Proceedings of the Special
Senate Committee on the Arctic
Issue No. 14 - Evidence - October 1, 2018
OTTAWA, Monday, October 1, 2018
The Special Senate Committee on the Arctic met this day at 6:30 p.m. to consider the significant and rapid changes to the Arctic, and impacts on original inhabitants.
Senator Dennis Glen Patterson (Chair) in the chair.
[English]
The Chair: Good evening, unnusakkut.
Welcome to this meeting of the Special Senate Committee on the Arctic. My name is Dennis Patterson, senator for Nunavut. I’m privileged to chair this committee. I would like to ask senators to please introduce themselves.
Senator Bovey: Patricia Bovey, Manitoba.
Senator Boyer: Yvonne Boyer, Ontario.
Senator Boniface: Gwen Boniface, Ontario.
Senator Galvez: Rosa Galvez, Quebec.
The Chair: Thank you, colleagues. Tonight as part of our study on the significant and rapid changes to the Arctic and impacts on original inhabitants, we continue with economic development and infrastructure.
For our first panel, we welcome by video conference Kelly Lendsay, President and Chief Executive Officer, Indigenous Works. Mr. Lendsay, thank you for joining us. I invite you to proceed with your opening statement after which there may be some questions.
Kelly Lendsay, President and Chief Executive Officer, Indigenous Works: It is a pleasure to join everybody from Saskatoon, Saskatchewan. I didn’t have to get on a plane and travel to Ottawa. It’s great to meet everybody via video conference.
Senator, I like your sealskin vest.
The Chair: Thank you.
Mr. Lendsay: Ladies and gentlemen, I want to talk about two things and bring this to your attention. I was trying to put this in the context of the Arctic. A year and a half ago, we did the largest study ever on corporate Indigenous engagement. This is important to the folks in Nunangat. When we think about jobs, business and social investments, what I have learned over 30 years is this really is an issue of engagement.
Our friends at Indigenous Services Canada provided the funds, and we undertook the largest study ever on corporate Indigenous engagement. We surveyed 511 medium- and large-sized firms.
The key findings are three things. One, 85 per cent of the companies that responded had no Indigenous engagement strategies or practices. They were asked a number of questions around awareness, strategies and consulting; there were five areas. They got a score.
The average index score, what we call the “engagement score,” is 13 out of 100. If you look at companies in the resource sector, many of them were scoring 80 or 90. If you look across all sectors of the economy — retail, hospitality, advanced manufacturing, digital, IT and transportation — the Indigenous engagement is not on the radar screen.
The third finding was about the Truth and Reconciliation Commission. They were asked if they knew about the truth and reconciliation corporate call to action. Only one in four of the companies knew about TRC.
There is this engagement gap. If we’re really going to advance and support Indigenous people, in this case the Inuit, how are they engaging with corporations? How are corporations engaging with Inuit economic development corporations and communities?
We are now working with ITK, the Inuit Tapiriit Kanatami, on this engagement project. It just got started. Last week we met. We have been talking for a year, the terms of reference, and it’s rolling out. We will have to keep you apprised, senators, on the progress of this. Basically we’re looking at how we address this issue of corporate Indigenous engagement, but, of course, Inuit-specific.
When I say Inuit-specific, I’m not just talking about Inuit through the Arctic. I’m talking about Inuit who live in Ottawa, Winnipeg, the two other big centres outside Nunangat. I thought that would be of interest to you. I think this is going to help address jobs, business and social investments. It’s also going to address what we call “social capital.” Social capital is social harmony; it’s the bonds and linkage between and among groups. That’s some of the work we are now doing.
We have experience doing benchmarking. We have benchmarked the workplace. We used to be called the “Aboriginal Human Resource Council.” We were a recommendation out of the RCAP, the Royal Commission on Aboriginal Peoples. We did all this work around workplaces.
Senator Patterson, you would be pleased to know I’m one of the few people that promote the IQ principles. The Inuit have created seven principles they would like to see integrated in the workplace, government and education. These principles involve harmony in working with others, respecting the environment, and there are seven. Of course, I can’t speak Inuktitut, but I have a PowerPoint slide where I promote these.
I bring this to your attention because I think instead of looking at Indigenous engagement as a deficit or through a deficit lens, I think there are some things the Inuit are doing, such as these IQ principles, that could actually benefit not only other companies but also other Indigenous groups. I think this is an example of good leadership that is underway, and something I have learned in working with Inuit.
I have one last story and then we’ll open up to questions. I was in Iqaluit in 1999. It was called the Nunavut conversation. Of course, it was right when Nunavut was formed. About five years later, we did a corporate community engagement forum in Nunavut. There was a guy, Nester Albert. I always remembered him because he was the first Inuk linesman to work for Nunavut Power, if that’s the name of it today. If you look at that compared today, I think we are on the cusp of accelerating these corporate Indigenous engagements, really driving a job, a business and a social economy that is going to benefit people throughout the Arctic.
I will pause there and welcome questions, comments and conversation.
The Chair: Thank you very much, Mr. Lendsay. We will now go to questions.
Senator Bovey: Thank you. I really appreciate your insights and recent findings and the way you’re taking action on them; however, I have to say I find them pretty depressing. I don’t find your actions depressing; I find your findings depressing.
Why do you think 85 per cent of these firms had no Indigenous engagement strategies? Why do you think the score was so low? Why do you think only one in four knew of the TRC? “Why” is my first question.
Mr. Lendsay: I think it’s the right question. So often, I think people jump too quickly to this word racism. I don’t think it’s racism. I call it “innocent ignorance.” That’s the first thing. I think there is a lack of knowledge about what the real issues are. Everybody in this room knows the issues. We know about the acronyms like RCAP. That is the first thing, truly a lack of knowledge.
We know there is a history of not learning about this in schools and universities, but that’s changing. But for the leaders in organizations and corporate Canada today, there is a knowledge gap.
Number two, I think there is a bit of fatigue. Looking at America, if you were to go to Detroit to talk about African-American issues, there is fatigue. In Canada I think there is some fatigue around Indigenous issues. It’s that Canadians really don’t understand what the issues are. They see it as noisy. People said things like they saw it as “friction,” as “negativity.” There is a caution, a resistance, and people see this as a risk.
I’m sort of paraphrasing why I think you have the right question because we think there needs to be a fresh approach, a new approach to profile Indigenous engagement at work, to profile a new generation of Indigenous people who want work, to profile corporations, colleges, universities and communities working together.
If we keep doing it the same old way, nothing will change. I mean, everyone will throw out examples like role models. You know how on television they have those Canadian Heritage Minutes? They are 30 seconds to a minute. You watch them. Another example is a good Tim Hortons commercial. It gets you thinking.
We’re talking with three big departments: ISC, Indigenous Services Canada; ISED, Innovation, Science and Economic Development; and ESDC, Employment and Social Development Canada. These are the three big elephants in Ottawa. We are trying to get the three big elephants to figure out what and how should government collaborate, first of all? Government has its silos, industry has silos and so do Aboriginal people. We have silos; we’re just as fragmented as the provinces and the territories.
We need to create intersections between and among groups. I want to create this more integrated approach. I want to find ways to reach out to the private sector and reach the disengaged. I would ask all of you to do one thing in Ottawa. First, where are you from, madam? Where do you live?
Senator Bovey: My home base is Winnipeg.
Mr. Lendsay: Winnipeg. When you’re back home —
Senator Bovey: One of the large Inuit centres.
Mr. Lendsay: Yes, exactly. When you’re back at home and out with your friends, ask people in your circles whether they have an Indigenous engagement strategy — “Do you talk about Indigenous issues?” Generally you are going to find in your broader circles — if you went to a room full of 100 people, the majority of people are going to say, “Well, we kind of know it’s important, but no, we don’t have a strategy. Our leadership is not really doing anything about it. We know it’s important.” They are sympathetic. There is empathy. “We know there are a lot in jail.”
We need to be very honest. Again, they are not racist; they are simply ignorant. They would like some guidance. There is an opportunity, but it’s going to take partnership and engagement brokers to go out and do this work. It’s not going to happen by itself.
Senator Bovey: Let me flip to the other side of it and talk about the Inuit for a moment. Where does education play? Is some of this innocent ignorance and fatigue because we’re not having Inuit people from various parts of the North knocking on those corporate doors for jobs because our education system or the education system in the North is not of equal access and equal standards to that in the South? Is that part of the other side of the equation? For engagement, you need both sides of the equation; you need the host and you need the engagers.
Mr. Lendsay: It’s like this, isn’t it?
Senator Bovey: Yes.
Mr. Lendsay: You need both.
If you look across the North from the Yukon Territories through to Nunangat, generally Canada can learn a lot from the North. I find the approach and attitude to wanting to partner is much stronger in the North. This goes beyond impact-benefit agreements and so on. People know you need to find ways to engage.
You’re absolutely right there is an educational and skills deficit. Companies that are serious — and we’re talking the mining and the resource companies — they generally have to put in the effort.
