Proceedings of the Standing Senate Committee on
Aboriginal Peoples
Issue 5 - Evidence - Meeting of February 22, 2005
OTTAWA, Tuesday, February 22, 2005
The Standing Senate Committee on Aboriginal Peoples, to which was referred Bill C-20, to provide for real property taxation powers of first nations, to create a First Nations Tax Commission, First Nations Financial Management Board, First Nations Finance Authority and First Nations Statistical Institute and to make consequential amendments to other acts, met this day at 9:09 a.m. to give consideration to the bill.
Senator Nick G. Sibbeston (Chairman) in the Chair.
[Translation]
The Chairman: I see a quorum. I call the meeting to order.
The Standing Senate Committee on Aboriginal Peoples is meeting today to deal with Bill C-20, the First Nations fiscal and statistical management act. Mr. Andy Scott, Minister of Indian Affairs and Northern Development is here.
Welcome. Please proceed, Minister.
The Honourable Andy Scott, Minister of Indian Affairs and Northern Development: Thank you very much, Mr. Chair and members of the committee, for the opportunity to lead off the committee's review of Bill C-20, the First Nations fiscal and statistical management act. I believe that this legislation will help First Nation communities build viable, thriving economies, and I am confident that members of this committee will support Bill C-20 once they have scrutinized and analysed it carefully and comprehensively.
Last year, members of this committee began a valuable investigation into the involvement of aboriginal communities and businesses in Canada's economy. Thanks to the diversity of perspectives presented during the investigation, committee members have acquired a deep understanding of the difficult obstacles aboriginal peoples face and the significant opportunities that might be made available to them. The importance and relevance of this work will become increasingly clear as the committee reviews Bill C-20.
Last November, the committee heard from Manny Jules, a successful entrepreneur, former chief and passionate advocate of Bill C-20.
Given the fact that Mr. Jules is here, I hesitate to quote for fear I will be corrected, but I will persist. At that time he said:
...legislation is about a simple fact: governments do not build economies; businesses do.
This...legislation is not asking the government to build our economies with a pile of public money. This is about us building viable economies ourselves.
Today, I would like to describe how Bill C-20 will enable First Nation communities to fulfill the vision outlined by Manny Jules. I am convinced that the legislation will serve as a crucial stepping stone for First Nation communities eager to improve living standards and fiscal performance, and I expect that committee members will quickly recognize that Bill C-20 supports a range of development options. In fact, the flexibility and inclusiveness built into Bill C-20 is perhaps its greatest strength.
Unlike the Indian Act, this legislation is not prescriptive. It has been designed and created by First Nations for First Nations. It recognizes and fully supports the right of communities to plan and follow their own paths. It is entirely appropriate that the men and women who conceived of Bill C-20 are members of First Nations themselves. After all, they are most familiar with the particular problems facing their communities. They have recognized the crucial link between physical infrastructure, economic development and community well-being.
Until now, however, few First Nation communities have enjoyed access to the tools needed to develop physical infrastructure. Bill C-20 will alter this situation in a fundamental and positive way. With this legislation, a First Nation community is free to take advantage of a wide range of fiscal and statistical tools and legal mechanisms, the same instruments long used by municipalities to attract investment, address social needs and create jobs.
The viability of communities across Canada depends absolutely on strong, reliable infrastructure from roads to communication links to modern water and sewer facilities. Community leaders recognize that modern infrastructure is essential to economic growth, but the construction, maintenance and expansion of infrastructure is expensive. To offset high costs, municipalities have long relied on long-term low-interest loans. Lenders invest in infrastructure projects because they are confident in the legal status, financial health and stability of municipal governments.
Few First Nation communities, though, are blessed with these advantages. In fact, their legal status alone limits the access of most First Nation communities to low-cost financing options. Financial studies of the current borrowing options of First Nations describe these options as comparable to mortgaging a house with a credit card. In many cases, the borrowing costs are prohibitive and many projects cannot be completed.
The First Nations fiscal and statistical management act establishes four institutions that will enable First Nation communities to raise much needed property tax revenues, to pool their resources and finance infrastructure improvement projects, and to make effective decisions to benefit their members. Participation in these organizations is completely voluntary. No First Nation community is required to avail itself of any of the services offered through Bill C-20.
These institutions — a tax commission, a financial management board, a statistical institute and a finance authority — would provide discrete yet complementary services. They would operate at arm's length from one another, have distinct mandates and offer particular advantages. Although the benefits of each organization are significant, the combined effect of all four institutions is both powerful and enduring.
Allow me to describe the role that each institution will play. The first institution created under Bill C-20, the First Nations tax commission, is designed to facilitate the implementation of fair and effective First Nation property tax regimes. The commission would provide standards for the development, by First Nations, of property tax laws that both balance community and ratepayer interests and are consistent with those in neighbouring jurisdictions. The commission would also provide for effective dispute resolution. In short, the tax commission will assist First Nations to foster the secure and stable fiscal environment sought by investors and lenders alike.
The second institution, the First Nations finance authority, will enable communities to raise private capital at preferred rates. Here is how it works: A First Nation community that collects property tax under this bill may become a borrowing member of the authority if it meets the strict requirements of the authority. On the collective strength of the property tax revenues of its borrowing members, the finance authority would then raise private capital with First Nations bonds. The proceeds of each bond issue would be loaned back to the participating borrowing members at a competitive rate of interest. Analysts estimate that this mechanism could generate more than $125 million in debt financing over the first five bond issues.
The third institution, the financial management board, would provide a range of technical and support services to any interested First Nation. The board would assist with research and advocacy on financial matters, policy and capacity development, along with financial procedures and reporting standards. These activities will help First Nation communities to make the most of their financial resources. The board would also play a role in the borrowing pool. It would approve the financial administration laws of borrowing members and provide an independent assessment and certification of the financial health of these First Nations. This would provide investors with the information and the confidence needed to invest.
The fourth and final institution created under Bill C-20, the First Nations statistical institute, would address a problem that has long faced First Nation communities in Canada: limited access to an essential precursor to development of accurate, relevant and reliable information. For community planners, unfettered access to precise pertinent data is crucial. The statistical institute would be able to help First Nations both access statistical information held by federal departments and create new data sources, but, just as important, it would also be able to provide a First Nations perspective on the collection and analysis of First Nations data. This would also benefit First Nations by providing valuable input into federal programs.
Mr. Chairman, this legislation seeks to put First Nation communities firmly in control of their own destinies. Let me quote again from Manny Jules, when he appeared before the committee last November:
I want our people to be able to create their own institutions and build their own economies so that we do not need to go cap in hand to anyone. We want to be an integral part of this economy and this federation and to be able to trumpet that to the world...
Mr. Chairman, Bill C-20 enables First Nation communities to realize this vision to build self-sustaining economies and to foster prosperity across the land.
In the last three weeks, I had the occasion to participate with Senator Rompkey in a signing ceremony in Nain, Newfoundland and Labrador, and then, last weekend, a First Nation in the Yukon became the first First Nation to settle a land claim and establish self-government inside an urban municipality, that being Whitehorse. In both instances, it became extremely apparent to everyone in attendance that, generally speaking, the solution to most of the problems that exist is to put the capacity to determine a community in its own hands, which is what this legislation attempts to do.
Senator Stratton: Welcome, Minister Scott. Most often, when bills come before the Aboriginal Committee, we are concerned about whether there has been consultation with the affected people. In your opinion, if there has been consultation in this instance, what concerns were expressed by the affected people and what, if any, were their objections to this bill. Did they express a desire to have modifications to the bill? If so, did you accept those modifications, or are there outstanding issues with respect to this bill such that you could not go along with that they wished to have?
Mr. Scott: Thank you for your question, senator. It is an important one and probably should lead the questioning when we come forward with proposed legislation.
I would ask Ms. Barnes to respond because she has that information before her.
Senator Stratton: We were in a committee meeting yesterday where the same thing happened. We call it ``passing the buck.''
Mr. Scott: The reality is that, before becoming Parliamentary Secretary, Ms. Barnes served as Chair of the Aboriginal Affairs Committee in the other place; therefore, she can provide first-hand knowledge and testimony in terms of the things that have been brought forward in the past. I would say that the first point in answering the question has to be to direct everyone's attention to the fact that this came from the community; that is critically important. Notwithstanding that fact, it is not unanimously supported within the community. However, I do not know that we should expect a higher standard of consensus there than we would be able to achieve outside the community, even for other things that we do.
