Proceedings of the Standing Senate Committee on
Aboriginal Peoples
Issue 13 - Evidence - April 22, 2015
OTTAWA, Wednesday, April 22, 2015
The Standing Senate Committee on Aboriginal Peoples met this day at 6:49 p.m. to study challenges relating to First Nations infrastructure on reserves.
Senator Dennis Glen Patterson (Chair) in the chair.
[English]
The Chair: Good evening ladies and gentlemen. Welcome to all honourable senators and members of the public who are watching this meeting of the Standing Senate Committee on Aboriginal Peoples either here in the room, via CPAC or the web.
I am Dennis Patterson from Nunavut. I am privileged to be the chair of this committee. Our mandate is to examine the regulations and matters relating to the Aboriginal Peoples of Canada and generally.
This evening we are pleased to hear testimony on a specific order of reference authorizing us to examine and report on the challenges and potential solutions relating to infrastructure on reserves. That includes housing, community infrastructure, and we're also looking at innovative opportunities for financing and more effective collaborative strategies.
We have completed hearings on housing and are in the last stages now of our study on infrastructure.
Today we are privileged to hear from two panels of witnesses. During the first hour, we will hear from the All Nations Trust Company, The Usand Group and Forrest Green RMC. During the second hour, we will be hearing from a representative from the Assembly of First Nations.
Before proceeding to the testimony, I'd like to go around the table and ask the members of the committee to introduce themselves.
Senator Moore: Good evening and welcome. I'm Wilfred Moore from Nova Scotia.
Senator Sibbeston: I'm Nick Sibbeston from the Northwest Territories.
Senator Watt: Charlie Watt, Nunavik.
Senator Oh: Senator Oh, Ontario.
Senator Enverga: I am Tobias Enverga from Ontario.
Senator Raine: Nancy Greene Raine, British Columbia.
Senator Tannas: Scott Tannas, Alberta.
The Chair: Members of the committee will help me welcome our guests for the first hour. With the indulgence of our witnesses in the room, we will first hear, via video conference from Kamloops, B.C., the Chief Executive Officer of the All Nations Trust Company, Mr. Paul Donald. Then we'll hear from The Usand Group, Mr. Sean McCoshen, Chairman and Chief Executive Officer, and Erinn Mah, Chief Operating Officer. From Forrest Green RMC we have Murray Rowe Junior, President.
Witnesses, thank you for appearing. We look forward to your presentation. We will leave the questions from senators until afterwards. I would now like to begin with the All Nations Trust Company to be followed by The Usand Group and then Forrest Green RMC.
Mr. Donald, please proceed.
Paul Donald, Chief Executive Officer, All Nations Trust Company: As you noted, my name is Paul Donald and I'm the CEO at All Nations Trust Company.
All Nations Trust Company was formed in 1987. We are an Aboriginal-owned trust company. We have 209 Aboriginal shareholders. Our shareholders include First Nations communities, First Nations individuals, non-status and Metis individuals and organizations. All the shareholders are located in British Columbia.
Since we started, All Nations Trust Company has provided more than $75 million in financing, and an additional $20 million or so in funding for Aboriginal businesses and Aboriginal communities to help start-up businesses. Recently, just this year, we formed B.C.'s only 100 per cent Aboriginal-owned insurance brokerage.
Currently for the Province of British Columbia, we manage a program called the Pathways to Technology. Pathways to Technology is a project where we are assisting the Province of B.C. with some additional funding from Aboriginal Affairs and Northern Development Canada and Health Canada. We are connecting all 203 B.C. First Nations with access to high-speed internet. That's a project we've been working on for about four years, and we still have roughly 25 or 30 First Nations to be connected in B.C.
As I mentioned, we've been working on that project for several years now. We have had some challenges. The biggest challenge for us as a small company in B.C. is that there is no centralized decision-making body. You're dealing with the First Nations one-on-one. So you're dealing with individual First Nation communities, one community at a time. We have managed to leverage some dollars from what was initially a contribution from the provincial body called Network BC. We have managed to leverage additional dollars from Health Canada and Aboriginal Affairs and Northern Development Canada, and it is roughly a $48 million project.
As I noted, we do have some communities still left to be connected, but the challenge is that we're dealing with each of those communities individually, and each individual community is at different levels of readiness to take on permits, allow permits and sign contracts. So we're working on those individually, and I think we're doing a pretty good job.
Those are my introductory comments.
The Chair: Thank you very much. We're going to hold questions for now, and we will hear from Mr. Sean McCoshen, representing The Usand Group.
Sean McCoshen, Chairman and Chief Executive Officer, The Usand Group: Good evening everyone, and thank you for having me and taking the time to listen.
The Usand Group was formed out of a holding company incorporated in 2007, and we officially began operations about two years ago. It was borne out of discussions with Ovide Mercredi, who was looking for ways to bring what he called proper financing to First Nations communities across Canada. Since inception, within the last two years, through private markets or through bank debt financing, we have placed $113,478,000 in financing for communities to date. We currently have $180 million that are in closings, and we're currently negotiating, through an engagement process, another $300 million across the board, across Canada with First Nations. This is all through normal channels of financing. We're not accessing any government funding whatsoever.
Usand is a modern corporate financier, and that allows us to customize each financing deal specific to the needs of the community. We have focused on debt, but we are now entering into the equity space as well. We are different from commercial lending and we feel that is our competitive advantage. Additionally, Usand brings a radically different approach to financial education that complements our process and financing package. We have teamed with Forward Vision Games to teach financial decision making and about financial risks through a computer game style of teaching.
Corporate debt models function very well in First Nations and Usand's rapid growth is proof of that. We're not here to talk about treaty and politics. We're here to focus on discussions on meeting a serious social need through a financial mechanism, a practice where The Usand Group has had great success, and that's in housing. We have teamed up with Douglas Cardinal to form the Douglas Cardinal Housing Corporation. We are financing houses on reserve and that is the main angle we're looking for here. The cultural aspects are taking into consideration in design, and the lifespan of the house is 50 years as opposed to the traditional 20.
We have incorporated the company called the Douglas Housing Corporation, which I just mentioned, and it will use the architectural designs of Douglas Cardinal, a renowned Order of Canada recipient, and the financing methodologies of The Usand Group.
We are now in a position to specifically finance housing using our approach and taking into consideration any and all available programs from the government should they be able to assist in getting these houses on the ground. For lesser credit-worthy bands, our method will hinge on an outright restructure of the band's finances to ensure that the additional capital is freed up to move forward to get these houses built.
We were also asked to discuss the First Nations Finance Authority. I'd like to refer to the February 4, 2015, hearing and the comments from Keith Martell, Chairman and Chief Executive Officer of the First Nations Bank, and simply say in reference to those comments that I completely agree. From what I have experienced with the First Nations Finance Authority, the model hand-ties First Nations to seek other sources of revenue. Trying to use an infrastructure model designed to raise bonds on a municipal level for individual communities is akin to the European model or the Euro. It means healthy communities can suffer from the mistakes of less healthy bands in the pool; and this is a fundamental flaw that is well documented from the 2009 mortgage-backed security crisis as well as the savings and loans crisis from the previous decade.
Terms such as the 5 per cent uptick charge for a reserve fund on top of the bond offering price on bond offerings of less than $300 million do not allow the flexibility that a growing First Nation community demands. Anything above the $20 million mark or more up to and including $0.5 billion, or more precisely $1 billion, requires a more flexible model of finance rather than the rigidity of a bond, especially in the growing communities.
To conclude, I'd like to reiterate that we're using normal capital market procedures to great success. If we can recommend what we would like to see from the government, we would encourage more ministerial-style guarantees or some level of guarantee for private financing that would give banks more ability to secure and to lend. I know my colleague Mr. Rowe will address that. We would also like to emphasize more spending on financial capacity training, especially for youth and communities.
The Chair: Thank you very much; and I thank Senator Watt for suggesting that you appear.
