Proceedings of the Special
Senate Committee on the Arctic
Issue No. 13 - Evidence - September 24, 2018
OTTAWA, Monday, September 24, 2018
The Special Senate Committee on the Arctic met this day at 6:29 p.m. to consider the significant and rapid changes to the Arctic, and impacts on original inhabitants; and in camera, for the consideration of a draft agenda (future business).
Senator Dennis Glen Patterson (Chair) in the chair.
[English]
The Chair: Good evening. Welcome to the Special Senate Committee on the Arctic. I’m Dennis Patterson, senator for Nunavut.I’m honoured to be chair of this committee. I’d like senators around the table to please introduce themselves.
Senator Bovey: Patricia Bovey, Manitoba, deputy chair of the committee.
Senator Neufeld: Richard Neufeld, British Columbia.
Senator Coyle: Mary Coyle, Nova Scotia.
Senator Oh: Victor Oh, Ontario.
The Chair: Thank you.
Colleagues, as part of our study on the significant and rapid changes to the Arctic and impacts on original inhabitants, we continue our study of two specific topics: economic development and infrastructure.
Tonight, to assist us, we welcome, from Arctic Cooperatives Limited, ACL, Duane Wilson, Vice President of Stakeholder Relations. Thank you for joining us.
Senator Galvez, welcome.
Mr. Wilson, I invite you to proceed with your opening statement, after which we will go to a question and answer session.
Duane Wilson, Vice President of Stakeholder Relations, Arctic Co-operatives Limited: Thank you very much, Senator Patterson. Good evening, honourable senators and those in attendance. As Senator Patterson said, I’m Vice President of Stakeholder Relations for Arctic Cooperatives Limited. It’s a pleasure to be here to present on behalf of the organization which is owned and controlled by 32 community-owned cooperatives in Nunavut, Northwest Territories and Yukon.
These cooperatives operate in a business model that shares seven principles with cooperatives around the world. These principles are a lot different than the ones I learned when I was studying commerce at Carleton here in Ottawa. These are the principles that compel us to continue to support the Inuit art industry that others have abandoned. They compel us to train and develop local staff instead of offering solutions like a 1-800 number for service and support. And they compel us to develop and promote programs for recycling and waste reduction in jurisdictions where none exist, such as the Tundra-Take-Back program for end-of-life area vehicles developed with Summerhill Impact and the Automotive Recyclers of Canada.
In Canada’s Arctic, cooperatives were one of the first private sector developers of in-community infrastructure and have exhibited a spirit of collective entrepreneurship since their inception.
Many of the challenges relating to operating in Canada’s Arctic are well identified, even if the singular or cumulative impacts are not well understood. These include many identified in the Arctic policy framework discussion guide such as infrastructure deficits and the lack of housing and unemployment.
From my perspective, the impacts of high operating costs in the territories such as transportation, repairs and maintenance, utilities, salaries and wages and construction are amplified by the small market sizes of the remote communities. Retail and wholesale trade in which our members operate are dependent on critical mass and economies of scale. These economies of scale are simply impossible to achieve in small communities, and member co-ops have taken all practical steps at their disposal to realize scale through localized diversification and voluntarily working together through a cooperative service federation.
A significant source of economic leakage is the export of salaries and wages to southern employees who do not reside in the communities on a permanent basis. The temporarily relocated or fly-in/fly-out workforce that is symptomatic of many industries, most notably resource extraction and construction, is a significant drain on the northern economy. The high transportation costs have led some companies, including in construction and mining, to internalize their air transportation, fracturing the airline industry that has some of the same struggles of scale, resulting in higher costs to be borne by other users of these essential services.
From an in-community retail perspective, leakage in the form of direct and online shopping, personal sealift and high baggage allowances all contribute to erosion of scale and the high fixed operating costs borne over a smaller book of business.
