Proceedings of the Standing Senate Committee on
Aboriginal Peoples
Issue 13 - Evidence - April 21, 2015
OTTAWA, Tuesday, April 21, 2015
The Standing Senate Committee on Aboriginal Peoples met this day at 9:32 a.m. to study challenges relating to First Nations infrastructure on reserves.
Senator Dennis Glen Patterson (Chair) in the chair.
[English]
The Chair: Bonjour. Welcome to all honourable senators and members of the public who are watching this meeting of the Standing Senate Committee on Aboriginal Peoples either here in this room or via CPAC or the Web.
I'm Dennis Patterson from Nunavut. Our mandate in this committee is to examine legislation and matters relating to the Aboriginal peoples of Canada generally. This morning we're hearing testimony on a specific order of reference authorizing us to examine and report on challenges and potential solutions relating to infrastructure on reserves, including housing, community infrastructure and innovative opportunities for financing, as well as more effective collaborative strategies.
We have completed our hearings on housing and are in the last stages now of our study on infrastructure.
Today I'm pleased that we'll hear from two witnesses. Here with us in Ottawa is a familiar face to our committee, C.T. Manny Jules, Chief Commissioner of the First Nations Tax Commission. Welcome back.
Joining us by video conference from New York City is Ken Coates, Senior Fellow in Aboriginal and Northern Canadian Issues with the Macdonald-Laurier Institute.
Before proceeding to testimony, I would like to go around the table and ask members of the committee to introduce themselves.
Senator Moore: Good morning. Wilfred Moore from Nova Scotia.
Senator Lovelace Nicholas: Sandra Lovelace, New Brunswick.
Senator Watt: Senator Watt from Nunavik.
Senator Sibbeston: I'm Nick Sibbeston from the Northwest Territories.
Senator Beyak: Good morning. Senator Lynn Beyak from Ontario.
Senator Enverga: Tobias Enverga from Ontario.
Senator Tannas: Scott Tannas from Alberta.
The Chair: Thank you, colleagues.
Witnesses, thank you very much for appearing to assist the committee, and we look forward to your presentations. They will be followed by questions from the senators. Perhaps we could begin, please, with Mr. Coates, to be followed by Mr. Jules.
Mr. Coates, please proceed.
Ken Coates, Senior Fellow in Aboriginal and Northern Canadian Issues, Macdonald-Laurier Institute: Thank you, everybody. It's an honour to be with you today and to have a chance to speak to you. I understand I have but a few short minutes to summarize my thoughts. It's a particular honour to be with Chief Manny Jules, whose work has been fundamental in changing our attitudes about exactly the issues we're talking about.
Some very quick context: The new rules that have emerged around resource development and Aboriginal rights generally have provided this country with the first chance, really since Confederation, to create an opportunity to share prosperity with First Nations, Inuit and Metis people. We had opportunities in the past. They were not taken advantage of.
But we now have rules. We have the new rules about duty to consult and accommodate, and revenue sharing, which is a reality in many parts of the country. We have Aboriginal economic development corporations, over 250 of them, which collectively have several billions of dollars in assets. In fact, First Nations, Metis and Inuit communities have investable own-source revenue and investable assets of substantial sums for the very first time, really, in Canadian history.
The challenge that you have addressed here about on-reserve infrastructure development is perhaps one of the most fundamental that we face as a country and with indigenous peoples generally.
First off, identify one reality, and that is geographic luck. Individual indigenous communities may be close to a major city, close to a resource, close to an attractive tourism kind of destination, and geographic luck can create opportunities, but geographic bad luck could have exactly the opposite effect. Being too far away, through no fault of the indigenous communities, being isolated way off the road system and what have you, can create substantial challenges for the supply and support of those particular populations.
In those locations on those reserves, those settlements, there are very few investment opportunities and economic development opportunities, and we see some very innovative approaches by very isolated communities. I'm from the Yukon, and looking at what they've done in places like Old Crow is truly impressive, where they've looked at the off- reserve opportunities to build capital, have done extremely well in creating wealth for themselves, for the community as a whole, and have used the off-reserve wealth as a way of developing on-reserve activity.
There's another phenomenon that we should also take into account, and that is the off-reserve migration of large numbers of Aboriginal folks. We end up with a bit of a false dichotomy here where we assume that people are either on reserve or off reserve, and in fact many First Nations, Inuit and Metis people are sort of both. They have part of their feet in their reserve community and traditional settlement, but also are in the larger centres and perhaps in the South.
But the populations are moving, and in fact there are some communities in Saskatchewan, for example, where they've decided not to invest their own money much on reserve. They don't see economic opportunity there, and actually images are emerging of the reserve as a ceremonial hearth, a summer retreat, a place to go back for important ceremonial activities.
We also know that in order to sustain infrastructure in these communities, we need substantial economic stability. The communities that have a solid economic foundation in terms of work and in terms of other opportunities can sustain the infrastructure; in other places you get a development of new facilities, new houses or what have you, but general poverty in the community and a lack of economic opportunity make it difficult to maintain that infrastructure as we move forward.
We end up having — and this is I'm sure something you all talked about a great deal — a large deficit on reserves in many instances. The housing deficit across Canada in Aboriginal communities is a serious one. We have significant problems with water supply. The Internet, everybody knows, is a foundation for the new economy and the new society, yet the services to some of the isolated communities are subpar, to put it gently and politely. We have significant problems with road access.
What I actually see happening, and perhaps we can discuss this, is we have not in this country made a clear declaration of what our standards and expectations are. We do not have uniform national standards for the basic infrastructure in our communities. We do not seem to have trouble with the idea that an isolated community should struggle with water and should not have proper Internet access.
I draw your attention — and some may have been there — to conditions in places like Norway. The Government of Norway made a decision many years ago, and not in just in the years of resource wealth, that all communities should have the same access to infrastructure so that their roads would be paved and not potholed, and they would have decent housing and support facilities in terms of hospitals and other community assets.
More generally in Canada, we have not yet really settled on the idea that Aboriginal people should have the same equality of opportunity that other Canadians have. I think infrastructure becomes a symbol of exactly those kinds of problems.
On the positive side, we are seeing new models emerging, new attitudes towards indigenous property development and ownership and a re-emergence of co-ops, which are important in the Arctic. Our colleagues in the Far North will know this very well. The co-op model has great potential — community ownership generally.
The hidden gem in all of this is that a lot of Aboriginal communities are developing own-source revenue. They have found ways, beyond the official sort of transfers that occur even through resource revenue sharing, that are actually involved through economic development corporations and major business operations and are producing substantial amounts of own-source revenue that they can use for the long-term stability of their community. They have the capacity to invest back in local facilities — houses, for example — particularly building community assets in the form of new business operations, community centres and what have you.
To wrap up my introductory comments — I was told to keep them to five minutes — I think we have not yet had a real national debate about who pays for the infrastructure, and what part is appropriately left to government, the federal government, territorial and provincial governments; to what degree the infrastructure is connected with regional assets, for example, regional governments in terms of road facilities, water supplies, fire protection, and what have you; and what sort of formal expectations are with Aboriginal communities, both as individuals, the people within the communities in terms of providing their own housing, and the responsibility of the community as a whole, particularly as they now have these investable assets and own-source revenues.
I'll end with a final point that is one I'm sure you've discussed at great length. The location of many of the Aboriginal communities in this country is a severe challenge with the high cost of getting supplies into remote communities, difficulty providing services in areas without ready road access, serious challenges related to weather and extreme conditions, particularly in the Far North, and a level of cost that no community, Aboriginal or non- Aboriginal, could ever address in terms of their own economic resources and possibilities.
