Indigenous Path to Prosperity

Commentary, Aboriginal Futures, Lee Harding

The saying, “The more things change, the more they stay the same,” should not be applied to First Nations bands. Those that have maintained the same tired model that has failed for decades are still failing. Ones that have adopted property rights, economic development, and self-governance have improved drastically. Unfortunately, most judges, activists, and Indigenous leaders are proposing solutions of a very different kind. Empirical data and recent examples suggest that these “answers” will actually create more harm than help.

The Community Well Being Index (CWB) issued by Statistics Canada shows that Indigenous Communities lag as far behind others as they ever did. The CWB takes census data on income, education, housing, and labour force participation, and translates that into a score out of 100. From 1981 to 2016, the CWB rose from 64.5 in 1981 to 77.5 for non-Indigenous communities and 45.0 to 58.4 for Indigenous ones. The gap of 19 points between Indigenous and non-Indigenous hardly wavered.

Between 1946 and 2012, per capita spending on First Nations grew 128 per cent faster than per capita spending for all Canadians. Money can’t solve this problem. As further proof, special claim settlements paid out $5.7 billion (inflation-adjusted) since 1974. Yet, in 2011, the mean CWB for the 269 First Nations that received a settlement and the 241 that did not was exactly the same: 59.2.

If special claim settlements are not the answer, what is? To find out, Tom Flanagan and I looked at each of the top 21 Indigenous communities ranked by their CWB scores. The findings were published in 2016 in Seven Habits of Highly Effective First Nations. In 2019, Flanagan expanded this analysis in Wealth of First Nations and Gaining Ground, Losing Ground. The result, in his words, is “a body of evidence that is not only consistent with general economic theory but has been empirically tested against results.”

The path to success is simple, but challenging. First, a band council governs with stability, doesn’t overpay itself, and keeps the band out of debt. Second, a band makes its own land management scheme and uses certificates of possession to establish property rights. Third, it levies property taxes and creates more own-source revenue. Fourth, it works with whatever opportunities its location presents, such as recreation, tourism, and natural resources. Fifth, it co-operates with the surrounding society for business ventures, contracts, and employment.

To any capitalist, this makes intuitive sense. However, capitalists are hard to find amongst academic and activist voices more fond of Marxism, social justice, and environmentalism— plus an endless bashing of colonialism. Calls for industry and initiative are drowned out by ideology.

Judges educated in these perspectives have infused an added significance to the “honour of the Crown” when interpreting treaty obligations. They have emphasized that governments and businesses have “duty to consult” Indigenous bands when resource development affects their interests. The result of these changes is great legal uncertainty for corporations. Many of them sign big-dollar Impact Benefit Agreements (IBA) with bands to gain their consent for projects. 

This environment is not as good for Indigenous interests as it might seem. High transaction costs slow economic growth for everyone. Worse still, even when many First Nations agree to a project, a few dissenting ones are all it takes to kill a project in court. This happened TransCanada’s Mackenzie Valley Pipeline project and Enbridge’s Northern Gateway Pipeline. Both projects were scrapped. Even now, the Trans Mountain Pipeline expansion remains undone due to court injunctions related to consultation. More than 40 Indigenous groups have signed IBAs but won’t get a cent until the project goes forward.

The United Nations Declaration of the Rights of Indigenous Peoples would ensure even more futility, should it ever be fully implemented in Canada. A codified right for First Nations to veto resource development could mean precious little takes place.

Another current popular suggestion is to share all resource revenues with First Nations. This is hard to justify and even harder to implement. Constitutionally, resources are provincial jurisdiction, and the Indigenous are federal responsibility. Disputes on how such benefits should be shared and to whom would also be contentious, and could lead to more court proceedings.

Flanagan points out another potential negative consequence. For all its problems, the current situation has one advantage. It incentivizes bands to enter into agreements with corporations that provide training and employment opportunities when they develop projects on or near native land. If bands got money from all resource projects, they might prefer that their own lands stay pristine and the development happens elsewhere. In this scenario, revenue sharing would kill the kind of economic partnership reserve residents need for better lives.

Chiefs and band councillors can be excused if they talk more about rights and needs than responsibilities and initiative. Band councillors and federal employees are the only winners of the reserve system and its inherent model of dependency. It is always easier to take a dollar than to earn one, or to be a well-fed cat instead of chasing mice. Even so, if the Indigenous and their leadership don’t take the proven path to prosperity, First Nations will stay in second place.