Many of the issues in remote communities in the Arctic are a result of poverty and income disparity. The gap between those who have and those who have not is significant. Just as an example, Inuit Tapiriit Kanatami reports that the individual median income for Inuit living in Inuit Nunangat is just over $23,000 compared to the non-Indigenous residents with a median income of over $92,000. The high income earners typically have market access and the available financial resources to bypass the in-community service providers, putting further upward pressure on prices and further marginalizing some residents.
Some research is now beginning to correlate income disparity to reported social problems, which are categorized with such indicators as educational attainment, rates of incarceration, suicide rates, teenage pregnancy and rates of violent crime to name a few. While the research may not be entirely conclusive to this point, those of us who work in and around the North can’t help but recognize these are among the challenges facing many of the communities in Canada’s Arctic. I’m led to question if the disparity within a community is even in part responsible for circumstances such as the rates of suicide in the territories, which can only be described as a crisis, and what we may do in our personal or professional lives to be part of the cadre to help improve the lives of people in the communities we serve.
Most would agree there is no one thing that will entirely remedy the social and economic inequity that many of the residents of Arctic Canada are facing. From my vantage point policy or investments that assist permanent community residents with required basic education and life skills, starting at a very early age, to be able to take advantage of employment opportunities, particularly in the areas of skilled trades and mining, would help. In addition to reducing the economic leakage of an imported workforce, the spinoff benefits should include reduced costs for residential housing construction due to locally available labour and improved feasibility for potential projects, improving the likelihood of these projects advancing, spurring more economic activity and employment opportunities.
Addressing the underlying condition and availability of suitable housing is a matter that is absolutely necessary to improve if the aspirations of higher educational attainment are to be realized.
It’s very tough to have a wholesome submission in five short minutes. I do thank you for your interest in hearing from the cooperative sector in Canada’s Arctic and providing us with this opportunity to present.
The Chair: Thank you. I think you covered quite a lot of ground, Mr. Wilson, in the time available. I thank you for that.
You referred to intriguing research linking the income disparity with social problems. Would you be able to now, or through our clerk, give us more details on that research you referred to, please?
Mr. Wilson: Certainly. There’s some research by Daniel Wilson — no relation — and David Macdonald. I would be happy to provide some references through the clerk post-meeting, senator.
The Chair: Thank you very much.
Senator Bovey: Thank you very much for this and for the linkage of the critical issues that you bring up. You won’t be surprised that I want to go back to the beginning of the co-ops and the tremendous work of the artist co-ops that led the way substantially financially and with an understanding of the Arctic. That goes back to the mid-1960s. Something has happened to that. I appreciate that Arctic Cooperatives Limited still goes, but somehow the connection with the artists and the understanding that the South has had through the art has dissipated. Yet as you talk about suicide rates and all, I find it very disturbing to look at some of the current work which, of course, depicts the social dimensions you’re talking about.
Then you talk about direct online shopping. I’m sure it’s not some of the work that depicts those realities, namely, that people want to buy online. Can you talk about the role of the artist co-op and the co-op movement as it stands right now?
Mr. Wilson: I’ll do my best. I don’t profess to be an expert in the area of art, but cooperatives around the world — it doesn’t matter on the geography or the industry — typically are a response to market failure. You are 100 per cent right; back in the mid-1960s, people formed largely along community lines to form cooperatives to respond to market failure. Part of that was the trade of retail goods, but a part of it was marketing, at that time, not only art but also fur. They wanted to have a greater degree of control and influence in the economies of their communities.
Over time, as markets evolved, what was traditionally a very large contributor to the overall volume of what the co-op as a network did has stayed stagnant or, I might even argue, has diminished. For matters of principle and also because, as I made reference earlier, as a business model that’s governed on principles other than just those you learn in business school of net present value and cost benefit analysis, et cetera, one of our principles is concern for the community.