I have only a partial list of items, but I am sure that Ms. Barnes has the complete list and so I will ask her to speak to that.
Ms. Susan Barnes, Parliamentary Secretary to the Minister of Indian Affairs and Northern Development: Thank you, senator, for the good question. This is the third version of the bill and there were significant changes in two substantial areas that you should be most concerned with. There is the non-derogation clause that Senator Watt was concerned about in the last reincarnation, which was Bill C-19, the predecessor to Bill C-20, and which was introduced without a non-derogation clause. I was at that meeting when it was inserted unanimously at the committee stage. When Bill C-20 was introduced, it came with the non-derogation clause. That important part was wanted by a large number of people who were originally opposed to it and raised concerns about it. That has been rectified in this bill.
Concerning the optionality, while First Nations could, under Bill C-19, choose if and when to implement property taxation, once the choice was made First Nations had no option but to tax under Bill C-19. Again, this is an important change in Bill C-20, which came about as a result of amendments to a previous incarnation, Bill C-23, which were made at report stage in response to those First Nation concerns. The current version, Bill C-20 before you today, is completely optional. First Nations can still choose if and when they want to implement property taxation; however, First Nations have the option to tax under this bill or under section 83 of the Indian Act. First Nations choosing to participate in the tax and borowing regimes established by Bill C-20 would be listed in the schedule to the bill. The name of the First Nation would be added to the schedule only at the request of the council of that First Nation. The process for adding the name of a First Nation to the schedule is found in the act. It is there to ensure that people understand that there really is an option, especially with respect to the three institutions. The procedure on the statistical aspect is somewhat different, but there is an ability to use it within that institute to gather information that is beneficial to the community; and that did not exist before.
Senator Stratton: I will ask the same question of the later witnesses on their side as to whether there are outstanding issues that were not addressed. That is the critical aspect for the committee: are there outstanding issues that you were unable to address, and, if so, what are the reasons for that.
Ms. Barnes: Perhaps I could follow up on that. There were some amendments made in the House committee to Bill C-20. You will see the legal counsel for West Bank in the room today. That was one of the original proponents 15 years ago when this first came on the landscape. There was some wording that may have been looked at as not including them in opting in after a self-government agreement. We clarified that and made some changes. There were about five or six minor changes of a technical nature, all of which were approved unanimously in the House, as was this bill, by all four parties in the House. Of course, there could always be other issues left outstanding that were on the table that others might have brought forth, but it was narrowed down to the ones that were acceptable to all. The proponents, through legislative counsel and the department, were consulted on six amendments that were brought forward at committee. There certainly could have been others, but there was no consensus on those that we got around to. It was found that the major impediments in the past had been the optionality and the non-derogation clause. Substantively, senator, you would find that all of the proponents of the bill are on side with the proposed legislation, but some of the First Nations that are off side from both Ontario and Québec are so for reasons other than the bill, such as the overriding section 35 concerns.
Mr. Scott: If I may interject, invariably after three different exercises, the discussion would have progressed to such a point that the dialogue would have tended toward those who had problems with the bill beyond a certain point and been somewhat defensive. It is probably best to let those with objections express them. I would not want to suggest that objection does not exist; the Parliamentary Secretary is right in saying that many of the problems have been satisfactorily dealt with, but not all of them have been. It is probably better for those who object to make their own case to the committee.
The Chairman: The minister and Ms. Barnes have raised the issue of the non-derogation clause of Bill C-20. I want to commend you for having a non-derogation clause, particularly one that has been used from the 1980s to the 1990s. As you may know, some senators dealt with this issue a number of years ago. We recognize that, after 1996, there was a slightly different version of the non-derogation clause applied to bills. We were concerned that this might result in a watering down or diminishing of the rights of Aboriginals so we pressed the then Minister of Justice to reintroduce the original non-derogation clause used in statutes up to 1996. I am glad that the original version of the non-derogation clause is included in Bill C-20 and I recommend that that continue. We like this version of the non-derogation clause that is the standard wording. If you have a hand in any future legislation, please be mindful of using this version of the non-derogation clause to avoid concerns.
That is just a comment, and I thank you for using that good version in Bill C-20.
Mr. Scott: Thank you for the leadership.
Senator Pearson: This is an interesting bill and a welcome one for us to discuss. I am interested in the statistical institute and the various things encompassed in that and how that will all work out. It seems to me that this project has been evolving for a long time and, while one always talked about the need for those kinds of statistics, I recognize that here it is and it is being tied into prosperity, in a sense. I do not want to overemphasize my questions, but I am concerned with matters of education and so on.
How it has been envisaged that this institute will evolve, and how it will work in relation to Statistics Canada?
Mr. Scott: The general comment is that it will be more comprehensive. It will be driven by the community itself in terms of the particular perspective that the community would bring to the gathering of data. That is a critically important element of it. It does enhance our capacity to do good public policy. I say that within the caveat of the protections the bill carries with the information.
Generally, the principal purpose of this legislation is to offer the evidence that is necessary to create the confidence that is part of the package in terms of enabling communities to have access to tools that are available to municipalities and other public government bodies and have been for a long time.
Ms. Barnes: The First Nations statistical institute will be established as a complement to statistical work currently being undertaken by Statistics Canada and other departments. The institute itself has several functions. First, with access to data held by federal departments, agencies and other organizations, the institute can build on this existing data to develop a complete, accurate and relevant picture of First Nations across Canada. In addition, it can identify where the gaps in the data will occur and take steps to jointly undertake studies to collect the data. Second, the institute would assist the First Nation governments themselves in building the capacity to understand and use the statistical information in their decision making, delivery of services and negotiations. This would identify information requirements of First Nations, ensure that the information is readily available to them and compile the necessary statistical information to support not only the bond regime established by the bill but also other decisions made to invest in First Nations or in developments on First Nations lands.
The statistical institute mandate is dealt with in section 104 of the bill. It is a cooperative work with Statistics Canada to ensure that the national statistical system meets the needs of First Nations in Canada and builds on statistical capacity, and it goes into that. There is a close relationship with Statistics Canada, and the Chief Statistician of Canada is a necessary member of that particular board.
This will be useful for First Nations themselves and we are quite confident that all of the other issues that have been raised around the institute have been canvassed and looked at, including the privacy issues. Because this is a Crown corporation, there is a distance from the government and it still has the same protections.
Senator Pearson: Will it complement Statistics Canada data so that it will set up a long-term relationship that will be fruitful for both sides?
Ms. Barnes: Through agreement with individual First Nations, those agreements can be negotiated so that there will be access.
Senator Pearson: It is a mechanism for beginning to develop a body of data that does not exist yet.
Ms. Barnes: Yes. No individual First Nation person could be compelled. There is no enforcement, just as right now you and I would voluntarily give information. We are hopeful that this ability and this institute will be able to better serve First Nations communities across Canada.
Mr. Scott: It is a very good example of the kind of model of complementary institutions that I see as the future on many fronts. It carries with it all the important information that is available to Statistics Canada now. It carries with it the recognition of the specific perspective of the community, it is complementary, and it adds value to what Statistics Canada does in these communities across Canada.
The Chairman: Having reviewed the bill, I recognize it to be an intricate regime that would be in place on reserve lands to raise tax for infrastructure.
In Canada, this would not be the only system for making money available for the infrastructure on reserve lands. I take it the system being set up here is most suitable for reserves or areas that are close to urban centres where businesses are interested in being established on reserve lands. Hundreds of other reserves throughout our country would not likely be affected. Those reserves still get money from the federal government for infrastructure. Would you be able to comment on that, please?
Mr. Scott: Certainly. I would reassure everyone that this is in addition to the various programs and investments that are currently available. It simply adds another avenue for those communities that choose it. It has been available to municipalities in Canada for a long time and was a manifestation of the desire of many communities to take a leadership position in these kinds of projects that is not so dependent on the reference in the quote to ``people coming cap in hand.''
I do not believe that that is what is happening in the context of those who depend on the Government of Canada, but the point is that many communities would wish to do this but have not had the opportunity because they have not had these institutions that have been available to the rest of the country for a long time.
Senator Watt: What impact, if any, will this piece of legislation have on the Indian Act? Will there be a requirement to make a specific amendment to the Indian Act in order for this to be validated, or has that already taken place? It states that the Indian taxation board was established 1989. I would imagine that this bill is an extension of the fact that it was dealt with in 1989.
