Cost/Benefit Analysis of Future Investment in the
Framework Agreement on First Nations Land
Management
Final Report—January 27, 2010
Final
Contents
• Purpose of the study
• Study objectives
• Background on work plan and methods
• Cost Analysis
• Benefits Analysis
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
2
Purpose of the study
•
Capture the current costs and benefits of implementing the Framework
Agreement on First Nations Land Management (FA) to ascertain the true cost
to First Nations and Canada.
•
To estimate the cost and benefits of expanding the number of signatories to
the FA.
•
Contributing to the “business case” for increased investment by GOC.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
3
Study objectives
Four areas of concentration:
1.
2.
3.
4.
Future estimate of land transaction activity on reserve land
Estimate future costs (build two models, FNs and GOC)
Identify and describe benefits for both FNs and GOC (quantitative &
qualitative)
Comparative Review
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
4
Work plan overview
ESC
Ma
y
WKSP
AGM
WKSP
Deliverables Progress
Report
Feb
2009
Mar
ESC
Oct
Apr
Draft cost
model
Benefits
survey
May
Phase I
Cost Model frameworks
Prelim
analysis
benefits
Pilot
findings
Prelim
analysis
costing
Prelim
analysis
costing
Jan
2010
June
Jul
Phase II
Pilot
Aug
Phase III
Roll-Out
Sep
Oct
Nov
Dec
Phase IV
Analysis
Phase V
Reporting
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
5
Work plan overview – Five phases
• Phase I – Cost Model frameworks
• Develop GOC and FNs paper models
• Create data collection templates (including
benefits issues) for both FNs and GOC
for use in Pilot phase.
• Phase II – Pilots
• Pilot data collection with one INAC region
• Pilot data collection with 3 FNs
• Input to cost models
• Phase IV – Analysis
• Review investment options
• Detailed cost analysis
• Analysis of non-financial benefits data
• Phase V – Reporting
• Prepare draft report
• Prepare final report
• Phase III – Roll out
• GOC data collection, site visits, followup/verification
• Data collection FNs: site visits to FNs
• Address non-financial benefits with FNs and GOC
• Input to cost model
• Document investment options
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
6
Methods – Participants
First Nations
Beecher Bay First Nation
Chippewas of Georgina Island
Kinistin Saulteaux Nation
L'Heidli T'enneh First Nation
McLeod Lake Indian Band
Mississauga's of Scugog Island First Nation
Muskoday First Nation
Nipissing First Nation
Opaskwayak Cree Nation
Government of Canada
INAC HQ
• Land registry & operations
• First Nations Land Management
Initiative
• Environment
• ATR & Titles
• Legislative Initiatives
Sliammon First Nation
Squaila First Nation
Tsawout First Nation
Tsawwassen First Nation
Ts'kw'aylaxw First Nation
Tsleil-Waututh Nation
T'Sou-ke Nation
Tzeachten First Nation
Westbank First Nation
Whitecap Dakota First Nation
INAC Regions
• Atlantic
• Quebec
• Ontario
• Manitoba
• Saskatchewan
• Alberta
Other Gov’t Dept’s
• NRCan
• DOJ
• Env Can
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
7
Methodology/Approach to Costing
© 2007 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
8
“Type” of activities
Four main “types” of
activities:
• Complex – business or
planning activities that will
vary depending of the
complexity of the
organization
• Volume – resources
allocated to these activities
will vary by the number of
transactions/registrations
• FNLM – activities performed
•
to support the FNLM Initiative
FNLM-V – activity performed
to support the FNLM Initiative
but will vary by the number of
transactions/registrations
Function
Activity
Description
Other Driver
Governance/Regulations
Develop/Maintain national legislation, laws & regs
Develop/Maintain/Defend local laws/by-laws
Develop/Maintain policy & procedures
Manage Liability/Insurance
Environmental Management
Provide Advice/Research on EM Issues
ESA Phase II&III
EMA
Land Management Operational Design, Redesign & Maintenance
FNLM Operational Phase
FNLM Transition Phase
FNLM Developmental Phase
Manage funding agreements
Address legacy issues
Evaluation & Review
Relationship Building
Liaison with FN membership
Liaison with FNs and FN Land Mgt Institutions
Liaison with orders of government
Liaison with Third Parties
Natural Resources Mgt
documt/research/commtn
Land Use Planning
# designatn for GOC
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
Activity Type
FNs
GOC
Complex
Complex
Complex
Complex
Complex
Complex
Complex
Complex
FNLM
Complex
Complex
FNLM
FNLM
FNLM
FNLM
Complex
Complex
Complex
FNLM
FNLM
FNLM
Complex
Complex
Complex
Complex
Complex
Complex
Complex
Complex
Complex
Complex
Complex
Complex
Complex
Complex
Volume
9
“Type” of activities (cont’d)
Four main “types” of
activities:
• Complex – business or
planning activities that will
vary depending of the
complexity of the
organization
• Volume – resources
allocated to these activities
will vary by the number of
transactions/registrations
• FNLM – activities performed
•
to support the FNLM Initiative
FNLM-V – activity performed
to support the FNLM Initiative
but will vary by the number of
transactions/registrations
Function
Activity
Description
Other Driver
Negotiations (includes surveys)
Registered/Pending
Regulatory review of surveys
# of surveys
Negotiate residential/cottage/recr leases/subs
# of residential leases
Negotiate commercial leases
Size of commercial space
Negotiate commercial sub-leases
# of commercial sub-leases
Negotiate industrial leases
Size of industrial space
Negotiate industrial sub-leases
# of a industrial sub-leases
Negotiate timber permits
# of timber permits
Negotiate mining permits
# of mining permits
Negotiate other permits
# of other permits
Negotiate other agreements
Administer transactions
Registered/Pending:
Registration of instruments under ILRS
# of IRLS transactions
Registration of instruments under FNLRS
# of FNLRS transactions
Review of 53/60 instruments
# of 53/60 transactions
Manage CP holder mortgages
# of mortgages
Administer individual land interest
# of Transfers/BCR
Administer Lease Terminiations
# of lease terminations
Financial Management
Collect/Maintain Accounts Receivable/Payable
# of accounts
Review of instruments
# of instruments
Administer/process GOC funding
