AAND Committee Meeting

STANDING COMMITTEE ON ABORIGINAL AFFAIRS AND NORTHERN DEVELOPMENT

COMITÉ PERMANENT DES AFFAIRES AUTOCHTONES ET DU DÉVELOPPEMENT DU GRAND NORD

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, April 23, 1998

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[Translation]

The Chairman (Mr. Guy Saint-Julien (Abitibi, Lib.)): Pursuant to Standing Order 108(2), we continue our study of Aboriginal Economic Development.

Today, our witnesses will be Ms. Mary Jane Jim-Cant, Regional Vice-Chief, Yukon, and Mr. Dale Booth, Director of Economic Development, Assembly of First Nations. Welcome to you. We are happy to have you with us this morning. I believe you have an opening statement.

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[English]

Vice-Chief Mary Jane Jim-Cant (Regional Vice-Chief, Yukon, Assembly of First Nations):

[Witness speaks in her native language].

My name is Dak wa ül. I also have another name, which is Nnë che ne chea. I'm Southern Tutchone and Tlingit from the Yukon. I'm also a member of the Champagne Aishihik First Nation. I am also speaking to you on behalf of the Assembly of First Nations as the vice-chief representing the Yukon.

I would like to thank you, Mr. Chairman, for inviting the AFN to present to the standing committee. We hope we will continue to have opportunities such as this to make representations on first nations issues. In particular, we're presenting today on first nations economic development issues.

I would like to address the following issues: the economic state of first nations people in Canada; the need for a renewed partnership where first nations are full and complete partners; and preparing our first nations for the next generation and the next millennium.

I don't think those of you sitting around the table were surprised to have heard that the economic situations of first nations across Canada are in an appalling state. Based on my reading of this committee's Minutes of Proceedings and Evidence, I do not think it's a surprise that those statements have come forward.

The Assembly of First Nations national chief, Phil Fontaine, stated that the key to self-government is economic development, and the Assembly of First Nations is working towards seeing that this is one of the top priorities of the AFN.

In terms of the “Gathering Strength” initiatives and the “Agenda for Action”, AFN will proceed on economic development issues within the guidelines of that agenda—making economic development a priority. As you're well aware, the economic state of many of our communities is below Canadian standards. First nations are under-represented as owners and operators of Canadian businesses across this country.

There's a large income gap between first nations individuals on reserves and non-aboriginal Canadians. In 1991 the average income of a non-aboriginal person was $24,000 a year, while for the aboriginal person it was $14,000 a year, and the gap continues to widen.

The average unemployment rate among first nations people is about 25%, and in some remote locations it hovers around 90%, and that may be true in the Yukon. Social welfare dependency was at 42%, and that's a 1991 figure.

These numbers that are facing the majority of our communities do not begin to capture the horrific social price that is paid on a daily basis. The levels of unemployment among aboriginal people are not now, nor ever will be, in the best social or economic interests of Canadians.

At the same time as we speak about the appalling conditions, there are some examples of first nations businesses across this country that are worthy of mentioning in terms of their successes. One is the Meadow Lake Tribal Council, which runs forestry operations worth over $60 million a year. The Cree Construction Company is a successful aboriginal company that exports its products internationally. There is the recent joint venture between three Saskatchewan first nations, the Peter Ballantyne, Montreal Lake, and Lac La Ronge First Nation, and Weyerhaeuser to complete a $22 million sawmill.

The Kitsaki Development Corporation has a joint venture company with Trimac and ten other first nations and Métis companies called Northern Resource Trucking Limited. The partnership started in 1986. This company hauls all of the commodities for the northern mines in Saskatchewan. They have annual sales this year of $24 million and employ 135 people.

A question that may be asked as a result of these is why are these first nations communities and businesses surviving while the majority of other first nations standards are intolerable? Obviously there are differences between these communities. It will be our job to find out what the differences are and to get the community resources they need to become participants in the Canadian economy.

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We have to ask the communities the following questions: What tools do their communities need? How do we expand their business opportunities in the traditional and new economy? What skills and capacities can be transferred to the communities? How do we promote self-reliant businesses in our communities? What resources do these communities need to access? How do we create a supportive environment for first nations economic development?

In order for these questions and others like them to be properly addressed, there must be meaningful and comprehensive partnership with first nations communities to determine their economic needs in order to find real solutions to the problems of unemployment, poverty, and dependency.

The main focus needs to be on what first nations do not have now, and that's access to capital, access to resources, access to markets and access to capacity. We will be adamant in our quest for those issues as part of rectifying the first nations situation.

For those of you who know about the royal commission on aboriginal peoples, statements have been made about the cost of doing nothing, and that's very high. In 1996 the cost alone was $7.5 million, and by the year 2016 it will grow to $11 million. The status quo is not an option. There needs to be a proactive response to those worsening economic conditions. There needs to be an investment of time, resources, and money to avoid what has been predicted.

At this moment the economic development programs offered by the various federal departments—you heard from many of them during earlier hearings by this committee. One of the principal roadblocks of these programs is that there is not enough coordination between them. For example, DIAND, ABC, and regional agencies such as ACOA and FedNor all have equity programs for first nations businesses, and all have relatively the same criteria. Efforts need to be made to allow easier access to these programs.

In addition, there are not enough funds being brought to bear on the programs, especially when we consider that we're spending close to $1 billion annually on social assistance, but only $100 million annually on economic development. Our hope is that those totals will some day be reversed.

The federal departments that have responsibility for economic development and are currently running economic development programs have realized these programs are not well coordinated or connected. From what we understand, in order to address these issues the federal government, co-led by DIAND and Industry Canada-ABC, are in the process of developing federal government partnering strategies for aboriginal economic development to address these very questions.

The Assembly of First Nations would advocate as part of any strategy to improve economic conditions for first nations the coordination of all federal departments involved in first nations economic development; that is to say, coordination of these resources be brought to bear on this issue.

In addition, this strategy needs the voices of first nations people as full and complete partners. Without them there is no partnership. At the same time, the Assembly of First Nations will be developing an economic development strategy in order that we may contribute as full partners in the agenda for action.

This new partnership is not only for governments. The private sector, primarily banks and financial institutions, also have a place in the new partnership to address economic development. There are banks, in particular the Royal Bank, that have recognized this responsibility and are taking some proactive steps to help first nations. One example is hosting conferences like “The Cost of Doing Nothing”.

With the banks making record profits, perhaps they could help by making some progress on addressing some of the access to capital issues that are facing first nations people. Furthermore, tomorrow the national chief will address the Economic Renewal Conference in Toronto. This is a conference of many private sector companies to discuss issues surrounding first nations economic development.

There has to be a recognition that improved economic conditions for first nations is a Canada-wide issue. It is not just isolated to governments. It touches everyone. This why we urge as many as possible to get involved in order to reverse what is happening now.

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There is need for change and a new partnership. The Assembly of First Nations and other members of the partnership must aggressively seek solutions to address these economic challenges. The Assembly of First Nations will adopt a mission statement similar to the following—I say similar to the following because this is just a guideline at this point. We haven't adopted it yet.

First, the Assembly of First Nations will promote and encourage partnerships and joint venturing between first nations businesses, entrepreneurs, and mainstreet corporate Canada. It is through strategic partnering with the established Canadian and international business communities that first nations businesses and entrepreneurs will truly be competitive and capable of supporting employment and wealth creation for the communities.

Second, the Assembly of First Nations will ensure that initiatives are created to increase community wealth, to give greater access to equity and seed capital, to increase employment for first nations to the national average, and expand business development for first nations communities.

Third, the Assembly of First Nations will become a leading partner with the federal government under the “Gathering Strength” initiatives, ensuring that all federal government departments and programs understand first nations priorities and needs with respect to economic development, and that future federal government programming reflects these needs and aspirations.

Fourth, the Assembly of First Nations will ensure that the tools of economic development and business development are equally accessible to all members of first nation communities in order for our first nations communities to be full partners in the Canadian economy and to prepare them for the next millennium.

For any new initiative to work there must be equal representation from the partners. If you've been following current news stories, you will see what happens when you do not consult the communities on economic development issues. Diashowa is now feeling the brunt of that resistance from members of the Lubicon Nation. The whole country's prosperity is and was built on the backs of first nations. This has got to stop. And this was with little or no representation or recognition of their rights. Exploration and resource development amounted to trillions in this country, without the involvement of first nations in the share of profits. This has got to stop.

The national chief has been spending a great deal of time talking about partnerships with government and the private sector. For this partnership to work, it needs to have the following principles: it needs to be based on trust and equality; it needs to be accessible by all communities and people; it needs to have first nations input to give it credibility; and it needs to be continuing, growing and dynamic.

Canada is preparing itself for the next millennium by creating new initiatives like the millennium scholarship funds. We too must prepare for the next millennium.

In the not too distant future there will be a need for creation of 300,000 new jobs. This has been an estimate by the royal commission. In order to meet this challenge we have to think creatively. The first nations communities must have the capacity to participate in the global economy. The work needs to continue to expand this economic base to include not only the development of domestic but international markets as well.

