Nault is right, the First Nations and Canada are at a crossroads; however, you have been at this juncture for decades, with little progress to show. Despite tens of billion of dollars in spending by INAC and other federal government departments over the past 50 years, there have been limited economic payoffs for Aboriginal peoples.

Although Canada is among the top countries in which to live according to the United Nations’ Human Development Index, Inuit and on-reserve Indians are ranked below many developing nations. Many First Nation and Inuit communities face housing shortages, as well as rates of unemployment, dependence on social assistance and youth suicide which are higher than the national average. Indeed, the United Nations Committee on Economic, Social and Cultural Rights has observed that there has been little or no progress in the alleviation of social and economic deprivation among the Aboriginal peoples.

Economic development for the First nations is imperative. Stephen Cornell and Joseph Kalt have stressed that sovereignty, nation-building, and economic development go hand in hand. Without sovereignty and nation-building, economic development is likely to remain a frustratingly elusive dream.

There is general agreement that the First Nations must be in control of their destiny, regain the rights to resources, expand their land bases and continue to receive reparations from the federal government to support economic development initiatives, including education, health care, infrastructure and social programs.

But what is the road ahead? What needs to be done?

We know the following:

One, that sovereignty is critical if the First Nations are to ever move beyond the state of dependency and revitalize their economies so as to narrow and eliminate the economic and social gaps their peoples have long endured.

Two, substantial economic gaps exist. John McCallum has summarized the socio-economic plight of Aboriginal peoples very succinctly and very well: "The statistics leave no doubt as to the very sad state of aboriginal economic and social development today."

Eliminating the gaps would produce sizable benefits for both the First Nations peoples and all peoples living in Canada. RCAP calculated an annual net benefit of $7.5 billion. Closing only the income gap between registered Indians and non-Aboriginals could lead to a net economic benefit of between $5.8 and $7.8 billion. These estimates do not include the additional savings that would result from lower health care costs, lower social assistance payments and lower costs for justice and correctional services. With conservative estimates for these additional savings, the net economic benefits could well exceed $9.0 billion annually.

Three, the federal government is not interested in spending any more money in total in dealing with the First Nations.

Four, the federal government wants new treaties to limit its financial exposure and risks. Canada’s continued refusal to respect the spirit and intent of the historic treaties, while they implement "modern day treaties", which are extinguishment agreements rather than treaties, are part of this strategy.

Five, paternalism has been and continues to be the basis for the relationship between the federal government (and provincial governments as well) and the First Nations. The Indian Act smacks of the worst excesses of colonial paternalism. The First Nations Governance Initiative is no better.

Six, the Chretien government’s ultimate goal still appears to be assimilation as originally spelled out in the 1969 "White Paper". The 2001-02 "White Paper" model is just more sophisticated and is being sold to the public more effectively than the original. It also builds upon the failure of 30 years of policies with the failures presented to give credence to the paternalistic view of Canada towards Aboriginal peoples.

Consequently, your goals must include:

• Getting rid of the Indian Act;
• Negotiating constitutionally entrenched and protected sovereignty, including appropriate compensation;
• Creating a First Nation government and economic development strategy.

What is the strategy to achieve your goals?

It must consist of several components.

One involves public education, especially of the history of the relationships between the First Nations and the white settlers. The Report of the Royal Commission on Aboriginal Peoples should become required readings in all Canadian History courses at all levels of education. It is also critically important that the public is made aware of the conclusive findings of the Harvard Research project on the need for sovereignty.

A second component involves attacking the federal government with its own words. There are numerous examples one could use.

The third component involves the international community. A road trip by the AFN leadership to meet with the major energy and forestry companies abroad with interests in Canada, major fund management companies and the three major credit rating agencies in the U.S. to spell out clearly the current situation regarding control/ownership of lands and resources in Canada and the potential liabilities of resource companies and governments in Canada should be a priority.

Tax policy should be viewed from the point of view of incentives than as a source of revenues for First Nation governments. This latter perspective plays into the hands of the federal government and runs counter to the view that the federal government should maintain, if not expand, its financial support of First Nations communities.

There are at least two lines of argument to support tax exemption for all First Nations peoples and their companies, whether they are collectively or individually owned.

One line of argument follows from the fact that the rights to set tax rates and formulate tax policy belong to a government and are important instruments for a sovereign nation to control. If First Nations are to have self-government and eventually be treated as equals, they alone must determine how their people should be governed, and this includes how they should be taxed. Indeed, the First Nations have every right to set tax rates at zero if they decide that this would be in the best long-term interests of their peoples.

