the Aboriginal communities, and Aboriginal policy units are not familiar with the cooperative model.
Finally, economic development leaders and entrepreneurs within Aboriginal communities are equally unaware of cooperatives as a form of enterprise.
A second challenge is the complicated political and policy environment that acts as a general barrier to economic and community development in all provinces and territories, although in different ways, depending on provincial and territorial context.
These barriers may help explain the mixed success rate and low take-up of the co-op model over the past few years. Access to capital and programs varies across the country due to policy and program differences. Developers working to establish co-ops are often frustrated by what appear to be fragmented programs, with no one program offering sufficient funds to get the co-op up and running.
The dual goals of cooperatives, economic and social, mean that developers are often directed from one program to another because existing programs serve only one rather than both.
On reserve, development is both helped and constrained by the requirements of the Indian Act. Aboriginal cooperatives need alternative sources of financing because there is limited access to traditional sources of capital.
Co-op development funding programs sometimes impose traditional models of cooperatives on the very different world of a reserve setting. There is sometimes confusion regarding under which legislation, federal or provincial, to incorporate and what form of cooperative enterprise should be chosen. These frustrations may lead even the most committed Aboriginal co-op developer to look to a different model.
Therefore, what is needed to further the development of the cooperative model, a model which, as you have heard, has demonstrated its cultural and long-term sustainability and significant business success in our northern communities?
We have some recommendations for you. Government resources are required in the following areas to enable more Aboriginal communities to use the co-op model: Increased promotion of the cooperative model is needed. Aboriginal people need information about how co-ops have worked in other Aboriginal communities and what is involved in starting new co-ops. This can be provided by economic development officers, CED organizations, government officials and the co-op sector. However, outreach and active promotion of the model are necessary.
Second, access to culturally appropriate co-op development resources is needed. All new co-op groups require assistance with planning and development. Aboriginal groups need access to experienced co-op and business developers who can work with them through all stages of development. Aboriginal co-ops need access to existing federal government programs, as well as dedicated funds within the advisory services component of the federal co-op development initiative and the new social economy program.
Third, there is a need for dedicated capital. Existing Aboriginal-owned and operated loan funds, such as the Arctic Co-operative Development Fund, and community-based financial institutions demonstrate how co-op financial models can be directed toward community-focused economic development. Aboriginal co-ops in other parts of Canada need dedicated capital to borrow for start-ups, working capital and expansion. This capital should be controlled by the co-op sector in partnership with Aboriginal organizations.
The fourth point concerns capacity building through education and training. Employees and board members need continuous training, and it has to be funded. Cooperatives, as with any business organization, require leaders and decision makers well versed in basic business acumen. In addition, co-ops require leaders and decision makers who are well trained in the requirements of working within a democratic, member-driven organization.
My final point has to do with funding to support cooperative networks. One of the principles of cooperatives is working together with other co-ops. Aboriginal co-ops need to get together with others in their sector or region to develop needed services and supports such as joint marketing, management services or financial expertise. Co-op federations can play a major role in providing the critical after-care essential to secure long-term business and cooperative success.
We thank you very much for hearing our presentation this evening. We appreciate the opportunity to profile Aboriginal cooperatives as a key part of overall Aboriginal economic development.
The Chairman: Thank you. I am aware that the Hudson's Bay Company opened the first stores in many of the Arctic communities. Eventually, the co-op came on the scene. I know Mr. Lyall has been involved for decades in that Arctic co-op movement in the North.
I would ask Mr. Lyall for his opinion on the future of co-ops in the North among the Inuit people. Is it good? Are you threatened in any way?
Mr. Lyall: I think the future of the cooperative movement in the Arctic is very strong, which is one of the basic reasons most of the co-ops are successful. There is a story to tell about the time that the federation was set up, in 1972; 22 co-ops were involved in that. Today, out of those 22, 20 of them still exist. The success rate of small-business start- ups in the North is 80 per cent. Down south it is the reverse, with only a 20 per cent success rate.
One of the biggest reasons for the success is that they belong to the people. The people use them the way they used to use the land in our country, providing for each of the little communities. We were called nomadic people in those days. We did not stay in one settlement; we always moved to where the resources were.
When we were forced to move into a community, it only stood to reason that we would try to see what we could do with our lives when we were all together. For that simple reason, people began to wonder whether they could help themselves in a situation like that and try to succeed.
As to whether or not they will continue to be successful, that is our hope. For the last 20 years, many people have supported the local cooperatives.
One of the other reasons for their continued success, as Ms. Hammond Ketilson told you, is that their earnings go back to their members.
Two weeks ago we had our annual meeting in Cambridge Bay. The people there received in the neighbourhood of $309,000 extra to spend for the Christmas season.
