Proceedings of the Standing Senate Committee on
Aboriginal Peoples
Issue 13 - Evidence - May 5, 2015
OTTAWA, Tuesday, May 5, 2015
The Standing Senate Committee on Aboriginal Peoples met this day at 9:34 a.m. to study challenges relating to First Nations infrastructure on reserves.
[English]
Jessica Richardson, Clerk of the Committee: Honourable senators, as clerk of your committee it is my duty to inform you of the unavoidable absence of the chair and deputy chair and to preside over the election of an acting chair. I am ready to receive a motion to that effect.
Senator Raine: I move that the Honourable Senator Tannas take the chair.
Ms. Richardson: It has been moved by the Honourable Senator Raine that the Honourable Senator Tannas do take the chair. Is it your pleasure, honourable senators, to adopt the motion?
Honourable Senators: Agreed.
(Motion carried.)
Senator Scott Tannas (Acting Chair) in the chair.
The Acting Chair: Thank you and good morning. I would like to welcome all honourable senators and members of the public. We are watching the meeting of the Standing Senate Committee on Aboriginal Peoples either here in the room, via CPAC or on the Web. I am Scott Tannas from Alberta, and today I have the privilege of serving as the acting chair of the Standing Senate Committee on Aboriginal Peoples.
The mandate of this committee is to examine legislation and matters relating to the Aboriginal peoples of Canada generally. This morning we are hearing testimony on a specific order of reference authorizing us to examine and report on the challenges and potential solutions relating to infrastructure on reserves, including housing, community infrastructure, innovative opportunities for financing and more effective collaborative strategies.
We are in the final stages of our study. This morning we are holding our final hearing with two witnesses we hope will aid the committee as it considers ideas for inclusion in its final report. With us this morning are Harold Calla, Executive Chair, First Nations Financial Management Board, and John Kiedrowski, President, Compliance Strategy Group.
Members of the committee, please join me in welcoming our guests this morning. I would like all honourable senators to introduce themselves at this time, please.
Senator Moore: Wilfred Moore from Nova Scotia.
Senator Watt: Senator Watt from Nunavik.
Senator Raine: Senator Nancy Greene Raine from B.C.
Senator Beyak: Senator Lynn Beyak from Ontario.
Senator Enverga: Tobias Enverga from Ontario.
The Acting Chair: Witnesses, we thank you for joining us this morning. On behalf of the group it seems fitting to have you two fellows as our final witnesses on this study. As agreed, we will not be proceeding in the usual fashion of inviting you to offer introductory remarks. Instead, during the first hour, we would like to ask Mr. Calla to lead a general discussion on innovative financing, and in the second hour, we would ask Mr. Kiedrowski to lead a general discussion on the First Nations Market Housing Fund and capacity development.
We hope that both gentlemen will participate in these discussions with each other, as well as with members of the committee.
Mr. Calla, please get us started.
Harold Calla, Executive Chair, First Nations Financial Management Board: Thank you, Mr. Chair, and good morning to all of you. It's a pleasure to be back before you to talk about this obviously important issue. I think one of the things that struck me as we began to examine this situation is the significance of it, both at a community level and the challenge it represents to government because at this moment, based upon estimates, if there is in fact a $10 billion shortfall, it is an amount of money that can never adequately be covered through transfer payments.
I think the first thing you need to be able to understand is that the status quo and the approach of procurement is never going to succeed. It must change. If there is an outcome that comes from your report it must be to acknowledge that the current approach is not working. That current approach is not in the life of this government. It's in the life since the beginning of time. This is not a partisan issue, in my view, Mr. Chair. This is an issue that has significant consequences to the Canadian economy, the Canadian taxpayer and the lives of people in those communities. As I've said to you before, I view this as an opportunity to help kick-start economies in communities. The $10 billion investment that needs to be made in infrastructure and housing on reserves has a great opportunity to provide not only the Aboriginal communities but the non-Aboriginal communities surrounding reserves in this country with economic opportunity.
I recall in 2008 when we found ourselves in a very difficult global situation, some very wise decisions were made to invest in infrastructure in this country. Billions of dollars were provided in infrastructure investment. The results of that are going to benefit future generations because we've now made those investments. Our economies can and should grow.
We're in a very similar situation here, Mr. Chair, where this kind of investment should be viewed in much the same way as the investments we made in 2008.
As I have said before, and I want to reiterate, it's difficult for me to imagine a program that will be successful in and of itself. If we can't support the development of economies in First Nations communities and rural communities that support Aboriginals and non-Aboriginals, then we're fooling ourselves, quite frankly. We need to be in a position where First Nations communities are able to develop economies, able to provide employment and able to become much healthier from both a social perspective and financial perspective. Things need to change for that to happen.
Access to capital is probably the single largest barrier facing First Nations communities today as they attempt to meet their responsibilities to fulfill their own aspirations. They were the only government, until the advent of the First Nations Fiscal Management Act, that could not access capital markets in the same way as other orders of government. I am pleased to acknowledge that that has changed since 2005 with the passage of the FNFMA. In fact, we have proven that the theory works. The First Nations Finance Authority has issued its first debenture for $90 million; and it will issue another debenture, I expect this June or July, for around $100 million to $110 million. The capital markets have responded favourably to the oversight framework created by the FNFMA and the roles that each of the institutions plays in ensuring that it is a credible regime that can maintain an investment-grade credit rating, which we have now been able to achieve.
I have looked at this issue and now realize that we can't wait for cash flow in the conventional way to respond to these issues. In much the same way, when I bought my first car, I had to go somewhere to borrow money; and when I bought my first house, I had to go somewhere to borrow money. We had to respond to my needs over time, and I had to pay for them over time. I respectfully suggest that notwithstanding the significant transfer payments that come towards these matters, we can't allow cash flow to be the constraint that doesn't allow for some thinking outside the box. We need to be in a position where we understand that you need to be able to do that.
The federal government has a role, and provincial governments could also find themselves in a valuable role in supporting the changes that need to be made. Even Adam Smith acknowledged in his thinking around free enterprise that there were times when government needed to step in. We've shown in this country that we've had the capacity to understand when appropriate and have done so, and 2008 is a very good example of that. There is a role for the federal government to take leadership and say, "We are going to address this issue. We're not going to wait for the procurement model currently in place, which may take, depending on whom you talk to, somewhere between 100 and 200 years to solve.'' That's not a solution. Fundamentally, you're going to come to the conclusion that if you want a solution, then you're going to have to look at alternative means of accessing capital.
Certainly, government can take the lead with ministerial guarantees, and those kinds of tools are available to them. The question you will have to ask is how you wish to utilize them. For far too long, we've dealt with the social consequence of poverty. We've never wanted to deal with the economic reality of poverty. This is an opportunity for Canada to change that view. We need to expand the scope of programs and services to encourage economic development, not to exclude it as currently many of the programs and services seem to do. That opportunity would then create the ability for First Nations to begin to look after their own needs.
Many communities are in a position where we acknowledge that there are responsibilities for treaties, treaty entitlement, and Aboriginal rights and title. Those matters are all very real and true and need to be addressed. In the meantime, our communities are struggling. We have the highest suicide rates, the highest unemployment rate, and the highest abuse rates. We have to create healthier communities than we have today, and creating economies, I believe, is a way to start that process. All too often we expect silver-bullet solutions and those solutions are going to occur overnight and with the provision of a program or service that's going to solve the problem. We don't often acknowledge that it has taken generations to get to where we are today. Hopefully, it will take us fewer generations to get out of where we are today. I hope that your report can comment on that — that it has taken a long time to get here.
