[Recorded by Electronic Apparatus]
Monday, October 28, 1996
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[English]
The Acting Chairman (Mr. Bélair): I call the meeting to order. Good morning, ladies and gentlemen and colleagues. It's a pleasure for us to be in Yellowknife today to hear what our witnesses have to say for the betterment of their community as well as this very beautiful region of Canada.
Without further ado, I'm going to ask Mr. Schmidt, manager of the Inuvialuit Regional Corporation, to take a chair.
The format will be half an hour for each witness. The first two briefs are fairly long and would probably take almost the full half hour. It is up to the witnesses if they want to read their briefs or give a summary to allow for questions that the members will want to ask you, given that it's not a very familiar region for most of us.
The floor is yours, sir.
Mr. Patrick Schmidt (Manager, Inuvialuit Regional Corporation): Thank you, Mr. Chair. I will read a summary of the brief I have provided to you.
Hon. members, associate members and research staff, the Inuvialuit Regional Corporation would like to thank the standing committee for its invitation to express the Inuvialuit interest and concerns regarding natural resources and rural economic development.
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During this presentation I hope to outline the following: the Inuvialuit land claim agreement with respect to natural resources management and economic measures, the economic conditions of the settlement region, the natural resources of Inuvialuit, impediments to economic development within the region, and which steps in government policy will assist in overcoming these impediments.
The Inuvialuit are the Inuit of the western Arctic, consisting of the six communities of Inuvik, Aklavik, Tuktoyaktuk, Sachs Harbour, Paulatuk and Holman. The Inuvialuit population is approximately 5,000.
In order to effectively discuss rural economic development or natural resource development, we must first recognize the institutions and regulatory bodies associated with the land claim agreement of 1984. The land claim agreement laid out land and wildlife management procedures, land title, financial compensation and economic measures for the Inuvialuit. The essential goal of the agreement was to preserve the Inuvialuit cultural identity and values within the changing northern society, to enable the Inuvialuit to be equal and meaningful participants in the northern and national economy and society, and to protect and preserve Arctic wildlife and environmental and biological productivity.
In essence the Inuvialuit agreement granted 35,000 square miles of land with 5,000 square miles of subsurface rights and $170 million in financial compensation, implemented a series of environmental screening systems, and developed a joint management system for wildlife resources within the Inuvialuit settlement region.
There was also an economic measures component of the claim that tried to meet the goals of the Inuvialuit in economic development. They are specifically that the Inuvialuit are committed to full participation in the northern Canadian economy, and to Inuvialuit integration into Canadian society through the development of an adequate level of economic self-reliance and a solid economic base.
The government assumes certain obligations with the claim such as economic planning, general access to government programs and notification of Inuvialuit activities within the region. These have been important to the Inuvialuit given economic conditions.
The economic condition within the settlement has been a series of boom and bust, with trapping, whaling, petroleum, the military presence and now a decline in government administration. Many Inuvialuit are now looking to the land claim organizations to lead them out of the present economic condition.
With the decline in the economy the economic conditions are very poor. Despite the significant land claim, the ISR, the Inuvialuit settlement region, remains one of the most economically depressed areas of Canada. Unemployment amongst the Inuvialuit in the six communities ranges from 32% to 59%, with the aboriginal unemployment rate for the Inuvialuit in excess of 40%. Social assistance registrations are noteworthy. Within the six communities social assistance recipients represent 10% to 25% of the population within the community. The economy is further stifled by the high cost of living, which inhibits the ability for local investment. The cost of living in the settlement region ranges from 1.65 to 2.1 times higher than in Edmonton. Food prices alone are 20% to 80% higher than in Yellowknife. Besides the cost of living, transportation and communications are higher in cost and inferior in quality. Further, the cost of electricity is four times higher than in Calgary, for example.
As you can see, there are significant barriers to economic growth. This is unfortunate given the tremendous resource potential within the region. The Inuvialuit have control over the wildlife resources within their region, which are world-class pelts and furs such as muskrat and fox, the single largest supply of musk ox, and control over game for sport hunting in the region.
Besides wildlife resources, there is a tremendous amount of petroleum potential still in the Beaufort Delta region. It's estimated that the Mackenzie Delta and Beaufort Sea has 1,112 million cubic metres of oil and 1,918 billion cubic metres of gas. By comparison, the Norman Wells oilfield, which is the economic engine for Norman Wells and has been active for decades, provides approximately 10,000 cubic metres of oil per year to southern markets. Unfortunately, it is anticipated that the high cost of removing this petroleum resource will inhibit any petroleum development in the region probably for the next ten to fifteen years.
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Tourism also has a lot of potential in the settlement region, given the natural beauty and the colourful culture of the Inuvialuit and Gwich'in.
Mining is looked at as a great panacea for the south territories, but the potential in the settlement region is limited right now. Further, with the high cost of transportation, it may be some time before we see a mine in the settlement region.
Finally, there are cultural resources. They're not generally recognized as normal natural resources, but the ability of the Inuvialuit to live off the land should be recognized as a strong natural resource.
Why aren't these resources developing? There are tremendous impediments to development. The number one impediment is the lack of experienced management and skilled labour within the region. The educational levels within the aboriginal population in the Northwest Territories, including the Inuvialuit, are the most critical factor preventing development. While the national average of those attending high school between the ages of 15 and 18 was 85%, NWT fell significantly behind with 16% below the national average at 69%. For the Inuvialuit population the situation is worse. It's estimated that the Inuvialuit have the highest unemployment rate in the country. It will be impossible for the Inuvialuit to achieve a competitive northern economy without drastic improvements the education levels in the coming decades.
In terms of transportation, it's generally intermittent and costly. A flight within the settlement region can be as much as $700.
As I previously mentioned, the cost of energy can be as much as four times higher than in Calgary.
For entrepreneurs living in the region there is a limited market. There are only approximately 10,000 people in the region to whom the entrepreneur can sell a product. To expound on this, there is also limited access to southern markets.
One of the key things in developing the settlement resources is the limited research and development funnelled into the north. There is research and development, but it's not driven by northern organizations. It's often southern universities that have a mandate to come up and perform some type of research.
There is very limited access to information for strategic planning. Unlike the south, where you have a Statistics Canada library or a business service centre, the Inuvik region doesn't have that.
What should the government do to meet these goals? I guess the first thing is education development. There has to be a focus on multi-year business programs. There has to be a focus on multi-year vocational development programs directly linked to employment opportunities within the region. Too often training and education are tied to one fiscal year, while the development of the human capacity may take a few years.
There has to be a focus on northern and culturally relevant pedagogy for business development. There has to be a focus on making a globally rather than regionally or territorially competitive workforce. Setting training and education programs without a global benchmark is to entrench a protectionist attitude in the population, restrict mobility and further set back development.
The next big thing is to have the government provide better access to information. This is critical for any type of planning or business development.
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The third thing is to provide some type of rule or natural resource research and development that's directed from the north. There are a lot of products that need the direction, and it's costly. The lack of universities or educational institutions that can do the research in the north inhibits that.
Finally, any government pressure to ensure that the existing transportation infrastructure remains is important. There's a lot of talk right now of shutting down the Dempster Highway, which is the main artery to the Inuvialuit region. It is critical that this doesn't occur.
The Inuvialuit claim retains significant control over the resources in the region. Development of these natural resources will require government to provide policies suited to this development of the levers of economic growth.
Once again, thank you very much for allowing the Inuvialuit to make this presentation.
The Acting Chairman (Mr. Bélair): Mr. Asselin.
[Translation]
Mr. Asselin (Charlevoix): First of all, I want to thank the witness who just made a presentation. He very clearly showed us what the problem is in terms of educating and training the work force, and how we could end up with a poorly-qualified and very expensive work force and with underdeveloped employment.
Could you clarify the basic problem and tell me how the federal government could help you with the education aspect? I believe we could probably help you deal with that issue, but we would have to start with the fundamentals. How should education, manpower training and vocational development be driven, so that we create sustainable jobs in this rural environment?
[English]
Mr. Schmidt: The present institution in the region is known as Aurora College. This is part of the network in the western territories. Aurora College takes the first step in providing locally based education to the Inuvialuit, and that should be commended. Unfortunately, the only program offered at Aurora College that is not year to year is the recreation leadership program.
If stable financial resources could be provided to an institution like Aurora College to ensure program delivery year after year on a five-year strategy, I think that would be the first and critical step in this type of development. This also ties into a northern pedagogy for actually developing the training programs. Most of the curriculum is southern-based and ill-suited for the north. It's critical that the Inuvialuit are able to have a say in how programs are delivered and develop a curriculum that better allows them to learn.
[Translation]
Mr. Asselin: The witness told us that there are important mining and oil resources that could be developed in the Northwest Territories. The problem is that governments did not invest where they should have to create sustainable jobs and develop the Northwest Territories.
Do you think the federal government should focus its financial assistance mainly on research and then, develop an international market for the mining and oil resources that can be found in the region?
[English]
Mr. Schmidt: In terms of developing markets I don't know. Given the products currently held by the Inuvialuit, such as petroleum resources, this strong world commodity factor - you can't disregard the fact that oil is $20 or $40 a barrel. If that's what the world demand is, you have to live with that. I don't know if the federal government could change that.
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What could be changed, though, is research and development into extracting the resources from the ground. The problem with the Inuvialuit development region isn't a lack of resources; it's the cost for removing the resources.
To touch on a similar example of research, there are 85,000 musk ox on Banks Island. For years the Inuvialuit have invested in trying to develop this. A strategy of actually developing the product is required. It is costly but it would salvage a whole community. This may be in things such as developing jerkies for loin meat cuts or in developing the wool off the musk ox, which is high in cashmere.
So there are products. They have to meet the world commodity prices, but the research into lowering the production costs is critical.
The Acting Chairman (Mr. Bélair): Mrs. Cowling.
Mrs. Cowling (Dauphin - Swan River): Good morning, Mr. Schmidt. I certainly enjoyed your presentation.
As you know, at the federal government level we are creating a climate for economic growth and jobs and we've also had to set some priorities. As we're in the north, could you tell our committee, if you wanted to send a very clear message to our government, what in fact that message would be. If you had to set a priority for the north - you've indicated there are barriers to growth and what not - if you wanted to send back with this committee what we should be doing as the government, what would that priority be?
Mr. Schmidt: You're asking me for a single priority when things like research and development, information services and education are inextricably linked to each other. You can't have research and development and a void of educational development. If the Inuvialuit are to become the researchers, they're going to need the educational development.
I would say education is probably the number one priority for economic development of the Inuvialuit. In order to direct appropriate resources there, options such as block funding are probably important, because to tie funding into one specific program makes it difficult for the Inuvialuit to set up training and education programs.
To give you an example, there's Aulavik National Park in the settlement region. One of the things the Inuvialuit hope to do is to train a series of guides to take people down the river. This would potentially provide employment for five to six Inuvialuit yearly, which is a significant number given the small population. Government programs right now don't recognize that it takes maybe three to five years for a guide to become fully qualified and that in order to become fully qualified this guide may have to work in conjunction with a corporation or another guiding company on a very informal basis for a number of years.
Mrs. Cowling: I have another question and it's with respect to education. One of the things happening in Canada right now is that the information highway is bringing technology to rural areas of the country. I'm wondering what you think of the possibility of access to that type of thing and if you think it is possible to have it in the north.
Mr. Schmidt: Inuvik currently has Internet access. Actually, it's the fastest rate in the territory is in terms of speed. The thing is it has to be acknowledged that information technologies have limitations as well. They can become costly.
Go into Statistics Canada and you'll recognize it once you get in. It's hard to manoeuvre, it's hard to find, and it's costly because you have to pay a price for it. It's not the same as walking into a physical library. There is a difference. I may be able to find out where the information is on the information highway, but to actually obtain it is difficult.
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To give you an example of something we've worked on in our region, we took the entire library at the Department of Economic Development and Tourism and scanned it onto CD to distribute to our communities. This is very important. They have all the 2,000 documents now on CD. It's going to be there immediately. The full document is there. It's not an index to a document that's in a southern library that you have to put in a request for.
As you're probably well aware, to do research sometimes requires hours in the library. You don't know what you're looking for sometimes and it just happens to pop out after you've sifted through the information. The information highway doesn't always provide that ability, and it has to be recognized.
The Chairman: Mr. Wood.
Mr. Wood (Nipissing): Thank you, Mr. Chairman.
Mr. Schmidt, you were talking about some of the entrepreneurs in your area.
I think in a lot of cases - and correct me if I'm wrong - they run into a lot of problems. They can go to a lending institute and the first thing they're asked is to show their business plan. Most of them become so intimidated since they're unprepared and they just walk away and forget it.
Having capital available, I guess, for small businesses is probably admirable, and in many cases those people really need it. As I said, they don't know how to go about getting it.
As manager of the regional corporation, what have you done or what do you maybe plan to do to simplify the process for these business people in your area to access capital so they can develop their own business? Do you work really closely with these people?
Mr. Schmidt: Very closely. It's actually my primary job at the Inuvialuit Regional Corporation to assist potential entrepreneurs, and generally you know when they come in the door if they have the skill levels associated with the task.
After working with government through agencies like Aboriginal Business Canada, we've become very well linked up to access capital for them. So in effect if an entrepreneur comes in, I'll sit down with him and we may work for a week developing a business plan together. With that business plan he will go to seek financial assistance, either in grants or in loans.
Mr. Wood: How successful are they? What kind of a success rate do you have?
Mr. Schmidt: It's actually quite high. I'd say it's about 70% plus.
Mr. Wood: Are some of the federal environmental policies and native land claims affecting the economic development prospects?
Mr. Schmidt: Within the Inuvialuit region, if they are, I would think it's more in the mindset of southern Canada. The Inuvialuit is the first comprehensive land claim in Canada, and the Inuvialuit have demonstrated incredible leadership in resource development.
The Inuvialuit will put in a concerted effort to ensure resources are developed within the region. At the same time, with the claims developing in the southern region here, such as the Dogrib claim, a lot of southern Canadian companies believe that mixing up with the land claim group just hits red tape. I don't think that's true for the Inuvialuit. They do have their screening processes to protect the environment, but by no means will they impede it if it's not environmentally damaging.
Mr. Wood: You talked about the boom and bust cycle. I'd like to talk about tourism for a second - and you just touched a bit on the environmental protection. How do they work with your group? Is there a problem with the tourism industry because of their environmental protection policy? Is that contrary to some of the interests of your group? Is there friction between the two?
Mr. Schmidt: A series of local councils is set up - they're called hunters and trappers committees - in each one of the communities. They approve a guide for taking people out. With things like sports hunting, it's the local HTC that provides the tag to the individual hunter or guide taking people out.
So they're linked in a way so that there is no friction. If there is, there's a legitimate reason why a hunters and trappers committee doesn't want a particular guide to to take people out through ecotourism. It's a developing industry, and it's quite fascinating to see it develop. The nice thing about tourism is that it really distributes the wealth among the Inuvialuit.
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Mr. Wood: So these people go out and monitor it themselves, do they?
Mr. Schmidt: Yes. A number of guiding programs being taught in the territories are being used right now by the Inuvialuit.
Mr. Serré (Timiskaming - French River): By reading through your brief, I see that the vast majority of jobs in this area are resource based or, more specifically, wildlife based. We see that 30% of all jobs relate to fur harvesting alone, and if you add up the tourism jobs because of fishing and hunting, you seem to be very, very dependent on wildlife.
As you mentioned in your brief a couple of times, there is a world movement against trapping, against fur harvesting, against hunting, and now against fishing. Unfortunately, that also seems to be the case in some of our urban centres in Canada. The federal government has tried to conquer that in the EEC, and we're putting a lot of pressure on it, but it seems we're not getting anywhere. Would you feel it would be of any help to have the aboriginal communities, not only from this region but also from across the country, work actively with the EEC to try to counter that movement?
Mr. Schmidt: Absolutely. It's actually occurring right now. There have been a number of campaigns out of the Northwest Territories. The former premier of the territories is a strong advocate for the fur industry. Unfortunately, the number of dollars being put into countering the anti-fur lobby are limited versus this large economic community of Europe. How do you compete with this enormous body, with celebrities condemning the use of furs?
It's been interesting in Canada. I find it very ironic. A very damaging product in the world today is automobiles. We've had automobiles only for 100 years, but if you asked people to give them up, they'd say ``no way''. Furs have been around in the Canadian economy for 400 years. They're much more rooted in the aboriginal culture. But trying to sell them to Europe is very difficult and it's costly. Maybe the federal government could offer some type of assistance or put greater pressure on Europe to ensure the comeback of the industry. I am hopeful; this year is the first year in which fur prices have started to rise again.
Mr. Serré: I have one quick question: do you think the new gun control regulations are an impediment to economic development in the territories?
Mr. Schmidt: I'm not sure. I would say they are for the average hunter and trapper in the territories. They've lived with guns for years, and to suddenly impose regulations upon them is unjust.
Mr. Serré: Thank you.
The Acting Chairman (Mr. Bélair): Mr. Schmidt, do you have a closing statement?
Mr. Schmidt: No, actually I don't. Thank you very much for your time.
The Acting Chairman (Mr. Bélair): We also thank you very much.
I call upon Mr. McLeod of the Government of the Northwest Territories.
I'm being told you are actually Mr. Singer. Are you a baritone or a tenor?
Mr. Gary Singer (Director, Strategic Planning, Government of the Northwest Territories): I'm a tenor...baritone. It's the weather.
The Acting Chairman (Mr. Bélair): The floor is yours, sir.
Mr. Singer: Thank you very much for the opportunity to make this presentation. I'll highlight some of the points in the presentation, rather than reading through it. I'd rather deal with the questions and explore some of the issues in greater depth as we get to them.
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First, with an economic overview, as Mr. Schmidt alluded to, the Northwest Territories has operated in a boom and bust cycle. In the 1980s we had the fastest rates of growth, but that growth wasn't spread evenly among the communities. Jobs were being created in larger centres. For example, the NWT's five largest communities accounted for 55% of the population growth between 1986 and 1991. The remaining 40 communities, with less than a population of 750, accounted for only 20% of the growth over the same period, reflecting the nature of the jobs being created and the economic concentration in larger centres where the markets were.
While our population continues to grow at one of the fastest rates in Canada, job creation has slowed. Between 1986 and 1994 the economy created over 6,000 new jobs, but that was 2,000 less than the labour force increase of almost 8,000. Unemployment has therefore been increasing and could exceed 20% by the turn of the century unless new investment and job creation occur. As Mr. Schmidt said, there are some communities where that's far exceeded - the smaller communities, especially.
In the past people used to come to the NWT looking for work; now, more people leave than enter. While the economy has slowed, more and more people want wage employment. So there's been a shift from the traditional to more of a wage economy. Participation rates have gone from 58% to 70% in recent years, and the largest portion of this increase originated within the aboriginal population.
During the 1970s and 1980s most new jobs were created in mining and government. Over the past five years these two sectors have created relatively few new jobs. The recent BHP development will hopefully reverse this trend for the mining sector. The outlook for the government sector continues to be one of restraint. I think the mineral sector has the greatest potential for creating the jobs and investment to a scale that will significantly affect unemployment.
Other natural resources - fisheries, fur, and wildlife - are small in comparison when measured in economic terms. However, we look at it more in terms of the imputed value of wildlife harvesting that comes with trapping and commercial and domestic use of game meat and fish; that imputed value is nearly $50 million, which is near the tourism industry in terms of economic value. Although it may not appear to be significant in dollar terms, it's a lifestyle and a hidden value we recognize and support.
As mentioned, trapping has been severely affected. Fur sales have declined from $6 million in 1986 to just over $1 million in 1993-94. We have been involved in joint efforts with the federal government to counter the EEC proposed ban, and further work towards that would be beneficial.
In terms of possible mechanisms to facilitate growth, the NWT has limited infrastructure and that restricts access to resources. There are a number of significant mineral deposits north of Yellowknife but no real corridor to access them. In the past we had communities such as Pine Point, which was a single-industry town that came and closed down. It did leave behind some significant infrastructure that carries on to benefit the remaining communities such as Hay River and the western territories in terms of providing a jumping-off point for the rail-to-barge, for example.
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In terms of renewable resource development in forestry, fisheries and wildlife harvesting areas, programs such as the Canada-NWT economic development agreement were of great assistance in the development of infrastructure such as docks or the abattoir facility in Hay River, which couldn't economically be done by the private sector. There was also a study element in terms of inventorying resources that allowed for sustainable use, or the plans to be made for it.
So such a replacement agreement would greatly contribute to our ability to carry on with development in those areas.
We found that there was a question of access to lands and land claims. The resolution of claims has given aboriginal groups the opportunity to participate as partners in development. It has helped in firming up the situation regarding exploration and development.
Further, in terms of devolution and mining oil and gas, we have been pursuing devolution of these responsibilities to the territorial government from the federal government. It would allow us to encourage responsible development of our resources for the benefit of northerners and Canada as a whole. We feel this is an important initiative to help us take control of the resources there and to develop them in a manner that provides maximum benefit. It's a similar case for devolution of federal fisheries responsibilities.
In terms of an issue of the value added, our historic trend with any large-scale development has been that our imports increase as dramatically with any boom that happens. Exploration in the Beaufort Sea, for example, brought in millions of dollars, but if you looked at our accounts you'd see an equal boom in imports. So we weren't adding a lot of value. The effects were quite localized. The recent impact benefit agreements with, say, BHP, looked to maximize both the business spin-off opportunities and the employment aspects.
In terms of government purchasing, we promote a business incentive policy we have. We are proposing a manufacturing incentive for northern businesses as a stimulus to northern business. It has been effective in that our service sector has been growing in the territories, but we need that mineral base to maintain growth.
Education and training was mentioned as well. This is a key element. Our Ministry of Education, Culture and Employment will be proposing a labour force development plan in the near future. That covers the complete range of in-school education to skills training specifically for mineral development opportunities, for example, and also incorporates the income support reform initiatives in terms of welfare recipients and training and attempts to get people into productive work.
Over the years we have been making concerted efforts to make capital available to small communities. We have a network of over 30 community economic development officers, for example, who provide that assistance in terms of developing business plans for people who may not know how to do that. We're taking it a step further and have transferred over half of those positions to communities themselves so that the person now works for the community promoting economic development there as opposed to being a government employee. We think this locally controlled community empowerment initiative is significant.
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In terms of access to world businesses in domestic and international markets, you mentioned the information highway. The territorial government has undertaken an initiative that over the next three years will put a digital link into every community in the territories. This was prompted by departments such as education, culture and employment and health to assist in distance learning, to assist in diagnostics in terms of patient care, etc. But the spin-off benefits in terms of access to local businesses through the Internet will also be there.
In terms of more general trade, I think our approach in the past has been to piggyback our trade initiatives on federal government initiatives, or jointly in terms of the fur ban. In terms of tourism, for example, we don't have the resources for an international presence to the same extent the federal government can. So we look to continue that.
In terms of rural development approaches, we recently took over the federal community futures program in the Northwest Territories. At the time there were only four regions supported, whereas we have eight. We're now faced with having to fund the other four internally, but we're finding that approach has been excellent in terms of getting community involvement, regional planning and leveraging of available funds. Part of the problem was that aboriginal groups would have their own pot of money and we'd have our own pot of money. This allows for common grouping of the funds and a common approach to setting priorities for the region. We find that an important and positive development.
I think that touches on the major points in the presentation. I'll leave it open for questions for the remaining 15 minutes.
[Translation]
The Acting Chairman (Mr. Bélair): Let's start with the Opposition. Mr. Asselin.
Mr. Asselin: You, as well as the witness who appeared before you, maintain that in the Northwest Territories, there are important resources which are not developed because the necessary research has not been carried out and because the required infrastructure and manpower are lacking. In other words, the resources are there, but they're not developed.
Residents leave and settle in large urban centres. You mentioned that 5,000 people have left the Northwest Territories this past year.
Have the Territories been able to take advantage of the infrastructure program offered by the present government through federal, provincial and municipal agreements? I suppose that here, there are very few, if any, communities with 100,000 residents. Could the federal government launch a federal-provincial infrastructure program?
