Publications and Reports
Aboriginal people are the least prosperous demographic group in Canada. In life expectancy, income, unemployment, welfare dependency, educational attainment, and quality of housing, the pattern is the same: aboriginal people trail other Canadians. And within the category of aboriginal people, another pattern also stands out: First Nations (status Indians) do worse than Métis and non-status Indians; while among First Nations those living on-reserve do worse than those living off-reserve. These patterns have been more or less stable for decades. Aboriginal people and First Nations are progressing on most indicators compared to other Canadians, but the progress is painfully slow, and it will take centuries to achieve parity at these rates of change.1
A market is where voluntary and efficient exchange between a buyer and a seller takes place and this exchange is facilitated by some informal and/or formal rules and infrastructure. In section 1 of this paper we use anecdotes drawn from modern and historical markets to list six identifiable characteristics of market cultures:
Trading networks (exports and imports)
Public Infrastructure to support trade
Commercial laws, standards, and dispute resolution processes
Mediums of exchange
This study analyzed investment projects on some of the best situated Indian reserves in Canada and compared them to projects off-reserve. It found that the lack of opportunities on reserve has resulted from the imposed system of First Nation governance, which has artificially raised the costs of doing business. It can cost four to six times as much to put together a major investment project on reserve and it takes much longer to take a project from the proposal to operating stages. As a result, even favorably located reserves have low business presence and see potential investment diverted to adjacent jurisdictions even when these alternative locations are less favorably sited.
A number of First Nations are interested in having residential, commercial, or industrial development on their lands. They want to have the open market work on their lands. Some First Nations are perplexed, however, when their open market lands are not valued as high as nearby and comparable non-First Nation lands. It seems unfair. This sense of injustice was confirmed when in 2000 the Supreme Court ruled in the Glass decision that certain leasehold properties within the Musqueam First Nation should be valued at 50% of comparable off reserve properties. A number of First Nation commentators were concerned that this meant that all First Nation open market land would be valued at 50% of comparable off reserve land.
The residential real estate market on First Nation lands is not effective. Based on a statistical analysis of residential assessment data from a sample of 68 First Nations collecting property taxes in BC, this premise is not rejected. The reasons for these lower values are well established in economic theory and law - uncertainty related to tenure and governance lowers real estate values.
The objective of DIAND social service delivery is to achieve comparable standards to that of the relevant province or territory. This research compares social service delivery standards on reserve to those off-reserve by comparing funding determination methods and service delivery funding levels between DIAND regions and the relevant province or territory. First Nations have a significant stake in the research. They want to be adequately resourced to deliver social programs of comparable quality to their neighbours. Moreover, they want to be adequately resourced so that social needs do not need to be subsidized by other revenues. This interest is shared with the Indian Taxation Advisory Board and the First Nation Finance Authority. They expect that other local revenues will not be used to subsidize social service delivery because this would reduce the First Nation credit rating and potentially harm economic development initiatives.
Financing First Nations Infrastructure: the Use of PPPs - Public-Private Partnerships and First Nation Governments (2004)
This paper explores the potential for applying Public-Private Partnerships (PPPs) in a First Nation context. A Public-Private Partnership is not a privatization. It is a situation where government has chosen to provide a service or infrastructure project in partnership with a private sector partner.
A popular bumper sticker in the early 1990s stated, “Think Globally, Act Locally”. It was meant to be a statement about environmental awareness, but it is also a euphemism for what it takes to succeed in the 21st-century economy. It says that the health of local economies, no matter how small, cannot be separated from their connection to the global economy.
This paper is a successor to Expanding Commercial Activity on First Nation Land and Turning on the Taps. It will focus on the role of the lease document, in the context of the larger land administration system, in facilitating economic development on reserve. Clear, concise, and equitable lease documents can help reduce the cost of doing business on reserve, thereby stimulating economic development and increasing the First Nation property tax base. Furthermore, the Glass decision, which held that that land interests in the Musqueam reserve are worth 50% of comparable fee simple lands off-reserve, has important implications for the ITAB since First Nation Taxation Authorities could potentially lose 50% of the value of their property tax base. This paper will examine how the use of good lease documents can increase property values on reserve and reduce the gap between on reserve and off reserve assessed values.
Recent research projects conducted under the direction of the Indian Taxation Advisory Board (the ITAB) and the Department of Indian Affairs Research and Analysis Directorate have identified a lack of infrastructures such as water and sewer treatment and distribution systems and roads on First Nations land. The under-provision of infrastructure contributes to the high costs of doing business on First Nations’ land. The lack of infrastructure, and more specifically, a lack of any policy or regulation that contemplates the provision of such infrastructure, increases uncertainty for potential investors and hence increases the level of risk of any investment.
Most Canadians support the concept that First Nations have a right to self-determination. While it is supported in principle, there has been little agreement on what form the First Nation government should take. This research contemplates a First Nation government that assumes tax jurisdiction as well as associated expenditure responsibilities. The principles and benefits of such an approach are discussed and these are compared and contrasted with current federal and provincial policies. Case studies of tax and related expenditure models are used to illustrate the tangible benefits of such an approach. The first case study examines the Indian Taxation Advisory Board’s use of budget-based tax rates in property taxation regimes. The other case studies examine the Sliammon and Kamloops community improvement fees.
The costs of doing business on First Nation land are high for a variety of reasons. The Indian Taxation Advisory Board retained Fiscal Realities Economists to identify the competitive challenges First Nations face and develop responses that will lead to improved economic development. A multi-faceted approach will be required to turn on the taps. The table below describes some of the projects, processes and institutions that are working to lower the costs of doing business on First Nation land.
Opponents of First Nation governments often argue that what they advocate is in the best interests of First Nation persons. The usual argument is that First Nation governments themselves force many people to leave the reserve in order to find opportunity. The implication is that First Nation governments are limiting their prospects and so the solution is to do away with these governments.
Indigenous people in Australia, New Zealand, and the United States have socio-economic characteristics very similar to Canada's Indians. They also suffer from sub-standard public services and infrastructure. Each of these peoples also has movements for self-government or "self-determination"; outstanding claims, and demands for improvements in the infrastructure and services they receive. Each of these peoples desires a land base and more powers. They all wish to use these powers to improve their economic opportunities and protect cultural sites. These aspirations are creating political pressure to improve their place within their respective national fiscal frameworks.
The paper finds that First Nations require a new fiscal relationship if they are to ever develop tax regimes and significant revenues from these. A new fiscal relationship is a key to developing incentives to tax and, more importantly, developing the tax base on First Nation lands. A new fiscal relationship could therefore provide an opportunity for First Nations to greatly improve self-sufficiency and economic opportunity.