Indigenous and Northern Affairs Committee on March 8th, 2012

[The Chair, Conservative, Chris Warkentin]

Colleagues, we're going to call this 28th meeting of the Standing Committee on Aboriginal Affairs and Northern Development to order.

Today we continue our study on land use and sustainable economic development.

We have a full table of witnesses. We certainly want to express our thanks for your willingness to come. There are a number of you, and we're going to pick your brains a little bit today about an issue that we're trying to become more educated about in our effort to fully understand it, so that we can better make recommendations to the government with regard to this study topic.

I think what we'll do, colleagues, is have the Commissioner of the Environment and Sustainable Development testify first, if that would be appropriate, followed by the National Aboriginal Capital Corporations Associations and then the National Aboriginal Forestry Association.

Mr. Vaughan, we'll turn it over to you to begin with. We like to keep the opening submissions around 10 minutes, give or take. After we complete the opening statements, we'll begin the questioning.

We'll turn it over to you, Mr. Vaughan.

[Scott Vaughan, Commissioner of the Environment and Sustainable Development, Office of the Auditor General of Canada]

Mr. Chair, thank you very much for this opportunity to discuss our office's work related to aboriginal land use and sustainable development.

Related to this topic, in December 2011 my colleagues briefed this committee on chapter 6 of the Auditor General's fall 2009 report, “Land Management and Environmental Protection on Reserves”. Today, I will be focusing most of my comments on chapter 4 of the Auditor General's spring 2010 report, “Sustaining Development in the Northwest Territories”.

With me today is Frank Barrett, the principal responsible for the audit, and Kim Leach, the principal who also worked on this audit.

The federal government has a mandate to promote political and economic development in the Northwest Territories and to protect the environment. Our audit looked at whether responsible federal departments had laid the foundations for sustainable and balanced development in the Northwest Territories. Specifically, the audit focused on whether Aboriginal Affairs and Northern Development Canada, Environment Canada, and Human Resources and Skills Development Canada had adequately implemented key measures to prepare for sustainable development.

These measures included settling comprehensive land claim agreements and self-government agreements; establishing and implementing a regulatory system that protects the environment; and supporting appropriate economic development and skills training programs for aboriginal peoples in the Northwest Territories.

Comprehensive land claim agreements and self-government agreements set out governance rights and the ownership of land and resource rights. These agreements are therefore important for economic development. They help to provide a level of certainty and predictability for business, industry, communities and governments. Almost all of the Northwest Territories either lies within settled land claim areas or is the subject of ongoing negotiations.

At the time of our audit, four land claim agreements had been finalized. Other land claim and self-government agreements were under negotiation. We found that Aboriginal Affairs and Northern Development Canada had made constructive efforts to negotiate these agreements and had followed the established processes for their negotiation. As well, the department had used alternative approaches when negotiations appeared to be stalled.

While much remains to be done, in our view the efforts to settle land claim agreements and self-government agreements represent a significant achievement and an important step towards sustainable development in the Northwest Territories.

We have also looked at the environmental regulatory system. Protecting the environment is important particularly because aboriginal communities in the Northwest Territories depend on wildlife, water, and land for subsistence and for economic development opportunities.

We examined whether Aboriginal Affairs and Northern Development Canada and Environment Canada had established and implemented an adequate regulatory system in the Northwest Territories. We found that, in regions with settled land claim agreements, there are systems and structures that support land use plans and provide a means of adequate consultation with communities.

In regions without comprehensive land claim agreements, however, there was uncertainty about aboriginal title to the land, how it might be used, and who should be consulted. Moreover, in those regions without land claim agreements, we noted a lack of specific mechanisms for developing land use plans. Without a formal land use plan, development decisions must be made on a case-by-case basis. Decisions related to project approvals may therefore take longer, because it has not been determined where different types of development should take place and what conditions should be applied.

AANDC also has specific responsibilities for monitoring the cumulative impacts of development. This information is important because it provides co-management boards with environmental information to support informed decision-making on development proposals. Our audit found that 11 years after receiving a mandate to do so, AANDC has not yet put in place a program to monitor cumulative environmental impacts. Similarly, funding for Environment Canada's program that would support cumulative impact monitoring ended in 2007. As a result, neither department has implemented this program.

