Indigenous and Northern Affairs Committee on May 12th, 2015

[Robert Lajoie]

It's delivered through the schools. The teachers promote it within the school and register their students into the program. There are online courses and there are online benchmarks. It's throughout the school year. Once they complete their business plan and their video they send it back to BDC where we have judges who are account managers within the ABU, account managers who are not in the Aboriginal Banking Unit, as well as people in our head office. We judge them and then we award them.

[John Barlow, Conservative, Macleod, AB]

Is it part of their school curriculum or is it something separate?

[Robert Lajoie]

It's voluntary. It's something separate and we encourage them to participate in it.

[John Barlow, Conservative, Macleod, AB]

I'd be curious, it's been going since the early 2000s and that's more than 10 years. Do you track any students who would have participated in the program and then later on access BDC programs, whether it's the business development fund or the growth fund? Is it working to get them involved in business?

[Robert Lajoie]

That's a very good question.

We haven't tracked the success. I'll have to go back to see if we can find that information for you.

[John Barlow, Conservative, Macleod, AB]

It would be interesting to see if you're having some success in carrying them on to a long-term career in business.

[Robert Lajoie]

Great question.

[John Barlow, Conservative, Macleod, AB]

I'm going to move to Chief Austin Bear.

You talked about the framework agreement that was signed in 1996 and how that has been a benefit to first nations communities.

Can you talk a little bit about what it is about that agreement that is making it easier for first nations communities to access capital compared to those who are not? What is it about that agreement that's making that a much smoother process than those that are not part of that agreement?

[Chief Austin Bear]

Actually, we have here an operational first nation and an original signatory to the agreement from 1996. My friend and colleague Councillor Bill McCue from the Chippewas of Georgina Island, this might be a good question for you.

[William McCue, Councillor, Chippewas of Georgina Island First Nation, Ontario, and Director, First Nations Lands Advisory Board]

As my friend has stated, our community was the first to actually pass the land code and support the framework agreement. In doing so, we were venturing into the unknown from coming out of underneath the Indian Act.

I was chief at that point in time. Under the direction of the elders in the community, they had seen how difficult it was for us to move forward in any areas of economic development or improvements within the community itself, and how to access capital or financing to do any kinds of ventures that we had.

They gave me the mandate to take our community into land management. Our community did ratify our land code with 96% voting in favour of establishing our own lands by coming away from the Indian Act. I know we're short for time, but our community is 50 miles north of Toronto. We had some of the largest undeveloped lakeshore property in the area.

Through the Indian Act, we had several deals that were lost because of the time constraints and moving at the speed of business. Now we can do that and have the access to capital to create our own cottage industry. It has improved our revenues—I would say a tenfold increase in our community revenues—which in turn helps us subsidize programs where we experience shortfalls from government funding.

[The Chair, Conservative, Blake Richards]

Ms. Bennett, you have seven minutes.

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

Thank you all. It's really interesting to hear the successes in what you've been doing.

I guess our committee wants to be able to say, “Where do we go from here in building on your successes?” I was hoping, Mr. McCue, if you could continue in terms of explaining what's going on.

I know that my colleague asked Chief Austin Bear a little bit about how we go forward, or what we need to do in terms of both capacity and governance to get more first nations participating at the speed of business, as you've said. What would you like to see in the recommendations? What are the barriers that still exist and how could all of you do your work better?

I've heard about the business of using own-source revenues to backup access to the financial institutions. There seems to be something going on there that maybe we could help explain and fix.

Do you want to just continue your story and then use the rest of the seven minutes, whichever way you want?

[William McCue]

Thank you for the opportunity. As I said, our community was fortunate within the lands management to increase its revenues by having the opportunity to develop our lands. Further to that, the access.... How we could improve always is through increased funding, whether it be by partnership with government or increased funding for the infrastructure dollars we do need for our own communities.

We do use our own-source revenue. We are presently doing it right now for something that is very important to us and that's our water system. It has been antiquated for quite some time, and we've been trying to negotiate with the Department of Indian Affairs to access capital to redo our system. Unfortunately, our community, like others, is on a long waiting list for capital expenditures in the priorities, we're below the folks who don't have water, understandably. Even though we have a boil water advisory, we're down the list even though it's a need.

Having to borrow funds or use the own-source revenue funds that we derive to fix the infrastructure in our community takes away from other avenues of priorities such as education. As I said, from our lease fundings and our own-source revenue, we do fund areas of post-secondary education. I think our post-secondary is 80% to 85%. We try to fund as much as we can with our own-source revenue for what we can't get from INAC.

I think it's a partnership that is needed with financial institutions. It's good to hear our friends announce these programs. That's news to me, and it sounds like a very exciting program that I am going to take back to our council. I think if we can have an increased commitment from Canada to help with priorities of infrastructure through the capital or the access to the action plan, it would free up opportunities for first nations to move even further and want to be in the economy. We don't want to continually have to go to other sources to govern. We should be self-governing. This is what we're trying to do and having lands management helps us create that.

Austin, do you want to add anything else? Thank you.

