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Aboriginal Participation in Project Development

By Rob Miller - May 17, 2016 under First Nations, MT+Co.

Emerging and Lost Opportunities

The role of Aboriginal people in the Canadian economy is coming full circle.

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 Indian Act) 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 land interests.

Outside of the Indian Act, 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 partner;
  • 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 initiatives.

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 economies prosper.

This article was originally published in the April, 2016 edition of Bar Talk.

If you would like more information regarding Aboriginal law issues generally, please contact Rob Miller, Practice Group Leader for the First Nations Economic Development Grouprob@millertiterle.com.