Developing an economy is not like walking into a room and opening a light switch. It takes time. Our communities need to be educated. We need to develop an entrepreneurial class that needs to have access to capital. Capital is many different things to many different people. To some, it's cash, while to others, it's the ability to borrow money. Unless you have an opportunity to spend some time in that business, it can be very confusing.
There are different tranches of capital, in my view. Obviously, there is venture capital for economic development opportunities perhaps. It comes with a reward attached to the risk that it's prepared to take. Lending based on security, in which most retail banks are involved, is another form of access to capital that should not be ignored. Borrowing as a government in a collective like the First Nations, who are becoming part of the First Nations Finance Authority borrowing pool, is a very viable means for First Nations governments to contribute to resolving the problem.
It's also a very good way for government to begin thinking about how it might implement programs to try to address this issue. As you develop these programs, you should look to the institutions that you help to create and determine the extent to which those institutions might contribute to a better solution. Understand that the First Nations Financial Management Board works with First Nations communities to develop financial literacy, first and foremost. We promote the development of financial administration laws. We measure financial performance and issue a financial performance certificate. More importantly, we issue a financial management system certificate, which is the means by which we gain some confidence that a First Nations community has the tools it needs to manage its financial affairs over the long term — to manage its debt, to recognize its assets, to look at what its community needs might be now and in the future, and to develop a financial model that supports a plan that addresses the issues.
The one thing that I hope we won't do in this exercise is shy away from confronting the issue because of the sheer size of the deficit. If it's $10 billion today, it's going to be $20 billion 20 years from now. We can't allow the shock that comes from the situation we find ourselves in today to prevent us from examining options outside the box and dealing with that reality. Let's promote the development of economies in First Nations communities through approaches that will be taken to address this issue. Let's empower First Nations to develop own-source revenue, to develop authorities to raise revenue from their lands, to share in the bounty that will come from the major resource development that will occur in this country over the next 50 to 100 years.
We have golden opportunities through those initiatives and again using government support to ensure that First Nations participate in those activities to bolster not only First Nation economies but mostly rural economies in the North from coast to coast. First Nations participating in those ventures are better able to address the social and economic needs of their community, and I hope that you will be in a position where you will consider these as you move forward.
The federal government, I believe, needs to take a role. Commercial banks need to play a role. The First Nations Finance Authority and the First Nations Fiscal Management Act can play a role. It will take all of those to be able to achieve the objectives of eliminating this deficit.
With that, Mr. Chair, I would welcome questions and discussion.
The Acting Chair: Thank you very much, Mr. Calla.
Senator Moore: Thank you both for being here. Mr. Calla, at the end, you said it's going to take all of the above — the government, charted banks, the First Nations Financial Management Board, the First Nations themselves. Do you see some kind of a coordinating body or person to haul those people together to assess what each of them could contribute to the solution? As you identified, it's going to take some time, but everything starts at one and that shouldn't scare anybody. You just have to start chipping away at it. How do you see that happening? Have you thought about that part of it?
Mr. Calla: Thank you for the question, senator. We have. If you look at the tools of the First Nations Fiscal Management Act, which were created through all-party support in the House of Commons in 2005, the mandate under the purposes of those institutions provides the vehicle by which a lot of this can happen. Certainly, the First Nations Financial Management Board is in a position where, if it were reflected in our corporate plans that get reviewed and considered by government on an annual basis, we could certainly play a role. We're doing that on major resource projects in British Columbia at the moment, bringing communities together and looking for solutions, creating literacy. We're doing that already in that area. This could be another area. Again, if you go to the purposes of the First Nations Financial Management Board under the act, this is the type of opportunity that exists for government to use an institution it created to support its objectives.
Senator Moore: You mentioned the need to support economies on First Nations especially and, indeed, in rural areas. Does anybody have any statistics on the First Nations that need the most help? We visited some First Nations, Mr. Calla, that obviously needed help, and others who were very successful. Do we have, of the 630-some First Nations, an analysis of which ones need immediate help and the type of help they need, not just the money but management skills and help for them to find their way to develop the entrepreneurs that we know they want to be?
Mr. Calla: I'm not aware of any statistical data. We have bits and pieces in various places. We know, for example, that approximately 25 per cent of all First Nations across the country are scheduled under the First Nations Fiscal Management Act. We understand that client base, and it is a good statistical sample of First Nations. We have fly-in communities who are certified by the First Nations Financial Management Board. We have some communities in urban areas with significant revenue streams. I say with respect to everyone that there probably isn't a community in the country that can't deal with some measure of support.
Senator Moore: That doesn't matter if you're a First Nation or non-First Nation.
Mr. Calla: That's true. The difference with non-First Nation governments is they have other means. They have an ability to raise revenue and to access capital, and they don't start with the deficit that many communities are in. The reality is many of our communities across this country have been grappling with the 2 per cent funding cap at 3.5 per cent growth rate for 20 years. The cumulative effect of that is that you can't cover that off with efficiencies and tweaking programs. Many of these communities are now in third-party management. It's going to take a long time, unless we're prepared to address that issue, for them to recover from that. I think there has to be a serious question asked about how they got there, what the responsibilities are of government for them being in that position and what can they do to get out of that position. Again, one of the purposes —
Senator Moore: "They'' meaning the government?
Mr. Calla: Government and First Nation communities themselves need to ask how they got into that position. In many cases, it's because they cannot respond to the demand for services based upon the revenue streams they currently have. Now, again, we have to develop the means, the financial literacy, the financial management systems, to start bringing to light some of these matters instead of it just appearing in an audit as a result of some circumstance where they're in a deficit and need to go into third-party management.
When you start peeling back the onion on these issues, there are many layers. The layer here is that the fiscal or financial relationships that First Nations found themselves in have not contributed to their getting access to capital to meet their own needs, to develop an economy and to care for the increase in demand in programs and services that have existed as a consequence of funding. Understand that funding has increased; 2 per cent a year is 2 per cent a year, and it occurred at a time when many were not getting any increases. But the reality is that it hasn't kept pace with inflation or the growth in our population, and it can't be sustained. It's a systemic problem that needs to be fixed. Will it be fixed through transfer funding, or are we going to increase the economic activity and make those investments? I think that's the wiser decision. Certainly the infrastructure and housing deficits on reserve provide that opportunity.
Senator Moore: We had some witnesses a couple of weeks ago talking about putting together a meaningful First Nations bank to operate like the existing chartered banks and to pool resources that they have. There are some very successful First Nation entrepreneurs and financial leaders, yourself included. There is a huge nucleus of quality, experienced people to take the leadership in such an organization. Would you see something like that happening?
Mr. Calla: Yes, I do, and in fact we have the First Nations Bank headquartered in Saskatchewan, and it has done an exceptional job.
Senator Moore: I mean going national.
Mr. Calla: They are national. They are moving nationally.
Senator Moore: Are they doing projects other than in the West?
Mr. Calla: The issue always now is that the financial strength we've been able to develop either as institutions or as individual First Nations is now dwarfed in comparison to the economic opportunities. We don't have 200 years to evolve. We need to build the mechanism by which we can get onto that carousel called the "global economy'' as it's moving. You need to jump onto it, not get run over by it. That's our challenge.
To give you an example, one illustrative LNG project in British Columbia that the First Nations Financial Management Board did an analysis on was a $37 billion investment. It produced a $200 billion value chain over the first 25 years. The First Nations had negotiated in Mackenzie Valley and the Pacific Trails Pipeline equity options in those ventures of 33 per cent in the case of Mackenzie Valley and 30 per cent in the case of Pacific trails. If you had 30 per cent of a $37 billion project, over the first 25 years, our estimates were that the 16 communities would have received $5.5 billion.