First nations communities, because of their vast dispersal over this country, are involved in a myriad of differing economic ventures and sectors. First nations communities are involved in the following areas: international trade, tourism and ecotourism, mining in the north, forestry and fisheries. But most of the businesses are small in scale and have to be nurtured. A new climate and environment has to be created, and the Assembly of First Nations is committed to doing that.

In conclusion, I urge the standing committee to cast their nets wide on this issue. You may wish to permit Natural Resources Canada, Human Resources Development Canada, Agriculture and Agri-Food Canada, and the Department of Foreign Affairs to make presentations to see how their departments could fit into this strategy to tackle these issues.

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There must be an aggressive and energetic approach taken by all the partners to ensure that these economic living conditions are drastically improved. Measures must be taken to ensure that one of the most successful countries in the world does not continue to have a third world within its borders.

I think we can all agree that there needs to be a positive change. There needs to be a shift from social assistance to economic development and employment. In order for that change to happen there needs to be a partnership between first nations, all levels of government and the private sector. Only through this partnership can we provide a better life for the next seven generations and into the next millennium.

On behalf of the Assembly of First Nations executive and the national chief, I thank you for hearing us out.

[Translation]

The Chairman: Thank you very much, Madam. We will give the floor to Mr. Dale Booth.

[English]

Mr. Dale Booth (Director of Economic Development, Assembly of First Nations): Mr. Chairman, on page 3 of the presentation, fourth paragraph, where it starts “The Royal Commission on Aboriginal Peoples....”—that should be billion, not million. That was my mistake. I apologize for that.

[Translation]

The Chairman: Thank you for adding that point. I am impressed by your statement, Madam; what you said was very clear on what we want to hear from our Aboriginal friends.

We will now proceed to a first round of questions beginning with Mr. Konrad.

[English]

Mr. Derrek Konrad (Prince Albert, Ref.): Thank you.

Thank you for your presentation. I'd like to introduce myself for a minute. My name is Derrek Konrad. As our chairman said, I'm deputy critic for Indian affairs and northern development with the Reform Party and opposition vice-chair of this committee, so I have a lot of issues at stake here.

On page 2, a lot of that is right in my constituency or right next door to it. Prince Albert is where I'm from, and it's good to see things happening in Saskatchewan.

I have a few questions. I don't know how you answer this, but when you have reserves in uneconomic areas—I'm a land surveyor by trade, so I've been to a number of remote communities—how do you propose to give these people work when there's basically one road in and one road out? Getting products to market involves trucking only. There's probably minimal air access and no railroads. What's your plan on that?

Mr. Dale Booth: I could take that question.

First of all, at the end of our presentation we said we'd like to see the committee cast its nets wide. For example, Natural Resources Canada produces a future of resource development. I think you'd be pleasantly surprised to see that overlay on a first nations communities map to see where the future of resource development is going to happen. Many of the communities fall right in the middle of these future resource development areas they're predicting. I think that through the partnership and through the new relation, questions like these will be addressed and can be answered.

But it is a very good question. What do we do? That would be the impetus of the partnership—to find solutions.

Mr. Derrek Konrad: That sounds interesting in the short term, but looking down the road, mines have a way of running out, as you're well aware. A number of communities that were built for that purpose.... I am thinking in particular of Uranium City in Saskatchewan, which was a boom town for a while and then a hold-its-own kind of a town, and now it has basically disappeared, with the exception of a few people who refuse to leave the area, and they're having a difficult time getting the resources they need to do anything.

Is there a plan that goes beyond the immediate?

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Vice-Chief Mary Jane Jim-Cant: I think that to some degree, with respect to Yukon, we're certainly facing that very scenario ourselves with respect to the Faro Mine closing down. There's a huge panic out there about the economic situation in the Yukon changing as a result. However, other mines are opening up, and as those other mines are opening up, we're looking towards developing partnerships with the first nations in their traditional territory with respect to building capacity for first nations involvement in those areas. And perhaps the next move, towards the next millenium, will be focused on building capacity within the respective regions.

Certainly mines are not going to be the thing of the future; if anything, the trends in the international market state very clearly that a lot of the time mining, especially in the north, is a risky business.

There are other avenues with respect to economic development that first nations people have to look at, like ecotourism and also settling with respect to developing traditional knowledge-based businesses and also businesses based on the new technology, the technology of today. We have to build capacity so that we can be equal partners in those ventures.

When you look at the north with respect to other things taking place in terms of development, the first nations in the north have developed a memorandum of understanding with respect to oil and gas. We're now working on a memorandum of understanding with respect to forestry development. In the next couple of months, we're looking at sustainable resource development. We are actually having a major conference in May on sustainable development.

So certainly the challenges are there before us and there needs to be a creation of the partnerships; we need to listen to one another and address development together.

Mr. Derrek Konrad: One of the things that was talked about here was coordination, if I'm not mistaken:

At the same time, the Assembly of First Nations will be developing an Economic Development Strategy...

I presume this would involve coordination. I brought this up yesterday and I'll bring it up again today. We have DIAND, AFN, FSIN, and in my area the Prince Albert Tribal Council, along with the band and the individual. That's a lot of people for the federal government to deal with, at all different levels.

Are you aware of much overlap there? And if so, what is being done to sort of save the bureaucratic part of the money from being spent so that it is put into actual productive jobs?

Mr. Dale Booth: Your question is in relation to the partnership and how there needs to be coordination between the different partners. Is that essentially what the essence of your question is? And when you're embarking on a huge task like this, how do you ensure that there is equal representation without casting your net so wide that really nothing gets done? Is that the essence of your question?

Mr. Derrek Konrad: It's essentially about doing the same thing two and three times over at different levels when you're dealing with so many levels. The Auditor General just released his report on health care and it seems like a lot of programs are attempting to do the same thing. There's a lack of coordination. And I'm looking at having an answer as to how this is working out in economic development and if there's a lot of overlap that you're aware of.

Mr. Dale Booth: That would be one of our recommendations, essentially—

Mr. Derrek Konrad: To streamline things?

Mr. Dale Booth: —to get the government departments that have a responsibility within the department for economic development and that have economic development programs for aboriginal people to all come to the table, along with first nations, to figure out a way to better coordinate how the funds can be spent.

Mr. Derrek Konrad: Do you feel there is a lack of coordination, then, that different government departments and different aboriginal groups are overlapping and money is falling through the cracks somewhere? And we still have high unemployment.

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Mr. Dale Booth: I don't know if I would say money is falling through the cracks when it comes to developing a business project, for example. If you develop a business project and your business project falls within the criteria of Aboriginal Business Canada and the Indian and Northern Affairs programs, you have to go to all these different areas. There may be an HRDC component, there may be a business development component that's handled by Indian Affairs, there may be many different components to it where you can access different types of funding. To do that takes a lot of ground work. You have to go to HRDC and negotiate with them; then you have to go to ABC and talk to them; then you have to go to DIAND and talk to them. If it were all coordinated somehow, you'd walk in one door. It costs money to go and do that, to the person—

Mr. Derrek Konrad: That's the money falling through the cracks that I'm talking about. We bureaucratize the thing to death and at both ends there's nothing but frustration.

Mr. Dale Booth: But I think the partnering strategy being contemplated by the.... I understand you heard from Assistant Deputy Minister Williams yesterday—

Mr. Derrek Konrad: That's right.

Mr. Dale Booth: —and from Bob Dickson.

There is a call to better coordinate these programs. We would be quite happy to be involved in that type of coordination to ensure that first nation businesses don't have to spend that leakage money on travelling all over the place trying to put together an equity package to start their business.

The Chairman: Thank you.

[Translation]

Mr. Perron.

Mr. Gilles-A. Perron (Saint-Eustache—Sainte-Thérèse, BQ): My name is Gilles Perron. Welcome to Ottawa.

The Chairman: Mr. Perron, Mr. Dale Booth speaks French very well.

Mr. Gilles Perron: Very well. Good morning Mr. Booth.

In your paper, you speak of federal-Aboriginal relations. We know that each Canadian province has implemented economic development assistance programs on its territory. Have you established any contacts with these authorities and developed action plans with them?

[English]

Mr. Dale Booth: If you don't mind, I'd like to respond in English.

Mr. Gilles Perron: No problem.

Mr. Dale Booth: Yes, how the provincial and territorial governments would be involved in the strategy was neglected in our brief. But the national chief has been meeting with provincial leaders or is going to be meeting with provincial leaders on various issues, and being that economic development is one of his top priorities, I'm sure that will be one of the questions he's talking about.

I'm aware that two to three weeks ago, I believe, there was an announcement by Minister Chevrette about a new infrastructure and economic development building program that's being offered by the Quebec government. I'm of the understanding that also in Ontario there is a project being run called North of 51, which is going to be looking at the different resource and business development issues that affect the north of 51 area of Ontario.

We are aware of some of these initiatives, and yes, we want to be involved. We'd want the provinces to be involved. They would have to be involved, and we would invite them to become involved. At the end of Vice-Chief Jim-Cant's presentation, we call that the nets are cast wide. It's an all-Canadian challenge that has to be met.

[Translation]

Mr. Gilles Perron: May I ask another question, Mr. Chairman?

The Chairman: Yes, you have enough time, Mr. Perron.

Mr. Gilles Perron: You will surely allow me to, since I will be talking about your region.