Hopefully, that answers your question.
Although the Hudson's Bay Company was the first organization there, it sent our furs out of the communities, along with the money. With the co-op system, it stays there. That dollar takes a little better than one turn in the community. Anything that came in to the Hudson's Bay Company went to England, Detroit, Toronto or wherever. In our case, it stays in the community.
The Chairman: I certainly have respect for the co-op movement. I am familiar with it. I can see that it is culturally appropriate to the Inuit people, the Dene people in the North, where there is a sharing of efforts, resources and, eventually, the profits, as you just said.
In many cases, this movement is the Aboriginal people's first entry into this entire unknown world of business. Has that movement resulted in any entrepreneurs going on to start their own businesses? Does the co-op encourage that?
Mr. Lyall: When the cooperative movement began in the North, it created many of the leaders in our communities today. Some are in the rest of Canada, Nunavut or the Northwest Territories. Most of our leaders today started out either going through cooperative college as assistant managers, or even as janitors or stock boys in retail stores or as oil truck drivers. In that regard I could name John Ningark, James Eetoolook and Jack Anawak. I could name many people who started out at the cooperative movement level. They are leaders of our people today.
I know that our own store in Cambridge Bay is the best. After 4 p.m., when the kids are out of school, our staff turns over completely. We have our school kids come in to do the job that adults were doing before. They are there until closing.
You asked if we have seen any people start their own businesses. Yes, we have. Many people who worked for the co- op before, who went through the system from, say, sweeping the floors to becoming an assistant manager, or manager, getting up to the level they wanted to be at, then start their own business.
The Chairman: Apart from the co-op movement, other significant developments in the North in the last few decades include the establishment of Nunavut and the settlement of claims for the Nunavut people, the Inuvialuit, and so forth. What has been the relationship among the co-ops, government and land claim bodies? Have the co-ops been supported by these new governments and land claim organizations that have come into existence in the last few decades?
Mr. Lyall: When land claims negotiations started out in the early 1970s, we were part of the negotiating committee with the other native organizations that existed at the time. As time went on, the co-op movement was deemed not to be Aboriginal owned because of our membership structures, so we were turned away and eventually had no representation at the negotiating table.
I would not say that support from our land claim organizations today is nonexistent, but we have no monetary support from them, although we do serve the same people. All the beneficiaries are members of our land claims organization, NTI, but we are left out of some of what is happening. We rely on our own merit and do our own thing.
We would like our land claim organization to be recognized as a native organization. Anyone can become a member, but no one person can take control of the organization. In that way, whatever we have in the North belongs to the people who will, hopefully, live there for many more years.
Senator Christensen: It seems that co-ops are more successful in the North, where the Dene, the Inuit and the Metis are in the majority. Is that correct?
Mr. Lyall: Yes.
Senator Christensen: Is it the case in the northern parts of the provinces, where First Nations persons are also in the majority, that co-ops are more successful than on reserves and treaty lands?
Ms. Hammond Ketilson: That statement is generally true. The largest percentage of cooperatives is in the far North. The balance is spread across Canada. They are located in northern and southern communities, urban and rural, on reserve and off. They are present in all types of situations.
It is fair to say that we find fewer cooperatives in the on-reserve situation. There are a variety of challenges related to the legislative framework under which these communities work that have been a barrier to co-op development, as well as a lack of understanding of the model generally. Perhaps there is less exposure to it.
Senator Christensen: Is one of the major barriers getting the financing needed to support them in a start-up situation?
Ms. Hammond Ketilson: That is an important part of it.
Senator Christensen: You were also saying that there is a great need for some group to give direction and assistance. What is the role of the Canadian Co-operative Association? Would you not be the obvious group to do that?
Ms. Hunter: We were instrumental in launching a multi-year effort to secure resources for the first generic co-op development program in Canada, which was launched in 2002. It is known as the co-op development initiative. There is an envelope within that known as advisory services. The Canadian Co-operative Association and the Conseil Canadien de la Coopération jointly manage those funds, which provide the provincial associations such as the Ontario Co-operative Association and Arctic Co-operatives Limited with a small pool of money to help people start cooperatives in various communities.
The good news is that that is the first generic fund for co-op development, but it is $5 million over five years, so $1 million a year divided among 17 organizations, and $60,000 to develop cooperatives in the North is inadequate. In our brief to the Department of Finance we urged consideration of additional funds for that initiative. Because we are a national organization, we do not get involved in helping co-ops on the ground. We try to enable our partners across the country, such as Arctic Co-ops, to do that.
Senator Christensen: You do not have the capability to assist those organizations with development?