Finally, we have a challenge as Canadians to take responsibility for ensuring that we have equality of opportunity and uniform national standards for infrastructure and that Aboriginal people in this country have the same level of support and facilities that non-Aboriginal people generally take for granted. Thank you.
The Chair: Thank you very much, Mr. Coates.
We'll now go to Manny Jules's presentation. I ask committee members to hold their questions until we've heard from both presenters, please.
C.T. (Manny) Jules, Chief Commissioner, First Nations Tax Commission: Honourable senators, good morning. I am the Chief Commissioner of the First Nations Tax Commission.
It is an honour to be invited back to appear before this committee to provide practical suggestions to important questions. Why are our people so poor? Why aren't the original inhabitants sharing the wealth of this country? Why does First Nation community infrastructure lag behind the rest of Canada, and why don't First Nations people support resource development more strongly?
As I have said before, the answers to these questions are simple: We have been legislatively and fiscally pushed to the margins of the Canadian federation. Whenever there is resource development in Canada, such as a new mine, there are two types of benefits. First, there are economic benefits which flow to individuals in the form of jobs, contracts and profits. Second, there are fiscal benefits that flow to governments in the form of taxes that are used to improve infrastructure, housing, health, education and other services. Tax revenues allow Canadians to realize more economic benefits from resource development.
First Nations, because of recent court cases, are starting to generate economic benefits. However, very few are generating fiscal benefits from resource development, particularly direct benefits, meaning revenues.
Not only are we not getting direct benefits, but our indirect benefits, meaning transfers, are capped. The result is that our infrastructure, health, education and housing are well below national standards. We have to create a fiscal benefit for First Nations so that when development comes to their territory, they also get direct revenues.
Some are proposing that provincial governments share their revenues derived from resource development with First Nations. This is a good start, but sharing revenues is not as good as tax jurisdiction.
I know first-hand that tax jurisdiction is the key. For the last 40 years, I have worked to establish First Nations tax jurisdiction. My home, Tk'emlúps te Secwepemc, was the first community in Canada to have a revenue sharing agreement with the provincial government. My brother helped negotiate that agreement.
What I am going to say now may surprise you: We have never viewed royalty sharing as our end goal for the best solution to sharing in fiscal benefits. The best solution is, and always has been, to implement our tax jurisdiction. First Nation tax jurisdiction has existed and was practised long before contact. As the Supreme Court stated in 1995, our tax jurisdiction is an inherently governmental power.
For the past 20 years, First Nations have been successful in establishing property tax and sales tax jurisdictions across Canada. These revenues have improved community services and infrastructure. These jurisdictions have been established in a coordinated and efficient way with the federal and provincial governments through legislation and with the support of the Tax Commission.
Extending our tax jurisdiction to resource projects could help remove much of the opposition and uncertainty about resource projects in British Columbia and elsewhere in Canada. It could provide the necessary revenues to finally close the existing infrastructure, service and economic gaps.
We shouldn't be talking about sharing a tax that was developed by a provincial government over a limited range of projects. We should be talking about a transparent First Nation tax, an Aboriginal resource tax, and how both the federal and provincial governments should vacate some of their tax room so that we don't tax investment out of existence, and here is why.
First, court decisions have moved us past fighting about title and rights into a new era of First Nation ownership and jurisdiction. Tax is the blood of government. This is how we begin to restore our place in the federation. It is the place to start a new fiscal relationship with Canada.
Second, royalty sharing doesn't work for many types of projects, such as pipelines. There is no relevant royalty, and most of the fiscal benefits may be enjoyed by the federal or provincial government.
Third, revenue potential of royalties is determined by a provincial government, not us. So if they want to offer a royalty holiday, and we're sharing revenues, we're not going to get a cent while that holiday is in effect. If they want to shift the incidence of taxation from royalties to the corporate tax, First Nations will get less.
Fourth, the process of negotiating financial agreements with resource companies is what I call pseudo-taxation. It is enormously inefficient and even destructive. It's time-consuming, creates uncertainty, and ultimately can kill deals and investment. This should be replaced with a transparent, pre-specified and administratively efficient tax.
Fifth, and this point needs to be raised by provincial governments as well, with royalty sharing, provincial governments give up some tax room to First Nations, but why should all the vacated tax room come from provincial governments?
Provincial governments are the ones facing the biggest fiscal challenge over the next 30 years. First Nations are a federal responsibility, not a provincial one. Many resource and resource infrastructure projects span multiple provinces, so royalty sharing by one province doesn't work well.
The federal government will be a big fiscal winner if we reduce the liabilities associated with First Nations infrastructure and First Nations poverty. The federal government is often the biggest beneficiary in terms of new revenues when a project goes forward.
The question we should be asking is how do we coordinate this tax? Here is a suggestion. We can take a giant step towards resolving the issues of First Nations support for resource development and the growing federal-provincial fiscal imbalance through one simple initiative: The federal government can create tax room for First Nations by offering a tax credit that would be based on taxes paid by industry to First Nations. Provincial governments could do the same.
The Tax Commission could work with First Nations to create a tax that is fair, administratively simple, transparent, and offers low compliance costs. First Nations will no longer be the only governments that don't get revenues when there is development on their lands.
Accordingly, I am asking this committee, as part of its current study, to recommend that the federal government begin to explore how it can reconcile an Aboriginal resource tax in the federation. It has been alluded to as a possible solution to stalled negotiations in the recent report by Mr. Doug Eyford.
Canada needs this investment. We need First Nations support for it to happen. We need to provide a First Nations fiscal benefit to get that support. We need the federal government involved because provinces are apprehensive and revenue sharing is flawed.
The federal government can offer up tax room, and it can influence provinces. And the Tax Commission can help ensure a new tax is successfully implemented so that First Nations get these much needed revenues to build their future and take their rightful place as partners in the economy and in this federation. Thank you.
The Chair: Thank you.
Senator Sibbeston: My question is to Mr. Coates. Mr. Coates, in a January 2015 report for the Macdonald-Laurier Institute, you are reported to have stated that resource revenue sharing between Aboriginal peoples and provincial, territorial and federal governments is a key policy issue that is currently emerging as an uncoordinated system in Canada. I would ask you to elaborate on that, because we see tidbits of that in the Northwest Territories, where I live. In any resource development, such as diamond mines and pipelines, Aboriginal people negotiate for benefit agreements. In a sense, this is a sort of revenue sharing. So the notion is that in any resource development, the resources belong firstly to the Aboriginal people of Canada, and so whoever develops them should give a share of the benefits of that development to Aboriginal people.
I know that notion has just come up in Canada in the last maybe 10 or 20 years. How long have we got to go before it becomes a part of policy, a part of the way we do business in Canada?
Mr. Coates: Senator, thank you for the question. This raises an excellent topic.
First off, it is part of the way we do business in Canada in many parts of the country already. The impact benefit agreements are not generally seen as royalty revenue sharing in a direct way. It's basically sharing the benefits and making sure the local populations get some return.
Basically we have a revenue sharing system that reflects Canadian federalism. So the resources, as Chief Jules pointed out, belong in the hands of the provincial governments, and now the territorial governments, so you end up with a hodgepodge arrangement. For example, British Columbia has revenue sharing on a project-by-project basis. The advantage is that it deals with the First Nation that is closest to the resource. So if a resource is 100 kilometres away from your community, then you're the one that gets the benefit. If you're 300 kilometres away from the resource, then you're probably not going to get a benefit at all.
The Northwest Territories, as you well know, now has a system that shares the revenue across all the First Nations. The ones who are directly affected get a major share, but part of the royalty from the Northwest Territories government actually is distributed uniformly across other First Nations.
In Alberta and Saskatchewan, we do not have those kinds of arrangements in place. Modern treaties have created those arrangements across from Labrador, northern Quebec, into the Yukon and other jurisdictions.
