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Heather Exner-Pirot, a Special Advisor at the Business Council of Canada and fellow at the Macdonald-Laurier Institute talks to the Hon. Lisa Raitt about the importance of meaningful financial support for the Indigenous community, the success of the Alberta Indigenous loan guarantee program and why it’s time for the federal government to act.

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Lisa Raitt: Thank you for tuning in to The Raitt Stuff. I&#8217;m your host, Lisa Raitt. And in this podcast, I&#8217;m going to share insights on current hot topics in the areas of public policy, politics and business with some guests along the way. Welcome back to The Raitt Stuff. Today I have another expert in Indigenous economic reconciliation. It&#8217;s Heather Exner-Pirot who is coming to me today from Calgary, Alberta. If you&#8217;ve read the National Post or The Globe and Mail recently, you can see that Heather has had a number of op-eds talking about not only the importance of it, but just how Indigenous equity investment makes sense. And I&#8217;m delighted to have you here today, Heather.
Heather Exner-Pirot: Thanks so much for having me, Lisa.
Lisa Raitt: I appreciate it. I emailed you and I said Heather, it would be great if you could come on and talk about your latest op-ed that appeared a couple of weeks ago. Give us a flavour of what you wrote for folks who haven&#8217;t actually had the opportunity to read it.
Heather Exner-Pirot: For sure, so maybe people are familiar that, you know, Alberta has had a provincial Indigenous loan guarantee program for a couple of years, has been very successful, backstopped that very big Athabasca pipeline deal, a few other pipeline deals, a few power plants. Ontario has actually had one since 2009, focused on clean electricity and clean energy, and has had big wind deals, hydro transmission, actually quite a few really big deals and now Saskatchewan just initiated theirs. Now a group of Indigenous groups led by First Nations Major Projects coalition, I&#8217;ll say, has been the thought leader on this is pushing for the federal government to have a national Indigenous loan guarantee program. What this does, it allows for low cost capital with lower interest rates guaranteed by the government. Because most First Nations and Inuit communities don&#8217;t tend to have access to capital, don&#8217;t have the collateral and the leverage. So we are anticipating in this budget in the fall update that there will be some kind of announcement, but also a lot of concerns that it will exclude oil and gas.
Lisa Raitt: Right.
Heather Exner-Pirot: That the federal government will will kind of pick and choose which are the appropriate categories and Indigenous peoples can invest in or not. And what I wanted to articulate in my op-ed is why that would be wrong, why it should be up to Indigenous communities to decide what kind of projects they get involved in, not least because I did the tally. About 40% of all these equity deals in the last few years has been in the oil and gas sector, so it would be really cutting off a very big portion of where they could make money, where they could get some prosperity and economic self-determination.
Lisa Raitt: Heather, paint a picture for our listeners on the sophistication levels of the First Nations that are are looking for these kind of equity deals because it is a sophisticated group of business people.
Heather Exner-Pirot: Absolutely. And I&#8217;ll say, you know, I&#8217;m out West. So I&#8217;ve seen this in Alberta firsthand. Used to be industry, Indigenous relations, you know, was first impact and benefit agreements. There might be some training, some employment that fit more heavily into procurement, that build up some Indigenous business. We call them economic development corporations a lot of the time. And then started to look at what is the next step in the evolution is this equity. And so we&#8217;ve seen some again, massive deals. These are sophisticated actors. Some of them have nine figure plus balance sheets. It is not small potatoes of course there&#8217;s variants across different communities. Some communities have more or less business sophistication. But sometimes I hear that industry is selling off their worst assets, or they&#8217;re giving stranded assets and really want to emphasise these communities know the sector. A lot of them have worked in all their lives. They&#8217;ve been involved as contractors, they&#8217;ve been involved in receiving revenues, and now they&#8217;re moving into equity, and they&#8217;re doing this with their eyes wide open and understanding the business landscape and having some good professional advice. So this is big business. It&#8217;s good business, and it&#8217;s a win-win in my perspective.
Lisa Raitt: So you mentioned that Alberta has a loan guarantee program. A couple of days ago there was an announcement that Alberta made about the loan program.