We look forward to hearing now from Forrest Green RMC, Mr. Murray Rowe, Jr.
Murray Rowe, Jr., President, Forrest Green RMC: Thank you, honourable senators and distinguished guests. My name is Murray Rowe, Jr. and I'm the President of the Forrest Green Group of Companies, which includes Forrest Green RMC, a licensed consumer credit reporting agency. We have affiliations with TransUnion, a global consumer credit reporting agency, and Dun & Bradstreet, a business credit bureau.
Our presentation today will focus on solutions leveraging recent advantages in technology. I am not an expert in Aboriginal Affairs, although I have had the pleasure to visit reserves from coast to coast. I would like to thank Chief Terry Paul and Jennifer Deleskie of Membertou First Nation located near Sydney, Nova Scotia, for allowing us to use an image from their website on the cover page of our presentation.
As the father of three children, this image resonated with me. It makes me think about positive outcomes and how we can work together. I am an unapologetic advocate that the private sector needs to participate in helping with financial independence — I'm sure Sean will be pleased with that comment — and own-source revenue to allow First Nations communities the ability to eliminate dependence on the federal government.
On page two, we talk about integrating First Nations into the established financial and credit bureau value chains. Financial institutions, credit bureaus and regulators need to address existing challenges that are complicating risk assessment and credit ratings for bands, businesses and individuals. Innovation will require all parties to examine leveraging new technology. I was delighted to hear about the progression with high-speed internet in British Columbia. We also feel that there should be an open dialogue between the financial sector, government and First Nations to develop a common understanding and integrated policy approach. I'd also like to point out for future discussions that section 89.(1.1) allows for some creativity within the Indian Act.
Page 3 is about the current state. We don't want to get into a discussion about all the negatives or challenges that are taking place, but I think it's important that as outsiders, we're looking at information provided, whether from the Senate or other sources. This is how we establish our view of the health of First Nations communities from an access to capital perspective, which, quite frankly, is critical in doing things such as capital projects in housing, schools and infrastructure.
First, we looked at the Senate report, which I think was from February 2015, that talked about 2 per cent growth per annum. I would call that a modest growth, quite frankly, based on population growth. Second, First Nations populations are one of the fastest growing. The third point is about housing shortages on reserve. We gathered a statistic from the Assembly of First Nations of 80,000. There are many people who debate whether it's closer to 35,000 or 40,000. Regardless of what position you take, it's a large number; and that's important to discuss. We also think that a large number of First Nations communities experience high unemployment and limited own-source revenue; and this is of great concern to us.
We have many challenges with First Nations communities as stated on this slide, the least of which is that I do not believe the federal government alone has enough funds or the proper skill sets to solve the complex problems challenging First Nations leaders. The good news is that with new technology, many of the challenges can be solved for the majority of reserves. We need to work together, that being the private and public sectors. We need to be realistic in what for-profit businesses will and will not do. I subscribe that government does a good job of addressing issues that the private sector cannot or will not solve. We need to change the narrative about First Nations communities. In the future, I hope we will refer to First Nations communities as one of the fastest growing economic engines in Canada.
On page 4, we talk about quantifying the problem. We went to the Canadian Banking Association, and there was a very powerful quotation that said that 77 per cent or approximately three-quarters of Canadians last year reported using online banking. I spoke recently with Brenda Zurba, Vice President of the Tribal Wi-Chi-Way-Win Capital Corporation, TWCC, in Winnipeg. She provided me with an interesting statement: Less than 10 per cent of First Nations individuals use online banking. In order to do online banking, individuals require two important components: internet access and a bank account. Both of these have proven historically difficult for many First Nations communities. This estimate is based on a sample of several thousand TWCC on-reserve customers.
The next piece on this page relates to credit bureau comparisons. We wanted to be able to provide high-level, anonymized aggregate data. For the purposes of comparison, Forrest Green leveraging this anonymized consumer credit bureau data, averaged six First Nations across Canada and compared them with a typical Ottawa bedroom community commencing with the postal code K1V. I'd like to point out the stark differences in three simple categories. The first is the average risk score. One of the issues that we look at is 657 versus 761. For the delinquency rate, for example, we use information called an "odds chart'' that talks about the likelihood of a person with a credit score and what will happen. As many as six times more are likely to default using our data. We talk about some of the other information — delinquencies at 24 per cent versus 8 per cent and bank cards.
It's important to note on some of this information that we are only looking at six First Nations communities and because we included some that are very entrepreneurial, we believe that these numbers are artificially high.
In fact, the situation as an average, we would estimate to be significantly lower than the information we're providing here. But I think having six communities coast to coast is a good start, as far as a comparison.
Based on the data presented on the slide, I believe we can read that there is a significant gap between First Nations and non-native communities. Later in the presentation, we will submit that one of the solutions to these issues is education. E-learning with specific First Nations-centric content is one of the tools we are leveraging to address these challenges.
On page 5, we're looking at long-term leasing as established in common law. This is a very delicate topic and I do not wish to be an expert on some of the issues relating to leasing land or non-native leasing of land, but suffice it to say that there is some remarkable innovation taking place. There is room for innovation with existing legislation, to leasing and obtaining mortgages. However many Canadians, like me, believe the Indian Act is outdated and paternalistic. There are approximately 44,000 head leases to individuals and/or developers.
Leases of Crown land are currently mortgaged in many locations. Off-reserve examples include Banff National Park or even the city of London, England. On-reserve examples include Sun Rivers Realty in Kamloops. It's interesting to note, by the way, that in Banff National Park there is a residency requirement, so leasing doesn't have to simply be unlimited or without structure or terms and conditions. We need to examine the merits of First Nations leasehold- markets for reserve housing being able to lease land on-reserve. One of the critical benefits of First Nations individuals being able to manage and sell long-term leases that will eventually revert back to the band is the ability to pledge the equity in the home to start a small business. The number-one asset pledged to start small businesses is equity in the home. If First Nations communities are being prevented from unlocking this asset, they will not grow as quickly as other communities with more financing options.
On page 6: Symptoms that banks do not understand First Nations processes and are therefore challenged to estimate the financial risk and reward. I was fortunate enough to speak with Dr. Dominique Collin, who is a principle of Waterstone Strategies and has a remarkable background in working with AANDC and First Nations communities. He is very well respected. His quote was:
Few individuals have chequing accounts. Establishing an account is challenging for First Nations peoples due to Banking Know Your Client (KYC) rules that often result in financial services firms requesting government photo ID and a copy of a utility bill with a civic address.
I had the privilege of meeting with Garland Moses, who is a resident of the Objibways of Pic River First Nations in New Marathon, Ontario. In fact, I understand that some of the senators may have gone there to visit him and the band. It's a beautiful area. He indicated it takes four hours to drive to his bank branch in Thunder Bay. This is a significant challenge for First Nations' communities.
This is a sensitive topic, on page 7, where we talk about the annual percentage rate — a sample calculation for a 14 day loan for $500. Once again, I was fortunate to consult Brenda Zurba from Tribe Wi-Chi-Way-Win. This is her quote:
Payday lenders charge in excess of 600 per cent APR. Access to lending alternatives to payday loans with First Nations individuals and businesses has several barriers that can be overcome. One simple example is that Canada Post has not assigned civic addresses for houses on many reserves. Banks and credit card companies need to demonstrate to FINTRAC that they have completed appropriate know your client, KYC, activities, which may include presenting a utility bill with a civic address, not a PO Box. First Nations on-reserve residents are often prevented from opening bank accounts, completing loans agreements or obtaining credit cards, as they often only have PO Box mailing addresses. With support from organizations like the Senate, we can quickly and cost- effectively overcome these process inefficiencies and help Aboriginal People access credit. In the long-term, effective access to credit is a critical component to developing and growing the economies of local communities.
