The Modern Treaty Era

16

Chapter 16: Header (Silver 25 cents coin in the background)
Summary: Before moving on to analyze the economic challenges facing Indigenous communities today, we pause to assess their economic situation. Lack of detail on the finances of non-reserve communities constrains us to rely on Census data as we did in Chapter 2; the results are consistent with the broad pattern that Métis and off-reserve Status Indians fare better than Inuit, who fare better than Status Indians on reserve. Self-government agreements appear to weakly correlate with higher Community Well-Being scores.

We now know about the great variety of Indigenous Communities. There are people in regular cities, towns, and rural areas across Canada: perhaps geographically isolated from one another (Toronto), perhaps living in distinct neighbourhoods (Winnipeg), perhaps forming the majority of the population (Moosonee). There are traditional reserves, which may or may not be using some of the Amendments to the Indian Act to increase their financial options. There are Métis settlements. Then there are the communities governed by different kinds of regional authorities created by Modern Treaties.

This variety serves as an extensive natural experiment as to which forms of organization, governance, and financing best promote well-being.  In years to come the data from these various communities will be mined for insights by researchers, perhaps by you!  For now, the data is limited.

In this chapter we’ll briefly present each category of community and its economic situation. Then in the following chapters we will go into detail about economic challenges and opportunities, especially for reserve communities.

Statistics on Canada’s Indigenous Small and Medium Exporting and Non-Exporting Businesses 2017: Indigenous Business Infographic based on reports done by CCAB, Global Affairs Canada, and the Sodexo Indigenous Business Survey (2016-17)
Statistics on Canada’s Indigenous Small and Medium Exporting and Non-Exporting Business, 2017. Graphic compiled by: Pauline Galoustian [112]

Indigenous Business Generally:

According to reportage in the Spring 2019 edition of Corporate Knights, Indigenous business represents about 1.4% of the Canadian economy.  This falls short of the number it should represent if it were proportional to population, but is still quite an accomplishment considering the history.  Indigenous business comprises about 45,000 firms generating 30 billion dollars.  The Corporate Knights estimate roughly agrees with the Canadian Council for Aboriginal Business’s estimate of 50,000 aboriginal-owned businesses.

In terms of businesses located within Indigenous communities, in 2017 there were “over 19,000 businesses located in Indigenous communities (17,000 on First Nations territory and 2,000 on Inuit lands) generating over $10 billion in revenue”.[1]

 

Top 11 Obstacles to Growth of Small and Medium Indigenous Businesses in Canada 2017: 1) attracting skilled employees, 2) overall economic conditions, 3) access to equity or capital, 4) changes in government policy, 5) difficulties retaining valued employees, 6) access to financing, 7) increase in competition, 8) increased costs of doing business, 9) IT reliability, 10) access to employee training supports, 11) infrastructure challenges.
Statistics on Canada’s Indigenous Small and Medium Exporting and Non-Exporting Business, 2017. Graphic compiled by: Pauline Galoustian [112]

First Nations Reserves:

Many reserves are faring well economically, and host some of the Indigenous businesses we have just described. For example, Membertou First Nation near Sydney, Nova Scotia boasts ISO 9000 designation[2], an international standard of management quality, and its Development Corporation was named one of Canada’s best-managed companies in 2019. In 2020, Membertou joined with other Mik’maq communities and with Premium Brands Holdings Corporation in a billion-dollar deal to purchase Clearwater Seafoods Incorporated, the largest holder of shellfish licenses and quotas in Canada. The Community Well-Being score for Membertou First Nation in 2016 was 70, not far from the average score for non-Indigenous communities, 77.5.

There are also nineteen First Nation reserves and other First Nation communities whose 2016 Community Well-Being scores exceeded 77.5, according to data available from Indigenous Services Canada (June 2019). Not all of these communities are near large urban centres; the list includes Opaskwayak Cree Nation (near Le Pas, Manitoba), Matsqui First Nation (near Abbotsford, British Columbia), and Shuswap Indian Band (in eastern British Columbia).

At the same time there are many reserves where poverty is endemic. Almost one quarter of First Nations are receiving some kind of intervention to help them pay their debts.[3] According to Flanagan (2019), the first step is to require communities to create a plan for addressing their budget deficits and debts. The second step, if needed, is to require the community to hire an external accountant to co-manage finances. Finally, Indigenous Services Canada imposes third-party management on the band: a person outside the community is hired to run the finances . There were only seven reserves under third party management in 2018.[4]

Flanagan (2019) found that whether or not a community was under default management correlated strongly (and inversely) with its Community Well-Being Index score, even when accounting for own source revenue, remoteness, and existence or not of a property tax system.

This suggests that, while poverty may contribute to financial disarray, the causation is likely to be more in the reverse direction; that is, financial disarray contributes to poverty.

