Indigenous and Northern Affairs Committee on June 5th, 2024

[The Chair, Liberal, Patrick Weiler]

I call this meeting to order.

Welcome to meeting number 112 of the House of Commons Standing Committee on Indigenous and Northern Affairs.

I want to start by recognizing that we are gathered on the ancestral and unceded territory of the Algonquin Anishinabe people and by expressing gratitude that we're able to do the important work of this committee on lands that they have stewarded since time immemorial.

Before we begin, I would like to ask all members and other in-person participants to consult the cards on the table for guidelines to prevent audio feedback incidents.

Please take note of the following preventive measures in place to protect the health and safety of all participants, including the interpreters. Use only use the approved black earpiece; the former grey earpieces must no longer be used. Keep your earpiece away from all microphones at all times. When you're not using your earpiece, please place it face down on the sticker provided on the table for this purpose.

Thank you all for your co-operation.

Today's meeting is taking place in a hybrid format. In accordance with the committee's routine motion concerning connection tests for witnesses, I'm informing the committee that all witnesses have completed the required connections tests in advance of the meeting.

With that, I would like to welcome our first panel, which includes, from the Canadian Council for Indigenous Business, Mr. Matthew Foss, vice-president, research and public policy.

From the National Aboriginal Capital Corporation Association, we have with us Mr. Andrew Leach, chair, board of directors, Tale'awtxw Aboriginal Capital Corporation.

From the Association of Iroquois and Allied Indians, we have Grand Chief Joel Abram, who is connecting virtually.

With that, I will turn it over first to Mr. Foss for five minutes for an opening statement.

[Matthew Foss, Vice-President, Research and Public Policy, Canadian Council for Indigenous Business]

Tanshi, Matthew Foss dishinihkaashoon.

Hello. My name is Matthew Foss. I'm a member of the Métis Nation of Alberta.

As vice-president of research and public policy for the Canadian Council for Indigenous Business, I want to thank you, Mr. Chair, and those involved for this opportunity to provide some comments for this study on tax revenues from businesses on first nations territories.

Since 2013, the Canadian Council for Indigenous Business has been conducting research on indigenous economic development corporations and broader indigenous community economic development initiatives. Our 2019 study found that many—about a third—reinvest 21% to 50% of their after-tax revenues back into the community. Some—about 15%—reinvest between 75% and 100% of those revenues into the community. Few—about 20%—reinvested only 0% to 5%.

This funding helps to support infrastructure development, social and business programs, and really anything that the community decides to spend it on.

The main challenges in engaging the community include getting community members' attention and then, once they are aware, helping them understand the role and approach of the indigenous economic development corporation.

Participants cited numerous community benefits from economic development corporations. Over half indicated that the most significant benefits are that they support digital infrastructure and provide employment income. About a quarter pointed to the support for physical infrastructure, keeping members in the community and helping to strengthen the community economy. About 20% highlighted that economic development corporations contribute to a stronger sense of community pride and fund local services and programs.

Communities should be directly receiving a share of the value of the economic activity that happens in their territory. Taxation from businesses operating on reserve provides an opportunity to generate own-source revenues to support community priorities and projects, particularly in the case of non-indigenous businesses, where the income is brought in from elsewhere.

In the current state of affairs, much of these taxes are already generated; they just go to a different source, so it only makes sense to redirect them to the first nations governments. At least in this way they will be able to better support community priorities, including addressing the $349-billion infrastructure gap facing their communities, and work to address other issues like digital connectivity and reinvestment into the many social initiatives that exist. Turning the revenues over directly to first nation governments helps to strike the right balance between taxation and facilitating indigenous entrepreneurship.

Indigenous entrepreneurs provide employment and income for themselves and other community members. This enables diversification of the local economy, skills development, employment opportunities and, most importantly, positive role models for people to aspire to. There is a need to ensure that these efforts keep them in mind.

First nations entrepreneurs are already reinvesting their revenues back into their communities and other priorities through social finance and charitable initiatives. Some companies, like Birch Bark Coffee Company, which reinvests a portion of its revenues from every bag of coffee sold to support indigenous clean water initiatives, do this consistently. Others, such as artists like Patrick Hunter, will engage in initiatives like developing designs for orange T-shirts and donate those revenues to support indigenous children's initiatives.

Many first nations entrepreneurs and people hold reservations around taxation. While first nations people share out of abundance, taxation differs from that. While taxation did exist within some pre-contact indigenous societies, these were relatively few and far between. For the vast majority of first nations, sharing was done more informally and aligned with the cycles of abundance and scarcity. It was done when needed to ensure that there was enough to go around for everyone and that having enough was not always a given.

