Indigenous and Northern Affairs Committee on June 2nd, 2020

[The Chair, Liberal, Bob Bratina]

We're out of time.

[Jaime Battiste, Liberal, Sydney—Victoria, NS]

Thank you.

[The Chair, Liberal, Bob Bratina]

Madame Bérubé.

[Sylvie Bérubé, Bloc, Abitibi—Baie-James—Nunavik—Eeyou, QC]

Thank you, Mr. Chair.

I would like to thank all the witnesses currently present, as well as the technicians and interpreters, who are essential to the proper functioning of the Standing Committee on Indigenous and Northern Affairs.

Let me introduce myself. My name is Sylvie Bérubé and I am the member for Abitibi—Baie-James—Nunavik—Eeyou, a traditional territory of the Algonquin, Anishinabe and Cree people in my constituency.

My question is for Mr. Daniels. How does the current market turbulence affect First Nations' borrowing power, right now and in the future?

[Ernie Daniels]

I'm going to ask my colleague, Mr. Berna, to respond to that.

[Steve Berna]

The timing is perfect for this question. Next week we are looking to issue our seventh debenture into the capital markets.

We work the same way a provincial treasury works. We work with all six chartered banks, plus Laurentian Bank, plus Casgrain out of Montreal. We were looking to raise close to $230 million next week. It sold out. It's not a question of whether there's confidence in first nations to repay loans—$230 million is a lot to borrow—it's simply do the first nations have the revenue streams they need to take their communities from the infrastructure level they have now and increase going forward. If the revenues can be increased, the capital markets will lend.

So far there has been no turbulence in relation to the FNFA's program, and as Ernie mentioned earlier in his opening statement, we were upgraded by Moody's—unprecedented. Confidence by first nations in the capital markets has grown each year, and it's at the point now if we were able to work with Canada to do monetization, I think you'd find the investors in the capital markets would step up to support that.

[Sylvie Bérubé, Bloc, Abitibi—Baie-James—Nunavik—Eeyou, QC]

I will continue with you. How do you see the situation of the financial markets after the crisis? Are you afraid that interest rates will increase or that credit conditions will tighten, for example?

[Ernie Daniels]

I'll ask Mr. Berna to answer that as well.

[Steve Berna]

Under our act, to get the comfort of both the credit rating agencies and the investors in the capital markets, we are mandated, when we go to make a loan, that the revenue streams pledged to support that loan are a multiple higher than what's needed to pay the loan. It's called a debt coverage ratio. Currently, every first nation that is an FNFA member is meeting its coverage ratio, which means the revenues it has pledged are a factor greater than its loan payments, and that has been maintained for eight years.

The question will be how long the COVID-19 restrictions will be in place. If they are in place longer than September, we may have to talk with our board of directors again and find out our authority or mandate going forward. Currently, we are in a position where we have no deficiencies, no late payments. It's simply a question of how long this COVID-19 will shut down businesses that have been supporting the loan payments. Right now, we're fine.

[Sylvie Bérubé, Bloc, Abitibi—Baie-James—Nunavik—Eeyou, QC]

Thank you.

My last question is also for Mr. Berna.

What do you think the federal government should do to maintain or improve First Nations' access to low-cost borrowing, while also preserving their independence?

[Steve Berna]

That's a wonderful question. Point two in Ernie's opening comments talked about establishing a commercial paper program. The purpose of any loan is to get the interest rate as low as possible so the repayments from the first nations communities are as low as possible, which means every dollar will go further.

A commercial paper program needs three things. It needs credit ratings. FNFA can get those. It needs clients. FNFA can get those. The third thing it needs are investors to buy the commercial paper program, which are short-term loans borrowed every month. If COVID-19 persists and investors are not stepping up to buy either FNFA commercial paper or provincial commercial paper, we would look to the Bank of Canada to be a buyer of last resort.

It's not a grant. They would buy it as an investment and be paid interest. A commercial paper program would save all our members 1% from today. We're already below bank prime on our loans. We would go 1% further below bank prime, so the dollars would go further. We simply need support to make sure our commercial paper program has end buyers in today's markets.

