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Aboriginal Involvement in Economic Development:
Elements for Success and Obstacles to Achievement

Speech to Generating Opportunities and Wealth Conference November 2006

The statistics documenting the problems experienced by aboriginal communities across Canada are well-known.  Poverty, high unemployment, lack of infrastructure and suitable housing are all endemic to aboriginal communities.  Despite this, there are many aboriginal success stories – communities that have gotten fully engaged in economic activities, exploiting renewable and non-renewable resources for the benefit of their people.

These successes have not been limited to First Nations in oil-rich Alberta or the T’licho communities that surround the NWT diamond mines.  Aboriginal communities from coast to coast to coast have been able to transform their lives and their futures through successful business endeavors.  The determining factor seems to be not so much about the richness of the surrounding resources as the richness of effort and imagination that aboriginal people bring to the enterprise.  Yet many communities with access to similar resources continue to struggle.  What are the elements that lead to economic success and what are the obstacles aboriginal people must overcome to achieve it?

Tremendous opportunities for aboriginal involvement in economic development are looming on the horizon.  The MacKenzie Valley Pipeline as well as new northern diamond mines, oil and gas exploration in northern BC and the tar sands of Alberta and Saskatchewan are just a few of the possibilities in the non-renewable resource sector.  Sustainable development in fishing, forestry, tourism, real estate and the service sector also hold out hope for aboriginal communities if they can only grasp it. 

Studies at the Project on American Indian Economic Development at Harvard University suggest sovereignty, good governance and culturally appropriate institutions coupled with a can-do attitude by leaders and communities have made a huge difference for the economic prospects of many American Indian communities.  However, no similar study has ever been undertaken of Canadian aboriginal success stories.  How much of the American experience is transferable to Canada?  What would need to change?  Are there Canadian specific factors that have to be taken into account to explain success and failure? 

The proposed study by the Senate Committee on Aboriginal Peoples would seek out witnesses from aboriginal organizations and communities with exciting success stories to tell as well as experts in the field to try to discover the keys to success in the Canadian context.  The Committee would travel to select communities across the country to witness first hand the success of aboriginal people and to document the factors that created it.  By identifying success stories and best practices as well as means to overcome specific obstacles, this study would be of immediate use to governments and aboriginal communities across Canada.

Generating Opportunities and Wealth    Ottawa 2006

I’m pleased to be here.

Every time I hear of Aboriginal people meeting about business, I get very excited.  In recent years there’s not a week that goes by without meetings and conferences on Aboriginal involvement in industry and business.

Aboriginal people have advanced to the point where there isn’t a project -- be it diamond mines, pipelines, oil and gas exploration – that they aren’t a part of.

Back in the seventies and eighties, I was a politician in the Northwest Territories and since 1999 I’ve sat in the Senate.

When I was appointed Senator in 1999 I spent a lot of time telling people in the North about my new job.  Most people didn’t know much about the Senate.  Prior to that they had heard about this Senator who spent a lot of time in Mexico, showing up in Ottawa only once a year.  So I had to banish the thought that I would be spending a lot of time in Mexico.  Though from the far northern point of view it’s all south – Ottawa or Mexico.

I did tell them the Senate was like an Elder’s Council.  The elected younger rambunctious guys in the House of Commons made the laws and we older wiser guys reviewed and passed judgment on their work.

Being older, I told them we had good health care.  We had nurses on standby in case any old Senator keeled over or expired.  Nurses are trained to tell the difference between heart failure and “having a nap.” 

There is even Dr. Keon, a noted heart surgeon in the Senate.  He sits on the other side --- he’s a conservative and hopefully he will look kindly on a liberal heart should it fail.

The normal Senate days of work are Tuesday to Thursday and my staff are always amused when I say, “Thank God it’s Thursday.”

Seriously though, between politics and the Senate, I was in business.  My wife and I ran a large bed and breakfast and I was also involved in building an office building in Fort Simpson – so I learned first hand just how tough it is to be in business.

It takes blood, sweat and tears to create a well-run successful business.  You have to be disciplined and careful, doing without a lot of the “frills” so you can get together enough money to get started.  But with perseverance and hard work, you can build up your business and become independent. 

As a Senator I get the opportunity to travel to all regions of our country to see Aboriginal communities.  While in many places life simply goes on with not much new happening, there are pockets of burgeoning economic and business activity.

It is exciting to see Aboriginal people getting into business.  We don’t come from a culture of business.  Our ancestors were hunters and trappers.  We didn’t own things in the modern way.  Our economy operated on a different basis than the market system.  More recently, we were labourers – we worked for other people rather than ourselves.  So the transition to business is a phenomenal accomplishment.

