Government Operations Committee on Oct. 31st, 2024

[The Chair, Conservative, Kelly McCauley]

Good morning, everyone.

I call this meeting to order. Welcome to meeting number 150 of the House of Commons Standing Committee on Government Operations and Estimates, of course widely known by everyone far and wide as the mighty OGGO.

We have three groups of witnesses with us today. We'll invite each to do a five-minute opening statement.

We would ask you to please watch the clock so that we can spend as much time as possible with our questions.

We'll start with the First Nations Finance Authority.

Please go ahead. You have five minutes.

[Jody Anderson, Strategy and Partnerships Advisor, First Nations Finance Authority]

Meegwetch.

Aaniin and good morning. Meegwetch for the invitation to speak today.

I would like to acknowledge the unceded lands and territory of the Algonquin Anishinabe people, on whose lands we are gathered here today.

My name is Jody Anderson. I am the strategy and partnerships adviser for the First Nations Finance Authority, or FNFA. I am a proud member of Couchiching First Nation, located in Treaty 3. I am joined today by my colleagues Ernie Daniels, president and CEO of FNFA, and Todd Eberts, FNFA partner and adviser for surety, who works with BFL Canada.

FNFA is a non-profit indigenous-owned and -governed institution that operates under federal legislation, the First Nations Fiscal Management Act. Our mandate is to provide financing and investment options to first nation governments operating under the Indian Act. To date the FNFA has successfully issued 10 debentures, raising close to $3 billion in financing for infrastructure and economic development projects for first nations, with zero defaults. Our financing model is recognized by three investment grade credit rating agencies, including S&P Global, Moody’s Investors Service and Morningstar DBRS.

I am here to speak about the challenges and barriers faced by first nation contractors and construction companies located on reserve and their inability to access surety and bonding. Put simply, indigenous procurement must be improved and reformed.

Section 89 of the Indian Act prevents the leveraging of assets situated on reserve land as security. Without security, a contractor cannot execute an enforceable indemnity agreement, which is a necessary requirement to gain access to surety bonding. Surety bonding is required for a vast majority of construction, civil infrastructure and similar contracts with Canada. Without access to bonding, an indigenous contractor's opportunities are severely limited.

I appreciate that in your last meeting, Keith Conn, ADM of lands and economic development at ISC, acknowledged the importance of surety and bonding. We urgently need concrete action to move this forward.

To date there are limited methods for first nation contractors to satisfy the indemnity agreement and access surety bonding support, all of which include either additional costs or additional risks. These unfair costs and risk burdens have severely stunted the economic growth opportunities for indigenous businesses. Thus, the continuation of economic oppression remains enforced by the federal government.

Many of these affected contractors have the capacity and character to execute these jobs flawlessly, but many indigenous businesses are forced to create joint ventures to help access the needed capacity and capital, which further perpetuates the formation of unnecessary joint ventures and the vulnerability of misuse. As long as section 89 acts as a racist barrier to equitable access of capital—in this case, to surety and bonding support—contractors who are subject to the Indian Act cannot freely pursue their economic development on equal footing as compared with those who are not subject to the Indian Act. This is in direct conflict with the articles of UNDRIP.

The opportunity is clear: Removing inequitable and racist barriers will help improve the quality of life for many indigenous businesses and people by providing greater access to project and procurement opportunities, allowing first nation contractors to grow, build and scale their businesses similar to our non-indigenous counterparts. This also supports Canada to achieve its 5% procurement goal by including first nation contractors more meaningfully in publicly funded construction projects...and contribute to the infrastructure crisis that our nations are currently facing. Without changes, legitimate indigenous companies are limited from accessing the government's indigenous program.

What is needed is a stand-alone bonding and surety fund to enable equitable access to bonding indigenous contractors. We are currently working on a model to lead the development of an infrastructure-led fund. This fund would work to provide security and a backstop for indigenous contractors. When the infrastructure project is completed, this security would be released and then returned to the fund to be used by another contractor. We are requesting support from the federal government to establish a stand-alone fund to unlock this economic potential.

First nation contractors and businesses are often the backbone of our communities. They have a lot to offer, and are key to the success of these commitments.

The FNFA stands ready with the trust of first nation communities and our members, and with a track record of success to seek the viable solutions.

Meegwetch for your time, and I look forward to your questions.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

We will now go to the First Nations Financial Management Board.

Mr. Calla, please go ahead, sir.

[Harold Calla, Executive Chair, First Nations Financial Management Board]

Thank you For the opportunity to appear before you today.