In your paper, you mentioned that the Cree from Northern Québec were a tribe that had really developed. Do you think that the signature, a few years ago, of the James Bay Agreement, which was designed to establish a relationship and ensure regional development through each group's contribution, is responsible for this success, as you seem to want to demonstrate. What was the role of the James Bay Agreement in the development of the Cree, of Air Creebec, and of the Cree Construction Company?

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[English]

Mr. Dale Booth: I'm not really sure how that impacted. That would be a.... I really don't know how it impacted on that.

What I do know about the Cree Construction Company and Air Creebec is that they're successful businesses, and we use those as examples to show aboriginal successful businesses. Obviously we have things to learn from those successful businesses, and we want to take what they've learned and how they're doing business and transfer that capacity to the less well-off communities and less well-off aboriginal businesses.

But to address your question about the impact of the James Bay agreement, sir, I am not aware of how it impacted on that.

[Translation]

Mr. Gilles Perron: You know that following this Agreement, Aboriginals trained by Hydro-Québec now manage hydro-electric power plants. This is an asset. If I am not mistaken, there are currently discussions about a hydro-electric power plant project that would be strictly controlled and built by Aboriginals of the Great North.

Another interesting part of your paper deals with chartered banks, which, as we all know, certainly make good profits. How receptive are they, and what kind of contacts do you have with them? Are they interested in going along with you and investing risk capital in your projects?

[English]

Mr. Dale Booth: We brought this up in our brief, because there are banks, such as the Royal Bank, that late last year put together a symposium with the Committee for the Advancement of Native Development Officers. It was a forum about the cost of doing nothing. They are interested in looking at the different issues.

Also the Royal Bank was involved in something we're looking at putting together, a first nations economic council, where business people would come together and talk about needs of first nations businesses and needs for first nations economic development.

I guess what we'd be looking for from banks is to explore the access to capital issues. There are a lot of questions with regard to access to capital, such as section 89 and the problems with mortgaging and different things like that. It's very difficult for first nation businesses and communities to raise equity capital, so we look to them to help us out with those issues and come up with creative solutions for those issues, to make access to capital easier than it is now for first nation businesses and communities.

[Translation]

Mr. Gilles Perron: Thank you, Mr. Chairman. I could go on talking all morning, but I will give others a chance to speak.

The Chairman: Thank you, Mr. Perron. That is well done.

Mr. Earle.

Mr. Gordon Earle (West Halifax, NDP): Thank you, Mr. Chairman.

[English]

First I want to commend the AFN for a very excellent presentation. You've touched upon many issues that are important to economic development.

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At the very top of page 5 you talk about the importance of strategic partnering with the established Canadian and international business communities. I agree that's very important. I'm wondering what your thoughts would be, in light of that statement, around the issue that's currently taking place in New Brunswick, where the appeal court has overruled the decision of the lower court with regard to the forestry industry and the right of aboriginal people to cut trees on crown lands. Has the AFN had any involvement directly with the business community, with those forestry companies, about the potential for sharing that resource in a way that will avoid further confrontation, either through the courts or otherwise?

Vice-Chief Mary Jane Jim-Cant: With respect to that particular issue, AFN likes to respect the regional jurisdiction with respect to political issues and statements. Unless specifically requested to embark on a process of initiating a protocol or initiating work together, AFN respects the jurisdiction of those regions. To date we have not been asked to step in to support or to intervene in any way. However, I think that in the event we are asked, we would be prepared to do it. Thank you.

Mr. Gordon Earle: Thank you.

My second question is again around the sharing of resources. I raised this issue at the last committee meeting with respect to the mining industry. The mining industry has been mentioned today, so I'll just follow up on this. Quite often with respect to the mining industry the outward results that we see from a company moving into an area and mining is that there's employment, or, as has been mentioned by my colleague, perhaps like in the case of the dam, the hydro plant, people get trained and they end up in certain positions. What I would see as being even more important when you look at the mining industry would be the actual sharing of the royalties and the sustainable wealth that comes from those industries, rather than just the spin-off effect of the jobs. Has the AFN looked at that particular issue in terms of economic development, at how there can be more equitable sharing of the true wealth that comes from the resources, the profits, rather than just the spin-off effect of the jobs and the training?

Mr. Dale Booth: I must make you aware also that the Assembly of First Nations, as of April 1, started the economic development secretariat. We are in the process ourselves of developing strategies, and these strategies will be looked at by our executive. We need to look at valid impact and benefit agreement documents in order for first nations to take advantage of these resource developments and not only to get jobs in capacity-building, but also to have, as you say, the spin-off businesses that are the result of a large mining operation or a large forestry operation. So I think that's definitely something we'll have to look at.

Vice-Chief Mary Jane Jim-Cant: If I may, with respect to impact and benefit agreements and jurisdictional issues, I think that the move toward partnership is and has been created with respect to certain land rights cases that have taken place across this country, not the least of which was the Delgamuukw case, which will set precedent in terms of jurisdictional issues with respect to traditional territory with first nations. Unfortunately, we've had to have those cases to support our work towards development on impact and benefit agreements and royalty issues. As I stated earlier, Industry Canada has not been very friendly to first nations with respect to development, and certainly has ignored first nations issues in the past, drastically ignored them to the point where first nations have not developed economically equally.

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That's certainly the case in the Yukon, where we have the Faro Mine, which operates within a 50-mile radius of a nearby first nation, which has not had royalties or spin-offs from that mine up until very recently, in which case they have built in capacity for employment and also job training. And now that you have the mine closed, it leaves the first nation in a very precarious state of unemployment, and future development with respect to other industry is questionable. However, that first nation is looking at its role in terms of jurisdiction, in terms of development in the future, whether it's in forestry or mining or oil and gas.

Companies now are respecting first nations' jurisdictions more and more, and I think that's going to be the way of the future, that we're not going to be ignored any more, that we're going to have to be partners with respect to development, and certainly sharing of resource royalties is going to be a huge issue.

On the other hand, we still have and still speak to development with respect to issues that are conflicting. Northern Cross Development, oil and gas in the Yukon, is proceeding to explore in the north and in the Vuntut Gwitchin traditional territory without the respect of having discussion with the Vuntut Gwitchin and respecting their traditional development, respecting their way of life in terms of the caribou and that sort of thing.

Those kinds of things have to stop. They absolutely have to, not only as Canadians for the development of the Canadian economy, but there needs to be a partnership. That confrontation, that we're going to develop without you, like it or not, has to stop. Certainly we're moving toward that and AFN is looking to supporting first nations in furthering their issues with respect to impact and benefit agreements, royalty sharing and partnering.

So certainly when we speak to representing first nations, those are issues we have to respect and we have to look at in the very near future.

The Chairman: Mr. Keddy.

Mr. Gerald Keddy (South Shore, PC): Thank you, Mr. Chairman.

Thank you, people, for coming in. It's a very well thought out brief.

I have several questions. As with most of the people on the committee, a number of the points you make raise questions. I'd divide them into two areas and I'd like some feedback from you folks on them.

First of all, I would like to make a comment on your breakdown on international trade, tourism and ecotourism, mining in the north and forestry and fisheries, and the real need out there to be involved in that loop, to be a participant, to be at the table. I think all of us understand that.

The one thing with tourism and ecotourism is I like the fact that it's there, but I also like the fact that it's only one out of five, because it very much depends on the vagaries of the dollar and the economy and how many people are available to spend money. There's always been a group of affluent people in the world who have had dollars to spend and who were willing to travel into northern Canada or into remote areas, but those people will never be enough to sustain anyone's economy, so it can only be part of that economy. That's the point I want to make.

It's nice to see it as part of it, but there seems to be a belief out there that tourism and ecotourism can be the panacea that will save a lot of remote communities throughout Canada, and that's just not going to happen. I wanted to make that point.

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The point Mr. Konrad made on the coordination of all federal departments involved in first nations economic development and the fact that it took a little while to understand where the point was coming from.... The idea that we can avoid bureaucracy is a positive idea. In relation to that, I want to take that a step further and look at what has happened and the fact that there has been no movement on it.

I've certainly listened to a number of concerns from various first nations communities that live on reserve across Canada, as anybody at this table has. There's a lack of control over on-reserve property. This is actual property that's first nations property now, but it's completely, 100%, controlled by the federal government and by DIAND. If you want to start a logging operation, open a mine, have a housing consortium, or do anything in the majority of them—there may be the odd different case—today there is absolutely no first nations control over their own resources. It may be slightly different in northern Canada, but certainly in southern Canada and within the provinces, that's very much the situation.

So I think we have to make some fundamental changes, but so far, those changes haven't been made. First of all, you need to have control over your own property, your own land. The chiefs or your band councils, the people in charge of the decision-making process, have to be able to make those decisions within the laws of the country.

One of the problems I've been confronted with and have talked to a number of people about is on-reserve resources and the fact of matrimonial rights. There are a couple of things that haven't been settled here. Have you been talking through the AFN? Do you see any movement towards a settlement of the control of those resources? We haven't even stepped into continuing and settling the land claims in Canada. We're a quantum leap away from that. We're just at the base of it, but somehow we've got to start. What do you see there?