The second line of argument follows from the fact that tax policies have long been considered and used for a wide range of economic and social objectives, and as such, they can play a key part of a First Nations economic development strategy. The current and former Ministers of Finance in the Chretien government have made tax cuts a major component in their economic growth strategies.

Further, the federal government continues to have in place a large number of tax incentives to stimulate economic growth and these measure cost the government billions of dollars annually in foregone revenues.

Thus, at a minimum, First Nations peoples should not be subject to an income tax since economic development is critical to reduce and eventually eliminate the income gaps that exist between the First Nations peoples and non-Aboriginal peoples in Canada.

Incentives do matter, regardless of cultural and historic differences. Higher after-tax incomes create the incentive to invest in education and training. A more highly education and skilled work force is essential for the First Nations to have the talent to govern themselves and to have the talent that will be necessary to drive their economies. Tax exemption produces higher after-tax incomes, as long as employers do not try to capture some or all of the tax benefits.

Small businesses generally rely on personal savings and those of family and friends, as well as on internally generated cash flows, to finance the early years of their start up and growth. Higher after-tax personal incomes provide the cushion for savings, which could be invested in small businesses. Higher after-tax business incomes translate into larger cash flows, which can be re-invested in the business. Tax exemption, especially when extended to companies and their profits, can play a major role in addressing the capital barrier faced by small business and especially those started by and owned by the First Nations peoples.

So, if tax cuts and tax incentives are considered important by the federal government and the Department of Finance, they are even more so important for First Nations trying to develop their economies. It makes no sense from an economic perspective, nor should it from a political perspective, to try to raise tax rates for First Nations peoples, many of whom fall below low-income cutoff levels, when the thrust of fiscal policy is to cut tax rates and when tax incentives continue to be integral to the federal government’s policies to make the country more competitive and wealthier.

Once the tax powers are fully transferred to the First Nations, a tax model based on "citizenship" should be chosen; that is, all registered Indians should be eligible, regardless of residence and this would include all companies owned and/or controlled by registered Indians, collectively or individually.

There are two global options available for the First Nations: constitutionally-entrenched First Nations’ governments with specific responsibilities similar to those enunciated in the BNA setting out provincial and federal responsibilities; or local/municipal type governments under the control of the provinces without any further protection of treaty and Aboriginal rights.

The path you take at the crossroads is yours to choose.

Robert Nault, the present Minister for Indian and Northern Affairs Canada (INAC), stated at a recent conference in Ottawa (April 18, 2002: Beyond the Indian Act):

Nault is right, the First Nations and Canada are at a crossroads; however, you have been at this juncture for decades, with little progress to show.

As several distinguished First nations people repeatedly have emphasized, there are two exits out of the Indian Act:

• One leads to assimilating lands and peoples under provincial laws and rules;
• The other exit leads to preserving and respecting a Nation-to-Nation relationship and non-interference in internal affairs.

Sovereignty is critical if the First Nations are to have a real opportunity to extricate themselves from a cycle of dependency and to create the economic development opportunities that will give hope to current and future generations.

Cornell and Kalt, the two leading researchers for the Harvard Research Project, have concluded that the most powerful arguments for tribal sovereignty is the simple fact that it works. Nothing else has provided as promising a set of political conditions for reservation economic development.

Their research provides overwhelming evidence to support the imperative of sovereignty: a Nation-to-Nation relationship. But the inherent right to self-government cannot be realized on a foundation of dependency and poverty. The Royal Commission on Aboriginal Peoples (RCAP) emphasized:

Economic development has to become the priority of all First Nations governments. This is an important step because, without an independent source of wealth, First Nations futures and self-government dreams are just that, dreams.

Jane Stewart, the former Minister for INAC, also highlighted the critical importance of economic development and pointed out several of the major impediments standing in the way of this development when she unveiled the federal government’s action plan for Aboriginal peoples ("Gathering Strength") on January 8, 1998:

Despite tens of billion of dollars in spending by INAC and other federal government departments over the past 50 years, there have been limited economic payoffs for Aboriginal peoples.