We’re finding if you look at all the subcontractors — hundreds of subcontractors — that work for major companies, they don’t have an engagement plan; they don’t have to do Indigenous engagement. To me, we’re missing an opportunity to vertically integrate or push engagement through companies right down to contractors.
That’s just one example of a policy and a strategy that, if you’re going to receive federal contracts and these types of things, then a company has to take a more active effort to engage contractors and just look at the number of jobs, internships and investments that could follow.
The other thing about the education side is there is not always a job and people are not always job-ready. To me, we have a mismatch. What we need companies to do — and again, this can work with Inuit very well, especially throughout Nunangat — we need to say to companies that if you don’t have a job today, we want you to invest in the mechanisms, the training and the education to prepare people for those jobs. That way, there is still an investment, but it’s targeted toward career awareness, career development, Grade 12, calculus, chemistry, computer skills and so forth. You have to align the education with these job opportunities.
Senator Bovey: Thank you. I may be back later with another question.
Senator Boyer: Hi, Kelly. Thank you for appearing. I seem to remember we knew each other a long time ago.
Mr. Lendsay: We did. Yes, we did.
Senator Boyer: I have a question about women. In light of the grim statistics you have presented, I’m almost afraid to ask about Indigenous women, in particular Inuit women, and how sparse women are in the mining industry. What do you think could happen to increase Indigenous women, particularly Inuit women, in the resource economy?
Mr. Lendsay: I don’t have any data specifically on Inuit. We’re discovering that Indigenous women — so not just Inuit but Metis, First Nations and Inuit — are doing much better in the economy than men. Women are more organized, they are more goal-oriented and they want to make something of their lives. If you look at the number of people graduating with post-secondary university degrees, the majority are women.
The real vulnerable ones are teen men. Some of the research coming out is around where is the vulnerability.
If we turn to your point about women in the resource sector, whether you’re native or non-native, women in the resource sector, women in the boardroom and women in senior management are the big three issues. There have been some changes. There are more and more women going into the resource sector, specifically the trades — women in the trades and now Indigenous women in the trades. We have seen a shift that is benefitting all women. There has been a shift to say there is a huge skill shortage, and it will get worse. People are starting to put their thinking caps on and getting women into these sectors.
The role models — I think only 13 per cent — if you look at corporations, how many resource companies have women on their boards? It’s a low number. Again, we need women on boards who are going to drive women’s issue, hopefully including Indigenous women’s issues, to drive the company to do more active engagement in that regard.
Third, there are some Indigenous female-owned companies in the resource sector: a woman from Goose Bay, Labrador; Nicole Bourque-Bouchier in Alberta. Teara Fraser just opened the first female-owned Indigenous airline out of Vancouver. Women have always been good entrepreneurs, and I think they are starting to open up businesses. Victoria LaBillois, a Mi’kmaq in Listuguj, is President of Wejuseg Construction.
We are starting to see Indigenous women take leadership in this area. Still, more work needs to be done.
Senator Boyer: You mentioned the boardroom. How do you think you could convince boards to restructure their composition to increase the number of women on their boards — some gender parity?
Mr. Lendsay: The good news is the security groups that oversee boards have got boards to explain or comply. If you look at Europe, the European Commission that oversees boards encouraged boards for years and years. Finally, they gave up. They said 30 per cent; you must get to 30 per cent females or there are penalties.
How long do you have this encouragement, strong persuasion and so on? Canada has started to say to companies they must set some targets for females and explain what has been done to achieve them. If they don’t, they have to explain. It’s comply or explain. We should get more information, but I think it’s the right direction.
What we need now is Indigenous people on boards and a more active push in that regard.
There is a growing number. There are more people getting training. There is this ICD, Institute of Corporate Directors. We need to take the training so we can be in the boardroom.
Senator Galvez: Thank you very much, Mr. Lendsay. I have so many questions. I don’t know where to start.
Let’s start with the fact the perception of the North is evolving. For 37 years I’ve been working with the environmental impact assessment of mining projects in the northern Canada, and also in South America. I know the perception is changing.
I remember when we used to see the North only as a place where we go to get good natural resources. Now, finally, we are realizing there are people who live there. Of course, there are workers who fly in, but there are people who live there and who want to be part of the development that is going on in the North. I cannot agree more with your statement that we need education and knowledge.
One of the recommendations of the Truth and Reconciliation Commission was to educate and create universities and programs within southern universities to receive students from the North. I am from Quebec, and in Quebec we are doing that at Laval University.
The programs that seem to be very popular are effectively for women: nursing and social work. We don’t seem to attract the men for more technical engineering things. My first question is how can we do this? Can they be financed by mining companies with bursaries and scholarships so we can then have a direct relationship and furnish you with professionals?
My second question: Of course, the mining industry cannot replace the government. I have seen in South America how mining companies replace the government and create hospitals and schools. I want your opinion on that, too.
Mr. Lendsay: Where is your beautiful accent from?
Senator Galvez: Peru.
Mr. Lendsay: What is interesting about this engagement agenda is that I’ve been to Australia three times. I’m looking at Indigenous engagement globally. These companies work in many countries. I think there is an opportunity for Canada to play a leadership role and ask what can we do on Indigenous engagement globally for all Indigenous people? As you know, we’re talking more about human rights in Peru, Argentina and Chile and so on. That’s a topic for another day, but an important one.
On education, we need to change some of the expectations. For example, we continue to talk about Grade 12 completion rates. I feel we should not be talking about that, we should be talking about post-secondary — trades, technology, university. We have a negative job market for people with Grade 12.
This morning I was talking with somebody, at a bank — Vancity. They see the market to work with Indigenous folks, but they don’t have their Grade 12. Should they take them with a Grade 11? My advice was no. You’re setting people up for failure. If you start working in a bank with a Grade 11 education, you have to upgrade. You will have to get your Grade 12, then you will have to get post-secondary, otherwise your career is limited.
In the same way, we need to foster these expectations through our parents, the teachers and the employers for the Inuit, and to ask, where is your post-secondary training path? It has to be a post-secondary path. I’m talking broadly: the trades, the technology and university paths.
The indigenization of our colleges and universities is going faster than the private sector. If you look at most colleges and universities, they have an Indigenous vice-president or a provost. If you look at Winnipeg, Saskatchewan, Cape Breton, SFU, UBC, they are achieving record numbers of Indigenous people, including 10 per cent at the University of Saskatchewan.
Even though there are negative numbers and statistics, the trend is going the right way. That’s the good news. Yes, there are incarceration problems here, but the education rate is going this way. It’s hard, though, for people to see it, because it’s so noisy. One day you’re hearing about murdered and missing women, and the next day you’re hearing about jobs.
What needs to happen on the education front is much higher standards and expectations. We are playing catch-up. We look at it as what do we do to help the native people catch up? If we’re serious as a nation of innovation, we should say, how can the Inuit be the leaders from K-12 education? They are onto the right track with some of these principles and things. How do we compare the performance of our kids in school to international scores?
I would like to compare ourselves on the international stage and we should not be afraid or embarrassed. I think we are though. As parents, we have to push our children. If you don’t have a parent who will push you then you need a teacher or a coach. If they won’t push you, then you need an employer. I’m much more of a pragmatic parent when I think about this education gap and there is a lot that could be done.
I was on the plane last week to Thunder Bay. We just did a big announcement with the Canadian Chamber of Commerce. Perrin Beatty and I announced this thing. I’m on the plane, sitting in row 5. There is a young gal in row 4, right next to the window seat, with her mother. She has a chemistry book open. She’s doing homework. I watched her the whole time. She is doing homework. The plane lands. I said, “What’s your name? Is this Grade 12?” “No, I’m in university, doing chemistry.” I gave her my business card. I said, “Way to go. I’ll tell you something: People who work hard doing homework do really well in their career. Let me know when you’re finished and looking for a job.”
It’s a little thing, right? We need employers across this country to do this and to reward students who are studying. You just don’t see that often.
Again, I was the first director of an Aboriginal business education program in Canada in 1995. We started the first business education program at the Edwards School, College of Commerce, University of Saskatchewan. Today, almost every university has an Aboriginal or Indigenous program or an MBA. They’re everywhere. That’s in 24 years. I think the trajectory is going the right way. I think the institutions are looking at First Nations-, Metis-, Inuit-specific types of curriculum. We just need to keep the focus on that.
The Chair: Thank you.
The committee just toured Arctic communities. To reinforce what you said, it was the parents and often students themselves who said they were not being educated to the standards required for university and transferring to other institutions. That was very much reinforced in our recent visit.
Senator Boniface: Thank you for joining us. I listened closely to your comments, particularly around the public sector. Colleges and universities have moved faster than private sector has. As someone who spent their career in the public sector, it always frustrates me that the private sector doesn’t make decisions for the purpose of ensuring the social contract part you refer to.
I would assume your organization has a role to play. I am interested in what you would advise these private organizations to do to advance themselves for the betterment of the community. They have a vested interest in the outcomes, just like the community.