Ms. Hunter: No. We would do the promotion and try to secure resources so that they can do the development work.
Senator Christensen: I asked how you get your youth involved in these co-ops, and Mr. Lyall said that after school, the young people take over the stores as part of a training process. Does that happen in many co-ops, or is it specific to one particular area?
Mr. Lyall: It is the case in at least 90 per cent of the co-ops in Nunavut. I am not sure whether the Dene communities do the same. We are trying to raise resources to enable us to do education and training on our own, but it is difficult, especially with our demographics in Nunavut and the Northwest Territories.
You asked about how it is done in the south. More is known about cooperatives since we have been spreading the word. Southern businesses are not the only ones operating in the North. We are there as well, and we have multi- service organizations. That is how co-ops work. In a settlement where there are not many people, a store alone would not survive. You have to go into the oil business or the hotel business to complement the rest.
We are getting many requests from Aboriginal settlements in the northern parts of the provinces. We hope that the movement will create more interest and to be able to help people for many more years.
Senator Christensen: It would seem to be an excellent training ground on reserves for young persons. They could acquire saleable skills for when they move from the reserves into larger centres that would enable them to become employed much more easily.
Cooperatives fit well in the culture of First Nations because that is the way your governments, et cetera, operate.
Senator Peterson: I believe it was Ms. Hammond Ketilson who indicated that you need capital funding for your development work. How are you able to do that? Can you secure financing through mortgages on fixed assets or buildings or land, or would it have to be some kind of northern development fund?
Ms. Hammond Ketilson: It depends on where the development is taking place. If it is on reserve, you cannot; if it is off reserve, depending on the resources of the individuals involved, they may have assets that could be used to secure loans.
If we could have dedicated resources available to cooperatives or to individuals who want to start cooperatives within their communities, wherever they are located, that would be a good starting point. Depending on the nature of the cooperative that is formed, they encounter different types of capital needs. For example, one I am working with now is trying to set up retail cooperatives on reserve. They can access funds from a variety of sources. However, they are not able to cover off inventory purchases. They have to be creative in patching together funds to ensure that they can continue to stock their stores. If there were a loan fund such as the Arctic Co-op Loan Fund to support that kind of development, it would contribute to faster and more sustainable growth on the part of that particular initiative.
Senator Watt: [Senator Watt spoke in his native language].
Thank you for coming here. We always appreciate hearing what the people from the far North have to say to the Senate.
My question will be on the high cost of transportation and the high cost of living. How do you combat that? Could you elaborate on that? How do you compensate for one cost that might be more useful to the Inuk people who need to purchase an item, knowing that, when you buy goods from the shelf, there are taxes on those items? When you transport those same goods, there are taxes on that. When they go on the shelf in the North, there are also taxes. How do you deal with the high cost of living and transportation?
Mr. Lyall: We are asked that question every time we do presentations like this one today. When one is in business, someone has to pay for it. The same as anywhere else, the last person who buys that item is the one who pays for it. Everything that is passed on by whomever — for example, the airline because of the high cost of fuel; electricity passed on by the power corporation; the fuel that we buy — is eventually paid by the person who buys that item.
Senator Watt: By the consumer?
Mr. Lyall: Yes.
While things are getting a little better with the Food Mail Program subsidy, the government is raising the price of fuel oil. That, in turn, raises the price of electricity. It somewhat defeats the purpose of receiving subsidies on that.
I am not able to explain that as well as an academic who does it all the time, but whatever kind of subsidy we may have received is taken away by raising the price of diesel, for instance, which creates our generating system. On the one hand, they might give you something, but it is taken away again through the cost of running all your freezers and whatever has to be done to preserve the food to stay on the shelf.
Senator Watt: Over the years, there have been discussions between the two co-op federations, one in Nunavik and one in Nunavut. At times, there seems to be not exactly a merger, but developing relations. What is happening there? Are they still moving in the direction of trying to enlarge the activities that the cooperative movement is dealing with on both ends, or is that pretty well shut off now?
Mr. Lyall: We still talk about these things. We even went into a joint venture at one point. Although we are close together, we are very different. Maybe one of these times we will still talk about it, but whether we need to keep talking about it or not in the future is questionable, because things are changing, whether we like it or not, with the price of everything going up. Things are changing for the better, I think. Hopefully, in the future we may not need to talk about it but will still be able to sit down and tell each other how we do things. I am not really versed on what is happening at this time with the FCNQ.
Senator Zimmer: I am fairly new on this committee but I am constantly impressed by the success stories. This is one of them.
Over 100 cooperatives are run by Aboriginal peoples. Approximately how many people do they employ? Can you break it down on the basis of how many Aboriginal women may be involved? Maybe you can give a breakdown of the people involved in these developments, for example, youth, women and Elders.
