Indigenous and Northern Affairs Committee on Feb. 8th, 2022

[The Chair, Liberal, Marc Garneau]

All right.

Mr. Vidal.

[Gary Vidal, Conservative, Desnethé—Missinippi—Churchill River, SK]

Thank you, Mr. Chair.

To both witnesses, Ms. Bull and Mr. Metatawabin, thank you for taking time to join us today. I know your opinion is valued by the committee.

I'm going to ask one question first to Mr. Metatawabin.

In your first recommendation, you talked about the opportunity to leverage financing for investment in infrastructure. You spoke specifically about housing, but also other infrastructure. Last week, we heard from the first nations fiscal management folks about their concept of monetization as a methodology to leverage own-source revenues into infrastructure investment to fill a very large infrastructure gap we have in first nations communities.

I'm really curious about your concept of how you would utilize the leverage financing and how that would accelerate investment in infrastructure, and maybe more importantly, adding to the end of that conversation, how it would remove barriers to indigenous business successes in doing so.

[Shannin Metatawabin]

It's important to realize that the capital markets have plenty of money to invest into good opportunities. The indigenous community is an opportunity for them to invest into providing finance while earning interest. Indigenous communities are looking for low-cost capital to undertake infrastructure, housing and business projects.

The witnesses you heard on Friday have some great ideas on how to leverage some government backstop to attract private-sector capital. The indigenous growth fund that we recently launched did that with the Business Development Bank of Canada, FCC and EDC, along with the Government of Canada. We use this concept of a tiered approach to investors coming in and leaving in an evergreen model as a good model that can be utilized around the world.

We're just looking for different innovative financial mechanisms to attract public-sector capital, because the government's unsustainable approach and inability to keep up with the growth of our community requires us to think differently, outside the box, and to co-develop different financial tools to ensure that we can do the work on the ground.

[Gary Vidal, Conservative, Desnethé—Missinippi—Churchill River, SK]

Thank you for that.

The other quick question I would have, in follow-up to that, is that in your third recommendation you talked about the more stable, longer-term funding models that would allow more predictability, more sustainability and the ability to look further down the road. If I heard you correctly, you used the comparison of the 10-year grant program to first nations once they've achieved the eligibility or certification requirements, which I assume are the same ones that are talked about under the First Nations Fiscal Management Act type of process that's going on there.

Could you just expand again briefly so we are very clear and we can get it into the report? I'd really like to hear your concept of how that applies to the AFIs as well, if you don't mind, just a little further dive into that third point you were making.

[Shannin Metatawabin]

With the government's recent support of the United Nations Declaration on the Rights of Indigenous Peoples, in there it clearly states that we need indigenous institutions to provide programs and services to indigenous people. With the government's recent approach to supporting indigenous communities that have good financial systems in place, that have a track record, they're being recognized with 10-year grants, which provides them some flexibility around delivering services on the ground.

As an organization that has been delivering the aboriginal entrepreneurship program and has been delivering $3.3 billion in lending, I think we deserve the opportunity, because of our track record and our success and our systems in place, to be allocated that 10-year grant so that we can start moving towards transferring services and responsibility to indigenous institutions and communities. This is a good growth area for the government [Technical difficulty--Editor] with devolution and transferring services in a good and planned way.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Thank you very much.

I think Gary is going to give the rest of his time to me.

Let's continue down that path, if we can, and the conversation around the infrastructure gap and how to close it. I'm looking at some stats here that show it could take, in some cases, upwards of five times longer to get a project built on indigenous lands compared with non-indigenous lands.

You touched on it a bit, but is there anything else you care to share with us that would potentially reduce some of the time gap?

[Shannin Metatawabin]

I would be afraid for Canada's planning, the present approach to supporting indigenous communities and how long it will take to meet the 130,000 housing units that are required in the communities and the renovations needed for half of the housing units that currently exist. The longer we wait, the more expensive it gets. I think the last witness on Friday said that in the last year expenses have gone up by 30%, so you're going to be spending more money already.

