The Wealth of First Nations Tom Flanagan Fraser Institute 2019 Copyright ©2019 by the Fraser Institute. All rights reserved. No part of this book may be reproduced in any manner whatsoever without written permission except in the case of brief passages quoted in critical articles and reviews. The author of this book has worked independently and opinions expressed by him are, there- fore, his own and and do not necessarily reflect those of the Institute, its Board of Directors, its donors and supporters, or its staff. This publication in no way implies that the Fraser Institute, its directors, or staff are in favour of, or oppose the passage of, any bill; or that they support or oppose any particular political party or candidate. Printed and bound in Canada National Library of Canada Cataloguing in Publication Data The Wealth of First Nations / by Tom Flanagan Includes bibliographical references. ISBN 978-0-88975-533-8. Fraser Institute ◆ fraserinstitute.org Contents Preface / v introduction —Making and Taking / 3 Part ONE—making chapter one —The Community Well-Being Index / 9 chapter two —Governance / 19 chapter three —Property / 29 chapter four —Economics / 37 chapter five —Wrapping It Up / 45 chapter six —A Case Study—The Fort McKay First Nation / 57 Part two—taking chapter seven —Government Spending / 75 chapter eight —Specific Claims—Money / 93 chapter nine —Treaty Land Entitlement / 107 chapter ten —The Duty to Consult / 117 chapter eleven —Resource Revenue Sharing / 131 conclusion —Transfers and Off Ramps / 139 References / 143 about the author / 161 acknowledgments / 162 Publishing information / 163 Purpose, funding, & independence / 164 About the Fraser Institute / 165 Peer review / 166 Editorial Advisory Board / 167 fraserinstitute.org ◆ Fraser Institute Preface The Liberal government of Justin Trudeau elected in 2015 is attempting massive policy innovations in Indigenous affairs. Major changes include large increases in federal spending on Indigenous peoples, division of the former department of Indigenous and Northern Affairs into a department of Indigenous Services and another depart- ment of Crown-Indigenous Relations, reconsideration of the Indian Act, and adoption of the United Nations’ Declaration of the Rights of Indigenous Peoples. Less sweeping but still important changes include allowing more people with Indigenous ances- try to become Registered Indians, addressing the land claims of some Métis organ- izations, revising the specific-claims process, and negotiating further settlements for past injustices (residential schools in Newfoundland & Labrador, the “Sixties Scoop,” Indian hospitals). Beyond these particular changes, a whole new framework for Crown-Indigenous relations has been promised before the 2019 election (Teal, Singh, Bursey, and Curpen, 2018). I do not propose to enter into the debate over First Nations at this level. Whatever differences exist with respect to constitutional, legal, and political arrange- ments, I think everyone would like to see First Nations enjoy a higher standard of living, or well-being, as it is often called today. When the Constitution is being reinter- preted, laws passed, bureaucracies re-organized, and large amounts of money spent, we need to know what the impact on First Nations may be, because more spending and greater official attention does not necessarily translate into improved well-being. The book title,The Wealth of First Nations, is borrowed from my American friend Terry Anderson, who has used the phrase “the wealth of Indian nations” in several publications. The word “Indian” is still widely used in the United States, but “First Nations” is now preferred in Canada. Although like Terry I use the word “wealth,” I am writing not just about material accumulation but about well-being more gener- ally, in which material prosperity is an important factor. Of course, behind both of our titles looms the incomparable work of Adam Smith, The Wealth of Nations. The explicit reference to Smith shows my conviction that the principles of political econ- omy apply to all peoples. Applications may vary in particular circumstances, but the laws of supply and demand cannot be repealed, suspended, or evaded. fraserinstitute.org ◆ Fraser Institute ◆ i Fraser Institute ◆ fraserinstitute.org The Wealth of First Nations introduction Making and Taking Prior to the nineteenth century, the large majority of human beings lived in what today would be considered poverty. In all complex societies, an elite stratum used its control of political and economic institutions to enjoy a varied diet, clean water, formal education, and relief from long hours of manual labour, but such luxuries were not for ordinary people. For causes that are still debated, things came together