Aboriginal-Business Connection: From partnerships to prosperity

Aboriginal-Business Connections: From partnerships to prosperity

Acknowledgments

Presenting Sponsor:

Supporting Sponsors:

Advice for Aboriginal-Business Connections: From partnerships to prosperity has been provided by the Aboriginal-Business Connections taskforce made up of key stakeholders, including: Barrie Robb of Mackenzie Aboriginal Corporation; Ryan Robb of Treaty 7 Management Corporation; Toni Polchies from Aboriginal Futures Training Center; Barry Brisson of First Peoples Focus Inc.; Brian McGuigan of Eagle Law Group; Tom Erasmus, Gary Willson and Stephen Leblance of Newalta Corporation; Bonnie Veness, Mark Prystupa and Ann Harding of Suncor Energy; RJ Hunt and William Nurnberger of Black Diamond Group; Teresa Homik, Morgan Yates and Gerald Bassisty of Enbridge Inc.; and Nadine Busmann and Sandi Morisseau of Nexen Inc. The Calgary Chamber would like to recognize the contributions made by members of the ABC taskforce for their insightful comments and direction in the preparation of this report, as well as all the individuals who participated in personal interviews, taskforce meetings, policy dialogue round tables and expert sessions that informed this report. The Chamber sincerely thanks Suncor Energy whose generous support allowed us to present the ABC series, as well as Newalta Corporation, Enbridge Pipelines, Black Diamond Group and Nexen Inc. for their support of this event series. The series was also delivered in association with Treaty 7 Management Corporation and the Circle for Aboriginal Relations Society. The Chamber would like to acknowledge the Government of Alberta for funding the work that went into developing the ABC Research Report and the Toolkit for Business.

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Aboriginal-Business Connections: From partnerships to prosperity

Acknowledgments

The Aboriginal-Business Connections: From partnerships to prosperity was written by Tyson Vandament, policy analyst with the Calgary Chamber, with contributions from Ben Brunnen, director of policy and government affairs and chief economist with the Calgary Chamber, and Tomasz Kmiec, manager of policy and research with the Calgary Chamber. The opinions expressed in this document are those of the authors and not necessarily those of the Calgary Chamber’s donors, members, board of directors, or the ABC taskforce and the organizations they represent.

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Aboriginal-Business Connections: From partnerships to prosperity

Executive summary

Aboriginal communities are crucial to the growth of the Canadian economy. They represent new markets, an underutilized labour force, valued landowners and potential business partners. For many industries, developing and maintaining productive and respectful relations with Aboriginal communities has become a key part of their business strategy. The Calgary Chamber launched the Aboriginal-Business Connections series in 2011 as a response to the emerging role of Aboriginal communities in the Canadian economy. This policy-event series brought together leaders from industry, government, academia and Aboriginal communities to share insights on how business and Aboriginal communities can develop successful working relationships. The Chamber hosted eight events between fall 2011 to spring 2012. Each event consisted of a presentation from our featured speakers and panelists. These were accompanied by a policy discussion roundtable with the speakers.

Key areas for government, Aboriginal communities and industry to focus their efforts for improved Aboriginalbusiness partnerships include: Developing Aboriginal institutions and capacity • In order for Canada’s Aboriginal communities to fully participate in the economy there needs to be a serious effort to build capacity in areas such as governance, education and social services. • Lower capacity within communities hinders the ability of Aboriginal people to partner with industry, take advantage of economic opportunities and develop effective and accountable governing institutions. • These same issues present a barrier for industry when engaging with Aboriginal communities.

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Aboriginal-Business Connections: From partnerships to prosperity

Executive summary

Facilitating Aboriginal-business partnerships • The involvement of Aboriginal people in the Canadian economy will continue to increase. This trend is being driven by a number of factors including the proximity of Aboriginal communities and land to resource development projects, as well as current and future labour shortages in these areas. • Poor relations with stakeholders – Aboriginal or otherwise – results in time delays that can negatively affect the performance of a project. • The Aboriginal population is young, growing and located close to remote development projects. Ongoing labour shortages in these areas and recent court decisions that have increased the involvement of Aboriginal communities when approving a major development project means that the impetus for engaging Aboriginal communities has never been stronger.

• The business community has much to offer Aboriginal people, including technical and financial expertise, investment, jobs and knowledge transfer, along with acting as a catalyst for capacity development. • The key challenge will be to remove the legislative and political impediments that stand in the way of building partnerships between Aboriginal communities and business, along with a framework that enables the widespread distribution of best practices. Building a renewed relationship for success • Facilitating Aboriginal economic prosperity requires engagement and support from all levels of government. While funding and program administration are a key element of this support, the long-term focus should be to transition government’s role from that of a funder to an enabler and facilitator. • By enabling Aboriginal governments and communities to make their own decisions, they will be better able to respond to economic incentives and market conditions.

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Aboriginal-Business Connections: From partnerships to prosperity

Executive summary

Aboriginal-Business Connections series: Thought leaders and topics (Please see Appendix A for a summary of each event)

Corporate Social Responsibility – October 21, 2011 Sam McCracken Chairman of Nike Native 7 and General Manager of Nike’s Native American Business Accessing Capital – November 29, 2011 Manny Jules Chief Commissioner of the First Nations Tax Commission Harold Calla Chairman of the First Nations Financial Management Board Good Governance – January 26, 2012 Stephen Cornell Co-Director of the Harvard Project of American Indian Economic Development Renewed Relationships for Success – March 1, 2012 Shawn Atleo National Chief of the Assembly of First Nations Renewed Federal Engagement – March 20, 2012 John Duncan Federal Minister of Aboriginal Affairs Structuring Business Partnerships – May 15, 2012 Bob Reid Chairman of the Aboriginal Pipeline Group Clayton Norris Director of Aboriginal Services with MNP Consultation and Accommodation – June 7, 2012 Moderated by Chuck Strahl Former Federal Minister of Indian and Northern Affairs Thom Stubbs Partner with Integrated Environments Lee Francoeur Partner with Eagle Law Group The ABC series concluded with the release of this final report at an event featuring Robin Campbell, Alberta’s minister of Aboriginal Relations. This event took place on June 27, 2012 and was accompanied by the release of a toolkit detailing how business and Aboriginal communities can build prosperous business partnerships.

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Aboriginal-Business Connections: From partnerships to prosperity

Table of contents

EXECUTIVE SUMMARY

4

1. INTRODUCTION: THE OPPORTUNITY About the Aboriginal-Business Connections series Developing Aboriginal institutions and capacity Aboriginal-business partnerships Renewed relationships for prosperity

8

2. DEVELOPING ABORIGINAL INSTITUTIONS AND CAPACITY Why institutions matter Aboriginal institutional development Two approaches to institutional and economic development The path forward: Developing institutional capacity

12

3. ABORIGINAL-BUSINESS PARTNERSHIPS The business case Key principles of successful Aboriginal partnerships Key strategies for business Structuring business partnerships: Tax and legal implications Key agreements and business structures The role of corporate social responsibility

22

4. RENEWED RELATIONSHIPS FOR PROSPERITY Key strategies for success

30

5. POLICY RECOMMENDATIONS Strategies for government Strategies for business Strategies for Aboriginal communities

44

6. APPENDIX A – THOUGHT LEADERS AND TOPICS

48

7. APPENDIX B – KEY AGREEMENTS

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Aboriginal-Business Connections: From partnerships to prosperity

1. Introduction: The opportunity

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Aboriginal-Business Connections: From partnerships to prosperity

1. Introduction: The opportunity

Aboriginal communities are open for business and are actively seeking partnerships with industry to develop their resources, improve their lives and provide opportunities for their citizens.

Canadian Association of Petroleum Producers, “Industry Practices: Developing Effective Working Relationships with Aboriginal Communities” CAPP (2006): 1.

1

The natural resource sector has been at the forefront of developing longterm business partnerships with Aboriginal communities. This has occurred for a number of reasons, including the need to access Aboriginal labour in remote areas, as well as gaining land access and stakeholder support for development projects. The benefit of cultivating these relationships cannot be overstated, since they can often make or break a business development. A recent report issued by the Canadian Association of Petroleum Producers recognized this, noting that: “Effective working relations support more timely access to land and greater involvement with local labour and contractors. In contrast, failure to develop productive two-way communication processes can result in misunderstanding, disagreements and unresolved opposing views.”1 Aboriginal communities are open for business and are actively seeking partnerships with industry to develop their resources, improve their lives and provide opportunities for their citizens. In a recent address to members of the Calgary Chamber, National Chief of the Assembly of First Nation Shawn Atleo acknowledged that First Nations are eager to promote a harmonious relationship based on trust and prosperity, rather than one based on confrontational litigation and poverty. “That path of recognition and co‑operation is driving dozens of projects in mining and forestry, from northern British Columbia and Alberta, to the Ring of Fire in Ontario and northern Quebec,” he said. “We have no interest in our rights and claims being tied up in endless, costly negotiation and litigation – this wastes all of our time and potential.”2

Shawn Atleo, “National Chief Speaking Notes to the Calgary Chamber” (Presented at Aboriginal-Business Connections Series “Renewed Relationships” event on March 1, 2012).

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1. Introduction: The opportunity

About the Aboriginal-Business Connections series The Aboriginal-Business Connections series is a policy-event series that brought together leaders from industry, government, academia and Aboriginal communities to raise awareness about some of the key policy issues affecting these groups and to foster prosperous Aboriginal-business partnerships.

Photo: Thom Stubbs, a partner with Integrated Environments (left), Chuck Strahl, former federal minister of Indian and Northern Affairs (centre), and Lee Francoeur, a partner with Eagle Law Group (right), discuss Aboriginal consultation and accommodation.

The Chamber hosted eight events between fall 2011 to spring 2012. Each event consisted of a presentation from our featured speakers and panelists. These were accompanied by a policy discussion roundtable (PDRT) with our featured speakers, Chamber staff, members of the ABC committee and sponsors to further explore the issues, and develop policy recommendations. These PDRTs were crucial in informing our research for this series, and developing our policy recommendations, government relations strategy and advocacy efforts.