What we have is a situation that the industry actually finds quite puzzling because depending on where you are, you have different arrangements and different ways to proceed.
The major question with the way we deal with our royalty arrangements right now is that they tend to be localized. So the community that is most affected by resource activity will be the one that gets the primary benefit.
It goes back to my point about geographic luck or bad luck. If a mine is close to your community, then you have a chance to gain hundreds of dollars. Just to be clear, I'm sure you all know this, but in arrangements that Cameco has reached with counties or with First Nations like English River, the benefit package is worth $600 million. We're not talking about small sums. We're talking about a large, substantial program of support between the company and individual First Nations, Metis or Inuit communities.
We are doing that on a piecemeal basis. The problem is that the indigenous populations have no certainty. They don't know what is going to happen. The individual mining companies, if they are working in four jurisdictions, have those four different regimes. We have a federal response to this particular issue. So I simply agree with your first point that this is a key issue. I would add to this the fact that the new legal arrangements do need to consult and accommodate. Arrangements like that are making it absolutely clear that the support of Aboriginal populations is going to be essential if we are going to see our resource economy develop as we wish. The only way you're going to get there on a stable basis is if the Aboriginal populations can see that there are direct returns to their communities and to their own livelihoods as a consequence of these projects.
Senator Lovelace Nicholas: Thank you, and it's nice to see you here this morning. My question is for Chief Jules. In your view, how important is own-source revenue as an alternative source of funding for First Nations infrastructure projects?
Mr. Jules: Well, the question is how do you get to own-source revenues? What I was suggesting in my presentation is that one of the problems with resource revenue sharing is that it is not bankable. You can't take it to the bank. You have to be able to create a situation that you can ultimately lever to create your own sources of revenues.
Right now with resource development, the majority of those revenues goes to the federal or provincial governments and in turn goes to municipalities, counties and regional districts. First Nations are by and large bypassed by major resource extraction in this country.
I'm not talking about business arrangements like Ken was alluding to in terms of the $600 million. Governments need to be able to have revenues.
As I mentioned in my presentation, tax is the blood of government, and we have to have an approach, nationally, that makes sure that First Nations get tax revenues, so that they can enter into the business arrangements and get their own sources of revenues. Long-term, stable revenues from taxation will ultimately alleviate infrastructure, help build homes, schools, roads, and water systems, and we have to make sure that we do it, as Ken alluded to again, so that we've got national standards. Right now there are no national standards.
Senator Lovelace Nicholas: It was also mentioned that they're fighting about who is to pay, the province or the federal government. Of course the federal government has a fiduciary responsibility for First Nations. It is not even a question of who pays: It should be the federal government.
Mr. Jules: Right now the federal and provincial governments occupy the tax field. What has to happen is that both levels of government have to vacate a portion of their tax jurisdiction for the implementation of a First Nations Aboriginal resource tax.
This has met with some resistance. As an example, in Saskatchewan they're reticent about resource revenue sharing because they say that the revenues benefit the entire province, including First Nations. This doesn't take into account that First Nations view themselves as governments within the Canadian federal system. What has to happen ultimately, to change the dynamic and lead toward a new fiscal relationship, is that First Nations have to have jurisdiction.
In this particular case, I believe that taxation is a long-term, stable source of revenue for First Nation governments. It allows individuals then, if we can create other tools, to begin to own their own homes.
The problem that we have is that we are, as First Nations, a federal responsibility. Once we leave the reserve, then you're into this area where there's a fiscal fight between the federal and provincial governments. I believe they both have responsibilities, and both have to give up tax room so that First Nations can secure the tax room so that we can begin to move forward.
Own-source revenues, from that perspective, are critically important.
Senator Lovelace Nicholas: As you know, third parties are forced on First Nations when they are in deficit. What about those communities? How do they get to this tax and revenue sharing?
Mr. Jules: Obviously there will have to be quite a bit of work. The first step is the recommendation from this committee that the federal government look at this situation very seriously and recommend that the government begin to have discussions with the provinces and First Nations over the implementation of a First Nations resource tax.
As far as third-party management goes, when I look at the situation on a national basis, this is just something that I've looked at. It isn't a science. The majority of cases that I know about are a direct result of a housing deficit. Individuals have borrowed money, and First Nations have to come forward and, because they've guaranteed the debt, end up paying the money.
I just visited a community last week, and they have to pay $500,000 off the top before they begin to deal with their budgets. Even $1 million is not unheard of, or $2 million. When you have that kind of impact in our communities, it points, obviously, to a need to institute a system of private property rights, individuals being able to own their own homes to move forward, and then lever that money to get into business.
Most cases that I've seen are not a direct result of anything more than individuals not being able to own their own homes and therefore saying, "I'm not going to pay for it.''
Senator Lovelace Nicholas: I think part of the reason is that our governments change every two years. And of course there are no permanent jobs. There are a lot of people on social assistance. A lot of this is because of that problem.
Once they are qualified to buy their own home, have a mortgage, the next thing you know there are no jobs, so they can't pay for that mortgage. That's what I'm trying to get at.
Mr. Jules: It is a cyclical issue. It's a dilemma that we have to solve, and hopefully in our lifetime.
If you look at the situation, First Nations are not part of the economy in a fundamental way. We're dependent on other governments to come up with our budgets. That isn't how governments operate. Governments operate by having their own sources of revenue, by exerting their own jurisdictions over certain areas that are in and part of the federation. That means tax-sharing agreements have to be very important, areas over education, child welfare, all of those other areas are critically important for us to build institutions that facilitate a true economy and our true entry into the fiscal makeup of Canada.
Senator Lovelace Nicholas: There has to be true communication between Aboriginal peoples and the governments. Thank you.
Senator Enverga: Thank you for your presentations, gentlemen. I have a question first to Mr. Coates, and maybe Mr. Jules can reply as well.
It was mentioned in one of our committee meetings that the private sector isn't overwhelmingly investing in First Nations communities due to a lack of certainty in various investments created by the Indian Act. Would you agree with this statement? Are there other factors that might explain the limited involvement of the private sector in First Nations?
Mr. Coates: That is a very interesting question. Nobody would create the Indian Act now. If you were sitting, as you are, on Parliament Hill and deciding how to manage relationships with Aboriginal communities, there is not a single person among you who would say, "Here's a really good idea: Let's take the Indian Act and implement it today.''
It's an historic piece of legislation that has all sorts of flaws and challenges in it. We have a hundred First Nation communities in Canada that do not live under the Indian Act. We have more than a hundred First Nation communities applying to get out from under the Indian Act. Modern treaties eliminate the Indian Act's power over indigenous communities.
The Metis communities don't live under the Indian Act, and some are impoverished and some are doing better.
Boy, wouldn't it be lovely to start over again, because nobody would ever come close to the Indian Act the way it's described. It's a paternalistic, colonial, outdated and irrelevant piece of legislation, except that it still applies.
No First Nations are going to give it up, nor should they, unless they have the kind of assurances that Manny Jules is talking about, where they know they have the resources, power, authority to make decisions for themselves going forward.
We can and should think about a radical restructuring of our relationships that recognizes Aboriginal communities as separate governments and makes sure that they have exactly the kind of authority that we've talked about.
Let's be clear about something else. You're right about the private sector. It's hard to get an individual real estate developer to go into an Aboriginal community and build houses. It's not going to happen under the current structures. You see limited private sector development going in and opening up a store or something like that.
We have more than 250 collaboration agreements across Canada between resource companies and Aboriginal communities. I would suggest to you that on the private sector part, on the resource industry part, it's one of the best examples of extensive and mutually beneficial collaboration in Canadian history. Those mining companies, the oil companies, the pipeline companies, the forestry and hydro companies are working with First Nations communities, and often in mutually beneficial ways. It doesn't always work, but, I'll tell you, it's working in a lot of places.