in the nineteenth century to make possible a gradual extension of these luxuries to the broad mass of the population (Clark, 2007). A new society emerged character- ized by universal education, the harnessing of science to engineering, the division of labour and mass production, multiplication of energy through use of hydrocar- bon fuels, the extension of private property rights and free markets, and inclusive political institutions based on constitutionalism, representative government, and a widely distributed franchise. After its obvious success in Western Europe and North America, there have been many attempts to export this form of society to the rest of the world, with great success in countries such as Japan, South Korea, Taiwan, and Singapore. The experience of the Soviet Union and its satellites, as well as Mao Tse-tung’s China, showed that a high general standard of living could not be achieved without private property and free markets. China is now conducting an experiment using many ele- ments of the new society (with the notable exception of free political institutions), with remarkable economic progress so far but with questions remaining about the longer term. Canada has thrived under the new form of social organization, achieving rank among the world’s leaders in political freedom and stability, material standard of living, longevity, advanced education, relative equality between the sexes, and many other economic and social benefits. Immigrants from all over the world have been able to benefit from Canada’s achievements by participating as individuals in the society—becoming citizens and voting in elections, earning income from employ- ment and investment, attending educational institutions, and raising children who fraserinstitute.org ◆ Fraser Institute ◆ 3 4 ◆ The Wealth of First Nations ◆ Flanagan can progress even farther. Members of some groups also work hard at retaining a distinctive religious or cultural identity, but that does not compromise their pros- perity as long as they also take part as individuals and families in Canada’s wider social and economic life. There is, however, a serious problem of prosperity for Indigenous people, who did not voluntarily choose to join Canadians in seeking the benefits of the modern form of social organization. Rather, that model was imposed upon them by coloni- alism, often with harshly coercive methods such as the prohibition of their inherited languages and religious practices, so they are naturally in conflict about it. Some have reacted rather like immigrants, pursuing employment, education, and social participation while also often trying to preserve a distinctive cultural inheritance. Others remain outside the wider society and are largely shut off from the economic and social benefits that most Canadians enjoy. Let’s look at some numbers. In the 2016 census, 1,673,785 of Canada’s 34.5 million people labelled them- selves as having an Aboriginal identity. (The Liberal government elected in 2015 is in the process of switching official terminology from “Aboriginal” to “Indigenous,” but the term used in the 2016 census was “Aboriginal.” The denotation of the two words is the same, even if the connotations may be slightly different.) Of those iden- tifying as Aboriginal, 977,230 called themselves First Nations, Registered, or treaty Indians, while 587,540 called themselves Métis, that is, being of mixed Aboriginal and other ancestry. A comparison between Métis and First Nations highlights the focus of this book. The Métis were designated as an Aboriginal people in theConstitution Act, 1982, but they have never been separated from Canadian society in the same way as Indians. Except for the eight small Métis settlements in Alberta, there are no Métis reserves, no Métis Act, no history of separate legal and political status. So how have they done in Canadian society? Figure I.1 compares some important social and economic indicators for First Nations, Métis, and non-Aboriginal Canadians drawn from the 2016 census data tables (Statistics Canada, 2017b). Other indicators would show the same pattern: the Métis occupy an intermediate position between First Nations and non-Aboriginal Canadians, often closer to the latter than the former. The pattern has been the same as long as data have been available (Thomas, 2015; Flanagan, 2017b). The disparity between Métis and First Nations would be even larger if we looked at the approximately half of First Nations people who live on Indian reserves. Unfortunately, detailed data from the 2016 census on the characteristics of reserve populations were not yet available at the time of writing. However, data from pre- vious census years have always shown that First Nations people living on reserve were less well off than