Although Canada is among the top countries in which to live according to the United Nations’ Human Development Index (based on income, education and life expectancy), Inuit and on-reserve Indians are ranked below many developing nations. Many First Nation and Inuit communities face housing shortages, as well as rates of unemployment, dependence on social assistance and youth suicide which are higher than the national average. Indeed, the United Nations Committee on Economic, Social and Cultural Rights has observed that there has been little or no progress in the alleviation of social and economic deprivation among the Aboriginal peoples.

When Jane Stewart was Minister for INAC, the department’s approach to economic development was to place a large emphasis on training for job. Some have suggested that the motive was to train the more promising residents for jobs off-reserve and use this "economic development" strategy to gradually depopulate these communities.

As Matthew Coon Come has pointed out:

Moreover, as Fred Wien noted in his contribution to the Royal Bank/Cando Symposium, governments in Canada continue to meet the economic distress of the Aboriginal peoples with income support payments rather than investing in the more difficult measures that would rebuild the Aboriginal economies.

A re-birth requires sovereignty, and sovereignty must lead to economic development.

Simply stated, the primary objectives are:

• To highlight the need for First Nations to take the initiative to tackle the barriers to economic development and accelerate the pace of economic development;
• To examine alternative strategies that might position the First Nations to break out of the current cycle of poverty and to decrease their dependence on government support; and
• To demonstrate the importance of tax exemption as an economic development policy lever and as a critical sign of independence.

The need to address the discrepancies in living standards between Aboriginal and non-Aboriginal peoples is compounded by the fact that the Aboriginal population is growing about twice as fast as the overall Canadian population. This increases the demand for school space, housing, public infrastructure, social services and jobs.

Hence, the challenges faced by the First Nations over the next 30 to 40 years will be to make measurable improvements in economic development, for this in turn, will generate the wealth required to improve education, housing, infrastructure, social programs and the self-sufficiency of governments. But the First Nations will find themselves facing a Catch-22 paradox: the improvements in education, housing, infrastructure, social programs and the self-sufficiency of governments will have to proceed in parallel with economic development; however, the First Nations may lack the wealth required to make all of the necessary investments. And a gap in one area may prevent progress in the other areas.

Consequently, sovereignty and the fiscal capacity to govern must go together. The fiscal capacity will enable economic development strategies which will provide the foundation for long-term prosperity and financial self-sufficiency.

While development must be compatible with the cultures and traditions of the First Nations and all initiatives should build upon on them, so too must development strategies consider the realities of today’s global economy. Innovation, the product of risk-taking and the creativity and talents of people, will drive economic performance and generate wealth. But innovation is not restricted to any one sector.

Tax policies play an important role in stimulating risk-taking, innovation and personal investments in human capital. So while the current tax exemption must be retained and expanded, it will be imperative that the First Nations, in negotiating new treaties and adherence by the federal government to the old treaties, do not sacrifice any of the sources of financing owing to them and fall into the trap of trading off one source (e.g. tax exemption) for a promise of an increment in another source.

Matthew Coon Come has asked: "Is it cheaper to reduce our poverty by enhancing our capacities and helping make markets work on our lands while helping First Nations to partake in the mainstream economy?"

The answer is obvious. The alternative strategy has failed. A dependent and welfare economy has provided a minimal level of income for its "beneficiaries" and a measure of economic security, but it has exacted an enormous cost in terms of individual self-esteem and family and community well-being.

In 1990, Employment and Immigration Canada commented that the "Social costs associated with high unemployment, impoverished living conditions, dependency on social assistance and low educational attainment are exceedingly high."

Six years later, RCAP highlighted the costs of a "business as usual" approach and the resulting potential benefits for both Aboriginal and non-Aboriginal peoples sharing this country. According to RCAP:

RCAP estimated the annual cost of the status quo at $7.5 billion in 1996. RCAP also assumed that all Aboriginal peoples would pay taxes on their higher incomes – an assumption at odds with one of the major themes of this report.

Furthermore, RCAP’s estimate of the potential aggregate, annual benefits of just bringing the living standards of all Aboriginal peoples to the average for Canada are probably on the low side. They do not factor in any multiplier effects of higher income levels for Aboriginal peoples. The multiplier effects – measuring the economic spillovers to the rest of the economy of higher income levels – could double the $5.8 billion estimate of foregone production. In addition, RCAP did not try to fully cost out the potential savings in health care costs (higher incomes and lower unemployment are associated with fewer health problems, likely induced by stress), law enforcement and corrections costs (again higher incomes and lower unemployment lead to lower crime rates) and administration costs (as staffing levels at INAC and other government departments would be sharply reduced).

