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Evidence of meeting #40 for Indigenous and Northern Affairs in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was investment.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

John Gailus  Partner, Devlin Gailus Barristers and Solicitors
André Le Dressay  Director, Fiscal Realities Economists Ltd.
Christopher Devlin  Partner, Devlin Gailus Barristers and Solicitors

4:30 p.m.

Director, Fiscal Realities Economists Ltd.

Dr. André Le Dressay

The First Nations Land Management Act, the First Nations Fiscal and Statistical Management Act, and the First Nations Commercial and Industrial Development Act were all directed at that particular finding, that the costs of doing business on first nation lands are too high. The reason they're too high is that the legal, the administrative, and the infrastructure framework that exists off first nation lands isn't present. We have to find a way to help close that gap.

Yes, the FNLMA could be very effective in closing that gap. Some first nations have used it effectively to close that gap.

I suggested earlier that gap could be closed even more quickly if you had some of the legal framework that's available under FNLMA, if it were more of a turnkey approach, so that first nations didn't have to develop scores of laws. They could just have a lot of that legal framework in place for them and then make some good policy decisions to encourage development. That's one possible element of the FNLMA that might be improved.

The other thing I was mentioning earlier in terms of the cost of doing business is property right security. A lot of the high cost of doing business on first nation lands is a result of a lot of legal work in order to create as secure a property right as possible for investors. As I mentioned earlier, there's an opportunity to help reduce that particular constraint, as well, through the proposed property ownership act.

All of these things are voluntary and opt-in. It's critically important for first nations to have options, in order to have those options available to them, if it's their desire, to facilitate more investment.

4:35 p.m.

Conservative

Rob Clarke Conservative Desnethé—Missinippi—Churchill River, SK

What factors affect the probability of first nations opting into these various regimes?

4:35 p.m.

Director, Fiscal Realities Economists Ltd.

Dr. André Le Dressay

Quite often it's opportunity. If there are economic opportunities and these regimes will help them realize those economic opportunities, the probability of their joining is much higher.

Sometimes there's an interest in the first nations to want to assert their jurisdiction, and they see these as an opportunity to assert their jurisdiction and to move beyond the Indian Act. You have those types of motivations for some first nations. But it ultimately comes down to leadership within those communities and community decisions.

4:35 p.m.

Conservative

Rob Clarke Conservative Desnethé—Missinippi—Churchill River, SK

What factors may affect the economic development outcomes?

4:35 p.m.

Director, Fiscal Realities Economists Ltd.

Dr. André Le Dressay

The outcomes depend upon your ability to create a climate for investment, if your principal advantage is location. It depends upon what your comparative advantage is. If you're trying to develop your economy through resource development, then there's a different answer to that question. But if your principal advantage is location, then what influences the outcome is being able to create as much investor certainty—in order to take advantage of your location advantage—as compared with your neighbour, as exists in your region.

4:35 p.m.

Conservative

The Chair Conservative Chris Warkentin

Mr. Devlin, I think you wanted to jump in there on one of those answers.

4:35 p.m.

Partner, Devlin Gailus Barristers and Solicitors

Christopher Devlin

I did. I wanted to say two things in response to those questions.

The first is this. One of the economic costs goes back to those legacy issues that I was just talking about. We have one client who adopted a first nation land management code and spent the last three or four years trying to deal with legacy issues but has not been able to really move forward because they're still dealing with issues and a real mess of legal interests on that reserve that were left over from Canada's administration.

Even if you have the law in place, even if you have the code in place, you still have legal interests that remain unresolved from the previous administration. That continues to impede the ability to move forward, even if you have a code in place or something else.

The second thing I would say is that another factor not widely perceived is that first nations have huge, varying degrees of size and capacity. You have some first nations with 5,000 to 10,000 members. They have a much better capacity for personnel and institutional frameworks for investment. But when you're talking about a community of 250 people, the number of adults who have sufficient education and who can even begin to be in a leadership role and understand the legal regimes that are in place is vastly diminished. There are simply only so many people who can run that community.

The economic opportunities might be there but for the fact that there are only three people or a handful of people in that community who have the capacity to do everything, from running the community to administering the housing to writing the laws. That can be a real inhibitor to unlocking economic potential—the size of the community—even if it has been blessed with geographic location. If you have only 250 people, there's not much to draw on.

4:35 p.m.

Conservative

The Chair Conservative Chris Warkentin

Thank you very much, Mr. Devlin.

Mr. Bevington, we'll turn to you now for five minutes.

June 12th, 2012 / 4:35 p.m.

