Editorial: Aboriginal think tank calls for ‘bold’ infrastructure development in Far North

With the new federal government having vowed in its election platform to improve the lives of Aboriginal Canadians and spend tens of billions on infrastructure projects to offset the economic downturn, it’s a perfect time for aboriginal groups to lobby governments to step up their investments in infrastructure investment in northernmost Canada.

And that’s exactly what the National Aboriginal Economic Development Board (NAEDB) is doing with its new report, “Recommendations on northern infrastructure to support economic development.”

Founded in 1990, NAEDB says its goal is to help Aboriginal Peoples in Canada become economically self-sufficient, and full participants in the Canadian economy. The NAEDB board is made up of 10 First Nations, Inuit and Métis business and community leaders from across Canada, with Clarence Louie, chief of the Osoyoos Indian Band in B.C., serving as chairperson.

The authors argue that Canada’s North is “facing a significant infrastructure deficit — one that is a major barrier to improving the quality of life in northern indigenous communities and acts as the predominant barrier to economic and business development in the region.” (They define the “North” as the three territories and the northernmost reaches of Quebec and Labrador.)

Further, they state “bold investment in large, nation-building infrastructure” is required alongside more investment in local-level infrastructure to support Northern communities, and that indigenous peoples “must be engaged as true partners” along the way.

They lament that the North missed out on the political drive of decades past that resulted in such government-funded mega-projects as the St. Lawrence Seaway, the National Highway System, national railways, ports and airports.

The NAEDB estimates that infrastructure costs in the North are 150% higher than in the rest of Canada. They cite a recent study by the Mining Association of Canada that building a mine in the North costs up to 2.5 times more than in the south, with operating costs 30–60% higher.

But, based its past studies of northern infrastructure, the board claims that each dollar spent on Northern economic infrastructure can, if invested wisely, generate $11 of economic benefits for individuals and $11 of fiscal benefits for governments.

To boil it down, the NAEDB argues it’s time for a far more coordinated approach to infrastructure development in the North, and that governments, with their longer time horizons and lower borrowing costs, are best-suited to making these investments.

The Public-Private Partnership programs that are so popular in Southern Canada — best exemplified by Infrastructure Canada’s centrepiece, $14-billion New Building Canada Fund — are not as well-suited to the North, the authors argue, due to the daunting scale of needed investment and the North’s sparse population density, which often excludes the region from being considered under most programs’ investment formulas.

Yet the NAEDB recognizes the importance of getting private money indirectly involved in infrastructure spending in the North by buying the long-term bonds governments have created to fund infrastructure building. Private investors will also probably remain more vigilant that money is being well-spent by governments as the infrastructure projects proceed.

Another new but growing source of funds for these infrastructure-related investments are the various indigenous-development corporations set up in the wake of land claims being settled across much of the North. These corporations are essentially the economic and business development arms of aboriginal governments. An example is Makivik Corp., which represents the Inuit of Nunavik and has a net worth of $180 million, and owns six subsidiary businesses, including a regional airline and a construction company.

The NAEDB sees the First Nations Finance Authority (FNFA) as another good model. The FNFA is a not-for-profit organization under the First Nations Fiscal Management Act that provides investment and capital-planning advice, and access to long-term loans with low interest rates. The authors note that in 2013, the FNFA obtained an A3 credit rating from Moody’s, and issued its first bond of $90 million, “representing a major breakthrough for member First Nations.” Twenty-three First Nations now participate, and last July another $50 million was added to the bond, with proceeds used by First Nations for community infrastructure, housing and economic development projects.