The Aboriginal-Business Connections series culminated in a research report highlighting the key findings from the project and a toolkit for business, which provides tips on how organizations can develop meaningful business relationships with Aboriginal communities. This report is based on the events and PDRTs, along with independent research conducted by the Chamber. It is separated into three themes: Developing Aboriginal Institutions and Capacity, AboriginalBusiness Partnerships and Renewed Relationships for Prosperity. Developing Aboriginal institutions and capacity It is one thing to have an opportunity, it is quite another to seize it. In order for Aboriginal communities in Canada to fully participate in the economy there needs to be a serious effort to build capacity in areas such as governance, education and social services. 10

Aboriginal-Business Connections: From partnerships to prosperity

1. Introduction: The opportunity

Lower capacity within communities hinders the ability of Aboriginal people to partner with industry, take advantage of economic opportunities and develop effective and accountable governing institutions. These same issues present a barrier to industry when engaging with Aboriginal communities. To address these issues the Chamber hosted an event on Good Governance, which shared insights on the role internal capacity building and governance plays in facilitating economic development. Aboriginal-business partnerships More than $315 billion in major resource development projects has been identified on or near Aboriginal communities.3 According to study by TD Economics, there is also “a rising recognition among Canadian companies that employing Aboriginal people and partnering with Aboriginal communities is a smart business strategy.”4 These trends combined with ongoing labour shortages and underpinned by recent court decisions that have increased the involvement of Aboriginal communities when approving a major development project means that the impetus for these groups to engage one another has never been stronger. The Chamber

Aboriginal Affairs and Northern Development Canada, “Federal Framework for Aboriginal Economic Development.” Government of Canada (2009): 4. Retrievable at http://www.aadnc-aandc. gc.ca/DAM/DAM-INTER-HQ/STAGING/texte-text/ ffaed1_1100100033502_eng.pdf.

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hosted three events – Structuring Business Partnerships, Corporate Social Responsibility and Consultation and Accommodation – which examined the complex legal, financial and political issues that need to be addressed when developing partnerships between Aboriginal communities and industry. Renewed relationships for prosperity Facilitating Aboriginal economic prosperity requires engagement and support from all levels of government. While funding and program administration are a key element of this support, the long-term focus should be to transition government’s role from that of a funder to an enabler and a facilitator. By enabling Aboriginal communities to make their own decisions, as well as develop their own policies, they will be better able to develop efficient and effective governance systems and respond to market conditions. The challenge going forward for governments is how to build a framework that allows Aboriginal communities and individuals to solve their own challenges. To address this complex issue, the Chamber hosted two events: Federal Engagement and Renewed Relationships. Each event dealt with issues directly relating to the role of the federal and provincial governments in fostering business partnerships, promoting economic development and helping to build accountable and effective Aboriginal governments.

TD Economics. “Aboriginal People in Canada: Growing Mutual Economic Interests Offer Significant Promise for Improving The Well-Being Of The Aboriginal Population.” TD Bank Group (2009): i. Retrievable at http://www.td.com/document/PDF/ economics/special/td-economics-special-db0609aboriginal.pdf.

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2. Developing Aboriginal institutions and capacity

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Aboriginal-Business Connections: From partnerships to prosperity

2. Developing Aboriginal institutions and capacity

Many Aboriginal communities find that they lack the institutions required for good decision-making.

Aboriginal communities have expressed a strong desire to partner with government and industry to develop strategies on long standing issues such as poverty reduction, economic development, and the delivery of social services and education. However, while communities may express an interest in working with government and industry to develop solutions to these important issues, often what is lacking is an ability to sustain the governing and institutional structures which are necessary to make these strategies happen. This dilemma has been recognized by a Standing Senate Committee on Aboriginal Peoples, which a number of years ago noted: “many Aboriginal communities find that they lack the institutions required for good decision-making and have considerable catching up to do in terms of acquiring the administrative capacity to identify economic opportunities, form partnerships, negotiate agreements, design and operate business ventures, [and] design and operate institutions that support economic development.”5 Why institutions matter Core institutions are essential to economic development, the improvement of living standards and effective governance. The development of institutional capacity is slow, incremental and challenging, but these small changes add up over time, resulting in radically different levels of economic and social development.6

Standing Senate Committee on Aboriginal Peoples, “Sharing Canada’s Prosperity – A Hand Up, Not a Handout: Final Report Special Study on the involvement of Aboriginal communities and businesses in economic development activities in Canada” Government of Canada (2007): 8.

5

Daron Acemoglu and James Robinson, “The Role of Institutions in Growth and Development” Backgrounder for World Bank Growth Commission (2007): 6.

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2. Developing Aboriginal institutions and capacity

The crucial role that institutions play in economic growth and development has been recognized by the World Bank, which noted in a recent report that: “the main determinant of cross-country differences in income per-capita are differences in economic institutions. Though institutions often persist for long periods of time and have unintended consequences, differences in institutions across countries

primarily reflect the outcome of ­different collective choices.”7 This means that if Aboriginal communities and governments begin to make different choices on the character and structure of Aboriginal governance, we can produce radically improved outcomes in economic and social development – the choice is ours.

Case Study Nisga’a Nation

The Nisga’a Nation in British Columbia stands as a model for embracing autonomy. The Nisga’a journey to selfgovernment has not been easy, but it shows the immense potential that exists within Aboriginal communities when they embrace autonomy, build capable institutions and stay focused on long-term goals. The journey to autonomy began in the 1890’s when the Nisga’a’s hereditary chiefs formed a land commission to negotiate self-government and title to their tradition lands from the government. From 1927 to 1951, the Nisga’a were barred from advocating because Canadian laws made it illegal for Indians to raise money to advance land claims.8 After the repeal of these statutes in 1955, the land commission re-established itself as the Nisga’a tribal council, but the goals remained the same: self-government and recognition of their Aboriginal title. In 2000, after 113 years of work, the Nisga’a Final Agreement came into effect, heralding a new relationship between the Nisga’a and the federal and provincial governments based on a respect for Aboriginal culture, title and autonomy.9 The Nisga’a have broad control over a number of key government functions including healthcare, education, social services, lands and resources, economic development, environmental stewardship, fisheries, wildlife and culture. In addition, the Nisga’a are no longer burdened by many of the archaic laws stipulated in the Indian Act, and can instead be the authors of their own future. For more information, please visit www.nisgaalisims.ca.

7

Ibid: 31.

Aboriginal Affairs and Northern Development Canada, “Fact Sheet: The Nisga’a Treaty,” Government of Canada (2010). Retrievable at http://www.aadnc-aandc.gc.ca/eng/1100100016428.

8

Nisga’a Lisims Government, “Nisga’a Government: About Nisga’a Lisims Government,” last updated 2010. Retrievable at http://www.nisgaalisims.ca/about-nisgaa-lisims-government.

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2. Developing Aboriginal institutions and capacity

Aboriginal institutional development Some of the most innovative research addressing the role of institutions in Aboriginal economic development is currently being done at the Harvard Project on American Indian Economic Development. These researchers have

concluded that economic development is achieved through the ability of an Aboriginal community to both set long-term economic goals based on their own needs, desires and culture, and to achieve those goals through the development of capable governing and economic institutions.

Key findings on economic development and institutional capacity building 10 • Autonomy matters: When Aboriginal communities have control of their own affairs and make their own decisions with regards to political and economic matters they achieve better results in natural resource management, economic development and improving living conditions. • Institutions matter: Autonomy is a necessary but not a sufficient condition for economic development and needs to be supported by effective governing institutions. Institutions allow autonomy to be effectively exercised. Examples include stable and consistent decisionmaking rules, objective dispute resolution mechanisms, and an adequate separation of powers, in particular between politics and business. • Culture matters: Economically prosperous communities are built on a foundation of culturally sensitive institutions. Each community’s culture and traditions are unique, and therefore should be reflected in their governing institutions. Aboriginal leadership needs to ensure that the mandates, principles and operations of governing institutions reflect the culture of the community. • Strategy matters: Successful communities do not rely on quick fix economic development projects, but determine their community’s longterm strategic objectives – cultural, political, economic and social – and implement policies and develop partnerships that will help these goals be realized. • Leadership matters: Leaders who focus on long-term goals, and who act in the best interest of the community (and can convince others to do the same) are crucial. Such leaders convince people that things can be different and inspire them to take action.

Stephen Cornell, and Joseph P. Kalt. “Two Approaches to Economic Development on American Indian Reservations: One Works, the Other Doesn’t.” Resources for Nation Building: Governance, Development, and the Future of American Indian Nations. (2005): 4.

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2. Developing Aboriginal institutions and capacity

Two approaches to institutional and economic development Many Aboriginal communities are poor, but this poverty is not universal or uniform. Some communities have broken away from the condition of poverty by embracing a different approach to economic and institutional development, referred to as the nation building approach (NBA).

This approach emphasizes good ­governance, institution development and capacity building, and is driven by members of the Aboriginal community who embrace a strategic long-term approach to economic development.11 The NBA is contrasted with the standard approach (SA) to Aboriginal economic development, which grew out of policies of the early 20th century, and is still in practice today.

Case Study Membertou First Nation

In the early 1990’s the Membertou First Nation in Nova Scotia was in dire financial straits: it had an annual budget of $4 million and a deficit of more than $1 million. The community also suffered from poor socio-economic conditions and high unemployment.12 In 1995, Chief Terrence Paul set out a path develop a clear, transparent and consistent financial system that would support economic development in the community. To achieve this goal, it was decided that the community would become compliant with a set of regulations for government and business set up by the International Organization for Standardization (ISO), a worldwide federation of national standards bodies from 160 countries that works to ensure consistency and quality in companies around the world.13 This certification signaled to companies, government and other organizations that the Membertou First Nation had the systems and infrastructure in place to properly conduct business. In 2002, Membertou achieved its ISO status, the first Aboriginal government in the world to do so. Even more important than the certification itself has been the immense economic turnaround that building transparent financial management systems has facilitated. In less than a decade, the government of Membertou has seen its annual budget grow to more than $65 million, unemployment decrease and the development of many successful new businesses. For more information, please visit www.membertou.ca.

11

Ibid: 4.

National Centre for First Nations Governance, “Governance Best Practices Report” Submitted for the New Relationship Trust (2009): 45.

12

Membertou First Nation, “ISO 9001 Designation” Last updated 2012. Retrievable at http://www.membertou.ca/iso_9001_2008.asp.

13

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The SA focuses on short-term projects and grants, neglects capacity building and governance issues, and is externally directed by outside funders or bureaucrats.14 It treats Aboriginal

communities as passive receivers of policy, rather than participants and partners in the process. A summary of the contrasting methods is presented in Table 1.