The private sector will work with whatever structures are in place. As Chief Jules was saying, they need certainty. If you put in a new tax regime the way he's suggesting, the private sector will adjust. It will be a part of the cost of doing business. They'll figure out how these things apply.
We need more consistent and favourable structural arrangements to make sure that Aboriginal communities have independence so that they can make judgments for themselves and work with First Nations or work with the private sector in a constructive and consistent way.
I would make sure we remember one thing: The growth of Aboriginal entrepreneurship is one of the most remarkable developments of the last 25 to 30 years. You are much more likely to be a new entrepreneur in Saskatchewan if you're Aboriginal than if you're non-Aboriginal. We have a situation where the private sector is not a non-Aboriginal phenomenon anymore. The private sector is now an Aboriginal phenomenon.
We're working on a project right now to try to figure out how much money it is. I would hazard a guess right now that Aboriginal economic development corporations have $5 billion of investable assets. If you project that forward a decade, my guess is that the number by that time will be closer to $20 billion. That is private sector money in an Aboriginal development corporation context that is available for investment in communities, investment in prosperity and investment in infrastructure.
The problem is the structures — that is, the absence of tax regimes, of real meaningful self-government and the interference of Indian Affairs, the kind of problem you see around the First Nations Financial Transparency Act, which has good parts to it, but the way it bleeds between the public and government side into the investment or the corporate side has caused uncertainty among First Nations communities.
We're partway there. It's important for us to realize that good things have been happening that show potential. We're actually within a decade of seeing some remarkable things happen where we will be dealing with a reality that many Aboriginal communities will be quite wealthy. We are so used to seeing Aboriginal communities being poor by definition that we're going to have to adjust to that different mindset.
My final point, to reinforce something I have already said, is that the private sector is an Aboriginal phenomenon, and the growth of Aboriginal entrepreneurship has been one of the most under-celebrated elements of the last 20 years.
Senator Enverga: I know that the Indian Act was a bill saying we can do something about it; we can change something. If there's one thing that you would like changed in the Indian Act, what is it? Is there anything that you would like us to say that will help us, one piece of information?
Mr. Coates: I will take two, if you don't mind. Number one is to completely change the oversight arrangements, because Aboriginal communities are being reported to death. They have to produce many reports in so many different ways in which they have to justify what they're doing. Most of our Aboriginal communities are very small and have small governments. When they have to produce dozens of reports a year back to Aboriginal Affairs, which is legally required under the existing structures, it really is an oppressive burden on a small bureaucracy and a small political leadership.
I'm a huge fan of Manny Jules and his ideas around taxation and local autonomy. That is, we have to create a situation where Aboriginal folks do not have to be supplicants and don't have to wait every year to find out how much money the federal government is providing for them. There are many ways we can quite easily come up with a structure that assures Aboriginal people a share in the tax revenue of this country. This is the part people forget, namely, that if you have a shared tax revenue — Manny Jules doesn't forget this and I'm sure he might want to comment on this — you have a major share of the responsibilities. You don't just get to take the money and not do anything with it. This process basically has the capacity not just to give Aboriginal people a share of the tax points, but also to allow them to take on a larger and more formal share of the responsibility for infrastructure.
Those two things go hand in hand. Let's be clear about who does what and who pays for what, but you can't ask Aboriginal folks to pay for things if they don't have a safe source of revenue.
Senator Enverga: Manny, would you like to comment on this?
Mr. Jules: Obviously, my hope would be that the Indian Act would be done away with today. I think that's the simplest solution, but we can't get there in one jump.
I believe First Nations need many options so that they can pick and choose what is best for their own community. The day has long past where they're going to be told what they can and can't do. That's the first thing about your question.
The second point is about why is there a lack. Ken answered it a bit, but most of those private sector partnerships are off Indian reserves; they're not on reserves. We did an analysis looking at a number of developments that took place on reserves, my reserve in particular, and it is 10 times longer and harder to do any development on reserve lands. That's because somebody else owns that land. It is the federal government.
As I mentioned to this committee before, the problem with that is that it comes with baggage. The baggage is "save harmless Her Majesty.'' They're risk-averse. Even coming to managing our own money, lots of communities have money in what is called the "capital account,'' and they're told how they can spend their own money. That isn't right in this kind of day and this kind of era.
If we're truly going to be part of the 21st century, then we have to have 21st century technology, 21st century institutions, 21st century thought, not 19th century. That has to be put behind us.
Senator Enverga: You mentioned that one of the solutions would be creating tax room for the First Nations. Can you give me one example? How much potential does it have? Will it lead to self-sufficiency if this is implemented?
Mr. Jules: The best example is my own community. We are part of the Kamloops division of the Shuswap. There was a mine called Afton mines. It morphed into New Gold because they were going back into the mine and mining not just copper but looking at extracting the gold which benefited from the high gold costs.
As part of those negotiations, there had to be an impact benefit agreement which led to resource revenue sharing, which was 37 per cent of the provincial government's tax jurisdiction over that mine. It means that the two communities are able to employ individuals to mine the land, to have trucking developments, to have electricians involved, and to have all kinds of spinoff benefits as a result of that.
As a matter of fact, one of the individuals who were involved became a millionaire as a result of the developments. That's something I want to see more of. We should be able to have the same kind of wealth generation that Canadians take for granted.
In this particular case, there's been a huge economic benefit to the two communities, not only in terms of exerting their jurisdiction and getting a share of the resource benefits but also in terms of real economics, where dollars are being able to be put in the bank and houses are being built and infrastructure is being upgraded as a direct result of that partnership.
Senator Enverga: I know your community is one great example of such deals. Why don't first Nations follow your lead? What's the problem there?
Mr. Jules: Part of it is what I talked about before, namely, the lack of private property rights on private reserve lands, and institutions to help facilitate these developments. We created, through the Tax Commission, Tulo, a Chinook word, or a trade language. The trade happened between Alaska to California. The trade language meant that all of our indigenous groups could trade with one another because we had a trade language to facilitate that trade.
We have a word called Tulo, which means profit, and we have set up an institution for indigenous economics. As Ken was saying earlier, we want to be able to create the institutional basis to get more people thinking about economic development and economic growth. You need institutions to be able to impart that.
It isn't simply saying, "I'm going to talk to you and you're going to become this great entrepreneur.'' It is creating institutions that impart personal stories, how to do something and how to create standards, so that you can create long-lasting economic development and growth. That has to be a multi-tasked approach, not just simply talking about it, but creating the institutions to facilitate it.
Senator Moore: Thank you, witnesses for being here. My question is for Chief Jules.
First of all, I would like you to educate me. You said that First Nation tax jurisdiction is not new. It existed and was practised long before contact. Can you tell us about that, please?
Mr. Jules: A lot of people think that there was no such thing as taxes in traditional times; people say that this is something that was new, that this is the white man's way of doing things and this wasn't our way when, in fact, it was fundamental to our way. That's why potlatches were outlawed in 1927, because they were a way of sharing resources within our communities so that everyone had a benefit from that.
That's why dances, out here in Ontario and this part of the country, were so critically important because it meant that we were sharing resources.
When you went to our territory and you fished and you used somebody's fishing rock to do that, you paid somebody to do that. You paid them in the form of fish.
There is a contest on right now, ending at the end of the month, with the currency museum asking for people to come out with new designs for coins. One of the coins that we're all familiar with is the nickel, and that's the beaver. In my language that's sqléw. That means money. In traditional times that's what we did. We traded with one another. We had an economy. That's how we survived for many millennia on this land. We didn't just live here and say, "Geez, I'm on holiday.'' You had to work hard. Those who worked hard, they shared.
