Thank you, Mr. Chairman.
Let me first explain to you how we got here to present a proposal, what we're proposing, how we see our proposal working, and where we're at in the process of having our proposal enacted.
We're certainly grateful to have the opportunity to present an amendment to the Indian Oil and Gas Act for a financial incentive program that will be a stimulus to promote vertical integration and value-added activities in the oil industry, both upstream and downstream, on first nations land.
To tell you how we got here, let me take a moment to reflect back on history.
The Iroquois people sided with the British and made an arrangement that was recognized in the Royal Proclamation of 1763, which is now enshrined in the Canadian Constitution Act of 1982, under section 25 of the Charter of Rights and Freedoms. As such, when the American revolution broke out, the Mohawks and other tribes fought to establish the country of Canada, and then again, in the American invasion of 1812, they successfully defended the country.
In 1867, when the founding fathers confederated the country, there was a recognition established in the Constitution under section 91(24) that Indians and lands reserved for Indians would be the exclusive jurisdiction of the Parliament of Canada. Thus, the fiduciary trust responsibility was established between the trustee and beneficiary.
As development moved westward in the late 1800s, oil was discovered on Manitoulin Island and the Indians were boiling it to make a kerosene out of it. In 1898 the first Indian oil and gas mineral surrender was established at the Wikwemikong unceded Indian reservation.
In 1900 a joint Senate and House of Commons study reviewed petroleum deposits in the country and identified Wikwemikong as being one such site. Exploration permits were granted, drilling commenced, and they discovered oil. They capped it in 1905, before there was an automobile and before the auto industry had a market demand for crude oil petroleum products.
When the Leduc oil field was discovered in 1947--and shortly thereafter the Bonnie Glen field on the Pigeon Lake reserve owned by the Hobbema band--mineral oil and gas surrenders were established. The leases were made in accordance with regulations under paragraph 57(c) of the 1951 Indian Act.
Then in the 1960s John Diefenbaker gave the Indians the right to vote in Canada and Pierre Elliott Trudeau became the Minister of Justice. The Department of Indian Affairs and Northern Development Act was established in 1967 and Jean Chrétien became the first Minister of Indian Affairs. He reached out and engaged first nations people in consultation and discussions, which were turbulent at first. As Mr. Chrétien said in his infamous speech of 1968 at Queens University, “The paths to hell have been paved with the good intentions of do-gooders from within the department.”
In the early 1970s, under contract, the Indian Association of Alberta initiated a review of the 1951 Indian Act in its totality. At that point, the oil industry, concerned about their lease holdings on Indian land, pressured the government to establish free-standing legislation. The oil-producing bands were only getting a 12.5% royalty under the regulations, and, combined with the other interests, brought about the establishment of the Indian Oil and Gas Act of 1974, which you are presently amending today. It wasn't until 1978 that amendments to the regulations provided increases in royalty rates to the bands.
Then in 1987 the Indian Resource Council was established and for the first time the oil-producing bands were able to collaborate and bring forth their concerns to the government so that in 1999 they initiated the revision to the Indian Oil and Gas Act.
In 2002 Roy Fox, of the Indian Resource Council, came and met with us at Akwesasne on Cornwall Island and reached out to the downstream operations and retail gas stations.
At that point we launched this amendment for a financial incentive program for vertical integration and value-added activities. We petitioned other groups and got their support and then presented it to the Department of Indian Affairs. Their immediate reaction was to do what we were proposing as a major policy change. Our rebuttal was swift: That's exactly what is required to make major changes in the quality of life in first nations communities today.
We continued discussions with them on this matter, and they had an organizational problem at that time dealing with our proposal, namely that Indian Oil and Gas Canada is set up just to deal with the fiduciary trust responsibility in issuing oil leases under the Indian Oil and Gas Act. What we were proposing was economic development promotion, and they were not in a position to deal with that. Another department, economic development, would be more likely best suited to deal with that. In September 2008 they resolved that internally. They amalgamated into one branch under economic development, Indian oil and gas, and Indian lands and reserves and trusts, all in one, because somebody in the department, in their wisdom, realized that economic development on Indian land involves land tenure to a large extent, whether it be mineral rights or whether it be surface leasing and construction in some form.
We come to you today at this point to present this amendment as such. In the amendment this is what we're talking about in terms of vertical integration. We would like to have the government provide an incentive to allow the retail outlets on first nations land to purchase oil directly from the oil-producing bands, and we would like the government to provide incentives for oil-producing bands to joint-venture and participate in oil refinery construction and operation. Downstream we would like to be looking at bulk storage capacities. First Nation Independent Fuel Handlers Co-Op Ltd. of Ontario did an extensive study a few years back, and the economic opportunity is there throughout Ontario for such a venture.
On value-added activities, we can show you from example that we're not talking about just a simple gas station. A gas station can turn into a gas station-restaurant-motel-banquet hall, or gas station-convenience store-coffee shop, or home heating fuel operations. That's what we're talking about in terms of vertical integration and value added.
How we perceive this amendment working is we start with a premise that you do not throw money at the problem. I've worked in the department for four years in a program where we had money, but we had a sunset clause on our money and we had to distribute the money. We funded certain projects and we had auctions to call to get the money out. But the way we've structured this proposal is that you give an authorization as a stimulus to promote within first nations communities and you wait until they make applications accordingly, and then you measure their capacity as part of a business incentive.
The department in its letter.... Here's where we're at with the department. I asked the clerk to distribute copies of the department's letter to you. They said they have business centres set up. They just initiated that, and that is very fine and works well with this initiative because those business centres should have the capacity to provide professional consultative services to first nations people to help them organize and make applications that would coincide with our proposal. That way you would get value for your dollar.
At that point, Mr. Chairman, thank you for your time.