As our population is growing by four times, the longer we wait, the more expensive it gets. It's an unsustainable system that's in place right now. What we have to do is shift our focus to creating tools that allow us to raise private sector capital so that we're all working together on creating innovative financial solutions to solving all the problems.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Do you see—

[The Chair, Liberal, Marc Garneau]

There are only about five seconds there, so I think it will be tough to get an answer in that time.

Thank you, Mr. Schmale.

We're going to pass to Mr. Weiler.

You have six minutes.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you, Mr. Chair.

I'd also like to thank the witnesses for joining our committee today.

Ms. Bull, it's great to hear your testimony today after we had the pleasure of welcoming you to the government operations and estimates committee in the last government.

Getting to the recommendations you had, particularly on markets and the supply chain, you mentioned that corporate Canada was exceeding the pace of the federal government for involvement of indigenous-owned businesses.

I'm wondering if you have any advice or learnings we might be able to take from how corporate Canada has been able to do this effectively.

[Tabatha Bull]

Thank you.

We've definitely provided a few specific recommendations towards moving faster on procurement policy. I think a lot of that is about really cutting red tape and ensuring that we're able to get new indigenous businesses into the federal supply chain.

We see in corporate Canada, as well, that once they have a supplier, it's very easy for that procurement officer to go directly to that same supplier again. That's no different in the federal government as well, so we need to find ways to bring indigenous businesses into the federal supply chain.

A good opportunity for that is to increase the sole-source contract opportunity from $40,000 to $100,000, which would allow procurement officers to go directly to an indigenous business.

There are a few others that would take a little bit more change such as the mandatory minimum indigenous requirement of 5% of all contracts valued over $5 million required to be from indigenous suppliers. This was something that was key in Australia in their being able to move forward on their commitments.

Mandatory set-asides as well [Technical difficulty—Editor] between $100,000 and $200,000.

In corporate Canada, we've really seen organizations that have stepped up and been very public about their commitments. They also report their spending in both their annual reports and with their shareholders. We're definitely also recommending reporting, and the estimates committee is a prime example of where that could take place in a regular public reporting of the spending of every department and organization.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you for that.

In your third recommendation, you identified access to funding. We didn't have an opportunity in your opening statement to really delve into that in detail.

Could you maybe highlight one or two areas where the federal government is best placed to be able to facilitate access to funding for indigenous-owned businesses?

[Tabatha Bull]

I think the work the AFN network and NACCA is doing has been exceptional, but I think some of the concerns.... What we saw as well from indigenous businesses in the survey in not accessing some of the funding that was available through COVID in particular was the requirement for a GST, HST or CRA number [Technical difficulty—Editor] the number of times.

We did work with the Province of Ontario on a similar restriction, and the Province of Ontario did alleviate that [Technical difficulty—Editor] businesses, and the result was close to 100 indigenous [Technical difficulty—Editor] granting programs, because they didn't have that requirement.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you.

The next question is for Mr. Metatawabin.

You mentioned in your testimony something that was echoed by a previous witness, concerning the opportunities for devolution on pursuing economic reconciliation.

Would the creation of an indigenous economic development agency be one of the best paths forward for Indigenous Services Canada's economic development programs to have devolution?

[Shannin Metatawabin]

I think that's a good idea.

There are a number of institutions that need to be created in Canada to ensure that proper planning, economies of scale and a code development, are in place. An economic institution would definitely be one of them. In addition, an HR institution, procurement, infrastructure and an organization that deals with land, are all things that need to be nationally planned and worked on, so that we're supporting all communities in order to have a concise planning process in place.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Do you see barriers at this point for indigenous-owned businesses to be able to access the current regional development agencies that we have across Canada?

[Shannin Metatawabin]

The funny thing is that we brought the RDAs together in a meeting before the pandemic, and not one of them had the same services and programs. They were very unaligned.