When I speak about the fact that transfer funding isn't the solution, it's because the order of magnitude is so large that it can't be. Whether it be in the Ring of Fire or in energy moving east or west, what we have is a golden opportunity, which is to engage First Nations in a way that allows for them to develop an economy, in a way that respects their traditions, language, culture and their stewardship over their traditional territories.
Senator Moore: Yes.
Mr. Calla: To allow for that kind of investment, through a ministerial loan guarantee program, in a way that minimizes the risk of default to the Crown, to me is a more progressive approach in trying to deal with these issues. When I look at the Constitutional rights, I would like to think that in this country, Aboriginal rights allow us to be more than the wards of the government. We should be equal partners. We should have opportunities. First Nations are not responsible for finding themselves in the position that they see themselves in today. These were all government policies and procedures.
What we need now is an alternative and a better solution. We don't need to see some of the disasters that we've seen over the last year with young children. We need to develop economies and provide resources.
Government has a really positive role to play in doing that. It has a role that it can play that develops economies and eventually reduces the burden on the social system and therefore the burden on the transfer system. If we can become self-reliant, develop our own economies and our own tax bases and if we have access to capital at all the levels — venture capital, securitized lending and un-securitized lending, as appropriate — then that's what we have to do. We have to position ourselves as government.
Senator Moore: In that LNG example, the $37 billion, First Nations could have a one-third equity position. So you're talking about $13 billion or thereabouts. How do they get that? From what source does it come from, or does somebody guarantee it, or do they go to the commercial markets? Do they participate with existing financial institutions? It's a huge thing, but it's a wonderful opportunity.
Mr. Calla: All of that. We considered a rate regulating utility model in which there would be a debt equity determination on the value of the project. We considered that it would be 60-40, 60 per cent debt and 40 per cent equity, so you would go to the conventional markets for that. You would then go to the capital markets, in our example, an illustrative example, with the federal support to get access to that equity, to acquire the equity on commencement of operations. So we would eliminate the project development risk.
Then you would get all kinds of economic and banking activity as a consequence of implementation and participation in the procurement policies. So First Nations could develop businesses that would see the project develop. All sectors of the financial community would participate and benefit. All sectors of the economy, Aboriginal and non-Aboriginal, would benefit from these kinds of initiatives.
Senator Beyak: I just have a point of clarification. Mr. Calla, we have heard from witnesses about the 2 per cent cap, from you and others, and we have it in our committee notes. But the government, AANDC witnesses and correspondence with AANDC have told us there is no such cap. Can you explain, for those watching at home, where the discrepancy lies or what the misunderstanding could be?
Mr. Calla: I'm not sure. I can't answer for the department. All I know is that many years ago, almost 20 now, there was a tremendous cut in government spending. Departments were capped at 2 per cent. The increase in funding has been restricted since that date. I mean, as late as this year, in my conversations with the department, not government, regarding the budget for the First Nations Financial Management Board, restraint was mentioned as a consideration. I don't know what the current status of acknowledgement is. What I do know is the reality of it.
Senator Beyak: They sent it to us in writing. So I was concerned with the discrepancy. Thank you.
Senator Enverga: You want to empower First Nations. We want to give them more sales from development. Are the First Nations ready? Do they have the capability to do this? What is our time frame for this? Have you received any perspectives from any particular community?
Mr. Calla: Thank you for that question because it is probably a question that really deserves to have some consideration in your thinking.
There are 634, as I understand it now, First Nations in this country, all at different stages of evolution, economically and socially. Some are self-governing. Some are treaty. Some are more ready than others. I know it's not always polite to respond to a question with a question, but in this particular case, I feel I need to because I will say that investment needs to be made in those communities to get them ready. That has to be the strategy.
I've been before this committee and others, and often I will pose a question for which I don't expect an answer, but I think it's a question that needs to be asked. What do you want this file to look like in 20 years? Twenty years from now, what do you want? Every decision you make needs to tie into that objective.
So to your question: Some are ready; some are not. Part of the strategy needs to be to invest in those communities sufficiently to get them ready. In many cases, senator, that requires them seeing economic opportunity before them.
It's hard to talk about employment and access to capital when you're in an area that has no economic development opportunity. That is changing dramatically, particularly in the North, with our major project development. That's why I focus on it because it is an opportunity to bring them forward in a much more expedient way. But in a way that brings the private sector into their traditional territories and allows the private sector to expedite the skills transfer that needs to take place to compete in the global economy. I think that's got to be a consideration here.
The other consideration is that as in the case with the First Nations Land Management Act, when it was passed, the constraint in the evolution of that act has been the ability of First Nations to get access to come under that act because of the cost implications to do it and the implications to Canada of bringing the status of the land to a point where First Nations are prepared to take it over.
There have been some program restraints as to why that particular initiative, in my view, has not grown as significantly as it might otherwise because if you're going to take responsibility for your reserve lands after a certain point, then you want to know what the status of the lands was at transfer. That's been a problem. It's been a problem for the department because they have not been able to respond to the requests of First Nations to engage in the development of a land code and to make their own decisions.
We have to look at all of these opportunities and understand that without a willingness to make further investments in developing the administration of First Nations to give them the exposure to economic development in ways that allow them to see a way forward, it will be difficult. Major projects will put major economic development activity right at their back door. If we lose this opportunity for First Nations, I don't know when it will come around again.
It's a great question where we have to acknowledge that we have to move forward with those who are able and willing to move forward. We can't wait for 634 First Nations in this country to move in lockstep. We need to provide the resources necessary to ensure that those who aren't able to move forward today can do so at some time in the future at their choosing.
Senator Enverga: It's nice to hear that we should move forward for those who are ready. Would you give us an idea of how many First Nations are ready? Are you suggesting that we do it on the basis of First Nations A, then B, then C? Is that how you might want it to happen?
Mr. Calla: My experience with the First Nations Financial Management Board is that you can't categorize them. If someone had told me a fly-in-fly-out community in northern Manitoba would want to get certified ahead of some urban Indian bands in 2005 when this legislation was passed, I would not have believed it; but, in fact, that's what has happened. It really is the willingness to move forward that needs to be embraced, regardless of the current state. The determining criterion will be are you willing to move from where you are today?
Senator Enverga: In your view, for those who are willing, are we looking for a certain amount of money? What kind of support can we focus on so that we can make sure they're out of the loop?
Mr. Calla: It's a question that everyone wants to know the answer to; and I understand why everyone would want to know. I don't know how much that would be, but I'm going to suggest to you that the means by which this should be considered is not so much what the quantum is but what the economic activity resulting from this is.
Making investments where there is no economic activity, no growth in the economy, no increase in tax revenue and just straight payment to programs and services is one matter. Investing in the developing economy is quite another matter. In my view, as long as the value that's created from that investment is greater than the amount invested, and hopefully significantly, then the actual amount invested isn't as significant; but it's in the billions.
Senator Watt: Harold, nice to meet you again and to have you both here.
I guess we have quite a challenge in front of us. Harold, you've been quite active in finding solutions to make the things happen slowly bit by bit. I share with you that you would like to be able to move it forward faster because of the fact that we should look at it not only from the Aboriginal perspective but also from the perspective of Canada as a whole when you're looking at the economy.
I always believed, for a number of years since I've been involved in the corporate structure and now the governing structure, that we have to make a positive move in terms of trying to lift people up and into the field of economic opportunities just like everybody else. This is long overdue.
