Proceedings of the Standing Senate Committee on
Aboriginal Peoples
Issue 15 - Evidence
OTTAWA, Tuesday, March 19, 2002
The Standing Senate Committee on Aboriginal Peoples met this day at 9:34 a.m. to examine access, provision and delivery of services, policy and jurisdictional issues, employment and education, access to economic opportunities, youth participation and empowerment, and other related matters.
Senator Thelma J. Chalifoux (Chairman) in the Chair.
[English]
The Chairman: Good morning, ladies and gentlemen. Welcome to the Standing Senate Committee on Aboriginal Peoples.
This is not a study, because Aboriginal people have been studied to death. This is an action plan for change. Your input today is important for how we, as Canadians and Aboriginal people, can make changes for the better for our communities and agencies.
Today's discussion is on urban Aboriginal people. I would like to welcome our witnesses. Mr. Moore and I have met before.
Mr. Jeff Moore, Executive Director, Aboriginal Business Canada, Industry Canada: It is an honour and privilege to be here to discuss issues affecting Aboriginal people, and in particular, Aboriginal youth. I am Algonquin from Kitigan-Zibi Anishinabeg, which is just north of Ottawa.
You have before you a presentation outlining what Industry Canada and Aboriginal Business Canada do to support the participation of Aboriginal people in today's economy. I will begin by outlining the broader issues, then provide an overview of the role of Industry Canada and its portfolio partners and some information about Aboriginal Business Canada, its programming and achievements over the past few years, focusing on how we are assisting Aboriginal youth entrepreneurs. Finally, I will conclude by outlining a number of challenges and our opportunities to meet them.
The first slide provides some demographic information, with which I think many of you are familiar, on an Aboriginal population that is young and growing quickly.
The next slide indicates a significant gap between the socio-economic conditions of the Aboriginal population and the general population of Canada. It demonstrates the low educational attainment, low earnings and also the high unemployment figures for Aboriginal people.
We see on slide 3, on Aboriginal business development, that Aboriginal people are embracing the entrepreneurial spirit and starting businesses at a rate two and a half times faster than non-Aboriginal people. This is true not only in traditional sectors, but also in manufacturing, transportation, et cetera. These businesses — particularly the clients of Aboriginal Business Canada — have a 70 per cent survival rate compared to a 64 per cent survival rate of businesses in general in Canada.
These growth and success rates are something to be proud of and show much promise for Aboriginal people. However, much remains to be done.
Slide 4 shows federal spending on Aboriginal programming. Most of the federal government's spending on Aboriginal people is targeted at social programs, mainly for status Indians on reserve. Only 8 per cent of total funding is dedicated to economic development initiatives, both on and off reserve. It is clear that there is a need to reassess this situation.
The social conditions that persist can be partly alleviated through opportunities to participate economically, through the dignity of having a job and running your own business, and in doing so, become a positive role model for others. This is especially true with respect to the demographics and needs of Aboriginal youth in Canada.
The next slide demonstrates the current federal Aboriginal economic development framework in Canada. The figure of 8 per cent of total funding dedicated to economic development is broken down as follows: $336 million per year is directed to skills development and delivered by HRDC to all Aboriginal people across Canada, regardless of status; almost $103 million is directed to developing an economic business climate, is delivered primarily by DIAND and targeted to status Indians on reserve; $94.3 million is targeted to resource development and delivered by DIAND, Fisheries and Oceans and Natural Resources Canada. Again, this is primarily directed to status Indians on reserve. Finally, and the number that concerns Aboriginal Business Canada and its partners, $73.1 million for business development, which is primarily delivered by the Industry portfolio to all Aboriginal people, regardless of status or where they live in Canada.
The next slide gives a quick snapshot of the role the Industry portfolio plays. The portfolio works in partnership on a number of things, first and foremost being innovation through science and technology. We help firms and not-for- profit institutions turn ideas into products and services. We deal in trade and investment, encouraging more firms in more sectors to export to more markets and assisting firms in attracting foreign direct investment. This shows the growth of small and medium-size enterprises, or SMEs, for which we provide access to capital, information and services, and finally, the economic growth of Canadian communities through fostering new approaches to community economic development across the country.
The next slide gives you an idea of what is included in the Industry portfolio. It lists the various agencies, from the Atlantic Canada Opportunities Agency right down to the Canadian Space Agency. Aboriginal Business Canada is a part of this portfolio.
The next slide deals with the programs that are offered through the Industry portfolio, including a wide array of programs for Aboriginal people in Canada. For example, Aboriginal Business Canada delivers $30 million in grants and contributions per year. There is the First Nations SchoolNet and FedNor for Northern Ontario, and also Aboriginal Digital Opportunities, which offers contribution agreements of $25,000 per project to Aboriginal organizations to provide Aboriginal youth with paid experience in creating Aboriginal content for the Internet or the World Wide Web. We have the regional agencies, ACOA, Western Economic Diversification, and CED-Q in Quebec, which also delivers some programming, the Business Development Bank of Canada, and the list goes on.
