THE STANDING SENATE COMMITTEE ON INDIGENOUS PEOPLES
EVIDENCE
OTTAWA, Wednesday, March 22, 2023
The Standing Senate Committee on Indigenous Peoples met with videoconference this day at 6:46 p.m. [ET] to examine the federal government’s constitutional, treaty, political and legal responsibilities to First Nations, Inuit and Métis peoples and any other subject concerning Indigenous Peoples; and, in camera, for the consideration of a draft report.
Senator Brian Francis (Chair) in the chair.
[English]
The Chair: I would like to begin by acknowledging that the land on which we gather is the traditional, ancestral and unceded territory of the Anishinaabe Algonquin Nation and is now home to many other First Nations, Métis and Inuit people across Turtle Island.
I am Mi’kmaw Senator Brian Francis from Epekwitk, also known as Prince Edward Island, and I am the Chair of the Standing Senate Committee on Indigenous Peoples.
Before we begin, I would like to ask our committee members in attendance to introduce themselves by stating their name and province or territory.
Senator Arnot: Good evening, everyone. My name is David Arnot. I’m a senator from Saskatchewan. I live in Saskatoon, which is in the heart of Treaty 6 territory.
Senator LaBoucane-Benson: Senator Patti LaBoucane-Benson. I’m from Alberta, Treaty 6 territory — it might not be the heart, but it’s the soul of Treaty 6.
Senator Martin: Good evening. Senator Yonah Martin from British Columbia.
Senator Hartling: Good evening. I’m Senator Nancy Hartling from New Brunswick.
Senator Tannas: Senator Scott Tannas from Alberta.
Senator Sorensen: Senator Karen Sorensen from Alberta, Treaty 7 territory, specifically in Banff.
Senator Greenwood: Senator Margo Greenwood from British Columbia and originally from the best part of Treaty 6.
Senator Coyle: Senator Mary Coyle. I’m not from Treaty 6. I’m from Antigonish, Nova Scotia, right in the heart of Mi’kma’ki.
Senator Audette: [Innu-Aimun spoken] — also called Quebec.
The Chair: Thank you, senators.
On tonight’s panel, from the First Nations Finance Authority, or FNFA, we will hear from Ernie Daniels, President and Chief Executive Officer; Steve Berna, Chief Operating Officer; and Jody Anderson, Director of Business Development.
Wela’lin. Thank you to all of our witnesses for joining us today. Mr. Daniels will provide opening remarks of approximately five minutes, which will be followed by a question-and-answer session with the senators. I now invite Mr. Daniels to begin his opening remarks.
Ernie Daniels, President and Chief Executive Officer, First Nations Finance Authority: Thank you, Mr. Chair, and thank you to the members of the committee for inviting us to present to you on the broad topic of the federal government’s legal, political, constitutional and treaty obligations to Indigenous peoples. I also respectfully acknowledge that I’m on the beautiful, unceded and unsurrendered Algonquin Nation territory.
I know that most of the senators here are familiar with the FNFA, but for those of you whom we have not had the pleasure of meeting, the FNFA is one of the institutions that was established under the First Nations Fiscal Management Act. This act received Royal Assent in 2005, and was proclaimed and enacted in 2006.
I would like to note that the act was supported by all parties in Parliament, and we work hard to maintain this broad support. As well — and this is very important moving forward — the FNFA and our sister institutions were conceived by First Nations, and remain governed by and accountable to First Nations.
As we have often seen, the best solutions to the challenges facing Indigenous peoples and communities are those designed by Indigenous peoples. Government has an important role to play in facilitating and supporting those solutions. To date, we have raised $2 billion to facilitate much-needed infrastructure, social development and economic development in member First Nations. Using Statistics Canada’s models, we estimate that the investment has created 20,000 jobs in participating First Nations and neighbouring communities.
As impressive as this is, we believe that it is time to take our partnership with the federal government to a new level. We have two main challenges: The sheer scale of the need in First Nations, and the hard limit we will encounter as own-source revenues aren’t sufficient to close the infrastructure gap.
To bring things back to the topic of tonight’s meeting, and the federal government’s responsibility toward Indigenous people, there are moral responsibilities related to the legacy of colonialism, generations of neglect and underinvestment that have left First Nation communities without the basics that most Canadians take for granted. Estimates vary regarding how much would be needed to bring our infrastructure up to the Canadian average: The Canadian Council for Public-Private Partnerships conservatively estimated $30 billion in 2016, which would be closer to $60 billion today after inflation, and the Assembly of First Nations, working with Indigenous Services Canada, or ISC, has recently produced a figure closer to $350 billion. The current federal government has set a goal to close this infrastructure gap by 2030 — it is 2023. It seems less realistic with every day that goes by.