As indicated on the agenda, in a way, you represent the Northwest Territories government: You told us about your strategic planning: are the Northwest Territories ready to invest substantial funds in partnership with the federal government? If the federal government set aside a certain amount of money for the Northwest Territories, is the regional government ready to invest as well in the building of the infrastructure required to access resources? Or are you telling us that the Northwest Territories' government does not have the necessary funds? What do you expect from the federal government?
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Can you tell me whether, these past years, the Northwest Territories' Government made representations to the federal government to explain the specific problems you are faced with and, if it is the case, did you get any answers? Is the Northwest Territories' Government satisfied with the involvement or the contribution of the federal government, in terms of ensuring that the opportunities for economic expansion are the same here as in every other region in Canada?
[English]
Mr. Singer: First of all, we've been involved in negotiations with the federal government towards a joint approach in terms of transportation infrastructure that potentially includes aboriginal groups, and with land claims. There's a significant interest and capital base there as well.
The purpose of the negotiations and the joint approach is that we don't have the funds to develop the infrastructure to the extent we think would be necessary, but we also think the benefits from that development, given the leakages from the economy, are as beneficial to Ontario and Quebec as they are to the territories in terms of where the equipment comes from and where most of the spin-offs end up.
Our emphasis is on trying to keep some of the spin-off benefits here, but the fact of the economy is that we don't produce heavy equipment. We don't produce many of the things required for that infrastructure development.
So our position is that we're seeking federal support because of that overall benefit to Canada, not just to the NWT.
The Acting Chairman (Mr. Bélair): One of the member's questions touched on whether you used the last infrastructure program.
Mr. Singer: Yes, we did. I believe it was more community-based. I wasn't closely involved with that program. Our transportation department would probably be better able to answer your questions in detail. I can provide only some general statements on it.
From the federal government we'd want support for at least that joint approach. I can't say how much our portion could be. We're faced with a deficit reduction target wherein by the time division happens, we will have no deficit. So these are very tight times for the territorial government, whereas the economic opportunities remain. That's why we seek the federal government involvement.
I can't give you an exact percentage of what we're willing to contribute, but I do know we are proposing a joint approach to doing that, using any new infrastructure programs and becoming involved with that.
The Acting Chairman (Mr. Bélair): Mr. Chatters, given that you've missed the first part, do you want to skip this one?
Mr. Chatters (Athabasca): Yes. I have to get up to speed here.
The Acting Chairman (Mr. Bélair): Very good. Mr. Wood.
Mr. Wood: I have a couple of quick questions. Is diversifying the rural economy away from natural resources extraction development a priority for your government?
Mr. Singer: In terms of support for the renewable resource economy traditional way of life, yes. We've recently amalgamated the Department of Economic Development with the Department of Renewable Resources and Energy, Mines and Petroleum Resources to provide a more comprehensive look at development so that there's balanced growth. Part of the reason for that amalgamation was to promote balanced growth, recognizing the value to the economy of renewable resource development and the way of life that goes with it.
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Mr. Wood: You mentioned in your presentation that you had capital set aside that is available for entrepreneurs. Your government encourages it. What kind of controls are put on it? Do people take advantage of it?
Mr. Singer: Yes, it is. We're often oversubscribed. We have a range of funds - a loan fund, a contribution fund. The past economic development agreement was also fully subscribed. It was a $50 million agreement over a five-year period from 1991-96.
So there is demand for that capital. But the service sector has been growing and we've been feeding that. It really can't be sustained unless there's some new wealth created through the mineral resources.
Mr. Wood: How's your success rate?
Mr. Singer: With the contribution fund, it's quite high in that we're one contributor to many sources of funds. With the loan fund, we're near to 20% in terms of possible defaults or loans in trouble, for example. That's off the top of my head, and I'd have to check, but it is a risk fund and we emphasize development in the smaller communities.
We still operate on a strategy developed in 1990 that categorized communities into levels 1, 2 and 3, level 3 being the smaller or low funds. The loan funds and contribution funds were designed to be more accessible to smaller communities with lower equity requirements, for example, to recognize the greater amount of difficulty they have in smaller markets. In places like Yellowknife, there is better access to normal commercial financing, the markets are here, etc. So we've tried to push the money to those level 2 and level 3 communities.
The Acting Chairman (Mr. Bélair): Mrs. Cowling.
Mrs. Cowling: Thank you, Mr. Chairman.
Mr. Singer, building strong partnerships with all levels of government has been one of our focuses as a government. The infrastructure program is a good example of that. I want to come back to this, because you have mentioned tourism.
The focus of the last infrastructure program was on roads and sewers and water. But we've heard about tourism at least a couple of times this morning. I'm wondering if that initiative should be one of the focuses for the federal government should they choose another infrastructure program. I'd like to hear your comments on that.
Mr. Singer: There is the priority of the mineral development side, which is really the main engine. The tourism side, which I think is a major means of diversification, is certainly an important area to support. We have a wealth of resources in that area. It's a growing industry and our capacity has been increasing, but we certainly could do more. So I think some additional emphasis in that area would be beneficial.
The hard infrastructure in terms of roads, etc., is still the main engine, though, that is required to make a significant dent in our unemployment figures.
Mrs. Cowling: So the response would be, in fact, that you would say yes to tourism as being one of the criteria.
Mr. Singer: Tourism is important, yes.
Mrs. Cowling: Thank you.
The Acting Chairman (Mr. Bélair): There is still time for a short question.
Mr. Serré.
Mr. Serré: Perhaps I'm asking the same question as the previous witness. Tell me briefly what the major impediments for rural economic development in the territories would be. What would be the top priority for the federal government?
Mr. Singer: It would be supporting the mineral development aspect as the greatest potential for immediate jobs. Our Department of Education is gearing up to target those sorts of skill levels and is doing inventories of skill requirements. But the mineral side is the core.
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It's not really meant to set aside aspects like tourism or the natural resources use, the traditional use, for example. They're all key. Again, that's why we've been amalgamated. They're all important.
The Acting Chairman (Mr. Bélair): Mr. Singer, could you tell us about the Whitehorse Mining Initiative? Has it been profitable for you?
Mr. Singer: I'm not familiar with the energy side of the department. As I say, we've just amalgamated, so we're not really accomplished on it.
The Acting Chairman (Mr. Bélair): Thank you very much for your presentation.
Mr. Singer: Thank you very much for your time.
The Acting Chairman (Mr. Bélair): We will now call upon Mr. Bob Brooks, executive director, Northwest Territories Chamber of Commerce.
Good morning. The floor is yours.
Mr. Bob Brooks (Executive Director, Northwest Territories Chamber of Commerce): I'd like to thank you for giving the NWT Chamber of Commerce this opportunity to speak. Originally, the president of the chamber of commerce was due to be here today, but he couldn't make it.
As an introduction, the NWT Chamber of Commerce is a pan-territorial business organization representing business concerns since 1973. Our membership is made up of 12 separate chambers of commerce across the NWT, which is actually 100% of the chambers of commerce that are available in the NWT. So we have the only 100% record in Canada.
As well as numerous pan-territorial and national and international companies holding associate memberships, this membership encompasses more than 1,000 businesses across the territory and in every region of our territory.
The progress of rural resource development in the Northwest Territories is vital to our economic viability leading into the 21st century. Our efforts to become more self-efficient lead us directly into the natural resource sector, especially in these economic times of government cutbacks.
We see resource development as a window of opportunity that can help solve many of the NWT's economic development problems and can provide us with the opportunity to contribute to the wealth of Canada and the NWT.
The Northwest Territories has a land mass covering approximately one-third of Canada. In a region harsher than any other in Canada and with a population of just over 60,000, the natural resource industry is vital. As the NWT's largest employment sector, anything the Government of Canada does in regard to policies and regulations has a direct impact on the economy of the north.
We've made a few recommendations. Under the Northern Accord, as you are no doubt aware, the Government of the Northwest Territories has been involved in discussions with the federal government for a number of years, trying to bring home our own northern accord.
The Government of Canada is continually urging us to become more self-reliant, and yet they refuse to give us the control of our own resources that would help bring us to that point. Our own northern accord would help industry do business in the NWT, as there would be fewer levels of government bureaucracy for business to try to hurdle and more options for the GNWT to direct spending where appropriate.
Under land claims recommendations, the NWT Chamber of Commerce has always been a strong proponent of settling the outstanding land claims issues with the aboriginal peoples of the NWT. If there is anything your panel can do to encourage the fair and timely resolution of these claims, it would help to create a business climate where all the players know the rules and resource developers can talk to the landowners directly in striking an arrangement.
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In today's economy we can no longer afford to be stagnant. We must make every effort to help create responsible resource development that benefits the landowners, the companies, the people of the NWT, and the people of Canada.
We have an infrastructure recommendation. In the rural setting, natural resource development creates a need for infrastructure development, but rural infrastructure development has to be subsidized. The south was developed by building a transportation system and then developing around it. In the north we have an enormous area to cover and few ways in which to do it.
There are any number of ways that the Government of Canada can help to create the link necessary for development to happen. Companies, municipalities, and governments are willing to share the costs. However, none of these things can happen without the cooperation and support of the federal government.
The jobs and economies that are created are immense and bring in tax revenues for both the territorial and federal governments, not to mention the savings gained from the unemployment systems.
In education and training, the need for continued development in this area is critical to the success of our northern economy. With the new technologies that business and industry operate under today, the workforce must be literate, educated, and functional in the new technologies if they are going to be able to take advantage of the job opportunities. The private sector is willing to participate to ensure that the training is relevant and up to date. Employment quotas and expectations can often be skewed if based on numbers alone, especially if we are dealing with an area that has a high illiteracy rate.
It is essential that the government bodies cooperate and facilitate our education system to produce an effective workforce. We're encouraging this committee to look at the funding streams that are going into our education system to make sure they represent the realities of today.
As you know, the NWT is set to divide in April 1999. The ramifications of that division for this region will create a large gap in the workforce as various government jobs are reassigned to Nunavut and the government downsizes. In addition, the current wait-and-see economics have created a slowdown in many industries of our economy. The natural resource industry is one of the answers in the solution to this problem in the NWT. The industry will help to bolster our economy in the north and to prepare for the future.
In summary, the Northwest Territories, like every other region of Canada, is looking for answers to develop their economy. In the Northwest Territories we are fortunate enough to have a natural resource industry that has huge potential for growth and development. Your committee can help the Northwest Territories prosper. Please help us to make that happen.
There was a question posed earlier by Mrs. Cowling in regard to tourism priorities. If I might, I would also like to address that question.
Tourism in the Northwest Territories is a virtually untapped resource. It has huge potential in the Northwest Territories, and there's a lot of hope for that because it's somewhat untapped. It's an industry that the aboriginal peoples embrace. It's an industry that can be responsible and traditional. It also can be more diverse in other communities, so it's an industry with a lot of potential.
However, in supporting the tourism industry we also put a priority on the infrastructure development of the road systems. What we've found is that by building the infrastructure to get there, natural development will happen. As you build a road, people start coming to the road and building industry around those roads.
As I mentioned, one of the priorities is the road and infrastructure development. With the possibility of connecting, I believe, nine or ten different mine sites, going up as far as Coppermine and certainly to Lupin, there is huge potential to tap into those mine sites for contribution as well. Everybody can pay a little piece: the federal government, the territorial government, even the municipal government and the regional governments, as well as the companies operating in those areas. You may know that the companies are already building the winter roads themselves on a regular basis, so it's not a stretch for them to contribute to a road that's more permanent.
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[Translation]
Mr. Asselin: You just confirmed that there is indeed an infrastructure problem to access resources and you also mentioned that, in terms of economic development, the Northwest Territories are again having a problem. Do you think that the federal government should directly subsidize businesses or get involved on its own in research and development, particularly the development of exports on the international market?
[English]
Mr. Brooks: I'm glad you asked that question. I don't think the federal government should do anything by itself. The federal government should be working in cooperation with industry to develop the programs.
Industry, as you know, operates on a bottom-line system. If it's not viable or profitable, they're not going to go into it. If the federal government were to operate in isolation, it might identify something that's not considered viable with industry or that industry is not ready to participate in. It would be more relevant to provide help, to provide liaison, to open doors.
We also have international dealings. Simply because of our location we deal with Russia and Greenland, and we've found that the political ties and political importance these other countries place on their representatives For example, with Russia, if we didn't have a sanction by the Government of Canada, the Government of NWT, they wouldn't even talk to NWT businesses.
So there are many roles the Government of Canada can play. Most of them are opening doors. Yes, you do have the research capacity that could help direct this and help them out. I guess the short answer is that I don't believe anything should be done in isolation.
[Translation]
The Acting Chairman (Mr. Bélair): Mr. Asselin, do you have any other questions?
[English]
Mr. Chatters.
Mr. Chatters: I found your recommendation on education and training interesting. Having worked in the Northwest Territories many years ago and having tried to include aboriginal people in some of that development, I don't think the experience was particularly positive for many aboriginal people.
I read this morning, on the way up here on the plane, an article in The Globe and Mail about an aboriginal family in the latest mineral rush in Quebec, the new copper and nickel development there. Those people are absolutely rejecting that mineral development based on what it does to their traditional lifestyle. They aren't interested in the development, not from a land claim basis but because of the destruction to the aboriginal lifestyle.
Is there the same attitude in the Northwest Territories? Not the leadership, but the grassroots aboriginal community - are they welcoming of large resource and mineral development in the Northwest Territories? What do we have to do to help them become participants and be part of it? They were quite isolated from that development in the years I was here, and it wasn't a very positive thing.
Mr. Brooks: There are two different realities here now than there were even a year ago or two years ago. First of all, this committee is fortunate in its timing. This area of the Northwest Territories just went through the BHP environmental assessment review. In that, we got to hear from a number of the aboriginal groups, a number of business groups, basically anybody who wanted to speak to it. In addressing the aboriginal concerns, the vast majority of the aboriginal people who made the presentations came out in support of responsible development. Such was their concern that they were only willing to support this development if it was going to show direct benefits to the people of the Northwest Territories. They were no longer interested in supporting anything that was fly in, fly out. They also were only interested in supporting the project if they were able to directly negotiate an impact benefits agreement with the resource companies.
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So, as you know, BHP has had to do impact agreements with all the aboriginal groups that are affected or are in that area of the North Slave region. As a matter of fact, the last one, which was with the Dogrib, was released just last week, and it said that they now supported it based on the impact agreement.
There may be one or two holdouts out there. Certainly, there's always going to be somebody who doesn't want development at all. But even the ones who expressed a concern about the development...they had mentioned a concern that the community was not going to benefit, that they were going to do it without them.
Then of course we just had a release of the socio-economic impacts from the GNWT, which basically stated all the things that BHP promised to do during the hearings. We were quite pleased with that.
The aboriginal peoples mentioned that they would prefer something in tourism. So we were trying to find a way to have mineral resource development enhance the tourism possibilities of their communities. So we believe we addressed the majority of those problems.
The other scenario I was talking about is that two years ago many communities of the Northwest Territories were 95% to 99% funded by the GNWT. That's no longer the case. For example, we just had a meeting with the president of the Keewatin Chamber of Commerce. He said their community was 95% reliant on the government for all their business concerns. Because of the recent federal government cutbacks to the territories, which then went down to the recent territorial cutbacks to the communities, and the different programs that could come out, suddenly there's a new reality out there saying, the government is not going to give us that money any more so we have to try to create it ourselves. Last year they might have said, the government has given us the money, why do we want to tip the scales or disturb anything? Now they're saying, we need to find ways to make development happen.
In regard to the concern about tourism, we feel that development can happen through resource development.
The Acting Chairman (Mr. Bélair): Mr. Wood.
Mr. Wood: Thank you, Mr. Chair.
As you know, the reason we're here is to try to find a way to stimulate the rural economy. I guess everybody is going to ask the same question, and it's probably my turn to do it.
Mr. Brooks, in your opinion in the chamber of commerce, what can the federal government do best to stimulate the rural economy? Would you say it could be tax incentives, or could it be infrastructure improvements, or reducing the regulatory burden? Should we focus our efforts on one particular area?
Mr. Brooks: To answer the last question, I don't think you should focus on one particular area. I do believe we fully supported the last infrastructure program you had done, the one-third, one-third, one-third. In this case, for resource development, I think we could go even further than that and involve the companies, the corporations, and the development corporations, which are also looking to develop in those areas. I think they can have a large part to play in this as well. I certainly feel that the federal government can help in that manner by creating these programs that will not only put our people to work but will provide the job training to enable them to take advantage of those opportunities.
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You may have heard or you may know that the Northwest Territories has a high illiteracy rate. My concern is that it doesn't matter how many jobs we create if they're not educated enough to take advantage of them. What's the point? We won't win in any case in that manner.
The companies have already made a commitment to work with the education department of the GNWT to help them with education programs to ensure that the programs they are putting in are relevant in terms of what jobs are forecasted to be needed in the future. They'll make sure the appropriate type of training is available for these people.
There's an initiative called the community mobilization partnership that was initiated by BHP in these last hearings, where basically they are getting all the people from each of the different sectors interested in how to prepare the young people for these jobs that are available, in how to prepare people who are in the community who are not employed or would like to move into that industry. We're working with BHP and with the department of education to try to get programs to reduce the illiteracy rate and make the jobs more directly relevant.
Mr. Serré: In regard to the Northern Accord, which you talked about, could you tell us exactly what you're looking at in the Northern Accord and why it's not happening.
Mr. Brooks: I think the reason it's not happening, and this is my personal opinion, is that I believe the federal government has had control of the resources for so long that they don't really want to give it up. Moreover, I don't know whether they are going to get the support of the other provinces at this time because of the recent activity that is happening in the north.
If these Northern Accord discussions were taken more seriously three years ago, there would have been a lot less argument. But now that there is potential for mineral development, money that could flow directly to the provinces rather than indirectly, I think there would have been more support three years ago. It was discussed three or four years ago, but it wasn't given a high priority at that time. It has taken on a higher priority, especially now that we're moving into a division of the territories and we're trying to find more surety for both the territories.
Mr. Serré: What you're looking at is getting complete control of the natural resources - the same way as a province would.
Mr. Brooks: Basically, the provincial control of the resources.
The Acting Chairman (Mr. Bélair): Mrs. Cowling.
Mrs. Cowling: Thank you, Mr. Chairman.
I would like you to make some specific comments on building on the strength of the Northwest Territories, and particularly on the natural resource sector.
My question is framed around small business and entrepreneurship and creating jobs and growth up here. I'm wondering about your young people and their pioneer spirit to create jobs and be entrepreneurs with their own strength. Is that happening, and how can we make that happen for the people of the Northwest Territories?
Mr. Brooks: First of all, I've been here in the Northwest Territories for 16 years, and because of the officiating I do I've also travelled to almost every community in the Northwest Territories. What I've found in the past was certainly a different value system, where the people in the communities didn't really value the entrepreneurial spirit. However, over the past five years, and as the communities are brought into the 21st century through the new telecommunications technology and what not, I find the young people are becoming more and more interested.
Through the school systems we're finding that the young people are getting interested in the world around them. As you know, any 10-year-old can operate the Internet now, and I'm still trying to catch on. I'm finding that through the newer technologies, the young people in the communities and in the larger communities have a natural interest. As long as we can make it interesting and relevant for them, we will help to bring them along.
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There is a program called Junior Achievement that business is already involved in. You may have heard of that. It basically teaches entrepreneurial spirit or how to operate businesses to young children to get them interested.
I think programs like that need to continue and be supported. I think the biggest proponent that would help to bring these young people along and keep them interested is the education system. I think the education system has to be supported by the business sector and certainly the Government of Canada in whatever ways they can help to keep it interesting and to show the young people how it would benefit them to be able to pay for their own movies instead of sitting on the side saying they wish they could have gone to the movie. This is a way they can do it. So I think the education and the industrial sector working together would probably be the best way to get young kids involved and interested.
The Acting Chairman (Mr. Bélair): Mr. Asselin.
[Translation]
Mr. Asselin: I have a question further to the one asked by Mrs. Cowling. I don't know what the educational level is right now in the Northwest Territories. First of all, I would like to know if you have the proper schools to provide people with a good education at a high enough level and ensure that they have access to the job market.
Do people have access to training centres to learn trades and thus be in a position to get a good job in the industry or in existing businesses? We know that a youth who has to leave the Territories and go to Edmonton or Vancouver to study at a higher level is not likely to come back. He or she will likely stay in a larger urban centre, which in turn has a ripple effect, because with time, parents will go and join their children.
Do you have the proper infrastructure to give young people the training and the education they need? Do industrial companies provide for the training of their work force?
[English]
The Acting Chairman (Mr. Bélair): Mr. Brooks.
Mr. Brooks: Thank you. The infrastructure is there. The infrastructure is there in that we have the schooling to be able, first of all, to bring the kids up to the entry level to get into colleges. That infrastructure is there even though in some communities the quality is not going to be high enough or the lack of funding is not going to be beneficial to certain communities that are having a lot of trouble. However, in the overall picture, the infrastructure is there for the general schooling.
The other thing that's happening is that Arctic College and Aurora College are starting to... The business community and the industrial community have been lobbying Arctic College and Aurora College to have more mineral type courses. It's mostly an adult education college. They do it through correspondence as well as through classes in various communities.
So the infrastructure is there. The problem is the changing value system. It's not quite happening fast enough, we don't think.
Some of the people are not going to be able to take advantage of the new jobs that will be created unless we can get some help to encourage these people to participate in these programs and to make sure the programs that are going to be brought forward or introduced are properly funded in order to make sure they're relevant. So industry is certainly going to have a hand in making sure that the curriculum is correct.
It seems to me that with all the other government cutbacks - and we have just heard of other education cutbacks that are coming - there may be a problem. They're not going to be able to take advantage of the stuff we're putting forward. There is a movement already in place that states that we would like to have a much more industrial development type of curriculum in the Arctic College program.
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There has been talk of creating a college campus in the Northwest Territories. Normally what happens to universities is they'll start with a specific program or field of expertise and that will grow to an extent at which they become colleges or universities. We feel that can certainly happen here.
We feel one of the largest assets in the Northwest Territories is its natural resources. These are diversified natural resources. There's not only gold or diamonds, but there are natural gas and numerous minerals out there. We have the northern technologies, and since we operate in those northern technologies and because our area is so vast, it would probably be a good place to teach other people, not only from the Northwest Territories and the rest of Canada, but from circumpolar regions that do mining, such as Russia and Greenland. They can do their training here. It's something we can offer them.
With the introduction of all these new minerals in the Northwest Territories By the way, it's not that they're new minerals; it's just that we have the new technology to be able to find them or get to them at a viable cost. I think there's a lot of potential now to build up the education infrastructure system that will allow this to happen.
The Acting Chairman (Mr. Bélair): I thank you very much, Mr. Brooks. That was quite interesting. Keep up the good work in keeping all those chambers of commerce together. It's quite a feat, actually, if you consider the area you have to cover.
Mr. Brooks: Yes. Thank you.
The Acting Chairman (Mr. Bélair): We will listen to Mr. O'Neill now. Go ahead, Mr. O'Neill.
Mr. Greg O'Neill (Operations Manager, Northwest Territories Co-operative Business Development Fund): Thank you very much. I really appreciate being invited to make a presentation to this committee.
I'm here to represent the cooperative movement in the Northwest Territories. It's unusual that I would be here representing it. Usually we would have a director come to represent the interests of the members, but our directors are tied up. We had very short notice to get this presentation ready and to make it. Bill Lyall, who is our president, is in Baker Lake right now involved in some Nunavut land claims meeting, so he couldn't make it. So you got second best.
I'm going to start by telling you a bit about the cooperative movement in the Northwest Territories. There are community cooperatives in 41 communities in the Northwest Territories, and cooperative members include Inuit, Dene, and non-aboriginal people. Of our membership of over 11,000 - close to 12,000 - about 95% would be Inuit and Dene.
The cooperatives also have two central organizations that are owned by the community cooperatives. They're Arctic Co-operatives Limited and the NWT Co-operative Business Development Fund, or the NWT CBDF. Most of the 41 community cooperatives are multi-purpose co-ops.
A community co-op can be involved in a wide range of business activities, which may include the retail of food, dry goods and hardware, hotel operations, petroleum products distribution, cable television, post office services, construction contracting and heavy equipment operations, rental properties, arts and crafts production, purchase and marketing, airline services, and other contracts. We're also involved in tourism services.
