Canada - Aboriginal revenue sharing is an idea whose time has come

Date of publication: 
23 January 2015

Current unpredictability in world oil markets aside, Canada’s economic prosperity lies in the development of its natural resources. What’s equally evident is that aboriginal communities are going to demand, and receive, a greater share of that wealth.

It wasn’t long ago that the notion of apportioning a percentage of resource revenue to First Nations was considered lunacy. But a series of court decisions over the past couple of decades has imposed a change of thinking on the country’s political class. Consequently, governments have slowly begun coming around to the idea there might be more to be gained by making aboriginal groups legitimate economic partners in resource development than by continuing to shut them out of the action.

But the approaches taken by provincial entities and territorial governments have been ad hoc, creating a patchwork of revenue-sharing arrangements. Some governments, such as British Columbia, have aggressively pursued these agreements, while Saskatchewan and Alberta remain holdouts.

In a well-reasoned paper being released Friday by the Macdonald-Laurier Institute, author Ken Coates argues that it’s time for the country to more fully embrace resource revenue pacts as a means of improving the lives of First Nations people and creating a more stable resource development environment.

“There is an excellent foundation for improving resource revenue sharing in Canada,” writes Mr. Coates. “In the current environment, proceeding without due recognition of aboriginal rights and interests is untenable, for a variety of moral, legal, political and economic reasons.”

He’s right, of course, but not everyone agrees. As mentioned, Alberta and Saskatchewan both refuse to make resource revenue a pillar of economic development. Premier Brad Wall has said that as long as he’s in charge, there will be no special deals for any groups in terms of natural resource revenue sharing. There are a raft of such arguments, Mr. Coates points out.

There is a view, for instance, that the money the federal government sends to support First Nations communities is already partially supported by resource revenue. Some believe many aboriginal governments don’t have the administrative capacity to handle substantial cash infusions. There is also a feeling that aboriginal communities could become dependent on this money and would not properly prepare themselves for inevitable downturns in the market or the eventual disappearance of the resource itself.

While there might be cause for concern on some of these fronts, they are not enough on their own to refute revenue sharing as sensible public policy.

The fact is that there’s far more to be gained by accepting the current reality and trying to derive as much benefit from it as possible – for all sides. Aboriginal people deserve a financial return from resource development in their traditional territories and revenue sharing is an obvious way to make that happen. And, as Mr. Coates points out, it may be the only significant tool at the disposal of aboriginal communities seeking to address the major infrastructure challenges they face around housing, roads and water supplies.

“The revenue provided would cover many of the costs associated with the additional government programming and would help protect indigenous communities from further dislocations associated with rapid economic expansion and social change,” he says.

Where revenue sharing has occurred, some First Nation governments have wisely understood that this money won’t flow forever. The smart ones have used the money as a source of capital to protect the community’s long-term fiscal health. They have done this by investing the funds in more sustainable business opportunities, in some cases setting up partnerships with non-aboriginal companies to create powerful, wealth-generating consortiums.

And this can only be a good thing, for everyone.

Resource revenue sharing is likely going to be a bigger part of the national discussion with Chief Perry Bellegarde as the new chief of the Assembly of First Nations. He is fiercely of the view that the country’s aboriginal people did not cede or relinquish resource rights, but rather agreed to share the land with others. He is likely to turn up the heat on Mr. Wall and others to make resource revenue sharing a fundamental aspect of economic development in this country.

As Mr. Coates points out, either through negotiations or legal action, resource revenue sharing will soon be commonplace in Canada.

“It is the price that aboriginal communities can and will exact in order to support development on their territories.”