Finance Committee on Oct. 17th, 2018

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you, Mr. Chair, and thank you to all of you for very interesting presentations.

I wanted to direct a couple of questions to the Assembly of First Nations, to the regional chief.

I really support your comment about recognition of where your wealth comes from. I represent a riding where over half of my constituents are indigenous. We have probably the second biggest oil well just outside my community and we don't have one job. Not one. I watch with interest as the guy who owns the companies invests in universities in Manitoba, and hospitals, yet has not given us a dime.

I watch as diamond mines pop up in the middle of Akaitcho communities. Those are Akaitcho lands. We sit there and we struggle in despair. Low housing and suicides, things of that nature. As I travel, I talk to indigenous governments. We talk about how to be self-sustaining, to move forward, to be self-governing.

We don't want to be under any other government. We want to be on par. We want to be partners. We want to co-manage, and that's where we're heading. But we can't be continually going to the federal government for what are called handouts by most people in the general population. We want to be able to operate on our own source of revenues. That means we need to look at resource revenue sharing.

Some jurisdictions have done it. I know that in the Northwest Territories the resources are split fifty-fifty between the territorial government and the federal government. Of the 50% the territorial government has, they give 25% to the indigenous governments. It's not enough, but it's certainly better than it was, and they just started that.

If we're going to move forward on governance and self-sustaining governance, we also have to look at procurement. In July 2015, the Prime Minister made some changes to the indigenous procurement program. We've seen some improvement, but of the 200 and some departments spending money out there, over 80% of them are spending zero on indigenous companies or on trying to promote indigenous economic development. That's a concern for us as indigenous MPs. We have our own caucus where we're flagging this issue and we're tracking it.

We're spending what? There's so much room for improvement that we want to make some recommendations.

What would you suggest to improve indigenous procurement? The indigenous set-aside policy is not doing what it should be doing. Do we need a new policy? Do we need new programs? Do we need to revise this program? What would be your suggestion?

[Regional Chief Marlene Poitras]

There are a lot of programs out there. ASETS is one program.

The procurement strategy needs to be improved. It needs to have first nations at the table to develop those policies around procurement. There are a lot of instances, as I said in my presentation.... Ontario is working with 31 first nations, and I know that in northern Alberta—I'm from the Mikisew Cree First Nation—there are a lot of aboriginal communities working on that, under businesses as well and they are successful.

I think more needs to happen because, especially now, more and more women are getting into business ownership. There needs to be some recognition of small businesses and the growth that is needed for them to become successful in the Canadian economy.

[Michael McLeod, Liberal, Northwest Territories, NT]

I'm also watching the land claims, governments and the indigenous self-governing nations. We are still seeing too many government projects being developed right in the heart of their communities with no attempt to ensure that indigenous companies get in. There are lots of indigenous companies. Some self-governing first nations have economic clauses in their agreement that state that they are supposed to get the first right of refusal on these contracts.

How do we ensure that happens? Is there something you would recommend that the government as a whole can start to honour? This has been going on for a long time. The initiatives that have come forward have improved it, but they still haven't changed it enough for most indigenous people across the country.

[Regional Chief Marlene Poitras]

Absolutely.

In Alberta, there is a wide range of first nations. There are the haves and the have-nots. As you said, a lot of them have success in their businesses. But those have-nots really don't have any type of resource opportunities within their region.

I think the government needs to look at that, so that the first nations, the have-nots trying to create businesses, are taken seriously, because they want to be successful as well.

The chiefs in Alberta have also started some discussions around resource revenue sharing, but it needs to go further than where things are now.

[Michael McLeod, Liberal, Northwest Territories, NT]

There's a lot of work to be done. The whole issue of how to work with the indigenous people, from a government standpoint, is complicated. It's complex. We have on reserve and off reserve. We have Métis. We have first nations. We have the Inuit. Everybody is in a different situation. We're looking at it from the indigenous caucus. We're having a lot of discussion on this issue.

If your recommendations are compiled somewhere, maybe you could share them with this committee so that I could get the chance to look at them. I'd appreciate it.