Ms. Nirlungayuk: I can only answer for the area where I grew up, one of the areas that is more successful in employing women. I do not know for what reason, but we have more women in the workforce. It balances itself out. At the board level, that is one of the things we are working toward improving. In the local community, about 98 per cent Aboriginal people are employed at the cooperative level. In the managerial area, mainly non-Aboriginals are employed.
Senator Zimmer: Is there any serious competition from multinational firms moving in? Do you have any competition in that area?
Mr. Lyall: You asked how many people are employed. In my presentation, I gave the figure of 800 across the Northwest Territories and Nunavut. Approximately 40 per cent of our workforce is school kids.
More women are employed by the co-op system than men. In our own co-op in Cambridge Bay, our board consists of nine individuals who are all volunteer workers — three men and six women.
Senator Zimmer: Those are good odds. As you move further up into the management and the board level, do those percentages change?
Ms. Nirlungayuk: Can you repeat the question, please?
Senator Zimmer: When you have people in management positions and as you move up into higher management, do those percentages stay about the same or do they start to move in favour the male population?
Ms. Nirlungayuk: They do change, but we try to keep it balanced in the sense that I do not think we recognize whether it is a male or a female; we recognize that women have opportunities in these positions too. We do balance it out.
Mr. Lyall: Again, in Cambridge Bay, our general manager is a woman, our assistant manager is a woman and our grocery manager is a young fellow.
Senator Zimmer: Is there any major movement from larger corporations to compete against you?
Ms. Nirlungayuk: In the small, remote communities, we have competition from the Northern Store. In the larger centres, there are competitors like Wal-Mart, Sears and Canadian Tire.
The Chairman: If there are no other questions, I want to thank all of you for coming from such a distance.
On a lighter side, in the south here it sounds as if the government is in its last few days. We might have an election pretty soon, so there will be lots of politicians campaigning over the holidays. Mr. Lyle, you live up in Cambridge Bay, which is pretty close to the North Pole, where Santa Claus lives. Do you want to say anything about what he is doing these days? Perhaps he will have to come south this winter as there might not be any room for him with all the politicians campaigning door to door.
Mr. Lyall: One of the wishes on my list is that the new government, whoever it may be, take a good, hard look at our situation. We are part of Canada up there, and one of the things that I really tried to get the government to give us a hand with was banking services. There are no banking services in most northern communities. I tried hard to get a banking institution that would run much like the credit union system down here to come up North, because the banks do not operate like the credit unions. I wish that the government would understand that we do need banking services in the North.
I could tell you stories about how we bank in Cambridge Bay. I just finished telling one of the people here with us today how we used to deposit our money when we had too much cash. We made out regular deposit slips, put the money in a very conspicuous co-op bag, and went to the airport to ask if anyone was going to Yellowknife. If so, we would say, ``Can you drop this off at the CIBC?'' That is how we did our banking until very recently.
I would like the government to look at that. We have a work plan for a banking system that would work very much like a credit union system; maybe that is a Christmas wish.
The Chairman: I know there are also people, particularly children, who would like to know that Santa Claus and his wife are busy making toys for distribution — maybe through the co-op and other ways.
Thank you for your presentation and for coming from so far away.
Next we have representatives from the First Nations National Building Officers Association: Bud Jobin, Keith Maracle and John Kiedrowski. Welcome to our committee.
Keith Maracle, Co-president, First Nations National Building Officers Association: Thank you for allowing us to make a presentation before the Standing Senate Committee on Aboriginal Peoples.
We realize that we only have 10 minutes to make our presentation, and we have already provided a submission before the meeting. We will provide a brief overview on the focus and the key successes, our obstacles and recommendations. My colleague, Bud Jobin, will focus on the organization and our successes, and I will focus on the obstructions and the recommendations.
Bud Jobin, Co-president, First Nations National Building Officers Association: Since the beginning of our association, FNNBOA, or First Nations National Building Officers Association, we have accomplished many projects, all geared towards providing inspectors with greater business opportunities while addressing our housing conditions.
The important accomplishments include the establishment of a website that provides information on this sector, the development of a national occupational standard focusing on the required knowledge and competencies of an inspector and the establishment of an independent certification council that is responsible for certifying First Nations inspectors.
We have also established a standard of practice and code of ethics to illustrate how inspectors are to conduct themselves professionally. We have established a strong foundation that will help to promote the sector as a professional occupation.
As an association representing First Nations inspectors, we have identified several key successes that have helped to provide excellent business opportunities.
