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Cost/Benefit Analysis of Future Investment in the Framework Agreement on First Nations Land Management Final Report—January 27, 2010

Final

© 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

Contents

• Purpose of the study • Study objectives

• Background on work plan and methods

• Cost Analysis

• Benefits Analysis


3

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.


4

Study objectives

Four areas of concentration:

1.  Future estimate of land transaction activity on reserve land 2.  Estimate future costs (build two models, FNs and GOC) 3.  Identify and describe benefits for both FNs and GOC (quantitative &

qualitative) 4.  Comparative Review


5

Work plan overview

Feb 2009

Mar Apr May June Jul Aug Sep Oct Nov Dec

Phase II Pilot Phase IV

Analysis

Phase III Roll-Out

Phase V Reporting

Pilot findings

Prelim analysis costing

Phase I Cost Model frameworks

Progress Report

Deliverables

ESC

May

WKSP

Draft cost model

Benefits survey

WKSP

Jan 2010

Prelim analysis costing

AGM

ESC

Oct

Prelim analysis benefits


6

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 III – Roll out • GOC data collection, site visits, follow-up/verification

• Data collection FNs: site visits to FNs • Address non-financial benefits with FNs and GOC • Input to cost model • Document investment options

• Phase IV – Analysis • Review investment options • Detailed cost analysis • Analysis of non-financial benefits data

• Phase V – Reporting • Prepare draft report • Prepare final report


7

Methods – Participants

INAC Regions •  Atlantic •  Quebec •  Ontario •  Manitoba •  Saskatchewan •  Alberta

INAC HQ •  Land registry & operations •  First Nations Land Management

Initiative •  Environment •  ATR & Titles •  Legislative Initiatives

Other Gov’t Dept’s •  NRCan •  DOJ •  Env Can

First Nations

Government of Canada

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

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

© 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

Methodology/Approach to Costing


9

“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

Activity TypeFunction Activity Description Other Driver FNs GOC

Governance/RegulationsDevelop/Maintain national legislation, laws & regs ComplexDevelop/Maintain/Defend local laws/by-laws ComplexDevelop/Maintain policy & procedures Complex ComplexManage Liability/Insurance Complex Complex

Environmental ManagementProvide Advice/Research on EM Issues Complex ComplexESA Phase II&III Complex ComplexEMA FNLM FNLM

Land Management Operational Design, Redesign & MaintenanceFNLM Operational Phase FNLM FNLMFNLM Transition Phase FNLM FNLMFNLM Developmental Phase FNLM FNLMManage funding agreements Complex ComplexAddress legacy issues Complex ComplexEvaluation & Review Complex Complex

Relationship BuildingLiaison with FN membership Complex ComplexLiaison with FNs and FN Land Mgt Institutions Complex ComplexLiaison with orders of government Complex ComplexLiaison with Third Parties Complex Complex

Natural Resources Mgt documt/research/commtn Complex ComplexLand Use Planning # designatn for GOC Complex Volume


10

“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

Activity TypeFunction Activity Description Other Driver FNs GOC

Negotiations (includes surveys) Registered/PendingRegulatory review of surveys # of surveys Volume VolumeNegotiate residential/cottage/recr leases/subs # of residential leases Volume VolumeNegotiate commercial leases Size of commercial space Volume VolumeNegotiate commercial sub-leases # of commercial sub-leases Volume VolumeNegotiate industrial leases Size of industrial space Volume VolumeNegotiate industrial sub-leases # of a industrial sub-leases Volume VolumeNegotiate timber permits # of timber permits Volume VolumeNegotiate mining permits # of mining permits Volume VolumeNegotiate other permits # of other permits Volume VolumeNegotiate other agreements Volume Volume

Administer transactions Registered/Pending:Registration of instruments under ILRS # of IRLS transactions VolumeRegistration of instruments under FNLRS # of FNLRS transactions Volume FNLM-VReview of 53/60 instruments # of 53/60 transactions VolumeManage CP holder mortgages # of mortgages Volume VolumeAdminister individual land interest # of Transfers/BCR Volume VolumeAdminister Lease Terminiations # of lease terminations Volume Volume

Financial ManagementCollect/Maintain Accounts Receivable/Payable # of accounts Volume VolumeReview of instruments # of instruments Volume VolumeAdminister/process GOC funding Complex ComplexMaintain revenue/capital trust accounts Complex ComplexFinancial reporting Complex Complex

