Indigenous and Northern Affairs Committee on May 1st, 2023

[The Vice-Chair, Conservative, Jamie Schmale]

Good afternoon. I call this meeting to order.

Welcome to the 61st meeting of the Standing Committee on Indigenous and Northern Affairs. We recognize that we meet on the unceded territory of the Algonquin and Anishinabe peoples.

Our meeting today will be in a hybrid format, according to the order adopted in the House on Thursday, June 23, 2022. Members may be present in person or on Zoom. The proceedings will then be published on the House of Commons website. Just as a note, the webcast will show the person who is speaking and not the entire committee.

For those participating remotely, I would like to outline a few rules to follow.

You may speak in the official language of your choice. Interpretation services are available for this meeting in French, English and Inuktitut. You have the choice at the bottom of your screen of floor, English or French audio. Please select your language now. If interpretation is lost, please inform me immediately and we will ensure that interpretation is properly restored before resuming the proceedings.

For members participating in person, proceed as you would normally do when the whole committee is meeting. Before speaking, please wait until I recognize you by name. If you are on the video conference screen, please click on the microphone icon to unmute yourself. For those in the room, your microphone will be controlled as normal by the proceedings and verification officer. Please address all comments through the chair. When speaking, please speak slowly—not like I'm doing right now—and clearly, and when you're not speaking your mike should be on mute.

With regard to a speaking list, the committee clerk and I will do the best we can to maintain a consolidated order of speaking for all members, whether they are participating remotely or in person.

We now move on to the committee. With the motion adopted by the committee on April 19, 2023, the committee is now commencing its study of the subject matter of Bill C-45, an act to amend the First Nations Fiscal Management Act.

Today we welcome our witnesses. We have Harold Calla and Grant Christoff, executive chair and general counsel respectively, from the First Nations Financial Management Board. We have Allan Claxton and Jason Calla, development board chair and technical team, from First Nations Infrastructure Institute. We have Manny Jules and Marie Potvin, commissioner and legal counsel respectively, from the First Nations Tax Commission; and Ernie Daniels, president and CEO of the First Nations Finance Authority.

Thank you everyone for being here today. We look forward to your testimony.

Since we have Harold and Grant up first, we will start with them.

Please, you have five minutes.

[Harold Calla, Executive Chair, First Nations Financial Management Board]

Thank you for the opportunity to be here today.

As you said, my name is Harold Calla. I'm the executive chair of the First Nations Financial Management Board and a member of the Squamish nation. For those who don't know, I've been the executive chair of the First Nations Financial Management Board since its inception some 15 years ago. Prior to that, I spent many years championing the passage of the First Nations Fiscal Management Act. It took three attempts. I hope today's amendments to the act have a much speedier passage and are through the House and the Senate by the end of June.

These amendments build on the achievements of Canada's most successful piece of indigenous-led legislation. A huge part of this success lies in the FMA's optionality for first nations that choose, on an individual basis by band council resolution, to be scheduled to the act. There are no financial enticements to do so, just an individual nation's desire to have good financial management that is recognized to meet international standards, to be able to borrow from the First Nations Finance Authority or to levy local revenues to fund first nations government services.

With the passage of these amendments, nations will be able to choose expert advice and support for building and maintaining infrastructure. The optionality of this legislation also provides evidence of its success. Nearly 350 first nations have chosen, one by one, to be scheduled to the FMA. That is over 60% of the first nations that are part of the Indian Act.

The vast majority of these first nations work with the First Nations Financial Management Board. Like the other FMA institutions, the FMB is indigenous-led, accountable to a board that is primarily indigenous and has a staff that is mostly indigenous. We are an indigenous-driven solution that supports communities in getting the results an Ottawa-driven approach never could.

The FMA is a success and we need to build on it. That is what these amendments are about today. For the FMB, the amendments will enable us to work with modern-day treaties and tribal councils, something communities have been asking for for years. The amendments will mean we can build on the statistical work we have been doing so that chiefs and councils have better facts to inform their decision-making. The amendments bring some of our operations into the modern day, such as allowing us to hold our AGM virtually, when appropriate.

The FMB supports nations in developing financial administration laws to enshrine transparency and good governance. We provide capacity support so nations can bring their laws into practice. We award financial performance certifications to qualified first nations that meet the standards, so they can borrow from the FNFA. When we award a financial management system certification, first nations can use this to show to their community and business partners that their financial practices meet high standards internationally—standards most municipalities in Canada actually don't meet.