The first thing I want to say is that it's in everyone's interest to get the indigenous procurement policies and practices correct. The best way to get results for us is for first nations themselves to be in a position of providing the design and supports for the procurement program, and you're going to hear from everyone today about that. You've just heard from Jody.

I think you have to start by recognizing also that first nations themselves were legislated out of the Canadian economy for much of Canada's history. We were denied the ability to leave reserves, to get bank loans, to get an education, to hire a lawyer, and entering in commercial contracts was near impossible. Most of my career as a member of the Squamish Nation has been focused on getting first nations back into the economy, and the procurement policy is a great vehicle to support economic reconciliation.

While there may have been challenges with Canada's procurement policy over the last number of years, which we don't need to go into, let's not throw the baby out with the bathwater here. Let's get to the point where we support first nations participation in the development and the design of the policies that we need to support indigenous participation in the procurement policy.

I want to give you an example of what procurement policy can do for a first nation. I'm a member of the board of Trans Mountain pipeline, the expansion project, and 24% of the contracts on the expansion project were provided to indigenous businesses and partnerships, which totalled nearly $6 billion since 2016. As the expansion moved along, TMX identified specific business opportunities along each section of the expansion project. It communicated these to indigenous communities and identified the potential partners through our vendor system.

Indigenous businesses need to have a line of sight to the opportunity, and they need the opportunity to scale up to respond to the opportunities that are before them. At the end of the day, what it meant to one particular community was very extensive. The Alexis Nakota Sioux Nation provided services to the oil field, to forestry and to security services across western Canada. It had a significant impact in that community. It was the largest source of independent income for the Alexis and was the largest employer of Alexis members. I think it's important to understand that these are significant opportunities for first nation communities as they move forward and as they look towards economic reconciliation.

I think that we need multiple activities to take place concurrently. Jody spoke about the need for bonding. We need to improve the access to capital, I believe, with NACCA to be able to support entrepreneurs moving forward to scale up their business opportunities.

It's always a challenge, I guess. The 5% target is a very worthy target, and I think we should do things that allow us to move forward in doing that. Supporting the creation of first nation organizations and institutions I think is going to be an important part of that. We've had, under the legislation, the ability to stand up an infrastructure institute for 16 months, and we're still waiting to get that done. We have to start moving at the speed of business in the processes that we established, and I look forward to the opportunity to do this.

In closing, I just want to say that the indigenous procurement program is an integral part of economic reconciliation. It needs to be supported, and the first nation organizations like the ones you have today need to be supported. We need to look at the ways and means in which that can be achieved. I know Jody didn't speak about it, but Ernie might. We want the ability to securitize federal capital transfers. That's going to be an important way of supporting economic reconciliation—to support that whole process of bridging the infrastructure gap.

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you, Mr. Calla.

We'll now go to Mr. Metatawabin, please, for five minutes, sir.

[Shannin Metatawabin, Chief Executive Officer, National Aboriginal Capital Corporations Association]

[Witness spoke in Cree]

[English]

My name is Shannin Metatawabin. I'm from Fort Albany, Ontario, and the Mushkegowuk community has raised me. I want to say thank you to the Kitigan Zibi community for allowing us to be here today.

I'm the CEO for the National Aboriginal Capital Corporations Association, or NACCA.

In the 1980s, the government delivered an indigenous business development lending program that was plagued by 85% losses. Since that program was transferred to indigenous partners, it now celebrates a 97% repayment rate. For over 35 years, NACCA has championed indigenous entrepreneurship through financing training and resources that foster success for indigenous business owners. With over 56,000 loans deployed totalling $3.3 billion, our network of 50-plus indigenous financial institutions are committed to economic self-reliance.

A growing challenge for Canada is the prevalence of indigenous identity fraud, particularly in cases of federal procurement. Fraud diverts possible contracts and resources meant for indigenous entrepreneurs. Despite hearing in previous OGGO sessions that this is just a few bad actors, I can assure you that it is not. I feel the fraud is siphoning billions away from first nations businesses that represent less than 1% of the $22 billion the government spends on goods and services each year.

The numbers are stark, and so is the impact. Fraudulent claims of procurement drain opportunities and hinder first nations community growth, job creation and economic stability.

In response, NACCA and four other national indigenous organizations have formed the First Nations Procurement Organization, or FNPO, as a solution. FNPO is supported by the Assembly of First Nations through a resolution, and it centralizes first nations business certification through a trusted, indigenous-led process. It's also modelled by the Supply Nation, which Australia has had for more than 15 years and through which it has seen more than $4.6 billion in indigenous opportunities.

