Indigenous and Northern Affairs Committee on March 15th, 2012

[Dawn Madahbee]

I have only just a cursory understanding of the Alberta project.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Don't worry about the details.

[Dawn Madahbee]

There definitely is not enough financing available to support those major projects. For example, our AFI has a loan limit of $150,000, so you can't do a whole lot of financing, other than for small and medium-sized businesses. For major projects there is just not enough.

For any economic infrastructure on a reserve, there's basically nothing available. You have to go to conventional banks and provide guarantees, if you have the money available to guarantee something like that. There are a lot of those issues of access to capital. Our businesses and consortia of aboriginal groups have a difficult time with them.

For example, in our area a first nations group is developing a hotel, but they're developing it off reserve, because to develop it on reserve would require an additional $3 million in funds because of the lack of economic infrastructure. They'd have to start from scratch. Developments on reserve are definitely more expensive.

I'm not sure if I answered your question.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

I think you did.

Perhaps you'd like to speak to this $100 million-a-year aboriginal enterprise development fund, the call for federal leadership in stimulating partnerships between first nations and non-first nations in joint ventures, and the support mechanisms to leverage private sector funding.

[Dawn Madahbee]

On that request for additional capital for aboriginal financial institutions, many of those institutions were established 25 years ago to live off the interest they earned. In those days interest rates were higher, but with interest rates at about 4% now, you don't have enough to cover operational costs. As a result, a lot of these aboriginal financial institutions are borrowing from the banks to relend, and the clients are paying exorbitant interest rates, if they can even afford to. It really affects the business case of any project when you're paying back interest rates of 16%, so there's a need right now.

I think there's a request to the federal government for at least $17 million for this year to provide capital to aboriginal financial institutions across Canada, just to meet the current demands they have for lending.

[The Chair, Conservative, Chris Warkentin]

Thank you.

Mr. Clarke, you have seven minutes.

[Rob Clarke, Conservative, Desnethé—Missinippi—Churchill River, SK]

Thank you, Mr. Chair.

Thank you, witnesses.

I'll shoot straight to the dilemma of the Indian Act. We're heard over and over again that the Indian Act is the cause of the problems here.

Could I get a short answer on this? I have 100 questions here to ask you, and I might just have to borrow some time from my colleagues. In your view, how could the barriers in the Indian Act to accessing capital best be addressed?

[Dawn Madahbee]

I think that could be done by using the network of the aboriginal financial institutions. Right now many of them are already lending on reserve. They have been able to overcome the issue of security in most regards because the first nations allow you to go on reserve to collect security, other than buildings or property. There is the ability to go on reserve, because for the most part first nations own these financial institutions, so they allow them to collect security. That's one way of overcoming it, because the banks don't necessarily have that ability. I think there's an agreement there.

As aboriginal financial institutions, we have a strong interest in making sure those businesses are successful. We do a lot of the developmental work ahead of time so that we know we're investing in a good business risk.

[Chief Clarence Louie]

My answer to that is that you have to realize that in every province, there are a handful of first nations that are doing good economic development. They concentrate on it. They do it.

My answer to that would be that we're not going to get rid of the Indian Act right away. I told the minister that this morning. That's a 100-year-old statement. It will probably be around here for another 100 years, so just work with what we have. Tweak it. Put more staff, for example, in the lands section of the department to deal with leases.

Whether it's Osoyoos, Kamloops, Membertou, or Squamish First Nations, we have banks wanting our business. We have decades of the banks knocking at our doors, even though we're under the Indian Act. You can still be under the Indian Act and have all the banks willing to lend you money if you have the income or if you have some land leases. We need the land lease processes to start moving at the speed of business.

One of the things I've asked over and over again, as have many chiefs across this country, is this: why can't we sign off on this fiduciary relationship? I don't want a fiduciary relationship with the government. To me, that means a dependency relationship. On our land leases, rather than having the Department of Justice and SARA, or wherever in the department, slowing it down and worried that the band's going to sue them, let us sign off on something. Let us sign off on this fiduciary responsibility. I don't want a fiduciary relationship with the federal government.

[Rob Clarke, Conservative, Desnethé—Missinippi—Churchill River, SK]

Thank you, Chief.

To what extent would making government-guaranteed bank loans more readily available to businesses on reserves, such as with the small business loans act, address some of these issues?

[Chief Clarence Louie]

That would be great. That would be awesome.