Maintain revenue/capital trust accounts
Financial reporting
Monitoring, Compliance and Inspections
Monitor/Compliance/Inspection of EM instruments
Monitor/Compliance/Inspection of other instruments
Enforcement
Dispute res/ adjdtn/prosct
Capacity Building
Develop/administer/maintc
Support Services
# of FTEs
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
Activity Type
FNs
GOC
Volume
Volume
Volume
Volume
Volume
Volume
Volume
Volume
Volume
Volume
Volume
Volume
Volume
Volume
Volume
Volume
Volume
Volume
Volume
Volume
Volume
Volume
Volume
Volume
FNLM-V
Volume
Volume
Volume
Volume
Volume
Volume
Complex
Complex
Complex
Complex
Complex
Complex
Complex
FNLM
Complex
Volume
Volume
Complex
Complex
Complex
Complex
Complex
Complex
Complex
Complex
Complex
Volume
10
FN complexity criteria/classification table
Size
Rating 1
Rating 2
Rating 3
1-4
5-14
15 or more
Total population on reserve:
< 500
500 to 999
1,000+ FN mbrs &/ resid'l tenants
Total registered band members
< 500
500 to 999
1,000 or more
< 2,000
2,001-10,000
>10,000
< 50
50 to 499
500 or more
5
10
15
3
6
9
1
2
3
Number of reserves:
Number of hectares:
Land Tenure or Evidence of Title
E
n
v
i
r
o
n
m
e
n
t
a
l
R
a
t
5
i
n
g
R
a
t
3
i
n
g
R
a
t
1
i
n
g
Location:
Urban
(Geographic Zone 1)
Nat Res Dev: Oil & Gas, Mining
Land Dev: Industrial development
Gov't Rel: Multiple prov, mun, other FNs
Location:
Rural adjacent to a town
(Geographic Zone 2)
Nat Res Dev: Forestry/Sand & Gravel/Agriculture
Land Dev: Commercial housing/development
Gov't Rel: Shared - tribal council, prov, mun
Location:
Rural or remote
(Geographic Zone 3 or 4)
Nat Res Dev: None
Land Dev: FN infrstructure & housing only
Gov't Rel: Federal only
Classification Key
Score
Rating
>10
6-10
1-5
Category C
Category B
Category A
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
11
Foundational analysis of cost and transaction
data
© 2007 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
12
Findings on cost and transactions
• FA First Nations are increasing the annual number of land transactions
at a higher rate than what is generated under the Indian Act.
• FA First Nations are able to complete land transactions at less cost
than GOC.
• Existing operational funding formula is not aligned with actual costs FA
FNs are incurring:
• In total, half of the current costs are not funded.
• FNs allocate more resources to complexity type activities than volume
based activities .
• Functions identified with largest resource gaps are Environmental
Management and Operational Design (transition).
• To fulfill obligations under both Indian Act and FA with existing policies
in place, an increase in GOC HQ and regional resources is required.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
13
Transactions or Registrations
© 2007 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
14
Transactions or Registrations – Historical Trends
• This chart illustrates the total number of registrations over the last ten years for FNs that have
•
•
•
operated under the Indian Act versus those FNs that are currently (as of FY 08/09) operating under
FA (or Self-Government).
FNs operating under the Indian Act (blue line) show some high and low years but an overall average
decrease in the number of transactions of 1% per year.
FNs operating under FA (green line) show an overall average increase of 9% per year.
If we use an average number
of transactions registered prior
to land code coming into effect
as an estimate of what FNs
operating under FA would
register if they were continue to
operate under the Indian Act
(red line) we see that they would
initially registered more
transactions but after a period
of transition they would register
less. The average increase
would be about 3% per year.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
15
Transactions or Registrations for FA FNs (cont’d)
• Changes in the number of transactions
•
for FA FNs vary depending on
complexity, average changes over the
last 10 years versus an estimate of
what would have happened if they
remained under the Indian Act are:
• Complex A* - FA 13.5% vs Pre
15.1% (diff -1.6%)
• Complex B** - FA 6.5% vs Pre
2.5% (diff 4.0%)
• Complex C - FA 15.8% vs Pre
1.8% (diff 14.0%)
Most of the overall increase in
transactions for FA FNs driven by
those rated as a C
*Driven by one of the more active FN which became operational recently.
**Two of the more active FN became operational recently.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
16
Transactions or Registrations by Type
•
Over the last ten years most of the
transactions completed under the Indian
Act have been residential, land interest,
other permits or designations, over 40%
each year.
•
There are very few transactions in the Oil
& Gas and/or industrial sector for both
FNs operating under the Indian Act or FA
•
For FNs currently operating under FA,
we see a shift to more mortgages,
terminations and other transactions
(easements, amendments, modifications,
infrastructural leases such as wells,
access roads, hydro, communications)
and away from residential, land interest,
other permits and designations.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
17
10 year transaction forecasts – Status quo
• FA FNs are estimated to see the number of transactions increase to over
3,500 per year. A 32% increase over 10 years from the base year 08/09.
• Indian Act First Nations see the number of transactions decrease by 5%
(or 358 transactions).
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
18
FNL
$16
$15
08_09
09_10
10_11
11_12
12_13
13_14
08_09
09_10
0
$17.5
+5%
10_11
1
$19.6
+18%
$19.6
11_12
2
$20.7
+25%
$40.3
12_13
3
$19.8
+19%
$60.1
13_14
4
$18.7
+13%
$78.9
14_15
15_16
16_17
17_18
18_19
14_15
5
$18.5
+11%
$97.4
15_16
6
$18.6
+12%
$116.0
16_17
7
$18.6
+12%
$134.6
17_18
8
$18.6
+12%
$153.2
18_19
9
$18.6
+12%
$171.8
13_14
14_15
Fiscal Year
15_16
16_17
17_18
18_19
15_16
6
3,532
+32%
20,142
16_17
7
3,532
+32%
23,674
10 year transaction forecasts – Status
quo FA FNs
Fiscal Year
# of FNLM transactions
FY
Year
Yrly Costs ($Ms)
% Incr from 08_09
Cum Costs
$16.7
3,700
3,500
3,300
3,100
2,900
2,700
2,500
08_09
09_10
10_11
11_12
12_13
FY 08_09
09_10
10_11
Year
0
1
# of transactions 2,669
2,749
2,973
% Incr from 08_09
+3%
+11%
Cum transactions
2,973
*No new FNs enter as development
resulting in 42 operational FN by FY 2010/11.
