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2017-08-30 General Resource Revenue Sharing between the Government of Alberta and Indigenous Peoples in Alberta: Policy Options, Implications, and Considerations
Berry, Matthew
Berry, Matthew. (2017). General Resource Revenue Sharing between the Government of Alberta and Indigenous Peoples in Alberta: Policy Options, Implications, and Considerations. (Unpublished master's thesis). The University of Calgary, Calgary, AB. http://hdl.handle.net/1880/106793 master thesis
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MASTER OF PUBLIC POLICY CAPSTONE PROJECT
General Resource Revenue Sharing between the Government of Alberta and Indigenous Peoples in Alberta: Policy Options, Implications, and Considerations
Submitted by: Matthew Berry
Approved by Supervisor: Jean-Sébastien Rioux
Submitted in fulfillment of the requirements of PPOL 623 and completion of the requirements for the Master of Public Policy degree
Acknowledgements
Thank you first and foremost to my wife, Jenna Berry, for her patience and support over the last several years of this program and during the writing of this Capstone. I would also like to thank Dr. Tom Flanagan for his initial guidance on the proposal, as well as for his previous research in this area that I was able to draw on. Finally, I would like to thank Dr. Jean-Sébastien Rioux for both his valuable advice and much appreciated encouragement as my Capstone Supervisor.
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Capstone Approval Page
The undersigned, being the Capstone Project Supervisor, declares that
Matthew Berry
has successfully completed the Capstone Project within the
Capstone Course PPOL 623
Supervisor: Dr. Jean-Sébastien Rioux
______August 30 , 2017 (Supervisor’s signature) (Date)
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Table of Contents
Capstone Executive Summary ...... 1 1. Introduction ...... 3 2. Historical and Legal Context ...... 7 3. Indigenous Peoples in Alberta ...... 12 4. Literature Review ...... 15 4.1 Alberta’s Resource Revenues ...... 15 4.2 Funding of Indigenous Communities in Alberta ...... 18 4.3 Distribution of Alberta’s Resource Revenues ...... 23 4.4 Resource Revenue Sharing Positions of Relevant Parties ...... 26 5. Analysis ...... 29 5.1 Resource Revenue Sharing Models ...... 29 5.2 Applying the Models to Alberta...... 38 6. Considerations for Policymakers...... 41 7. Conclusion ...... 44 Bibliography ...... 46
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Capstone Executive Summary
For any jurisdiction, having the option, some would say opportunity, to share significant
resource wealth is in many ways, “a good problem to have”. Significant comparative research has
been conducted with specific reference to the wide variety of models in Canada and internationally
that enable Indigenous communities to benefit from resource development through revenue
sharing agreements. This Capstone is a response to the lack of a jurisdictionally-focussed analysis for Alberta, where the concept is not currently applied but where the debate continues.
The goal of this Capstone is to equip policymakers with both context and data needed to ensure a constructive and informed dialogue around the important and complex issue of sharing
Alberta’s general resource revenues with indigenous communities in the province. It explores the historical and legal context of the issue, as well as the context of Indigenous Peoples in Alberta.
Its Literature Review covers the sources of Alberta’s significant but volatile resource revenues, the vastly different financial capacities of Alberta’s indigenous communities, the current distribution of Alberta’s resource revenues, and the positions of relevant parties. The Analysis component evaluates models for revenue sharing from across Canada and around the world, as well as estimating the potential costs of revenue sharing if those models were applied to the Alberta context. These indicate an annual cost to the Government of Alberta of anywhere from $66 million
1 to $2.5 billion per year by 2019-20. Finally, it provides an overview of several key considerations
for policymakers.
The Capstone’s primary recommendation is the development of an inclusive and politically
arms-length process involving all relevant parties to study various policy options and make recommendations. This process would be focussed not only on the “how” of revenue sharing, but also on the “why”. This would allow the Government of Alberta and the province’s indigenous communities to better ensure that the ultimate outcome will best reflect their available resources and preferences, and build a stronger and more durable foundation for future cooperation.
2 1. Introduction
Indigenous peoples have the right to redress, by means that can include restitution or, when this is not possible, just, fair and equitable compensation, for the lands, territories and resources which they have traditionally owned or otherwise occupied or used, and which have been confiscated, taken, occupied, used or damaged without their free, prior and informed consent. - Article 28(1) of the UN Declaration on the Rights of Indigenous Peoples1
In considering the objectives of the UN Declaration, our approach will be based on the principle that the bounty of Alberta’s resources must be shared by all Albertans. Our task will be to engage directly with Indigenous people to find a common and practical understanding of how the principles of the UN Declaration can be implemented in a way that is consistent with our Constitution and with Alberta law.” - Premier of Alberta Rachel Notley in a letter to her Cabinet2
“The way it (Natural Resource Transfer Act) was set up and drafted in 1923, by the Province of Alberta regarding all our oil and gas, timber and mining and all the various industries fall underneath that. When it was drafted they didn’t consult with us. That’s where part of our problem with, especially oil and gas, there’s no revenue sharing. We should be having revenue sharing.” (Morin 2015)3 - Assembly of First Nations Alberta Regional Chief Craig Mackinaw
1 “United Nations Declaration on the Rights of Indigenous Peoples,” United Nations, http://www.un.org/esa/socdev/unpfii/documents/DRIPS_en.pdf, (September 13, 2007) 2 “Premier Notley Letter to Cabinet”, Government of Alberta, http://indigenous.alberta.ca/documents/Premier- Notley-Letter-Cabinet-Ministers.pdf, (July 7, 2015) 3 Morin, Brandi. “New Alberta AFN regional chief says treaties guaranteed resource revenue sharing,” APTN News, http://aptnnews.ca/2015/06/29/new-alberta-afn-regional-chief-says-treaties-guaranteed-resource-revenue-sharing/, (June 29, 2015)
3 In July 2015, the Truth and Reconciliation Commission of Canada (TRC) released a Final
Report that included 94 “Calls to Action” to advance reconciliation, which is defined as
“establishing and maintaining a mutually respectful relationship between Aboriginal and non-
Aboriginal peoples” in Canada.4 Although the TRC’s mandate was to learn the truth about what happened in the residential schools and to inform all Canadians, the Commissioners’ recommendations were much farther reaching. The report calls for awareness of the past, acknowledgement of the harm that has been inflicted, atonement for the causes, and action to change behaviour. Among the report’s most significant recommendations was a call for federal,
provincial, territorial, and municipal governments to fully adopt and implement the United Nations
Declaration on the Rights of Indigenous Peoples (UNDRIP) as the framework for reconciliation.
This recommendation has been accepted in principle by both the Government of Canada and the
Government of Alberta. As indicated by this Capstone’s opening quote, a primary concern of
UNDRIP is indigenous ownership of lands and resources. It also introduces the concept of “free,
prior and informed consent”, which demands a significant role for indigenous peoples in the
development of lands and resources located within their traditional territory.
As demonstrated by the second and third quotes that preface this Capstone, a prominent
issue affecting these relations in Alberta is the distribution of land and related resource wealth.
With calls for the sharing of the Government of Alberta’s general resource revenues with the
Province’s Indigenous peoples from Craig Mackinaw, the Assembly of First Nations Alberta
4 “Honouring the Truth, Reconciling for the Future: Summary of the Final Report of the Truth and Reconciliation Commission of Canada,” http://www.trc.ca/websites/trcinstitution/File/2015/Honouring_the_Truth_Reconciling_for_the_Future_July_23_201 5.pdf, (July 23, 2015)
4 Regional Chief, there is significant value for all parties in a thorough analysis of the various policy
options and their implications.5
Significant comparative research, which will be explored in a literature review later in this
Capstone, has been conducted to outline the wide variety of models in Canada and internationally that enable Indigenous communities to benefit from resource development. These include not only general resource revenue sharing agreements, but also more specific impact and benefit
agreements with companies and governments. With respect to resource revenue sharing, several
think tank papers, including from the Natural Resource Governance Institute,6 the Frontier Centre
for Public Policy,7 and the Macdonald-Laurier Institute,8 as well as a report from a Government
of Canada-Assembly of First Nations Working Group on Natural Resource Development,9 have
weighed the pros and cons of several models. However, a jurisdictionally-focussed analysis for
Alberta, where the concept is not currently applied but where the debate continues, is lacking.
This analysis will consider the historical and legal context of the issue in Alberta, which
informs the positions and options of the relevant parties. This context is also meant to recognize
that the sharing of general resource revenues is a political decision that can be implemented in any
number of ways, each with its respective advantages and disadvantages. It is meant to provide
relevant information for decision makers—both Indigenous and non-Indigenous—on the
5 Morin, Brandi, New Alberta AFN regional chief says treaties guaranteed resource revenue sharing, APTN News, http://aptnnews.ca/2015/06/29/new-alberta-afn-regional-chief-says-treaties-guaranteed-resource-revenue-sharing/, (June 29, 2015) 6 Natural Resource Governance Institute and the United Nations Development Program, Natural Resource Revenue Sharing, https://resourcegovernance.org/sites/default/files/documents/nrgi_undp_resource-sharing_web_0.pdf, (September 2015) 7 Flanagan, Tom. Resource Revenue Sharing: Property Rights and Economic Incentives, Frontier Centre for Public Policy, https://fcpp.org/wp-content/uploads/2015/07/Flanagan-Resource-Revenue-Sharing.pdf (July 2015) 8 Coates, Ken. Sharing the Wealth: How resource revenue agreements can honour treaties, improve communities, and facilitate Canadian development, (Macdonald-Laurier Institute: January 2015), http://www.macdonaldlaurier.ca/files/pdf/MLIresourcerevenuesharingweb.pdf 9 Assembly of First Nations and Aboriginal Affairs and Northern Development Canada, Finding the Ways and Means for First Nations to Fully Share in Natural Resource Development February 2015) http://www.afn.ca/uploads/files/Working-Group-on-Natural-Resource-Development-Report.pdf
5 implications of various models. In particular, it will focus on the fiscal impacts of existing models if applied in the Alberta context, both historically and based on current resource revenues forecasts.
Not included in this analysis are the ways in which Indigenous communities benefit from resource development irrespective of Alberta’s treatment of general resource revenues. Examples include Impact and Benefit Agreements (IBA) unrelated to royalties and resource extraction on
Indigenous reserve lands, which provide royalties directly to the community. These revenue sources are excluded as, unlike general resource revenue sharing, they are not contested. Today
IBAs are commonplace as a tool to reduce uncertainty and delays in project development and are seen by industry as a central part of corporate-indigenous relations,10 while the ownership of non-
reserve resource royalties is clear and legally protected under the Indian Oil and Gas Act, 1974.
