Trusts help build reserve economies

Aboriginal communities across Canada have a unique opportunity to assert more influence over their respective economies. As a result, First Nations, which historically haven’t shared in the wealth evident in Canada, are starting to experience a new era of prosperity.

For instance, arrangements are being made between governments or companies and aboriginal communities on activities taking place on native territory, such as the extraction of natural resources. Not long ago, this notion of a “duty to consult” was completely absent. Today, it is an obligation.

There are examples across Canada where First Nations communities have negotiated agreements with resource developers in areas such as mining, forestry and power generation. These result in revenue sharing and jobs, with a tremendous impact on the local economy.

Ongoing revenue streams may be spent, but in our experience, significant dollars are often set aside for future generations — a wise and generous practice. Combined with the direct financial benefits that flow from land claims agreements, aboriginal people are gaining access to unprecedented financial resources. This means aboriginal communities are better positioned than before to improve their services and infrastructure.

With such financial resources available to communities, they key is to ensure the money is invested to the best effect. Establishing trusts is an important way to achieve this. Trusts provide a way to secure and protect wealth acquired from land settlements and resource sharing agreements for the benefit of the community today and for generations to come.

To show how this can work, we can look at the example of the Cote Nation in central Saskatchewan. BMO Trust Company is the Corporate Trustee for two separate trusts for this First Nation, with more than $130 million in its custody.

Working with BMO Trust and the bank’s Aboriginal Banking and Corporate Finance groups, Cote has successfully leveraged the income and cash flow from the trusts to finance loans for the First Nation, thereby providing immediate access to larger pools of capital.

These loans have provided fund payments to members of the community, while the capital in these trusts is preserved – ensuring the funds continue to provide long-term benefits – and cash flow is also available for those who need it.

Loans have also been established to make capital available to the community for projects to improve quality of life and to make capital investments for the community. The funds have been used to purchase lands to add to the reserve, bring in low-pressure water systems, renovate reserve homes, invest in oil wells and make capital improvements to a resort property on band land.

The ability to access capital without encroaching on the trust has been significant. The capital has allowed band members to achieve benefits that would have otherwise taken years.

The examples of infrastructure development we see in the Cote Nation are being replicated across Canada; the importance of this trend cannot be underestimated. Our bank’s chief economist, Doug Porter, has noted that spending on infrastructure not only can provide short-term support for economic activity, but also help an economy perform more efficiently over the longer haul by alleviating bottlenecks, and ensuring the smooth flow of people, goods and even information.

That applies to aboriginal communities as much as it does to any other jurisdiction.

The cash flow created by trusts has provided funding for various projects that have made a real difference to community members. These run the gamut from the construction of generating stations, gymnasiums, schools and police stations, to the financing of infrastructure projects such as sewers, water and natural gas. These projects have improved the lives of the people, both through the jobs created and the services that were built.

Banks such as ours have growing aboriginal banking units to provide assistance on these matters for communities across Canada. With more partnerships being established every year, the future for aboriginal communities and their relationships with banks is bright.