My question is related more to whether we know exactly what we have and what we don't have. Have we done enough evaluation, inventory, in terms of what we need to do individually, as groups and as communities? That's one area. The other area is, what do we want the government to do? How can the Government of Canada help us? I was much encouraged by the fact that you mentioned that the provincial governments also have to be taken into consideration. It's timely, and I don't think we have done that sufficiently with First Nations. I have a small amount of experience dealing with the two levels of government trying to sit down and negotiate something that would be meaningful for the future, not only for Aboriginal groups and the Inuit but also for Canada as a whole. We have been quite successful in that field. I'm sure you have followed that over the years.
If we are looking for a magic solution, we're not going to find it. There is no such thing as a magic solution in this field. The question we have to ask ourselves is, what kind of legislative pace do we want to imprint in the form of law that the government would have to follow from year to year? We have many years coming, and we will not be able to find a solution immediately. Perhaps we could begin to complete the inventory and put the package together, including what the government has to do. Maybe we need a working group for that purpose.
If that becomes an opportunity, would you be prepared to head that working group? That would have an influence on the general public of Canada, the corporate structure, industries, including mining and oil companies, et cetera, in dealing with two levels of government at the same time. We need to try to sit down and negotiate a package that one day, hopefully, becomes a reality for our people to rely on when they seek capital for a project. Could you elaborate on this?
Mr. Calla: Thank you, senator. They're all very appropriate questions that need to be considered.
If I can characterize the one thing that government needs to do, it is to empower First Nations government and individuals. If program solutions as wards of the government were going to be successful, they would have been that long before now. It now appears that the Supreme Court of Canada has suggested that we should be a contributing factor to the mainstream economy in this country.
Let's seize that opportunity and empower. Let's be prepared to move beyond the status quo in the thinking of where First Nations belong in this country, from those that have existed. Many of them developed prior to many of the Supreme Court decisions over the last 20 years. Aboriginal rights and title need to be embraced. The attempt to extinguish them needs to be abandoned by federal and provincial and local governments. By embracing Aboriginal rights and title, we will then be in a position where we can all collectively benefit.
Today, we're seeing that industry, represented by international money, is frightened and confused at the inability of Canada and First Nations communities in this country to come to an agreement and understanding on how to proceed. The consequence will be that all Canadians will suffer as a result of that.
You have this emerging perspective internationally and within First Nation communities about what their title interest means. We need to sit down and figure that out, but not to do it, respectfully, necessarily through programs. Our communities are not going to be any different than others.
Some communities may not be in a position where, in the foreseeable feature, they will be able to develop an economy that supports themselves. They need to be supported. We should not be, as I heard yesterday, eighth in the world with First Nations at sixty-third in the standard of living. That gap needs to be eliminated. We need to address those issues.
I think that empowering First Nations, embracing the concept of Aboriginal rights and title, looking at policies that are not based upon extinguishment, that are based on inclusion and supporting the development of an entrepreneurial class within our First Nations communities are all important. Continuing to support education is absolutely critical. Taking advantages to create partnerships with the private sector that allow for skills transfer to occur at a much expedited rate I think is very important to do. Those are what I see as investments that need to be made.
I also appreciate that you can't bring everyone together who is not ready, because they don't see opportunity. I think it takes time. In some cases, it's taken us a couple of years of dialogue with a First Nation community before they become a client with the First Nations Financial Management Board, but once they're there, they're committed to the process. We have to provide that opportunity.
You need to understand that there is a benefit to going down a certain path, and we have to create the incentives to move beyond the status quo for First Nations. That's how I would consider needing to do it.
I think these are business concerns. If you go into the communities, there isn't a community that I've been to that doesn't talk about the desire for employment, the ability to provide for their families, to house their families and to do those things that the average Canadian takes for granted. I think we have to give them hope that they can actually achieve that. Empowering them as a government is one of the best things we can do to try to achieve that objective, which does not mean that we shouldn't understand what it's going to take. To that point, I agree with you.
You don't need to unearth a whole bunch of data. You don't need to start from scratch. When we did our illustrated project, we went out and just gathered data that was out in the public domain. We didn't research it all. It was already out there.
There are a number of things that we can do, and certainly we're prepared to help in any way we can, senator.
Senator Watt: Actually, in a sense, just following the comment that you're making, this is a comment from me also, we have been empowered — bits and pieces of recognition of rights and things of that nature. I guess what has not been empowered to our people is definition of those rights, and I think you are stepping into those areas. It's going to require a group of people, financial specialists who have the expertise in that field and probably some lawyers also, to hash it out. I think it's time now for us to acknowledge the fact that we have to do something. As you said, it's very well known what's going to happen if we don't do anything.
The Acting Chair: Maybe just on that, I can try and sum up a little bit what we've heard so far. Mr. Calla, you talked about a lot of things, but my sense is that a framework needs to be developed, at least as a starting point, where no matter where you are in the 630 First Nations, no matter where you are on the continuum of development, you can move through a framework that you and your organization have helped to establish around financial governance and financial management.
You've said a number of things, and I've been trying to place them so we can maybe get a sense of that framework. I heard you talk about really a planning exercise that needs to happen in the beginning and an assessment exercise that not only talks about opportunities, as you clearly said, but also confronts some of the brutal truth about where they are now and how they got there, just to get it out of the way, if nothing else. Out of that initial assessment and planning exercise would come some kind of a plan that would address the deficits that we've all talked about but would also look to address the opportunities.
Would you say that's kind of where, to Senator Enverga's point, all of the successful ones have gained momentum, through something like that? I'll tell you I am thinking of the one place where the councillors all came together in what they described as a completely dysfunctional community and looked in the mirror first and said, "We've got to figure out what our problems are, and then we're going to assess, and we've got to act on those. We're going to assess our opportunities and move forward.'' It's a thriving community now, but it took them many years to go there.
Step one is this exercise of planning and envisioning what could be, which is also something you challenged us on. What do we want it to look like in 20 years? I think, on all sides, that's the way out of this. That's how the Marshall Plan got developed after the Second World War. Everything was in complete disarray, and they had to decide. We can't start looking at where we are today. We have to figure out where we want to be and then work backwards, because it's too overwhelming today to try and figure it out today.
Once that's complete, then there's a readiness exercise where the things that you need to do in order to execute this, just the way you need to orient yourselves and organize yourselves, come into play, and then a certification process, which is where you come into play. Am I on the right track here?
Mr. Calla: Absolutely, because we have seen that those communities that have come through the system have done exactly what you've said, but the key part of it is that they see opportunity. They see a way out.
The Acting Chair: Yes.
Mr. Calla: Until you can see a way out, you don't know what to do.
The Acting Chair: Right. From there, then, once you've done the certification, there's a financing process. We have to recognize that your organization right now is really getting to the financing process. There's a very small number of First Nations that qualify on their own dime for financing and that have enough revenue to actually on their own- source revenue finance themselves. What would that number be right now?
Mr. Calla: Well, senator, we have over 160 First Nations who are scheduled to the act right now. We're getting about 15 or so every time the Governor-in-Council adds names to the list. If I were to use this as a measure, I think that upwards of 200 to 300 First Nations in this country, if they chose to, in a limited form, could participate in what we're doing today.
What we're seeing, which is a very encouraging sign, is a number of communities today who acknowledge that they may not have the financial performance readiness to be able to borrow today, but they're going through the system to get certified so that two or three years from now they might. I think that's a very encouraging sign, senator.
The Acting Chair: I'm sorry to hog the time here, colleagues. I think this is important.
