A new development model gains steam in aboriginal communities

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Rejecting the advice of government bureaucrats, Ken Noble decided to think big.

A member of Henvey Inlet First Nation, he led direct talks with developers - bypassing Ottawa and other "economic development" officials - to find out what type of project might work for his reserve near Parry Sound, Ont.

"We just really listened to the industry and paid attention to what a developer required," he said. "We didn't apply to any government."

The message to Mr. Noble, whose community sits on 20,000 windswept acres on the northeast shore of Georgian Bay, was to go big. It did - and in February, the Ontario government approved a proposal to build a $1-billion wind farm that will generate 300 megawatts of electricity - enough to supply 70,000 homes.

The project involves $700-million in debt financing from Canada's five big banks, as well as foreign lenders. Mr. Noble estimates that, when the turbines are up and running in 2015, the band will receive $25-million in annual revenues, of which about $15-million will go toward paying off the debt.

"We're getting into an industry and a project that's making more money than we ever dreamed possible," said Mr. Noble, president of Nigig Power Corporation, an energy company run by the band. "It means we'll shut down our welfare department."

The widespread problems of substance abuse, despair and suicide in Canada's native communities are well documented. Less well known are the small pockets of economic success that show how some communities - even those far from urban centres - can thrive under the right circumstances.

Big success stories remain rare, but first nations are increasingly trying to work with the business community to change that. Their optimism is tempered with frustration that federal parties aren't seized with efforts to spread this economic activity more broadly.

Many business leaders - more accustomed to conflict when it comes to projects that involve native Canadians - are going out of their way to smooth relations. Mining, forestry and energy still provoke battles, but experience is leading to more enlightened resource deals that go beyond the traditional model, which sees a company simply handing out royalty cheques.

The Churchill Falls development project has yet to receive final approval from the Labrador Innu, but is considered an example of this new approach: It promises the Innu an annual $2-million in royalties, but the government of Newfoundland and Labrador and Nalcor Energy also pledge to provide jobs, training and $400-million in business contracts.

Even if Churchill Falls doesn't go ahead, the Innu have already seen increased employment and training in recent years because of a 2002 deal wit the Voisey Bay Nickel Mine.

"I think there's been a significant change," said Grand Chief Joseph Riche, whose community attracted national attention more than a decade ago with images of despair and gas-sniffing children.

What's happening

To succeed, communities often must find a way around a key hurdle: the fact that property on reserves is communal. This means that people have no collateral to offer when they want a personal or business loan.

Long-term leases between first nations and their members are starting to fill that void. Banks increasingly recognize them as a form of security, and offer special on-reserve mortgages. Some native leaders and academics are pushing to tackle the land issue head-on, prompting strong debate as to whether the 19th-century Indian Act's restrictions should be scrapped entirely in favour of full private property.

First nations still block some projects with protests and barricades, but corporations increasingly realize the futility of battling aboriginals in courts of justice and public opinion. It is virtually impossible to be in the natural resources business in Canada without dealing with natives, and companies now try much harder to build positive relations.

Ontario's Green Energy Act - a controversial 2009 law that critics warn will drive up consumer prices - is turning into a good news story for many communities. Provincial programs pay energy producers a higher fee per kilowatt if they are at least 10-per-cent aboriginal-owned. Henvey Inlet is one of 16 aboriginal groups to sign power-generation deals. Many others are in the works.

In British Columbia, Chief Clarence Louie has received lots of attention for the dramatic turnaround he engineered for the Osoyoos Indian Band in the Okanagan Valley, creating many jobs with a winery, golf resort and other real-estate ventures.

The major banks are trying harder to deal with the complicated web of rules that block natives from access to capital. As national chief of the Assembly of First Nations, Phil Fontaine once led the AFN's "day of action" protests; today he is a senior adviser with the Royal Bank of Canada, overseeing regional aboriginal banking projects.

"We do have a ways to go, but we are making some progress," RBC president Gordon Nixon said in an interview, pointing to his bank's growing number of loans to aboriginal clients.

What's working

Rulings by the Supreme Court of Canada have drilled home the message that companies and governments have a duty to consult first nations on projects that touch on their traditional territories. Last November, the federal government ended its objections and endorsed the United Nations Declaration on the Rights of Indigenous Peoples, which goes one step further to state that exploiting resources on their land requires the "free and informed consent" of indigenous peoples.

For business, that means it's better to forgo the legal battles and try to strike a deal.

Sharing their experiences, first nations are also finding creative ways to get around the red tape of the Indian Act, which forces them constantly to seek Ottawa's approval. A string of relatively recent laws allowing communities to opt out of certain sections of the Indian Act - such as the First Nations Land Management Act - offers more freedom to do business.

How to spread the success

A stronger focus on education and training is widely viewed as a priority. The high-school dropout rate on reserves is over 60 per cent, and schools are strapped for cash.

"The underfunding by the federal government is just immoral," said former prime minister Paul Martin, whose 2005 Kelowna Accord with aboriginals was not implemented when the Conservatives took office.

Since leaving politics, Mr. Martin has launched a $50-million venture-capital fund (including $2.5-million of his own money) that brings some of Canada's biggest companies together to support aboriginal businesses, as well as apprenticeships and business curriculum for aboriginal students.

In an interview, he said that more education funding is the key, but tax breaks for "social enterprise" investments also would make a big difference. They would encourage investment in companies that make money but also perform a social good, such as curbing aboriginal unemployment.

Communities with resource deals in the works are already training residents for the jobs that will come, whether they be in catering, construction or something more skilled, such as environmental testing. This summer, the AFN is hoping to announce a new institute, involving universities and the private sector, that would help first nations with legal advice and on-site training to take advantage of resource jobs - and produce more success stories like the one at Henvey Inlet .

Shawn Atleo, now the AFN's national chief, is a vocal advocate for more education funding and moving "beyond" the Indian Act to tackle the legal hurdles to development. He says government funding for the basics such as education, water and housing pay off in the long run because it allows communities to take advantage of the economic activity around them - ultimately becoming self-sufficient. Yet he said he's frustrated so far by how little talk there is in the campaign when it comes to addressing these issues.

"It really feels like, once again, first nations are like the forgotten population," he said. "Unless we have some real leadership, some courage from the federal level, this will continue to be something that confounds Canadians and federal governments."