In my six years as the chair of the First Nations Financial Management Board, I have spent many hours consulting First Nations and responding to their needs, and over the years I have noticed big changes in those conversations.
When I first started, the conversations were usually about fiduciary duty under the Indian Act. Today the conversations are about financial autonomy and the emerging aboriginal economy. This should not be a surprise because the board I represent and its governing legislation, the First Nations Fiscal and Statistical Management Act, were initiatives that originated with First Nations.
The current attention on major resource projects that involve First Nations’ land is very well timed. These projects represent an opportunity for aboriginal people to break free from dependency under the antiquated Indian Act. If Canada’s economic future is tied to energy and natural resource exports then the reality of First Nation participation stemming from the duty to consult and accommodate needs to be embraced by all stakeholders. Participation in revenue sharing and securing equity participation are seen to be necessary elements of the impact benefits agreements that are the result of the duty to consult and accommodate.
The success of Canada’s economic strategy is linked to inclusion of First Nations in the development of our economy. The major issue that needs to be overcome is First Nations current inability to access the capital markets to raise the debt and equity in the order of magnitude required for the major initiatives being considered. It is in the national interest for federal and provincial governments to support solutions to this problem.
First Nation participation in these projects, through a share of royalties and equity, will enable communities to plan and build healthy First Nation economies around the country.
Great examples of resource revenue sharing deals already exist, for example, the $3.4-billion agreement between the Grand Council of the Cree and Quebec in 2002. As well, British Columbia’s stance on revenue sharing toward new mining projects emphasizes a strong focus on community development to assist First Nations in achieving their social and economic goals.
Healthy and well-managed First Nation economies that break dependency on the Indian Act and empower First Nations to elevate living standards are in the best interests of all Canadians.
This is why top business leaders in non-aboriginal Canada such as John Manley, president of the Council of Chief Executives, have joined our national chief, Shawn Atleo, in urging governments to make First Nations partners and direct beneficiaries of the country’s bounty of resources.
Five hundred billion dollars in resource development projects in Canada involve land in the hands of First Nations. In addition, Canadian courts have steadfastly upheld the federal duty to consult aboriginal communities on all material matters.
These are just two of the great advantages that well position First Nations in bargaining for access to resource revenue.
Some have argued that these advantages should be used in confrontation with Ottawa. I argue partnership will accomplish far more than brinkmanship.
To those who are concerned about the environmental impact of resource developments, I would argue that First Nations are better placed to look out for the environment as active stakeholders in these projects.
Our best path forward is by taking an ownership stake in Canada’s economic future.
So how can First Nations finally take a seat at the table with government and the private sector as key decisions are made affecting all our futures? The truth is, we already are.
Let me point to the prime minister’s announcement of $6.2 billion in loan guarantees for the Muskrat Falls power project on the Lower Churchill River in Newfoundland-Labrador.
Aside from enabling a project that will supply affordable power to two provinces and saving $1 billion in borrowing costs, those federal loan guarantees will make possible important aboriginal participation. The Innu -- after some hard bargaining -- will receive five per cent of the royalties from this project and first crack at local job creation. This means years of steady, predictable revenue.
Aboriginal participation like this will not only set a precedent for governments, it will be an important milestone for First Nations to improve in future resource projects.
Successful endeavours like these, is one more reason why the federal and provincial governments should provide loan guarantees to stimulate aboriginal participation in the economy. Loan guarantees represent far better value for money than the costs of litigations and land claim negotiations.
Unfortunately, there is a widespread perception in financial markets that projects involving First Nations have additional risk. Canada and provinces need to turn this perception around through their support of consultation and accommodation. That is where the organization of which I am chair comes in.
The First Nations Financial Management Board exists to offer support and guidance to First Nations in establishing capacity and confidence. Established under the First Nations Fiscal and Statistical Management Act, the board sets standards and certification.
Several First Nations have already taken advantage of our certification services to greatly reduce borrowing costs. The First Nations Financial Management Board’s standards and certification are being recognized by all stakeholders as meaningful input into an evaluation of that First Nations capacity. The oversight responsibilities of the institutions created by the First Nations Fiscal and Statistical Management Act are providing the confidence the capital markets are looking for.
In my opinion, the Indian Act of 1876 was designed to keep First Nations dependent. The First Nations Fiscal and Statistical Management Act, on the other hand, is designed to foster financial independence for First Nations.
Sound, strong and certified management practice is the best way to eliminate the perception gap that is discouraging investment by venture capitalists in First Nations projects.
Our federal government is recognizing the role it needs to play by loan guarantee. The provinces are also a part of this equation because Crown land is provincial jurisdiction.
If Canada’s First Nations are able to be equity partners in the country’s growth such projects as Northern Gateway and Ring of Fire have a much better chance of coming to fruition.
Partnership and entrepreneurship trump confrontation and rhetoric every time.
Harold Calla is a member of the Squamish First Nation in B.C. and Chair of the First Nations Financial Management Board.