Evidence of meeting #40 for Indigenous and Northern Affairs in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was need.
A recording is available from Parliament.
9:50 a.m.
Conservative
The Chair Conservative Blake Richards
We're moving across now to Ms. Ashton for the next five minutes.
9:50 a.m.
NDP
Niki Ashton NDP Churchill, MB
Thank you very much.
Chief Moody, you and Mr. Vincent have outlined some pretty fundamental barriers to economic development, particularly when we're talking about first nations members being able to access economic development opportunities directly, a recurring theme in your presentations. We've heard from others as well on education.
I wonder if you could speak in the context of NCN. You mentioned the need for a new school. I wonder if you could speak to the funding gap that NCN members face when it comes to education and what the federal government should be doing in this area.
9:50 a.m.
Chairperson, Business Development Committee, Community Futures North Central Development
To answer the question that was asked about the FNFA, we don't belong to that organization, but we are certainly looking at that to access more capital for our community.
As far as the education issue in our community is concerned, right now, unfortunately.... Over the weekend, our kids were trying to burn down our school. I am not quite sure how we are going to deal with that. It's unfortunate, but that is sometimes the reality. People are not doing anything, so they look at other things to accommodate their time.
In terms of education for our people, for our community, we need a brand new school. Our school is about 30 years old. It is totally non-functional as a school. We had to build a temporary high school using our own funds from our own community because there was a need for a high school in the community. Education-wise, there are more dollars that we need in our community to properly educate our children.
We have a funding shortfall. We get $5,600 per child, I think. Other school divisions in Manitoba get about $12,000 per child. There is a disparity there. We need to educate our children.
Even when we had our Wuskwatim project, we had over $12 million to upgrade our people so they could qualify for jobs at Wuskwatim. The majority of that money was spent upgrading our youth, our people who need to get those jobs at Wuskwatim. Throughout that process, our goal was to hire as many people as we could at the Wuskwatim hydro project, but unfortunately, because of the grade levels, we weren't able to get them trained so they could work at the Wuskwatim project, because a lot of them needed training, upgrading especially. That tells you there is a tremendous need to educate our people so they can get their basic grade 12.
Even the people who graduate from our school system—they have their grade 12 level and they graduate—at the end of the day are still only equivalent to about grade 8. That tells you about the system itself.
When we look at the grand scheme of things, when you look at educating yourself, is there hope for our people? They don't see a light at the end of the tunnel for them. Maybe that is why they don't want to do anything, because there is nothing for them to do anyway. There are no jobs. There is no industry for our people in our community.
We are trying very hard to correct that problem, but we need some opportunities. We need hope. We need to be economically independent, and that's why we are involved with so many economic development projects, so there can be hope for our people, and so they can be inspired to go to school and get that training.
Education is key, as you know, and this has been echoed everywhere in this country, but at the end of the day there is no hope. There are no jobs for people. Maybe they will be stuck, not being trained or educated, but it is so fundamental.
As I said, we need proper facilities where our people can go to school, where they can get trained. Part of the access to capital is that there have to be more training dollars available too, more economic development dollars [Inaudible—Editor] that need to be available.
We get about $200,000 for economic development in our community, but that is not enough. People want to start up their own businesses, but unfortunately there is not enough money for that, even for our people in the community to start up their own small businesses. We have to rely on Community Futures North Central Development to help our people, but we need more money for economic development because the status quo is not working. Providing more money for SA, the standard approach to aboriginal economic development, is not working. We need to change that attitude. We need to create training dollars, more economic development dollars for our community.
9:55 a.m.
Conservative
The Chair Conservative Blake Richards
Thank you.
We'll go back to Mr. Seeback now, for the next five minutes.
9:55 a.m.
Conservative
Kyle Seeback Conservative Brampton West, ON
Thanks.
Mr. Johnston, I want to follow up on a couple of things from where we were last time.
What happens to an AFI that is losing this average of 8%, let's say? Where does that shortfall get made up? Does this turn into a depletion of the actual initial capitalization so their lending ability continues to decline over time?
9:55 a.m.
Manager, Community Futures North Central Development
I appreciate the question. I would be hesitant to answer on behalf of other AFIs, but I....
9:55 a.m.
Conservative
Kyle Seeback Conservative Brampton West, ON
What would happen in your circumstance if you were losing 8% every year?
9:55 a.m.
Manager, Community Futures North Central Development
We would deplete the fund. That's exactly what would happen. With a small fund like ours obviously it would just be a matter of time. Again, I think if we look at it historically that has been exactly the challenge.