The more I read about this issue of payday loans — I have a young daughter who is going to University of Queen's and the idea of her taking a loan out and having to pay 600 per cent interest rate, APR is very distressing to me. I would be very disappointed, if she got involved in something like that. Yet as I read this, it is a growing industry. It's remarkable. Banks are finding the costs to run bricks and mortar branches in remote communities difficult. Some individuals believe that as bank branches close, it is encouraging the growth of payday loans.
In January 2014, CBC reported that consumer protection B.C. found payday lenders were charging as much as 35 per cent interest per month. If we educate individuals in remote communities that they have alternatives then we can help them escape predatory lending practices. We need assistance from organizations like Canada Post, FINTRAC, the banks, Aboriginal financial institutions and the credit bureaus to address root-cause process challenges. The good news is that many problems can be solved quickly and efficiently.
On page 8, we talk about improved online tools for secure communications and collaboration, expanding access to mobile banking and trusted data exchanges. We reference BlackBerry. We should be proud of Canadian technology. In order to address some of the challenges facing First Nations communities, we will need to leverage breakthroughs in technology. BlackBerry's Canadian firm is widely regarded as a world class solution provider for secure communication and collaboration technology. Forrest Green is proud to leverage BlackBerry solutions.
The Chair: Mr. Rowe, I hate to interrupt you, but we are trying to hear from three panellists in this hour, so if you could move it along that would be appreciated.
Mr. Rowe: I'd be happy to. I'm going to show you this photo of nine, which I think is an example, in the last, close to a year, of innovations with regard to banking. It is an image of CIBC with the eDeposit Mobile Banking. On July 29, 2014, they had processed their 1 millionth cheque. This is an example of the technology that we need to start examining because you don't require bricks and mortar on-reserve. It allows people to move forward.
On page 10, I talk about the example of working with Forrest Green and with TransUnion and Dun & Bradstreet. We need to partner with global players and that's an example of some of the organizations that we partner with.
On page 11, we examine a new e-learning and video web portal for financial literacy. We do not believe that you can take videos from a downtown Toronto example and go out to Pic River and show that to someone and have that be meaningful. We think it should be First Nations-centric content that is provided to Aboriginal communities.
On this next page, we talk about the development of a secure web portal to improve the number of credit report tradelines on First Nations' individuals. We literally have a solution where we are working and communicating with chiefs, councils and economic development officers to be innovative in improving the data in the consumer and business credit bureaus. This is a critical component to supporting colleagues in the financial services industry.
In summary, the solutions need to integrate private and public sector participation. We believe the first step is to improve communications, a solid knowledge of process, and regulatory environments need to be in place with credit bureaus and financial services firms. The second step is to implement measurable improvements and engage stakeholders — First Nations bands, business and individuals, the banks, credit bureaus, and governments — with joint policy reform. The third step: supporting the growing First Nations' entrepreneurial spirit. The number one asset used to start small businesses is equity in the home. We should not prevent First Nations' individuals from leveraging this asset.
Finally, we believe that expanding band and individual own-source revenues will allow First Nations to be financially independent from governments and we believe we need to end the dependency cycle. Thank you very much.
Senator Enverga: Thank you for your presentations.
After so many witnesses talking to us, one of the major problems they are getting is the fact that the Indian Act is creating a barrier for a lot of lenders. My question is this: What does your organization do to address this barrier? How do you go around it? Is there something you have been doing to make it work for you?
Mr. Rowe: We believe that section 89.11 of the Indian Act allows for long term leases, and there is also precedent in common law recently. I think there was a ruling by a judge in 2009 and therefore established common law that when an individual waives, let's say for a commercial enterprise like a gas station on a reserve, they can in fact go in and seize the asset. One of the big challenges will be that we be able to find credit bureau data to assess risk to support the financial services institutions. I'm far from an expert on the Indian Act, but there is tremendous precedent already in common law. There are literally tens of thousands of individuals, whether they're leasing a cottage or where, in numerous places, such as Vancouver, Indian land is leased, and very creative opportunities are available. There is low hanging fruit here. It's delightful if you are looking at changing the Indian Act and making it more innovative, but we are capable of working within the existing legislation and effecting changes. I think some of this has to be within those confines. We need to have more open dialogue. I am delighted to see Sean here as a demonstration of some of the creativity that is taking place from financial services firms.
The Chair: Mr. McCoshen, can you address this as well, please?
Mr. McCoshen: To be honest with you, other than some of the points that Murray just mentioned, it's a non-factor for us because we are basically using a revenue stream-backed model to create leverage. It hasn't really come up in terms of the work that we've been doing. I also am no expert in the act. We're aware that it needs to be changed from various other perspectives, but it really hasn't affected any of our lending or capital raising whatsoever at this point in time.
Mr. Donald: The All Nations Trust Company is an Aboriginal capital corporation. That was why our company was started in the 1980s. We were started there because First Nations specifically and Aboriginal people were having difficulties finding financing. We have been able to work around the Indian Act in terms of we don't require a mortgage on a home for collateral, for a business loan. We place a lot of emphasis on the actual business plan itself. If there are assets on reserve that we can take and if we could remove them from the reserve, then we were able to get a band council resolution to allow us access to the reserve. We have been successful for 25 years working in that regard. What that does is limit the size of the loans that we are able to do. Most of my small business loans are under $100,000.
Senator Enverga: Have your organizations been working with Aboriginal Affairs? Are they a factor so that you will be able to address some of the barriers that you have been encountering? How effective is this approach? How effective are they?
The Chair: Is that to Mr. Donald?
Senator Enverga: Mr. Donald and maybe Mr. Rowe.
The Chair: Start off with Mr. Donald. Interface with Aboriginal Affairs?
Mr. Donald: Thank you. Aboriginal Affairs, over the past several years — I would say roughly eight to ten years — has provided some equity programs to assist the First Nations with leveraging their equity. That has been a really great assistance over the last several years. The clients then are required to borrow less for their project for many of the businesses that we've financed I would say since roughly 2007-08. That program, though, which was under the Aboriginal Business Development Program, is now being reviewed. I understand the oversight will be transferred to an organization called NACCA, the National Aboriginal Capital Corporation Association. I'm not sure how that will affect the delivery over the next few years, but historically, from about 2007 to 2014-15, it's been a big help to the entrepreneurs in our region. I know that is a national program, the Aboriginal Business Development Program. It's been a great success, and I'd like to see it continue, even if the delivery of it is modified somewhat, which it is undergoing right now. It's under way.
The Chair: Mr. McCoshen, you said that you didn't access any government monies. Do you have any comment?
Mr. McCoshen: For the work that we've done, we haven't asked for any assistance from AANDC at all, based on the category that we're lending in, but we do recognize that, in terms of the work that's being done here, you have to. But from our perspective, no, we're just using regular capital markets techniques.
Mr. Rowe: Our experience with Aboriginal Affairs has been remarkable, and one of the reasons we are so impressed, particularly the innovation team, is that, we feel, that they are taking a refreshing approach, which is to engage the private sector. I think they are being realistic. I don't think that there is enough money or staff or resources at Aboriginal Affairs to address all of the problems. The private sector can take up some of the finance requirements. I think it would be fair to say there are billions of dollars that need to be raised in order to address just the 40,000 or 80,000 house number. There is not enough. I don't see Aboriginal Affairs coming up with $10 billion to cap this up and doing so on a regular basis.
We're not suggesting we're going to come in and deal with all of the problems, particularly in extremely remote communities, but by engaging the private sector and working with my colleagues here, we could probably address 25 per cent of the capital requirements. I think a lot of credit needs to go to AANDC because they are willing to be open minded to solving the problem. I think more credit should be given to them.
Senator Watt: I need a bit of clarification. First of all, welcome to the Senate. These are excellent presentations, and we are all trying to find solutions to the problems we are facing today in this country. I hope you will be able to contribute to this. We have been wrestling with them for some time.