Mr. Dale Booth: Thank you, Mr. Keddy. As you started out, there were a lot of questions being raised. Our intent is to raise a lot of questions and to bring a lot of issues surrounding economic development to the table. The list that is here is not exhaustive. This list goes on and on.

Mr. Gerald Keddy: Yes.

Mr. Dale Booth: It's an example. Yes, you're right that a tourism operation for one community is not going to save that community. It has to be part of an integrated economic development plan that has tourism, forestry, or whatever involved in it.

With the access to resources issue you brought up, it's exactly that. The partnership has to address the issue of access to the first nations' own land. As you say, in many cases they don't have access to their own resources and their own land. That should be one of the primary focuses of any partnership that's looking at these issues. LTS, the lands and trusts services at Indian and Northern Affairs, is in the process of dialoguing with AFN and other groups. I'm not really too sure about what's involved with that process or exactly where it's going, so it wouldn't be fair for me really to comment on that. But I'm aware that there are discussions between AFN and lands and trust services within DIAND to talk about these issues.

On the issue of matrimonial rights, I'm not really too sure about where that's going.

Mr. Gerald Keddy: There seems to be a major conflict in resource management. It works into the entire equation of handing over jurisdiction to your tribal councils or local band council. There's a bunch of questions that haven't been answered. It seems to me that we're talking about international trade, mines, forestry, fisheries, and a whole lot of issues. But we have not laid the groundwork to get into the greater discussion. So there's a bunch of things that have to be done here. We're started at point A and are trying to get to point E or point F or point G somewhere down the road, but we're light years away from that and we haven't laid the groundwork to get there. We can't jump there first.

• 1205

Vice-Chief Mary Jane Jim-Cant: With all due respect, Mr. Keddy, in the north—and I can only speak of the north because that's where I'm from—we've already laid that groundwork.

Mr. Gerald Keddy: The north is a different situation.

Vice-Chief Mary Jane Jim-Cant: We've already laid that groundwork. And certainly there are other first nations across this country that are working towards self-government and self-government in the broader context of matrimonial law. It is an outstanding issue with us with respect to the development of self-government in light of our agreements. That's not to say that we're not able to resolve those broader issues, but we are working toward that development.

Certainly I'm sure that there are other first nations jurisdictions across this country that are working in the same light. I can't speak of any one in particular, but there is movement. Perhaps it's not fast enough for both sides or all sides, but we have to respect that movement and we have to move together in terms of addressing a lot of those issues.

In the development of self-government, there has to be a recognition—and I don't disagree with you there—that there is a lack of control of first nations property. The government and the courts hear of them every day with respect to coming forward and issues that are brought, and it's a very costly venture for this country, but it speaks loud and clear that first nations people want to be, in terms of their own entity, self-governing, and they need to be respected in terms of their jurisdiction over their traditional lands as well as the reserve lands.

Mr. Gerald Keddy: As one final comment, regarding the reason I brought that up, I wasn't proposing for an instant that somehow we should put everything on hold until we have some of these issues looked after. It's important to look at it in the big context as well. However, I think the Government of Canada, the AFN, the aboriginal nations, and throughout the country, all of us, should be looking at settling some of these other issues that are already in the way and are major stumbling blocks to what's going to happen down the road. I don't think we're putting enough emphasis on it.

Mr. Dale Booth: I think in what you have touched on, Mr. Keddy, you've illustrated quite well that there are a number of different levels of government. There are a number of different areas that touch on economic development. It's a huge cluster, but we have to make sense of that cluster and we have to have all the people who are members of that cluster at the table to talk about these issues to see how the patrimonial rights issue fits into a discussion on economic development. So the point is taken.

Mr. Gerald Keddy: There has to be more than discussion.

The Chairman: Thank you, Mr. Keddy.

Mr. Gerald Keddy: Thank you.

The Chairman: Mr. Bryden.

Mr. John Bryden (Wentworth—Burlington, Lib.): I was taken by the statistics you used on page 2, the $24,000 for a non-aboriginal person and $14,700 for an aboriginal person as annual income. For the past hour I've turned the parliamentary library upside down trying to verify those figures, and the best I can do for 1991 is non-aboriginal family income of $53,000. Family income for Newfoundland for 1991 is $41,000. If one assumes a family of four, then what one finds is that a single person in Newfoundland's average income is $10,250. I don't know how to square that with the per person income of $14,700 a year. Can you give me some explanation of what we're talking about here?

Mr. Dale Booth: I got these statistics from Statistics Canada.

Mr. John Bryden: They don't seem to have them now.

You did the study yourself?

Mr. Dale Booth: I took this from Statistics Canada.

• 1210

Mr. John Bryden: Can I ask you then to send back to the committee, for my assistance in understanding these figures, exactly where the statistics came from? The reason I'm interested is, when one has important discussions like this on the future of communities and the future of Canadians, one has to make sure that the information one is using is very exact.

Further to that, if you obtained that $14,700 figure, can you give me an indication of how much of that was money directly from government agencies, one way or another through government? Was it social assistance? Was this subsidies for on-reserve activities? I need to know what that $14,700 means. Is it earned income in the marketplace, or is it basically money that is coming from the taxpayer as income to the aboriginals? Again, that would help us enormously in understanding the nature of the problem we're trying to deal with here. Can you do that for me?

Mr. Dale Booth: I can commit to providing you with where I got the original information, but I'm not sure about the breakdown within that figure.

Mr. John Bryden: Then I'll try to help you there, and we'll resolve that.

Mr. Dale Booth: Okay.

Mr. John Bryden: As to the question I have, I relate a lot of what you say to situations like Newfoundland, which is why I went after the Newfoundland statistic. We obviously have an enormous problem as Canadians, trying to help other Canadians in Newfoundland, where you have a major resource that has collapsed and you have all these outport communities in terrible trouble. You can translate that problem to the remote communities.

How do you address the problem in long-range planning when your economic planning is based specifically on territory, one region—one self-government region, if you will, versus another self-government region—when there's enormous disparity, not only in resources but access? For instance, I happen to know that in the chairman's riding, he has about 14 remote communities. Were he to travel by plane to each one of them, it would cost him something around $24,000 to do that.

Referring to my colleague across the way, when he raises the issue of tourism, well, it's all very well to want tourism, but if it costs you an arm and a leg to bring tourists in there, then you're going to have a problem.

So how do you resolve trying to encourage businesses in remote communities when those remote communities do not have the material resources or have the disadvantage of remoteness? How do you do it?

Mr. Dale Booth: That's a very, very large and broad question: How do we do it? We're all going to have to sit down and figure that out. I don't have the answer for you right now, but hopefully through the isolated first nations communities that face this problem, the provincial-territorial governments, the federal government and the private sector sitting down, through the partnership, they can figure these questions out, how to deal with this issue.

Mr. John Bryden: Isn't it true, then, that in a resource-based community like an outport in Newfoundland or a mining town somewhere in Canada, when the resource runs out the community moves? I take it, though, that you would agree that this is never an option when we're looking at first nations remote communities. I'm just trying to address the pith of our dilemma here.

Vice-Chief Mary Jane Jim-Cant: Can you give an example?

Mr. John Bryden: Any outport in Newfoundland that has relied primarily on cod stocks is now faced with the dilemma. And one of my colleagues did give an example of a mining town that was emptied when the mine ran out. Canadian history is full of towns that appeared and disappeared in areas of forest resources: when the forests ran out, the communities moved.

The problem I'm getting at here, which everyone seems to avoid, is that our dilemma as all Canadians, when we look at the situation with aboriginal remote communities, is we want to give them economic independence but we don't seem to allow for the fact that some of these communities may not have and may never have the resources.

• 1215

So what is the solution? Are you prepared to say that maybe the answer is that some of these communities are not going to be self-sustainable and they're going to have to move, or if they're not going to move, then they're always going to be on the largesse of government? Is this not really the type of dilemma that brings us together here today?

Vice-Chief Mary Jane Jim-Cant: With all due respect, two issues come to mind right away in terms of economic development for first nations.

One is sustainability. Sustainable development is a key in the future. Certainly first nations values and principles incorporated into sustainable development will have to be, and I say “have to be”, adhered to. In the past you have—and I say “you” in broader terms—ignored first nations values, principles, and jurisdictions, to the point where first nations communities have been relocated physically to accommodate economic development.

Mr. John Bryden: I know that.

Vice-Chief Mary Jane Jim-Cant: Today those communities do not have to be relocated any more, and certainly a lot of them don't want to be. But they can be a part of the process of development with respect to royalties, jurisdiction, impact benefit agreements, sustainable development partnering, and all of those kinds of things. Certainly we're not going to have the answers for all of the communities in all of the northern parts of Canada. If we had that, we would have developed as a country and we'd be forerunners, certainly years in advance of everybody else.

So, with all due respect, those are challenges we face as Canadians and as first nations communities. It's not to say that all first nations communities want to have the mines coming in or the oil and gas or any of that sort of thing. Perhaps ecotourism or tourism will be enough for them to sustain their culture and their values and principles and to maintain that jurisdiction and the lifestyle they're accustomed to.

Mr. John Bryden: May I observe that the various first nations are a shining example of success in establishing themselves as self-sustaining communities in the past and as nations. The difficulty is that it is now a different world, and we're trying to figure out how to maintain the traditional values in the global marketplace context.