I talked about the levels of unemployment. For many people in the Arctic, they are gainfully employed by producing art. For that reason and, really, for matters of principle, we remain steadfast in our support for that industry where others have thrown in the towel because it doesn’t meet their required return on investment.
Senator Bovey: Can I ask a follow-up on that one? I don’t mean to belabour points, but maybe I do. I agree with you that a higher percentage of people in the North create art as a means of living. I appreciate that, whatever business we’re in, we’re always looking for new sources of revenue and new bases on which to do the work.
The Canada Council recently changed its funding structure from 140 programs to 10. My next question ties in with digital opportunities for doing business. I was very grateful to get a list, on request, from the Canada Council of all the northern artists who received grants in the last grant run and it doesn’t even equal three pages. Where you have a population where I believe a higher percentage of individuals than in other parts of the country are actually creating art, I look across the North and see support for that art is less on a per capita basis by far than other areas.
I look at the Yukon, if I may, and there’s not one Yukon artist whose work is in the National Gallery of Canada. What’s going on with the marketing? What’s going on with the access to these programs? How are these artists supposed to get support to create and get their work out? When I go back to the 1960s, 1970s and early 1980s, the exportation of their art was what brought the money back to the North instead of being a financial drain of dollars to the South.
Mr. Wilson: Thank you for the question. I’ll do my best to try to give it a response.
We face a host of fiscal pressures all the time. Every dollar that the co-op system invests in art is one dollar more that food needs to cost because we’re a cooperative. Our net savings is returned to our member owners, true to the spirit of cooperative autonomy and independence for them to use as they see fit in their communities. For example, the co-op in Holman is positioning now to start to revitalize their printmaking and local art production. We feel those decisions are best done at a community level because each autonomous co-op has its priorities. The Co-op in Naujaat is going to put concrete in the floor of their local rink so kids can use it year round. That’s the priority that co-op has identified.
Much of what we do on a day in, day out basis to support the arts is not only the marketing, whether it’s through Canadian Arctic Producers in Mississauga or online around the world through the Northern Images website. I think more importantly, because the co-op system is a strong pillar in that industry. Many of the staff at the showroom in Mississauga have developed a great deal of expertise. One of the things they do, and this is tough to monetize, senator, is to help coach the artists with how they can improve the marketability of their art. Whether that is giving them some suggestions about how to better proportion a piece, how to finish it, details to add and other mediums to include together in the art to improve the value.
The other thing is the advocacy and the participation that the organization continues to have with Inuit Art Foundation with respect to preserving the igloo tag. The research the Inuit Art Foundation has done indicates — I’m going from memory — that the average piece has 40 per cent more value when it has that certificate of authenticity in the form of the igloo tag. Canadian Arctic Producers is one of, I believe, 10 or 11 licensees that remain able to certify art as being authentically Inuit in origin.
Senator Bovey: Thank you. That tied in for me the training as well as the business opportunities. I think that’s critically important. Thank you for the work you do.
Senator Oh: Thank you, Mr. Wilson. In fact, we just came back from the North. My impression is I see a lot of problems up there, such as high operation costs, social, employment and housing problems. Education is poor and infrastructure is not there. They seem to have all the problems. Do you need more funding to step up? Or what can you do to really help improve the life of the communities up there?
Mr. Wilson: Well, if it was as simple as one thing, I’m sure there are folks with much bigger foreheads than mine who would have figured it out long ago.
If I were to try to do one thing — and I can’t take credit for this idea — to me the housing question is fairly fundamental. There’s an opportunity with the investment that’s going on with the deep water port in Iqaluit to change how housing is done. I’ll try to sum it up very briefly.
Right now, one of the reasons why residential housing is now pushing $450 a square foot is due to some of the things I mentioned in my presentation such as fly-in/fly-out labour, the climate, et cetera. I think there’s a real opportunity for modular housing in refurbished containers in a community like Iqaluit. Right now, the drawback of modular is it’s less efficient to ship because instead of shipping, for example, a bundle of steel studs that’s the size of this table, they’re all standing up 16 inches apart and you’re basically shipping a whole lot of air because the modular is already constructed.