11_12
2
3,259
+22%
6,232
12_13
3
3,408
+28%
9,640
13_14
4
3,464
+30%
13,104
14_15
5
3,507
+31%
16,610
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
17_18
8
3,532
+32%
27,206
18_19
9
3,532
+32%
30,737
19
GO
$26
$25
08_09
09_10
10_11
11_12
12_13
13_14
14_15
15_16
16_17
17_18
18_19
08_09
09_10
0
$27.5
-1%
10_11
1
$26.9
-2%
$26.9
11_12
2
$26.3
-5%
$53.2
12_13
3
$26.2
-5%
$79.4
13_14
4
$26.2
-5%
$105.6
14_15
5
$26.1
-5%
$131.7
15_16
6
$26.1
-6%
$157.7
16_17
7
$26.0
-6%
$183.8
17_18
8
$26.0
-6%
$209.8
18_19
9
$26.0
-6%
$235.8
09_10
10_11
11_12
12_13
13_14
14_15
Fiscal Year
15_16
16_17
17_18
18_19
11_12
2
6,462
-5%
13,109
12_13
3
6,453
-5%
19,562
15_16
6
6,432
-5%
38,876
16_17
7
6,428
-5%
45,304
Fiscal Year
10 year transaction forecasts – Status
quo Indian Act FNs
FY
Year
Yrly Costs ($Ms)
% Incr from 08_09
Cum Costs
$27.6
# of IA transactions
6,900
6,800
6,700
6,600
6,500
6,400
6,300
6,200
08_09
FY 08_09
09_10
10_11
Year
0
1
# of transactions 6,782
6,784
6,647
% Incr from 08_09
+0%
-2%
Cum transactions
6,647
*No new FNs enter as development
resulting in 520 Indian Act FNs by FY 2018/19.
13_14
4
6,444
-5%
26,006
14_15
5
6,438
-5%
32,444
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
17_18
8
6,425
-5%
51,729
18_19
9
6,424
-5%
58,153
20
First Nations: Current Land Management
Resources
© 2007 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
21
First Nations – Current and Additional/New Resources
• The sample of 12 First Nations currently (i.e., in FY 08/09) employ 50 FTEs but
feel it is necessary to add on ~37 additional/new FTEs (or increase by 75%).
This currently costs the FNs $6.3 million (in salary, O&M and capital), and will
increase to $9.4 million with the additional resources.
Com# of Registraplexity
FNs
tions
Current
Total over participating First Nations
A
4
0
6.8
FTEs
Add/New
Total
% Incr
Costs (Salary, O&M & Capital) $000s
Current Add/New
Total
% Incr
5.0
11.8
73%
561.2
312.8
874.0
56%
B
5
387
14.7
15.4
30.1
105%
2,375.5
1,665.2
4,040.7
70%
C
3
1,509
28.3
16.9
45.2
59%
3,407.2
1,120.9
4,528.0
33%
Total
12
1,896
49.9
37.2
87.1
75%
6,343.8
3,098.9
9,442.7
49%
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
22
First Nations – Current FTEs and Costs by Type of Activity
• 69% of FTEs and 79% of costs are currently being allocated to activities that
•
are driven by the complexity** of land management.
27% of FTEs and 19% of costs are dedicated to volume or transaction based
activities. Overall, 1,896 transactions were registered in 08/09.
• The average costs of registering a transaction ranged from approximately
$370 (for FNs rated as a C) to $1,500 (for FNs rated as a B).
Com# of RegistraCurrent FTEs by Type of Activity
Current Costs ($000s) by Type of Activity
plexity FNs
tions* Complexity FNLM
Volume
Vol/Reg Complexity FNLM
Volume
Vol/Reg
Total over participating First Nations
A
4
0
5.4
0.7
0.7
465.9
42.3
53.0
B
5
387
8.9
0.6
5.2
0.0134
1,721.2
72.7
581.5
1.50
C
3
1,509
20.1
0.6
7.6
0.0050
2,812.3
38.7
556.2
0.37
Total
12
1,896
34.4
1.9
13.5
0.0071
4,999.5
153.7
1,190.7
0.63
78.8%
2.4%
18.8%
% of Total
69.1%
*Registrations logged in 08/09
3.9%
27.0%
**This includes activities such as governance, environmental management, operational design, relationship building, monitoring, compliance and enforcement.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
23
First Nations – Add/New FTEs and Costs by Type of Activity
• First Nations feel it’s necessary to add resources mainly to activities that are
driven by the complexity of land management, in fact 90%(or more) of both
FTEs and costs are identified against activities such as governance,
environmental management, relationship building, land use planning,
monitoring, enforcement and support services.
Com-
# of
plexity
FNs
Add/New FTEs by Type
Complexity
FNLM
Add/New Costs ($000s) by Type
Volume Complexity
FNLM
Volume
Total over participating First Nations
A
4
4.4
0.2
0.3
290.1
8.9
13.9
B
5
14.1
0.6
0.8
1,480.0
116.4
68.8
C
3
15.3
0.5
1.1
1,059.1
27.0
34.7
Total
12
33.7
1.3
2.2
2,829.1
152.3
117.4
3.4%
5.9%
91.3%
4.9%
3.8%
% of Total
90.6%
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
24
First Nations – Add/New Costs by function
Additional/New Cost Allocation By Function -- All FNs
Governance/Regs, 8%
Support Services, 30%
Capacity Bldg, 0%
Enforcement, 6%
Monitoring, C&I, 9%
LM Operational Dsgn, 14%
Relationship Bldg, 4%
Natural Resources Mgt,
3%
Financial Mgt, 1%
Admin transactions, 2%
Enviromental Mgt, 15%
Negotiations, 2%
Land Use Planning, 6%
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
25
INAC: Current Land Management Resources
© 2007 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
26
INAC - Current and Additional/New Resources
• 170 FTEs or $41 million in INAC resources currently support land
•
management activities. This includes Headquarters and the 7 Regions
expenditures for direct salary, direct O&M, support and some of the G&Cs.
Both Headquarters and the Regions indicate additional resources are required
(increases of 26% in FTEs and 11% in costs).