Table 1: Models of Aboriginal economic development Nation building approach

Standard approach

Economic development process • Autonomous decision-making authority

• Identify funding opportunities

• Building capable institutions

• Apply for grants or respond to outside entities

• Establish strategic objectives • Craft policy to support strategic objectives • Choose projects and businesses that support these objectives • Implement and improve

• Receive whatever funding is available regardless of strategic goals • Community politicians appoint supporters to run enterprise • Leadership micro-manages business and programs

Role of First Nations government • Build effective institutions with effective • Lobby government and outside funders separation of powers • Implement objectives set by bureaucrats • Set strategic and policy priorities and outside funders • Develop internal capacity to deliver on policy priorities

• Political leadership functions as distributor of resources and jobs

• Create transparent resolution mechanisms

• Overlapping responsibilities and lack of clarity in mandate

• Ensure functional barrier between political leadership and the day-to-day running of business Role of outside governments • Focus on institutional capacity building and the facilitation of effective decision making

• Focus on program management

• Shift from program specific funding to block grants, which places more autonomy in the hands of Aboriginal communities

• Paternalistic approach to funding

• Impose strategic objectives and policy goals • Lack of emphasis on building effective governing institutions

• Shift from a consultative to a partnership style of relationship with Aboriginal communities

14

Ibid: 18.

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15

Ibid: 19-20.

The path forward: Developing institutional capacity

Key strategies for enabling Aboriginal institutional capacity building include:

1. Tasks for Aboriginal communities Developing institutional capacity requires Aboriginal communities to both gain increased decision making authority and exercise it effectively. It requires long-term planning and strategic direction, along with the development of the necessary government institutions to ensure effective implementation of policy. It requires clear and transparent mechanisms for Aboriginal communities to hold their leadership accountable for their decisions, along with a functional separation between business and politics.15

• Embrace autonomy: The transfer of jurisdiction appropriate Aboriginal governments should be embraced as a mechanism for the development of institutional and governance capacity. Aboriginal governments have an opportunity to develop unique models of governance that reflect their culture, traditions and values.11 • Focus on setting strategic objectives and identify necessary institutions: Aboriginal political leadership should focus on articulating the ­strategic priorities of the community

Photo: National Chief of the Assembly of First Nations Shawn Atleo (left) spoke at the Calgary Chamber on the importance of building prosperous partnerships.

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2. Developing Aboriginal institutions and capacity

and setting attainable, incremental goals. Along with establishing the community’s goals, the leadership needs to ascertain what institutional and governmental structures are necessary to reach those goals. • Create transparent and non-political dispute resolution mechanisms: A non-political dispute resolution mechanisms is essential for the development of business confidence, so that investor and community members can be sure they will be dealt with in a fair, consistent and

non-arbitrary manner. Developing coherent and clear legal and tax structures is also necessary to improve the business climate and improve certainty for investors. • Build transparent financial management systems: Developing clear and transparent financial management systems will improve the business climate and certainty for investors while simultaneously improving Aboriginal financial literacy and capacity.

Case Study Fort McKay First Nation

The Fort McKay First Nation is located 65 kilometers north of Fort McMurray. It has taken advantage of its strategic location in the heart of Canada’s oilsands and forged numerous productive business partnerships with resource companies. It has also developed an effective governance structure with clearly defined roles and mandates. Beginning with single janitorial contract in 1996, the Fort McKay Group of Companies has since grown into a dynamic player in Alberta’s industrial heartland with assets more than $150 million.16 They are involved in a diverse array of businesses from contracting, trucking, earthworks, environmental services, and fuel supply. Fort McKay has used its success in business to deliver investments to the community by funding important initiatives such as cultural retention and education.17 In 2009, Fort McKay partnered with Suncor Energy to create the Fort McKay Business Incubator, a non-profit organization designed to increase entrepreneurship and business development in the community member.18 The Fort McKay story stands as a model of economic development that future generations can follow. For more information, please visit www.fortmckaygroup.com

Nelson Semeniuk, “In the eye of the storm” Uphere Business, September 6th 2010. Retrievable at http://www.upherebusiness.ca/node/456.

16

17

Fort McKay Group LP, “Fort McKay Group of Companies” Annual Report 2010 (2010):1.

18

Fort McKay Business Incubator, “About Us,” last updated 2010. (Accessed June 4, 2012).

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• Ensure adequate separation of powers between politics and business: It is critically important to ensure that when developing key governing institutions they are designed in a manner that ensures adequate separation of powers between the political and business leadership. It is important that political leadership focus on developing and implementing strategic goals rather than micro-managing in the day-to-day operations of business. • Build networks and knowledge: First Nation communities are encouraged to build networks of support and education, so that they may learn from their colleagues on

how best to achieve the above strategies and pool their resources where appropriate. This will ensure they are applying the most up-to-date information and foster a culture of continuous improvement. 2. Tasks for government For policy-makers, a focus on institutional capacity building requires a shift in outlook. Economic development needs to be consistently viewed as not something imposed externally from the top down, but rather something that is internally generated. This may mean reallocating resources and capital from program design and administration to capacity building in Aboriginal communities.

Case Study Squamish Nation

The Squamish Nation is made up of 23 communities located in North Vancouver, Howe Sound and Gibson’s Landing. The Nation has been a leader and innovator in business partnerships and effective governance. In 2001 the Squamish Nation completed its land use plan for the wilderness areas in its territory, including identifying areas with particular cultural and historical significance. Today, 74,541 hectares are designated as “wild spirit places” with nearly 5,000 additional hectares of protected cultural sites and training areas.19 The Squamish Nation has also been a leader in developing its own lands and businesses for the benefit of its community members. The Nation is the owner of a diverse portfolio of real estate assets including the Park Royal Shopping Centre, condominiums and the Mosquito Creek Marina.20 In addition to its accomplishments in business, the Nation is on the long path to self-government. In 1993 the Nation filed its Statement of Intent to enter the treaty process and just one year later the government decided that the Nation was ready to begin framing an agreement for self-government, which they are currently working through. For more information, please visit www.squamish.net.

Squamish First Nation, “A Community Development Plan” For discussion at the Squamish Nation Annual Meeting (2010): 26.

19

20

Ibid: 36.

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The gradual shift of decision making authority and service provision to appropriate Aboriginal governments has been shown to increase outcomes in governance.

21

Ibid: 18-19.

Harvard Project on Indian Economic Development, “Overview: What works, where and why?” Last modified 2010. Accessed January 6, 2012. Accessible at http://hpaied.org/about-hpaied/ overview.

22

Government needs to maintain an open mind concerning the development of economic and political structures so as to enable the creation of legitimate decision-making institutions. Critical to the success of this approach will be a shift in decisionmaking authority from government to Aboriginal communities and their leadership.21 Key strategies for the provincial and federal governments for enabling institutional capacity building include: • Enable practical decision making authority: While the transfer of decision making authority from the government to Aboriginal political leadership is not a simple task, the gradual shift of decision making authority and service provision to appropriate Aboriginal governments has been shown to increase outcomes in governance, economic development and socioeconomic outcomes.22

• Focus on institutional capacity building: By focusing on institution and capacity building rather than program and policy administration, the government can more efficiently allocate its resources and transition its role from that of a funder and overseer, to a facilitator and broker. • Embrace diversity in governmental forms: In order to develop institutions that are culturally sensitive and reflect community objectives, the government needs to embrace a diversity of governmental and institutional forms, rather than trying to impose a one-size-fits-all model of development on all communities. • Engage a diversity of partners: By embracing a diversity of partners such as educational institutions and non-profit organizations, the government can play a more effective role in capacity building, leveraging existing resources and knowledge, and coordinating the many aspects required for a community to prosper.

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3. Aboriginal-business partnerships

Companies that manage environmental, social and governance risks effectively deliver better risk-adjusted financial performance than their industry peers.

Connie Bryson and Maylu Walters, “Learning from Experience: Aboriginal Programs in the Resource Industry” Alberta Chamber of Resources (2006): 3. Retrievable at http://www.acr-aboriginalproject. org/PDF%20Files/Publications/2006_ACR_ Publication.pdf.

23

Orlitzky et al, “Corporate Social and Financial Performance: A Meta-analysis,” Organizational Studies 24 (2003): 403.

24

Jason Hohnen, “Corporate Social Responsibility: An Implementation Guide for Business,” International Institute for Sustainable Development, (2007): 13. Accessible at http://www.iisd.org/pdf/2007/ csr_guide.pdf.

25

There are few industries where Aboriginal-business partnerships are as critical to success as the natural resource sector. Due to the often remote locations of natural resource operations and the importance of securing land as well as labour access, it has become vital that industry continue its work as a forerunner at integrating Aboriginal partnerships into their business model.23 The business case Studies have shown that effective stakeholder engagement, including Aboriginal partnerships correlate positively with an organization’s financial performance.24 In fact, there is a growing body of evidence that companies which manage environmental, social and governance risks most effectively tend to deliver better risk-adjusted financial performance than their industry peers.25 The business case for Aboriginalbusiness partnerships can be summarized as follows: 1. A local, skilled and reliable workforce According to a recent report by the Alberta Human Services, the province could experience a labour shortage of 114,000 workers in the coming decade.26 That means Alberta will need all of the smart, motivated and skilled individuals it can find to ensure that it has the labour resources necessary to take advantage of the economic ­opportunities in the coming decades. The Aboriginal community is an ideal source of workers to meet this shortage.

Alberta Human Services, “Alberta’s Occupational Demand and Supply Outlook: 2011-2021.” Government of Alberta. (2011): 4. Retrievable at http://employment.alberta.ca/documents/occupational-demand-and-supply-outlook.pdf.

26

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Ministry of Indian Affairs and Northern Development, “Federal Framework for Aboriginal Economic Development,” Government of Canada (2009): 4.

27

2. A large and expanding Aboriginal land base Canada’s Aboriginal peoples control a land base that totals more than 60-million hectares and is poised expand further with the settlement of comprehensive and specific land claims.27 Much of this land is rich in natural resources making it a key strategic resource for Aboriginal communities, along with creating a strong impetus to partner with ­business to capitalize on its development potential.

3. The importance of stakeholder support for development Building and maintaining stakeholder support for resource development projects is important. Industry refers to this as its social license to operate. Poor relations with stakeholders – Aboriginal or otherwise – results in time delays and unfavorable media scrutiny, along with regulatory and cost uncertainty. Working with stakeholders early on in a project’s lifecycle helps mitigate concerns, sets a positive tone for the whole relationship and ensures consistent stakeholder support for development.

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In Alberta, the duty to consult is often delegated to project proponents, necessitating increased collaboration with Aboriginal communities.

Aboriginal Affairs and Northern Development, “Aboriginal Consultation and Accommodation Updated Guidelines for Federal Officials to Fulfill the Duty to Consult,” Government of Canada, (2011):1.