When we think about the challenge related to infrastructure alone, I don’t think we can realistically expect any federal government — however committed to real reconciliation they might be — to achieve that scale of expenditure over a short period of time. That being the case, we need to look at innovative solutions.
The FNFA, in partnership with our board and with the support of our member nations, is proposing what we think is a workable, innovative solution that we call “monetization.” Essentially, this would involve the federal government identifying an annual appropriation that the FNFA could securitize in the capital markets, allowing us to raise a significant amount of capital in the short term that could be invested in communities across Canada.
Obviously, we need to test how such a relationship would work, which is why we recommend that the government think of this as a pilot. A budgetary line item of $200 million a year for 20 years would allow us to raise roughly $3.6 billion immediately. This could be used to finance projects and developments today at today’s prices — it’s an important consideration as inflation eats away at the value of the infrastructure funds available through ISC each year.
Obviously, this isn’t a magic bullet, and it isn’t going to solve the infrastructure gap overnight, but it would be a new approach — one that’s developed by First Nations and driven by a First Nation institution, and, if it is successful, it’s something that we can build upon in partnership with the federal government.
What we are requesting tonight from the Senate is if you could provide a letter of support from the committee to urge the federal government to support a budget ask of $200 million over the next few years in order to test — as a pilot project — this solution of monetizing government transfers as a way to close the infrastructure gap.
I look forward to any questions that you have, and I thank you for your time, and I thank you for inviting us here today to speak to you in this beautiful chamber.
Thank you.
The Chair: Thank you, Mr. Daniels.
I will now open the floor to questions from senators, and I will start on my left with my deputy chair.
Senator Arnot: Thank you for that overview, Mr. Daniels. I am very impressed with your organization and its success, and, certainly, the federal government should not have any trouble investing in your organization given the success that you have already shown.
I think a lot of your work fits under the rubric of reconciliation, and the federal government has to look at it from the point of view of the fiduciary relationship — and you are a conduit for that.
I don’t think there will be any trouble getting a letter of support from this committee, so that is covered off.
Do you have any specific asks in the letter that you would like to see — which would help you with any of your discussions with the federal government? And, if so, please provide those to us because we are quite happy to support your work.
One question that I have, and I don’t mean it facetiously, is this: Why did you pick the number $200 million? I ask that because I think the gap, as you have identified, is huge — and that will not close the gap. You obviously picked a number that you think you could work with, or that was reasonable given the circumstances, or that you will be able to make significant inroads with while working with First Nations.
I’m curious to know this: Would more money work better for you?
Mr. Daniels: Thank you for your questions.
First of all, I will answer the first question: I think the specific ask would be to urge the Minister of Crown–Indigenous Relations, the Minister of Northern Affairs or the Minister of Indigenous Services to be a sponsoring minister, and to support this budget ask.
We also believe $200 million is a low number, but, since we were talking about a pilot, we thought that this would be easier to get through the government system, as well as receive support from all of the central agencies in the sponsoring departments: either Crown–Indigenous Relations and Northern Affairs Canada — CIRNAC — or ISC. With the $200 million, we thought, with a pilot project, we could work out how this would work.
We know it will be successful, and, as we achieve the success, and iron out all of the kinks, then we would request that the amounts be larger and larger as each year goes by.
When we first started this — and I think Senator Tannas will remember — I talked about $1 billion. ISC’s budget on infrastructure is a little over $2 billion a year right now. If we took $1 billion of that, based upon our ability to leverage this into the capital markets, and based on the success that we have had to date, we could raise $25 billion to $26 billion. I thought that this would be a good start; then, we are starting to make a difference.
Mr. Berna, I don’t know if you would like to answer part of that.
Steve Berna, Chief Operating Officer, First Nations Finance Authority: Senator, the number came from a bit of backward research. When you want to raise money, the question is, “What are investors willing to lend to you?” Since this is a new area, it is Canada-backed, which is a strength, but if you are going to ask investors for a certain amount of money, you have to be within their comfort zone.
Large central banks around the world can raise up to $5 billion at a time. The Province of Ontario raises $42 billion a year, but they spread it over 52 weeks of the year. In order for us to work within the comfort zone of investors, we have to be under the $5 billion mark because it is new, and they will want a presentation, a comfort and an understanding of what it is.
After you do the initial raising of the $3.6 billion, supported by the $200 million, investors’ comfort levels will be achieved. You then can up the amount to align with what Canada and the First Nations respectfully would like to achieve together, but $200 million is a start within their comfort zone.
Senator Arnot: Thank you very much. I really support what you are trying to do, and I’m sure this committee does as well.
The Chair: I have a question.
I wonder if either of you, or all three of you, could comment on how the approval of a pilot project on monetization would help address not only the infrastructure gap, but also other socio-economic conditions on reserve — for example, I am thinking about how it would help the employment gap or education gap, or whatever the case may be.
