Ken Martin, Vice-President, Newfoundland and Labrador, Atlantic Canada Opportunities Agency (ACOA)

Home , Labrador City, Labrador West, Nunatsiavut, Rigolet

Written Submission to Special Senate Committee on the Arctic

Submitted By: Ken Martin, Vice-President, Newfoundland and Labrador, Atlantic Canada Opportunities Agency (ACOA)

Contact Information: The John Cabot Building 10 Barter’s Hill, 12th Floor P.O. Box 1060, Station C St. John’s NL A1C 5M5 Tel: 709-772-4150 E-mail: [email protected]

Economic Overview of Labrador

Labrador is the mainland portion of the province of Newfoundland and Labrador (NL) and the northernmost geographical region in Atlantic Canada. The province of NL covers an area of 405,720 km2, of which three quarters is in Labrador. Labrador is often differentiated into four sub-regions: Northern Labrador (containing Nunatsiavut), Labrador West (containing Labrador City), Central Labrador (containing Happy Valley-Goose Bay), and Southern Labrador.

Despite Labrador’s vastness, only 5% of the province’s population live there, spread between 22 municipalities and 7 unorganized areas. Labrador’s population in 2017 was an estimated 27,500, down 1% over the last 5 years (2012-2017). Labrador’s population is 44% Indigenous originating from three distinct groups – Inuit (4,800), the Southern Inuit (3,900), and the Innu (2,800). The Inuit are self-governed by the Nunatsiavut Government.

Labrador has a relatively young population, with an average age in 2016 of 37, compared to 44 for the province as a whole. Education levels are very similar to NL as a whole, with 62% of the population aged 25 to 64 having post-secondary qualifications in 2016. The region’s only post- secondary education facilities are located in Labrador City and Happy Valley-Goose Bay.

Overall, jobs in Labrador are higher paid than in NL as a whole, with 30% of income earners in the region making $75,000 or more in 2015, compared with only 17% of NL income earners. As a result, 6% of the province’s total income is earned by people in Labrador, which is higher than its share of the provincial population. Labrador, in general, is also less dependent on government transfers, with only $12 in transfer payments for every $100 of employment income compared with $25 for NL in 2015.

In June 2017, there were 884 employers in Labrador, 4% of the provincial total. Businesses in Labrador tend to be larger, with 34% of the businesses in Labrador having 10-plus employees, compared to 22% for the province. Labrador’s main private sector industries include mining, fishing, aerospace and defence, tourism, and electric power generation and distribution. Opportunities exist in all of these sectors for further development.

Economic Overview of Nunatsiavut

Nunatsiavut, which has been specifically identified in the Arctic Framework, is the first Inuit region in Canada to achieve self-government. Nunatsiavut is comprised of 5 Inuit communities totalling 69,000 km2 in size: Rigolet, Postville, Makkovik, Hopedale, and Nain. In 2017, Nunatsiavut had a population of around 2,700, down 1% over the past 5 years due to inter- and intra-provincial out-migration. Nearly half of the population is in Nain, and the vast majority is Inuit (around 90%). The Inuit population of Nunatsiavut is even younger than in the rest of NL, with an average age of 34 in 2016.

The economic situation in Labrador differs across its four sub-regions and not all sub-regions are equally well-off. Nunatsiavut faces economic challenges not seen in other parts of Labrador. For example, many of the economic constraints for Labrador are felt most intensely in the Northern region, which contains Nunatsiavut.

Also of note, all areas of Labrador are not similarly educated. In Nunatsiavut, only 43% of the population 25 to 64 completed post-secondary education. As a result, the income levels in Nunatsiavut are lower than the averages for the Labrador region as a whole, with only 14% of income earners earning more than $75,000, and dependence on government transfers is on par with the rest of NL (i.e. requiring more transfers than Labrador as a whole).

While Nunatsiavut’s Business Registry lists 126 Inuit businesses, of note is that many of these are not based in Nunatsiavut. From Statistics Canada’s Business Register, in June 2017, Nunatsiavut had 51 employers. The Nunatsiavut Group of Companies (NGC), the business arm of the Nunatsiavut Government (NG), owns a number of businesses in areas such as: marine transportation, air transportation, commercial real estate, construction, remote camp operations, logistics, and heavy civil engineering.

Opportunities and Challenges

In Nunatsiavut, the main economic drivers include mining, fishing, tourism, and aviation.