Heather Exner-Pirot: Yeah. So they moved from $1 billion. And this was under Jason Kenney and to his credit, and worked very closely with my colleague Stephen Buffalo, who&#8217;s the president of the Indian Resource Council and also the chair of the board for IRC. It&#8217;s a brilliant idea, really. One best thing the government can provide for economic reconciliation is just a low interest loan, a low interest guaranteed loan. It&#8217;s almost no cost to the taxpayer whatsoever. It is a loan. It does get paid back at the interest rate at which governments can borrow on. So it&#8217;s a billion program. They&#8217;ve had five successful deals. The biggest one was that Athabasca pipeline deal. And now there&#8217;s 90 or 100 projects in the queue. They won&#8217;t all get funded, but there are a lot of good projects coming up. And it was clear that that billion dollar cap wasn&#8217;t going to do it. And it&#8217;s been a successful program. Everyone&#8217;s getting pretty good at it. And so they upped it to $3 billion, which is great to see. Now this only applies to Alberta projects mostly, or those involving Alberta First Nations. In an ideal situation, you&#8217;d have a federal national Indigenous loan guarantee program and you could stack. It would be a way for Indigenous communities to get more equity in bigger deals. And they should not compete. They should complement each other.
Lisa Raitt: I agree, and the United States has a loan guarantee program for a long time as well, and it&#8217;s a significant amount.
Heather Exner-Pirot: Yeah. So there&#8217;s the tribal loan guarantee program in the States. It was $2 billion, which if you think about the size of the US economy, it wasn&#8217;t very big, and on the Inflation Reduction Act, they did boost that to $20 billion. That&#8217;s significant. And I guess what I do want to highlight for your listeners, though, Lisa, is that there is a narrow set of projects that can get funded under these loan guarantee programs that they are conservative and they are risk averse and for good reasons. And so Alberta is probably the most successful. There&#8217;s only five projects that have been funded in it. As far as I understand, there are no deals under that new $20 billion tribal loan guarantee program where it wasn&#8217;t as of a month ago when I checked. But there are things moving through the system. But another thing that people are concerned about the risk to Indigenous communities of owning a bad project or losing that. It&#8217;s the loan guarantee. The burden is on the government. The government is guaranteeing the loan and the project is that they choose are very low risk, usually have a long term contract or purchase power agreement, something where the amount of revenue coming in will pay off the loan and then leave some for the community also, and that usually on day one, the communities start earning some income off that asset. So they are really developed in a way in their chosen, in a way where it&#8217;s really a win for the Indigenous community.
Lisa Raitt: That&#8217;s awesome. So the federal government dipped their toe, I would say, into Indigenous equity loans through the Canada Infrastructure Bank. But as you pointed out, they put some really strong guardrails on what the infrastructure bank can and cannot actually invest in or enter into an agreement, and can you flesh that out a little bit?
Heather Exner-Pirot: Yeah, absolutely. We&#8217;ve all been talking about the loan guarantee program and that is very, very good tool in the tool kit. But I want to reiterate that we need a lot of tools in the tool kit. And they shouldn&#8217;t be competing. You can get traditional finance. You know if you have a good balance sheet. There&#8217;s the First Nations finance authority. That was what backstopped the big Clearwater deal with the $500 million equity stake. There&#8217;s Indigenous financial institutions, First Nations Bank of Canada. There are other options. The Canada Infrastructure Bank did come up with an Indigenous community investment fund, and that really focused on the debt side of things and not necessarily income generating, but it could be income generating assets. But there is so much demand for the equity side of things that they did change their mandate with the with the budget in March to be able to finance equity also. However, like you say, the Canada Infrastructure Bank has particular mandate, has a particular focus. It&#8217;s really much about transportation and clean energy and the energy transition, and not so much on profit generation. But communities need profits, they need revenues, that&#8217;s part of their self-determination. And so again, I think this national Indigenous loan guarantee program would complement, not replace with the Canada Infrastructure Bank is doing for sure.
Lisa Raitt: And the Canada Infrastructure Bank is very clear, they cannot do fossil fuel projects.
Heather Exner-Pirot: I think that&#8217;s clear and they won&#8217;t. And that&#8217;s why I think having a program that is really just looking at the best deal, maximize profits for communities makes sense where it&#8217;s really on the economics of the deal.
Lisa Raitt: So we&#8217;ve been waiting with bated breath for years for this federal program. Any insight as to what are the challenges for a federal government to put something like this in place?
Heather Exner-Pirot: The balance sheet now is weak.
Lisa Raitt: Yeah. That&#8217;s true.
Heather Exner-Pirot: I mean, you&#8217;d be the one to tell me, Lisa, with your experiences.
Lisa Raitt: No. That&#8217;s okay.