Dir/
# of
RegistraFTEs
Region
Dir/Reg
tions
Current Add/New
Total
Total for INAC HQ and Regions (direct support)
HQ
1
6,783
34.2
13.5
47.7
% Incr
Costs* (Salary, O&M and G&Cs) $000s
Current Add/New
Total
% Incr
39%
9,250.9
1,889.9
11,140.8
20%
Region
7
6,783
136.5
30.2
166.7
22%
31,933.0
2,588.8
34,521.8
8%
Total
7
6,783
170.6
43.7
214.4
26%
41,183.9
4,478.7
45,662.6
11%
*Includes support FTE, support costs and G&C funding for RLEMP, RLAP, 53/60, LABRC, Developmental Funding, and
Operational Funding. Excludes MOU with NRCan and DOJ that reside with HQ.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
27
INAC – Current FTEs and Costs by Type of Activity
• Fairly equal FTEs are being allocated to complexity versus volume type
•
•
activities. Most of the costs (about 40%) fund volume type activities.
Overall to process a transaction/registration under the Indian Act, it costs
about $2,350 in the Regions and an additional $60 at Headquarters for a total
of $2,410.
It also costs about $60 for Headquarters to register instruments under FNLRS
or SGLRS, i.e. transactions negotiated/registered by FNs under FA or Self
Government
Dir/
# of
RegistraCurrent FTEs by Type of Activity
Region Dir/Reg
tions
Complexity
FNLM*
Volume
Vol/Reg
Total for INAC HQ and Regions (direct support)
HQ
1
6,783
14.1
14.9
5.2
0.0008
Current Costs ($000s) by Type of Activity
Complexity
FNLM*
Volume**
Vol/Reg
2,823.1
6,755.7
401.5
0.06
Region
7
6,783
66.1
4.8
65.2
0.0096
6,799.3
9,219.0
15,914.7
2.35
Total
7
6,783
80.1
19.7
70.4
0.0104
9,622.4
15,245.2
16,316.3
2.41
% of Total (per above)
47.1%
11.6%
41.4%
23.4%
37.0%
39.6%
FNLM - Volume
2,669
0.0009
0.06
* Includes registration of instruments under FNLRS/SGFNLRS, developmental funding and operational funding. Excludes NRCan and
DOJ MOUs.
** Includes RLEMP, RLAP and 53/60 funding (with support costs).
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
28
INAC – Add/New FTEs and Costs by Type of Activity
• INAC has identified the need to increase resources in all three types of activity
areas.
Dir/
# of
Add/New FTEs by Type
Region
Dir/Reg
Complexity
FNLM
Volume
Total for INAC HQ and Regions (direct support)
HQ
1
5.9
4.7
2.9
Region
7
19.7
0.0
10.5
Total
7
25.6
4.7
13.4
% of Total
58.5%
10.7%
30.7%
Add/New Costs ($000s) by Type
Complexity
FNLM
Volume
984.6
1,840.6
2,825.2
63.1%
606.2
3.8
610.0
13.6%
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
299.2
744.4
1,043.5
23.3%
29
FNs Operational Funding versus Costs
© 2007 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
30
First Nations – Operational Funding versus Current Costs
• In total, of the sample12 FNs,
does not take into consideration whether an
activity is funded or not.
Current
Costs
46%
51%
C
49%
54%
0%
20%
561.2
2,375.5
3,407.2
6,343.8
25%
54%
B
Total
• Note: This analyses looks at total costs and
% of
75%
A
Complexity
operational funding is providing
54% of their current
expenditures. This percentage
varies depending upon
complexity category. Those
grouped in A are funded to 75%
of their current costs whereas
both B’s and C’s are funded at
54% and 51% of costs,
respectively.
$000s
Com- # of
Current Funding
plexity FNs
Opt'nl
ESA
EMA
Total over participating First Nations
A
4
418.4
0.0
0.0
B
5
1,071.5
212.8
0.0
C
3
1,546.4
190.0
0.0
Total
12
3,036.3
402.8
0.0
* Funding figures provided by HQ-FNLM and it
includes ESA & EMA funding.
46%
40%
60%
80%
100%
% of Current Cost
Funded by GOC
Not Funded
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
31
First Nations – Funding versus Estimated Costs
• Should these FNs increase their
Complexity
current resources to include the
additional/new resources, in total
we see the current funding
(operational and environmental)
covers 36% of the costs, FNs
are covering 31% and 33%
remains unfunded.
$000s
Com- # of
Current Funding
FN Costs
plexity FNs
Opt'nl
ESA
EMA
Current Add/New
Total over participating First Nations
A
4
418.4
0.0
0.0
561.2
312.8
B
5
1,071.5
212.8
0.0 2,375.5
1,665.2
C
3
1,546.4
190.0
0.0 3,407.2
1,120.9
Total
12
3,036.3
402.8
0.0 6,343.8
3,098.9
* Funding figures provided by HQ-FNLM and it includes ESA &
EMA funding.
48%
A
32%
B
C
38%
Total
36%
0%
20%
16%
27%
41%
37%
31%
40%
36%
60%
25%
33%
80%
100%
% of Current+Add/New Cost
Funded by GOC
Funded by FNs
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
Not Funded
32
%
Benefits Review
© 2007 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
33
Methods
• Web survey was distributed to 26 First Nations who were operational as of July
2009. Responses were received from 17 First Nations.
• Economic/social impact questions were addressed with First Nations
participating in the costing exercise. This sample includes those First Nations
who have been operational for more than 2 years using 2008/09 as the base
year. Responses were obtained from 13 First Nations.
• Modified follow-up questions on economic/social impacts were conducted with all
First Nations who submitted a response to the web-survey or who participated in
the costing exercise. Response were obtained from 17 First Nations.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
34
Overview of Findings – Benefits Review
• The FA provides better circumstances for First Nations to improve their land
management systems and processes (i.e., governance and decision making,
community support, relationship building , more favourable terms and
conditions, etc. ).
• The FA is impacting economic development efforts on reserve land:
• The FA has contributed to First Nations increasing the number of
•
businesses on reserve, with most new businesses being First Nation
member-owned business.
FA First Nations are expanding their business development to new and/or
different industry areas.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
35
Overview of findings – Benefits Review (cont’d)
• FA First Nations have experienced increasing internal and external investment
in their communities– in more areas than before (i.e., hard/soft infrastructure,
business regeneration/growth, new business).
