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Evidence of meeting #40 for Indigenous and Northern Affairs in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was investment.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

John Gailus  Partner, Devlin Gailus Barristers and Solicitors
André Le Dressay  Director, Fiscal Realities Economists Ltd.
Christopher Devlin  Partner, Devlin Gailus Barristers and Solicitors

4:10 p.m.

Conservative

The Chair Conservative Chris Warkentin

Thank you very much.

We'll turn to Ms. Bennett, now, for seven minutes.

4:10 p.m.

Liberal

Carolyn Bennett Liberal St. Paul's, ON

Thank you very much.

Mr. Le Dressay, the first of your four recommendations is, of course, the proposed first nations property ownership act. As you know, as we've criss-crossed the country, there have been lots of concerns expressed about this in terms of the almost existential threat to a reserve's integrity. There's the potential of having a checkerboard.

Even when Mr. Jules was here, he could really only name four or five reserves that had expressed any interest in this at all. So it seems that the majority of chiefs and councils aren't really interested in this.

I wonder, as Mr. Payne asked with respect to the turnkey legal framework, if that is only obtainable through the proposed legislation. Are your third and fourth recommendations possible without it?

4:10 p.m.

Director, Fiscal Realities Economists Ltd.

Dr. André Le Dressay

I think the only way you can establish the turnkey legal framework is through a piece of federal legislation, and that piece of federal legislation is being proposed right now. That might be a good place to put it. I'm not saying it can't be in other places.

Can you build administrative capacity without the property ownership? Of course you can.

I do want to make one thing clear because you mentioned the checkerboard. I think there's a general misunderstanding—and it certainly was mine until it was explained to me by a leader up in Kitselas—in that there's a difference between when we say a property is held in fee simple by an individual and what a government owns. This is how he explained it to me. He said, people think that because they have fee simple ownership, they own the property, but here's a little experiment for you. Stop paying your property tax and find out who owns your property.

I think that's what's certainly contained in that particular proposal. The difference between government property rights, I guess, is in some cases that they can own the property, but they also have the jurisdiction, the land, and tax powers. They also have the reversionary rights, and they also have expropriation powers.

It doesn't matter who owns the land. Those powers always exist. I'm from B.C. If I were to purchase land in Saskatchewan, it doesn't all of a sudden become B.C. It's still Saskatchewan because they still have the underlying jurisdiction, the reversionary rights, and the expropriation rights.

In the exact same way, that's how the proposed property ownership act would work. First nations would always retain the jurisdiction, the tax powers, the land powers, the expropriation powers, and reversionary rights. And so it's always their land regardless of who's there.

4:15 p.m.

Liberal

Carolyn Bennett Liberal St. Paul's, ON

I think the question has been that the ability to sell the land to someone who's not a member of the community puts everything at risk.

Maybe I should ask the first two witnesses what do you think of the proposed legislation, and why do you think there's been so little interest in it from the rest of first nations communities?

4:15 p.m.

Partner, Devlin Gailus Barristers and Solicitors

Christopher Devlin

I haven't reviewed that particular piece of proposed legislation but stepping back on the fee simple question generally, you talked about existential questions and the nature of the aboriginal title held in reserve lands recognized by the Supreme Court of Canada in Garron. I think many first nations take that very seriously.

I think there's also a fundamental difference between first nations that are located in urban or semi-urban areas and the bulk of first nations lands, which are in the hinterland, and frankly have almost no value to them unless they happen to be sitting on a big pool of oil.

In those rural communities even if you had a legislative framework in place—even under the Indian Act there are economic opportunities that can be accessed, and we can talk about those even under existing regulatory framework—when you're in the hinterland when you have no industry around, you can't put a Walmart on your reserve. No one will come and buy things there. That often I think is a real driver as well.

For the communities that are in urban and semi-urban areas or they're on a major highway and there's easy transportation access, then I think the kinds of questions about ownership and property ownership become more relevant. But most first nations aren't there, and I think that may be one reason why you're not seeing an overwhelming number coming forward saying we want that. As my partner said, I think the ones that are blessed with a certain geographic advantage, are the ones that are rightfully driving this debate.

4:15 p.m.

Partner, Devlin Gailus Barristers and Solicitors

John Gailus

I agree with what Mr. Devlin said.

I think when we talk about the existential angst, it really comes down to: what is the nature of these lands? What is the nature of the relationship with the federal crown if we go under this fee simple model as opposed to...?

When you go back to the definition of a reserve, legal title is held by the crown for the use and benefit of the first nations. For many of those first nations that's the public trust that we're talking about.

In addition to the economics of it, I think there is a distrust, frankly, if the government was pushing this forward to say we're going to turn it all into fee simple. That's the same issue with the treaty negotiation process that's ongoing in British Columbia as well, and why many of those first nations aren't buying into that process either when they're surrendering their aboriginal title and the reserves are being turned into some form of fee simple title.

4:15 p.m.

Conservative

The Chair Conservative Chris Warkentin

Thank you very much.

We'll turn now to Mr. Wilks for seven minutes.

June 12th, 2012 / 4:15 p.m.