That leads me to my very last question. Mr. Booth, you were mentioning that it is very difficult for some communities to raise capital from the banks and this is a major problem. Again, how do you address the difficulty if the bank is looking at a community making the request and it just is not market-feasible without a grand government subsidy?

I'm not saying this is not a choice, because I have to tell you I think it's very important for all of Canada that the remote communities be sustained. But I'm curious about how one can ask banks to invest in something that may be, shall we say, a very poor risk without involving the federal government or the government at some level, using taxpayers' money to underwrite something that may indeed lead to a loss of taxpayers' money. How does one resolve this kind of thing?

Mr. Dale Booth: Well, number one, we have to look at each individual business case as an individual business case. Number two, we'd be looking to the banks to help us address the question of how can we come up with solutions to deal with these problems. If the bank is involved and it's a poor investment, and the first nation business or community sees that it's a poor investment, well, on a case-by-case scenario, if they were shown that, I don't know why they would continue with that particular venture.

With respect to the banks, what we'd be looking at is dealing with the access to capital issue, the grandiose issue—to get them to the table to help us work out strategies to look at these issues.

I agree that there are going to be some business projects where it's just not viable. If it's just not viable for the first nation, for the federal government, and for the bank to get involved, well, then they shouldn't.

• 1220

Mr. John Bryden: Can I make one last comment?

I have great sympathy with this situation, except that maybe the approach has to be not just on a first nations basis, but on a remote community basis. I see it as an important sovereignty issue that we maintain a Canadian presence in all parts of Canada, and that the government should be prepared to invest in that presence. The first nations are on the leading edge of doing that great service to the country, and I would make the approach to the federal government, or make it part of the agenda of your approach to the federal government and consequently to the banks, that this is the role the first nations have to offer, and that in this context the remote communities have reason to call on the federal government for assistance.

Thank you.

[Translation]

The Chairman: Thank you, Mr. Bryden. I know time is running short and several members have a lot of work this afternoon. I am impressed by the statements of our witnesses. Before hearing the next two groups, I will give each member an opportunity to speak for two minutes during a last round.

Mr. Konrad.

[English]

Mr. Derrek Konrad: I thought we were done, so I didn't develop any real questions here.

The Chairman: That's okay.

Mr. Derrek Konrad: Then I'm going to pass.

[Translation]

The Chairman: Go ahead, Mr. Konrad.

[English]

Mr. Derrek Konrad: I might have one short one.

The Chairman: That's okay. Go ahead. Five or ten minutes is no problem.

Mr. Derrek Konrad: We talked a lot about self-government. I'd like to know what your view of self-government is. Just a short question for you.

Voices: Oh, oh!

Mr. Derrek Konrad: I'm not taking five minutes to ask it. It took 30 seconds.

Vice-Chief Mary Jane Jim-Cant: Do you have all day?

Mr. Derrek Konrad: No, but I would like to have an answer, and if you can't give it to me now, I'd like a written answer. We need to know. It's my question right now.

Vice-Chief Mary Jane Jim-Cant: I think you have put me in a very precarious position—

Mr. Derrek Konrad: I'm just throwing it out.

Vice-Chief Mary Jane Jim-Cant: —and with all due respect, I cannot answer your question within the time allowed to us. If you want a generic answer, I can tell you that self-government interpreted by first nations across this country, with all due respect to those first nations, will be based on that first nations interpretation.

Mr. Derrek Konrad: I'll pass.

[Translation]

The Chairman: Ms. Jim-Cant and Mr. Booth, I am impressed by your leadership and that of the First Nations. You give a great deal of hope to our Canadian Aboriginal friends for the implementation of a major strategy that will improve the economic conditions of Aboriginals in Canada. I am confident that you will meet this challenge and that we will be at your side to witness your success. I sincerely thank you for coming here this morning. We are very impressed.

[English]

Thank you very much.

Mr. Keddy.

Mr. Gerald Keddy: Mr. Chairman, I did have one last comment to make. It is in relation to what Mr. Bryden said about northern remote or isolated first nations communities.

I think we should all be aware, as I'm sure our guests are, that there have been all kinds of first nation communities that have moved, been abandoned or have changed locations throughout history, throughout the history of the country, for thousands of years. So there's nothing new about moving a community, but I do want to make this point. Mary Jane mentioned it, but I don't think she put enough emphasis on it, and that's the thing that has been overlooked for too long: the “culture” word. It's very difficult to encompass that culture and encourage it and to allow it to survive under the dynamics of the Canadian government and the world as they exist today, for a remote community—some of them that are dependent on living off the land, although there are few if any of those today.

• 1225

It comes back to that whole “culture” word and the lack of respect by the Canadian government for a culture that may be different from the so-called Canadian culture. That's the only comment.

The Chairman: Thank you very much.

Vice-Chief Mary Jane Jim-Cant: I would like to thank the members of the standing committee for allowing us to present today. I look forward to seeing you again and I definitely look forward to working with you. Thank you.

[Translation]

The Chairman: Thank you very much, Madam and Sir.

We will now move on to the Business Development Bank of Canada, represented by Mr. Jim Richardson, National Director, Aboriginal Banking.

I also invite Mr. Keith Martell, Chairman of the First Nations Bank of Canada, to take his place.

• 1226

• 1232

The Chairman: If the members agree, I would like us to resume our proceedings without delay so that we may be finished by one o'clock, because several members must attend other meetings around 1:05 or 1:15.

Since we have already received copies of your statements, I would ask you to summarize them, following which the members will ask questions. We apologize for this delay, but we preferred hearing you during the last half-hour rather than cancel your appearance. Thank you for your patience and understanding. The previous group was really interesting, and we have given it more time than scheduled. We apologize.

Mr. Richardson, then Mr. Martell.

Mr. Jim Richardson (National Director, Aboriginal Banking, Business Development Bank of Canada): Good morning, Mr. Chairman, Ladies and Gentlemen.

[English]

I'm pleased to have the opportunity to address this group of distinguished parliamentarians. My name is Jim Richardson. I'm a Micmac Indian from northern New Brunswick, Pabineau First Nation. I was pleased to speak with Mr. Keddy and Mr. Earle, who are fellow maritimers.

I'm largely here because of my experience with the national task force on access to capital, an aboriginal financing task force, where I chaired the regulatory issues subcommittee. It was a DIAND-sponsored task force mandated to provide creative solutions for access to capital for aboriginal entrepreneurs. We looked at a wide array of problems associated with access to capital.

I prepared for you, in the brochures you have before you, a copy of my presentation that includes notes and other interesting information. I've also included in the presentation a copy of the key recommendations of the Royal Commission on Aboriginal Peoples that relate to the issue of access to capital, and are contained in the royal commission report, for your interest.

Because of the time constraints, I will summarize what I think, from my experience on the task force, are the two major impediments to aboriginal economic development. The first one deals with access to capital, and that is the security, equity, and management issues, or the three C's of credit, as people call them. It is very difficult for an aboriginal entrepreneur to deal with financial institutions in an on-reserve setting. All entrepreneurs face those dilemmas, but it's particularly compounded for aboriginal entrepreneurs because of the Indian Act, specifically the inability to seize Indian properties.

• 1235

There are other issues related to the inability to acquire equity when you're looking at a lower level of income to start. These and other management issues compound the problem for aboriginal entrepreneurs and the receptivity of financial institutions to financing aboriginal businesses.

In particular, start-ups are generally risky. If you look at the statistics, 50% of the businesses that start today are not around in five years' time, indeed are not around in three years' time. There are a number of issues attributable to the failure of start-ups, but by and large you can look at factors over which the entrepreneur has no control.

For example, if you start a lumber operation and you happen to be selling lumber into a market that exports to Southeast Asia, for example, with its currency crisis, you could be a great entrepreneur, but it would not have any bearing on your success because those are external variables.

The internal variables are like management, and that's an area where I think financial institutions look at hedging their risk in some cases. If you attribute a certain percentage of those business failures to management, then you start looking at areas like management support and so on to bring the entrepreneur along for a period of time to hedge your risk.

The other area largely ignored by the financial institutions is development lending. In many communities you find that this is an issue. Development lending is an area where financial institutions, primarily the major banks, don't see a role. Indeed, the aboriginal capital corporations were developed to look at that particular market niche, but in recent years they've concentrated more on bankable projects, largely as a result of survival.

In the task force we recommended that the government look at areas where they can perhaps provide assistance to aboriginal capital corporations to cover the costs associated with administration and perhaps a loan loss reserve to deal specifically with development lending.

In the case of some financial institutions—the Business Development Bank, for example—we have a wide array of products. We're a different kind of bank that rounds off many of the products the major financial institutions provide. We looked at the aboriginal market as an area where we wanted to grow and contribute toward small-business development, and we developed a growth capital for aboriginal business loan product that specifically tried to tackle those barriers that restricted access to capital for entrepreneurs.

We provided greater flexibility in this loan product that was developed and launched in September of this past year and is now available across the country. It provides start-up funding of up to $25,000, and up to $100,000 for expansion of an existing business, with greater flexibility in the areas of equity and security, and we have provisions for management support as well. The other unique feature of this loan product is that we also contribute to the community organization or charity of choice of the entrepreneur 0.5% of the annual interest on a loan outstanding up to a minimum of $100 every year.

