Ottawa Should Introduce Native Property Law

Aboriginal Futures, Canada, Commentary, Joseph Quesnel, Property Rights, Uncategorized

The post-Shawn Atleo Aboriginal landscape is a perfect opportunity for Ottawa to embark on some bold new First Nations policy.

Finally introducing a First Nations Property Ownership Act would certainly count as a bold move.

In 2011, the federal government announced its intentions to introduce such legislation.

In the tabled pre-budget report, the House of Commons Finance Committee called for the federal government “to examine the concept of a First Nations Property Ownership Act as proposed by the First Nations Tax Commission.”

That proposal envisioned a regime where underlying title to reserve lands would be transferred from the Crown to a participating First Nation.  That First Nations government would then choose whether or not to grant that land to individuals living on reserve.

However, with an election closing in, Ottawa has the opportunity to finally introduce this kind of legacy legislation.  If the Conservatives are defeated at the polls, it is not at all clear whether the Liberals or the NDP would introduce such legislation.

The federal government has expended considerable political capital on the issue of First Nations education.  However, with that initiative floundering, perhaps it is time to re-focus attention on another issue:  property rights for reserve residents.

According to the conception favoured by the federal government, the chief advantage of property rights, is that it will be a voluntary move.  First Nations must opt into the initiative; it is not imposed from above.  Although the Assembly of First Nations has not embraced the idea and in 2010 chiefs opposed it, it would be unlikely they would oppose a voluntary move.

Voluntary options seem to have a good track record among First Nations.  For example, research by the National Aboriginal Economic Development Board reveals that First Nations that opt into the First Nations Land Management Act (FNLMA) tend to economically outperform those that do not.  The FNLMA allows bands to opt out of the land management provisions of the Indian Act.  A KPMG study of 17 bands operating under ¬FNLMA revealed these communities generated $101-million in investment and 2,000 jobs in the 17 communities.

The other voluntary move is on-reserve property taxation.  Under Section 83 of the Indian Act, or under the authorities of the First Nations Fiscal Management Act (FSMA), First Nations can tax property. 

The National Aboriginal Economic Development Board found that First Nations that have real property taxation bylaws tend to have better economic outcomes than those that do not. 

But, can full property rights advance First Nations?  Canadian studies have already confirmed that they can.

Fiscal Realities Economists, a B.C.-based consulting firm that advises First Nation developers, studied the potential of 68 First Nations in British Columbia.  Their research revealed that if only 40 per cent of the land of these First Nations were converted to fee-simple ownership (land that can be transferred, sold or leased to anyone without restrictions and used as bank collateral) and implemented other reforms, it would generate $3.8-billion in increased land values over 15 years.

The issue is not really hypothetical because the existence of mixed land tenure in the United States illustrates the difference that full property rights can make to indigenous communities.

Fee simple lands were first created on Native American reservations during the days when the U.S. federal government decided to engage in a top-down privatization of reservations under the Dawes Allotment Act.  Under the Act, tribal lands were carved up and given to families while the rest was then made available to non-indigenous settlers.  Allotment came to an end in the 1930s, but it left a legacy of differing forms of land tenure.  Today, we see the legacy in the mix of fee simple, individual trust and tribal trust lands.

Two economists, Terry Anderson of Montana State University and Dean Lueck of the University of Arizona, conducted research on how the differing forms of land tenure affected output.  In terms of value of output per acre and agricultural productivity, fee simple land ownership came out on top.  However, land that was in a trust status reduced output by more than 50 per cent.  It was clear which form was superior.

Fee simple property rights are not a panacea but they will certainly help ailing First Nations communities.

Clearly, Ottawa can help advance First Nation economies if it embarked on this initiative now.