If we said, though, that when we look at the financing and the capacity that those First Nations have to borrow to address what they want and need from that initial vision, how many First Nations can actually today self-finance themselves, to actualize the vision, versus how many you think have a portion and how many have none of the revenues that they need? That's what I'm asking. Without some help, some formula that provides a layer of help in the financing, what portion can actually self-actualize 100 per cent themselves?
Mr. Calla: I doubt there is a First Nation in the country that can meet its full needs without some support.
The Acting Chair: If we look at this framework, in this financing process, this is where there needs to be a confluence of the resources as they exist in the 630, from almost 100 per cent to zero, to be able to finance their needs and their opportunities. That kind of needs to come together and recognize not only where those First Nations are in today's context, but also needs to have some provision for what might happen in the future. We talked about resource sharing and all of those kinds of things. So there needs to be something that says this is the reality today for financing needs. But there may be a better reality in the future, and that has to be put into the formula. Then the final phase, obviously, is to execute over many years, and hopefully over not too many generations, to see all of that come to pass.
I would be interested to know, in all of those levels, where you see in each one of those areas that your organization could make the contribution.
Mr. Calla: Well, I think that we support the decision at a political level to make change. That's the first thing. A band council needs to make a decision to request to be scheduled under the act because it has looked at the opportunities of the First Nations Fiscal Management Act with the three institutions and sees a role for them in their future. That's the first thing that happens. I think that where we then play a role is we start to develop the concepts of planning in good financial management. We like to refer to our systems as moving from personality-based to process- based decision-making models, in terms of how you manage your affairs. As a requirement, we talk about planning, budgeting, good financial management, conflict of interest and independence. These are all the kinds of concepts that we bring into a good financial management system that are present. So that in of itself starts to develop some concepts that have applications outside of just financial management. They become good business practices.
Some of the communities that we're dealing with want to use our certification, not just for the band's affairs, but also for the entities that the bands own. It grows. It's a concept of saying that we want to be able to respond to your membership's request for an understanding of how we're managing the affairs of the nation, both at the band level and at the corporate level. I believe that that's where we make a significant contribution, because in order to move forward, the political leadership must have the confidence of the membership, and ultimately that's where we have to go.
Senator Raine: Thank you very much. Many of my questions have already been elaborated on. We obviously need in our country the support of the people of Canada, and the political will to make this major change. This is kind of like unlocking the door and setting people free to have what Canada is all about — opportunity and harnessing your own energy to do things. I'm wondering what the role of our committee can be in making recommendations towards that. How do we get Canada behind this idea of First Nations moving forward? There are still a lot of people out there who don't understand what's happening.
Mr. Calla: There are tough questions today. I think, first of all, we need to have people understand that Aboriginal rights and title are alive. They exist. They are continuing to be defined. Then if we don't engage in that conversation that results in agreements, we're going to continue to have decisions coming out of the Supreme Court. Is that what we want?
I think the other thing that Canadians might benefit from understanding is the contribution that Aboriginal communities can make culturally and internationally. Our stewardship of our traditional territories needs to be incorporated into the way we do business. I think the economic contributions that we can make by our engagement are to the benefit of all Canadians. As I probably said before this committee, I would rather see us contribute to the gross national product than the gross national expenditure on a net basis. That benefits Canadians. Canadians might benefit from having a greater appreciation of that, and this committee might be in a position to better describe that.
The Acting Chair: Well said. The why and the how are what we need to focus on.
Senator Beyak: Thank you very much, Mr. Calla. I agree with you that this is a non-partisan issue. Governments of many stripes, over decades, haven't been able to get it right. The status quo is not working. We've heard from chiefs about the numbers that live on and off reserve and that there is no total of the funding across the country. I'm wondering what your thoughts are about a national referendum of individuals — not the 634 chiefs and band councils and all the folks here in the Ottawa bubble but the actual individuals living on the reserves. Where do you want to live? And to Senator Greene's questions, how do you want to live? How do we preserve your traditions and splendour and yet take part in this modern world? Has anyone considered that?
Secondly, a national audit of the federal, provincial, municipal resources, treaties — all the wealth and money that is going in, but that is either not adequate or not properly managed. No one has been able to tell us the total across Canada or the number of natives on reserve or off reserve. How many children under 16 are in school, on reserve or off reserve? Our report says it all: a contradictory statement right at the start that there is a large infrastructure deficit of First Nations infrastructure, and yet we can't quantify it.
I think do we need those two things — the national referendum and the national audit — so we know where to start, similar to what Senator Tannas was saying earlier. Thank you.
Mr. Calla: As I look back at it, at contact we got frozen in time. We got put on Indian reserves. Our rights were defined. We were not allowed to evolve. We were not allowed to participate in the economy. I recall laws in Saskatchewan, not picking on them necessarily, but the fact is that in Saskatchewan, an Indian farmer couldn't sell his crops to anybody but an Indian. So we were not allowed to participate in the economy. We were not allowed to evolve as governments.
In effect, perception of Aboriginal rights and title got frozen on what the non-Aboriginal public felt our rights were at contact, which is, I think, not an appropriate consideration of Aboriginal people. The fact is that we have been marginalized, and we're going to have to evolve. Had we been allowed to evolve then, we might have national Aboriginal governance today. Rather than view it as another burdensome level of government, I think we need to encourage it to evolve. As an example, when the First Nations Summit was created in British Columbia, I wanted to look at it as another legislature where we could all come together, and I would hope one day we might find ourselves in that position.
We have national and provincial political organizations, but we're in a position where they're not empowered. We have this entity called a "band,'' which was created by the Indian agent in the reserve allocation process. We weren't bands. We were nations before, but nations got dismantled into Indian bands. There is an impetus to recreate that nation setting, and that has to be encouraged. Certainly, Aboriginal people need to find their voice. If we want to talk about some dialogue and how we might be able to do that, it would be a worthy exercise because we are very divided because we're starting from different places — self-governing treaty, modern-day treaty and unceded lands. We're a mixed bag. Some of our communities are territories. It's a complicated issue that much brighter minds than mine have to solve.
At the end of the day, it will come down to a willingness to move. Whether we like it or not, until we solve the fiscal financial implications of change, it will be difficult for anyone to move forward. I strongly believe that a national table on fiscal relations should be supported and created again.
Senator Moore: This is supplemental to your question, chair, with regard to which nations are on better financial footing than others and could self-finance. I think that's what I was trying to get at earlier, but you put it more accurately.
Mr. Calla, you said there are none. I don't know if I can accept that. We visited Westbank First Nation, and we visited the First Nation of Osoyoos, which certainly has good financial management, good assets and ongoing revenues. I think they could qualify to be self-generating in terms of revenue. As you said earlier, everyone needs something. There are other First Nations like them, and I would put Membertou in Nova Scotia in that category. There are some that could self-finance, and they have demonstrated it. Do you have any comment on that?
Mr. Calla: Well, as I understood the original question, senator, it was whether there is a First Nation in this country that could fully meet its needs. The emphasis was on "fully.'' My response was that there is not one because I would almost guarantee that every one of those communities you mentioned would have a housing wait list or an infrastructure program that is on hold. Yes, some are very successful, and they access capital from the commercial mainstream and the First Nations Finance Authority. Each of those communities you mentioned does that. I agree that they are successful and manage themselves well, but we still have an inability to respond to all the needs. We still have an inability to access capital in the same way that others do, which impedes our ability to fully meet our needs. My response was based on the concept of fully meeting the need.