You can see on the next slide the mission of Aboriginal Business Canada. It is to rebuild the Aboriginal economy and integrate it into the national and international economies. This shows why ABC, or Aboriginal Business Canada, is here. Aboriginal people face many challenges in getting into business, not the least of which is limited sources of personal equity, and there are barriers to using personal collateral to access loans. There are other challenges listed there.
As we see from this slide, our approach is to work with the individual right from the idea phase. This could involve assisting in the development of business plans right up to expansion of current businesses. Our overall focus is on investing in Aboriginal-controlled businesses with solid prospects and a high likelihood of success. We do not provide funding to support ongoing business operations. These are one-time contributions, although there could be more than one in a series of projects with which we are assisting. The majority of our clients are small businesses with 10 employees or less, and with average contributions of less than $30,000 per project.
The next slide illustrates the program delivery mechanisms that we use across the country. We have third party agreements with Aboriginal groups to assist us in delivering programming in remote areas. As you can see, we are truly national in scope. We work through unique partnership agreements to achieve tangible and lasting results. Our approach helps Aboriginal entrepreneurs pursue opportunities at local, regional and national levels.
The next slide describes the National Aboriginal Economic Development Board, known as the NAEDB, which provides advice and strategic direction on Aboriginal economic development to the Minister of Industry and Aboriginal Business Canada. It also provides advice to the ministers responsible for HRDC and Indian Affairs. The board meets approximately four times a year and discusses issues pertaining to business and economic development for Aboriginal people. The chair is Roy Whitney, from Alberta, whom some of you may know. This board is truly engaged and very dynamic, involving Aboriginal and business leaders from across the country. They are committed to assisting Aboriginal people to enter into and succeed in business, in Canada and across the world.
This slide gives you a quick snapshot of the strategic priorities of Aboriginal Business Canada. You will be interested today in youth entrepreneurship, as well as innovation, trade and market expansion, tourism, and strengthening Aboriginal financial and business organizations.
In terms of accomplishments and results for Aboriginal Business Canada, Aboriginal people are creating businesses and employment opportunities for themselves. For example, of the 2,600 jobs created by Aboriginal Business Canada clients, 63 per cent of these employees are of Aboriginal heritage. ABC's business clients operate across a spectrum of business sectors nationwide. For example, 61 per cent operate in the service sector, and approximately 24 per cent are involved in manufacturing and production of goods. Just over half of the businesses with which we deal, or 54 per cent, are located in rural or remote communities, with the remainder located in urban areas. The majority of businesses, 61 per cent, are located off-reserve.
The next slide deals with Aboriginal youth entrepreneurs. Entrepreneurship is becoming an important career option for young Aboriginal people, as was demonstrated by one of the first slides in this deck. It is evident from the growth in entrepreneurship that this is a viable option for Aboriginal people. Aboriginal entrepreneurs under the age of 30 make up almost 19 per cent of all Aboriginal people who are self-employed. This is nearly double the 10 per cent for Canadians in general. Starting a business is a viable and important option for Aboriginal youth. Aboriginal youth are also almost two-and-one-half times more likely to be entrepreneurs than Canadian youth in general.
Turning to the next slide, Aboriginal youth entrepreneurs are faced with unique needs, and probably the most important is access to capital. Status Indians on reserve are faced with the challenge of section 89 of the Indian Act, which prevents the pledging of on-reserve assets. They also have time and capacity constraints on building equity themselves. Historically, there has been little equity available to Aboriginal people, particularly youth, which restricts available collateral for loans. This limits the size of the loans for which they are eligible. A limited track record creates a perception of young entrepreneurs as high-risk borrowers. Thus, banks will charge higher interest rates for loans or will ask for higher collateral requirements from the Aboriginal youth.
The next slide shows further unique challenges or needs of Aboriginal young entrepreneurs, one being business and management support and training, especially given the lower levels of formal education amongst the Aboriginal population, the limited experience in starting and managing a business, and the smaller business development network they have to draw on.
A third unique need is access to information, for example, on researching business opportunities, sources of finance and programs, tools to develop business plans, marketing plans, et cetera, and finally, management resources such as human resources development, exporting, taxes, et cetera.
Turning to the next slide, on what Aboriginal Business Canada offers targeted to Aboriginal youth, I did mention that ABC has five strategic priorities, one of which is youth entrepreneurship. Under this strategic priority, Aboriginal youth aged 18 to 29 are eligible for assistance with practically any type of business they want to start up.
Under this priority, non-repayable contributions of up to $75,000 are provided for business plan development, start- ups, expansions, business support and marketing. There is a lower equity requirement for Aboriginal youth of 10 per cent, versus the 15 to 20 per cent required under our other strategic priorities.
Another initiative delivered by ABC is the Aboriginal Youth Business Initiative, or AYBI, for which we have earmarked $1 million per year. Aboriginal youth aged 18 to 29 are eligible. It is delivered by participating Aboriginal capital corporations and community futures development corporations on behalf of Aboriginal Business Canada. Loans of up to $25,000 are provided for business start-ups. There is also business support, counselling and after care.