Over the years, our functions at FMB have grown in response to nations' needs. We lead the way in providing the capacity supports first nations need to get out and stay out of third party management. We provide opinions on whether or not first nations have met standards for the eligibility of 10-year grants. We did the research on the size of the first nations economy, which allowed necessary supports to be distributed to first nations government owned businesses during the pandemic. We are now piloting a program to provide backup supports, such as bookkeeping for rural and remote communities that have trouble attracting and retaining staff.

The nations that work with the FMB enjoy both improved economic development and greater trust in their communities. Our records and research show that first nations that have achieved their FMS certification have seen their own-source revenue grow significantly and enjoy higher community well-being index scores.

Before I end my comments, I want to note that first nations were heavily engaged in the consultation on these amendments to the act. Every single first nation currently scheduled to the act was contacted by FMB staff and invited to an across-the-country town hall on the amendments. The responses we heard at the town hall were overwhelmingly positive.

In particular, there was tremendous support for the centrepiece of these amendments, the creation of a First Nations Infrastructure Institute.

We did the same thing for modern-day treaties and tribal councils. These amendments will allow us to work with them.

In short, indigenous institutions are providing solutions and support to first nations that the current federal system never could. More and more first nations are choosing to work with these institutions. Nations are asking us to do more, and we are prepared to respond.

Pass these amendments so that we can continue down the path of options that actually work for nations.

Thank you.

[The Vice-Chair, Conservative, Jamie Schmale]

Thank you very much, Mr. Calla, for that testimony.

Next up we'll go to the First Nations Infrastructure Institute, Allan Claxton and Jason Calla.

You have five minutes, please.

[Allan Claxton, Development Board Chair, First Nations Infrastructure Institute]

Mr. Chair and members of the committee, good afternoon.

My name is Allan Claxton. I am chair of the First Nations Infrastructure Institute's development board. I was formerly chief of my nation for 20 years. I'm on council now, and I have been on council for 10 years. I've spent a lot of my life in politics, working for my nation.

High-quality public infrastructure is important for the health and sustainability of our communities. As I said earlier, I've been involved in my community for over 30 years. I have seen and understand the challenges to develop infrastructure projects. We just completed a couple last year, including a modern bighouse, with a state-of-the-art kitchen attached to it. We also upgraded a road with paving, sidewalks and lighting. We are proud of that, but we still have many more infrastructure needs in our community, like all the other first nations in the country.

Community infrastructure is more than a collection of buildings and the roads that connect them. These are places of learning, belonging, sustainment and healing.

The problems with the current first nation infrastructure systems are well known. Infrastructure on reserves takes too long to develop, costs to much to build and does not last long enough because it's not built up to the proper standards. This contributes to a series of poor health, social and economic outcomes.

We are proposing to establish the First Nations Infrastructure Institute—otherwise known as FNII—to tackle these problems. We are proposing to establish the First Nations Infrastructure Institute to join the FNFA, FNTC and the FMB, the three institutions created by the FMA.

FNII has been designed to build on the successes of the FMA model. It will also be optional to all first nations.

The first nations and indigenous organizations that choose to work with FNII will be able to use standardized best practices to plan, procure, own and manage their infrastructure projects. We know that infrastructure needs are great. We have been talking to first nations across the country about their proposed projects.

Jason and I have been doing a lot of travelling to a lot of communities across the country. We know that there are many projects that nations have in mind, including water and wastewater systems, roads, internet connectivity, recreation centres and health centres. That's just the tip of the iceberg.

These projects support and serve both members who live on our lands and non-members who may be residents living or working on our lands. That's a good example of my community. We have 10 trailer parks and two RV parks in my community. We know that development of these projects will benefit not only our community but the regional economy as well.

We believe that working with FNII will support first nations and indigenous groups in advancing their projects. Our goal is to assist nations to develop infrastructure in a better and more sustainable way than the current approach.

I thank you for the opportunity to present these amendments. We are asking for your support to move ahead with the proposed amendments to the First Nations Fiscal Management Act in Bill C-45.

Hych’ka Siem. Thank you very much.

[The Vice-Chair, Conservative, Jamie Schmale]

Thank you very much for your presentation.

Next up we can go to Marie Potvin and Manny Jules.

You have five minutes.

[Clarence T., Manny) Jules (Chief Commissioner, First Nations Tax Commission]

Members of the committee, good afternoon.