Charles Coffey, the Executive Vice President for Business Banking at the Royal Bank of Canada, and John McCallum, then Chief Economist at the Bank and now Minister of Defence, agreed with RCAP that Aboriginal issues are a matter of concern for all Canadians and Aboriginal economic development can have a significant impact on the country as a whole.

McCallum added:

Even INAC seems to have recognized the importance of economic development for the First Nations and Canada as a whole, or at least they pay lip service to this. In its 2002-03 report on Plans and Priorities, INAC stated:

The path to follow is obvious. How to get onto to it and what to do once you are upon it are much less obvious.

Can you work with the federal government? Matthew Coon Come has observed that the Assembly of First Nations’ (AFN) suggestions have been ignored by the federal government and have been replaced by a series of unsubstantiated excuses of why First Nation priorities cannot be implemented.

• The Federal government already gives First Nations enough money.
• First Nations cannot be held to account for the funds provided.
• The Federal government knows what is best for First Nations
• First Nation governments are incapable of promoting economic development."

But do you have any choice? These issues will be addressed in section two of this report.

How far behind are the Aboriginal peoples in terms of socio-economic well-being? Section three will look at the economic and social data and examine the gaps.

What does economic development entail? What are the possible strategies to overcome the barriers and exploit the opportunities? Sections four to six will deal with the economic development issues.

Why does tax exemption matter? What role do tax policies have in stimulating economic development? These will be the subjects of section seven.

What is the path ahead – what are some strategic options to be considered by the First Nations? Sections eight and nine will focus on these and other questions.

The federal government has created a number of commissions and task forces to study self-government and other issues as they relate to Aboriginal peoples in Canada. For example, the 1983 report of the Special Committee on Indian Self-Government (the Penner Report) recommended that Aboriginal self-government should be enshrined in the constitution through recognition of Aboriginal title to land, waters and resources while calling for the establishment of a First Nations and federal relationship mediated by a Minister of State for First Nations

In 1985, the Oberle Report called for Treaty implementation with the rules of Treaty interpretation geared to restore inherent self-government powers and titles and re-establish nationhood with intergovernmental relationship with the Crown, and the Treaty and interpretation clauses to become part of the Constitution.

RCAP (1996) called for a restructuring of the relationship between Canada and Aboriginal Peoples through a change in policy from one of domination and assimilation to one of co-operation and co-existence. The RCAP Report also recommended the redistribution of lands and resources and the re-establishment of First Nation governments guided by an Aboriginal Parliament.

Sovereignty did not appear to be an issue in any of these reports. It was the logical consequence of treaties and their interpretation by Aboriginal peoples. And all of these reports supported the creation of self-government powers for all Aboriginal peoples with the provision of adequate financial resources to ensure the success of sovereignty.

Prior to re-gaining power in 1993, the Liberals appeared to be supportive of Aboriginal issues, including tax exemption. In the 1992 Liberal Party Convention, the following motion was passed: "therefore be it resolved that the federal Liberal Party categorically rejects the imposition of the GST to the First Nations and their citizens across Canada"

Chretien wrote to Chief Doxtator in 1993 stating:

Paul Martin wrote in 1991 to Don Mazankowski, the then Minister of Finance:

Even after they assumed power the Liberals continued to say the right things. The Gathering Strength initiative introduced in 1998 recognized that the vision of strong, healthy Aboriginal communities, peoples and economies depends upon a strong foundation of partnership and the building blocks of good governance and a new fiscal relationship. The priorities for this action plan included facilitating capacity development; strengthening governance; creating an Aboriginal economy; modernizing the Indian Act; and designing a modern treaty relationship.

The January 30, 2001 Throne Speech stated that "too many [Aboriginal people] continue to live in poverty, without the tools they need to build a better future for themselves or their communities". The Speech also contained several key commitments including:

• to ensure that basic needs are met for jobs, health, education, housing and infrastructure;
• to help strengthen Aboriginal entrepreneurial/business expertise; and
• to strengthen the relationship with Aboriginal peoples.

With regards to this latter commitment, the Throne Speech acknowledged that the federal government was committed to working out government-to-government relationships at an agreed-upon pace acceptable to the First Nations. These government-to-government relationships would be consistent with the treaties, the recognition of the inherent right of self-government, Aboriginal title, and Aboriginal and treaty rights under section 35 of the Constitution Act, 1982.