Furthermore, I will note at the outset that this analysis will focus on hydrocarbons: oil,
coal, and gas. For example, although forestry is Alberta’s third largest primary economic sector,
stumpage fees—the equivalent of royalties in the other sectors—provide so little revenue as to not
appear in the Minister of Finance’s public reporting. Indeed, it has been noted that even with
additional corporate, personal and property taxes from forestry companies and workers added, the
total is still less than what Alberta spends on forest fire fighting annually.11
The goal of this Capstone is to equip policymakers with both context and data needed to
ensure a constructive and informed dialogue around the important and complex issue of sharing
Alberta’s general resource revenues with indigenous communities in the province. It will explore
the historical and legal context of the issue, positions of relevant parties, the sources and
distribution of Alberta’s resource revenues, the finances of Alberta’s indigenous communities,
10 The Fraser Institute, What are Impact and Benefit Agreements (IBAs)?, http://www.miningfacts.org/Communities/What-are-Impact-and-Benefit-Agreements-(IBAs) (June 17, 2017) 11 Richards, Tadzio. Our Vital Forest and How Alberta Mismanages Them (Alberta Views: June 1, 2016) http://albertaviews.ca/our-vital-forest/
6 models for revenue sharing and their costs if applied to the Alberta context. Finally, it will conclude
by outlining several key considerations for policymakers.
2. Historical and Legal Context
Evidence of Indigenous history within the boundaries that today define the Province of
Alberta goes back at least 11,000 years, a time period that represents 500 generations. Culturally
diverse, the peoples who today inhabit these lands for include Dene, Woodland Cree, Stoney-
Nakoda, and Blackfoot. Timelines and territories are hotly contested, but the Cree and Stoney-
Nakoda are believed to have come to Alberta relatively recently with the arrival of Europeans and
the fur trade.12 In the 19th century, they were joined by the Métis, a distinct cultural community
arising from the union of Euro-Canadian fur traders and First Nations women. 13
In 1670, a British Royal Charter created the "Governor and Company of Adventurers of
England Trading into Hudson's Bay", more commonly known as the Hudson’s Bay Company. The charter gave the company exclusive rights to trade and colonize in all the lands with rivers draining
into Hudson’s Bay—Rupert’s Land—which included today’s south and central Alberta. The
Company merged with its rival the North West Company in 1821 and gained ownership of the
remainder of what is today Alberta and was then called the North-Western Territory.14
In 1870, the Government of the Dominion of Canada was wary of its territorial position
due to America’s acquisition of Alaska from Russia in 1867, combined with previous agitation for
12 Getty, Ian, Stoney Nakoda (The Canadian Encyclopedia: February 7, 2006) http://www.thecanadianencyclopedia.ca/en/article/stoney-nakoda/ 13 Government of Alberta – Department of Aboriginal Relations, Aboriginal Peoples of Alberta: Yesterday, Today, and Tomorrow (November 2013) http://indigenous.alberta.ca/documents/AboriginalPeoples.pdf?0.4805502842646092 14 Ann Smith, Shirley, Rupert’s Land (The Canadian Encyclopedia: February 7, 2006) http://www.thecanadianencyclopedia.ca/en/article/ruperts-land/
7 American annexation of British North America, as demonstrated by Republican Party
electioneering in 1864 and an annexation bill passed by the U.S. House of Representatives in
1866.15
With a desire to expand its territory following Confederation in 1867, the Government of
the Dominion of Canada purchased Rupert’s Land and the North-Western Territory in 1870 from
the Hudson’s Bay Company for $1.5 million.16 The Government recognized both implicitly, through the very act of subsequent treaty making, and explicitly, through treaty text, that although it held ownership of what is now Alberta in the western sense of the word, the territory remained
“unceded” without the consent of Indigenous peoples.17
In the decades to follow—between 1871 and 1921 in western Canada—the federal
government began a process of treaty making with Indigenous peoples in these newly acquired
territories. The goal of these treaties, as demonstrated by the language of Treaty 6 and reflected
consistently in the text of others, was to obtain the consent of Indigenous peoples inhabiting a
specific tract of land to open it to settlement, immigration and other purposes in return for certain
benefits to be provided by the Crown. The benefits provided in exchange included, among others,
reserve lands protected from infringement from whites; schools; agricultural equipment; hunting
and fishing rights; other materials; and annual payments. In the case of Treaty 6, medicines were
also included. Treaty signing meant that rights, titles and privileges related to the lands described
in the treaty, and in any other portion of the Dominion of Canada, would be ceded, released,
surrendered and yielded up forever to the Government of the Dominion of Canada.
15 Library and Archives Canada, Towards Confederation: Influence of the American Civil War (June 18, 2017) https://www.collectionscanada.gc.ca/confederation/023001-2400.01-e.html 16 Tattrie, Jon, The Northwest Territories and Confederation, (The Canadian Encyclopedia: December 19, 2014) http://www.thecanadianencyclopedia.ca/en/article/northwest-territories-and-confederation/ 17 Indigenous and Northern Affairs Canada, Copy of Treaty and Supplementary Treaty No. 7 between Her Majesty the Queen and the Blackfeet and Other Indian Tribes, at the Blackfoot Crossing of Bow River and Fort Macleod (1877) https://www.aadnc-aandc.gc.ca/eng/1100100028793/1100100028803
8 Although specific plans for natural resource extraction were not outlined, each numbered
treaty covering today’s Alberta stated a desire to open the relevant lands to “settlement,
immigration, trade, travel, mining, lumbering and such other purposes”.18 The extent and authority of these treaties with regard to sub-surface resources, such as minerals, oil and gas, has emerged as a critical question in the debate over modern resource revenue sharing. Oral traditions with respect to the treaty making process indicate that some Indigenous leaders understood the land transfer to be exclusively directed at agriculture.19 Whether these ancestors of today’s Indigenous
peoples understood the transfer to extend only “to the depth of a plow”,20 and what that could
mean for subsequent questions of Aboriginal title in the territories covered by numbered treaties,
are important questions for which there is competing evidence. University of Calgary Professor
Emeritus Tom Flanagan notes that not only does the “depth of the plow” concept not appear in
treaty text, it is never referred to in any of the large number of primary sources from the literate
negotiation participants, as either a demand or an offer.21 These participants included treaty commissioners, interpreters, missionaries, and the North-West Mounted Police.
References to coal resources can be found in the accounts of early explorers, cartographers and fur traders in what is now Alberta, who would have been aware of its value and use in the
Industrial Revolution.22 However, it was not until the start of construction of the Canadian Pacific
Railroad in 1881 – well after the negotiation of Treaty 6 and Treaty 7 – that commercial coal
18 Ibid 19 Office of the Treaty Commissioner, Treaty Backgrounder (June 18, 2017) http://www.otc.ca/public/uploads/resource_photo/Treaty_Backgrounder.pdf 20 Flanagan, Tom. Resource Revenue Sharing: Property Rights and Economic Incentives, Frontier Centre for Public Policy, https://fcpp.org/wp-content/uploads/2015/07/Flanagan-Resource-Revenue-Sharing.pdf (July 2015): 10 21 Ibid, 10-11 22 Government of Alberta – Department of Culture and Tourism, Early Coal History to 1900 (June 18, 2017) http://history.alberta.ca/energyheritage/coal/early-coal-history-to-1900/default.aspx
9 mining took off in the area, with the first mine opening in Medicine Hat in 1883.23 Similarly,
although the existence of oil, gas and bituminous sands were well known prior to the negotiation
of treaties, they were not commercially developed until many years later.24
Subsequent to the signing of treaties 4, 6, 7, 8, and 10 that cover Alberta, a third party
emerged that would play a critical role in determining the future of resource revenues in a part of
the former Northwest Territories: the Province of Alberta.
Although the Government of the Province of Alberta was established by the Alberta Act in
1905, it was not originally endowed with the same rights and responsibilities as the four provinces
present at confederation. As was the case for British Columbia, Saskatchewan and Manitoba, all
Crown lands, mines and minerals and royalties continued to be administered by the Government
of Canada.25 In the case of Alberta, the Government of Canada had assumed ownership over these
resources and related revenue streams with the purchase of Rupert’s Land and the North-Western
Territory from the Hudson’s Bay Company in 1870. The justification for this discrepancy was the
federal government’s belief that control of land and resources would facilitate its immigration and
settlement efforts. 26
With the growth of Alberta’s population and economy, popular opinion amongst settlers
(i.e. non-Indigenous people) turned against the status quo and led to demands for provincial control over local resources. In the 1920s, a series of federal-provincial conferences were held leaded to
Parliament’s passage in 1930 of the Alberta Natural Resources Act. This legislation transferred
“the interest of the Crown in all Crown lands, mines, minerals (precious and base) and royalties
23 Electric Scotland, Mining History of Alberta (June 18, 2017) http://www.electricscotland.com/history/canada/alberta/vol1chap21.htm 24 Cranstone, Donald, A History of Mining and Mineral Exploration in Canada (Natural Resources Canada: 2002): 41 25 Government of Canada, Alberta Act (1905): Section 21 26 Hall, D.J., The Natural Resources Transfer Acts of 1930 (The Canadian Encyclopedia: February 7, 2006) http://www.thecanadianencyclopedia.ca/en/article/natural-resources-transfer-acts-1930/
10 derived therefrom” to the Province of Alberta,27 and was so critical to the province’s later success that it has been described by constitutional scholar Peter Hogg as “Alberta’s forgotten constitution”.28
Reference in the Act was made to “Indians” but limited to Alberta ensuring the availability
of unoccupied Crown lands for confirming additional Indian reserves, as well as assuring access
for hunting, trapping and fishing to unoccupied Crown lands and other lands for which Indians
had a right of access.29 The Memorandum of Understanding that formed the basis for the Act was
negotiated and signed by the Ministers of Justice and of the Interior on the part of the Government
of Canada, and by the Premier and the Minister of Agriculture on the part of the Government of
Alberta. There was no reference made to any off-reserve Indigenous ownership of lands or resources other than fish and game, nor did Indigenous representatives participate in the negotiation of the Memorandum between Canada and Alberta.30
It is this series of events that shape the conversation around general resource revenue
sharing in Alberta today. Relationships with chartered corporations, a contested history of treaty
making with the Government of the Dominion of Canada, and the transfer of rights and revenues
to a subsequently-created provincial government. This is the unique context that frames the
expectations, options, and leverage of the relevant parties.