This approach respects indigenous control over business data and ensures that procurement contracts go to verified indigenous-owned businesses. Through initiatives like a national directory for certified businesses and training programs, the FNPO closes gaps in accessibility, allowing first nations businesses to overcome systemic barriers and strengthen community economies.

The FNPO is accountable to both the federal government and rights holders in indigenous communities. It is governed by a first nations board and advised by first nations leaders. It will conduct annual reviews on large scale procurement projects of over $5 million to prevent misrepresentation and assess economic impact.

We are also addressing the systemic biases indigenous entrepreneurs face. Legal barriers like section 89 of the Indian Act, which Jody talked about, make it harder for first nations businesses to access and compete for government contracts. FNPO training resources build capacity, improve competitiveness and help first nations businesses navigate obstacles effectively.

In closing, indigenous procurement is not just a business opportunity, it's a step towards sovereignty and reconciliation. This comprehensive indigenous solution offers a critical step forward in reducing fraud, increasing equitable access and providing economic opportunities to indigenous businesses.

Thank you for your time and consideration. I would now like to introduce you to Dawn Madahbee Leach, Chair of the National Indigenous Economic Development Board, to present for the remainder of my time.

Meegwetch.

[The Chair, Conservative, Kelly McCauley]

Ms. Leach, you have about a minute, please.

[Dawn Madahbee Leach, Board Chair, National Indigenous Economic Development Board, National Aboriginal Capital Corporations Association]

I'm speaking to you today as the manager of the Waubetek Business Development Corporation, which is one of the 50-plus indigenous financial institutions in Canada that invests in indigenous businesses. Over the past 38 years, Waubetek has invested more than $150 million in indigenous businesses, achieving a business success rate of 97%. From the beginning, our applicants have had to provide proof of indigeneity. This ensures that the financing we provide goes directly to verified indigenous businesses. We have never accepted self-identification.

[The Chair, Conservative, Kelly McCauley]

I'm sorry, Ms. Leach. I apologize. I have to interrupt you. We're having some problems with our interpretation. Can I get you to move the mic about an inch lower, away from your mouth?

[Dawn Madahbee Leach]

Okay.

[The Chair, Conservative, Kelly McCauley]

If you don't mind saying a few words, we'll see if that's better for our interpreters.

[Dawn Madahbee Leach]

From the beginning, our applicants have had to provide proof of indigeneity. This ensures that the financing we provide goes directly to verified indigenous businesses. We have never accepted self-identification so that we could ensure that—

[The Chair, Conservative, Kelly McCauley]

Sorry, I apologize. We're still having technical issues. Can you move it maybe another inch further away from your mouth?

[Dawn Madahbee Leach]

Is this better?

[The Chair, Conservative, Kelly McCauley]

If you don't mind, say a few words.

[Dawn Madahbee Leach]

From the beginning, our applicants have had to provide proof of indigeneity. This ensures that the financing we provide goes directly to verified indigenous businesses. We have never accepted self-identification so that we could ensure the integrity of the financing and programming that we deliver meets the needs of the intended purposes to benefit and support indigenous people.

Our indigenous financial institutions support the establishment of the proposed First Nations Procurement Organization, also known as FNPO. FNPO will be 100% indigenous-led, single-window support for indigenous businesses to help them become procurement-ready to market their availability to provide goods and services to all levels of government, corporate Canada and institutions across the—

[The Chair, Conservative, Kelly McCauley]

I apologize again, Ms. Leach. I feel really bad. Can you try moving it maybe about an inch up? Keep it the same distance away, but an inch up—a bit closer to your nose.

Try again, please.

[Dawn Madahbee Leach]

What we're hoping that FNPO will do is help our businesses become procurement-ready to market their availability to provide goods and services to all levels of government, corporate Canada and institutions across the country.

We also propose that FNPO will monitor, track and report on indigenous procurement annually. Most importantly, FNPO will become a certification authority to verify indigeneity, addressing the pressing issue of indigenous identity fraud in procurement.

[The Chair, Conservative, Kelly McCauley]

Ms. Leach, I apologize for interrupting you a third time. We're just not getting a clean feed for our interpreters, so we can't continue with your statement.

Maybe what we'll do is we'll go to our round of questions, and I'll see if our IT folks can get in contact with you so we can get you properly connected so that we can have interpretation.

