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The federal government should create a First Nations Infrastructure Institute to help bridge the yawning infrastructure gap between Indigenous and non-Indigenous communities, says the First Nations Financial Management Board in a prebudget letter to Prime Minister Justin Trudeau.

The proposed institute would support Indigenous communities that may not have the capacity to manage the risks that come in building, operating and maintaining infrastructure assets over the long term, the group says.

“The systems that First Nations are required to operate under to build and maintain their infrastructure are fundamentally flawed, and until they are fixed the outcomes will also be flawed,” says the letter, which is dated March 25 and signed by FNFMB executive chair Harold Calla and and First Nations Tax Commission chief commissioner Manny Jules.

“In short, First Nations are required to take on the risks and liabilities associated with projects without having the corresponding control and decision-making power during project planning, financing and construction.”

The gap between Indigenous and non-Indigenous communities in access to services such as housing, drinking and waste water treatment, roads, broadband and energy systems has been estimated to be as much as $30-billion.

The letter says the FNFMB has engaged with federal officials “for several months” about the proposal.

In an e-mailed statement, Mr. Calla said those talks came after the federal government reached out to his agency and its two sister organizations about ways to roll out infrastructure funds more readily.

The 2021 federal budget included billions for Indigenous infrastructure, including $4.3-billion over four years, starting in 2021-22, for the Indigenous Community Infrastructure Fund, which is designed to build “shovel-ready” projects in Indigenous communities.

Mr. Calla said a new approach, along with money, is required to break a pattern in which infrastructure built for Indigenous communities tends to cost more, takes longer to build, and not last as long as comparable projects built in non-Indigenous communities.

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The proposed First Nations Infrastructure Institute would be a fourth organization under the First Nations Fiscal Management Act, or FMA. That legislation came into effect in 2006 and created the First Nations Finance Authority, the First Nations Tax Commission and the First Nations Financial Management Board.

First Nations that sign up or are “scheduled” under the act (participation is optional) have access to services from FMA agencies, including loans from the First Nations Finance Authority.

That agency in 2020 announced it had surpassed $1-billion in loans to Indigenous communities, including a $117-million loan to the Henvey Inlet First Nation in Ontario to help build a 300-megawatt wind farm.

Financing is a big part of the FMA groups’ pitch for an infrastructure division. A First Nations Infrastructure Institute would help First Nations move away from a “pay as you go” approach to a model that is more in line with that taken by municipal governments, which use long-term loans to build infrastructure, Mr. Calla said.

“If you want to improve housing and infrastructure, money will not be the main solution. You have to create an economy and employment, and that is what [First Nations Infrastructure Institute] and other initiatives will do,” he said.

“Economic reconciliation means creating a level playing field for First Nations to be able to move their reserve lands into the economic mainstream, with the same kinds of infrastructure provided to other orders of government, and non-Indigenous Canadians.”

The idea for a fourth body has been circulating among FMA agencies since at least 2017, with a technical proposal shared among the group last year. A First Nations Infrastructure Institute technical team has been “engaging regularly” with federal officials, Jason Calla, a technical team member, said in an e-mail.

An institute could allow First Nations to team up to pursue joint facilities or “stack” funds to pursue projects that fit community needs, and open the door to public-private partnerships, Harold Calla said.

Finance Minister Chrystia Freeland will deliver the 2022 budget on Thursday.

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