It was the phenomenon of Aboriginal people getting into business that inspired me, as Chair of the Senate Committee on Aboriginal Peoples, two years ago to undertake a study on Aboriginal participation in business and industrial projects.  In particular we wanted to find out what were the factors for success and the obstacles to development.

Why are some Aboriginal communities struggling while others are getting on their economic feet and succeeding?

Over the last few years we’ve been to every region of Canada and heard experts from business, government and, most importantly, the aboriginal community.  We are now in the last stage of the study – we will finish our hearings before Christmas and will release our report early next year.

What we hope to do is give clear and concrete recommendations – not just to the Federal government but to First Nations, provincial governments and business – on how to foster economic success. 

We want to be able to say: These are the things that must be put in place if you want aboriginal communities to succeed.  These are the barriers that have to be removed if development is going to happen.

While our final recommendations have not been drafted, I am able to offer you some observations that I’m sure will be reflected in our report.

Economic development is a complex subject and, of course, there are a lot of issues that are the same whether you are an aboriginal or non-aboriginal business – such as access to capital and having a good, well-trained workforce.

But our study has shown there are a number of issues and circumstances that are specific to aboriginal economic development.  I want to limit my talk today to three of those:

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governance,

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the role of land and resources, and

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capacity building.

The Harvard Project on American Indian Economic Development has looked at this issue of Aboriginal people in business in the US and has even done some work in Canada.  One of the first witnesses our committee heard from was Dr. Steven Cornell from the Harvard Project.

They’ve concluded that the key factors for economic success are sovereignty and well designed and culturally appropriate governance institutions.  Our study has certainly found that good governance is critical to economic success.

When you enter the business realm, bankers, business partners and industry look to see if you’re organized, whether you have laws and policies that you operate by.  Business demands certainty and clear rules.

So – is the solution simply to grant every First Nation self-government and let them begin to build their economies?  And does that mean every First Nation is doomed to economic misery until they achieve self-government?

The answer to both questions is a resounding: “it depends.”  Self-government is not a guarantee against bad decisions.  Self-government without good governance can be a disaster.  More importantly, even communities still operating under the Indian Act can develop good governance models that help them move forward economically.  Those who have all say they succeed despite the department.

Our clear conclusion is that good governance is needed for communities to succeed. 

Good leadership is essential.  Sometimes leaders are born, sometimes they develop through experience, in other cases they can be trained. 

But they all have certain traits in common – a consistent and long-term vision; a commitment to keep political and business decisions separate; an ability to command respect; and a understanding that you need to have good people around you if you want to reach your goals.

But leadership is not enough.  Leaders come and go.  So it is important that you build good institutions.  Good institutions are ones that operate with clear and consistent rules.  They need clear lines of authority and accountability.  Good institutions build the capacity of the community and produce future leaders.

The Harvard Project talks about culturally appropriate institutions.  That’s a little harder to nail down in terms of what it means.  A lot of people will say that business is business and it has no room for culture.

But I’ve noticed that a lot of successful aboriginal businesses are collectively owned.  Not in the way a corporation is owned by shareholders – who can buy and sell their shares – but rather in the way a community is owned by the people who live there.

Stakeholders not shareholders.  I think this is one example of what culturally appropriate means.

More simply put – I think the governance institutions need to make sense to the community.  They have to be consistent with widely held values of the community and they have to be modern expressions of the traditional way things were done.  Traditional values brought into modern business culture. 

But they do have to be modern.  To operate in the modern economy you have to move at the speed of business.

Which is one of the reasons why so many First Nations have pointed to the Indian Act as one of the main obstacles to effective economic development.  The Indian Act is blatantly paternalistic and unsuited for progressive people.

Still, a lot of communities have figured out ways to work around the Indian Act; a lot more have tried to get out from under it – whether entirely through self government agreements or, more frequently, by coming under more modern legislation, like the First Nations Land Management Act or the First Nations Oil and Gas and Monies Management Act.  Another example is the First Nations Fiscal and Statistical Institutions Act, which promotes solid financial management and permits First Nations to build their own infrastructure.

This new legislation represents real improvements over the Indian Act.  They provide tools for First Nations who want to take control over specific aspects of their lives to do so.  I think it is significant it has been individual First Nations that have been the driving force behind these changes. 

These acts allow first nations to develop their own land codes and to manage their own trust monies.  Self-government is, of course, the ultimate goal but there are interim steps that communities can take along the road.  I think it is significant that every First Nation we have heard from who have opted to use these Acts have told us that they have been able to make real economic progress.