I am interested in your perspective on that, and what can your organization do to help that?
Mr. Lendsay: I will get you a copy of our short, six-page summary of the research report. I think you would be shocked at what the disengaged company said.
For example, the researchers captured some of their comments. They don’t see it as their responsibility; they see it as government’s responsibility. They don’t see the fact of the unfortunate socio-economic picture and circumstance of Indigenous peoples as in any way their responsibility. They said things like, “We’ve never thought about it. Our leadership has never considered it. There is no policy, no direction, no business model.” They were very honest in their answers.
But we did ask: What would motivate you?
There were four types of companies. There was disengaged, engagement novices, relationship builders and committed. They said they needed things like expert resources, better knowledge, systems and tools. They were requesting, but the point is they don’t want to pay for it. They don’t see any reason why a Starbucks, Tim Hortons, Lowes or Hudson’s Bay — look at our oldest company in Canada, Hudson’s Bay. We have no relationship with them. They cannot tell you how many Indigenous people work at Hudson’s Bay or where they procure.
There is no compunction. I think it will take government policy — not our organization, not any of these little Indigenous organizations. I think government will have to say to companies outside the resource sector, “If you are doing contracts with provincial, territorial or federal governments, you need to have an Indigenous strategy.”
I think there needs to be investment in organizations like ours and others to go out and do this work on behalf of government, because the private sector will not just wake up and start doing this.
I think there needs to be a marketing campaign. There needs to be an active marketing and promotional campaign to change the language and engage people.
I think we need to take the TRC and say: They don’t know about it. They are not responding. How do we create an exciting TRC strategy? People look at the work “reconciliation” as a form of guilt. How do we change it into “No, reconciliation is actually an opportunity to start a new relationship”? Yes, there is the truth side, and then there is the reconciliation side. How can we encourage companies to get involved in that and to sign up and say they will implement the four recommendations in Call to Action No. 92?
A number of things can be done. Some of them are happening. We have put a proposal in front of those three big departments to say we have a strategy and a plan to increase the engagement index score. I am a pragmatist. It was 13; I want to double it. We need resources to do that. The departments are quite willing. There are some creative discussions; however, we have been talking for a year. I find the government is moving too slowly. We have the studies and the reports. The criticism is that the education gap is 15 to 20 per cent. How do we close that?
Some pragmatic things need to happen at the policy level. I think we need to support more Indigenous organizations to go out and do this work. I think if we continue to put effort into Indigenous economic development corporations, especially through the Arctic, we will start to close more of these gaps and create the social capital.
I like your reference to social capital. We talk so much about the economy. If you look at the OECD, Organisation for Economic Co-operation and Development, it has said that countries with higher social capital — the bonds and linkages between people — have greater labour market outcomes. We cannot just create economies; we have to create social and economic economies and partnerships.
I will tell you one last thing about Indigenous people and economic development corporations. I have looked at the top 10 Indigenous economic development corporations. I call them Native Crown corporations because they are owned by the community. About 40 to 60 per cent of the jobs that our Indigenous companies create are for Canadians, all Canadians. They are great companies that should be winning every diversity award because they are generating jobs — yes, for their people, but also for non-Native people. It’s a great story that we want to tell.
However, here is the gap: In talking to Sheila and Hélène Laurendeau, Deputy Minister at ISC, Indigenous Services Canada, we have no labour market or economic profile on Indigenous economic development corporations in Canada. There has never been a labour market and economic profile study. If we talk to a company like Samsung, or anyone, we cannot give them a prospectus on how many companies we own, how many employees we have, what are their occupational codes, where we would like to invest? Do we want to go into clean energy or transportation?
This is one important feature these three departments are keen on, especially Indigenous Services Canada. We need to get better data and baseline measurements so we can talk to the private sector in a meaningful and serious way, with good data.
I am excited about that aspect of the project, which will hopefully get going this fall and we will roll it out in 2019.
The Chair: Mr. Lendsay, would you be willing to send the committee a copy of your proposal, please?
Mr. Lendsay: I would be pleased to do so, yes.
Senator Boniface: This is more of a comment, but I think it is an important one. I could roll back and listen to the same words you use that you are hearing from the companies, and I can think of what we were told as women in the 1980s. I think the opportunity missed here is you don’t take advantage of the entire population. I suspect that is part of your argument. It is just so familiar to me. I must say I find it equally frustrating.
Mr. Lendsay: This is the most important part of this conversation. Go to the universities and look at the walls in the 1960s, 1970s, 1980s and 1990s, and look at the private sector. You find the first woman to become a pharmacist, a doctor, then the first vice-president. These are all in the 1970s and 1980s.
My mother was one of those women. She became a psych nurse. She wanted to have a career. I remember; I was 11 years old, and she was told by the women in the community she was a neglectful mother because she had a career.
You know the story. If you look at the women’s trajectory, they have plowed through ceiling after ceiling and they have opened the door in every sector. Have women stopped? Have women achieved the pinnacle? No. There is still more work to be done. The Fortune 500 have coined a new phrase — not the glass ceiling but “the glass cliff.” I think only 3 per cent of Fortune 500 companies have female CEOs. The glass cliff is that if the company is doing well, the woman gets rewarded; if the company is doing poorly, they push the woman, the CEO, off the cliff and blame it on her.
It is a new phenomenon of how women are being supported even when they do get into these positions.
I do lots of public speaking. I do exactly what you did; I talk about the women’s movement. Where were women in the 1970s and 1980s? Women had no economic power, and they had to get permission from a co-signer, their husband, to get loans, and all these types of things. Basically, they were told they can do nursing, social work and teaching, and then it started to open up.
Aboriginal people are on exactly the same trajectory as women. If we can accelerate it, we will see Indigenous people in the economy, just like women. Hopefully on a faster trajectory. There is a good comparison there. I am glad you raised it.
The Chair: Mr. Lendsay, you gave us good advice here tonight. I appreciate it.
I want to make one comment. I think Natan Obed, the President of ITK, would endorse this.
ITK is an advocacy organization based in Ottawa. The people on the ground delivering programs, which ITK doesn’t do much of or at all, are the economic instruments of the land claim agreements in the various Inuit regions going from Nunatsiavut, Labrador, all the way to the Inuvialuit in the Northwest Territories. If you could find a way in your new project that you mentioned working with Inuit to reach out beyond ITK, that would be my respectful recommendation.
Mr. Lendsay: We will action your suggestion, sir. I can tell you ITK has articulated the same thing and has said that there are six Inuit-owned economic development corporations that have formed a council. I am meeting with Bill Williams in Edmonton on October 15 with 15 Inuit EDOs.
To your point, they know they are not the service delivery mechanism. We need to be connecting at the ground level with those folks. Natan knows about this project, and I would be most pleased to share this report with the Inuit’s permission once it’s completed. We will circle back with you. It will take about a year for us to do this engagement partnership study. I would be pleased to do so.
Do you want the six-page research summary or the actual proposal that I was talking about?
The Chair: Both. You said you have done a research project that we would like to see. I believe you have a proposal into the “three big elephants,” as you called them. We would be great to see that, if you would be willing to share it.
Mr. Lendsay: Thank you.
The Chair: With that, I would like to thank you very much. I am sorry, but we have run out of time, colleagues. Thank you, Mr. Lendsay.
I believe Mr. Marshall is here and ready to appear on behalf of the Mining Association of Canada. We will not break, if that is agreeable, colleagues.
Senator Bovey: May I make one comment?
The Chair: Please.
Senator Bovey: You associated reconciliation with “guilt.” I think that was the word you used. I would like to congratulate you on your “reconcili-action.”
Mr. Lendsay: Thank you.
The Chair: The word is gaining currency, Senator Bovey.
Senator Bovey: We will make it have currency.
The Chair: Thank you again, Mr. Lendsay.
Now I would like to invite a familiar witness before the Senate in my time, Brendan Marshall, Vice President of Economic and Northern Affairs for the Mining Association of Canada. Thank you for joining us, Mr. Marshall. Please proceed. You can expect comments and questions at the end.
Brendan Marshall, Vice President, Economic and Northern Affairs, Mining Association of Canada: Thank you very much. Senator Bovey, before I begin, we think it should be very “serious action” and not “silly action” with respect to Indigenous economic reconciliation, just so we are clear.
Senator Bovey: Okay.
Mr. Marshall: Thank you for the opportunity to appear and participate in this important discussion. The roots of my career began in the Senate; I used to work for Senator Kinsella when he was the Speaker. I have a lot of appreciation for the work you do, which is often misunderstood by Canadians, generally speaking. It is a critical institution. I am happy to be with you today.
The Mining Association of Canada, MAC, is the national voice of Canada’s mining and mineral-processing industry, representing more than 40 members engaged in exploration, mining, smelting and semi-fabrication across a host of commodities.