Any time you can add something that's going to speed things up to the speed of business.... Often there is a window of opportunity. When it comes to people wanting to do business, wanting to lease your land or be partners with a first nation, they're not going to stick around for month after month after month. I think of British Columbia, where there are 1,500 Indian reserves; you have a staff at the INAC office you can count on one hand looking after all the leases and all the new leases in the hopper in the province of British Columbia.

[Rob Clarke, Conservative, Desnethé—Missinippi—Churchill River, SK]

Chief, you mentioned the Indian Act being colonial and going back to 1857. You've seen the amendments going through. My impression is that it's a band-aid effect here.

Do you feel that first nations under the Indian Act are ready for a new and modern act? Do you have any solutions for them yourself that could work?

[Chief Clarence Louie]

I don't go to AFN meetings. I'd rather hang around business people. At the assembly, the AFN, you're not going to get consensus around the table on how to deal with even one section of the Indian Act. That, to me, is decades in the making.

I tell the department that we should just work with what we have. Let's tweak. When Aboriginal Business Canada was taken out of Industry and put in the department, and then when they took the lands departments of INAC and put them in economic, it was supposed to.... In theory, it sounded good.

The biggest problem in the Department of Indian Affairs is that we need an economic focus, at least on the floor where lands and land leasing happen—in the Department of Justice and with SARA, for example—rather than having this whole department here in Ottawa and all the regional offices being more like welfare offices.

If they could be changed, if mindsets could be changed, and as the minister has said.... We took Aboriginal Business Canada out of the industry department a few years ago to hopefully wise up the department a little bit and hopefully bring a business mindset to the department, and we moved lands into economic development, hopefully to start creating....

The most important department in Indian Affairs should be the economic development sector of the department, not the social service area. It should be the economic development area.

[Rob Clarke, Conservative, Desnethé—Missinippi—Churchill River, SK]

If I can, may I just ask Chief Stinson Henry what her point of view is, if you don't mind?

[Chief Sharon Stinson Henry]

I don't mind at all. I agree with Chief Louie.

Rama First Nation has always been proud and progressive. In leadership, long before I came along, we've always done well, despite the obstacles.

I'll give you one quick example of our getting involved with the St. Eugene resort operation in British Columbia. We get around $60,000 to $70,000 for economic development of our community. We were going to use that $60,000 to assist with updating a business plan, or whatever it was. What we found out from Indian Affairs was that we couldn't use that money for that purpose; it had to be used within our own community. That's just one tiny example.

First of all, it's not enough money, as Dawn said earlier. It just isn't enough money. However, we went ahead. Because we had a reputation throughout our history with a local bank that had taken a risk with us many years ago, they trusted our ability to go out and do a good job, because we have great staff and great support staff. We kept the money in Rama, but went out anyway, just based on our reputation.

We shouldn't have to do that. There should be more flexibility and more money. We don't want to have to rely on government money, but it's there. It's a very small portion, and I think first nations that struggle, such as Attawapiskat, for instance, do need help. There have to be more resources for them.

We won't get into that, but we understand that they're not getting their fair share of resource revenue sharing, and there are other issues, I understand.

Again, it's not enough and it should be more flexible.

[The Chair, Conservative, Chris Warkentin]

Thank you, Chief.

We'll turn to Ms. Bennett now for seven minutes.

[Carolyn Bennett, Liberal, St. Paul's, ON]

Thanks very much, and thank you for coming. It has been wonderful to listen to you and hear your optimism for the future. I think sometimes Canadians' eyes glaze over at topics such as economic development. They're not really sure, but when you talk about jobs and the ability to have jobs where you live, I think people understand what the talk is about.

When we met in your office, Chief Louie, we talked a little about the beauty of your location and what it offers. Obviously the Rama Reserve on Lake Couchiching and Lake Simcoe is also beautiful.

You were on your way to Moosonee to talk to some of the people in northern Ontario. I would love to know what to say to those people whose location doesn't offer the same obvious opportunities for economic development. Even the Victor Mine, 80 kilometres from Attawapiskat, is only going to be there for 10 years, and then it's gone.

Is it through additions to reserves? How do you advise those people, or how does your board advise those groups to prepare themselves or to dream in Technicolor about what could happen in the land they have or the land they would like to have?