So we're seeing positive steps in respect to the recommendations dealing specifically with the access to capital problems that we raised in the national task force report. Most recently we saw a joint committee of the CBA and DIAND getting together to look at some of the recommendations associated with the task force. We're also seeing positive steps in other areas with respect to trying to work more in terms of partnerships to deal with economic development.

In dealing with those commercially viable projects, the other area that may be more significant, I heard some of the members allude to the major barrier that exists in many communities because there's limited opportunity for broad market penetration of goods and services. In a small remote community of 300 or 400 people you can only have so many types of retail operations. I mention retail operations because there's a propensity for aboriginal entrepreneurs to look at that particular sector.

Structural change is required if we're going to deal with that issue. What structural change am I talking about? If one wants to be visionary and look at the restrictions of geography, one knows that technology knows no geographic boundaries. So you can develop partnerships with all stakeholders, including the private sector and governments, to try to encourage innovative pilots in many of these remote communities.

• 1240

Yes, some of these communities may in fact rely on transfer payments. That's the cost of maintaining the geography of this country. I wore a uniform for 23 years and was proud that I could look at the Atlantic Ocean and Pacific Ocean and go north and south. I want to maintain the geography of this country, and yes, it may in fact be a reality.

By and large, there are opportunities as well, though, if one were to be creative and look at technology as an option. In some remote communities, you have a combination of communities. We see, for example, in northern Manitoba, where you have the Island Lake area, you have a lot of young people. There are three communities. Combined, you're looking at a population of almost 6,000.

Well, say you were looking at relocating a call centre. God forbid it. I love the call centres being located in Moncton, New Brunswick, as a fellow New Brunswicker, but I would think that, being creative, there's an opportunity where you can encourage some sort of incentives for the private sector to look at locating there or contracting out administrative services, etc.

Finally, I think that by and large this is not a fast process, it's something that's going to have to happen at the pace of first nations. We heard the cultural issues being raised and so on. There really is, I think, a lot of room for improvement in the access-to-capital area, but I don't want to dwell on it any longer because of the time constraints.

Mr. President, I want to thank you for the opportunity to be here today. I wish you continued success in your efforts to make Canada a better place for aboriginal people and all Canadians.

[Translation]

The Chairman: That was very interesting, Mr. Richardson. Would the members prefer hearing Mr. Martell now or later?

Mr. Martell, I invite you to make your statement.

[English]

Mr. Keith Martell (Chairman, First Nations Bank of Canada): Thank you, Mr. Chair.

Thank you, Jim, for taking up most of the time. So I'll be very brief.

I'm just not going to go into the details. I think you all have the words I was going to go through. I'm taking this as giving you my impressions and my observations. I think there are a couple of things I have to bring to this table that really broaden the views of where we're coming from.

I'm an aboriginal person. I was born on a remote reserve in northern Saskatchewan. I was raised in the city. I knew what the aboriginal community looks like and operates like in cities. As a chartered accountant in public practice, and now chairing the board of the First Nations Bank of Canada, I really have been from coast to coast in Nunavut territory and on the east coasts and west coasts of Canada to look at aboriginal economic development and see where it's happening on the ground as we sit here today.

I'm going to talk about two areas that I think came up earlier, but I have a slightly different perspective on them. One is the economic viability of communities. It was discussed earlier that some of these aboriginal communities may not be viable. I think I agree with the AFN stance that we have to cast our nets wide. I agree with Jim's response that there are some opportunities for us to continue the economic development of a lot of our communities if we think about things differently and innovatively.

I also recognize that there are a lot of communities in remote areas that are not as viable as the number of people who currently reside in those communities. I don't think those communities will ever disappear because I think there is an economy that can be built around those communities and there is a history to the land and to their residence there, and I think they will exist forever.

But I do believe that a lot of the people who currently reside on reserve do so under economic duress. They move to cities, where they are faced with unviable economic opportunities because they try to get into training opportunities that are not available to them. Or if they do get trained, they're faced with employment in companies where the non-aboriginal workforce is not trained to tolerate diversity.

So what ends up happening is that a lot of our people end up returning to their communities because it's a safe place to go back to. If we're going to cast the net wide, I think we need to cast the net over our cities, our urban centres, as well. In Saskatchewan, approximately 50% of our people do not live on reserve any more, they live off reserve. When we think about economic development and economic opportunity for first nations people, we need to include all first nations people, both those in urban centres and those who still continue to live in their communities. So that's the one issue.

The other issue is control over economic development programs. With my experience in aboriginal economic development, I've seen many aboriginal economic development programs that are driven, delivered, and created or established by non-aboriginal agencies. My experience is that those programs do not work. Aboriginal people must have some say in their economic development initiatives. If they do not, they tend to focus on regional or national priorities that don't recognize some of the realities of the aboriginal economies, and I don't feel a lot of these programs end up doing very much good for our people until they get control of it and become stakeholders in their own economic development.

• 1245

One other area I want to talk about that hasn't been talked about today is successful partnerships. Partnerships with non-aboriginal private sector entities can be a means to address a lot of the obstacles we talked about today. Partnerships can give you access to capital, especially in the resource development area.

A lot of the successes were talked about in northern Saskatchewan. The Prince Albert Grand Council, Northern Resource Trucking, and the Meadow Lake Tribal Council and their forestry developments were all initiated with non-aboriginal corporate partners.

The difference there was that those economic activities and accesses to capital also included access to a management and labour capacity that was transferred. Technology transfers and management transfers brought along the first nations to be truly equal partners in these economic ventures. That's why they're successful. These partnerships also brought some access to infrastructure and markets, which is also an issue for first nations economic development.

The First Nations Bank of Canada, of which I chair the board, was created for all of these reasons. We saw the opportunity. We had an aboriginal capital corporation. This was the first aboriginal capital corporation that was developed in Canada, and it started in Saskatchewan. It lent out, over a period of seven to twelve years, approximately $30 million to small aboriginal businesses and created more than 3,000 jobs.

The difference in the success of this program, as opposed to the old Department of Indian Affairs economic development program—this had a loan-loss ratio of approximately 80% in some years, while the Saskatchewan Indian Equity Foundation achieved a loan-loss ratio of approximately 1% and created real economic opportunity—was clearly the aboriginal control, understanding our own economies, being stakeholders in it, and recognizing that this is our capital we're putting up in these business opportunities.

That aboriginal capital corporation grew to the point where we saw our customers being repeat and commercial customers. In 1993 we sought to expand our opportunities to grow a national chartered bank. We recognized that we didn't have the capability in-house to do this and to operate this bank in accordance with the Office of the Superintendent of Financial Institutions and the Canada Deposit Insurance Corporation. To be successful, we needed management capability, access to infrastructure and systems, and some capital in order to secure our future in this entity.

We sought out partnerships with corporate Canada and tendered this opportunity to every one of the chartered banks. After some due diligence, we partnered with the Toronto-Dominion Bank. On November 19, 1996, the First Nations Bank of Canada received its charter as a national chartered bank in Canada.

This strategic alliance will eventually result in an Indian-controlled institution that is a facilitator of economic development. The one difference between our bank and the Business Development Bank of Canada is that our bank is a commercial institution. We're not a development lender; we have a parent that's a development lender. Our parent, the Saskatchewan Indian Equity Foundation, is an aboriginal capital corporation, and will continue to be a development lender that develops businesses on first nations for first nations people. We're the economic corporate side of our partnership, and we will do the bankable opportunities that exist in first nations economic development that is happening across the country.

In conclusion, I just wanted to mention that I think there's some validity to the option that some of these economies are not sustainable, although we do have to cast our net wide and consider the cities and some of the new economic ventures. I agree that they're not a panacea or an answer to all solutions.

Ecotourism is an issue that we are addressing very strongly in Saskatchewan, because we have a distance issue where we can contain a package of products in ecotourism, cultural tourism, that would allow bus tours to visit tent sites in a day. It's viable and economical.

We can bring people in and make it worth while, but it isn't an answer, I agree, for a lot of the remote communities in northern Quebec and in Labrador, where it does cost $2,000 to $3,000 to visit one community. It would be a very small slice of the industry that's available to them.

• 1250

We especially support mutually beneficial partnerships that enhance the pace of aboriginal economic development. We think there have been a lot of successes in Saskatchewan that are based on this model. We must ensure that these ventures are mutually beneficial in the long-term, and not what we call storefront operations that have little sustainable development for the aboriginal partner.

I just wanted to focus on those issues. I think we'd get a lot out of the questions, if there are any. I'd like to thank you again for the opportunity to appear here today.

[Translation]

The Chairman: Thank you, Mr. Martell. It was very interesting.

Mr. Konrad, please.

[English]

Mr. Derrek Konrad: Thank you for your presentation. I was really interested.

Jim, you said that the Indian Act was one of the biggest hindrances to first nations economic development, and I presume that also includes the reserve system. I wonder, are you in favour then of amending or abolishing the Indian Act to enable first nations people to develop as people not as tied to these communities...by not being able to own the land or something? Is this what you're proposing?

