Toronto Star: It’s no secret that Canada is not on track to meet its commitment to close the infrastructure gap for First Nations by 2030 through current delivery mechanisms and policy approaches.

In fact, the Auditor General’s reports released in March 2024 served to reinforce the enormous chasm between First Nations and non-Indigenous communities in Canada, which is exacerbated by the traditional cash-based, pay-as-you-go approach.

Closing the critical infrastructure gap, pegged at a staggering $349.2 billion, is impossible on the current course by the 2030 target date. Ottawa spent $2.7 billion on infrastructure in 2021-2022. Even without inflation, it would take 130 years to meet the target using the current approach.

Thankfully, there is a way to get there faster — using the First Nations Finance Authority (FNFA) to its full capacity in leveraging capital markets through debentures, instead of dispersing scarce taxpayer funds on an annual cash basis for housing, clean water, health care, energy systems, schools and telecommunications.

If even $200 million in federal funds were invested annually, FNFA could issue a $2.5-billion debenture monetized over 20 years so First Nations could build 8,000 houses right now. It’s the same process used by municipalities and provinces and it makes taxpayer funds go a lot farther.

FNFA was created in 2005 with the support of all federal parties, becoming the first finance authority in the world owned and governed by its First Nations members. It is clearly a success story and an evolving entity that can meet growing demands and needs.

FNFA has established itself in the capital markets under the Federal Agency Index and raises capital to finance members’ priorities at interest rates enjoyed by Ontario and Alberta. More than 360 First Nations are currently scheduled to the act which created FNFA.

Since its first debenture issue in 2014, FNFA has surpassed $2 billion in financing, creating more than 22,000 jobs at no cost to the federal treasury since loans were supported by First Nation own-source revenues.

The largest single investment financed by FNFA facilitated the purchase of a controlling interest in Clearwater Seafoods by a coalition of Atlantic First Nations.

One way to close the infrastructure gap much sooner is increased monetization through FNFA, particularly if new revenue streams using traditional lands and resources were allowed. But we can help on other fronts to accelerate economic development.

• Loan Guarantees: The 2024 federal budget earmarked up to $5 billion in loan guarantees to help Indigenous communities become equity partners in large natural resource and energy projects. FNFA could raise low-cost capital for First Nations and become the lender of choice, resulting in lower interest rates and higher returns.
• Bonding and Surety Insurance: Section 89 of the Indian Act prohibits First Nation contractors on reserve from using assets as collateral to access bonding and surety insurance required to bid on projects. That further limits the ability to fully realize Canada’s commitment to meeting its five per cent federal procurement target. FNFA would like to develop a “backstop” — a pool of money that would enable contractors on reserve to access surety for more bidding opportunities.
• Protecting Community Assets: FNFA is developing an Indigenous-owned insurance model to protect community assets. First Nations are often unserved and/or quoted exorbitant premiums.
• Increased Membership: Federal regulations still preclude Inuit and Métis communities and Indigenousowned special purpose vehicles from FNFA membership and potential borrowing members are required to be certified by the First Nations Financial Management Board. Simplified membership requirements would allow more communities (including Indian Act bands) to benefit.

Economic reconciliation is vital to Canada’s economic prosperity. The Royal Bank of Canada recently concluded that closing the Indigenous infrastructure gap could help boost annual Indigenous output by up to 17 per cent and add close to half a per cent to the total production capacity of the Canadian economy.

FNFA is ready to make more significant strides toward improving outcomes for First Nations in collaboration with the federal government. We just need the tools.

Through debentures, the First Nations Finance Authority can leverage capital markets. It’s the same process used by municipalities and provinces and it makes taxpayer funds go a lot farther.

ERNIE DANIELS CONTRIBUTOR ERNIE DANIELS MANAGES THE BUSINESS AFFAIRS OF THE FIRST NATIONS FINANCE AUTHORITY. A CHARTERED PROFESSIONAL ACCOUNTANT AND A CERTIFIED ABORIGINAL FINANCIAL MANAGER, HE IS THE INAUGURAL FIRST NATIONS MEMBER OF THE BANK OF CANADA