• Increased technical requirements, costs and limited resources are making it
difficult for some to move towards fully functional land governance operations.
• No operational FA First Nation would consider returning to operations under
the Indian Act.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
36
Why did your First Nation become signatory to the Framework
Agreement (FA)?
• First Nations respondents were asked to provide all reasons why they became
signatory to the FA. “Control own lands”, “control decision-making” and
“economic development” were the top three reasons selected by respondents:
Reason
Control own lands
Build community pride
Control decision-making
Economic-development reasons
Other *
(n)
13
11
13
13
3
(%)
81.3%
68.8%
81.3%
81.3%
18.8%
Elaboration by FN respondents in support of the above selections included:
• First Nations feel they are better equipped to make decisions at the local level
• Managing their own land is a significant step towards accessing a state of self government and governance
• First Nation respondents were then asked to identify the main reason why they
became signatory to the FA. 59% of respondents selected “Control own lands”
as their main reason.
* Other reasons cited:
Treaty, direct control over lease revenue; control leasing permits.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
37
To what extent did your First Nation develop its land
management processes and decision making systems prior to
becoming signatory to the Framework Agreement?
• There is a fairly even split
•
To a
great
extent
1
5.9%
To a considerable
extent
2
5.9%
between FN respondents who
developed land management
processes from a great extent
to some extent prior to becoming
signatory to the FA and those FN
respondents who developed land
management processes to a small
extent or not at all.
From
With a mean rating of 3.8, FN
"A great extent"
respondents, as a minimum, did
to
"Some extent"
develop land management
processes to a small extent before
becoming an operational FA band.
However, there is still a large number of
respondents reporting land management
processes were not developed at all prior
to becoming operational.
To
some
extent
3
35.3%
To a
small
extent
4
11.8%
Not at
all
5
41.2%
Not
applicable
0.0%
Mean
3.8
From
"A small extent"
or
"Not at all"
47%
53%
(n=17)
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
38
To what extent has your First Nation been able to develop its
land management processes and decision making systems
since becoming operational under the FA?
• With a mean rating of 2.8,
First Nation respondents,
as a minimum, have been
able to develop land
management processes
and decision making
systems to some extent
since becoming an
operational FA band.
• There is 29% of
respondents indicating
they have made progress
to a small extent or not
at all.
To a
great
extent
1
17.6%
To a considerable
extent
2
23.5%
To
some
extent
3
29.4%
To a
small
extent
4
23.5%
Not at
all
5
5.9%
Not
applicable
0.0%
Mean
2.8
From
"A small extent"
or
"Not at all"
From
"A great extent"
to
"Some extent"
29.4%
70.6%
(n=17)
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
39
To what extent do you feel your First Nation is still in
transition?
• With a mean of 2.8,
•
•
most First Nations still
place themselves in
transition, to some
extent.
29% of respondents
indicated that they have
moved out of transition
or are experiencing
transition to a small
extent or not at all.
Some First Nations
have had operational
capacity in place for a
number of years in
advance of the FA.
To a
great
extent
1
23.5%
To a considerable
extent
2
17.6%
To
some
extent
3
23.5%
To a
small
extent
4
11.8%
Not at
all
5
17.6%
Not
applicable
5.9%
Mean 2.8
From
"A great
extent"
to
"Some extent"
From
"A small
extent"
or
"Not at all"
29%
65%
6%
(n=17)
N/A at this
time
Further elaboration in support of First Nations’ ratings include:
 Some First Nations are still dealing with issues related to funding, training and dedicated resources.
This has made transition to becoming operational very slow.
 Legacy issues are still being dealt with for some.
 Some First Nations that have been operational for several years still consider themselves in transition
due to difficulties implementing a fully functional land management office.
 Land law development (i.e. environmental management) has taken longer than anticipated.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
40
On average, does your First Nation find the processes
surrounding land management activities to be faster or slower
than those when you were operating under the Indian Act?
• The majority of respondents indicate land management processes are
•
•
faster now compared to operating under the Indian Act.
No First Nation identified land management activities to be slower.
A quarter of respondents mention there has been no change:
• Three First Nations have processed a very limited number of
transactions over the past 10 years (two First Nations registering a
maximum of one transaction since
No
becoming operational).
change
• One of the First Nations had their land
25%
systems developed to a great extent
prior to becoming operational.
Slower
• Two First Nations noted they were
0%
still in transition to a great extent or
a considerable extent.
(n=16)
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
Faster
75%
41
On average, does your First Nation find the processes surrounding
land management activities to be faster or slower than those when
you were operating under the Indian Act?(cont’d)
• Some of the changes in
processing time are quite
significant. Examples of the
changes in process timing
were provided by First Nation
respondents as follows:
Process
● Allotment/Land Use
● Collections
● Leases
● Registration
● Applications
● Approvals
-
Average length of time
(specify days or months)
Pre-land code
Currently
3 - 4 months
1-5 days
6 mth-1 yr
1 month
12 months
1 month
2-3 weeks
1 week
2-3 mths
Monthly, direct
Up to 1 years to collect all Direct monthly collection
lease revenues
by cheque
2 - 15 years
under one year
6 months
30 days
6 months
1 month
6 months
3 months
1 month
2-3 days
Years
8-12 months
7 mths
2 months
1 year
1 month
12 months
1 month
Avg. 3 months
1-5 days
1 month
2 wks
6-12 mths
1-2 days
2 weeks
3 days
2 weeks
1 day
3 weeks
immediate
not sure but slower
not sure but faster
10 days
1/2 day
1 day
1 day
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
42
How has FA impacted the following characteristics of
governance/decision making for your FN?
•
•
•
•
The FA has had a positive impact
on First Nations’ governance/decision
making.
The two areas noted to be better by the
largest majority of First Nation
respondents were the extent of band
member involvement and the support
from community.
Not far behind are all other attributes
listed with a minimum of 71% of FN
respondents identifying the characteristics
of governance and decision making as
being better.
The areas where some First Nations
indicated a rating of worse, further
elaboration on these circumstances
indicate that increased requirements, need
for technical knowledge and expertise,
lack of training and resources are proving
difficult for some to support expectations
and undertake essential activities.