Arctic Co-operatives Limited, or ACL, provides services to the community co-ops based on their identified needs. The support system for cooperatives developed over a 40-year period. The first northern coop was incorporated in 1959 in George River in Quebec. There's also a sister organization in northern Quebec called the Fédération coopérative du nouveau Québec, or FCNQ.
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Over the years, cooperatives that have been developed by northern people have met regularly to identify their common needs and find solutions to their problems. Through their continual democratic and participatory approach, the cooperatives set up two centrals or second-tier co-ops that they own and control, and those are ACL and NWTCBDF.
ACL provides management advice, merchandising support, accounting services, arts and crafts marketing, education and training, and other technical support such as tender and bid preparation services and project development support.
The NWTCBDF is a financial arm of the NWT cooperative system. It provides loans to member cooperatives in the form of financing for annual resupply. Once a year we have an opportunity to bring the majority of inventory into most of the cooperatives in most of the communities we serve by barge when the waters open. We have loans. It's like operating lines of credit we provide to the member cooperatives. We also make development loans and refinancing loans for cooperatives that include preferred share options. Our capital base is about $22 million and we have an additional $4 million operating line of credit with the Bank of Nova Scotia.
As a system, the cooperatives are partners in an insurance brokerage that is developing and adapting products and services for residents of northern communities. Cooperatives are also partners in the provision of a broadband digital communications network to communities in the NWT. We're in partnership with NorthwesTel and NASCo, which is a consortium of aboriginal development corporations. We were just awarded a tender by the Government of the Northwest Territories to provide that service across the north. That's the infrastructure that allows Internet services to be provided.
The NWT cooperatives developed from a desire among community residents to provide themselves with needed services and to have ownership participation in the commerce of their country. In some communities cooperatives are the only businesses that exist, and in many NWT communities they're the only businesses that are directly owned by the Inuit and Dene residents of those communities.
As with most communities in rural Canada, sustainability is the major issue facing many rural communities in the NWT. Sustainability can be defined in terms of economic viability, but you also have to look at it in terms of social vitality, political efficacy, and cultural vibrancy. Sustainability is an integrated goal that we want to achieve.
How do cooperatives contribute? Under economic viability, first and foremost cooperatives are businesses. The ownership structure is set up so that ownership is 100% community-based. As a result, any profits or savings generated by co-ops are kept within the community. The profits are distributed to the community members based on their patronage of the service provided.
Initially there was no commercial infrastructure in most NWT communities. They were isolated by geography, climate, and other factors. There was commercial exploitation of natural resources for fur, whale by-products, and other commodities, but for the most part profits generated from these ventures were never seen by the people living in those northern communities.
A program of economic development was initiated by the federal government in the 1960s which was focused on community cooperative development. In some communities, the original economic activity that helped to generate the development of these cooperatives was the marketing of sculpture and, later, prints by local artists. Materials were scarce and some of the first retail stores were built with materials that were scavenged or salvaged from DEW Line sites and other military operations.
The airstrip in Pelly Bay, for example, was built using a Caterpillar tractor that was abandoned by the workers on the DEW Line site. The local residents went and got that tractor. It wasn't operational, so they fashioned some replacement pieces out of local materials and got it working and built the airstrip. It was later upgraded by the federal government, but the original airstrip was built by those people, again using materials that were available locally.
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As time passed and other opportunities arose, the cooperatives expanded into other operations, such as those I mentioned earlier. The economic viability of the cooperatives is demonstrated in their consolidated performance for 1995. Cooperatives in the Northwest Territories had total revenue of over $75 million in 1995 and a net savings or profit of about $3.4 million. They have total assets of $64 million and equity in those assets of about $20 million.
The cooperatives have therefore proven themselves for more than 40 years to be economically viable businesses in the NWT, and that's the basis for sustainability. You have to have that economic viability.
Social vitality is also an important aspect of sustainability. At the time the first cooperatives were being formed, most NWT people were not organized around communities. They were generally engaged in nomadic hunting and resource harvesting. The evolution of communities happened gradually, as more community infrastructure such as health care, schools, and housing was developed. The cooperatives played a crucial role in supporting the social fabric of the communities in those early days and still do today.
The vitality of a society may be measured by the number of democratic or voluntary organizations that exists and the ability of people to organize to solve problems. The broader the range and number of organizations, the greater the participation of citizens in the life of the community and the higher the degree of vitality.
Cooperatives provide an ongoing vehicle for participation by citizens in decision-making that directly affects their daily lives. So rather than being dependent on decisions that are made outside the community, through their participation in cooperatives local citizens take control of that decision-making. They decide on the products they will consume and the services they will provide for themselves.
Initially cooperatives in many communities were the only organization that existed for citizens to participate in. Cooperative members meet annually and at other times during the course of the year, to review the co-op's activities, to make decisions on policy, major asset purchases, and patronage allocations, and to make resolutions on issues that are important in the community.
The next aspect we'd be looking at is political efficacy. Cooperatives are a democratic organization; they are based on a principle of one member, one vote. As already mentioned, co-op members meet at least once annually to review the co-op's activities. It's required by legislation that there be an annual general meeting. They also elect a board of directors that meets regularly throughout the year with management, and the board is responsible for safeguarding the members' assets. Directors are called on to make policy decisions. They also serve to inform management about issues that are important in the community and to generally guide the affairs of the co-ops, and this is a crucial function in NWT cooperatives.
As issues of self-government grew in importance and political organizations developed, many of the leaders of these new political organizations drew on their experience as directors of cooperatives and as managers of these cooperatives as well. Cooperative directors today are playing leadership roles in land claim organizations and serve communities as MLAs, as MPs, and in regional and local governments. Directors of the central organization have represented the interests of northern people at a variety of important political fora - territorially, nationally, and internationally. As I said, it would have been much better today for a director to have represented the cooperatives at this presentation, but unfortunately we couldn't arrange for that.
Finally, an issue that I think is very important in northern communities, especially the communities served by cooperatives, is cultural vibrancy. The vibrancy of a culture is evident or can be measured in the strength of its traditions and its ability to assimilate change. The cooperatives have worked with a diversity of cultures in the NWT and the very way that cooperatives do business - incorporating both social and economic objectives - is in harmony with the caring and sharing culture we serve.
More specifically and concretely, cooperatives have helped to export and create awareness of northern aboriginal culture, through the marketing of aboriginal arts and crafts. For example, Inuit sculpture and prints are pre-eminent in Canadian art. Each piece is born from an artistic vision that is tempered by the experience of living in a unique culture. The marketing of this work has helped to keep alive traditions that may otherwise have disappeared.
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The cooperatives also own and operate 20 hotels in NWT communities. We're probably the only organization that you could say has a chain of hotels operating in the NWT.
Through its Inns North program the NWT cooperative system plans to provide a tourism experience that features northern cultures. It will be done in a respectful way because these hotels, inns, and cooperatives are owned by the members of those communities who are aboriginal peoples.
This provides local citizens with an opportunity to research traditional culture and to develop skills. By way of example, one community that I worked in was Cape Dorset - this was about 10 years ago. We were scheduled to have a cruise ship from the National Geographic Society come in. The local people wanted to put together a display for the cruise ship that was coming.
They wanted to put together a traditional hunting camp, with a sealskin tent and that sort of thing. They started to get those materials and artifacts together, and as they were putting the display together they realized that they'd lost a lot of the words they used to have for some of these artifacts, for some of these materials.
They asked some elders to help. The elders came in and worked with some younger people in putting together the display. It also helped to educate people in that community about some of the traditional things that used to be used.
Cooperatives are also expanding cable television operations in NWT communities. While this could be seen as a threat to traditional cultures, co-ops plan to do much more than just import southern TV.
The cable systems are planned to be used as a vehicle for local fora, and they will be part of the infrastructure for delivering the broadband, digital communication network to the NWT communities. Once established, the network will allow for a broader, rich dialogue between NWT communities and the rest of the world. And this may be - I'm saying it is in this presentation - the only instance of aboriginal groups being majority owners of information technology infrastructure.
I would like to talk a little about credit unions.
The Acting Chairman (Mr. Bélair): Sir, before you go any further, we have set aside half an hour for each witness. You're already 18 minutes into your presentation, so I'm going to leave it up to you. You may want to complete your presentation and leave not that much time for questions, or you may want to have the members ask questions.
Mr. O'Neill: Yes, I'd like to touch on a few more things.
One initiative still is unrealized by the NWT cooperatives, and that's providing financial services to NWT communities. The co-ops have been working for the past 10 years to capitalize the credit union system.
Right now there is no deposit taking, cheque writing, loan providing or local investment facility in over 90% of NWT communities. Without this service, without local pools of capital, it's very difficult to identify and create development opportunities.
I'd like to give you an example of a community and the sustainable development that's possible through cooperatives. The community of Pelly Bay, which is over 1,300 miles northeast of Yellowknife, is a community of about 400 people. It's a very small community, and its people were traditionally dependent on the harvest of marine mammals, mainly seals.
Right now that cooperative provides 111 full- and part-time jobs in a community of 409 people. In addition to the consumer service, the co-op markets arts and crafts products, operates a hotel, distributes petroleum products, is a construction contractor and operates heavy machinery, provides a taxi service, runs the post office, is an agent for the telephone company and the airlines, operates a haulage service, and owns rental property.
In 1976 that cooperative was technically insolvent. It had negative output. In 1977 it had $200,000 in equity. In August 1996 there was over $3 million in equity in that cooperative. That size of an investment by a community of 400 people may be unparalleled. But I think what's really important is what they did with the equity. They put together for elders in the community a pension plan, which is based on a payout of the equity and the shares held by those elders. They bought an ambulance, and they did a number of other things in the community. So through the cooperative the people there have really ensured the sustainability of the community.
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Thank you very much.
The Acting Chairman (Mr. Bélair): Thank you.
[Translation]
Mr. Asselin.
Mr. Asselin: For a cooperative to work, it needs members. I don't think that you can force everybody in the Northwest Territories to be a member of the cooperative. Could you tell me what are the benefits for members and what are the disadvantages for people who are not.
Isn't it true that the cooperative expands and grows at the expense of those people who are not members? I'm sure that non-members do not enjoy the same advantages as members. If the cooperative grows regularly every year, as you have indicated, it could be at the expense of non-members.
I think a cooperative such as yours contributes substantially to the economic development of the Northwest Territories and can also, by exercising some control, keep the cost of living from rising.
I'd like someone to tell me what are the advantages of being a member and to give me some assurances that the cooperative does not operate to the detriment of non-members.
[English]
Mr. O'Neill: Thanks for the question.
I think the benefits to members of cooperatives are detailed pretty well in the story of Pelly Bay. There's employment. There's access to services that would otherwise not have been provided. There's ownership participation in the commerce of that community that otherwise would not have happened. There's a strength of being able to provide communal services collectively rather than depending on one individual or an entrepreneur or somebody from outside the community to provide those goods and services.
Membership in cooperatives is open and voluntary. You're correct in saying that nobody is forced to be a member of a cooperative. You have to understand the uniqueness of some of the communities in the Northwest Territories. I think it's fair to say that in many of those communities, the development that happened through cooperatives wouldn't have happened otherwise.
We had a representative from the chamber of commerce talking about skill deficiencies - I hate to use that phrase - or literacy problems. A lot of factors did and still do inhibit the development of entrepreneurship in an individual way in the Northwest Territories. I think entrepreneurship in cooperatives is just as valid as entrepreneurship through individual effort. The only difference is that it's done collectively instead of individually.
In communities where there is a mixed economy that includes cooperatives, non-cooperative businesses, and government, which is a big player in the local economies in the NWT, non-members can access services through non-cooperative businesses. We do have a mixed economy that way. However, I think we're looking at very small communities. In Pelly Bay there are 400 people. Some communities have under 300 people. In Baychimo, outside Cambridge Bay, I think there are about 90 or 100 people.
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The return on investment for a private investor to go in to start a business there, and the amount of effort that would be required, is really prohibitive, and I don't think that's going to happen. Cooperatives are probably the only way we're going to see economic development in some of those smaller communities. In communities that are larger and that can support a more diversified and mixed economy you already have private investment taking place.
[Translation]
Mr. Asselin: It must cost something to join the cooperative. When you belong to a co-op, you expect to get dividends. Are all the people who want to become members able to do so?
[English]
Mr. O'Neill: Yes.
[Translation]
Mr. Asselin: Without any restrictions?
[English]
Mr. O'Neill: Yes.
The Acting Chairman (Mr. Bélair): Mr. Chatters.
Mr. Chatters: Having grown up in rural Alberta, I'm very much aware of the cooperative movement. The cooperative movement was very much alive and well there. I'm very much aware of the advantages the cooperative movement provides along with the disadvantages. In more southern Canada the weaknesses of the cooperative movement soon became apparent when entrepreneurial...and competition was introduced.
I don't know if that's particularly realistic in many of the communities you talk about, simply because it's not likely any private enterprise or entrepreneur will come in and provide those services on a competitive basis with the co-op. But I think the cooperative movement is a natural in small aboriginal communities because of the collective nature of the culture. I certainly think it's a wonderful way to provide those services, and an efficient way.
The Acting Chairman (Mr. Bélair): Thank you. I'll move on to Mrs. Cowling.
Mrs. Cowling: Mr. O'Neill, having been a director of the local co-op in my home town in the northwestern part of Manitoba, I'm wondering what message or what priority you would ask this committee to bring forward on behalf of the cooperative movement of the Northwest Territories to enhance the viability and sustainability of this area.
Mr. O'Neill: There are two major things we want to accomplish. In the presentation I touched on the first, the involvement of credit unions in the Northwest Territories. Right now we have commitments of $3.6 million towards the capitalization of that system. According to our business plan we need approximately $6 million to $7 million in contributed permanent capital. We'd use that money to have a deposit guarantee corporation that would safeguard the deposits of members using that system. Through the interest we would generate on that money we could have development workers go into the communities and help the local residents develop their credit unions.
The second is the provision of education and training to directors and to community residents on cooperative management. In the late 1970s, early 1980s, we were receiving an annual contribution from what used to be called Manpower at that time - -I guess it's called HRD now - of over $1 million to provide this education and training. At that time, twenty-five of our managers were aboriginal people. Right now only two of our managers are aboriginal people. I don't think that's a very good percentage.
So I think support for that education and training is very important. Things have changed, and to do that we're going to have to work with the existing education infrastructure. Industry and the education system working together is something the chamber of commerce is talking about and something we're interested in as well.
So those are the two things we're really interested in having happen. The first is education and training and the other is development of a credit union system.
Mrs. Cowling: I believe we heard from the previous witnesses that with moving towards technology so rapidly, it appears there is a bit of a transition and a timeframe we need to be working in.
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Have you thought that through in the cooperative movement, and do you believe it's so? We are moving fairly quickly within the natural resource sector with high-tech job creation. Do you think there needs to be that timeframe of adjustment?
Mr. O'Neill: I think these things are going to happen. Whether we want them to happen slowly or quickly is I think to a large degree out of our control. The cooperatives want to participate in the development of information technologies in the Northwest Territories, and we have. We're involved in that. Through our involvement, and our continuing involvement, in that we're going to provide opportunities for community residents to have real-life experience with that technology and to learn that way.
I come from a background of learning by doing. I'm from the Maritimes originally, and that's how you learn there. So I think some type of marriage of that practical, real-life experience with theoretical knowledge is going to be important.
The system we're talking about being a partner in the development of provides a much better vehicle for such distance-education opportunities as the broadband digital communication network. We're right in there. Our first priority is service to our members and opportunities that arise for employment out of being a partner in this development. Because that's who we see as the beneficiaries of those.
Mrs. Cowling: Thank you.
The Acting Chairman (Mr. Bélair): Thank you, Mrs. Cowling.
Mr. O'Neill, that was quite interesting. The whole concept you're putting back into gear, you're quite successful at, and we wish you well.
Mr. O'Neill: Thank you very much.
The Acting Chairman (Mr. Bélair): I've been informed that our next witness is not here at the moment, but I understand Mr. Vaydik from the Northwest Territories Chamber of Mines is present.
With your agreement, colleagues, we will invite Mr. Vaydik to the table. When Mr. Bevington comes in, hopefully before 11 a.m., we will hear him then.
Mr. Vaydik, the floor is yours.
Mr. Mike Vaydik (General Manager, Northwest Territories Chamber of Commerce): Thank you for the opportunity to discuss the policy framework for economic development in the Northwest Territories.
You can't get more rural than this. In 1.3 million square miles we have only 65,000 people. Yellowknife, Hay River, Fort Smith, Inuvik and Iqaluit are our five largest centres, and together they hold almost half our population. The rest of us live in about 50 smaller communities spread between Grise Fiord, at 76S north, to Fort Smith, which hugs the Alberta border at the 60th parallel.
When we talk about our economic future we are talking about limited resources in most sectors. Agriculture is very restricted by climate, and forestry, with limited potential, is centred in our southwest corner. There are some small timber operations supplying local demand, but the resource is limited throughout most of our territory and non-existent north of the tree line.
Oil and gas have potential, but the reserves are in high-cost areas. Low prices have kept exploration activity to a bare minimum. There is currently some gas exploration being done in the Liard Valley. This has brought some jobs and business activity to the two small communities in that immediate area.
Our commercial fishery is limited by our cold northern waters and the attendant slow growth rate of fish. This industry is probably fully developed now and supports a few families in Hay River and Yellowknife.
The fur industry has been all but destroyed by the international anti-fur lobby. A few trappers continue to sell furs at prices far below those of ten years ago.
Tourism is developing at a slow pace and suffers from a short season and high transportation and infrastructure costs. Tourism has only limited potential to provide benefits beyond seasonal service sector jobs.
So when we talk about our economic future in the north, we're talking about mining. Mining is a billion-dollar industry in the Northwest Territories now. It accounts for about 12% of the NWT's gross domestic product and about half of its exports. Our seven producing mines provide about 1,700 direct jobs. We calculate that about 3,000 additional jobs are dependent on mining. These are in exploration, mining services, construction, transportation, catering, etc.
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You've no doubt heard about the excitement surrounding diamond finds in the Northwest Territories. We are now anxiously awaiting word of federal cabinet approval of Canada's first diamond mine. In some ways the short history of this project illustrates all that is right and all that is wrong with our industry, so I will attempt to give you a very brief overview of the project.
Diamonds were discovered after a 12-year search by a single-minded and determined individual. He risked his own money and the capital of his few investors in the belief that his search would discover something that no one had ever found in Canada and that had never been found in commercial quantities anywhere in the western hemisphere: diamonds.
The search took him from the Mackenzie Mountains in the west to the Lac de Gras area in the barren lands. He was eventually able to stake an area of good potential and interest a senior partner in proving a reserve and developing a mine. The mine is proved, planned, and ready to go. Broken Hill Proprietary, the senior partner, has submitted to the most extensive environmental review of any Canadian mine. The public hearings went on for weeks. The environmental impact statement and attendant background documents when stacked are taller than I am, and I'm 5 feet 10 inches.
BHP has now invested over $200 million in the project and still does not have a clear go-ahead to operate the mine. The risks and frustrations facing the company have been enormous. Most of these have been unnecessary. Mining is already a risky business, but most of the risks are technical in nature and are familiar to mining companies and to those who invest in mining ventures.
Can we find a deposit? Will it be large enough? Will the price be stable? What is the cost structure and what influences it? Can we compete in the global marketplace? These are tough questions to answer, but not as difficult as the uncertainties facing BHP as it saw its project through from the initial discovery to the point it has now reached. Because land claims were not settled, BHP was compelled by the federal government to negotiate impact benefit agreements with four separate aboriginal groups and the Government of the Northwest Territories.
The pressure placed on the company was enormous. In the final push the minister of DIAND gave the company 60 days to show significant progress in the negotiations. This was to conclude agreements which are properly the purview of government and which the government had not been able to settle in 25 years of trying. The arbitrary nature of the term ``significant progress'' underlies the uncertainty facing any company dealing in the Northwest Territories.
I recently attended the Northwest Territories water board hearing into BHP's water licence. This is the final and most important permit that a mine needs to operate. The board is the creation of DIAND, yet the chairman of the board had to question DIAND officials repeatedly and at some length to try to determine the board's areas of responsibility concerning security deposits for land and water reclamation.
This is not meant as a criticism of the board chairman; he was only trying to satisfy members of his board as to where the board's authority lies. He is concerned that the company not be placed in double jeopardy, to use his term. There is confusion among the regulators themselves.
Department of Fisheries and Oceans officials only attended the hearings under threat of a subpoena, in spite of their key role in determining the effect of the mine on fish. Last winter two mining companies, BHP among them, were charged with offences under the Fisheries Act for activities which were carried out under a land use permit issued by another federal department, DIAND. Imagine how companies and particularly their shareholders feel when they hear such confusion among their regulators. The situation is ridiculous and out of control.
What does the mining industry need in order to to do its part for economic development in the Northwest Territories? Regulatory reform. Note that I'm not saying deregulation. We believe in environmentally responsible sustainable development. What we cannot condone is the maze of uncoordinated and overlapping regulations in authorities that do not contribute to a better environmental review. They simply waste investors' and taxpayers' money and add to the uncertainty of developing any project into a producing mine.
We need harmonization of various agencies. BHP's project was reviewed under the EARP, or environmental assessment and review program. We now have CEAA, the Canadian Environmental Assessment Agency, and a proposed new act is scheduled for introduction to Parliament soon, the Mackenzie Valley Resource Management Act.
We do not need more authorities and jurisdictions. We need one process that can include all stakeholders, the proponent, all federal and territorial agencies, and all of the interveners who have business in the process.
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The area of influence of the project needs to be clearly spelled out. The process needs clear timeframes and certain steps need to be followed. There needs to be clear sign-off procedures for each step and the roles of all agencies need to be defined.
Currently, three federal agencies and one territorial agency have responsibility in some way for water and fish: the Department of Fisheries and Oceans, the Department of the Environment, the Department of Indian Affairs and Northern Development, and the environmental protection division of the Government of the Northwest Territories. Does this seem reasonable in view of government downsizing and cutbacks?
In addition to the above agencies, BHP has been charged with funding a new environmental agency to monitor the effects of its projects. No one knows how this agency will relate to the others already in existence. For a stable investment climate we need stable and clear regulations.
Public policy is our second item. The government needs to deal with public policy issues outside of environmental hearings. Land claims need to be settled quickly and fairly. Mining companies should be left to deal with what they know best - mining and producing mines. The BHP EARP review is delayed significantly by the discussion of issues not related to the environmental question.
The third item is we need an information bank. The government needs to develop a database of background information on wildlife, the environment, and socio-economic factors, to enable all parties to make relatively rapid determination of the costs and benefits of a proposal.
The fourth item concerns infrastructure. The government needs to work with industry to support the development of an infrastructure needed for industrial development. We live in the highest-cost area in the world. Most of this can be attributed to isolation, vast distances and transportation costs. Goods used to develop mines in the north are either flown in or trucked by privately constructed ice roads. This makes our cost structure high and influences our ability to compete on the world market.
Diefenbaker's roads to resources program in the 1950s was on the right track, but his road only went about 40 miles out of Yellowknife. We need some new initiatives in that area and in the provision of deep-water ports.
Our fifth item is geoscience. The mining industry needs a continued commitment to geoscience by the federal government. The work of government geologists has formed the backbone of exploration in Canada.
Exploration companies are attracted to areas that have been mapped as it allows them to eliminate areas of low potential.
Voisey Bay is a recent example of a mining discovery triggered by a government geological report. Recent cutbacks in research funding, reduced hours, and access to existing geoscience libraries are all matters of concern and do not augur well for our industry. The government needs to get on with completing the long-awaited computer database for all geological information.
Number six is education. Everyone in the north needs a continued emphasis on education, both in schools and outside of schools, and by all levels of government. Because our territorial government depends so heavily on federal transfer payments, it affects you as federal parliamentarians.
The unhappy fact of past mining ventures has been an under-representation of northerners, particularly aboriginal northerners in the workforce. This is due to a population that has the lowest level of basic education in the country. We in industry are working with educators to try to change that. We need to be able to rely on government providing its share of the funds. Our industry is high-tech and our expertise is exported around the world. Education is critical for our industry and for our people.
