A series on issues that beg the question.
Tonina Simeone and Jodi Bruhn | April 30, 2013
Time to investigate options for resource revenue sharing. |
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Natural resources are central to Canada’s economy. Budget 2013 states that the federal government expects new investments of over $650 billion in over 600 major resource projects over the next decade. Virtually all of these projects involve Aboriginal traditional lands.
Aboriginal people have long advocated for a share of government revenues from resources derived from their traditional territories. Increasingly, their demands are being buttressed by judicial rulings requiring governments and project proponents to consult and accommodate Aboriginal interests when contemplating resource development activities on traditional territories. In Resource Rulers: Fortune and Folly on Canada’s Road to Resources, Bill Gallagher documents 150 legal victories giving Aboriginal people significant influence on how resources are developed on their traditional lands. According to Gallagher, if resource projects are to proceed, a new approach is required – one that includes resource revenue sharing with Aboriginal groups and treats them as partners in development. In a January 2013 statement reflecting a consensus among chiefs across the country, the Assembly of First Nations identified resource revenue sharing as a key priority and necessary component of a renewed relationship between the Crown and First Nations. Bolstered by recent court victories, Métis have also renewed their call for resource revenue sharing on their traditional lands. Despite the changing legal landscape, the approaches of federal and provincial governments to date have been described as ad hoc, piecemeal and reactive. A discussion paper prepared for the Prospectors and Developers Association of Canada argues that governments, with a few notable exceptions, “have been content to let industry and aboriginal groups sort out how economic benefits will be distributed and have resisted calls to share their allotment of the rent with other jurisdictions or parties.” For their part, some Aboriginal groups are registering increasing hesitation to embrace resource development on their lands until resource revenue sharing with governments has been meaningfully addressed. In a recent issue of the Journal of Aboriginal Management, Harold Calla, Chair of the First Nations Financial Management Board, highlights the benefits of exploring such arrangements: “First Nation participation in these projects, through a share of royalties and equity will enable communities to plan and build healthy First Nation economies around the country." Successive parliamentary reports, as well as the report of the Royal Commission on Aboriginal Peoples, have made similar arguments. Recent court decisions demonstrate that Aboriginal people have the legal leverage to delay or even halt development altogether until their legal interests are meaningfully reconciled with non-Aboriginal interests. Thinking again of that projected $650 billion, all parties may find the potential for a stalemate and lost revenues unacceptably great. Accordingly, the discussion may need to shift, asking not whether but how governments can share their resource revenues (royalties, stumpage fees and mineral taxes) with Aboriginal groups. To promote the latter discussion, we present some precedents across the country. PrecedentsResource revenue sharing with Aboriginal peoples is already occurring in some areas of this country. Federally, the comprehensive land claims (or modern treaty) process is the sole policy vehicle to provide for such arrangements. Under modern treaties in the North, the federal government shares direct rents following a relatively standard formula – ranging from 7.5% to 50% of the first $2 million in royalties collected by the Crown and 1.5% to 5% of additional royalties. The revenues are separate from, and in addition to, subsurface resource revenues on Aboriginal-owned lands that are part of the land claims settlements.
Further, since 2003, in an effort to reinvigorate the British Columbia treaty process, Canada has agreed to share the cost of future resource revenue sharing arrangements in treaty settlement areas on a 50/50 basis with the BC government. For example, under the 2006 Maa-nulth Final Agreement, Canada and BC will cost-share the province's revenue sharing payments to the signatory First Nations. At the provincial level, British Columbia is the only jurisdiction to have established formal resource revenue sharing policies with First Nations. Since 2003, that province has provided First Nations with a share of its revenues generated from forestry activity. In 2008, the province authorized its negotiators to include revenue sharing on new mining projects. The BC Government has since negotiated 100 forestry sector revenue sharing agreements with First Nations. It has also signed four mining agreements, most recently with the Ktunaxa Nation in January 2013. In Quebec, after nearly 30 years of litigation, the provincial government and the Cree Nation signed an agreement to implement the province’s existing obligations to the Cree people. At over $3.5 billion over a period of 50 years (up to $70 million annually in royalty payments), the 2002 La Paix des Braves agreement represents the largest revenue-sharing package related to treaties in Canada. Other jurisdictions have also taken steps. Ontario, following the 2007 Ipperwash Inquiry report, began work toward a policy that would see all First Nation communities benefit from natural resource development in that province. The Northwest Territories has committed to sharing up to 25% of its resource revenues (up to 50% of total revenues) with participating Aboriginal governments on concluding its devolution agreement with Canada. Newfoundland and Labrador has negotiated agreements for 5% of revenues with the Nunatsiavut Inuit as well as the Innu of Labrador on the Voisey’s Bay mining development. As the above examples make clear, public resource revenues are already being shared with Aboriginal groups in this country. Some argue, however, that this shift is not moving fast or far enough. For one, there is a significant gap between what governments are prepared to negotiate and what Aboriginal people are demanding. A discussion paper for the Assembly of First Nations states that land claim agreements provide their Aboriginal signatories “only token amounts in comparison in either the value of the resources or the fiscal capacity needed by First Nation and other Aboriginal communities to develop their political, economic and social self-sufficiency.” Another issue is the lack of a revenue sharing policy or framework for areas of the country where so-called historical treaties were concluded – despite the view among signatory First Nations that these treaties did not mean simply “land cession” but an equitable sharing of lands and resources. Many of the contemplated major resource projects are located in these areas – whether in the oil sands in Alberta, the Ring of Fire in Ontario, or pipelines across the country. Compared to resource revenue provisions of modern treaties, First Nations in these areas appear to be left at a distinct disadvantage. So what now?How to begin developing a framework for resource revenue sharing that will match the declared aspirations for resource development of federal and provincial leaders? Aboriginal leaders have called on the federal government to lead provinces and territories in developing a revenue sharing process and, in turn, support the social and economic development of their communities. The Canadian Council of Chief Executives has recommended that governments establish a framework to facilitate “transformative investment” that will benefit both Aboriginal communities and corporations. Others have proposed that the federal government, in consultation with industry, provincial and Aboriginal representatives, establish regional tripartite processes to develop consensus around principles for a harmonized, transparent and consistent approach across jurisdictions.
Whatever the approach adopted, any framework will need to address at least some of the following questions:
In light of the Supreme Court consultation trilogy and following decisions, the demands of Aboriginal leaders, and the high stakes involved on all sides, it may well be time to reflect in more depth on the options involved. |
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Jodi Bruhn is director of Stratéjuste Canada. Both authors specialize in Aboriginal policy issues. |