First Nations Bank of Canada CEO says education key to infrastructure development on reserves
- Fraser Needham | February 08, 2015
The head of the First Nations Bank of Canada says if the Harper government is serious about addressing the infrastructure gap on reserves, it will ensure K-12 education is properly funded in these communities.
First Nations Bank of Canada CEO Keith Martell was testifying before the Senate Committee on Aboriginal Peoples on February 4. The Senate committee was examining the challenges of meeting infrastructure needs on-reserve.
Martell says in reality recent federal government policy changes have not increased the access to private capital for First Nations communities.
He says the only way to build economies of scale is through education.
“The biggest impact the federal government could have on the future economic health of First Nations is to concentrate on K-12 education,” he says. “Because frankly the largest correlation between economic well being and any other factors is achievement of education.”
He also says education is key in terms of creating an economic environment on First Nations reserves that banks will feel comfortable lending in.
“The federal government still has a huge role to play in education on-reserve and the more we can get that accomplishment completed and get those people educated and effective, the more likely we’re going to have real economies in these communities that are going to be effective that we can lend in to. And that’s really the biggest impact you could have on that outcome.”
Martell adds recent policy changes made by the federal government have also not really increased the capacity of First Nations to finance on-reserve capital projects.
In June of last year, the First Nations Finance Authority issued its very first bond of $90 million. The bond is a mixture of First Nations and government revenues.
The theory is the FNFA bonds will increase the capacity of First Nations reserves to finance infrastructure projects by increasing their access to private capital. First Nations will be able to get private loans at good rates by issuing what is seen as a secure government-like bond.
However, the First Nations Bank of Canada CEO says in reality this is not the case. This is because the FNFA bonds contain government revenues mixed in with private revenues from First Nations companies that vary from year to year and will be seen as risky by private investors.
Martell says for this reason, the bonds will not be able to generate the private capital at the low rates of interest some government officials are touting.
“What First Nations Finance Authority is proposing by lumping government revenues in to commercial revenues for borrowing purposes is like a for-profit commercial business teaming up with a province or city to jointly issue a 30-year bond to finance capital spending. This is simply not done.”
Related story: First Nations Bank of Canada Community Banking Centre opens in Far North
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