New Economic Studies
Closing the social gaps between Indigenous and non-Indigenous people is a key goal of reconciliation. A new study from Deloitte commissioned by BCTC, Socio-Economic Benefits of Modern Treaties, 2016 [Deloitte Report], validates the findings of previous studies that there are significant future economic benefits from treaties to First Nations ranging between $1.2 and $5.8 billion total dollars. The Deloitte Report also begins to examine the broader socio-economic benefits that come from self-determination and self-government.
The Deloitte Report also begins to examine the broader socio-economic benefits that come from self-determination and self-government. The Deloitte Report quantifies the benefits of treaties to all British Colombians. Negotiations result in a considerable infusion of federal capital into BC's regions where First Nations are implementing a modern treaty.
A 2009 report by PricewaterhouseCoopers, concluded that completing treaties with First Nations will deliver more than $10 billion in benefits to British Columbia's economy over the next 15 years.
Financial Overview
Province-wide, treaties will bring certainty to land ownership and jurisdiction, a major cash injection and new investment. Through treaties, First Nations will be able to provide services appropriate to the unique culture, economy and social needs of their communities.
Government Operations
Treaties may include funding for First Nation government operations, programs and services.
In treaties concluded in BC and other parts of Canada, funding for First Nation government operations typically covers several years at a time, are renegotiated periodically and are not usually constitutionally protected.
Generally, funding provided by Canada for all First Nation government operations, programs and services to members will be combined and forwarded to the First Nation government. These funding agreements are intended to allow for longer-term planning and budgeting.
Funding to implement the Treaty
Treaties may also include funding for First Nations to make the change from operating under the Indian Act to self government.
For example, funding may be negotiated to develop laws and a First Nation constitution, or to determine eligibility for treaty benefits, and to undertake enrollment and ratification for treaty purposes. The Tsawwassen First Nation treaty agreement provided $13.5 for startup and transition cost. The treaty agreement with the five Maa-nulth First Nations provided $47.3 to fund transition and implementation costs.
Funding for Infrastructure
There may be one-time costs established in the treaty for physical infrastructure. An example is the BC government's commitment of $41 million to pave the Nisga'a Highway.
Fiscal Accountability
Each First Nation will develop a constitution and a government structure with greater accountability for allocation of funding than is currently provided by the Indian Act. For example, Tsawwassen First Nation government is required to prepare an annual report including financial statements.
Compensation
The BC Claims Task Force, established in 1991 to make recommendations for a made-in-BC treaty negotiations process, envisioned that "negotiations will likely include consideration of a financial component to recognize past use of land and resources and First Nations ongoing interests".
The Task Force further recommended that "Although recognition of past and current uses is important, detailed calculations would be technically difficult, costly and time consuming. The Task Force encourages the parties to reach a negotiated solution by bargaining in good faith in the determination of compensation."
Compensation is a tough issue for treaty negotiations. First Nations feel they should be compensated for land they are being asked to give up and wrongs done to them in the past; the governments of Canada and BC want to avoid focusing on the past and use treaties to build stronger relationships for the future.
Canada, BC and the First Nations Summit are working together to find creative solutions to compensation and other common fiscal issues.
Taxation
It's important to clarify that First Nations only receive tax exemptions when on reserves; most Indigenous people pay the same taxes as other Canadians.
The Indian Act has made economic development on reserves difficult. Because it stipulates that reserve lands cannot be seized to enforce payment of a debt, these lands have never been available for use as collateral. The same is true of all real and personal property of aboriginal people or bands on a reserve. Negotiated cash and land settlements will provide First Nations with the capital they need to begin businesses and create jobs and industries.
Through treaties, First Nations will acquire a land base and establish a government with powers to access revenues, borrow, receive transfers from other governments and levy taxes. The governments of Canada and BC seek to gradually eliminate tax exemptions as First Nations move towards greater economic self sufficiency. For example, generally under treaty, transaction taxes such as sales tax will be eliminated eight years after the effective date and all other taxes, including incomes tax, after 12 years.
Many First Nations in the BC treaty negotiations process are reluctant to give up their tax exemption when most other First Nations in Canada will continue to have these exemptions —including those that have signed treaties in the past. Canada, BC and the First Nations Summit are working together to find creative solutions to taxation and other common fiscal issues.
Costs and Benefits
The cost of not settling treaties is far greater than the cost of treaty making.
A study conducted by PricewaterhouseCoopers estimated that uncertainty surrounding unresolved aboriginal rights and title could cost B.C. $1 billion in lost investment and 1,500 jobs a year in the mining and forestry sectors alone. A 2009 report by PricewaterhouseCoopers, concluded that completing treaties with First Nations will deliver more than $10 billion in benefits to British Columbia's economy over the next 15 years.
The BC government's share of the overall cost is estimated at $2 billion, or $50 million annually over 40 years, plus rural Crown land with a notional value of $2.8 billion to $3.5 billion. BC's annual portion is equal to about 25 cents of every $100 in the current provincial budget.
The Treaty Commission allocates negotiation support funding so that First Nations can prepare for and carry out negotiations on equal footing with the provincial and federal governments. Since opening its doors in May 1993 the Treaty Commission has allocated approximately $533million in negotiation support funding to more than 50 First Nations— $422 million in the form of loans and $111 million in the form of contributions.
Canada funds 60% of the Treaty Commission's operating costs and BC funds 40%. The Treaty Commission is a small organization, with 10 full time staff in addition to the five commissioners.
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Cost Sharing
Funding for administering the treaty negotiations process and the cash settlement costs are borne jointly by the provincial and federal governments. The federal government is responsible for 72% of the total cost of treaties and the provincial government is responsible for 28%.
Canada funds 60% of the Treaty Commission's operating budget, and BC funds 40%.
Eighty percent of negotiation support funding to First Nations is provided as loans from the federal government, and 20% as contributions from the federal and provincial governments. The federal government provides 60% of the contribution funding and the provincial government provides 40%.
