Study says resource boom helping Aboriginals, but leaves unanswered questions

Blog, Poverty, Joseph Quesnel

A major study by TD Economics reveals how the resource boom is working greatly to the advantage of Aboriginal peoples.

The important points being raised in the media is the explosion in Aboriginal business activity and income growth.  In particular, much is being made about this finding: “The combined income of Aboriginal households, business and government sectors will reach $24 billion in 2011 and could eclipse $32 billion by 2016. If achieved, this income would exceed the level of nominal GDP in N. & L. and PEI combined.”

What is significant is that over the past decade, there has been a major shift in the Aboriginal labour force towards the natural resource sector (oil and gas and mining) and the construction and development that service these industries.

Increased resource activity, a shortage of skilled labour to serve these industries, and legal obligations imposed by courts on government to consult and accommodate First Nations when developing on their lands, are all factors propelling Aboriginal business activity forward.

However, despite all this good news, at the end of these media accounts of this study is the caveat that despite all this activity per capita incomes for individual Aboriginals still continue to lag behind. The Canadian Centre for Policy Alternatives, quoted in the report, places income at about 30% lower than median Canadian averages.

Driving this resource and income boom are Aboriginal small businesses, but especially economic development corporations (EDCs). These firms are more often than not the development arm of an Aboriginal government, as the study states.  The study mentions that often EDCs are owned outright by First Nation governments.

Looking deeper, we need to ask if these EDCs are being run as efficiently as they can be.  It is recognized in the economic literature that governments should not be in the business of business.  Unless of course these firms are completely insulated from political pressures or influences. This often involves an independent board of directors answerable to business managers, not politicians.

Businesses should be looking at the bottom line, making a profit and hiring the best people– they should never become default job creation schemes or lose sight of their profitability.

The report also prominently mentions education as a main driver of income growth for Aboriginals. This is true, to an extent. But, the generation of good jobs on the Rez involves reforming laws to make it easier for entrepreneurs and investors to operate on reserves and businesses need to be free of politics. In other words, you need a vibrant business support supported by good and fair rules and institutions or educated Aboriginals will still have limited job prospects on-reserve.