The next slide provides a quick snapshot of some of the accomplishments and results under our youth priorities. At the first bullet, we see that ABC has invested approximately $6 million in 337 youth projects, accounting for 42 per cent of all ABC business projects in 2001-02. Therefore, a significant chunk of our business is dealing with Aboriginal youth who want to start a business.
The breakdown of these 337 youth projects is as follows: There are 111 projects in urban areas, accounting for 33 per cent or $2.1 million; 193 projects in rural areas, accounting for 57 per cent or $3.3 million; and 33 projects in remote areas, accounting for 11 per cent or $670,000.
Based on 1996 census data, over a 15-year period, the number of Aboriginal youth starting a business grew from approximately 660 in 1981 to 1,655 in 1996. We are anxiously awaiting the figures from the most recent census to update us on this issue.
Slide 20 deals with challenges and opportunities. The challenges are obvious. The job situation for Aboriginal people continues to be unfavourable across the country. The population is growing at almost triple the rate of the non- Aboriginal population. The continued creation of viable business opportunities will be essential in the future to provide employment and income for Aboriginal people, particularly Aboriginal youth. We need to ensure that funding and programming meet this unprecedented demand, transcending time frames and location status of Aboriginal people.
The next slide continues with challenges and opportunities. In January 2001, the Speech from the Throne committed the government to working with Aboriginal people to help strengthen their entrepreneurial and business expertise. The National Aboriginal Economic Development Board and Aboriginal Business Canada are pursuing additional funding for a suite of things, the most important being to provide more funding to Aboriginal youth and focus on their needs, whether they live in urban, remote or rural areas.
We are looking in particular at the idea of strengthening partnerships with key organizations and groups such as the Canadian Youth Business Foundation and the Business Development Bank of Canada — which is working with youth as well — Aboriginal capital corporations and HRDC to try to enhance training for Aboriginal youth to start, maintain and operate a business, and also to develop a mentorship program with mentors to whom Aboriginal youth can turn for advice. We hope that these efforts will eventually increase the viability of business start-ups by Aboriginal youth.
Annex A of the presentation provides a snapshot of other programming provided by the Industry portfolio that can accessed by Aboriginal youth, be it First Nations SchoolNet, the National Aboriginal Career Symposium delivered by the National Research Council and NSERC, or E-Spirit, which is of particular interest to us and is delivered by the Business Development Bank of Canada. This program gives Aboriginal youth experience in developing business plans in order to start a business.
The Chairman: Thank you for a very interesting presentation.
Do your statistics on the population's socio-economic challenges include the Metis and Inuit?
Mr. Moore: Yes, they do.
Senator Christensen: On page 15 of your document, you say that Aboriginal youth are two and a half times more likely to be entrepreneurs than Canadian youth in general. Could you tell us why that is?
Mr. Moore: That is a good question, but I do not know the answer. Perhaps it is because of the limited opportunities to find employment in existing businesses, or the lack of businesses in rural and remote communities. They create their own opportunities by starting their own business.
Senator Christensen: Have you compared the problems experienced by non-Aboriginals and Aboriginals in starting up businesses?
Mr. Moore: We have not, but it would be an interesting study.
Senator Christensen: I would think that many Aboriginal youth have the initiative and the knowledge, but not the required education, so their best option is to start their own business.
Mr. Moore: Exactly.
Senator Hubley: Thank you for your presentation, which contains a great deal of information. We went through it quickly, but I hope to have time to study the figures and how they impact Aboriginal youth.
Can you share with us an example of a successful business start-up by Aboriginal youth? Can you give us an idea of the type of businesses that appeal to them and the kind of success they have had?
Mr. Moore: As I mentioned, Aboriginal people are involved in all sectors of the economy. There is obviously more of an emphasis on the primary sector, that being natural resources, which would include mining and forestry. However, we support companies involved in high tech. For example, in the early stages, we supported John Bernard, president of Donna Conna, a high-tech firm located in Ottawa. We supported an Aboriginal youth in Vancouver named Chris Piché who heads up a firm called Eyeball Networks, another high-tech firm that is doing extremely well.
My favourite example is an on-reserve status Indian, Ron Kocsis, from Saskatoon. He started out with two 18- wheelers and a plan to expand, and he came to us with some ideas. We assisted him in developing a business plan and accessing some capital. That was about five years ago, and now he has a fleet of well over 50 18-wheelers and is looking to expand further. He is hoping to secure a contract with Wal-Mart to distribute goods across Canada.
That is one of my favourite success stories.
We also supported him in accessing some technologies under the innovation priority. He has developed a computerized GPS system that tracks all his trucks up to the second, where they are, who is driving, and their performance and attendance records. It all comes up on screen. It is very scary.
Senator Hubley: Is there a financial incentive for those businesses to hire young Aboriginal people so that they can get some training?
Mr. Moore: Yes. The terms and conditions of our program contain a number of criteria that we look at when approving a project, including how many jobs or positions will be available or created for Aboriginal people. We look at full-time equivalent positions as well as how much it will cost to create those jobs.
Senator Hubley: You mentioned mentoring programs, which I believe to be valuable. Do you have apprenticeship programs to give people an opportunity to work in a business to see if it might be something they would like to learn more about or eventually work in?