Mining

The majority of mining and mineral exploration in the province occurs in Labrador, with the gross value of mineral shipments from NL in 2017 estimated at around $3.6B. A significant amount of the mining development in Labrador occurs near Nunatsiavut (e.g. Vale’s nickel,

copper, cobalt mine in Northern Labrador). Since Voisey's Bay is located in an area subject to land claims by both the Innu Nation and the NG, Vale has Impacts and Benefits Agreements (IBAs) with both of these groups. The IBAs contain specific employment commitments for Innu and Inuit and first consideration must be given to Indigenous businesses to provide goods and services. Approximately 500 people are employed at the Voisey’s Bay mine, of which about 51% are Indigenous, and approximately 80% of the operations support contracts are with Indigenous businesses. Going forward, the recently announced underground mine will provide new, valuable opportunities for Nunatsiavut.

Opportunities also exist in the Northern region for uranium and rare earth metals mining. Located just outside Postville is one of the world's largest undeveloped uranium resources.

Fishery

The fishery is significant to the Nunatsiavut region, with two fish plants operated by the Inuit- owned Torngat Fish Producers Co-Operative in Makkovik and Nain, which processes snow crab, turbot and arctic char. The co-op worked closely with the NG.

As well, there are three separate entities with major northern shrimp allocations within Nunatsiavut: the Torngat Co-Operative, Pikalujuk Fisheries Limited (50% owned by the NGC), and the NG. Specifically, the NG is a quota-holder for various commercial fish species, including shrimp. From 2015-2018, there has been an 82% reduction in the Northern shrimp quota off the Northeast Coast of Newfoundland/Southern Labrador in Shrimp Fishing Area (SFA) 6; however, the stocks in more northerly areas of Labrador, SFAs 5 and 4, remain healthy which may allow for some growth in this industry. The NG currently has a share of the shrimp quotas for SFA 5 (9.9%) and SFA 4 (10%).

Tourism

There is huge potential in Labrador to further build upon its world-class tourism assets and attributes; however, tourism in Northern Labrador is still in its infancy. Only 0.4% of non- resident visitor parties to NL overnighted in this region from May to October 2016, representing around 800 parties. Key tourism assets in Nunatsiavut include National Historic Sites (the Hebron Mission Station, the Hopedale Mission Complex, the Okak Mission Station, and Ramah Bay); the Torngat Mountains National Park, which houses the Torngat Mountains Base Camp and Research Station (a Canadian Signature Experience and a Park's Canada Northern Iconic Experience); and cultural experiences like drum dancing, throat singing, traditional Inuit games, ice fishing, and traditional crafts. The NG has a tourism strategy in place spanning 2014-2020. Key constraints to growth in this industry in Nunatsiavut include access, accommodations and food services. The only access to Nunatsiavut is by air or by sea from Goose Bay.

Aviation

The Labrador region has considerable aviation and aerospace infrastructure in place, including the Canadian Forces Base – 5 Wing Goose Bay, which includes the only international airport is in Labrador. This infrastructure has provided opportunity for development in the sector. In 2017, Air Labrador, majority owned by the Nunatsiavut Group of Companies, combined with Innu Mikun Airlines to form a new company, Air Borealis, which is operated by PAL Airlines. Air Borealis provides daily passenger and cargo service between the Goose Bay Airport and the five Nunatsiavut communities, as well as the Innu community of Natuashish.

Economic Challenges

Despite the economic potential of Labrador with its abundance of natural resources and considerable tourism potential and infrastructure in Goose Bay, there are a number of sizable challenges constraining the region’s growth:

• Moving people, supplies, raw materials, and finished goods to Northern and Southern Labrador is difficult and expensive, especially in winter due to a lack of transportation infrastructure and the harshness of the climate. For example, there are no roads linking the urban centres with the North, and the ports in Northern Labrador cannot support large vessels. • Broadband internet access is scarce or at full capacity in Northern and Southern regions. • Basic tourism infrastructure is lacking in key growth areas, including airport infrastructure in Nain. • There is a shortage of both skilled and unskilled labour in many sectors. • Major project developments are complex (e.g. requiring negotiations of IBAs and environmental assessments).

ACOA Support for Economic Development

As the Government of Canada’s regional development agency in the Atlantic region, ACOA’s mandate has always been to create economic growth in Atlantic Canada. With a field office in Happy Valley-Goose Bay, Labrador, ACOA has an on-the-ground presence and in-depth local knowledge which allows the Agency to be engaged with local stakeholders and to make investments to address specific opportunities or challenges in the region. The Agency’s programs have been used to address the specific challenges and realities, demonstrated in the tailored approach to economic development in Labrador.