Mr. Daniels: That’s a good question. Based on what we have done to date with the First Nations’ own-source revenue, we estimate that 20,000 jobs have been created — that is $2 billion.
If we do the math and extend it, for example, to $350 billion, I cannot imagine how many jobs that would be; it is going to be a lot. The other thing is the positive effect on the Canadian economy as a whole.
Can you imagine the GDP going up if $350 billion in infrastructure is available for First Nations to close this infrastructure gap? It would be enormous; it would be many more times than that investment. The government’s investment would be really minuscule compared to what the impact would be. Right now, with the $2 billion that we have already accessed from the capital markets, we estimate that the impact on the economy is about $4 billion — so it would be enormous.
Mr. Berna: I will add to that: This is a very timely question. A number of chiefs, some of whom are sitting behind me, came with Ms. Anderson and me to a meeting with Procurement Canada this morning. We talked about bonding insurance, which includes this question: Who will be able to bid to build the assets that will be needed on reserves, and who has the capacity? Each chief stood up and told the story of what their needs are. They also told the story of community members who have training in construction, electrical and plumbing, and who are waiting for jobs to show up. The enormity of infrastructure building would also be added to the enormity of job creation within the communities that need the infrastructure. You would not only build infrastructure, but also build employment for youth. You would also build training programs and create wealth management.
When we talk about monetization, there is an asset — but think about how the asset goes from an idea through construction, through tendering, through employment, through finalization, and hand over the keys. It is an absolutely imperative part of monetization that would create a huge change in communities and the youth who are coming up.
Senator Coyle: Thank you to our witnesses, and welcome back, Mr. Daniels.
You are describing what a well-known Canadian, Frank McKenna, from my colleague’s home province of New Brunswick, would call a “force multiplier.” That is really what you are talking about — an incredible force multiplier. It is exciting and powerful to even imagine the impact this could have.
I want to go back to the basics: When we are talking about this infrastructure gap — and nobody is going to argue that there is a significant one — would you be able to characterize for us the nature of that infrastructure gap? What does it look like? What kinds of infrastructure are included? What are the main components that need to be developed in order to close that gap? Those would be my first questions.
If we still have time, I would like to know if you have anything to tell us about the establishment of the First Nations Infrastructure Institute. Thank you.
Mr. Daniels: Thank you for the questions.
I’ll talk about housing first: We’re in a crisis situation with housing on our reserves in Canada. Housing would be one of the big-ticket items; roads, water and wastewater would be the other ones; and others would be nursing homes and elders’ centres. I will ask Ms. Anderson and Mr. Berna to name off a few.
Jody Anderson, Director of Business Development, First Nations Finance Authority: In a lot of communities, there is a tremendous wait for schools to be built — schools, health, connectivity and basic infrastructure. I’m from northern Ontario, and, oftentimes, the lack of connectivity prohibits young children — recently, we’ve gone through a pandemic where children could not even attend school online. If there is a school in their community, that is wonderful, but there is a 50-year waiting list to have that school rebuilt. If that is not going to happen in the near future, the children need to be transported outside of their community.
In addition to what Mr. Daniels said, I would certainly advocate for education, connectivity and health.
Senator Coyle: Before proceeding to the next question, is there anything on energy infrastructure? Is that included as well?
Mr. Berna: I have an example to share: Let’s go with the reverse. Let’s say that instead of First Nations needing infrastructure, what if you woke up tomorrow morning and $349.2 billion of infrastructure was removed from the communities in which you live? You would wake up in the morning, and you would hope that the lights work when you turn on the switch — because the diesel generator is either producing energy or it is not. You would go to the bathroom to get ready for work, and you would hope the water is there. It is probably not clean water in some cases. You are not drinking it or brushing your teeth with it. You may be able to take a shower — or not. You go downstairs, and you want to eat breakfast, but the table is full because there is not one family but three families living in the house; you might have gotten up too late.
Then, it is time for you to go to work; you drive your car. The road is paved, and then it goes to dirt and gravel. It may go back to paved for a little bit, but it goes back to dirt and gravel. When you eventually get to work, you might realize that the business you thought you worked at doesn’t exist because businesses don’t set up for economic purposes when they don’t have reliable energy, clean drinking water or the infrastructure to make a business function.
We talk about assets, and we talk about investment in infrastructure, but think about the economic lack that occurs when you do not have those.
In the communities in which most of you live, you have sewers, and you have water. You take it for granted, but, if you did not have those, how many stores would be there? How many shopping centres would be there? It’s probably not too many. So, if you go with the reverse, it gives an impression of what you take for granted, but others may need.
Senator Coyle: And what about the infrastructure institute?
Mr. Daniels: The infrastructure institute is part of the next amendments to the First Nations Fiscal Management Act. We understand that there may be an announcement tomorrow — I don’t have that confirmed yet, but it will be part of the next round of amendments. They will be in place to help communities obtain projects, and get the concepts off of the ground to a place where they can actually do the tendering.