With regards to the Indian Act, Robert Nault admitted the following:

INAC as well has said the right things regarding self-government, treaties and the Indian Act.

In its 2001-02 Report on Plans and Priorities, INAC stated that the "Indian Act is an antiquated piece of legislation that has proven inadequate in supporting the aspirations of First nations communities to build and maintain healthy, vibrant communities."

A year later INAC observed that:

But do the Liberals and their advisors "walk the talk"?

In 1969, then Indian Affairs Minister Jean Chretien developed the "White Paper" which would terminate the rights of First Nations as Peoples, would make reserves municipalities under provincial jurisdiction and would assimilate all First Nations peoples into "White society".

Today, is the position of a Jean Chretien-lead government any different?

In December 1994, then Finance Minister Paul Martin stated that forcing Aboriginal peoples to pay income tax is part of the process towards self-government. Indian Affairs Minister Ron Irwin commented in May 1995 that Indians who strike costly land claims deals and form their own governments should eventually pay taxes back into Canadian society. According to Irwin, the removal of the Indian Act’s tax exemption would be part of a future federal policy. He also accepted the position of the British Columbia provincial government that Canadians would find it easier to accept self-government and land deals if Indians lost the tax exemption they get if they live and work on reserves.

The Gathering Strength plan called for financially viable Aboriginal governments able to generate their own revenues and able to operate with secure, predictable government transfers. In light of the fact that INAC has suggested in the past that due to federal fiscal constraints all federal funding for self-government would be achieved through the re-allocation of existing resources and that in a draft version of the "Financial Institutions Act", mention was made that this statute would introduce local taxation, the federal government appears to be setting the stage for canceling all tax immunity and shifting more of the financial burden for social and economic programs onto the First Nations and their people. Paul Martin and the Department of Finance still seem to be driving the agenda to force Aboriginal peoples to pay income tax as part of the process towards and to defray part of the costs of self-government.

In an October 1999 speech, XXX noted:

But to the federal government, good government and strong accountability means the First Nations Governance Initiative, which, according to Robert Nault, will supply the tools missing from the Indian Act and pave the way for greater self-reliance, economic development and hope among First Nations’ communities. In other words, the First Nations cannot be trusted to govern themselves, and so the federal government, following in the footsteps of the paternalistic Indian Act and general government policies towards all Aboriginal peoples, must dictate how the First nations are to conduct their affairs.

Yet, as I will argue later in this report, if good governance is in the interests of the First Nations and their governments, why would they not adopt the most appropriate practices compatible with their goals and cultures? Either you know what is best for you or if you do not know or do not want to adopt what is in your interests, then externally imposed rules will not work either. Curiously, the federal government does not make similar demands for good governance of all its co-members in international bodies such as the United Nations or the World Trade Organization.

With respect to land claims, INAC has pointed out that:

The failure largely can be placed upon the federal government. It has had no financial incentive to negotiate – the longer the process is drawn out, the more the federal government saves since interest costs are not included in any settlement and the more likely that the First Nations will agree to lower valued settlements as they become weary and frustrated by the process. The federal government also has no political incentive. Treaties and land settlements are not understood by the public, who also view Aboriginals as beneficiaries of unnecessarily extravagant government largesse. Aboriginal peoples as a whole do not have the same political influence as do the non-Aboriginals who would oppose the payment of reparations and fair settlements to the Aboriginal peoples.

Thus, the First Nations have every right to be wary when Robert Nault announces that:

A new Commission is not the solution. Commitment and goodwill on the part of the federal government are needed. A Commission protects the government from further criticism for dragging its feet.

So is the Jean Chretien government 2001-02 "White Paper" model fundamentally different from the original 1969 model? The current model is just more sophisticated and is being sold to the public more effectively than the original. It also builds upon the failure of 30 years of policies with the failures presented to give credence to the paternalistic view of Canada towards Aboriginal peoples.

The current model includes:

• A Governance Act;
• Land Management Act;
• A phase-out of federal spending via First Nations own source revenues and provincial funding;
• Financial Institutions Act;
• Certainty to Treaties as Extinguishment Agreements; and
• Certainty to Constitutional Rights once defining laws are passed.

Paternalism flourishes in the current model.

Own source revenues will lay the groundwork for the full taxation of Indians and the gradual reduction in federal spending on First Nations’ health, education, social assistance, economic development and infrastructure initiatives. In addition, the Financial Institutions Act is likely to introduce property and other forms of local taxation on reserves and end all tax immunity.