[The Chair, Liberal, Bob Bratina]

You have 30 seconds.

[Sylvie Bérubé, Bloc, Abitibi—Baie-James—Nunavik—Eeyou, QC]

Thank you.

[Ernie Daniels]

I'll just add to Mr. Berna's remarks. One of the other items we had was monetization of Canada's infrastructure dollars. Monetization would be a leveraging of current infrastructure budget dollars, which we could leverage into the market to build a lot more infrastructure we need today at today's dollars.

[The Chair, Liberal, Bob Bratina]

Thank you very much.

That brings us to time, and six minutes now go to Ms. McPherson.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you very much.

I want to double-check that you can all hear me. I found a headset at the last minute.

[The Chair, Liberal, Bob Bratina]

It sounds good.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

I want to thank the interpreters and apologize that I wasn't ready to go at the beginning.

Thank you to all the witnesses who have joined us today.

I have a couple of questions for a dear friend of mine. I'd like to ask Herb some questions to start.

Herb, first of all, it's nice to see you on the call.

Can you talk a bit more about the Metis Settlements' unique structure and how it has impacted your ability to receive support?

[Herbert Lehr]

Thank you very much, Heather.

The Metis Settlements are under provincial legislation, so we're an ameliorative program. We need to move into our section 35 rights, and that's what we've been working on with Canada so we can move forward in getting that type of funding.

Canada has worked diligently for Métis people through the Métis National Council and has provided funding to organizations like that, but those organizations don't have the infrastructure, the actual physical community, that we have, such as roads, water treatment plants, lagoons, all these types of things, so we don't have anyone who has advocated for us and moved that issue forward.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

The next question follows on that a little, Herb.

We know you've negotiated a three-year stopgap agreement. What does the Government of Canada need to do to fulfill the government's obligations, and I think you spoke about this a little, in accordance with the Daniels v. Canada Supreme Court of Canada ruling?

[Herbert Lehr]

We've put forward a business case, Heather. No one has given us any guarantee that it will be successful. It hasn't gone forward really because of COVID. There's no federal budget there, so nobody can negotiate with us, and our communities are headed into insolvency if we don't get something before the end of this fiscal year.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

I have one last question for you, Herb.

We know that the economic impacts of COVID-19 have run along gender lines, especially for women who work in the service industries. How can the government assist Métis women at this time?

[Herbert Lehr]

Again, we look for more capitalization for SIC to get our women into different kinds of businesses and further education. Our constituents, all of the people within our communities, are sorely lacking educational opportunities. If we look at the statistics available to us, you'll see it's very clear we're underfunded when it comes to education.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you very much. I also want to express my condolences on the loss of the three elders in your community. My heart is with you there.

Next I'd like to ask some questions of the FNFA.

One of the industries that we know was particularly hard hit was indigenous tourism. We know indigenous tourism was one of Canada's fastest-growing industries prior to COVID-19.

Can you talk about the larger ramifications for communities' financial stability with these growing sectors unable to operate now and for the foreseeable future?

[Ernie Daniels]

Thank you for that question, Ms. McPherson.

For clarification, we don't lend to individual.... We just lend to the first nations bands. We operate under the act. Our eligible borrowers are only Indian Act bands at this time.

We've noticed that a lot of the infrastructure the first nations build usually goes to supporting individual businesses as they set up operations. The ability to pay rent for office space, retail space or anything like that is one thing that's being affected. The other thing too is that, in most cases, some of the first nations bands own businesses that operate tourism or other service industry-type businesses. Those were severely affected, and some of their operations are pretty big. For instance, the Enoch Cree have quite a big operation where they've had to lay off pretty close to a thousand people. They were really affected by that.

The support Canada gave wasn't addressing the needs of businesses that were owned and operated by first nations. I've since heard a number of recent updates, and there seems to be some effort to try to address that. I think it would go a long way. We'd like to thank the Government of Canada for providing the $17.1 million. I realized what you were talking about but I hadn't heard about them until now.