Implementing the BC Declaration on the Rights of Indigenous Peoples Act

The Indigenous Business and Investment Council
Regional Programs & Engagement Branch
Ministry of Jobs, Economic Recovery and Innovation
Presented by Ernie Daniels, FNFA President & CEO

February 9, 2021

On behalf of our Chair, Chief Warren Tabobondung, and our Board of Directors and members of
the FNFA I am pleased to be with you today and to provide some thoughts on implementing the
United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) and the BC Declaration
on the Rights of Indigenous Peoples Act (Declaration Act).

I am aware that the Declaration Act mandates the provincial government, in cooperation
with Indigenous peoples, to bring provincial laws and policies into alignment with UNDRIP and to
develop an action plan. The Act also supports new agreements between the Provincial
government and Indigenous governing bodies on decisions that directly affect Indigenous
peoples. These, of course, could have a financial component.

The FNFA and the First Nations that govern it (47 of the 119 Borrowing Members of the FNFA are
from BC) has an interest in ensuring that UNDRIP is implemented in such ways that will continue
to support and expand the essential service that the FNFA provides to Indigenous governments.
The FNFA, in its current form, has been in existence since 2005 and provides consistent and
predictable access to low-cost public financing for Indigenous governments across Canada.
Currently we have over $1.3 billion in outstanding bonds.

We are certainly in exciting times. Indigenous peoples are rebuilding their governance structures
within Canada based on their inherent rights and ancient legal orders. The FNFA is pleased to
have been a product of this work as it relates to the needs of contemporary Indigenous
governments to have access to the capital markets as do all governments in Canada, indeed, as
do all stable governments, globally.

As a country and as a province, in order to support ongoing Indigenous governance reform and
nation rebuilding we will, in fact, need more mechanisms and tools to support the transition to
self-government based on the recognition of rights. UNDRIP and the Declaration Act, will help.
For its part, the federal government will also need to continue to show leadership. Nationally,
the government has introduced legislation like the Declaration Act, Bill C-15, which had first
reading.

With respect to fiscal matters, the FNFA is an example of one of the earlier mechanisms that has
been established to support self-government and was accomplished through the enactment of
the First Nations Fiscal Management Act (FMA). I understand that you have already heard from
the two other institutions that the FMA establishes: namely the First Nations Financial
Management Board and the First Nations Tax Commission. All three institutions have our
operations centered here in BC where they originated. The FNFA is located in West Kelowna
given the origins of the FNFA through the work and leadership of Westbank First Nation.

As part of Indigenous nation rebuilding within Canada, there is an evolving fiscal relationship with
the Crown as well as among Indigenous groups. Change has been incremental along a continuum
of governance options for reform (e.g., Indian Act governance, sectoral governance initiatives,
comprehensive governance arrangements). Today, as the Province considers its action plan to
implement UNDRIP within the scope of its jurisdiction it is important that we all continue to build
on our successes and not try to reinvent the wheel. We need to take stock of what has already
been accomplished, and why, and build upon what is working.

In the early 1990s when the First Nation’s fiscal institutions were being designed, the framers of
the FMA were very cognizant that a UNDRIP was being contemplated. Early drafts of a UNDRIP
were being circulated at the time. Everything was connected. It always has been. With a vision.

I say this, as it may not always be obvious where aspects of the nation rebuilding project have
taken place over time in different parts of the country and with different people. The work may
seem disconnected or separate. But it is not. For example, when the FMA was being framed it
was always the vision of those leading the initiative that, over time, all First Nations would
eventually, to some degree, be self-governing. So, while the FNFA borrowing regime under the
FMA on its face might seem to be principally for Indian Act bands, the vision was never that its
current members would remain under the Indian Act and that future ones would be under the
Indian Act. Indeed, the long-term vision was that any recognized Indigenous government, or its
institutions, would be able to benefit from collective borrowing through the FNFA. This is
important to understand in terms of the larger process of nation rebuilding and the ongoing
transition from governance under the Indian Act to something else contemplated by UNDRIP
based on rights. It is important to understand this because the actions the BC government takes
now can either hinder or support the nation building work that has been ongoing well before
UNDRIP was adopted or the Province passed the Declaration Act.

I am sure many, if not all, of the presenters before me have already identified some of the most
relevant articles of UNDRIP to this conversation on fiscal matters. So, I apologize if this next part
of my presentation is a bit repetitive. I will provide our take on what these articles mean in
practical terms for implementation and for the FNFA.

Article 38 sets out that:
“States, in consultation and cooperation with indigenous peoples, shall take the
appropriate measures, including legislative measures, to achieve the ends of this
Declaration.”

This article is important because it means Indigenous people must be consulted but it also means
that it is expected that states – and in this case we can read the national federal government
along with sub-national governments such as a province – will take legislative measures. Not just
overarching and general legislation such as the Declaration Act, but legislation on specific matters
that require it. I am highlighting this because this is exactly what the FMA is, nationally. Federal
legislation contemplated by UNDRIP to, in this case, create and support the establishment of
three institutions, for which there was no other practical way to constitute them, then or now.
Two of these are shared governance models, FMB and FNTC, and the third, the FNFA, is a not for-profit special purpose corporation governed by its members – all First Nations. The legislation
was necessary, and Parliament was the place to make it.