Mining is the largest private-sector driver in Canada’s Arctic, employing approximately 8,500 people, one in every six jobs, or 8 per cent of the total territorial population. These numbers expand when the Arctic regions of Manitoba, Quebec, and Newfoundland and Labrador are incorporated. Direct GDP contributions in the Yukon, the N.W.T. and Nunavut are approximately 13, 18 and 21 per cent, respectively, as of 2016. In recent years, mining companies are or have committed to invest more than $9 billion in the region.
MAC supports the government’s objective of achieving a new Arctic Policy Framework, an initiative that will plug a significant policy gap at the federal level. As a major stakeholder to government policies in the Arctic, the industry can be a powerful constructive partner in achieving social, economic and environmental policy objectives and priorities in the region. More important, the industry sees itself as a platform that can be leveraged by decision makers to help achieve those goals.
The Arctic Policy Framework comes at a crucial time. Domestic, legislative and regulatory processes with implications for project permitting and costs persist, while recent supply chain failures have damaged Canada’s reputation as a reliable trade partner. Internationally, these challenges are amplified by an increasingly unpredictable trade relationship with the U.S. — granted, there is some clarity on that now, which is nice — whose comprehensive tax reform has significantly enhanced that jurisdiction’s investment competitiveness over Canada’s.
The impact of this uncertainty has been felt by Canada’s mining industry, where investment has dropped by than 50 per cent, or upward of $70 billion, since 2014. That occurred amidst a strong price rebound for many commodities over the last three years. The government is considering action to quell increasing investment leakage across Canada, but how does the Arctic fit into these and into policy development, generally speaking?
MAC has three recommendations for your consideration.
The first is to make the Arctic Policy Framework a policy clearinghouse; MAC recommends that it have this function. Traditionally, clearinghouses have acted as intermediaries between buyers and sellers of financial instruments to inform and facilitate smooth transactions. As a policy clearinghouse, the framework would have a mandate to inform broader Government of Canada policy development to ensure the recognition of unique Arctic needs and realities, have the authority to inform Arctic-specific policy or regulatory modifications to achieve regional representativeness, and to facilitate and monitor policy deployment to ensure these objectives are achieved.
The Arctic Policy Framework is an opportunity to modernize the old “one-size-fits-all” approach to federal policy development that too often overlooked the Arctic or considered it too late in the policy development process. This has presented challenges in the past, particularly in the area of infrastructure development, where the Arctic remains disproportionately under-built compared to the rest of Canada and other Arctic regions internationally.
The second recommendation: One of the largest factors influencing mineral investment decisions in Canada’s Arctic is heightened costs. Industry research in the Levelling the Playing Field report states that it costs two to 2.5 times more to build the same base or precious metal mine off grid in the North compared to the South. About 70 per cent of this northern cost premium is directly related to the Arctic infrastructure deficit.
To date, infrastructure decisions that recognize Northern challenges and opportunities through the Trade and Transportation Corridors Initiative, TTCI, and the Investing in Canada plan have been welcome, though the need is far greater than the funds allocated. MAC is aware the Northern allocation, which is $400 million under the TTCI, was over-subscribed by more than five times. Also concerning is the Canada Infrastructure Bank may not recognize Arctic realities based on our understanding of that institution’s proposed functioning, potentially limiting it as a means to address Northern priorities.
Enabling additional mining development in remote and Northern Canada is inextricably linked to the government’s Indigenous reconciliation and climate change agendas. The Arctic infrastructure deficit is the single largest barrier to mining development in the region. To address this, government should, as an immediate action, renew the TTCI in Budget 2019, including the $400 million Northern allocation; and as a long-term dedicated solution, recognize the unique challenges of remote and Northern regions through a dedicated Arctic fund in the Canada Infrastructure Bank or, preferably, establish a unique stand-alone Arctic infrastructure investment fund based on the Alaska Industrial Development and Export Authority.
The final recommendation is with respect to strong Arctic people and communities. It is well documented that significant gaps in human development indicators exist between Indigenous and non-Indigenous Canadians. According to recent data, the territories host the highest per capita demographic of Indigenous peoples of any subnational jurisdiction in Canada. As such, more so than any other region in the country, strengthening Arctic peoples and communities means advancing Indigenous economic reconciliation.
Further, significant research has underscored the primacy of employment generation as a driver to improving quality-of-life indicators and social development.
Acknowledging the mining industry is the largest private sector employer of Indigenous Canadians in Canada’s Arctic and to meaningfully achieve progress toward Indigenous economic reconciliation in the Arctic, the framework should make provision for the development and implementation of a bold regional macroeconomic development policy that prioritizes responsible resource wealth development and employment generation as a primary means of advancing social development and closing the disparity gap between Canadian and Arctic Indigenous human quality of life indicators.
There is a real opportunity to create a positive institutional legacy by ensuring the unique needs and realities of Arctic peoples are given the appropriate policy consideration. Paramount in achieving this is building off the region’s existing strengths and opportunities.
Thank you for your consideration. I would be pleased to answer any questions you may have.
The Chair: Thank you very much.
Senator Bovey: I appreciate the three recommendations. I have questions on two of them.
With infrastructure, when you are talking about renewing the Budget 2019 and the $400 million, tell me what you think about how it could work better, taking these budgets for the North on a per capita basis, which they are doing now, when you have all those spaces in between. What other manner of creating those budgets that are viable for the Arctic would you look at?
The Chair: Shall we stop there?
Senator Bovey: Sure.
Mr. Marshall: If you add up the population of the territories — and that doesn’t include the Arctic regions in the near North, south of 60 — you have one person for every 33 square kilometres.
Senator Bovey: That is right.
Mr. Marshall: If you look at trying to reconcile the largest, most disproportionate infrastructure deficit of any region in the country on a per capita basis, you will not get anywhere. That is a fact. We need different types of solutions to solve a problem. That’s why, when we look at infrastructure — and we also look at policy considerations more generally speaking — we need a regionally specific lens through which to assess and make decisions about what regional investment priorities are and what a reasonable relative return on those investments are, and not just the private sector; I am talking about the federal government.
This is one of our concerns about the Canada Infrastructure Bank. If you look at a dollar invested in the North in a remote region versus that same dollar invested in the south, unequivocally on almost every single comparative basis you will find a greater return on the dollar invested in the south. If that is the measure against which you are assessing the value of a dollar invested in the Arctic compared to a dollar invested in the south, those Arctic projects will always lose out.
That is one of our recommendations about infrastructure. We need an institution that understands what those unique realities are and takes them into consideration. One of the things we have advanced in a number of past consultations is taking into account social development indicators. When building this piece of infrastructure and generating this piece of economic opportunity, what is the corollary social benefit to that? That is a difficult thing to measure but it is something we have to take into account. Otherwise, if we just look at pure economic returns in a dollars and cents kind of way, the Arctic will always disproportionately be burned relative to competing projects.
The Chair: You were concerned that the Infrastructure Bank may not reflect northern realities. You have recommended this specific allocation for northern and remote projects within the Infrastructure Bank. What is going on there? Are you making progress? Are you having a dialogue? Where is that at?
Mr. Marshall: We have had a number of discussions. We are probably overdue to follow up with people in the Infrastructure Bank now. At this point, we are keeping the recommendation alive. If I had to be honest with the committee, I don’t know how likely an outcome this is going to be given that legislation has passed. We think this is something that is worthwhile pursuing in the long-term best interest of the region and also the country. That is why, Senator Patterson, we had a two-fold recommendation on that point. I think it is important to make progress in the near term with the TTCI. If we are really serious about harnessing and developing the potential and even just closing the gap between Arctic quality of life indicators and economic opportunities and those in the south, we need a concerted, dedicated regionally specific effort to do that.
The Chair: You said the $400 million TTCI was five times oversubscribed. Do you have a comment on whether that money was spent wisely or how it was spent while it was available?
Mr. Marshall: Sure. To give you a bit of context, there were two rounds of applications for this $400 million. The first round over subscribed the $400 million by greater than five times. I think the first round only dispensed about $255 million. The second round will be occurring this fall. Will some of those same projects apply again? Possibly. Will new projects apply again? Potentially. Is it possible that the fund will be over subscribed by even greater than five times if new projects apply? Yes.
When it comes to how that money was spent, we think there were some reasonable investments. We think the fund was a step in the right direction but was insufficiently capitalized to deal with the demand in the Arctic. For example, one project, the Grays Bay Road and Port Project —
The Chair: We will hear from them tonight.
Mr. Marshall: — is simply more expensive than the entirety of that fund itself. If you look at the scale of nation-building projects across the Arctic, if we are going to build one such project in each territory to begin to develop this region, you are looking at $1 billion or more. So $400 million across the entire Arctic is a good start and I think the government made the right decision to create the northern allocation, but we need to build off that.
The Chair: Thank you very much. I am sorry. I hijacked you, Senator Bovey.
Senator Bovey: That is fine. I want to return to a comment you made about social benefit and infrastructure. We all know the issues of Internet connectivity and the crises in the North. If they have connectivity, it is slow and many parts don’t have it. Tell me about infrastructure, broadband and social benefit.