27 Government of Canada, Alberta Natural Resources Act (1930) http://www.laws.justice.gc.ca/eng/acts/A- 10.6/index.html 28 Government of Alberta – Department of Culture and Tourism, Resource Ownership (June 18, 2017) http://www.history.alberta.ca/energyheritage/sands/underground-developments/energy-wars/resource- ownership.aspx#page-2 29 Government of Canada, Alberta Natural Resources Act (1930) http://www.laws.justice.gc.ca/eng/acts/A- 10.6/index.html 30 Coates, Ken. Sharing the Wealth: How resource revenue agreements can honour treaties, improve communities, and facilitate Canadian development, (Macdonald-Laurier Institute: January 2015), http://www.macdonaldlaurier.ca/files/pdf/MLIresourcerevenuesharingweb.pdf: 14
11 Clearly, both at the time of treaty making and the subsequent devolution of resource
control, neither Indigenous peoples nor the Government of Canada nor the Government of Alberta
could fully comprehend the future value of the territory’s mineral and oil and gas resources. From
the passing of the Alberta Natural Resources Act in 1930, it would still be years before global
political, economic and demographic trends would create the conditions for the resource wealth
that the Government of Alberta has enjoyed in recent decades.
3. Indigenous Peoples in Alberta
Alberta is home to 45 First Nations, eight Métis Settlements, and, as of 2011, more than
220,000 people claiming Aboriginal identity, representing 6.2 per cent of the Province’s
population.31 Of this total, 116,670 were First Nations people. 32 Of those who identified as First
Nations people in 2011, four in five (83% or 96,730) reported being a Treaty Indian or a Registered
Indian as defined by the Indian Act of Canada.33 Métis people numbered 96,865 and Inuit or people
with multiple/other Aboriginal identities numbered 7,160.34
In addition to the five historic treaties (Treaty 4 - 1874, Treaty 6 - 1876, Treaty 7 -1877,
Treaty 8 - 1899, and Treaty 10 - 1906), the Government of Alberta has settled 12 Treaty Land
Entitlement disputes in partnership with the Government of Canada since 1986.35 This process
allows for First Nations to make a claim for additional land not received as promised under
31 Statistics Canada, Number and distribution of the population reporting an Aboriginal identity and percentage of Aboriginal people in the population, Canada, provinces and territories (2011) http://www12.statcan.gc.ca/nhs- enm/2011/as-sa/99-011-x/2011001/tbl/tbl02-eng.cfm 32 Ibid 33 Statistics Canada, Aboriginal Peoples: Fact Sheet for Alberta (March 14, 2016) http://www.statcan.gc.ca/pub/89- 656-x/89-656-x2016010-eng.htm 34 Statistics Canada, Number of persons with Aboriginal identity, by Aboriginal group, provinces and territories (2011) http://www.statcan.gc.ca/pub/89-645-x/2015001/c-g/desc/desc05-eng.htm 35 Government of Alberta – Department of Aboriginal Relations, Aboriginal Peoples of Alberta: Yesterday, Today, and Tomorrow (November 2013) http://indigenous.alberta.ca/documents/AboriginalPeoples.pdf?0.4805502842646092
12 previously signed treaties. As of 2014, the 140 reserves in Alberta account for approximately
812,771 hectares of land.36 This represents approximately 1.3 per cent of Alberta’s land base.37
Approximately 40 per cent of all First Nations people in the province, and 47 per cent of Treaty or
Registered Indians, live on reserves. In addition, Métis Settlements - the only Métis-specific land
base in Canada - cover an additional 0.8 per cent of the province.38 A large majority of Métis
people - 96 per cent - do not live on the Settlements.39
The geographic distribution of reserves, Land Claims and Métis Settlements in Alberta is
shown in Map 1 on the following page.
36 Government of Canada – Department of Indigenous and Northern Affairs, First Nations in Alberta (2014) https://www.aadnc-aandc.gc.ca/eng/1100100020670/1100100020675 37 Stamp, Robert. Alberta (The Canadian Encyclopedia: March 26, 2009) http://www.thecanadianencyclopedia.ca/en/article/alberta/#h3_jump_0 38 Government of Alberta – Department of Indigenous Relations (June 18, 2017) http://www.aboriginal.alberta. ca/Metis-Settlements.cfm 39 Government of Alberta – Department of Municipal Affairs, Population List (September 1, 2012) http://www.municipalaffairs.gov.ab.ca/documents/msb/2012_pop.pdf
13 Map 1: Aboriginal Treaties, Reserves, Land Claims and Métis Settlements in Alberta
Source: Global Forest Watch, The Last Great Intact Forests of Canada: Atlas of Alberta (Part II), (April 2, 2009) http://globalforestwatch.ca/sites/gfwc/files/images/20090402A_A4b_AB_FirstNations.png
14 4. Literature Review
4.1 Alberta’s Resource Revenues
As the owner of 81 per cent of mineral rights in the province, including coal, oil and natural
gas, the Government of Alberta receives royalties when these resources are developed by
companies.40 Currently, the value of these royalties depends on resource prices, company costs,
and production levels, among other variables. Using various formulas, royalties range from 0 per
cent to 40 per cent for conventional oil and gas, 1 to 9 per cent for “pre-payout” oil sands projects,
25 to 40 per cent for post-payout oil sands projects, and either $0.55/tonne for coal or a percentage
of revenues (1 per cent of mine mouth revenue and 13 per cent of net revenue).41 In addition, a
Freehold Mineral Tax is assessed on revenue from production on such properties. Finally, the
Government of Alberta also receives value from its resources through bonuses and sales of crown leases, as well as other rentals and fees.
Historically, the resource revenues received in any given year have depended primarily on the availability of efficient extraction technologies, as well as the spot prices for each volatile resource. Deducting any royalty incentive programs and excluding the Freehold Mineral Tax, resource revenues were $236 million in 1970/71, peaked at $14.6 billion in 2005/06, and were $2.9 billion in 2015/16.42 As markets have evolved over the years, natural gas royalties and oil sands royalties have alternately served as the most lucrative revenue source, with bonuses and the sale
40 Government of Alberta, How Royalties Work (June 20, 2017) https://www.alberta.ca/royalties-how-royalties- work.aspx 41 Ibid 42 Government of Alberta, Budget 2017: Fiscal Plan, http://finance.alberta.ca/publications/budget/budget2017/fiscal-plan-complete.pdf (March 16, 2017): 6
15 of Crown leases at times also accounting for a significant share of revenues (as much as $3.5 billion
in 2005/06).
Resource revenues are forecast to rise to $6.6 billion in 2019/20, and although conventional
oil production is expected to remain flat up to 2030, oil sands production is predicted to increase
by 1.3 million barrels a day from 2016 to 2030 and reach 3.7 million barrels a day.43 With the
International Energy Agency predicting that global oil demand will not peak before 2040 based on current policies, resource revenues could continue to provide significant funds to the Government of Alberta in the medium term.44 Thus, resource revenues - whose volatility and unpredictability
are indicated by the graphs on the following page - will likely continue to present a constant
challenge for the Government of Alberta’s planning. According to Alberta’s 2017 budget, since
2004/05 resource revenues and related corporate income tax and investment income have
accounted for up to 55 per cent of total revenue. In 2017/18, they are estimated to account for only
22 per cent of revenue.45
43 Canadian Association of Petroleum Producers, Crude Oil Forecast, Markets & Transportation (June 2017) http://www.capp.ca/publications-and-statistics/publications/303440 44 Reuters, Oil Demand Won’t Peak Before 2040 (November 16, 2016) http://fortune.com/2016/11/16/oil-demand- 2040/ 45 Government of Alberta, Budget 2017: Fiscal Plan, http://finance.alberta.ca/publications/budget/budget2017/fiscal-plan-complete.pdf (March 16, 2017): 6
16 Figure 1: Alberta Natural Resource Royalties and Corporate Income Tax Revenues
Source: Government of Alberta, Budget 2017: Fiscal Plan, http://finance.alberta.ca/publications/budget/budget2017/fiscal-plan-complete.pdf (March 16, 2017): 28
Table 1: Alberta Non-Renewable Resource Revenues - 2015/16 to 2019/20
Source: Government of Alberta, Budget 2017: Fiscal Plan, http://finance.alberta.ca/publications/budget/budget2017/fiscal-plan-complete.pdf (March 16, 2017): 28
17 4.2 Funding of Indigenous Communities in Alberta
According to the Constitution, the Government of Canada retains exclusive jurisdiction
over, and fiduciary responsibility for, “Indians and lands reserved for the Indians.”46 As a result,
the largest government revenue source for Indigenous communities in Alberta is Government of
Canada contribution agreements. These agreements finance programs and services that would
otherwise provided by the provincial government or municipal governments, such as education,
health and social services, roads, housing, and water and wastewater management. Total transfer
and other direct payments from the federal government to indigenous communities across Canada
represented approximately $7.3 billion in 2015/16, the latest year for which detailed figures are
available.47 This number includes $1.77 billion for education, $1.75 billion for social development,
$1.26 billion for infrastructure, $1.05 billion for treaty and other agreement implementation, and
$660 million for health. These figures do not include supporting federal departmental expenditures on personnel, transportation and communications, supplies, and other miscellaneous line items.
Additional federal funds are provided on a voluntary basis in areas such as training, green
and social infrastructure, climate change adaptation, justice, culture, energy, and
agriculture/aquaculture. In Budget 2016, the Government of Canada provided an additional $8.4
billion over five years in these and other areas, along with a further $3.4 billion over five years in
Budget 2017.48
46 Government of Canada, Constitution Act, 1867, http://laws-lois.justice.gc.ca/eng/const/ 47 Government of Canada, Program Expenditures by Standard Object, 2015-16 (June 23, 2017) https://www.canada.ca/en/treasury-board-secretariat/services/planned-government-spending/budgets- expenditures/program-expenditures-standard-object-2015-16.html 48 Government of Canada – Department of Indigenous and Northern Affairs, Budget 2017 Highlights – Indigenous and Northern Investments (March 30, 2017) https://www.aadnc-aandc.gc.ca/eng/1490379083439/1490379208921
18 Indigenous communities may also receive funding from provincial grants, selling treaty
land, lawsuits, and own-source revenue. The latter may include community-owned companies, on-
reserve gaming, investments, or payments from Impact and Benefit Agreements. In addition, in
1988 the Indian Act was amended to allow First Nations their own tax authority and today
approximately one-sixth of bands collect primarily property taxes that account for one-tenth to
one-third of revenues.49 The overall makeup of revenues will vary depending on the jurisdiction,
geography, resources, and demographics of the community.