The clarification I need goes to what Paul Donald mentioned about his company. I was not clear exactly what he meant by the shareholders. Who are the shareholders? Is it a collective company owned by communities, not necessarily individuals? I think we need to clarify that before we go further in terms of getting into the technicalities of what we are dealing with here. If you could provide that answer, I would appreciate it very much.
Mr. Donald: All Nations Trust Company shareholders include 30 different First Nations communities from five different tribal areas in B.C. It also includes two tribal councils and some Metis organizations, all B.C. based. The rest are Aboriginal individuals.
All of those shareholders invested money in the company in the late 1980s. There hasn't been much change in the number of shareholders other than that some of the original shareholders have now divided their shares amongst their children. The last time I added it all up, roughly 75 per cent of the actual shares themselves are owned by First Nations communities in the Southern Interior of British Columbia. Again, there are 30 of those different First Nations communities from five different tribal areas.
Senator Watt: So 75 per cent is owned collectively and the rest of it is owned by the individual stakeholders. Is that what you're saying?
Mr. Donald: Correct.
Senator Watt: When you're looking at the capital aspects of it, what is normally issued as capital? How do you divide up the collectivity versus individuality having a stake hold inside that company? You're talking about a mixture of a company, collectivity but including individuals.
Mr. Donald: Correct. Like any corporation, it's based on the number of shares that they purchased. The communities have larger shareholdings. The individuals have much smaller shareholdings.
Senator Watt: So individuals do get their dividends, as well as the collective?
Mr. Donald: Correct. We pay dividends just like most corporations. We're proud to say that since 1987, we have paid dividends, except for two years in the 1990s when we had a rough patch. We've been paying dividends to our shareholders all along. We have been growing our loan portfolio since that time as well.
Senator Watt: I guess the same thing applies to you also; that is, what we're hearing from Mr. Donald?
Mr. McCoshen: Usand Group is 100 per cent privately held.
Senator Watt: So there is no collectivity at all.
Mr. McCoshen: No.
Mr. Rowe: Forrest Green is a private corporation as well.
Senator Raine: Thank you very much. It's good to hear about so many different options and potential ways for capital to be obtained by First Nation individuals and communities.
Mr. McCoshen, I'm interested in the Douglas Cardinal Housing Corporation and the special design you have. Is this a design for a single-family house?
Mr. McCoshen: Yes. There are options that go from $155 a square foot all the way up to $300 a square foot, and they are single family homes. They have two separate washrooms within the home. The smaller unit is a thousand square feet and you can go up from there. There are some units that have two-car garages, and they're basically designed to have a 50-year lifespan. That's pretty good compared to the 20-year lifespan.
I think the more significant part of it is that when it comes into the community, it comes with a financing solution and is of cultural significance to that community. It is like when you drive down the streets of Montreal and you see the different styles of houses with the different types of roofs that are unique to Quebec, as opposed to some of the house styles that are unique to Manitoba. I think that the pride in the corporation that I have is that it's culturally unique to the community. It's properly priced and it lasts 50 years.
Senator Raine: Are these typical stick-built houses?
Mr. McCoshen: Not being the architect and just having seen lots of really cool pictures, I think it's called a cross lamination — and I hope I'm getting this right for Douglas or Ken, if you're watching this.
Erinn Mah, Chief Operating Officer, The Usand Group: It is something close to that.
Mr. McCoshen: I think there is a version that has a copper roof. The roof is set in such a way to deal with melting snow in an effective way. The number one issue here is mould. Because of the shortage of housing, you have two, three, four — I've heard of nine families living essentially in a stick-built house.
I'm the father of a four year old, and I know how fast he's growing. He's going to be taller and heavier than me at that age. I guess with one temper tantrum he's going to go through a wall pretty quickly.
The key here is addressing that and addressing the mould. They're really good looking, they're properly priced and they come with modern financing techniques. In other words, the method of financing is designed for the community and the affordability or the credit worthiness of that community.
What I'm trying to say is what that community can afford is irrelevant to the fact that they need the houses. If you design a financing solution so that the community can afford the number of houses that they need, and you have a 50- year lifespan, and you get into some of the innovative techniques of financing that both of my colleagues are looking at, then I think that you've found a capital market solution to the shortage of housing.
Ms. Mah: I'd like to add to that, if I could. As well, there's an environmental awareness aspect to them. They're considering what is called district heating. It's a very old type of technology. We can supply more information on these homes to you as it comes up if you'd like. So there's the environmental aspect that's obviously taken into consideration. It's very important to all the First Nations communities.
As well, we should mention is the infrastructure component that goes along with these houses. Usand looks at the long-term and short- and medium- term horizons for the communities and are able to build in an infrastructure and a housing plan that fits within other financing needs they have, as in economic development projects and the like.
One benefit of this program is we're able to look at the picture as a whole as opposed to just looking at the housing component or the infrastructure component.
Senator Raine: Obviously, you can't build a house if you don't have the infrastructure. Sometimes it's a chicken and egg situation.
Ms. Mah: Exactly.
Senator Raine: Could you send us some more information on the houses?
Ms. Mah: Absolutely.
Senator Raine: Where I live, one of our First Nations has designed a roundhouse, post and beam. It sounds like a similar type of plan. I think there is an opportunity to have culturally appropriate designs ready to go and quick to build, I suppose, but what's interesting in what you're doing is putting the financing package together with it.
Would you be open to having that kind of financing package to other similar type of modular homes across Canada?
Mr. McCoshen: We'd have to look at our non-compete, but absolutely. Our emphasis is on the Douglas Cardinal Housing Corporation. I would be happy to sit down and discuss financing techniques, but to go about and actually finance another product is probably not in our best interest as a company.
It doesn't mean that I would be unwilling to go in and suggest financing techniques.
There are lots of houses that we need to build. Although we'd like to build all of them, realistically speaking, we can't.
Senator Raine: Mr. Donald, do you think All Nations Trust Company could take financing models such as Usand has developed and add those to a package-type home and put that together for First Nations?
Mr. Donald: I think it is something that we could look at. I'm not familiar with the total financing model, but it is something we could look at.
As they have stated, there's more demand than there is supply. Certainly, the demand seems to be there, so I would be willing to explore that further.
Senator Tannas: Thank you all for participating here.
Mr. Donald, do you take deposits; do you leverage the capital that comes in from your shareholders through deposits or through borrowings, or is it a direct model where you gather up your money and loan it out like a community futures would?
Mr. Donald: We are not a deposit-taker. We are essentially a small-business loan company, so we make money by lending it out and getting paid back.
Senator Tannas: Do you put any leverage on the money that comes in, or is it just one time — the money that comes in gets loaned out?
Mr. Donald: The money that comes in gets loaned out.
Senator Tannas: Understood.
Mr. Donald: Where we are able to leverage any government funds or any type of programs, we will do that.
Senator Tannas: Add that in, yes.
Mr. Donald: We will put together a financing package for an entrepreneur or a First Nations community to help leverage their dollars.
So we will put them all together.
Senator Tannas: Given that, your value must also come through advisory services and helping put packages together; is that fair to say?
Mr. Donald: That is a crucial part of our business. Many of our Aboriginal entrepreneurs aren't sure where to go in terms of what type of financing the business is eligible for, or even what type of programs or funding might be out there for their particular business. Our role is to put it all together, get it loan-ready and get it financed.
Senator Tannas: For the folks at Usand, I didn't quite catch the numbers that you talked about in the beginning. You said you had closed deals of X dollars, and you had a pretty clear number. What was that number?
Mr. McCoshen: In the last two years, we have closed — as in disbursed — $113,478,000. We're currently in the process of closing on approximately $180 million. We're currently negotiating engagement agreements on another $300 million, and this ranges from infrastructure to business acquisition to business mergers to casino funding to housing developments.
Senator Tannas: Thank you. Those are big numbers.
Mr. McCoshen: They could be bigger.
Senator Tannas: Yes.