28

29

Ibid: vi-vii.

4. Duty to consult and accommodate As a result of court cases, the federal and provincial government have a duty to consult with, and if necessary, accommodate Aboriginal groups whose rights may be infringed due to development in their territory.28 And while the duty to consult rests with the government, in Alberta the responsibility is often delegated to project proponents, necessitating increased collaboration with Aboriginal communities. Key principles of successful Aboriginal partnerships Many factors determine the level of success an organization has in implementing an Aboriginal engagement and partnership strategy. Each organization’s approach must be tightly calibrated to the firm’s goals, culture and business model. While the tactics and policies will vary from organization to organization, the underlying principles remain the same, and can be summarized as follows: • The importance of early and effective consultation An overarching theme of successful Aboriginal engagement is early consultation. Aboriginal groups should be brought in at the earliest possible stage of the project to ensure that any potential issues are dealt with in a preemptive rather than reactive manner. This need not only arises from an organization’s legal requirement to consult, but derives from the motivation to ensure that Aboriginal stakeholders feel they are being treated and valued as longterm ­strategic partners, rather than ­passive observers.

• The importance of long-term, mutually beneficial relationships Numerous reports and studies have shown that effective Aboriginal engagement is built on a foundation of long-lasting relationships. Given that the economic life of a large project may exceed the political life of an Aboriginal community’s leadership, it is important that an organization builds strong relationships with the community – not just the chief and council.29 Having a long-term vision for the organization’s Aboriginal engagement plan will help to foster this type of trust and reciprocity. • Establishing clear and measurable goals Organization’s that focus their Aboriginal engagement strategy, develop clear goals and have ­transparent and consistent metrics for evaluation are more successful than those who do not. These metrics include goals for Aboriginal employment, business development, workforce training and the environment.30 With these evaluation benchmarks, organizations can easily demonstrate to Aboriginal communities and government the progress that has been made, which can serve as the basis for ­continuous improvement. • Understanding the unique challenges of Aboriginal communities Effective Aboriginal partnerships necessitate a minimum awareness of cultural sensitivity and historical context that not all organizations possess. Companies that aim to develop long-term, mutually beneficial relationships will have to develop their own internal capacity through training, workshops and continuous improvement.

CAPP, “Industry Practices: Developing Effective Working Relationships with Aboriginal Communities,” Canadian Association of Petroleum Producers (2006): 12.

30

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3. Aboriginal-business partnerships

Key strategies for business The impetus for Aboriginal engagement is clear, but how is this achieved? While there is no one-size-fits-all approach, some of the most effective strategies include: • Top management commitment In order to signal the importance that the company places on the ­partnerships and set the tone for the relationship, a company’s management team needs to be committed and on board from the beginning of the engagement process. If possible, initial discussions should be initiated leader to leader, from CEO to chief. This sets the tone for the relationship, denoting the importance given to the potential partnership.31 In addition, early and sustained senior management commitment to Aboriginal partnerships helps to signal to all employees the importance the company places on the relationship. • Embrace community and organizational partnerships Be prepared to embrace unique partners to accomplish your goals. This strategy is especially important for training and employment agreements. These agreements can engage organizations such as post-­secondary institutions and Aboriginal human resource agencies to build partnerships where each group contributes to the project by offering help from their area of expertise.32

31

Ibid: vii.

Tyson Vandament, “Closing the Gap: Partnering for Métis Labour Market Success,” Calgary Chamber, (2012): 36.

32

• Invest in Aboriginal engagement capacity To develop successful Aboriginalbusiness partnerships, companies need to invest time and resources to improve their internal capacity for Aboriginal engagement. This could be accomplished through workshops, mentoring or Aboriginal awareness training.

• Ensure there is a strategy for contractors The use of contractors is an essential element of most company’s business strategy. However, this creates unique challenges from an Aboriginal engagement point of view. While the company leading the project may have a dedicated and well integrated Aboriginal engagement strategy, their contracting partners may not, potentially compromising the relationship with the Aboriginal community. Communicating to contractors the potential ramifications of insensitivity to Aboriginal concerns along with the importance the company places on the relationship is critical. In some cases it may be worth investing time and resources to develop a contractor’s capacity for Aboriginal engagement through workshops or sensitivity training. • Establish clear and measurable goals for Aboriginal-business partnerships Organization’s that focus their Aboriginal engagement strategy, develop clear goals and have transparent and consistent metrics for evaluation are more successful than those who do not. These metrics could include goals for Aboriginal employment, procurement, business development, workforce training and environmental protection. This can help an organization demonstrate to Aboriginal communities and other stakeholders the progress that has been made, and serve as the basis for continuous improvement.

26

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3. Aboriginal-business partnerships

It is important that the objectives of the community and the company determine the structure of the business model, not the other way around.

• Determine the goals of community before developing a business model It is important that the objectives of the community and the company determine the structure of the business model, not the other way around. Companies need to spend the time understanding the needs of the community, and the appropriate tax and legal structures will flow from this relationship. Structuring business partnerships: Tax and legal implications

Paul C. Wilson and Raziel Zisman, “Win Win: Creating Successful Mining Joint Ventures” Fasken Martineau DuMoulin LLP, (2009): 8.

33

Once a company and an Aboriginal community agree to work together on a project, the question becomes, what is the appropriate business model? This issue goes to the heart of how a business is structured, which is typically defined by legal and tax arrangements. These agreements – be they tax or legal – are attempts to allocate risk and reward, define the relationship between various parties and ensure certainty for investors.

Mitigating uncertainty is vital as it has been cited as a key barrier for many businesses to engage and partner with Aboriginal communities.33 The key forms of uncertainty that can be potentially mitigated through effective business relationships include: • Project certainty: Will we be able to move forward with the project? • Time certainty: When will the project get approved? When will the project be operational? • Cost certainty: How much will the project cost? • Risk certainty: What are the risks and who bears and controls them? Key agreements and business structures There are several common ­agreements and business structures that are typically involved when partnering with Aboriginals. The most common business structures are summarized in Table 2. 27

Aboriginal-Business Connections: From partnerships to prosperity

3. Aboriginal-business partnerships Table 2: Summary of business structures Joint Ventures (JV)

Trusts

Corporations

Partnerships

Management

The appointment of an external manager is made by the participants. The manager has day-to-day control of the JV.

Trusts are governed by deed. Usually management is carried out by the trustee on behalf of the beneficiaries who typically have the ability to remove the trustee.

Company law requires the directors to act as the management authority on behalf of the company. Shareholders have limited ability to influence the day-to-day management of the company.

Each partner is responsible for all aspects of the business. Any management decisions must be agreed to by all of the partners.

Funding

The JV is not self-funding. All revenue is generated directly by participants who must continually provide funds to the JV to meet further operating and capital costs.

All revenue is received by the trustee and income is distributed to the beneficiaries if it exceeds expenses.

Revenue is received by the company, which is legally distinct from the company’s shareholders. Dividends are issued if revenues exceeds expenses.

Revenue received by the partnerships is distributed if it exceeds expenses.

Ownership of assets

The JV owns no assets. Participants have ownership of specific assets.

Assets are vested in the trustee for benefit of the beneficiaries.

Shareholders have limited rights to assets. In the case of a bankruptcy, debt holders take precedent over equity holders.

Each partner has an interest in all of the partnership assets but this does not give them title prior to the dissolution of the partnership.

Income

Income is received by individual participants. No income is received by the JV itself.

Income is received by the trustee, and distributed to the beneficiaries.

Income is received by a company, which pays dividends to the shareholders.

Income is received jointly by all of the partners in proportions that are specified in the partnership agreement.

Liability

Each participant is liable for the activities of the JV.

Beneficiaries are not liable Shareholders are not to third parties but must liable. compensate the trustee if the actions taken are within the terms of the Trust.

Each partner is typically liable for all of the partnership debts. This is not the case in a limited partnership, where liability is limited to each partner’s investment.

Termination

If there is no fixed term, a JV may terminate if participants have fulfilled obligations under the agreement. For a fixed term, a JV is not terminable before expiry.

Term maximum must be specified. Deed should provide for earlier termination if specific events occur.

If there is no fixed term, a partnership is terminable by the partners at will. If there is a fixed term, the court may end it in the event of breach by a partner.

A corporation is continuing legal entity but can be dissolved by courts in certain events such as a bankruptcy.

28

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3. Aboriginal-business partnerships

The role of corporate social responsibility Corporate social responsibility (CSR) is a form of corporate self-regulation that involves the integration of social, environmental and economic concerns into an organization’s decision-making strategy and operations. Increasingly, organizations are taking a broader view of their responsibilities to encompass not only economic performance,

but also metrics such as environmental and social sustainability, along with community engagement.34 Companies understand that good economic performance and being a good corporate citizen are not mutually exclusive. Taking into account the interests of affected parties by company activities is yet another way of generating good governance, mitigating business and regulatory risk and enhancing the company’s brand recognition.

Companies understand that good economic performance and being a good corporate citizen are not mutually exclusive.

Photo: Sam McCracken, manager of sport giant Nike’s Native American business, discusses corporate social responsibility.

Interdepartmental Working Group on Corporate Social Responsibility, “Final Summary Report, Lessons Learned” Natural Resources Canada, (2005): 8. Accessible at www.commdev.org/ files/1006_file_csr.pdf.

34

29

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4. Renewed relationships for prosperity

30

Aboriginal-Business Connections: From partnerships to prosperity

4. Renewed relationships for prosperity

There needs to be substantial work rebuilding and re-affirming the often strained relationship that exists between the government and Aboriginal communities.

In order for Aboriginal communities to achieve their full potential, there needs to be substantial work rebuilding and re-affirming the often strained relationship that exists between the government and Aboriginal communities. This relationship should be built on the foundation of an enabling legislative framework for Aboriginal self-sufficiency, economic development and the building of effective governance structures. This framework should re-conceptualize the role of the federal and provincial government with the Aboriginal people in Canada, working to transition from a contingent funding model focused on program administration and oversight to a model focused on institutional and economic development with the gradual transfer of powers to appropriate Aboriginal governments. The primary purpose of this renewed relationship should be focused on developing institutions, political structures and legislative frameworks that allow Aboriginal communities to opt out of elements of the Indian Act that hinder economic development, in particular legislation surrounding land administration and taxation. A number of reforms have been adopted to free Aboriginal communities from the Indian Act, both incremental (amending or replacing current Act provisions) and comprehensive, (involving self-government agreements and the transfer to sovereignty to Aboriginal communities). The intent of these reforms has always been the same: to reduce the influence of the Indian Act and the Department of Indian and Northern Affairs (now Aboriginal Affairs and Northern Development) on the lives of Aboriginal communities, enlarge their fiscal independence, and increase their standard of living.35

Tom Flanagan et al, “Beyond the Indian Act,”(Montreal: McGill - Queens University Press, 2010): 138.