Senator Coyle: Thank you.
Senator LaBoucane-Benson: I will ask a question by going out on a limb and showing how little I know about this area. However, I feel like some of my colleagues may know as little as I do, so I will ask the question.
I’ve been reading the information you sent; I got a letter from you not long ago, and I have been reading your website. It says that you raised financing through the issuance of debentures in a capital market. When I further looked to see what a debenture is, it says it is an “uninsured loan certificate.” I am wondering this: Does the fact that these are uninsured raise the level of risk? I’m not saying that they are not going to be paid back, but is there a risk to your organization and to the communities? Why are they uninsured? Why can’t these loans be insured?
Mr. Berna: Those are great questions. No municipal, provincial or federal debenture is insured. The reason is because there are multiple steps you have to take, including the FNFA, before you can go to investors in the capital markets. These are not steps that we have written. These are steps that have been in place since the 1950s. All parties who want access to investors must accommodate those rules. The rules are as follows: You receive a credit rating — it is similar to having an audit done; you have an auditor general. A credit rating agency is like an auditor who comes in and tells investors the risks and rewards of lending you money. All issuers have them — provinces, Canada and municipalities. Then, you look to the revenue streams that back up the loans, and those are rated. In the FNFA’s case, we leverage provincial agreements and, sometimes, federal agreements with the First Nations.
The provinces have taxing abilities, and the federal government has taxing abilities. The reason we’re able to get a credit rating, and not need insurance, is because the backstops and safeguards of Canada and the provincial governments support the revenue streams upon which we borrow. It is not a private company that is borrowing, which either exists as a company or fails as a company. Provinces in Canada are going to be here for a long time, and the First Nations are going to be here for a long time, so the revenue streams and safeguards make insurance not necessary.
Senator LaBoucane-Benson: That’s great. There are bands around where I live — I’m west of Edmonton — who are very wealthy. I can see them jumping quickly into this opportunity. But there are also bands — not that far away — who are really quite poor, with roads that are completely impassable in the fall and in the spring. How is this set up to ensure that those bands who need it the most are still able to access these kinds of opportunities?
Mr. Daniels: That’s another really good question. I’m going to use the example of British Columbia:
In British Columbia, the provincial government does revenue sharing of gaming. Each First Nation receives a certain portion of it. They do have monies that they can leverage. Some other provinces don’t have that in place. You’re right; in Alberta, there are very wealthy bands. We work with them. There’s a member of our board who is here today from a First Nation in Alberta, and they’re into the oil and gas, so they do have revenue — there are others who don’t.
As far as closing the infrastructure gap, I firmly believe that we can work around some authorities that would allow us to work with those nations directly because money would be coming from the federal government; it wouldn’t be from them.
The second part of that is building the financial management capacity that’s needed. That’s the mandate of our sister organization, the First Nations Financial Management Board. They’re looking at current programs right now with a shared services program that would allow those professionals — who are needed — to help these nations as they work through this.
Mr. Berna: One of our board’s mandates — our board goes back to 2011 when the act was created and the other revenues — was to not create haves and those that have less. There should be a fair playing field, with one rate for all communities — rural, urban, large or small — and one set of rules for all.
In most cases, the door is open. Our largest community has 10,000 members. Our smallest community has 137 members. Sometimes, what differentiates the larger community from the smaller community is the ability to have staff who have the expertise, either in the accounting area, finance area or planning area — areas that provide information to the chief and council for decision making.
In some cases, as Mr. Daniels has mentioned, the revenue sharing from the provinces aren’t what is next door in the other provinces. That’s an inhibitor. The other problem is the staff challenge. We are trying to work on certain measures where staff can be shared — you would work for one community during part of the week, and work for another community during part of the week. You try to build capacity if you can’t do it singularly by communities; it’s shared by communities. The challenge is to not have some left behind.
Senator LaBoucane-Benson: That’s really good to hear. Thank you.
Senator Sorensen: Thank you. My question has actually been answered, but I will make a comment: First of all, I’m meeting with a group of delegates tomorrow morning at some point, so I’ll have another opportunity to discuss this.
My previous job was as a municipal mayor, so my philosophy is to borrow now and build now while the cost of builds is less than it will be down the road, particularly when you’re also creating jobs and improving the economy. And, of course, if interest rates are favourable, I would convince my constituents that we should borrow because it’s fiscally irresponsible not to borrow and build now.
I agree with Senator Arnot; it’s certainly no problem for me to agree to signing a letter to support this. I think it’s an incredible initiative.
Senator Greenwood: Thank you for your presentation. This is not an area that I’m well versed in, so I’ll say that first.