Given this, and the fact that indigenous entrepreneurs already face a number of barriers relating to taxation and access to finance in general, it's important not to create a situation in which communities require double taxation and load burdens on businesses. Simply providing first nations with the ability to raise revenues from activities on their territories risks overtaxing indigenous businesses and entrepreneurs.

Already, indigenous entrepreneurs have highlighted in our interviews that a predatory nature can exist within some first nations communities when entrepreneurs do not feel supported within their communities. Having the money that they already pay in taxation go directly to their communities would alleviate some of these pressures.

It's also important to note that the transfer of tax jurisdiction does not absolve the federal government of its fiduciary obligations to first nations people and communities. Many communities cite concerns that their federal funding will be cut after they start generating their own-source revenues. We need to clarify that own-source revenues will not impact federal transfers, as is the case for provinces.

I think it's important for the Government of Canada to clarify this misunderstanding of their obligations to first nations people and I would call on the government to do so. As things stand, this fear can pose a major impediment to engaging with resource development and broader economic development.

[The Chair, Liberal, Patrick Weiler]

Mr. Foss, I'm going to have to ask you to wrap up, please.

[Matthew Foss]

Yes.

There's a need to continue discussions around the money that's being held in trust for first nations communities by the federal government and how that's currently being allocated.

With all that being said, thank you for the opportunity to lend the Canadian Council for Indigenous Business's voice and that of our members to this important topic. I look forward to questions that you may have.

Meegwetch.

[The Chair, Liberal, Patrick Weiler]

Thank you very much, Mr. Foss.

Next, I will hand over the floor to Mr. Leach for a five-minute introductory speech.

[Dr. Andrew Leach, Chair, Board of Directors, Tale’Awtxw Aboriginal Capital Corporation, National Aboriginal Capital Corporations Association]

Thank you.

Hello, everyone. It's good to see you all today. It's a real honour to be here.

I'm with the National Aboriginal Capital Corporations Association. We have a head office not too far from here.

I'll summarize my notes that I submitted, so I'll be done in five minutes. I saw how many pages Matthew had, and I don't want to be cut off. I'll quickly summarize what I have.

First of all, NACCA has been around for 30-some years. We basically lend money, development dollars, to indigenous entrepreneurs across Canada from coast to coast to coast.

In the early 1990s, the federal government put out $200 million or so to these capital corporations across Canada. We lent that money out and were paid back, and then we lent that money out and were paid back. We have grown that $200 million into $3.4 billion of loans over the last 30 years.

Where I think we can bring value to this table is that in lending money to indigenous entrepreneurs from coast to coast to coast, we get information from them when they fill out an application. Just think about the information that you would have to put on a loan application. We have boots on the ground across the country. When people don't pay their loans, we know.

When COVID hit, it was very important for the government to know what was going on out there. What better source would there be to know who's paying their loans in that given month? Who would collectively have that information across the country for indigenous communities in the business sector but NACCA? That's the nature of our business.

I think that's the value that we can bring here today. It's knowing the information that we've been able to collect with the individual financial institutes across the country. It's collectively what NACCA has been able to provide on what's going on out there and the most and latest information on what sectors are growing, what types of businesses are there, how many employees are being created, what types of revenues are being generated, who's paying their loans and stuff like that.

I think what we've been able to see over the last 20 years are the indigenous communities that are most active and, dare I say, aggressive in applying the new laws and policies that have been coming down. Those include the fiscal management act and the land codes that have been created through the land management act, and they have had tremendous benefits. We know the constraints of the Indian Act. We've heard this for too long now. We know that these laws have been applied, and those who have been applying them the best have been able to really grow in their communities. The correlation between the amount of activity that's going on in a community and their ability to apply those new laws and policies is very clear.

We think that this idea of moving forward to the taxation question and how that might roll out and what could be done is a very important question. We do believe that those laws and those policies have created a better environment. We're trying to live within the Indian Act, basically. Creating these things will only do well for those who are going to apply it.

This idea that now that we can extend it to a tax regime for businesses that are doing work in first nations' backyards is a good thing. The three that you brought up in your motion—I just want to be sure of my time, by the way—included the excise taxes, the ATM casino sales and the carbon taxes.

The thing I want to say about excise taxes is that through the loans we give, a lot of those clients are providing services to first nations, and they would be tax exempt. I'm not so sure of the idea of getting tax revenues through excise taxes on reserve from tobacco sales, cigarettes, etc., but if there's something that can be done, great.

With respect to casinos and ATMs, obviously there are a lot of non-indigenous people who frequent these places. There's probably a better tax base from that.

Finally, on the carbon taxes, it's an issue for you guys to deal with in Ottawa. We can see that a lot of those industries are right in the backyard of first nations communities. If some regime could be created that could provide benefit back to these communities so that they could create the infrastructure that's needed, it would just seem to make sense, especially since many of those industries are affecting the traditional way of life and the food sources of those people.