Monitoring, Compliance and Inspections Complex ComplexMonitor/Compliance/Inspection of EM instruments Complex ComplexMonitor/Compliance/Inspection of other instruments Complex Complex

Enforcement Dispute res/ adjdtn/prosct Complex ComplexCapacity Building Develop/administer/maintc FNLM ComplexSupport Services # of FTEs Complex Complex


11

FN complexity criteria/classification table

Rating 1 Rating 2 Rating 3Number of reserves: 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

Number of hectares: < 2,000 2,001-10,000 >10,000

Land Tenure or Evidence of Title < 50 50 to 499 500 or more

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 KeyScore Rating>10 Category C6-10 Category B1-5 Category A

Environmental

Rating

1 1 2 3

Size

Rating

5 5 10 15

3 6 9

Rating

3


Foundational analysis of cost and transaction data


13

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.


Transactions or Registrations


15

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.


16

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.


17

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.


18

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).


19

10 year transaction forecasts – Status quo FA FNs FY 08_09 09_10 10_11 11_12 12_13 13_14 14_15 15_16 16_17 17_18 18_19

Year 0 1 2 3 4 5 6 7 8 9Yrly Costs ($Ms) $16.7 $17.5 $19.6 $20.7 $19.8 $18.7 $18.5 $18.6 $18.6 $18.6 $18.6

% Incr from 08_09 +5% +18% +25% +19% +13% +11% +12% +12% +12% +12%Cum Costs $19.6 $40.3 $60.1 $78.9 $97.4 $116.0 $134.6 $153.2 $171.8

FY 08_09 09_10 10_11 11_12 12_13 13_14 14_15 15_16 16_17 17_18 18_19Year 0 1 2 3 4 5 6 7 8 9

# of transactions 2,669 2,749 2,973 3,259 3,408 3,464 3,507 3,532 3,532 3,532 3,532% Incr from 08_09 +3% +11% +22% +28% +30% +31% +32% +32% +32% +32%Cum transactions 2,973 6,232 9,640 13,104 16,610 20,142 23,674 27,206 30,737

*No new FNs enter as developmentresulting in 42 operational FN by FY 2010/11.

Status Quo Model: GOC costs & # of transactions under FNLM

$15

$16

$17

$18

$19

$20

$21

$22

08_09 09_10 10_11 11_12 12_13 13_14 14_15 15_16 16_17 17_18 18_19Fiscal Year

FNLM

Cos

ts ($millions)

2,500

2,700

2,900

3,100

3,300

3,500

3,700

08_09 09_10 10_11 11_12 12_13 13_14 14_15 15_16 16_17 17_18 18_19Fiscal Year

# of

FN

LM tr

ansa

ctio

ns


20

10 year transaction forecasts – Status quo Indian Act FNs FY 08_09 09_10 10_11 11_12 12_13 13_14 14_15 15_16 16_17 17_18 18_19

Year 0 1 2 3 4 5 6 7 8 9Yrly Costs ($Ms) $27.6 $27.5 $26.9 $26.3 $26.2 $26.2 $26.1 $26.1 $26.0 $26.0 $26.0

% Incr from 08_09 -1% -2% -5% -5% -5% -5% -6% -6% -6% -6%Cum Costs $26.9 $53.2 $79.4 $105.6 $131.7 $157.7 $183.8 $209.8 $235.8

FY 08_09 09_10 10_11 11_12 12_13 13_14 14_15 15_16 16_17 17_18 18_19Year 0 1 2 3 4 5 6 7 8 9

# of transactions 6,782 6,784 6,647 6,462 6,453 6,444 6,438 6,432 6,428 6,425 6,424% Incr from 08_09 +0% -2% -5% -5% -5% -5% -5% -5% -5% -5%Cum transactions 6,647 13,109 19,562 26,006 32,444 38,876 45,304 51,729 58,153

*No new FNs enter as developmentresulting in 520 Indian Act FNs by FY 2018/19.

Status Quo Model: GOC costs & # of transactions under Indian Act

$25

$26

$26

$27

$27

$28

$28

08_09 09_10 10_11 11_12 12_13 13_14 14_15 15_16 16_17 17_18 18_19Fiscal Year

GO

C In

dian

Act

Cos

ts

($millions)

6,2006,3006,4006,5006,6006,7006,8006,900

08_09 09_10 10_11 11_12 12_13 13_14 14_15 15_16 16_17 17_18 18_19Fiscal Year

# of

IA tr

ansa

ctio

ns


First Nations: Current Land Management Resources


22

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 Registra- FTEs Costs (Salary, O&M & Capital) $000splexity FNs tions Current Add/New Total % Incr Current Add/New Total % Incr

Total over participating First NationsA 4 0 6.8 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%


23

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).