Our audit also examined skills training and economic development programs for aboriginal communities. We found that Human Resources and Skills Development Canada had established clear objectives and targets for both of their programs that we examined but that Aboriginal Affairs and Northern Development Canada's economic development programs did not have clear objectives and that the department did not monitor its programs' performance or review information reported by funding recipients.

Overall, we concluded that Aboriginal Affairs and Northern Development Canada and Environment Canada had not adequately implemented key measures designed to prepare for sustainable and balanced development in the Northwest Territories.

We have done other audits that have addressed broad issues around environmental protection and sustainable development that affect aboriginal communities. One issue that we hear about from communities, particularly in the north, is the impact of climate change. In another 2010 audit we examined how the federal government was helping communities prepare for and adapt to climate change.

The federal government has confirmed that climate change is already under way, and its impacts will affect every major economic sector, every region, and many communities. Observed impacts are already under way in Canada's north. We found that while good work was under way in helping community leaders understand the localized impacts of climate change, the demand from across Canada was outstripping the ability of the federal government to keep up.

In another 2010 audit we looked at the capacity of the federal government to prepare for and respond to oil spills from ships. Last week the Auditor General was in Iqaluit and heard from their public accounts committee about their concerns around the possible opening of the Northwest Passage and the implications of an oil spill in the north.

Finally, we have also audited different aspects of freshwater management. In 2005, and again in our 2011 follow-up audit of programs for first nations, we found that drinking water quality on reserves was significantly worse than what was found in most Canadian communities.

I should point out that these audits to which I refer are over two years old and we have not looked at these issues since then.

Mr. Chair, that concludes my opening statement. We'll be pleased to take questions from honourable members.

Thank you.

[The Chair, Conservative, Chris Warkentin]

Thank you so much, Mr. Vaughan.

We'll now turn to the National Aboriginal Capital Corporations Association. I believe Mr. Donald is bringing a submission.

[Ian Donald, Acting Chief Executive Officer, National Aboriginal Capital Corporations Association]

No, it's Ms. Pelletier.

[The Chair, Conservative, Chris Warkentin]

Ms. Pelletier will be bringing a submission.

Thank you so much for being here. We'll turn it over to you now, for about 10 minutes.

[Lucy Pelletier, Chair, National Aboriginal Capital Corporations Association]

Thank you.

Tansi, bonjour, bon après-midi, and good afternoon.

I would also like to honour and acknowledge that I have been invited to the traditional territory of the Algonquin people to make this submission.

Thank you for the opportunity you have extended to us to appear here today.

I am Lucy Pelletier, a member of the Cowessess First Nation within the Treaty 4 territory within the province of Saskatchewan. I serve as the chairperson of the board of directors of the National Aboriginal Capital Corporations Association, otherwise known NACCA, in addition to serving as the chairperson of the Saskatchewan Indian Equity Foundation. Accompanying me today are Ian Donald, our interim CEO, and Kevin Schindelka, our director of corporate development.

Our first point is on the aboriginal economy. Many aboriginal communities are now beginning to capitalize on the emerging opportunities provided by court judgments, land settlements, new revenue sources, the new economy, resource development, and export markets. They are also adapting mainstream business practices to their own values and cultures in order to create jobs, grow incomes, and generate wealth for their community.

This is being reflected in the rapid growth of entrepreneurship and aboriginal businesses, which in turn is generating increased demand for both debt and equity capital. More varied types of financing are also being required as individual aboriginal businesses grow larger and progress through their life cycles. In addition to more traditional term financing, there is increasing demand for seed capital and youth entrepreneur loans, larger term loans, operating loans, surety services, quasi-equity or subordinated debt, and equity financing.

Our second point is on aboriginal business clients. However, the characteristics of many of these aboriginal businesses continue to present difficult challenges to most sources of capital. For example, they are predominantly small and medium-sized enterprises, or SMEs. Whether these are mainstream or aboriginal businesses, SMEs, for financial institutions, generally represent relatively higher transaction costs and the perception of higher risk resulting from their smaller size and their more limited management capacities. These factors are often accentuated by a relative lack of equity capital and an overreliance on debt financing.

Aboriginal businesses often present additional financing challenges resulting from social and economic development factors. These can include even more limited management capacities than their mainstream counterparts, less familiarity with commercially oriented debt management practices, and a greater proportion of early-stage businesses.

Finally, on-reserve businesses present further challenges related to section 89 of the Indian Act, which include differing commercial cultures, fewer incorporated businesses due to the tax-free status, a greater focus on the recurring natural resource sectors, and more limited market opportunities for remote locations.