9:55 a.m.
Conservative
Kyle Seeback Conservative Brampton West, ON
I ask because what we heard on Tuesday—I now wish I'd asked this question on Tuesday and I don't have my notes here, unfortunately—is that the initial amount that AFIs had to lend was something like $65 million. I think the number now is somewhere in the nature of $25 million. I could be off a little on those numbers.
It seems to me if there's this average of an 8% loss, that's where the reduction has come from. That may be the issue on having less money available to loan.
You can't speak for others.
10 a.m.
Manager, Community Futures North Central Development
I can only speak to North Central. Our board was very clear that because of our small loan fund, we had to be very cautious in our lending practices. Our objective was to build the fund. We've been successful at that. At a 6.9% loan loss rate, we're sustainable in the loan fund. It may not be covering all our admin. Unlike many ACCs, we're fortunate because we get some funding from the regional agency to offset that.
I was doing some math after we spoke, and at 2.5% we would create about $150,000 in revenue if that were required. That would cover our admin cost as well.
10 a.m.
Conservative
Kyle Seeback Conservative Brampton West, ON
You don't operate like a schedule I bank so you have no ability to take deposits?
10 a.m.
Conservative
Kyle Seeback Conservative Brampton West, ON
Do you think that would be good for aboriginal financial institutions?
10 a.m.
Manager, Community Futures North Central Development
I think that as an independent AFI it would be a challenge to meet the regulatory requirements. I think it would have to be a broad pool that we could perhaps draw on. But I don't believe individual AFIs would have the capacity to do that.
10 a.m.
Conservative
Kyle Seeback Conservative Brampton West, ON
Mr. Vincent, you seem to be interested in that because regular banks are obviously leveraging deposits, which is how they're able to be so successful.
10 a.m.
President and General Manager, Aboriginal Savings Corporation of Canada
That's exactly the game we have been in since 2005. So far we have raised close to $25 million from private investors and also from institutional investors. I can tell you that I could make a call this morning and get $50 million in my bank account, but we have to offer savings products that meet the requirements of the investors, whether we have products rated by companies such as Standard & Poor's and companies like that or we get a guarantee from government.
A lot of money is available in the market at this point. A lot of investors are ready to put those dollars to benefit first nations, given that we are in a position to offer savings products that meet their investment policies exactly. This is why we have this pilot projet in conjunction with AANDC, Aboriginal Affairs and Northern Development Canada, and also with the J.W. McConnell Family Foundation. We have a pilot project at this point to prove that we can raise money from investors, given we can't count on the federal government to help raise this capital from investors.
We can raise a lot of money but we need the government to kick into this venture. I can tell you there is huge potential.
10 a.m.
Conservative
10 a.m.
NDP
Niki Ashton NDP Churchill, MB
I have a quick comment.
I appreciate the feedback from North Central. We did hear from witnesses on Tuesday, but I think it's so important to recognize that people speak best to their own reality. That's why you're here today to tell us about North Central's reality.
Before I pass on the time to Madame LeBlanc, I do want to take this opportunity and ask Mr. Johnston if he could perhaps, give us a quick brief on how keen folks in northern Manitoba are to work in partnership? You spoke of the aboriginal accord and the work that's been done to overcome systemic racism and to look at ways that economic development can benefit our communities. I think that's an important piece that our committee needs to hear about, the willingness that already exists on the ground, which we need the federal government to be part of as well.
10:05 a.m.
Manager, Community Futures North Central Development
I think this is an area of real opportunity that we miss, and I would agree with the comment. I think that industry and organizations are especially eager to get involved, because there's a mutual benefit. For example, in northern Manitoba right now, we always had the paradigm that government operated in its own silo; industry was over here and we didn't mix. We moved forward on the aboriginal accord, quite frankly, because of the challenges we were facing at the local level, including some opposition to the designation of the Mystery Lake property as an urban reserve. We realized that it's a question of bringing people together so they understand the needs. We started with five signatories—aboriginal organizations, and the municipality. Industry has come to the table, including Vale and Manitoba Hydro, because they have realized that being at the table provides unique opportunities to meet some of their needs.
