More money won't solve Aboriginal woes

If Canadians wonder why little progress has been made in bringing prosperity to First Nations communities, they just received another reminder from an Ottawa-based think tank that reinforces the status quo approach to Aboriginal policy: spend more tax dollars.

In a recent column published in PostMedia papers ('Catching up on Aboriginal services is not cheap,') Brian Lee Crowley of the Macdonald Laurier Institute took issue with and was highly critical of our recent study, which documented a portion of the tax dollars spent on Aboriginal matters.

Among a number of problems in the column, Crowley contradicts himself by simultaneously arguing that our study on Aboriginal spending adds 'little to the debate' while also discussing the importance of Aboriginal spending. Either it is important to measure spending on Aboriginal people or it isn't. It can't be both.

Our study provides critical insights into the trend of taxpayer spending on Aboriginal Canadians. For example, the study, conservative in its numbers, (given that only provincial government spending and three federal departments were examined) found that federal government program spending on all Canadians, inflation-adjusted, rose by 387 per cent per capita between 1950 and 2012.

In contrast, inflation-adjusted spending on Aboriginal matters by just one federal department Aboriginal Affairs and Northern Development Canada  rose by 882 per cent per First Nation's person during that same period.

That successive federal governments financed such a jump in spending surely matters to any debate over funding for Aboriginal Canadians. This is especially useful going forward as it highlights that increased funding often has not resulted in increased prosperity or better social outcomes for Aboriginal Canadians.

Crowley further asserts that government spending rose due to our "commitments under treaties and the Constitution." However, some of the increases in government spending on Aboriginal matters (and chronicled in our report) have nothing to do with treaties or the Constitution. For example, according to the federal government, supplementary medical and dental benefits for almost 900,000 First Nations and Inuit persons (about $1,200 each) are not required by any treaty or by the Constitution.

On education, Crowley asserts (without providing any empirical evidence) that "federal spending is too low." But on a per capita basis the federal government spends roughly $14,000 per First Nation student compared to between $8,933 and $9,774 spent by the provinces on non-Aboriginal students. Thus, to suggest that current spending is 'too low' and imply that additional funding alone will improve First Nations education without any empirical evidence or explanation is insufficient. In fact, in a 2012 book Crowley himself argued that more government funding doesn't necessarily result in better education.

Crowley also argues that federal transfers to provinces are a justification and a model for federal-First Nations transfers. He notes the example of Prince Edward Island. As it happens, federal transfers are equivalent to 65 per cent of Prince Edward Island's own-source revenues, making PEI the most federally dependent province in the country. This is no model for First Nations to follow who wish to be free of Ottawa's fiscal shackles.

Over the past decade, the Fraser Institute has charted the course for Aboriginal policy reform in successive reports. That includes studies on why property rights matter on reserve, and how those same rights, the rule of law, and tax collection powers can be the difference between Aboriginal communities that succeed and those that do not. Also, in November, we released a study that identified how over 90 First Nations in Western Canada can profit from the $650 billion in planned oil and gas developments.

Thus, our most recent work, also breaks new ground and provides a baseline on actual spending trends on Aboriginal matters instead of mere speculation. It will therefore help guide future research on Aboriginal policy.

Canadians have financed growth in the Aboriginal welfare state at a pace that eclipsed even the growth of the Canadian welfare state and unfortunately with little improvement in the well-being of Aboriginal Canadians to show for it. That makes it critical to track existing spending and to offer up policy reforms for federal and provincial governments. That is vastly preferable to the tried-and-failed approach of simply throwing more money at failed Aboriginal polices.