Mr. Scott: The general answer is that it will not, but I will let counsel perhaps respond in more detail.
Mr. Paul Salembier, General Counsel, Legislative Initiatives, Legal Services, Indian and Northern Affairs Canada: The bill does not make amendments to the Indian Act, but, for First Nations that come under this bill, certain portions of the Indian Act that deal with taxation will no longer apply to them. They will have moved out of the regime of the Indian Act, which is focused on section 83. They will move out of that regime and into the new regime under Bill C-20, but there is no actual amendment to the Indian Act besides inconsequential amendments to make cross-references to this act.
Senator Watt: If the communities choose not to opt in, what happens if there are technical changes? Does that not also apply?
Mr. Scott: No, the technical changes that are spoken to here are more administrative in the context of referencing.
Senator Watt: Could you explain to me what that is?
Mr. Salembier: First Nations that choose not to go under Bill C-20 will continue as they do now and can continue, if they choose, to exercise taxation powers using section 83 of the Indian Act. For them, there will be absolutely no change.
Senator Watt: We have all been around the business area, and the proponent of this bill is very much aware of that. In regard to the business side, sometimes it goes well, but sometimes it does not go well, depending on the nature of the market and so forth.
What would happen in the case of a bankruptcy in the communities, where a third party takes over? Does Indian Affairs step in to bail them out? What kind of safety mechanism do you see as the minister?
Mr. Scott: I will answer generally, but I will call upon a more technical response. The financial management entity, which is contained within this, has a general responsibility. It is important to distinguish between third-party management in the context of how it exists in First Nations and what we are talking about here. The third party is just the same word, but it is not the same concept in the strictest terms. Ms. Kustra can explain it more clearly, but the reality is that the first line of responsibility after the community is the financial management entity.
Ms. Brenda Kustra, Director General, Lands and Trust Services, Governance Directorate, Indian and Northern Affairs Canada: Specifically, the financial management board will have the authority under the act to act as a third-party manager with respect only to the local revenue account, which is only that account used to deposit the tax revenues.
All the other revenue from the First Nation, such as the revenue that it would receive from the Department of Indian Affairs, is held in separate accounts; so it would not be impacted by this specific bill. If a First Nation defaults in its repayment schedule to the borrowing pool, that affects the pool at large and the financial management board would be able to step in and work with the First Nations to develop an appropriate remedial action plan for the repayment of the outstanding amount.
Senator Watt: If the action plan is not well suited to saving the companies, what happens?
Mr. Salembier: There are failsafe mechanisms within the bill, one of which is called a debt reserve fund. If a situation arises where a First Nation is unable to make its payments, there is a fund already established under the bill that will make the payments on behalf of that First Nation. If for some reason the First Nation continues to be unable to make its payments, the bill also has a mechanism whereby all other members of the borrowing pool, in other words, all members who are borrowing under any bond issue, will be called upon to make up those payments on behalf of that First Nation. The bill has a couple of mechanisms to ensure that the bond itself will not be at risk.
Senator Watt: In other words, if the community were to get into this predicament, it would have to get consent from another community in order to be able to rectify the matter?
Mr. Salembier: They do not technically require consent from the other communities, because when you become a borrowing member you basically contract into the system whereby you will share the obligations of all members of the pool. By taking advantage of borrowing from the First Nations financing authority, you also take the obligation to assist any other First Nations if they run into problems. You do not require consent. The First Nations finance authority has its own internal mechanism to assess extra charges against other First Nations in order to maintain the integrity of the bond issue.
Senator Watt: If they fully exhausted their means to find a solution to the problem, would the Government of Canada step in to bail them out? If not, what would happen?
Mr. Scott: The safeguards created in a shared pool of funds will allow people to invest in the things that would gather the money in the first instance. In other words, in order for this to work it is not necessary for us to guarantee it. That is the bottom line. The reality is that the measure against which you have to create the program is the willingness of people to invest without a guarantee by the Department of Indian Affairs.
Ms. Barnes: Senator, there are many checks and balances in this act. We were very careful not to take anything away when the bill went through the House committee, because we want to ensure a good credit rating when the first bond issue comes out. There have been preliminary discussions with both Standard & Poor's and Moody's. They anticipate, based on the data currently available, that the first bond issue will get an A credit rating, which is very good.
To reiterate, under the act, no First Nation can use land as collateral. The security offered to the bond market is the revenue flow from the real property tax base, which is a separate fund. One of the big differences between the second incarnation of this bill and Bill C-20 is the number of First Nations that are interested, those being ones that have economic bases on reserve. From about 30 First Nations originally interested we now anticipate that about 100 will participate if this bill becomes law. That is a substantial increase between the two incarnations of this bill, and I think it is owing to some of the good recommendations put forward by this body and acceded to in the House. It is now in a much more complete and acceptable form.
We are convinced and, evidently, so are the independent bodies like Standard & Poor's and Moody's. They do not give an A credit rating lightly. That is a very good credit rating, and it is obviously not guaranteed until the first bond issue is put out for pickup, but the checks and balances are very prudent in this bill.
Senator Watt: Will this be attractive to non-native people who have money and would like to make an investment? In other words, can this instrument be used to attract investment into the community?
Ms. Barnes: The bond is exactly that. Anyone can purchase it.
Senator Watt: I am concerned about certainty and safety mechanisms. Does the bill contain a mechanism to protect First Nations from large corporations that might invest in the community?
Ms. Kustra: There are many uncertainties in the Indian Act right now with respect to attracting private investment, so the regimes that will be put in place through this bill will provide the kind of certainty and checks and balances that many private investors are looking for in order to invest substantial sums in First Nation lands and in economic joint ventures with First Nations.
Ms. Barnes: One of the financial benefits to a participating First Nation that is part of the capital pool is that at this point the cost of borrowing for their own purposes may decrease by up to 30 to 50 per cent. Some of those who are opposed have gone after those figures saying they are too generous, but those are the figures being given to us.
Senator Rompkey: I wanted to go back to the chairman's questions about funds that were available to First Nations. Perhaps most people here know the answer, but what other funds are still available apart from what is contained in the legislation? I recall that back in the 1980s, for example, we started an aboriginal economic development fund, or whatever it was called. Is that still there? What other mechanisms, apart from those contained here, are available to First Nations?
Mr. Scott: The reality is that there is a large number of programs. The President of the Treasury Board has identified some 300 programs that exist in Canada that would speak to this specifically, but not all of them have to do with infrastructure, of course. The point I am making is that there are programs in Industry Canada, in Infrastructure Canada and in Indian and Northern Affairs. None of those programs is in any way affected by this.
Senator Rompkey: I just meant within Indian and Northern Affairs.
Mr. Scott: We do infrastructure in First Nations. We do a great deal of these kinds of projects directly, and this option would be in addition to that. Let me use an analogy. Municipalities receive grants from provinces; in addition to that, they also are able, as municipalities, to borrow at very good rates, based on relatively the same kind of instrumentation that is being built by this legislation. It simply makes available to the community another option that, to this point, has not been available and in no way diminishes the options that otherwise would be available.
Senator Stratton: I would like to ask follow-up questions with respect to three issues: One is privacy, the second is opting in and opting out, and the third is transparency.
As I understand it, a statistical institute is being formed. How do we protect the privacy of individuals when statistical data is obtained? How do we assure them of privacy, particularly in view of today's concerns about privacy?
Mr. Scott: I will answer in general, and then, if you wish, someone else can be more specific. It is important to note that the information that would be available comes from two sources. The first is information that is currently available and currently used by the Government of Canada to do public policy planning. As I say, that information is already available, and someone can refer you to the specific sections for that, but the privacy provisions within this legislation are more rigorous than would be the case absent this legislation for that information. The second source is information that is gathered by the statistical institute specific to its own purposes; howewver, that is optional; if a community or individual does not want to participate in that exercise, it has the right not to. When gathered, that information is protected by the privacy provisions of this bill. Those privacy provisions meet the standard that we have today, and that standard is, I believe, higher than the standard that existed when other similar pieces of legislation were brought forward some time ago. I would say that the level of protection is greater in this bill than would be the case for most information that would be available now.
Ms. Barnes: The minister is absolutely correct there, senator. The statistical institute as a Crown corporation would be subject to the strict requirements of both the Access to Information Act and the Privacy Act. In the bill itself, under consequential amendments, the Access to Information Act is in clause 147, and the Privacy Act is in clause 152 of the bill, so we are adding the financial management boards, the statistical institute and the First Nations tax commission. They are adding those into that, so you can see it directly in your own act. That would be pages 61 and 63 of the English version of the bill.