My name is Manny Jules. I am the chief commissioner of the First Nations Tax Commission. It is one of the three institutions created by the First Nations Fiscal Management Act, better known as the FMA. I was also chief of my community, the Kamloops Indian Band, from the years 1984 to 2000.

Thank you for this opportunity to appear before this committee and to speak in support of Bill C-45.

Canadian history has shown that practical proposals to increase our self-determination and to implement economic reconciliation move slowly unless we design and lead the changes.

The proposals are optional. First nation institutions support their implementation. I know this first-hand, as I've spent most of my adult life working on proposals to renew the fiscal means for our self-determination. These include the Kamloops amendment to the Indian Act in 1988, which gave first nations the ability to generate wealth from lands leased on designated lands; the creation of the First Nations Gazette in 1997, which supports the legal voice of first nations; the first nations sales tax in 1998; and the passage of the FMA in the year 2005. In each case, I worked to ensure that we had all-party support.

Twenty years ago, in June of 2003, I appeared before this committee in support of the original FMA. I spoke about how the FMA gave us hope for a better future by giving us more fiscal powers, by supporting faster implementation of our jurisdictions and by raising our credit rating. Since that time, I am proud to say we have turned that hope into trust, and we have delivered on that promise.

The FMA first nations have realized billions of dollars in investment, and the assessed value of reserve lands now exceeds $15 billion. Thousands of FMA laws have been passed, and 150 first nation administrators have graduated from the Tulo Centre of Indigenous Economics.

Perhaps more importantly, with the success of the FMA, we have created a formula to speed up the process of self-determination and of economic reconciliation: pass federal legislation to open up the jurisdictional space for interested first nations; occupy that space with our own laws, if first nations are interested, to fully respect their right to self-determination; and support first nations who opt in with first nation institutions, standards and accredited training to increase the benefits.

Bill C-45 is the next step in this process, and it reflects what we have heard from the FMA first nations. We need our own infrastructure institute. We need to expand our fiscal powers. We need to take control of our fiscal information, and we need to expand our capacity to support within the Tulo Centre of Indigenous Economics.

These amendments reflect what the FMA institutions told this committee in 2022 as part of your study on barriers to economic development. They were also recommendations in the committee's report to the House of Commons.

The FMA is the most successful first nation-led legislation in Canadian history, with more than half of all first nations using this act. We now know that with these improvements the number is only going to grow. We have moved beyond simply recognizing first nation rights to implementing first nation jurisdiction.

Working together, with the support of all parties in Parliament, the FMA institutions and first nations have provided an optional legislative path to complete one part of the unfinished business of Canada: to find a place for first nation governments in the federation and in the economy.

Our work will continue down that legislative path, for example with the development of a first nations resource charge to ensure we benefit from resource revenues derived from our lands. Another example would be the creation of a first nations assessment authority, which would provide an accessible and reliable institution for the valuation of first nation lands.

All-party support for these amendments will demonstrate Canada's commitment to our self-determination and to economic reconciliation.

I believe that the legislation is the continuation of what my father, Chief Clarence Jules, started in 1965. His words then still resonate today: We must be able to move at the speed of business.

Your support for these amendments demonstrates that my ancestors were right when they wrote in a letter to the prime minister, Sir Wilfrid Laurier, in 1910, that by working together we can make each other “great and good”.

Thank you very much.

[The Vice-Chair, Conservative, Jamie Schmale]

Thank you very much for that presentation.

We now go to Ernie Daniels, president and CEO of the First Nations Finance Authority, for five minutes.

[Ernie Daniels, President and Chief Executive Officer, First Nations Finance Authority]

Thank you, Chair.

My name is Ernie Daniels and I am the president and CEO of the First Nations Finance Authority. I am a member of the Salt River First Nation in the Northwest Territories.

I'd like to thank Leane Walsh and her team at CIRNAC, the First Nations Tax Commission and the First Nations Fiscal Management Board for working collaboratively on these amendments to the First Nations Fiscal Management Act, or FMA, over the last several years.

The First Nations Finance Authority, or FNFA, is a non-profit organization whose mandate is to provide financing, investment and advisory services to those first nation governments across Canada that voluntarily schedule to the FMA.

The FNFA board is elected annually from the member first nations. The FMA received royal assent in 2005 with all-party support, and the FNFA has been providing services to first nations governments across Canada ever since.

To date, 342 first nations have been scheduled to the FMA, and FNFA has loaned over $1.8 billion in financing to its membership of 151 first nations through nine provinces and the Northwest Territories. This has resulted in the creation of over 20,000 jobs and an economic output of $4 billion, which demonstrates that we are stronger together.