With the deep water port in Iqaluit and now with the ability to be able to handle fully loaded 40-foot containers, you’re going to have an opportunity to take containers where goods for resale — non-perishable foods, et cetera — are shipped to Iqaluit along with the building supplies to outfit them into residential units in a more economic manner.
Whether it’s trades, apprenticeship programs et cetera in Iqaluit, you’re able to maximize the productivity of the sea lift. A vessel can leave 100 per cent laden from the South and drop 15,000 cubic metres in Iqaluit, pick up 15,000 cubic metres of residential housing and carry on its way to Pond Inlet, Arctic Bay, Pangnirtung, Kimmirut or Cape Dorset and, in essence, in one round trip, deliver more than 100 per cent of its theoretical capacity.
Now, that in and of itself is not going to be a broad game changer for the North. I’ve come to learn no one is truly self-sufficient in the North. If we can do just that — improve the efficiency of sealift, use larger containers, which cost the same amount as one half the size — it’s going to help. If we can then get more people in houses, I firmly believe that’s going to help with their educational attainment, their employment prospects as the economy continues to expand, whether it be trades, mining or exploration. It’s painful to have to send a refrigeration technician to Arctic Bay. That’s part of the reason why food costs what it does. That repair bill, which would cost $375 in suburban Winnipeg, would cost over $9,000, to be borne in a population where there are perhaps 1,000 people in Arctic Bay. All of those little things have this cumulative effect of why widgets in Winnipeg and widgets in Whale Cove don’t sell at the same price.
Senator Oh: I want to follow up on your question about the artwork. We were told the cruise ships coming in are supposed to buy artwork from the local artists, but instead they’re buying artwork on the ship. Are you aware of this problem? It’s not directly helping local artists.
Mr. Wilson: I think there are many cruise operators who are trying to internalize that. There are many where I suspect it’s a bit of a quality control. They’re trying to manage the experience because they want to have greater control on what the guests’ experience is. They’ve got greater control when they internalize that and there may be cases where they are also looking to profit from those sales, unlike ones done ashore.
Senator Neufeld: Thank you for being here. I appreciate the hard times upon people who live in the North. I certainly don’t live as far north as what you’re talking about. I do live in the North, so I experience a lot of fly in/fly out, thousands of jobs. My experience has been, with the mining and resource industries, that it doesn’t matter where you’re at — in the Arctic, Fort St. John or the Interior of British Columbia — there is fly in/fly out. It’s people not wanting to live in those communities. I don’t know why, but they do not. They’ll live in larger communities and the companies will provide air access through charters. In many cases, we have lots of charters coming into Fort St. John with hundreds of people. I think that’s a problem generally — not just in the North, but it may be a bit larger — across those industries.
What are the education statistics are for students in the North? It would vary in different communities, obviously. Maybe you can give me some sense of that. First off, people in today’s world are quitting in Grade 8 and trying to go to work is not going to get you a lot of things further on in your life. Tell me what the education rate is.
Mr. Wilson: Senator, thank you for the question. I don’t profess to be an expert in education. I won’t cite statistics. I know anecdotally, many of our co-op managers certainly have a challenge with even doing some very basic numeracy and literacy training, even just to do some of the entry-level roles in an operation. I know you’ve heard from others who have testified about the education system specifically.
There’s a lot of talent in the North. I can’t speak —
Senator Neufeld: Don’t get me wrong; I wouldn’t say there isn’t talent.
Mr. Wilson: I can’t speak for Fort St. John and say whether some of the fly-in/fly-out workforces are just because there aren’t people in great enough numbers to do the work. In the North, there are many communities that have lots of fly-in/fly-out work or trades, et cetera. And we’re guilty of it ourselves, of not being able to find an electrician in Hall Beach and trying to fly someone in. It pains us.