Senator Stratton: The second question was about opting in and opting out. There are two aspects to this that I would like to question. One is the statistical institute. Is there a choice of opting in and opting out of that? And for the fiscal institute is there a choice of opting in and opting out? What is the process for each of those? Is the statistical one mandatory and the fiscal one optional?
Mr. Scott: They are both optional. All elements of the legislation are optional.
Senator Stratton: Including opting out?
Mr. Scott: You can get out once you have divested yourself of your responsibilities when you are in. You have to absolve yourself of those responsibilities before opting out. If you have opted in and not taken on any responsibilities, you can opt out; I guess that speaks to the question.
Senator Stratton: It is a band resolution to opt in, as I understand it.
Mr. Scott: That is correct.
Senator Stratton: But it is an Order in Council to opt out or to get out, in both instances, fiscal and statistical?
Mr. Salembier: Just to clarify, to opt in, there is a band council resolution requesting it, followed by an Order-in- Council. To opt out, it is the same mechanism, a band council resolution and an Order in Council. The one caveat is that, if the First Nation has borrowed money from the financing authority, then they have to pay back the money before they can opt out.
On the statistical institute, the statistical portion is a law of general application. Therefore, there is no strict opting in or opting out of the statistical institute. However, if the statistical institute is gathering information directly from First Nation communities, they cannot compel anyone to provide information that the person does not want to provide. Even if they do provide the information, they can direct that that information shall not be shared, so there are protections there.
Ms. Barnes: It is a way in which you talk about the statistical institute, because, technically, there is not an opting into the statistical institute. How you speak about it can affect what you think about it, so in some senses some people would say that that is not optional. I am saying I could argue both sides of that. In actual fact, there are no teeth to force any individual here, but there is a specific mechanism in the other three; so, in contrast to all the others, there is nothing forcing First Nations into the regime on the first three.
One of the financial benefits of the bill that not enough people talk about is that you do not have to be in the capital pool to take advantage of the business advice that is there in one of the other institutes that is fiscal. That is one of the benefits to those not participating in the capital pool that may not be ready to utilize this infrastructure that is there now but could in due course be able to get involved and get some assistance. I would like to stress that point.
Senator Stratton: I appreciate that. The last question has to do with transparency. There is a lot of talk about transparency on the part of the Auditor General with respect to arm's-length corporations formed by the government — the foundations, I believe they are called. How do we assure both the community and Canada as a whole that we handle or manage transparency so that this is as transparent as possible?
Mr. Scott: If one goes back to the rationale behind this, it has to do with confidence. To some extent the essence of that confidence is transparency; consequently, to some extent it is driven to transparency by virtue of its objective. You are not going to get people to invest in this, if they do not believe that all of the checks and balances are in place that would be necessary. I think that is probably the most significant departure in the context of how we are going about the business of developing communities.
With respect to this legislation, in the same way it is necessary to put a pretty rigorous series of backstops in place so that people will make their investment and realize that it is a safe one. The same checks and balances would apply: it is audited.
Senator Stratton: There is an independent auditing process?
Mr. Scott: That would also, senator, be necessary in order to satisfy the potential investor.
Senator Stratton: I appreciate that. Just for the record, I think it is important for you to state that. By doing so, you build confidence in the whole process.
Mr. Scott: Thank you for the opportunity to make the statement.
The Chairman: I think that is all the time we have. Thank you very much, Minister. I wish to thank you and the parliamentary secretary and officials for your attendance.
Mr. Scott: Mr. Chairman, thank you for the attention of the committee and also for your accommodation in other recent legislation. We are very appreciative of the committee's sensitivity and good work.
Senator Stratton: Minister, you owe us on that last one.
The Chairman: I would now welcome the next panel of witnesses to our committee. You may proceed, if you wish. Perhaps you could introduce your delegation.
Mr. Clarence (Manny) Jules, Spokesperson, First Nations Fiscal Institutions Initiative: Thank you, Mr. Chairman. With me are Deanna Hamilton and Chief Tom Bressette, Harold Calla and Chief Strater Crowfoot.
The Chairman: Proceed, please.
Mr. Jules: Thank you for this opportunity to speak to the Senate about the First Nations fiscal and statistical management act. It is a privilege to lead the committed team that has created this legislation. The legislation before you is a result of the 1988 Kamloops amendment to the Indian Act. I would like to recognize the role of Senator Len Marchand in that amendment.
The Kamloops amendment has enabled over one hundred First Nation property tax systems; however, we can do even better. The First Nations fiscal and statistical management act is an important step forward. It has all-party support in the House of Commons. With this legislation we are building an economic solution instead of just talking about social problems. Our issue is simple in theory. Our social problems stem from our poor economies. Our poor economies result from the lack of private investment. Private investment accounts for 80 per cent of all investment in this country. We are receiving only a tiny fraction of that private investment. That, in a nutshell, is the root of our disadvantage. If we correct this problem, all other initiatives will become more effective. If we do not, then social problems will continue and we will have lost yet another generation.
Why do we receive such a tiny share of private investment? There are a lot of theories. The nature of property rights, poor locations of many First Nations, mistrust of First Nation governments. While there is a little bit of truth in each of these, if I were asked to express the most fundamental reason, I would say it is because the decision making is not in the right hands. Central planning does not work. It did not work for Eastern Europe, and it is not working in First Nation country. This legislation begins to break down the wall preventing First Nations' economic growth. It begins the process of replacing DIAND with First Nation institutions and legislation. There are investors all over the Canada who see opportunities in First Nation countries. There are First Nation leaders who want to respond to these opportunities.
There are two keys to making these deals happen. First, investors need certainty over their property rights and taxes and services. Second, First Nation leaders require the authority they need to move at the speed of business. A lot of people think transferring significant authority is impossible. They say First Nation governments are too small to be viable. They say it is too complex to transfer substantial powers over to 600 First Nation governments. They say that all these governments will create higher administration costs and threaten the Canadian economic union.
These institutions answer all those questions. These institutions help us exercise our powers in a way that reduces bureaucracy. They allow us to move decisions to the people who best see their opportunities. With this legislation we are building an institutional framework for First Nation government. This framework will allow First Nations to assume powers as they develop capacity. They will allow us to realize administrative economies of scale. They will build infrastructure. They will create the certainty required by investors. They will support First Nation governments that work. Most importantly, this framework has been developed by the First Nations who participate in it. This is our legislation. We are not asking for transformative change; we are doing it.
Harold Calla, Chairman of Advisory Panel, First Nations Financial Management Board: Good morning, and thank you for being here. I want to start by saying that, as a Canadian, I acknowledge the Senate in its current form. This is about the third or fourth time I have had the opportunity to be here, and I am always impressed with the level of debate and the content of the work you do. You provide a valuable service to Canada and, as a Canadian, I applaud it and do not look for it to be changed.
As Mr. Jules has said, we are here today to share the vision and the work of like-minded First Nations who are seeking to put in place the tools they need to support the development of economic and business opportunities in their communities. We have to look to the future. I know that there are some First Nations who do not have the same kinds of opportunities today, but this must be viewed as just one piece in a parcel of work that has yet to be done.
We have examined the current problems and have constructed through this legislation viable options that respond to many of our challenges. As Mr. Jules has said and as you are aware, about one in six First Nations in Canada are now collecting property taxes — a far cry from the 14 that were talked about at the time the Kamloops amendment was put forward. While it has made a significant difference in our community, the full benefits of property taxation that are available to other governments delivering local services have eluded First Nations. Bill C-20 bridges those gaps and levels the playing field.
This work builds on the initiative of the Kamloops amendment, the Land Management Act, and there will be a synergy created that will be a critical piece in the move from dependency to economic self-reliance. Enabling initiatives such as this one recognize the diversity among First Nations. This legislation will give those who are ready to advance their communities in ways that respond to their reality the opportunity to do so.
We have looked at the reasons for poor economic and business development results in our communities and know that this bill will address the most significant issue, which is the lack of infrastructure. You cannot compete in economic and business development if your land is without infrastructure.
The concepts behind this legislation should not be new to any of us. To support economic and business development, we need stable, predictable and viable environments that will attract private sector investment. For those First Nations who opt in by asking to be scheduled, the legislation responds to the private sector investment needs and makes it easier for them to consider investing in First Nation lands.