Mr. Marshall: One thing the industry can relate to with respect to broadband and the capacities that brings is a whole spectrum — no pun intended — of possibilities for innovation, site efficiencies and management that is just not possible on a dated technology that is 20 years or more in the past.
If you are looking at modern mine sites these days that are grid-connected, you have robotic technology, drone capacities and a number of different technologies you can look at to apply. If you don’t have that base level of infrastructure on which to build that, there is only so far you will be able to advance the efficiency of that site.
There are a number of spinoffs with respect to that, not just with respect to greenhouse gas emissions but also safety, communication and economic development. That would be the way we would look at it.
From a personal standpoint on the social side, whenever I travel to the North — and I have the privilege to do that several times a year — I temporarily experience the frustration of not being able to connect to my loved ones over Facetime to say good night to my kids. I have the personal experience of not being able to work as efficiently as I otherwise would. If that were to be my permanent status in a day-to-day life, I could see how that would be limiting. From a entrepreneurial and business standpoint, enhanced connectivity and connecting to the outside world opens tremendous opportunities.
Senator Bovey: Would that be one of your measures?
Mr. Marshall: For infrastructure?
Senator Bovey: Yes.
Mr. Marshall: I think it is critical, yes; absolutely. We have companies that are right now in northern Quebec, for example, Glencore is doing a feasibility study to expand the fibre-optic network that the Plan Nord is funding.
They fund it up to a particular community. The next community is not connected in that plan. The company is looking at connecting from that community to the mine site and then linking subsequent communities down the chain to expand that public investment further.
Where there is synergy between the industry and communities, you will find those investments do move ahead. Sometimes the distances make it difficult for that type of infrastructure. Where those possibilities are real, they are being looked at, assessed and moved forward.
Senator Boniface: I am interested in more explanation around your notion of being a policy clearing house. Can you help me understand that a little better?
Mr. Marshall: I’m happy to do that. I’ll do it by telling you a story. Northern policy issues are one of the portfolios I’m responsible for at the association. I have another portfolio of issues, the economic affairs portfolio. I’m currently also working on transportation, broader infrastructure, climate change and other policies.
Let me give you an example about climate change, which is a really important issue for Canada. It’s a really important issue for the North. It’s also an issue that dovetails differently in the North, if you’re familiar with the infrastructure deficit and the relationship between energy, infrastructure and emissions.
For example, the first proposal on the electricity OBS was a standard that was only achievable based on connection to a natural gas grid. It was 420 tonnes of emissions per gigawatt hour of electricity generated.
The Chair: For committee members, that’s the output based system for calculating greenhouse gas emissions under the carbon-pricing regime.
Mr. Marshall: That’s right. What it demonstrated to me when I first read this was whoever generated this policy proposal is completely unfamiliar with what remote living and northern life is like. It was like the comment made earlier; it was sort of like blissful ignorance. What would a policy clearing house do? A policy clearing house on that particular issue would have allowed a lens, with people who have an expertise and more on the ground understanding of the challenges and opportunities in the Arctic, to inform something like that before it goes out.
How can we create this lens so the Arctic realities can be taken into account in broader pan-Canadian policy development? The one-size-fits-all approach to policy making has consistently failed the Arctic. It doesn’t work for the Arctic. It hasn’t worked on infrastructure in this respect with climate change. Granted, I think we’re making some progress, because common sense will prevail when you’re persistent. But that’s an example of how a clearing house could work with the current issue we’re facing — that would disproportionately burden the North on a cost basis.
Senator Boniface: Have considered in your thinking on that clearing house whether or not — because I think you’re right; it is often people that are staying, but there is a community piece here that is also important. Would that be a joint-type function? Could it be a joint venture from that perspective on the clearing house, or would it just be from the mining side of things?
Mr. Marshall: I wouldn’t presume that the mining industry would populate this clearing house. Not in my wildest dreams. I think this would be an institution that would be in partnership likely between the federal, territorial and Indigenous governments. Maybe we would have a seat to be able to share perspective or something like that. But this would be an opportunity for the individuals who hold the policy-making pen to inform those outcomes.
I’m not trying to say we need another layer of process. It just seems to me there is a gap. We end up with these situations where sometimes, in that policy-making process, the oversight comes too late or the Arctic is an afterthought and you end up with outcomes that are less than optimal. It would be great to avoid that.
The Chair: Mr. Marshall, if I may make a comment here, the Inuit of Nunavut sued the Government of Canada for failing to implement the provisions of the land claim agreement, specifically on employment and contracting. Those were two major issues where there was supposed to be preferences for Inuit in employment and contracting. The suit was settled for over $500 million. One of the terms of the settlement was that Canada would adopt a government-wide approach to these issues of procurement and employment in the North rather than funnelling it through one department. In that case, it was Indigenous Services Canada. I think there is an analogy there for government-wide policy making rather than through one department. Thank you for that.
Senator Galvez: Thank you for your presentation. When we studied the budget and this Infrastructure Bank, I remember reflecting on exactly what you were saying. Is this a good thing for everybody, for all the provinces and territories, particularly with respect to the Arctic that is changing so much due to climate change and other reasons?
Let’s say one recommendation that comes out from this committee is in agreement with what you’re suggesting, that there is a lens from which to see how to finance the North. Will you expect, if the government decides to have particular special lenses to look at the North, the conditions for the projects in the North should also have to meet specific conditions? Right now, in my mind, I have an example, talking about the type of development needed and wanted by the people in the North.
Mr. Marshall: Let me make sure I understand your question —
Senator Galvez: If I say, for example, mines in the old times used to take 30 years from the beginning to the end of the extraction period. Now it could take eight or 10 years and that will be done. That is not sustainable for the people around. The people will remain there, particularly the Indigenous people. What can we accommodate for them so they can sustain their life after the closure of a mine?
Mr. Marshall: There are a couple of things. One is that shorter mine lives are usually understood in terms of an initial mine life. While there are and can be smaller deposits, usually the scale of infrastructure required to build a mine makes those smaller deposits not economical to generate.
A typical initial mine life would be 10 years. If you look at some mining districts, like Sudbury, it has been operating for over 100 years. If you look at the Raglan Mine, they just did an expansion. They will be operating for another 20 years, and pushing 50 years for that site.
If you look at Agnico Eagle as an example in Nunavut, their initial mine life at Meadowbank was approximately 10 years. They have a satellite deposit they are generating and then they are building another mine. Any given mine life is just a snapshot in time, generally for larger companies. I think that’s an important distinction to make.
But your question is very significant nevertheless. I think it is one that I can only provide a partial answer to. The mining industry, as you know, is a for-profit industry. If we can’t make a profit, then we’re not going to operate. That doesn’t mean that companies don’t care or expect to deliver a level of best practice, while they are on the ground, that incorporates sharing of benefits and training and other things like that, but what happens after the mine is gone?
I think one thing is the company fully deliver on its responsibilities with respect to reclamation and environmental management.
The other piece is that one of the policies MAC has recommended is resource revenue sharing. It’s currently in place in British Columbia. That’s an agreement between the provincial government and particular bands whereby a greater level of the revenue generated from that benefit, or from that resource, is shared directly with those communities. Supplementing the benefits that the company shares provides a greater level of funds to be used potentially over the long term or create an endowment or what have you. Basically, it gives the community a greater level of agency.
The company, at the same time, can help provide guidance. We don’t have the agency of the community to determine what it’s going to do with the benefits that it has after the company leaves. We can help provide guidance. We can provide opportunities. But just like before a company comes in, there is a pretty significant role for governments to provide those social benefits and programming. A company can come in and provide economic opportunity that a government can’t. How do you turn or transition that into something more sustainable? That’s a complex question. I don’t have a silver bullet answer. That’s a hard question.
The Chair: Mr. Marshall, maybe I’ll just give you a little background because I have made a statement about this in the Senate. I have a fear that despite the $180 billion that has been committed by our current federal government to develop infrastructure in this great country, the money is going to end up, as you said in your remarks, going to projects where there is greater return in the South, in the urban areas, going to shorten commuter waiting times in the major cities and neglecting the remote regions of the country.
You said in your presentation — or I have it in my briefing notes, I guess — your association has supported infrastructure proposals in the Arctic. Specifically, the Grays Bay Road and Port project in Nunavut. We will hear from the consortium immediately after you tonight.
Regarding the Keno power lines extension and upgrades in the Yukon and the Slave Geological Province Access Corridor in the Northwest Territories. Could you tell us how those projects are making out in the decision-making process now under way? How are they going?
Mr. Marshall: My understanding is the Slave Road and the Grays Bay Road and Port were rejected by the TTCI for funding. I don’t know if that was a surprise to anyone, given the scale of those projects exceeded the value of that fund in its entirety.
How are those projects progressing at this point? I think it’s one of those situations where when you have, like we do, many choices and opportunities, and one door gets closed on you, you can just walk through another one. If something you’re hoping for doesn’t come to pass, then you have the flexibility to adapt or adjust or proceed in a different direction. That’s not the case for some of the communities on the other ends of these projects. This is the one project; it’s their one door; it’s their one window. That’s the case for the Kitikmeot Inuit Association with respect to the Grays Bay Road and Port.