We had processes to look after our elders because, if we didn't look after them, they wouldn't be able to survive on their own. We had programs in place to look after the young children. We had scientists, chefs and artisans. We had everything that made up a society. That was legislated away from us. We couldn't practice our traditional forms of government because the government made it illegal. One of the questions earlier was about the Indian Act. We couldn't deal with the land question until the 1950s because of an Indian Act amendment in 1927 that forbade us from leaving the reserve, hiring our own lawyers and pursuing the land question. That's why it is still here and alive today. For First Nations, Inuit and Metis, this isn't new. This is as though it happened yesterday. This isn't ever going to go away.
One of my key documents that I always go back to is the Wilfrid Laurier Memorial, which was given to Prime Minister Laurier in Kamloops in 1910.
Senator Moore: What did it say?
Mr. Jules: It said that when we feel justice is withheld from us, so long unrest will exist among us. That simply means that if we feel justice isn't given to us, then there will be unrest and uncertainty. That's what is happening today.
When we talk about taxation and traditional times, if I was going to cross a bridge, more often than not in our area, it was built by an individual, so then a toll was paid. If we were going to use a method of herding deer or fish with weirs that were built by an individual, then an individual got meat. If there was lots of meat to be shared, then that was given out to the community.
So we looked after ourselves. That's really what taxation is. So when we move forward, we have to be able to be responsible and help look after ourselves. What has happened as a result of the Indian Act is that it created this sense of dependence. It is a culture now of dependence, meaning that somebody else has to look after us.
Senator Moore: Well, Mr. Coates said it is a paternalistic, archaic document and it should be done away with immediately. If I was in your shoes, I would be so frustrated because I know that we have travelled to reserves and met bright people who want to do well, have the dignity of a pay cheque and have the ability to do that. But the way this is now, you have others interfere with your life. How can you sit through each year and you wait for somebody else to tell you what your budget is? Nobody is asking you as a co-venture: How do we participate here? How do we move ahead? You tell us what you need.
Anyways, thank you, Manny.
Senator Tannas: Thank you both for being here. It has been wonderful just to listen and think about what have you talked about. I want to ask a lot of questions. A number of them have already been asked.
Chief Jules, the idea of creating a tax regime for First Nation governments makes a lot of sense. As I think through the obstacles, a couple come to mind, and maybe Mr. Coates could also weigh in on this.
We have got, as we all agree, a federal jurisdiction around First Nations, and we have got the majority of the resource revenues at the provincial level. Number one, I would be interested to know, if you've thought through this, if you were in the federal government's shoes, how do you create this mechanism that doesn't require you to go cap in hand to all of the provincial jurisdictions to try to sort this out? Have you thought of a mechanism that would make sense, other than creating, as you say, which nobody wants, an additional tax on top?
Mr. Jules: First, this is something that is unprecedented. It is the first time it has been introduced as a concept. It is something people will have to intellectualize, if you will, and begin to think through all the myriad issues to get to the fact that we need First Nations to be part of the economy. We need First Nations to be able to have their own areas of jurisdiction, particularly tax jurisdiction, so that they can begin to look after their own needs in terms of infrastructure, health and education.
When you look at the federal budgets and indeed the provincial governments' budgets over the next decade to 30 years, the biggest costs are going to be looking after the elderly. We have got an aging population. We have got a deficit in that area. Pensions are going to be a huge issue in the foreseeable future. Because we have a First Nations cap on expenditures by the federal government, that means there is a lessening of funds available for First Nations. It means that for the federal government, it's going to be looking at what its real fiduciary responsibilities are. That means education from kindergarten to Grade 12. It also means that you have to continue the investment in post- secondary education.
When you think about the provincial deficits, that is infrastructure — roads, buildings. I sat on a subsidiary of BC Hydro. You can't do a mining development without having hydro. You have got to have hydro access. That involves and entails lots of planning and maybe some new dams being built.
Resource extraction is how the economy operates in Canada, whether it is oil in Alberta or northern British Columbia or gas, timber or mining; all of these areas are natural resource extraction. Those are developments that happen, most notably, within the traditional territories of First Nations.
When First Nations see that development, they immediately think "I don't get anything from that.'' The federal government benefits, the provincial governments benefits, municipalities that are close to that benefit, the regional district benefits, and the counties benefit. But as a government, we don't get anything. Why should I even support that? Aboriginal tax is critically important for those reasons.
Then, because of recent court cases, First Nations have to enter into impact benefit agreements with the government and with the private sector. That is time-consuming. In a lot of cases it's a year, two years or three years of negotiations. That isn't jurisdiction. That's part of a business arrangement.
I believe that First Nation governments have to be a fundamental part of the federation, and we have to be able to make room. So that means that both levels of government, whether it be the territories, whether it be the provincial governments and the federal government, have to give up some room and not for an additional tax because that taxes us out of business. It has to be part of the existing tax room that First Nations can occupy. That means the federal and provincial governments have to vacate.
Right now the provincial governments don't want to vacate that area because they lose. To close that loop, I'm suggesting that the federal government enact a tax credit so that it's really revenue neutral for the provincial governments and for First Nations because ultimately the federal government will be the largest winner in terms of that lottery.
That means the federal government ultimately has to take the lead, and that lead has to start at this table. You, as honourable senators and the chamber of sober second thought, have to tell the government that you should begin to go down this path; First Nations have to be a part of this society and have to be a part of the federation economically and politically.
The provincial governments have to be convinced, and that can happen with direct discussions by the federal government. And it's in Canada's interest to be able to do that.
Senator Tannas: The tax credit that you're talking about that would effectively make the provinces whole again really has the effect of saying that the federal government, who don't have the majority of the resource revenues, need to foot the bill for this, right?
Mr. Jules: Not necessarily foot the bill. I don't think that's the right way of stating it.
Senator Tannas: No, you're right; it's the wrong thing to say. But making the room has to come entirely then from the federal government if you institute this idea of a tax credit that goes back — a federal tax credit.
Mr. Jules: But remember, both the federal and provincial governments have to vacate some of the tax room. So it isn't all just all the federal government saying, "We're going to cover all of this.'' The provincial government also shares in some of that burden.
Senator Tannas: Okay, that's great. Let me get to the next question then quickly, because this is where in my very limited two-year experience I keep hearing. Just when we think we are presented with an interesting national idea, somebody reminds us that there are actually 630 deals that need to be made, and that's where the whole thing falls apart.
Do you have a solution for this, an opt-in kind of thing where there is some surrendering of rights and future calls on the rest of Canada for this? I may be sounding cynical or frustrated here. I'm not. I just know where this is going to go if we latch onto this.
Can you give us a solution for this or your thoughts?
Mr. Jules: Well, initially it has to be optional. As I mentioned before, when you tell a First Nations community, "You have to do this,'' there's going to be resistance. And you see that everywhere in society. There's a huge debate right now in the Lower Mainland in British Columbia over a small tax that would go towards transportation. People are resisting it because they make it personal. Any time you make it personal, which tax is, people are going to say, "To hell with that.''
It has to be optional. First Nations have to be engaged, but at the same time First Nations, individuals and governments that I've talked to, and I have talked to a substantial number, agree with this motion because for the first time they're going to be able to exert their tax jurisdiction outside of Indian reserves, with the benefit of having those discussions with the federal and provincial governments ultimately.
When you start having that level of discussion, it begins to change the fiscal makeup and the big "P'' politics of this country. It means that when there are discussions about resource revenue sharing or federal-provincial responsibilities, First Nations are going to be there because they've got some of their own blood at stake — their tax blood.
Senator Tannas: Thank you.
