The role of Aboriginal people in the Canadian economy is coming
From time immemorial, vibrant Aboriginal economies supported a
strong trade network throughout North America. In fact, the Fraser
River was a major trade corridor. This changed with the arrival of
Europeans: fur economies centralized trade and communities around
outposts and forts; disease decimated the Aboriginal population;
racist government policies led to internment on reserve; and many
instruments of the Aboriginal economy became illegal (the Potlach
Ban, for example, was Canadian law from 1885-1951).
While many of these wrongs have yet to be adequately addressed,
Aboriginal economies are once again dominating the Canadian
economic landscape. Decisions such as Delgamuukw and Haida created room for Aboriginal
groups to lever the doctrines of consultation and accommodation
into meaningful participation in development. The historic Tsilhqot'in decision, by
confirming that Aboriginal jurisdiction and resource ownership are
important parts of the law of Canada, provided even stronger tools
to support the Aboriginal economy.
All of this means that many Aboriginal groups now have
meaningful own-source revenue that can be deployed as project
owners and developers. However, many legal barriers to project
development still confront Aboriginal organizations.
Section 89 of the Indian Act limits the type of
property that Indians and Indian bands (we use those terms here as
they are used in the IndianAct) can pledge as
security. Despite the recent ability of a band to exercise control
and jurisdiction over reserve land through the implementation of a
land code, the Indian Act still limits third party reserve
Outside of the IndianAct, many lenders still
seek to include funding received for social programs, such as
health and education, in loan security – meaning Aboriginal
governments often face the difficult choice of placing important
social dollars at risk or receiving no financing. Moreover, because
of the history described above, many Aboriginal groups do not have
a resumé of successfully completed large projects. This
often forces Aboriginal developers to seek partners that can
satisfy lender "track record" requirements, placing a
number of risks on the Aboriginal developer:
the credibility and ability of their
the commercial and management
arrangements of the partnership relationship; and
the potential of failed project
execution by a third party.
Even once these barriers are overcome and projects are
successfully developed, own-source revenue can cause issues for
Aboriginal communities. The federal government provides funding for
government initiatives to many Aboriginal communities just as it
provides health funding to provinces. Often, federal funding
agreements include claw-backs if the community develops meaningful
own-source revenue – meaning that generating income through
business can cause the loss of funding for other important
None of these are new issues. In fact, many of these issues were
canvassed in a 1969 federal government White Paper and the 1996
Report of the Royal Commission on Aboriginal Peoples. However, as
the leadership role of Aboriginal groups in Canada's economy
grows, so does the scope of the lost opportunities caused by these
barriers. For those of us who practise commercial law for
Aboriginal clients, our role must be to understand these issues and
provide advice that mitigates economic barriers to help Aboriginal
This article was originally published in the April, 2016 edition
of Bar Talk.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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