The Acting Chair: That was an excellent discussion. I thank everyone very much for participating.
We'll go now to John Kiedrowski of Compliance Strategy Group to carry on the discussion. Mr. Kiedrowski, do you want to kick things off?
John Kiedrowski, President, Compliance Strategy Group: Do you want me to focus on the capacity questions and move to the trust fund later? Would that suffice?
The Acting Chair: Why don't you address both up front?
Mr. Kiedrowski: I can do that.
Good morning, senators, and thank you for having me back to talk about the challenges of housing and infrastructure in First Nations. First, I'll focus on the issues of capacity and suggestions for the committee to consider, and then I'll and get some thoughts on the housing trust fund.
One of the problems I've always had since I've been involved in First Nations is the word "capacity,'' which means different things to different people. A level of frustration has been expressed, I believe, among senators trying to understand what "capacity'' means. I will throw out a definition and, based on that, try to move forward.
I've always viewed "capacity'' as the ability of First Nations people, organizations and communities as a whole to manage their own affairs successfully. The capacitive element, as I understood it, is a process whereby First Nations people, organizations and communities as a whole strengthen, create, adopt and maintain capacity over time.
I'm going to work with that broader concept and introduce something the committee may want to consider: the development of a capacity development results framework. Over the years, everyone has talked about the influx of substantial amount of money for capacity development. As alluded to, it becomes a question of accountability and performance based upon those monies going to First Nations. It has always been a concern of mine. I'm concerned for most people who receive these funds. My suggestion for the committee to consider is to develop some type of capacity development results framework whereby funds under capacity framework being funneled into communities or groups have a result outcome-based performance. I believe that doesn't really exist wholeheartedly on many of the capacity funds going forward.
As part of this, capacity involves two streams. One stream would be resources, which could be from the private sector — development of investors, oil and gas revenues — or infrastructure monies from government. The key to capacity is that the community has to have ownership. If the community does not have ownership moving forward, you can pour all the monies into those projects, but they'll not move forward.
Senator Moore: Is that ownership of the land?
Mr. Kiedrowski: Ownership of a project. For those projects, in my case it would be housing or infrastructure projects moving forward, there is a need for ownership and efficient use of those dollars and project resources. To do that, it has to come with a change in management. As we're trying to figure out today in our conversation, what percentage of those communities have changed management — have the capacity to move forward with leadership to provide the type of direction such that other First Nations can say, "I like that direction. How can we do same thing?'' Under some type of capacity framework, we could try to identify those.
I believe that doesn't really exist. Everyone is haphazardly moving money toward capacities with no general framework. The frustration happens because we don't know what is successful. We don't have the figures or understand how it's working. Yes, we have case studies. We have illustrations that show this is working, but under a more succinct capacity results framework, we'd better understand that type of information.
On further discussions on capacity for housing and infrastructure, monies and capacities have been invested. We know it's directed to chiefs and councils, band administrators and a number of different areas. I find that the big gap in capacity is in technical support and advice for councils, contractors and others involved in these projects.
In most cases, chiefs and councils are left to their own capacity to understand the technical requirements on building a house to infrastructure. The capacity just does not exist, and each one is left to their own resources to try to determine this. If you look at it, there is no organization that provides this technical advice on capacity and infrastructure. We have the financial administration and people that provide that type of direction, but when it comes to the infrastructure and the project sides of housing and infrastructure, it does not exist at all.
A lot of those communities are hiring third-party engineers, and we know that these engineers, in conversation with them, are also left struggling to understand land entitlement issues and governance issues, and it really becomes a quagmire to try to get through these infrastructure projects.
As part of that framework, I'm also suggesting we need to consider basically a total quality management framework for construction and infrastructure projects. Under this total quality management framework, we can provide technical advice, technical specifications and technical direction to First Nations to help them move forward on these projects. Rather than relying upon a contractor to make his own contract and say to First Nations, "Please sign this contract that has only 30 days,'' we could have directions to many of these First Nation to help them get through and understand these building projects, because many of them do not have project management capacity.
We know, for example, that Prince Albert Grand Council has been moving forward, and they are working on behalf a lot of their communities. Their engineering department works with them to take on that capacity, which I think is a very good model. That's really an exception to the rule, and it doesn't happen across Canada.
While we pour in all these monies and all this capacity building, we lose a lot of monies because of mismanagement. There is no risk understanding. We need some type of quality management framework.
The other gap that seems to exist is contractors. It's funny, because when you talk to communities, they hire these contractors and there's no capacity to build and make sure that these contractors are basically meeting certification qualifications that are compatible with off reserve. While HRSDC has a number of programs and projects that are geared for contractors, we found that there is a major gap when it comes to First Nations.
We also find there is a gap that when people hire off-reserve contractors that are qualified, they seem to basically lose the sense of responsibility and commitment when they go on reserve because there is nobody watching over them to the same capacity. So those are some of the challenges in terms of capacity.
If we go back to how to address these issues of capacity results frameworks and total quality management, I'm suggesting a need of an organization. I have been working with the First Nations National Building Officers Association, FNNBOA, as a possible group that could maybe take on the broader capacity to do infrastructure projects and to help with housing projects and ensure that they're being implemented properly and that the risks are being minimized for First Nations. Right now, it just does not exist.
Those are my few comments for capacity. I'll switch over to the First Nations Market Housing Fund and concerns in terms of mandates. If you had the housing fund come forward, they would probably be best to answer some of the concerns raised by the Senate committee. The views I am providing are from my understanding and talking with communities.
I think a valid question has been raised, and the reason I think it's such a valid question is that when it was implemented in 2008, they had $300 million of credit enhancements to move forward to create a housing trust fund, to create home ownership in First Nations. Here we are in 2015 and, with the numbers of, for example, creating over 1,000 home ownerships and some estimates and projections of up to 10,000 home ownerships in First Nations, my understanding is that to date we have approximately 55 homes that have been created on a $300 million fund from 2008. Of that 55, approximately 20 or so are rental units. It becomes a political question. Is that value for money, and can that money serve better elsewhere?
When you look at the housing trust fund that they have funding to move towards capacity and provide capacity to First Nations, if you don't buy into the housing fund framework, it's unclear whether or not you get capacity monies to help to move if you have other housing issues. I believe their capacity monies support the housing trust fund but, if you have capacity issues, such as, for example, building a building permit system that will not lead to housing trust fund but may lead to some type of relationship to banks to provide homes, I'm not sure if they would fund those. To my understanding, the capacity funds that the trust fund has, which is a few million dollars, is for their purposes only and not used to the greater good.
The third component on the capacity is getting access to those funds. I know that they have a very stringent program to qualify people and, as part of the qualifications, individuals had to have errors and omissions insurance in order to get project money. For example, Keith Maracle, whom you met earlier, would have to purchase errors and omissions insurance, which would cost him probably about $10,000, to go out and do some capacity work, for which he might be paid about $5,000 or $6,000, but that was a stringent requirement in order to meet the qualifications. If you had the capacity, for example, in any other organizations, that requirement for insurance would not be there, making it more accessible, and people could provide capacity to the communities. The funding base on the capacity development funds is, from my view, very restrictive.
That's sort of a quick overview so we can get opened up for discussions.
The Acting Chair: I'll kick off here. If I heard you, you would not declare a success on 55 houses, $300 million over six years, and there has been a fairly broad consensus amongst witnesses, and a surprise amongst all of us, that no one with a straight face can declare that successful.
Mr. Kiedrowski: I agree. That is not a successful program.
The Acting Chair: The other thing that you just mentioned is that even in the capacity development side of things, the way it's currently structured, it's not able to make a contribution in that area either. Is that fair to say?