In regard to aboriginal financial institutions, Canada’s network of aboriginal financial institutions, or AFIs, is the primary source of developmental financing and management support services across Canada for those aboriginal businesses that cannot secure such financing from mainstream financing institutions. The network has evolved over time and currently comprises aboriginal capital corporations, aboriginal-controlled community futures development centres, aboriginal-controlled business development centres, and privately capitalized aboriginal developmental lenders. Of the 60 AFIs comprising the network, 53 are members of NACCA and represent first nations, Inuit, and Métis communities in each of Canada’s provinces and territories.

Each AFI is unique with respect to its structure, capacities, performance, client focus, services, and the territories it serves. All AFIs are fiercely independent and accountable to their own community. Their community roots give them a unique ability to place more reliance on community-based creditworthiness assessment to supplement deficiencies in their clients’ financial situations. This results in a very high acceptance rate for new accounts and relatively good loan performance. Through ownership of their AFIs, aboriginal communities have been able to exercise control over the decision-making process and thereby generate the culturally sensitive change that will have the greatest impact on their communities.

NACCA's national office is increasingly developing its capacity to enhance the institutional capacity of each member AFI to support its AFI membership, much like a credit union central works to support individual credit union members. In this context, it is providing an ever-expanding range of targeted and often customized support services, including program administration, customs training, best practices, loan management systems, new product development and testing, research and analysis, performance measurement systems, and communications strategies.

In terms of financial performance, each year AFIs provide approximately 500 new business start-up loans and 700 expansion or modernization loans, totalling $100 million, to aboriginal small businesses. This financing assists these small businesses to create or support the equivalent of nearly 4,000 full-time jobs. Since 1985, AFIs have received a total of $235 million from the federal government in contributed and repayable loan capital. During that period, they have provided over 36,000 loans, aggregating over $1.5 billion dollars, and over $1.2 billion of these loans have now been repaid. The overall AFI loan loss experience is approximately 6%, which compares very favourably to the 13% experienced by the Canada small business financing program. At March 31, 2011, the consolidated AFI loan portfolio comprised some 4,000 loans valued at $238 million.

In terms of strategic priorities, NACCA's current strategic plan for the period of 2012 to 2014 is based on four priorities that are intended to enhance our service to our aboriginal business clients and, by extension, to the greater aboriginal economy. These are as follows: one, increasing the financial viability of AFIs; two, improving AFI access to loan capital; three, developing the capacity, skills, and professionalism of AFIs; and four, enhancing AFI services to respond effectively to the changing needs of our business clients.

In this context, NACCA AFIs are encouraged by AANDC's increased focus on aboriginal economic development issues, particularly the small business development component as expressed in the new federal framework. We believe this framework could greatly assist us in achieving our four strategic objectives and have been approaching these priorities through two complementary, parallel activity streams: one, the joint AANDC-NACCA program renovation working groups and committees developing new programming approaches, operating concepts, and implementation plans for consideration by ministers and central agencies; two, independent NACCA-led initiatives developing complementary programming. AANDC staff will participate where appropriate and when available.

I’d like to briefly summarize the approaches currently being undertaken within these two activity streams.

Number one is increasing the financial viability of AFIs. This priority focuses on ensuring the financial sustainability of AFIs engaging in pre-commercial developmental lending to a geographically dispersed clientele despite the challenges of higher operational, lending, and capital costs, and the provision of associated advisory and support services required.

The primary issue here is that the overall financial model for AFIs is unsustainable. AFI lending costs comprise 10% for administration, plus 6% for losses, for a total of 16%, versus loan portfolio revenue of 9%. This leaves an unfunded gap of 7%.

Discussions with AANDC officials to date have focused on addressing this shortfall by establishing a performance-based allocation program to offset the AFI lending cost shortfall as well as by restructuring current AANDC loan capitalization programs to better respond to the reduced liquidity of AFIs that has resulted from this flawed funding model.

Number two is improving AFI access to loan capital.

To date approximately 90% of the AFI loan capital has come from the federal government, with the remaining 10% coming from the private sector. However, based on the increase in demand for AFI loans over the past decade, AFIs will need to secure an additional $100 million to $150 million in loan capital over the next decade. Since the federal government cannot reasonably be expected to support this level of funding on an ongoing basis, new approaches targeting much greater participation by aboriginal sources and the private sector must be launched as soon as possible.