Mr. Moore: We do not currently, but that is something we could look at in expanding our mentorship and training programs. The Canadian Youth Business Foundation is planning some pilot projects in Saskatchewan and Manitoba. They want to bring Aboriginal youth into existing businesses as apprentices to see if it is something in which they would be interested. We are looking at partnering with them on that.
Senator Pearson: Could you introduce your companion and tell us what work she does?
Ms Mary Lou Bird, Policy Analyst, Aboriginal Business Canada, Industry Canada: My name is Mary Lou Bird. I am a policy analyst at Aboriginal Business Canada. My main task is to study things from a policy perspective to determine what the federal landscape looks like in terms of opportunities for Aboriginal people.
I also work closely with one of our policy analysts who is monitoring the group of ministers with some responsibility on Aboriginal issues. We have our ears to the ground and we develop decks such as this one. We look closely at policy issues rather than operational issues.
Senator Pearson: I am interested in knowing the breakdown between females and males.
Mr. Moore: That is a very good question. The FPTA is looking at Aboriginal participation in the economy. That working group discussed the issue of women entrepreneurs, particularly Aboriginal women entrepreneurs. A study was done on this about 10 years ago. I have been trying to dig that up, but cannot find it. I do know that Aboriginal women are under-represented as entrepreneurs. We want to work with some partners, whether NWAC or other organizations, to learn why that is and how we can encourage more Aboriginal women to get into business. It is timely that you mention that, as the FTPA process is looking at it and we are going to do the same.
Senator Pearson: I am glad to hear that. I believe that one potential solution to unemployment in remote communities is greater use of the Internet and new technologies. Do you have other examples of entrepreneurship in primary fields such as lumber and fishing? Are there any examples of fairly remote, on-reserve groups beginning to set up businesses using electronic technology?
Mr. Moore: There really are not. It is a challenge to find ways to support businesses in becoming more innovative in rural and remote communities.
Senator Pearson: You mentioned SchoolNet and Community Net.
Mr. Moore: Yes, and there is also CAP, or the Community Access Program. However, it only goes so far. It provides access to a school, but not to the entire community. We need to look at bringing broadband into a community and making it available to companies as well as individuals. There are opportunities for Aboriginal companies to become Internet service providers, which is something we have been trying to encourage through the broadband initiative.
The answer to your question is no, but we are looking at broadening our definition of ``innovation.'' Our current definition is high-tech, but we need to get back to basics. From our perspective, it should mean putting in place a new idea or process that could improve your bottom-line productivity. Under that definition, there are many opportunities in remote and rural communities.
Senator Johnson: Am I correct that your program has invested over $300 million, which has led to an infusion of $1 billion into the Aboriginal private sector?
I see from page 21 of your presentation that you are seeking additional funding. How much more money do you want and for what specifically would it be used? You have listed five areas. What percentage of Aboriginal youth does this involve and how is it divided between males and females? I am informed that women constituted the fastest- growing segment of entrepreneurs in the last 10 years.
You invested $300 million, which has led to a further $1 billion investment. Now you are asking for more and I am curious to know for what it will be used.
Mr. Moore: Our current funding is $30 million a year. Before the program review of the early 1990s, the ABC program funding was $70 million to $80 million per year. We were cut back to $30 million, forcing us to develop strategic priorities. Prior to that, ABC was involved in general business support.
Thirty million dollars is not a lot of money. We overspend our grants and contributions every year. We are fortunate to work in a department where we can occasionally trade off grants and contributions. We are able to get a little more support in that way.
The demand is there. It is clear that, given the demographics, there will be much pressure on the program in the next 20 years or so.
We are seeking new funds because we would like to reach more youth, and one of the considerations is the appropriate age range. Right now, it is 18 to 29 and we are proposing jacking that up to 35. This would not only make us more consistent with other youth programming, but also provide that extra time frame that some youth may require to garner more experience and build more equity, which would put them in a better position to access funds from either a bank or ABC.
Senator Johnson: Do you have an ideal figure for that additional funding?
Mr. Moore: We are looking at the possibility of an additional $25 million a year.
Senator Johnson: Where will you be seeking that?
Mr. Moore: We have already been to cabinet. To be honest, I do not know how far I can go in revealing the details. However, cabinet has approved the proposal.
Senator Johnson: This would be beginning when?
Mr. Moore: Beginning this coming fiscal year. However, no source of funds has been identified. We went through a budget process and there was nothing in the budget. We are working through the reference group of ministers and the Aboriginal policy process to illustrate the importance of Aboriginal economic development, what it can do, and perhaps garner more support for our proposal that way.
Senator Johnson: Does the suggestion for raising the age limit to 35 come out of your experience with past programs?
Mr. Moore: It has come out of past experience and some of our studies.
Senator Johnson: Kids now stay in school until they are 30 instead of 20.
Mr. Moore: That is part of the problem. Kids are dropping out and then going back to school. People are graduating at the age of 30 or maybe older. By that time, they may be in a better position to become entrepreneurs.