The Chair: You are saying private sources of capital are not as easily available in remote locations. Is that where you’re coming from?
Mr. Marshall: I don’t think those projects are going to get built unless there is a political will to support them moving forward. I think that political will doesn’t mean the government has to 100 per cent pay for those projects. I think there can be a middle ground. There has to be a desire to see them get built.
You asked about the status of those projects. I think the individuals who are the proponents of those projects are pushing forward because they know this is a long-term opportunity. I don’t think the current rejection is going to be something that causes them to throw the towel in.
Is this going to be funded in Budget 2019? I’m not holding my breath.
The Chair: That’s where your recommendation comes that it should be repeated.
Mr. Marshall: I think it has to be. I think we have to continually make progress moving forward on the options available to us. Particularly in the Arctic, it’s not as though there are dozens and dozens of these types of opportunities. It’s not as though we’re looking at this massive pipeline of projects and having a hard time picking between them. It’s either we want to build something and make a commitment to get a toehold in to create this national corridor and manage that appropriately, see the benefits come from that, or we don’t.
The Chair: What is in it for Canada to invest in these projects? You outlined three major projects here. What does the Canadian taxpayer get out of these investments?
Mr. Marshall: Well, there are different ways to look at it. If we’re just talking about dollars and cents and you want to talk about a long-term return, upwards of 90 per cent of Nunavut’s operating budget comes from the Ottawa fisc. When you look at a one-time investment for this project, it does have a substantial price tag. I don’t think anybody would deny that. When you look at dependence in perpetuity as a comparison for a standard of life that is below the average Canadian standard of life, and this subsistence that sort of persists, then qualifying that one-time investment as a means to reduce the reliability on Ottawa, create a greater level of dependence, have Canadian or foreign investment come in to generate or catalyze this type of investment opportunity, then you’ve given yourself a chance.
There is no such thing as no risk. I think we could probably all agree the status quo probably isn’t very tenable either. When we look at the opportunities available for us, we have to change the risk profile we’re willing to accept, because the region demands it. We can’t impose our perspective on this region and expect it to change. It’s not all of a sudden going to cost less to do business there, or per capita costs aren’t all of a sudden going down. We have to change the way we approach the region.
The Chair: You’re saying investment in infrastructure to create orderly natural resource development will reduce reliance on handouts and transfers and will increase self-reliance.
Mr. Marshall: I think it does. I think it will. Is it a perfect solution? No. Is the mining industry the silver bullet to the North? No. But it gives people a choice. For some of those people, that’s something they don’t have right now. Do we expect that every Inuit or Indigenous person in the Northwest Territories is going to work at a mine? No. But maybe they will get training, work at a mine and then do something else. Maybe they will start a business and supply that mine. Maybe they will become an entrepreneur. Maybe they will do something and become a role model for their family because no one in their family ever had a trade certification. You see this incremental rollout of the benefits a project can create.
It’s not for everybody. I’m not trying to say that mining is for everybody. It is an advantage and opportunity for the North, most especially because, unfortunately, there aren’t many other opportunities. This is something unique within Canada in that region.
The Chair: Mr. Marshall, thank you very much for your presentation and being with us here again. I very much appreciate it.
Mr. Marshall: My pleasure.
The Chair: Colleagues, for this last portion of our meeting, I’m pleased to welcome from the Kitikmeot Inuit Association, based in Cambridge Bay, Nunavut, which some of us just visited, we have Charlie Lyall, Vice President of Economic Development, Kitikmeot Inuit Association; Paul Emingak, Executive Director, Kitikmeot Inuit Association; and from the Nunavut Resources Corporation, Scott Northey, Chief Operating Officer; and Patrick Duxbury, Advisor and Operations Support.
We look forward to your opening statement. Sounds like this panel is working out as planned because your project was referred to by the previous presenter. I think he said we would have to ask the proponents how the project is going. We have the golden opportunity to do that here. Thank you and please proceed.
Charlie Lyall, Vice President of Economic Development, Kitikmeot Inuit Association: Thank you Senator Patterson. Good evening, and thank you for taking the time to come to Cambridge Bay to meet with us in September and to meet with us this evening.
I’m sorry I missed you when you came through our region. I was at home in Taloyoak and it’s very expensive to travel to Cambridge Bay. In order to get to Cambridge Bay, I would have had to leave Taloyoak one day, go all the way down to Yellowknife and then go all the way back up north to Cambridge Bay. It’s not easy to travel 250 miles.
My name is Charlie Lyall. I’m the Vice President of Economic Development, Kitikmeot Inuit Association. Our president, Stanley Anablak, sends his regrets, as does Charlie Evalik, with whom you met in Cambridge. He is currently running a caribou workshop with Inuit knowledge holders in Kugluktuk.
I will refer to us as KIA. I am here to talk to you about KIA’s role in the execution of an important opportunity, the Grays Bay Road and Port Project. In this presentation, we will introduce the Kitikmeot Inuit Association to you and how we came to lead the development of the Grays Bay Road and Port Project. It is very important to note this is an Inuit-led project.
We will address why KIA is championing this project, and the benefits the project should generate for Nunavut and Canada. We will also address how advanced we are in the development process, what the next steps are and what support we need to make it all happen.
To begin, it is important to note that KIA has tasked its wholly owned subsidiary, Nunavut Resources Corporation or NRC, with executing its responsibilities as a proponent of this project, and Scott and Patrick are here on NRC’s behalf. I sit as a KIA representative on the NRC board.
Paul Emingak, Executive Director, Kitikmeot Inuit Association: Good evening senators. My name is Paul Emingak, Executive Director, Kitikmeot Inuit Association. I live in Cambridge Bay, Nunavut. Approximately 1,700 people are situated in Cambridge Bay, as well as our headquarters for the Kitikmeot Inuit Association.
Kitikmeot Inuit Association is identified as a designated Inuit organization under the Nunavut Agreement. It has long standing with the other two regional Inuit associations: Kivalliq Inuit Association, as well as Qikiqtani Inuit Association. KIA represents over 6,000 Inuit beneficiaries of the Nunavut Agreement. In the blue on your map, the Kitikmeot Inuit live in five communities: Cambridge Bay, Kugluktuk, Gjoa Haven, Kugaaruk and Taloyoak.
Our mandate is to manage lands to protect and promote a balanced state of well- being for Kitikmeot Inuit beneficiaries. This pursuit of a balance is a crucial feature of KIA’s vision, and is well laid out in the Nunavut Agreement. This balance is a basis of our efforts on the Grays Bay Road and Port Project.
As you know, KIA is directly responsible for managing the surface rights associated with Inuit-owned lands. In our region, they comprise more than 106,000 square kilometres. These lands were selected during the negotiation of our land claim agreement. Some of the lands were selected for their social and cultural value. All our lands include mineral rights selected on the basis known geological potential.
These lands with mineral rights were intended to be the means through which Inuit could become self-sufficient. We in the Kitikmeot have a keen economic interest in seeing these lands with mineral rights explored at the very least, and ideally developed. All of these activities will generate rents, jobs, opportunities, and mines and development will result in additional compensation to us in the form of an Inuit impact benefit agreement, payments and royalties through the Nunavut Tunngavik trust. The Grays Bay Road and Port Project has a significant role to play in stimulating this activity.
Mr. Lyall: Here are the basics of our project: You can see where it is supposed to be located in western Nunavut. The project consists of a port at Grays Bay and a 230 kilometre all-season gravel road that runs south to the Jericho mine site.
The Jericho mine site connects to the winter road in the N.W.T., which then connects to the national highway system north of Yellowknife. This will mark the first and only terrestrial connection between Nunavut and the rest of Canada.
GNWT is looking to build its own all-weather road to replace the winter road for the same reasons we are: all-season access to their interiors to stimulate exploration activity.
Both roads are intended to be part of a green energy trade corridor that stretches from Yellowknife to the Coronation Gulf in the Northwest Passage. The hope is to take advantage of hydro power generation opportunities in the N.W.T. to green the mining industry in this area. Diavik has started the process with the development of its wind farm.
We are building a trunk road. Mine developments will be responsible for building their own spur roads, although I think we can help with the development and financing process.
This is a design drawing of the port site and some of the other infrastructure that would be near the port. The design is meant to allow many parties to use the infrastructure. Potential users include the mining industry, tourism operators, the Canadian Coast Guard, the Canadian Armed Forces, regional businesses and community members.
The Grays Bay Port would be the only deepwater port in the Northwest Passage that connects to the national highway system. The facility will be able to respond to the increasing traffic in the Northwest Passage to manage growing traffic and exposure to search and rescue operations, marine spills, or to assert sovereignty over our waters. It is the only port in the Central Arctic, and it has an airstrip that could be extended beyond its 5,800-foot length and paved. The nearest deepwater port is at Nanisivik, more than 1,300 kilometres by air and almost 2,000 kilometres away by water. The port could be a base for resupply and redeployment for the new ice breaking class of cruisers scheduled to start patrolling Arctic waters in 2020.
