First Nations urge Canada to Choose Partnership over Paternalism in Federal Budget by Enacting Collaborative Funding Model to Close the Infrastructure Gap

OTTAWA, ON, March 22, 2023 /CNW/ - First Nations Finance Authority (FNFA) is urging Canada to embrace a new and innovative method of funding Indigenous infrastructure based on partnership rather than paternalism to keep its promise to bridge the infrastructure gap between First Nations and the rest of Canada by 2030.

"The federal model for funding infrastructure has failed to deliver the housing, clean water and other critical infrastructure that will improve the living conditions in First Nations communities," said FNFA President and CEO Ernie Daniels. "We believe there is a better way, a way that works with First Nations as partners rather than the colonial approach that's rooted in the almost 150-year-old Indian Act."

FNFA and its Indigenous partners are urging the federal government to start by annually setting aside $200 million in the upcoming budget. FNFA will issue a debenture to build priority infrastructure and funds provided by Canada will service the debenture payments. This annual amount can increase each year as the program increases in size. The innovative new program is called Monetization – build now at today's costs and repay over a preferred loan term. Monetization is the same way that provinces and municipalities pay for infrastructure.

FNFA is a federally legislated, non-profit financial institution with 151 borrowing First Nations members in all provinces and the Northwest Territories. It has provided $1.8 billion in loans to fund critical infrastructure and economic development projects in First Nation communities and has earned a rating among international bond rating agencies equal to that of Ontario and Alberta. All of the $1.8 billion in loans is supported by the First Nations own-source revenues. These revenues are not sufficient to materially close the infrastructure gap further. A partnership with Canada and the FNFA is needed.          

In fact, a new report from the Assembly of First Nations and Indigenous Services Canada pegs the infrastructure gap at a staggering $349.2 billion.

Monetization would be an alternative to the current government "annual cash" model and would leverage the capital markets through a FNFA debenture to provide long-term loans to qualifying First Nations to finance critical infrastructure. Monetization would focus on such community priorities such as housing, clean water, replacement of diesel generators with clean energy, schools, health centres, administration centres, and other community priorities.

Using housing as an example, $200 million in annual federal funding could finance a $3.6 billion FNFA debenture monetized over a 20-year term, which would build about 12,000 houses at today's construction costs with work beginning immediately. Far fewer homes could be built under the current pay-as-you-go model with inflation impacting costs in the years ahead.

"Monetization would be a new tool that could put shovels in the ground now to address the critical shortage of decent infrastructure in our communities," said FNFA Chair Warren Tabobondung, who is also Chief of Wasauksing First Nation in Ontario.

Last April, the Standing Committee on Indigenous and Northern Affairs recommended that the federal government work with Indigenous institutions to test monetization to transition remote Indigenous communities off dirty diesel fuel into cleaner energy.

"Monetization is not a silver bullet that will close the huge and growing infrastructure gap overnight," said FNFA Vice-Chair of the Board of Directors, Derek Epp, who is also Chief of Tzeachten First Nation in British Columbia. "However, it could be a real game changer for those qualified First Nations that choose to follow this path in our journey toward economic reconciliation."

For more information about Monetization, please visit: www.fnfa.ca/monetization/ 

About the First Nations Finance Authority (FNFA)
FNFA is a not-for-profit First Nation institution that plays a crucial role in the social and economic development of First Nations across Canada by providing qualifying members with access to the capital markets at competitive rates. Established by the federal First Nations Fiscal Management Act in 2005, FNFA is by First Nations, for First Nations. FNFA will continue to expand and diversify, looking to strengthen its credit rating and increase the financial benefits to its growing membership.

SOURCE First Nations Finance Authority

Naomi Mison, Communications Manager, Telephone: [phone], Email: [email protected]