Mr. Chair, I am thankful for the opportunity to speak this evening to explain some of the impressive work our government is doing to drive economic development on reserve to my colleagues. When we talk about that, one of the biggest issues is access to capital. Right now our committee is in fact conducting a study on access to capital. We have heard some very interesting and impressive testimony to deal with some of the issues that are faced by first nations communities.
When we are talking about access to capital, we are talking about funding to start a small business or to expand a business, to perhaps purchase a family home, or to leverage real property and entice investors from off reserve. This remains an enormous problem due to section 89 of the Indian Act, which prevents fee simple ownership. Therefore, it really limits the use of property as a security when trying to negotiate that type of financing. That type of financing is critical for most businesses off reserve, the ability to leverage real property. This is essential for entrepreneurs, small business and really anyone who is seeking any amount of capital to start or expand a business.
Our government understands how this can limit the potential of first nations, so we are working with willing partners to try to find a solution to the problem.
One of the solutions we heard about a bit earlier was the First Nations Land Management Act. This is a great piece of opt-in legislation. It allows a participating first nation to actually opt out of 34 land-related sections of the Indian Act. It gives a first nation the ability to manage its lands and resources. It also gives it the ability to operate at the “speed of business”, a phrase we have heard many times. The inability to operate at the speed of business has been an incredible impediment to first nations communities.
Another important tool is the First Nations Fiscal Management Act. This is also opt-in legislation. This encourages first nations across Canada to establish property tax systems and strengthen fiscal management. It provides them with increased revenue raising tools, strong standards for accountability and access to capital markets available to other levels of governments. The act does this in three ways, through three aboriginal financial institutions: first, the First Nations Tax Commission; second, the Financial Management Board; and three, the First Nations Finance Authority. I will talk a bit about each.
The First Nations Tax Commission creates legal, administrative and infrastructure framework for first nations to establish property tax regimes. Property tax allows a first nations government to have a reliable stream of income that it can leverage into loans with other financial institutions to do all kinds of improvements on reserve.
The First Nations Financial Management Board certifies the financial management systems and performances of individual first nations. This ensures good governance and fiscal responsibility. It assists first nations in developing the capacity to meet their financial management requirements, provides the tools and guidance that will instill confidence in first nations financial management and reporting systems.
Finally, the First Nations Finance Authority issues bonds to borrowing first nations, secured by the revenue coming in from things like property tax and other revenues. The First Nations Finance Authority is a non-profit aboriginal government-owned and controlled institution built to provide all first nations and aboriginal governments, big or small, urban or remote, resource-rich or not, with the same finance instruments that other levels of government in Canada have at their disposal to build safe, healthy and prosperous communities. These bonds are sold on the market and provide participating first nations with an innovative way to access the capital required for economic development.
The First Nations Fiscal Management Act has been very successful, with strong and sustained demand from first nations to participate in the regime.
To build on this success, since 2007, the First Nations Financial Management Board, the First Nations Tax Commission and the First Nations Finance Authority have been working in concert with our government on a series of recommended changes to the act. These changes are designed to improve the legislation, reduce needless red tape and increase investor confidence. The overall goal is to improve the economic opportunities and well-being for first nations communities. In fact, we heard directly at committee during our study that changes were needed to make this operate more efficiently.
It makes me proud to say that Bill C-59, the budget implementation act, introduced on May 7, proposes 43 administrative and technical changes to the legislation. These changes would streamline participation in the regime by providing for first nations to be added by ministerial order rather than an order in council.
It would eliminate the duplication and needless red tape, and strengthen the confidence of capital markets and investors. For example, one proposed amendment would clarify that all certified first nations must remain in compliance with the certification requirements of the financial management board. This proposed legislation could have a significant and positive effect on first nations and I urge all hon. members to support it.
It is projected, and these projections are really quite exceptional, that if the act is amended as suggested, by 2020, a mere five years from now, 235 first nations will have opted into the regime, $70 million annually will be collected in property taxes, 100 first nations will have received certification from the First Nations Financial Management Board, and $1 billion in borrowing room will be available to borrowing members. This is the example of being able to leverage that revenue stream and turn it into funding for infrastructure projects on first nations reserves. This is an exceptional opportunity.
To date, the regime has been very successful and I welcome the opportunity for more first nations to become active participants. Demonstrating the potential advantages for first nations of this regime, in June of last year, 14 first nations from British Columbia, Manitoba, Nova Scotia and Ontario were part of the first nations finance authority's inaugural $90 million bond. The proceeds of this bond are being used for vital things, such as building roads, water, waste water systems, public buildings, as well as refinancing existing bank loans and economic opportunities both on and off reserve.
In fact, in some of the testimony heard at committee, this would allow a first nation community to save $140,000 a month, which is equivalent to building one house on reserve. The bond issuance was a significant achievement for first nations and the first nations finance authority.
Chief Terry Paul of the Membertou First Nation in Nova Scotia, which raised $21 million through the bond, and the chair of the FNFA, stated:
Today, First Nations have made a significant step forward as economic equals with other governments. Over the long-term, this will have a profound and positive impact in our communities.
The first nations finance authority is currently working toward issuing its second bond, which it expects to exceed $100 million later this year. Access to capital is the key to unlocking the economic potential of our first nation communities.
I now have some questions.
On May 7, 2015, the government took, as I stated, another important step to promote prosperity in first nations communities and introduced Bill C-59, which includes a number of amendments to the First Nations Fiscal Management Act. Earlier this year, the aboriginal affairs committee heard testimony from Manny Jules, Harold Calla and Ernie Daniels, all of whom had worked hard to identify ways that the act could be improved.
Could the parliamentary secretary share with the rest of the committee of the whole what the proposed amendments to the First Nations Fiscal Management Act intend to achieve?