However, certain economic and social needs of our member communities can only be met through amendments to our act.

The FNFA strongly supports Bill C-45 in principle. It brings significant positive change that will lead to enhanced opportunities for first nations and indigenous governments across Canada. For example, the financing secured by other revenues regulations will be incorporated directly into the FMA. Bringing the provisions about other revenues directly into the FMA will result in a comprehensive FMA that is much easier to follow.

Another example is that the definition of “borrowing member” is expanded in anticipation of eligibility being expanded to indigenous governments and non-profit organizations through other regulations that will still be required. These important entities provide essential economic and social services to first nations.

The proposed amendments will have significant positive impacts for first nations.

Thank you and mahsi cho for your time and consideration.

[The Vice-Chair, Conservative, Jamie Schmale]

Thank you very much for your testimony today.

We begin now with a round of questioning, starting with a six-minute round.

With the Conservative Party, we have Gary Vidal, who gets six minutes.

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

Thank you, Chair.

Thank you, everybody, for being here today and for the work that you've been doing with your own respective organizations to move this legislation forward.

I think everybody agrees that there are very good components to this legislation and that it's going to make a big difference in the lives of people across the country.

Mr. Daniels, I want to start with you for a minute.

You and I started having a conversation about the concept of monetization way back in 2021. I know that seems like forever ago with COVID and all that stuff in between, but we started the conversation back in 2021. We talked about all kinds of things, like how the multiplier effect of leveraging could create upfront investments to really work at closing the infrastructure gap. We talked about the fact that inflation didn't allow the increase in capital grants that are provided at, say, a 2% per year increase to keep up with inflation. We talked about own-source revenue definitions and how the expansion of those could actually lead to more opportunity to leverage some of those revenues to attack that infrastructure deficit.

Today, in one of the presentations, it was already mentioned about the report on barriers to end indigenous economic development and how this committee unanimously endorsed the idea of testing this concept out with a pilot project of some kind.

Could you expand on that just a little bit? Just take a couple of minutes and talk about how this concept of monetization is really a huge opportunity to close that infrastructure gap in indigenous communities.

[Ernie Daniels]

Thank you for that question, Mr. Vidal.

We really believe that the monetization of government transfers, be it a new source of funding or an existing source of funding, will really be a big game-changer when it comes to closing this infrastructure gap. I actually became aware of a report that was done just recently by AFN and CIRNAC together that indicated this infrastructure gap is at $349.2 billion. That's a staggering number. There's no way this government, which is funding infrastructure right now, will be able to do that in the next few years without an innovative solution. I really believe that the concept of leveraging means we can build more today than tomorrow with tomorrow's inflated dollars. Inflation does really eat away at funding amounts that are static.

In the recent budget we requested a budget ask of $200 million to start the monetization project, and $200 million annually over a 20-year period would create in excess of 12,000 homes, for sure. That makes a big difference on our reserves. Also, on replacing diesel generators, the idea of monetizing existing expenditures on diesel would almost be cost-neutral to replacing the diesel generators that exist in our communities right now.

Those are a few examples. We didn't get the budget ask. We will continue to do that. I'm sure at some point in time that monetization will happen, but I just don't know when. The concept is sound. It works. Every other government does that.

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

I'm sorry, but I don't mean to cut you off. I'm going to run out of time, and I want to sneak one more question in for you, Mr. Daniels. I'll come back to the other members in a later round.

In those conversations you and I had, you also talked to me about the fact that in the regulations, the Minister of Indigenous Services could have undertaken a pilot project without a change. We didn't need this legislation for that to happen—the provision in regulations was already there.

I know this conversation has been happening since at least 2020. It's identified actually in the departmental plans of CIRNAC starting in 2020. It's there in 2021, and again in 2022. We've been talking about this for three years, and now it's finally coming to fruition here, which is good news—don't get me wrong.

Can you maybe speak to how the lost time of three years is impacting the ability to close that gap, based on the rise of inflation and some of those challenges we face? If we had started three years ago, we could have built lots more homes, if I'm understanding your approach here. Would you agree?

[Ernie Daniels]

Yes, I would agree with that. The concept of time and money is that it only goes one way. The value of your dollar goes down every single year.

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

Very specifically, what kinds of challenges does that create for the communities, for the people on the ground? Can you speak to the challenge that this lost opportunity has created in the last several years?