I’m really interested because the communities that I’ve talked to have varied opinions around taxation. I know that one of your opportunities is the authority to enact property taxation. Can you tell me a bit about that? What might that look like? What would be the impact on First Nation communities? Some might do that, and some might not — there could be a variation across this country. Can you tell me a little more about that?
Mr. Daniels: I’ll give you one example, and then Mr. Berna can talk about this as well. I live on the Westbank First Nation reserve in British Columbia. Westbank First Nation is a self-governing First Nation. They actually generate over $20 million a year in property taxes — this is not from their members. Their members are less than $1,000. It’s from non-members living on their lands.
I’m a First Nation, but I’m not a member. I pay property taxes to the Westbank First Nation. In addition to that, there are hundreds of businesses located on their lands. That’s what it is; it’s a property tax on individuals and businesses.
Mr. Berna: Senator Greenwood, each chief and each council makes a decision on the use of their land. Some say, “The land is ours; you’re not coming on it, and we’re going to keep it for our people — no businesses and no outsiders.” There’s no property tax system.
Others say, “We’re going to use our land for economic development, largely the communities that are close to tourist areas with municipalities next door.” They decide to take parts of their land and parcel them out like a municipality would for the construction of neighbourhoods, business licences, et cetera, but it’s a voluntary choice. We do have some communities that do property taxation on a voluntary basis because it helps support infrastructure needs for their members. The majority of our membership don’t do any property taxes — it’s simply not the use of land that they want, but it is a choice by the chief and council respectively.
Senator Greenwood: Thank you for that. I live in Vernon, British Columbia, so I’m really familiar with your territory.
I understand that, but the communities who are not fortunate enough to have a beautiful lake, or a mall — and all of those sorts of things — will never be able to generate the kind of revenue that Westbank First Nation does, for example.
When we’re talking about haves and have-nots — I’m probably thinking way down the road — how do we equalize that? How do we share across these nations? I think about that. Otherwise, if we’re talking about haves and have-nots — those that have geographic locales — it’s very different across this country. You think of rural and remote communities that you can hardly get to; will they ever have that opportunity?
Mr. Daniels: In order for First Nation governments to really advance themselves, they need a revenue stream. In our case, I think our sister organization is working on the First Nations Tax Commission. They’re asking the federal government to share some revenue, whether it’s gaming revenue or from the provinces, as well as tobacco sales and sales tax revenues — those types of things where you get a steady stream of revenue that would help First Nations leverage that. It’s a sharing of revenue. It’s in one of the articles of the United Nations Declaration on the Rights of Indigenous Peoples, or UNDRIP, that the state is urged to share revenues with Indigenous groups and people. We need that, whether it’s a resource tax or other types of tax that are implemented and put in place, or existing.
Mr. Berna: Since you live in the beautiful city of Vernon, you’re probably aware that the B.C. government — I still don’t know if they were the only one that passed UNDRIP. What came out of that was a 20-year agreement where every First Nation community in B.C. would get a share of a $2-billion program. They would each have a minimum amount of $250,000, bumped up by their population, and bumped up further whether they were remote or rural. The monies came from gaming: Lotto 6/49, Lotto Max, racetrack betting, casinos, et cetera. Once they passed UNDRIP, they then thought that revenue sharing was an obligation, a right and the correct thing to do.
To date, I don’t know of another province — maybe I’m wrong — that has passed UNDRIP, but it was a reconciliation in starting to share revenues. Some communities now leverage the amounts they receive under the 20-year sharing agreement with us for some projects, but it’s a start; it’s not the end result. As Mr. Daniels said, more revenue sharing is needed because chiefs and councils can prioritize community needs, and have the ability to borrow and leverage to meet those needs.
The Chair: I have a quick question before proceeding to Senator Audette.
There are roughly 642 First Nations across Canada. How many of them work with the FNFA, and what are the types of projects?
Mr. Daniels: The First Nations Fiscal Management Act is voluntary. First Nations request to work under the act. It’s an order-in-council that has to happen.
There are 345 First Nations scheduled under the act. Over 200 of them have gone through the First Nations Financial Management Board process and have become certified — and there are 151 right now that are working with the FNFA. There is always a lag between the three numbers. Eventually, we hope to have a majority of the First Nations. We have over half now.
The Chair: In what ways do you work with them? Do you have any examples?
Mr. Daniels: We assist in terms of looking at what revenues they have available to borrow. We also help them look at investments, if they have cash available for investing. We provide advisory services, debt restructuring and debt management — those types of things.
Mr. Berna: For those who worked on council at a municipality, or at the provincial level, planning is key. But you can’t plan if you don’t know what your capacity is to borrow in order to meet those planning needs.
