It's my pleasure.
Mr. Chairman, members of the committee, good afternoon. I want to thank you for the invitation to speak with you about first nations economic development.
As the chairman said, I have a few opening remarks. I'll establish my credentials at the outset, such as they are, to provide a basis for my views on this topic.
My academic training is in economics and regional planning. As an undergraduate, I was fortunate to have studied under Professor Jack Stabler at the University of Saskatchewan, a well-respected practitioner in the art and science of regional economic policy. This sparked a life-long interest in understanding the factors that contribute to or detract from economic development.
I joined the then federal Department of Regional Economic Expansion, DREE, in 1980 and pursued a career with the federal government spanning some 27 years, including time at western economic development, and over 15 years at the Department of Indian Affairs and Northern Development. While at Indian Affairs, I was assistant deputy minister in a variety of roles, including having responsibility for lands and economic development. I've been retired from the public service for some six years.
I understood from your committee clerk that your topic of study is land use and sustainable development, specifically looking at the First Nations Land Management Act. I have some familiarity with the lands act, but I am by no means an expert, and any specific knowledge I have may well be dated.
Having said this, I'm prepared to offer some views to the committee on first nations economic development and engage in a discussion after this presentation, as you wish.
I don’t need to tell the committee that first nations economic development is a puzzling matter. Some first nations succeed beyond their wildest dreams in the most difficult of circumstances, while others fail miserably when it would seem they have the obvious attributes to be very successful. Why is this?
A few years back, when I was with the Public Policy Forum, I did a small research study on the question of barriers to first nations economic development. I interviewed a number of first nation leaders to get their insights into economic success and failure. The number one success factor described to me was a community commitment to succeed, a kind of community self-esteem. This is a rather intangible quality, but it's usually evidenced by strong community leadership.
Strong community leadership is often associated with strong governance. There's a great deal of evidence that good governance is a necessary condition for economic development. In terms of successful first nations, it may even be that good governance is associated with self-governance.
A few years ago the Royal Commission on Aboriginal Peoples looked at this problem and they provided a quote from Paul Samuelson, who some of you will undoubtedly have heard of, a famous American economist. He predicted in the 1950s that Latin America, not Asia, would be the next area of economic growth. Latin America was rich in natural resources, he reasoned, and did not have the population pressures that Asia faced. “I was wrong”, he said subsequently. “The key to economic development is not resources. The key to economic development is effective self-government.”
This same point is made by the Harvard University group that's studied first nations economic development in North America for many years.
A first nations community that exhibits strong self-confidence is also usually characterized by a strong desire to return to self-sufficiency. This translates into a strong work ethic, which often starts a spiral of economic virtue. Success breeds success.
While strong leadership and governance are necessary conditions, are they sufficient? The short answer is no.
Aboriginal businesses face a number of barriers, some of the same barriers that other small non-aboriginal businesses face, but some are unique to first nations. Within first nations there is great diversity.
Access to capital remains an imposing barrier. First nations businesses without a track record have a great deal of trouble attracting the necessary capital to start and successfully operate a business. Those that do attract capital often face crushing interest rates or partnership arrangements that are not necessarily favourable to the first nations.
Geography and lack of natural resource access are significant barriers for some first nations. In some cases, geography itself imposes a serious impediment to economic development. Some first nations simply do not possess any reasonable basis for economic development, whether it be proximity to urban centres or access to natural resource developments. Remote communities face enormous challenges that can be overcome only by finding a niche unrelated to location. But these opportunities are few and far between.
Some first nations leaders lament the lack of mobility of many first nations individuals. One of the enduring debates in regional economic development theory is whether public policy should favour “place prosperity” or “people prosperity”. I don’t pretend to have the full answer, but it seems that efforts to shift economic activity artificially through subsidies have generally had little long-term success. Ensuring that individuals have the capacity to participate in economic activity and supporting mobility to jobs may be a more effective policy.
To be effective, individuals need to be willing to move to where the jobs are. The corollary to labour mobility or access to the labour force is training and education. First nations have traditionally suffered because of low educational attainment. This in turn limits their access to jobs requiring education or to training opportunities requiring a prerequisite level of education. In the long run, education of the first nations population will be a very significant factor in sustainable economic development.
The Indian Act creates barriers to economic development, but it also creates opportunity. The constraints imposed on property ownership on reserve sometimes make it difficult for first nations to obtain the inventory or equipment they need to operate a business. But at the same time, on-reserve first nations individuals or businesses can use their non-tax status to advantage.
Land tenure is an important aspect of economic development. First nations that have clear rules on land tenure can create a business climate of greater certainty. I understand that there is a debate under way on whether fee simple land tenure is a necessary condition for further economic development. Certainty of land tenure is an important aspect, but so is transferability of title. The current legal regime on first nations lands limits tenure to registered Indians as defined by the Indian Act. It's an empirical question whether successful first nations are achieving a lower level of economic activity by limiting ownership only to first nations. I don’t know the answer.
It's important to consider the historic and cultural dimensions of land tenure. If Indian reserves had not been created, it is arguable whether first nations would have survived as vibrant modern entities. The fact that the alienation of first nations reserve land was severely constrained has been an important factor in maintaining first nations as separate entities. It’s not clear what impact it might have if this prohibition were to be removed.
From what I know of the First Nations Land Management Act, I would say that this is a positive institutional arrangement for first nations to facilitate economic development. Institutional arrangements cannot overcome geography or create an educated and trained workforce, but they can create a climate of certainty. According to the first nations leadership associated with the land act, the fact that the land act prohibits first nations from selling reserve lands does not appear to be a significant barrier to economic development at this time.
If a different type of land tenure were to be created, and I don’t have a ready description of what that might be, it would have to build in some kind of guarantee that the land ownership, in and of itself, could not result in first nations lands ceasing to be first nations lands. Equally important to the certainty that land tenure can provide is the matter of environmental regulation. Sustainable economic development goes hand in hand with a regulatory regime that provides timely decisions and a high degree of future certainty. Improvements to the environmental regulatory regime under the land act provide a significant benefit—creating conditions for economic development.
First nations economic development is a puzzling matter, and I don’t think there is any one factor that will make the difference. Rather, I think that the continued efforts of lawmakers and policy-makers working with first nations leaders on a variety of fronts will create an environment increasingly favourable to sustainable economic activity.
Thank you, Mr. Chairman, for the opportunity to make these remarks.
I welcome any questions or comments.