Finance Committee on June 1st, 2021

[The Chair, Liberal, Wayne Easter]

Mr. Fast.

[Ed Fast, Conservative, Abbotsford, BC]

This would be recognized security by a lending institution. Is that right?

[Garima Dwivedi]

That's correct, Mr. Fast. It would go through the First Nations Finance Authority, which releases debentures on the markets in terms of then going back to the first nations to provide them with loans.

[Ed Fast, Conservative, Abbotsford, BC]

Has your department done any modelling on how this additional financing tool could positively impact first nations' welfare and, say, prosperity?

[Garima Dwivedi]

In terms of this specific amendment, while there hasn't been specific modelling related to it, we do know, on the revenues first nations can currently use to secure capital on the market, that they have been able to secure upwards of now almost $1.5 billion for their communities' economic development and infrastructure needs.

[Ed Fast, Conservative, Abbotsford, BC]

How much would this free up in terms of additional working capital?

[Garima Dwivedi]

Mr. Fast, I don't have the specific answer to your question. It would depend on individual first nations and whether they chose to use these revenues to secure loans.

I'm not sure if my colleague, Leane Walsh, would like to add anything.

[The Chair, Liberal, Wayne Easter]

Go ahead, Ms. Walsh.

[Leane Walsh, Director, Fiscal Policy and Investment Readiness, Department of Crown-Indigenous Relations and Northern Affairs]

Thanks, Garima.

These revenues are about $17 million of the available revenue that those first nations, if they choose to use it, can use to secure loans.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you.

[The Chair, Liberal, Wayne Easter]

Mr. Falk.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chair.

Thank you for those explanations, Ms. Dwivedi. I have a couple of further questions.

Would this just be in a situation where there is cash flow lending, and it makes no changes to asset lending?

[Garima Dwivedi]

Leane, can I ask you to address that?

[Leane Walsh]

Sure. For this type of loan, there is no collateral. Instead, it is very much a cash-based loan. It's really used to pay the principal and interest on the loan.

I hope that answers your question.

[Ted Falk, Conservative, Provencher, MB]

Yes, it does. They're securing financing simply on a cash flow basis.

Can you tell me the extent of the demand there has been or the request from first nations for this kind of facility?

[Garima Dwivedi]

There has been demand through the First Nations Finance Authority. The First Nations Finance Authority and its borrowing members have wanted this change for some time. I can't give you an exact number in terms of the number of first nations who want this currently, but they have requested this for some time.

[Ted Falk, Conservative, Provencher, MB]

Well, it seems to make sense to me.

Thank you.

[The Chair, Liberal, Wayne Easter]

All right.

(Clause 193 agreed to on division)

(On clause 194)

[The Chair, Liberal, Wayne Easter]

Ms. Dwivedi, Ms. Walsh and Mr. Clark, thank you for appearing.

We turn now to division 11, dealing with the Federal-Provincial Fiscal Arrangements Act (Fiscal Stabilization Payments). The lead on this is Ms. Kennedy, I believe.

Go ahead, Suzanne. The floor is yours.

[Suzanne Kennedy, Acting Director General, Federal-Provincial Relations Division, Federal-Provincial Relations and Policy Branch, Department of Finance]

Thanks. I'm Suzanne Kennedy. I'm the acting director general of federal-provincial relations at the Department of Finance.

Clause 194 amends the Federal-Provincial Fiscal Arrangements Act to implement the modernization of the fiscal stabilization program that was announced in the fall economic statement. It has five subclauses. I'll go through those briefly.

The first two would eliminate an inconsistency in the program's treatment of declines between 0% and 5% in resource and non-resource revenues.

The third subclause amends the act to include revenues from equalized tax point transfers as revenues eligible for fiscal stabilization.

The fourth subclause amends the act to measure a province's personal and corporate income tax revenues, based on taxes payable resulting from assessments or reassessments completed in the calendar year following the fiscal year for which a claim is made rather than on the basis of the tax year to which the assessments apply. This change would help enable claims to be finalized 11 months earlier.

The fifth subclause moves up the deadline for application to the program by a province by six months. It also raises the maximum per capita amount a province can receive for a given fiscal year from $60 per capita to $166 per capita for 2018. That amount is then indexed to grow thereafter in line with GDP per capita, along with a provision to make sure it cannot decline. This subclause also specifies that population for the purposes of these calculations is as measured as of July 1.

I'd be happy to take any questions.

[The Chair, Liberal, Wayne Easter]

Go ahead, Mr. Kelly.

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

Thank you.

The maximum will go from $60 to $166, and then it will go to $170, I think, the following year. Is that correct?

[Suzanne Kennedy]

Yes. This would work out to about $170 per capita for 2020-21.

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

Now, Alberta's true decline would be about $4,000 per capita. Is that correct, as far as you know? I think we had testimony at finance to that effect, in pre-budget consultations.

[Suzanne Kennedy]

Of course, nobody has applied, and we don't have actual revenue declines for any province at this time. Nobody has applied yet for 2020-21.