A unilateral declaration of independence is not a feasible option. Therefore, there is no alternative to negotiating with the federal government. But there are a number of strategies worth considering – they will be the subject of the final section of this report.

But as a starting point, it might be worthwhile throwing back the words of the Liberals into their faces and emphasizing the inconsistencies to the media.

For example, the words of Robert Nault:

Why not put forth such a proposal? Of course, before you would be in the position to do so, you would have to have all your positions worked out thoroughly and your arguments developed clearly. The principal goal of this report is to assist in this process.

As well, it is interesting to note that, in supporting his Governance Act, Nault referred to the Harvard Research Project and its finding that the U.S. tribes with good governance were the ones that were most successful. He failed to emphasize the major conclusion of the Project; namely, the most powerful arguments for tribal sovereignty is the simple fact that it works. Nothing else has provided as promising a set of political conditions for reservation economic development. This principal finding together with the obvious logic that, if good governance is a prerequisite for sovereignty to succeed, First Nations are wise enough to do what is in their best interests and adopt good governance practices would make clear the government’s real objective – assimilation as spelled out clearly in the 1969 White Paper.

Or the words of Nault’s predecessor at INAC, Jane Stewart:

Are these still the positions of the INAC bureaucrats? If not, why not? If so, why do they not also represent the views of the Minister and the government?

The federal government is sensitive to external views and pressures. For example, the federal government wants Canada to remain among the top-rated countries in the world. But to accomplish this goal, it will have to address the discrepancies in living standards between Aboriginal and non-Aboriginal peoples in Canada. Furthermore, in the international context, Canada supports the recognition of a right to self-determination for indigenous peoples, which respects the political, constitutional, and territorial integrity of democratic states.

So a multifaceted strategy is required for the First Nations to have a chance of achieving their goals of sovereignty and prosperity. And an economic development strategy must be part of the overall strategy.

3. THE RELATIVE SOCIO-ECONOMIC STATUS OF ABORIGINAL PEOPLES IN CANADA

The United Nations (UN) uses the following indicators to evaluate the economic well-being of the citizens of a country: average income per capita, life expectancy and education. As we will see, by all three measures, Aboriginal peoples rank poorly.

Jane Stewart has expanded upon the UN list. According to her, well-being is measured by the following variables: the physical environment – adequacy of housing and availability of clean water; access to education and training opportunities; the opportunity to participate in the economy and earn a meaningful livelihood; and access to the health, social and cultural supports needed to ensure that people can remain healthy. The expanded list only makes the comparison worse for Aboriginal peoples.

It is useful to put the area of the land set aside for reserves for the 600+ Indian bands into some context in order to gain a better understanding of the issues surrounding land claims. Canada has a land mass of 6.5 million square kilometers. Over 130,000 square kilometers have been set aside for National Parks (2% of the total land mass). There are currently only 26,300 square kilometers of reserve lands (0.4% of the total land mass).

The Indian population on reserves is distributed as follows in 1999:

• Urban: 35.7%
• Rural: 44.4%
• Remote: 1.8%
• Special access: 18.1%.

But even these numbers are misleading since they do not provide a good indication of the remoteness of reserves. For example, reserves defined as in urban centers bear little resemblance to our common perception of an urban center. According to INAC, an urban reserve is defined as a First nation reserve located within 50 km from the nearest service center having year-round road access. A service center in turn is defined as a community where the following services are available – supplies, material and equipment (for construction, office operations, etc.); pool of skilled or semi-skilled labour; at least one financial institution; provincial services; and federal services. Not an urban center by any stretch of the imagination.

A special access reserve is one that has no year-round road access to the nearest service center.

Thus, as noted by INAC, "(a) large portion of Indian reserves are considered rural or remote, as such it can be expected that these reserves experience unique social and economic characteristics which differ from Canada as a whole." Interestingly, the INAC study did not confirm "the universal assertion that marked differences found between the reserve population and the Canadian population as a whole can be attributed to community size and remoteness of location."

3.2 Labour Market Status

Tables 1 and 2 should be looked at together.

UR: Unemployment rate – total unemployed as a proportion of labour force

PR: Participation rate – labour force as a proportion of population 15+ years of age

ER: Employment-population ratio – total employed as a proportion of population 15+ years of age

Sources: 1991 and 1996 Census

It is apparent that on-reserve Indians fare poorest in the labour market. Not only are their unemployment rates much higher than the non-Aboriginal labour force – almost three times higher in 1996; but they are higher than each of the other distinct categories of Aboriginal peoples. Off-reserve Indians have the second highest levels of unemployment.