Conservative

David Wilks Conservative Kootenay—Columbia, BC

Thank you, Mr. Chair.

Thanks to the witnesses for being here today. My questions are directed toward Mr. Le Dressay and we'll go from there.

In the 2000 ruling of the Musqueam Indian Band v. Glass, the Supreme Court of Canada decided that, for the purposes of calculating residential rental rates, the fair market value of properties on reserve lands should be determined by applying a discount of 50% to the market value of comparable fee simple, non-reserve properties, to account for the costs of reserve-related factors.

Since then the decision has been used as evidence of a difference in the market value between reserve lands and non-reserve lands.

It was also noted in the financial impact of affected real estate market and first nations lands that first nations such as Westbank and Kamloops have implemented market-friendly tenure systems and governance structures for residential development that resulted in elevating the value of reserve land similar to non-reserve land.

In your opinion, which reserve characteristics affect land value—for example, land codes, residential bylaws, etc.?

4:20 p.m.

Director, Fiscal Realities Economists Ltd.

Dr. André Le Dressay

In the brief we provided you, we went through all the aspects of the first nation governance that would be required. We divided it up into three processes.

It was based on our research that looked at the beginning of an investment to the end of an investment process. We divided it up into that which creates greater security over property rights, those which create greater certainty with respect to local services and the cost of those local services, and those which provide better access to capital. We have a list of laws in those areas that can be quite effective.

Westbank has been very good in filling in a great number of those laws. In the case of Sun Rivers, where our office is located, a lot of those laws are located in what's called the development and servicing agreement. The key is to create investor certainty, and as I mentioned, it is possible to do this. It takes a long time and costs a lot of money. That's why we're advocates of a turnkey legal framework, and I'll use that analogy again.

Quite often when you give first nations lots of law-making powers, which a lot of legislation has done so far, of course that respects first nations' right of self-government, but what it does is put the onus on them to develop those laws. It's almost like giving them a disassembled car and saying, “Okay, go build it and then your economy will work.”

We don't do that with any other government in Canada. We say, “Here are the keys to that car. Make some smart policy decisions to develop your economy.”

That's why I'm a strong advocate for the turnkey legal framework.

4:20 p.m.

Conservative

David Wilks Conservative Kootenay—Columbia, BC

You also mentioned that location is the primary detriment in real estate values. What do you suggest for those that are in remote first nations communities?

4:20 p.m.

Director, Fiscal Realities Economists Ltd.

Dr. André Le Dressay

I'm going to give you a different answer. I hope it will eventually get to the answer. I think the answer is that it's always better to have some access to credit than to have none.

I want to step back for a second. There are three actors in every single economy. There are governments, businesses, and households.

Governments, as you know better than most I suspect, are constrained fiscally. There's only so much money you have. Households are constrained by income and by credit. Businesses are constrained by their ability to trade and their ability to invest.

If you have opportunities to reduce any of those constraints, you improve the functioning of those economies. Even in isolated areas it's better to have some access to credit—to somehow improve the property rights for residents, for example—than to have no access to credit. At least that's some improvement.

As the other two witnesses mentioned, there is potential for resource development, and I believe another one of your colleagues also mentioned the importance of sharing in resource revenue on traditional territories. There are opportunities for those that may not have direct comparative advantages in location or labour.

4:20 p.m.

Conservative

David Wilks Conservative Kootenay—Columbia, BC

Thanks.

Could you also briefly touch on how leasehold interests operate on reserve lands, and what the economic benefits are of leasehold interests on first nations communities?

4:20 p.m.

Director, Fiscal Realities Economists Ltd.

Dr. André Le Dressay

I think leaseholds for commercial purposes are pretty common practice, both on and off first nation lands. With leaseholds for residential purposes, depending on the nature of the residential purposes, you can have comparable values.

With respect to long-term residential properties, there is a little observation from the people who sell homes in Sun Rivers. These are some of the nicest lands in Kamloops. When people found out they were getting a lease—in this case it was a 114-year lease because there was some sort of build-out and then a 99-year lease—65% of people said that's okay and 35% of people said “no interest”.

My first comment about the lease is, yes, it's an effective property right. Is it the most effective property right in Canada? The answer is no, from a residential perspective.

4:20 p.m.

Conservative

David Wilks Conservative Kootenay—Columbia, BC

Mr. Chair, I'll defer the rest of my time to Mr. Payne.

4:25 p.m.

Conservative

LaVar Payne Conservative Medicine Hat, AB

Thank you, Mr. Chair.

I have one question, as I didn't get to Mr. Gailus.

I know you folks specialize in areas of ATR. Do you have any recommendations on how the present system could be improved, in 30 seconds or less?

4:25 p.m.

Partner, Devlin Gailus Barristers and Solicitors

John Gailus

I think there is always going to be the potential for delay. I don't think there's a one-size-fits-all solution.

I talk about proportionality. If you have a willing seller.... So we're talking about fee simple and of course the crown purchasing that land and turning it into a reserve, and there aren't those potential impediments in terms of third-party interests or needing to talk to the province or the municipality. The policy needs to address those sorts of issues, or small areas that are being returned to reserve.