Mr. Daniels said that there are 151 First Nations that have completed the process. There’s another 50 waiting to come into the fold. We’re not subject to freedom of information, so we work with them confidentially to review their revenue-sharing contracts, and provide the chief and council with a borrowing capacity letter. That letter says, “Based upon the revenue streams that you have, back off of the commitments against those revenue streams. This is the amount of money that you, as a community, can borrow from the FNFA, and we stand behind it.” When they have that in hand, it’s a pretty simple process to take a look at their community priorities — the cost of those priorities — and prioritize what they would like to borrow in order to start meeting them. The problem is that there are not enough revenues to make the borrowing capacity large enough to cover all of the needs, and that’s why the infrastructure gap is there.
We’ve done schools, health centres and communities that now have hydro projects, wind farms and solar projects. We’ve done elder care centres, youth centres, administrative centres and multi-purpose centres — everything that you would say is necessary for a community. We’ve done housing — stuff that you would recognize. There are simply not enough own-source revenues to bring the gap down. It’s growing, not falling.
Ms. Anderson: A couple of senators have mentioned the haves and have-nots. The foundation of this regime has been to focus on building capacity within our First Nations across Canada.
One of the things that we heard from our nations — while we were creating this piece of legislation — was, “We need to increase the capacity. We don’t want people coming into the nation, doing work and just leaving. We want to learn. We want to have the ability to manage our own finances and allow for autonomy.”
Through this piece of legislation and the institutions, we have become the most successful sectoral governance agreement in Canada to date. We work with the nations to build capacity, and it doesn’t matter the size of their community. We have a number of communities that vary in size, as Mr. Berna mentioned. We work with them to increase both their governance processes and policies, as well as improve their financial rigour.
We talk about safeguards that we have in place. This is not just a regime for the communities that happen to be situated adjacent to a winery or these beautiful places. We certainly have a lot of smaller, more remote communities that have benefited greatly from using this regime. This can allow communities to move forward by doing things like coming off of diesel and participating in renewable energy projects, which also greatly benefit the communities. Meegwetch.
The Chair: Thank you for that.
[Translation]
Senator Audette: I’m going to give you a little exercise. As we speak, in Gatineau, on the territory of the Anishinaabe people, the chiefs of the First Nations and all the mayors of the Quebec municipalities are meeting. For three years, we have been talking about economic reconciliation. Now, in my heart, it is also an economic certainty because we want to get out of poverty and dependence on the federal government.
I know we talked about this earlier, but I think my colleagues could be reassured to know that the regions that have less capacity, such as my magnificent nation, will have a national wind project. There are people far from this community, who are part of the nation, who will benefit. The Innu will not work in all sectors. Talented people from Quebec, Canada or other countries will, because we do not have the expertise.
Can you explain to me the relationships you have with universities, or partnerships with colleges, or tell us how you nurture this up-and-coming generation from one region to another?
In closing, I want to commend the women leaders who serve on this board. I salute their courage.
[English]
Mr. Daniels: Thank you for that question. It’s a really important question.
That is not in the mandate of the FNFA at this point in time. It’s in the mandate of our sister institution, the First Nations Financial Management Board. In a previous life, I was the president and CEO of the Aboriginal Financial Officers Association, or AFOA, a successful not-for-profit organization. The mandate of that organization was to build up the capacity of the individual Aboriginal finance managers. It’s been a very successful program to date.
We talk to our communities about all kinds of capacity issues, and we recommend certain things. As I mentioned before, we try to provide advice on debt restructuring because we don’t want to see a First Nation over-leverage. It’s not a good thing for them — it’s not a good thing for us either — or for their membership in general. I’ll ask Ms. Anderson to speak about that; Ms. Anderson and I worked together at the AFOA, and we’re still working together today. We enjoy each other’s company.
Ms. Anderson: Thank you, Mr. Daniels, and thank you for the question, Senator Audette.
We strongly believe in and encourage continuing education. We continue to encourage our communities to achieve a certain level of certification through our sister institution, which continuously improves the outcomes of the nation.
We also believe in providing autonomy and power back to the nation, and allowing the chief and council to make those decisions for its communities as opposed to mandating what we think they should do. Many of our communities have experienced that for many years. Our approach is to return that self-determination and autonomy back to the communities. We will happily support and encourage them to obtain those certifications, but we don’t prescribe them or mandate them. We allow the chief and council to decide what is best for their own community members.
Senator Tannas: It’s nice to see you all. Let me start by saying that you and the First Nations Financial Management Board are the vanguard of the new wave of Indigenous-led institutions. The more that we can get Indigenous-led institutions in place in all of the key areas — in every meeting, it seems that we are talking to somebody who is talking about what we really need in this space. In our last meeting, it was an Indigenous-led institution that will provide resources and expertise — and all of the common things that all other governments have — for First Nations governments as they work in their own communities to deal with things. I want to congratulate you. I know that you know that I am a huge supporter of your organization.