On reserve, between  2005/6 and 2015/6[5] :

  • the employment rate, which is the fraction of working-age adults who are employed, decreased
  • the labour participation rate decreased
  • the unemployment rate was about the same (increased for men; decreased for women)
  • the fraction of people whose main source of income was government assistance rose but
  • median income rose faster than non-Indigenous median income
  • median income was still more than $17,500 below non-Indigenous income
  • female median income continued to be higher than male median income
  • the high school completion rate for youth rose by from 38.9% to 48.4%
  • the proportion of people living in dwelling needing major repairs stayed at about 44%
First Nation Revenues by Source, 500 First Nations in Canada 2015-16 (Flanagan 2019): 64% Federal and Provincial Transfers, 32% Own Source Revenues, 4% Own Natural Resources
First Nation Revenues by Source, 500 First Nations in Canada 2015-16. Data credits to: Flanagan 2019. Graphic by: Pauline Galoustian [113]

In 2015/6, about 64% of First  Nations’ revenues came from the federal and, to a much lesser degree, provincial and territorial governments. The rest came from own-source revenue (OSR). Own-source revenue is income from Band-owned businesses, royalties from resource extraction, rents from leased land, payments from Impact Benefit Agreements, and interest on trust funds. The ten highest-earning First Nations accounted for 18% of the total own-source revenue.  Concludes Flanagan (2019), “OSR is about as unequally distributed as income in the larger Canadian society”.

Métis Settlements:

In our last chapter we described the funding and rights of the eight Métis Settlements in Alberta. While census data is available, the Community Wellbeing Index is not computed for them.

Métis and First Nations living off reserve:

University of Fraser Valley - Métis Nation, BC Joint Education Development Project Announcement-27. Photo credits to: University of Fraser Valley
University of Fraser Valley – Métis Nation, BC Joint Education Development Project Announcement-27. Photo credits to: University of Fraser Valley [114]

Although Métis have higher median income than off-reserve First Nations, and typically score better on other economic indicators as well, both groups experience some of the same economic pressures. For both groups between 2005/6 and 2015/16[6] :

  • the employment rate decreased
  • the labour participation rate decreased
  • the unemployment rate increased for men in both groups, but stayed the same for women in both groups; the gap with non-Indigenous men shrank, however
  • the fraction of people whose main source of income was government assistance stayed about the same
  • median income rose faster than non-Indigenous median income and was only $2,700 below non-Indigenous median income for Métis and about $9,500 below non-Indigenous median income for off-reserve First Nations
  • the high school completion rate for youth ages 20-24 rose by 12% for First Nations off reserve and 9% for Métis, narrowing the gap with non-Indigenous graduation rates to 49.3%
  • the fraction of the population living in dwellings in need of major repair fell by about 3 percentage points for each group, to 13.8% for off-reserve First Nations and 11.3% for Métis.

Inuit Communities:

Most Inuit are living  in areas covered by Inuit self-government agreements: Nunavut, Nunavik, Inuvik, and Inuvialuit. For Inuit between 2005/6 and 2015/6[7]

  • the employment rate increased overall but decreased for men; the gap with the non-Indigenous employment rate shrank
  • the labour participation rate increased; the gap with non-Indigenous labour participation shrank
  • the unemployment rate increased
  • the fraction of people whose  main source of income was government assistance rose slightly
  • median income rose at about the same rate as non-Indigenous median income and was about $10,000 below non-Indigenous median income
  • the high school completion rate for youth ages 20-24 rose to 49.3% from 39.8%
  • the fraction of the population living in dwellings in need of major repair decreased slightly to 26.2%

First Nations and Inuit with Modern Treaties:

There are currently at least 25 modern treaties with self-government agreements, involving at least 43 Indigenous communities. Because of their autonomy, their financial statements are not published  for or by Indigenous Services Canada. It is not obvious how to find each entity’s financial statements.

Instead, let’s have a look at their  Community Well-Being scores. We’ll use the 2016 scores published by Indigenous Services Canada (2020a, 2020b). Recall that the Community Well-Being Index (CWB) is a weighted average of  indicators about income, employment, housing, and educational achievement.

Inuit hunter feeds his child with meat from freshly hunted ring seal, Pond Inlet, Canada. Photo credits to: GRID-Arendal
Inuit hunter feeds his child with meat from freshly hunted ring seal, Pond Inlet, Canada. Photo credits to: GRID-Arendal (CC BY-NC-SA 2.0) [115]

 

In the Yukon, there are more than a dozen First Nations covered by the same Umbrella Final Agreement. Unfortunately, their Community Well-Being scores have not been computed, probably owing to the communities’ small sizes. In the Northwest Territories, the four communities in the Tlicho Final Agreement have scores ranging between 56 and 64.  These scores are lower than the 66.3 which is the average for First Nations communities in the Northwest Territories and Yukon.

The four out of five communities under the Sahtu Dene and Métis Comprehensive Land Claim Agreement for which CWB scores were found have scores between 59 and 66, a little higher yet still slightly below average.

