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The State of The First Nation Economy and The Struggle to Make Poverty History

The 61 page report is available at http://www.afn.ca/misc/FSFNE.pdf   

From the EXECUTIVE SUMMARY

It was almost 40 years ago when the Indian Tribes of Manitoba issued their statement called Wahbung: Our Tomorrows, outlining a vision of their relationship with Canada and the steps that would need to be taken to restore balance in relationships and assure self‐sufficiency for future generations. It was a document specific to Manitoba but reflective of principles that are reflected in the aspirations of First Nations in all parts of Canada:

• First Nations must assume control and ownership over all aspects of their lives
• First Nations dependency on the Canadian state must not continue
• First Nation economic, social and educational development are interrelated and must develop uniformly

The document proceeded to lay out a detailed program, showing how existing relationships would need to change with respect to such matters as treaty and Aboriginal rights, the land, the Indian Act and culture. It also specified what would need to be done in areas such as health and social services, housing, education, and economic development. By underlining the importance of a broad approach to community development and especially in emphasizing concepts such as social capital and self‐determination, they were a couple of decades ahead of the academic community which would later show the relevance of these ideas for achieving community economic development.

At the same time, the leaders of the Indian Tribes of Manitoba could not have foreseen some of the major changes in the context for development that have occurred in the interim. While they were struggling to meet the requirements of a rapidly growing population, the large‐scale movement of the population to urban areas was not apparent in the early 1970’s. Neither were the changes taking place in the Canadian and global economies, evident in more recent decades, that would place a premium on knowledge, higher education, creativity, trading on a global scale, the need to adjust to quickly to changing environments, the use of computers, and the importance of connectivity via information technology.

In this report, our objective has been not only to describe the current state of the First Nation economy but also to document the changes that have taken place over the past 40 years, to see to what extent at least some portions of the vision set out by the Indian Tribes of Manitoba have been achieved, and to draw attention to new issues and gaps that need to be taken into consideration as the struggle to make poverty history continues. Our intent is not to provide a long shopping list of measures yet to be taken in areas such as education, housing or economic development as recommended by many recent reports. Rather, it is to extrapolate from the detailed empirical analysis that we have undertaken to highlight certain issues that may not always be apparent in the current debate and in that sense, to provide some “value added” to the discussion. The main themes of our report can be summarized in the following 12 points.

(1) As documented by our charts, the socio‐economic position of the First Nation population has improved over the past 40 years. Whether it be in education, employment or income, the charts show (with very few exceptions) that change is going in the right direction. Indeed, we say to those in the media, in politics or academia who consistently emphasize the negative, or who seize on particular communities or situations where things are falling apart as being representative, that they do a disservice to the First Nation leadership, its public service and others, including those in government, who have worked so hard and so creatively, in the struggle to make poverty history over the past four decades.

(2) But the rest of the Canadian population is not standing still. As often as not in the period to the mid‐1990’s, the rate of positive change on the available indicators has been greater for the Canadian population than it has been for the First Nation population. As a result, the gap in education levels, for example, and on some indicators of employment and income has widened rather than narrowed. However, in the 1996‐2006 period when the Canadian economy was growing strongly, most of the indicators show a narrowing of the inequality gap. An important lesson, therefore, is that we are more likely to make progress in reducing the gap in relative or comparative terms when the macro‐economy is growing strongly.

(3) While progress in the past decade has been encouraging, the First Nation economy is especially vulnerable to recessions, which can reverse, at least for a time, the positive changes we have documented. Many First Nation businesses are less well established, overrepresented in the primary resources sector and more likely to be engaged (and exposed) in the export of goods and services. The First Nation labour force is younger, growing faster, has less union protection and seniority, and less education ‐‐‐ all of which make it more vulnerable in the current climate.

(4) First Nation young people currently in the labour market or about to enter it faced especially challenging, even desperate, times despite the generally favourable economic environment that has characterized the last decade. As of 2006, they were disadvantaged in educational terms and their unemployment rate stood at 38 per cent on reserve and 27 per cent overall. Their incidence of low income was 34 per cent if living in a family context, and 77 per cent if living as “unattached individuals”.

(5) Figures on the proportion of the First Nation population living off reserve vary from 45 to 57 per cent, depending on how the population is defined and counted. Despite a substantial urban migration since the early 1970’s, it is a population that has not had sufficient attention paid to it. There is a lack of research, policy, programs and engagement to address the particular needs of this segment of the First Nation population. For the most part, urban Aboriginal residents are better off than those living on reserve, but less well off than the larger Canadian population. On some indicators, such as being able to retain indigenous culture, and the incidence of low income, urban residents are in a worse situation than their on‐reserve counterparts.