Senator Johnson: Do you think that raising the age limit will also enhance your chance of obtaining funding? It will include larger numbers of people if it goes up to 35.
Mr. Moore: We think so.
Senator Johnson: You do not have any breakdown of how many males and females are accessing the money?
Mr. Moore: Unfortunately we do not, but we can obtain that fairly easily and provide it to you.
Senator Johnson: It is true in the non-Aboriginal sector that women are responsible for more small business start- ups. It would be interesting to know about Aboriginal women.
Mr. Moore: The unfortunate thing is that, while the rate of increase of entrepreneurs may be high, they are still under-represented.
Senator Johnson: I know that. I am from Winnipeg and I know that mentorship is critical. I worked in continuing education in the 1980s with Aboriginal students to encourage and fast track them in medicine, law and various other areas. Mentorship made the difference.
Senator Léger: I would like to say that, while I was preparing for this meeting and reading about Aboriginal Business Canada, I was perhaps encouraged for the first time. I am not minimizing the immense challenges described in other reports we have had, but this is a bread-and-butter issue. That is the basis, if we want to improve the situation.
In business, you have to go the global way. We have been studying how, if these initiatives are to work, we have to start with the Aboriginal way of doing things, while others say it has to be the ``global way'' — not to say the non- Aboriginal way. Is that true?
Mr. Moore: I think so.
Senator Léger: Senator Hubley mentioned apprenticeship, but what about co-op education? They speak about that now in secondary schools
Mr. Moore: Do we have co-op programs? No.
Senator Léger: I know it is not business.
Mr. Moore: We do not necessarily support it through our program. However, we are trying to set up agreements with universities and high schools across the country for students who may be interested in pursuing a career in government or with Aboriginal Business Canada.
For example, we are in the midst of signing an agreement with the I.H. Asper School of Business at the University of Manitoba. They have an Aboriginal business program and we will be recruiting one to two Aboriginal people per year to work for Aboriginal Business Canada. It is a small start, but it is something that we like to do.
We would like to get more involved in supporting Aboriginal people who want to start a business training other Aboriginal people. That has not been explored as fully as it should be. For example, a big hydro development in Northern Manitoba is looking at hiring X percentage of Aboriginal people. Where will they find them? They will need people who can train people, and maybe the best ones to do that are experienced Aboriginal people who understand the culture and the needs. We would like to pursue that further.
Senator Sibbeston: I want to ask about your involvement or presence in the Northwest Territories, where I am from. I have some experience in this area because, in the early 1990s, I became involved with a number of native people in my community. We built an office building, and it is still going. We were funded by the predecessor organization to ABC. What was your prior name?
Mr. Moore: NAEDP, National Aboriginal Economic Development Program.
Senator Sibbeston: Perhaps there was one of which Ken Thomas was chairman?
Mr. Moore: Yes, the National Aboriginal Economic Development Board.
Senator Sibbeston: We built a very successful office building in Fort Simpson. The Metis and the local band were involved. The project is still viable and has made a positive contribution to our community. It has helped many native people.
The economic climate in the Northwest Territories is very good. Aboriginal people in different parts of the country are getting into big business at an unprecedented rate. Are you involved in any of those partnerships or development corporations in the Northwest Territories?
Mr. Moore: Not as much as we should be. The challenge is that our program is small, with $30 million a year. We could spend $30 million in one day if we got involved in these large oil and gas and diamond mining projects.
We are trying to support businesses that are ancillary to those types of projects. For example, transportation is required. How can we support an Aboriginal person who may want to start a transportation company or a catering company? All sorts of other businesses are required to ensure that these large projects are successful.
As for our presence in NWT, we do support an Aboriginal capital corporation in Yellowknife. We also have a third- party contribution agreement with that corporation to deliver the program on our behalf. That is more cost effective for us than sending our employees up to Yellowknife all the time. It is serviced out of Edmonton, but we have that third-party presence in Yellowknife. We are also considering a unique partnership with, I believe it is NTI and Indian Affairs out of Iqaluit, for a third-party delivery structure servicing Cambridge Bay, Iqaluit, Rankin Inlet and other areas in Nunavut.
That gives you an idea of our presence north of 60. As I say, we are trying to get more involved and to capitalize on these major projects.
Senator Sibbeston: There is a tremendous amount of economic activity in the Northwest Territories related to the diamond mines and oil and gas. The development, and native participation in it, is partly made possible by the Aboriginal land claim settlements. The Inuvialuit and all the other Aboriginal groups have money because of the land claims process and their ownership of the land. As a result, they can participate and insist upon certain conditions for companies working in their area.
I think the Northwest Territories provides a pretty positive scenario for the involvement of Aboriginal people. It is encouraging to go North and see that. I tell people whenever I can about the success of land claims, the idea of Aboriginal people having ownership of land and money that allows them to participate in business. After all, money is needed to participate in business. When you have a source of money, it can be your equity and entry into the business world. The North is a good example of what governments can do in assisting Aboriginal people to get on their feet.
The Chairman: You talked about apprenticeship. There is a group of 10 Aboriginal journeymen contractors who, because of many issues, were unable to get work. They formed a consortium and had wanted to bid on different projects, as well as establish a training program so they could take on apprentices and put them to work. The problem is with the bidding process. They need bid bonds. Is there any way your department could assist them?