The concept of pooled borrowing is not new in this country and neither is the concept of using a property tax base and debt to finance infrastructure. The institutions created in this legislation will allow this to happen for First Nations who opt in. It will be less costly and timelier than the status quo.
Initially, those First Nations with property tax revenue will be able to utilize the legislation to access long-term debt for infrastructure through a pooled borrowing using the property tax base, and not their land, as leverage. Under the fiscal and statistical management act land is not being put up as collateral for any loan secured under the legislation; therefore, it can never be lost through the legislation.
Under the legislation, First Nations agree to guarantee each other's debt in a joint-and-several liability. They use the First Nations finance authority as the vehicle to administer this. Each First Nation in effect pledges their property tax base and the revenue that can be generated from that base as the source of debt repayment to the pool. It is the finance authority that, on the strength of the combined property tax base of all First Nations that have opted in, secures the bond credit rating and issues the debt. The First Nation borrows from the finance authority and repays the finance authority. The investor and the finance authority bonds never deal directly with the First Nation.
To make the system work there needs to be a lot of trust reinforced with a strong oversight role that ensures that joint-and-several liability is the system's last resort solution to any problems with the pooled taxing and borrowing regimes. It is this independent role of the financial management board that is a keystone to the success. It becomes the overseer and, as such, provides a service to the First Nation, the finance authority and the tax commission and provides investors with the confidence they need. They want to know they will get paid their interest on their bonds and, when the time comes, their principal.
The mechanics of the legislation provide for the financial management board to establish standards for financial management law. The law sets out the regime to manage the local revenue account. The financial management board will also certify that a financial management law passed by a First Nation has met the standard. The financial management board will certify that a First Nation has the required financial law in place for the local revenue account at the time of borrowing.
Let us be clear that this legislation only speaks to the revenues defined as local revenues under the act and does not include transfer funding or a First Nation's own source revenue. These funds are not subject to this legislation. The standards the financial management board will develop provide for the segregation of transactions and records for the local revenue and expenditures from the First Nation's other sources of revenue and expenditures. This is required for periodic compliance verification with the laws passed under the bill, and in exceptional circumstances where intervention as contemplated in the act is necessary the financial management board can more easily undertake its responsibilities.
The intervention provided for under the act is designed to respond to First Nation and investor concerns about debt repayment. First Nations want to feel confident that they will not be called upon to pay someone else's debt, and investors want to make sure they will be paid regardless.
The financial management board will also be positioned to support any First Nation, if it asks for help, in developing financial management capacity, by sharing best practices, in developing standards in cooperation with the Aboriginal Financial Officers Association, and by providing a life-long living education opportunity in the field of financial management.
This bill is a building block that supports the aspirations of self-reliant First Nation governments. The issues considered in this bill are issues that must be dealt with if there is to be any hope for transformative change. This is not a request for a special right or subsidy. It is a request to move outside the box and, in doing so, to create economic development that will benefit all Canadians.
This bill should also be viewed as a living document. It will be reviewed in time and should be amended to respond to the needs of First Nation communities at the time.
Ms. Deanna Hamilton, President and Chief Executive Officer, First Nations Finance Authority: Mr. Chairman, I am a member of the Westbank First Nation, from south central B.C.; we are part of the Okanagan Nation. I am the founding member and CEO/President of the First Nations Finance Authority, the FNFA.
Across Canada, as First Nations we find ourselves rebuilding our governments and our communities as we gradually move away from paternalistic governance under the Indian Act to true self-government. It is not easy. It takes dedication and hard work. It was not all that many months ago that I sat in this committee listening to you debate my community's self-government legislation, the Westbank First Nations Self-government Act. It was a proud day then just as it is a proud day today.
When developing our self-government agreement and constitution, we came to understand that while communities must chart their own path, communities are not islands. There is a need for national and regional First Nation institutions of governance to support local self-government. The FNFA is an example of what I am talking about. Let me explain what I mean by telling you a little about the FNFA and how it was developed.
Shortly after taking over property taxation in 1990, Westbank began to explore ways to lever our existing tax revenues to build infrastructure that was needed to upgrade the water system, to support economic development and to generally improve the quality of life in our community.
Local governments typically borrow for infrastructure over long periods of time, spreading the cost and the tax burden between current and future taxpayers to more appropriately match the life of the infrastructure being built. For instance, the cost of a water system might be spread over 30 years.
As we explored our options for long-term public-debt financing at Westbank we watched the adjacent non-native community of Kelowna build its infrastructure more efficiently and more cost-effectively than we could. They could borrow with other local governments in B.C. far more more cheaply and over much longer periods of time than we could. We discovered very quickly that, as First Nations, we did not have the same tools as our neighbours did. We learned that there were legislative barriers to public financing by First Nations. We realized that if we wanted affordable long-term public-debt financing based on property taxes we needed a new regulatory framework to make it work. We also realized that for maximum benefit we could not do it alone.
In 1992 and 1993, Westbank hosted two national conferences to consider the options for First Nations public-debt financing. A number of models were reviewed, both from within Canada and from abroad. The model chosen was the municipal finance authority of B.C., known as the MFA. All local governments in B.C. pooled their borrowing requirements through the MFA, which issues bonds to raise the money. The borrowing scheme is established through provincial legislation.
As First Nations we liked this model, not because we equate our governments to municipalities, but because the model favoured small governments working together for mutual economic benefit. We realized that collectively we would be stronger. To get the public-financing ball rolling, FNFA Inc. was incorporated in 1995. Today the shareholders of the interim corporation, which will be superseded by the statutory FNFA, are: Millbrook in Nova Scotia, St. Mary's, Tzeachten, Songhees and Westbank First Nation in B.C. To create the borrowing scheme the board of directors of FNFA Inc. asked Canada to pass legislation. This is now part of Bill C-20.
The legislation is well thought out and establishes an appropriate regulatory framework that will provide comfort to First Nation governments that borrow together — that are, for all intents and purposes, jointly and severally liable for each other's debt — as well as providing comfort to the purchasers of our bonds that they are good investments.
While the FNFA is modeled on the MFA, there are of course differences in the legislative framework, given that the First Nations are not municipalities and have inherent law-making authority. Bill C-20 has been drafted accordingly. The four institutions created under the bill will work together to make the system work.
First Nations that opt to participate in the FNFA borrowing process will first be certified by the financial management board, and then they will pass a borrowing law that will be approved by the tax commission. The FNFA will then batch all the borrowing laws and issue bonds in amounts sufficient to meet the requirements of the individual borrowing laws. To help investors make informed decisions, they will be given access to information on borrowing members through reports published by the statistics institute.
FNFA bonds will not be secured with hard assets. No land is mortgaged. Rather, it is the integrity of the property- tax system that supports the credit. The financial management board and the tax commission will ensure the integrity of the property tax and financial management systems that stand behind the FNFA bonds. Counsellor Calla and Chief Crowfoot will talk to these points.
From our discussions with Moody's Investment Services, Standard & Poor's, as well as our consultants RBC Dominion Securities, the FNFA and Canada are satisfied that the structure proposed in Bill C-20 will support an investment-grade credit rating, probably a single ``A.'' This will mean that pension funds and trusts will be able to buy our bonds and First Nations will pay less interest. When the MFA was first rated it too received a single ``A.'' It now has an enviable triple ``A'' rating, which is something that we will aspire to as well. It is very significant that the FNFA will be the first Aboriginal government, or institution, in the world to be rated by an international credit-rating agency. We should not lose sight of this fact.
As we grow, it is our vision that Canadians will become as accustomed to buying First Nation bonds as they are to buying federal, provincial and municipal bonds. Also there has been significant interest internationally, where investors see our bonds as being ethical. We believe that demand will exceed supply.
Before I conclude I must caution senators that Bill C-20 cannot be used by future governments as a substitute for Canada's collective responsibility to First Nations; nor can it be used as a substitute for federal infrastructure commitments. There will be a continued need for federal assistance to First Nations to support our infrastructure requirements, particularly in communities where basic infrastructure is needed to save lives, and where water is unsafe and there is no property tax base.
In closing, we should all celebrate this historic moment. A great many people have been involved in this initiative. Without partnerships, progress could never have been made. The FNFA is an excellent example of the power of working together for mutual benefits. Through the FNFA, its members will have an interlinked economy more powerful and viable than the individual communities on their own. Those of us involved in this innovative financing initiative sincerely hope that our example of creating our own solution to a specific problem that we faced will demonstrate that there are steps we can take to begin rebuilding our economies and improving our lives. Thank you for listening.