I think we were a little concerned when Mr. Wernick, the deputy minister, was here saying that first nations need to be ready to enter the land management regime but that the self-assessment tool is designed by the department, not by you. That seemed a little funny. Then you have these big wait times as well for the people who maybe haven't been as creative as you have in being able to work within the Indian Act.

Given that situation, what did you say in Moosonee?

[Chief Clarence Louie]

You have to face the reality, and of course there are certain percentages of the reserves across this country that have a huge isolation factor and, because of that isolation factor, huge barriers to ever getting into economic development at the level of, say, some of the southern bands.

At the same time, I think of the problems of B.C. and the many isolated first nations. Even in the case of the national chief's first nation, you can only get to it by boat. The treaty process is a big issue in B.C., and I tell those involved in the treaty process to make economic development the foundation of their treaty.

Of course it means additions to reserves. Whatever land claim they have, it means going out there and buying properties elsewhere from a willing seller and getting these additions to reserves. In that way they'll have an investment that for many of them is going to be their first chance ever at having a business or having good property from which to start a project.

I think there is at least one first nation in every tribal territory that has the opportunity to do economic development. We can't wait to save everybody. That's another thing: get the ones going that can be got going. At Osoyoos, and maybe at Rama, we employ first nations people from all over the country. Given the choice, most first nations people would rather work for a first nations company. That's why at our last count, 37 different native people have come from Manitoba, Saskatchewan, Alberta, all over B.C., the Yukon, and the Northwest Territories to work at Osoyoos. If it's Membertou, if we can get a handful of first nations....

Let's understand that we're late out of the gate. It's only been since the eighties and nineties that first nations have been involved in business. If we can use the next decades to build on those ones and to improve those ones more and more.... With the speaking requests that I get and others get, and the corporations, I always tell people that more money and more jobs have been created in the last 10 years amongst first nations than in the previous 100-plus. That's a fact.

In the next decade there's going to be even more. We're going to outdo what we've done in this last decade in first nations when it comes to business and economic development. That has to be the focus of the aboriginal affairs department.

Let's face it: the old formula has never worked, will never work, and the department needs to change. That's the most important job, and it should properly finance and staff Allan's office. Economic development should be what the headquarters building is all about here, and all of these headquarters across the country.

You have to realize that there's going to be a philosophy change needed. I talk about our having to switch our philosophy from spending money to making money. That's a change. That's a mindset change. When I go to those first nations that are isolated, I say that hammering and blaming.... Every time a budget comes down from the federal government, everybody's upset about it. The provinces are the first ones upset, unless they're Alberta.

[Voices]

Oh, oh!

[Chief Clarence Louie]

Every province wants more money. The teachers want more money. Doctors and nurses in this country want more money. First nations are somewhere low on that totem pole.

The reality is that we're never going to get enough money to properly run our programs and services. We have to start making our own money. Put your focus towards entrepreneurship and towards business development.

The problem with most first nations, like those ones up there.... I say, “How many of you people concentrate on economic development? How many of you people concentrate on business and look for business opportunities?”

As Sharon said, getting $60,000 to hire an economic development officer is just crazy. What kind of person are you going to hire with that type of money? The economic development fund needs to be increased, and a decade from now, you're going to see what the chiefs and councils start their meetings with. At Osoyoos every one of our council meetings starts with economic development, just as I'm sure, at the PM's level, that the economy is always the number one issue. With every premier, including the Premier of B.C., the economy is always the number one issue.

That type of mindset gets carried on year after year after year. That's what I tell people in those communities: that they've got to start focusing on the economy, not focusing on running to Ottawa and asking for more money or running to the Department of Indian and Northern Affairs thinking they have more money. There's not enough money to go around, and there never has been. That's what I tell them.

[The Chair, Conservative, Chris Warkentin]

Thank you, Chief.

Go ahead, Mr. Wilks, for seven minutes.

[David Wilks, Conservative, Kootenay—Columbia, BC]

Thank you very much, Chair.

I always enjoy listening to you, Chief Louie. It's very stimulating for me.

I did want to say that I have made several trips to the St. Eugene resort over the last several years. I live in Sparwood, so I go there several times a year. My environmental study of the golf course is frustrating and ongoing and my financial study at the casino is not going well. Having said that, it is a great place to go. Chief Sophie has done a phenomenal job there, as has Chief Kathryn as well. They have an exceptional resort there.

Having said that, I did want to speak about a couple of things that you had mentioned and go from there.