The six Inuit communities of the Northwest Territories, organized as Inuvialuit,  have scores ranging between 63 and 80. The score for the Inuit of Inuvialuit and Nunavut combined is 60.7, implying that Nunavut  scores are lower than those in Inuvialuit.

IRC, Government of Canada and Government of Northwest Territories signed a Self-Government Agreement-in-Principle, 2015. Credits to: Inuvialuit Regional Corporation [116]
IRC, Government of Canada and Government of Northwest Territories signed a Self-Government Agreement-in-Principle, 2015. Credits to: Inuvialuit Regional Corporation [116]

The Inuit communities of Nunatsiavut in Newfoundland-Labrador have scores ranging from 62 to 71. Those in Nunavik, part of the James Bay and Northern Quebec Agreement and its derivatives, have scores between 53 and 76, a lower average but a wider range. The 76 for Kuujjuaq is an outlier since the second highest score is 65. Kujjuaq is the largest community in Nunavik and its administrative capital. Since all the Inuit have self-government agreements, we cannot compare their Community Well-Being scores to those of Inuit without such agreements.

We do know that for Canada overall, the average Inuit community score (61.3) is higher than the average First Nation community score (58.4), despite Inuit populations being smaller on average, and their communities being located further north. This suggests a positive impact from self-government agreements.

On the west side of James Bay and Hudson Bay, the self-governing Cree communities of northern Quebec have 2016 CWB scores which are higher and less variable than the Nunavik scores: they range from 60 to 68. Among the five communities on the Ontario shores of James Bay and Hudson Bay, which do not have a modern treaty, scores range from 48 to 67.

The following Table shows (outdated) CWB scores by Treaty from the document Community Well-Being and Treaties: Trends for First Nation Historic and Modern Treaties, (2011-2015).

 

Community Well-Being Scores, 2006; Source: Aboriginal Affairs and Northern Development Canada
Community Well-Being Scores, 2006; Source: Aboriginal Affairs and Northern Development Canada
Community Well-Being Scores, 2006; Source: Aboriginal Affairs and Northern Development Canada

Based on these data, which do show an advantage for communities with modern treaties, the authors were not overly excited about the Modern Treaties. They noted the favourable location of many First Nations having a modern treaty. They also point out that, if Prairie First Nations were excluded, Historic Treaty community scores would look better than Modern Treaty community scores.

In British Columbia, many of the First Nations who obtained self-government agreements are located in the south and were already doing well prior to obtaining a modern treaty. Data on two of these Nations, Tsawwassen with a score of 83 and Nisga’a with a score of 64, show they were doing better in 2016 than the average BC First Nation (score of 62.9).

We observe that the self-governing Inuit and Cree, as well as Sioux Valley Dakota First Nation and two communities in BC with modern treaties, appear to be doing better economically than they might be otherwise. This accords with Flanagan and Johnson(2015), who found a statistical correlation between CWB scores and self-government agreements for Canada’s First Nations. However, evidence from the Northwest Territories is not as positive.  Clearly self-government agreements are not a ticket to instant prosperity.  Our Chapters 24-29 describe some of the hard work that needs to be done to bring prosperity to small, often isolated communities which in many cases suffered a hundred years of dispossession and interference.

A note on Economic Inequality:

We now have a feel for the current economic status of the various Indigenous communities in Canada. What about the distribution of income within the communities?

A detailed look at inter-community income distribution is beyond the scope of this book, but we do have data to suggest that income inequality is not extreme.

2015 Gini Index (based on Census 2016). Data source: Census 2016, reported in NIEDB (2020)
2015 Gini Index (based on Census 2016). Data source: Census 2016, reported in NIEDB (2020)[117]

As we see in the table above, data from the 2016 Census indicates that income inequality in Indigenous communities is roughly the same as in non-Indigenous communities. However, we should note that the distribution of  income is less equal on reserves.  On reserves we typically have a dozen high-paying jobs associated with Chief and Council, perhaps a dozen more associated with the heads of various portfolios, but not many other high-paying jobs or high earners on reserve.

In one university class, students tasked with selecting reserves and comparably sized municipalities, similarly distant from a major city, in Ontario and Manitoba, found that Gini coefficients were three times as high for reserves as for municipalities.[8]

For more insights into on-reserve inequality, see our chapters on Governance and Employment. Employment and wage data may be more favourable for women than for men on reserve, owing to the prevalence of women in the types of occupations likely to receive government funding. In our next chapter we explore government funding and whether it is sufficient for its purpose.


  1. Haaris and Alasia (2019)
  2. Withers (2020)
  3. National Indigenous Economic Development Board (2019)
  4. National Indigenous Economic Development Board (2019)
  5. Census 2016 data reported in National Indigenous Economic Development Board (2019), Annex A
  6. National Indigenous Economic Development Board (2019), Annex A
  7. Census 2016 data reported in National Indigenous Economic Development Board (2019), Annex A
  8. 16 First Nations and 16 municipalities in Ontario, 18 each in Manitoba, computed using 2015 data from  the 2016 Census

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