Vale Inco operated a mining complex in Thompson for 50-some years. I would suggest that it has only been in the last five or six years that we've truly seen people coming from Nelson House to work because of a joint program that I think this was the basis for. I think this may provide the opportunity where industry also—as we've said—has access to capital. I think industry is a potential source of access to capital. The hydro agreement on Wuskwatim brought capital to the table from Manitoba Hydro that the federal government didn't have to provide. That will create a unique opportunity for NCN to generate wealth for years to come. I'm not saying that's because of this, but I tell you that it is amazing what has happened as a result of bringing those groups to the table.
The latest one we're just initiating is the development of a northern Manitoba economic accord that would set the parameters for general beliefs, values, and principles of moving forward with development. That's going to bring together industry, environmental conservation, aboriginal organizations, and the municipalities. I think that provides an opportunity to look at some of the unique things that can take place. We haven't fostered that discussion enough. That's where some of the dollars can come.
I would agree that there are opportunities to gain money, not as an individual AFI at North Central—we couldn't do that, but NACCA might be able to play that role for our AFIs.
10:05 a.m.
NDP
Hélène LeBlanc NDP LaSalle—Émard, QC
Thank you. I find it fascinating that you are able to do amazing things for aboriginal communities with the resources you have available.
As a critic for cooperatives, I wonder whether you think that the cooperative model could be useful for the businesses you want to support in aboriginal communities? Perhaps there are already cooperatives in the area that are successful.
My question is for Mr. Vincent.
10:05 a.m.
President and General Manager, Aboriginal Savings Corporation of Canada
In First Nations communities, I have certainly seen forestry worker cooperatives that were doing well.
I’m not saying that the cooperative model is the most widely used, but perhaps its advantage is having features that are similar in a way to the values of First Nations. First Nations work together a great deal. The concept of a circle is very present.
10:05 a.m.
Conservative
The Chair Conservative Blake Richards
Sorry, we'll have to stop you there.
We will move on to Mr. Barlow now.
10:10 a.m.
Conservative
John Barlow Conservative Macleod, AB
Mr. Vincent, I wanted to ask you a little more about the ABSCAN project for housing loans on reserves that you've talked about.
You said that it's sort of a pilot project. With the success it sounds like you've had so far, is this something that you would expand to other first nations communities? Is this something that will just be in Quebec or something that other communities across the country could take a look at as a model?
10:10 a.m.
President and General Manager, Aboriginal Savings Corporation of Canada
Right now, we are working in Quebec only, but our company is structured in such a way that we will eventually be able to provide services outside the borders of Quebec, across Canada. This is a pilot project, but it has still helped raise $25 million in capital so far. The $25 million was invested in loans.
There is one noteworthy fact of interest. In all the loans that we have made, there are no arrears and we have never experienced any losses on these loans. There is a reason for that. Our management team is competent. We know the aboriginal market well and we are able to accurately assess risks, which helps us to properly manage the investments we receive and make loans in the communities.
I would say that it has been a success so far. The obstacle is that we are not able to find the capital. As I was saying just now, we could have $50 million today. Some investors have expressed an interest but only if the bonds match their investment requirements, whether for pension funds or insurance companies. Actually, our clients even include an insurance company and a pension fund.
All these major fund managers have investment policies and they cannot just buy any kind of product. Mr. Valcourt, Minister of Aboriginal Affairs and Northern Development, is well aware of the project with McConnell. The idea is to demonstrate that it works. At the end of the day, we must have the federal government working with us to guarantee the bonds that investors are willing to buy, instead of guaranteeing the loans. If we go by what we have achieved so far, that guarantee should not cost very much because we have not lost any loans in 10 years. No loans are in arrears. If the government had taken action in 2005, it would not have cost anything today. Government involvement would ensure that the model we have implemented could experience tremendous growth because capital is available. That is truly the key to success.
Ms. Whiteduck, whom I know very well, appeared before this committee. She probably told you about capital funds to attract capital. I have just recently participated in a roundtable discussion with investors because NACCA wants to set up a mechanism to attract $25 million in short-term capital to serve the aboriginal finance companies that need it.
We recently had a meeting in Toronto, with a table of investors. They said loud and clear that they wanted products to invest in, but the products had to fit in with their investment policies. It’s not terribly complicated: they buy AAA or BBB bonds, whichever, or bonds guaranteed by the federal or provincial government, or even by a municipality.
We cannot get around it. If we want to develop aboriginal communities, we need a huge amount of capital. This capital is available and it is in the hands of large investors, who want products offered to them that match their investment policies. We have been working on this for 10 years. Mr. Valcourt and the Department of Aboriginal Affairs and Northern Development are well aware of the project. Right now, the key to success is in the hands of the federal government.