(6) However, the First Nation population is still very much a rural population, especially in comparison with the rest of Canada. While the rest of Canada is 80 per cent urban, only 45 per cent of the First Nation identity population (41 per cent for Registered Indians) live in urban areas. Some population projections suggest that the proportion of the Registered Indian population living on reserve will increase in the period to 2026, while the urban percentage will decrease.

As evidenced by rural to urban commuting patterns and, more systematically, by comparisons of unemployment rates, urban areas in Canada are now and will likely continue to be, centres of economic, educational and other forms of dynamism and opportunity. Both First Nation businesses and the First Nation labour force have benefitted from an urban location even if their “home base” remains the rural reserve community. Some research indicates that reserve communities with an urban connection do better on composite measures of community wellbeing (housing, education, employment and income) than is the case for communities located in more remote and isolated areas. Thus an important research and policy challenge remains one of establishing appropriate development strategies for rural and isolated communities, and how they can develop a viable urban connection.

(7) Positive change, whether in education, employment or income, has been more evident and more substantial among the off‐reserve First Nation population than on reserve. The result of this trend over time is that the gap that exists between on and off reserve, between rural and urban, is increasing rather than decreasing. Reserve‐based economies and societies require effective development strategies as much as do urban areas. Indeed, the two are closely connected through migration and in other ways.

(8) The First Nation population is growing more rapidly than the Canadian population as a whole. This presents an opportunity for First Nation people to fill many of the job vacancies that will be available after the current recession ends. But we are far from having the commitment by governments and the strategy for matching supply with demand, along with an appropriate approach to labour force training. The preferred approach seems to be to rely on immigration.

(9) First Nation development strategies also tend in many cases to focus on the natural resource sector and on First Nation business development. Neither will come close to providing the number of jobs required by the rapidly increasing First Nation labour force. A natural resource sector strategy makes good sense from the point of view of First Nation business development, but its capital‐intensive nature means that it provides relatively few jobs.

(10) Over the past 40 years, one of the major achievements has been in the growth and development of First Nation businesses, both those that are privately owned and those owned by their communities. Unlike 40 years ago, there are now, in each region of Canada, “breakout” communities that are not only successful in providing a viable economic base for their own communities but that also serve as a source of employment and business opportunity for their surrounding areas. Each year, the success of particular First Nation businesses is profiled in award shows and in the media, and they are becoming prominent in trade missions to other countries.

Three cautions are in order, however. First, while Industry Canada and other sources proclaim that there are thousands of new First Nation and other Aboriginal businesses in Canada, we note that the number of First Nation businesses (some 15,000 in 2006 as measured by the number of persons self‐employed in incorporated or unincorporated businesses) as a percentage of the experienced population 15 years of age and over is actually declining and remains at only about half of the rate for the Canadian population. Secondly, new Aboriginal businesses account for only about one in four of the new jobs available to the Aboriginal labour force, reinforcing the fact that a successful First Nation poverty‐reduction strategy needs to go well beyond a strategy focused on First Nation business expansion. Finally, the available sources on figures pertaining to First Nation businesses in Canada do not include businesses that are community‐owned, where there isn’t an individual owner/operator. This is a significant gap in the information base because it appears that the dynamism in First Nation economic development is coming as much from community‐owned as from privately‐owned businesses.

(11) In reviewing the record of the past 40 years, we have also been impressed with the growth in what we call the institutional base for First Nation economic development. First Nation communities have trained economic development officers; they may well have community economic development corporations, and they have access to capital through Aboriginal Capital Corporations as well as from the banking sector. On a broader scale, their tribal organizations may have an economic development arm, and various specialized organizations exist for special purposes – to organize trade missions, for example, to examine matters related to taxation, or to strengthen the institutions of governance. The information base available to guide community and economic development has also improved enormously.

Still, there are important gaps in the institutional structure, and recent reports have done a good job in setting out the agenda to be achieved. Access to capital (such as equity and venture) continues to be problematic. This, plus Indian Act constraints in areas such as land tenure and land management, make it difficult for reserve communities to respond quickly to economic opportunities. Housing and other infrastructure shortages abound, especially in the more isolated communities. Fragmentation and other shortcomings in federal policy and programs need to be addressed. These are just some of the important issues that have been identified.

(12) Perhaps the most important point is this concluding one, the importance of “hanging in” for the long haul. First Nations in Canada are in the process of making a historic but difficult transition from a time when they were the subject of colonial‐era controls, assimilative measures and removal from their traditional land and resource base. They have regrouped and, as our charts and other references note, have made considerable progress in realizing key elements of the vision set out by the Indian Tribes of Manitoba almost forty years ago. Important gaps and issues remain to be addressed not only with respect to economic development narrowly defined, but also in related dimensions such as education, culture, child welfare, and governance. We should all be encouraged by the progress that has been made, while renewing the commitment to continue the struggle which may well take a full “seven generations”.