Internally, ACOA has identified Indigenous economic development (IED) as a pan-Atlantic priority file. The Agency has a long-standing coordination committee focused on sharing information and best practices across regions, with representation from all Atlantic Provinces and ACOA’s Head Office. Additionally, the Agency has recently identified a senior executive

champion for this file. Specifically, ACOA NL has mobilized on this priority through the establishment of an internal IED working group that meets regularly to share information and discuss emerging issues relating to the Indigenous community, including Nunatsiavut. Indigenous groups are aware of the IED working group and support its activities by sharing information and meeting directly to discuss matters of importance and/or mutual interest.

The Agency has worked closely with the NG since the signed Land Claims Agreement in 2005. ACOA supports the NG by investing in projects that create economic opportunities for its members and the region. ACOA employees often participate on advisory groups, planning committees, panel discussions and, specifically, the Nunatsiavut Regional Economic Development Committee. Over the last 10 years, ACOA has made significant, direct investments in Nunatsiavut, supporting 44 projects with $10.9M in ACOA funding on $57M total project costs.

These projects have included direct investment with businesses, investment in communities, and investments with partner organizations that support the populations to take advantage of opportunities. Case studies outlining ACOA’s comprehensive support for economic development projects, including not only funding, but activities to build capacity and provide advocacy support, are included in the attached Annex.

Direct Investment in Business

ACOA NL works directly with businesses owned by the Indigenous groups. Two examples include:

• Universal Helicopters – ACOA has partnered with this business to acquire Electronic Flight Bag technology to improve the operational efficiency of its specialty helicopter services business ($300K ACOA), and to undertake training initiatives aimed at improving the company’s technical and core management and leadership skills ($32K ACOA). • Nunatsiavut Construction Inc. – ACOA has partnered with this business on a variety of projects, such as establishing a sawmill operation ($181K ACOA); developing a rock crushing quarry ($262K ACOA); creating a business plan for the establishment of a concrete batching plant ($7.5K ACOA); expanding operations to create packaged cement grade aggregate ($220K ACOA); and hiring a production manager ($48K ACOA). • Grace Hotel Ltd. – ACOA has invested in this Inuit-owned business, including a recent project to hire a marketing manager to develop and implement a plan to reach a steadily growing tourism market for Nunatsiavut. The Amaguk Inn, owned and operated by beneficiary Patricia Dicker, is a 22 room inn and restaurant with approximately 20 employees most of whom are Nunatsiavut beneficiaries. The Amaguk offers traditional

Inuit experiences such as dogsledding and ice fishing, salmon fishing and tours of the adjacent Moravian Mission Complex ($50K ACOA). Investment in Communities

ACOA NL makes strategic investments in Indigenous communities to support business development and create economic opportunities by building on their strengths. Some examples include:

• The Torngat Mountains National Park (TMNP) Base Camp and Research Station – ACOA has participated in several projects with the NG to develop a tourism offering at Base Camp, including a two-year project to develop and implement a marketing strategy and product development activities ($253K ACOA contribution toward $755K total project cost for the base camp, and an additional $55K ACOA contribution toward $122K total project costs for TMNP). • The Illusuak Cultural Centre – ACOA has supported a project to undertake construction, exhibit and program development for a new Inuit Cultural Centre in Nain. ($2M ACOA contribution toward $17.5M total project costs). • Broadband – Recognizing the need for broadband in Indigenous communities to support business and community development, ACOA has worked with the NG, the Innu Nation, the Miawpukek First Nation (on the island of Newfoundland), and other supporting organizations to invest approximately $5.3M in their communities. This has included the Labrador North Microwave Overbuild project in partnership with NG, Mushuau Innu First Nation and Bell ($750K ACOA contribution toward $5.3M total project costs for 2 phases).

Investment and Work with Partner Organizations

ACOA invests in projects with other organizations that benefit Indigenous groups and their communities. An example is ACOA NL’s support for the Labrador North Chamber of Commerce to co-host the annual Northern Lights Business and Cultural Showcase. This event highlights opportunities for investment in Labrador with a focus on energy, mining, and transportation. While participation is open to all, the three Labrador Indigenous groups are important participants as their communities and businesses derive significant benefits from the outcomes of the event.

ACOA has also supported the Nunatsiavut Business Centre since 2003 to assist Inuit businesses and entrepreneurs to better participate in major developments, such as the Voisey’s Bay Mine and the Torngat Mountains and Mealy Mountains National Parks. The most recent investment is a contribution of $460K toward $753K in total project costs.