**This includes activities such as governance, environmental management, operational design, relationship building, monitoring, compliance and enforcement.

Com- # of Registra- Current FTEs by Type of Activity Current Costs ($000s) by Type of Activityplexity FNs tions* Complexity FNLM Volume Vol/Reg Complexity FNLM Volume Vol/Reg

Total over participating First NationsA 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 0.37Total 12 1,896 34.4 1.9 13.5 0.0071 4,999.5 153.7 1,190.7 0.63

% of Total 69.1% 3.9% 27.0% 78.8% 2.4% 18.8%*Registrations logged in 08/09


24

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 Add/New FTEs by Type Add/New Costs ($000s) by Typeplexity FNs Complexity FNLM Volume Complexity FNLM Volume

Total over participating First NationsA 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 34.7Total 12 33.7 1.3 2.2 2,829.1 152.3 117.4

% of Total 90.6% 3.4% 5.9% 91.3% 4.9% 3.8%


25

First Nations – Add/New Costs by function

Additional/New Cost Allocation By Function -- All FNs

Governance/Regs, 8%

Enviromental Mgt, 15%

LM Operational Dsgn, 14%

Relationship Bldg, 4%

Natural Resources Mgt, 3%

Land Use Planning, 6%

Enforcement, 6%

Capacity Bldg, 0%

Support Services, 30%

Monitoring, C&I, 9%

Negotiations, 2%Admin transactions, 2%

Financial Mgt, 1%


INAC: Current Land Management Resources


27

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 Registra- FTEs Costs* (Salary, O&M and G&Cs) $000sRegion Dir/Reg tions Current Add/New Total % Incr Current Add/New Total % Incr

Total for INAC HQ and Regions (direct support)HQ 1 6,783 34.2 13.5 47.7 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, andOperational Funding. Excludes MOU with NRCan and DOJ that reside with HQ.


28

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 Registra- Current FTEs by Type of Activity Current Costs ($000s) by Type of ActivityRegion Dir/Reg tions Complexity FNLM* Volume Vol/Reg 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 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 2.35Total 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 andDOJ MOUs.** Includes RLEMP, RLAP and 53/60 funding (with support costs).


29

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 Add/New Costs ($000s) by TypeRegion Dir/Reg Complexity FNLM Volume Complexity FNLM Volume

Total for INAC HQ and Regions (direct support)HQ 1 5.9 4.7 2.9 984.6 606.2 299.2

Region 7 19.7 0.0 10.5 1,840.6 3.8 744.4Total 7 25.6 4.7 13.4 2,825.2 610.0 1,043.5

% of Total 58.5% 10.7% 30.7% 63.1% 13.6% 23.3%


FNs Operational Funding versus Costs


31

First Nations – Operational Funding versus Current Costs

•  In total, of the sample12 FNs, 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.

•  Note: This analyses looks at total costs and does not take into consideration whether an activity is funded or not.

75%

54%

51%

54%

25%

46%

49%

46%

0% 20% 40% 60% 80% 100%

A

B

C

Total

Com

plex

ity

% of Current Cost

Funded by GOC Not Funded

$000s % of Current CostCom- # of Current Funding Current

plexity FNs Opt'nl ESA EMA CostsTotal over participating First Nations

A 4 418.4 0.0 0.0 561.2B 5 1,071.5 212.8 0.0 2,375.5C 3 1,546.4 190.0 0.0 3,407.2

Total 12 3,036.3 402.8 0.0 6,343.8* Funding figures provided by HQ-FNLM and itincludes ESA & EMA funding.


32

First Nations – Funding versus Estimated Costs

• Should these FNs increase their 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.

48%

32%

38%

36%

16%

27%

37%

31%

36%

41%

25%

33%

0% 20% 40% 60% 80% 100%

A

B

C

Total

Com

plex

ity

% of Current+Add/New Cost

Funded by GOC Funded by FNs Not Funded

$000s % of Current+Add/New CostCom- # of Current Funding FN Costs

plexity FNs Opt'nl ESA EMA Current Add/NewTotal over participating First Nations

A 4 418.4 0.0 0.0 561.2 312.8B 5 1,071.5 212.8 0.0 2,375.5 1,665.2C 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.


Benefits Review


34

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.


35

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.


36

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.


37

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:

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.

