Mr. Speaker, I rise today to speak in support of Bill C-20, the first nations fiscal and statistical institutions initiative. The act would provide for real property taxation powers of first nations, create a first nations tax commission, first nations financial management board, first nations finance authority and a first nations statistical institute, as well as making consequential amendments to other acts.
The bill was tabled in the previous Parliament as Bill C-23 but was not passed before dissolution. The purpose of the act is to create the above-mentioned institutions with the intention that those institutions provide first nations with the tools needed for economic development primarily by facilitating access to capital markets for much needed infrastructure development.
We should make no mistake that infrastructure development is sorely needed on first nations right across the country. I know this first hand. In my riding of Desnethé—Missinippi—Churchill River there are over 30 first nations and 108 separate reserves. Many are in desperate circumstances with incredible and severe problems. Any access to additional tools for economic development and improvements to infrastructure are a positive thing.
The four institutions that would be created by this act are designed to provide participating first nations with the tools they need to build stronger local tax bases, infrastructure and economies. Economic independence is intended to be pursued by improved access to private capital.
Participation will be restricted to ensure that only those first nations that have demonstrated the requisite managerial and financial capacity will have access to the borrowing capacity of these new institutions. The first nations financial authority will allow participating first nations, like local governments, to raise long term private capital at preferred rates for infrastructure development. They will do so by securitizing a portion of their potential real property tax revenues generated under the bill. It is estimated that $120 million in debt financing will be raised over the first five bond issues. These funds will allow first nations to develop infrastructure that supports business and investments.
At this point I would like to stress that the legislation does not provide federal government credit backing or guarantees and that borrowing participation is voluntary, as are the advisory services. First nations choosing to participate in the first nations finance authority will pool together their capital. The FNFA will act as a central borrowing authority by selling bonds on the strength of the first nations collective credit. They will attempt to achieve an A credit rating.
The qualifying and participating first nations will be required to guarantee one another's debt. The finance authority will establish eligibility requirements, issue first nations debentures and re-lend the proceeds to those first nations participating in the borrowing. In concert with such borrowing, the on reserve property tax system will be gradually expanded to provide debt service cash flow. The result will be to provide qualifying first nations with the comparable credit for infrastructure expansion to that available to municipal authorities elsewhere in Canada.
The second new institution that would created under the act, the first nations tax commission, is essentially the natural evolution of the current Indian Tax Advisory Board. The ITAB has worked to build awareness of the real property tax system and provide the tools for its implementation. The FNTC will have the authority to approve first nations tax bylaws, a power that is currently exercised by the minister alone. The FNTC will also provide sample bylaws, training, education and an alternative dispute resolution process to prevent and resolve disputes.
At present, 100 first nations levy property tax, collecting $44 million annually from 28,000 taxpayers. The FNTC will be responsible for the development and regulation of first nation property tax systems. It will assume responsibility for the approval of bylaws, ensure compliance and provide dispute resolution mechanisms for on reserve taxation, providing an alternative to the Indian Act property tax system.
Another new institution mandated in the bill is the creation of the first nations financial management board. The initial task of this new institution will be to provide the independent and professional financial management assessment services required by participating first nations. It will provide professional advice to those first nations that have entered the FNFA borrowing pool and provide training and services related to policy development for all first nations.
The final new institution that would be created under Bill C-20 is the first nations statistical institute. This organization is intended to provide statistical data and analysis of the social, economic and environmental conditions of first nations. It will supplant Statistics Canada in the development of statistical information, support borrowing, credit rating, property taxation and provide information for marketplace investors. It is intended to address the current lack of capacity of first nations to maintain statistical systems needed to match their growing local decision making responsibilities.
I must admit that I have some problems with the creation of this institution. This institute will clearly duplicate the services that are supposed to be supplied by Statistics Canada, a federal agency that receives $600 million per year in funding.
Why does this institute have to be created? The answer is not entirely clear, but to me it would seem to indicate a failure on the part of StatsCan to keep adequate information on first nations across the country.
Although I have stated that I support this bill, I also am somewhat worried about the costs associated with the creation of the new institutions I have talked about. It is estimated that the cost over the first five years will be $67.3 million. This is based on a start-up of $9 million and operational costs over the five year period of $58.3 million. The objective of the financing authority is to be self-financing. I sincerely hope that this is the case. There are also opportunities for some cost recovery with the other institutions, although break-even, by even the best estimates, will occur in 2010.
Another concern I have is that this bill may also underscore a trend we are starting to see develop, namely, a schism between have and have not first nations. Only time will tell in this regard.
It cannot be stressed enough that this bill is an initiative of first nations leaders from across the country. These leaders are seeking the gradual removal of their communities from the Indian Act. They blame much of the on-reserve poverty, joblessness, and the minimal wealth creation on the poor quality infrastructure and institutional limitations of the Indian Act.
Mr. Manny Jules, spokesperson for the first nations fiscal institutions initiative, has said:
This legislation is the bedrock on which you can break the dependency cycle. The creation of the First Nations Tax Commission, First Nations Finance Authority, First Nations Financial Management Board and First Nations Statistical Institute will provide the information, certainty, a regulatory framework, confidence and infrastructure required to attract investment to First Nation lands.
The hallmark of this bill is its optional nature, which recognizes the diversity among first nations. This legislation will apply only to those first nations that have chosen to access the full range of services offered by the institutions in the areas of property taxation and financial management. Solid capacities in these areas are essential for the future of first nations from coast to coast.