[Ernie Daniels]

The challenge is that the social problems still exist. Overcrowding in homes creates a multitude of problems. The social problems are still there and will still continue. The population growth in our communities is growing faster than the Canadian average, so that problem is not going to go away. We need better air ventilation in our schools for our schoolkids. We need proper water, more water, rather than all the boil advisory notices we get every year. It's those types of issues that will be dealt with. It will create employment. It will create an economic impact that I strongly believe Canada as a whole will benefit from, not only the first nations.

[The Vice-Chair, Conservative, Jamie Schmale]

Thank you very much, Mr. Daniels and Mr. Vidal. That was six minutes.

We go next to the Liberal Party and Michael McLeod for six minutes.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you, Mr. Chair. I just want to say you're doing a very good job.

[The Vice-Chair, Conservative, Jamie Schmale]

Thank you. It's seven minutes for you.

[Voices]

Oh, oh!

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you to all the presenters for being here and for the work they've done on this issue.

My question is for Ernie Daniels. Ernie and I go way back. He's from the Northwest Territories. I wanted to hear his view on how important the FNFMA, in this proposed legislation, is to reconciliation. How does it fit with the whole concept of economic reconciliation?

[Ernie Daniels]

Thank you for that question. It's a really good question.

I think it fits, because all the amendments that are part of Bill C-45 have a direct impact on first nations communities, especially services to communities. We would hope that infrastructure, especially with the First Nations Infrastructure Institute coming on, will help communities to plan and build the proper infrastructure they need and with the costs associated with that. That definitely will be a benefit, for sure. The more infrastructure we can get into our communities, like health services and health and community centres, those things will benefit our communities.

In terms of reconciliation, I think it's empowering our communities to do things on their own terms and on their own time. I believe that's the whole benefit of the FNFA. It's a voluntary process as well. I strongly believe that when first nations are in control of when they do their assets, when they do their economic development and when they choose to do certain things, such as developing a property tax system, all those things are, to me, true reconciliation.

Thank you.

[Michael McLeod, Liberal, Northwest Territories, NT]

Earlier, I saw the work that happened on the Salt River First Nation reserve and the beautiful building there. Every community in the Northwest Territories and every nation wants one now. It's modern and really nice. Of course, the reality is that we don't have a reserve in every community. We have only two small reserves in the Northwest Territories.

How do we work this piece of legislation or the system to include modern treaty holders and self-governing nations who are looking at significant investment in the area of infrastructure over the next while?

[Ernie Daniels]

That's a good question again.

There was availability in part of the existing legislation to develop a regulation for self-governing first nations. This work is actually going on right now. I think we're getting closer to having that completed. That regulation, I believe, is in section 141. It's really close to being finalized.

The other thing, especially for the Northwest Territories, is that these sets of amendments right now actually are looking at expanding eligibility. This would be for not-for-profit organizations that are providing services to first nations. Up in the Northwest Territories, we do have a few not-for-profit development corporations that are doing economic work in our communities. I could see that the amendments and the regulations that would need to be done shortly afterwards would do that.

As it exists right now, a number of communities in the Northwest Territories have actually expressed interest in the act and the work we do under the act. As a matter of fact, this morning I have an invitation to go and speak in the Northwest Territories about how more communities in the Northwest Territories and more first nation bands can get involved in becoming part of this work under the FMA and actually end up financing different projects.

I think there is a benefit. It's happening slowly. Hopefully, these sets of amendments will lead to more involvement and more economic activity from the first nations in the Northwest Territories.

[Michael McLeod, Liberal, Northwest Territories, NT]

I have one last question. You've stated that this is optional legislation. We both know that there are some parts of the country that still can't take part, which is being worked on. Could you point to some reasons that first nations in the south who can opt in are choosing not to opt in? Would there be any reasons that stand out?

[Ernie Daniels]

That's a good question. Believe it or not, in this day and age, with this legislation getting royal assent in 2005, there are still some first nations that are not aware of what we do under the act. Other than that, there are first nations that feel they don't have the revenues or the wherewithal to join this act. Once they find out, and once they see that other similar first nations have actually gone in and have actually borrowed, the interest happens. A few of them, some nations, like to work on their own. Some are just learning about it, and some are actually seeing the benefits of joining and want to join now.

It's going to take some time. We have 342 scheduled to the act, which is a high number. It's really a good number in itself. If you grouped 342 municipalities together to take advantage of an act like this, they would gladly do so.

I think we would like to see more first nations join, of course, but from my knowledge, from what I hear, those are some of the reasons why.