Extent band members involved
94%
6%
Support from community
94%
6%
Speed of decisions
88%
12%
Transparency
88%
12%
Project due diligence
88%
6% 6%
Appropriateness of process
88%
6% 6%
Quality of decisions
82%
18%
Autonomy for best use of land
82%
12% 6%
Process Implementation
75%
13% 6% 6%
71%
Process effectiveness
Cost or adequate resourcing
47%
0%
20%
18%
40%
60%
18%
6% 6%
29%
6%
80%
100%
% of Respondents
(n=17)
Better
No change
Worse
N/A
“It’s good that we are able to function more
independently from the department in our land
matters, but we should still be afforded the same
resources as the department would have if they were
still administering our land programs.”
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
43
How has the FA impacted your FNs ability to develop more
favourable terms and conditions for land related transactions?
• Overall, the FA has had positive impacts on First Nation’s abilities to develop more favourable terms and
•
•
•
conditions for land related transactions.
Protecting community values for development and flexibility are the two areas identified by the
greatest number of FN respondents as being better.
Not far behind are protecting community legal
6%
94%
Protect values for development
interests, lease terms and accountability for
6%
94%
Flexibility
third parties also identified as better.
88%
13%
Protect community legal interests
For attributes such as revenue generation
76%
12% 12%
and environmental protection , most
Lease terms
respondents identified these as being better
76%
12% 12%
Accountability for third parties
although some respondents indicate there
59%
29%
12%
Eff & eff of revenue collection
has been no change or that this attribute is
6%
59%
35%
Revenue generation
not applicable at this time.
53%
35%
12%
Environmental protection
In the area of consistency with land use plan,
most respondents mentioned that this question
53%
18%
29%
Market competitiveness
does not apply at this time, that there was no
47%
24%
29%
Employment protocols
change, or in one instance that the that the
47%
12% 6%
35%
Consistency with land use plan
conditions for consistency with the land use
plan were actually worse. In this instance, again
0%
20% 40% 60% 80% 100%
it is a lack of appropriate training and resources
% of Respondents
(n=17)
cited to perform required research as the main
Better
No change
Worse
N/A
reason why.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
44
How has the FA facilitated relationships with third parties for
your First Nation?
•
The majority of First Nations have identified relationship building components as being better
since becoming operational under the Framework Agreement.
•
Direct involvement with the First Nation (88%), increased certainty/sense of security for
third parties (88%), and a better negotiating environment (76%) were the top three factors
noted to be better.
•
Even though a majority (59%) of
FN respondents note the area of
alternative dispute resolution
process mechanisms as being
better, a significant share of
respondents noted that this did
not apply to their first nation and
a small percentage
indicated no change.
Direct involvement with the First
Nation
88%
12%
Increased certainty/sense of security
88%
12%
Negotiating environment
76%
Level of stability in the community
71%
Autonomy
71%
Land use planning and zoning laws
18% 6%
24%
29%
65%
Competitiveness
12%
65%
Alternative dispute resolution process
18%
59%
0%
20%
40%
6%
12%
60%
24%
18%
29%
80% 100%
% of Respondents
(n=17)
Better
No change
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
Worse
N/A
45
How has the FA strengthened other initiatives within your First
Nation?
• According to First Nation respondents, the FA has strengthened other
•
initiatives within their First Nation for the most part. Respondents note areas
such as the achievement of overall vision (82%), marketability (71%) and
interactions with other FNs (71%) are better since becoming operational.
The exception is access to
support resources (such as legal,
environmental, etc…) where
82%
18%
Achieve overall vision of your FN
approximately half have
71%
18% 12%
Marketability
indicated that there has been
no change and a small
71%
24% 6%
Interactions with other FNs
percentage indicated that access
is worse. The increased need for
6%
63%
31%
Existing systems
technical expertise and an inability
6%6%
41%
47%
Access to support resources
to fund these types of
requirements were noted as
0%
20% 40% 60% 80% 100%
reasons why this element is worse.
% of Respondents
(n=17)
Better
No change
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
Worse
N/A
46
How has the FA facilitated potential market opportunities?
• Better circumstances facilitating the development of market opportunities is being experienced by most
•
•
•
operational First Nations.
Enhanced communication, as well as an improved facility to building relationships, with industry
as well as other levels of government are
82%
18%
Enhanced communication
notably better.
Fewer First Nation respondents identified
76%
18% 6%
Building municipal relations
an impact on approach to market, ability
76%
12% 12%
Building industry relations
to select prime land for development,
ability to compete and harmonization/
71%
18% 12%
Implementation of instruments
collaboration of land use plan.
69%
13%
19%
Proactive/availability to market
In these areas, between 30% to 40%
of respondents indicate there has been
65%
12% 6% 18%
Third-party awareness
no change as a result of the FA.
53%
29%
18%
Approach to market
In one instance a First Nation noted third53%
29%
18%
Ability to compete
party awareness was worse, the response
was more so related to the First Nation’s
47%
41%
12%
Select prime land for development
own awareness of third-party requirements
41%
35%
24%
(particularly provincial requirements
Harmonization of land use plan
and regulations) There is a lack of technical
0%
20%
40%
60%
80%
100%
expertise to efficiently accomplish activities.
% of Respondents
(n=17)
Better
No change
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
Worse
N/A
47
What are some of the factors influenced by operating under the
Framework Agreement that contribute to attracting business to
your reserve?
• Overall, First Nations are experiencing improved circumstances under which
•
they are able to attract business on reserve.
Some of the factors that have influenced the environment are:
• Control being exercised locally provides direct access to First Nations
representatives – decisions are absolute and not delayed by having an
additional party involved
• A First Nation’s controlled development of the reserve and businesses,
including land laws and regulations provides increased sense of security to
investors.
• Land code (and supporting instruments) provide third parties with clear
•
understanding of conditions
The most cited factor contributing to the attraction of business activity on
reserve lands are the efficiencies gained in relation to land management
processes, including simplification and improved processing conditions
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
48
How has FA impacted the following attributes within your First
Nation community?
Land management control
• The FA has had a positive impact on
•
social attributes within operational First
Nations. Respondents mention areas
such as land management control
(100%), community pride (94%), level
of interest, involvement of FN members
in land management (94%) and,
increased awareness of community
issues and priorities (94%) are better
since becoming operational.
Levels of social assistance appear to
be the attribute least affected by FA,
where almost 60% of First Nation
respondents reported there has been no
change.
