Can Property Rights Heal Native Reserves?

Worth A Look, Aboriginal Futures, Frontier Centre

Canada doesn’t do flamboyant polemicists anymore — certainly we have no one as gratuitously offensive as Ann Coulter and her suggestion that Muslims travel by camel, rather than fly.

Tom Flanagan has had his moments, though. A decade ago, his book First Nations, Second Thoughts prodded the politically correct conventional wisdom-by-suggesting aboriginal Canadians were merely “the first immigrants,” a sacrilege compounded by the contention that Indians had been bested by a higher degree of civilization. To many he appeared to be arguing the only sensible native policy was assimilation — a charge he denies.

The University of Calgary political scientist, who left academia to run Stephen Harper’s election campaign in 2004, was derided as a racist and became a hate figure for many in native circles.

Yet, Mr. Flanagan has long confounded his critics by adopting unexpected positions and he’s back with an important new book that advocates a simple legislative change that presents perhaps the single best opportunity to improve living standards on native reserves across this country.

In an interview yesterday, Mr. Flanagan said the vision of the political right generally favours assimilation, as did the original vision of the Indian Act, which saw reserves as temporary.

“Some of my conservative friends may read the book and feel I’m letting them down. But I never actually did endorse individual assimilation, even though it was attributed to me. It should be clear now that I’m not saying that, and that there should be a meeting of minds to find common ground with aboriginal communities. The original vision of the Indian Act simply failed — history has shown it’s not going to happen. First Nations are not going away as communities.”

The thesis is all the more potent because it is co-authored with Manny Jules, chief of the First Nations Tax Commission and a former chief of the Kamloops Indian Band, as well as economist André Le Dressay and political scientist Christopher Alcantara. TODD KOROL / NATIONAL POST FILES Political science professor Tom Flanagan believes a simple legislative change presents perhaps the single best opportunity to improve living standards on native reserves across Canada.

The authors adopt the approach pioneered by Peruvian economist Hernando de Soto, who has argued that defective property rights breed poverty in the Third World. They argue that Ottawa should introduce a First Nations Property Ownership Act to encourage the widespread ownership of private property on reserves — a move they say would free up “dead capital” and increase prosperity among Canada’s poorest citizens.

The legislation being suggested would transfer the underlying ownership of land on native reserves that opt into the program from the Crown to those bands. Once Indian bands legally own their own land, they would be free to issue individual property titles on homes and commercial real estate that could then be bought and sold the same way as across the rest of Canada.

The hope is that the introduction of more widespread market practices would help alleviate a chronic housing situation on reserves where, according to Statistics Canada, one in four homes is deemed “crowded” and nearly half require major repairs. The authors also contend that “with the stroke of a pen,” First Nation land values would rise to a level in line with the rest of Canada. A study of 68 First Nations by Mr. Le Dressay’s firm suggested that the benefits in increased real estate values, new employment and booming property tax revenues would total $5.7-billion over 15 years. The benefit to Canadian taxpayers would be a reduction in the $4-billion they pay annually to combat poverty on reserves.

The authors say that the bureaucracy of the Indian Act puts off investors, who are deterred by uncertainty, extra legal work and the risk of litigation. Moreover, aboriginal entrepreneurs find it difficult to fund their businesses because the lack of property ownership means they can’t use homes as collateral for a business loan.

Several types of private property rights do exist on Canadian reserves, including customary rights, certificates of possession and leases but the authors argue that all have their shortcomings — customary rights are often undocumented, certificates of possession can only be transferred to other band members and leases, by their nature, are temporary.

New legislation would introduce the rules, powers and administration that would reduce the costs of completing real estate deals on reserves. The book details one case study where it took 53 months to process the development of a Real Canadian Superstore on Squamish Nation land in B.C. A similar development in Vancouver would have taken 14 months. “It suggests the cost of establishing marketable property rights on First Nations land is at least four times more expensive… Transaction costs that high are likely to lead to market failure,” wrote Mr. Le Dressay.

There are, of course, many First Nations that do not have the competitive advantage of resources, labour or valuable land near expanding cities but Mr. Le Dressay said that even on these reserves, there are opportunities for local ownership. “The first First Nation to do this [offer individual property rights similar to elsewhere in Canada] is the Nisga’a, which is located 680 kilometres north-west of Vancouver. If they think it’s worthwhile, then it has applications across the country,” he said.

The dependency of many Indian bands on Ottawa did not come about by accident. The Department of Indian Affairs banned property tax collection in 1875 — a prohibition that was not overturned until 1988. By 1918, further amendments to the Indian Act banned traditional methods of redistributing wealth, prompting Calgary MP Thomas Mitchell Tweedie to say: “The Indian may be satisfied and he may not. My personal view with regard to the Indian is that he is the ward of government and, being a ward, he is bound to accept the treatment given him.”

It’s clear that many bands have no desire to be the wards of state any longer. Mr. Jules said many individuals he has talked to wish to escape the Indian Act, which has patently failed to bring Canada’s natives into the 21st century. However, it seems their leaders still have to be convinced. Mr. Jules said he has discussed the idea with Shawn Atleo, national chief of the Assembly of First Nations, and has been invited to a policy conference to discuss the proposal. The fear appears to be that a system of individual title could see band members sell their homes or businesses outside the First Nation, which could reduce native land reserves and lead to the very assimilation they most fear.

But Mr. Jules said the proposed reform is not about natives giving up their identity. “Cultures, if they’re static, are going to be in the dustbin of history. I don’t think our cultures are like that — our cultures are dynamic, they change with the times and we embrace new technologies,” he said. “First Nations are tired of being a ward of the federal government. The antiquated conditions of the Indian Act were passed the 19th century. We should be firmly part of the 21st century and that means creating modern institutions.”

The federal politicians seem to be onside — in the 2008 election, both the Liberal and Conservative parties supported legislation to create a First Nations lands-title system. Mr. Jules said that there is also interest in the business community from banks and chambers of commerce.

If native leaders buy into the concept, it seems to be an idea whose time has come. It will be richly ironic if Tom Flanagan, the bête noir of many aboriginal activists, is instrumental in its passage.