In order to better understand the potential community-level fiscal impacts of resource
revenue sharing with Alberta’s indigenous communities, I evaluated the audited financial
statements of three First Nation band governments, which are published online as per the
requirements of The First Nations Financial Transparency Act (2013).50 I selected the following
case studies for the diversity of their regions, land bases, and populations: the Kainai Nation (also
known as the Blood Tribe) in southern Alberta (Treaty 7), Enoch Cree Nation in central Alberta
(Treaty 6), and Fort McKay First Nation in northern Alberta (Treaty 8).
49 Schwartz, Daniel, How does native funding work? (CBC News: February 6, 2013) http://www.cbc.ca/news/canada/how-does-native-funding-work-1.1301120 50 Government of Canada – Indigenous Affairs Canada, First Nations Profiles (June 20, 2017) http://fnp-ppn.aandc- aadnc.gc.ca/fnp/Main/Index.aspx?lasng=eng
19 Table 2: Finances of Select First Nations and Government of Alberta Note: all figures are for the 2015/16 fiscal year unless otherwise indicated
Kainai Nation Enoch Cree Nation Fort McKay First Nation Government of Alberta
On Reserve Population 8,327 1,711 413 N/A
Off Reserve Population 4,045 898 456 N/A
Total population (2016) 12,372 2,609 869 4,067,175
Revenue (per capita) $150,720,000 $82,075,000 $60,282,730 $42,500,000,000 ($12,182) ($31,458)51 ($69,370) ($10,450)
- Federal grants $106,415,000 $15,734,000 $2,486,000 $7,142,000,000
- Provincial grants $5,458,000 $46,830,00052 $570,000 N/A
- Personal income tax N/A N/A N/A $11,357,000,000
- Corporate income tax N/A N/A N/A $4,195,000,000
- Business income N/A $11,435,000 $13,881,000 $2,570,000,000
- Investment income $6,227,113 $2,778,000 -$474,000 $2,544,000,000
- Own-source gaming revenue N/A $33,837,000 N/A $1,553,000,000
- Rent and property tax $5,865,000 N/A $5,272,000 $2,255,000,000
- Non-renewable resource revenues N/A N/A N/A $2,789,000,000
- Industry grants N/A N/A $14,765,000 N/A
- Agriculture and land leasing N/A $6,150,000 N/A N/A
Expenditures (per capita) $144,996,000 $80,231,000 $32,804,000 ($37,749) $48,942,000,000 ($11,720) ($30,752) ($12,033)
Sources: ● Government of Canada – Indigenous Affairs Canada, First Nations Profiles (June 20, 2017) http://fnp- ppn.aandc-aadnc.gc.ca/fnp/Main/Index.aspx?lasng=eng ● Government of Alberta, Budget 2017: Fiscal Plan, http://finance.alberta.ca/publications/budget/budget2017/fiscal-plan-complete.pdf (March 16, 2017) ● Government of Canada – Statistics Canada, 2016 Census Profile (July 21, 2017) http://bit.ly/2hX5nCg
51 The band’s investment in the River Cree Resort and Casino is recorded on a modified equity basis, which resulted in a loss of $31,999,000, which accounts for the revenues listed exceeding the topline number. 52 $46,541,000 of this amount includes revenues from provincially-owned slot machines shared through the Government of Alberta’s First Nations Development Fund.
20 While each First Nation uses its own expense categories, several broad categories can be identified that account for significant proportions of annual budgets. These categories and the upper limit of proportional expenditures among the three case study First Nations include:
● Infrastructure, housing, other capital projects, and operations - up to 32%53
● Education - up to 28%54
● Government and administration - up to 26%55
● Social and Community Services - up to 20%56
● Health - up to 10%57
● Economic Development and Employment - up to 9%58
Unlike expenses, which are broadly similar between nations, there are significant differences on the revenue side. Common significant line items and the upper limit of proportional revenues include:
● Federal government grants - up to 71%59
● Business income - up to 23%60
● Rent, property tax and real estate - up to 9%61
53 Government of Canada – Indigenous Affairs Canada, Fort McKay First Nation (June 20, 2017) http://fnp- ppn.aandc-aadnc.gc.ca/fnp/Main/Index.aspx?lasng=eng 54 Government of Canada – Indigenous Affairs Canada, Kainai First Nation (June 20, 2017) http://fnp-ppn.aandc- aadnc.gc.ca/fnp/Main/Index.aspx?lasng=eng 55 Government of Canada – Indigenous Affairs Canada, Fort McKay First Nation (June 20, 2017) http://fnp- ppn.aandc-aadnc.gc.ca/fnp/Main/Index.aspx?lasng=eng 56 Government of Canada – Indigenous Affairs Canada, Kainai First Nation (June 20, 2017) http://fnp-ppn.aandc- aadnc.gc.ca/fnp/Main/Index.aspx?lasng=eng 57 Ibid 58 Government of Canada – Indigenous Affairs Canada, Fort McKay First Nation (June 20, 2017) http://fnp- ppn.aandc-aadnc.gc.ca/fnp/Main/Index.aspx?lasng=eng 59 Government of Canada – Indigenous Affairs Canada, Kainai First Nation (June 20, 2017) http://fnp-ppn.aandc- aadnc.gc.ca/fnp/Main/Index.aspx?lasng=eng 60 Government of Canada – Indigenous Affairs Canada, Fort McKay First Nation (June 20, 2017) http://fnp- ppn.aandc-aadnc.gc.ca/fnp/Main/Index.aspx?lasng=eng 61 Ibid
21
Unique and significant revenue sources that reflect each nation’s unique context include:
● Gaming Revenues - Enoch Cree Nation, which owns the River Cree Resort &
Casino adjacent to Edmonton - $46,541,000 or 57% of total revenues62
● Industry grants (including Impact and Benefit Agreement payments) - Fort McKay
First Nation, which is situated at the centre of oil sands development in Alberta -
$14,765,000 or 12% of total revenues63
● Farming - Kainai Nation, which has the largest reserve lands in Canada -
$1,044,000 or 0.7% of total revenues.64
It is clear that there is significant differentiation in fiscal capacity among indigenous
communities in Alberta, just as exists between Canadian provinces. Indeed, while there are many
communities relatively isolated from urban centres or natural resource opportunities, others have
secured significant assets as a result of their geographic fortune. These include the Samson Cree
Nation, with financial assets of $482 million due to on reserve oil and gas development, and the
Tsuut’ina Nation, which received $275 million as part of a land transfer deal to complete the
Calgary ring road.65 Tsuut’ina also received $33 million in 2014/15 in gaming revenues from its ownership of the Grey Eagle Resort & Casino adjacent to Calgary.66
62 Government of Canada – Indigenous Affairs Canada, Fort McKay First Nation (June 20, 2017) http://fnp- ppn.aandc-aadnc.gc.ca/fnp/Main/Index.aspx?lasng=eng 63 Ibid 64 Ibid 65 Dippel, Scott, Tsuut'ina band members to get compensation for southwest ring road deal (CBC News: January 3, 2015) http://www.cbc.ca/news/canada/calgary/tsuut-ina-band-members-to-get-compensation-for-southwest-ring- road-deal-1.3097908 66 Government of Alberta – Department of Indigenous Relations, First Nations Development Program: Grant Program Annual Results 2014/15 (2016) https://open.alberta.ca/dataset/e919fb78-44bb-46df-8d7b- 3d58f97e0223/resource/c294b3f0-8210-4fb7-8af3-f45314f47664/download/2014-15-FNDF-Annual-Results.pdf
22 Finally, it should also be noted that 17 per cent of those in Alberta who reported their
identity as First Nations were not a Treaty Indian or Registered Indian as defined by the Indian
Act.67 As a result, their access to federal funding opportunities is limited. Similarly, the federal financial relationship to the Métis is unlike that with First Nations. However, the Government of
Canada’s fiduciary responsibility for non-Status Indians and Metis people is evolving due to a
2016 Supreme Court that found they are classified as Indians under the Constitution.68
The objective of this section is to demonstrate that the sharing of provincial resource revenues could represent a major realignment of revenue sources for indigenous communities in
Alberta, and particularly for First Nations that currently receive a majority of their funding from the federal government. It is further meant to demonstrate the significant diversity in funding opportunities for indigenous individuals and communities - treaty, non-treaty, status, non-status, or Métis - as well as the diversity in fiscal capacities and own-source revenue opportunities among indigenous communities.
4.3 Distribution of Alberta’s Resource Revenues
Alberta’s resource revenues are not currently allocated to any specific purpose, but rather
simply deposited into the Government’s General Revenue Fund that provides for all government
activities. This fund also holds revenue from sources such as personal income tax, corporate
67 Statistics Canada, Number and distribution of the population reporting an Aboriginal identity and percentage of Aboriginal people in the population, Canada, provinces and territories (2011) http://www12.statcan.gc.ca/nhs- enm/2011/as-sa/99-011-x/2011001/tbl/tbl02-eng.cfm 68 National Post, Landmark Supreme Court ruling extends rights to 600,000 Métis, 'non-status Indians' (April 14, 2016) http://nationalpost.com/news/canada/landmark-unanimous-supreme-court-ruling-states-metis-non-status- indians-are-federal-responsibility/wcm/aa6d4e90-a3ef-434a-a731-e65b4cb1f099
23 income tax, education property tax, and other taxes and fees. It is worth noting that a percentage
of the province’s resource revenues were earmarked for savings in its Heritage Fund from 1977 to
1987. This offers a precedent for an allocation with a specific public policy objective.69 However, an attempt in the early 1980s by the Alberta Urban Municipalities Association to secure 8 per cent of provincial oil and gas royalties as an annual grant was not successful.70
One indicator of how indigenous communities benefit from Alberta’s resource revenues is the Ministry of Indigenous Relations’ $193 million 2015/16 budget.71 In addition to its
constitutional responsibility for Indigenous consultation on the use of lands and resources in the
province, the Ministry delivers grant funding and other supports through the Aboriginal Business
Investment Fund, the Economic Partnerships Program, the Employment Partnerships Program,
and the Urban Initiatives Program. It also provides funding to Alberta’s Native Friendship Centres
and to the Metis Nation of Alberta and the Metis Settlements. Finally, 67 per cent of the Ministry’s
expenses ($129 million) come from the Alberta Lottery Fund and are directed to the First Nations
Development Fund.