100%
Community pride
94%
6%
Level of interest and involvement
94%
6%
94%
6%
Awareness of community priorities
Land management accountability
88%
Clarity and interpretation of rights
6%6%
81%
Revival of cultural aspects
13% 6%
71%
Capacity development of FN members
24%
65%
Mechanisms for dispute resolution
29%
59%
Healthy families and communities
53%
Personal incomes
50%
Levels of social assistance
20%
6%
29%
12%
41%
6%
44%
35%
0%
6%
6%
59%
40%
60%
6%
80%
100%
% of Respondents
(n=17)
Better
No change
Worse
N/A
• Respondents mentioned an increased sense of pride resulting from community involvement in the consultation process
and the economic development of the First Nation.
• Similarly, increased levels of community interest in lands as members of the community felt included throughout the
•
transition phase.
The two elements with a worse rating are related to inadequate (or lack of) training (e.g., to be fully aware of
accountability within a Lands Office)
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
49
Based on your operational experience to date, would your First
Nation consider returning to operations under the Indian Act?
• 100% of First Nations responded “No” to this question; no First Nation would
consider returning to operations under the Indian Act.
• Further elaboration in support of First Nation’s response:
 First Nations would not return to operations under the Indian Act because
now with the FA, they find it easier to protect and manage lands. First
Nations believe managing their own lands will have a positive impact on
communities.
 First Nations believe they now have a greater opportunity for economic
development, something they didn’t have under the Indian Act.
 First Nations feel a sense of pride to have moved away from the Indian Act.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
50
How has the FA impacted business on reserve?
Since having your land code in effect, has this impacted new business creation or business
expansions on reserve? If yes, how many new businesses or expansions have been
created?”.
• Eleven First Nation respondents (65%) indicated there has been at least one new business created
(or expanded) on their reserve land since their land code came into effect. Most of these First Nation
respondents have been operational for at least six years.
• The most common response falls between one and five businesses being created or expanded.
One
Two
3 to 5
6 to 10
>10
No new/expansions
Number of
Respondents
3
3
3
1
1
6
(n=17)
• Six First Nation respondents (35%) indicate there has been no new business creation or business
expansion on their reserve land since their land code came into effect. We could find no common
attribute among First Nations within this sub-respondent group to identify a trend (i.e., length of time
operational, geographical location, etc.) We refer back to the question on the reasons FNs become
signatory to the FA where 81% of First Nation respondents selected “control own lands” as one of the
reasons and 59% of respondents identified “control own lands” as the main reason.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
51
How has the FA impacted business on reserve? (cont’d)
“Who are the owner/operators of these businesses?”
• 10 respondents (53%) identified most of the new or expanded businesses as
being owned/operated by First Nation members.
FN members
Non-members
Band-owned
External partners
Other
Number of
Respondents
10
3
2
3
1
(n=19)
*Note: A FN can select more than one owner/operator
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
52
Has the FA contributed to higher employment?
How many new jobs have been created by these new businesses or business
expansions?
•
11 First Nation respondents (65%) indicated new jobs have been created by the new
businesses identified.
•
•
The most common response was between 6 and 25 new jobs being created on reserve.
•
Using the mid point of each range we can estimate that 1,959 jobs have been created.
Two First Nation respondents identified more than 500 jobs have been created on their
reserve.
5 jobs or less
6 to 25 jobs
26 to 150 jobs
151 to 500 jobs
More than 500 jobs
No new jobs
Number of
Respondents
2
6
0
1
2
6
(n=17)
• First Nation respondents also identified positions created within the Band office itself (i.e., GIS
technician, Lands Assistant).
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
53
Has the FA contributed to higher employment? (cont’d)
How many of these jobs have been filled by band members?
• Seven First Nation respondents identified 50% or more of the jobs are being
filled by band members, with four (29%) reporting that all new jobs are filled by
band members.
All
More than half
About half
A few
None
Number of
Respondents
4
2
1
3
4
(n=14)
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
54
Has the FA impacted the repatriation of off-reserve band
members?
How many band members have been attracted back to the community due to these
new businesses or business expansions?
•
Among First Nation respondents who indicated members had been attracted back to the
community, the most common response (20%) was between 6 and 25 members
attracted back due to new business starts.
•
Most First Nation respondents (60%) noted that no members have been attracted back
to the First Nation due to the new business creation.
•
Other external influences can impact the attraction of First Nation members back to
their communities. First Nations respondents cited lack of housing and proximity to
large service centres as a few examples.
100 to 200
26 to 99
6 to 25
5 or less
None
Number of
Respondents
1
0
3
2
9
(n=15)
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
55
What types of businesses are in place on your reserve?
• 42% of respondent First Nations indicate they are moving into more types of
businesses (e.g., retail, institutional, health, construction, transportation, food
service and tourism) and one FN indicates they are moving into a different type
of business (e.g. out of agricultural)
*Note: A FN can select more than one type of business.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
56
Has your First Nation been able to attract internal investment in
relation to land within the community?
Since your land code came into effect, has your FN been able to attract
internal investment in relation to land within the community?
• Surveyed First Nations indicate the land code has had a positive impact on an
•
operational First Nation’s ability to develop internal investment.
65% of First Nation respondents indicated they have new internal investment
since the land code came into effect.
No new
internal
investment
35%
(n=17)
Internal
investment
65%
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
57
What amount of internal investment is realized by your First
Nation?
• Among the respondents who indicated that they had been able to develop
•
•
internal investment, most of them (70%) reported amounts up to $2 million.
Most of this investment has been through the creation of small member owned
enterprises. This supports the earlier finding that most business created or
expanded are band member owned businesses.
30% of First Nation respondents indicated they had been able to attract
between $10 million and $20 million in internal investment.
Using the mid point of each range we can estimate approximately $53 million in
internal investment has been realized by respondent First Nations.
< $500K
$500K to $2M
> $2M to $5M
> $5M to $10M
> $10M to $20M
Number of
Respondents
3
3
1
0
3
(n=10)
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
58
Has your First Nation been able to attract internal investment in
relation to land within the community? (cont’d)
• For the group of First Nation respondents that participated in the costing
exercise, a majority are attracting investment in more areas
Yes
Attract internal investment
(n)
9
No
(%)
75%
(n)
3
Total
(%)
25%
(n)
12
(%)
100%
If yes, please indicate in which of the following area(s):
*Note: A FN can select more than one area of investment.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
59
Has your First Nation been able to attract external investment in
relation to land within the community?