NDP

Dennis Bevington NDP Western Arctic, NT

Thank you, Mr. Chair.

Thanks to the witnesses.

I'm going to start off with Mr. Gailus. I want to explore your knowledge of the capacity within the Department of Aboriginal Affairs and Northern Development for land management, as you saw it from your history there. Is there sufficient capacity, personnel, within that department to effect the myriad of changes that are required—the third-party interests that are required to be analyzed for each land transaction?

4:35 p.m.

Partner, Devlin Gailus Barristers and Solicitors

John Gailus

The short answer is no.

4:35 p.m.

NDP

Dennis Bevington NDP Western Arctic, NT

Describe your experience there.

4:35 p.m.

Partner, Devlin Gailus Barristers and Solicitors

John Gailus

Certainly. This is mostly from my own personal experience and it's a little dated, but I still have a great deal of interaction with people who work at the department. Part of my practice is dealing with designations, leasing, and that sort of thing.

As I see it, there are two challenges there. One is that the complexity of the transactions going across a land management leasing officer's desk is getting greater. For those non-FNLMA first nations or self-governing first nations, you're getting potentially more complex transactions and there's a need to seek Department of Justice assistance. They're part and parcel of that. You have your DOJ lawyers, and then you have your lands managers dealing with these complex issues and not being able to deal with them oftentimes in a very timely manner.

That's a resourcing issue that I see in terms of transactions I'm doing for my clients, for instance. The turnaround time for me is in terms of weeks, versus the turnaround time for the department and for Justice, which is calculated in months. There's that opportunity which may be lost, given the delays that come out of that.

It oftentimes is a situation where this person is overworked and they have too many things on their plate, or it's the Justice lawyer. Sometimes it's hard to tell where the roadblock is, but it seems to me that there doesn't seem to be enough competent bodies to address these issues.

There's a fairly large turnover in the lands department. I might be dealing with a lands officer today and then the next day it's somebody new, and trying to get that person up to speed as best I can is often a challenge.

4:40 p.m.

NDP

Dennis Bevington NDP Western Arctic, NT

To Mr. Le Dressay, when you talk about four to six times higher land development costs and the difference with structural land outside of reserves that is under municipal control, how close of a comparison can you make?

Are you talking about raw land outside of on-reserve land that you're completely servicing from square one? Is this what you're comparing in your cost structure?

4:40 p.m.

Director, Fiscal Realities Economists Ltd.

Dr. André Le Dressay

When we did the study, we actually looked at projects that were successful. We looked at developing a project, and the four areas we looked at were Sept-Îles, Siksika, which is outside of—I'm trying to remember the town in Alberta—Squamish, and Kamloops.

We looked at four successful first nation developments, and we looked at four successful developments in adjacent communities. We measured each stage of the development—the securing of the property right, the negotiation of the deal—all the way through. We measured each element and compared the cost, and it was four to six times longer and four to six times more expensive. Those are some of the best located first nation lands in Canada, so you can imagine how much higher the costs would be in other lands.

4:40 p.m.

NDP

Dennis Bevington NDP Western Arctic, NT

Was a great part of that the difference in cost in building infrastructure?

4:40 p.m.

Director, Fiscal Realities Economists Ltd.

Dr. André Le Dressay

In almost all of the cases it did involve some infrastructure, but a lot of the biggest cost was creating the property right certainty. Creating the certainty for investment was principally one of the major differences in cost, and it's because of that legal framework that's by and large missing on first nations.

4:40 p.m.

Conservative

The Chair Conservative Chris Warkentin

Thank you very much.

We're going to turn now to Mr. Rickford, for five minutes.

4:40 p.m.

Conservative

Greg Rickford Conservative Kenora, ON

Thank you, Mr. Chair, and thank you to the witnesses.

I'm in a bit of a difficult situation here because I took some time to go through a lot of the work that all three of you have done, and when I realized I only had five minutes to ask questions I was in quite a state.

To that end, I would recommend to the analyst, given some of the important work all three of these gentlemen have done, that we consider them for the phase two part, because there's some important work—I say, rather selfishly—on some of the issues that you were scratching away at in a previous answer, Christopher, with respect to small communities and some of the inherent problems with capacity around economic development, whether it was on reserve or off reserve. I am particularly interested in the Ring of Fire and the communities that are involved in that development, and how that would fit with the work, and I'd be interested in your impressions.

So I'm just going to focus in the last couple of minutes here on ATRs because this has been coming up pretty consistently, and I think we can all agree that we'd like to see some changes. The Senate committee is taking a look at that. We haven't had a chance to appreciate that body of work.