[Regional Chief Marlene Poitras]

Absolutely. I'd love to do that.

A lot of first nations right now are building their economies with their nations, working toward self-determination, building their laws and their constitutions, protocols and all of that. There are good things happening. I believe that with government supporting those nations, we can go a long way—

[The Chair, Liberal, Wayne Easter]

Thank you all.

If you have anything additional, Chief Poitras, just send it to the clerk, and we'll get it to committee members.

Mr. Kelly is next, and then Ms. Rudd. We'll go to five-minute rounds, and we'll have a little time after that.

Go ahead.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Thank you.

My question is to Chief Poitras as well.

I'm very interested in the obstacles to indigenous participation in public procurement.

The government operations committee tabled a report on this subject. It was broader than just indigenous procurement. The study was on modernizing federal procurement for small and medium-sized enterprises, women-owned enterprises and indigenous-owned enterprises.

What was quite common in the testimony at that committee was that the obstacles to participation in government procurement were very similar between any small and medium-sized enterprise and those owned by indigenous shareholders or women-run enterprises. They all said that federal procurement is absolutely, horrifically complicated and difficult. This has spanned governments. This is not new.

I wonder if you could identify for this committee some of the very specific obstacles indigenous-owned enterprises have in participating in public procurement.

[Regional Chief Marlene Poitras]

As I said previously, when the funding comes to the regional level, it becomes harder to access. I believe the biggest obstacle is the bureaucracy—when there's funding available, you have to do the proposal, you submit the proposal and then there are more things you need to submit. It creates a lot of barriers for first nations, especially those that don't have the capacity in the first place. They're hiring consultants to help them develop their proposals. It becomes a barrier. They have less and less funding.

I really believe it's the bureaucracy that needs to change so that accessibility can be better for the first nations.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Are you aware of whether indigenous-owned enterprises find it easier to get private-sector contracts? We heard at committee that Suncor, Syncrude and Imperial Oil annually have about a billion dollars in subcontracts that are filled by indigenous-owned enterprises. That's far more than the federal government does, and those are just three companies.

Is it easier to deal with private companies than to deal with the federal government when you're trying to get a contract as an indigenous enterprise?

[Regional Chief Marlene Poitras]

Yes, it is, because with the businesses you don't go through that big bureaucracy. They're developing one-on-one relations. They build relations and have an understanding of what the first nation wants and the expectations of the company. It's easier to work through that. With the bureaucracy, you have to go and deal with some bureaucrat who's been sitting in an office and really doesn't understand the needs and expectations of the proposal going forward.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

So having a set-aside for indigenous businesses doesn't really help an indigenous business, simply because it costs too much or the risk is too great to actually participate in a government RFP when you could perhaps have a better business opportunity elsewhere.

Would reducing complexity be the key recommendation to do requests for proposals from the federal government?

[Regional Chief Marlene Poitras]

Yes.

[The Chair, Liberal, Wayne Easter]

On this point of dealing with the bureaucracy, do you deal with Ottawa or do you deal with someone local?

[Regional Chief Marlene Poitras]

We deal with both levels. When Ottawa has a pot of money it usually comes to the region, but it has a lot of expectations attached to it. When it comes to the region, even though they try to work with us to relieve some of those bureaucratic requirements, it still creates a lot of issues in terms of accessing the funding.

[The Chair, Liberal, Wayne Easter]

I think what you're saying is the local people probably have an understanding of the project and want to move it forward, but they're dealing with a bureaucracy in Ottawa that just doesn't understand things on the ground.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

A lot of the focus, it seems, is on indigenous communities that are in remote areas, or at least outside of the major centres, and yet many indigenous Canadians, perhaps the majority, now live in cities. Are there other ways besides the resource sector in remote communities that the federal government can see better participation of indigenous Canadians, perhaps in procurement in the cities or more procurement on the service side? Do you have any recommendations there?

[Regional Chief Marlene Poitras]

I think it would be better if the funding were to go directly to the nations or to the regions where there are institutions that actually provide resources, like Aboriginal Business Canada. A lot of first nations do access those institutions for funding. Of course, the funding that goes there is limited. If they were to increase the funding to that, and especially to the institutions in the region, it would make life easier for those trying to access it.