Article 3 is also a very critical article. It is the one that speaks to the right of self-determination:
“Indigenous peoples have the right to self-determination. By virtue of that right they freely
determine their political status and freely pursue their economic, social and cultural
development.”

Article 4 builds on this and sets out:
“Indigenous peoples, in exercising their right to self-determination, have the right to
autonomy or self-government in matters relating to their internal and local affairs, as well
as ways and means for financing their autonomous functions.”

Read in conjunction these two articles speak to what we call in Canada the “inherent right of self government” that is protected under section 35 of the Canadian Constitution. Article 4 also
specifically addresses, “financing their autonomous functions.” Which, of course, is what the
FNFA sets out to do in terms of financing autonomous functions through borrowing. Other
financing mechanisms are also, of course, contemplated – taxation powers, revenue sharing and
transfers between governments.

Article 5 of UNDRIP says:
“Indigenous peoples have the right to maintain and strengthen their distinct political,
legal, economic, social and cultural institutions, while retaining their right to participate
fully, if they so choose, in the political, economic, social and cultural life of the State.”

While Article 5 speaks to what we could say is a right of independence for an Indigenous people
(a group or nation) to organize, it also recognizes that an Indigenous people may desire to work
with the state or other Indigenous groups. This is important because being distinct, does not
negate the importance of interconnectedness and interdependency. Being a part of the national
fabric and to work both with each other and other state actors (i.e., the federal government and
provinces) is what cooperative federalism in Canada is all about. The FMA is an excellent example
of this. A legislative mechanism to accomplish this goal, with the FNFA as an example of an
institution that makes it members stronger financially by coming together than when they are
acting on their own. While the FMB provides certification and, if needed, intervention services.

Article 19 is an article that is often referred to:
“States shall consult and cooperate in good faith with the indigenous peoples concerned
through their own representative institutions in order to obtain their free, prior and
informed consent before adopting and implementing legislative or administrative
measures that may affect them.”

There are several articles in UNDRIP that deal with Free Prior and Informed Consent and this is
one of them. What is important to understand here with respect to the FMA and the FNFA is
that using federal legislation to achieve our objectives in establishing institutions to support
Indigenous governments was a deliberate and considered choice and an exercise in self determination. This is not the same as where a state government may be proposing in legislation to do something that was not requested or agreed to with an Indigenous people, and where they may, or may not, have been sufficient interaction during the policy phase of the initiative before the legislation was introduced.

Finally, the last article I will highlight, is article 39 which is very broad and says:
“Indigenous peoples have the right to have access to financial and technical assistance
from States and through international cooperation, for the enjoyment of the rights
contained in this Declaration.”

One way to do this, of course, is using legislative and regulatory initiatives such as the FMA.

At the end of my presentation, I will provide some specific FNFA issues that the Province might
consider when thinking about the implementation of UNDRIP. But before I do, and for some more
context, I want to provide some additional background on the origin of the FNFA and our mandate.

In the early 1990s Westbank First Nation wanted to lever its newly acquired property tax
revenues to build much needed infrastructure – specifically a new water system for its most
populous reserve (approximately 6,000 people and dozens of businesses). Going to a bank was
not a good option, if an option at all. Given that most of the money for the water system was
going to come from property taxes collected over many years, the Westbank First Nation
property tax office contacted its municipal neigbours to see how they borrowed. It was suggested
Westbank contact the (BC) Municipal Finance Authority to inquire if they could provide services.
Westbank did this, and it was explained to them that it was not the mandate of MFABC to include
First Nations in their borrowing pool. Soon thereafter the idea was floated that First Nations
should establish their own pool. And to do so nationally. The idea of an FNFA was born.

As this idea was explored further it became clear that there were serious limitations to borrowing
under the Indian Act and the borrowing powers of “bands”, whether borrowing on their own, or
collectively. Even then, if a Band could go to the market legally, no Band was, or is to this day,
big enough to realistically issue debentures on their own. Even for the self-governmentsthat now
have the recognized legal power to borrow, it is not a realistic option. At the time, it was also
identified that there was a lack of institutional structure to support First Nations in their
borrowing needs. Bands were basically beholden to the banks and this was just the “way it is”.
Their own “special case”. Neither a government, nor a corporation and not a private client.

The idea started to crystalize. The work began to create a not-for-profit institution like the
MFABC, to pool the borrowing requirements of First Nation governments to provide access to
public debt financing like other sub-national governments in Canada and to do so using federal
legislation. This took a lot longer than expected and there are some important lessons here. But
once the First Nations Fiscal Management Act became law, the legislated FNFA established, and
all the regulatory pieces were in place, the FNFA grew exponentially. Today the FNFA enjoys a
credit rating of Aa3 with a stable outlook from Moody’s Investor Services, and a rating of A+ with
stable outlook from S&P Global Rating.

