OTTAWA – The “next steps” for a long-awaited Indigenous loan guarantee program will be announced in next year’s federal budget, the Liberal government promised in its fall economic statement on Tuesday.
But industry groups and Indigenous leaders are still waiting for details on whether the program, which the fiscal update said would help communities invest in the natural resource sector, will facilitate equity ownership in oil and gas projects.
It is important for help to be available across all sectors, the First Nations Major Project Coalition said on Tuesday after the government promised to “advance development” of loan guarantees.
“We hope to see a program that ultimately seeks to respect the rights of First Nations to participate in projects on their lands, as they wish,” said a statement from the coalition, a group of more than 130 Indigenous Nations working to ensure First Nations communities get a fair share of the benefits from projects that cross their territories.
A loan guarantee would protect lenders from potential defaults by including language that a third party — in this case, the federal government — would pay the bill should the borrower default.
Ottawa is promising “to increase access to the affordable capital that Indigenous communities will require” to make investment opportunities a reality.
But there were scant details about how a program would work in Tuesday’s budget update.
“Everyone in Canada deserves to share in Canada’s economic prosperity, and the clean economy opportunities that lie ahead offer new ways to advance economic reconciliation,” the document said.
“The federal government is determined to ensure that Indigenous communities can share in the benefits of major projects in their territories on their own terms.”
In its 2023 budget, the federal government committed to lending affordable capital to Indigenous communities through the Canada Infrastructure Bank, to help them purchase equity stakes in infrastructure projects in which the bank is also investing.
But the infrastructure bank is only mandated to invest in realms such as clean power, green infrastructure, broadband technology and transportation.
If the parameters for the Indigenous loan guarantee program are similar, the oil and gas industry could be left out, despite communities’ repeated calls for its inclusion.
Niilo Edwards, the CEO of the First Nations Major Projects Coalition, argues that Indigenous communities are at a significant disadvantage when it comes to seeking financing through mainstream capital markets.
“The main reason is, the Indian Act does not enable First Nations to use their land and other assets as collateral,” Edwards said in a recent interview with The Canadian Press.
“This has historically precluded First Nations from participating in the mainstream of the economy, and therefore when our members are presented with these opportunities, they don’t have the level of at-risk capital required to secure a good interest rate.”
According to the group’s research, over the next decade, 470 major projects that affect Indigenous lands represent more than $525 billion of capital investment. They estimate $50 billion could be needed for Indigenous equity financing.
Indigenous loan guarantees are already available in Alberta, Saskatchewan and Ontario, but the lack of a federal program has led to criticism from industry and First Nations leaders that jurisdictional gaps prohibit economic development.
Speaking with The Canadian Press last week, Harold Calla, the executive director of the First Nations Financial Management Board, said he’s been calling for such a program for years.
“It’s becoming very apparent to all that Indigenous economic participation requires the ability to see what the real benefits are going to be for First Nations,” said Calla, who also serves on the board of directors for Trans Mountain.
“We need to be at the table, part of the decision-making process. We need to be supported and gain meaningful economic participation in these projects.”
The president and CEO of the First Nations Bank of Canada, Bill Lomax, said Tuesday that a national Indigenous loan guarantee program will help encourage investments made by Indigenous communities. Lomax said the program would help reduce risks while leading to economic growth in communities.
Ahead of the fall economic statement, Chief Evan B.G. Taypotat of Kahkewistahaw First Nation in Saskatchewan said Canada shouldn’t have a say in which industries First Nations communities decide to partner with — including the oil and gas industry.
“It just handcuffs us. It’s not a viable pathway to success,” he said.
“It’s time that we really say to the Canadian government, ‘Help us help ourselves.’ It’s not a handout, it’s a hand up.”
Taypotat also said having Indigenous ownership in companies would mitigate conflicts between industry and Nations.
He recalled stories from his childhood in which his community was strongly opposed to outside development for the sole reason that their leaders never had a seat at the table, or an opportunity to meaningfully invest.
Now, that’s changing — and growing those relationships is beneficial for the government, First Nations and industries alike, he said, so they should all be on board.
“If you don’t, you’re going to be in the rear-view mirror looking at everybody going forward,” he said.
“The Indigenous economic business train is coming.”
– With files from Amanda Stephenson.
This report by The Canadian Press was first published Nov. 22, 2023.