[The Chair, Liberal, Wayne Easter]

Thank you all.

Ms. Rudd.

[Kim Rudd]

Thank you, and thank you all for coming and being with us this morning.

I just want to make a couple of comments.

David, on your support for Mitacs, I want to let you know that yesterday in Victoria we had an excellent presentation from them, and we certainly learned the scope of the work they do. It's important work, and I'm very glad to hear that there's a partnership and that you indeed are supporting the work they do. Thank you very much for that.

On Sport Matters, I did a little bit of research. You've been around since 2000, and you are still called the senior leader. I think that's very cool. It's a grassroots organization that has not gone into the corporate structure of not-for-profit organizations. You're to be commended for that. The amount of overhead in administrative compensation that comes out of your organization is very minimal compared to the overhead of a lot of others.

I have a very quick question for you. In terms of the funding allotment, you've said that some years it went down in some areas, and in some areas it went up. This $18 million you're requesting, is there a formula that would divide it among those categories? What's the process?

[Lindsay Hugenholtz Sherk]

Our recommendation is sector-wide. If you were to talk to Canada Soccer, Curling Canada and Bobsleigh Canada, you would find that we would prefer that the funding be injected into the program. The program is administered by Sport Canada. It has a sport funding and accountability framework to which each organization submits, and its formula then disburses the money. We're looking for an injection total into that program.

[Kim Rudd]

Good. That's very concise. That you very much.

I'll turn to the agricultural manufacturers. Thank you for your presentation, Richelle, and to Tyler for coming.

I come from an agriculture community. We talk about the accelerated capital cost allowance, which I was interested to see in here. The average person has no idea what a combine costs and how big they are, and the technological advances that have been made.

One of the notes you made was the recommendation that the government encourage Export Development Canada to continue to strengthen its support for Canadian exporters active in developing markets such as South America. As you know, there are ongoing conversations around the Mercosur agreement. I had the privilege of being in Argentina not that long ago, and the agriculture opportunities for Canada there specifically are quite large, so I was really happy that you put that in as one of your recommendations. Thank you very much.

Isabelle, it's good to see you. It's been a couple of weeks. I gave you a shout-out in the earlier group. Your organization did an excellent analysis of the capital cost allowance, and I very much enjoyed hearing about how that process transpired.

The first polypropylene plant in Canada is a big deal. Until that point, we have been importing all of the polypropylene Canada has been using. What is that number? How much are we using and what are we importing, in dollars, if you have that?

[Isabelle Des Chênes]

I don't have the specific dollar figure for the Inter Pipeline polypropylene plant.

One thing that is really interesting about that particular project is it's a $3.5-billion investment. It was announced at the beginning of the year here in Alberta. They've already injected over $650 million as part of the construction work so far. They've engaged 150 Alberta-based and almost 40 Canadian-based companies to participate in the conception, design, fabrication of the equipment and overall construction.

When we talk about ACCA and what that means for government, in particular, and for the companies, with the research we've done, we'll start seeing investments coming back and a return on their investment in terms of lifting the taxation in about six to eight years. In the long term, you're going to start getting those revenues coming in. If we look at the Inter Pipeline example, we see its construction is slated to be completed in 2021, and during that process it will be employing 13,000 people. Its labour income is over $2 billion and the GDP impact is about $3 billion. The federal coffers will be enriched by about $508 million in that time.

When it moves to the actual operation phase, it's more than 1,000 jobs; it's $131 million in government revenues every year, $44 million of which will go to the federal government; it's labour income of $141 million; and an annual GDP impact of $650 million.

From our perspective, allowing ACCA to move forward ensures that we will receive investment in Canada, because if there is no investment, you're not getting any of these benefits.

[Kim Rudd]

As Canadians, the fact is that we've been importing that product forever, and this will be the first production in Canada, with another plant about to be started as well.

[Isabelle Des Chênes]

It's about to be started—