Senator Moore: Further to the question posed by Senator Tannas, Chief Jules, if there was an agreement that certain provinces and the feds would give up some of their tax room, on the other side of that I would expect that whatever the equivalent was in dollars they would not continue to give those monies to the First Nations that they're now giving. They're giving up the tax room and saying, "Here, you get that money now. We're not going to be giving you any more.''
Has that been thought through, or is that how you would see this unfold?
Mr. Jules: Well, ultimately —
Senator Moore: You can't just double dip, you know what I mean? I think you're right. The First Nations have a legitimate claim, right, to resource revenues, but if the feds give up that, they don't have those monies to give to the First Nations. So that, I would think, would be off the books; as somebody said, with tax revenue access comes certain responsibilities, so then it's over to you to take that on. Have you thought about that?
Mr. Jules: That's absolutely the case. When First Nation communities are involved in real property tax right now, that's to take over the service responsibilities that have been taken away from them. Right now the communities that I work with, which are about 160, provide road services. They provide upgrading to those roads. They provide and supplement what they get from the Department of Indian Affairs in terms of infrastructure — water, sewer and those kinds of things.
This doesn't lessen the fiduciary responsibility. Those are issues that are for other tables. Ultimately, when you take over tax jurisdiction, it changes the fiscal dynamic in the country. It's what Ken said, and I agree with it wholeheartedly: It's who does what? Who pays for what? That's the kind of discussion that we have to ultimately have in this country. It isn't one of just having your hand out, because you can't have your hand out and call yourself a government.
The Chair: I wish to intervene here, in keeping with the question of Senator Tannas, and ask this of Mr. Coates: You've argued in your very thoughtful report of the Macdonald-Laurier Institute that Aboriginal governments should work together to develop large revenue and investment pools using revenue from natural resource development. And I think you've drawn our attention to I would say about half of Canada, including Yukon, Northwest Territories, Nunavut, northern Quebec and Labrador, where through modern treaties there are resource revenue sharing pools that are largely territorial wide.
I'm glad the attention was paid to that because I think we've made progress in Northern Canada that the rest of Canada could learn from, but my question is this: We develop the large revenue and investment pools in provinces. Who would manage the investment pool? How would you ensure that remote communities which have limited own- source revenues benefit from resource revenue sharing, as well as those that have what you called the geographical advantage? Can you just tell us how this might work in practice?
Of course, we have made efforts with pooled financing models such as the one provided by the First Nations Finance Authority. How would what you envision be different from that?
Mr. Coates: A very comprehensive sort of question.
The Chair: Sorry about that.
Mr. Coates: That's okay. The arrangements have to change. There is no question. When you look at the whole question of pooling, right now, almost all First Nations communities in Canada are poor. We have very few wealthy First Nations.
I want to go back to something Manny said before, and that is that our goal should be to have Aboriginal people who are just as wealthy and just as many millionaires as anybody else. That's when we know we've succeeded, but right now, a lot of them are very poor.
The arrangements right now very much allow the money to go back to the community that is closest to the resource. We have those places that are geographically fortunate. Squamish First Nation happens to be right in North and West Vancouver and up to Squamish. The ones in northern Saskatchewan or northern Alberta are near resource developments, so Fort McKay First Nation has opportunities that are hundreds of times greater than those for Kashechewan in northern Ontario.
Because they're so poor as a starting point, and they have been for a hundred years, they need that extra money just to get up to the level. So they are investing in their own communities, building roads, building houses, starting new businesses and creating economic opportunity, but we are almost there in some instances where the money is now available to spread more generally. You are starting to see individual First Nations who are investing in other communities. They are taking their prosperity and sharing it with other First Nations. There are some communities in British Columbia where they're saying, "We still have an unemployment problem, but you have an even bigger one, so we're going to hire some of your First Nations people to work on our project because we need to make sure we all rise together.'' They don't want one community to have something and the other one to have nothing.
As a country, we haven't yet thought through this question about the pooling of resources. I like the idea of Manny's suggestion about the overall tax because that spreads it around much more effectively. The Government of the Northwest Territories has a good solution where they are taking the royalties that come into the Government of the Northwest Territories and putting a portion of them to First Nations. They're sharing a portion of that. Part of that goes to the community that is affected, and part goes to all the communities that are affected.
A group of five First Nations in northern British Columbia and the Yukon has an arrangement where people share with all five communities a portion of the benefits from resource development. If one community has oil and gas development near to it and it produces $1 billion of revenue, that local community will get about 40 per cent of it, but the other 60 per cent will be divided among the other four communities.
So the First Nations are thinking this through themselves. They haven't really thought about it too much across cultural lines, although we are starting to see examples of that in the Inuvialuit Regional Corporation, which, you will remember, started off with a land claims settlement of $100 million and now has $550 million of investable assets, and they are, in fact, looking at other investments they can make with other indigenous peoples both in the North and more generally.
We also have an interesting situation that we don't pay enough attention to, and that is that the reserve base communities are often the ones that get the money, but more than half of their population no longer live close at hand. I'd invite you to look at English River, which has half of the people living in English River and half of them living mostly in Saskatoon but in other areas. Their investment strategy covers both areas, so they're trying to invest in Saskatoon so that they can create jobs in Saskatoon for English River people who live there.
We have a real challenge in terms of figuring out how to pool the resources and share them generally. The best example, if you want to get excited about this, is northern Quebec. Look at the Inuit and James Bay Cree where they have created regional economic development corporations. They are investing in multiple communities and sharing the revenues and resources in those directions.
But I would like to highlight one other point I forgot to make before, and that is that when we look at this in terms of what's good for Canada, one of the most interesting phenomena you can find is that when you have a resource development, the more money that goes into the hands of Aboriginal people, the greater the regional impact. If you have a project that does not have a lot of Aboriginal participation, almost all the money flows out of the region. You have fly-in and fly-out workers or you have a southern-based corporation or a multinational that takes the profits out the area. You can have a mine developed, and the actual net impact on the local area, whether it's the Yukon or northern Saskatchewan or northern Manitoba, is relatively small. As soon as you have First Nation involvement — my preference is equity ownership, the kind of taxation thing that Manny is talking about, impact and benefit agreements, those kinds of arrangements — the multiplier effect on the regional economy is simply staggering. So we have a huge problem in Canada, not just an Aboriginal one, with the sort of general poverty of our northern and rural areas, and if you want to address that for all Canadians, we find that empowering Aboriginal people is the best way of keeping money close at hand.
The Chair: Thank you.
Senator Watt: Chief, I know that over the years you have been involved in many different projects that have been worked on by the First Nations, and one is the commission that you have been dealing with for some time now. I know that you have been instrumental and effective in terms of making minor amendments from time to time when it comes to administrative requirements to amend, allowing the First Nations to benefit from that set of amendments that you have made over the years. This is in relation to the land issues, the financial management and things like that.
I'm not going to go into the nitty-gritty of the issues that all of us are talking about. I would rather try to get your sense of where you're coming from in terms of the timetable that would be required to nail this down if we're going to have a meaningful agreement with the Government of Canada at some point, hopefully, in the near future. But if this goes on for much longer, then I don't think we're doing any service to our people, and I think we all know that. I'm sure you and Harold Calla have shared this idea over the years. I have been one of the persons that have been involved in this idea in trying to find the solutions to make things happen within the federal level, but it's not an easy thing to do.
I guess there have to be two focuses. One is pulling it all together. What does it mean as a single institution that would be providing services to 640 communities across the southern part of Canada and the northern part, which represents about 56 communities, if not more? So those have to be taken into consideration.
Even though we have, as our chairman stated, comprehensive land claims in the North, they work to a certain extent in terms of what we're talking about today. In some cases, some obstacles need to be removed or amended in order for the people in the community to benefit the same way as the rest of Canadians do.