The seventh item is land access. Mining needs a lot of room to look for minerals. Only one showing in 1,000 ever reaches the status of a producing mine.
There is currently a move in the country to set aside vast areas of the north as parks. We do not disagree with preserving significant natural areas. We are concerned about the size and number of them proposed for the north.
The Northwest Territories already has about 18% of its area set aside as national and territorial parks, park reserves, wildlife sanctuaries, and various special areas. The Thflon Game Sanctuary alone is larger than Nova Scotia. Economic activity of any kind is prohibited there, including exploration. I'm not saying there's a mine there, but we have to be careful when we withdraw land from exploration.
Nova Scotia supports a $700 million mining industry and a $680 million tourist industry, side by side. Unfortunately mining does not lend itself to regional land use planning. Mines are where you find them, not where you might like them to be. The land around Voisey Bay had been looked at for many years before the recent discovery of the largest nickel deposit in the world. Imagine the loss to the country, and particularly to a have-not province, if the area had been designated a park.
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We know we have to set aside areas of special significance. We ask that we be consulted and that we have some certainty that we can explore outside those special areas. We need a system of multiple land use to allow mining to continue in the Northwest Territories. Mining is a temporary land use and all the mines, past and present, occupy only three one-thousandths of the Northwest Territories land area.
We were very surprised by the Prime Minister's recent announcement of a park reserve on Bathurst Island. This area has good geology and significant potential. There is a process for determining the mineral potential of an area before a park is declared, and we would like to see it followed before any further action is taken towards creating this park.
In conclusion, I would like to tell you about our motto at the Northwest Territories Chamber of Mines. Our motto is ``proudly mining, digging Canada out of debt''. We believe we can do our share to attract investment and to allow Canada to compete in a global economy. I thank you for allowing me to tell you some ways that you can help us do that.
The Acting Chairman (Mr. Bélair): Thank you very much, Mr. Vaydik.
[Translation]
Mr. Asselin.
Mr. Asselin: I'd like to know what actions the Northwest Territories' Government has taken regarding the BHP project, as opposed to the federal government. You indicated that there were overlap and duplication problems which made it difficult to operate this diamond mine, in particular with regard to the fishery, the environment, the natural resources and maybe several other sectors.
Is the export of the whole potential production of the Northwest Territories' mines guaranteed under NAFTA?
[English]
Mr. Vaydik: As I tried to point out, mining is an international business. We operate in a global marketplace and are subject to changing conditions in that marketplace, and we're never totally aware of how the market can change.
For instance, the Northwest Territories has one of the largest tungsten deposits found. The Cantung mine in the western Northwest Territories quietly produced tungsten for many years, paid its taxes and provided jobs for people. The deposit there is not mined out. There's still a very good deposit there. But tungsten was discovered in China, and with its very low labour rates China was able to supply the world market totally out of China. Almost no one else is producing tungsten now.
[Translation]
Mr. Asselin: If you look at the problems you face when you negotiate or when you need several departments to come to an agreement, as in the case of the BHP mine, don't you feel that the federal government is kind of an irritant when it comes to the decisions the Northwest Territories' government would like to take regarding the operation of that mine?
[English]
Mr. Vaydik: I think ``irritant'' is too strong a word. I know that the policy of the Government of the Northwest Territories is that it would like to have the responsibility for lands, waters, mines, forests and all natural resource areas devolved to the Government of the Northwest Territories over time so that it can assume provincial-type responsibilities. Of course, it is uncomfortable for the people of the Northwest Territories to have decisions made that are normally made much closer to source now being made in Ottawa. So I think generally the policy of the government and of the people is that they want those decision-making authorities moved to the Northwest Territories over time.
The Acting Chairman (Mr. Bélair): Mr. Chatters.
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Mr. Chatters: On the BPH Diamonds project, why has it been so difficult to get federal government approval? Why has it been so difficult for the project to go ahead, in spite of all the various stakeholders? Certainly in my experience in the tar sands development, where all the stakeholders are in favour of a project and behind a project it can still be done quite quickly; the approval process can move quite quickly and the mine can be developed. Why has the BPH mine been so slow? Are there still stakeholder groups that are opposed to the mine today?
Mr. Vaydik: I believe the key to some of the opposition to the mine was the lack of land claims being settled. I think in the north we're all looking forward to land claims being settled so we can get on with business with the land claimants instead of having to deal in an area where there is no certainty. We don't know what the claims are going to look like, and the government has a dual role of protecting aboriginal interests, yet that same department is charged with northern development, so it has a tough time making up its mind on what it wants to do. The fact that land claims are settled underlies the problems we have with almost any decision on a project of this nature.
Mr. Chatters: But that's not realistic, because new land claims are coming in every day. It's an ongoing process. Certainly Voisey Bay was an example of that. Wherever you find particularly a large mineral deposit, you are going to have to deal with new land claims around it. So I don't know that it's realistic to say the federal government has to get busy and settle the land claims quickly and fairly. I think that's an ongoing process.
Mr. Vaydik: But it has been going on for 25 years. I think in the north it's not just the business community; most people would like to see those claims concluded.
I can give you examples of areas where the claims have been concluded. In the Gwich'in area, in the Inuvialuit area, and to a certain degree in Nunavut, which is just about to come into force, it's much easier to do business. We know what the rules are there. We know who we're talking to. The people themselves then have an interest in development, because they own part of the resource. They have a stake in the development.
So it's in areas where the claims aren't settled - and we believe they can be - that we have some frustration.
The Acting Chairman (Mr. Bélair): Mr. Serré.
Mr. Serré: Welcome, Mr. Vaydik. I think we met at the CBC in Toronto. It seems familiar. I recall we met there.
As you know, I've been involved in the mining industry for quite some time now. The concern you express in your brief and the impediments to new development and mining are real. I've heard that maybe a hundred times in the last couple of years. But I think we are moving fairly quickly now in addressing some of those concerns. You are well aware of the Whitehorse Mining Initiative, some of the provisions of which are being implemented as we talk.
This committee has also completed a report on streamlining of mining regulations. I imagine it will be tabled very shortly. We've just completed the report. I think if implemented the recommendations of this report will go a long way towards addressing some of those concerns. However, I would suggest that as soon as it's tabled you get a copy and your organization pursue the recommendation with cabinet members and the government itself. It's okay to table a report, but we need action on these reports.
My question is very brief. In the case of BHP, what are the last requirements for BHP to be able to proceed? Is it waiting only for cabinet approval, or are licences not in place or whatever?
Mr. Vaydik: I believe the final permit is the water licence. The Minister of Indian and Northern Affairs indicated that if he were convinced there is significant progress in all these other negotiations he would sign the water licence.
The hearings last week were the last public hearings. There's a technical advisory committee hearing to come. As far as we know at this point, all of the negotiations have shown significant process, with one possible exception, the Yellowknife Dene Indian Band, who have an unresolved land claim. Those are the aboriginal people who live in Yellowknife and who claim part of the area where BHP is located. They still have not agreed to going ahead with the licence. We don't know where that leaves us.
The Acting Chair (Mr. Bélair): Mrs. Cowling.
Mrs. Cowling: Thank you, Mr. Chairman.
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This is a question I've raised with many of the other witnesses and I'd like to raise it with you as well. If there were a message you would like to send to our committee and we should incorporate into our report, what would that message be - your clear, focused message? What would that priority be, from your perspective and that of the group you represent?
Mr. Vaydik: I really believe regulatory reform is required, and as Mr. Serré indicated, your committee is already working on that. Without seeing a report I don't know how it's going to work in the north, frankly. With the establishment of these claims groups, who all want their own management agencies to look after the environment and regulate development, I'm not optimistic that your committee is going to be able to resolve all those competing interests and make it reasonable for a company to do business in what we now know as the Northwest Territories. It's going to be very difficult. I think northerners have to work together to come to those kinds of accommodations, and I guess part of that is tied up in devolution of some of those responsibilities from the federal government.
The Acting Chairman (Mr. Bélair): Mr. Wood.
Mr. Wood: I have a couple of questions. First, when natural resource-based companies pay for their infrastructure, whether it's roads or whatever, in their development projects, to your mind, should they be given some kind of a financial or tax benefit from government?
Mr. Vaydik: I think it's reasonable. If we look at, for instance, the Pine Point mine, which no longer produces but was the reason the Great Slave Railway was built, a railway that even after the mine has been closed continues to serve the western part of the Northwest Territories, that was built by CN as a crown corporation. What we have now, serving the mines where the action is right now in the Slave Province, is an ice road. It's open from January until April every year. It's built by a private trucking company. They maintain it and they haul the goods to the mine. They pay the cost and charge the cost back to the companies that use the road. There's no government involvement at all.
Maybe because of the benefits these mines can eventually reap for the population of the Northwest Territories there should be some provision for tax write-offs for those costs.
Mr. Wood: You talked about the lack of qualified people working in the mines, I believe. I wonder if your organization has thought of getting together with mining companies and putting together training programs that would train people. I know some of the offshore countries work in harmonization with some of the Canadian mining companies to educate and train local residents. I wonder if that has been given any thought: training the aboriginal and non-aboriginal people so you have a better workforce in place when some of these mines come on stream and there is that employment opportunity. Has there been any talk about that?
Mr. Vaydik: Yes. I'm on an industry committee with the Northwest Territories Minister of Education, Culture and Employment, as are a number of senior officials of mining companies. We're trying to help the Department of Education and Aurora College, which is our chief training organ in the north, to prepare northerners, particularly aboriginal northerners, because that's where the highest unemployment is, that's where the lowest education levels are, and we are working on a number of fronts to come to grips with that.
The BHP mine alone, when it goes into production, will employ about 860 people. At this point we can envision only that half of those will come from the north. Yet we still have a very high unemployment rate in the north. So that's our challenge: to try to lower that gap.
Mr. Wood: When is that mine supposed to come on stream?
Mr. Vaydik: In 1998.
Mr. Wood: So you have two years to educate people.
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Mr. Vaydik: Yes. That's fine if you're talking about some trades, but even some trades take longer than that to train. Frankly, a lot of our communities have not very many people even at entry level for trades training.
So we have a basic upgrading program. We have some basic life skills training for where people have not been used to living in a camp situation - they've always lived in their home community - and there are stresses and new things you need to learn to deal with that.
In the past some of our mines and the government, working hand in hand, have gone a long way towards trying to get people into these positions, and we've had some success, but the numbers still aren't good enough. So we're still working at it.
The Acting Chairman (Mr. Bélair): On this note, Mr. Vaydik, I thank you for your presentation. It was quite interesting. The report we are working on right now will be of great interest to you. It has been finalized in committee. The researchers are still working on it a bit. It should be published any time now.
I now call on Mr. Bevington. Mr. Bevington is president of the NWT Association of Municipalities.
The floor is yours, sir.
Mr. Dennis Bevington (President, Northwest Territories Association of Municipalities): Thank you, Mr. Chairman.
I'm presenting this brief on behalf of the NWT Association of Municipalities. I'd like to thank the Standing Committee on Natural Resources for your invitation.
To place our concerns and interests in perspective, allow me to give you background information on our association.
In September 1967 municipal leaders from four communities gathered to form an association with the objective of promoting the exchange of information among the municipalities in the Northwest Territories and provide a united front for the realization of municipal goals. Since 1967 the NWTAM has grown to its present membership of 47 municipalities. Membership in the NWTAM is voluntary. However, we're proud to say all eligible municipalities in the Northwest Territories are members of this association, and they represent approximately 90% of the population.
Our communities can be characterized to one degree or another as rural and remote. To a large extent they are communities whose connection to the land is by means of hunting, trapping, and fishing, and whose locations have served the needs of the fur trade in the past.
A few communities - Yellowknife, Norman Wells - have resource industry beginnings. Many in the Arctic were created as a result of Canadian defence or sovereignty issues. Conventional rural economies - agricultural, forestry, small manufacturing - within the communities are fledgling at best.
History and geography have provided us with communities that today have serious economic deficiencies and a high degree of dependency on imported energy, food stocks, and other essentials of life. Transportation links are long and tenuous. Basic costs of living even in the best-serviced and -connected communities run 40% to 50% above those of urban centres such as Edmonton and Ottawa.
The tasks facing our communities to overcome these rather formidable realities can be characterized in two basic areas: first, to reduce the basic cost of living to a level that is sustainable for the people in the communities; and second, to increase participation in the resource economies of the land, both renewable and non-renewable, to provide real and long-term economics. On both of these issues partnerships on behalf of the federal government, the Government of the Northwest Territories, and community government - and I characterize this as both public and aboriginal - can be a creative tool in achieving substantive change.
The federal government has and will continue to play a significant role in a variety of ways. Community development can be enhanced through national transportation policies, settlement of aboriginal claims, development of renewable energy and conservation strategies, support for sustainable resource extraction industries in the north, devolution of land and resources, and encouragement of northern-directed research programs.
The Government of the Northwest Territories has embarked on a process of community empowerment over the past year and most municipalities view this as a positive action. With the communities having greater autonomy in a wide variety of services - housing, health and social services, education, public works, economic development, transportation, utilities - a sense is developing that better use of declining resources can be achieved through this process.
Direct control over a wide variety of services at the community level may lead to innovative and efficient delivery. For the foreseeable future our communities must be prepared to accept change and move on. Taking on the challenge of their own future is the northern communities' primary responsibility.
The NWT Association of Municipalities works in a variety of ways to assist in articulating the concerns of our members over the years. While we have focused to a large extent on the improvement of municipal function in the NWT, community development and economics have been an object of debate, resolution, and direction. Consequently we feel confident in presenting a number of specific issues for the attention of the committee.
I do have presentations on those issues. I think I'll paraphrase them as much as possible, to move forward here.
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Tourism is significant to us. The northern product is well received around the world. We do have a product here that's saleable to the worldwide tourism market, but technical expertise and financing resources in our communities present serious shortcomings. We really don't have it on the ground to take advantage of the opportunities that exist worldwide for the kinds of tourism opportunities that are available to the communities.
I must emphasize that I'm speaking for the communities. For tourism to be important to us, for the communities to take on the work, it must be related to the communities. It can't simply be opportunities that are divorced from the community. The community must benefit from tourism. No one in the community has any real interest in expanding the amount of visitors there are if there's no direct economic benefit to the community in employment or business opportunities.
Transportation - you've heard a bit of Mr. Vaydik's presentation - is a significant component of northern living costs. The majority of the communities aren't on highway systems. Except for barge and sealift delivery during the summer months, many communities are dependent on our regional airlines for passenger and freight service. Even with deregulation, this expensive mode of transportation contributes significantly to the high cost of living. The average passenger-mile rate to our larger communities by major carriers is double the national average.
The last time I looked, Canadian Airlines was running about 17¢ a passenger mile on average, based on their yearly statements. Even to a community such as Fort Smith, which is about 500 miles north of Edmonton, you'll see the cheapest available airline rate would be in the neighbourhood of 30¢ per passenger-mile. Anyone who is experienced with flying knows cold weather takes less fuel. There's less fuss and bother in northern airports. Why is the cost of these transportation services so much higher in the north? I think it goes back a bit to deregulation, but I won't get into that to a great extent right now.
The present condition of the NWT highway system increases the difficulty for truck transportation and increases the cost of goods for communities situated both off and on the highway system. It also has a negative impact on our tourism industry. The highway systems need badly to be continued to be upgraded. It's of great importance to all of us.
Adding to the need for improved highway transportation are the new mining activities that are taking place through the north. If we have a chance to prosper we must deal with upgrading of interprovincial-territorial highway systems to accommodate and encourage higher traffic and development of the north.
Any new national highways policy should identify the need for northern road development. Neighbouring provinces are often reluctant to initiate highway projects through northern roads in their jurisdiction to service out-of-province interests. These interjurisdictional problems must be mediated by the federal government. We're seeing that with the Dempster Highway now, and we've seen it for years with the Alaska Highway. We've seen it because in many areas we have difficulty in getting connections to the provinces established. The provinces are looking at their interests, and you can't blame them for that, but there is a national interest in roads, interjurisdictional roads and northern roads, and I think that has to be expressed quite clearly by the federal government. You can't leave it in the hands of provinces. It's an issue that is a national issue.
About Canada Post, we've been experiencing ongoing problems with the Canada Post Corporation. In many communities in the north the local post office is being run by the municipal council. They are having difficulty with dealing with the cost of providing service and remuneration from Canada Post for these services the municipality is providing. We would flag this as a significant problem for some of our communities. It's a vital link we would like to see better maintained.
One of the areas I'd like to talk about is the goods and services tax. We don't want to see any changes to the goods and services tax impacting on municipal governments. We join with our parent organization, the Federation of Canadian Municipalities, and all the other associations across the country, in saying the federal government must consider the implications to us when contemplating the design for a new tax. Alberta would probably back us up totally on this. We don't want to see a GST that adds any more to our tax burden.
The absence of manufacturing and the isolation aspect of the Northwest Territories mean the majority of goods consumed must be imported from southern Canada. These factors force northern consumers to pay much higher prices for essentially all goods and services produced. Consumption taxes add a greater financial burden on those areas with higher basic costs. This is inherently unfair to most rural communities across the country and especially to the Northwest Territories.
I have got a cost of living comparison on the back and you can see that most communities run anywhere from 40% to 90% higher than urban centres in the south. So basically we're being taxed double on our consumption because of the inherent nature of the consumption tax.
I think that's a point that should be well remembered by any committee that's dealing with rural and remote communities. Consumption tax is a problem for us. It is an unnecessary extra burden on rural communities that larger centres will not feel.
The federal government must consider the impact of a national sales tax on other levels of government. Currently under the GST tax, municipal governments recover a rebate of 57% of the GST they paid. There should be no greater tax burden on municipal governments under any harmonized federal-provincial tax. Any rebate mechanism should remain.
Mining in the north: The mining industry in the Northwest Territories will have varying social impacts on individual regions throughout the Northwest Territories. The local citizens of any region in which development occurs should be a prime source of information for determining impacts on their communities. This is the subject of a resolution that was adopted by our association.
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Mining has been a driving force in many municipalities across the north. Municipal leaders feel that the economic growth that is generated through the northern economy should stay in the northern regions. It is crucial that communities are directly involved in the mining industry as a significant source of economic growth.
The development in new mines must be accompanied by the kind of socio-economic agreement that was recently announced between BHP and the Government of the Northwest Territories. These agreements must be living documents that are backed up fully by the federal government as the prime land authority in the Northwest Territories today.
I have a fair bit on community energy planning.
The Acting Chairman (Mr. Bélair): Mr. Bevington, I see that you still have quite a bit to go. I'm leaving it up to you whether you want to complete your full presentation or leave time for questions.
Mr. Bevington: I'll just say quickly on community energy planning that we have an appendix on the cost of energy in the communities. It's extremely high. We're suffering from a system that was put in place many years ago that doesn't foster energy efficiency. It doesn't use renewables. We need to change our outlook on this whole issue.
There's much ground to be made. There's much private industry money that's looking at renewables these days, at energy conservation plans. We need the federal government to support those kinds of measures by tax breaks in the renewable energy field, just as you're doing. It's a very important thing for the north to get that tax structure set up to give the same breaks to renewables that are presently given to non-renewable fossil fuel sources. We can see development and good things for the communities out of those moves.
I'd like to hear what you have to say, too, so I'll leave my presentation there and open it up for questions.
The Acting Chairman (Mr. Bélair): Thank you very much.
Mr. Asselin.
[Translation]
Mr. Asselin: First of all, welcome. I am sure you'll be pleased to know that in the House of Commons, in Ottawa, there are many former mayors and councillors who are now members of Parliament, Parliamentary Secretaries or Ministers. I was a councillor for the town of Baie-Comeau for 14 years; the Chairman can confirm that. Among mayors of larger towns, several are interested in higher levels of government. I presume that it's to help their municipalities.
Since you represent a group of Northwest Territories municipalities, I'd like to know what you think of the current infrastructure program. It's a program which involves the federal, territorial and municipal jurisdictions. Should the federal government be smart and defer the project aimed at assisting municipalities? We know that municipalities consult and privatize more and more and that they establish priorities. Money is forever in shorter supply within municipalities, as it is at the territorial and federal levels, which leads municipalities to consult and to prioritize. Should the federal government carry on the current infrastructure program without changing it?
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[English]
Mr. Bevington: Yes, I think the infrastructure program can be continued. This has been the subject of a great deal of work at the Federation of Canadian Municipalities level. We have done a fairly in-depth study via McGill University outlining what occurred under the infrastructure program, getting beyond the negative headlines in the press about boxes in the Saddledome and things like that. There's a fairly good document that outlines where the money was spent and shows where the municipalities feel new infrastructure money should be directed.
We're concerned that municipalities remain a prime partner in any infrastructure program that develops. Certainly municipal governments have increased their stature over the years. The municipalities have gone from 15% of the government dollars spent in the late 1970s to almost 30% of the government dollars spent now. You can see that the growth in municipalities has been quite large over the last number of years. We don't see any change in that pattern. The provision of basic services will remain and will increase at the municipal level, so obviously we are concerned that infrastructure continues to be renewed. We would encourage you to support a program like that.
[Translation]
Mr. Asselin: You said yourself that the infrastructure program is useful to enhance the quality of life and the basic services you offer to the public you serve as municipal councillor?
Since you know the particular problems that exist in the Northwest Territories, don't you think that the federal government should finance the territorial government which would then be in a position to carry out consultations and establish priorities - such as improving the infrastructure - to facilitate the development of the mining and other industries? We know that there are many local workers employed in the mining sector. The Northwest Territories should use this money to build roads, of course, but also to enhance regional development, and thus, create jobs. Shouldn't we first spend money to make mining sites accessible and thus improve the quality of life, lower unemployment and create more jobs which, in turn, would make it easier for the population to finance the basic infrastructure?
[English]
Mr. Bevington: As I pointed out in my brief, I believe we need two basic elements to improve our economic position in the communities. One is to get down the cost of living in our communities through improved infrastructure, and through changing the way we deal with energy in a lot of cases. Energy is a huge cost to some of these communities: 30% of the budgets are tied up in energy costs in a lot of the communities. We have situations in some communities in the north today where the subsidy for electrical costs for one public housing unit is in excess of $1,200 a month.
These are things we have to change. At the community level a lot of basic changes have to take place for any kind of realistic economy to develop. At the same time, we need to move ahead on mining and the kind of resource extraction economy that can assist. These are two definite paths we have to follow. To say that you can put it all in one basket and that the federal government should subsidize mining before it subsidizes communities, or should work to improve the infrastructure of mining operations before improving the infrastructure of the communities...I don't know. I would say communities come first and business and commerce come second. We need to get our basic costs in line in these communities. They are so high.
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The Acting Chairman (Mr. Serré): Mr. Chatters.
Mr. Chatters: Do the municipalities in the Northwest Territories have any direct access to the 1% tax for non-resident workers in the Northwest Territories? Does that simply go to the Government of the Northwest Territories and then is distributed through grants and so on?
Mr. Bevington: I believe that goes directly to the territorial government. It is mostly eaten up in administration costs.
Mr. Chatters: Do you have any idea of a cost estimate for the completion of the Mackenzie Valley Highway, from where it is north of Fort Simpson to Tuktoyaktuk?
Mr. Bevington: The cost estimate on that kind of construction would be in the order of $300,000 or $400,000 a kilometre for a basic road.
The Acting Chairman (Mr. Serré): Mr. Wood.
Mr. Wood: Thank you, Mr. Chairman.
Mayor, I was just going over your brief and saw something that really disturbed me. I noticed in part of one of your resolutions that the municipal governments have no representation on any of the municipal infrastructure programs.
It says that the proposed municipal infrastructure program, as recently described by the President of the Treasury Board, would provide for a management committee with two representatives from the federal government and two representatives from the provincial government and no municipal government representative.
Obviously you want to be a full partner on this.
Mr. Bevington: That's exactly -
Mr. Wood: I find that rather strange. I'm from northern Ontario. Municipalities play a really big part in where infrastructure money goes. Perhaps it's a different set-up here. I'm not sure. Perhaps you could clarify that for me.