35

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The Canadian government has signaled its willingness to write a new chapter in their relationship with Aboriginal peoples. In 2008, Prime Minister Stephen Harper offered an apology to the families and victims of Indian Residential Schools, acknowledging the profound impact this had and continues to have on the Aboriginal people in Canada.36 In the summer of 2011, the federal government announced Canada-First Nations Joint Action Plan in conjunction with Assembly of First Nations, focusing on addressing key policy concerns such as education, economic development, land claims and institutional development. In January 2012, Harper and 12 members of his cabinet joined First Nations at the Government – First Nations Summit, hosted by the Assembly of First Nations, where they worked to renew and reaffirm the historic relationship between Canada’s First Nations and the government.37 Provincial governments are also increasingly playing an important role in renewing Canada’s relationship with Aboriginal peoples.

In May 2012, Aboriginal Relations once again became a stand-alone Ministry in Alberta, signaling the importance Alberta places on this relationship. British Columbia has developed its own New Relationship framework, a comprehensive policy framework designed to guide provincial-Aboriginal relations and dramatically improve the lives of Aboriginal people and build healthier communities that benefit all British Columbians.38 Furthermore, provincial and federal governments are increasing working to coordinate their efforts. In 2012, the governments of Canada and Quebec signed an agreement with Assembly of First Nations of Quebec and Labrador to improve the academic outcomes of Aboriginal students.39 Similar agreements have been signed with New Brunswick, Manitoba, Alberta, Prince Edward Island, Nova Scotia and British Columbia.

Prime Minister Stephen Harper, “Statement of Apology” Government of Canada, June 11th, 2008. Retrievable at http://www.aadnc-aandc.gc.ca/ eng/1100100015644.

36

Assembly of First Nations, “Government – First Nation Gathering” Last updated 2012. Retrievable at www.governmentfirstnationgathering.com.

37

Ministry of Aboriginal Relations and Reconciliation, “New Relationship with Aboriginal Peoples and Communities in British Columbia: Annual Report on Progress 2010-2011,” Government of British Columbia (2011): 2-3.

38

Aboriginal and Northern Affairs Canada, “Quebec Tripartite Memorandum of Understanding Education Agreement” Government of Canada, (2012). Retrievable at http://www.aadnc-aandc. gc.ca/eng/1336414511848.

39

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The key task for governments should be the development of a legislative framework that promotes institutional and economic development.

Tom Cooper et al, “Aboriginal Finance and Regulation – What Are the Regulatory Impediments to Establishing an Atlantic Canadian Aboriginal Financial Institution?” Workplace Review (2010): 64.

40

Key strategies for success 1. Develop an enabling legislative framework The key task for governments should be the development of a legislative framework that promotes institutional and economic development, gradually transfers decision making to appropriate Aboriginal governments and unshackles Aboriginal communities from the archaic and counterproductive Indian Act.40 One of the key tasks this framework is to increase the capital available to Aboriginal communities. Communities need money to grow and prosper. It allows them to build the appropriate infrastructure to facilitate economic growth, increase employment and attract businesses. An undercapitalized community is never as productive as an adequately financed competitor, putting those communities without adequate access to capital at a serious competitive disadvantage. The government has introduced a number of legislative reforms designed to improve Aboriginal access to capital and economic opportunity. These can be summarized as follows: First Nations Fiscal and Statistical Management Act

One of the most important of these legislative reforms is the First Nations Fiscal and Statistical Management Act (FNFSMA), which provides a codified framework by which First Nations can use their right to levy property taxes on their reserves to access capital markets to make infrastructure improvements. The act integrates property taxation, fiscal management, borrowing power, the ability to obtain financing and statistical information into a single code.41

The borrowing model that Aboriginal communities now have access to is based on the Municipal Finance Authority of British Columbia (MFA). The MFA was created in the 1960’s to help community’s access capital. By pooling their borrowing needs, the MFA was able to obtain capital for municipalities at lower interest rates and provide certainty to investors by spreading risk among a larger pool of borrowers. Under the new legislation, the First Nations Finance Authority will play the role of the MFA, assisting Aboriginal communities to access the capital they need to develop their communities. Along with improving the ability of an Aboriginal community to access capital, the FNFSMA is important in that it creates a comprehensive institutional framework for the implementation of policy. The Act created four key institutions; each with a unique mandate to ensure the implementation and operationalization of the legislation’s policy objectives. This Act is an important step to building institutional capacity within Aboriginal communities and is an excellent model for institutional and capacity development. The four institutions created by the Act are: the First Nations Fiscal Management Board, which establishes standards for on reserve financial reporting; the First Nations Tax Commission, which regulates First Nation property tax systems; the First Nations Finance Authority, which provides low interest loans and capital planning to First Nations governments; and the First Nations Statistical Institute, which works to improve the availability of statistics on the Aboriginal population.

Christopher Devlin, “An Overview of the First Nations Fiscal and Statistical Management Act” The Advocate (2006) Vol. 64 Part 1: 59.

41

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Devlin, “An Overview of the First Nations Fiscal and Statistical Management Act”: 62-63.

42

Aboriginal Affairs and Northern Development Canada, “Summary: First Nations Land Management Act” Government of Canada (2011). Retrievable at http://www.squiala.com/files/File/ Summary_First_Nations_Land_Management_Act.pdf.

43

44

Ibid.

These four bodies represent the institutional framework of the FNFSMA. First Nations who choose to participate in the FNFSMA have access to a powerful new set of tools for economic development, while investors who wish to invest in First Nation communities have the certainty they crave. The benefit this framework has in creating certainty for investors has been recognized by the Canadian Chamber of Commerce, which recently noted: “Investors will have the confidence that the bonds issued by the Finance Authority to pay for the loans to the First Nations are legally secured by the taxation revenue. This mechanism simply did not exist before for First Nations.”42

First Nations Land Management Act

The First Nations Land Management Act (FNLMA) is a piece of federal legislation that allows First Nations to take authority for making laws in relation to land management, reserves and environmental protection.43 The legislation allows First Nations to opt out of the land administration sections of the Indian Act and establish their own regimes to manage their lands and resources. The framework also promotes community management initiatives that will result in greater land protection, improved economic development and self-sufficiency on reserves.44

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Susanna Cluff-Clyburne, “Ready for Business: Canada’s Aboriginal and Non-Aboriginal Businesses as Equal Partners” Canadian Chamber of Commerce (2010): 6.

45

Fitzpatrick, Meagan. “18 more First Nations sign land control deal .” CBC News, April 13, 2012. http://www.cbc.ca/news/canada/ story/2012/04/13/pol-aboriginal-land.html.

46

Cluff-Clyburne, “Ready for Business: Canada’s Aboriginal and Non-Aboriginal Businesses as Equal Partners”: 6.

47

Aboriginal Affairs and Northern Development Canada, “The Regulatory Gap: The First Nations of Commercial and Industrial Development Act” Government of Canada. Last updated 2012. Retrievable at http://www.aadnc-aandc.gc.ca/ eng/1100100033561.

48

The agreement was first signed in 1996 by 14 initial First Nations, and was enacted in parliament in 1999 which allowed other interested First Nations to make use of the legislation. The legislation was a response to the desire of many Aboriginal communities to get out from under counterproductive land codes within the Indian Act.45 Participating First Nations have the ability to opt out of 34 land specific regulations stipulated within the Indian Act. Today there are 60 First Nations whom have opted to make use of the FNLMA and its powers, and approximately 70 First Nations are in some stage of negotiations with the government whom have indicated interest in establishing their own land management regimes.46

First Nations Commercial and Industrial Development Act

Many Aboriginal communities control valuable land rich in natural resources, and close to major cities and strategic transportation hubs. Many of these communities have taken advantage of this strategic advantage by developing commercial property on reserve. The First Nations Commercial and Industrial Development Act (FNCIDA) is federal legislation that closes regulatory gaps and harmonizes on‑and-off-reserve land codes.47 The legislation was tabled introduced in parliament in 2005, and came into force in the spring of 2006. The FNLMA is opt-in legislation and only applies to those First Nations that choose to make use of it. The regulations are project-specific, developed in cooperation with the First Nation and the relevant province, and are limited to the particular lands described in the project.48

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Aboriginal Affairs and Northern Development Canada, “Aboriginal Consultation and Accommodation: Updated Guidelines for Federal Officials to Fulfill the Duty to Consult” Government of Canada (2011): 1. Accessible at http://www.aadnc-aandc.gc.ca/DAM/ DAM-INTER-HQ/STAGING/texte-text/ intgui_1100100014665_eng.pdf.

49

50

2. Improved Aboriginal consultation and accommodation The duty to consult and accommodate is one of the most important developments in recent Aboriginal public policy. The duty arose as a result of Canadian Supreme Court cases such as Haida Nation v. British Columbia, Mikisew Cree First Nation v. Canada, and Taku River Tlingit First Nation v. British Columbia. The Crown is required to consult where either claimed or established rights have the potential to be infringed due to development within a community’s territory. The Crown’s duty stems from Aboriginal’s constitutionally protected rights as outlined in Section 35 of the Constitution Act 1982.49 The duty applies to both proven and unproven Aboriginal and treaty rights, greatly expanding the number of potential communities whom may require engagement. The responsibility to consult and the specific jurisdictional duties are often spread across federal departments, provincial governments and independent regulators making assigning roles and responsibilities difficult. Furthermore, while the duty to consult rests with the Crown, much of the process is delegated to industry. This creates a situation whereby industry may be consulting with Aboriginal communities on behalf of the Crown.50 Failure to do this can result in the delay of a project. In fact, recent court decisions in both British Columbia and Quebec forced companies to not go ahead with projects they had provincial approval for because the government had failed to adequately discharge its duty.51

The diversity of consultation and accommodation policies and approaches in Canada seems to reflect how new and undefined the concept is with regards to federal and provincial public policy. In addition, it seems that most governments have taken a rather narrow scope when viewing the duty to consultation and accommodate, while many Aboriginal communities argue that duties owed to Aboriginal people should be interpreted broadly. In response to these court decisions federal, provincial and territorial governments across Canada have developed a variety of policies with respect to consultation and accommodation. While each jurisdiction has a policy, they vary in terms of scope and approach. Table 3 is an overview of the elements of the accommodation and consultation policies for the federal, western provincial and territorial governments in Canada. Clarifying the expectations of all participants prior to the beginning of the consultation process is important in managing expectations and ensuring that potentially contentious issues are dealt with proactively rather than reactively. Sensible, clear, consistent and transparent processes for Aboriginal consultation that clarify the rights, roles, duties, responsibilities and expectations of proponents, government and Aboriginal communities are critical to providing predictability for business and Aboriginal communities.