Mr. Jim Richardson: One of the things we looked at in the national aboriginal financing task force was the ability of first nations to look at an amendment to section 89, whereby they could look at the options, given that the chief and council and the members of the community decided to opt out of that particular clause. You have to recognize that individual first nations are the ones that have to make that decision.

Mr. Derrek Konrad: Certainly.

Mr. Jim Richardson: We looked at that as an issue. I think it certainly is a significant barrier, in many cases, as it relates to financing.

Mr. Derrek Konrad: That's interesting. I'm not sure what section 89 says. I'm plugging my way through the Indian Act, complete with all of the court decisions that go with it. Section 89 would allow them to opt out of the Indian Act? It applies to just what?

Mr. Jim Richardson: Well, basically section 89 defines Indian properties, in a simple sense. Under the Indian Act, you can't lay claim to Indian properties, with the exception, for example, of things that are financed under conditional sales agreement arrangements, for example moving vehicles and so on, where ownership isn't transferred to the individual until such time as payment is realized. But by and large, immovable assets cannot be laid claim to on an Indian reserve under the Indian Act.

Mr. Derrek Konrad: A lot like a ready-to-move home—it's no longer ready to move when it's on the foundation.

Mr. Jim Richardson: It's a very real issue. Individual entrepreneurs can mortgage their house as an option. You can't, on the reserve.

Mr. Derrek Konrad: Another question I have is have any non-reserve land and buildings been put up for collateral and lost as a result of corporate failure, that you or Mr. Martell are aware of?

Mr. Jim Richardson: Well, my response is no, because technically, legally it can't happen.

Mr. Derrek Konrad: To non-reserve?

Mr. Jim Richardson: Oh, you're talking about non-reserve?

Mr. Derrek Konrad: Yes.

Mr. Jim Richardson: Oh, non-reserve—yes, absolutely.

Mr. Derrek Konrad: That has happened.

Mr. Jim Richardson: Sure.

Mr. Derrek Konrad: I see, okay.

I'm going to quit, Mr. Chairman, because a lot of people....

[Translation]

The Chairman: Although our proceedings may go beyond one o'clock, I invite you to ask your question. Our witnesses are very interesting.

Mr. Perron.

Mr. Gilles Perron: Welcome Jim and Keith. I have a threefold question that will probably be answered by Keith.

My information system tells me that a branch of the First Nations Bank of Canada will be or has recently been opened in Chisasibi, Québec. I would like you to talk about this and tell me which Aboriginal groups are involved, either Cree or other groups. Are Québec chartered banks associated with you? What are the mandate and economic development projects of this bank?

[English]

Mr. Keith Martell: Yes, we are opening another branch in Chisasibi in northern Quebec, and we are pursuing expansion within the Cree territory in the province of Quebec.

The decision to go there was an economic decision. There are viable economic opportunities in that part of the country. The leadership is well developed. They have a well-developed business infrastructure, and we will be their corporate banking side. We would like to be partners with their future developments, and that's what we're going into that region as. Again, we're not a development lender, so we're not doing development lending in that area, but we are the commercial bank that we hope the Crees will partner with and choose for a lot of their developments.

• 1255

[Translation]

Mr. Gilles Perron: Is your bank affiliated with other chartered banks from Québec or Canada?

[English]

Mr. Keith Martell: We have an affiliation in the creation of the First Nations Bank. We chose a strategic partner, the Toronto-Dominion Bank, which has a national banking charter. We have a national banking charter as a schedule II bank, and we can operate in the province of Quebec. We operate with the infrastructure and management assistance of our partner, the Toronto-Dominion Bank.

[Translation]

Mr. Gilles Perron: Thank you.

The Chairman: Thank you, Mr. Perron.

Mr. Earle.

[English]

Mr. Gordon Earle: I don't really have as much a question as more a comment, and you may wish to respond to it.

I'm very pleased to see in the conclusion of your paper, Mr. Martell, the comment of ensuring that the land and resources of northern communities are truly assets for the northern economies. This is a point I've raised in previous discussions with this committee and I think it is very important, because we know a lot of the problems that aboriginal people face in the remote communities and elsewhere have been because of that lack of being able to ensure that the benefits of those resources are turned back into their communities or to the use of the people who reside in those communities.

I think particularly of the mining industry, where the mines are exploited more or less by large corporations, and none of the real sustaining profits are turned back into the community. Then you think about the hydro dams, where power is generated and then you look afterwards and see the effect these have had upon the traditional way of life, of fishing and hunting, and so forth.

I think it is a very important point, that if those communities are ever to sustain their lifestyle, they have to control those natural resources. I'm glad to see that's tied in. You may want to elaborate a bit upon how your financial institution helps to ensure that kind of thing, or whether you've had any involvement directly to ensure that kind of resource control.

Mr. Keith Martell: The parameters on that resource control change daily. As everybody knows, every time you turn around we seem to operate first nations resource control and economic development, and we need to be lawyers and have the legal services update us daily as to where we need to be developing our economies. I think that's an issue around self-government development that is really the prime focus, defining how our relationship is going to work.

One member talked about the elimination of the Indian Act, but behind the Indian Act there were a lot of treaties and negotiations that established Canada to begin with. As long as we can implement those treaties into some modern process that will allow us on both sides to know how we're going to run our lives, we have no problem eliminating the Indian Act, yet recognizing that there are agreements between first nations and non-first-nations people that developed this country.

And there are modern-day treaty negotiations going on in British Columbia. The Province of Saskatchewan has a common table with the Government of Canada and the Government of Saskatchewan to establish new relationships.

So we can use those agreements—and it is a political decision, government decisions—where they can come together to establish these relationships and know exactly how this resource development is going to happen. Whether it's resource revenue sharing or local input into co-management initiatives, that's how it has to happen.

Our bank is looking forward to the day when we don't finance a New Brunswick logger, based on a court case, and find out the next day that their business is gone because the courts have changed their mind.

Mr. Gordon Earle: The other point I want to raise is the idea of recognizing the importance of giving aboriginal communities the option of creating viable economic futures for the citizens who are apart from their home, and I think that's very important. So in terms of the business you are doing, are you experiencing that the bulk of your financing is with people who are off reserve, who have chosen to move away from their communities, or is it more...?

Mr. Keith Martell: No, not necessarily. Our branch in Saskatoon, our head office and first branch, is an urban branch. It resides in the city of Saskatoon. But it is a gathering point for a lot of the first nations that are in the surrounding area. In Chisasibi, we are right in a northern reserve community. So we have been equally successful in both sectors.

Mr. Gordon Earle: Thank you.

[Translation]

The Chairman: Thank you, Mr. Earle.

Mr. Keddy.

• 1300

[English]

Mr. Gerald Keddy: I have a comment on the court challenge in New Brunswick. It's an interesting case, and it's certainly a precedent-setting one, but I don't know if it's a situation of the courts changing their mind, or the interpretation had never been followed through the channels. I don't think that has anything to do with whether that's a native logger or non-native logger. Anybody in business faces that same thing with the courts coming down with a decision that affects the entrepreneur at the end of the line.

Getting back to what I was speaking about earlier, the fact that we have a bunch of rules and regulations in front of us right now that we haven't dealt with, we're trying to make major moves into a new frontier almost, and we haven't settled the ground rules in front of us to begin with. So that's the fault of this government and previous governments for a long time. As parliamentarians we need to settle with that.

I had a question on how much capital you folks have loaned and how much capital you have access to.

Mr. Jim Richardson: In our case, our total gross authorizations for last year were just over $11 million. Those are in small-business start-ups, by and large. There are a few large loans in there. Our outstanding loans portfolio right at the moment is just approaching $32 million.

Mr. Gerald Keddy: So it would be safe to say you just started the aboriginal bank?

Mr. Keith Martell: No, he's speaking for the Business Development Bank of Canada, not for the First Nations Bank. Our bank began operations with a minimum under the Bank Act, $10 million of capital, which would allow us to expand out to approximately a $150 million assets portfolio. So we are about 10% of the way there, approximately a $15 million book or so right now.

Mr. Gerald Keddy: I'm not trying to ask an unfair question, but what changes do you see that are needed most immediately for progress so that there can be more funding available? I'm not saying that we should change the Indian Act tomorrow, but what small changes, what things, do you see that are stumbling blocks and are really discouraging future loans, further loans and more entrepreneurs, that could be done immediately?

Mr. Jim Richardson: I can speak certainly for our bank. I think it's important to realize that the commitment at the top trickles down throughout an organization. And we have. We're one of the first banks to have a subcommittee of the board that's dealing with aboriginal business development. So that goes a long way to sending strong signals and making things happen. Where things are commercially viable we can stretch the envelope out to deal with risk. So I think commitment is the important thing from the top.

In terms of the clarity of rules, as it relates to the standardization of policies and procedures, for example, we looked at directional payments and the band council resolutions with respect to that, as it related to the national aboriginal financing task force I was on, and we found out that in different provinces there were different rules. So there has to be a coordination within INAC for the various regions to deal with those, be they tripartite types of agreements or the like—and that's happening.

So I think we're seeing the window of opportunity expand a bit with respect to commercially viable projects, but you still have that element of development that's still unserved by and large. That's very important in the long term to develop viable businesses. You need those people.