Since your land code came into effect, has your FN been able to attract external
investment in relation to land within the community?
•
For some First Nation respondents, external investment takes the form of a partnership
between a member of the band and an external investor in which both parties invest
funds.
•
53% of First Nation respondents indicated they have been able to attract new external
investments since their land code came into effect.
•
Of the 8 First Nations who indicated no external investment:
•
•
3 have been operational
for 3 years or less.
4 indicated they are still in
transition to a considerable
extent or a great extent
No new
external
investment
47%
(n=17)
External
investment
53%
Note: Investment on First Nations corporate lands is not included. There is significant activity in this area in some cases.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
60
What amount of external investment is realized by your First
Nation?
• Among the respondents who indicated they had been able to attract external
investment, two mentioned investments ranging between $2 million and $5
million and two indicated they had been able to attract external investments
worth more than $20 million.
• Remaining First Nation respondents have either captured external investments
•
valued up to $2 million, or are unable to provide an estimate.
Using the mid point of each range we can estimate approximately $48.5
million in external investment has been realized by respondent First Nations.
< $500K
$500K to $2M
> $2M to $5M
> $20M
Yes, but don't know
Number of
Respondents
1
1
2
2
3
(n=9)
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
61
Has your First Nation been able to attract external investment in
relation to land within the community? (cont’d)
• For the group of First Nation respondents that participated in the costing
exercise, majority of the First Nation respondents that identified the attraction
of external investment, indicated they are attracting investment in more areas.
Yes
Attract external investment
(n)
8
No
(%)
67%
(n)
4
Total
(%)
33%
(n)
12
(%)
100%
If yes, please indicate in which of the following area(s):
*Note: A FN can select more than one area of investment.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
62
How has the FA impacted the average annual revenue
generation on reserve in the following areas?
Land Revenue
100% of FN respondents collect
revenue from this source.
Tax Revenue
53% (9) FN respondents
collect revenue from this
*
source.
5 FN respondents indicated this is a 1 FN respondent indicated this
new type.
is a new type.
For First Nations who identified land
In the case of First Nations
revenue generation in place prior to
who identified a tax system
land code, the majority (50%) have
already in place prior to land
experienced an increase in the level of code, the majority (50%) have
revenues.
had no change in their tax
revenues. The remaining 50%
was evenly split between
respondents who experienced
an increase and those who
were unsure of the extent of
change.
The increases in land revenue range For First Nation respondents
from 40% to 700%, depending on the who experienced an increase
respondent and are mainly due to
in this type of revenue, the
higher levels of development on
increase is mostly due to large
reserve lands.
developments on leased lands.
n = 17
User Fee Revenue
47% (8) of FN respondents
collect revenue from this source.
1 FN respondent indicated this
is a new type.
Among the First Nation
respondents who identified a
user fee system being in place
prior to land code, 57% reported
an increase in fees being
generated.
In the case of respondents who
reported increased revenues,
the rate of increase ranged
between 100% and 300%,
mainly due to more
development taking place.
*Tax revenue is not covered under the Framework Agreement
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
63
What is the most significant economic advantage of the FA to
your First Nation?
• Based on the feedback obtained from First Nation respondents, the most
significant economic advantages of the FA are:
- Processes are more timely and efficient
- Increased direct control over leases, licenses, permits
- Higher land related revenue potential
- Ability to borrow for capital investments
- Access to external investment that will generate jobs and revenue
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
64
Are there any economic disadvantages to operating under the
FA for your First Nation?
• Based on the feedback obtained from First Nation respondents, the most
significant economic disadvantages of the FA are:
- Costs and processes around Environmental Management Agreements
(EMA).
- Complexity of FA was not fully considered in the areas of legal, technical
-
issues and costs (EMA, Land Code, Land Use Plan). This lead to
complications and increased costs during transition.
The above has resulted in delayed movement towards economic
development activities.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
65
What does the literature say?
• A cursory review of literature on the drivers of business and job creation
revealed that the positive impacts being generated by FA (particularly in
relation to governance) are key to economic development.
• One relevant study is the World Bank Policy Research Working Paper on “The
impact of the business environment on the business creation process”.1 This
study identifies a very strong and statistically significant relationship between
entrepreneurship and a better business environment. The greater ease in
starting a business and better governance are associated with increased
entrepreneurial activity.
• The Standing Senate Committee on Aboriginal Peoples March 2007 report
“Sharing Canada’s Prospertity – A Hand Up, Not A Handout” 2 , identifies six
key factors shared by Aboriginal communities experiencing economic success.
These include areas such as stable leadership and vision, legitimacy of
economic activities to the community, strategic use of available resources,
among others.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
66
What does the literature say? – cont’d
• The Harvard Project on American Indian Economic Development (in-place
since the mid-1980s) has published numerous research papers and has
consistently found three key factors to success in economic development on
reserve. One of those is independent power and authority in the community
“Sovereignty Matters Where tribes make their own decisions about what
approaches to take and what resources to develop, they consistently outperform outside decision-makers. . . tribes that make their own development
decisions do better.” 3
1The
World Bank, Development Research Group, Finance and Private Sector Team, The Impact of the Business Environment on the Business Creation Process,
Policy Research Working Paper #4937, May 2009
2 The Standing Senate Committee on Aboriginal Peoples, Sharing Canada’s Prosperity – A Hand Up, Not A Handout, March 2007.
3 Harvard University, What Determines Indian Economic Success? Evidence from Tribal and Individual Indian Enterprises, The Harvard Project on American Indian
Economic Development, Jorgensen, Miriam and Taylor, Jonathan, Wiener Center for Social Policy, John F. Kennedy School of Government, June 2000.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
67
Wrap-up
• Study results indicate the FA is an enabler to FN community and economic
development efforts.
• Environment is changing in a positive way.
•
•
Improved effectiveness and efficiencies
•
Stimulating entrepreneurial activity
FA First Nations are enhancing their attractiveness to third parties and increasing
business interest.
• Stronger communities, $101M in investment, approx. 2,000 jobs created, all
identified by a sample of 17 FA First Nations. If a balance can be found
between funding and requirements, these types of positive impacts can only
continue to grow.
© 2008 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
68
Thank you!
© 2007 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss
cooperative. All rights reserved.
69