Another example of the Agency’s work with partner organizations is the involvement of ACOA NL in the development of a Nunatsiavut Energy Security Plan. ACOA NL’s Vice-President sits on the Nunatsiavut Government’s Energy Security Plan Working Group with representatives from the Nunatsiavut Government; Natural Resources Canada; Indian and Northern Affairs Canada; Lumos Energy; Newfoundland and Labrador Hydro; as well as other government representatives from the Department of Environment and Climate Change and Energy; Natural Resources Canada; and the Government of NL. ACOA Labrador field staff participate on an officials’ Working Group for implementation of the Energy Security Plan, with representatives from the Nunatsiavut Government, Natural Resources Canada, and Indigenous and Northern Affairs Canada.

Summary

ACOA continues to collaborate within Labrador, specifically with the NG, to look for ways to identify and support projects that maximize economic development opportunities.

Going forward, ACOA will continue to work with the NG and regional stakeholders to advance the following priorities:

• Position Nunatsiavut as a premier tourism destination; • Maximize opportunities related to the Torngat Mountains National Park; • Maximize opportunities related to the Mealy Mountains National Park; • Strengthen and enhance the competitiveness of the seafood sector; • Better position the NGC to create wealth and employment throughout Labrador. This includes building upon ACOA investments in NGC subsidiary companies (NGC Construction, NGC Marine, and United Helicopters), as well as through a recent direct investment with NGC for an Executive Training Program for their entire management team.

While the financial investments made by ACOA NL are important, equally as important is the value of our people who have established solid relationships in all areas of the region and work with businesses and communities on a daily basis to help them achieve their goals

Annex: Case Studies of ACOA’s Support for Economic Development in Labrador

Voisey’s Bay

The Voisey’s Bay Mine and Mill Project in Northern Labrador is an example of how different levels of government, industry, and Indigenous groups worked together to increase Indigenous Peoples’ participation and engagement in major projects. Indigenous Peoples now make up more than 50% of the workforce at Voisey’s Bay and enjoy business participation that far exceeds the targets established in their IBAs with the mine owners. Prior to Voisey’s Bay, the Indigenous Peoples’ did not have significant direct business ownership; however, due in large part to this project, there are now many Indigenous-owned businesses, and many of these companies are actively involved in resource development projects in the region.

There were many factors that contributed to positive outcomes of the Voisey’s Bay project. Notably, ACOA played a leadership role through its coordination, advocacy, and program support. For example, ACOA took a leadership role in project coordination, with the establishment of three committees – a Deputies Committee, a Voisey’s Bay Interdepartmental Committee, and the Voisey’s Bay Federal Aboriginal Coordinating Committee. These committees were instrumental in helping to coordinate the federal response in fulfilling the Government of Canada’s commitment to the company and the Indigenous groups regarding development of the project.

The Federal Aboriginal Coordinating Committee also helped to ensure that federal departments were responsive to the self-identified needs of the Indigenous groups, creating a single-window approach that would make it easier to access federal programs. Where a single-window approach was not feasible, a whole-of-government approach was employed to respond to the unique opportunities and challenges.

In addition, the Agency’s on-the-ground presence at Voisey’s Bay, coupled with its strong working relationships and advocacy efforts, helped provide input and insight into policies and decisions which lead to positive outcomes. To support the broader economic development opportunity at Voisey’s Bay, ACOA provided funding to help establish business centres for the three Indigenous groups in Labrador. These centres continue to help local community members to better position themselves for business opportunities associated with the project, as well as other opportunities for economic development in the region.

SmartICE

SmartICE is a rich and diverse partnership of community, academic, Indigenous government and industry that began in Nain, Nunatsiavut in 2012, and subsequently expanded to Pond Inlet, Nunavut in 2015. For its part, ACOA was engaged in early discussions on the project. The Nunatsiavut Government is a funding partner, and holds two seats on the SmartICE board.

Since 2013, SmartICE has secured support from sources such as the Government of NL, Polar Knowledge Canada, Canadian Northern Economic Development Agency, Indigenous and Northern Affairs Canada, industry and Indigenous partners to develop the technology and demonstrate its operation. In December 2016, the Arctic Inspiration Prize awarded SmartICE $400K to partially support its knowledge-to-action plan to expand across the Arctic through a social enterprise business model.

The next step for SmartICE is to develop a technology production and training facility in Nain, Labrador. This system is the first in the world to integrate traditional knowledge of sea ice with advanced data acquisition and remote monitoring technology, then combine these approaches to provide invaluable, data-driven insights into sea-ice thickness and local ice conditions, in near real-time. SmartICE embraces a business model that aims to expand opportunities for economic and social development in northern markets, while preserving local cultures and lifestyles. ACOA will be providing $660K through the Innovative Communities Fund toward this $1.66M project, along with SmartICE, the NG, and the Government of NL.