Mr. Bevington: We've been very concerned with this move at the Federation of Canadian Municipalities. The provincial finance ministers met together about two or three months ago and came up with this scenario where there would be stronger federal-provincial ties to the infrastructure program and the municipalities would be taking a back seat. This resolution comes directly out of that.
This speaks to the new program that's being proposed. We want to keep the tripartite relationship on infrastructure in place. It seems there have been some concerns on the part of the provinces that they're not getting enough say about infrastructure. They want to modify the program to give them the bigger kick on it. The infrastructure, the programs, in most cases are being done in communities. We want to direct how those dollars are going to be spent in our communities. That's the fact.
Mr. Wood: As the head of the NWT Association of Municipalities, could you tell me what rural development approaches you have found to be successful. Which ones should be dismissed as inappropriate? Which ones have you found that worked for you?
Mr. Bevington: Rural development in the north has succeeded when there's been direct community support for it. We talked about this in that community energy planning section.
Many times the Government of the Northwest Territories has developed programs for energy efficiency and for conservation, but they have never directly involved the communities in developing those plans for each community. What we're proposing is that a form of planning begin to take place where communities would be directly involved.
So rural development requires the full cooperation of the rural community. It is very rarely a success without it. The successful examples of that are where the community has the full say and responsibility in the carrying out of projects.
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I don't know how many of you have municipal or community political experience. I'm sure some of you know the frustrations of working through other levels of government to achieve your goals.
In my community we've just switched to a block funding arrangement with our territorial government. We find it a most refreshing change. The paperwork has been cut out. We're now fully in control of the dollars we spend in the community.
We had to take a bit of a hit to do this. We had to sign an agreement that gave us less money than perhaps we could have achieved through a wide program entry. But we find that the ability to work with the resources within the community in the absence of any kind of guidelines has helped us out a lot. That's our community.
The Acting Chairman (Mr. Serré): We have two minutes left. I'd like to give Mrs. Cowling the chance for a very short question.
Mrs. Cowling: My question is with respect to the infrastructure program. The response from municipalities right around the country has been extremely positive.
I found that in my community in the province of Manitoba, the infrastructure program not only provided jobs for the projects, but there was also a spin-off in the community itself. I'm wondering if that's happened in the Northwest Territories. Has an infrastructure project been introduced, where it not only created the jobs for that specific project, but it was also a spin-off in the whole community? People saw something very positive happening.
Mr. Bevington: Yes, most definitely. In a way, it was because there weren't the strict regulations about sewers and roads that had first come along. The communities were able to deal on a wide variety of community projects that in some cases created -
In the Northwest Territories the money was split between aboriginal government interests in the community and the public government interests. In some cases, the aboriginal people built offices. They put power lines into developing areas. The community at the same time would focus on a wide variety of activities that could enhance the life of the community and could enhance tourism. I think it was a very successful program up here in that regard.
The Acting Chairman (Mr. Serré): I'll just put my two cents' worth in before we let you go. I agree with you wholeheartedly that if there is a new infrastructure program, it should be community driven. I presume that my colleagues will agree to that.
Thank you very much, Mr. Bevington.
We'll now call upon Mr. Doug Anguish from the NWT Development Corporation.
You can have your job back, Mr. Chairman.
The Acting Chairman (Mr. Bélair): The floor is yours, Mr. Anguish.
Mr. Doug Anguish (Director of Marketing, Northwest Territories Development Corporation): Good morning. On behalf of the Northwest Territories Development Corporation, I'd like to thank your committee for the opportunity to appear before you today.
Those of us who live in the Northwest Territories sometimes feel that the attention we'd like does not fit well with your busy schedules. The fact that you're here today is some reward in itself. You've obviously been listening to our members of Parliament and the Government of the Northwest Territories and other representative bodies.
The Northwest Territories Development Corporation is a crown corporation created by an act of the territorial legislature. Our mandate is to create jobs and assist in driving economic development. We have direct involvement in some 38 projects, located at 28 different communities. Geographically, our involvement is from Pangnirtung in the east, to Fort McPherson in the west, and from Taloyoak in the north, to Fort Liard in the south.
Our involvement in the companies themselves takes the form of majority shareholder in some, and equity positions in others. We have two wholesale companies. One concentrates on the sale of food products, while the other sells arts, crafts and manufactured products.
The companies in which we have an interest employ some 1,100 people and achieved sales of just under $7 million in 1995. Our goal is not to own, but to create, develop and divest.
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The Department of Resources, Wildlife and Economic Development made a presentation to your committee earlier today. We report to the territorial legislature through the same minister, the Hon. Stephen Kakfwi. Our presentation will expand on a few items that are of particular interest to the companies we represent here today, as well as a few areas in which we think the federal government could provide valuable non-monetary assistance.
The majority of our companies use natural resources to create the products we endeavour to sell. These are not natural resources in the sense of minerals or forests; the natural resources to which we refer are on a much smaller scale, but nonetheless valuable to the local company that requires stone for carving; caribou, musk ox, and wild Arctic char for processing; or furs for garments.
We have the pleasure to be associated with four food processing facilities, all of which have federal certification and continually monitor quality control. Kitikmeot Foods at Cambridge Bay processes caribou, musk ox, and Arctic char. Keewatin Meat and Fish at Rankin Inlet processes caribou and Arctic char. Pangnirtung Fisheries at Pangnirtung on Baffin Island processes turbot and Arctic char. Western Arctic Foods at Hay River processes local pork.
The three facilities that process red meat have circumstances that place them at a competitive disadvantage when they comply with the Meat Inspection Act. We would recommend that both Houses of Parliament give expeditious passage to Bill C-60, which was introduced to the House of Commons on September 19, 1996. The passage of this bill and the subsequent regulations should give us fairer access to the markets in southern Canada, assuming there is close consultation with the government and the industry in the Northwest Territories.
Soapstone carvings from Canada's Arctic have become well known far beyond our borders. Traditional Inuit carvers and today many Dene carvers derive significant income from their works. At one time, all of the stone used by our local carvers was acquired close to their home community. This is not necessarily the case today. Stone quarries that were once used have in some cases been depleted. A significant number of carvings that come from Canada's Arctic today are of stone from faraway places such as Brazil or Africa.
We would recommend in this case that the federal Department of Natural Resources use whatever encouragement necessary to have mining companies share information about what they find in their core samples that could be used to develop new quarries of stone suitable for carving.
While the companies we are associated with could always use training or research and development funding, they could benefit almost as greatly from having a system of one-stop shopping when it comes to export markets. Most of our associated companies are too small and too far from their markets to have an effective marketing sales program. We have overcome this to some extent by centralizing our marketing and sales efforts. Whenever we identify a potential export opportunity, it is usually frustrated by the new walls that are encountered at each telephone call, fax, or letter.
We would recommend in this case that if the potential exporter knows what they want to export and the receiving company, one contact should be able to guide the exporter through the requirements until the customer receives the product.
Artists of the Arctic work in a number of mediums. Ivory and whalebone are two that are particularly troublesome. The difficulty arises in that the most readily available market in the world has a ban on both these products. We understand and appreciate that the United States of America has placed these bans for legitimate reasons. Our neighbours do not want to encourage the slaughter of elephants for their tusks and they do not want the indiscriminate hunting of whales that could lead to their extinction. At the same time, we would like some accommodation for the people of the Arctic who have lived in harmony with the land for centuries and never endangered any species.
In this case, we would recommend that the federal government request and lobby the Government of the United States to change its laws to allow ivory and whalebone art as an accepted import so long as it is certified to be from a traditional gathering process in Canada's Arctic.
We have intentionally tried to keep our presentation short today and hope that it has some meaning to the focus of your committee's deliberations. In closing, we'd like to thank you again for your thoughtfulness in coming to the Northwest Territories. If you have any questions, we'd be pleased to try to answer them to the best of our ability. Thank you for the opportunity.
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The Acting Chairman (Mr. Bélair): Thank you, Mr. Anguish. Your presentation was indeed very good.
Mr. Asselin.
[Translation]
Mr. Asselin: I'd like you to tell me what actions the government could take in the short term to help economic development in the Northwest Territories.
[English]
Mr. Anguish: One of the major things you can do is what you've done today: you've come as parliamentarians to the Northwest Territories to hear the concerns of people first-hand.
In my experience, if those in elected positions who go to a central location don't keep in touch with the outlying areas, they often lose sight of what is really important in their home constituencies. It's no different in Yellowknife, where we have the majority of the population and people live in outlying areas. If we don't go into the outlying areas we lose a sense of what is happening there.
So the first point is just a listening, consultative process with the people who live in the territories. Although some are similar, many of our rural economic development problems here in the territories are different from those in the rest of rural Canada.
Also, the regulatory process is sometimes difficult for us, and I think that is overcome by listening as well. I've mentioned the Meat Inspection Act, which causes us great difficulties. The regulation works well in Montreal, in Saskatoon, in Vancouver. But when we want a meat inspector to come to a plant at Rankin Inlet, it costs us thousands and thousands of dollars, therefore increasing the price of the meat for us.
So speaking strictly from the economic point of view of the Northwest Territories Development Corporation, I think two greatest issues are listening to us and regulatory assistance in terms of taking into consideration the differences here. We want to comply with regulations, but sometimes they increase the burden on us.
The Acting Chairman (Mr. Bélair): Mr. Chatters.
Mr. Chatters: As a crown corporation, you appear to be in many of the same ventures as the cooperative movement we just talked about. You talk about going into the community and setting up an enterprise and then divesting that enterprise. How do you do that? Do you in fact set up cooperatives, or do you divest the enterprise to private enterprise through a sale? How do you do that?
Mr. Anguish: We usually identify the opportunities in the outlying communities by a community-driven...if there is a need there already. We're very conscious of not repeating something that's already being done by someone else, whether it's a cooperative, the old Hudson's Bay Company, the North West Company or a retailer here in Yellowknife. For example, we are not involved in the retail business in the Northwest Territories. We are involved in the wholesale business, and we do that consciously because we don't want to compete with the northern businesses that are already there.
When we do set up a business it's locally driven, because we find that if there isn't significant local input and a business is imposed on a community, it's not likely to work very well. So once a business is set up, we have the training in place and the plant capacity is there to deliver a product, we would then turn it over to what makes sense.
To be realistic, some of the enterprises we are in will likely never make a profit because of the geographic distance and what's there. But we do feel it's better to pay people to work than to pay people not to work, so we have a response there as well. We try to make the businesses self-sufficient. We try to make them show a profit so that a private investor or a cooperative will eventually take over the enterprise we've set up in a community.
Mr. Chatters: But that doesn't always happen.
Mr. Anguish: No, it doesn't always happen. We go into it with eyes wide open.
I mentioned that in our mandate the two most important things for us are creating jobs and assisting in driving economic development. So in some cases - in all cases initially - we offer a subsidy to the businesses that are operating, regardless of what they are, and we try to get the businesses to a position where they do not have to be subsidized. To be realistic, some of those businesses will likely never reach a position where investors would come in and want to buy them because they could make a dollar on the investment. In that case, we have to look at the employment factor, at the pride there is in holding a job, producing a product and getting it sold someplace else in the world.
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The Acting Chairman (Mr. Bélair): Thank you.
Mr. Serré.
Mr. Serré: The advantage of these tours for members of Parliament, I guess, is you learn a lot of stuff. I've learned two things this morning that amaze me.
One is actually very positive. I can't understand how you can process local pork in Hay River and make it economically viable. I'd like you to touch on this in a little while.
But the other point I want to make is a bit more disturbing. You have to import stone from Brazil and Africa. I personally would be very upset if I bought an Inuit carving and found out the stone was from Africa. I can't understand for the life of me how, in a country like ours and with the vastness of the territories, we cannot find enough stone to do those carvings.
In my riding we have many different stones and mining. We have some very high-quality granite of every colour. But I think it should be coming from the territories. I don't know the answer, but how can we make sure this does not happen any more?
Mr. Anguish: I appreciate that you've learned new things by coming to Yellowknife. I trust the committee will take those away and in their deliberations help us to remedy some of the problems we face.
First in our recommendations is something that would be very helpful to us. There has been a vast amount of hard rock exploration taking place in the Northwest Territories. Mining companies would be hesitant to turn over information about their core samples to anyone. It would be helpful if you could find some remedy to this, so in the core samples they would be able to identify where there is stone of a quality suitable for carving.
I don't want to leave you with the impression that large numbers of carvings are done in stone from outside of Canada, but this is happening because there has been no way to replace depleted quarries. Originally the quarries were developed because of the local knowledge of Inuit people who lived in the community and had been carving for many years. As the quarries deplete, they don't have the resources, and we don't have the resources, to go out and look for quarries in other areas.
As we have said in our recommendation, you can help us by finding a remedy whereby there would be a confidential process in which mining companies would share information about their core samples from the hard rock mining. We'd be able to at least identify areas close to carvers' communities. They could go out and develop a new quarry. They could do this with our assistance, or with the assistance of the mining company, the community, and possibly the co-op that might also be involved in the community.
Mr. Serré: How can you make pork viable in Hay River?
Mr. Anguish: Eggs are also viable in Hay River. One of the reasons eggs are viable is that there is no system restricting the amount produced.
Milk is viable in Yellowknife. You might find this hard to believe. I had to be convinced. I'm a prairie boy myself and I thought I understood something about agriculture. I couldn't believe you can make money producing milk in Yellowknife. Where do you get the feed from? You have to import all the feed. But you counter it off when you have to ship the weight of fluid milk in versus the weight of feed and the efficiency cows have where the main input is as much water as it is food. You actually end up being able to produce a product that is competitive, at least in our market here.
In terms of pork, all our pork except for that produced in Hay River is imported from outside the Northwest Territories. Some of the same benefits apply to pork. There is a local group that raises the hogs. The hogs are slaughtered locally. One of the costs we have that they don't have in the south is the cost of having a veterinarian or a federal meat inspector inspect the meat. This does increase the cost to us. But you can produce feed in or close to Hay River.
You may know Great Slave Lake divides the tree line from the Canadian Shield. So there are areas there where you can produce feed. So the transportation to at least our local market in the Northwest Territories, in the larger centres, makes it viable at some point to produce pork.
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The Acting Chairman (Mr. Bélair): Mr. Wood.
Mr. Wood: Thank you, Mr. Chairman.
I have a couple of quick questions. Maybe you could just elaborate a bit and go into greater detail on one of your recommendations. One of the sentences is: ``Whenever we identify a potential export opportunity, it is frustrated by the new walls encountered in each telephone call, fax or letter.'' Tell me about the new walls.
Mr. Anguish: The walls aren't new. They're new to us. I suppose the walls have been there for a long time. For example, we just recently shipped wild Arctic char to a reception hosted in the Canadian embassy in Tokyo.
When it was first brought to our attention that this company would generously take our product over and promote it, because Japan is one of the markets, we thought this was a good idea. We put together a fish package that included cold smoked Arctic char. It included whole dressed fish and it included some gift boxes that are a retort process of Arctic char.
The first hurdle was that when we got the product from Cambridge Bay to Edmonton, it had to have the approval of the Department of Fisheries. We understand this. The Department of Fisheries approved it, and then we found you had to get approval from the place where it was being imported to or taken to for reception, even if it was not for resale. The Japanese authorities had to know what different processes were involved and what the different additives were, if any. It was a frustrating process, because when we're dealing with large distances and the timing is very short, we as the supplier want to get the product to the market. The market in this case happened to be Japan.
If we want to send wild Arctic char over to Japan or to Germany, there should be one agency within the federal government. I don't know whether it would be in the Department of Agriculture or in Foreign Affairs or some other department. But we could phone one person assigned to the Northwest Territories and we would deal with this one person from the time we made contact until the product got into the customer's hands in the foreign market, whether it be Japan or Germany.
If you're not used to dealing with exports all the time, the frustration comes when you think you have it resolved and suddenly there is another wall preventing your product from getting to its final destination.
I think if we had people assigned to geographic areas, it would be very helpful. You could deal with this same person until your product was actually delivered.
Whether it is the Department of Fisheries or whether it is Agriculture, the people who work there are very helpful. But there are still impediments and there could be a consolidation of the requirements for export products. I know we've dealt with the Department of Agriculture. They've been helpful in terms of telling us where they think export markets are, but then you have to go to the Department of Fisheries. You might have to go to a different branch of Agriculture because it is a meat product. There are many different stops you have to make before you actually get your product to its final destination.
Mr. Wood: Could I ask just one quick question? I want to piggyback on Mr. Chatters' question and ask you to tell me if there have been any success stories out of your group. Or, where have you not lost money?
Mr. Anguish: There aren't many success stories if you look at bringing a company to the point of being able to divest to the private sector, to a cooperative, or to some other entity who would buy it in the local area. I would say there is improvement and we're hopeful this will happen. I think today there are likely two companies that could be put up for sale and someone might buy them.
My job at the Northwest Territories Development Corporation is director of marketing. This is a new position. We've never had a marketing side before. The emphasis was first put on the development of the company, the training of employees, having the company be able to produce a quality product that can be put into the marketplace. This was heavily subsidized and there was no thought of selling the product.
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Now we're focusing on the selling of products, and the success is not in whether or not people in these companies can produce the product they're producing; they can do that. The key to success is whether we can market those products to the southern Canadian market. The other prospective markets, of course, are the United States, Asia, and over into Europe, particularly Germany. The companies have not been able to do this on their own, so you have to consolidate to do the marketing program.
You're looking at products that have some uniqueness to them that is about the Arctic. The Arctic has an appeal, a mysticism, almost a romance about it, and people do add value to a product, because it comes from the Arctic. I have every confidence that the companies that produce those products can get a break-even, a profit-making, position, and be divested at some point.
You have a problem when you have companies that produce homogeneous products with which you're really trying to compete with the southern Canada market. This is where you bring in the cloth, you add value to the cloth by making it into a blazer, or something like that, and then ship it back to the market.
I'm skeptical that those companies can ever be in a break-even position, because we have so many competitive disadvantages. But if the product is unique, and you can market it as something from the Arctic, I believe those companies are in a position where they will have investors one day, or they may be employee-owned, where they can make an actual dollar off of them.
The other side of that is that most of those companies will continually need to come together, to have a marketing agency for them. Because of the larger numbers it's more efficient to have that centralized, and have a marketing agency to market products in the outside markets.
The Acting Chairman (Mr. Bélair): Let's hope you're right.
Mrs. Cowling.
Mrs. Cowling: I am going to address the last recommendation you made on page 2. I was at a conference with the Inter-Parliamentary Union in Copenhagen, and the issue we addressed was combating poverty in the world. I spoke to that with respect to the fur trade in Canada, the jobs and the growth that creates here, and how the anti-fur trade rules and regulations in the European Community were very devastating to those of us in Canada.
I draw this to your attention because in your recommendation It's one thing to make a recommendation, but it's quite another to incorporate that recommendation so that it doesn't have a devastating effect on those of us who are in Canada.
So some of the rules we have in place in this country are to preserve the high quality of the product we produce here. I don't think that with respect to this recommendation you're going to be able to do this today in a few quick sentences, but I'm wondering if you could think about that and make some recommendations to our committee as to how we bring forward this specific recommendation so that we don't hurt some of the industries we already have here in our own country, because it's a recommendation made from an international perspective.
Mr. Anguish: Well, it's a trade issue and an animal rights issue. There are many issues involved, but I think the qualifier you put on these products I mentioned specifically We're concerned with whalebone and ivory. The ivory that is acquired by Inuit people in the north is acquired by traditional processes of gathering food. They haven't put species into extinction, and they're not going to do that.
In terms of the whalebone, if it's bone from a bowhead whale, it's virtually hundreds of years old. There's so much oil in the bone itself that you can't carve it unless it is 70, 80, 100, maybe 200 years old. They go out and actually find it throughout the Arctic by their own exploration, either by dog sled, snow machine, or if they are fortunate to have enough money, by flying or going by boat in the summertime.
The whalebone that is not bowhead, again, would be from animals that die by natural causes. These are some of the smaller whales, for which there is not an extinction or numbers problem. They would be taken as part of a traditional harvest for food.
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So I think that as long as we can show to other countries, particularly the United States, that it doesn't endanger any species and that it's a traditional method of gathering by which the products are accumulated, they should be able to find some way to make an exception for that. Truly carvers can make a very good living, and many carvers use whalebone as one of their media to get into those markets.
In terms of ivory, ivory is very collectable. That would be helpful as well, but I think the traditional gathering methods are key to it.
Mrs. Cowling: I wonder, Mr. Chairman, if I could ask Mr. Anguish to submit to us something in writing that would help us with that specific recommendation, because I think it's going to be difficult for us to get around that. If he could help us with that, I think it would be much appreciated.
Mr. Anguish: I will provide that. One thing I would say is that we will try to do some lobbying in the United States as well. I know a couple of politicians in the United States who I think will take this up as a cause. And we'd certainly be willing to submit to you in writing some of the things we think can be done to overcome the ban on these particular products.
The Acting Chairman (Mr. Bélair): On that note, Mr. Anguish, thank you very much for your presentation.
The meeting is adjourned until 1 p.m.
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The Acting Chairman (Mr. Bélair): First things first, I'll call the meeting to order. Does everybody have a copy of the brief?
Okay, Mr. Clarkson, you have the floor.
Mr. Peter Clarkson (Executive Director, Gwich'in Renewable Resource Board): Good afternoon.
I certainly thank you for the opportunity to present to this standing committee. The chairperson, Mr. Robert Charlie, was unable to come today. His work took him to various parts of northern B.C. and the Yukon this week, so he wasn't able to come down and make the presentation himself.
As a background, the Gwich'in Renewable Resource Board is a co-management board established by the Gwich'in land claims. The main function of the board is to be the main instrument of wildlife for renewable resource management within the Gwich'in settlement area, which is north of here in the Mackenzie Delta. The board looks at all factors of renewable resource research and management, which includes subsistence use and the local and potential commercial use for export.
As I mentioned, the board is a co-management board, which means that 50% are Gwich'in beneficiaries representatives and 50% are government representatives. The government representatives are from departments that have the mandate to deal with renewable resource management: Fisheries and Oceans, the Canadian Wildlife Service, and the territorial Department of Resources, Wildlife and Economic Development.
The board is set up by the Gwich'in Comprehensive Land Claim Agreement, which, like other land claims agreements, exists throughout the Northwest Territories, Yukon and in other places. With the land claims agreement, as in other areas, it sets up business a little bit differently from other parts of the country whether there are no claims.
The Acting Chairman (Mr. Bélair): Mr. Clarkson, I'm sorry to interrupt you. In all fairness to you, I've told every witness this morning that they have half an hour. It is their choice to use the whole half hour in making a presentation, or to make a short presentation and answer questions from the members.
I see you have a fairly long brief, and you're ad libbing also.
Mr. Clarkson: Hopefully the presentation will be roughly 12 minutes long, and then the rest of the time will be for questions, as we see this as the most productive part of the meeting.
The Acting Chairman (Mr. Bélair): Very good. I just wanted to make you aware of that. Go ahead.
Mr. Clarkson: The rest of the presentation is broken into nine areas of concern and recommendations based on the discussion paper that was prepared for the standing committee. We read through that and tried to focus on the areas that would be of greatest assistance.
The first point is this renewable resource board. The Gwich'in are certainly interested in long-term sustainable natural resource development. With that, they are interested in a critical review of what is to take place, what is to be funded, to ensure that the projects that are implemented will be of long-term use to people.
As an example of how things are connected, with timber harvesting in Alberta and British Columbia there is certainly the potential to impact other resource development projects that would take place downstream, and in this case downstream on the Mackenzie River. We would hope that any policies or recommendations coming from this committee would, if anything, strengthen the existing regulations and environmental regulations for review and assessment before projects are in place.
The second point is that throughout the north in the rural areas there is a large amount of renewable resource use presently taking place. A lot of this is in the form of local use and subsistence use. It's not in the form of large megaprojects, but it is important to the local economies throughout the north.
For example, in the Gwich'in settlement area, beneficiaries harvested last year over 24,000 white fish, 2,500 arctic char, 1,500 caribou, and a variety of other species. These numbers in the local economy don't show up in large dollar values. There is, however, a large economic value to the local community and a large social value to the people in those communities. The recognition of this local use should be considered when we're looking at policies for resource development, whether it's renewable or non-renewable.