Initiatives currently being addressed with AANDC include enhancing AANDC's loan capital interest rate buy-down program, refining the loan loss reserve approach, and establishing and capitalizing a NACCA treasury function to attract wholesale capital.

Internally, NACCA will be examining the use of bonds, debentures, and other innovative financial instruments; structuring syndication frameworks; and developing methodologies for liquidity pools.

Number three is developing the capacity, skills, and professionalism of AFIs. This priority is intended to further the AFIs' strategic focus on sound operating standards and on building a capacity equivalent to the credit union central within the AFI network. NACCA member AFIs have already developed a number of tools to enhance AFI operations—for example, a risk-measurement tool for AFI loans, a performance-measurement database and related monitoring reports, and a number of custom on-site, distance, and accredited learning programs.

During the strategic planning period, collaboration between NACCA and AANDC should result in enhancement of the governance and capacity-building elements of AANDC's Access to Capital program and development of a comprehensive performance measurement framework for AFIs.

Internally, NACCA will be expanding its custom training products, enhancing its AFI loan management systems, developing a structured database for best practices and critical standards, and developing generic personnel and financial administration manuals for its members.

[The Chair, Conservative, Chris Warkentin]

Ms. Pelletier, I'm sorry to interrupt, but we're running over time a fair ways, so could you briefly cover the final points? If there's additional stuff, we can maybe catch up with that in the question periods as well.

[Lucy Pelletier]

Sure. I'll do two minutes of closing remarks.

[The Chair, Conservative, Chris Warkentin]

Sure. If you want to jump to that, it would be helpful. Thank you.

[Lucy Pelletier]

The increasing professionalism of our membership is clearly being reflected in enhanced operating standards, improved financial performance, continuing portfolio growth, and stronger client success rates than those experienced by mainstream SMEs. NACCA's national office continues to build its skills and capacity while progressively providing broader and more effective capacity-building support services to the membership.

With AANDC's active engagement and the involvement of a wide range of knowledgeable aboriginal and government strategic partners, AANDC's program renovation initiative should finally provide a substantive opportunity to establish programming that offsets the risk and the cost of developmental lending and provides more comprehensive AFI financial and management support services for business clients. This renewed engagement and partnership reflects the comments made by former AANDC Minister Chuck Strahl at the Empire Club, when he said that “Aboriginal financial institutions are a prime way we as a government are using partnerships to help aboriginal entrepreneurs generate tangible economic results.”

In closing, NACCA would greatly appreciate the support of the Standing Committee on Aboriginal Affairs and Northern Development for our strategic priorities with respect to financial viability, access to capital, capacity-building, and enhancing client services.

Thank you, merci, meegwetch.

[The Chair, Conservative, Chris Warkentin]

Thank you so much. I hate to cut people off, because there are important things to say. We certainly appreciate the submission.

We will now hear from the National Aboriginal Forestry Association. I believe, Mr. Bombay, you will be bringing the submission. Thanks.

I will turn it over to you, and we'd love to hear what you have to say as well.

[Harry Bombay, Executive Director, National Aboriginal Forestry Association]

Thank you very much.

I too would like to acknowledge the traditional territory of the Algonquin Nation, particularly the Pikwàkanagàn, whose traditional territory we are now meeting on. My thanks to them. I would also like to thank the standing committee for the invitation to be here.

With me is Brad Young. He is our senior policy adviser, and I am the executive director of NAFA, the National Aboriginal Forestry Association.

First I'll tell you a bit about NAFA.

We are a non-governmental first nation-controlled organization focused on research and advocacy activities in the forest sector. We advocate for policy frameworks that address aboriginal rights, values, and interests leading to a more equitable sharing of benefits from the forest resources of this vast land we call Canada.

We wish to contribute to the goal of building an aboriginal forest-based economy. We recognize that an aboriginal forest-based economy cannot be achieved in isolation from the broader forest sector or from the economic realities facing all forest industries in Canada; we do, however, have circumstances, challenges, and opportunities unique to the aboriginal forest sector.

The term “aboriginal forest sector” is probably one you have not heard frequently, or possibly ever before, yet it is probably one the oldest economic sectors in North America, predating the arrival of Europeans and others. For multiple generations, aboriginal people have depended on forests for food, shelter, medicine, and a wide range of forest resources to produce goods and materials, thereby sustaining their livelihood and culture.

