At the end of a two-day economic development workshop in late September, Naut’sa mawt Tribal Council leaders wrote down the challenges and opportunities that faced their nations.
The words written on the flip-chart paper were a typical SWOT analysis, showing strengths, weaknesses, opportunities and threats to economic development. Those words differed in the details, but showed that there is much in common in our communities around the Salish Sea according to NmTC’s chief executive officer Keith Wilson.
“Many of our nations showed that they are challenged by the lack of land, an inability to share in the wealth that comes from natural resources and the need to generate own-source revenues,” he said. “But the SWOT showed that our communities are definitely moving forward in terms of building capacity and forging partnerships with businesses and their neighbouring municipalities.”
Leaders also revealed the vital role NmTC can play in the years ahead. They indicated that workshops, seminar and other networking opportunities are highly valued. So too is the tribal council’s role in providing information on training, funding sources and as a resource pool for its eleven member nations.
Tools to work with
The workshop's goal was to provide information and tools needed to move economic development plans forward.
A series of presenters covered a wide range of topics from taxation and housing to the federal government’s framework for Aboriginal economic development and a how-to in reading financial statements.
Delegates learned how to better identify and develop economic opportunities as well as strategies for keeping community informed while developing an entrepreneurial spirit in their communities.
The presenters dealt with how-to methods rather than just theoretical discussions. By the workshop’s end, leaders were more familiar with the role of chiefs and councils with relation to development corporations, potential partnerships and community consultation.
Taxation structure can be rewarding
Bill Maclagan of Blake, Cassels and Graydon, a Vancouver-based law firm that was named Canada’s law firm of the year for 2009, spelled out the intricacies of taxation on reserves.
“One size doesn’t fit all,” Maclagan said referring to dealing with federal and provincial taxation issues on reserve. “You must look at all the facts and decide what’s best for you. But there are lots of opportunities on how to structure your development corporations and, if you do it right, it can be very rewarding.”
Many of the delegates were familiar with the many taxation challenges, especially when applied to working as commercial fishers or loggers.
“We have been commercial fishermen,” said one. “Our businesses were on reserve, so we never paid taxes. We always filed our tax returns. Can the CRA (Canada Revenue Agency) come back at us?”
Maclagan said: “No, I don’t think they can, but it is always much safer if you file a tax return. I don’t think the CRA is out there going after people.”
But another delegate who worked off reserve in the logging industry said that was not always the case. “They keep coming after one guy in our company every four years.”
Maclagan said that provisions in Section 87 of the Indian Act that deals with general tax exemptions became clearer after the Williams Decision in the mid-1990s, but problems still exist. “Court cases generally focus on where the employment is exercised, where is the work done,” he said.
“Section 87 is still almost useless for Indian people and creates a mass of uncertainty.”
But as First Nations move toward self-government, Maclagan said some taxation issues might become less challenging.
“Under the Income Tax Act, First Nations can claim the same exemptions that municipalities do when it comes to income,” he said. “If you are a public body performing the function of government… the CRA is much more comfortable with this.
While these exemptions can be used with treaty, land entitlement settlements specific claims, they are available only to First Nations directly and not to corporations owned by First Nations.
He then spelled out various corporate structures that could be put in place to maximize revenues and other opportunity for First Nation businesses while limiting the tax implications.
Those options included setting up a limited partnership with non-aboriginal partners, which Maclagan said was a “tax effective flexible arrangement”.
Another option could be setting up a municipal-type corporation. “This could be effective for on reserve activity, but a limited partnership may be just as effective with less tax risk,” Maclagan said.
“Partnerships can be very good for First Nations to use. A limited partnership can be a good vehicle with limited liability.”
Maclagan also warned about the pitfalls of chiefs serving on boards of directors. “If I had my druthers, I would just as soon not have a chief on the board of a corporation. It creates issues, but if the board operates on majority votes and there are non-First Nations on the board, you would be better off.
“But you do have to be careful. A chief can’t be deciding everything (on a corporation) because you could lose your liability protection.”
More info at: www.blakes.com
More money coming
David Hooper, who is manager of economic development programs for Indian and Northern Affairs Canada’s Pacific region, outlined the Government of Canada’s framework for Aboriginal economic development in the coming years.
He said that Canada would be investing $66.3 million over four years to strengthen Aboriginal participation in key sectors of the economy.
“Forging new and effective partnerships is necessary to ensure that investments and actions taken now by the federal government and its partners will lead to meaningful and permanent gains for Aboriginal Canadians,” Hooper said.
“Longer-term success will depend on bringing the interests, roles, and accountability of all actors – especially Aboriginal Canadians themselves – to the table.”
Financial statements are there to be read
Certified general accountant Bonnie Wallis who runs her own accounting firm in Parksville demystified the contents of financial statements.
She showed not only how to read financial statements, auditor’s reports and similar documents, but how crucial such records are for First Nations, their companies and organizations.
Delegates learned what to look for when reading financial statements and how to recognize ‘unhealthy’ items in a balance sheet.
Wallis also covered the reading of ‘pro forma’ information in financial statements that showed projections and assumptions.
Housing solutions via buying group
A new way to buy materials below wholesale prices was presented by Leonard Brillon from First Nations Housing Solutions.
Brillon, a Haida from Skidegate, has 25 years of entrepreneurial experience in developing and running businesses and was the developer of the Haida Gwaii Alternative Energy Project.
“We are pulling together all of our purchasing power to create a First Nations Buying Group for all our benefit,” he said.
First Nation members of the buying group would have access to below wholesale prices and would realize additional savings by consolidating shipping and cutting out the middlemen.
“We take away the headaches,” he said. “The more bands that join the buying group the lower the prices.”
Brillon said the buying group could supply everything from a complete house delivered kit-style on a truck, including all materials and appliances, to individual items such as doors or windows.
“Typically contractors earn a good part of their income on building supplies by marking it up,” he said. “We’ve drawn a line in the sand between labour and building costs. We provide all the materials tax-free and at wholesale prices through our partnerships with large suppliers.”
He said the buying group mission was to provide good quality materials at the best prices, at about 50 per cent the cost as from normal suppliers.
“If we have 200 bands in BC buying together, we will get a better deal; 600 bands buying nation-wide would be even better.”
More info at: www.fnhs.ca
How does CCP fit in?
Gary Reith, NmTC’s business development manager, explained the links between economic development and the comprehensive community planning (CCP) process.
He gave an overview of CCP and how it touches every aspect of life in a community. Reith then linked parts of the CCP – including environment, governance, education, health and culture – to economic development.
“Governance and administration within the CCP is directly linked to economic development by making sure your First Nation is business-ready by setting up the appropriate economic development institutions.
“Another example is the land component of the CCP and linking it to overall land-use planning by designating certain areas for economic development in relation to other types of land use.”
Reith said that the holistic approach of CCP means that economic development does not occur in isolation in our communities.
“Achieving supporting relationships among different elements is why I think fitting economic development within the context of the CCP process is both important and valuable.”
People on the move