What I'm interested in looking at here on this committee is how to deal with this aspect. We're talking about housing needs, social needs, and at the same time we're talking about infrastructure requirements in the communities.
We know that the money from the Government of Canada or the provinces is not always going to be there when the need is identified, but we have to find a way to generate our own revenues, and I fully support that idea.
By saying that, are you sort of looking at somehow putting the large national organizations like AFN and ITK together politically and setting up a table with the Government of Canada, maybe without involvement from the provinces to start off with? You might have to bring them in later on.
Are you looking at something like two to three years to try and negotiate something meaningful to put the mechanism in place? What it might be at the end of the day, we don't know for sure, but at least to begin the negotiations. Are you pushing for that in order to end up with a legislative base so that we have a base to start from when dealing with the government? Is that where you're coming from?
Mr. Jules: I can only talk about my timetable. I'm 62 years old, and I don't want to be doing this when I'm 70, so —
Senator Watt: I'm 70 now.
Mr. Jules: You either look at it in terms of three years — I'll be 65 — or eight years at the outside. I'm an eternal optimist. I've been doing this for 40 years. I've seen my daughter be born and be on her own. She's 40 years old, and I love her dearly. My son is 20. I don't want to burden them with all of the work that is necessary, but they're still going to have to be active. We're not going to resolve every issue in the next two to three years.
I definitely want to concentrate a lot of my efforts on the Aboriginal resource tax in the next two to three years, and I do see a legislative base to do that. Ultimately, the federal government has to give some room. That means legislation. The provincial governments are going to have to give some room. That means legislation.
I believe that the first province should be British Columbia. I've had some discussions with some of the politicians out there about this very issue. One of the key individuals says that as far as he's concerned, taxation gives long-term, stable revenues for First Nations communities. I believe that cooler heads will ultimately prevail over this issue. We're having a meeting in Kamloops with a lot of the communities on April 28 to discuss this issue. We have to start at the community level. We have to build up momentum. That is indeed where the change has to take place. They have to be asking for it. Right now, they're coming forward and saying, "We want to do this.'' That means engagement with the provincial government.
Sandra was talking about how a lot of our governments have a two-year horizon. Parliamentarians and legislative assemblies have a bit of a longer timetable. In British Columbia, you're looking at probably another two to three years. That gives a window of opportunity. We're probably looking at the next mandate of government here at the federal level. That gives another four years. This has to be made a priority.
I believe that resource development is a priority for this country because of its impact on the economy. Look at Alberta. They're headed for an election right now, and I know that Jim Prentice is very familiar with these issues and hopefully will come on side with Alberta. That would give more momentum. I know that here in Ontario, Kathleen Wynne had offered resource revenue sharing to First Nations, and it was coolly received because it wasn't enough room.
Part and parcel of that is going to be developing the infrastructure to go up to the North. It's not one road but two roads, basically a cross up there. There are a lot of issues that, if you will, cross the boundaries between First Nations, provincial governments and the federal government. It's creating political will. I believe strongly in the art of the possible, and that's ultimately what politics is about. We have to be able to have the vision. We have to be able to enunciate it. We have to be able to get support for it. Ultimately, that will have to be legislated. We'll have to create the institutions to facilitate it.
As I was saying earlier, we have to have a transparent system. We have to have one that isn't going to be complex. We have to have one that assumes it's going to be occupying areas that are already in existence, because we don't want to tax businesses out of business. We want to create more business. We have to create a climate of trust. That means leaving the baggage that we've all accumulated behind us.
From an optimistic standpoint, I don't see doing this beyond 65, but if I really have to and I do have rubber arms, maybe to 70. Like you. So three to eight years. That's all I'm going to do. I promise.
Senator Watt: There is just one more issue. There is one area I raised. What do we do with those organizations that already exist, and they do claim, and not only claim, but they do represent their people, like the Assembly of First Nations, as an example? How do we engage them in this?
Mr. Jules: I do know that the present national chief said that he supports resource revenue sharing, and he supports that on a national basis. I think that from a political perspective, he would love to have tax jurisdiction because it's within his treaty area.
One of the problems that we have on a national basis is that Saskatchewan doesn't support resource revenue sharing because they feel they're already sharing that with all citizens of Saskatchewan. I don't agree with that, but that's the political sense they are taking now.
Senator Watt: Can they be enlightened on that?
Mr. Jules: I believe so. It's economics. Fundamentally, what makes this country and our governments operate is having a good economic system. Canada and the West have really been successful in having the institutions to facilitate greater economic development, including benefits for its citizens. I think from that argument alone, Saskatchewan should be able to see the light of day.
Senator Raine: Thank you both very much. This has been a very good session. I have a couple of questions.
I'm not 100 per cent clear, Chief Jules. When you talk about tax credit in terms of the tax room, could you just explain that a little bit more? I mean, I think of tax credit like the child tax credit going to parents who are paying taxes, and they take it off their taxes. I would see this as tax sharing. There's a share of the taxes, provincial, federal and First Nations. Could you clarify that, please?
Mr. Jules: I like that better.
Senator Raine: Okay.
Mr. Jules: You're taking the words out of my mouth. It is tax sharing.
Senator Raine: So when you say tax credit, you don't say the tax would come from the federal government and go to the provincials or whatever.
Mr. Jules: When industry pays the First Nations tax, they can write those taxes off against the taxes they would have paid to the federal government. This way, taxes don't go up for industry, and the resource development climate isn't harmed. A tax credit approach means that rather than targeting a current provincial revenue, both the federal and provincial governments are contributing through tax sharing for First Nations.
Senator Raine: So that amount that was then the credit, if you like, would go to the First Nations?
Mr. Jules: What happens is that under the regime, both the federal and provincial governments would have to give up a portion of their tax room for the First Nation governments to occupy. So from that approach, it is truly tax sharing.
Senator Raine: Thank you. The second question that I had, and it's just something that I can't quite wrap my head around, is about our history. We have a country, Canada, that was here long before 1867. In pre-colonial time, First Nations shared the land and had boundaries and had their traditional territories. When we now refer to a First Nation, it could be one of 17 communities in the Shuswap Nation Tribal Council, for instance. People who aren't used to thinking of it could think of a community of 200, 300 people as a First Nation, and yet the Cree people are in today's term a First Nation and they are, I would guess, a true nation.
When you look at tax sharing in terms of resource revenue coming from traditional lands, would we not have to redraw the maps for this greater sharing?
Mr. Jules: Just so that I am clear, I believe the Secwepemc are a nation and are a true nation. We were a nation before colonization, and we still refer to ourselves as the Secwepemc. When you talk about redrawing the maps, I think it's our responsibility to do that. When you self-identify, that's the beginning of that process.
Even when you look at the Cree, there are Woodland Cree, there are Plains Cree and there are Cree from northern Quebec. Yes, they speak the same language with many dialects. If they wanted to get together, I wouldn't stand in their way. I would encourage it. If all of the Shuswap wanted to get together, the more power to the Shuswap. I hope one day it will happen.
When you talk about "First Nation,'' a lot of individuals say, "Well, I'm a First Nation,'' so you go from the Cree, which is lots of northern Canada, to an individual. So the way "First Nation'' is talked about isn't how I view it.
When I think about the First Nations, it was indeed those First Nations in traditional times that had jurisdiction, occupied the lands and defended the lands. When I look at my own people, they are the Shuswap. We did that. We had a defined territory. But that was changed over time because of different situations that happened.
The smallpox epidemic meant there were migrations from some of our traditional communities to other communities that they occupied. And then the Supreme Court says you have to look at 1849 as the date. Were you an organized society? Did you occupy these territories from that period of time? There's a whole bunch of different dynamics at play when you talk about First Nations.
