Financial
Successful implementation of treaties are integral for lasting and meaningful reconciliation, and is fundamental for self-determination and improving the quality of life for Indigenous peoples and communities. Treaties will bring certainty to land ownership and jurisdiction, a major financial component, and new investment into the First Nation and the entire region benefitting First Nations, British Columbians and all Canadians. 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 is 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 $13.5M for startup and transition cost. The treaty agreement with the five Maa-nulth First Nations provided $47.3M 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.
New Economic Studies and Policy
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.
Canada's collaborative self-government fiscal policy
Successful implementation of treaties and self-government are integral for lasting and meaningful reconciliation, and is fundamental for self-determination and improving the quality of life for Indigenous peoples and communities. A new fiscal relationship was necessary to address previous gaps. In 2019, the Government of Canada established Canada's collaborative self-government fiscal policy, a renewed and trransparent funding model and policy to better support the implementation of self-govenment agreements and treaties with self-government arrangements.
The policy aims to co-develop in collaboration with self-governing Indigenous governements, a new approach and arrangement tailored to address the specific circumstances of each government and sufficient fiscal resources to fulfill responsiblities to provide public services that are reasonably comparable to other Canadians. Its executive summary outlines the following shared vision:
- That the new fiscal relationship should constitute a regime that by design recognizes and is responsive to First Nations' right to self-determination – a recognition-of-rights approach;
- That the new fiscal relationship should strengthen First Nations' exercise of their right to self-determination by supporting First Nations-led capacity enhancement;
- That the new fiscal relationship should be a learning, evolving and empowering relationship – a conscious break from rigid colonial structures - with whole-of-Government approaches that address the realities of all First Nations;
- That a new fiscal relationship will ensure sufficient funding;
- That the new fiscal relationship will empower First Nations to plan and invest based on their own priorities, by ensuring greater predictability, flexibility and autonomy of funding arrangements;
- That the new fiscal relationship should be founded on a mutual accountability relationship whereby First Nations governments operating under the auspices of the Indian Act are primarily accountable to their own citizens, while the Government of Canada and First Nations governments hold one another mutually accountable for the commitments they make to one another and work together to achieve results for First Nations citizens; and,
- That a new fiscal relationship will underpin progress toward the elimination of socio-economic gaps underpin between First Nations and other Canadians.
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 assert 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 is important to clarify that First Nations only receive tax exemptions when on reserve lands, this is often misunderstood. Most Indigenous people pay the same taxes as all 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 needed 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 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.
Negotiation support funding is allocated to First Nations to negotiate with Canada and BC. The funding is provided by Canada and BC and the Treaty Commission allocates this funding to First Nations.
Treaty negotiation support funding allocated by the Treaty Commission is now 100 percent contribution funding. In 2018, the federal government announced that going forward it would replace negotiation support loans with non-repayable contribution funding for First Nations participating in modern treaty negotiations. Canada provides over 90% of the contribution funding and BC provides the remainder.
Existing treaty loans will be eliminated. The government of Canada’s federal Budget 2019: Investing in the Middle Class to Grow Canada’s Economy indicated that outstanding treaty negotiation loans for First Nations across the country would be eliminated. Canada will confirm the timing for the elimination of existing treaty loans.
The Treaty Commission is a small organization, with 11 full-time staff in addition to the four Commissioners and one Chief Commissioner.
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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%.
Treaty negotiation support funding allocated by the Treaty Commission is now 100 percent contribution funding. In 2018, the federal government announced that going forward it would replace negotiation support loans with non-repayable contribution funding for First Nations participating in modern treaty negotiations. Canada provides over 90% of the contribution funding and BC provides the remainder.