I'll leave it there. Thank you very much.

[The Chair, Liberal, Patrick Weiler]

Thank you very much, Mr. Leach. You were right on time for five minutes. Thank you for that.

Next up, I'd like to turn over the floor to Grand Chief Abram for a five-minute opening statement.

[Grand Chief Joel Abram, Association of Iroquois and Allied Indians]

Thank you very much. Hopefully, you can hear me in the room. I know that there were a few issues.

Thank you very much for inviting me to say a few words in front of the committee today. I appreciate that.

My name is Grand Chief Joel Abram of the Association of Iroquois and Allied Indians in Ontario. I currently hold the portfolio of economic development within the Chiefs of Ontario for the province of Ontario.

I chair the chiefs committee on economic development. We've been focusing on a few different items there around the excise tax—casino, ATM and carbon taxes, but perhaps I can say a few words before that around economic reconciliation and about landholding and the tax base.

One of the areas I really want to talk about here is this: How does Canada hold fiduciary obligations for first nations? It is true the way Canada came to claim most of their land. Our first nations understanding of treaties is that they were out of sharing rather than out of surrender. However, the interpreters of those told first nations people one thing and government another.

We know that the doctrines of supremacy also influenced how Canada claimed not only legislative power over first nations but also had claims over land and those sorts of things. We know that those doctrines of superiority are based on racism from the 1400s coming from papal bulls. We think it's long past due that we started to unwind these things, that we decolonize and start to recognize first nations sovereignty and jurisdiction.

At our Chiefs of Ontario committee, we're focused on things like excise tax sharing and its possible feasibility. For instance, we have Grand River Enterprises, which pays hundreds of millions of dollars in excise taxes to the federal government, but the Six Nations community where that comes from doesn't really get those excise taxes back in any form from the federal government.

We have talked about focusing on the excise tax. That work has been ongoing. We did a legal feasibility study recommending that we move forward with a FACT tax-sharing framework mentioned in the federal budget. Also, we're exploring excise tax revenue-sharing options that could retain profits within communities, which could then be utilized for community needs, while the tax-collecting powers and responsibilities would remain with the Canada Revenue Agency.

We're also looking forward to participating in and providing input to see the federal FACT tax-sharing and framework creation. We also hope that the federal government's consultation framework for the creation of the FACT tax-sharing framework will include provincial government representatives as well to address FACT taxes remitted to the province.

Regardless of whether section 89 applies to the excise tax, it's up to the federal and provincial governments to create new revenue-sharing agreements with first nations leaders and communities to ensure that FACT tax profits are allotted to first nations communities' needs.

Around the casino and ATM taxes, from Bill C-92 and the recent Supreme Court decision around that, when Quebec challenged its legitimacy, we do know now that the federal government has the power to legislate even in areas where provinces have the mandate—for instance, in health. Bill C-92 was about child welfare, but the federal government did give jurisdiction over child welfare to first nations. They could do the same thing with regard to gaming. That's something that I think we should take a serious look at.

On the topic of casino taxes and ATM taxes, the problematic provincial cartel system, as we like to call it, hurts first nations gaming hosts from maximizing their profits.

The federal government can also provide partnership opportunities—

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Mr. Chair, I must interrupt.

Interpretation has stopped. We were informed that the poor sound quality was already making interpretation difficult. I want to thank our interpreter for having continued as long as she did, despite the circumstances.

Thank you.

[The Chair, Liberal, Patrick Weiler]

Thank you, Mr. Lemire.

Grand Chief Abram, I understand that we're having some trouble with the sound on your microphone. It's not coming through very clearly.

Perhaps we can have the technicians call you and see if they can find a way to clarify your sound and then perhaps bring you in after that's been done. Unfortunately, we can't continue unless your sound is coming in clearly.

At the very least, perhaps we can bring you back in for the second round of questioning as well as to finish your opening statement for another 40 seconds or so.

[Grand Chief Joel Abram]

Thank you.

[The Chair, Liberal, Patrick Weiler]

With that, we'll move into the first round of questioning, starting with Mr. Zimmer for the Conservative Party for six minutes.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Thank you, Mr. Chair,

Thank you to our witnesses, Grand Chief Abrams, Matthew Foss and Andrew Leach.

I think we have some Edmonton Oilers fans with us today. I think so, by the smiles. I'm another one, so let's hope.

The one thing that I really appreciated from Grand Chief Abram is the discussion about economic reconciliation. We've had previous committee meetings here talking about reconciliation and how important economic reconciliation is to reconciliation. To you all, how important is economic reconciliation to reconciliation?

We'll start with Mr. Foss, and we'll go around.

[Matthew Foss]

It's fundamental. Until indigenous communities are able to participate effectively in Canada's economy and have the means to self-direct revenues to their own priorities, have businesses that are successful and have opportunities for their children to be successful, since they're the fastest-growing population in the country, we won't see the social challenges that exist within those communities rectified.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Mr. Leach, what are your thoughts?