I would love to see better trades training. Often that has to be the foundational parts of early childhood education. Basic numeracy and literacy skills are precursors to that sort of training.
Senator Neufeld: Have you visited other Arctic countries to find out what they do? I assume they face many of the same issues.
Mr. Wilson: I’ve not had the opportunity or the pleasure to do that. I’ve had the good fortune of travelling to a couple dozen communities in our country, in the Arctic, but not any other countries I’m afraid.
Senator Neufeld: You can do a lot of it by Internet. Has your group done that kind of work — I don’t think there’s a silver bullet — to see what they do?
Mr. Wilson: No, I have not. In my view, education is something the territorial government looks after. We’re an organization that barely numbers 100 people and is trying to support member cooperatives operating in our retail, food service, hotels, fuel delivery, cable TV in the harshest area for commerce in this country.
We have a host of people that make it their life’s work to help them out in those specific domains, less so in education, with some notable exceptions, though. Most of our involvement with respect to education considers the specific needs of the co-op system.
For example, many co-op directors go through director leadership modules. That’s not early childhood education. It’s leadership training, whether it’s how to run an effective meeting or understanding financial statements, things like that to try and build up the capacity of the elected side of our democratic organization. There’s a lot of skill-specific training, whether that be in cable tech, spill response for fuel, small engine repair, et cetera. These are the things our members say is important to them.
My comment might have been somewhat tongue-in-cheek about the 1-800 number for service. We kind of shudder when people refer to snowmobiles and ATVs as recreational vehicles. I can assure you our member owners don’t consider them recreational vehicles. That’s the school bus and family car. That’s how they go hunting and pursue a lot of their traditional activities.
Despite the fact the cost-benefit or the ROI might not be there on supporting power equipment parts, training and warranty, we continue to because, aligned with our principles of concern for communities, we’re compelled.
Senator Coyle: Thank you very much, Mr. Wilson. Welcome back to the Senate of Canada. Mr. Wilson tells me he was a page a number of years ago in the Senate.
I really appreciated your presentation. This discussion is also very helpful. I have a couple of questions, if I may. Is that right all right, Mr. Chair, if I have two questions?
The Chair: Yes.
Senator Coyle: The first line of inquiry I’d like to take from your point about housing and the opportunity relating to housing with the deep water port coming to Iqaluit, which we heard about when we were visiting there. Does the Arctic co-op movement, organization, see housing as an opportunity for itself to get into?
The Chair: You’re in hotels.
Senator Coyle: Yes, exactly. I see you’ve done some social housing. There is a mention of it here.
Mr. Wilson: A lot more of the housing that we’d be involved in is staff housing which, truth be known, we’d rather not be in. In our utopia — we’re not importing general managers into communities either — and we’re not at utopia just yet.
I get asked regularly about housing. I think the reason is because cooperative housing is something that, in the South, is fairly commonplace. It’s an established model. People make the connection we’re Arctic co-ops and the Arctic needs housing, so they look to marry those notions together.
As much as I’d love to say I see that today in the short term or even the midterm, cooperative housing in the South is an option that displaces a mortgage payment or rent. It’s just another business model by which one puts a roof over their head.
With such a large portion of the residents of the territory in substandard housing or social housing, and often at a greatly subsidized rent, the economics of cooperative housing would mean the territorial governments would need to relinquish some of their spending to make the economics work.
Some people on social housing only pay as little as $60 a month in rent. The notion of taking $60 a month in a high-cost environment and suggesting that we’re going to have this cooperative housing concept, the economics for that don’t exist.
As much as the cooperatives are founded on these seven principles, they are still a business model. If they don’t earn one dollar, they’re not going to be in a position to carry on. That becomes the challenge. If territorial governments were willing to cede their investment in delivering housing — but that in and of itself is a big ask and a big project and a big risk, to be quite frank, to change that large of a program.
