The federal government has changed its additions to reserve policy (ATR) to streamline and improve the process for changing First Nation-held land into urban reserves.

An urban reserve is land that Ottawa has designated as a First Nation reserve in an urban setting and that maintains the tax-exemption status of reserve lands. Urban reserves are controversial because they are tax exempt and critics believe they present an unfair advantage to non-Aboriginal businesses.

However, if done properly, urban reserves can greatly spur First Nation economic development because they allow bands to exploit economic opportunities unavailable on traditional reserve lands. In fact, an upcoming study found that Saskatchewan urban reserves have been very entrepreneurial and ambitious, featuring casinos and other recreational facilities, restaurants, shopping centres and gas stations.

So, streamlining and improving the urban reserve conversion process is a positive development for all First Nations that are ambitious and entrepreneurial-minded.

However, the federal government should recognize the inherent limitations of reserve lands when they reform this policy and expand it to include the option for First Nations to own land outright.

In 2012, Manny Jules, the chief commissioner of the First Nations Tax Commission (FNTC), testified before the Standing Senate Committee on Aboriginal Peoples on the topic of the federal additions to reserve policy. Jules succinctly stated that, “The problem with ATRs is that they make formerly productive lands unproductive by converting valuable fee simple land into Indian reserves. Reserve lands are generally about one-tenth as productive as other lands in Canada. They are subject to systems of governance and land tenure that make it very difficult to do business or attract investment. People who grow up on unproductive lands are going to be less productive themselves. The current ATR process spends enormous government resources that, at the end of the day, make us less productive.”

So, the problem is the reserve lands themselves.

For Jules, the urban reserves policy creates an unfair dilemma for indigenous communities. If they choose to convert the land to a reserve they lose the value, but gain jurisdiction over the land. But if they want to maintain the best value, they keep the land in fee simple (the highest form of property rights in Canada), but they lose jurisdiction.

The FNTC proposed First Nation property rights legislation to solve this problem so that First Nations can get both value and jurisdiction. The proposed legislation would transfer title to First Nations who would gain jurisdiction over the land. First Nations then can preserve the market value of their ATRs and have jurisdiction at the same time. Private property ownership, Jules asserted, will make First Nations lands and individuals more productive.

The federal government should work with indigenous communities to make true property ownership available to ATRs. Bands should have the option to maintain lands in less-valued reserve status, as well as in full fee simple status, to maximize their full value to the community. Indigenous communities should have as many tools as they want in their economic development toolkit.