For aboriginal people, forests today are every bit as important as they were centuries ago. We have to recognize the significance of forests to future generations of aboriginal people and the potential they offer for the socio-economic advancement of aboriginal communities. It is important, therefore, that the aboriginal forest sector be considered a contemporary concept and an integral component of Canada's economy.

In our work at NAFA with first nations, we have found it necessary to differentiate the aboriginal forest sector from the broader forest sector in Canada. What is different about the aboriginal forest sector is that our forest values with respect to forest land and resource use does not mirror those of the dominant forest industries. Also, the form of business ownership and forest management governance is community-based rather than controlled by multinational corporations. Statutory and jurisdictional arrangements with respect to our forested lands, though largely inadequate from a management and development point of view, are specific to first nations. The focus of aboriginal forest-based development is on smaller-scale operations and value-added products and services rather than the mass production of commodities. Finally, there are niche markets for aboriginal-produced forest products that differ from those of large forest companies.

My purpose in emphasizing that the aboriginal forest sector is different is to point out the need for specially focused programming, policy, and institutional support to advance the aboriginal forest sector. The federal and provincial governments provide access to forest resources for the broader forest sector and have helped to support the forest industries in many ways. Programs like the pulp and paper green transformation program, the Canada wood export program, and others have been a means by which the federal government has invested hundreds of millions of dollars over the past few years in forest products development and in the industries that produce them. The aboriginal forest sector, however, receives no such recognition and support.

Considering that the federal government has constitutional responsibility for Indians and lands reserved for Indians and that 80% of first nations communities are located in forest-producing areas of the country, creating the conditions for aboriginal forest development should be a priority. The new federal framework for aboriginal economic development does not reflect this as a priority.

Despite the lack of attention to the aboriginal forest sector as an important segment of the economy, aboriginal people are gaining prominence in forest sector activity. Through court decisions, land claim settlements, and increased access to provincial forest tenures, aboriginal people in some parts of the country now have access to resources in significant volume, warranting new approaches to support the diversification of the aboriginal forest sector.

To advance the aboriginal forest sector and its diversification, policy and program support is needed in the following areas: capacity development support to first nations governance to enable effective, sustainable forest management at the community level; human resource development in professional and technical skill areas related to forest-based development; investment capital, of course; forest research and research and development support with respect to forest land management and forest product development; marketing and market development support for existing businesses and new entrants to the sector, which would advance the aboriginal causes in the sector; and institutional arrangements with respect to management of the forested land base, which would enable forest resource access and effective land use consistent with community values.

Now, concerning the aboriginal land base that is potentially available to aboriginal people for forest sector activity, there are basically three categories of land: provincial crown lands, treaty settlement lands, and Indian reserves. These three categories of land each come with different jurisdictional arrangements.

Right now, the vast majority of first nations and aboriginal people and companies involved in forest sector activity operate on crown land. Stated another way, aboriginal forest resources development occurs in the traditional territories of first nations in accordance with provincial tenure systems or through contracting with forest companies.

Though reluctantly, some provinces are engaging first nations through consultation processes, resulting in an increased number of aboriginal-held forest tenures. Forest tenure is becoming an acceptable interim measure to aboriginal and treaty rights recognition for some first nations.

Currently first nations collectively hold across the country approximately 13 million cubic metres of timber. In some parts of the country, the issue is becoming market access for aboriginal producers, considering that the forest industries in Canada are experiencing a long-term downturn as a result of their decreased competitiveness at the global level.

With respect to forested land under the jurisdiction of first nations that have settled land claims or have entered into modern-day treaties, land management regimes addressing forest management are being implemented. There are, however, only a handful of such cases, and where this is occurring, it is normally the practice to adopt provincial standards. As you know, most land claim settlements have occurred in the northern regions of the country, where commercial forestry is not prevalent. Thus, we don't have a great deal of experience in terms of forest management through land claims and treaty land settlement agreements.

The reserve land base falls under federal jurisdiction, specifically under sections 93 and 57 of the Indian Act and the Indian timber regulations made pursuant to those sections. The inadequacy of this management regime has been described in numerous studies and reports, including the Royal Commission on Aboriginal Peoples in 1996, and by the Auditor General on at least three occasions since 1986.

The forest management regime provides authority not to first nations but to the Minister of AANDC, and only for the cutting of timber. The forest management regime does not address environmental or sustainability issues, nor does it call for forest management planning on the part of first nations. The result has been overharvesting, lack of reforestation, inadequate site tending, and overall mismanagement on Indian reserve lands.