I hope that answers your question.
Senator Coyle: It does in a way. Housing, we heard over and over again across the Arctic, is a huge issue. As you have articulated, is connected to so many other factors. I’ll leave that. I was actually more interested in business opportunities and what Arctic cooperatives are seeing as potential future business opportunities. I’d love to understand a little bit about the state of all of the parts of your network of cooperatives. Where are the trends going? What do people see as new opportunities? What is contracting? What is growing? What might be new on the horizon? I believe very strongly this network of cooperatives is absolutely essential to the lifeblood of the people in those communities. Not only does one want to preserve it, one hopes it will also expand and thrive in a new way.
I’m trying to understand what the trends are.
Mr. Wilson: We’ve got this vision of entrepreneurship as being a man or a woman owning their own small business and being an entrepreneur. I made reference in my presentation that I view cooperatives as collective entrepreneurship.
Many of the business lines that member co-ops operate today are really only able to be done, at least at the outset, because of the strength of the collective. A group of people pooling their resources — whether it be financial, administrative, vehicular — or whatever those resources might be.
I think co-ops in the North have been around since 1959. Building a degree of critical mass and getting merchandise of all different types and sizes to some very remote places with a good degree of reliability given the environmental conditions. These are some of the same services that mining clients and territorial governments need. We’ve been able to lever that critical mass and expertise over the course of the last decade and are now providing a lot of material, food and all sorts of other consumables to mining organizations, such as Agnico Eagle Mines, such that the benefits don’t accrue to a person or a small group of people, but are spread broadly across an entire community. As I discussed in my presentation, when you can disperse benefits broadly across a community, you’re not exacerbating a situation of a limited number of people that have and a whole group that have not. I think the cooperative model is an excellent way to do that. Because we deal with about 11 airlines each and every week, ranging from flying planes as small as a Pilatus PC-12 with an 1800-pound payload to a Boeing 767-300 which has a 126,000-pound maximum payload, we can be infinitely flexible as a single point of contact for mines, government or other third parties that might require those services.
Senator Galvez: Thank you, Mr. Wilson, for your presentation. It was interesting but also sad to hear about all the troubles in the North. I can’t stop making a parallel with the Indigenous people living in the Andes, 3,000 metres above sea level, working and living in cooperatives exactly as you describe. I still see a great advantage in your system with respect to the people in the Andes because, as you said, large containers can arrive and bring so many kinds of products, equipment and goods.
I agree with you that the main problem is housing. It can’t solve everything but it will help with other issues, because many things come from the quality of life that you live in the North, which can be very hard and very isolated.
I was wondering if you’re looking for some ideas. I was thinking of some ideas, for example with housing. If you develop the recycling industry and the deconstruction industry with your cooperatives, that can help with materials such as tools for construction and extending the life cycle of housing. Furthermore, all of the materials are there.
For housing, you need electricity and heating. Have you looked into businesses with renewable energy, such as sun, wind, hydraulic or biomass? You have a lot of waste. All of these communities produce human residues which are biomass that can be turned into methane. Have you thought about using drones for the transport of small goods and online services? You said online is there, so why don’t you use online for education?
Mr. Wilson: There’s a lot packed up in that question.
Senator Galvez: Sorry.
Mr. Wilson: That’s okay. We’ve participated in information gathering and workshops about hybrid airships and all sorts of other alternatives. At last report, they were still going to be triple the cost of sea lift. They also rely on critical mass, which means in small communities they’re not going to be a viable option for fixed-wing aircraft.
Regarding other things like drone delivery, I’d like to put that in perspective with respect to critical mass. Four good Walmarts probably do the combined volume of all the cooperatives together across the Arctic. To put that in perspective as to the amount of resources that are available to investigate drones and all sorts of other things, we don’t have the resources to be on the leading edge of that sort of thing.
