Indigenous oil, gas support, sales taxes suggest Ottawa’s shaking its ‘paternalistic streak’
It takes some doing to make a billion dollars the equivalent of spit in the ocean, but the Liberals have managed it. If Mike Myers’ Dr. Evil character, pinkie on bottom lip, was to hold Canada ransom for “one billion dollars” it would provoke howls of mirth, such is the devaluation of the concept.
Budget 2024 promises another $29 billion in new spending, pushing program expenses to over $500 billion this year, including debt payments.
The chapter on Indigenous services provides some eyepopping statistics: federal government spending has increased 181 per cent since 2015 to $32 billion in the current year, more than is spent on defence.
In addition, the government has committed to paying out $57 billion to Indigenous Canadians in compensation for past wrongs, and has recorded contingent liabilities of another $76 billion for court cases it expects to lose.
The budget breaks out the huge sums earmarked for First Nations housing, health, education and children’s welfare; for schools, water, wastewater and, yes, roads.
It also details each pay-out for “the past harms of colonialism” in the form of compensation settlements.
The impression the government would like to leave is one of enlightened benevolence. But in the case of service provision, it is merely the federal government fulfilling its obligation to provide a comparable quality of services for First Nations people to those received by all other Canadians.
The settlements are courtordered compensation for illegal acts committed by the government of Canada, such as the failure to provide cows and plows as part of the agreed transition from hunting and gathering to settled agriculture in the 1870s. The money is largely paid to individuals and should not be portrayed in a budget as government largesse.
The surge in spending has not yet been transformative, according to Ken Coates, professor of Indigenous governance at Yukon University.
“The results are very mixed,” he said. “Indigenous folks are used to high-sounding programs but often there are problems getting money out of the door.”
The 2021 census suggests that median individual income has risen since 2015 — for registered Indians on reserve to $32,000 from $22,100. But that still trails the non-indian average income of $50,400 by a considerable margin. Education outcomes and housing quality have improved marginally, while the number of Indigenous Canadians admitted to a correctional facility has fallen slightly.
Coates said the increase in use of block grants and multiyear funding has made an unwieldy governance structure more efficient.
“It is getting better, but the pandemic was staggering in its impact, while the epidemic of opioid use is causing enormous difficulties.”
The education system still has real challenges when it comes to results, the standard of teachers and the curriculum, he said.
But there are points of light amid the gloom, the and this budget makes some substantial progress in fundamentally changing the nature of the fiscal relationship between Ottawa and Canada’s Indigenous peoples.
The government has slowly been devolving responsibility in areas like child and family law, land management and education, where a deal in Quebec two years ago saw 22 First Nations taking responsibility for 6,000 students based on their vision of education.
Budget 2024 extends that self-determination to the fiscal relationship.
One positive development saw the government announce that it will bring forward legislation that allows First Nations to opt in to a new sales tax regime that would see them keep the sales tax on fuel, alcohol, cannabis, tobacco and vaping products sold on their land. The government said it is open to negotiating First Nations GST and personal income tax agreements, as well as exploring the potential role of tax arrangements to allow Indigenous communities to benefit from resource development.
While these kinds of deals are not a panacea — the likelihood is that they will only benefit urban and near-urban communities — they could prove another source of revenue that some First Nations will be able to leverage to secure loans from Indigenous financial institutions, like the First Nations Finance Authority, for badly needed infrastructure projects.
The second major forwardlooking announcement was that Ottawa will provide up to $5 billion in loan guarantees to First Nations looking to invest in major projects across the country.
Crucially, the loans would be “sector agnostic,” allowing First Nations to look for equity deals in oil and gas projects — a major concession for a government that previously blocked the Canada Infrastructure Bank from taking positions in carbon-emitting projects. The loans will be provided by financial institutions and guaranteed by the government of Canada. First Nations would benefit from the government’s triple-a credit rating, which would make the loans significantly cheaper than those negotiated on commercial terms, given the lack of collateral available to many communities.
This is a smart move on the part of a government that is keen to see the swift development of critical minerals projects, more than half of which are on First Nations land.