We can look at the opportunities and note that we've got community infrastructure, roads, sewage, and water treatment. We've got community-based housing — and it's interesting as that's where your Douglas Cardinal housing thing is — we've got individual housing, and then we've got the big old pool of economic development, such as building casinos, investing in river power plants and all those things.
Where in those buckets has your $300 million gone so far?
Mr. McCoshen: Oftentimes, when you go into a community, no two communities are like. For lack of a better word, their credit ratings are different — if you could call it a credit rating — the three key ratios put forward by Aboriginal Affairs fall in different areas.
Sometimes you're attacking an individual project. For example, within this $300 million, there's one group in particular that's going for a very large percentage of that just for infrastructure. To be honest, I could say the mix is 50- 50, because it's really difficult for certain communities to go on and do a massive business build or a massive casino build while houses are collapsing, there's back payout to CMHC, or there's a significant amount of money owed to Aboriginal Affairs on educational issues.
You kind of have to take care of that, or, politically speaking, the chief isn't going to get re-elected again, nor will some of those councillors. It's difficult to do one without the other.
Senator Tannas: I get you. So really the nugget of what gets you interested and what would get capital markets interested is economic development. Yes, you've got to go in and fix some of these other things and get that going, because you're not really — are you interested in financing sewer projects in place of what would be a municipal kind of financing? If so, would you finance municipal governments, as well?
Mr. McCoshen: Actually, I am interested in that. I'm interested in financing everything, because that's what I do. I'm very focused and narrow. I can't give too many comments on the Indian Act; I've never read it, and I don't intend to.
Usand exists to find corporate solutions as they are available in Canada today directed toward the communities that are facing challenges. It's like an emerging market fund. It's no different than when, in my previous career, I had to go into Dubai and Abu Dhabi in the Middle East. Despite the fact they had already captured their resources — in this case, it was gobs of oil — there was still a tremendous need for infrastructure, and there wasn't a big, general knowledge pool on how to do it.
When you're getting into larger finances, I know how to do it because I've done it. But if I hadn't done it, I wouldn't know how to do it, and I wouldn't be an authority to talk about it.
From my experience, you can't really do just the economic development without the sewage, without the houses and without taking care of an inability to cover your payables. You have to term out your payables. That's why I am actually interested in the sewers; namely, because it gives me the ability to finance the casino or the truck-stop or something of that nature.
Senator Tannas: Thank you. You are, I think it's fair to say, one of the best-kept secrets. We've have others who have been here with $300 million pots of money who can't seem to get it out the door. You've done a very good job.
Thank you all.
Senator Moore: Thank you, witnesses, for being here. I wanted to follow up on Senator Tannas' questions.
Mr. McCoshen, you've got $113 million out there in loans, $180 million about to close, and another $300 million is in negotiation of possible transactions. Where do you get your deals?
Mr. McCoshen: We go to the banks. We go to the market.
Senator Moore: You go to the banks, but how do you know if a certain First Nation needs something? Do they come to you? How do you get hooked up with a First Nation?
Mr. McCoshen: In the beginning, a First Nation community would have a need and, like I mentioned, Ovide Mercredi would point me in that direction. Now we're bigger.
If you want to figure us out, we're no different than a capital markets company on Bay Street or Wall Street, you know merchant banking services. The only difference between us and them is we focus entirely on, at this point, Canadian First Nations. Eventually we will expand down to the United States.
Senator Moore: I understand. I just want to know, how do you find one or how does one of them find you? There's Ovide Mercredi, a former grand chief, is he out stirring up deals for you?
Mr. McCoshen: As Erinn can attest to, my phone doesn't stop ringing these days. In fact, I'm feeling the vibrations right now. Lately it's a lot of people coming to us.
Senator Moore: That seems like a great track record for just two full years of operating.
Mr. McCoshen: Well, I have had previous experience in finance, as they say.
Senator Moore: I heard you say that. Are you the principal owner of Usand Group?
Mr. McCoshen: Yes, I am.
Senator Moore: We were talking about infrastructure and housing needs on reserves. Is your main interest the funding of housing opportunities on reserves? You mentioned you have to have infrastructure, of course. Is it those two things primarily, or is it the economic activities like a casino or gas station?
Mr. McCoshen: To reiterate, it's all of that. We're financiers. We want to finance everything, so it's great when a community calls you. They don't just have one need, they've got dozens.
I hate to say this, $113 million sounds like a lot of dough going out on the table, but it's peanuts; it's scratching the surface.
Senator Moore: In terms of the opportunities that are available.
Mr. McCoshen: In terms of the needs. The thing that gives me personal pride in what the company has achieved is we're using normal methodologies of finance. I think that's significant and speaks volumes of the First Nations that are out there.
Senator Moore: Where is your head office?
Mr. McCoshen: Our head office is in Winnipeg, Manitoba.
Senator Moore: Mr. Donald, I don't think I heard you say the amount of loans your trust company has out there.
Mr. Donald: We have provided $75 million in financing over our history, but our loan portfolio is just under $12 million, so we're a fairly small company. Our entrepreneurs that we lend to, small business, my typical loan is under $100,000.
Senator Moore: Is your focus more small business loans than housing and the infrastructure needs that go with that?
Mr. Donald: Correct.
Senator Raine: In your opening remarks, you mentioned that you could use more ministerial guarantees. If there were ministerial guarantees, what kind of risk would they be at and what would that do for your ability to expand the capital pool?
Mr. McCoshen: Well, I read up on the previous hearings that the big five banks attended, like the Royal and the BMO, and we have great working relations with them. In their comments they were focused on the First Nations Market Housing Fund.
I think government is most effective when they're facilitating the markets to come in and do the job that they've been designed to do. If you look at transactional-based, Western-style economies, this has been perfected over hundreds of years in terms of putting capital where capital is needed and looking for opportunities in order to gain a return.
Government should be facilitating as opposed to getting into the business of lending money itself, the catastrophes of which are well documented. Government is there to facilitate growth.
When I say "guarantees,'' the First Nations Market Housing Fund, even though this is a case where there's $300 million, faces difficulty in getting it on the ground because there's difficulty in terms of understanding what it does. But this is a fantastic way for the government to assist in getting more homes on the ground.
I've done deals in the Middle East, America, Canada and Europe, and the children on reserves have as much capacity as anyone else to learn complex financing tools. In fact, most of them, if they went through the same education I did, would probably be 10 times better than me. But in terms of educating, providing funding towards more sophisticated education, more tailored education such as this Forward Vision Games, who we've teamed up with. For example, there's something in finance called a "swap,'' which gives you an ability to work with the futures markets to keep your interest rates very low and flexible over a longer period of time as opposed to term lending with an amortization. The game to teach young children how to understand the futures or derivatives market is a hockey game, with the puck passing over the blue line and the centre line, and that's how you learn about a very complex tool called a "swap.''
Funding towards that kind of education is probably the best way the government can act here.
The Chair: I think we'd probably like to learn more about that financial education through computer games, if that would be agreeable, following this meeting.
Mr. McCoshen: That's fine.
Senator Watt: This is a question that was bothering me as well, and Senator Raine has raised the issue. I'm not entirely sure she got the answer she was looking for. That is, where do you see the government coming in to provide security to your investment, In the form of collateral or what? Are you looking for any input from the government along that line?
Mr. McCoshen: Well, you're talking about financing in a general term, and I'm going to look at more specific aspects and bring an example, and it's something that Mr. Rowe touched on in terms of securitization.
If you want to place an investment, whether it be a senior debt facility or whatnot, into the building of a casino, what happens if the management of that casino goes awry and it starts losing money and the original investors need to come in to get their money out? A mechanism of securitization needs to be developed. It's quite simple. If you go to the bank and take a mortgage on your house —this is not on reserve — and you default on your monthly payments, that bank has an out, and their out is they take the home and they sell the home.