It is the objective of the members of the FNFA, that the FNFA be the institution of choice to raise
capital for all Indigenous Governments in Canada and the institutions that support them. Over
time our mandate will continue to evolve, and this is an area where the Province can help.

When implementing UNDRIP and considering plans and initiatives with respect to the recognition
of rights and the ongoing work of reconciliation, we ask that, where appropriate, you please
acknowledge and accommodate the role of the FNFA. Further, where plans could impact the
borrowing capacity of Indigenous groups, or where you intend to recognize Indigenous
governments and their associated institutions, that you support their ability to utilize and
become a part of the FNFA. The following are some specific issues to consider.

Access to FNFA by Self-governing Indigenous Groups

As mentioned previously, the framers of the FNFA and the other fiscal institutions were very
cognisant that self-governing First Nations would need to use the FNFA and some First Nations
would, in fact, be borrowing through the FNFA as Indian Act bands before becoming recognized
as self-governments (either through stand-alone self-government agreements or as part of
modern treaties). Unfortunately, this is not yet the case.

Of the 29 self-governing Indigenous groups in Canada (some are former Indian Act bands and
others are an amalgamation of former bands in accordance with their historical pre-contact tribal
affiliation) not one is borrowing through the FNFA. This is a national issue with a BC dimension.

There is an outstanding issue with respect to First Nations that have entered into modern treaty
agreements with Canada and BC, and specifically those who want to become a part of the FNFA.
Without going into all the details here, the issue has to do with the construction of the
Constitutionally protected agreements and the role of the FMB with respect to intervention and
the internal financial management of an Indigenous government. I understand a fix to this
problem is being finalized and we encourage the Province to move quickly along with the other
fiscal institutions, Canada and the affected First Nations to resolve this matter as soon as possible.
To do so in the spirit of implementing UNDRIP and good governance.

For those groups that are actively negotiating modern treaties or rights recognition agreements,
either as bands or part of larger tribal groupings, I also understand that there is new language
that can be used in agreements that would recognize that a former band can continue to use the
FNFA or use it in the future if they currently are not. Ensuring this option is in all agreements, is
consistent with implementing UNDRIP and demonstrates an understanding of the
complementary role that First Nations institutions can play in regulating and supporting aspects
of Indigenous governance as an exercise of self-determination.

Securitisation of Revenue Sharing/Benefits Agreements

In addition to the recognition of the structure and powers of self-governments as I have just
described, it is also important to continue to ensure that that there is nothing in revenue sharing
or benefits agreements that would preclude the securitization of those revenues through the
FNFA or that would prohibit those revenues from being deposited into an interceptor account.
Under our pooled borrowing model revenues that are coming from a third party to a borrowing
member are transferred first into an independently run interceptor account. The amounts
necessary to satisfy FNFA obligations are transferred first to the FNFA and the balance transferred
to the Indigenous government. This feature of the financing model provides security and peace
of mind for all borrowing members and the market and is very efficient. To date, our experience
with BC revenues has been good. A number of our BC Borrowing Members have provincial
revenues, including through the B.C. First Nations Gaming Revenue Sharing Limited Partnership,
or hydro income from run of the river or wind projects, or other provincial revenues, that are
being used in the calculation of borrowing room and being used to service FNFA obligations.

Maximizing the Benefits of Pooling

While Indigenous governments are, of course, free to raise their own financing as they see fit,
(assuming they have the legal authority to do so), it is important that the federal and provincial
governments do not support the establishment of an entity or entities that basically mimic the
FNFA and that would, in effect, compete with the FNFA. This would be counter intuitive to the
purposes of the FNFA and the benefits of pooling. Their establishment would, rather than
creating healthy competition as in the private sector, potentially increase the costs of borrowing.
While competition in the private sector is good and keeps costs down, when it comes to
government financing and where there is no profit motive, the same considerations do not apply.
For example, BC would never create a parallel body to compete with the MFABC. That said, the
FNFA recognizes that changes to our structure may be needed as the range and scope of
Indigenous governments and institutions expands. Including when UNDRIP is implemented.

Purchasing FNFA bonds

With over $1.3 billion of bonds issued there is now a growing and healthy secondary market
which helps to keep borrowing costs down. For our last issue, the spread over Ontario’s cost of
borrowing was only 9 basis points (.09%). The Province and other public bodies that have the
function and need to make investments should look to purchase FNFA debentures if they are not
already.

Finally, I am including with this presentation a deck entitled, “A Summary of FNFA’s Loans to First
Nations Across Canada and Projects Financed (By Province)”, dated January 14, 2021. This will
provide some more detail on our borrowing program, who is borrowing and for what purposes
the loans are being used. You can also visit our website, www.fnfa.ca, for more information.

Thank you for listening to me. If you have any questions, I would be pleased to answer them.

Thank you.