First of all, I did want to congratulate you, Chief, on the most recent announcement by the Premier of British Columbia with regard to the new jail that is going to be built on your land, as I understand it. I wonder if you could speak a little bit about that with regard to economic development, what it means for you and your peoples, and where you see that going. Do you see that as an opening from the province in that there's an opportunity here that you've just been missing, and now you see a great opportunity to move forward?

I have a second question that I wanted to ask you, Chief Louie. You mentioned that the formula is wrong. What do you think is the proper formula? Is there something that you would suggest? I'm sure you have suggested it to the minister, but I'd like to hear it here.

We could just start with those two questions, and then if I have time, Chair, we'll go from there.

[Chief Clarence Louie]

I'll start with the formula, because that's the thing that upsets me the most.

Any reasonable person should see that the formula doesn't work. Forget talking about changing the Indian Act; why can't you just change that formula? The government controls the formula.

In any case, we asked the department, we asked the minister, and we put it down on paper. I catch heck from other chiefs across the country because they want to concentrate on more money for Ministry of Children and Family Development stuff, or more money for treatment centres, more money for social service stuff—all that sort of thing.

I keep telling them to look at what's happened. They want more money for these other aches and pains, but the reason half our people wind up in the treatment centres is that they don't have jobs. The idleness of unemployment is killing them. That's why people wind up in jail half the time: because they don't have a job. A job is dignity.

The national chief talks about the dropout rates. If you go to any poor neighbourhood—and it's not just a native thing, but wherever you go in this country where there is a poor neighbourhood—you have high dropout rates. You have high incarceration rates, you have all the social aches and pains, and you have poverty.

What do the nurses in this country say? The number one indicator of a person's health is personal income. Where does personal income come from? Yours comes from a job, and so does mine. Unless you're a drug dealer or you're waiting to win Lotto 6/49, personal income comes from a job.

We asked the minister, and we put it in writing: we want economic development funding on this $10 billion plus, as it is now—it used to be $10.3 billion. We want it raised from 2% to 10%. That's what we asked, and I hope that with your support this can happen.

We don't have to have all of these royal proclamation reports. All that stuff has been done. We need economic development spending on the aboriginal side of the scale.

When it comes to the prison, I look forward to the opportunity, as I said yesterday. This will be the first time in Canada or the United States that there's going to be a prison built on a reserve, the first time ever. With the long history of the bad incarceration rates of aboriginal people, we hope this is going to be a turning point, when it is built, that we can showcase to the rest of the provinces—because every province has prisons—to show that we can put together something different, because obviously what's being done in these prisons is not working.

There was a report just yesterday that the aboriginal offender rates in British Columbia are rising. They're not going down. That says that the whole system isn't working. With this prison being on a reserve, we're meeting with the province to see whether for the first time ever we can do something different for the aboriginal offender, because this time it's going to be on a reserve.

As to the $200 million project, of course it's about jobs. I always say that my platform is jobs, jobs, jobs. That's my platform. There are not very many chiefs who go around saying that. Jobs are always my platform, jobs and making money for the Osoyoos Indian Band. Those are the two things I like doing: creating jobs and making money for my first nation.

The revenue from that lease is going to be huge. The ongoing revenue and the grants in lieu of our taxation revenue are going to be huge.

You have to remember, going back years, why banks lend money to the Osoyoos Indian Band. Do you know why? It's because we had some land leases as collateral. We had that guaranteed income, which the bank could look at, from our land leases. That's why land leases are so important to first nations. That's why we need to tweak this land stuff within the Indian Act—to have it staffed properly, to have it resourced properly—to the point that more and more bands will have a relationship with a bank, if they get their land leases done quickly and done right.

We have loans with all the major banks. They knock at our door because we have land-lease revenue they can see as a guaranteed source of income to protect their loan interests with the Osoyoos Indian Band.

[The Chair, Conservative, Chris Warkentin]

Thank you, Chief.

Thank you, Mr. Wilks.

We'll turn it over to Monsieur Genest-Jourdain. Go ahead, Jonathan.

[Jonathan Genest-Jourdain, NDP, Manicouagan, QC]

[Member speaks in native language.]

[Translation]

I have a quick question. I know that your organization focuses on the economic realities of first nations. What do you think about first nations members' need for access to graduate studies or, at least, to post-secondary education, in order to become key players with regard to modern global socio-economic realities.