Lack of property rights handcuffs Aboriginal opportunity

In the midst of the Cold War, Ronald Reagan used to say you could tell a lot about a country by what happens when its gates are flung open. If people flowed in, it was an obviously desirable nation; if they ran out, not so much.

Reagan meant it as a criticism of collectivist countries, where almost every sort of freedom and opportunity was restricted, including economic, religious, media, and freedom of association (i.e., to belong to a union or some other group).

Decades later, the question should be applied to Canada’s reserves. The Assembly of First Nations (AFN) just recently re-elected Shawn Atleo as National Chief, and he, along with his colleagues from reserves, face a significant challenge: how to foment economic opportunity for Canada’s aboriginal peoples, or at least, those who choose to live under such chiefs on reserves.

At present, many reserves have a standard of living that is sub-par, far below that which exists in surrounding non-native communities.

One key reason is a lack of property rights. Consider this bit of an anachronism from the Indian Act on property: No Indian is lawfully in possession of land in a reserve unless, with the approval of the Minister [of Aboriginal Affairs], possession of the land has been allotted to him by the council of the band.

That section of the Act has been responsible for much mischief over the years. Imagine if in any other city, before you could buy a house, a deal must first be struck between a federal politician, and your local mayor and her supporters. Consider what happens when you’re part of the Capulet clan and the people in charge at City Hall are part of the Montague family.

This, in a nutshell, is only one of the problems that exist on reserves, the lack of full property rights, ones not subject to chronic delays and manipulation by politicians. Property rights (especially when respected) contribute to economic development and wealth creation. For example, owning a home leads to wealth accumulation. And as a Peruvian economist pointed out years ago, those homes are then used as collateral in starting a small business, which also furthers prosperity.

There are other problems with reserves. The remote location of many doesn’t help their residents prosper. Outside of reserves, hamlets, villages, towns and cities only exist if some natural economic reason for people to live in a distant location exists. Absent that, the result is a ghost town.

Given the one-two punch of a lack of property rights and the remoteness of many reserves, it is not surprising that the statistics about reserves lag behind non-reserves, including for Aboriginals themselves.

Consider the latest available results on median earnings for “North American Indians”—the official Statistics Canada description (and to distinguish that cohort from Metis, Inuit and other Aboriginal peoples).

In 2006 (breakdowns from the 2011 census are not yet available), the median earnings for those Aboriginals on-reserve who worked full-time was $29,014. That compares to $37,447 off-reserve—a difference of more than $8,000.

The same pattern appears when one compares individual reserves with nearby cities. For example, Aboriginals from the Stoney band near Calgary who work full-time have median earnings of $21,265; those Aboriginals who work full-time in Calgary have median earnings of $38,094.

But even those statistics don’t fully reveal the state of many reserves, as labour participation rates on reserve are low (and unemployment rates high) compared to non-reserve communities.

The Kahnawake reserve across from the city of Montreal demonstrates this: participation in the labour force was 56 per cent for Aboriginals on reserve compared to 66 per cent for Aboriginals in Montreal. Unemployment for Aboriginals on the Kahnawake reserve was twice that of Aboriginals living in Montreal (16.8 per cent versus 8.7 per cent).

Such statistics might be why out of almost 1.2 million Canadians who identified themselves as Aboriginal in the 2006 census, (again, the most recent one available with detailed breakdowns) just over 26 per cent live on a reserve.

Even among the Aboriginal group most likely to live on reserve, the “North American Indian” category, only 43 per cent live on reserve. That was down from 45 per cent in the 2001 census.

Of note, the absolute number of Aboriginals living on reserve is up. But off-reserve Aboriginal populations have grown even faster, thus the ever-higher proportion of Aboriginals off-reserve.

The numbers reveal something rather important about the desirability of many reserves. Ronald Reagan could have guessed at why: a lack of opportunity.