VANCOUVER—To mitigate the risks involved in the $20 billion governments have earmarked for Indigenous loan guarantees to facilitate participation in infrastructure projects, lessons should be learned from past successes and failures, finds a new study published by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“Loan guarantees involve real risks, and so it only makes sense to review the history of past successes and failures to better understand practical guidelines for government’s role in these larger infrastructure projects,” said Tom Flanagan, senior fellow at the Fraser Institute and author of Risk and Reward: Indigenous Loan Guarantees for Resource Megaprojects.

The study documents the success—and failures—of loan guarantees for Indigenous participation in a variety of projects in recent years, and lays out a series of policy guidelines that could mitigate risks associated with loan guarantees, particularly those for larger infrastructure projects, including:

• Requiring First Nations to invest some of their own wealth, such as settlement trusts.
• Coordinating between federal and provincial programs.
• Using independent review of proposals to minimize political influence.
• Monitoring the indebtedness of First Nations.
• Using loan guarantees for new projects rather than for the takeover of existing projects.

“If Canada is truly committed to building a new generation of resource megaprojects, and if First Nations are to play an important role in the ownership of this infrastructure, then policymakers need to take steps to mitigate the risks inherent with government loan guarantees,” Flanagan said.

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