The port is also well placed to be a hub for and exploration project resupply. Goods could be shipped by barge to or from the port once waters are open in July.
Scott Northey, Chief Operating Officer, Nunavut Resources Corporation: The total product cost, including contingency, is just over $550 million. The port’s estimated cost alone is $110 million. The road is estimated to cost just under $370 million. That may sound like a lot of money. In the context of other projects, it is not that much.
A portion of the funding for construction is expected to be financed by third parties through project debt financing and repaid via tolls and port usage fees. This is part of the partnership concept that Brendan was talking about in the previous presentation.
We currently estimate the revenue stream would only be able to support one quarter to one third of the cost of construction. That is where the shortfalls are in the North. To fill the gap, we will need significant federal government support to make this first and only terrestrial connection to Nunavut work. Our short-term focus is to access funding to make this project shovel ready in the next three years.
Mr. Lyall: For us, the key features of the project are, first, the project connects Canada’s highway to the Northwest Passage. Second, we need to address the opening up of the Northwest Passage while addressing a shorter winter road season now affecting the Northwest Territories. Third, we need to reduce the high cost of living and increase food security in our region, where unemployment is high and opportunities are very scarce.
This project has the potential to do it all. This project also helps fulfill the vision of Inuit negotiators on the land claim agreement. As mentioned earlier, the negotiators selected lands with subsurface rights because of their mineral and royalty potential. These royalties would promote economic self-sufficiency. However, development of many mines in Nunavut can only happen with infrastructure that provides lower-cost access to Inuit-owned lands in the interior.
I now want to address the mineral potential. This infrastructure project will open up huge mineral opportunities in the northern portion of the Slave Geological Province. This area is comparable to the Abitibi geological province of northern Ontario and Quebec, which has generated major wealth for Canada over the last 100 years. There are many known ore bodies on or near the corridor, including MMG’s world-class zinc deposit, the Izok Lake project. Without road access, these mines can cost more than two times the cost of the same mine in Ontario. It is important to us that we see these Inuit-owned lands developed, but in a responsible way.
Mr. Northey: As part of our process, we hired experts to help us craft the business case. One of the experts we hired was a fellow named Graham Clinton, who runs Impact Economics and is a northern expert on economic analysis. He uses Statistics Canada’s models of input and outputs. The outputs come out as a result of the way the models generate their returns.
The objective of those models is to calculate local, regional and national economic stimulation for new inputs. Our project would be the perfect example of a new input.
Graham’s mandate was to determine how much additional benefit could accrue solely from the construction and operation of the port. This analysis initially did not include the potential for additional stimulation from increased mineral exploration activity. We asked him to do that in a subsequent study, which we will talk about.
Absent mineral exploration stimulation, the findings are very encouraging. The project itself would generate jobs, business opportunities, and contribute to GDP during the construction and operating periods in our region, territory and across the country.
Mr. Lyall: Mine development is not only about royalties; it is about jobs, long-term jobs. Many beneficiaries cannot borrow money because the only jobs available outside the government are seasonal.
Mr. Northey: Graham’s additional work showed the project will stimulate employment. The project will create 250 full-time-equivalent jobs for each of the four years of construction, and 10 to 20 jobs for every year of operation.
In terms of other development, MMG estimates that their project — including our road and port and every other activity that touches their mine — will generate more than 38,000 person years of employment.
Other mining companies are starting to accumulate properties along the corridor in anticipation of lower-cost access. They own the properties and they need lower-cost access to be able to make their projects economical. Graham calculated that for every $1 million spent on exploration activities, 5.2 direct full-time-equivalent jobs are created.
In a veiled reference to the proposed MMG mine — this is an important figure to note — Graham calculated the tax revenues from this mine alone would more than pay for the cost of the infrastructure, while generating more than $7.5 billion in gross domestic product over its 11-year economic life. The tax revenues are over $650 million versus our project cost of $550 million.
Mr. Lyall: Any new development will be huge for us in the form of rents, Inuit Impact Benefit Agreement payments and royalties. All these payments go into our Kitikmeot Trust to support our social and cultural initiatives.
The creation of a right-of-way also creates the potential to improve other infrastructure such as telecom and electricity. We have already made reference to the significant hydro capacity and potential in the N.W.T. that could be used to power future mine development. The ability to use a terrestrial-based telecom network will bring our region out of the Internet Stone Age.
I am hopeful some of you were appalled by the poor quality of Internet you experienced in Cambridge. For you, this would have been temporary — but for us, this is our reality.
This project will be a game changer for our region.
This year has left two shining examples of the risk of not having terrestrial access and proximate marine support services. The sealift to our region has been significantly delayed. This once-a-year supply comes out of either Montreal or Hay River. The Montreal-based supply is late; they just finished offloading cargo and went back to Montreal. It was over a month late. In Hay River, the supply is unlikely to make it to our region. I received word today they aren’t going to Kugluktuk or Cambridge Bay.
The Chair: The ice is preventing the last ship of the late delivery?
Mr. Lyall: Yes. It is hurting private industry in the region badly.
Senator Bovey: Sorry, is this Cambridge Bay?
Mr. Lyall: Cambridge Bay and Kugluktuk.
The grounding of the Akademik Ioffe in our region was a sharp reminder of how poorly prepared we are for these sorts of situations. The first search and rescue contact was made by a Hercules airplane seven hours after the distress call went out — seven hours. In that time, a sister ship arrived and was able to remove the passengers. This time there were no deaths and no hazardous spills, which is very lucky. We need to be better equipped and better prepared, especially if traffic increases in our Northwest Passage.
Mr. Northey: The next slide is entitled “Fit with Canada’s Objectives.” We went through ministerial mandate letters for the current government to see some of the aspects of their mandate they are being asked to fulfil. We determined the project satisfies a number of objectives that have been laid out in these ministerial mandate letters across a broad range of ministries. Ironically, the ministerial objectives were confirmed by people in the multiple meetings we have had with ministers, their staff and some of the members of the ministry.
At the heart of it, this project seems to check a lot of boxes for this government. That is one of the things we continue to move forward on the basis of the fact that we think we helped them to perform the jobs that they have set out to do.
The next slide is our timeline. As I mentioned earlier, we are hoping to spend the next two to three years getting the project shovel-ready. We are optimistic, at that point, to have the necessary funding in place and start construction of the project. We think, given the harsh environment, it will take three to four years to complete the construction. We will start at both ends of the road and meet in the middle. We hope to be in operation by 2025.
In terms of our overall state of development, on the next slide, this is not a pie-in-the-sky process. We have the benefit of more than $35 million in investment in design and environmental data accumulation from MMG. Our timeline is realistic.
The departure of the Government of Nunavut was unfortunate but not fatal. We are working with them to ensure their future decisions are based on facts and the truth. In that regard we are making progress.
Our environmental assessment process is one-third complete. We had to suspend it until we had the necessary funds in place, which is about $6 million to complete. With the GN’s departure, we lost that primary source of funding.
We continue to seek to engage with our own community and other Indigenous groups in the Northwest Territories. These efforts have been well received to date.
You should also know we have been at this for more than six years on this specific project. Our efforts in Ottawa have been extensive and have required us to travel — my colleagues especially — for two days to and from our region pretty much every quarter to make our story heard and understood. To date, we have focused primarily on the political staff within ministers’ offices and have filled in with ministerial staff as issues have emerged and processes need to be discussed.
We have talked to a broad range of ministries and agencies. We know what we need to do. We have had to adapt to what is on offer. We think we know how to get the funds required to make the project shovel-ready, but nothing has emerged that would allow us to take the project into construction.
Our biggest challenge is that no programs have been created that can advance funds in support of nation-building projects. Everyone loves the term “nation-building projects.” Those are projects required to open up new areas for economic development and are unlikely to generate pure economic returns quickly enough to justify private sector investment, but they can generate a bunch of benefits to Canada as a whole.
Our project will result in the development of a new mine, which is MMGs Izok Lake mine, which will generate tax revenues over its 11-year life that will exceed the cost of the project.
The obvious source of nation-building capital is the new Infrastructure Bank, but it is solely focused on megaprojects that reduce congestion in the existing transportation grid. That is clearly not what we are proposing to do with our project.
The bank currently does not consider benefits to Canada as part of its project return requirements. These excluded benefits include tax and royalty revenues, reduced social support for newly employed people, increased food security leading to lower health costs and a lower regional cost of living, leading to more disposable income to cover more nutritious food.
We are hoping by the time we are shovel-ready, there is a program available to us for projects of this sort, or the bank’s mandate has been adjusted properly to consider the overall benefits to Canada, not just institutional investors.
It is also important to note, in addition to the lack of a program to fund nation-building projects, there is no program established to explicitly support the efforts of Indigenous proponents to move their expensive processes forward.
