FMB/CGF Ten Times Harder The role of the FSMA in levelling the private sector playing field.

Outline Why First Nations need the FSMA. How it works.

First Nations Need the Private Sector Private investment is 5 times greater than public. First Nations receive a relatively tiny share of private investment. Public resources cannot replace “missing” private investment. First Nations must receive their share of private investment to meet their aspirations.

First Nations Need Private Investment Source: Statistics Canada

Why the FSMA It is 10 times harder for a First Nation to attract private investment. The FSMA will help change this.

The FSMA Is A First Nation led piece of enabling federal legislation that creates four First Nation institutions that will: Provide First Nation access to debenture markets and Improve the First Nation investment climate

Basic Messages The FSMA…. is not a subsidy is not a special right creates a net fiscal benefit creates job opportunities on reserves improves infrastructure on reserves. allows the market to work better on First Nation lands.

FMB/CGF How Economies Grow In a typical Canadian community

$1000 in annual property tax finances $6000 in infrastructure every $1 of infrastructure generates $5 of private investment $30,000 private investment Which means Jobs, More Revenues and Better Services Typically, communities can finance $6 in infrastructure for every $1 in annual tax revenue. A typical Canadian community attracts $5 in private investment for every $1 of new infrastructure. Private investment creates the capacity to provide jobs, improve services, and raise incomes. If this capacity is used properly, the community prospers A typical Canadian community collects property tax and other local revenues. The federal and provincial governments may make other revenues available.

$1000 in annual property tax finances $6000 in infrastructure every $1 of infrastructure generates $5 of private investment $30,000 private investment Which means Jobs, More Revenues and Better Services Typically, communities can finance $6 in infrastructure for every $1 in annual tax revenue. A typical Canadian community attracts $5 in private investment for every $1 of new infrastructure. Private investment creates the capacity to provide jobs, improve services, and raise incomes. If this capacity is used properly, the community prospers A typical Canadian community collects property tax and other local revenues. The federal and provincial governments may make other revenues available.

FMB/CGF How Economies Aren’t Growing In a typical First Nation community

$1000 in annual property tax finances only $2000 in infrastructure every $1 of infrastructure generates $1.50 in private investment $3000 in private investment Which means 10 times fewer jobs and revenues A First Nation community can collect property tax. A typical First Nation community can finance only $2 in infrastructure for every dollar in tax revenue.  Some First Nations can’t get a loan  Delays in processing loans  Shorter borrowing terms  Higher interest rates  Higher collateral requirements First Nation infrastructure improvements attract on average only 1.5 times their value in additional investment.  Unclear property rights  Cumbersome regulatory processes  Fiscal uncertainty  Lack of investor awareness and confidence  Lack of administrative expertise and quality statistics  Less efficient infrastructure First Nations are receiving only one tenth the investment they might otherwise generate. Many First Nations have still not parlayed private investment into improved communities and job opportunities.

$1000 in annual property tax finances only $2000 in infrastructure every $1 of infrastructure generates $1.50 in private investment $3000 in private investment Which means 10 times fewer jobs and revenues A First Nation community can collect property tax. A typical First Nation community can finance only $2 in infrastructure for every dollar in tax revenue.  Some First Nations can’t get a loan  Delays in processing loans  Shorter borrowing terms  Higher interest rates  Higher collateral requirements First Nation infrastructure improvements attract on average only 1.5 times their value in additional investment.  Unclear property rights  Cumbersome regulatory processes  Fiscal uncertainty  Lack of investor awareness and confidence  Lack of administrative expertise and quality statistics  Less efficient infrastructure Many First Nations have still not parlayed private investment into improved communities and job opportunities. First Nations are receiving only one tenth the investment they might otherwise generate.

FMB/CGF What the FSMA Does Using infrastructure to develop business

10 times fewer jobs and revenues $1000 in annual property tax finances only $2000 in infrastructure every $1 of infrastructure generates $1.50 in private investment $3000 in private investment Which means  Some First Nations can’t get a loan  Delays in processing loans  Shorter borrowing terms  Higher interest rates  Higher collateral requirements  Unclear property rights  Cumbersome regulatory processes  Fiscal uncertainty  Lack of investor awareness and confidence  Lack of administrative expertise and quality statistics  Less efficient infrastructure  We are not fixing all the problems with this initiative  More work is necessary  More confidence in local account  More fiscal certainty  Improvement in administration  Quality information  Simplification of regulatory environment  More efficient infrastructure investment FSMA Brings  No collateral requirements  Lower interest rates  Longer term of loans  Faster processing 3 times fewer jobs and revenues 2 times fewer jobs and revenues

$1000 in annual property tax finances only $2000 in infrastructure every $1 of infrastructure generates $1.50 in private investment $3000 in private investment Which means 10 times fewer jobs and houses FSMA Brings  No collateral requirements  Lower interest rates  Longer term of loans  Faster processing  Ensuring the right infrastructure 3 times fewer jobs and houses 2 times fewer jobs and revenues  More confidence in local account  More fiscal certainty  Improvement in administration  Quality information  Simplification of regulatory environment  More efficient infrastructure investment  We are not fixing all the problems with this initiative  More work is necessary

FSMA – Creating Four First Nations Institutions First Nations Tax Commission (FNTC) First Nations Financial Management Board (FMB) First Nations Finance Authority (FNFA) First Nations Statistical Institute (FNSI)

FSMA – Improving the Investment Climate Greater confidence in local government account Financial statements (FMB) Fair Treatment (FNTC) Quality information (FNSI, FNTC, FNFA, FMB) Recourse (FNTC, FMB) Fiscal prudence (FNTC)

FSMA – Inspiring Confidence Greater confidence in local government account Financial statements (FMB) Fair Treatment (FNTC) Recourse (FNTC, FMB) Fiscal prudence (FNTC)

FSMA – Improving the Physical Infrastructure Improving access to capital will significantly lower financial thresholds for First Nation capital projects. Improving First Nation statistics will enable First Nations to better match infrastructure requirements with their economic and community development plans.

FSMA – Improving the Information Infrastructure Public and private investment is only as good as the information it is based on. The FSMA will allow better information regarding: First Nation finances in general. Local revenues and expenditures. Debt and Debt servicing obligiations State of infrastructure. Social, demographic and economic data pertinent to performance measures and investment facilitation.

Unfinished Business... The FMSA does not solve all problems with the investment climate. Examples: New revenue sources are required. Coordination with land management is required. Marketing of First Nation opportunities is required. Regulatory vacuums create uncertainty. Most First Nations need improved investment facilitation. More decision making is required at the local level. More certainty is required over the regulatory and fiscal environments. Human resource capacity must be supported First Nations with an interest in investment need a political vehicle.

The Returns to the FSMA Pre-FSMA: $5 million in annual property tax = 150 job opportunities Post-FSMA: $5 million in annual property tax = 1800 jobs opportunities In five years the FSMA will deliver $79 million in new infrastructure and $218 million in new investment.

The Cost of Delaying the FSMA Every day this legislation is not passed costs First Nations $ Every minute this legislation is not passed costs First Nations $68

FMB/CGF Thank you To learn more visit