Mr. Moore: Not really. They should probably be talking to Indian Affairs.
The Chairman: These men are off reserve. Some are Metis and some are treaty.
Mr. Moore: I do not think so. Our program at ABC is primarily to assist business. Are they a business?
The Chairman: They are. It is a consortium. They are incorporated and have a good business plan. However, to bid for large jobs, you have to have bid bonds. They are having difficulty because they are facing latent racism, along with many other issues. These are good business people and good contractors. They have owned their own businesses for years, but due to a number of issues, they decided to join forces. There is strength in numbers. They face a number of issues, including stereotyping.
Do you have any help for this type of consortium that wants to take on apprentices, train and then hire them? Anyone can get apprentices and trainees. Once they are trained, what do they do or where do they go? This consortium is bidding on the jobs so that their apprentices will have work after their apprenticeship is finished.
Mr. Moore: Our program might be able to help them. We would need to get the details and a contact. We can discuss it with them. To be honest, there is nothing we can do about the racism or preferential treatment, if there is any.
The Chairman: That is an education issue.
Mr. Moore: Certainly we can talk to them and see if we can help them out.
The Chairman: Who appoints the board?
Mr. Moore: They are Governor in Council appointees through the minister's office on recommendations made to him.
The Chairman: Which minister?
Mr. Moore: Minister Rock. From Minister Rock, it goes to cabinet.
The Chairman: Do you have any statistics on businesses either on or off reserve that you assist?
Mr. Moore: What kind of statistics would you be looking for?
The Chairman: We have an interesting scenario in Canada. We are talking about the migration of people within our own country. A large number of people are moving into the cities and urban centres because of the lack of employment and opportunities on reserve. Do you have any statistics concerning established businesses on reserve that are able to keep the people in their own communities, which is where they want to be?
Mr. Moore: The best we can do is give you stats on how many businesses are located on reserve versus off reserve. We can certainly do that if it would be helpful.
The Chairman: It might help in our deliberations.
[Translation]
Senator Gill: My questions are related to the annual budget of $30 million. If we distribute this amount between the provinces, it amounts to $2 or $3 million per province. If think that, if you look at page 5, the distribution we see there can be confusing. Could you explain the amounts on page 5?
[English]
Mr. Moore: Page 5 sets out who is responsible for what area and how much is earmarked for that area. For example, Labour Force Development is the biggest piece of that pie and is delivered by HRDC. That pertains to the Aboriginal Human Resources Development Strategy. It amounts to almost $336 million per year and is pan-Aboriginal, meaning that it is available to all Aboriginal people — Metis, Inuit, status, non-status, on reserve and off reserve. It is focused on skills training for individuals.
The next biggest piece of the pie is Economic Business Climate/Infrastructure, which is led by Indian Affairs. As you all know, the mandate of Indian Affairs is status Indians on reserve. That is primarily focused on creating the necessary climate for investment, whether it is resource access negotiations funding or partnership funding. It is primarily investments on reserve to assist Indians in attracting investments.
The next piece, Resource Development, could be focused on forestry or mining, or it could be related to accessing permits for resource development and that sort of thing. There is a little money divided among Indian Affairs, Natural Resources Canada and Fisheries and Oceans, whether it is for Marshall or out in B.C. The focus is primarily on communities, on status Indians on reserve, and amounts to $95 million per year.
We are then left with the smallest piece, Business Development, which has a much broader focus. We deal with individual and communities, but primarily with individuals. It is pan-Aboriginal — Metis, status, non-status, Inuit and so on. It includes funding from not only Aboriginal Business Canada, but also from FedNor, Western Economic Diversification, ACOA, other organizations such as the Business Development Bank of Canada, and so on.
That is how we come up with the figure of $73 million a year for business development in the Industry portfolio.
I do not know if that helps.
[Translation]
Senator Gill: This makes things more complicated because we do not reflect clearly the image of the economic support received directly by the Aboriginal people. The federal funds for Labour Force Development, amounting to $606 million, are distributed between the provinces which must administer them, in Quebec at least, because I do not know for the other provinces. However, do these funds reach the Aboriginals people? When we looking at the budget as a whole, we find that these are fantastic amounts which are allocated to economic development whereas in fact it is not so. I do not know of such a big budget in the communities or elsewhere for the Aboriginal people. Could you give me some explanations on this?
[English]
Mr. Moore: The $330 million under HRDC for the Aboriginal Human Resources Development Strategy does not go to the provinces. These funds are provided to Aboriginal organizations to develop labour market programming for their constituents. The provinces have their own labour market development agreements with HRDC. This funding follows some of the same principles of a labour market development agreement with the province, but it is between HRDC and various Aboriginal groups.
There are approximately 63 agreements with Aboriginal groups across the country to deliver labour market programming. It is a devolution process that provides monies to Aboriginal peoples because they know their needs and can create culturally sensitive programming for training.