As it pertains to alternative energy, I mentioned in my presentation that among the drivers of the high-cost environment is the cost of utilities. We’ve been trying to work with Qulliq Energy Corporation, the utility in Nunavut, for example, but presently the legislation doesn’t allow for reverse metering. We’ve got one or two solar projects in abeyance right now. They won’t allow reverse metering because they’re the only ones that can sell power in the territory. It’s a bit of a challenge.
We need to understand that may be part of a snowball effect that they look to recover the cost of delivering power in that community. If one of what might be two or maybe three nongovernment commercial users now supplement their own power and are buying less of it, the costs are largely the same. They might burn a little less diesel, but if they need to recover what the costs are in the rate, then the rate per unit just goes up. You end up taking one step forward and three quarters of a step back.
Senator Galvez: You said there is a shortage of electricians and that electricians are very expensive, as are mechanics. Maybe we are looking too much for a higher degree. Maybe in the North what we need is less than the average technical skill that we know here in the South. Can you play with that too? Some basic electricity can be learned by my 19-year-old son on YouTube. There are some things that are very possible. It depends on what you ask.
Mr. Wilson: Yes, I would agree. However, when you get your building inspected, they’re going to want to know that somebody with the required accreditation did the wiring because of the fire risk, et cetera.
I just used the electrician in Hall Beach as one example. I think it comes back again to the critical mass. I made reference to the cost of a refrigeration technician in Arctic Bay, for example. The fact is there’s probably only three buildings in Arctic Bay that have commercial refrigeration in them: the co-op, the northern store and there might be something at the school.
Fortunately, knock on wood, they don’t break down that often so that you can keep somebody busy. There isn’t the critical mass to have that specialized trade in that community. As a result, it needs to get outsourced.
That’s just another example of one of the things that makes widgets more expensive in Whale Cove than Winnipeg. When your alarm goes off because your refrigeration is down in Winnipeg, somebody is there in 45 minutes. You don’t lose $30,000 worth of products like they do in Arctic Bay because they’re not there in 30 minutes. They’re there in three days if you’re lucky.
Many consumers and residents of the North have a decent appreciation of some of the cost elements that drive pricing in the North because they know what their NorthwesTel bill is. They ship cargo around by air. They have an appreciation of how those costs are elevated. I think the impact of the small market sizes and the lack of critical mass is much less appreciated.
The Chair: Mr. Wilson, if I may, we’re talking about economic development and infrastructure tonight. You’ve got a thousand people working for ACL, I understand. The majority are Indigenous. You’ve trained close to 400 people with assistance from the Skills and Partnership Fund of the federal government. Could you tell us a bit about that, how that’s worked and also about what your Arctic cooperative development fund does?
Mr. Wilson: Certainly. For a period of approximately three years, we ran a program whose acronym was STAT, or Strategy for Training of Arctic Technicians. It was a departure from what the federal government would have typically funded in the way of training. It allowed us to train people who were employed as opposed to people who were unemployed. For example, somebody who was employed at the cooperative in whatever capacity was able to receive training in a whole host of areas. There was assistant manager training, office manager training, small engine repair, cable TV, building maintenance and a whole host of others.
One of the nice things is because we’re having a hand in delivering the training, we included a financial literacy component of this training. We had the good fortune, through the principle of co-operation among cooperatives, of receiving some funding from Gay Lea dairy cooperative in Southern Canada. They recognized they wanted to do something within the borders of their own country and chose to invest in a financial literacy program in partnership with ourselves and the Financial Consumer Agency of Canada. We infused that into other training we’re doing.
The numbers you cited, Senator Patterson, would be the cumulative employment for all of our member owners. Those 32 autonomous co-ops would account for about 900 or so of those employees, and there are about 105 at the support office in Winnipeg.