Other government ministries and programs also include set asides or special allocations
directed at Indigenous individuals and communities. In Budget 2017, these included $100 million
over four years for water and wastewater management and $151 million over three years for renewable energy and energy efficiency.
69 Government of Alberta – Department of Treasury Board and Finance, A History of the Heritage Fund (August 23, 2017) http://www.finance.alberta.ca/business/ahstf/history.html 70 LeSage Jr, Edward and Masson, Jack, Alberta's Local Governments: Politics and Democracy (University of Alberta Press: 1994): 37 71 Government of Alberta, Budget 2017: Fiscal Plan, http://finance.alberta.ca/publications/budget/budget2017/fiscal-plan-complete.pdf (March 16, 2017): 114
24 However, no single line item is available to describe the value of programs and services
delivered by the Government of Alberta to Indigenous people in the province. All indigenous
people are eligible for the same health, education and other services and benefits that non-
Indigenous Albertans receive, irrespective of whether they live on or off a reserve or settlement.72
As detailed in the earlier section on Alberta’s Indigenous people, the majority of First Nations and
Metis people in Alberta do not live on reserves. As a result, they are likely accessing these same
services. For context, the Government of Alberta’s expenditures in 2015/16 totalled almost $49
billion, of which the largest line items were Health ($20 billion), Education ($7.9 billion), and
Advanced Education ($5.7 billion).73 Recall that 6.2 per cent of Alberta’s population identifies as
indigenous, and the large majority live off-reserve.
Consider K-12 education as an example. The Calgary Board of Education supports 3,942
self-identified First Nations, Métis and Inuit students in 218 schools.74 Edmonton Public Schools operates amiskwaciy Academy, which provides public education based on an Aboriginal context for 252 students.75 In addition to the base funding provided regardless of ethnicity, the Government
of Alberta provides a supplement of $1,178.10 (2016) for each student whose parents identify
themselves as having First Nations, Métis or Inuit heritage.76 This funding is in addition to $37
72 Gerson, Jen, Federal funding not a problem for First Nations as yearly spending has risen to $9,056 per capita, study finds (National Post: December 10, 2013) http://nationalpost.com/news/canada/federal-funding-not-a-problem- for-first-nations-as-yearly-spending-has-risen-to-9056-per-capita-study-finds/wcm/99e75e9b-0d10-4add-92f6- 1ffd557c0d62 73 Government of Alberta, Budget 2017: Fiscal Plan, http://finance.alberta.ca/publications/budget/budget2017/fiscal-plan-complete.pdf (March 16, 2017): 13 74 Calgary Board of Education, Aboriginal (K-12) (August 24, 2016) http://www.cbe.ab.ca/programs/supports-for- students/Pages/Aboriginal-Education.aspx 75 Edmonton Public Schools, amiskwaciy Academy (June 22, 2017) https://www.epsb.ca/schools/amiskwaciy/ 76 Hampshire, Gareth, Use of indigenous student grants leaves Alberta parent 'outraged' (CBC News: February 4, 2016) http://www.cbc.ca/news/canada/edmonton/use-of-indigenous-student-grants-leaves-alberta-parent-outraged- 1.3432730
25 million allocated by Budget 2017 to both on- and off-reserve schools to support indigenous student success.77
Clearly there are a wide variety of ways in which Government of Alberta revenues are
currently shared with the province’s indigenous peoples. This sharing is done at both the individual and community level, and takes place through direct grants, targeted departmental expenditures, and the provision of services accessible to all Albertans, notably healthcare and education.
However, as the next section will demonstrate, there are clear differences of opinion between the
Government of Alberta and indigenous leaders in the province with respect to whether the sharing of additional revenue streams should be considered.
4.4 Resource Revenue Sharing Positions of Relevant Parties
Government of Canada
Although the Government of Canada retains a legal and fiduciary responsibility for most
of the Crown’s obligations to Status and Non-Status Indians, as well as the Inuit and Métis,78 to
date it has not seen itself as relevant to the debate over the sharing of Alberta’s general resource
revenues with the Province’s Indigenous peoples. This is due to the 1930 devolution of
responsibility and rights over natural resources explained in the previous section. The Government
of Canada undoubtedly profits from natural resource extraction in Alberta, but it does so indirectly
through personal and corporate income taxes and other indirect taxes collected in the province
77 Government of Alberta – Department of Education, Budget 2017 Funding Support Breakdown (June 28, 2017) https://education.alberta.ca/budget/funding-supports/everyone/budget-2017-funding-charts/?searchMode=3 78 Library of Parliament, Federal-Provincial Jurisdiction and Aboriginal Peoples (February 1, 2001) https://lop.parl.ca/content/lop/ResearchPublications/tips/tip88-e.htm
26 rather than royalties that can be explicitly connected to the resource. In 2011, when Alberta Chiefs
raised the issue of resource revenue sharing with then Prime Minister Stephen Harper, he directed
them back to the Government of Alberta as the proper authority. 79
Government of Alberta
In 2013, then-Minister of Aboriginal Relations Robin Campbell confirmed the provincial
government’s position that it would not share resource revenues directly with First Nations.80 He
instead suggested that First Nations would continue to benefit from these revenues in the same
way as other Albertans, presumably programs and services and relatively low tax rates afforded
by resource wealth.
During the 2015 Alberta provincial election, the New Democratic Party of Alberta
committed to implement the United Nations Declaration on the Rights of Indigenous Peoples
through provincial laws.81 After forming government later that year, Premier Rachel Notley told
her cabinet that, “in considering the objectives of the UN Declaration, our approach will be based
on the principle that the bounty of Alberta’s resources must be shared by all Albertans.”82 She also noted her expectation that “the most challenging part of the discussion will be related to land and resources.” When the report of a review panel struck to evaluate Alberta’s resource royalty framework was released early the following year, it noted that “representatives of First Nations
79 Morin, Brandi, New Alberta AFN regional chief says treaties guaranteed resource revenue sharing, APTN News, http://aptnnews.ca/2015/06/29/new-alberta-afn-regional-chief-says-treaties-guaranteed-resource-revenue-sharing/, (June 29, 2015) 80 Sweetgrass, Shari Narine, No to resource revenue sharing, says Alberta government (Aboriginal Multi-Media Society: March 2013) http://www.ammsa.com/publications/alberta-sweetgrass/no-resource-revenue-sharing-says- alberta-government 81 Alberta NDP 2015 Election Platform, https://d3n8a8pro7vhmx.cloudfront.net/themes/5538f80701925b5033000001/attachments/original/1431112969/Alb erta_NDP_Platform_2015.pdf?1431112969 82 “Premier Notley Letter to Cabinet”, Government of Alberta, http://indigenous.alberta.ca/documents/Premier- Notley-Letter-Cabinet-Ministers.pdf, (July 7, 2015)
27 and Métis communities consistently represented the issue of sharing resource revenues with their
communities.”83 Although the report suggested that the Government of Alberta could address these
concerns in its future discussions with the Province’s Indigenous peoples, it did not make any
recommendations in this area. The Government of Alberta under the New Democratic Party has
not taken a formal position on the issue.
Alberta’s Indigenous Communities
Assembly of First Nations Regional Chief for Alberta, Craig Mackinaw, former Grand
Chief of the Confederacy of Treaty 6 and former Chief of Ermineskin Cree Nation, has pointed to revenue sharing as a solution to socio-economic challenges in First nations communities.
Suggesting it could improve service provision, he also states that revenue sharing would help fulfill
the original intent of treaties with the Government of Canada.84 Mackinaw points to the Alberta
Natural Resources Act and the lack of consultation with First Nations at that time as a contributor
to the absence of revenue sharing today in Alberta. Furthermore, he has suggested that talks on
revenue sharing would contribute to the NDP government’s efforts to implement UNDRIP.85
An objective of this literature review has been to demonstrate the relative importance of
non-renewable resource revenues in funding the Government of Alberta’s program and service
delivery. It has also sought to provide the necessary context to understand the ways in which
Government of Alberta revenues are currently shared with the province’s indigenous peoples.
83 Government of Alberta – Department of Energy, Alberta at a Crossroads: Alberta Royalty Review Panel Report (January 2016) http://www.energy.alberta.ca/Org/pdfs/RoyaltyReportJan2016.pdf 84 Morin, Brandi, New Alberta AFN regional chief says treaties guaranteed resource revenue sharing, APTN News, http://aptnnews.ca/2015/06/29/new-alberta-afn-regional-chief-says-treaties-guaranteed-resource-revenue-sharing/, (June 29, 2015) 85 Morin, Brandi, Alberta First Nations up pressure on province for cut of royalty revenues after review announcement, APTN News, http://aptnnews.ca/2016/01/30/alberta-first-nations-up-pressure-on-province-for-cut- of-royalty-revenues-after-review-announcement/ (January 30, 2016)
28 Further, it highlighted the variety of revenue tools used by indigenous governments in Alberta to
support service delivery, as well as the significant disparity in available resources and
opportunities between First Nations in Alberta. Finally, it outlined the positions of the various
relevant parties with regard to the sharing of Alberta’s non-renewable resource revenues with
indigenous communities in the province. The following Analysis section will explore various
revenue sharing models and their potential impacts in the provincial context, should the
Government of Alberta choose to consider such a policy in the future.
5. Analysis
5.1 Resource Revenue Sharing Models
Significant comparative research has been done to outline the wide variety of models in
Canada and internationally that enable Indigenous communities to benefit from resource
development, including general resource revenue sharing agreements. In particular, work done by
the Natural Resource Governance Institute,86 the Frontier Centre for Public Policy,87 and the
Macdonald-Laurier Institute,88 as well as a report from a Government of Canada-Assembly of First
Nations Working Group on Natural Resource Development,89 offer a range of policy options for
86 Natural Resource Governance Institute and the United Nations Development Program, “Natural Resource Revenue Sharing,” https://resourcegovernance.org/sites/default/files/documents/nrgi_undp_resource- sharing_web_0.pdf, (September 2015) 87 Flanagan, Tom. Resource Revenue Sharing: Property Rights and Economic Incentives, Frontier Centre for Public Policy, https://fcpp.org/wp-content/uploads/2015/07/Flanagan-Resource-Revenue-Sharing.pdf (July 2015) 88 Coates, Ken. Sharing the Wealth: How resource revenue agreements can honour treaties, improve communities, and facilitate Canadian development, (Macdonald-Laurier Institute: January 2015), http://www.macdonaldlaurier.ca/files/pdf/MLIresourcerevenuesharingweb.pdf 89 Assembly of First Nations and Aboriginal Affairs and Northern Development Canada, Finding the Ways and Means for First Nations to Fully Share in Natural Resource Development February 2015) http://www.afn.ca/uploads/files/Working-Group-on-Natural-Resource-Development-Report.pdf
29 governments to consider. Table 3 at the end of this section outlines some of these models currently
in place in Canada and around the world.
