Pushing programs designed to stimulate growth in an unprepared region is an exercise in futility, and ultimately doomed to fail. The focus must be on building capacity at the local level.[22]

Mark Morrissey, Nunavut Economic Forum

The Government of Canada, through its October 2007 Speech from the Throne, announced its intention to introduce a Northern Strategy, with the aim of helping the North “realize its true potential as a healthy and prosperous region within a strong and sovereign country.”[23] As part of this strategy, the 2009 Budget committed $50 million over five years to support the establishment of a new regional economic development agency for the North. Launched on August 18, 2009, the Canadian Northern Economic Development Agency (CanNor) provides support for northern communities and businesses through a suite of economic development programs, some of which are pre-existing programs that were transferred over from the Department of Indian and Northern Affairs Canada (INAC), including Community Economic Development (CED) programs, and the Aboriginal Business Development Program:[24]

• Community Economic Development Program (CEDP)—provides financial support to First Nation and Inuit communities for economic development initiatives, including planning and capacity development initiatives, proposal development, leveraging of financial resources and for carrying out various other economic development activities.
• Community Service Support Program (CSSP)—funds the implementation of national and regional plans to deliver support services to First Nation community economic development organizations. The services are intended to increase the economic capacity of community organizations to carry out one-time projects and ongoing activities related to economic development.
• Community Economic Opportunities Program (CEOP)—provides project-based support to those First Nation and Inuit communities that have identified economic development opportunities. The program is expected to lead to community economic benefits as a result of planning and negotiating activities, research and advocacy initiatives, and economic infrastructure projects.
• Aboriginal Business Development Program (ABDP)—supports the establishment and growth of Aboriginal-owned and controlled businesses and works with Aboriginal clients across Canada, through financial contributions for activities including business planning, support, start-ups and acquisitions, expansion, and marketing.

Also housed within CanNor is Strategic Investments in Northern Economic Development (SINED), a five-year program transferred from INAC that provides targeted support for economic development projects, various new and pre-existing infrastructure and skills development programs,[25] as well as the new Northern Projects Management Office (NPMO), which began its operations in May 2010. The NPMO is tasked with coordinating federal regulators, tracking projects, providing guidance, and maintaining a consultation record for northern resource development projects.

Witnesses told the Committee that the development of CanNor is a positive step towards improving economic development initiatives in the North. There is much hope that this new agency will be able to facilitate the development of the northern economy in a manner that better addresses the unique needs and circumstances of northerners.
To achieve this, northerners stressed that the federal government must undertake sufficient consultation and collaboration with them. The following provides an overview of some of the more significant issues mentioned by witnesses in relation to these economic development programs.

Co-Management

Some witnesses told the Committee that little consultation with northerners occurred in relation to the development of the Northern Strategy and CanNor, such that their respective mandates are deemed to be driven by the views and aspirations of the South, rather than the needs of northerners. For example, Chief Steve Nitah, of Lutsel K’e Dene First Nation, Akaitcho Treaty 8 Dene stated:

Dene chiefs should have been involved from the beginning in shaping the structure and the policy and priorities of this new agency.[26]

Similarly, Richard Runyon, of the Whitehorse Chamber of Commerce stated:

 [F]ederal programming is designed in Ottawa by technicians who have limited experience in rural communities. The result is often a disconnect on how program dollars can be used versus implementation that will work in our limited human resource environment.[27]

In response to these concerns, northerners advocated a co-management approach to federal programs, through which the creation of a common economic development plan would be developed to ensure greater self-sufficiency for northerners. This view was shared by the National Economic Development Committee for Inuit Nunangat (NEDCIN), a joint federal-Inuit committee established to collaboratively manage economic development policy and program development and implementation. In addition to advocating CanNor membership within NEDCIN, it was recommended that:

A formal agreement should be reached between NEDCIN and CanNor to ensure that the appropriate governance arrangements are in place for management of federal [economic development] programs.[28]

The active engagement of northerners in the development of policies and programs in which they are affected was considered by many as a key factor in ensuring sustainable economic development in the North. Through co-management, northerners become shareholders in their own communities, such that development can evolve from a focus on jobs and income to one of nation building. As explained by Keith Martell, of the First Nations Bank of Canada:

[T]he main thing governments can do is to create an environment where economic development has the best opportunity to flourish. This starts with changing the approach of government to economic development. I have seen the success of First Nations who change their approach to economic development from being the doers of economic development to being the facilitators of economic development by creating an environment where economic development can succeed.[29]

CED Program Funding Arrangements

A 2010 Spring audit by the Auditor General of Canada revealed a lack of focus in long-standing policies and programs for economic development that were transferred from Indian and Northern Affairs Canada (INAC) upon the establishment of CanNor in August 2009. The audit recommended that:

CanNor should clarify the objectives of its economic development programs… and develop a strategic approach to delivering federal programming that includes the identification of needs and gaps, clear and coordinated objectives, effective performance measurement, and consistent reporting on results.[30]