In 1996 NAFA proposed a first nation forest resources management act as optional and alternative legislation to the Indian Act. This is much like the First Nations Land Management Act. Our legislative proposal, however, encountered major stumbling blocks, particularly those centred around federal liability for the past mismanagement of reserve forests and also the cost of forest land rehabilitation.

The primary reason Indian reserve forests have not garnered much attention lately has been the reduced demand for timber by the large forest industries. It has been said by certain parties that on their own, Indian reserve forests are small, and the majority do not contain merchantable timber in volumes sufficient to support any notion of a viable forestry operation.

This is not our view at NAFA. Our view is that Indian reserve forests should be models of sustainable forest management practices in Canada, despite their small size. This should begin with forest management regimes that value uses other than timber and enable first nations to innovate and combine reserve land resources with those acquired otherwise, such as forest tenure from the provinces.

To conclude, we feel it is important for the federal government to acknowledge the aboriginal forest sector, its needs and potential. The federal government could play a key role in implementing measures to support the aboriginal forest sector. In the broader forest sector, the federal government is responsible for issues of importance to the national economy, including trade and international relations as well as federal lands and parks, and it has constitutional, treaty, political, and legal responsibilities for aboriginal peoples and their interests.

The federal government has jurisdictional responsibility for “Indians, and lands reserved for Indians”, a fiduciary obligation for the good management of first nations interests, and a constitutional duty to protect aboriginal treaty rights and in some circumstances to accommodate aboriginal treaty rights. Despite this responsibility, the federal government has been quite silent on the relationship between aboriginal rights and interests and forest management in Canada. Supporting the aboriginal forest sector would be thinking outside the box and would be considered a proactive approach to many of the aforementioned issues.

Thank you very much.

[The Chair, Conservative, Chris Warkentin]

Thank you, sir.

Ms. Duncan, we'll turn to you for the first round of questioning. You have the first seven minutes.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Thanks, Mr. Chair. I'm sitting here feeling very frustrated that we have all three of you at once, because I'm sure I could spend my seven minutes asking questions of any one of you.

I particularly want to thank Mr. Bombay for that presentation. I look forward to being able to look at that again on the record. It was very informative. Thank you very much.

My question is first to the commissioner for sustainable development. Welcome to the committee. I miss your good company from when I was on the environment committee, so it's nice to have you and your crew here.

I note, of course, your portfolio is environment and sustainable development, and of course, for our mandate, it's aboriginal affairs and northern development, so I find your comments very interesting. I think in many ways we have to look between the lines of a lot of the reports that your office has done and the Auditor General has done. I am aware of the report in which you identify problems with the lack of attention by Aboriginal Affairs and Northern Development to cumulative impact assessment and monitoring in the Northwest Territories.

I'm wondering if you could speak in a broader way to your feelings of the adequacy of the sustainable development reports by Aboriginal Affairs and Northern Development and whether or not you feel that they have adequately identified, assessed, and addressed the variety of responsibilities they have under their mandate for ensuring the sustainable development of resources on first nations lands and by first nations peoples.

[Scott Vaughan]

Thank you very much for the question.

First of all, yes, the mandate related to what I and my colleagues do, which is in the Auditor General Act, touches both on environmental protection and, as you said, on sustainable development, which is how you get economic, social, and environmental issues to be working together in a balanced way.

Specifically on the member's question on the federal sustainable development strategy, the government introduced a new strategy in 2008. The timetable, then, for each department to put forward its contribution to the overarching strategy is in motion as we speak, so none of the departments are yet on track to be able to say how they're going to be interpreting it. When they come forward, we have a legal obligation to inform Parliament on the progress. We have specific requirements within the act to follow the progress, but to date, those are still pending and they're not behind schedule.

That's the timetable that has been laid out by Parliament; it's too early to say how each department will interpret this.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Okay, thanks.

Mr. Commissioner, you mentioned that you did the report on delivery by this department on cumulative impact assessment and monitoring in the Northwest Territories. I'm aware that you've also done reports on the adequacy around the oil sands. I wonder if you could share here. What we're looking at are incentives and encouragement and ability and capacity of first nations to benefit from their lands and resources so that they can have economic development and build their own societies.