Resource revenue sharing agreements can be designed to suit any number of contexts and
political or economic objectives, and each model brings its own unique advantages and challenges.
Below is an overview of some of the important decisions that policymakers should consider in
designing a scheme suitable for their jurisdiction.
Jurisdiction-Wide, Interest Group, or Impact/Location-Based Sharing?
The status quo in Alberta represents the most general form of resource revenue sharing in
a jurisdiction. Royalties from across the province are collected in a central fund and used for
general expenditures across the jurisdiction. A worker in Fort McMurray may receive an outsized
benefit from oil sands development through their paycheque, but the royalties and other
government revenues from that resource benefits him or her as much as any other Albertan across
the province. Many central governments, including Algeria, Chile, and Norway, similarly pool
resource revenues with all other income sources and then spend or make transfers from a central
fund.90
According to a second model, revenue sharing is directed at specific interest groups across
the jurisdiction, such as indigenous communities. In many cases, such sharing is not linked to the
impacts of resource extraction, but rather based on political negotiations with these groups. For
example, resource-producing provinces in Bolivia receive the largest share of revenues (50 per
cent), but the remainder is shared with non-producing provinces (40 per cent), and indigenous
90 Natural Resource Governance Institute and the United Nations Development Program, “Natural Resource Revenue Sharing,” https://resourcegovernance.org/sites/default/files/documents/nrgi_undp_resource- sharing_web_0.pdf, (September 2015): 30
30 communities (10 per cent).91 Similarly, some indigenous communities in the Northwest Territories
with land claim agreements receive a fixed portion of the territory’s resource royalties in the region
beyond their settlement lands. In addition, the Government of the Northwest Territories recently
negotiated the devolution of authority over natural resources from the federal government, and as
part of that deal it has developed a formula for the sharing of anticipated additional resource
revenues with indigenous communities.92 A similar system exists in the Yukon Territory, whereby
all Yukon First Nations with final land claim agreements with the federal government receive a
portion of resource royalties payments according to a specified formula and up to “the amount
which, if distributed equally among all Yukon Indian People, would result in an average per capita
income for Yukon Indian People equal to the Canadian average per capita income.”93 Finally, in
Nunavut, Inuit are entitled to a percentage of royalties received by the Government of Canada on all non-Inuit-owned land in the territory.94
A third model is that of impact/location-based resource revenue sharing, also known as derivation-based transfer. Under this model, revenues are not shared with indigenous communities throughout the jurisdiction, but rather specifically with those communities most affected by a specific development or by developments within a specific region. At least thirty countries implement this model of revenue sharing.95 In the Philippines, the Mining Act requires miners to
91 Natural Resource Governance Institute and the United Nations Development Program, “Natural Resource Revenue Sharing,” https://resourcegovernance.org/sites/default/files/documents/nrgi_undp_resource- sharing_web_0.pdf, (September 2015): 50 92 Northwest Territories Intergovernmental Revenue Sharing Agreement (February 27, 2014) http://devolution.gov.nt.ca/wp-content/uploads/2012/04/140310-Signed-Resource-Revenue-Sharing-Agreement.pdf 93 Government of Canada – Department of Indigenous and Northern Affairs, Umbrella Final Agreement Between The Government Of Canada, The Council For Yukon Indians And The Government Of The Yukon (May 29, 1993) http://www.aadnc-aandc.gc.ca/eng/1297278586814/1297278924701#chp23 94 Agreement between the Inuit of the Nunavut Settlement Area and Her Majesty the Queen in Right of Canada (May 25, 1993) http://nlca.tunngavik.com/?lang=en 95 Natural Resource Governance Institute and the United Nations Development Program, “Natural Resource Revenue Sharing,” https://resourcegovernance.org/sites/default/files/documents/nrgi_undp_resource- sharing_web_0.pdf, (September 2015): 30
31 pay royalties of at least one percent to indigenous groups when mining occurs within their ancestral
lands.96 In British Columbia, revenue sharing is currently limited to First Nations communities
and is done on a sector-by-sector and case-by-case basis. The objective of these arrangements is
to facilitate resource development in a jurisdiction where the large majority of the land base is not
covered by land claims agreements. Sharing of mineral revenues in British Columbia is facilitated
through Economic Community Development Agreements, 17 of which have been negotiated as of
August 2017. Percentages range from 12.5 per cent to 37.5 per cent, depending on the project.97
Finally, a fourth model for resource revenue sharing is based on indicators, which allocates funds to lower orders of government or other groups on the basis of population, revenue generation, poverty level or geographic characteristics, such as remoteness. Under this model, practiced in Ecuador, Mongolia, Mexico, and Uganda, albeit not with a specific focus on indigenous communities, the location of extraction is not taken into consideration.98 The federal
equalization transfer program in Canada is analogous in that, although it takes into account a wider
variety of revenue sources, it too is based on revenue-generating capacity. This program helps to
ensure that Canadians in every province have access to a similar level of government services at
similar levels of taxation.99
In each of the four models above, revenues can be shared directly and on an annual basis,
or, alternatively, can be allocated to a long-term diversified fund. Such funds are designed to
96 ibid, 56 97 Prospectors and Developers Association of Canada. Government Resource Revenue Sharing with Aboriginal Communities in Canada: A Jurisdictional Review (2014): 21 98 Natural Resource Governance Institute and the United Nations Development Program, “Natural Resource Revenue Sharing,” https://resourcegovernance.org/sites/default/files/documents/nrgi_undp_resource- sharing_web_0.pdf, (September 2015): 57 99 Library of Parliament, Canada’s Equalization Formula (November 10, 2008) https://lop.parl.ca/Content/LOP/ResearchPublications/2008-20-e.htm
32 smooth out revenue volatility and reduce local economic inflation in the short-term, replace revenues once the resource is depleted in the medium-term, and provide for future generations in the long-term. Provided this model is politically acceptable to the relevant parties and the assets are managed transparently and effectively, this model can extend the life and value of resource revenues, as demonstrated by the Niger Delta Development Commission, the Alberta Heritage
Fund, or the Norwegian “Oil Fund.”100 It is worth noting that many Alberta First Nations already
have similar funds in place, such as Samson Cree Nation’s $424 million Kisoniyaminaw Heritage
Trust Fund.101
Static versus Linear Projects
Although the vast majority of resource revenue sharing projects are focussed on the value
extracted from static projects, such as a mine or well, there is growing interest in revenue sharing
models that could compensate those affected by the linear infrastructure that facilitates resource
development, such as pipelines. These projects may cross the traditional territories of multiple
indigenous communities and impact Aboriginal rights and title in a way that requires
accommodation or compensation. British Columbia has negotiated 32 natural gas pipeline benefit
agreements102 and, in the absence of a nationally accepted way to value impacts across all forms
of linear infrastructure, the Indian Resource Council recently began to develop a valuation
100 Natural Resource Governance Institute and the United Nations Development Program, “Natural Resource Revenue Sharing,” https://resourcegovernance.org/sites/default/files/documents/nrgi_undp_resource- sharing_web_0.pdf, (September 2015): 60 101 Government of Canada – Department of Indigenous and Northern Affairs, First Nations Financial Transparency Act (March 28, 2017) http://fnp-ppn.aandc- aadnc.gc.ca/fnp/Main/Search/FederalFundingMain.aspx?BAND_NUMBER=444&lang=eng 102 Government of British Columbia, Natural Gas Benefits Agreements (July 15, 2017) http://www2.gov.bc.ca/gov/content/environment/natural-resource-stewardship/consulting-with-first-nations/first- nations-negotiations/natural-gas-pipeline-benefits-agreements
33 framework. This framework assumes legal and regulatory approval and compliance, and will address the entire lifecycle of a project, including its benefits, risks, and economics.103
Distribution and Use of Funds
Once decisions are made regarding the justification for revenue sharing, the projects to which it will apply, what percentage of which revenues will be shared, and whether those revenues will be made through direct annual payments or allocated to a savings fund, there is still the question of who the funds will be distributed to. Should payments be made to individuals or
Aboriginal Representative Organizations, such as band, tribal, or nation administrations? Existing agreements in Canada and internationally exclusively deal with the latter. Furthermore, will the allocating government, such as a national or subnational government, direct the eligible use of such funds, such as for social infrastructure or economic development, or will they leave allocation decisions to the recipients?
Generosity
The amount received by indigenous communities under various revenue sharing programs in Canada and around the world varies widely. In some cases, a threshold for royalty receipts may apply before sharing provisions kick in. Although some agreements provide for sharing of a straight percentage of royalties, others include initial and secondary shares with varying percentages for different revenue thresholds. Furthermore, some agreements offer minimum payments with the opportunity for increased sharing depending on revenues, commodity prices, or profitability for the relevant project. With the exception of agreements with minimum payment
103 Buffalo, Stephen and Norris, Clayton, Indigenous Community Experiences in the Energy Sector (May 2017) https://www.policyschool.ca/wp-content/uploads/2017/05/Indigenous-Community-Experiences-in-the-Energy- Sector_UofC-Presentation-1.pdf
34 provisions, clearly the funds received by indigenous communities depends on the scale and life of
the relevant project or projects. One of the more generous formulas is found in the Umbrella Final
Agreement with Yukon First Nations, which has no revenue threshold for sharing and provides 50
per cent of the first $2 million in royalties and 10 per cent of any additional revenue.104 However,
due to a lack of resource development in the territory, indigenous communities there receive fewer
revenues than others in jurisdictions with less generous agreements but more industrial activity.105
Table 3 on the following page provides an overview of the generosity of the Yukon agreement and
other select revenue sharing agreements from across Canada and around the world.