It's not so clear how you do that on reserve. There needs to be something, whether it be legislation designed to give the ability for the First Nation to grant that kind of security and for the investor to have that kind of security. I don't know how you do that, but that's the example I'm talking about.
Senator Watt: This is what you mean by something that still needs to be developed.
Mr. McCoshen: Absolutely.
Senator Watt: Or put into in the form of legislation or policy or whatever, that's what you are still looking for. You still don't have an absolute solution, but you have capital to make an investment.
Let me go a step forward. Let's say if I were to come in as a leader of one of the communities' band council and say, "Look, I have this community, but my community is down.'' You are fully aware of most of the reserves.
Mr. McCoshen: You're in rough shape.
Senator Watt: They're in rough shape. So how many communities would you want to start off with, knowing the fact that you need to put up the infrastructure, sewage system, the toilets — the whole community? How many communities do you think the company can handle in one year?
Mr. McCoshen: Well, I mean this has been a topic of discussion that Ms. Mah and I have been having. We are starting to realize we are short on manpower. I'd like to say I can do them all, but, I don't know — 50 to 60 communities a year maybe.
Senator Watt: That's a lot.
Mr. McCoshen: You develop a method. We have been doing this for quite some time. You start to recognize patterns, and when you recognize patterns, especially in finance, you can develop solutions for it, and the solutions have to be creative because there are no two deals alike, as we all know. Financing is, for lack of a better word, a personalized approach to dealing with very real world problems. A lot of times, let's face it, through a lack of knowledge of financing, communities can get into very real trouble, and I think across Canada there are 100 that are in severe trouble. What I alluded to in my statement is you can still get solutions for that community. It's difficult, but it usually involves a complete refinancing of everything, all of their stuff, all of their banks. You have to look at why they are in third party management. Did they have CRA owing or education funding owing or was there a massive political divide such that the whole thing came to a standstill?
You have to sort of tailor a solution to get out of it, but there are still patterns that emerge within that framework, but for the better ones you can do individual problems now. Often times, they also recognize the need for restructure.
Senator Watt: Chair, I think we are going to have to understand what he's talking about a lot more the way he's describing it. We may have to bring him back again because of the time available.
The Chair: We are running short of time, and this has been most interesting.
Senator Moore has a short supplementary, and then I will give Senator Oh the last question.
Senator Moore: Mr. Donald, you mentioned that all of your 209 shareholders are in British Columbia. Is that by legislation, or can someone else be a shareholder, whether they are First Nation or not, or whether it is a First Nation from outside B.C.? Can they buy shares and how are they available?
Mr. Donald: We are an Aboriginal-owned trust company, and our trust company is only legislated to do business in British Columbia. We are not seeking any new shareholders, but our articles of incorporation do stipulate that our shareholders need to be both Aboriginal and from British Columbia.
Senator Oh: Thank you for coming, witnesses.
Your company is doing extremely well. How many people do you employ?
Ms. Mah: Nine. Employed, there are only a handful. We actually use contractors a lot of the time as well.
Senator Oh: You farm out to contractors.
Ms. Mah: Yes, but it's a full team of about nine.
Senator Oh: How big is the loan portfolio on your company housing? What is the ratio on your business loans?
Mr. McCoshen: Very minor right now.
Ms. Mah: We did about $6 million for one community for their housing needs, and I don't have the number here exactly, but we provided financing for 23 homes for another community. The Douglas Cardinal housing initiative is just at its infancy right now. We just registered the corporation. Hopefully that will be getting off the ground quite quickly.
Senator Oh: You said 23 houses are to be built or 23 communities?
Mr. McCoshen: Forty-six all total in the first year, but we were not focusing on it. Now with the Douglas Cardinal corporation, which is a division of The Usand Group, we're going to focus on it, and we're hoping to do significantly more than that. In fact, I think we may have gotten our first order today.
Senator Oh: You have been in business for some years. What is the default ratio on the loans you give out on housing?
Mr. McCoshen: So far, our default ratio on all loans, including housing, has been zero. If you look at First Nations communities in defaults, it's almost zero.
Senator Oh: No bad loans?
Mr. McCoshen: Hardly any. From a credit perspective, in terms of defaults, it blows absolutely every other category out of the water. It's a little known fact, but there are hardly any defaults at all.
Senator Oh: Are you facing any competitors doing the same business?
Mr. McCoshen: Well, I mean, we've never focused on any competitors. I just focus on my own business. I'm sure there are competitors out there. There are some government-backed programs, some of which I agree with and some of which I completely disagree with. Like all emerging markets, you have to be a trailblazer in the beginning, and as you blaze the trail and methods become more understandable, competitors will come in and competition in finance is just as good as competition in any other field. You need it. The First Nations will demand it.
Senator Oh: Earlier I heard, and correct me if I'm wrong, that your company is also doing business in the U.S. and Europe?
Mr. McCoshen: No, I have previously done business in Europe, the U.S. and the Middle East. In terms of U.S. business, we are getting phone calls from the U.S. and we will move down there. Remarkably, speaking from the work we have done in research, the difference in terms of communities in the United States versus communities in Canada is very little to none. It's the same. We are a business. We are in business to make money and profit, and if an opportunity is down in the United States, and we are personally familiar with the United States style lending, then by all means, we will go down there and do business.
Senator Oh: What was your total volume of business turnover last year?
Mr. McCoshen: For us, $113,478,000.
Senator Oh: Thank you.
The Chair: Thank you, colleagues.
I would like to thank the witnesses. This has been very informative. I think we may want to follow up with some of you to get further information. It has been most enlightening for us.
I'm very pleased to welcome a former colleague of mine from the Legislative Assembly of the Northwest Territories, Richard Nerysoo, member of the Assembly of First Nation's Working Group on Natural Resource Development, who is joining us from Vancouver via video conference.
As you might know, Mr. Nerysoo, we are studying infrastructure and housing on First Nations reserves. We've decided as we near the end of our study that we need to look at other options for own-source revenue for First Nations communities, and I think it's timely that your working group has recently reported. We thank you for appearing to assist the committee, and we look forward to your presentation, which you can expect will be followed by questions from senators. Please proceed, and thank you for joining us from Vancouver.
Richard Nerysoo, Member, Working Group on Natural Resource Development, Assembly of First Nations: Thank you, Mr. Chair, Senator Patterson, and to your colleagues, the other senators, and to those of your staff and technical support.
Today, I thank you first of all for giving us the opportunity to make a presentation to the committee. For those who do not know, the working group was made up of four members. Actually, one had to resign earlier on, but the membership comprises the Regional Chief from Alberta, Cameron Alexis, and Mr. Douglas Turnbull. Both of them are co-chair with me, Richard Nerysoo. Patrick McGuinness is part of the working group, along with Regional Chief Roger Augustine of New Brunswick.
The committee itself was established for the purposes of undertaking a review of how First Nations could participate and be involved in natural resource development in Canada, how they could get involved in terms of sharing the wealth that was being generated by resource development in Canada and what other options there might be to encourage First Nations to participate without sacrificing the importance of protecting and maintaining the environment, water and natural resources.
It was quite clear from the conversations we had with First Nations business leaders and industry that everyone that was part of the conversation recognized there was a need to change the way in which decisions were being made around resource development and what the governments would share in the revenues from natural resources.
We realize that not all of these issues are simple. We recognize that there is a significant requirement for conversation with Canadians and with governments particularly, the provinces, the territories and the Government of Canada. But it also requires a significant dialogue and discussion with First Nation leaders across this country.
In many cases, many have different views about the issues that we raised. Nonetheless, the important thing is that there are a number of issues, items for which immediate action is recommended and recommendations for further dialogue.
Mr. Chair, I'm not sure if the report itself has been presented to you and your committee members, but if you don't have it, we certainly will make it available to you. For your information, Mr. Chairman, the report is in English and French. It was translated accordingly, simply because Canada had representation on the committee and was a strong supporter of the working group.
