The rising tide of mega-project billions in B.C. is straining the already limited business management resources of native bands and reserves, especially in remote areas of the province. That once-in-a-generation development windfall, coupled with rekindled entrepreneurial ambitions in aboriginal communities across the country, is proving to be a business boon for bankers and lawyers.
As chronicled in the first instalment of Business in Vancouver’s three-part Northern Exposure series (“A land of opportunity and economic optimism” – issue 1250; October 8-14), B.C.’s list of resource extraction proposals includes the $4.5 billion Kitimat LNG liquefied natural gas export facility, the $1.3 billion Pacific Trails Pipeline, the $6 billion Northern Gateway pipeline and the $12 billion LNG Canada joint venture.
News earlier this month that Petronas, Malaysia’s state energy company, has confirmed plans to sink $36 billion into B.C.’s natural gas sector adds further fuel to the resource bonanza fire for native and non-native populations around the province.
But tending that fire will be a major challenge for those closest to it.
Robert Walker is vice-president of ESG (environmental, social and governance) Services for NEI Ethical Funds. His seven-person team in Vancouver helps improve the ESG performance of companies NEI invests in. How resource extraction companies interact with First Nations is a key issue for NEI. Improving that interaction requires negotiation and management expertise on both sides of the First Nations and resource development company table.
But as Walker pointed out, in many cases, “[First Nations] are simply overwhelmed by the number of development applications that they are supposed to be reviewing and looking at.”
As an example, he pointed to northeast B.C.’s West Moberly First Nation. The band is dealing with everything from shale and conventional gas and mine development applications on up to BC Hydro’s Site C dam.
“So for a small office, a small community, this is a lot to deal with. There is a lot of technical information, and development pressures are absolutely overwhelming.”
Liz Logan can attest to that.
The tribal chief of Treaty 8 Tribal Association was in Vancouver on October 10 to meet with James Anaya, United Nations Special Rapporteur on the Rights of Indigenous Peoples, to raise concerns over damage being done to the vast Treaty 8 region in northeast B.C. from oil and gas and other extractive resource development and the looming environmental complications from Site C.
The former chief of the Fort Nelson First Nation spoke with Business in Vancouver about the challenges small band councils now face from the northern resource boom in just trying to process applications and permits.
“Some days we would get hundreds, and we are talking about oil and gas; we are talking about forestry; we are talking about mining applications; we are talking about the guide outfitter who wants to renew his licence; we are talking about fishing and wildlife applications; we are talking about all kinds of land-use applications.”
So for bands like Fort Nelson, with its half dozen council members, legal advice and banking and money management expertise are becoming high priority items.
That is proving to be good for business in law and banking circles.
Clint Davis is chatting on the line from Thunder Bay, Ontario. Nice day there. A good place to be sowing the seeds for business prospects in his new role as TD Bank Group’s vice-president of aboriginal banking.
Visiting Vancouver in 2010 as the president and CEO of the Canadian Council for Aboriginal Business, Davis, an Inuk from Labrador who is married to a Métis, talked with BIV about the business management deficit on the country’s native reserves. Key elements in that deficit include education and, more specifically, education in business management, without which, bands won’t have control over their economic destiny or be able to take advantage of the huge resource development opportunities knocking on band council doors.
That deficit remains, but Davis said it’s being reduced in many native communities as their economic power grows.
The aboriginal investment potential across Canada is multiplying rapidly. TD has estimated that the combined income of Canadian aboriginal businesses and individuals will balloon to around $32 billion by 2016. That, Davis pointed out, is larger than the combined GDP of Labrador, Prince Edward Island and Newfoundland.
“It’s massive.”
It would also be up markedly from $24 billion in 2011 and $12 billion in 2001. Davis estimates aboriginal purchasing power in B.C. to be more than $5.4 billion per year.
Its growth rate compared with many other sectors in Canada is significant.
“I tell people that proves that aboriginal people are not a drain on the Canadian taxpayer because everyone talks about the $9 billion that flows [annually] from the Government of Canada to First Nations and Inuit communities across the country. So what are we getting for $9 billion? Well, we are net contributors by $13 billion, which is quite profound.”
Davis added that his department at TD is relatively new, but that the potential for aboriginal business investment and growth and partnership deals in resource extraction and development projects, especially in Ontario, Quebec and B.C., is huge. And those projects are getting bigger all the time.
Davis pointed out that, with more than 200 native bands in B.C. and the number of resource and infrastructure mega-projects proposed for the province, “it’s a good market for TD. I’ll be coming out to B.C. more now.”
An example of that market’s growing vitality is the 2013 Aboriginal Business Match event held in Sylix/Okanagan territory earlier this year. Involving 120 B.C. First Nations and 140 corporate executives, it generated $30 million in new business deals over two and a half days. The next ABM is scheduled for late February in Penticton.
The growing complexity of aboriginal enterprise is also proving to be good for business in B.C.’s law sector. According to Merle Alexander, a partner with Gowling Lafleur Henderson LLP, practising aboriginal law “has moved from a subset to poverty law to a foreseeable pillar of some law firms. It has to be one of the fast-growing areas of client and business development.”
While neither the Law Society of BC nor the B.C. branch of the Canadian Bar Association tally numbers on the value of aboriginal law practice in the province, Alexander estimated it to be in the $120 million to $150 million range.
“It could be double or triple that if you included the work done for the B.C. and federal governments and all the industry legal counsel on aboriginal-related matters. It is an exponentially growing legal industry, there is no doubt.”
Alexander, a member of the Kitasoo Xai’xais First Nation, pointed out that the breadth of expertise and experience needed by First Nations to deal with such complex developments as multibillion-dollar LNG facilities now is “incredible.”
“No one would ever have imagined that small fishing villages on the coast would be the launching point for an international market gateway to Asia. There are some First Nations that I’m sure are as big as any blue-chip client … as big as any large international company per month [in billings for local law firms].”
Alexander added that more First Nations are now negotiating directly with project proponents as more of the Crown’s duty to consult is being delegated to those companies. Those negotiations, coupled with what is the relative infancy of the law involving aboriginal land and development issues in B.C., increasingly puts a premium on quality legal services.
Legal advice needed by bands is similar to what all businesses need, everything from accounting and technical on up to governance expertise, because as Alexander pointed out, aboriginal involvement in the energy business is more reactive than proactive.
The real long-term, sustainable business development trend for the province’s native bands is in cultivating their own enterprises – everything from destination resorts and private hospitals to major malls and independent power projects.
That, said Davis, is the real key to establishing sustainable economies for aboriginal bands in B.C. and elsewhere in Canada.
“I’ve always said what you will probably see some time down the road, some First Nation or collection of First Nations making a play for an iconic Canadian company and owning a major equity share in, say, a Canadian Tire or something like that, and it would really illustrate that we’ve arrived on the scene and now are very serious.”