104 Government of Canada – Department of Indigenous and Northern Affairs, Umbrella Final Agreement Between The Government Of Canada, The Council For Yukon Indians And The Government Of The Yukon (May 29, 1993) http://www.aadnc-aandc.gc.ca/eng/1297278586814/1297278924701#chp23 105 Windeyer, Chris, It’s time to review the Yukon’s royalty regime, Yukon News, http://www.yukon- news.com/editorial/its-time-to-review-the-yukons-royalty-regime (November 25, 2016)
35 Table 3: Revenue Sharing Provisions of Select Agreements106
Jurisdiction Agreement Primary or Total Share of Net Secondary Initial Revenues Share (if threshold (if applicable) applicable)
Yukon Umbrella Final 50% of $2 million 10% Agreement with Yukon First Nations NWT Gwich'in and Sahtu 7.5% of $2 million 1.20% $3 million Final Agreements Tlicho Final 10.429% of $2 million 2.09% $4.172 Agreement million
Deh Cho First Nations 12.25% of $2 million 2.45% Interim Agreement
Nunavut Nunavut Land Claims 50% of $2 million 5% Agreement
Newfoundland Labrador Inuit Land 50% of $2 million 5% and Labrador Claims Agreement - Excluding Voisey Bay
Labrador Inuit Land 5% Claims Agreement - Voisey Bay
Innui of Labrador 5% Memoradum of Agreement - Voisey Bay
British Williams Lake Indian 18.50% Columbia Band - Mount Polley
Soda Creek Indian 16.50% Band - Mount Polley
Lower and Upper 35% Similkameen Indian Banf - Copper Mountain Mine
Ktunaxa Nation - Elk 37.5% up to $23 million 5% Valley Coal Mine
Nak'azdli First Nation - 12.50% Mount Milligan Mine
McLeod Lake Indian 15% Band - Mount Milligan Mine
Stk'emlupsemc of the 37.50% Secwepemc Nation - New Afton Mine
Takla Lake First 11.67% Nation, Kwadacha Nation, - Kemess Mine
106 Table assembled by author using the cited sources.
36
Salteau First Nations - 12.63% up to $39,100,000 2% Zone A
Salteau First Nations - 13.33% up to $52,800,000 2% Zones B, C and D
Nlaka'pamux First 19.68% Nations - High Valley Copper Mine
Nisa'a Nation - Kitsault 35% Mine
Lleihdli T'enneh - 37.5 Giscome Mine
Halfway River First 10.63% up to $39,100,000 1.70% Nation - Zone A
Halfway River First 6.63% up to $52,800,000 1% Nation - Zones B, C and D
Quebec The Agreement $70 million guaranteed annual Respecting a New payment or "an amount Relationship Between determined by indexing the base the Cree Nation and amount in accordance with a the Government of formual that reflects the Quebec evolution of the value of hydroelectric production, mineral development and forestry harvests in the region"
Phillippines Phillippine Mining Act 1%
Bolivia Santa Cruz 10% for indigenous villages Department
National Revenues 5% for Indigenous People's Fund
Sources: Coates, Ken. Sharing the Wealth. MacDonald-Laurier Institute (January 2015), p. 16 Prospectors and Developers Association of Canada. Government Resource Revenue Sharing with Aboriginal Communities in Canada: A Jurisdictional Review (2014) BC Government First Nations Agreements Database. Accessed at: http://www2.gov.bc.ca/gov/content/environment/natural-resource- stewardship/consulting-with-first-nations/first-nations-negotiations/economic-and- community-development-agreements Revenue Sharing Case Study: Phillippines. Natural Resource Governance Project (February 2016) Revenue Sharing Case Study: Bolivia. Natural Resource Governance Project (April 2016) Budget 2017 - Fiscal Plan - Revenue. Government of Alberta.
37 5.2 Applying the Models to Alberta
Table 4 on the following page demonstrates the potential fiscal impacts of sharing Alberta’s resource royalties according to the formulas in the case studies previously outlined. This represents the empirical aspect of the Capstone and, to demonstrate how these impacts could change over time, I have provided figures for those years included the Government of Alberta’s 2017 Budget.
To simplify the exercise, I have also applied the formula for jurisdiction-wide resource sharing
(i.e. total resource revenues across Alberta), as is the case in Canada’s three northern territories, as well as Labrador. That being said, a future analysis that considers the potential impacts of resource revenue sharing tied to specific projects or regions (e.g. the Athabasca oil sands) would be valuable.
For the latest year for which the Government of Alberta forecasts non-renewable resource revenues (2019-20), the sharing formula provided for in two B.C. agreements (Lleihdli T'enneh -
Giscome Mine and Stk'emlupsemc of the Secwepemc Nation - New Afton Mine), which provides for 35% of Net Mineral Resource Tax revenues, would offer the largest allocation to Alberta’s indigenous communities: $2.485 billion. In contrast, the Philippine Mining Act, which provides for sharing of 1% of revenues, would offer the smallest amount: $66.3 million.
38 Table 4: Fiscal Impacts for Alberta of Select Revenue Sharing Models107
Jurisdiction Agreement Estimated Alberta Fiscal Impact (bolded figures are actual or forecast non- renewable resource revenues - all figures are in millions of dollars) 2015-16 2016-17 2017-18 2018-19 2019- 2020 $2,789 $2,430 $3,754 $4,226 $6,628 Yukon Umbrella Final Agreement with Yukon First Nations $280 $244 $376 $424 $664 NWT Gwich'in and Sahtu Final Agreements $34 $29 $45 $51 $80 Tlicho Final Agreement $58 $51 $79 $88 $139 Deh Cho First Nations Interim Agreement $69 $60 $92 $104 $163 Nunavut Nunavut Land Claims Agreement $140 $123 $189 $212 $332 Newfoundland Labrador Inuit Land Claims and Labrador Agreement - Excluding Voisey Bay $140 $123 $189 $212 $332 Labrador Inuit Land Claims Agreement - Voisey Bay $139 $122 $188 $211 $331 Innui of Labrador Memoradum of Agreement - Voisey Bay $139 $122 $188 $211 $331 British Williams Lake Indian Band - Columbia Mount Polley $516 $450 $694 $782 $1,226 Soda Creek Indian Band - Mount Polley $460 $401 $619 $697 $1,094 Lower and Upper Similkameen Indian Banf - Copper Mountain Mine $976 $851 $1,314 $1,479 $2,320 Ktunaxa Nation - Elk Valley Coal Mine $148 $130 $196 $220 $340 Nak'azdli First Nation - Mount Milligan Mine $349 $304 $469 $528 $829 McLeod Lake Indian Band - Mount Milligan Mine $418 $365 $563 $634 $994 Stk'emlupsemc of the Secwepemc Nation - New Afton Mine $1,046 $911 $1,408 $1,585 $2,486 Takla Lake First Nation, Kwadacha Nation, - Kemess Mine
$325 $284 $438 $493 $773
107 Table assembled by author using the cited sources.
39 Salteau First Nations - Zone A $61 $54 $80 $89 $137 Salteau First Nations - Zones B, C and D $63 $56 $82 $92 $140 Nlaka'pamux First Nations - High Valley Copper Mine $549 $478 $739 $832 $1,304 Nisa'a Nation - Kitsault Mine $976 $851 $1,314 $1,479 $2,320 Lleihdli T'enneh - Giscome Mine $1,046 $911 $1,408 $1,585 $2,486 Halfway River First Nation - Zone A $52 $46 $68 $76 $117 Halfway River First Nation - Zones B, C and D $31 $28 $41 $46 $70 Quebec The Agreement Respecting a New Relationship Between the Cree Nation and the Government of Quebec
$70 $70 $70 $70 $70 Phillippines Phillippine Mining Act $28 $24 $38 $42 $66 Bolivia Santa Cruz Department $279 $243 $375 $423 $663 National Revenues $139 $122 $188 $211 $331
Sources: Coates, Ken. Sharing the Wealth. MacDonald-Laurier Institute (January 2015), p. 16 Prospectors and Developers Association of Canada. Government Resource Revenue Sharing with Aboriginal Communities in Canada: A Jurisdictional Review (2014) BC Government First Nations Agreements Database. Accessed at: http://www2.gov.bc.ca/gov/content/environment/natural-resource- stewardship/consulting-with-first-nations/first-nations-negotiations/economic-and- community-development-agreements Natural Resource Governance Institute. Revenue Sharing Case Study: Phillippines (February 2016) Natural Resource Governance Institute. Revenue Sharing Case Study: Bolivia (April 2016) Government of Alberta. Provincial Fiscal Plan - Revenue (2017)
40 6. Considerations for Policymakers
In collaboration with the United Nations Development Program, the Natural Resource
Governance Institute has carefully catalogued examples of resource revenue sharing from around the world.108 In reviewing this work, it becomes clear that although each situation is unique, a flawed model can lead to wasted resources in the best case, or, in the worst case, internal conflict.
In its examination of policy options, the Government of Alberta should take into account a number of important considerations, several of which were first introduced earlier in the Capstone.
The first and foundational consideration is on what basis revenue sharing is being pursued?
Is it on the basis that a right to the revenue exists, or is it a policy decision in pursuit of improved
relations with indigenous communities and/or improved socio-economic outcomes? There is very
strong evidence that Alberta, “owns its public lands and natural resources without Aboriginal
encumbrance on the title, save for continuing rights to hunt and fish on Crown land.”109 However,
legal arguments are not the only motivation for resource revenue sharing. Despite the existence of
treaties in the Northwest Territories, the Government of Canada decided to pursue a more durable
political solution to debates over land and resources through land claim negotiations in the mid-
1970s. These modern treaties were, “designed to complement and build upon the relationship
which was established by historical treaties.”110 The Northwest Territories example shows that
even in the absence of a legal requirement, a political objective can justify the pursuit of revenue
sharing. Indeed, such arrangements have now become the status quo in regions of Canada not
108 Natural Resource Governance Institute and the United Nations Development Program, “Natural Resource Revenue Sharing,” https://resourcegovernance.org/sites/default/files/documents/nrgi_undp_resource- sharing_web_0.pdf, (September 2015) 109 Flanagan, Tom. Resource Revenue Sharing: Property Rights and Economic Incentives, Frontier Centre for Public Policy, https://fcpp.org/wp-content/uploads/2015/07/Flanagan-Resource-Revenue-Sharing.pdf (July 2015): 48 110 Government of Canada – Department of Indigenous and Northern Affairs, NWT Plain Facts on Land and Self- government (March 2007) https://www.aadnc-aandc.gc.ca/eng/1100100025943/1100100025945
41 covered by historical treaties, with the scope and generosity of sharing agreements varying between and within jurisdictions, as demonstrated previously in Table 3 on page 35.