Chief Tom Bressette, Chair, Advisory Panel, First Nations Statistical Institute: Good morning, senators. I am the chairperson of the advisory panel for the First Nations Statistical Institute. I would like to thank the committee for inviting me to speak to you today on Bill C-20.
I am a man who wears many hats. I am Chief of the Chippewas of Kettle and Stony Point First Nation, which is located in Southwestern Ontario. I am also a board member of the Union of Ontario Indians, which covers roughly 42 First Nations in the Province of Ontario. As well, I am involved in other committees, tribal councils and initiatives mainly in Ontario. I have been involved in First Nation governments for almost 20 years now. I believe strongly that economic development is essential in improving the lives of First Nations people and their socio-economic conditions. Our communities need support for self-government in order to improve infrastructure and to attract development and investment.
As my colleagues would point out, it is much harder to do business in First Nation communities. I am here to speak on one of the causes of this situation, which is a lack of information. We lack information to support economic development and promote investment. Potential investors and business partners expect to see specific community information readily available. The information must be accurate, clear and comparable to that of other information sources. A community's ability to market itself is compromised by not having the specific data. The First Nations Statistical Institute will begin to fill these gaps. The institute will be an evolving centre of statistical expertise for First Nations and other stakeholders; it will provide support services that will produce information of higher quality and will enable greater usage of First Nations statistics for all users.
Its function will include the following: statistical information development; statistical training and education; data collection methods, analysis and interpretation; advisory services to First Nation and federal departments; specialized services to fiscal institutes; the development of statistical standards, including performance indicator development; and data research and information management services. In short, it will be dedicated to improving the quality of First Nations information.
Improved data on First Nations will benefit First Nations. It will benefit policy makers and researchers in all governments. It will benefit the public and potential investors on First Nation lands.
The First Nations Statistical Institute will support the other institutions in Bill C-20. It will work with First Nations and the tax commission to develop statistics that support the First Nation property tax system. The First Nations statistical institute will work with the finance authority and First Nations to provide reliable and timely information to support a strong credit rating. The institute will work with First Nations and other institutions to market opportunities to potential investors. The institute will help the financial management board and First Nations determine what types of investment they are best able to attract. The institute will work with First Nations to build understanding and increase capacity in communities to utilize statistics.
The First Nations statistical institute will help coordinate the collection of First Nations administrative data. In 2002, the Auditor General identified the data and reporting requirements of First Nations as a significant administrative burden. The quality of First Nations statistics available now is poor. The statistical institute will work with Statistics Canada and First Nations to improve the quality, relevance and timeliness of statistical information.
The First Nations statistical institute will be providing the same service role that provincial and territorial statistical agencies currently do. Provincial statistics agencies use Statistics Canada and other public sources to support the system of national transfers. They use this information to represent their interests in trade and federal-provincial negotiations. They use this information to ensure that their communities have necessary information to attract investors. The creation of this institute levels the playing field for First Nations and enables First Nations to work from the same information.
The First Nations statistical institute will have a role to play. It will provide the necessary information for First Nations to establish effective financial management systems. It will be providing information to support the implementation of self-government. It will be providing information that is needed to facilitate infrastructure financing and support investment. It will be working with Statistics Canada to improve First Nations statistics.
In short, it is vital infrastructure for First Nations and all governments. I would like to close by thanking all senators for their support of this legislation. The process to bring this legislation through Parliament has been at times taxing — no pun intended. It is with great satisfaction that I am here today to witness the culmination of our efforts and your subsequent support.
Mr. Strater Crowfoot, Chairman, Indian Taxation Advisory Board: Good morning. I am Head Chief of the Blackfoot Nation, or Siksika Nation, in Alberta. We are part of Treaty 7, the Blackfoot confederacy.
I am here because of a vision. My great-great-grandfather, the first chief of the Crowfoot, signed Treaty 7 in 1877. There was a program on television last week about him and the important role he played in helping form Canada in a peaceful way. I pay tribute to him for his vision of bringing his people to be part of Canada. I am here to carry on that vision. I take on this work to build a future for our people so that we can become part of Canada. I am speaking for our ancestors who had a vision to ensure that all of our people would become part of Canada, share in its resources and be full participants in the Canadian economy. We all know our sad history, our lack of involvement and our precarious situation.
Last night I was with my first grandson in the United States for three hours, then I had to catch the red eye to come here. I did not want to, but I felt it was important to be present here to support my colleagues and talk about this very important initiative.
I am also the Chairman of the Indian Taxation Advisory Board. I have been involved with the Taxation Advisory Board since 1988 with Chief Manny Jules, among others.
This institution is different from other institutions in that we have been operating since 1988 as a board. We have evolved to the point that we share this vision with these other institutions that will help bring a change in how we deal with Canada. Over the past 15 years, ITAB has been involved in supporting First Nations by passing over 1,000 taxation bylaws. To date, we have raised over $300 million through property taxation to provide local services for our people.
I am here to support this bill, and the First Nations tax commission in particular. There is an expectation in this country that First Nation issues are always expressed by lawyers and politicians, and we often talk in legal language. I am not a lawyer. I have a master's degree in business, specializing in finance and cost accounting. Today, I want to talk business, not law or politics. Let us get right down to business.
First Nations need this bill passed now. The cost of doing nothing is far too high. Support for independent First Nation institutions would attest to the government's commitment both to self-government and to improving First Nations' economies and lives. We need real, independent, First Nation institutions like the tax commission so that we can let the market work on First Nation lands.
These First Nation institutions will give participating First Nations a framework that supports investment from the bottom up. First Nation ownership of their institutions of governance will create a culture of cooperation in our communities. The independent institutions give us the framework and expertise necessary to implement our government powers.
This institutional framework will free up resources for both the federal government and First Nations. It is a model for replacing DIAND with First Nation institutions. Some are ready for this and some are not. I have been involved in politics for a long time and I have been involved in many self-government initiatives with the Land Management Act, Bill C-115. Soon we will be dealing with the First Nations oil and gas management bill.
As a leader, I am caught in a fiduciary tug of war. I have, on the one hand, First Nations who do not want to change, who want that fiduciary obligation in place forever so that they can sit back and say that Canada owes them a living. We are trying to change that. On the other hand, we have some bureaucrats and politicians who do not want to change it either. They do not trust us and think we are incapable. We are trying to push the government out and pull our people in. This fiduciary tug of war is taking a toll on many of us. We are criticized for taking these steps.
I was involved in the Land Management Act in the early 1990s. There were 14 of us pushing it through. The ones who were most opposed are now lined up wanting to be part of the process.
This bill has been more than 10 years in the making, and it has been through the consultation wringer. We rolled out the consultation draft in 2002. A copy of this was sent to every First Nation in the country, not once but three times, along with additional information. Meetings were held with interested First Nations and other stakeholders across the country. We established a toll-free number and five Web sites to field inquiries. We published a newsletter. We sent an information booklet to all First Nations across the country. Letters were sent from the then national chief, Matthew Coon Come, to every First Nation in the country informing them of the initiative and inviting them to a national assembly to discuss it. Since that time, it has been discussed at the AFN no less than six times.
Since this bill was first introduced as Bill C-19, we have been invited to countless community meetings and have attended them all. We have mailed more than 10,000 packages of information that include a current copy of the legislation, updated materials, background information and a history of media reaction.
We are strong advocates of this legislation because these institutions will help correct the most fundamental cause of First Nation poverty, as was pointed out by a Harvard study on native American development.
Under the existing system, it is roughly 10 times more difficult for a First Nation to complete a business deal than it is for any other sector. We are at the mercy of the bureaucrats. The system is so hard to get through that in some cases it takes years to get a development.
Before Bill C-115 was passed, I was working on my reserve in setting up a 75,000 square foot mall. That took us a long time after the bill was passed and cost us an additional $500,000 in lost opportunity and interest costs because the process was not ready.
We can only finance one-third as much infrastructure as other jurisdictions. Each dollar of infrastructure improvement attracts 30 per cent of business investments, as it does elsewhere. Is it any wonder that we have remained poor?
These disadvantages are costing Canada billions of dollars every year. They are causing economic losses of $5 billion. Over the next 15 years, if nothing changes, First Nations poverty will cost this country about a $160 billion.
