Why First Nations succeed in Canada

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Appeared in the Globe and Mail, November 2, 2016

Although the living standard of most First Nations still lags behind the Canadian average, many are finding ways to improve conditions for their members. We can measure communities’ standard of living by using the Community Well-Being (CWB) Index, which combines data about incomes, employment, housing, and education.  Standard statistical methods can identify factors associated with higher CWB scores. In other words, we now have objective evidence about works and what doesn’t work to improve First Nations living standards.

Successful First Nations run a tight governmental ship. They balance their budgets and stay out of remedial third-party management. They pay their elected councillors less than average for First Nations, thus dampening political factionalism. And they reward visionary leadership with re-election and long terms in office.

Well-governed First Nations are more likely to assume more control of their own affairs, making use of “off ramps” that provide an escape from the strictures of the Indian Act. Negotiating a self-government agreement provides for overall self-determination within the Canadian Constitution. Entry into the First Nations Land Management Agreement allows faster and more effective control of local lands, moving “at the speed of business” rather than “at the speed of government.” Setting up a system of property taxes on leaseholds generates much-needed own-source revenue. And Certificates of Possession (a form of landownership on reserve) create incentives for individuals to invest in higher quality housing.

Strikingly, successful First Nations have achieved impressive results on their own initiative, not from additional transfers of public revenue or through participation in government-managed programs. The essential role of the federal government has been to get out of the way, to legislate new opportunities for First Nations to deploy their own creativity. Abolition or wholesale amendment of the Indian Act may not be politically possible, but building such off ramps has proven feasible in the past and can continue in the future.

First Nations that make use of these opportunities are more likely to achieve business success. Some are doing well in the hospitality and entertainment industries, hosting casinos, hotels, and restaurants. Some are succeeding in developing residential, commercial, and industrial real estate. Others are participating in natural-resource plays in oil and gas, forestry, and hard-rock mining. And some are succeeding in multiple areas, even using their own-source revenues to establish or buy companies elsewhere in the economy such as trust companies and airlines.

Successful First Nations are opportunistic in the good sense of the term, utilizing whatever advantages are offered by their location. The benefit equation is straightforward and highly visible in the statistical analysis: local control encourages location-appropriate business ventures that generate own-source revenues and a higher standard of living.

Of course, success comes more easily in some settings than in others. For various historical and cultural reasons, First Nations’ CWB tends to be higher in British Columbia, southern Ontario and Quebec, and Atlantic Canada, and lower in the three Prairie Provinces and the northern areas of other provinces. Being situated near a town or city also helps a great deal, as illustrated by the success of the Membertou First Nation in Sydney, Nova Scotia.

Yet there are also outstanding success stories in the Prairie Provinces, such as the Whitecap Dakota First Nation in Saskatchewan and the Fort McKay First Nation in Alberta. And the Osoyoos Indian Band, which has become an economic powerhouse under the leadership of Chief Clarence Louie, is located in a very arid climate zone, even though it is in British Columbia. The upward path to an improved standard of living through self-determination and good governance can be found in many settings, even if some First Nations have the good fortune to start from a higher plateau.

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