[Dawn Madahbee Leach]

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thanks. We'll have someone contact you. We're going to go on to our first round, but we will have someone contact you offline. We apologize.

We'll go to Mr. Genuis for six minutes, please.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you, Chair.

Thank you very much to all of our witnesses for very thoughtful and substantive opening statements that I think will significantly advance our work. I want to thank you, in particular, for some of the different witnesses shining a light on this issue of indigenous identity fraud.

As we've gotten into the issue of indigenous procurement policies, what I've been hearing from different community leaders and businesses is that there is a broader category of a problem with indigenous identity fraud. I wish the government would take this issue seriously, because what we often hear back from the government on this is, “Well, indigenous identity is complicated and there are disputes about it; there are different organizations who define it in different ways, and how can we really, as the federal government, resolve these issues?”

However, the problem is that if you don't take identity fraud seriously, then you risk undermining all of the structures and supports that exist for indigenous peoples. You end up with assimilation in the other direction, which means anybody and everybody can pretend to be indigenous. If you allow that reality to exist, then you've essentially got an assimilationist reality in terms of policies and programs where no distinction is being made, so I would hope and challenge the government to take up your comments on this and really take seriously the issue of indigenous identity fraud, because it's impacting, in a significant way, the contracting and procurement world, but I think it's a broader issue than that.

Minister Patty Hajdu was at the indigenous affairs committee on Monday, and all opposition parties found her testimony very frustrating. She didn't answer basic questions. In fact, this morning, the committee passed a motion to ask her to come back for two hours, essentially to try again at getting responses to the serious questions that were asked.

During my time with the minister, I asked her about issues around indigenous identity fraud, in particular some high-profile cases of businesses that were on the federal government's indigenous business list and then were removed from that list. In particular, Dalian and Canadian health care agency organizations got over $100 million each in government contracts. I haven't seen the documentation about whether they are, or aren't, indigenous, but what I know is that they were on the indigenous business list and then later they were off that list. The minister could not and would not provide an explanation as to why they were removed and what the process was for that.

If they were removed because they weren't indigenous, or they hadn't been indigenous or weren't indigenous at the time they got those contracts, surely they should be expected to pay back the money they got through representing themselves as being indigenous.

I'd like to ask all of our witnesses if they can comment on how the federal government should deal with these kinds of instances of abuse. Should there be penalties? Should there be stronger penalties around misrepresentation of indigenous identity or misrepresentation around joint ventures?

What kinds of structures and penalties should there be to deter and to respond to these kinds of instances where a company is on the list benefiting from these types of programs and then is off the list and there's no explanation for why they were taken off the list?

I'll open it up to whoever wants to comment on this issue.

[Shannin Metatawabin]

Thank you for that question.

We need to prevent this from happening. Indigenous people are also frustrated with the system. They're not seeing the opportunities. There's a big wall in front of the government, which means that we can't access government procurement, but on the other side of the wall, procurement is happening with actors that are not moving forward in the right way. There need to be penalties, for sure. You need to be barred from the process. There are OSIC policies that deal with this, up to and including barring them for life from accessing this program.

It's criminal behaviour to conduct fraud, so we have to take other steps and demonstrate to the world and to Canada that those actors who are engaging in this activity don't use this window and this program to access the federal government in a bad way. We need this opportunity for indigenous people, because right now indigenous people are taking their lives in their communities because they don't have opportunities in this world.

Thank you.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you.

Just to follow up on that very specifically, if you've got an instance where a company is on the indigenous business list and is benefiting from that program, and then they're removed from the list, maybe because there was some misrepresentation involved or abuse of joint ventures, it seems pretty bizarre to me that after that misrepresentation they would still be allowed to benefit from government contracts. If they're removed from the list because of misrepresentation, they shouldn't just be no longer on that list but still able to benefit from government contracts. If there have been abuses, they should be barred from government contracts in general.

It seems that indigenous identity fraud isn't being taken seriously by the government at the same level as we might hope they are taking on other instances of fraud.

In the time I have left, do you want to follow up on that point?

[Shannin Metatawabin]

I agree with you. They need to be held accountable. This is fraud. This is criminal behaviour, and they should be barred from doing any business with the government going forward.

Indigenous identity fraud won't happen if it's handed to an indigenous community. For 40 years our network has been assessing indigeneity and providing business loans and grants to 56,000 of them. We know our community. We know the organizations that are bad actors. We can make good decisions.

Thank you.