To outline our successes and key points, as an organization, FNNBOA is an excellent example of a capacity for development. Prior to the formation of FNNBOA, the First Nations building officers across the country had very little opportunity to communicate, network and consult with each other with respect to technical issues, housing development, business opportunities, skills development and training. This sector did not have a national voice on housing conditions and other grassroots-level issues.
Secondly, we have also focused on developing important partnerships that will help to advance business opportunities for our members. We have established partnerships with Canada Mortgage and Housing Corporation, Indian and Northern Affairs Canada, Natural Resources Canada, the National Research Council in charge of the National Building Code, and Health Canada, which primarily deals with mold and healthy housing issues.
Recently, the association formed a partnership with the Alberta Safety Codes Council and the Ontario Ministry of Municipal Affairs and Housing. The association works in partnership with other groups such as the Construction Sector Council, the alliance of municipal building officials and the Canadian Association of Home and Property Inspectors to ensure recognition of competencies and skills in order to provide additional business opportunities.
My partner, Keith Maracle, will discuss some of our challenges.
Mr. Maracle: I will take an opportunity now to focus on a few of the obstacles facing our group in terms of business opportunities.
One major obstacle facing our sector in providing more business opportunities is that we need official recognition and standardized skill levels through certification.
Currently, our certification is voluntary. However, to encourage First Nation building officers to become certified and for certified First Nations building officers to attain credibility, the certification needs to be officially recognized by government departments such as CMHC and Indian Affairs, who are responsible for First Nations housing, as well as by our own band and tribal councils.
CMHC and Indian and Northern Affairs require that all houses in First Nations communities be inspected by a certified building official.
Our band and tribal councils also need to pass bylaws requiring that houses be built to the National Building Code and inspected by certified individuals. This approach will not only provide more business opportunities but will address the Auditor General's report of 2003 on how to improve housing conditions in First Nation communities.
The second obstacle we need to address is that of our sector's access to training funds. Our inspectors require training and continuing education to ensure our professional skills are maintained. Especially with the new monies for First Nation housing and the increased demand for houses built to the National Building Code, if our inspectors are not properly trained, who will ensure that the houses are built to any housing standards?
Unfortunately, our members will have a difficult time accessing training dollars from any First Nation organization that holds an Aboriginal human resource development agreement. It is our understanding that new monies will be made available to contractors to build houses, but we need access to those funds as well.
As our time is limited, and our submission includes eight recommendations, the items we need to emphasize are as follows: Firstly, government agencies must formally recognize the certification model developed by First Nations National Building Officers Association.
Any funding allocation to promote the construction trades in First Nations communities should also include First Nation building officers and the property maintenance workers. Though the property maintenance workers are not a part of our organization at this time, they will most likely become part of First Nations National Building Officers Association next year. Collectively, FNNBOA would represent around 2,000 people serving in the communities.
This concludes our brief presentation. We would be happy to answer any questions honourable senators may have, either on our presentation or on our written submission.
Senator Christensen: Do you have reciprocal agreements with provinces to do inspections off reserves? Does your training conform to the training for provincial building inspectors?
Mr. Maracle: Right now, we have an agreement with the Alberta Safety Codes Council and the Ontario municipal housing.
We are attempting to accomplish training that is transferable so we can do inspections both on and off reserve.
Mr. Maracle: We are working towards that. We are working on those agreements. As I say, we have two in place now and we are working on others as we go along so that we will be able to move back and forth.
Senator Christensen: Is there any involvement with Canada Mortgage and Housing Corporation on the training? Do they give you any help on that?
John Kiedrowski, Project Manager, First Nations National Building Officers Association: Absolutely. CMHC has been critical in helping us in terms of providing capacity development funds and the key directions for training. They actually were instrumental in getting the association up and running because it addresses their needs as well. They use the native inspection services initiative, NISI, to set up inspections of their own homes. They have been quite critical in providing capacity dollars. However, that has been limited to meeting CMHC's mandate. INAC also needs to provide more funding. There is a big need for training to encompass better opportunities for this group. It is limited, but CMHC has been doing a great job.
Senator Christensen: How many inspectors would you have across the country? Are they spread right across or is there a concentration in certain areas?
Mr. Kiedrowski: That is a good question. There are about 250 to 300, we believe, across the country. Right now our membership is about 120. We think there are about 180 to 200 serving full time in the 650 communities. Someone like Mr. Jobin will be serving several communities in Alberta and Saskatchewan, for example. There is a real shortage.
Senator Christensen: How does it work? Do you take a contract with a community or do you live in that community and that is where you do the work? Are you on call? What are the working conditions? Are you working full time or part time?
