Building future wealth for First Nations
- Subtitle: Industry Spotlight
Howard Morry has been associated with First Nations work since the 1980s in the early days of his career. Often, he was focused on economic development projects and occasionally observing the obstacles First Nations faced in trying to grow their economic base.
Over time, as a tax lawyer working with First Nations doing the first joint ventures and settlement trusts, he started to see the market growing, in part due to some Supreme Court Cases related to the duty to consult and impact benefit agreements. In these instances, First Nations were starting to be “dealt into” resource development in Canada.
In setting up economic development structures for First Nations both upstream and downstream, he saw how difficult it was for these communities to use the structures he helped them create for their own wealth-generating opportunities that would ideally allow them to improve their lives and move beyond just operating on the often insufficient funds they received from federal transfers. In many cases, there were institutional problems getting in the way.
“One of the biggest problems I saw was that the numbers weren’t sufficient for them to do what they needed to do to get ahead and for quality of life,” he says. “In order for First Nations to advance their sovereign wealth, they need outside supports. They need to build a portfolio that includes financial and commercial assets such as infrastructure, real estate, etc.”
In many remote communities, he saw it was difficult for the people to move ahead even within the tax governance structures he had helped them put in place.
“I would go back to the community a few years later and not a lot had changed,” says Morry, a partner with Pitblado LLP and chairman of the board, CEO and president of EDIP Sovereign Wealth Solutions — a roster of advisers working together to provide expertise to help First Nations communities achieve financial independence.
He says resources and capacity to build effective economic development and sovereign wealth management and investment platforms are limited for First Nations. Most communities have not diversified their own-source revenues or put a plan in place to build community wealth in a systematic manner.
Morry started thinking about how to provide a way to streamline the wealth-generation process for First Nations and then scale it across the country.
He came up with EDIP — a multi-disciplinary platform of advisers to assist First Nations in building and growing their own revenue streams. It includes lawyers, accountants, economists, financial advisers and others working in a systematic manner.
The platform includes tools such as virtual data rooms and project management applications so the service provider advisers can design and build and support sovereign wealth institutions that would be owned and controlled by the First Nations.
EDIP invites service providers on to the platform and they in turn invite their clients to join them. There are currently 102 First Nations clients being served by providers on the platform. It is anticipated that more than 250 clients will eventually be part of the platform representing First Nations from all across Canada.
It is expected that one of the greatest examples of how EDIP can benefit a community will be work done in the Shoal Lake 40 First Nation in the coming years. Late last year, the Shoal Lake 40 First Nation signed an agreement with the municipal, provincial and federal governments to build a 24-kilometre road connecting their island community to the Trans-Canada Highway. They see it as a “freedom road” not just for travel but for future opportunities to build wealth.
The deal to build the Shoal Lake 40 Freedom road was finalized in December and will involve $40 million to pay for a new road.
Shoal Lake 40 is a community on a peninsula near the Manitoba-Ontario border. It became an island more than 100 years ago during construction of Winnipeg’s water system, which draws water from the Shoal Lake. To this day, Winnipeg still gets its water from Shoal Lake. After construction of the road, one of the first priorities is to build a water treatment plant so Shoal Lake 40 can lift its nearly two-decade-long boil-water advisory.
“They see it [the road] as aspirational and this [EDIP] is the framework in which they can plan their future,” says Morry.
“Right now, we’re looking at all the opportunities once we get access to the Trans-Canada Highway and all of the rest of Canada,” says Shoal Lake Chief Erwin Redsky. “We’ve been waiting for this day for a long time — we’ve been denied normal economic development for the past 100 years and this road is going to open so many opportunities and partnerships with industry and programs such as EDIP and will open many, many doors.
“We’re not just building a road here, we’re building partnerships. A concept like EDIP is what we’re striving for. The road is just the beginning,” says Redsky.
It’s an example of wealth building that Morry had in mind when he launched the EDIP to help generate “own-source” revenues independent of government control to improve quality of life and achieve financial independence.
Morry says First Nation, Métis and Inuit and their organizations have recognized for some time that they need to generate revenues apart from government transfers. Over the past quarter century, many have managed to balance federal funding with own-source revenues. And for the first time, it is estimated that collectively their own-source revenues have surpassed government transfers as a source of funding.