We are fortunate our project is a trade corridor, which gives us access to the National Trade Corridors Fund. However, power, energy, telecom and pipeline projects, to name a few, are not eligible for funding from the NTCF. There is nothing for Indigenous groups seeking to advance these sorts of projects in terms of finding money. On our side, we will have to see whether KIA’s eligibility to apply directly for funding from the NTCF will be properly considered despite the loss of the Government of Nunavut from our proponency activities.
There is also an inconsistency in the overall approach to funding Indigenous groups, especially as it relates to environmental assessment processes. There are many programs in place for funding of Indigenous groups as interveners in environmental assessment processes, but there is nothing available for Indigenous groups as project proponents.
CanNor, the federal government’s economic development agency for the North, has a blanket policy to not fund EA activities. That’s primarily because all the activities they have been asked to fund have been intervener activities. We have gone to them with the notion that proponents should be treated differently. They haven’t so far been able to twist their heads around that concept. At the heart of it, EA is an important part of any infrastructure project in pursuit of economic development. By not even considering funding EA proponent activities, CanNor has placed a significant barrier in the way of Inuit-led essential northern infrastructure development.
As we mentioned earlier, in our process to become shovel-ready, the cost will be about $29 million. We are seeking to access 75 per cent of this from the National Trade Corridors Fund, amounting to just under $22 million. We have a number of other avenues we intend to pursue for the remaining 25 per cent, including programs within the federal government.
The NTCF folks have assured us stacking is fine up to 100 per cent of the cost. That is an encouraging prospect. They have also assured us our request is in line with what the program’s mandate is and by not having the Government of Nunavut alongside us, it will not be viewed as detrimental, which is also good. In all respects, we will do our best and wait for the ultimate outcome of their assessment.
Our budget seems high as a consequence of some of the work that needs to be done to finalize design. Again, this is the cost of doing business in the North. Most notably, we need to execute a drilling program at the proposed bridge sites to confirm the geology there. We think there is rock. We hope there is rock. If not, we have bigger problems.
As you can imagine, helicoptering drill rigs around this remote area is not an inexpensive proposition. The cost of our drilling program is expected to be $10 million alone. Completing our EA process, as I mentioned, will cost approximately $6 million. The rest is required to engage with our communities, the regional First Nations in the Northwest Territories and potential user groups to increase the amount of third-party financing the project can support, all the while reducing the required need for federal government support to fund construction.
Mr. Lyall: Finally, thank you very much for your time.
The Chair: You covered a lot of ground. Thank you very much.
If we were to be making recommendations to the federal government, would the last points made by Mr. Northey about CanNor not funding environmental assessment activities, that policy should change and about the need for programs for Indigenous proponents of major projects being eligible, would those be key recommendations you would like us to make?
Mr. Northey: Yes. I think the other one is that somehow, someway, someone has to find a program to fund nation-building projects. That is the big one.
The Chair: Like the CPR and the Trans-Canada Highway.
Mr. Northey: Yes and the Trans-Canada pipeline.
Senator Bovey: I may be a bit confused. You did or didn’t apply in round one for the $400 million?
Mr. Northey: We did apply and were rejected. We applied for the full amount of the cost of support. It was over $400 million.
Senator Bovey: Were you told why you were rejected? Was it because you came in for so much, or because you —
Mr. Northey: It was a combination of a number of factors. Clearly the request was outrageous. We were looking for some guidance from them to say, if you scale it back to this we will look at it. However, at the heart of it, we were considered as part of a broad call for projects. I think they said there were over 70 projects submitted, representing over $60 billion in project value for a $2 billion program. In the face of all these shovel-ready projects from the south they couldn’t move forward with our application. We have developed a good relationship with them. They said our request in the next call, which is supposed to be just territorial projects, is much more legitimate.
Senator Bovey: To finish clearing my head here, you will come back in for the shovel-ready portion, then see where that takes you and move forward?
Mr. Northey: Yes.
Senator Bovey: Thank you.
Senator Oh: We just came back from up North. You guys have everything under the ground To get it out to the world market is very costly because of infrastructure. Do you have a partner beside MMG that is investing? How do you attract overseas investors coming in, because the upfront costs are so high?
Mr. Northey: Most of the upfront cost being high is the fact you have to fly everything in or build your own infrastructure.
Our hope is by building the infrastructure for them and charging them to use it, the shared cost of multiple users will lower the cost for each of the individual opportunities.
It is very much at the point where if you build the infrastructure it is much easier to go to Asia, Australia and Europe and say, we know the ore is there, it has been drilled but not enough to justify its economic viability. We are providing access for you, we are supportive of the mining industry,you already have the Indigenous group on side in terms of promoting mineral exploration. Our hope is that people say, “This looks like an interesting opportunity.” You have the geology and low-cost access. That is pretty good. That is the thinking.
Senator Oh: I was thinking they are the ones who will take the risk in investing because they know the market. They know where to sell the products. For other people it is difficult in today’s world market. Thank you.
Senator Boyer: Thank you very much for that presentation and thank you for coming all the way down here to talk to us.
The Chair: Hear, hear!
Senator Boyer: As you were speaking— and I am seeing the enormity of this project — I was thinking about health care and how difficult it is to access in the North. What benefits would this project bring to increase access to health care? Has there been analysis on this? That would be a huge financial and social impact.
Mr. Northey: Why don’t you talk about your experience with health care now, the flying in and flying out stuff.
Mr. Lyall: We haven’t really studied how it will affect health care. It can only improve what we have today. It is no secret that we have a high rate of suicide. A lot of that has to do with a lack of employment and a lack of being able to afford what other people can afford. Mental health is a huge issue. I’m hoping to be able to give people an opportunity to have meaningful employment. It will make a big difference in those aspects of health.
Senator Boyer: Thank you.
Mr. Emingak: To add to that, with the revenues generated by the government of Nunavut with taxes, it would go a long way to improve health facilities and telehealth. In most cases if there is an emergency situation in Nunavut, there is no highway transportation. You have to call for a medevac to fly the person out to Ottawa, Edmonton or Winnipeg. The government of Nunavut collecting taxes would generate revenue for their services.
The Chair: Mr. Lyall, I know you have been involved for many years in the development of transportation corridors in your region, in the rich mineral, Slave Geological Province. You had work done on the Bathurst Inlet road, which has now been rerouted to the Arctic coast at the natural deepwater port in Grays Bay.
Could you talk about the southern connection? You said there is a shorter winter road season which is affecting the Northwest Territories. Could you explain for us what the winter roads are in the Northwest Territories, what they serve and how your project could deal with climate change? Could you explain that in more detail, please?
Mr. Lyall: The winter road season is getting shorter every year because of climate change.
The Chair: Where does it go?
Mr. Lyall: From Yellowknife all the way up to Lupin. I can’t remember the mileage but it has been getting shorter and shorter.
The fact that it is getting warmer is shortening the season.
The Chair: What does the road supply?
Mr. Lyall: The road supplies all the mines up and down the winter road. Diavik, Ekati —
The Chair: And Gahcho Kue. There are three diamond mines, I believe.
Mr. Lyall: Yes. Everything from fuel to heavy equipment to food. It supplies the whole operation of the mines.
The Chair: How would your project reduce that risk of climate change melting the southern part of the road?
Mr. Lyall: I think we would be able to bring supplies in from the west by sealift. As soon as they arrive, they can be driven up and down that corridor much earlier and more efficiently than it is right now.
The Chair: North to south instead of south to north?
Mr. Lyall: Yes. That’s always been my dream.
Senator Galvez: Thank you very much for this very interesting project. You’re right, I think it’s a nation-building project. Although I think it’s underestimated in the cost because of the magnitude and the complexity of your project.
Mr. Northey: We’ll talk about that.
Senator Galvez: Yes. Why did Nunavut drop from the project? And why are you not knocking to the other territories? The Northwest Territories cannot contribute?
Mr. Northey: We’re in conversations with the Northwest Territories intensely. There are two challenges. One, they have not yet engaged their Indigenous groups to the level they would like. It’s going to be awkward for them to partner with an Indigenous group for the corridor.
Second, they don’t want to go public to make the Government of Nunavut look bad by partnering with the local Indigenous group in Nunavut. We are, behind the scenes, working very closely with them and trying to develop joint strategies and a joint vision for this Yellowknife-to-Coronation Gulf corridor. The conversations are very intense. That’s why. You can do the first one. Nunavut politics is your universe.
Mr. Lyall: They tell me I’m too blunt for Nunavut politics. There was a lot of misunderstanding. They weren’t getting the whole story straight. To be quite honest, they weren’t given the whole truth. There was a lot of misinformation; as a result of all that, they dropped support.
The Chair: I understand you are working on a presentation to the caucus of the Nunavut legislature in November on this project; is that correct?
Mr. Lyall: Yes, on October 26, we will be meeting with the whole Nunavut caucus.
The Chair: Thank you, as Senator Boyer said so well, for the long journey here. It was an excellent presentation and very timely. Qujannamiik.
(The committee adjourned.)