Mr. Jobin: The vast majority of NISI inspectors enter into delivery agency agreements for the Residential Rehabilitation Assistance Program, RRAP, through CMHC. These agency agreements with CMHC come in several forms. They can either be through a tribal council or as an independent agreement. For example, I work as an independent delivery agent for the RRAP program as well, and other people work on an ad hoc basis. That is, they work on a fee-per-use basis, so they may do some contracting. When the need arises to inspect houses, they are called upon by the delivery agency agreement holder.
Senator Christensen: If there is a building project, two or three new houses or whatever, you would be called in to inspect those houses. Would you be the sole inspector? Would there be any other inspectors involved?
Mr. Jobin: There would be several inspectors involved. It is something we have realized we have to address. Currently, the NISI inspectors only encompass those issues related to part 9 of the building code. I have had several dialogues with our counterparts in the fire inspection safety group, and it would be their mandate to do fire inspection safety, for example, in daycare units, public access buildings and those types of situations.
Senator Christensen: Is it ongoing?
Mr. Jobin: It is ongoing.
Senator Christensen: It is not just new construction; would you be going around and ensuring that different buildings were complying with regulations, codes and so on?
Mr. Jobin: Doing physical-condition reviews or inspecting existing houses is part of our contract. It is also part of the agreements that a First Nations community signs when they are involved in low-income housing projects, primarily the section 95 program through CMHC.
Senator Christensen: Would you be working on reserves if, for example, there were ventilation problems in buildings? Would you be doing those kinds of things?
Mr. Jobin: That is one of the reasons we want to encompass the maintenance workers within our sector. That would be a maintenance issue. Generally, the First Nation inspector would be speaking from an indoor air quality perspective. Therefore, we would not be developing any scope of work to repair an air conditioner, for example, but we would address the IAQ issues within that unit.
Senator Christensen: How long has the association been in existence?
Mr. Maracle: Since 2003.
Senator Christensen: You are relatively new; you are really just developing.
Mr. Maracle: We are a member of CHIBO, Canadian Home Inspection and Building Officials. When we sat down with them, we saw that the municipal inspector was responsible for seven or eight items, the home inspector did eight or nine items, and we looked at 15 or 20 items. When we did a matrix we realized that we did a lot more things. We are called in for a lot more. That is why we are after more training dollars, because we look at septic systems, and we look at water, plumbing, heating and ventilation systems. We need to make sure that our colleagues have the training in this area — good, certified training, not just ``I read it in a book, so I think it will work here.'' That is what we are after. That is why we are trying to access more training dollars.
As you just stated, we are called in to look at a ventilation problem, and this and that. Just to go back to one of the questions that Mr. Jobin answered, some of us work for tribal councils and some work as independents. I work both ways. I do work for a tribal council and I do independent work, but all of our work is based on First Nations at this point.
Through the tribal council that I work for, we have an agency agreement off reserve in Southwestern Ontario to do RRAP work, but that is the only one of its kind in Canada.
Senator Christensen: If you were working with a tribal council, it would be similar to a municipality, where they have a building inspector. If a band is undertaking any construction, improvements or whatever, you would be the building inspector who makes sure they were complying with regulations and sign off on it when it was completed?
Mr. Maracle: Yes.
One of the other problems we run into in that area is that funding from INAC to the tribal councils is only for inspection of houses under their housing program. There is no money to do inspections on renovations. There is no money to do inspections on upgrades of any kind, a ventilation problem or anything like that. The tribal councils, in most cases, will have the individual doing six or seven different things. Therefore, he is spread too thinly in most areas.
Senator Christensen: Building inspector is just part of the job if you want full-time work then.
Mr. Maracle: Exactly.
Mr. Kiedrowski: There is also regional variation in INAC funds. For example, in the Atlantic region there are no funds provided by INAC to do inspections, but out West they do provide some funding. From a business opportunity perspective, if there are no funds to do the inspections, well, it just will not happen. We see that the growth in the number of inspectors in the Atlantic region has been very limited because the opportunities to be paid fees for service are non-existent.
Senator Peterson: You said that you have introduced an independent certification council within your group. Do you also have a certification manual?
Have you set a standard whereby, when a person completes it, it meets CMHC's requirements?
Mr. Maracle: We have set an occupational standard for our sector. We have a code of ethics for our sector. We set up a certification council, and when we send all of our information in to them, they check it to see how we fit into that occupational standard and where there are gaps. They let us know in what areas we need to take courses to upgrade ourselves to a level 1, 2 and 3, as we have set out in our certification.
Mr. Kiedrowski: The council is independent. There are a couple of engineers and certified engineering technologists. They are independent from the association and agreed to volunteer for a couple of years to help with the work. It is the first council of this type to be established in Canada. The municipal home inspectors do not have one, nor do the home inspectors. It is actually a cutting-edge council that we have established. We are quite proud of it, and it is supported by CMHC, INAC and others who understand the industry.