I would like to double-check a few things: Maybe there are a number of new people here. I have been on the committee for 10 years. I remember us here, and over coffee, talking about what we could do if we could get a generous government in place. And here we are now, a number of years later, and there are opportunities. We have come a long way, but we could go much further. Let me take it one step at a time.
My understanding — and you can confirm this, or tell me that it has changed — is that the first step in accessing public investors and issuing bonds is to be certified by the First Nations Financial Management Board. The certification process involves governance — looking at the governance of a community, in addition to its fiscal management practices, and whether they are formal or informal, as well as whether they are weak or strong. That process takes place, and they are either certified or presented with a list of deficiencies that they have to fix. In many cases, the board will help them fix it. That is still the program, right?
Mr. Daniels: That’s correct.
Senator Tannas: Then, they come to you, and you do your assessment like bankers do if, for example, a couple was going to buy a house. You work backwards, and ask, “How much extra money do you have beyond your obligations, and how much could that mean in terms of monthly payments? That drives out a number that you could borrow.” You have gone, in the time that I have been here, from $100 million — and that sounded astronomical — to $2 billion. That is great.
When you are looking at the capacity of a community, you are really looking at what revenue streams they have outside of core funding. You are not saying that they are going to take a piece of their education money, and hive that off on an annual basis for the next 30 years in order to pay for something. This is outside of core funding, and it is what I always heard was called “own-source revenue.” That could be gaming revenue if it is shared, or if you have your own gaming facilities — or it could be tobacco, or resource revenue sharing. If we can get resource development going again, it could be resource revenue sharing. If we were really fair-minded, it would be resource revenue sharing of resources that are already approved and being monetized as we speak.
There’s property tax for those who have some ability to attract people to come and live in the area, like Westbank — I took my family to the shores of Lake Okanagan many times. I enjoyed everything that is in Westbank. But, as somebody said, not everybody has that. All of that is still the case.
What you are now proposing is this — and we talked about this, as I remember, as a way to take a miserly amount of annual capital budget, and ask how we can, in this age of low interest rates, carve out a portion of that — and you would commit annually to that amount to make the payments so that we would actually be taking the government’s money now and adding it to own-source revenue.
The question that I have is twofold: When we do that, there is a commitment that goes on for a really long time. It outlasts any government. It becomes an obligation that has to go beyond the mandate of the government. So if there was a cut that needed to happen in capital spending, they would still have to make that amount. Theoretically, you could cut all the way down to zero if we really got going. We could say, “Well, we cannot really cut to zero on anything because we have all of these payments for the next 30 years that we said we were going to make on behalf of folks who needed something now, and we are going to borrow the money.”
I can see a situation where non-certified folks start saying, “The pool for us — because we’ve chosen not to be certified and not to borrow the money — the capital budget is now less because of this.” How do you reconcile that? We talked about this before, where we would say, “Your capital spend is $2 billion. Drop it to $1.8 billion, and go allocate that, and give $200 million in a program to support borrowing, as you said, because it will help.” What I thought we were going to do with it was invest it in money-making projects — to some degree — so that the own-source revenue got developed.
We’re now on infrastructure, which is dead money; it is dead spending. Although, with housing, there are rents, but not everyone pays rents. We have heard that there are a lot of communities where people believe that the community needs to provide housing, and that it is a treaty right that they do not pay rent. So that is not always going to be the case.
How do you answer the question of whether we are grinding against that budget with the risk that we’re actually excluding the people who need it the most? This is opposed to the idea of generating own-source revenue where, at some point, you start making your own payments because you’ve created some infrastructure that would make your payments, or you have created a project that is going to help make the payments. Could you cover that for me? I am sorry it was a long-winded question.
Mr. Daniels: It’s a really good question, and one that we get asked a lot. In order for First Nations to generate wealth and create economic activity, they need a revenue stream. That has to be the starting point, and not all First Nations have that ability. Creating those economic development opportunities in some areas is going to be very difficult. That’s why we were talking about a revenue-sharing approach through whatever means.
Two budgets ago, they made a provision to allow First Nations to use GST rebates as a revenue source to leverage money. Before, it wasn’t allowed because the GST was at 7%, and it went to 5%. If future governments ever decided to lower it or raise it, then you have a problem if you have debt outstanding, and you do not have enough revenues to support that. That is available now — every First Nation has the opportunity to establish the First Nation GST regime.
What we need is more of those types of revenues so that First Nations have a steady source of revenue that they can rely upon to leverage in order to get into those economic activities — and to generate revenues — so that they can actually start building infrastructure. That is what is going on right now with First Nations that we have lent money to. Those who have the ability are using that to build infrastructure.
One other source of revenue is that — in different provinces — there are opportunities for green energy projects. Provincial governments have long-term contracts with these First Nations. They generate additional revenues that they are actually putting back into infrastructure, such as a daycare centre, an elders’ complex, et cetera.
