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From Globe and Mail

Ottawa pushes plan to boost native economy

Grappling with aborignal poverty and exploding population, Tories vows to boost business loans, provide more government contracts and speed development on reserves

Jul. 08, 2009 -  OTTAWA BUREAU CHIEF

Ottawa has unveiled a new blueprint to boost the economy of Canada's exploding first nations population, pledging to increase access to business loans, provide more government contracts and speed the pace of development on reserves.

Canada is grappling with grinding native poverty and a population that is growing four times faster than the non-aboriginal population. The plan includes measures to engage departments across government and to build more partnerships with entrepreneurs, provincial governments and others.

"There hasn't been anything updated for 15 or 20 years, and the needs for industry and aboriginal people are quite different from what they were then," said Indian Affairs Minister Chuck Strahl, who unveiled the strategy last week.

The program has a four-year, $200-million price tag and includes other changes meant to encourage job creation and development.

Among the actions it pledges to take, the government will increase first nations access to debt and equity capital. Mr. Strahl said the federal government would guarantee loans from a fund of more than $10-million per year. The government also plans to beef up aboriginal-based financial institutions.

Obtaining loans is often difficult for first nations people because reserve land - which is owned in common and cannot be repossessed for default - is difficult to use as collateral.

"Aboriginal businesses on reserve and in the North operate on a vastly different economic environment than in the rest of Canada," the blueprint said. "Aboriginal business on and off reserve, and in the North, also face persistent barriers to accessing capital."

The government is also promising under the framework to provide first nations with more access to government contracts. Ottawa wants all government departments to participate in providing procurement access to first nations, increasing native participation by 50 per cent.

Mr. Strahl said the government is trying to make it easier for native firms to obtain such work by tailoring contracts to fit their expertise. For example, he said that some native firms can't bid on government contracts because, although they are equipped to perform some of the tasks, they may not able to execute them all.

"Often, there is no conscious effort to make sure the aboriginal people have a chance to bid on [contracts]," he said.

The blueprint said that private-sector interests are increasingly recognizing the potential within aboriginal Canada. Examples include resource development projects, involving resources such as diamonds in the north, oil sands in the west and nickel in the east. Many are near aboriginal communities, and senior levels of the federal department see opportunities for the increasing numbers of young natives taking on jobs.

According to the outline of the program, a growing number of land-claim settlements can be used to create economic activity. First nations own or control more than 15 million hectares of land, while Inuit own or control more than 45 million hectares.

"This growing economic base, if activated, will make an important contribution to national and regional economies," the document said. More than $315-billion in major resource developments has been identified on or around aboriginal land.

Another measure involves government training in land-use planning for people on reserves. Many entrepreneurs wanting to establish the infrastructure for businesses on reserves throw up their hands in exasperation because the planning is handled by departmental officials, who often take a long time to make decisions.

The unemployment rate among aboriginals was 14.8 per cent in 2006, according to the census, compared to 6.3 per cent for non-aboriginals.