Reason(n) (%)

Control own lands 13 81.3%Build community pride 11 68.8%Control decision-making 13 81.3%Economic-development reasons 13 81.3%Other * 3 18.8%

* Other reasons cited: Treaty, direct control over lease revenue; control leasing permits.


38

To what extent did your First Nation develop its land management processes and decision making systems prior to becoming signatory to the Framework Agreement?

Mean 3.8

47% 53%

(n=17)

From"A great extent"

to"Some extent"

From"A small extent"

or"Not at all"

• There is a fairly even split 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.

• With a mean rating of 3.8, FN respondents, as a minimum, did 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 a To a con- To To agreat siderable some small Not at Not extent extent extent extent all applicable

1 2 3 4 55.9% 5.9% 35.3% 11.8% 41.2% 0.0%


39

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.

Mean 2.8

29.4%

70.6%

(n=17)


to"Some extent"


or"Not at all"


1 2 3 4 517.6% 23.5% 29.4% 23.5% 5.9% 0.0%


40

65%

29%

6%

(n=17)


or"Not at all"


to"Some extent"

N/A at this time

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.

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.


1 2 3 4 523.5% 17.6% 23.5% 11.8% 17.6% 5.9%

Mean 2.8


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?

• 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 becoming operational).

• One of the First Nations had their land systems developed to a great extent prior to becoming operational.

• Two First Nations noted they were still in transition to a great extent or a considerable extent.

Faster75%

No change

25%

Slower0%

(n=16)


42

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:

(specify days or months)Process Pre-land code Currently● Allotment/Land Use - 3 - 4 months 1-5 days

- 6 mth-1 yr 1 month● Collections - 12 months 1 month

- 2-3 weeks 1 week- 2-3 mths Monthly, direct- Up to 1 years to collect all

lease revenuesDirect monthly collection

by cheque● Leases - 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

● Registration - 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

● Applications - 10 days 1/2 day● Approvals - 1 day 1 day

Average length of time


43

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.

“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.”

94%

94%

88%

88%

88%

88%

82%

82%

75%

71%

47%

6%

18%

13%

18%

18%

12%

6%

12%

12%

6%

29%

6%

6%

6%

6%

6%

6%

6%

6%

6%

0% 20% 40% 60% 80% 100%

Extent band members involved

Support from community

Speed of decisions

Transparency

Project due diligence

Appropriateness of process

Quality of decisions

Autonomy for best use of land

Process Implementation

Process effectiveness

Cost or adequate resourcing

% of Respondents

Better No change Worse N/A(n=17)


44

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 interests, lease terms and accountability for third parties also identified as better.

•  For attributes such as revenue generation and environmental protection , most respondents identified these as being better although some respondents indicate there has been no change or that this attribute is not applicable at this time.

•  In the area of consistency with land use plan, most respondents mentioned that this question does not apply at this time, that there was no change, or in one instance that the that the conditions for consistency with the land use plan were actually worse. In this instance, again it is a lack of appropriate training and resources cited to perform required research as the main reason why.

94%

94%

88%

76%

76%

59%

59%

53%

53%

47%

47%

13%

12%

12%

35%

18%

24%

12%

6%

6%

35%

29%

6%

29%

29%

35%

6%

12%

12%

12%

12%

0% 20% 40% 60% 80% 100%

Protect values for development

Flexibility

Protect community legal interests

Lease terms

Accountability for third parties

Eff & eff of revenue collection

Revenue generation

Environmental protection

Market competitiveness

Employment protocols

Consistency with land use plan

% of Respondents



45

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.

88%

88%

76%

71%

71%

65%

65%

59%

12%

12%

18%

24%

29%

12%

18%

12%

6%

6%

29%

18%

24%

0% 20% 40% 60% 80% 100%

Direct involvement with the FirstNation

Increased certainty/sense of security

Negotiating environment

Level of stability in the community

Autonomy

Land use planning and zoning laws

Competitiveness

Alternative dispute resolution process

% of Respondents



46

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 approximately half have indicated that there has been no change and a small percentage indicated that access is worse. The increased need for technical expertise and an inability to fund these types of requirements were noted as reasons why this element is worse.

82%

71%

71%

63%

41%

18%

18%

24%

31%

47% 6% 6%

6%

12%

6%

0% 20% 40% 60% 80% 100%

Achieve overall vision of your FN

Marketability

Interactions with other FNs

Existing systems

Access to support resources

% of Respondents



47

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 notably better.