If you look at 1849, we occupied more land than we do today because there were some Tsilhqot'in. One of the questions I asked the Tsilhqot'in after their court cases was whether they included Riske Creek because that was part of our traditional territory from 1849. Because of the smallpox epidemic they occupied that area.
Two of our communities were truly ours in traditional times, but because of intermarriage and other situations they don't view themselves or self-identify as Secwepemc. All of those factors come into play.
I believe we are the ones, not the governments, who have to solve that. It's an internal issue. We have to have diplomats; we have to be able to approach our neighbours, and some of it is going to be what we did with the Upper Nicola people. We entered into the Fish Lake Accord, and that was entered into between the Shuswap and the Okanagan people in the late 1700s. And there was literally an exchange of children between our communities so that it became a family. We became family so that we couldn't go to war with one another anymore because we were now family. Because of that, we agreed to share certain areas of land. And that's what is going to happen. There isn't going to be this boundary line between us. We're going to ultimately say that this is an area we commonly used and we should commonly benefit from that, and we have to get together and determine that. And I believe one of the impetuses to do that is tax jurisdiction. Because if you don't have it, then what's the use of getting together?
Senator Raine: Thank you.
The Chair: I think the real challenge for this committee — and it has been addressed this morning several times — is the have-not communities.
Mr. Coates, in your report — and I think you spoke of it with regard to the Northwest Territories and some other examples, the devolution model in the N.W.T. — you said there should be a hybrid approach between the local and the general approach that would allow communities that are geographically advantaged to benefit as they should, but also have a fixed percentage of the resource revenue to be shared amongst jurisdictions where there are needs and there are disadvantages.
What is the next step to making this happen? Your report came out in January. I'm sure it has stimulated a lot of response and discussion. How do we move this forward?
Do you believe that the unfortunate confrontation that is emerging over resource development projects in various parts of the country, with threatened litigation and all that, gives us an opportunity to look for a different way forward?
Is your proposal supported by leaders like Chief Manny Jules? Is that an opportunity to find a new way other than confrontation and litigation on resource developments?
Mr. Coates: I would agree very much it is a new way and we need a new way. We do have confrontation. We need to realize that we also have confrontation with non-Aboriginal peoples. It's not just Aboriginal folks who have concerns. In fact, very often, if you look at New Brunswick and the shale gas controversy, there are a lot of First Nations people in New Brunswick who realize the necessity to move forward, and some in the same communities who realize they shouldn't go forward. But that's also a debate among the non-Aboriginal folks.
Let me put it this way: I think we need to realize that there are very major costs in not doing something. When you look at royalty revenue sharing, the tax kind of things that Manny Jules is talking about, we have to realize that yes, there is cost, and there's time and there's political process involved with that, but let's just add up what happens if we don't do that at all.
If you rely on a very slow process and nothing changes, we will see more court battles cross the country. Those court battles cost millions of dollars. The Tsilhqot'in spent $10 million on their court case, and they're a very poor set of communities. They had to really invest a lot of their own money and heart into that process, and the negotiations on individual projects take forever.
Manny Jules talked about how much time it takes to get these things in place. A tax regime would be very straightforward. Opportunities for equity investment would be very straightforward. The political struggles are huge.
Let's also realize, when you talk about the cost, that the Aboriginal communities bear an extraordinary cost, and that's the cost of continuing poverty. Take those communities you're talking about such as the ones that are isolated, away from resource opportunities, the Attawapiskats and the Kashechewans of Canada. Either those communities are representative of about a third of all the Aboriginal communities in Canada that are isolated from resource development, or they have domestic challenges.
If we don't do something in those communities, you're not just causing a problem for three or four years; you're going to cause problems for their families and for individuals that will actually saddle this country and individual First Nations with a staggering social cost that will go on for generations.
We talk about education all the time in the K-to-12 debate. The research shows overwhelmingly that the number one challenge is actually between the ages of zero and five. We don't have an institutional structure to relate to that. K to 12 you talk to the school system; post-secondary you talk to the institutions. However, if children are living in overcrowded homes, if there's mould on the walls, if there is not an adequate supply of food, if they don't have local facilities and support, they are going to be severely affected for the rest of their lives. The costs and consequences are huge.
Looking at this arrangement, we need a brand-new level of courage in this country. We need to look for dramatic changes. I want to highlight something that Manny Jules has talked about several times. We should get away from the idea that we will have one solution that will solve the problem for all Canadians at all times, sort of the old panacea. That is, we will use residential schools, or reserves, or self-government is going to solve everything.
What Chief Jules is talking about is creating a tool. If you created the taxation tool the way he has described it, you are going to find that individual First Nations will take it up. Some regional First Nations, be it a tribal council or maybe a group in the Yukon or Northwest Territories, will take it up, and then we will see the benefits of what I think is the most important part, namely, success. When you see successful communities — First Nation, Aboriginal, Metis, Inuit communities — they share their stories and experiences. It actually becomes part of the national conversation.
That's one of our challenges. Let's not look for one thing that will solve everything for everybody all at once. It is not going to happen.
The 636 First Nations cross the country range from Membertou in Nova Scotia and Fort McKay in Alberta to disadvantaged, marginalized and impoverished communities. Let's not solve all the problems all at once. Let's give tools that First Nations can grab onto and use. Let's use their success as role models for the rest of the country.
The Chair: What is the next step?
Mr. Coates: The next step is direct action. You are it. We need some powerful statements in the think-tank community where Macdonald-Laurier exists and in the First Nations community, Chief Jules and AFN. These ideas are out there.
My view is that support for Aboriginal rights in Canada has been declining. Support for Aboriginal rights declines almost as much as Aboriginal rights increase. As indigenous people get more power, people's support for that power diminishes. We have a problem in that the actual level of political interest in Aboriginal rights and empowerment is going down, even though the social costs are still there. We need, as a country, a strong and powerful declaration that we need to do things differently.
The joint report of AFN and Aboriginal Affairs on economic development was such a report. It basically said, "Hey, folks, everybody has to do something. Parliament has to do something, as do provincial governments, but so do First Nations and corporations.''
The next step would be getting a statement out of a group like yours that says, "Let's stop tinkering around the edges in small increments and money and small changes. We need some fairly dramatic action that changes the game.''
I don't talk about revolutionary transitions because Chief Jules outlined for you precisely what we need. We need to talk about the fact that things are getting a lot better. We have success stories. We don't have to say if we do this maybe something will happen. We can show that where there is royalty revenue sharing, where modern land claim deals have empowered Aboriginal folks, where revenue sharing going is on in British Columbia, communities are changing. The Haisla community in British Columbia is talking about an electrified natural gas plant, supporting the pipeline and revitalizing the economy of northern British Columbia. That is not something you heard of 30 years ago.
We are seeing changes because of what is already there, but what are the next dramatic steps? Quite frankly, the people that are talking about royalty revenue sharing, taxation regimes and Aboriginal equity need to know there is parliamentary support.
The Chair: Thank you.
Mr. Jules: A benefit of real tax jurisdiction is discussion around equalization. I believe that if First Nations have true tax jurisdiction within their treaty lands, outside of Indian reserves you will get to the point where First Nations will want to talk about equalization because we all want to see all of our people, all of our indigenous people, able to stand up on their own. We want to make contributions to that betterment.
The Chair: This has been a most enlightening session, and I am glad we did it. It adds a lot to our task of identifying innovative financing opportunities to deal with the challenges of housing and infrastructure.
On behalf of the committee, I would like to thank you both for the trouble you have taken and the thought you have put into these presentations and our dialogue this morning.
Thank you very much.
(The committee adjourned.)