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GN gives non-Inuit firms one-year NNI extension

"Some ministers are more interested in keeping big non-Inuit companies happy than supporting genuine Nunavut businesses," NTI says

PATRICIA D’SOUZA

After fierce lobbying from big northern businesses, the Government of Nunavut has extended the grace period for companies that don’t qualify for bid adjustments under the Nunavummi Nangminiqaqtunik Ikajuuti (NNI).

The business incentive policy, drafted in 2000, gave northern companies that qualified for preference under a previous policy two years to come into compliance with the new rules. But that two-year period expired April 1.

The additional one-year extension gives companies who fear they will lose business without the adjustment — including Canadian North, First Air and Tower Arctic Ltd. — time to change their company structures or launch an appeal.

"In the last sitting, there was some concern about the grandfather clause," said Peter Kattuk, minister of public works, the department responsible for the NNI.

"MLAs were also concerned. We listened to what they were saying. At the political level, we made a decision that will give [non-Inuit companies] more transition time."

In a letter tabled in the legislative assembly on March 7, the first day of the sixth sitting, John Jacobsen, the Montreal-based president of the Tower Group of Companies, provided tables showing the amount of money the company paid for goods and services bought locally ($5.3 million), taxes and utilities ($460,000) and charitable donations ($50,000).

"We request your assistance in asking the legislative assembly to consider the extension of Section 20 until such time as a full review can be completed, as mandated under sections 16 and 17 of the NNI policy," Jacobsen wrote.

"With time running out, we ask for this extension in recognition of our long-term and ongoing commitment to Nunavut."

The extension might give Tower Arctic more time to comply with the policy, "but that won’t be easily done," Jacobsen said in an interview this week.

"There is no one of Inuit ancestry who has the means to buy 51 per cent of our company. That leaves the development companies, which don’t have the desire," he said.

A third option, he said, would be to set up a storefront operation in Nunavut, but there is no guarantee that it would work. "NTI may say no. It still has to pass an evaluation process."

Section 17.4 of the NNI says that a committee made up of representatives of the GN and Nunavut Tunngavik Inc., who together drafted the policy, "conduct a comprehensive review at the end of the first three-year period and every five years thereafter."

The government’s one-year extension will end just as the NNI comes up for review.

According to NTI, the GN "surrendered to lobbying by non-Inuit companies that were given a chance but haven’t bothered taking steps to qualify them as genuine Nunavut firms," NTI president Cathy Towtongie said in a press release.

The decision shows "that at least some ministers are more interested in keeping big non-Inuit companies happy than supporting genuine Nunavut businesses," the release said.

Towtongie is also concerned that the GN acted alone in its decision. "Under the land claims agreement and the NNI policy itself, the GN has a clear obligation to consult with NTI before changing the policy," she said.

Kattuk would not say why the decision was not made jointly with NTI.

NTI called for immediate consultations — instead of a unilateral extension — which could have benefited some firms more than a one-year reprieve.

In a presentation during an NTI board meeting in Coral Harbour last month, Yellowknife-based Canadian North, a joint-venture between Northern Transportation Company Ltd. and Air NorTerra Inc., said its situation is unique — obeying the spirit of the policy, but not the rule.

In a letter to Baker Lake MLA Glenn McLean tabled in the legislative assembly in February, Carmen Loberg, president of Canadian North said his company is 100 per cent Inuit-owned.

However, because ownership is divided equally between the Inuvialuit of the western Arctic and the Inuit of Nunavut through Nunasi Corp., the company does not have the majority ownership required to benefit from the NNI.

"We have been advised that our interim status under the NNI policy will expire in April of this year and we understand there is no mechanism for us to appeal that situation," Loberg wrote.

"I urge you to explore whatever options might be available to provide an extension to the interim NNI qualification until such time as there is a review or an appeal process in place."

Kattuk said the government is likely to suggest changes to the NNI during the comprehensive review, but he declined to specify what they might be. "We still have one more year to talk about it. Probably there will be some changes one year from now. There will be some changes," he said.

In an e-mail sent on Monday, the first business day after the GN extended the policy, Loberg said, "Canadian North is happy about the decision to extend the NNI clause for a year."

Loberg, who is on vacation in a remote location off the Vancouver Island coast, was unavailable for further comment.

The NNI gives preference in awarding government contracts to companies that meet certain requirements. Nunavut firm status, worth a 14 per cent bid adjustment, means the company is majority-owned by Nunavut residents, maintains a "resident manager," or does most of its management and administrative functions in Nunavut.

Local status, gives a three-per-cent adjustment to firms based in the "subject community," or that employ a resident manager in the community.

Inuit firm status, also worth three per cent, applies to those companies in which Inuit hold more than 51 per cent of controlling interest.

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