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Fur harvesting was mentioned in a couple of presentations earlier today. It's still an important component of the north, though less in the past few years. It still provides some diversification for people. In the Gwich'in area we certainly see people who are still going out and trapping. They are also involved in other kinds of renewable resource use and harvesting.
So it does provide some benefit there, and we would recommend that any policies or recommendations for natural resource development consider fur harvesting - I'm sure that is part of the overall plan - and provide any possible support assistance to promote that sector.
As for commercial use of renewable resources, the board certainly supports commercial use when it is viable. Given the land claims situation, there are specific conditions, such as that subsistence needs of land claim beneficiaries are met, that residents in the area be involved in the decision-making process, and also that we see benefit. If those things are met and the local people are in favour of commercial use, then the board would also support that.
Next is integration and coordination of natural resource development in rural areas. In the Gwich'in settlement area we are currently in the planning stage of integrating land use management, so that when we get to the stage where there is development, it will be complementary to existing and future land use and other renewable resource land uses, so we don't get into an unproductive conflict situation of one sector fighting the other. Doing that beforehand will save a lot of time and allow for some productive work in the future. Any policies or recommendations for resource development should include a management and planning phase.
Training and education, as previously mentioned by some of the other groups, is important, and a northern-based training is especially important.
Regarding the infrastructure needed for northern rural development, it goes without saying we're a long way from the markets. The infrastructure in the territories right now is either inadequate or minimal at best. The only highway linking the Mackenzie Delta to the rest of southern Canada is under threat from reduced maintenance or possible closure. This would have a major economic effect on the delta, not only on the existing economy but on any future development. We would hope that any policies or recommendations from this committee would strengthen infrastructure and not do anything to weaken it.
The subject of tourism development is tied very closely to infrastructure. There a potential for tourism; it is growing, but there needs to be more work and development on that. With increased infrastructure, tourism will likely also increase.
Any future resource development projects hopefully won't take away from the pristine areas and wildlife areas that people are travelling to the north to see. People don't come here for our sunny beaches. They're coming here to see the wilderness, to see the wildlife populations in their pristine environment. That's the asset we have and we need to protect it.
On the subject of funding for natural resource development, like anything else, funding is going to be important to development in this area, given the limitations that there are. We would hope that good use is made of limited government funding, and that funding programs that have long-term benefits, such as infrastructure, will be the first ones considered.
As an example, we could dump money into tourism for the next 20 years under these projects in developing the community to bring them up to speed, but paving the Dempster would probably have a thousand times greater effect than dumping stuff into developing the tourism market.
I think that's everything I have. I realize that was brief, and hopefully not too fast for the translators.
The Acting Chairman (Mr. Bélair): Well, sometimes they have fun with that. No, it was okay.
First we'll have a series of questions. Monsieur Asselin.
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[Translation]
Mr. Asselin: Could you elaborate on the first issue you raised, that is long-term renewable resources, such as timber. You say it would be important for the federal government to strengthen existing regulations. Can you tell me what you mean by that?
[English]
Mr. Clarkson: I guess what we're meaning there is that on any resource development projects, we would ensure that the existing regulations stay in place and that the government doesn't look at reducing or softening any of these regulations just to promote natural resource development. Those resources are in place for a good reason and we would like to ensure that they remain in place.
[Translation]
Mr. Asselin: Here, in the Northwest Territories, is there any clear-cutting and reforestation to ensure that forests are maintained as a renewable resource?
[English]
Mr. Clarkson: In most of the territories where there is cutting, as in the southern part of the territories - in the Liard area, I believe they do have reforestation programs in place. I'm not sure if they're clear-cutting or not. That's a considerable way from the Gwich'in settlement area. In the Gwich'in area there is no clear-cutting. The trees are such that they go in and pick out the harvestable trees, so it's select cutting there.
[Translation]
Mr. Asselin: Last year, I had the opportunity to be part of a delegation of Canadian and European parliamentarians. When we met the European representatives, their government was threatening to stop buying fur coming from Canada because we use trapping. Right now, at this very moment, does the fact that we trap fur-bearing animals create problems, particularly in Europe?
[English]
Mr. Clarkson: No, trapping of fur-bearing animals is how most of the beneficiaries, the trappers on the land, would get the animals that they get. Because of the ban and the regulations, most of them have switched to the quick-kill traps in order to comply with the national regulations and the regulations that allow Canada to sell fur to Europe. They're making the switch, so the board does not have any concern with trapping. I guess our concern is that the fur industry remain there so that the trappers can still go out on the land at this time of the year and begin harvesting the fur-bearing animals. We see that trapping has been sustainable for many generations, that the people on the land have been responsible stewards in managing that, and we hope that will continue.
The Acting Chairman (Mr. Bélair): Mr. Chatters.
Mr. Chatters: Almost every presenter this morning talked about the need for training and education. We heard that the infrastructure for basic education is there, yet we continue to make very little progress in the numbers of - particularly aboriginal - youth who graduate from basic schools, elementary and high school. How can we motivate those people to the fact that education is the key, even for resource development? For the most basic jobs in resource development one has to have a good, sound basic education, and that's not even considering those who would become professionals and get in on the high-paying jobs - engineering and those types of jobs. Just to operate the equipment you still need that basic education. But we're not very successful at doing that. How can be motivate those families and people to take advantage of what's there, to be part of that?
Mr. Clarkson: That is a big and difficult question, but I think the more northern-based training programs that we have, such as we've seen with Aurora College in the last five years, the greater success rate we're seeing. In Inuvik in the last two years there has been a renewable resource technology program, which, you're quite right, started with something like 20 students and graduated four. But at least the two Gwich'in students who did graduate are now employed - one by our board in a training position and one by the Gwich'in themselves.
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So it's a start, and I guess we won't see dramatic changes overnight, but by continuing to ensure that those programs are available in the north, we'll see a change. The land claims have started to bring in that change, and people are seeing how important it is to have a good education and to become professional people. But it's only been a relatively short period of time since they have been empowered with that decision-making position, so I think we'll start to see those changes as time goes on.
The southern-based European civilization has had several centuries to deal with that problem and set up good educational institutions. We're seeing that in the north, but only in the past perhaps 10 years, not 300 years.
Mr. Chatters: Thank you.
The Acting Chairman (Mr. Bélair): Mrs. Cowling.
Mrs. Cowling: Thank you, Mr. Chairman.
I'm going to come from the educational perspective, from another side of it and from the community itself, because I firmly believe that people in the north have a culture that is unique to the world. When we talk about the educational component of that, whether it's stone carving, art or with respect to the fur trade, what are we doing to maintain and preserve that culture? Could you expand on that? I think that will lead to my next question, which is with respect to tourism.
I was told at noon that over Christmas you had 100 Japanese people in your restaurant. Are you mainly attracting people from the Asian Pacific Rim? Where are those tourists coming from? When we're thinking about another infrastructure program, should we be directing it in the way of a tourism infrastructure program?
Mr. Clarkson: That is a two-part question.
The cultural education and cultural enhancement of their people is very important to all of the land claims groups. The Gwich'in have a separate Gwich'in cultural institute that deals specifically with that.
Within the board, right from the beginning we started a Gwich'in environmental knowledge project, which focuses on traditional knowledge of the elders in the community. We're using that as an influence into the wildlife management decisions, where it will eventually, once the project is completed -
Linking over to tourism, the board doesn't specifically deal with tourism initiatives, but in the western Arctic our main tourism link is out of Dawson and up the Dempster. We do have a number of fly-in people. We don't get the Asian Pacific crowd that Yellowknife would get to see the northern lights, but we do get a lot of people coming up in the summer to see the 24-hour sun and that type of thing. That is increasing, but it's still relatively minimal.
For example, I think Dawson City gets 500,000-plus visitors a year up the road, by road traffic, while Inuvik gets 8,000, and we're only 10 hours apart.
Mrs. Cowling: And the latter part of the question - would you recommend that tourism be part of the next infrastructure program, should there be one?
Mr. Clarkson: I think it would certainly assist with development, but I think the tourism infrastructure, the money going into stuff that would be longer-term projects As mentioned earlier, we can spend all the money we want on tourism over the next 20 years, but it may have a marginal effect. Doing something like paving the Dempster would probably increase tourism tenfold in the first year. People get to the crossing at Dawson and look up the Dempster, and if it's a rainy day, it's looking down a gravel road that is getting smaller and smaller, and they say, no thanks, I'll go back to Alaska or someplace else.
The Acting Chairman (Mr. Bélair): Mr. Wood.
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Mr. Wood: I want to keep going on Mrs. Cowling's questions on tourism. About six or seven years ago I was on a mission similar to what we're doing now with tourism. We travelled around the country and talked to people about tourism. One of the biggest problems that came up was that there are so darned many tourism associations, where do you put your money to make it most effective? I'm sure you have a Dawson City tourism association, a Yellowknife tourism association, an Inuvik tourism association - everybody has a tourism association.
If we decide to do this and, as Mrs. Cowling said, put infrastructure money into tourism, how do we get the biggest bang for our buck? Where do we put the money so that it really works? There are so many little pockets of tourism associations throughout the country, how do we make this thing work if we decide to do that? We need some direction, some ideas, if we decide this, because it's really hard to do.
Mr. Clarkson: I can definitely appreciate that. To qualify that, it's a bit outside the board's tourism mandate. We deal with that on the periphery, where people would be coming up and getting approval to be tour-operating in specific areas, but from experience and from living in Inuvik for the last 10 years and actually being involved in a tourism business, I would have to say that having the infrastructure in place so that people can get to the area and get there easily Many communities in the Northwest Territories don't even have an airport, or you can't get into and out of them easily.
The second area would be funding for specific program development. Unfortunately, most tourism businesses are not economically viable on their own. They has to be tied in with something else, because the season just isn't long enough and the volume of people isn't there yet. For someone to buy a boat in order to take tours out on the delta - they also have to use that boat for hunting, fishing and whatever, so it has to be multi-purpose. So I guess assistance at both ends of the spectrum, the larger picture on the infrastructure and then assistance at the local level, would be the two areas.
Mr. Wood: Do you think the infrastructure that needs to be met first is paving the roads and -
Mr. Clarkson: Or getting infrastructure set up so that people will get into the area. There's no sense spending a lot of money developing tours, paying for boats or whatever, if the people aren't coming. We have to get the people to the north first, and if the demand is there, the market is there, the other stuff will fall into place.
Mr. Wood: But most of these people are really protective of their own turf, aren't they?
Mr. Clarkson: Do you mean the land claims areas?
Mr. Wood: Basically, yes.
Mr. Clarkson: They are no more protective than people in the south would be of their turf. It's a new turf for a lot of them in the land claims situation, and they're at the embryo stage of setting up economic benefits for people within the claims, and I think they're hoping things can be developed and set up to benefit the people who are in those areas.
The Acting Chairman (Mr. Bélair): Mr. Asselin, you have one more question.
[Translation]
Mr. Asselin: Do you think that, if we set up another infrastructure program, the federal government should continue to deal with municipalities and provinces or, in the case of the Northwest Territories, have a specific program to improve the highway system, which would make it easier to attract tourists and would facilitate access to mining and other resources?
I don't think the federal government can spend as much money as before to develop basic municipal infrastructure and, at the same time, finance the improvement of the road system. If you had a choice, what would you recommend?
[English]
Mr. Clarkson: The infrastructure program that has been in place for the last three or four years has been well received, and I think the money has gone to good projects in the north, because the infrastructure was definitely needed. For future infrastructure programs, I think addressing some of the basic infrastructure needs such as roads and airports would still be a priority. I realize there may not be as much money there, but if things can be partnershipped and cooperatively funded, perhaps the total dollar amount then could be larger and we'd be able to get some of the larger infrastructure into place.
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Certainly Diefenbaker's vision of the Dempster as the ``road to resources'' cost a lot of money, but I think since it's been put in, we in the Mackenzie Delta have realized that it has been well worth it. It has been a good economic link to the rest of Canada.
The Acting Chairman (Mr. Bélair): Thank you very much, Mr. Clarkson. It was a very good presentation, with good points.
Mr. Clarkson: Thank you very much for your time. Merci.
The Acting Chairman (Mr. Bélair): I'll now call on Gabrielle Decorby and Daniel Adam, from the Yellowknife Chamber of Commerce. The floor is yours.
Ms Gabrielle Decorby (President, Yellowknife Chamber of Commerce): Thank you. Good afternoon and welcome to Yellowknife. It's a warm day to receive you. With me here today is Daniel Adam, chairman of the the business development committee; and Steven Richards, who is a past president of the Yellowknife Chamber of Commerce and an interested party in this presentation. My name is Gabrielle Decorby, and I'm the current president of the Yellowknife Chamber of Commerce.
Thank you, Mr. Chairman, for the opportunity to make this presentation here today. If you're talking about rural economic development, you couldn't pick an area that is more rural than the Northwest Territories. By ``rural'' we understand you to mean areas that are economically less developed due to a variety of obstacles such as a small population, distance to markets, high operational costs, availability of trained workforce, access to capital, poorly developed infrastructure, etc.
The Northwest Territories is a vast area of Canada, geographically one-third of the land mass of the country. It is home to only 57,000 people, 21,000 of whom will be residents of Nunavut in 1999. Baker Lake is the geographic centre of our country. The Northwest Territories is definitely rural and a study in contrasts. It is a vast area of pristine wilderness, safe sanctuary for a variety of unique species, and, contained in our rocks, incalculable natural resources.
The people of the north are a study in contrasts. There are large discrepancies in education, and social problems. It is an evolving society, often forgotten or mystified by other Canadians, that is somewhere between traditions that are very old and the information culture that is so familiar to southern Canadians. But we are definitely rural.
Not only is our economy rural, it is also very tenuous. There is little diversity to our economy, a feature that gives southern economics strength. There is government and there is mining. Other sectors play minor but very important parts, such as tourism.
We need responsible development. While we are not here to promote the mining industry, I can't help but recall a bumper sticker which read ``If it's not grown, it's mined''. Given the exception of a few hardy attempts, we don't foresee agriculture in the north becoming a major contributor to the growth of the GDP. That leaves us with mining or government.
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You have solicited our input into the development of an economic policy framework for rural Canada in the natural resource sector. To reduce the barriers we rural Canadians face with respect to economic development, we encourage the committee to consider the following recommendations.
Mr. Chairman, our first point is to stabilize the political climate. The Northwest Territories Act prescribes the operating relationship the Northwest Territories has with the federal government. You are perhaps aware of the discussions taking place with respect to our Constitution. This debate is not really about constitution; we recognize that as Canadians we already have one. The debate is about how the western Northwest Territories will be governed. It is a debate of roles and responsibilities. Investors are watching closely.
I would encourage members of the committee to review the respective roles and responsibilities of the two levels of government. Most of the legislation concerning resources and environment are federal statutes. We do not have a northern accord, and therefore we do not have control of our resources. Great debates are ongoing with respect to who has control of them. Leaders of communities and government are confused, frustrated, and disappointed with this reality. What we are dealing with here is ownership of the resources. Settle the remaining land claims and make it very clear to one and all to whom they belong, and under what conditions.
As for roles and responsibilities, we can't over-emphasize the need for clarification of this issue. Imagine yourself an investor about to make a decision, and you receive a briefing on the reality of the jurisdictional and ownership dispute, and the hoops through which you will be required or expected to jump. South America or the Northwest Territories - where would you invest?
Our second point, Mr. Chairman, is with regard to infrastructure. We feel clearly that this is an appropriate role for responsible government. The conventional economic model, with which we are all familiar, suggests that if government provides the roads, power, and communications infrastructure, economic development will follow.
A quick look at our map will show a pitiful lack of infrastructure. We're not suggesting paving the Northwest Territories. But while we protect our natural advantages, let us have some of the tools and all-season roads that southern Canadians take for granted. Without such basic infrastructure, the people of the Northwest Territories are destined to continue in the spiral of economic dependency.
Think of the logistics and costs of accessing these resources without infrastructure. If this committee wants to develop a policy framework to encourage economic development of the primary resource sector in the Northwest Territories, we cannot overstate the critical importance of infrastructure.
In this process, a critical element in helping northerners reduce their economic dependency would be for Canada to insist upon full and detailed transparency in accounting for Canadian treasury source dollars. To that residents can make realistic comparisons and decisions about the relative value of various developments. As business people, we believe management and measurement data are synonymous.
Our third point, Mr. Chairman, is the regulatory environment. While we are admittedly in a period of change in our regulatory environment, industry, in our view, may fairly ask: what are the rules this week? While we must balance the need for economic development with the protection of our natural heritage, is it possible that current legislation is prohibitively onerous and discourages investment?
The Mackenzie Valley Resource Management Act will apparently be passed next month. How will it work with the Canadian Environmental Assessment Act? Will developers have to adhere to both pieces of legislation? What happens if there are conflicting requirements? Guidelines with respect to transboundary and cumulative effects are examples of issues that are unclear.
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We encourage the committee to think about what is responsible, to establish one clear set of rules so that proponents know what the rules of the game are, and then don't change them.
Our fourth point relates to fiscal policy environment. It is difficult to deal with so complex a subject in this type of context. However, to encourage investment, we respectfully suggest to the committee that it examine constancy of fiscal policy. If federal solutions are made to developers that incorporate an attractive tax and royalty regime, we recommend that the government not change its mind two or ten years down the road. We also suggest that the government do this openly, and not vary its policy from one proponent to the next. If the playing field becomes uneven, a competitive advantage may be obtained by one over another.
I acknowledge this as a complicated issue. We recognize that governments of the day will change fiscal regimes. But in an undeveloped economy such as exists in the Northwest Territories, these changes contribute to the boom-bust cycle and tend to discourage investment.
Our fifth point, Mr. Chairman, relates to education and training. Here is another example of a traditional and appropriate role for government. Governments at the territorial and federal levels must accept the responsibility of providing a trained and educated workforce. While we will not diminish the efforts made in the past, we must be candid about the need for continued efforts.
Another examination of the demographics paints a dismal picture. Leaders and residents of the Northwest Territories must ensure that the people are educated to fit within the global context. By so doing, we would ensure our own longevity in the workplace.
In addition to the gross amount of funds contributed to adult education and training by both levels of government, we encourage the committee to review the path and source of funding. Part of this review must be an assessment of the effectiveness of moneys already spent through disclosure.
Because there are too many anecdotal incidents suggesting that efficiency is limited, changes within HRDC have provided increased grassroots access to training funding, but at the same time decreased critical mass and decreased ability of those in established training institutions to deliver quality and relevant curricula.
While partnerships in training funding are a necessary and acceptable practice, and while business and industry are happy to contribute, third-party funding has become the requisite ingredient to achieve critical mass. This begs the questions: What is government's commitment to providing a trained workforce? Whose responsibility is it? What is the most effective way of achieving our objective? If industry feels that the financial burden is too onerous, we suspect that investment levels will be reduced.
We understand and applaud efforts to reduce the deficit, but we suggest that reductions must be considered in context.
Item six is community economic development. Over the years, a variety of economic development initiatives have been supported by the federal government. The most recent was a five-year, $50 million economic development agreement, a 70-30 partnership with the territorial government, which supported foundations of economic growth. It provided funding in sectoral areas such as arts and crafts, cultural industries, community-sponsored development, agriculture, mining, fishing, forestry and wildlife harvesting, tourism and training.
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There is an ongoing need for this type of programming. Important contributions were made in terms of feasibility studies and technology development. These assisted with the laying of foundations of economic development, yet if we look at those initiatives in terms of bang for our buck, there was little return.
Objective analysis based upon full and complete disclosure of the facts of the implementation of past initiatives would be particularly useful in terms of helping to determine ways to improve return. This type of programming continues to be important for community economic development, but we should maintain a distinction between those types of initiatives and those that attract investment that provides meaningful return in terms of sustained employment and business growth.
Mr. Chairman, the problems before you are substantive. We support your efforts to find a balance between budget and deficit reduction, with the need for federal support initiatives. If we were to challenge our assertions, we would ask ourselves to confirm what government's roles and responsibilities are, and then compare those fundamental responsibilities with existing programs and services. Perhaps then we would have a clearer blueprint of funding areas to be enhanced, reduced or eliminated.
We do not want to oversimplify the difficulties of such a task, but if we were to go through such an exercise, surely we would find widespread agreement that at a minimum, and especially in a rural context, the federal government should properly apply itself to matters of developing infrastructures, establishing an equitable fiscal regime, establishing rules and monitoring performance, resolving land claim issues and administering the Northwest Territories, and finally, providing funding that ensures our citizens are educated and trained to meet the demands of the economy.
Mineral development in the Northwest Territories offers the greatest hope of sustained and responsible economic development. A policy framework for economic development in the natural resource sector, in our view, could be most effective if it were to provide the tools we have described.
Thank you for the opportunity to address you. We wish you good luck in your efforts.
[Translation]
Mr. Asselin: Welcome and thank you for an excellent presentation. You have listed some positive and some negative aspects to clarify the situation for the committee, which will be very helpful when comes the time to write our report. Are the items you listed in order of priority?
I note that the first is about stabilizing the political climate. I thought this was something which applied only to Quebec, but it appears that it's also true at the other end of the country, in the Northwest Territories. Here, I am sure it's not for the same reason as in Quebec.
I also note that this situation tends to drive investors away and that, among other things, there seems to be a problem with land claims. What actions have been taken by the Northwest Territories to ask the federal government to deal with that problem once and for all?
What could the federal government do, in terms of infrastructure, tourism, political stability, etc., to help small and medium businesses as well as the industry to create new jobs, sustainable jobs here, in the Northwest Territories?
[English]
The Acting Chairman (Mr. Bélair): Who will answer?
Ms Decorby: We will all be receptive to answering.
Mr. Steven Richards (Past-President, Yellowknife Chamber of Commerce): I'd be happy to answer the wider part of that.
The Acting Chairman (Mr. Bélair): Yes, there are two questions. That's what I said.
Mr. Richards: I didn't have the translation for the initial part so I didn't hear the member's question.
With respect to the question about what the federal government could do to support SMEs, I think the chamber's position would be consistent in that we would encourage you to provide infrastructure and training dollars in the traditional areas of support, and allow industry and business to develop on their own.
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Some of the areas of federal support that have worked quite well are in technology development, so we would encourage that sort of continued support. At this point I don't think direct support is indicated. I think a number of existing programs are working well.
The Acting Chairman (Mr. Bélair): Can I just interrupt you?
This is going to be a very short question, colleagues.
Someone mentioned that ACOA was not of much use to you. Could you comment on that? It's in the same line of thought here. Sorry, not ACOA; that's in the east. I mean Western Diversification.
Mr. Richards: The comment, Mr. Chair, was that it wouldn't be of much use to us?
The Acting Chairman (Mr. Bélair): Yes, was not of much use to the Northwest Territories.
Mr. Richards: I think $50 million, regardless of how it's spent, is a significant contribution to the economy. Meaningful work was done in areas of feasibility in fishing areas in the Baffin area. Some important work was done with respect to wildlife harvesting, and there was a lot of community-sponsored development that the smaller communities certainly enjoyed.
The Acting Chairman (Mr. Bélair): I'm very pleased to hear that.
Mr. Richards: The point, Mr. Chair, is that there isn't a lot to show for it at the end of the day, and when we talk about bang for the buck, we would hope for more meaningful longer-term yield on that investment.
The Acting Chairman (Mr. Bélair): For the first question now.
[Translation]
Your first question was not answered. Gérard, do you want someone to answer it?
Mr. Asselin: I believe that is what the lady intends to do.
[English]
The Acting Chairman (Mr. Bélair): Gabrielle, on the first question.
Ms Decorby: Can I get a repeat of the first question, please?
[Translation]
Mr. Asselin: I just noted that it's not only in Quebec that there is a political stability problem, and that there is also a problem with land claims.
[English]
The Acting Chairman (Mr. Bélair): Political stability.
[Translation]
Mr. Asselin: I was asking what kind of representations had been made by the Northwest Territories' government to the federal government so that this problem, which drives investors away, can be dealt with once and for all.
[English]
Ms Decorby: They haven't done that yet, have they?
The Acting Chairman (Mr. Bélair): It is just another way of self-promotion, do you know what I mean? Anyway, the question is in order, I guess, because you've referred to it. So please answer.
