Thank you to the committee for the chance to speak today.
The First Nations Finance Authority is modelled after a very successful operation in B.C. called the Municipal Finance Authority. It's been in operation since 1970 and in 39 years has never had a default on payment from any of its members, which is an absolutely sterling record.
The controls that are in place for the Municipal Finance Authority were put in place for the FNFA through the regulations that we're looking for support for to have passed. I worked at the MFA for sixteen years, nine years as director of finance and seven years as its CEO. During that time we borrowed $10 billion to $12 billion on the capital domestic and international markets for B.C.'s local governments, transportation facilities, utilities, and regional hospital districts. The same model that works in B.C. will work across Canada for first nations.
There are two things that made it a sterling record in B.C. First, the act that allowed the MFA to operate said that all revenue streams for municipalities can be leveraged to support debt--all revenue streams. Second, they had about $110 million in equity. The equity is extremely important to get a credit rating, and it's extremely important for investor confidence when you're doing debenture issuance.
The purpose of the $110 million is that it sits on a shelf. It is not accessed unless one of your clients that you've lent money to does not pay when it's due. When the money has not shown up, you pull money out of the $110 million and pay the bondholder, so there's no default. It is a slush fund and a buffer zone. It is something for the credit-rating agencies when they say, “If a client does not pay, where will you get money to pay the bondholder?”
What we are asking for is feedback from the rating agencies, the banking syndicate, and the bond market. If we have $3 billion to borrow for first nations projects, which is what our estimate is, based on consultation with them, the markets are saying to us that $100 million like MFA has will get us the credit rating to provide the debenture issuance that we need to do.
So it's not a number pulled out of the air; it's based on historical fact out of B.C. Alberta has a similar model, backed up by the province. They have about $150 million in equity. It is something that is extremely important.
As for the opportunity cost of not receiving the $100 million, there are projects ranging from independent power projects to schools, hospitals, roads, and sewer and water, which will lead to private investment and job growth. If the money is not forthcoming, we will not be able to borrow for the first nations that are looking to do these projects right now.
When the tap cuts off on the credit side, it is usually the first nations that get cut off first, and right now that's happening. The projects have stalled all the way from Squamish's port authority, which they're trying to develop, to the independent power projects, both in the west and in Ontario and Quebec.
Estimates based on the numbers we have are that there's $2.1 billion in other revenues right now that first nations are willing to leverage. Some has already been financed. We have the opportunity to refinance that at lower rates. The $2.1 billion in revenues will support about $3 billion in debenture issuance, which will translate into job growth of very close to 100,000.