National Aboriginal Day—What drives economic growth for First Nations in Canada?

Today is National Aboriginal Day, an occasion to recognize the important contributions of Aboriginal peoples of Canada. Unfortunately, Canada has a sad history of imposing change on Aboriginal peoples against their will.

The Indian Act is one glaring example, as was the introduction of residential schools. However, this coercive pattern is changing.

For instance, how many Canadians and First Nations are aware the most important and effective pieces of modern legislation affecting First Nations peoples were actually introduced by First Nations?

In the mid-1960s, Manny Jules of Tk’emlups Indian Band in Kamloops, B.C. watched as his father, the chief of the community, struggled with tax issues unique to reserves. Outside businesses operating on reserve lands wanted to get roads ploughed in the winter and had to deal with bureaucracies at all levels of government. In the mid-1970s, when Jules became a band councillor, residents of an industrial park on his reserve were avoiding paying municipal taxes. The band could not tax businesses and the nearby municipality could not remove the businesses, so the band used its own funds to pay for municipal duties.

Jules led the passing of the so-called 1988 Kamloops Amendment to the Indian Act, allowing bands to collect property taxes on reserve. This was Canada’s first Indian-led change to the Indian Act. Taxation is one of the cornerstones of responsible and self-reliant government that First Nations lacked.

Now, more than 100 bands collect taxes that improve local infrastructure and spur economic development. First Nations improved their own public services with independent revenue streams. The development of independent First Nations taxation authority helped lead to the establishment of the First Nations Taxation Commission, a First Nation-led, but Ottawa-funded, public institution that helps bands develop taxation and other fiscal powers.

The Aboriginal Economic Development Board suggests that First Nations with real property taxation bylaws have improved economic outcomes and bands with bylaws for a longer period of time tend to perform significantly better than bands without. The introduction of First Nation taxation challenged the taboo many First Nations had over taxation, being as they are exempt from income tax under the Indian Act. Property rights taxation under the Kamloops Amendment opened up taxes on non-Aboriginal businesses on reserves, not direct taxation of band members. However, many communities now tax members directly, creating a fiscal relationship of accountability with their own members.

Another significant First Nation-led change was over land management. The Indian Act placed land management authority in the hands of Ottawa, not bands. This cumbersome system placed obstacles on First Nations trying to put their lands towards good economic use. In the early 1990s, a group of indigenous leaders, led by Chief Robert Louie of B.C.’s Westbank First Nation, approached Ottawa about economic obstacles created by the Indian Act. In 1994, these chiefs approached Indian Affairs Minister Ron Irwin and suggested 13 bands remove themselves from the 34 land management provisions of the Indian Act to develop their own land codes. Finally, in 1999, the federal Liberals passed the First Nations Land Management Act (FNLMA). Now, close to 100 bands have entered the land regime. The Aboriginal Economic Development Board concludes that bands under FNLMA have better outcomes than bands not under it.

According to Census 2006 data, the average income of $22,883 for First Nations people living in communities operational under the FNLMA was $4,554 higher than average incomes for First Nations people living in communities not enrolled in the FNLMA.

The latest First Nation-led change has not been implemented. Manny Jules’ First Nations Tax Commission has proposed a First Nations Property Ownership Act (FNPOA) that would transfer underlying land title from the Crown to a willing First Nation that can choose to create freehold title for band members. The FNPOA is partly inspired by an experiment of the B.C. Nisga’a Nation that created the first Indigenous private property regime.

On this National Aboriginal Day, Indigenous peoples should celebrate taking their destiny into their own hands.