The trend is for indigenous communities to gain even greater access to own-source revenues as Canadian courts continue to render decisions that effectively require resource and energy companies to partner in their traditional territories. In addition, they continue to grow businesses and develop real estate and infrastructure at a record pace.
In some cases, they are also raising revenues by sharing the tax base with federal and provincial governments through a regulatory framework for First Nation tax systems.
Through working with First Nations groups over the past several decades, Morry reached the conclusion that lawyers could not do this on their own, so a system to work with others (accountants, consultants, engineers and others) was necessary with a project management system with tools and templates to draw on.
The premise is that as governments, First Nations and other indigenous groups need a predictable stream of income to make up for their lack of a tax base. The solution is an institution they own and control aimed at managing that process.
“The goal is transforming their current economic development group into one focused on wealth generation and opportunities more broadly,” Morry says.
Gabrielle Ollinger is director of operations for EDIP. She sees the platform as potentially “transformational” for First Nations communities. Originally from Cowesses First Nation located in southern Saskatchewan along the Qu’Appelle Valley, Ollinger is also a certified aboriginal financial manager and oversees EDIP’s project management office. “Communities really need to develop a focused strategy and we’re calling that sovereign wealth strategy. In the absence of having one, many communities find themselves being entirely dependent on the federal government for funding and at the mercy of different policies and priorities not set by them,” she says.
Ollinger used to work in private banking and became interested in supporting some of the communities in Saskatchewan with community planning and how the bank could support their projects and initiatives.
“To me this is probably one of the most ground-breaking and important initiatives in Canada and we’re very excited about the privilege to participate and help put shape to the work that needs to be done,” she says.
“We realized most first nations don’t have access to the tools and experts they really need to not only analyze, select and manage their business and investment opportunities — they really need to take steps forward to generate own-source revenues and really put a plan in place to build community wealth,” she says.
Gary Kissack is a partner with Fogler Rubinoff LLP in Toronto in the business law and capital markets and securities practice groups. He is also a board director with EDIP. He advises First Nations on the formation of customized economic development groups, as well as on evaluation/negotiation and implementation of investments.
“At the end of the day, the primary focus is about giving First Nations and companies that work with First Nations and their professional advisers access to these tools that will facilitate wealth creation for First Nations, including their ability to work co-operatively and efficiently together,” says Kissack.
He says one of benefits of the EDIP project management tools and resources is that First Nations can access professional advisers from across the country to work with them in the cloud and on a remote basis.
“We’re looking forward to more cost-effectively delivering services to First Nations and companies that work with them,” he says. “Companies that work with First Nations experience certain challenges when it comes to advancing a project on a timely, cost-effective basis. That was one of the drivers behind the development of the tools EDIP has. We knew that being able to give communities opportunities with their projects was one of those biggest challenges and that’s where we decided that this project management delivery platform was one of the key ways we could help them to achieve one of their objectives. When projects slow down, there is a frustration experienced on a lot of different sides. It’s not for lack of desire to move it forward but lack of tools and capacity and we’re trying to address those capacity needs in First Nations.”
Kissack’s area of expertise is in the area of economic development and indigenous partnerships. He is no stranger to advising First Nations communities on large energy infrastructure projects. He says wealth creation is a focus for many First Nations across the country.
“As my colleague John Beaucage, former grand council chief for Union of Ontario Indians, said years ago, ‘There will soon come a time when First Nations won’t be focused on their poverty, they will be focused on managing their wealth,’ and we see opportunities now for First Nations to build that wealth,” says Kissack. “But it’s one thing to say they have the opportunities; it’s another thing to put tools in their hands to actually realize it. It’s much more difficult for First Nations than others. We take it for granted they can move forward with opportunities, but they need the tools.”
There’s a desire to do it to move forward, but the question Kissack often gets asked is how? “I think this type of platform puts companies and First Nations in a position to actually realize it and do it,” he says. “It’s a very exciting time. I love what I do. I’ve had the privilege of acting for many First Nations communities across the country and, at the end of the day, improving the quality of life for community members is the ultimate objective and I think this will go a long way in facilitating that.”
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Jennifer Brown is the editor of Canadian Lawyer InHouse.