Ibid: 19.

Connie Bryson and Marylu Walters, “Learning From Experience: Aboriginal Programs in the Resource Industries”, Alberta Chamber of Resources (2006): 71.

51

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The federal government has identified this challenge and, in its 2011 updated consultation guidelines, established the parameters under which federal departments and agencies must support the government’s efforts in meeting its duty to consult and accommodate. Key among these include: the need to ensure that a lead federal department or agency is identified and made accountable for any ­consultation

processes; the need to rely on existing consultation mechanisms where appropriate (and specifically the environmental assessment and regulatory approval processes); and the use of consultation processes and accommodation measures carried out by its partners (e.g. Aboriginal groups, provinces, territories and industry) to assist it in meeting its commitments.52

Table 3: Consultation and accommodation policies across Canada Government of British Columbia/ Oil and Gas Commission

Government of Saskatchewan

Government of Alberta

Government of the Yukon

Government of Canada

Consultation principles

X

X

X

X

X

Consultation procedures

X

X

X

X

Addresses treaty rights

X

Addresses Aboriginal title

X

Resources and funding for referrals

X

Addresses private lands

X

$ Compensation for infringement on rights

X

X

X

X X

X

X

X

X X

X

Aboriginal Affairs and Northern Development Canada, “Aboriginal Consultation and Accommodation”:7.

52

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Strategies for Government

Aboriginal communities need to have a sufficient weight in decisions made with respect to their territory.

b. Improved intergovernmental coordination The duty to consult and accommodate rests with both the federal and provincial government, making coordinating these policies, and where necessary, developing equivalencies to reduce duplication and reduce costs a critical factor moving forward.54

53

Ibid: 7.

54

Ibid: 18.

Key considerations for government and Aboriginal communities moving forward on best practices for consultation and accommodation include: a. Designation of a best placed regulator A clear and consistent lead federal department or agency must be identified and made accountable for coordinating the consultation processes. There is also a need to rely on existing consultation mechanisms where appropriate and retain the flexibility to rely on the consultation processes and accommodation measures carried out by key partners, including industry.53

c. An improved referral process Many Aboriginal communities have voiced their concern that the federal and provincial referral system is burdensome, costly and inhibits their ability to focus on more important elements of the process.55 The current process places large reporting and compliance requirements on communities without necessary yielding improved consultation outcomes.56 This needs to be streamlined and improved to reduce time, reporting and compliance costs, with more emphasis given to ensuring the Aboriginal communities have a sufficient weight in decisions made with respect to their territory.

Maria Morellato, Q.C, “Government Consultation Policies and Practices Across Canada” National Centre for First Nation Governance (2009): 8.

55

56

Ibid: 9.

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d. Focus on broad principles Achieving consensus on a tightly prescribed process for more than 600 Aboriginal communities, along with the federal and provincial government, is a difficult and complex task. Rather than trying to specify a highly detailed process that does not take into account the diversity of both industry and Aboriginal communities, government should focus on outlining a principlesbased policy, leaving project specific issues up to the project proponent and Aboriginal community. This combination of high level and principles-based guidance, along with flexibility on specific issues would yield an improved consultation and accommodation process. e. Focus on the development of effective dispute resolution mechanisms Many firms and Aboriginal communities are well versed in the consultative element of the consultation and accommodation process.

However, less success has been achieved in the accommodation component, creating an impetus for the development of clear and transparent dispute resolution mechanisms when accommodation proves illusive. A process which can provide certainty to industry and government on its responsibilities to Aboriginal communities, along with providing satisfaction to Aboriginal communities, could potentially mitigate unnecessary conflict and result in less litigation. f. Explore the use of royalties as a ­mechanism for accommodation Governments around the world charge private industry monies in the form of royalties for the development of natural resources on their territory, including Aboriginal lands. If industry is going to be accessing natural resources on Aboriginal territory, it is not unreasonable that those communities should feel entitled to a portion of the monies flowing from development on their land? Government should explore

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the option of finding a fiscal transfer of some proportion of royalties to affected Aboriginal communities. This transfer would be difficult, and would need to increase certainty and predictability for business. However, this could be a potentially powerful tool for economic development.

in ensuring that all parties enter into negotiations with realistic and attainable goals. The same principles apply to industry, which should have a clear understanding of its potential responsibilities imbedded within the process and the potential costs associated with those responsibilities. Strategies for Aboriginal Communities

Aboriginal communities have the right to be consulted and accommodated.

MNP LLP, “Best Practices for Consultation and Accommodation” Prepared for the British Columbia New Relationship Trust, (2009): 9.

57

58

g. Clarifying expectations to Aboriginal communities and industry Aboriginal communities have the right to be consulted and accommodated, but they do not possess a veto on the development process. It is important to clarify to both Aboriginal communities and industry what can be expected through the consultation process to mitigate any potential concerns early on, rather than having the same problem arise later in negotiations. Clarifying the scope and limitations of the consultation and accommodation process is an important step

a. Designate a representative for the ­community in the negotiations It is important that once substantive negotiations begin – with either industry or the government – that Aboriginal communities designate someone (or a team) to conduct negotiations on their behalf.57 This simplifies the reporting and negotiating process for both parties, develops internal capacity within the community and provides a single point of contact for both project proponents and stakeholders.

It is also important to ensure that the team leading consultation and accommodation negotiations for the community is not the political leadership of that same community. This leadership has an important role to play in setting strategic direction and providing clarity to negotiators, but should not be the individual’s negotiating the case.58 b. Develop protocols to coordinate ­overlapping territorial claims Often multiple Aboriginal communities’ rights may be infringed due to a development proposal, creating a uniquely challenging situation for government and industry. If Aboriginal communities can preemptively coordinate and formalize these overlapping jurisdictions, it will be easier for government to clearly understand whom it needs to engage.

Ibid: 8-9.

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59

Ibid: iv.

60

Ibid: 11.

c. Gather claim supporting documentation Making a case involving Aboriginal or treaty rights is a long and difficult process. One of the first steps to making the process less difficult is for Aboriginal communities to ensure that all evidence (GIS data, archeological artifacts, historical maps, treaties and agreements, oral history, etc.) is accounted for and categorized to appropriately support the community’s case.59 In many cases it may be necessary to bring in outside experts to assist with the preparation of a case. d. Ensure there is a clear communication with the community Ensuring that negotiators have a clear mandate from both council and community members is an important strategy to ensuring that whatever the conclusion of the

process, it reflects the shared beliefs, values and goals of the community.60 This may require multiple community meetings and open lines of communication to ensure that the community can make its concerns heard and establish what it expects will be achieved from the consultation and accommodation process. e. Work to resolve outstanding issues with neighbouring Aboriginal communities When developing relationships with industry, it is important that Aboriginal people ensure that the relationship and progress achieved is not compromised due to poor relations and communications with other Aboriginal communities. Hard negotiated gains and employment opportunities can be compromised due to unnecessary interference

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from unaffected Aboriginal communities. This issue puts a premium on an Aboriginal community’s ability to develop consensus and strong working relationships with another community’s political leadership and develop a mechanism to coordinate on common issues. f. Understand the unique challenges of business Just as industry needs to work diligently to understand the challenges faced by Aboriginal communities, those same communities need to understand the challenges that industry faces developing natural resource projects. These businesses are consistently under strong time, labour and capital constraints. Aboriginal communities need to understand the unique challenges that these companies face, and ensure that the costs of consultation and accommodation are balanced with ensuring a profitable venture for industry. Failure to do so will result in lost economic output for both industry and Aboriginal communities.

61

Ibid: 9.

62

Ibid: 9.

Indian and Northern Affairs Canada, “Resolving Aboriginal Land Claims” Government of Canada (2003): 5.

63

Aboriginal and Northern Affairs Canada, “Fact Sheet: Implementation of Final Agreements.” Government of Canada. Last modified March 2012. Accessed June 2, 2012. http://www.aadnc-aandc. gc.ca/eng/1100100030580/1100100030581.

64

3. Improve clarity surrounding Aboriginal land claims The issue of Aboriginal land claims pre-dates Canadian confederation and has been a source of historic and legal tension between the Aboriginal people and governments for more than two centuries. Beginning in 1701 and continuing to this day, Aboriginal people have been negotiating with the either the British or Canadian government to secure title to their traditional lands and formalize their relationship with the Crown. Despite numerous policy

developments and efforts at reconciliation, both sides continue to search for an effective and efficient mechanism for the resolution of outstanding claims in a timely manner. There are two types of claims that can be advanced by Aboriginal groups. Specific claims Specific land claims are related to grievances with regards to the implementation of Canada’s historic treaties. These are typically less lengthy and complex than comprehensive claims.61 Comprehensive claims Comprehensive land claims are modern treaties and are negotiated in areas where Aboriginal and legal title to land has not been resolved. These negotiations are long, complex and often involve much more than simply the transfer of land. These negotiations often encompass financial arrangements, resource revenue sharing, self-government and devolution.62

Negotiations for comprehensive land claims accelerated in the late 1960s and early 1970s due to the Calder case that ruled Aboriginals (in this case, the Nisga’a) had not surrendered title to their land, and “ruled that the Nisga’a had a pre-existing title to the land based on their long-time occupation, possession and use of the territory.”63 In 1973 the federal government opened the Native Claims Office and began to work with Aboriginal community to negotiate comprehensive land claims. The government has committed to ensuring modern treaties and self-government agreements continue to be a foundation for strengthened and renewed relationships. As of March 2012, 25 comprehensive land claims have been concluded, with the average taking more than 20 years to negotiate.64

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4. Renewed relationships for prosperity

While progress has been made, the current approach is slow, cumbersome and highly complex, resulting in time delays and a lack of certainty for Aboriginal communities and business. Comprehensive land claims can take decades, and many cases require substantial costs for legal and consultation fees, community engagement, environmental assessments and other work necessary for the resolution of a claim. This process puts First Nations at a distinct disadvantage compared

Settling outstanding land claims will improve certainty for business and Aboriginal communities, increase access to capital and act as a mechanism for economic development.