Ms Decorby: I would say they haven't. I would say that has not been addressed by the government at this point.
If I can flip back to the second question, I want to reiterate what Mr. Richards said - that if we could identify the ways in which government could pave the way for business and industry to support the country, I think we would be much better off in the long run.
The Acting Chairman (Mr. Bélair): Thank you.
Mr. Chatters.
Mr. Chatters: In your presentation, under infrastructure, you make the statement that:
- In this process, a critical element in helping northerners reduce their economic dependency
would be for Canada to insist upon full and detailed transparency in accounting for Canadian
treasury...dollars.
- What are you talking about? What do you mean? That's one question.
Ms Decorby: I'd like to address your second question first, and I believe Mr. Richards will address your first question second.
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With regard to the motivation within education and the workplace, I'm one of the few people in Yellowknife who have been here all their lives. I've gone through the education system here, from kindergarten to grade 12. I have to say that there is a real lack of motivation among large numbers when it comes to a good work ethic. I believe some of that is due to the many different cultures we have here. As well, things have come too easily for certain groups of the country.
If we provide a basic education that is equivalent in standard at the low levels to our students, I think that once they come out of grade 12 they will be able to fit into more of a global economy. I think the standard has been reduced instead of raised over the years. So that is one stream of thought.
On the other side, when we're dealing with adult education, again it's a motivator. I think lots of areas of education here are available to adults, whether married, single or have children. There is an opportunity for all people to be educated here. It really comes down to this: once they're on their own, once the ties have been cut, there's often a problem with motivation. I'm not sure if it relates to the fact that things have been easy for so long that once they have to stand on their own it becomes a real problem.
Mr. Chatters: I had a second part to my question.
Mr. Richards: The question with respect to transparency is perhaps more directed at the GNWT, where details with respect to public accounts are not just difficult but impossible to obtain. We're not privy to a lot of the evaluative or public accounting data that we might want, to see what programs and services have been afforded.
So it was just the simple point that -
Mr. Chatters: That really surprises me. Why is that? Why is it not available?
Mr. Richards: It's not the policy of the government to provide some data.
Mr. Chatters: Interesting.
The Acting Chairman (Mr. Bélair): Mrs. Cowling.
Mrs. Cowling: Thank you, Mr. Chairman.
I want to pick up on Gabrielle's comments on motivation and developing a good work ethic. First, do you believe that should happen in the home and in the community? As a parliamentarian, I think it would be very difficult to develop a policy that would create a good work ethic. Often that happens in the home and in the community.
Do you believe it should happen in the home and in the community, and that policy-makers should be creating a climate in which that may take place? If so, what would your priority be in creating that kind of climate for economic growth in a community such as Yellowknife?
Ms Decorby: It's very important to have a work ethic in the home environment and in the community. I can understand the difficulty in that you're addressing that situation on a bigger scale.
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If we were to dissect the way we live today, I think there are many ways in which people could increase their work ethic. Many homes don't have it available to them, so the school has to pick that up, and I think it does need to happen in the school system as well.
Mrs. Cowling: If I can go back to my question on economic growth and creating a climate for that, one of the things we have done as a government is the head start program. I'm not sure if that's available here or if you have it in Yellowknife. It has been very well received right across the country. It is a program for three- to five-year-olds so they can get a head start in the community.
I want to come back to creating a climate for economic growth and jobs, making the community viable, sustainable and a good place to live. I would like you to expand on your thoughts on that one.
Ms Decorby: Are you asking me for ways that might become -
Mrs. Cowling: Yes, you've provided a number of ways -
Ms Decorby: What often happens is that children go to school and don't realize what the end result of what they're learning in school could be, so they go to school on a daily basis, in many cases not really knowing what they're doing there, so they end up not having a clear direction. If there was more taking the children into the job environment so that they could see where their education might take them, perhaps that would help.
The Acting Chairman (Mr. Bélair): Colleagues, do you have questions?
Mr. Wood.
Mr. Wood: What is the chamber's view on the appropriate federal government role in the area of rural development? Where do you see us playing a role?
Mr. Richards: The appropriate role and the traditional role - I guess I can answer it briefly in that fashion. We believe that roles and responsibilities are something we should all look at, as I am sure parliamentarians do every day. Roles and responsibilities often get distorted, and we're not sure where responsibilities begin and end, and I think that's particularly true in the Northwest Territories. But I would suggest that the traditional roles of infrastructure and training and some of the points we made in our written presentation are the important areas. The regulatory...the political relationship the NWT has with Canada and so on -
Mr. Wood: Overlapping too, right?
Mr. Richards: Yes, there are some overlapping jurisdictional disputes.
The Acting Chairman (Mr. Bélair): Is there anyone else? A very short question. That's all the time there is left.
[Translation]
Mr. Asselin: Mr. Adam, this afternoon, we met representatives of the Northwest Territories Development Corporation. I note that the Yellowknife Chamber of Commerce also has a committee responsible for development, the Business Development Committee. Is there any coordination between these two entities and what joint actions are taken? I presume that both your organizations are concerned with economic development. Why did the Chamber of Commerce establish a committee when there already is a corporation?
[English]
Mr. Daniel Adam (Chairman, Business Development Committee, Yellowknife Chamber of Commerce): Thank you for directing the question to me.
I should start by saying that we had very little advance warning of this session, so I apologize for not coordinating our response. We do meet with these other associations and committees quite regularly, and we have people There are representatives on my own committee, the Yellowknife chamber's business development committee, from the chamber of mines and elsewhere.
We're not very familiar with what they said in their presentations to you. To be candid, we scrambled a little bit and wanted to give you some perspectives from the point of view of the Yellowknife Chamber of Commerce. I hope you haven't found too many contradictions in what we have said or what our colleagues have said.
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The Acting Chairman (Mr. Bélair): Thank you very much. I think it's a very good presentation. It's straight to the point and there's very good material in here. When researchers write a lot, it's a good sign.
Mr. Adam: Thank you.
Mr. Richards: Thank you.
The Acting Chairman (Mr. Bélair): From the NWT Arctic Tourism Association we have Mr. Furlong, or Ms Carmichael, or both. Please be seated.
The floor is yours, Mr. Furlong.
Mr. Charles Furlong (President, Northwest Territories Arctic Tourism Association): Thank you very much. I am Charles Furlong, president of NWT Arctic Tourism. Arlene Carmichael one of the board members, as is Eric Yaxley.
I'd like to present you with some of our thoughts on tourism and how we can best - jointly perhaps - make government aware of our situation up here in the western Northwest Territories. First I'll give an economic overview.
Tourism is one of the largest industries in Canada. Statistics Canada and Tourism Canada recently developed the tourism satellite account, which estimates that tourism now contributes nearly $30 billion to the Canadian economy. Tourism in the Northwest Territories is recognized as a critical component of the economy. As an export, it brings new money into the economy and is an activity in which all regions and communities can participate and reap a benefit.
Total non-resident visitation in 1994 was over 62,000 person-trips. Of this total, over 38,000 were pleasure visitors. The travel trade provides over 500 full-time jobs in the Northwest Territories. Rural areas account for a greater proportion of a long-term unemployment than do their urban counterparts.
As you may be aware, the NWT has the highest rate of long-term unemployment in Canada. Low levels of skill and formal education continue to be a problem. Communication and transportation infrastructure is also generally inadequate, and access to capital is poor. A final point worth noting is that community economic development initiatives need to be improved.
NWT Arctic Tourism was created by industry members in November 1995 to promote tourism and support community tourism and tourism operators in the western NWT. The board of directors represent the industry sectors, land claims groups and the Government of the Northwest Territories.
The 1996-97 joint Canada-NWT Economic Development Agreement, referred to as EDA, provides $545,920 for all the Northwest Territories to support tourism. Of this budget, 60% is targeted to tourism in the western NWT. This money was a significant component of the overall tourism budget for the whole NWT, especially for the western Northwest Territory.
Regarding programs, EDA currently funds the delivery of important programs in tourism training, international marketing initiatives, operator-based consumer show programs. These programs will not be funded under EDA in 1997-98. If tourism growth is to be maintained, replacement funds must be identified.
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The growth potential: the western NWT is well suited to strong growth in the tourism sector. We are a new territory and destination for visitors seeking outdoor adventure and cultural products beyond the mainstream products in Canada.
Our potential is significant. The western NWT has a more favourable export trade than many other Canadian travel destinations. Fifty-eight cents of every dollar spent in the western NWT comes from outside the region.
Tourism dollars can go a long way to securing and sustaining the financial future of a new territory, and this is compatible with the traditional lifestyle of our people. This includes protecting the land and resources while conducting business.
Planners Derek Murray Consulting Associates have indicated that the annual growth may reach 4% to 20% in our three principal tourism markets by 1999, if we aggressively market our new territory. The annual growth potential in these markets are: outdoor adventure, a 15% to 20% increase; auto touring, 8%; and sport fishing and hunting, 4% to 5%.
Regarding the challenges we face, tourism is a major part of the economy of the new western territory. We must support community tourism and tourism operators. NWT Arctic Tourism will stimulate industry growth and seek new ways to fund marketing and training.
NWT Arctic Tourism strongly supports the government's commitment to tourism, as demonstrated by the creation of the Canadian Tourism Commission and the corresponding increase in budgets from $15 million to $50 million.
Tourism Canada has the mandate to ensure that programs benefit every part of Canada. However, the western NWT has had difficulty accepting these programs because of the small size of our jurisdiction and population and a limited financial ability to buy into cooperative marketing programs with the CTC. CTC has to recognize the need to support tourism in smaller rural areas of Canada.
We must compete with other jurisdictions, placing a high value on tourism than we have in the past. The profile of our industry at home is at risk. The risk is increased as we move towards the creation of a new western territory in 1999. The evolving governments, scarce resources, and competing priorities threaten to dim the profile of our industry.
What are some of our needs? We need national recognition for a strong product - that the western NWT is an unique and developing destination. We require support for our continuing economic development activities. We need help to bring our product to the world.
We recognize the requirement for human resource development to develop quality product for positioning in the global market. Other jurisdictions have had resource development support for over 100 years; for example, some of the highway and railway infrastructure in different provinces.
We cannot afford to hesitate and risk the substantial investment that has been made in the western NWT tourism industry over the last 50 years. We support the development of complementary infrastructure development, such as our own highway from Wrigley to Tuktoyaktuk and the Beaufort Sea.
We must improve our marketing potential by establishing a level of public, industry, and government investment to sustain an effective long-term marketing campaign.
The average annual territorial investment was, between 1989 and 1994, $2.4 million; $2.2 million has been considered by planners to be a minimum investment to maintain an effective marketing program in the NWT and to achieve our visitor potential. The marketing programs help to deliver 89% of the NWT tourist travel to the western NWT.
The return on a $2.4 million marketing investment was an estimated $4.4 million. In 1996-97, investment in tourism marketing is expected to be under $1 million. This level of funding will result in a less than optimal return in income and employment in the north.
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In closing, given that EDA tourism marketing will run out this year, we recommend that the federal government consider funding similar programs in partnership with NWT Tourism, and that NWT Tourism and the Government of the Northwest Territories, in partnership, meet with the federal government to seek continued funding for community tourism and program development before March 1997. Your support will ensure development of a new western territory, and that Canada's last frontier will be enhanced in the global market.
Finally, on behalf of the tourism industry association, I would like to thank you for this opportunity to address the standing committee. Merci.
The Acting Chairman (Mr. Serré): Thank you, Mr. Furlong.
Does anybody want to add to the presentation?
[Translation]
Mr. Asselin, the floor is yours.
Mr. Asselin: First, like all the witnesses we heard this morning, you have made us aware of the importance of infrastructure, in particular a highway system which would enable tourists to move around the Northwest Territories and make your community as well as all resources, such as minerals, accessible.
We know that in the Northwest Territories, there are a lot of aboriginal communities. I'd like to know if aboriginals take an active part in the exploitation of natural resources. For instance, in your sector, do aboriginals participate in the development of tourism? Also, what should primary sector companies do to train and employ more aboriginals, mainly in tourism-oriented activities?
[English]
Mr. Furlong: The aboriginal communities, from north to south in the western territory, are basically involved in settling outstanding land claims, treaty entitlements, and are currently involved in self-government. However, the people maintain a strong tie to the land and resources and are very concerned when any kind of development is going to take place. They want to be involved to ensure that their land and resources are protected. However, many native people are prepared, I believe, to look at developing their communities in the areas of tourism, and they need that opportunity.
It's a shame that most native communities usually come in after the fact of the resources that were available. For instance, EDA money was available for five years or more, but native people didn't take the kind of advantage they have as far as developing their communities in the short and long term. Tourism is a good example. This is the only time since this tourism association has been organized where it involves more community participation, and it is a shame we don't have resources like EDA available so that we can assist those communities to develop the product and potential that exists in native communities.
We say the north is the last frontier, and it is. There is beautiful scenery down the Mackenzie River, into the Mackenzie Delta and into the Beaufort Sea. There's so much there. The smaller communities need the opportunity to develop that product and come to the same lifestyle as the rest of Canada enjoys. That's where I see it.
The Acting Chairman (Mr. Serré): Do you want to add something?
Ms Arlene Carmichael (Director, Northwest Territories Arctic Tourism Association): He asked if the aboriginal people were involved. In our organization over 50% of the directors are aboriginal, and probably 70% of our market is aboriginal.
Mr. Eric Yaxley (Director, Northwest Territories Arctic Tourism Association): I have one addition to that, just for numbers. We have a licensing system for tourism operators in the Northwest Territories. Across the whole north, over 50% of the licensed operators are aboriginal, but in the western Northwest Territories 40% are aboriginal. However, many of these aboriginal operators are the smaller operators with less equipment and less business. Those are the operators we are trying to develop and whose numbers we are trying to increase.
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The Acting Chairman (Mr. Serré): Thank you. Mr. Chatters is next.
Mr. Chatters: I'm curious. I've heard a number of times about the issue of the road from Fort Simpson to Tuktoyaktuk and the need for it, yet the traditional transportation route in the western Northwest Territories has been the Mackenzie River. Traditionally the government has maintained the capability of moving huge amounts of freight up and down the river during the summer, and of course during the winter the winter road is opened up on the same route. But there seems to be a withdrawal from the commitment to maintaining that transportation route, and from a number of groups we've heard that no one really seems to be looking at that. They're looking at a traditional all-weather road down the Mackenzie Valley. What's wrong with the traditional transportation route, and what's wrong with enhancing it?
Twenty-five years ago, when I worked up and down the Mackenzie Valley and up in the Beaufort Sea, there was a tour operator who ran a boat. I don't think that exists any more. There was huge potential for side trips out to some of the Arctic islands when you got to Tuktoyaktuk. You could stay a week with the traditional - we used to call them Eskimos in them days, but I guess they're Inuit now. There was huge potential. People loved that. I used to talk to the people on the boat who were travelling and they thought it was absolutely marvellous. They went home and told their friends what a different and great vacation it was, but that doesn't seem to be developing. It seems to be going the other way.
Mr. Furlong: I guess like everything else, people's lifestyles change. People are becoming used to the modern technologies, I guess. More people own their vehicles. All of these options are still available within these areas - to go out and sightsee and all of the wonderful opportunities - but transportation on the river, in the Beaufort and in the delta is not as common as it used to be. It's been hurt a lot by industry moving out of the Beaufort, and shipments to the smaller communities are not as frequent as they used to be. As I said, people's lifestyles are changing and we see a road as an opportunity to better open up the Northwest Territories for tourism.
Right now, tourists wanting to see the Beaufort and Delta can take the route of the Mackenzie or else drive along to Alaska or the Yukon. A lot of times we lose the possibility of a greater number of tourists who take in the Yukon-Alaska. By having our own highway we would try to capture that potential for the western territory. Not only that, it would open intercommunity relationships between all the communities from Tuktoyaktuk up to Fort Smith. I believe it would increase a lot of the travel in that area.
Mr. Chatters: But the river is there and the cost of providing a route to the Arctic via the river is a fraction of the cost of that road. The price tag on that road is phenomenal. I don't understand why we're abandoning the river in favour of that very expensive road. Why don't we enhance what we have on the river? Why don't we get government recommitted to marking the channel and maintaining the water route rather than abandoning it and then looking at this road? It is prohibitively expensive to build. It just costs so much.
Mr. Furlong: We have the river system from May until September, and for the rest of the year we can say we are isolated from the rest of the western community.
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Mr. Chatters: You have the road, except for about two months when it isn't available.
Mr. Furlong: But it's not only that. As I said, most people want to see a link between Fort Simpson and Tuktoyaktuk. We believe river transportation is getting more expensive, and we see that the traditional river routes are changing every year. Just a year ago the levels were very low, and transportation was affected in those areas.
I guess the new generation and everybody else is saying that before such a highway becomes too expensive, they would like to see something in place.
Mr. Chatters: Okay.
The Acting Chairman (Mr. Bélair): I was trying to locate Tuktoyaktuk and Fort Simpson here.
Mr. Furlong: Fort Simpson is right in the middle of the Mackenzie River. Tuktoyaktuk is right up on top of Yellowknife.
The Acting Chairman (Mr. Bélair): I have Yellowknife.
Mr. Furlong: Go directly west from there and you should see Fort Simpson, Fort Wrigley and Fort Providence. Tuktoyaktuk is right up on the ocean, on a peninsula.
The Acting Chairman (Mr. Bélair): Wrong map. It's not there.
Mr. Wood.
Mr. Wood: Thank you, Mr. Chairman.
Mr. Furlong, I need some clarification on the money and stuff like that. You said that although the budget has been increased, you're having difficulty accessing the programs to get the money. Do you go through Western Diversification? How do you go about getting what money you do get? Where do you access it from?
Mr. Furlong: Right now the bulk of the dollars we access are from the territorial government. It's part of economic development through existing EDA funding that will be no more at the end of this fiscal year, 1997. This leaves the tourism industry in a bit of a dilemma, because the past tourism associations were heavily dependent on government contributions such as EDA. It seems that this new association, which has community or rural representation for the first time, must find other ways of generating dollars to keep the level of operation that the tourism association had.
Mr. Wood: What's at the top of their priority list? Where is tourism on their priority list? Is it on the priority list? It doesn't look like it is. It should be. Is it on that list somewhere? How committed are they to enhancing tourism?
Mr. Yaxley: Mr. Chairman, I'll try a response.
Funding has been reduced as part of overall GNWT reductions, and that has affected the tourism budget, which is the mainstay of the tourism industry association budget. The other main funding was EDA, which was a bilateral agreement between the federal government and GNWT and with the associations. No funding is received from Western Diversification or CTC. It's a cooperative buy-in where we have to provide matching dollars. That's the problem. You have to have the matching dollars to participate. Also, the level of your matching dollars basically allows you to direct those programs. If you have fewer dollars to match with, you have more difficulty directing those programs to a jurisdiction's benefit.
Mr. Wood: So what you're saying is that without funding, a lot of these communities won't be able to develop viable long-term opportunities.
Mr. Yaxley: I think I agree with what you're saying. There is still funding; it's just that the level of funding has decreased, and from a tourism industry perspective we feel that an investment in the tourism industry is a good one.
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Mr. Wood: I think that even if the Canadian government wants to help, it's going to be very difficult to make sure tourism dollars get channelled to the proper locations in the country and to the proper organizations.
Mr. Furlong, in your opinion, would not economic diversification through tourism development lead to significantly greater economic stability for the whole region?
Mr. Furlong: There's a lot of room for development of the potential for tourism activity in our area, which would benefit the communities, the region and everybody else operating within, such as accommodations and everything -
Mr. Wood: Yes, spin-offs.
Mr. Furlong: There are a lot of spin-offs. One important factor is that because communities are involved in this new organization, they are on side. Not only that, but basically 80% right now are aboriginals.
The other important factor is land claims. Right now almost half of the western territory is aboriginally owned through land claims. By the year 2000 I see at least two-thirds of the whole west being under ownership of the aboriginal communities. That causes a strong need for cooperation and partnership among government, industry and the local people. The local people at the grassroots level control the organizations that administer land claims, so there's an opportunity there to develop an infrastructure or a tourism base so that everybody benefits. But the communities at this time need resources to develop short- and long-term strategic plans.
Mr. Wood: Maybe we should go back 15 years to when we had a ministry of tourism. It worked very well, but it just disappeared.
The Acting Chairman (Mr. Bélair): We're quickly running out of time. I'd like to give Mrs. Cowling a chance to ask a question.
Mrs. Cowling: Thank you, Mr. Chairman.
I'm looking at page 10 of the NWT Arctic Tourism booklet. I see that in 1989 you had 40,544 tourists and in 1994 you had 43,208. I assume there is a spin-off from those numbers. What numbers do you project for 1997 and 1998, or do you have that projection? That number is an increase of almost 3,000 tourists. What have you done as a group to maintain the sustainability of the whole tourism initiative for the NWT?
Mr. Yaxley: I'll try to answer some of the statistical questions. Projections have often been 2% to 3% per year. In some cases we've had 5% per year. Recently the growth rate has been stagnant in comparison with other bordering jurisdictions like Alberta and Yukon, which have been able to increase visitations in the last two years. Our perception is that they've done this by spending more money on marketing, the basic tool you need to regrow your visitation base each year.
Our projections in 1994 were significant, but they were based on a previous budget. A revised marketing budget would make us revise our projections. Personally, because we haven't made any official projection, I think that just maintaining our present visitations with the present budget would be doing well.
The Acting Chairman (Mr. Bélair): On this note, thank you very much for a very good presentation. It echoes many of the views we heard earlier today. I think that once we bunch them together, something will be developed. Thank you very much.
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Mr. Furlong: Again, thank you very much for allowing us the time. Merci
The Acting Chairman (Mr. Bélair): You're welcome.
Now I will call upon Margaret Gorman and John Bekale of the Denendeh Development Corporation. Are you Ms Gorman?
Ms Margaret Gorman (General Manager, Denendeh Development Corporation): Yes. Mr. Bekale couldn't make it.
The Acting Chairman (Mr. Bélair): We are pleased to see you here. The floor is yours.
Ms Gorman: Thank you very much.
I have provided a copy of the brochure on the Denendeh Development Corporation. I will give a brief description of what we do, but I want to focus most of my presentation on a western Arctic economic aboriginal summit we had last month during which a number of economic sectors and issues were discussed by approximately 250 delegates from the western Arctic, the aboriginal community, and their partners in industry.
Originally our president and chairman, Chief Darrel Beaulieu, was going to make this presentation today. He sends his regrets that he got called to Ottawa. Darrel is a very eloquent and dynamic speaker, so I have big shoes to fill here today.
The Denendeh Development Corporation was formed back in 1982 to take advantage of the oil and gas development in the Norman Wells area. They formed a joint venture partnership with Imperial Oil to set up a drilling company called Shehtah Drilling. In order to facilitate that joint venture, we established the holding company of the Denendeh Development Corporation, and at that time we were also in partnership with the Métis Development Corporation.
The Denendeh Development Corporation originally had the same membership as the Dene Nation. Its membership includes the bands in each of the 30 communities up and down the Mackenzie Valley, as far north as Inuvik and Aklavik and as far south as Fort Smith.
The corporation is now being restructured so that while those people are still our membership, it is held in trust by each of the five regional tribal councils or first nations up and down the Mackenzie Valley, and those are listed in the front of the brochure. It's the NWT Treaty 8 Tribal Council, the Dogrib Treaty 11 Tribal Council, the Gwich'in Tribal Council, the Deh Cho First Nation, and the Sahtu Dene Council. Each of these has equity ownership into the Denendeh Development Corporation. The Denendeh Development Corporation is a non-profit corporation. We don't have share value.
In addition to the drilling operation that we own part of in Norman Wells, we also acquired a percentage of Northland Utilities, which is the power distributing agency. It has operations in Fort Providence, Hay River, and Yellowknife. It basically purchases power from the NWT Power Corporation and distributes it to residents.
We also own 50% of the commercial financing industry with the Métis Development Corporation. It's called the Métis-Dene Development Fund, and we provide equity financing to small aboriginal businesses. We just formed a company with three other development corporations. We consider ourselves a pan-territorial development corporation with the Yukon Indian Development Corporation, the Inuvialuit Development Corporation, NIC, which is Nunavut, and the Denendeh Development Corporation.