We need to include the indigenous community and institutions into a process of bringing the RDAs back together with our indigenous institutions, so that there's alignment with equity of services and programs. Having it all over the place, and not having one planning path, is a problem of the federal, provincial and municipal governments. We all have to get on the same page, and this institution that you talked about would be part of the solution.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you. I have one final question.

Can you tell me a bit more about NACCA's indigenous women entrepreneurship program? What programs are in place to support indigenous women entrepreneurs?

[Shannin Metatawabin]

We recently launched this important program, and we received some money from the Government of Canada. This will allow us to go from 41% in loans to 50% in loans. It requires capacity, information, and it requires people on the ground.

In case you didn't know, the aboriginal entrepreneurship program used to be a larger program back in the 90s, when it was initiated. Over the last 20 years, we've seen a reduction in services and resources. An AFI that was able to hire four or five business development officers to line up projects [Technical difficulty—Editor] that it was accessing and starting a business, they might have only one or two people in-house covering the same area.

We need to return to historical levels of funding to support the needs on the ground. This can be done together in a co-designed and co-developed way, so that aboriginal financial institutions have what they need on the ground.

The housing program that I talked about is filling a gap between social housing and mainstream lending. There is a sweet spot in the middle, and an opportunity of $3 billion to $4 billion in first nations communities for people who are able to take out a mortgage, but nobody wants to give them one.

[The Chair, Liberal, Marc Garneau]

Thank you very much.

Mr. Garon, you have the floor for six minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you very much.

My thanks also to our two witnesses for joining us here today.

I will start with a question for Mr. Metatawabin.

I am interested in the applications that are made to indigenous financial institutions. In the applications you receive, are certain sectors of activity better represented than others? Could you please tell me about the sectors that have the most difficulty gaining access to capital and perhaps explain where those difficulties arise?

[Shannin Metatawabin]

Access to capital continues to be a problem for all organizations and communities. We need to work together to provide solutions to the major projects in Canada that have really stalled the economy for the prosperity of all Canadians.

The First Nations Major Projects Coalition has projects of about $17 billion in its plans for communities. It wants to participate in major projects, but it has no place to access that money. All it's looking for is lower cost capital and financial institutions that view it as low-risk as opposed to high-risk. What we're trying to do is unlock the potential of natural resources in the country, so indigenous communities can participate with Canada under a shared prosperity plan.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you.

Your proposal for an indigenous finance fund is very interesting, I find. Could you provide more details about the plan? Would the funding come from federal capital, for example, and would it then be allocated to indigenous financial institutions? How would the funding work? I'd like to hear what you have to say about it.

[Shannin Metatawabin]

An interesting thing is that we recently launched the indigenous growth fund. This is a partnership with Canada. The Business Development Bank of Canada assisted us in creating this fund and Farm Credit Canada and the EDC participated. We've already launched this. We're deploying capital to our members right now.

This is going to solve some of that access to capital, and we want to grow this over the long term. What I'm presenting today is to use that model and its success, and the success of the model for our AFIs, to deliver mortgages to the community by creating and jump-starting a new fund. This will be specifically for mortgages. Right now, we have two AFIs: ABSCAN in Quebec and ANTCO in B.C. Between both of them, they've delivered $30 million in mortgages. They issue bonds and they raise capital.

What we're trying to do is put this on steroids for all of Canada to access that percentage of the communities that are looking for mortgages; they have a full-time job, but they're not given a fair shake by lenders, who are afraid of the Indian Act and providing assets on a reserve. This is going to meet that need. There are other communities in Canada providing mortgages on reserves and this would jump-start that. There's an opportunity of $3 billion to $4 billion.

If the Government of Canada participates and gets that snowball rolling, it will grow as we access the mortgages and raise more capital on the markets. It's a good model. I think we should put that in your report for sure.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you.

Ms. Bull, you mentioned the obstacles that indigenous companies face, especially in terms of financing, and that the pandemic has made the situation worse. You also told us that two thirds of the companies said that they needed financial assistance. I am wondering about the geographic dimension to that problem. What makes things particularly difficult for indigenous companies in remote areas? What complicates the task before them?

My question goes to both our guests.