The working group itself also came out of a national dialogue that included the Prime Minister of Canada and the former National Chief in 2013. As a result of that they established the working group.
For your information, there were, as I said, four immediate action items that we thought were really important. One, that we needed to create a national dialogue in the form of a national round table on resource development. We needed also to convene a national discussion on resource revenue sharing.
And the reason why it becomes really important is that the dialogue is a much broader conversation that requires input from leaders from the territorial, provincial and federal governments and requires the First Nation governments to have representation.
There is also a need, in our view, to establish a central knowledge and information resource centre to assist and enable First Nations and, for that matter, Aboriginal peoples in this country.
The other issue that became very important was a conversation that required us to have an international forum to promote First Nations trade and international partnerships.
Simply put, there have been lots of conversations about the success and contributions that First Nation businesses have made in Canada, and in fact in other parts of North America and throughout the world. The issue is quite clear; we don't have much of a conversation as to how we can work together. One of the ways in which we can do that is to propose the concept of an international conference.
I don't want to get into the overall other recommendations. Just so you know, there were four areas that we had a conversation about and made recommendations on: governance, establishing a principled, inclusive and accountable approach; on the environment we said that it was based on ensuring a balanced approach; prosperity, creating a sustainable future; and finance, building strategic pathways.
If I might very quickly talk, Mr. Chairman, on the finance issue. What was clear in the conversation with First Nation leadership, the business community and even industry was that there are no effective lending and borrowing instruments. These are absolutely critical to a functioning economy. Certainly if we are to allow for Aboriginal and First Nation participation in resource development, we need to find ways to develop that. Investing first in First Nations will allow the First Nations to pool resources.
An issue that we need to address is one in which you have had experience, Mr. Chairman — that there are many First Nations that have significant resources available to them that could be a place for investment funds. That's just not happening — the coordination, the willingness to pool capital, share resources, work together leveraging instruments and establishing and pursuing joint venture opportunities. It seems that we have tunnel vision in the way we operate in the country. It's almost to a point where we have no interest in working together. That's not in the best interests of the investment and economic well-being of our communities.
If I might, Mr. Chairman, I will end there and answer questions in a more formal way.
Thank you.
The Chair: Thank you very much Mr. Nerysoo. We have your report.
Maybe I'll start off. Who did you report to, and what do you see as the next steps now that you've made your recommendations?
Mr. Nerysoo: We were requested to prepare the report for the National Chief of the Assembly of First Nations and the Minister of Aboriginal Affairs and Northern Development Canada on behalf of the Government of Canada.
Obviously the next steps are to take the report itself and the recommendations and to undertake a number of activities on whether or not it's a national discussion on resource revenue sharing. If we don't have that national conversation we're talking to ourselves. It's important that the provinces, the territories and the Government of Canada be part of a conversation.
In some jurisdictions revenue sharing already exists with First Nations and Aboriginal peoples. It's a matter of conversation, and I know you were part of the discussion with Nunavut around devolution and revenue sharing, and that's going to be an issue.
The proposition has been made by the Province of British Columbia, Ontario and there is some discussion with Manitoba. Some provinces have identified it as an issue that they don't want to talk about in the purest context of resource revenue sharing, but I think the conversation has begun.
Even the Canadian Council of Chief Executives supported the concept. They have supported the proposition of resource revenue.
Industry is open to the conversation. I guess the big question they have is what does this mean in terms of the revenues to industry and whether or not it's going to be giving away more as opposed to sharing what is already available. And that conversation needs to take place. If it doesn't, then obviously we're not going to get the political support that's necessary.
The other thing that is important for us is the idea of creating what you might say immediately is the concept of a resource centre, to share information on agreements that have been negotiated and knowledge on business development. There is no central agency in this country producing documents on best practices that we can share; on business development, on working with industry, on environmental management or land-use planning. Nowhere is that available, and we need to create some kind of mechanism for that.
The other issue for us is to have a good conversation on international trade and opportunities in general. There are many First Nations and Native people — as you know from your own experience, Mr. Chairman, with Native corporations in Alaska — that have been extremely successful in forging partnerships involved in resource development, not at the expense of their environment but in fact partners in resource development with huge amounts of capital. It is possible that we can create what you might say are investment funds or partnerships in Canada, cross- border, and we can take that to other jurisdictions like South America or other parts of the world.
Just for your own information, the information of senators, some of these corporations in Alaska actually provided services to the United States Armed Forces in places like Afghanistan or Iraq previously.
So these services and businesses are possible. We have been looking at businesses purely in the context of a trucking company or opening a store.
We're not talking about it in terms of sharing in the investment of a large mining company or a major oil and gas company. We're just looking at it in small terms. The result is that we take away the opportunities for the small businessmen in the community who could own the trucking company as opposed to the community corporations.
Senator Enverga: Thank you for the presentation. What you have given us is such a comprehensive study. Have any of the First Nations adopted any of your proposals? Has there been any positive feedback? Is there a timeline to work on the next steps? What are the plans here?
Mr. Nerysoo: The next part of our plans — and we're hoping, of course, that we get the resources to do it — is to actually take the documentation and meet with the appropriate First Nation leaders across the country and present the recommendations that have been proposed.
I can tell you this: Most recently, I can't speak on behalf of the First Nation leadership — that's National Chief Bellegarde — but there have been indications that the leadership of the Assembly of First Nations, the executive council anyhow, has adopted the report as a framework on which to move forward. So that's a good indication that, at least, we have the support of the national leadership. The next issue is to go to the communities or to the tribal areas and the provinces and make the presentations accordingly.
Senator Enverga: On your recommendations, is there a proposal that says that this is not really a one-size-fits-all solution? Are you recommending that this is a specific way to help specific First Nations? Is it just a general rule?
Mr. Nerysoo: We haven't gone into the specifics, simply because we want the First Nations themselves to articulate quite clearly what it is that they want in their respective regions. If it's ever possible, the adoption of the principle nationally would be in our interest. That would then allow the First Nation leadership, the provinces, the territories and the Government of Canada to come to the table to have a good conversation about what that really means. We didn't want to get into defining what the deals should look like. We didn't want to get into a conversation about what the developing models of governance might look like. That should be the First Nations themselves, recognizing that there is a need for those models.
What we were clear about, though, is that those models need to incorporate the concepts of accountability, responsibility, all of those things that are fundamental in making sure that, first, Canadians could see that we were being up front and accountable for the decisions we were making, and, second, that no one was hiding anything from the Canadian public. That included working with governments because governments themselves need to be upfront about the issues. If you don't talk about being upfront about the issues, then how do we come to a solution? It's impossible.
What we were trying to do is basically frame the conversation and then allow the people to have that discussion.
Senator Tannas: Thank you very much, Mr. Nerysoo, for being here. Around the world, is there any country with Aboriginal peoples that is getting it right on resource sharing? Do you see a model out there? Do you see something that you can grab onto and maybe mould or meld a little bit, or is it difficult everywhere?
Mr. Nerysoo: Put it this way: The conversation should begin, even in Canada, around the things that were done in Yukon and the Northwest Territories. The Inuit final agreement has some of those models.
The issue always is about detail. If you look back, you can say, "Okay, well, is there something that wasn't as good as it could have been, and can we do better?
The other thing is that other jurisdictions, like B.C., Ontario, have put on the table the idea of revenue sharing, but as complex governments as they are, they really have not come to a final decision about what that should look like.
I think the conversation that we need to have is: What is it going to look like without creating a backlash or opposition to the idea of natural resource development in this country? How do we make it so that we're all sharing, both in terms of the prosperity, the wealth, and the decision making in support of resource development? How do the people feel about supporting that, and the lands, the resources and the environment are also considerations in that conversation.
I know I've broadened the answer to your question. Money is one thing, but the other issues around that are really important to the conversation.