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The Acting Chairman (Mr. Bélair): You are describing to us quite a complex structure or organization.
We would be more interested in knowing what its failures and successes have been and if there is some kind of compromise, as well as what you have to suggest to us to improve what you have in place.
Ms Gorman: I've finished the presentation on Denendeh Development Corporation.
First of all, I wanted to give you an idea of where I'm coming from with the comments I want to make from here on in. We are not engaged in small businesses. We are trying to get into the larger part of the economy where we can make a difference, where we can get into the spin-off industries. For a non-profit organization trying to realize the benefits in thirty small communities, the issues are wide, along with the approaches to them.
In trying to focus my presentation, I went over the terms of reference for what this committee is looking at, and if I have time, I'm hoping to go back to that.
I imagine by now you've heard a lot of statistics from the chamber of commerce on the territorial government and the different resources. You know there are a vast number of resources here in the north, you know there is a potential, and you know we're also in a period of change. There are also changes that are as a result of the political changes from land claims and from the new ways of doing resource development in the north.
During our conference - and I mentioned before that there were 250 delegates and it was closed - there were two other development corporations, the Métis and the Inuvialuit. We addressed six economic sectors. They were tourism, mining, oil and gas, power, traditional economy and transportation. The conference taught us a lot of new things, but it also reiterated a lot of things that aboriginal groups have been saying.
One of the things they talked about is how important it is to work together in the north in a win-win situation instead of competing with one another. They also said that working together is the only way we can fully realize long-term sustainable development in the north. They said that is how we can avoid the boom and bust scenarios the north has been experiencing over the years with economic development in periods of high growth.
You've probably heard a lot by now about the diamond mining and community impact benefit agreements associated with that. Those kinds of agreements are an indication of how things are changing in the north and how business is being done.
Another area is the exploration for oil and gas. When companies are signing agreements with the federal government there's a general statement of principles for benefits, and then, of course, there are the land claims agreements in which there are certain provisions to give aboriginal companies benefits.
The Acting Chairman (Mr. Bélair): Has drilling been somewhat successful in finding any oil and gas?
Ms Gorman: Shehtah Drilling's main area of operation has been in Norman Wells. We have done some work outside the Wells, but the majority of our experience has been in the Wells. We have 70% aboriginal employment on our drilling rigs. We found that with this type of industry, the oil and gas industry, activity was high during the 1980s. It slumped during the 1990s and the kinds of benefits that came out of the operations It was very low profile in the early 1990s, but now it's starting to pick up again with the cost of oil going up and the increased interest in exploration in the Deh Cho and Sahtu regions.
The Acting Chairman (Mr. Bélair): Thank you.
Ms Gorman: Do you want me to finish my presentation or do you just want me to answer questions?
The Acting Chairman (Mr. Bélair): I just wanted you to expand a little on that. Go ahead.
Ms Gorman: During the conference many things were stressed. It was stressed that the federal government has to move forward with the settlement of outstanding aboriginal rights in each of the regions of the Northwest Territories.
Those first nations who have not settled their claims were urging the federal government very strongly to please get these outstanding issues resolved so that resource development can happen on a more coordinated and better scale. In particular, they find that companies are reluctant to invest in the north without that certainty of land ownership and of knowing what the rules are.
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The other thing that was brought out was about the necessity for some real labour-market-related training to be conducted in the north. It was also brought out that hopefully these training institutions would be built in the north and that the training should be done with a view to long-term sustainable development and skills that are transferable, especially in management areas.
They talked about technology and transportation. I mentioned earlier that we formed the company with three other development corporations. We actually took it one step further and formed a company with the telephone company and the Arctic cooperatives. We bid on the territorial government's digital communication system, which will actually build the information highway for the north. We recently learned that we won that contract. That is another example of the ways in which we work together. Our aboriginal corporations will not only have equity ownership in this new infrastructure, we will also have an ability to develop and implement a procurement policy whereby we're giving contracts to local aboriginal companies in the communities, along with training and employment opportunities.
Because we have no roads here, the technology of the new information highway is very important for us so that we are able to communicate among ourselves and with the rest of the world. It will help us with barriers towards training. Hopefully it will be a vehicle that we use to deliver training to the communities using those tools, not only in technology but in other issues. It would also help us with marketing, whether it is from oil and gas data findings or from tourism operations or our arts and crafts.
While technology is one solution for transportation issues, it was reiterated quite often during the conference that there is a strong need for road construction in the north to improve the transportation infrastructure. As long as it is inadequate, the cost of goods and services and the cost of doing business in the north will always be high.
Fuel prices are rising and the north is paying the highest cost, despite the fact that we have vast deposits of oil and gas here. Other points were made, like why these high fuel prices are good for the economy and growth by way of increased activity here in oil and gas, but they will also increase our energy cost in the north, and everyone would feel that, from residents to businesses to mining companies.
During the CAEDS conference we also heard from social agencies that were urging the business community and industry to work with the existing social agencies. They reminded us about the factor of education in the schools, about making young people realize the importance of staying in school. And they reminded us about the other issues, such as alcohol and drug abuse, family violence and the many negative impacts that come with mega large-scale development. They asked that they be considered and that we work with them as well if we're going to be launching a long-term economic strategy.
Comments were also made during the conference about the federal government's desire to administer and control economic development. The north has a long history of being administered and controlled from outside the north. They were talking about what's going on now with the aboriginal self-government and the transfer of programs and services. Many of the delegates mentioned that they have the people and the institutions to administer and control programs and services and that they have their own self-government entities for jurisdictional issues. They mentioned that these have to come together somehow in order for the goals to be achieved.
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The access to capital is another issue that was addressed. Both the territorial and the federal governments have run various initiatives in the past through Aboriginal Business Canada, such as the CAEDS program and ACC. The ACC model was probably the best in that it was the closest to the communities, but there were still problems at the community level and at the administration level. If we were looking at a new program for the communities, we could be tailoring that one. The preferred model of program - like this one - is one that is devolved to the communities and run by the aboriginal institutions.
Commercial financing is another area that was discussed. To some extent it has been improved. Relationships between banks and aboriginal businesses have been improved, but there is still a lot of uncertainty about land ownership, the Indian Act barriers and unpredictable economies. Sometimes that is what the banks think about when they're looking at lending. It affects the decisions of the banks.
I talked a little bit earlier about the Métis-Dene Development Fund that we own 50% of. The purpose of that company is to give out small business loans. We have a loan portfolio of approximately $2 million, but we find it's not enough for the amount of applications that we get. And that's despite the fact that we have a high success rate in the business loans that we do give out.
We did a study about a year or so ago and determined that in order for such a company and such a loan portfolio to really work there should be an investment base of about $6 million. That would enable the company to give out loans and maintain a cashflow, and the rate of return from those loans would keep it going.
If there were going to be improvements in access to capital, we would like to see governments that do give out equity loans or grants to aboriginal businesses work with our institutions to help build them up. Then our institutions could take over a lot of the administration and control of these things at a lot less cost to government.
I was going to take a minute to read some of the points that came out of each of our economic conferences, but I recognize that this is taking a bit longer I'll list about four or five key things.
The focus should be on, one, sustainable development and, two, on boom and bust. Training initiatives should be in industries that will last. The key to building a stronger economy in the north is the building of new roads. There should be advanced planning for labour market training and learning institutions in the north. Aboriginal policy and commitments have to be part of corporations' cultures and policies. The control and administration should be remain with the existing institutions in the north that have been established for those purposes.
The other thing is to stress the importance of the traditional economy to the north. Look at the economies of hunting and trapping and arts and crafts. No value can be put on them in terms of cultural identity and health. These things are necessary for their basic staples. There was one statement...if you put a cost value on replacing traditional foods with store-bought foods, on an annual basis the price is $40 million. That is quite a sizeable industry.
I'll conclude my presentation with that.
The Acting Chairman (Mr. Bélair): Mr. Asselin.
[Translation]
Mr. Asselin: Thank you. I'd like you to tell us what you expect from the federal government in terms of concrete actions to boost rural development. We know fully well that the resources you have here, in the Northwest Territories - mines, oil, or the tourism industry which doesn't seem to be very active - are underdeveloped.
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You also seem to have a labour force which, if better trained, could be used. This would, in turn, eliminate unemployment and the need for social assistance. Could you recommend three measures the federal government could take, by order of priority, to boost rural development in the Northwest Territories?
[English]
Ms Gorman: I have a little bit of a problem with the definition of rural development. I look at the north, which is one-third of Canada. When I think of rural Canada, I think of country roads and agriculture, whereas I look at the north as a vast resource area that is going through rapid political change right now.
When we look at what we can expect from the federal government in terms of priorities, the very first issue is the settlement of land ownership issues within those regions that have outstanding claims. And with that is the implementation. Those regions that have settled claims are experiencing some difficulties with the implementation of some of the regimes set up through those claims.
That is the number one priority, because it would give certainty to companies that want to invest in the north. It will enable the aboriginal communities to move forward from the negotiating table and into developing their regions and their economy.
Second, I guess, is access to capital, to funding, and it also must be recognized that it is not only economic community development, it is holistic. The communities need the funding to establish tourism, to work with mining companies and to go out and attract investors, and part of that is the social impact. They have to grow properly.
The third one is the importance of training, training that is planned, so that we're looking at what the market is going to be five years from now and looking at grade seven students and knowing what kind of jobs are going to be out there. The training must be planned so that we know there is going to be something out there for them in their smaller communities and they won't have to go down south to get jobs or to get technical training or whatever.
The Acting Chairman (Mr. Bélair): Thank you. Mr. Chatters is next.
Mr. Chatters: I'm interested in the Northwest Territories Métis and Dene loan fund idea. That's been a problem. There's been a lot of discussion about how the Canadian government and others could put in place the capital that is available to aboriginal people. How is that organization funded? How are they financing? You said you had a loan portfolio of $2 million. How is it capitalized?
An ongoing problem, of course - at least in my part of Canada - in securing funding for aboriginal people is the problem of being able to hold lands or collateral as security. How are you getting around that? What is your success rate with this organization?
Ms Gorman: The Métis-Dene Development Fund is a aboriginal credit corporation from the CAEDS. Do you know what I mean when I refer to CAEDS, the Canadian aboriginal economic development strategy?
Mr. Chatters: So it's capitalized by the federal government.
Ms Gorman: Yes. And they set up ACCs. They're called ACCs across Canada. Most of those in the south are basically Métis ACCs or treaty or first nations ACCs, but the one in the north is unique in that we combined forces with the Métis Development Corporation and established the ACC.
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We were given a commitment of $4 million to start this up, in which case we would have been able to meet a target to turn it over into a $6 million fund over a period of time. But with the cutbacks in case funding and the reorganization of ACCs across Canada, for some reason we only ended up getting a $2 million base. We are trying to get the Government of Canada to turn it over and recap it, because we have needed advances, so the Government of Canada would give us the $4 million base. It is a situation where the money has been reallocated and redesignated for economic development.
We also looked at the other possibilities for combining forces with the territorial government's business credit corporation. It provides loan funds. We looked at the possibility of our taking over its loan portfolio. But it is going through restructuring and strategic planning at the same time, so it is very difficult for the corporation to negotiate those things with us.
The success rate has been really good. We've given out short-term loans. They tend to be short term because we're like a last-stop financier. If they can't get it from the banks or if they can't get it from other government sources, they come to us. We put them through pretty well the same kinds of tests a commercial vendor would do. We find they're short term because we give them the cash and they are successful. They are able to turn around and pay us back. They avoid the higher interest rate when they go to a bank or a lending institution with proof they were able to turn the business around.
Mr. Chatters: Do you demand collateral or do you give loans without collateral?
Ms Gorman: We have collateral. We demand collateral. For example, if someone is opening up a trucking company and they want to borrow money to buy the truck, we ask for some kind of collateral. If they lose their business, we end up with the truck.
Mr. Chatters: May I say that on Indian reserves, for example, you can't do this. You can't hold this collateral and you can't reap the benefit of the collateral if the business goes under. Do you have this problem?
Ms Gorman: There are only two reserves in the Northwest Territories and the Indian Act is not applied to the northern communities in the same way. Basically, it is applied intermittently. It doesn't really apply here.
Mr. Chatters: That is interesting.
The Acting Chairman (Mr. Bélair): Mr. Wood.
Mr. Wood: I was going over the brochure, Ms Gorman. One thing that caught my eye was that one of the major objectives of the corporation is to pursue an employment policy that provides maximum opportunity for Dene and Métis people to obtain meaningful and stable employment.
How are you making out in pursuing your employment policy? Is it working out fairly well? The reason I ask is that we had a gentleman here this morning from the NWT Chamber of Mines. He was saying if everything goes according to Hoyle, they could be opening a mine in another couple of years and they're going to be employing a little over 800 people. I was asking if they were looking to employ aboriginals. He said they were, but they obviously have to train them.
I wonder if you get into cost sharing and training programs with various companies in the north with an understanding there will be a guarantee of a certain number of jobs available for aboriginal people. They could obtain meaningful employment and at the same time be trained. It could be in mining or anything, really. I'm just using this as an example. Do you get into those types of arrangements?
Ms Gorman: We do. But mining is on a large scale, and mining initiatives are mostly regional initiatives right now. Mining companies sign community impact agreements with each of the regions whose land they are on. The Denendeh Development Corporation has not been participating in those because we're not a regional organization. We're owned by the region and there have been some land disputes between different regions. We thought it was best that we stand back and become involved if the regions collectively came and asked us to.
In the oil and gas industry with the Shehtah Drilling, we have a high success rate. Our policy is that local regional people come first, and then other aboriginal northerners. I think the employment rate with Shehtah Drilling is 70%. It brings something like $1.5 million per year in payroll into the northern economy. So it is substantial, especially when there are high periods of drilling.
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Northland Utilities does not have a high employment base in the north. There are something like 35 employees with Northland Utilities in the Northwest Territories. Five of those are aboriginal. We have been having discussions with their parent company, ATCO Canadian Utilities, about more efforts in employment, training and education in the north.
We're talking about doing programs from the schools up. We are also talking about the idea of having young people who are interested in getting training in the utility and power field move down south to work with some of those larger companies. Then we would bring them back up north. Sometimes this works, sometimes it doesn't. When somebody gets a taste of the big city, they do not always want to come back and work in a smaller area. There is a risk involved there.
The company I mentioned earlier just won a contract on building the information highway for the north...we just found out a week ago. We have some really strong commitments towards procurement policies and employment training. We are working with Aurora College and the Arctic college in getting what we're calling IT training, information and technology.
So some communities have those resources and really define what the economic benefits are there for the smaller communities. Should they go out and buy computer companies? Should they form labour forces where you provide labour to [Inaudible - Editor] and things like that? So we're not organized on this, but there is a strong commitment to do so.
Mr. Wood: You said you were looking for grants to keep going. I think the grant situation has probably gone by the board as far as the federal government is concerned. If you're looking for capital, has there been any discussion about the federal government getting involved in some of your projects? If you need some bridge financing, or if you need some financing at all, has there been any discussion about the federal government taking a small equity position in some of those projects?
Ms Gorman: No, not that I'm familiar with. I don't know, I kind of like the idea of loan financing. You are saying the days of grants have gone by. This is with the exception, of course, of social agencies and their endeavours, but they are in a sense relationships.
I think the long-term intention for the aboriginal communities that have owned essentially 100% of any endeavour they go into is this. When they go into a joint venture with industry, I think a lot of them like to see a clause stating that after 10 years or after 20 years, when they have the experience and training, they have the option to buy out.
The Acting Chairman (Mr. Bélair): Thank you, Ms Gorman. The next witness is here. Thank you for your presentation, and we wish you well.
Ms Gorman: Thank you.
The Acting Chairman (Mr. Bélair): I call on Mr. O'Reilly from the Canadian Arctic Resources Committee. Mr. O'Reilly, welcome. The floor is yours.
Mr. Kevin O'Reilly (Research Director, Canadian Arctic Resources Committee): Thank you very much.
I would like to thank the committee for the opportunity to appear before you today. I apologize. I don't have any written presentation for you. I have prepared some notes very quickly and I will be speaking from these. I just found out about your committee meeting this morning and I approached the clerk just before noon about an opportunity to speak before you today.
My name is Kevin O'Reilly, and I've been a resident of Yellowknife now for 11 years. I've worked for a variety of aboriginal organizations, federal government departments, territorial government departments, and for the Canadian Polar Commission and, most recently, the Canadian Arctic Resources Committee.
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CARC has been around for about 25 years. We are very interested in promoting sustainability in its broadest sense for the north, and that includes environmental, economic and social sustainability. We are a research advocacy organization. We have about 8,000 members across Canada. We've had a very strong interest in mining and resource development in the north for a long time.
I will talk very briefly about the information I have provided to you. First, there is a general brochure about the goals and objectives of CARC and a little bit of information about what sorts of activities we've been involved with. I've also provided you with a copy of our critique of the BHP environmental review. I apologize that none of these documents is in French.
There is also a copy of a document and a covering letter to Minister Irwin about our recommendations on the BHP project; a copy of a paper by our executive director about sustainable development in the circumpolar north; a three-page letter to Minister McLellan about our comments on a proposed national mining policy for Canada; and finally, a copy of our regular newsletter, Northern Perspectives, which discusses sustainable development in the north.
I'd like to talk briefly about CARC's involvement with the BHP review. It would be fair to say that we are one of the few non-governmental organizations that has been there from the beginning right through to the most recent events. We proposed that the government hold a regional environmental review, looking at all of the mining exploration and development activities between Yellowknife and Coppermine, the Arctic coast.
The government decided to hold a site-specific assessment of the BHP project alone. We were an intervener at the public hearings from beginning to end. I was involved in several presentations and in the questioning of the applicant, the proponent and many of the government agencies that appeared before the environmental review panel. Most recently, I've been involved in presentations and questioning at the water board.
CARC was involved with a number of other environmental organizations before the BHP panel. We received about $28,000 to $29,000 of intervener funding as a coalition of environmental organizations. But in the end we did an informal calculation of our in-kind contribution, which totalled more than $200,000. We brought forward expert witnesses at the environmental assessment panel hearings and they conducted their work for free.
I'd like to say a few words about the BHP project, because I know you've heard quite a bit about it today. It will be the largest mine ever in the Northwest Territories. There'll be five open pits. A number of lakes, 12 in total, will be drained and filled. It is likely to trigger other developments between here and Yellowknife. Right now, the company is talking about a 25-year lifespan for the project, but there are many more pipes on their property that they're continuing to explore.
We believe there is the potential for some serious environmental and socio-economic consequences from the project. If you like, I'd be happy to discuss those further.
What did we really learn from the assessment? You have a copy of the critique I mentioned earlier. We believe the environmental assessment process for this particular project really failed -
The Acting Chairman (Mr. Serré): I'm sorry to interrupt, but we're going far away from the purpose and the mandate of this committee. I think your presentation would be better presented to the environment committee of the House of Commons. We're really interested in BHP, but our mandate is to study economic development in rural Canada. We're going toward the positives and negatives of a particular project, and I think we're getting away from the subject. So if you can, I'd like you to give a presentation on rural economic development.
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Mr. O'Reilly: Thank you.
I'm attempting to narrow or use BHP as a case study perhaps, but I would like to talk a little bit about the implications of that particular project for economic development in the western Northwest Territories. I know you've heard quite a bit about it today, but I'm just trying to place my comments in the context of this particular development. So if I stray to far, please bring me back on topic again.
You have heard that a number of supplementary arrangements were necessary for this particular project because we believe our regulatory systems and our government systems are not adequate to handle this development right now. There are some better ways of handling developments like BHP.
You've heard that northerners want to have greater control over their resources and their economy, and that's something that CARC has supported for a long time. One of the crucial ways of doing this, of course, is to make sure that land claims and treaty entitlements are settled in a timely fashion. Unfortunately, this has not happened in this area where the BHP project is being proposed. There are a number of overlapping land claims and treaty entitlement arrangements and negotiations going on. Really, though, as I just said, the proper way to make sure northerners can control resources and economic development is to make sure that claims and treaty entitlements are settled in a timely fashion.
One issue that did come up during the BHP review, and which I think is of direct interest for you, is the concept of economic diversification. I know that's highlighted in your paper. Part of the problem with the north, of course, is that we don't have a diversified economy. Mr. Vaydik spoke about that this morning. Mining is the major economic activity for this part of the Northwest Territories.
Part of the problem with BHP is that there are no plans, there are no strategies in place, to make sure that economic diversification does take place. You will recall, of course, that Alberta had a heritage fund during the 1970s and 1980s. That is something that has not been contemplated for this particular development, or indeed all of the development that is about to take place in the Slave geological province. That's something that we advocated strongly during the BHP hearings, because there are opportunities to use the taxation system to generate revenues that can be use to diversify the economy, but we unfortunately haven't had any response on it.
Perhaps I can leave it at that. I think I have tried to discuss the BHP project in the context of some of the issues that you have before you. We would like to make sure the north has a diversified economy. Mining certainly has a role to play in that, but we would like to make sure the revenues that do come in from this particular project are used to assist other forms of economic development.
Thank you.
The Acting Chairman (Mr. Serré): Thank you, Mr. O'Reilly.
[Translation]
Mr. Asselin, do you have any questions?
Mr. Asselin: I'd like to congratulate Mr. O'Reilly for his presentation. I think we should simply link his short statement to what we've heard all day. As far as I am concerned, I asked all the questions I wanted answered this afternoon.
[English]
The Acting Chairman (Mr. Serré): Mr. Chatters, do you have any questions?
Mr. Chatters: No.
The Acting Chairman (Mr. Serré): Mr. Wood.
Mr. Wood: You talked about diversifying the economy with this particular project. What did you have in mind? You were very vague. Maybe you could just be a little more insightful and tell us what you were thinking of when you said you want to diversify the economy. In what way? You must have some thoughts on that.
Mr. O'Reilly: Certainly. Right now there are very few programs to support renewable resource harvesting - hunting, trapping, fishing - in direct ways. Certainly it wouldn't be that difficult to capture some of the revenues, not just from this particular project but from non-renewable resource developments in general, and set them aside in a diversification fund, a heritage fund, which is something Alberta did. It wouldn't be that difficult to use some of those funds to support other sorts of economic development activities. I don't know all the details of the Alberta heritage fund; in fact, I can't say I've done a lot of research into it. It is, however, something we would propose now that we are on the verge of some major mineral development for this part of the Northwest Territories.
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Both the federal and territorial governments have available the tools needed to do something like this. Right now, the federal government is conducting a review of the mining royalty regime for the Northwest Territories. Unfortunately, it is a very narrow technical review. We would therefore propose that it be broadened to consider something like a diversification fund.
Mr. Wood: So this is obviously just in the planning stages. You haven't decided if it should be 1% or 0.5% of the taxes - or whatever - that they are taken out of there. Nothing like that has been done.
Mr. O'Reilly: I can't say we've done any detailed research on that, but it is something we will be following up on. We will probably put together a discussion paper looking at other tools that have been used for this purpose, and we'll be putting forward some ideas for how this might work in the Northwest Territories as well.
Mr. Wood: Okay, thank you.
The Acting Chairman (Mr. Bélair): Mrs. Cowling.
Mrs. Cowling: Thank you, Mr. Chairman.
Mr. O'Reilly, with respect to diversification, you indicated that you don't have anything at this point. When you do have something, would you mind tabling it before our committee so we can use it as part of our report?
Mr. O'Reilly: Certainly. I will commit to do that.
Mrs. Cowling: Great.
Mr. O'Reilly: Thank you.
The Acting Chairman (Mr. Bélair): Are there any other questions, colleagues? If not, I thank you, Mr. O'Reilly.
Mr. O'Reilly: Thank you.
The Acting Chairman (Mr. Bélair): Colleagues, the other set of witnesses has been called twice today. The calls have not been returned, so we might as well adjourn.
Before we do, though, I have to inform you that there is a major snow storm in Fort McMurray. The staff is currently trying to find out exactly whether or not we can fly there. If not, the recommendation probably will be to fly to Edmonton, to maybe skip Fort McMurray altogether, and to fly to Prince Albert tomorrow afternoon. Are there any questions?
We are adjourned until further notice.