I hope I’m not getting off the topic of your question. One of the things that I firmly believe is that infrastructure is a precursor to economic development. We need infrastructure in place, whether it is tourism or anything else where a First Nation needs to generate revenue.
For instance, Membertou managed to build a road. There was a ring road that used to go around their First Nation, and they managed to build a highway overpass and a road to their community; as a result, it took less time to get to the hospital, even for the community of Sydney. Membertou built infrastructure on that road for doctors’ offices and other things. That is an example of a First Nation using revenues — that they had from a revenue-sharing agreement through gaming — to create these opportunities. That is what needs to happen. There needs to be a revenue stream in order for that to happen.
In the infrastructure gap, a lot of First Nations — because it is such a large number. It’s dead money, like you said. The federal government can’t possibly close this gap right now without some sort of solution. That is why we’re here. There needs to be federal government money involved in trying to close this infrastructure gap and monetize it. To ensure that the have-not First Nations participate, we need to look at other mechanisms within the government, and how they operate in this structured funding environment in order to allow for those types of things to happen, including the authorities that allow us to work directly with those nations.
Senator Tannas: Thank you.
Senator Hartling: Thank you to all of the guests for being here. It is nice to see such a wonderful crowd of people. I want to say that your expertise, your leadership and your commitment to this is very impressive. You certainly have my support.
Mr. Berna, I really liked when you brought us into the reality of what it would be like for us, thinking about waking up without water or heat — all of those things. For us, when we have a power outage in Atlantic Canada for a day, we can hardly cope with it, so I can’t imagine living day to day in that manner; that is very stressful.
I also appreciated when you said that you have people at the ready to do the work, to do the building, because a lot of places now don’t have the labour to do that kind of work. It sounds like you are ready, and you are planning. I really appreciate the various infrastructures that you have mentioned. You have talked about schools, housing, nursing homes, water and even the internet for the children to have at school.
I guess that money is definitely essential here, but I want to ask you this: What are the impacts on people when they don’t have their needs met? What is happening to people? You are bringing us hope here for something that can change this. What are some of those impacts?
Mr. Daniels: I will start out, and then ask Ms. Anderson to finish off. The social impacts would be tenfold compared to what we’re facing today. There is overcrowding in houses. I cannot imagine that happening myself. I’m lucky; I live on a good reserve that provides all of that. We had a power outage because they were changing some electrical thing, and it was difficult to actually live without electricity — something that we take for granted every day.
For me, right now, our communities are facing social impacts as a result of the lack of modern infrastructure, such as housing, water, health services, you name it. We are seeing it right now. It is here. It is every day. In education, we have low graduation rates, which puts our children behind. I will ask Ms. Anderson to add to that.
Ms. Anderson: Thank you, Mr. Daniels. I spoke earlier about children not having the ability to attend school. Recently, as I mentioned, we have gone through a pandemic where, for over a year, a lot of our children were forced to attend classes online. In some of our communities, our children did not have the ability to attend classes, so, by default, they fell behind in a world where they’re already struggling.
If we talk about it from a health perspective, you and I have clean drinking water right in front of us. Families don’t always have that. Recently, I spoke with a woman who lived in a three-bedroom bungalow, but there were 27 other people living in that home. Not having access to clean drinking water means laundry and linens cannot be cleaned — things that we take for granted on a regular basis. That leads to other health challenges. We’re talking about mould-infested homes where breathing difficulties and asthma become the reality in a lot of people’s lives.
Quite honestly — you mentioned it, senator — this is about creating hope, and showing our children that a lot of hope exists, and we can create beautiful things for our communities.
We believe that we have a very sustainable solution wherein we can now offer a hand to the federal government to help close this gap. We are confident in our ability to execute how we can provide loans and build infrastructure, allowing our own people to talk about the types of things that they would like to see in their communities as opposed to being told what they need in their communities. We believe that is a very powerful tool.
Earlier today in a meeting, I heard about when we have our people employed, and have the ability to build these homes — if you’re building your auntie’s home, you are going to do an incredible job to make sure she has the very best and a good job is done. We take pride in the things that we do, such as the schools that we build that reflect our culture.
When we don’t have these things, it is a constant state of feeling like we’re not deserving when, in fact, we are. Our communities and our elders deserve the very best. Our children deserve the very best — not just today, but for generations to come.
Mr. Berna: I would like to clarify this: If you kindly give us a support letter, what we’re talking about is not pulling money out of the current capital budget; we are asking for a new line in the budget that would complement the current $2 billion — not take away from it. We’re not trying to create problems. We’re asking for a new line in the budget that could be amended going forward, but it would add to the existing amount there — not take away and cause harm.
The Chair: Thank you for that. The time for this panel is now complete. I wish to thank our witnesses for testifying this evening.
(The committee continued in camera.)