In B.C., we had the cut-off claims settlements. We have a history of lands that were pre-empted by churches, as does Ms. Crowder's constituency. Those take the same amount of time as the ones where you have hydro lines running through them and having to deal with the municipality for services.

It's trying to have a policy that is flexible enough to address the easy ones. You don't have to call it an expedited process, but having that policy guidance to say, on this one, we can just barge ahead. We don't need to go through all of the 13 steps set out in the policy to make it work.

4:25 p.m.

Conservative

The Chair Conservative Chris Warkentin

Thank you very much.

We'll now turn to Mr. Genest-Jourdain for five minutes.

4:25 p.m.

NDP

Jonathan Genest-Jourdain NDP Manicouagan, QC

Good afternoon, Mr. Devlin, Mr. Gailus and Mr. Le Dressay.

I appreciated each of your presentations. I would nevertheless humbly like to point out that, in my opinion, you failed to mention an element that ensures a community's socio-economic advancement. I am talking about the hoarding of capital. That practice consists in pooling the money that comes from the use of resources, which belong to the community and should benefit its whole population.

I hail from a community in northern Quebec, on the border with Labrador, called Uashat. I have too often seen certain things in those communities across the riding, as well as in Mamit Innuat. The community business people are often the ones who have a real impact and get their hands on natural resources or set up their businesses on community land. In my language, we call those people minachta—meaning that they don't share. Ultimately, they or their own family are the only ones who benefit from those advantages. They are minimally concerned about redistributing those benefits for the good of the community. In a community that basically used to operate on the model of sharing, that may be bordering on the capitalist and materialist model.

Could you tell me what you think about that?

4:25 p.m.

Partner, Devlin Gailus Barristers and Solicitors

Christopher Devlin

Thank you for the question.

I have worked for communities where the collective interest is held very near and dear to their hearts, and they refuse to issue certificates of possession to anyone as a result. It's all communal land and there are no certificates of possession whatsoever. There's no subdivision of the land. We've also worked for communities where practically the entire community is subdivided. There's almost no common band land left. So for the bands to do any kind of economic development for the band, as a whole on the reserve, can be extraordinarily difficult.

You're going to have individuals who take advantage of the situations they find themselves in, in any community. I don't think that's where your question is directed. I think it's more about what can be done from a legal framework. I think it's very important to understand that in different jurisdictions and different what used to be Indian agencies across the country, there were different policies in place. Some of those were benign neglect, but others were to try to turn first nations people into little fee simple suburban fiefdoms.

In some of the examples of first nations where we've worked, the entire reserve has been subdivided into CPs, and the result is that some people who have the good fortune to have road access as part of that subdivision have been able to develop their certificates of possession, and others who have equal-sized lots, because no road allowances were made by the Indian agent at the time, have landlocked parcels. So you have these inequities among property holders on reserve, but those inequities tend to be the result of what Mr. Gailus referred to in his opening comments, these legacy issues of the previous administration by the former Indian Affairs.

Part of the challenge now, when those communities wish to do large-scale development, is having to grapple with these legacy issues. In our capitalist system, you can't fault someone who has the good fortune of being geographically blessed with the CP along the highway or was able to buy out his brother's or his sister's CP from their estate or whatever, and has pulled together a parcel, and now they have a McDonald's and a gas station or maybe even a small mall or a larger hotel. They're doing very well compared to their landlocked cousin who doesn't have road access. Those are very challenging issues for first nations to grapple with.

I don't think the legacy issue can be dealt with in one big legislative fix. I think you have to look at each community, look at the history of those communities, and try to figure out how to deal with those legacy issues on a community-by-community basis.

4:30 p.m.

Conservative

The Chair Conservative Chris Warkentin

There are about 10 seconds left if you wanted to add anything, Mr. Gailus.

4:30 p.m.

Partner, Devlin Gailus Barristers and Solicitors

John Gailus

Not in 10 seconds.

4:30 p.m.

Conservative

The Chair Conservative Chris Warkentin

Sure.

We'll turn to Mr. Clarke now, for five minutes.

4:30 p.m.

Conservative

Rob Clarke Conservative Desnethé—Missinippi—Churchill River, SK

Thank you, Mr. Chair.

I'd like to thank the witnesses for coming. It's fabulous to have someone come here through video conferencing as well, to provide testimony to this committee.

One of the interesting things mentioned during one of the speeches was that the costs to first nations for economic development are four to six times more than for the non-aboriginal communities, and the challenges they have to face. In recent years several proposed changes have been enacted to the legal, political, and economic context of reserve lands through voluntary or opt-in legislation, such as the First Nations Land Management Act, designed to address the barriers in the Indian Act that impede economic development and investments on reserves.

How have these initiatives influenced the economic initiatives and opportunities for first nations people, collectively and individually? If one of you wants to take a shot at that, go ahead.

4:30 p.m.

Director, Fiscal Realities Economists Ltd.

Dr. André Le Dressay

I think that question is directed at me.

4:30 p.m.

Conservative

Rob Clarke Conservative Desnethé—Missinippi—Churchill River, SK

Yes.