To guide the decision making process, policy makers should clearly answer each of the following seven questions to determine whether a suitable revenue sharing model exists for the
Alberta context. If suitable answers to these questions cannot be found, then the status quo may be a preferable policy option.
1) Should revenues be shared with indigenous peoples: (1) equally across the province on a
per capita basis; (2) on the basis of certain social or economic indicators (similar to
Canada’s equalization formula); (3) on the basis of proximity to and/or local impacts of
natural resource development (e.g. damage to the environment, livelihoods or public
health); or, (4) some combination of these criteria? As demonstrated previously, the
financial position of indigenous communities varies significantly across the province, and
revenue sharing could have dramatically different results in different communities.
2) Following on from the previous question, who would be the appropriate recipient for these
revenues? For First Nations, would band governments be entrusted with funds on behalf
of their members? Would Métis also receive a share and, if so, would those monies flow
through the Métis Nation of Alberta, which is an evolving representative government that
counts only a small portion of Métis in the province as its members?
3) As a new policy, and particularly in the case of a policy that shares revenues only with
indigenous people in proximity to and/or impacted by specific projects, there is also the
42 question of whether revenue sharing would apply only to new projects/royalty streams, or
whether it would extend to those projects/royalty streams already in production? In either
case, it would also be important to determine whether the scheme would have any
relationship to or impact on existing Impact and Benefit Agreements that communities may
have negotiated.
4) What would be the formula for sharing revenues? In other words, how generous should the
program be? As outlined earlier, such case studies from around the world offer anywhere
from 1 to 35 per cent of net revenues to indigenous communities. In the Alberta context,
this could mean an annual difference between $66 million and approximately $2.5 billion
by 2019-20.
5) Should revenues be transferred directly on an annual basis or contributed to a savings fund,
in order to address absorptive capacity111, discourage current consumption and inflated
public spending, as well as provide for more predictable and smooth revenues?112
6) Should transfers include any conditions on the use of the funds, such as education and skills
training, or should it be left to communities to determine their own priorities?
7) Indirectly related to the revenue sharing scheme itself, is the question of how the
Government of Alberta would cover its annual expenditures with reduced revenues? With
111 Natural Resource Governance Institute and the United Nations Development Program, “Natural Resource Revenue Sharing,” https://resourcegovernance.org/sites/default/files/documents/nrgi_undp_resource- sharing_web_0.pdf, (September 2015): 56 112 ibid, 76.
43 an anticipated 2017-18 deficit of $10.5-billion, there is already significant pressure to cut
spending or raise new sources of revenue, which would be exacerbated by reduced resource
revenues due to sharing with indigenous communities.113
7. Conclusion
The goal of this Capstone has been to equip policymakers with both context and data
needed to ensure a constructive and informed dialogue around the important and complex issue of
sharing Alberta’s general resource revenues with indigenous communities in the province. It has
explored the historical and legal context of the issue, as well as the context of Indigenous Peoples
in Alberta. Its Literature Review covered the sources of Alberta’s resource revenues, the finances
of Alberta’s indigenous communities, the distribution of Alberta’s resource revenues, and the
positions of relevant parties. The Analysis component evaluated models for revenue sharing from
across Canada and around the world, as well as estimating the potential costs of revenue sharing
if those models were applied to the Alberta context. Finally, it provided an overview of key
considerations for policymakers.
Whether and how to share resource revenues with indigenous communities in Alberta is a
decision that ultimately falls to the province’s political leadership. If such a policy is pursued, it
is critical that a broad social consensus is developed through clear and open communication
around not only the “how” of revenue sharing, but also and especially the “why”. The Natural
Resource Governance Institute and the United Nations Development Program have emphasized
in their international review of resource revenue sharing schemes that the critically important
113 Tait, Carrie, Alberta burns through half of financial cushion built into budget, but deficit projection unchanged (The Globe and Mail: August 23, 2017) https://beta.theglobeandmail.com/news/alberta/alberta-burns-through-half- of-financial-cushion-built-into-budget/article36068141/?ref=http://www.theglobeandmail.com&
44 success factor is whether design is aligned with objective. To this end, it is perhaps more valuable to focus first on process than on the ultimate formula. We know from game theory that emotions related to perceived unfair offers can lead negotiating parties to an outcome other than that assumed to be in their rational best interest, and affect future cooperation.114 By developing
an inclusive process involving all relevant parties to study various policy options, the
Government of Alberta and the province’s indigenous communities can better ensure that the
ultimate outcome will best reflect their available resources and preferences, and build a stronger
foundation for future cooperation. One model could be an initial evaluation and
recommendations from an arms-length advisory group, such as that convened to review the
province’s royalty structure in 2016. The Royalty Review Panel, chaired by ATB CEO Dave
Mowat, received endorsements for its work on an extremely politically sensitive issue from
industry, think tanks, and municipalities.115
Whether and however the Government of Alberta chooses to develop a position on the
issue of resource revenue sharing, how the province chooses to spend its significant resource
wealth is sure to remain a hot button issue for debate. As per the title of an Atlantic Institute for
Market Studies report on the issue, it is certainly, “a good problem to have”.116
114 Yamagishi, Toshio et al, The private rejection of unfair offers and emotional commitment (Proceedings of the National Academy of the Sciences of the United States of America: Vol 106 No 28: May 15, 2009) http://www.pnas.org/content/106/28/11520 115 Varcoe, Chris, The Royalty Review: What They Said (The Calgary Herald: January 30, 2016) http://calgaryherald.com/news/local-news/the-royalty-review-what-they-said 116 Collins, Jeff, Navarro-Genie, Marco and Roach, Robert, A Good Problem to Have: Lessons for Atlantic Canada from Alberta’s Experience with Natural Resource Revenue (Atlantic Institute for Market Studies: June 2015) http://www.aims.ca/wp-content/uploads/2015/06/AIMS_AGoodProblem_JN05-F2.pdf
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49 Library of Parliament, Federal-Provincial Jurisdiction and Aboriginal Peoples (February 1, 2001) https://lop.parl.ca/content/lop/ResearchPublications/tips/tip88-e.htm Morin, Brandi, Alberta First Nations up pressure on province for cut of royalty revenues after review announcement (APTN News: January 30, 2016) http://aptnnews.ca/2016/01/30/alberta- first-nations-up-pressure-on-province-for-cut-of-royalty-revenues-after-review-announcement/ Morin, Brandi, New Alberta AFN regional chief says treaties guaranteed resource revenue sharing (APTN New: June 29, 2015) http://aptnnews.ca/2015/06/29/new-alberta-afn-regional- chief-says-treaties-guaranteed-resource-revenue-sharing/ National Post, Landmark Supreme Court ruling extends rights to 600,000 Métis, 'non-status Indians' (April 14, 2016) http://nationalpost.com/news/canada/landmark-unanimous-supreme- court-ruling-states-metis-non-status-indians-are-federal-responsibility/wcm/aa6d4e90-a3ef-434a- a731-e65b4cb1f099 Natural Resource Governance Institute and the United Nations Development Program, Natural Resource Revenue Sharing (September 2015) https://resourcegovernance.org/sites/default/files/documents/nrgi_undp_resource- sharing_web_0.pdf Northwest Territories Intergovernmental Revenue Sharing Agreement (February 27, 2014) http://devolution.gov.nt.ca/wp-content/uploads/2012/04/140310-Signed-Resource-Revenue- Sharing-Agreement.pdf Office of the Treaty Commissioner, Treaty Backgrounder (June 18, 2017) http://www.otc.ca/public/uploads/resource_photo/Treaty_Backgrounder.pdf Prospectors and Developers Association of Canada, Government Resource Revenue Sharing with Aboriginal Communities in Canada: A Jurisdictional Review (2014) http://www.pdac.ca/docs/default-source/default-document-library/pdac-grrs-report- 2014.pdf?sfvrsn Reuters, Oil Demand Won’t Peak Before 2040 (November 16, 2016) http://fortune.com/2016/11/16/oil-demand-2040/ Richards, Tadzio, Our Vital Forest and How Alberta Mismanages Them (Alberta Views: June 1, 2016) http://albertaviews.ca/our-vital-forest/ Schwartz, Daniel, How does native funding work? (CBC News: February 6, 2013) http://www.cbc.ca/news/canada/how-does-native-funding-work-1.1301120 Stamp, Robert, Alberta (The Canadian Encyclopedia: March 26, 2009) http://www.thecanadianencyclopedia.ca/en/article/alberta/#h3_jump_0 Sweetgrass, Shari Narine, No to resource revenue sharing, says Alberta government (Aboriginal Multi-Media Society: March 2013) http://www.ammsa.com/publications/alberta-sweetgrass/no- resource-revenue-sharing-says-alberta-government
50 Tait, Carrie, Alberta burns through half of financial cushion built into budget, but deficit projection unchanged (The Globe and Mail: August 23, 2017) https://beta.theglobeandmail.com/news/alberta/alberta-burns-through-half-of-financial-cushion- built-into-budget/article36068141/?ref=http://www.theglobeandmail.com& Tattrie, Jon, The Northwest Territories and Confederation (The Canadian Encyclopedia: December 19, 2014) http://www.thecanadianencyclopedia.ca/en/article/northwest-territories-and- confederation/ The Truth and Reconciliation Commission of Canada, Honouring the Truth, Reconciling for the Future: Summary of the Final Report of the Truth and Reconciliation Commission of Canada (July 23, 2015) http://www.trc.ca/websites/trcinstitution/File/2015/Honouring_the_Truth_Reconciling_for_the_ Future_July_23_2015.pdf United Nations, United Nations Declaration on the Rights of Indigenous Peoples (September 13, 2007) http://www.un.org/esa/socdev/unpfii/documents/DRIPS_en.pdf Varcoe, Chris, The Royalty Review: What They Said (The Calgary Herald: January 30, 2016) http://calgaryherald.com/news/local-news/the-royalty-review-what-they-said Windeyer, Chris, It’s time to review the Yukon’s royalty regime (Yukon News: November 25, 2016) http://www.yukon-news.com/editorial/its-time-to-review-the-yukons-royalty-regime Yamagishi, Toshio et al, The private rejection of unfair offers and emotional commitment (Proceedings of the National Academy of the Sciences of the United States of America: Vol 106 No 28: May 15, 2009) http://www.pnas.org/content/106/28/11520
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