Senator Peterson: Approximately how long would it take for an individual to become certified?
Mr. Jobin: Many years. When we first started developing the occupational standards, it became very apparent that inspecting houses was only one small component of what we do. We also work as advisers in First Nations communities and are involved in a lot of training in order to increase the standards within those communities. Typically, the First Nation inspector will have already had 20 years of construction experience as background. Beyond that, he would need some additional education requirements, such as a firm and full understanding of part 9 of the National Building Code, of building sciences, and of the house as a system. That is, he would need knowledge of how an existing house works to be able to address issues and problems.
We are technologists, in that we have to know a little about electrical systems and heating and ventilation requirements. We have to know the legislative requirements, First Nation politics and how band council resolutions work, as well as the funding requirements for the different programs in a community, as a lot of us do help the First Nations in developing housing proposals.
Senator Peterson: What chance would there be for a young person to get into this program? Is it very difficult?
Mr. Kiedrowski: We do have an apprenticeship level. We call it ``in training'' because we do not want to confuse ``apprenticeship'' with the real meaning. We also have a mentorship program. For a new fellow going through the training and doing inspections, it would take probably a couple of years. It involves a combination of competencies and experience. It will depend on whether or not he is in one of the remote communities. The ability to do a number of inspections will not be the same there as for someone in the southern parts of Canada, for example. That is one of the issues we are trying to address, namely, the remote access communities versus the more popular First Nations communities.
Senator Watt: Welcome. You began to explain your involvement and your focus on what you would like to do and how it can be beneficial to communities on reserves. We have been hearing all kinds of horror stories about what is happening on the reserves, from drinking water to housing and sanitation, and everything else that goes with it. We have some knowledge of the conditions in some of those communities. It varies across the country, but they are not in good shape. I think you agree with me on that.
Taking what you were talking about a little further, you must know something about regional politics, what triggers issues and whatnot. Can you be considered a national organization, the first one of its kind that is moving in that direction?
Mr. Maracle: Yes.
Mr. Kiedrowski: Absolutely.
Senator Watt: The Department of Indian Affairs, for example, has responsibility for the regions. Why do you not use your instruments to do a complete evaluation, to do the investigations in all the communities and make a report to the Department of Indian Affairs under a contractual arrangement? Can you move in that direction and flesh out the information that the politicians need today?
Mr. Jobin: We have certainly put that proposal forward. In fact, some of our Atlantic Canada partners have seen the need to go out into the community and put together a snapshot of the conditions. Obviously, mould is one of the big issues on both of the coasts, where it seems to be more prevalent than in the Prairie regions, for example. They have put a proposal forward to take a snapshot of where these houses stand right now. Certainly in Saskatchewan, they developed a database that was completed in 1996. They are probably a good example for the rest of the communities across Canada to use. They have been able to successfully use the data from their inspections in accessing additional funds to address their needs. For example, they received some additional funds to take out the open discharge sewage systems and bring those communities into the 20th century. We are certainly an advocate of that. We feel that the First Nations inspector has the qualifications to do those inspections and speak with some technical expertise on the matter.
Mr. Maracle: If I could add to that, with the help of CMHC, we have just developed three new training packages and we have done some pilot projects. As we all know, there is quite a difference between building a new house and inspecting an existing one. We are going through some rehab skills training right now. We have done some pilots in Val Dor, Quebec, in Edmonton and in Saskatchewan. There is a portion for RRAP and another portion for EnerGuide. We are trying to get the people trained to a level where they can go out and bring back that information that you are talking about, and not just an educated guess. We will use blower doors and do the inspection of the house from top to bottom. This is what this training course does, and it is working out very well.
Mr. Kiedrowski: There is a larger issue that touches upon your question and Mr. Jobin's comments. That is, CMHC and INAC provide funding for a First Nation housing program, but the responsibilities are up to the communities through bylaws, which do not exist. We have been encouraging bands to adopt bylaws to put some structure on the housing conditions and to adapt the National Building Code. There are approximately 650 communities and probably three or four have adopted National Building Code standards for any home being built. We have been a strong advocate in trying to work with those communities this way. That is an uphill battle for us and for the communities as well.
Senator Watt: Have you also considered building an expertise that would enable you to go into the communities and understand and evaluate the actual dollar requirement to fix the problems? Are you moving in that direction?
Mr. Jobin: That is an existing component of what we do. When we inspect existing dwellings, we provide a prescriptive remedy to bring that house up to a minimum set of health and safety standards. We also cost out the remedial repairs for the benefit of the chief and council to prepare budgetary items for the upcoming fiscal years.