Canada cannot afford to do this any more. First Nations are the fastest growing component of the Canadian workforce. If you do not let these institutions do their job, tens of thousands of future workers will grow up without exposure to business or positive work experiences. This legislation gives us back the dignity of our own economy.
Let me say a few words about the effectiveness of the First Nations institutions. When the Indian Taxation Advisory Board was first created, people predicted it would never be taken up by more than 20 First Nations. Today, more than 100 First Nations use it, and this number is growing every day. These people did not understand that it took a First Nation institution to harness the power of a First Nation initiative.
This legislation allows us to do even more. First, we will make improvements to the terms under which First Nations can use property tax to finance infrastructure. Many First Nations will be able to develop business infrastructure for the first time. With your support, we will improve the effectiveness of investments, training and infrastructure. We will ensure that investments and infrastructure are not stove-piped at the cost of efficiency. We will ensure that investments in training and infrastructure are coordinated. We will ensure that investments in business and infrastructure are based on maximizing real economic potential.
Second, we will work with First Nations to help them attract more business investment. First Nations are losing business opportunities because decisions take too long. First Nations can remove some of the worst bottlenecks from an overloaded bureaucracy and speed up these decisions. This legislation ensures that the authority of elected First Nation governance is respected. With your support, we want to create a mechanism to transfer our knowledge about doing business on First Nation lands across the country. This would be the most effective technology transfer agency in the country, because it would put to work the most under-employed resource in the country.
Our preliminary assessment is that in the first five years of full operation, these institutions will support construction of about $80 million in new business infrastructure. It will help First Nations attract $218 million in new private investment and create almost 3,000 jobs on reserves. In 10 years, we estimate we will support an additional $329 million in infrastructure, $733 million in new investment and over 10,000 new jobs. Independent First Nation institutions will be one of the best public investments Canada has ever made.
The Chairman: Thank you for your thoughtful, informed presentations.
Senator Stratton: Having served on this committee for quite a while, it is a pleasant surprise to see such enthusiastic support for a piece of legislation. Mind you, it is your own initiative, so I would expect you to be positive about it. Nevertheless, I thought you might say something about where you felt you still had problems, which is the big issue that concerns me.
My question is to Mr. Calla. You talked about the bill being a living document. As I understand it, there is neither a three-year review nor a five-year review. If you call this a living document, would you not expect there to be a review after three or five years? If there are any significant changes that you would like to see made in the future, how would you expect those to take place?
Mr. Calla: The question is a good one. The legislation does call for a review by the seventh year, but it should be able to happen before that, and we are already beginning to look at the means by which this bill would be reviewed now.
When I talk of its being a living document, we would expect, as other opportunities arise through the regulatory authorities that some of these institutions have, that we will come back to you to ensure that the scope is expanded to capture the needs of First Nations as they want to come on board.
Senator Stratton: Did you carry out a feasibility study for this? If so, could you have it filed with us?
Mr. Calla: I am not aware that we have undertaken a feasibility study as a group. Our Squamish First Nation community is located from downtown Vancouver to north of Whistler. We had leased land for 60 years in the heart of downtown Vancouver, and that required us to deal with issues of land management, taxation and infrastructure for a long period of time.
I will capture it in one theme. In 1964, the Squamish Nation was able to secure through the department a land lease that created the Park Royal South Shopping Centre. I do not know how they did it in those days. I raise my hands up to them, because it must have been an almost insurmountable task.
In 2006, the Squamish Nation will open up a shopping centre at the north end of the Second Narrows Bridge, and we will own it. We were only a landlord in 1964. That is what the power of this legislation will do. When you look at feasibility, it is a matter of having the ability to put the infrastructure in the ground and to be able to finance it; the financing has to be available. I understand that you will be hearing from witnesses about the issue of financing. That is certainly the key. If we can get infrastructure in the ground in an affordable way, we will create economic development opportunity and not just be a bystander leasing the land. We will have full participation and employment provisions. That is what this bill is. From my perspective, that is the feasibility.
We were able to do it in Squamish for one project, the Real Canadian Superstore. We could build on that land because we had on-source revenue and were able to go to the bank and borrow one million dollars for the infrastructure. Many First Nations are not in that position, and this will provide them with that opportunity. The business case is made just on that example, in my view, senator.
Senator Stratton: Believe me, I am an enthusiastic supporter because it gives you independence, which is the most critical issue facing all of us. Thank you for your attendance here, and I wish you well.
The Chairman: In reading the bill I saw that, while this is a general attempt to move away from government to become independent as First Nations in our country, there is still a fair amount of federal government control through the boards, the people on the tax commission, the financial management board, and our Governor-in-Council appointments. The only body that has First Nations representation is the financial authority board, which is where the First Nations appoint the directors. In your vision of this whole regime, do you foresee that the First Nations will eventually control all aspects of the regime that is being established?
Mr. Calla: The question speaks to the partnership that has existed between Canada, the department, the proponents up until this point, and the living example of the Indian Taxation Advisory Board that has been in existence since 1988. There is a need to ensure that Canada has the appropriate mechanisms for its own oversight over these, because they are institutions that will be funded by taxpayers' dollars. We are in a cooperative partnership. We have accepted, and put great store in, the assurances provided by the various ministers and the department throughout this piece of work that from the beginning these institutions will have members from the First Nations in the majority and the chairs will be First Nations people. We are working in an environment where this is, fundamentally, a new approach to how to construct a new relationship between Canada and the First Nations. There must be trust on both sides.
Our trust is that Canada will honour the obligations it has made to us, and we have no reason to believe that it will not, regardless of who sits in the seats of power. We accept the responsibility of proving that we are capable of developing competent, reliable institutions. The time will come for a review to look at other mechanisms, but this is an acceptable environment for us to work in today.
The Chairman: Many of us here can see the merits of setting up such a regime. Can you say something about the process in Canada of which you are highly supportive. You see the merits of the process and you have had experience in business and understand the advantage of setting up such a regime. Why would other First Nations not be as supportive as you are? We know that some First Nations are opposed to this, and we will have an opportunity to hear them later in our deliberations on the bill, but can you comment on this, please?
Mr. Calla: Over the last several days, I have had the opportunity to be in the presence of some of our strongest opponents at the National Aboriginal Financial Officers Association held here and in Toronto last week, and also when speaking at the dinner of the Canadian Council for Aboriginal Business. A philosophical divide was referred to by a number of people, who say that it is section 35 or nothing. Anything that you do that would be seen as an interim measure is seen as taking the government's attention away from dealing with section 35 rights. A growing number of First Nations, as demonstrated by the 100 First Nations with property tax revenue, are not prepared to sit and watch opportunity pass us by because they want someone named the Department of Indian Affairs and Northern Development, which has the fiduciary duty, to bend down and pick up the $100 bills flowing past us in the river. We will not do that any more and our communities will not allow it. We support the notion that section 35 rights must eventually be dealt with; and we would welcome the opportunity to do so, but to open up that door requires much more cooperation than the five of us sitting at this table. It involves all areas of government and the provinces. We cannot be and will not be held hostage by those opportunities. You have to go back, as Mr. Crowfoot said, and look at the fact that under the Kamloops amendment in Bill C-115, 10 to 20 First Nations would benefit from this across the country. There are now more than 100 First Nations in each.
More work will come forward in legislative change and our challenge will be to ensure that the resources and the opportunities are provided to First Nations so that they can be like the five First Nations represented at this table. That is our challenge. Where the opposition comes from, senator, is those First Nations that do not see that change is coming. How do they reach the point of sharing resource revenues and not being wholly dependent on the generosity of the parliamentary appropriation process to fund economic development and deal with issues around competitive equity? The reason is that they fear change and are afraid that treaty obligations and Aboriginal rights will be trampled upon.
We do not see that and it has not been a part of our experience in Squamish. In fact, our contributions from Canada have increased because we are more organized and we are better managers. We see a synergy in that cooperation with government as these initiatives go forward. Others do not see that opportunity. We all need to do more work to ensure that they reach the same point as we have reached.