Mr. Kiedrowski: Good comment. I would agree with that. Their capacity fund is for their mandate, and if you don't buy into that mandate, it's hard to get the capacity monies or to free up the monies.
The Acting Chair: Mr. Calla, you wanted to chip in?
Mr. Calla: Thank you. I will acknowledge I was on the board of CMHC when the fund was established, so I will speak to it from a variety of perspectives.
The first perspective, though, as the chair of the First Nations Financial Management Board, is that we have worked very well with the First Nations Market Housing Fund to support the capacity development needs, to develop financial administration laws, financial performance and financial management systems. We partnered with them on many different occasions, and many of the challenges that the fund is facing are as a result of this deficit that many communities find themselves in. It's an example of a program that I think should not be discounted out of hand but maybe was started ahead of its time because of circumstances. It has made some significant contributions to some of our clients in getting them through our system.
We have become a proxy for some of their financial requirements as we have with other bodies that have funding. As an example, we are a proxy for the readiness assessment for the Department of Aboriginal Affairs. So there's a lot of benefit that we see coming from that.
The Acting Chair: I wonder if they would have imagined that that would be one of the success stories, when they were first started. In other words, was that part of the original mandate, or has that been a bit of an ad hoc —
Mr. Calla: No. I think it arose as a consequence of the fact that this was a loan program and not a grant program. So you needed to have some good financial management, and we came into being and we've been there. I would just like to share that.
I think the other challenge that the fund and housing generally have met is that as a consequence of the significant deficit in infrastructure, many projects haven't been able to proceed because there aren't water and sewer in the ground.
I think as you look at the First Nations Market Housing Fund, I would look at its mandate and what it can contribute to as being a limiting factor, and how you might want to remove that.
The Acting Chair: So would you suggest maybe repurposing that fund to focus on what we've talked about in the framework, this planning exercise of saying what have we got? What do we need? What are all the elements that we need in order to move forward to allow that fund in its capacity development mandate to fund some of that work?
Mr. Calla: We look at the $300 million that the First Nations Market Housing Fund has. We look at the money that the government has on an annual basis, and you look at securitizing those. The amount of money that could be raised is significant, but the challenge is this: Where is the cash flow per debt service going to come from? You can raise the money, but how are you going to pay for it?
I think those are some of the issues that arise. But I agree that that the purposes of the fund, the mandate that it has, where it can contribute — it would not be inappropriate for that to be re-examined in light of the fact that it's been 10 or 15 years.
A large number of First Nations are looking at the program, but again because it's not a grant program and it needs cash flow to support it, if you don't have cash flow in the communities, how do you respond to it? I think that is the challenge.
I would offer that contribution, the fact that you need to have all this infrastructure built underneath it. Again, that infrastructure that's being talked about supports economic development, and equally. So the ability for this fund to recognize that would be a significant contributor to modernizing its purposes.
Senator Moore: Mr. Kiedrowski, regarding the $300 million trust fund resulting in 55 houses being built, is there any money left in that fund?
Mr. Kiedrowski: Again, that's a question for them — or maybe even Harold might be able to answer — because there's an interest on the $300 million that they carry over each year, I believe.
Is that right, Harold?
Yes. So there are monies still through the interest that's evolving through the $300 million on the fund.
Senator Moore: So the $300 million is put in a trust and used to build houses. Whatever is there keeps generating interest revenues.
Mr. Kiedrowski: That's right.
Senator Moore: So was the fund also available to provide for the construction of the infrastructure that would be needed to build a house?
Mr. Kiedrowski: Again, that's a question for the trust, but I believe that's not the case. If a First Nation wants to move forward and enter into an agreement with the trust fund, before that happens, they would have to have that infrastructure in place.
Senator Moore: They would have to have the infrastructure in place.
Mr. Kiedrowski: That's right. Would their funds be used to build that infrastructure? I believe that's not the case. They may pay for some preliminary projects to consultants to do some of the work, but the actual investment wouldn't be coming from the fund. I think that is the challenge.
Senator Moore: Mr. Calla, would you know how much is left in that fund roughly?
Mr. Calla: The fund is invested, senator, so whatever the capital value is as of today, I don't know. I know the concept was that the income that was earned from some of that would be allowed to support capacity development, and I think it was up to 50 per cent of the interest.
Senator Moore: Could that be used for infrastructure —
Mr. Calla: No, for capacity development.
Senator Moore: What's that?
Mr. Calla: My understanding is that none has been allowed to be used for infrastructure.
Senator Moore: So the 50 per cent could be used for planning the infrastructure that you need and where the houses are going to go, but not to build the infrastructure.
Mr. Calla: Right.
Mr. Kiedrowski: Again, it's under the Housing Act that this is being administered, and that's under CMHC, and CMHC is not involved in infrastructure. I believe that's the challenge.
Senator Moore: So this gets back to your remarks and those of Mr. Calla earlier today with regard to the need to access capital to create the capacity to build the houses that are needed.
Mr. Kiedrowski: That's correct.
Senator Beyak: Thank you both, gentlemen, for your expertise and your knowledge on these issues. You're both balanced in common sense and it's very much appreciated. We all have the goals to make things better, and how we get there is important, of course.
Mr. Kiedrowski, I wonder if you can answer the same questions I put to Mr. Calla. A national referendum, when I speak of that, I mean non-binding and more of an opinion poll to the actual individual First Nations. We don't know how many there really are. We don't know where they live. And speaking to capacity, what you spoke on, how can we build anything with that, the projects, when we don't know where people want to live? I thought we could ask them: Where do you want to live and how do you want to live? What would you think about that? Again, with the national audit, there are funds that come in from so many resources, whether it's casinos, natural resources, treaties, land claims, federal, provincial, municipal, own-source revenue — we don't even know the total. No one has been able to tell me the total funding and how many First Nations there are.
Mr. Kiedrowski: Thank you, senator. It's a good question and one that I know we work on when trying to determine housing infrastructure.
I think what's happening is that there are a number of silos of data collection in existence. For example, under their housing condition reports that are being submitted to CMHC, we know the number of occupants. We know the same data is being collected for AANDC. We know that, for example, my colleague Malcolm Smith when he was here talked about the insurance going out and collecting data. There are bits and pieces of data being collected, but the data is not being pooled together.
So somehow that information could be pulled together, and I believe there's supposed to be the First Nations Fiscal and Statistical Management Act that was supposed to pull in a lot of this data. Again, to date, I don't know what's happened to that, but that was my understanding of the movement, which is to collect all this type of data, so that we could better understand policies and process.
These are the same questions that are being raised by First Nations themselves. So, yes, there's a need, and I believe it's a patchwork that's existing right now. Can it improve? Absolutely, and there's a need.
I know FNNBOA was suggesting that a lot of the data, in terms of houses and infrastructure, be funneled into at least one organization, so they could keep, manage, understand and analyze that data.
Senator Beyak: Thank you very much. That's very helpful.
Senator Enverga: Thank you again for the presentation.
I know we've been trying to build capacity. We're involved in giving them the capability and empowering the First Nations. However, it's just going around the fact that the main issue here is that there is some sort of a problem with regards to the Indian Act. If there's anything in the Indian Act that has to be changed and should be changed to be able to accomplish all these goals, do you know which one in particular? Do you know which one in particular we should focus on in the Indian Act that could help First Nations?
Mr. Kiedrowski: That's a very good question, and I'm not sure if I have the expertise to respond about which sections of the Indian Act we should focus on.