Chris Alcantara. “Deal? Or No Deal? Explaining Comprehensive Land Claims Negotiation Outcomes in Canada.” Thesis for Doctorate of Philosophy at the University of Toronto Department of Political Science. (2008): 6. Retrievable at https://tspace. library.utoronto.ca/bitstream/1807/17303/1/ Alcantara_Christopher_200811_PhD_Thesis.pdf.

65

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to the government because often it is the government who is providing the funds for these communities, along with regulating many of the institutions such as the courts, governmental departments and various ­agencies that are involved in making the final decisions.65

Not only are negotiations slow, but the inability to settle outstanding claims has impeded economic and institutional development. Comprehensive land claims often act as a mechanism for development because the negotiation of such claims usually involves concurrent negotiations on long-term financing, taxation, self-government and social service provisions. Due to this complexity finding a consensus on so many issues within one framework frequently results in slow negotiations. Research suggests that land claim negotiations have a higher probability of success if issues like self-government agreements and financing are resolved prior to, rather than at the same time as the land claims.66 Settling outstanding land claims will improve certainty for business and Aboriginal communities, increase access to capital and act as a mechanism for economic development. A 2009 study concluded that the province of British Columbia alone could experience more than $425 million a year in net economic benefits over a 30-year period if it were able to settle its outstanding land claims. The same report determined that those benefits would be higher the faster the process was concluded, creating an impetus for action.67 Consequently, the federal and provincial governments should invest significant resources to resolve outstanding land claims, which will can act as both the foundation for a renewed Crown-Aboriginal relationship and a mechanism for economic and institutional development.

Ibid: 261.

PricewaterhouseCoopers LLP, “Financial and Economic Impacts of Treaty Settlements in BC.” Prepared for BC Treaty Commission (2009): iv.

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5. Policy recommendations

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Aboriginal-Business Connections: From partnerships to prosperity

5. Policy recommendations

In order for Aboriginal people to achieve economic prosperity there will need to be a strategy from both private industry and government. The following policy and strategy recommendations are informed by the research, dialogue and roundtable discussions hosted throughout the Aboriginal-Business Connections series.

For Aboriginal people to achieve economic prosperity there will need to be a strategy from both private industry and government.

Strategies for government Renewed relationship for success 1. An enabling legislative framework

• Continue to develop legislation that increases the access to capital for Aboriginal communities • Continue to focus on developing legislation that allows willing Aboriginal communities to optout of elements of the Indian Act, in particular those sections surrounding taxation and land administration • Continue to work to fee-simple land ownership for willing Aboriginal communities • Continue to work to increase accountability and transparency of Aboriginal governance 2. Consultation and accommodation

• Improve intergovernmental coordination between federal and provincial standards • Work towards the designation of a best placed regulator to lead the process and coordinate any overlapping governmental jurisdictions • Streamline and improve the referral process, which places undue time and financial burden on Aboriginal communities • Focus on the development of clear, non-political dispute resolution mechanisms in the case of accommodation

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5. Policy recommendations

3. Increase clarity of Aboriginal land claims

• Invest time and resources to expediting outstanding comprehensive land claims in an effective manner with firm timelines and accountabilities • Work to clarify self-government and other related issues prior to rather than during comprehensive land claim negotiations Developing Aboriginal institutions and capacity 4. Increase autonomy and decisionmaking authority of Aboriginal communities

• Continue to transfer ­practical decision making authority to Aboriginal governments

• Press for the continued development of accountable political structures for Aboriginal communities 5. Focus on economic development and institutional capacity

• Re-focus government’s role from the contingent-funding model to the block-grant model, placing more resources and responsibility in the hands of Aboriginal communities 6. Embrace a diversity of partners and governmental forms

• Embrace a diversity of partners such as post-secondary instructions and Aboriginal human resource departments as partners in developing Aboriginal institutions and capacity • Be willing to accept different governmental forms that are reflective of the diversity of the Aboriginal people in Canada

Strategies for business Aboriginal-business partnerships 1. Ensure that there is consultation with affected Aboriginal communities at the planning stage of projects

• This is a sound strategy regardless of whether the courts have determined that consultation and accommodation is necessary 2. Focus on developing long-term ­relationships with communities

• Often the lifecycle of a project will exceed the lifecycle of a community’s political leadership, so cultivating a relationship with the community is a key strategy for a successful relationship 3. Establish clear and measurable goals for Aboriginal partnerships

• Those firms that have clear measures for Aboriginal partnerships have more success than those who do not. This can also serve as the basis for continuous improvement and reporting

4. Invest in Aboriginal relations capacity

• Those firms who invest in Aboriginal relations capacity building – whether through workshops or the hiring of Aboriginal relations staff – have better outcomes in Aboriginal and stakeholder partnerships than those who do not 5. Determine objectives of the community first, then plan the business model

• Ensure that the particular business and tax structure that is chosen for the partnership serves the goals of the community and is reflective of their goals and aspirations

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Aboriginal-Business Connections: From partnerships to prosperity

5. Policy recommendations

6. Ensure there is a strategy for ­contractors and business partners

• While many firms have a strong Aboriginal relations strategy, their business partners and contractors may not. It is important to ensure these individuals understand the importance of the relationship with the Aboriginal community, along with the potential consequences of insensitivity Strategies for Aboriginal communities Renewed relationships for prosperity 1. An enabling legislative framework

• Make use of the legislative tools available by government to get out from under elements of the Indian Act

• Work with new institutional bodies created by the First Nations Fiscal and Statistical Management Act to develop transparent financial management systems and access capital 2. Consultation and accommodation

• Develop protocol and processes to coordinate overlapping territory’s with neighbouring communities • Designate a representative to lead the consultation and accommodation process • Gather supporting evidence prior to the process, and bring in outside experts if necessary

Developing Aboriginal institutions and capacity 1. Embrace and prepare for autonomy

• Work with government for the transfer of control over local decision-making authority • Develop effective, legitimate and accountable governance structures 2. Encourage political leadership to focus efforts on setting strategic priorities

• The role of political leadership is to set strategic priorities, develop effective governance structures and articulate the goals of the community, not program administration or the management of day-to-day business 3. Create transparent and non-political dispute resolution mechanisms

• Focus on the development of transparent legal, administrative and commercial codes to guide commercial activity • Focus on the development of a competent, professional and autonomous civil administration to carry out court decisions 4. Ensure adequate separation between politics and business

• Ensure there is a distinct separation of the political leadership from the day-to-day running of community businesses

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Aboriginal-Business Connections: From partnerships to prosperity

6. Appendix A – Thought leaders and topics

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Aboriginal-Business Connections: From partnerships to prosperity

6. Appendix A – Thought leaders and topics

Corporate Social Responsibility

Accessing Capital

Sam McCracken, chairman of Nike N7 and general manager of Nike’s Native American Business October 21, 2011

Manny Jules, chief commissioner of the First Nations Tax Commission Harold Calla, chairman of the First Nations Financial Management Board November 29, 2011

Nike N7 is an innovative and unique approach to CSR taken by apparel and sportswear company Nike Inc. The initiative began in 2007, and reflects Nike’s commitment to engaging Native American communities through the shared interests of sport and health promotion, along with community development. The initiative believes that sport helps people be healthy and happy, which gives them the confidence to be a force of positive change in the community.68 Sam McCracken came to Calgary to share how Nike N7 is illustrative of the success an organization can achieve when it builds on its own internal competitive advantages and applies them to CSR. Nike was able to further its CSR goals of health promotion by applying the skills it had developed in other areas such as product development, marketing, and athlete endorsements. As Nike CEO Mark Parker explained regarding the company’s overall approach to CSR: “It took us a while, but we finally figured out that we could apply these two core competencies – design and innovation – to bring about environmental, labor and social change.”69

Accessing capital to fund community infrastructure is a challenge for all communities. It can be especially difficult for Aboriginal communities due to the unique legal, economic and political structures used by many of these communities. The First Nations Fiscal and Statistical Management Act has made it possible for Aboriginal communities to access the capital via the debt market in the same way as other Canadian municipalities, opening up a potentially powerful mechanism for economic development. In the fall of 2011, two of Canada’s foremost experts on Aboriginal finance, Manny Jules and Harold Calla, came to the Chamber to better explain the important ramifications of this Act and the potential it holds in facilitating economic development for Aboriginal people in Canada.

“About N7,” Nike Incorporated, accessed September 27, 2011, accessible at http://niken7. com/about-n7/

68

Nike Inc. “Nike Corporate Responsibility Report: FY 2007, 2008, 2009” Nike Inc.(2009): 133. Accessible at www.nikebiz.com/crreport.

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6. Appendix A – Thought leaders and topics

Good Governance

Renewed Federal Engagement

Stephen Cornell, co-director of the Harvard Project of American Indian Economic Development January 26, 2012

John Duncan, federal minister of Aboriginal Affairs and Northern Development March 20, 2012

Good governance is essential to Aboriginal development. In the 2012, the Chamber welcomed Stephen Cornell, co-director of the Harvard Project on American Indian Economic Development, to share his thoughts on the role good governance and institutional development can play in economic development.

In early 2012, the federal government and First Nations came together to renew their relationship, develop effective policy frameworks and cement their shared commitment to improving the lives of the Aboriginal people in Canada. The gathering built on the Canada-First Nations Joint Action Plan that was agreed to by the government of Canada and the Assembly of First Nations in June 2011.

Cornell and his colleagues have concluded that practical decision making authority combined with capable governing institutions is the foundation upon which economic development is founded. This combination – practical decision making authority and capable institutions – are key because they allow Aboriginal communities to both set long-term economic development goals and achieve them. Renewed Relationships for Success Shawn Atleo, national chief of the Assembly of First Nations March 1, 2012 For First Nations to fully participate in the economic opportunities that will be available to them in the coming decades, there will need to be a renewal of the relationship between the federal and provincial government and Aboriginal communities. In early 2012, National Chief of the Assembly of First Nations Shawn Atleo came to the Chamber to share his vision for this renewed relationship, emphasizing the need for it to be based on trust, mutual respect and shared prosperity.

In the spring of 2012, Federal Minister of Aboriginal Affairs and Northern Development John Duncan came to the Chamber to speak about some of the important policy changes occurring at the federal level. He suggested that a growing natural resources sector and a tighter job market will likely mean more opportunities for skilled Aboriginal workers. This, Duncan noted, could help businesses looking for workers, but only if they do their part to engage this often overlooked segment of the workforce. Structuring Business Partnerships Policy Dialogue Expert Roundtable Bob Reid, chairman of the Aboriginal Pipeline Group Clayton Norris, director of Aboriginal Services with MNP May 15, 2012 Canadian companies see the value in partnering with Aboriginal communities, companies and entrepreneurs to achieve their business objectives.