I'm going to ask you a quick question, John, with respect to the three-week process, the fastest ATR known to mankind, perhaps. Could you briefly, in a minute or so, tell us, was there a test in there with respect to why and how that could be done in three weeks, or was this just simply some sort of prima facie situation that was dealt with speedily by the courts?

4:45 p.m.

Partner, Devlin Gailus Barristers and Solicitors

John Gailus

I think the case is called the Charles v. Semiahmoo case. That is the one where the land had been surrendered for a customs facility that was never built. So the Federal Court of Appeal made an order and the file landed on my desk and they said, get it done. Get the 14 or 16 signatures that we need to get an order in council on this within a month.

The judge was pretty clear. He said, I want to see you guys back here in a month and I want you guys to negotiate the compensation and these lands need to be turned into a reserve.

4:45 p.m.

Conservative

Greg Rickford Conservative Kenora, ON

And was there a test in there, John? As we, as lawyers, would traditionally pull out of any decision or process—

4:45 p.m.

Partner, Devlin Gailus Barristers and Solicitors

John Gailus

To be honest with you, there wasn't. The one advantage was that the lands were already held by the crown, the federal crown, so we didn't have to deal with the province. It was simply Public Works transferring the administration and control to INAC. There weren't the hoops around appraisals and surveys, and fortunately, there was a legal description that we could use to do it. So it was a fairly straightforward process.

4:45 p.m.

Conservative

Greg Rickford Conservative Kenora, ON

I'm going to spend some time with that another time. I just want to get to Dr. Le Dressay here, with two caveats. One, I've heard many mayors say that the problem with municipal legislation, particularly deriving from the province's authority, is that they become effectively wards of the province. We've heard that. So there's a little caveat there when we start to talk about comparisons, but I read with great interest “Comparing Municipal Boundary Expansion to Additions to Reserve”, a brief but precise document that identifies the fact that the MBE is a piece of legislation and so there is greater certainty, and in stark contrast, of course, ATRs are policy and therefore less clear. The criteria don't jump out at you. Tests are what lawyers would often look for.

On page 2 you lay out a best practice description. I'm really interested in this and I want to give you the opportunity to tell us today whether you think this has a broader application to ATRs, in relation to the federal government's responsibilities in ATRs, regardless of whether they're going to be for economic development—because we know sometimes ATRs are not. But is this a potential blueprint for us to look at more substantively as we, as a committee, try to come to some solutions on this particular point?

4:45 p.m.

Director, Fiscal Realities Economists Ltd.

Dr. André Le Dressay

Of course, I stand behind some of the best practices that we recommended, but as a committee, you also have to consider the following with respect to making the ATR process more like the MBE, to take some of the best practices out of the municipal boundary expansion situation. Of course, what makes the municipal boundary expansion situation simpler is that you're not changing jurisdiction. That's the fundamental sort of difference between the two. So how can you make that jurisdictional change as seamless as possible?

There are good practices in the municipal boundary expansion about doing good planning and making good communications and good public processes in order to make those who are affected by the change more comfortable. But there are also some legal aspects with respect to harmonization that would make those, who would provide legal advice to both the provincial and federal governments, much more comfortable as well, and I think there's a real opportunity there.

So I think that those best practices are only as effective as the legal framework that allows ATRs to happen, and of course, as you mentioned, it's principally policy-based.

4:45 p.m.

Conservative

The Chair Conservative Chris Warkentin

Thank you very much, Mr. Le Dressay.

We'll turn now to Ms. Hughes for five minutes.

4:50 p.m.

NDP

Carol Hughes NDP Algoma—Manitoulin—Kapuskasing, ON

Hi, and thank you very much for your input.

I'm going to go in a bit of a different direction. I want to ask so many things, but I know I'm going to run out of time.

One of the things we have been discussing in the committee is the environmental gaps on reserve that subsequently lead to a lower standard of health and well-being of people living in the community.

Similarly we have noted that this was addressed in a report that was just released by a first nations institute on governance. The report found that nearly a quarter of all aboriginal adults are living in overcrowded dwellings and over 50% of adults are living in houses contaminated with mould and mildew. Over one-third of adults cannot trust the water that comes into their homes.

What impact does this have on the workforce and economic well-being in first nations communities, and what possible solutions to the health and environmental gaps existing on reserves would you recommend? Because it all does build into the economic development. As you know, if the infrastructure is not in place, no matter what the changes are, you're not going to be able to entice the positive changes we're looking for.