Resource revenue sharing supports Indigenous communities and backs their moves toward greater Indigenous self-determination, write Ken Coates and Stephen Crozier.
By Ken Coates and Stephen Crozier, May 23, 2018
Every once in a while, the ground shifts in the Canadian public-policy landscape. So it was earlier this month, when the Ontario government announced an agreement to share mining and forestry revenue with First Nations. The specific deal was worked out with the Grand Council of Treaty #3, the Wabun Tribal Council and the Mushkegowuk Council. This transformative development, many years in the making, changes the very foundations of resource development in Ontario and holds the potential to set Indigenous, government and industry relations on a new path.
The situation in Ontario is well known. Many promising resource developments, highlighted by the Ring of Fire in Northern Ontario, have been stalled or slowed by Indigenous opposition. The often-stated position is that there was little reason to pursue developments when the returns to Indigenous communities were small and uncertain. Resource companies have supported resource revenue sharing, provided it represented a sharing of current taxes. The provincial government, for their part, worried about how they would fund other development costs, like major infrastructure, if their resource revenues eroded. An impasse had settled over the resource sector, leading to many delays, conflicts and legal struggles, all of which slowed investment and limited opportunities for Indigenous participation.
In the run-up to the provincial election, Premier Kathleen Wynne’s announcement did not get the attention it deserved, partly because Progressive Conservative Leader Doug Ford’s earlier support for revenue sharing with Indigenous peoples lifted the issue out of the realm of partisan politics. This is a good thing. Finding appropriate mechanisms for involving Indigenous communities in resource development is crucial to the general vitality of Ontario’s resource sector as well as the economic and social well-being of Indigenous peoples.
Finding appropriate mechanisms for involving Indigenous communities in resource development is crucial to the general vitality of Ontario’s resource sector.
The details of the agreements are straightforward. The province will allocate 45 per cent of forestry stumpage fees (the price a company must pay to the landowner to harvest timber from an area) and 40 per cent of mining tax and royalty payments associated with active mines to the affected First Nations. Government revenue from future mines will be subject to a 45-per-cent allocation to the First Nations. The funds will come to the First Nations with no strings attached; they can use the money to address local needs, which remain substantial in most communities.
Government resource revenue sharing is no panacea. The sums involved will not be high enough to immediately address urgent requirements, let alone produce windfall profits for First Nations governments. It is also not the only way that First Nations could share in the opportunities associated with resource development. Agreements with companies, typically involving training, jobs, business opportunities and community benefits, will remain an integral part of modern mining development in Canada. Revenue sharing, therefore, is a crucial piece of a larger puzzle of contemporary resource activity in Canada.
Indeed, perhaps the most important and difficult work lies ahead. The agreements have to be implemented successfully. Additional agreements will be needed, as currently only 32 First Nations have signed on. Notably, the current agreements do not extend to the Ring of Fire. Revenue sharing also does not remove the obligation of resource firms to work carefully, constructively and openly with Indigenous communities.
Collectively, the benefits for Indigenous communities could be substantial and are certainly well-deserved. For their part, communities need to remain vigilant to hold government to its commitment not to claw back the additional revenue from other Crown payments and contributions to First Nations. Companies will be keen to ensure that Ontario does not seek to offset the cost of the shared revenue through increased fees and taxes, which could easily make further development non-economic.
Resource revenue sharing supports Indigenous communities and backs their moves toward greater Indigenous self-determination. It also supports appropriate and well-planned resource development – something the province urgently needs. These agreements ultimately represent sound public policy and should attract continued support from all political parties moving forward.
That the agreement came as a pre-election surprise speaks volumes to the value of quiet and careful negotiations. It now falls to all parties – First Nations, the Government of Ontario and the resource companies – to ensure that these agreements are honoured and that discussions continue where agreements have not yet been reached. It is possible to make progress on Indigenous affairs. With this latest announcement on resource revenue sharing, progress has been made.
Ken Coates is a Munk senior fellow, Macdonald-Laurier Institute. Stephen Crozier is vice-president of corporate affairs, IAMGOLD Corporation.
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