As well, the participation rates of on-reserve Indians are much lower than the non-Aboriginal labour force (21% lower in 1996) and each of the other Aboriginal labour forces. Once more, the off-reserve Indians have the second lowest participation rates.

A relatively lower participation rate goes hand-in-hand with higher unemployment rates. High unemployment rates tend to discourage active labour force participation and so this leads to lower labour force participation rates. The unemployment rates for registered Indians, both on and off reserve, do not measure the so-called hidden unemployed – those individuals who have dropped out of the labour force altogether because they could not find any jobs. Hence, the real unemployment rates for registered Indians are much higher than those recorded and measured in Table 1. If one includes the hidden unemployed, the unemployment rate for registered Indians would have stood at 40% in 1996 – compared to the 27% shown in Table 1.

Source: Table 1

The employment-population ratio, which the product of the employment rate (one minus the unemployment rate) and the participation rate also is lowest for the on-reserve Indians – approximately 37% below the employment rate for the non-Aboriginal labour force. The off-reserve registered Indians had the second lowest employment rate.

The relative positions of all Aboriginal labour force groups did improve between 1991 and 1996. But despite the improvements, the relative positions of the total Aboriginal labour force and of registered Indians in particular are still abysmal. The unemployment rates for all registered Indians were 170% higher than those of the non-Aboriginal labour force; the participation rates were 18% lower (leading to an even larger unemployment gap when the hidden unemployed are included in the unemployment rate); and the employment rates were 32% lower.

The only Aboriginal group that compares reasonably well is the "other Aboriginal" labour force.

The unemployment rates for the Aboriginal labour force is consistently over twice the levels for non-Aboriginals in Canada in 1996, regardless of geographic location (Table 3). The Aboriginal labour force unemployment rates also were in excess of 21% in all geographic locations.

Source: 1996 Census

Source: 1996 Census

According to the INAC study, in 1991 only 1.2% of the gap between the unemployment rates experienced by registered Indians living on reserves and the unemployment rates of those living in Canada as a whole could be explained by community size and location. Assuming that INAC would find similar results in 1996 using its methodology, which is far from thorough, then it would appear that "remoteness" cannot explain the poorer labour force experiences of o-reserve registered Indians.

In all the major urban centers across Canada, the Aboriginal population fares much worse than their non-Aboriginal counterparts in the labour market – higher unemployment rates, lower participation rates (reflecting poorer job prospects) and lower employment rate (reflecting higher unemployment and lower participation rates) – Table 4. For example, the unemployment rates range from 50% higher in Halifax to 4.5 times (350%) higher in Regina.

RCAP pointed out:

Source: 1996 Census

The data in Table 5 confirm this position. Registered Indians, especially those living on reserves, are overwhelmingly employed in the public sector. They also are over-represented in the primary sector – a finding one would expect given the importance of the land and the customary occupations of hunting and fishing, and the proximity of reserves to the resource sectors and projects (forestry, mining and oil and gas).

Registered Indians in total, but especially those on reserve are very under-represented in other tertiary industries – financial services, transportation, retail and wholesale trade, business services, utilities, communications.

Poor labour force status translates into equally poor income status. Registered Indians in total and those on reserve in particular fare badly relative to the non-Aboriginal population in terms of median household income, average individual income, percentage of families below the low-income cutoff and the percentage of individuals with transfers as a major source of income. While income levels improved between 1990 and 1995, the incidence of low income and the importance of transfer payments as a major source of income actually increased during this time period.

1: Median household income – constant 1992 dollars

2: Average individual income – constant 1992 dollars

3: % of families at/below low-income cut-offs

4: % of individuals with transfers as major income source

Sources: 1991 and 1996 Census

The median household income of all registered Indians was 61% of the median income for non-Aboriginals in 1995 (Table 7). This represented a modest improvement from 1990. If we were to extrapolate this rate of improvement into the future, it could take almost 100 years for the gap in median household incomes to disappear.

Source: Table 6

The relative income status of Aboriginal peoples living in urban centers was better than those on reserve or in rural areas (Table 8). Nevertheless, even in the best case – the non-central metropolitan areas (non-CMAs) of urban centers, the Aboriginal populations’ average total income was only 73% of the average income for non-Aboriginals.