The problem is that this framework is frequently used by officials, whether ours or Indian Affairs or others, to talk about economic development. If you want to talk about economic development in its purest form, you would have to take out that 55 per cent piece of the pie. It is ``soft'' economic development because it is training; it is not pure economic development, investing in businesses and opportunities. It is about investing in people, not economies or businesses. If you take away the Labour Force Development piece of the pie, you are left with a little under $300 million, and when you compare that to the $7.7 billion that is invested in total by the federal government in Aboriginal programming, it is a small piece.
[Translation]
Senator Gill: Labour is clearly the responsibility of Human Resources Development. I have checked the references we have received on this. That department, as far as aboriginal labour is concerned, always prefers, for Quebec at least, to transfer the management of these matters to the provincial government. However, the applications are supposed to come from Quebec. The amount of $30 million is confusing. People think that there is a lot of money in Economic development when they look at the different pieces of this pie. However, when looking at your budget, and I understand why you are asking additional funding, we find it is small. It is confusing.
Mr. Moore: Exactly, this is why I wanted to stress that if we remove the $300 million, this is not much money.
Senator Gill: Concerning those working in your organization, are there many of you in the department to manage the aboriginal economic development at Aboriginal Business Canada? I know that you experienced some big staff cuts.
[English]
Mr. Moore: We have about 70 people across the country delivering this program. We have individuals at headquarters dealing with policy and communications issues. There are not that many people on the ground delivering the program. They must ensure that communities and individuals are aware of the program and we have some challenges there. Many people are not familiar with Aboriginal Business Canada or the board. One of our biggest problems is getting to the people and saying, ``Here we are. Here are our successes. We are here for you. This is what we can do.''
We do not have the people to deliver this program, although we are getting quite a lot of help from Aboriginal organizations with whom we have some third-party arrangements, where they will either deliver the program on our behalf or they have their own budget that allows them to actually sign agreements with clients. We are looking for as many opportunities as possible to deliver the program.
[Translation]
Senator Gill: What is the upper limit per project?
[English]
Mr. Moore: We will fund up to 60 per cent of eligible expenses for a project. For individuals, that funding is to a maximum of $75,000. For communities it is to a maximum of $250,000. There are exceptions, but those have to go to our board.
Senator Christensen: Migration from reserves into urban areas often involves single-parent families headed by women. It is difficult for them to find all the available information on Aboriginal women's programs. There were special programs for that group to enable them to work in the home and set an example for their children, who would then perhaps have a better opportunity to go on and become successful. You are saying there are no specific programs targeted to women. Are there plans for that? It seems to me that area needs special attention.
Mr. Moore: There is no direct programming, but I can say from experience of working at HRDC that one indirect program is childcare for First Nations and Inuit communities. Minister Blondin and I had a good discussion about the challenges for Aboriginal women getting into business, and much of it has to do with childcare. How can you expect a mother of two or three children to get into business when she has all these other responsibilities? Appropriate childcare and education, those kinds of indirect programs, would go a long way in assisting Aboriginal women who want to get into business.
Senator Christensen: Many women go into business so they can stay home, have part-time jobs and still care for their children. Childcare is not the issue. They need to find out about the programs and how to access them. They are not out in the workforce, so they are not exposed to the paperwork and bureaucracy that perhaps a young male who is working part time would be.
It is a very different perspective and way of approaching it.
Senator Pearson: There is room for entrepreneurship in arts and culture. Do you have programs for people who want to set up a creative activity at home? Are you working with other departments to encourage arts and culture? Can you see it as a business? A large number of people are employed in arts and culture in this country and many more benefit from them.
Mr. Moore: I think most of those activities would be covered under our tourism strategic priority, which could be anything from eco-tourism to cultural activities. We have had some experience with assisting individuals and small companies in marketing some of the goods that they are producing. We have also assisted people producing crafts at home, as well as larger businesses, with business and marketing programs.
Senator Pearson: You have done a lot of work for us already and I hate to impose anything else. However, it would be interesting to get that breakdown on males and females. I would also be interested in knowing whether you have been able to assist cultural activities, and if so, how many. We may want to recommend expansion in that area.
Mr. Moore: We will see if we can get that information. I went through the presentation quickly, but there is a lot of data there. However, I could provide this committee with a number of our studies that form the basis of much of this data, some evaluations of the program, and also some other research studies that may be helpful.
Senator Johnson: The Aboriginal Mother Centre in Vancouver opened very recently, approximately a year and a half ago, and provides space for women to organize themselves. They are looking at setting up three businesses to help support the centre's operations, using the ideas and initiatives of women who use the centre. Do you know of this?
Mr. Moore: No.
Senator Johnson: One business was a courier service called ``Moms on the Run,'' and another was a catering service. They build on the abilities of the women and their ideas. I was wondering if they had approached you for funding for their projects.
Mr. Moore: They may have. I am not familiar with every project. We have a regional office in Vancouver, and we can ask them if they are aware of this.
Senator Johnson: They are certain they could become self-sufficient in a short time because so many women are interested in doing these kinds of things. It is very new, and it is not in the cottage industry sector. It is actually proving to be incredibly successful. It gives women a chance to be with their children, to organize their time through flex hours and to work on the cyclical model, which is better for women than the linear model that is prevalent everywhere in our society. I do not know if they have received any funding, but I know they will be approaching you, if they have not already.