[Dr. Andrew Leach]

You're talking to a business guy, so obviously there's a slant there. I think that economic reconciliation is the key to reconciliation. I think that we can do better for ourselves than anybody can do for us.

The biggest issue that we have is closing that economic gap. By focusing on that in terms of reconciliation, I think we all can get on board. Whatever background you may have, we need to deal with that. By our having the best control over that, I think you'll get the best outcomes.

I believe it is the central piece and that it is the path for us to move on for all of reconciliation.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

The grand chief is not available yet, so I'll move on.

We have seen and heard from countless indigenous communities that although there are resource developments occurring within their boundaries, they often find it difficult to access capital.

Mr. Foss, you've spoken about how providing that capital has made such a difference in those communities, but first nations need capital to accelerate their economic growth. They need capital to increase first nations jobs, promote first nation residential development and help mitigate the infrastructure gap facing first nations.

We're talking about existing tax revenues. We're not talking about an addition, because I think you said, Mr. Leach, that adding taxes isn't necessarily great for business or great for the communities. What ways could existing tax revenues from businesses on first nation territories be placed under the control of those first nations themselves, or be better directed so as to increase resources available to first nations?

Let's start with Mr. Leach this time.

[Dr. Andrew Leach]

As I mentioned on the three that were cited in your motion—the excise, the casino and the carbon—those resources, if they were shifted over towards First Nations.... I know this first-hand. When we get control, we will be responsible. We will be very judicious in it, and we'll start thinking. We see it. It's not like all those that are doing well are having a big party; they're putting the money back into their communities.

Where we're really facing that shortage is in infrastructure. I do believe that if there was a plan put in place to target something like infrastructure, you would see the money going towards that, because infrastructure is what provides the vehicle for more activity.

If you can get rid of the legislative issues, which we've been doing to date, and now start dealing with the infrastructure issues, we're going to have a machine going. My concern is that if we lag on the infrastructure, we're going to slow down the train. To me, having a way to target it to the infrastructure is going to be smart for first nations and smart for Canada.

Thank you.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Please comment, Mr. Foss.

[Matthew Foss]

There's so much to say on this type of topic.

First and foremost, the communities themselves need to have control over revenues. To do anything else is just another form of the colonialism and paternalism that has dogged the communities since settlers came over.

Access to capital is a fundamental challenge. More than 50% of indigenous businesses cite that as one of their biggest challenges to operating. There is a lack of infrastructure and there are challenges around housing and clean water that exist in these communities. As Mr. Leach said, the importance of letting the communities dictate where those revenues go.... We can't, as an outsider to any of these communities, dictate and tell them the best thing they can do or what to spend their money on. They have to determine, based on their priorities, what is most important to them at this time.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Okay. Thank you.

[The Chair, Liberal, Patrick Weiler]

That's time. Thank you very much, Mr. Zimmer.

Next up, for the six-minute round, we have Mr. Battiste. You have the floor.

[Jaime Battiste, Liberal, Sydney—Victoria, NS]

Thank you for your testimony.

One of the things we're looking at is large infrastructure gaps in first nations communities across Canada. One of the unfortunate things, because of the Indian Act and the history, is that many communities do not generate any taxation revenues to pay for things like roads, infrastructure and all the things that first nations communities need, unlike municipalities that have the ability to tax people for land, for homes and for all of these things. That's not something, generally, that chiefs want in a first nations community.

Budget 2024 committed to moving forward with an opt-in fuel, alcohol, cannabis and tobacco tax framework. Do you think there's an appetite for this from first nations communities across Canada? If so, how do you see that working?

That is for either one of you.

[Dr. Andrew Leach]

I'll go first. Thank you for the question.

What I've loved about some laws that have been passed to date is the opt-in option. I've heard many communities say, “We don't like that. We don't want that here.” I say that's great. It's an opt-in option. They don't have to have it. However, those who have opted in and who have applied it seem to have done quite well with it. They seem to be quite satisfied with it.

I do wonder about the opt-in option in which we're basically saying that there are constraints with the existing environment, and you don't have to get involved in this, but if you do, you can do it this way: We're going to basically transfer the rules that are over here to over here, if you want. If the leaders who will jump in there right away can start with it and learn from it, then we can continue to tweak. I think that's what we've done so far. If we continue down that path, we'll not only learn from it, but also do better by it from an opt-in option. That's my thought.

[Jaime Battiste, Liberal, Sydney—Victoria, NS]

Mr. Leach, before I go on to Mr. Foss, can you give me some examples of first nations communities that have utilized tax sharing of this sort? You said there were some that are doing well once they have done this. Can you give me some examples of how that's worked?