My own view is that when you tinker with any legislation, you don't really tinker; you go full force, and challenge and revamp, and revise and amend.
This is probably one of the pieces of legislation that needs a massive overhaul, so you can't just tinker with one section. That would be my view: You can't tinker with one point or one section.
The Acting Chair: Mr. Calla, you wanted to add something?
Mr. Calla: Thank you. There are other pieces of legislation: the First Nations Land Management Act; the First Nations Fiscal and Statistical Management Act, now the First Nations Fiscal Management Act, the First Nations Oil and Gas Moneys Management Act. All of these pieces of legislation were optional pieces of legislation that allowed First Nations who were ready in certain areas to move out from under the Indian Act. So, on a sectorial basis, that's possible. A lot of it had to deal with economic development.
There are also some moves afoot that see the administration of programs changing. In British Columbia, for instance, we have the First Nations Health Authority, which is now managing the health regime. So First Nations are aggregating into a collective and starting to manage. That's part of something that's happening.
Education is another area where some of that was happening, and I know there was an education bill. But in British Columbia, we've had this approach to managing our children's education for quite some time.
I think you can move by sector, but there are some elements that cannot, and those elements require modern-day treaties or modern-day self-government agreements. If you want to eliminate the Indian Act on a community-by- community basis, the approach you have to look at is moving them out of the Indian Act through modern-day self- government or treaty.
I think to get broader acceptance of that notion, this committee would be wise to look at the mandates that are currently in place to encourage those discussions and what they might need to be to accomplish them. Had we had these matters resolved, we wouldn't necessarily be in the dilemma we're in today around some of these major projects that we're having to deal with.
It's the question we all ask ourselves, senator, and I appreciate it being asked again, because eventually we're going to come to a better understanding of some approaches that we might be able to follow.
Senator Enverga: Yes, because I know we're going to be talking about a lot of this funding and support. I believe you're right that we have to make some renegotiations of this Indian Act, First Nation by First Nation.
Would you suggest that, too, Mr. Kiedrowski?
Mr. Kiedrowski: I wholeheartedly agree with Harold's view. Absolutely.
Senator Raine: I have a question just on the building codes, because we've talked about this off and on throughout the study. I want you to just refresh us on the role of the First Nation building officers organization, the First Nations National Building Officers Association. There seems to be reluctance from First Nations — even self-governing First Nations — to adopt a building code.
Are there any suggestions you can give us on how to move forward on that issue? Personally, I'm not sure a building code really makes a lot of difference. There weren't any building codes 150 years ago, and a lot of those houses are still standing and still beautiful. I'd like to hear what you think about it.
Mr. Kiedrowski: Let me just back up. In First Nation communities, the chief and council was called the authority having jurisdiction. That means they are responsible for the construction in terms of building codes or in terms of any activities. They're responsible for building construction and the safety of people living in those communities.
Now, the problem that we're having is that, as communities have been moving forward and building houses, yes, some are building to building code standards; we have the First Nations National Building Officers Association inspectors inspecting as to code. But the problem that we're having is that, first of all, a lot of these homes are not being built to National Building Code standards, notwithstanding the comprehensive agreements between First Nations and CMHC or Aboriginal Affairs that say they have to be built to National Building Code standards.
Many are not meeting those standards for several reasons. Some contractors don't have the capacity for or understanding of how to build a home to the National Building Code. In other cases, they overbuild to National Building Code standards because they don't know. So there is an enormous waste going into these communities.
I remember looking at foundations that were being poured in townhouses in a community down east. They poured so much concrete into the foundation. It was for 10 units; you could have done 14 units. So rather than having one- foot footings, they were three-foot footings. The place would never fall down, but it was overbuilt, so there was a big expense there.
When homes are being built in communities, they're not meeting those codes. As a consequence, we see various things happen. We see a number of fire deaths. Fire deaths are the highest in First Nations communities, and a lot are the result of homes not having fire alarms, for example. They don't have fire-retardant building materials. They put after-market wood sources that aren't properly installed or not installed to certifications or to National Building Code certifications.
So basically while the chief and council are the authority having jurisdiction, those homes are being built. The homes not being built to National Building Code standards; in the study that we did, the life cycle of the home only lasts up to five years. So homes are basically being rebuilt after five years in many First Nations communities.
Yes, there's the question of overcrowding and the question of poverty and poverty relating to homes not being maintained, but generally a lot of the homes aren't meeting the life cycle of older homes.
I'll get back to your question: Do you need national building codes? A lot of the policies for First Nations move toward compatibility. You want the same equivalents that are taken up off or on reserve. It doesn't matter; you can go from on reserve to off reserve, you want the same capacity. You want to make sure the homes meet National Building Code standards.
So do you move and introduce legislation? We have been on this topic for about 10 years, and a lot of communities, by and large, still view homes to be the responsibility of CMHC and Indian and Northern Affairs, which is not the case because First Nations are the authority having jurisdiction. They are responsible for those homes.
You can move toward moral suasion, which we've been trying. You can move toward voluntary codes and make suggestions to move to codes, and some communities have done that, and there are some homes being built to code. Kamloops First Nation and Westbank First Nation — some fabulous homes are being built. They're being built mainly because some of those housing managers understand construction practices.
But because we have such a discrepancy across the country in terms of quality, safety, fire codes, and deaths and injuries, I would be a strong advocate for a piece of legislation for building codes and fire codes.
It also feeds into the argument of self-governance. There's debate about whether we need to take on ownership. They have the ownership. They are the authority having jurisdiction, so it's a beautiful model to move towards.
Now, I know some First Nations — of the 640, when I looked at the communities, probably about only a dozen passed bylaws to even adapt to existing building and fire codes. So a lot of the homes being built are not even built in accordance with their own governing structures, which is a problem, because if a home is not being built to National Building Code standard, an inspector cannot put a stop permit on it and say, "Stop building that home,'' which is not possible and doesn't happen.
The Acting Chair: Thank you. That's a sobering comment, on which we will begin to wrap up.
Thank you so much for being here today, gentlemen. I'd like to give you kind of a three-minute soapbox. As we go to the next phase of considering and developing our recommendations, what are the one or two things that you really want to impress upon us in terms of where you think we ought to be placing emphasis as far as recommendations go? If you've got something specific, we'd like to hear it in conclusion here.
We'll start with Mr. Calla.
Mr. Calla: I think we need to look at alternatives to the existing procurement models. I'm aware that in Atlantic Canada they're looking at an Atlantic Canada authority around water in a public-private partnership. We can't be afraid of the sticker shock of these things. We have to understand them. That model addresses many of the concerns raised here. How do you aggregate this? Aggregation is something that needs to be reflected upon.
Obviously, access to capital and focusing on the economic opportunities that arise from successfully overcoming these obstacles should also, in my view, form part of your report so that people appreciate what could be.
Mr. Kiedrowski: To sum up, I would suggest that the Senate committee look at building codes, and I get back to Senator Greene Raine's comments. Building codes are only a portion of that. What evolves around building codes also evolves around procurement policies, technical services standards, capacity. It also evolves around housing conditions. If you move that towards infrastructure, the same practices apply in terms of procurement and policies. The emphasis, I would suggest, would be on recommending building codes and fire codes, but it has to come with that large capacity so that they would understand how to implement it properly.
The Acting Chair: Gentlemen, on behalf of everybody here, we thank you for your attendance today. You have been most helpful, which was why you were invited back in the first place. We really have appreciated your testimony today and prior, and you've helped us greatly. Thank you very much.
With that, we are adjourned.
(The committee adjourned.)