Mr. Maracle: At the same time, we recommend energy-efficient measures. In Ontario, Akwesasne, to the south, builds with R-20 walls and 2 X 6 sheeting on it. They do the same in Sudbury, Sault Ste. Marie, Thunder Bay and Fort Severn. They go from 4,200 degree days to 7,900 degree days, and they are all building the same house. It just does not work. We are trying to do that education, to get them to understand the thermal values of the different materials, instead of using the same old thing all the time.
Senator Watt: If you were asked by the Department of Indian Affairs and Northern Development to collect that information by visiting all the reserves across the country, how long would that take? How many years would it take for you to flesh out this information? What would the Canadian government have to spend after they got your report?
Mr. Maracle: I have talked with a chief from Akwesasne in Ontario about doing just that. We sat on a committee that estimated it would take two years to do Akwesasne; every house, every element, cost estimations and total preparation would take upwards of two years for that community alone.
Senator Watt: How many communities do you have?
Mr. Kiedrowski: We have 651, I believe.
Mr. Maracle: That is one of the larger First Nations in Ontario, with 7,000 or 8,000 people. For those that are 400 or 500 people, you are looking at probably a month's work.
Senator Christensen: You were saying that some of the reserves do not have building codes, but anything built by INAC or CMHC must meet building codes even if they are on a reserve; correct?
Mr. Maracle: Yes, that is correct.
Senator Christensen: I presume you are working in the North as well, in Nunavut and Northwest Territories?
Mr. Maracle: We have a representative in the area.
Senator Christensen: Communities and municipalities usually have different inspectors: heating, ventilation, wiring, framing, foundations and plumbing. Rather than using these tradesmen, are you looking at training your people so that one person will be able to do all of that?
Mr. Maracle: Yes, we are. At the present, Health Canada looks after the septic systems on the outside, and in Ontario, Ontario Hydro looks after the electrical systems. Those are the only things we do not touch. We have to train our people to do the plumbing, heating and ventilation inspections.
Senator Christensen: What about other than Ontario?
Mr. Jobin: The same barriers would apply pretty much across Canada. In Alberta, for example, utilities are connected in First Nation houses through a permit process. They would apply to a governing regulatory body, a gas utilities company, and then they would issue a permit to install gas in a community. We felt that was a role we could handle within First Nations communities, particularly in view of the speed with which these permits come into place. I know of one community where they had their houses ready for people to move in, but they sat vacant for three months waiting for the utility company to issue the permit to install the electricity. That was something we felt we could look at down the road.
Senator Christensen: Would the utility company also inspect the house? Who would do the wiring inspection?
Mr. Jobin: That is lacking right now, which is why we want our members educated to do it. I can only speak of our situation in Alberta. The utility connector's responsibilities end at the panel box and do not extend into the house. When the First Nations inspectors arrive, they are aware of this. They ensure there is a light switch at the end of hallways, a connecting light switch at the top and bottom of stairs and the light switches in bathrooms and laundry areas are ground fault circuit interrupted plugs. We also look for adequate lighting in hallways and stairwells.
Mr. Kiedrowski: The key objective is an inspector who is multifaceted, trained in a number of areas, but we have now hit a major stumbling block. The First Nations inspector is a municipal building official. When it is a new home, he is doing electrical, plumbing and sewage systems. When you send him into a remote community you want him to be properly trained. How do we get errors and omissions insurance to make sure we are protected? Our problem now is to get that insurance for our inspectors from a business point of view, and we have been rejected by a number of insurance companies. They are telling us we cannot do certain things, and now we are in a bit of quandary as delivery agents working in remote communities and trying to obtain errors and omissions insurance to carry out that multi-tasking.
It raises big issues now of who is responsible. Nothing has happened, but we are just trying to figure out the ``what if.'' We worked with that assumption and we have been talking with insurance companies. It is just not possible for any of our members, or anyone working in the inspector or compliance capacity, to obtain errors and omissions insurance, unlike home inspectors and municipal officers, who can get their own insurance. It is a big issue for us.
Senator Christensen: Is your association more like a company?
Mr. Kiedrowski: No, it is a non-profit, registered with the federal government and representing inspectors who work independently or with tribal councils — anyone who carries out inspection activities related to houses. We wish we were a company.
The Chairman: If there are no further questions, I want to thank you for appearing before us and providing us the information that you have. So far, our study has focused on Aboriginal involvement in businesses, but your association and the work you do is certainly interesting and shows the progress that Aboriginal people are making in the building industry. Thank you very much for your presentation and I wish you well.
Mr. Maracle: I would like to thank you, Mr. Chairman, and senators, for giving us the opportunity to make this presentation.
The committee adjourned.