Mr. Moore: They may have, and we may have already funded them.
Senator Johnson: Do you have any idea how many Aboriginal youth or mature students are in business or MBA programs at universities across the country?
Mr. Moore: I have no idea.
Senator Johnson: That is where they are teaching people about the future of business. The I.H. Asper school is going to be something in my province. I was curious to know if you had any figures on the rest of the country.
Mr. Moore: No.
Senator Léger: I imagine the basic thinking is different when it comes to arts and culture. The arts are not about money in the same way as other businesses. However, it is something that can be developed. I imagine there is an opening for another way of thinking.
Mr. Moore: Yes, and we have funded them. I would guess that we do not fund that many for that very reason. As businesses they are not very viable, and that is one of the criteria that we need to look at. Will it be successful? Will it be profitable?
Senator Léger: Perhaps your department needs to use a different basis for judgment of arts and culture than for the trucking business, for example.
Mr. Moore: We try to be more lenient. Given our name, Aboriginal Business Canada, I think we need to do that.
Senator Sibbeston: My comment is on the whole business of economic development. I know the history of Indian Affairs in particular. The government in the Northwest Territories attempted decades ago to assist Aboriginal people to get into business. There was a stage where almost any kind of local community project that smacked of business or economic development would be funded. Many of these failed. It was the government's attempt to help native people get into the business world.
It is a big step to come from the bush, from the land, and get into the business world. Business is the most difficult endeavour. That is why you guys are working for the government and we are where we are. Many of these businesses failed. However, it was necessary that they did. I believe from my own experience that there is no short cut to getting into business. It is trial and error, and you must necessarily experience many failures before you achieve success. That is the way it works.
From my own experience of your program, it seems you only fund the very successful ones. You do not mess around with the ``mom and pop'' business or the coffee shop in the small community. You are more involved in bigger projects, where there is a good chance of success. Am I right in suggesting that?
Mr. Moore: I would not say that. Part of the reason for our high success rate is the time and effort that our development officers put into the business. There is a lot of pre-care in assisting the business to get started. There is also a lot of aftercare. Our clients can come back and ask, ``What do I do about this? What do I do about my taxes? How do I deal with the lease?''
As I said in the presentation, the majority of our clients are very small businesses with less than 10 employees. Funding on average is $30,000 per project.
I just returned from Winnipeg where we visited a woman in her mid-20s. She started a framing shop there, and if you want to talk about risk, that is a fairly high-risk position to be in, but she is doing fairly well. She is not making a big profit, but she is surviving. We have funded small flower shops or ``mom and pop'' shops right across the country.
To be honest, we also have the big ones, the very successful ones. We try to maintain a balance between the small ones that do not make a huge impact but do survive, and the ones that make a big splash.
Senator Sibbeston: I would be interested in knowing the number of applications that you receive and the number that you actually assist with funding.
Mr. Moore: We receive approximately 1,600 applications per year, and we fund probably around 1,000. There are two reasons we do not fund all of them. The first would be because they do not fit into our strategic priorities, which we have to maintain because we do not have a lot of money. The second would be not because they might not be financially viable in the end, but because these people probably just do not have their act together.
They do not know how to put together a business plan. They have no training or experience. In some cases, we will take a risk and help them out. We tell them that if they take a certain course, talk to a certain person who is involved in this business and get more experience, we will talk with them further.
Senator Sibbeston: Do civil servants like you make the ultimate decision or does a board decide whether to fund a project?
Mr. Moore: I only get involved in projects over $250,000, as does the board. Our regional directors and development or field officers have much of the decision making power on average-sized projects of approximately $75,000. It would not be fair to the clients if I had to decide on every application because of the time involved. Therefore, much of the decision making is in the hands of our field officers, who have a lot of interaction with the clients and understand what they are trying to do.
Senator Gill: I believe that your maximum is $250,000 for band or group projects and $75,000 for other projects. Do you have figures on that?
Mr. Moore: Are you referring to how many community projects we fund versus how many individual projects?
Senator Gill: Yes.
Mr. Moore: We can get those figures.
Senator Gill: Would you say that there is more money spent on band projects than individual projects?
Mr. Moore: I could not guess. We would have to get the numbers.
Senator Hubley: Senator Léger and Senator Pearson brought up the subject of arts and culture. Senator Léger also mentioned cooperatives. Cooperatives should not be overlooked because they have a potential for bringing together people who are engaged in one particular activity and they provide part-time, at-home employment. The cooperative movement is very popular in the Maritimes and has been very successful. There are some good models there, many dealing with quilting, rug hooking and things of that nature.
I wanted to reiterate that the cooperative movement can be helpful in certain situations.
The Chairman: I wish to thank you both very much. This has been very interesting. I am glad that Ms Bird was here because she can relate many of these discussions, such as on the cooperative movement, to policy.
I look forward to receiving all the materials we have asked for to help us create a very good action plan for change.
The committee adjourned.