•  Fewer First Nation respondents identified an impact on approach to market, ability to select prime land for development, ability to compete and harmonization/ collaboration of land use plan. In these areas, between 30% to 40% of respondents indicate there has been no change as a result of the FA.

•  In one instance a First Nation noted third- party awareness was worse, the response was more so related to the First Nation’s own awareness of third-party requirements (particularly provincial requirements and regulations) There is a lack of technical expertise to efficiently accomplish activities.

82%

76%

76%

71%

69%

65%

53%

53%

47%

41%

18%

18%

12%

18%

13%

12%

29%

29%

41%

35%

19%

18%

18%

12%

24%

6%

12%

18%

6%

12%

0% 20% 40% 60% 80% 100%

Enhanced communication

Building municipal relations

Building industry relations

Implementation of instruments

Proactive/availability to market

Third-party awareness

Approach to market

Ability to compete

Select prime land for development

Harmonization of land use plan

% of Respondents



48

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


49

How has FA impacted the following attributes within your First Nation community?

•  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.

• 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)

100%

94%

94%

94%

88%

81%

71%

65%

53%

50%

35%

13%

24%

29%

29%

41%

44%

59%

12%59%

6%

6%

6%

6%

6%

6%

6%

6%

6%

6%

6%

0% 20% 40% 60% 80% 100%

Land management control

Community pride

Level of interest and involvement

Awareness of community priorities

Land management accountability

Clarity and interpretation of rights

Revival of cultural aspects

Capacity development of FN members

Mechanisms for dispute resolution

Healthy families and communities

Personal incomes

Levels of social assistance

% of Respondents



50

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.


51

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.

•  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.

Number of Respondents

One 3Two 33 to 5 36 to 10 1>10 1No new/expansions 6

(n=17)


52

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.

*Note: A FN can select more than one owner/operator


FN members 10Non-members 3Band-owned 2External partners 3Other 1

(n=19)


53

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. •  Two First Nation respondents identified more than 500 jobs have been created on their

reserve. •  Using the mid point of each range we can estimate that 1,959 jobs have been created.

•  First Nation respondents also identified positions created within the Band office itself (i.e., GIS technician, Lands Assistant).


5 jobs or less 26 to 25 jobs 626 to 150 jobs 0151 to 500 jobs 1More than 500 jobs 2No new jobs 6

(n=17)


54

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 4More than half 2

About half 1A few 3None 4

(n=14)


55

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 200 126 to 99 06 to 25 35 or less 2None 9

(n=15)


56

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.


57

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

investment35%

Internal investment

65%(n=17)


58

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 3$500K to $2M 3> $2M to $5M 1> $5M to $10M 0> $10M to $20M 3

(n=10)


59

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 No Total(n) (%) (n) (%) (n) (%)

Attract internal investment 9 75% 3 25% 12 100%

If yes, please indicate in which of the following area(s):

*Note: A FN can select more than one area of investment.


60

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

Note: Investment on First Nations corporate lands is not included. There is significant activity in this area in some cases.

External investment

53%

No new external

investment47%

(n=17)


61

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 1$500K to $2M 1> $2M to $5M 2> $20M 2Yes, but don't know 3

(n=9)


62

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 No Total(n) (%) (n) (%) (n) (%)

Attract external investment 8 67% 4 33% 12 100%

If yes, please indicate in which of the following area(s):

*Note: A FN can select more than one area of investment.


63

How has the FA impacted the average annual revenue generation on reserve in the following areas?

Land Revenue Tax Revenue User Fee Revenue100% of FN respondents collect revenue from this source.

53% (9) FN respondents collect revenue from this source.

47% (8) of FN respondents collect revenue from this source.

5 FN respondents indicated this is a new type.

1 FN respondent indicated this is a new type.

1 FN respondent indicated this is a new type.

For First Nations who identified land revenue generation in place prior to land code, the majority (50%) have experienced an increase in the level of revenues.

In the case of First Nations who identified a tax system already in place prior to land code, the majority (50%) have 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.

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.

The increases in land revenue range from 40% to 700%, depending on the respondent and are mainly due to higher levels of development on reserve lands.

For First Nation respondents who experienced an increase in this type of revenue, the increase is mostly due to large developments on leased lands.

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.

n = 17 *Tax revenue is not covered under the Framework Agreement

*


64

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


65

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.


66

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.


67

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 out-perform 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.


68

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 •  FA First Nations are enhancing their attractiveness to third parties and increasing

business interest. •  Stimulating entrepreneurial activity

• 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.


Thank you!

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