[Chief Austin Bear]

I think in many first nations, one of the obstacles and delays to land use development is the dreaded and snail-paced process of additions to reserves. With TLE lands, TLE land claims, settled specific claims, it's a dreadful process. I'll use my own first nation as an example. In our TLE settlement agreement with Canada and Saskatchewan, we have opportunity to use the proceeds of the land claim for capital investment to create business opportunities and also community development. But that money is tied up for as long as it takes the additions to reserves to complete the process of those lands becoming reserve lands.

Right now, on our own first nation on a piece of TLE land, the process is being delayed and there are what we believe to be minor issues on the land. We've been waiting for two years now on an $8.5 million project, and we simply can't move on it. That's an experience and a problem we've had. It's not unusual for Muskoday. It's seemingly quite common for first nations across the country.

Thank you, sir.

[The Chair, Conservative, Blake Richards]

Thank you.

We'll move next to Mr. Dreeshen for the next seven minutes.

[Earl Dreeshen, Conservative, Red Deer, AB]

Thank you very much, Mr. Chair.

Thank you to our witnesses for being here this morning. These are certainly interesting discussions. Of course, we talked about section 89 and the restrictions that are involved there.

Mr. Lajoie, you spoke about mortgages of lease and access to land. Of course, those all tie into the same issue. You said that in order to make the deals that you needed, you had to look for band resolution. Therefore, we see how this interaction takes place. You also talked about the situation that can occur as far as the default is concerned. I'm wondering, first of all, if you could talk to us about the consequences for a company that goes through that particular process when they have defaulted.

Then perhaps, Chief Bear, you could speak from the other side, as far as the band is concerned, about the consequences when there's a default on a loan in a community.

Perhaps, Robert, you wouldn't mind starting on that.

[Robert Lajoie]

Thank you for your question. I do have a correction. E-Spirit was actually started in 1996, not 2000.

Our default rate or the process when a loan goes into default is to first work with the entrepreneur to see if we can help them turn it around. In specific cases of on-reserve land where there's a mortgage of lease and a band council resolution, we have to bring in all the parties. We have to work with the first nation and ensure that we come up with the right solution to see if we can save this company and see if maybe there's somebody within the community who could come and take over the company, buy it, and work with us to salvage that developed land if it's a mortgage of lease. It takes collaboration and teamwork and understanding of the long-term goals of the first nation for their land development and seeing how our existing loan can be saved or repaid or the assets can be sold. It requires working together.

At BDC, we call them our special accounts department, and we also have a business restructuring unit. Our goal is not to just quickly realize our assets; it's to really work with the entrepreneurs. Entrepreneurs may make a bad decision and cause stress on their companies for a period of time, but maybe we can just work through that period of time. It's working with all parties involved.

[Earl Dreeshen, Conservative, Red Deer, AB]

Perhaps then, Chief Bear, just so that we can kind of focus, BDC of course is one lender that you would have on reserve. You're dealing not only with BDC but with many other banks. Do you still have to go through the same thing as far as band resolutions go? Perhaps you could answer that part and then expand on what you see as your concerns, whether they be for your reserve or throughout the country, when loans go bad.

[Chief Austin Bear]

Of course, section 89 of the Indian Act no longer applies to my first nation.

[Earl Dreeshen, Conservative, Red Deer, AB]

Yes.

[Chief Austin Bear]

However, if it's an opportunity where the member wishes to acquire a mortgage for a home, the member is granted a registered interest in the land. The interest can be mortgaged—not the land itself, because the title doesn't remain with our first nation, but the registered leasehold interest can be mortgaged.

Now it's the same with the entrepreneurial. If it's agriculture, there are individuals who hold interests in the land by leasehold interest. They're long-term interests, and those interests can be mortgaged to the bank. The security of the bank will take the revenue generated on that interest. If they have to default, they would manage that by, upon agreement, claiming the revenue from the land.

If all else fails, we don't rely anymore on, if they even exist, ministerial guarantees. If necessary, if it's a mortgage for a home, the Muskoday First Nation will guarantee that loan, or for lack of a better term, perhaps underwrite that loan. If the homeowner, the member, defaults, we will satisfy the requirements on the mortgage and we will take possession of that home. We will either sell it to another member or turn it into social housing. Those are the opportunities created.

For small business for members, it's basically the same. We can provide for securing small business loans for entrepreneurs. We're going through a few of those now. Those are the opportunities that are provided. To satisfy the bank, or the lenders, we still provide a band council resolution. That's the strongest decision you can get from chief and council, so we still provide that. It's not an Indian Act band council resolution. We don't even like to call them band council resolutions anymore. We call them land resolutions.

[Earl Dreeshen, Conservative, Red Deer, AB]

Thank you.

Do I have any more time, Mr. Chair?

[The Chair, Conservative, Blake Richards]

You have about 10 seconds.

[Earl Dreeshen, Conservative, Red Deer, AB]

Earlier we had witnesses talking about the number of bands, I think 55, that have gone through the process. They were indicating that it takes quite a while, though, to gain the capacity to be able to enter. From what I understand, it simply isn't a case of saying, “Let's throw another 50 in here just to get the numbers up”; you have to make sure the capacity is there.

How is that process of the capacity building coming along?

[The Chair, Conservative, Blake Richards]

We're just at the end of the time here, but if you could make a very brief response, we can allow that.