Mr. Keith Martell: I think in the short term the issue that needs to be addressed is government's approach to economic development for first nations people. The policy seems to have a shifting base of standards, they have shifting forms of delivery, and as soon as our first nations economic development officers figure out how one program works, they change and it's something else.

I think if there's some consistency there.... There have been a lot of successes in the past, in say the aboriginal capital corporations, and then the government decides that while there are some successes there, there are some failures and they will not further fund the capital of these corporations. So that initiative that was very successful in Saskatchewan basically has to resort to survival techniques. The aboriginal entrepreneur can't ever really figure out where the government's going with the fundamentals of aboriginal economic development. If you can cure that in the short term, it will help a lot.

Mr. Jim Richardson: If I may just add one other important point, which I think was alluded to earlier on in a previous presentation, with to respect partnership, I see a lot more partnership. For example, we've signed agreements with CIBC, the Royal Bank, and an aboriginal capital corporation to work collaboratively. I think that's one way of hedging your risk as a financial institution.

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[Translation]

The Chairman: Thank you, Mr. Keddy.

Mr. Finlay.

[English]

Mr. John Finlay (Oxford, Lib.): Thank you, Mr. Chairman.

I appreciate both of your presentations, gentlemen. I've got a couple of direct questions arising from what you said and what I read here.

On page 2, Jim, you say:

The need for development lending is still great. It is a risky business and, in my view, requires Government support to cover administrative costs and a loan loss reserve if the Aboriginal Capital Corporations are to survive....

Keith mentioned the same thing in his presentation. Who can do that? Is it DIAND? Is it a DIAND initiative?

Mr. Jim Richardson: It's a combination right now. It really falls under the jurisdiction of Aboriginal Business Canada. Bob Dickson, I understand, was here earlier for a presentation. He basically has that responsibility under his portfolio, but it's being addressed collaboratively between DIAND and Industry Canada at the moment.

Mr. John Finlay: You mentioned further on something I don't quite understand fully. At the bottom of your second-last page, you said:

The Set-Aside Program as part of the Federal Procurement strategy could be modified to provide incentives for a trickle down benefit....

Is that a DIAND program too, or is it a general program across all departments of government? Who could modify it?

Mr. Jim Richardson: You're right. It was initiated by DIAND, but it runs across all departments.

Right now, for example, to encourage aboriginal economic development, points are allocated by virtue of the fact you're dealing with an aboriginal firm.

I think what we're talking about there, from the task force perspective, is that you should also provide a trickling down effect at the community level. Otherwise, you'll have aboriginal entrepreneurs in Winnipeg, Saskatoon, Regina, and so on taking advantage of it and it will not accomplish surely half of what was intended, and that's on-reserve economic development as well.

I think it's important to look at modifying it. We made that recommendation in the report, which I understand will be or has been delivered to members of this committee.

Mr. John Finlay: So that recommendation occurs in the report, does it?

Mr. Jim Richardson: Yes.

Mr. John Finlay: Keith, one of your conclusions I need a little help with. In the second paragraph you say:

These resources are often under the control of Provincial Governments, and the Natural Resources Transfer Act limits the ability of this body....

Do you mean the provincial governments?

Mr. Keith Martell: It's the federal government, sorry. It limits the recommendations you can have in directing provincial governments to share the resource revenues of first nations. It's really in the provincial territory. The natural resources transfer agreement transferred that responsibility to the provinces.

Mr. John Finlay: So they are the ones who have to make some changes if—

Mr. Keith Martell: Yes. As I said in the other part of my presentation, we, federal government and first nations, can't do this in isolation. It has to involve the provinces and territories.

Mr. John Finlay: Thank you for the clarification.

Mr. Jim Richardson: Perhaps I could add a comment there.

I was a member of a forum about two or three years ago. The former grand chief and Mr. Newell from Syncrude were there. The former grand chief, Ovide Mercredi, was talking about jurisdictional issues. Mr. Newell said there was nothing he could do. He said he heard what Chief Mercredi was saying but that he had to deal with the province, so he was between a rock and a hard place. He said he was sympathetic to what Chief Mercredi saying but that it was a very real issue over which he had no control.

Mr. John Finlay: Maybe that act needs some amending. It might be flying in the face of all the directions we're going.

Mr. Keith Martell: I think it's a constitutional envelope.

Mr. John Finlay: Thank you.

[Translation]

The Chairman: Ms. Karetak-Lindell.

[English]

Mrs. Nancy Karetak-Lindell (Nunavut, Lib.): Thank you.

Yesterday, when there was a presentation before us, I talked about a problem that faces people in my riding of Nunavut. I'm representing the Inuit there. I look at this presentation, which is called aboriginal banking, but I look on the second page and all we see is registered Indian population. The complaints I get from the people in my area is that a lot of times, in trying to apply for any of the services initiatives to promote economic development, they feel like a round peg trying to get into a square hole, because a lot of the initiatives are geared toward first nations.

• 1310

They want to know how they can be better accommodated. They're a culture on their own, and the criteria are usually geared toward first nations. They have a real problem in trying to access any of these initiatives. I know they're a small population, but to not even get included in any of the populations here.... And when I look at page 4 of the aboriginal banking, the language is Inuktitut, and they don't even have it correct.

That gives a little more emphasis on what problems people in my area deal with in trying to access these initiatives. They feel so left out all the time. I know they're a smaller population, but they do cover a big part of Canada.

What has the aboriginal banking done to cater some of their initiatives for people in my area?

Mr. Jim Richardson: Clearly, our focus in the aboriginal market is relatively new, as it relates to a dedicated individual in charge. We were quite active in the past, and we're now moving again in that direction. I certainly apologize for not including the Inuit population. I have other figures that do include them, but they were not included in this one.

We do work quite actively with the cooperative movement in the north. We do a lot on the management services component work as well. As you know, some of the other banks, particularly the Royal Bank and the Bank of Montreal, are quite active in the Nunavut constituency.

We heard, however, from the task force perspective about a lot of the unique problems associated with the north. They were raised in a number of forums, including Mr. Harold MacKay's task force, when we presented to him and outlined some of our concerns about the more isolated communities and regions in this country.

I think there are steps in the right direction. We have now undertaken a couple of projects in the north, and I hope to do more up there on the growth capital product we launched recently. We have been quite active through the Arctic co-op movement up there, in financing.

Mrs. Nancy Karetak-Lindell: Thank you.

[Translation]

The Chairman: Thank you, Madam.

Mr. Perron.

Mr. Gilles Perron: Mr. Chairman, my question is a little out of context.

The Chairman: There is no problem.

Mr. Gilles Perron: I would like to ask the banker what his personal vision of his bank and its future is in light of this new trend of megabank mergers, such as the one involving the Bank of Montreal and the Royal Bank. How do you see yourself in this game of new banking methods?

[English]

Mr. Keith Martell: I was interested to know that it hasn't come up yet. It's a question I've been answering all week.

From the First Nations Bank perspective, we are a commercial institution. We are interested in what's going to make banking viable in Canada and make us as a bank profitable. As the smallest and newest bank in Canada, I think we often end up trying to defend banking. Because of the big guys, it's very difficult to defend banking when you have billion-dollar bottom lines. Banks also have billion-dollar equities. The return on the equity of the banks is about 18% or 19%.

We didn't go into banking because we were going to make billions. We went into banking because we'd make a decent return on the equity we're going to put into it.

To make banking viable in Canada, I have listened to the arguments of the big banks. The mergers are their decision. They think they need it for international competition, for expansion.

I think a lot of it might have to do with regional rationalization of staff and locations, and for a new bank that's an opportunity for me. We will fill the gaps, especially where first nation aboriginal people are concerned. It's what's good for banking.

Already as a new bank we compete with Wells Fargo from the U.S. and with the Citizens Bank, which is located in Vancouver and does electronic access across the country. We compete with American Express Bank Ltd. and American Express Bank Canada Inc., which is very aggressive on the credit card side. We also compete with foreign banks. If these mergers make the Canadian banking industry more competitive with those large foreign institutions, and if we're a partner of Toronto-Dominion and their merger with the CIBC should be approved, we think it would be positive for our bank.

• 1315

Mr. Jim Richardson: I was asked that same question in one of the communities in Saskatchewan, Keith, by a chief and councillors I addressed. My response, particularly as it related to the Royal Bank and Bank of Montreal—and I'm speaking now from the perspective of serving an aboriginal market—both of those banks, as do TD and CIBC, have very progressive aboriginal banking units. So a combination of force could mean very positive things in many of the aboriginal communities, and that was my response.

I haven't thought it out analytically, but that was my gut feeling, given the character of the people in those particular banks in the aboriginal banking units.

[Translation]

The Chairman: Thank you. No other questions?

I would like to thank you for your patience, Mr. Martell and Mr. Richardson.

Mr. Richardson, I would like to confer an honour, or even a merit award on you for the documents you submitted. They are easy to read. We members receive many documents, and this is the first time I receive a document that is so easy to read. It is an excellent document, which also contains certain Aboriginal reflections that in turn encourage us to reflect as well. You give us a taste for reading your documents. Certain Canadian officials should follow your example. Congratulations.

Thank you very much, and we will see you at the next meeting.

The meeting is adjourned.