Heather Exner-Pirot: You know, how much money can they allocate to this? The government has better borrowing capabilities, certainly, than First Nations, but even their borrowing capabilities now are starting to get stretched and repairing a lot of interest. So you were taking away room from other things. But for me, it&#8217;s the energy transition. It&#8217;s Indigenous reconciliation. It&#8217;s energy security. It&#8217;s Canada&#8217;s place in the world. This gets projects going and that is what we need for our economy anyways. This gets more and better projects going and with Indigenous consent, I really can&#8217;t think of any other policy tools that would do more for this country than a national Indigenous loan guarantee program that would hit more buckets on the economic, on the ethical, on the environmental side than this program. So I guess it&#8217;s the size what size will they come up with? And again, if Alberta is coming up with $3 billion, then I would expect something with some heft from this government.
Lisa Raitt: And we&#8217;d hope B.C. Would do the same.
Heather Exner-Pirot: I absolutely hope B.C. will do the same. And Coastal Gaslink is a perfect example of a project that could have been a bigger equity stake. It could have been an earlier equity stake if there was something in B.C. for those communities. There is no B.C. program to buy Coastal Gaslink they were kind of at the mercy of the market. I&#8217;m sure they&#8217;ll pay a higher interest rate than they would otherwise. There&#8217;s more of an obligation on the side of the proponent, I think, to help out with the financing, which if you want more Indigenous economic self-determination, give them more options. So CGL is a perfect example. I think Cedar LNG stems where I think the communities would benefit. I mean, there&#8217;s all sorts of projects mining also. All sorts of projects where I think communities would benefit if they had more option and were more proponents would be interested to Indigenous communities with better deals.
Lisa Raitt: Yeah. And in terms of the proceeds for these equity investments, maybe you can give us a flavour as to what the First Nations communities do with the money that comes in.
Heather Exner-Pirot: It&#8217;s such a great question because this is really what this is about. So many First Nations and Metis communities are very dependent on federal transfers. It isn&#8217;t enough. It will never be enough. And having untied the money that they get and own source revenues, we call them that they can spend on what they want. The Athabasca deal, they&#8217;ve been pretty clear, but this would be consistent across any of these deals it can pay for, for example, a home for elders or elder care. It can pay for more boosting student loans or just, you know, paying for more costs of the students. It can pay for land. There&#8217;s been land purchases. You know, it&#8217;s land back. I&#8217;ve been able to do that. Social infrastructure, actual infrastructure, improving housing, more money for housing, cultural programs, you know, paying for the powwow, paying for camps, the things that the communities prioritise, that maybe there isn&#8217;t an Indigenous Services Canada program for, or that you&#8217;re going to have to wait eight months or you&#8217;re in the queue. But things that they can do for themselves, that the community prioritises, that is what self-determination is. And I say this again, there is no political self-determination without economic self-determination. They are two sides of the same coin, and we are seeing communities get healthier and stronger when they have access to their own revenues.
Lisa Raitt: Yeah, and gone are the days, or should be, gone are the days when a company rolls into town and they say, we&#8217;re going to give you six jobs and maybe an IRB on the basis of this project. Now it&#8217;s about ownership and equity.
Heather Exner-Pirot: It&#8217;s yeah, it&#8217;s really that step up. And and the Indigenous rights have been strengthened and affirmed in the courts in the last 20 years. They know what leverage they have and they&#8217;re using it. And people think they will use it to stop development. And what they&#8217;re using it for generally, is to have better development benefits for them, and not just for the proponent. I always say that this country is rich. This country is blessed. It&#8217;s not a zero sum game. We aren&#8217;t fighting over crumbs. If we get this right, everyone can be prosperous, everyone can benefit. And first and foremost, our Indigenous communities.
Lisa Raitt: Couldn&#8217;t have said it better. Heather, thank you so very much. By the way, for listeners, if you&#8217;re not following Heather Exner-Pirot on LinkedIn, then you&#8217;re missing all of this wonderful information that we just talked about today. And Heather, as well, please give a plug for the institute that you work with too.
Heather Exner-Pirot: Yeah. So I work for the Macdonald-Laurier Institute. I&#8217;m the Director of Energy Natural Resources. So we&#8217;re putting out lots of good work as Canada kind of grapples with how to promote our energy security while going through the energy transition.
Lisa Raitt: So I&#8217;ve given you a LinkedIn. You can go to the Macdonald-Laurier Institute&#8217;s website or you can follow for Heather&#8217;s op-eds in our national newspapers. Heather, thank you so very much for joining me today.
Heather Exner-Pirot: Thanks for having me.
Lisa Raitt: Thanks so much for tuning in. Now, if you have any questions or comments or even requests on topics to discuss, drop me a line at Lisa.Raitt@CIBC.com. Your interactions actually will make this better. I&#8217;m your host, Lisa Raitt, and this has been The Raitt Stuff.
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Indigenous Loan Guarantee Programs Work And We Need More Of Them

Lisa Raitt

Vice-Chair, Global Investment Banking

CIBC Capital Markets

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