With respect to the Arctic Co-op Development Fund, one of the impediments of the development and growth of cooperatives has been the access to funding. Fortunately, back in the early 1950s and 1960s, operating retail in the Arctic was far more spartan where a small number of people could pool a small amount of funding and were able to get started. Many of the stores had very modest beginnings, perhaps built out of scavenged material or a building that was pulled across the ice from a dew-line site.
As their businesses matured and the demands of their members grew, financing was increasingly a challenge. For a retailer operating in the South, the notion of buying a year’s worth of shelf-stable inventory and sending it in by sea would be totally foreign. Truth be known, it is probably 15 to 16 months in advance when you pay for it and eventually might sell the last case.
In 1986, through the support of the Government of Northwest Territories among others, the Arctic Co-op Development Fund, as it now known, was created. The Arctic Co-op Development Fund is part of the collective assets of the 32 member co-ops. They have amassed together a pool of funds they use to support one another. They will, in essence, be able to borrow from this collective asset to finance their resupply or perhaps do interim financing on an investment in community infrastructure or refinancing some third-party debt.
Since its inception in 1986, I believe that fund has lent over $600 million to those 32 member co-ops. It continues to cycle through the North to support the ongoing operation and development and improvement of member co-ops and provide a means of financial stability.
The Chair: Thank you. We have a very short time. I have Senator Bovey and Senator Coyle. Could you make these questions short, please?
Senator Bovey: I’m fascinated with the map and where the co-ops are located. One of the things we heard was the issue of lack of Internet and fibre optics. Has that affected the co-op program? Because you’re in pretty remote areas.
Mr. Wilson: We are in some pretty remote areas. The infrastructure or the architecture of some of our IT systems is such that they might not be live. They might replicate overnight when there is more available bandwidth and things like that. We are cognizant of some of the limitations that might present. For example, the notion of doing video training and those sorts of things. Our challenge is you can’t rely on the ability to stream the way we just take for granted here in Southern Canada.
Things like network failures are not uncommon. Our IT division has fortunately done a lot of work to try to find ways to have the degree of redundancy that you can given the realities.
I recall there was a satellite failure — I think it was in 2009 — that knocked out telecommunications to and within the North that led to a meeting in Yellowknife. We know we’re not alone on the island of being impacted with those realities. It’s something that we deal with as best we can.
Senator Coyle: I know we don’t have a lot of time. I’m just going to focus in on one question. This is with regard to your agreement, the ACL, with the First Nations Bank of Canada in order to provide financial services across the North. This is an area we haven’t delved into very much. I’m curious how that came about and what your intention is with that.
Mr. Wilson: Thank you for the question. Arctic Co-ops are a democratic, member-owned organization. We have had resolutions at our annual general meeting dating from well before I started working with the organization a decade ago because people recognize that elsewhere in the rest of the country there is the credit union model that is really like a co-op model, but that industry is so highly regulated and, again, in the territories it would not have the critical mass to be a viable option.
Being problem solvers and solutions-oriented, the same challenges of infrastructure and high costs that member co-ops see in retail operations are the same things that a restaurant or, in this case, a bank would be faced with. The prospects of building a bricks-and-mortar facility in the North is not viable for a financial institution either. When you can co-locate it in an existing facility, the costs are much lower.
Really, we’ve got a very good working relationship with First Nations Bank of Canada I think, in part, because there are a lot of similarities in who we’re trying to serve. We’re basically looking for practical ways in which we can deliver on the desires of our membership to help improve the availability of in-community banking services, because simply using the app or online banking isn’t necessarily the preferred option for many people. They may want to deal with a person face-to-face in their own language.
The agreement with the First Nations Bank has a lot of alignment from an organizational culture perspective and helps us in fulfilling the desires of our member owners to improve in-community financial services in a practical way.
Senator Coyle: Thank you. That was very interesting.
The Chair: Thank you very much, Mr. Wilson and colleagues. This brings us to the close of our formal part of the meeting. We are going to take a short break and then go in camera to discuss committee business.
(The committee continued in camera.)