Similar findings were reached by Inuit organizations, as provided by Gordon Miles, Coordinator of NEDCIN, in his testimony before the Committee. Inuit organizations noted the concerns held by northerners in relation to poor program tracking for federal programs, now provided through CanNor. In particular, NEDCIN stated that federal programs for community economic development “are inadequate in the comprehensive land claims context and fail to track important results indicators.”[31]

In relation to the lack of tracking the performance of INAC programs in the North, recent evaluations of INAC CED programs also pointed to the lack of sufficient regard for the increased costs of doing business in the North. For example, a January 2010 INAC evaluation of its CED programs concluded, with some exceptions, that:

The population formula-based funding design of the Community Economic Development Program formula disadvantages smaller communities, which often receive insufficient support to hire a qualified, fulltime economic development officer.[32]

Nunavut Community Economic Development Organizations (CEDOs) agree with this finding. In their submission to the Committee, it is noted that:

Despite the fact that the federal government recognizes the importance of putting realistic provisions in place for its own operations to account for the much higher costs of doing business in Nunavut [through application of the Isolated Posts and Government Housing Directive[33]], this is not acknowledged in the agreements with Inuit organizations... to deliver programs and services on its behalf.[34]

Moreover, various witnesses described how the lack of multi-year funding arrangements for CED programs hinders development in northern communities. For example, a submission by the Inuit members of NEDCIN explains that:

Short term renewals undermine organizational capacity, impose unacceptable levels of potential financial exposure upon organizations and have direct and measurable negative effects on program results.[35]

Witnesses also expressed concerns for the timing of federal support through its CED programs. Many noted that, when payments are not timed to the annual sealift of goods and material, this can result in delays and higher costs for local communities. As mentioned by Mark Morrissey, of the Nunavut Economic Forum:

New year funding is often withheld [by the federal government] pending submission of activity reports and, in many cases, audited financial statements. Realistically, at least here in Nunavut, many organizations are not able to provide audited statements until September. That being the case, organizations that are intending to use funding to purchase equipment and supplies have already missed the cutoff dates for sealift and are now forced to fly in goods at a much higher cost.[36]

The lack of appropriate timing of federal support also creates problems when contracts are put on hold, or are lost because of long delays. As explained by Rick Karp, of the Whitehorse Chamber of Commerce:

The frustration comes out locally when trying to deal with [the federal government], in that the applications at that level have to get certain approvals and there are delays. Here we are in November, we have three programs that we're working on, and we're still waiting for the funding.[37]

Access to Capital

In addition to obtaining access to capital through the ABDP, many Aboriginal businesses and community organizations in the North also turn to private-sector financing. Although federal support through the ABDP is generally appreciated, witnesses suggested that an enhancement to this program is required to address the shortage of access to traditional financing to more effectively address the needs of local communities. As mentioned by Chief Peter Johnston, of Teslin Tlingit Council:

Traditional lenders such as banks are requiring First Nations to guarantee most of these loans. There are not enough opportunities for First Nations governments and businesses to access government programming. We need this programming to provide substantial capital and capacity-building within our nations.[38]

The inability to obtain financing through mainstream banks in the North was most commonly associated with the lack of acceptance from these lending institutions due to a perception of higher risk for northern Aboriginal businesses, as these businesses tended to lack sufficient equity or liquidity under standard lending procedures.

One solution to increasing access to financing was offered by Stephen Mills, of Vuntut Development Corporation, who referred to the need for increased federal support for community economic development officers in the wake of past reductions in federal CED funding, noting that “they were of great assistance at the community level” in helping entrepreneurs secure financing.[39]

Todd Noseworthy, of Northwest Territories Community Futures Association, agrees with this view, and further adds that the role of community economic development officers in the North could be expanded to include educational training for northern entrepreneurs on how to manage a business. Mr. Noseworthy provided clarification:

Many small and medium-sized enterprises lack the skills and capacity to take advantage of even small-scale opportunities, and often require intensive one-on-one assistance.[40]

Summary of General Economic Development and Key Recommendation

The Committee concurs with witnesses that CanNor is an important step for a prosperous economic future in the North. This stand alone regional development agency for Canada’s North is well positioned to coordinate and deliver the existing economic development programs and services. We also agree with witnesses that, now that it is well established, CanNor must engage with and consult territorial governments, Aboriginal leaders and other stakeholders to further tailor its activities and programs to the unique needs of the North and the differing circumstances in each territory. The needs, views and aspirations of northerners must be taken into account in shaping economic development policies and programs in the North.

The Committee believes that, given the testimony provided, a better way should be sought to maximize the economic development potential of the North. Throughout its study, the Committee heard that the principle of co-management is a key factor in creating successful initiatives for economic development. Only by actively engaging with northerners can all parties be satisfied that their views are being incorporated into northern economic development policy and programs. In this way, the outcomes and benefits of economic development policies and programs are most likely to be realized and most likely to suit the unique needs of northerners. To arrive at more comprehensive solutions to which all parties can agree, the Committee recommends:

Recommendation 1:

That CanNor continue to work with territorial governments, Aboriginal leaders and other stakeholders in the North to develop, by the end of the 2011-2012 fiscal year, a formal mechanism for collaboration among federal, territorial and Aboriginal governments to ensure that its activities and programs are tailored to the unique needs of the North.