Source: 1996 Census

In 1996, in every major urban center across the country, the Aboriginal peoples had lower average total incomes and higher incidences of low income than non-Aboriginals (Table 9). In the cities Toronto and east, the average total income of Aboriginal peoples ranged between 70% and 77% of the income levels for non-Aboriginals. In the cities between Thunder Bay and Calgary, the average total incomes ranged between 55% and 65% of non-Aboriginals.

The incidence of low income ranged from a low of 28% in Halifax to a high of 64% in Saskatoon. Again, the incidences of low income among the Aboriginal peoples were higher in western Canada, including Thunder Bay, than in eastern Canada.

Source: 1996 Census

The INAC study found that in 1991, of the total difference in average individual total income of registered Indians on reserve and average individual total income for all Canadians, nearly 42% was explained by community size and remoteness of location.

Source: INAC Departmental Data, 2000

The incidence of low income and dependence on social assistance also are reflected in the large and increasing numbers of registered, on-reserve Indians, 15 years of age and older who received social assistance. The data in Table 10 together with the data in Table 5 support the contention that registered Indians living on reserves continue to be highly dependent on government transfers and jobs. This in turn reflects the serious underdevelopment of reserve economies and the failure of past government programs.

3.4 Education Status

Registered Indians are over-represented among those with less than a high school education – 22% of all registered Indians and 30% of on-reserve Indians had less than a grade nine education in 1995 compared to only 12% of non-Aboriginals – and under-represented among those with a university education or with some other post-secondary degree or certificate (Table 11). In 1995, only 6% of on-reserve Indians, 15 years or older were high school graduates and only another 2% had a university degree. 15% of non-Aboriginals had a high school degree and another 13% had a university degree.

Sources: 1991 and 1996 Census

While there has been some improvement in the educational attainment of registered Indians between 1991 and 1996. the improvements have been marginal for those with a high school degree, a post-secondary degree or certificate (university and other), or some post-secondary education other than university.

Source: INAC Departmental Data, 2000

The relative gap in full-time post-secondary enrollment rates for 17 to 34 year old registered Indians receiving INAC funding and all Canadians has not changed between fiscal year 1994-95 and 1998-99. The enrollment rates for the registered Indians also have not improved over this five-year period (Table 12).

Among urban populations, the Aboriginal peoples are over-represented among those with less than a high school education – an astonishing 48% had less than a high school education in 1995 (Table 13) – and under-represented among those with a university degree.

Educational attainment is positively correlated to labour force experience – the more educated experience lower rates of unemployment and are more likely to participate in the labour force because of the better job prospects, thus are likely to have higher participation rates. The Combination of lower unemployment rate (higher employment rates) and higher participation rates translate into higher employment-population ratios.

Source: 1996 Census

The data in Table 14 tend to show this positive correlation for both the Aboriginal and non-Aboriginal populations in 1996, although there appears to be a slight discrepancy for those with some post-secondary education. Perhaps, the failure to complete a post-secondary education is viewed negatively by prospective employers and thus hinders the job opportunities for all people – especially the Aboriginal peoples.

Source: 1996 Census

The relatively poorer labour force and income status of Aboriginal peoples, and in particular registered Indians, is in part a consequence of their relatively poorer education status. But there is a "chicken-and-egg" problem. The relatively poorer education status most likely reflects the relatively poorer employment and income opportunities available. So while a more educated work force could lead to higher income levels and lower unemployment rates, unless, there is an incentive to invest in education and training, there is likely to be little progress in improving the levels of educational attainment.

Expanding the scope of the current, but limited tax exemption, could serve as a powerful incentive for registered Indians, both on and off reserves to invest more in their education.

Registered Indians fare worse on several indicators of health status – life expectancy, infant mortality rates and age standardized TB incidence (Table 15). These findings are not surprising, since health status and labour force and income status are positively correlated. Individuals active in the labour market who earn above average income levels tend to be healthier and/or have better access to health care.

So the inferior health status of registered Indians is the mirror image on their relatively poorer labour force, income and education status. Economic development for the First Nations should improve the economic status of registered Indians and this should lead to improvements in their health. The status quo does have considerable hidden costs and the payoffs from economic development could be substantial not only for the Aboriginal peoples but for all other people in Canada.

Source: 1991 and 1996 Census

On a positive note, there does appear to be a steady increase in the life expectancy of registered Indians (Table 16). This might go hand-in-hand with the gradual improvements in income and education levels.