Senator Tannas: I understand. We are charged with trying to find ways to increase the number and provide innovative financial solutions for housing and infrastructure for First Nations on-reserve. My personal sense — and I'd be interested to know yours — is that the momentum is very much in finding ways to come to a revenue sharing, resource sharing, taxation kind of a regime for First Nations.
As we sit here today, with urgent needs to finance assets that have a 30-year life, in your opinion, when do you think that First Nations will be in a position to start seeing significant inflows of resources that can help pay, somewhere down the road, for stuff that the government might finance today.
Mr. Nerysoo: That, for me, is an extremely difficult question. I'll answer it this way: At a point in time when the First Nations are able to share in the wealth and the prosperity of this country, along with making decisions, and have their authority recognized. I don't mean it in the sense of a veto. That's not what I'm talking about. I'm talking about the idea of governments recognizing that we all need to go to the table with a sense of goodwill. If we don't go to the table with a sense of goodwill, then it makes it very challenging for all of us to come to any resolutions and to propose solutions — people taking their own preconceived ideas and solutions to the table and saying, "We're open to solving a problem,'' on things like infrastructure and housing.
I'll say it this way: There are many First Nations in this country and Aboriginal corporations or Aboriginal governments that have financial resources and capital. I come from the Gwich'in. The chairman, Senator Patterson, knows about the Nunavut Tunngavik and the compensation that they have, along with the Inuvialuit or the Sahtu, the First Nations in the Nisga'a. There are others. Membertou in Nova Scotia have revenues that are coming in because of good business decisions and because government has settled on agreements.
What I find right now is that we are unable to create what you might say is a national First Nation or Aboriginal investment fund that could be used to do that very thing. I always use this example: Why is it that First Nations are unable to create a comparable investment fund, with all the compensation that we've been able to accrue and continue to accrue, to the Ontario teachers' pension fund? Why is it that we can't put together the capital and start investing in partnerships with the provinces and with the Government of Canada on building infrastructure in First Nation and Aboriginal communities? If we're able to do those kinds of things, it's no different than the housing money.
I've always said that we spend a lot of time on housing without looking at some of the programs in the North. For instance, there's a home ownership program. Why is it that we're not looking at home ownership and using some of the capital money to promote actual home ownership, but First Nation citizens who are capable of investing and paying for their own homes are not able to do that right now?
We need to have that conversation and promote that kind of concept, because the people do want that; they do want to be their own homeowners. We need to have that conversation, without it being seen as Canada walking away from their fiduciary responsibility for First Nations and Aboriginal people in the country. I think if we can have that conversation, like I said, with a sense of goodwill, we will be much better off for it.
Senator Raine: I'm very sorry that I did not have time to read your document before the meeting. I can see that it is extensive and it will probably answer a lot of my questions.
At first glance, though, I'm wondering why you think it's necessary to hold an international forum. I see it's mentioned in two different places.
I would think that, on the national scale, we have a lot of work to do in terms of pulling people together and thinking with a common mind. In particular, I'm interested in coming to some kind of a strategy to convince, perhaps, the federal government to look at guaranteeing major capital projects like they did for the James Bay project. There are major national projects that could have Aboriginal buy-in, but to get that buy-in and really make it work, I think you'd need some kind of federal guarantee. Have you been looking at that?
Mr. Nerysoo: Thank you, Senator Raine. Just for your information, we did have conversations about financing infrastructure, both in terms of investment and partnership.
I was one of the founding partners of the Aboriginal pipeline group, the Mackenzie Valley pipeline project several years ago in which we negotiated the idea of ownership; it ended up 40 per cent ownership in the Mackenzie Gas Project.
We had conversations with Canada about is the idea of a loan guarantee. It's unfortunate, but I think we could have gone much further had we had the conversation purely on the loan guarantee on the First Nation ownership in the project, as opposed to having it as simply a loan guarantee for all the partners. Politically, that was a hard sell at that particular juncture because you're talking about the oil and gas industry. It's different today, but at that time the revenues were significant. It's very hard for people like yourselves, along with the political leadership, to sell the idea of a loan guarantee to ExxonMobil or to ConocoPhillips and that sort of thing. If we focused on how we could support the First Nation and the Aboriginal participation in projects of that type, we could get better results and outcomes from that conversation.
Senator Raine: It seems to me that an Aboriginal consortium of some kind could go to the capital markets and borrow money, with a loan guarantee, and then invest in those facilities and earn their ownership that way. Obviously most First Nations don't have enough capital to put into it and there are other needs. I'm just wondering, though, why you're focused on the international forums as well.
Mr. Nerysoo: Why we were talking about the international forums was to draw on the success of the American native corporations in the lower 48 and Alaska. The chair will know about this, but North Slope corporation, or NANA corporation, they have developed some significant partnerships with industry and have been very successful drawing income, for instance, even on the East Coast.
Several years ago, we had a conversation with the eastern tribes, and they had about $1 billion of capital cash on hand. They were looking at the possibility of investing as a partner in the Mackenzie Gas Project. If they were able to have that conversation and create an appropriate capital fund where they can invest, the very comment you made a few minutes ago would encourage other native people to be part of international investment, Canadian Aboriginal people and corporations investing in the United States and major projects. That conversation is needed.
Just from past experience, a small community like the Acho Dene corporation was involved in camp services. They were invited by Encana to provide services in Peru because they had done such a good job with their corporation in providing camp and catering. That's an example of a small, very successful community that was invited to provide international services and work with the native people in Peru.
That is an example of success that hopefully encourages further success in other relationships. That's why we proposed that idea.
Senator Moore: Thank you, Mr. Nerysoo, for being here. In light of your comments with respect to the need for a discussion to take place regarding environmental resources development and the sharing of the revenues, we heard a lot about that yesterday from Mr. Manny Jules who was before our committee. I wonder if he has been part of your discussion and outreach for ideas.
Secondly, you wondered, in response to Senator Tannas, why we can't have an organization like the Ontario teachers' pension fund. My question is that you have named a lot of successful First Nations who are wealthy, and why can't you? Why don't they get together and do that?
Mr. Nerysoo: I don't really know the reasons why we can't do it. Personally, I think it's in our interest to come together and develop a national investment fund.
When you're talking about banking institutions and financing companies making significant revenues off the lands and resources that come from the traditional lands of our people, I wonder why it is that we ourselves can't just knock down some of these barriers that we've created. In some cases, maybe we've created them ourselves. On the other hand, maybe it's the way in which the structure of Canada has focused the idea that we're going to fund this First Nation over in Ontario so that they can do business in Ontario, rather than saying to the First Nations in Ontario, "Go ahead and form a business partnership in the Northwest Territories, or get together with the Gwich'in, the Haida, the Nisga'a or the Dene in northern Alberta, if there are good opportunities.''
Senator Moore: I don't know why you need somebody to tell you that you can do that. If you have willing partners and you have contracts, why can't they go about that, make those arrangements and investments jointly?
Can you tell us whether or not Mr. Jules was part of your outreach and discussion? He certainly has some good modern, advanced ideas in this regard.
Mr. Nerysoo: He wasn't part of the conversation, but the head of the First Nations financing institution as part of the conversation, and they work together, so he was actually part of the conversation with us. Part of the recommendations we came up with under the "Finance — Building Strategy Pathways'' is a result of the conversation we had with them.
The Chair: In closing, I'd like to note that the committee did hear from the Macdonald-Laurier Institute, Mr. Ken Coates, whose report preceded yours by about a month this year. I trust you'll agree, Mr. Nerysoo — I'm not asking you endorse it completely — that many of the themes in that report, including pooled investments, opening up a dialogue, seem to have been echoed in the work you've done. I think we're feeling a momentum in this direction.
I'd also like to thank you for mentioning the example of Northern Canada. I think you and I know there have been examples of resource revenue sharing over large areas that Canada can possibly learn from and build on.
With that, I would like to thank you again for being available to us tonight and for your helpful interventions. The meeting is adjourned.
(The committee adjourned.)