These Acts give First Nations the decision making power they need to operate at the speed of business and take advantage of opportunities as they come along.

What kind of opportunities can aboriginal communities pursue?  A lot of that depends on where they are located and what kind of resources they have access to.

Some like Westbank near Kelowna or Millbrook in Nova Scotia or the Squamish in Vancouver, take advantage of being close to growing cities or busy transportation routes to develop commercial or real estate businesses.

Others, like the T’licho in the NWT are located next to large diamond mining or other resource developments and are able to negotiate benefits, including business opportunities, from the big corporations.  The Blood Tribe in Alberta and the Inuvialuit on the Arctic coast go one step further and are actually in the resource extraction business themselves – drilling for oil and gas on their own and others land.

Still others, like the La Ronge Band in northern Saskatchewan or the Inuvialuit in the North, have built business empires one step at a time, using the profits from one successful business to invest in or create other ventures – both in their traditional territories or farther a field.

Access to land and resources gained through land claims or through negotiated impact and benefits agreements are important elements to many communities success.  Money obtained from land claims, whether comprehensive or specific, can be a very important source of capital for business ventures as well.

But the important thing is not the size of the settlement but how well you use the money.  We’ve seen communities who failed to build on their settlements by using them as social handouts rather than investments in the future.

And that brings us back again to leadership – having the strength to resist the urge to spend your money right away on politically popular band-aid solutions.  Economic development does not happen over night and you need discipline and vision for the long haul.

I want to close my remarks by talking a little bit about capacity building.  This phrase sometimes seems to mean all things to all people.

To me though, it comes down to a few things.

You need good competent and committed people.  Eventually you want them to be from your own community but you may have to start by hiring them from somewhere else.  A lot of successful communities start by hiring the best non-aboriginal lawyers, accountants and business managers they can find. 

They become the mentors for the community and, in most case, eventually work themselves out of the job.  It sometimes takes awhile but it is working and it appears to be more effective – if less popular – than throwing local people into jobs they aren’t ready to do.

Capacity building also requires you to know what you don’t know.  You have to work hard to figure out what skills you need and then develop a plan to acquire them. 

And you have to know your limits.  Unlike tribes in the United States which can have as many as 250,000 residents – first nations in Canada are small, most fewer than five hundred people. 

As a result, a lot of communities are banding together to get into business.  One of the most interesting examples is the Meadow Lake Tribal Council in northern Saskatchewan which includes seven communities – some Dene and some Cree – working together.

And another thing we’re starting to see – which we have to find ways of supporting – are successful aboriginal communities and businesses starting to partner with or mentor communities just starting out. 

Partnerships and joint ventures have always been an important way for First Nations to get into business and build capacity but think of the advantages in shared experiences and shared trust when aboriginal people can learn from each other.

Finally, a word about education.  We are often told that education is the key to economic success.  Education is vital to create a modern labour force – including those accountants and business managers who will eventually run our businesses.

But economic development is also key to educational success.  It’s a lot easier to keep kids in school or get them back to school if they know there are real opportunities waiting for them when they graduate. 

Ten years ago, before the diamond mines opened on their territories, the T’licho only had about five students in post secondary education – even though they were the first aboriginal community to take over authority for schooling way back in the 60s.  They were committed to education but had limited success getting their kids to go farther.

The diamond mines changed all that.  There are now over 120 T’licho in post secondary education.  Certainly, scholarship funds from their benefit agreements helped, but the T’licho will tell you that having real jobs and business opportunities in their own territory is what is keeping their kids in school.

What does it mean?  It means that economic development is tremendously challenging because you have to try to deal with everything all at once – governance, business creation, education, community infrastructure. 

But is also means that it is the one force that can completely change a community in a generation.  The T’licho not only have a lot more people in school, they also have a lot more working and running their own businesses and a lot less people on welfare. 

And they did it without giving up being T’licho.  They were and remain one of the most traditional people in the North.  Their language and culture is strong and they are using their new found prosperity to make sure they always will be.

Earlier in our lives, during the 70’s, when we had few native businesses.  Those that did get into business were talked about and criticized as being “money hungry, selfish and non-native.”  Perhaps we lacked confidence.  But over time, we have learned that there is nothing we can’t do if we put our minds to it.  Business is tough but we’re tougher.

It’s an amazing phenomenon – Aboriginal people are succeeding in business all across this country.  I’ve learned that it takes a lot to succeed. 

Strong leadership, good governance and access to capital are all important.  Land and resources are critical factors, too.  But more than anything it takes the right attitude – the business attitude.  That’s the attitude you’re showing by being here this week.

 Thank you

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