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Aboriginal-Business Connections: From partnerships to prosperity

6. Appendix A – Thought leaders and topics

Once a decision to partner with an Aboriginal community or business has been made, many other relevant questions need to be answered. What is the most efficient structure for the business? Are they any specific legal duties that need to be addressed with respect to the partnership? How will risk, reward and decision-making authority be allocated? To address these complex issues, the Chamber held a policy dialogue expert roundtable with experts from Aboriginal communities and private industry to discuss some of the best practices involved with structuring a business partnership. Consultation and Accommodation Chuck Strahl, former federal minister of Indian and Northern Affairs Thom Stubbs, partner with Integrated Environments Lee Francoeur, partner with Eagle Law Group June 7, 2012

As a result of several Supreme Court cases, Aboriginal communities have the right to be consulted with and accommodated when a development in their territory has the potential to infringe on their treaty and constitutional rights. To better understand this issue, they Chamber hosted former Federal Indian Affairs Minister Chuck Strahl, along with Lee Francoeur and Thom Stubbs, to gain a greater understanding of how this important legislation has been interpreted and applied, and figure out how these groups can work together going forward. Capstone: From Partnership to Prosperity Robin Campbell, Alberta minister of Aboriginal Relations June 28, 2012 The ABC series concluded with the release of this final report at an event featuring Robin Campbell, Alberta’s minister of Aboriginal Relations.

The duty to consult and accommodate has emerged as one of the most important legislative developments in Aboriginal public policy.

Photo: Thom Stubbs, a partner with Integrated Environments, spoke at the Calgary Chamber about Aboriginal consultation and accommodation.

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Aboriginal-Business Connections: From partnerships to prosperity

7. Appendix B – Key agreements

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Aboriginal-Business Connections: From partnerships to prosperity

7. Appendix B – Key agreements

Key agreements Memorandums of Understanding (MOU) An MOU is a document that outlines and defines the relationship and general principles between parties, and may or may not constitute a binding legal agreement.70 It expresses a convergence of will between parties, and demonstrates a common line of action. In the Aboriginal context, an MOU has been used to define and structure the relationship between Aboriginal people and government/industry, and often function as precursors to more defined agreements, such as Impact Benefits Agreements.71 Impact Benefit Agreement (IBA) IBAs are legal agreements between Aboriginal communities and industry that defines the relationship and spells out in a contractual form the benefits that a local community can expect from the development of a local resource in exchange for its support and cooperation. Their specific content varies, but typically they include provisions on royalties and/or profitsharing, employment, wider economic development opportunities, and enhanced protection of environmental and/or socio-cultural amenities.72

Ginger, Gibson and Ciaran O’Faircheallaigh, “IBA Community Toolkit: Negotiation and Implementation of Impact And Benefit Agreements” Walter and Duncan Gordon Foundation, (2010): 78.

70

71

Ibid:78.

Ben Bradshaw and Courtney Fidler, “Background” Impact and Benefit Research Group, accessed May 9, 2012. Retrievable at http://www.impactandbenefit.com/Background/.

72

Irene Sosa and Karyn Keenan, “Impact Benefit Agreements between Aboriginal Communities and Mining Companies: Their Use in Canada” Canadian Environmental Law Review, (2001): 8.

73

Barry Reiter and Melanie Shishler, “Joint Ventures: Legal and Business Perspectives” Irwin Law (1999): 15.

74

75

Ibid: 19.

76

Ibid: 21.

IBAs contain elements of both a legal contract and a regulatory instrument73, because of the potential role they place in the regulation of development related activities. IBAs may or may not involve the Government; but the Government of Canada has encouraged these agreements because

they promote economic development and social benefits. Additionally these agreements form an adjunct to Government/Aboriginal consultation and have been used in the recent past to facilitate the development of Canada’s north, including three diamond mines in the Northwest Territories and Inco’s Voisey Bay ­project in Labrador. Key business structures Joint ventures A Joint Venture (JV) is a formal arrangement between two or more parties (who remain distinct entities) to create a new business for the purpose of carrying out some kind of mutually beneficial activity. These types of arrangements have proliferated in recent years due to shortened product lives, the potential for cost savings, operational synergies, and the continued expansion of domestic firms moving into global markets. JVs are most often used in the technology, manufacturing, automobile, real estate, software and mining industries.74 A clear definition of what exactly constitutes a JV is elusive, as the term “captures a wide range of business relationships in an even more diverse range of industries.”75 For example a JV can be carried out in a corporate form ( joint venture corporation), partnership ( joint venture partnership) or contractual form (contractual joint venture). It is also important to distinguish JVs from other forms of contractual arrangements, such as trusts. JVs tend to have shorter lifespans than trusts (3.5 years on average)76, because they are often undertaken for the purpose of bringing together complimentary assets and skill sets on a specific projects, rather than creating a new firm.

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Aboriginal-Business Connections: From partnerships to prosperity

7. Appendix B – Key agreements

Trusts A trust is a relationship whereby property (real, personal, tangible or intangible) is held by one party for the benefit of another. While there is considerable diversity with regards to trusts, they are defined by the terms of the parties and the relationships that relate to property. There are typically three parties with respect to trusts, a grantor, a trustee and a beneficiary. Any of the parties can be either an individual(s) or organization(s). Typically, a grantor will contribute property to the trust along with setting of the terms of the trust. The trust is managed by a trustee (in many cases the grantor and trustee are the same person or entity) for the benefit or one or more beneficiaries, to whom the trustee owes the duties of loyalty and care.77

Ward L. Thomas and Leonard J. Henzke Jr., “Trusts: Common Law and IRC 501( c ) and 4947” Exempt Organizations – Technical Instruction Programs for FY 2003, (2003): A-5.

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Trusts are often used to manage assets for tax and liability purposes and in many ways are structurally similar to corporations: “trusts generally combine the limited liability of the corporate vehicle with the flowthrough of tax benefits to the business principles that make a partnership or joint venture desirable.”78 One of the principle benefits of trusts is that they are private and do not have many of the same onerous governance and reporting guidelines as corporations. However, in the Aboriginal context, trusts are used less often to structure business relationships and more often are utilized to manage the funds arising from business relationship.

Corporations A corporation is an entity that has legal existence independent of its shareholders. Corporations can take various forms, such as joint-stock companies, cooperatives or statutory corporations. All of these forms have the key characteristic of a corporation, limited liability. In the case of insolvency, shareholder may suffer investment losses, but are not liable to the corporation’s creditors. This feature makes corporations excellent vehicles for creating and operating a business, as it provides “the greatest flexibility in the structuring of authority to make and execute business decisions.”79 Additionally, in many cases corporations receive favourable tax treatment in Canada, making them a cost effective way to conduct business. Partnerships A partnership is a relationship between two or more persons (including corporations and other legal entities) who agree to carry on a business or commercial venture in common with a view to profit.80 Partnerships are not distinct legal entities, but conceptually they are treated as such with each partner allocated a specific share of any profits and losses from the business. A partnership is treated as a conduit or flow through vehicle for income tax purposes, with income or losses shared among the partners, and the partnership is not subject to entity level tax, making them a potentially valuable way to structure a business.

Blaney McMurty Barristers and Solicitors, “Carrying on Business in Canada,”Blaney McMurty LLP: 3. Retrievable at http://taglaw.com/files/ Doing%20Business%20Guides/Doing%20 Business%20in%20Canada.pdf.

78

79

Ibid: 1.

Elizabeth J. Johnson and Genevieve C. Lille, “The Taxation of Partnerships in Canada,” Wilson and Partners LLP, (2009): 381.

80

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Aboriginal-Business Connections: From partnerships to prosperity

7. Appendix B – Key agreements

There are three forms of partnerships: general, limited, and limited liability. In a general partnership, the partners have unlimited liability with regard to debts or liabilities incurred by the partnership in proportion to their ownership. A limited partnership is composed of both general and limited partners. General partners control the business and have the same liability as partners in a general partnership. The limited partners are not involved in the running of the business and have their liability capped at the amount of their capital contribution.81 A limited liability partnership is a very specific form of partnership that allows members of certain professions (lawyers, accountants) who are unable to conduct business as a corporation to limited liabilities they may have otherwise faced had they structured themselves as a general partnership.82 First Nations Fiscal Management Board (FNFMB)

81

Blaney McMurty Barristers and Solicitors: 2.

82

Ibid: 3.

First Nations Fiscal Management Board, “About the FMB,” accessed October 18, 2011. Accessible at http://www.fnfmb.com/index.php?option=com_ content&view=category&layout=blog&id=10&Itemid =2&lang=en.

83

The FNFMB has the authority to establish financial reporting standards for First Nations who wish to access capital through the FNFSMA.83 For a First Nation to borrow, it must first pass a financial administration law set out by the Board. In addition, if the Board finds that a First Nation’s finances are not in compliance, it has the power to place the community’s revenue account under co-management or third party management. The Board is also actively involved in building financial and administrative capacity within First Nations.

First Nations Tax Commission (FNTC)

The FNTC is the successor to the Indian Tax Advisory Board (ITAB), and has the power to regulate a First Nation’s on reserve property tax system. The Commission mandate is to provide certainty and transparency with regards to First Nation’s revenue laws, along with building First Nation’s tax administration capacity at a local level.84 First Nations Finance Authority (FNFA)

The FNFA provides low interest loans, capital planning and investment advice to First Nation’s governments. Under the FNFSMA legislation, a First Nation can pledge its tax revenues to the Authority, who then pools these revenues and uses them to leverage capital for investment, community development and infrastructure: “Through the pooling of borrowing capacity of participating First Nations, the Finance Authority will be able to reduce the cost of borrowing and enable smaller First Nations to access capital markets that they could not access before.”85 First Nations Statistical Institute (FNSI)

The FNSI is Government Corporation that is charged with increasing the quality and availability of First Nations statistics to improve policy, decision making and investment.86

First Nations Tax Commission, “About the FNTC: Policy Objectives” Accessed October 18, 2011. Accessible at http://www.fntc.ca/index. php?option=com_content&view=article&id=6:policyobjectives&catid=38:abtfntc&Itemid=11.

84

Devlin, “An Overview of the First Nations Fiscal and Statistical Management Act”: 61.

85

First Nations Statistical Institute, “About Us: What is FNSI?” Accessed October 18, 2011. Accessible at http://www.fnsi-ispn.com/about.php?page=1-1.

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