Thank you very much to the committee for inviting us here to make the presentation. I would also like to acknowledge that we are on unceded Algonquin territory, and we thank them for allowing us to gather here.
We're very pleased to make a brief presentation and provide our recommendations to your study on income inequality and the relationship to taxation.
As you near the end of your hearings on this matter, I know you're well aware of the terms of income inequality in Canada, and in particular that first nations continue to rank very last here.
In the 2010 study published by the Canadian Centre for Policy Alternatives, they outline the persistent and growing income inequality of aboriginal peoples, which is generally 30% lower than the immediate income of non-aboriginal Canadians. At the current rate of change, the author has estimated it would take 63 years for that gap to be bridged.
According to StatsCan, in 2010 the average annual income of a first nations person on reserve was $14,000, compared to $18,400, which is the poverty cut-off line for those same communities. In northern remote communities, the cost of essential goods and services is at least 30% higher. We're seeing tremendous income inequality, and also gaps and opportunities.
So many of our communities are facing crippling poverty and wider social implications. The question is, how do we handle this, and what do we do? To paraphrase Mr. Scott Brison, who introduced the motion for this current study...he said that first nations income inequality is a demographic and economic ticking time bomb. The question is, what do we do for change?
For many years, AFN has made submissions to the federal government on their budget process for needed investments in these various areas, although significant change has not yet occurred. That's what I would like to focus on briefly here: the change that's required.
I'd like to speak briefly on taxation issues. For first nations governments and citizens, which this committee has heard before, what I'm about to say will be fundamentally different.
In the past 20 years of erosion, the courts are breathing new life into the tax immunity provisions of the Indian Act and how they impact our communities. The fishermen's decisions in the Robertson and Ballantyne as well as the Bastien and Dubé cases represent legal outcomes that we need to build on, and frankly this is a shared success.
We need to work together to ensure that the law develops in a positive way so that we can achieve corresponding policy outcomes by engaging and working with the federal government to restore fairness, predictability, and fair rendering of the tax rights of first nations governments, as they agreed to as part of the treaty-making with this country and as part of the go-forward solution.
Another practical component addressing inequality is building instruments to assist first nations governments in addressing their tax priorities, tax issues, and tax jurisdiction. The AFN has proposed a national conference on revenue options and generating revenue streams. There's much to be learned from other governments, both indigenous and non-indigenous.
I'd also like to talk briefly about natural resources. In 2011 KPMG introduced a guide to Canadian mining taxation, which was specifically targeted towards potential foreign investors and partners. There's not one single reference to first nations governments, first nations peoples, or first nations rights. This is not an oversight by KPMG, but it shows you that the tax system, which ignores first nations governments whose communities these very natural resources are on, is certainly a challenge that we must work together to address.
We can talk about lots of examples, but I want to talk about a positive example. Out of Fort McKay First Nation is one great success story. There are only 700 on-reserve residents in Fort McKay. After over 20-plus years of creating companies to serve the oil sands industry, they now employ 4,000 people, both aboriginal and non-aboriginal. Imagine if we had 100 more Fort McKays across this country. What would the income inequality be in these communities then?
This past March, Fort McKay Chief Jim Boucher told the Canadian Association of Petroleum Producers that the federal government has failed to acknowledge first nations rights to resources and to have a say in how these resources are to be developed. I quote:
Canada has not stepped up to the plate with respect to dealing with the First Nations on a treaty issue basis, and...it’s not contributing to a healthy economic development situation.
For us this solution appears relatively simple.