We've had a number of witnesses here, including the Mohawks, the congress of Atlantic first nations, and the director of ECO Canada. They were all raising concerns that while it's fine to have the ability to have new tools to develop, where they have a shortfall is in environmental management. A lot of them identified the gap federally. There really are not any federal laws regulating first nation lands.

I wonder if you could speak a bit to that.

[Scott Vaughan]

Thank you very much for the question.

We said in the report of 2010 that one of the requirements of what was then INAC, in cooperation and support with Environment Canada, was to provide particularly the co-management boards and the entire Northwest Territories with an ongoing cumulative environmental assessment, meaning that in addition to doing a project-by-project assessment of the impacts of this mining project—another oil and gas development project—there would be an overview of the combined impacts on air, water, migratory species, and biodiversity.

We said in the report that the requirements were there, but both departments did not deliver on what they were required to do. They've acknowledged that. They've said that if funding were available, they would try to put in place those monitoring systems. We've said that with the lack of those monitoring systems, people are making decisions without sufficient information.

The honourable member has mentioned the oil sands monitoring. We said last October that the government's announcement of the environmental monitoring program, which Minister Kent elaborated on in more detail a couple of weeks ago in Alberta, is a world-class model. I know many countries are looking now at what Canada is doing. They've set out quite clearly to look today at baseline conditions of key environmental drivers and some impacts of projects as well as at the combined or cumulative impacts of multiple projects. As well, they will look at traditional knowledge as one of the components of the program in Alberta.

That's something Canadians don't know enough about. It's a good-news story, and it may also inform other areas of Canada. For example, Environment Canada has identified the Mackenzie Valley basin as a primary ecosystem area, and they've identified many other areas. There may be some lessons from that cumulative assessment project to be applied elsewhere.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

I'll put the question to both the NACCA and Mr. Vaughan, if you have time.

Thanks for that, Mr. Vaughan.

It is important to assess, but it's also important to follow up and regulate. It's important to assess the risk, because you can incur liabilities if you don't have the knowledge in advance and you then develop.

One of my questions—and I'd like to hear from our financial people—is when the AiPs are loaning the money, do they also require the first nation to do a risk assessment and look at whether contaminated lands are being developed, and so on? It's environmental impact assessment at a different level. Do you feel they have the capacity to do that, and are they undertaking that work?

[Kevin Schindelka, Director, Corporate Development, National Aboriginal Capital Corporations Association]

That would apply to certain applications, but not all loan applications would affect the environment. Where there is an application for a convenience store and gas bar, it would require an environmental assessment report.

[The Chair, Conservative, Chris Warkentin]

Thank you very much.

I apologize. We had to keep that short because Ms. Duncan has used most of her time in asking the question.

Mr. Payne, you have seven minutes.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Chair.

I'd like to thank all the witnesses for coming today. It's important, particularly given the study we're doing.

I'll try to focus my questions to the Aboriginal Capital Corporations.

We know that the aboriginal financial institutions are uniquely positioned in that they are community owned and controlled, and widely dispersed across the country. I believe that in most cases they have something like 20 years of experience on record in risk assessment and debt financing to aboriginals, both on and off reserve.

In our study here we want to focus on the particular point of reserve land management and sustainable development. Given there are more first nations using more progressive land management—for example, the FNLMA—does this affect the community's ability to access commercial capital?

[Kevin Schindelka]

In some respects it's beginning to affect it. We have one AFI at the moment that, as Lucy mentioned, has issued bonds. The proceeds of those bonds have been used to finance infrastructure, and I think they've done some housing.

Does that answer your question?

[LaVar Payne, Conservative, Medicine Hat, AB]

I didn't know if there was anything more than that. I think it's also around potential new entrants to maximize the assets. Has NACCA considered that as well?

[Kevin Schindelka]

Yes. In terms of increasing the capital base, it's going to be particularly important to attract private capital. We have working groups established that are made up of general managers of AFIs and representatives of AANDC who are in the process of dealing with that issue. We would like to lever private capital somewhere in the range of five to one.

[Lucy Pelletier]

Additionally, I think part of the focus is leveraging based on their land base, because the original land base is reserve status. Some of the communities have that ability through specific claims and land claims for fee simple land to leverage. Based on that, they're practising the environmental considerations as well as the debt financing in ratio for the first nations bands.

To me, the instruments they are using through FNLMA are becoming more of a new tool for us as aboriginal lenders, because there are very few who are using it. If they are using it, they are going to a mainstream bank for major resource development. We basically take care of loans of $250,000 or less.