Mr. Crowfoot: Following up on the subject of opposition, why do we have four parties in government? There is opposition in all things; likewise on our side. I have 6,000 plus members in my tribe and they are opposed to anything I do. I am damned if I do and damned if I don't, and so I will do. I will not sit back and do nothing, because it costs too much. At the age of 32, I was the youngest head chief that the Blackfoot had ever had. Years before, I sat working with my tribe in economic development and managing their resources. I heard people talking about when we would get self- government; it was always ``some day.'' I was elected head chief at 32 and I told them that if they wanted self- government, we should talk about it. I spent six years talking about self-government. We had 600 meetings in consultation throughout my community, in Calgary, and in other places. We talked about it, and you know what? They are afraid. They do not want self-government and they are not ready for it. I told them that it would happen one way or another and, sure enough, Bill C-7 arrived, just as I had thought back in the early 1990s. Either we do it for ourselves or government, in some way, will do it for us. That is the mentality of the Indian agent — they will take care of you. This initiative is our vision and our goal. We know what we want, so get out of the way. No offence, but we need to get moving on this because it is costing us too much money; it is costing $95,000 per day.
The Chairman: From my own experience in dealing with government in the North, I think that self-government is sometimes romanticized and that it epitomizes a desirable thing. However, the reality is that it requires a tremendous amount of hard work. However, in the long run, it is desirable and necessary.
Senator Watt: Mr. Calla, following the same line as the question I asked the minister, what is your view on the guarantee?
Mr. Calla: Thank you, senator, for the question. I was a bit worried that there was an intimation, if something were to fail in the community, that that business would be supported by this proposed legislation. This is not about the business activity in a First Nation community, which stands on its own, with success or failure. However, the infrastructure that is required to create business opportunity would be financed through the First Nations finance authority by First Nations, like ours, coming forward and being prepared to be part of a pool. In so doing, we will bring the strength of the larger First Nations to that pool to provide First Nation communities with the opportunity to obtain financing they could not find otherwise.
The guarantee is a pledge. I have often said that I expect, when we do our first pledge in Squamish, that we will do it in our Long House in a traditional way. We will call witnesses and tell people that this is what we are committing ourselves to and that the expectation of all is that we will honour our obligation. Part of the responsibility, in our traditional sense, of the witnesses that we call upon is to remind our community of the responsibilities that we have agreed to accept. In that sense, the First Nations financial management board is the witness, senator. It will ensure that everyone fulfills their responsibilities.
These tools that we have developed will meet the test that I had to put for myself to go back to my council and to my community and say that this is a good thing. There has never been a failure in British Columbia in the 40 years that the municipal finance authority there has existed under this model.
There have been some challenges, but it has always been worked out. In this case the financial management board became involved in looking at a cooperative solution with the community, and that is what will happen here.
So joint and several liability provides the strength and the mechanisms between the tax commission and the finance authority, and the financial management board provides the confidence that First Nations will need that the joint-and- several-liability provision will never have to be called upon because the solution will reside in the collective tax base of all First Nations who opt into the pool and in the strength of all of those First Nations.
Senator Watt: I believe there is a provision in the Indian Act that the third party or the investor cannot come in and take control. If a business does not go through, that would kick in. Is that your opinion?
Mr. Calla: Yes. Again, there is no relationship between the investor and the band. It is between the investor and the finance authority, and the finance authority and the band. It is only the property-tax revenue that the financial management board can step in and manage under third-party management to repay the debt. It is only that.
Senator Léger: Mr. Calla, if I understood you correctly, you opened by saying how much you appreciated the Senate committee. I would like to say the same to you. I feel the witnesses we have heard here today are extraordinary. I would like to second what Mr. Crawford has said, that you are forming Canada in a peaceful way. I think you are predecessors of everything that is coming in, the differences, globalization, et cetera.
Ms. Hamilton, this intrigued me, but did I understand you to say that, of the finance authority members, one was from Nova Scotia and four were from B.C.? That is interesting, because I know you were saying the opponents and so on were there, but that there is some connection.
Ms. Hamilton: Yes. I would say that we started mainly in B.C., because basically that is sort of where taxation started; so you had the property-tax base to be able to look at ways to be able to leverage. It literally started from the hip pocket of the surveyor of taxes at Westbank, and that was myself, to start looking into why it would not work, and what we should do to ensure that we could afford to have the same kind of tools of government that other governments around us had. We did not have any money to do this, so as a result we sort of pooled the people that were there after we had the two national conferences and everybody realized it was a national problem. We wondered how we could look at this when we did not have the funding. Basically, Westbank was asked by that group to do that.
As property taxation started to spread, other communities who were in taxation would come to the tax administrators' meetings in British Columbia and, as a result, we started to be able to meet people from other parts of the country. Hence, we do have a member from Nova Scotia, and there are other provinces now represented. We do have the opportunity, in the First Nations plans authority, to have between five and 11 directors as time goes by, and I would assume that they would cover Canada.
Senator Léger: Already, as you were saying, from four or five you are up to a hundred; and Mr. Bressette and Mr. Crowfoot were saying that there are some from Ontario and some from Calgary, Alberta. That was my main point, and I especially wanted to thank you.
Mr. Bressette: Thank you. Back in 1972 our community at Kettle and Stony Point instituted a tax process, so we are not unfamiliar with the taxation business of taxing our lands. This initiative came along and immediately it was of interest to us, because we did not have that ability within Ontario, because in Ontario there is a strong objection to taxes from the First Nations groups. Our people got into this because the local municipality was taxing people living on our land in 1972, so we were not even getting the benefit.
The federal government was not overseeing whether other groups were collecting property taxes on reserve lands, which, in my mind, were breaking the law at that time; but it was allowed to happen. So we got involved with this and supported it, and I think this is happening in other parts of this country. This same thing that is happening to us is undoubtedly going on in other communities, if a local municipality imposes taxes. Those people who live on First Nations lands are utilizing services that the rate-payers pay for, because they are in no-man's land for taxes. Automatically, they have to try to get compensation for the service they provide, so ultimately I think that is how that came to be; but it has happened.
Our chief at that time said, ``I cannot sit back and allow this to happen. Why should they be taking taxation off our land?'' They were claiming services that we were providing at the time. It was a question of moving ahead and dealing with this or watching someone else become rich off our land.
The whole objection in Ontario, where you have a lot of opposition to this bill, is primarily because the people in Ontario believe there are negotiations around the treaties. I spoke about revenue sharing of all the resources that we agreed to share. We did not collectively give it all away and say, ``Here; you can have everything. We only want what we have on this little patch of reserve land that you recognize.''
Our people and our elders have often told us that our lands are bigger than where we are. We agreed to share. I think the witnesses you probably will hear in opposition to this are saying that their portion has not been met. The resource revenue sharing has not been dealt with and we are not getting what we should be getting off our own traditional lands.
When you talk about remote northern areas and how this does not fit and suit them, in my mind it does. If they find diamonds in a particular reserve, there is the ability to tax now, whereas there was not before. The federal and provincial governments will assume that, but it will allow that question of resource revenue sharing to be answered in a form that is acceptable to everyone, because then people know the formula base and how they will deal with that.
This goes a long way toward dealing with some of the very strong questions that are being asked. I know you asked the question why some people do not support it. That is the very reason they do not support it. It is because of those untapped resources; they do not know what they are or what impact they will have.
When you ask those questions, you get answers that do not sound very good, but they are things that other people think about there, and all we are trying to do is create a system and a structure so self-government can are happen. Without institutions, how will you ever be able to govern yourselves, if people do not know how a governing structure will work?
We are trying to fill a gap, I think, and it is a big gap, but it is a starting point. We hope it will take off and gain the support of the people in government, because we need to collectively work together.
Mr. Crowfoot: I want to be clear about this idea of taxation. If you take away the legislation, take away Canada, we are a young country. Before there was contact with the Europeans, First Nations, amongst themselves, paid tribute. My First Nation, the Blackfoot Confederacy, occupied a lot of Western Canada, and went into Idaho, Montana, North Dakota and South Dakota. That was our territory. As First Nations, we crossed through and they paid tribute to us in the form of taxation. If we want to go into B.C. for salmon, we trade, we pay tribute to be in that person's territory. This idea of taxation is not new to our people. It has existed for thousands of years. People who oppose it now do not understand the history. I cannot tell a Mohawk he cannot ask for tribute if somebody is going to go through his territory; it is their business. It is the same situation across the country. Taxation is not new. You are paying tribute for occupying or using someone's territory. If they oppose it, they do not understand their history.
The Chairman: With that, we have to close. Thank you very much. You have been a blue-ribbon panel.
I want to also thank the public, the people who have been here to observe the proceedings this morning. Thank you. You make our work as a Senate seem interesting and worthwhile, so thank you very much.
The committee adjourned.