Financial Issues

In 1990, Price Waterhouse calculated the cost to BC of not settling treaties to be $1 billion in lost invesment and 1,500 jobs in the mining and forestry sectors alone. The economic analyses conducted by the Treaty Commission over 2003/4 confirm that the absence of treaties is a major drain on the BC economy and that through settling treaties BC could realize enormous economic gains.

In treaties concluded in BC and other parts of Canada, funding for First Nation government operations typically covers several years at a time, are renegotiated periodically and are not usually constitutionally protected.

Generally, funding provided by Canada for all First Nation government operations, programs and services to members will be combined and forwarded to the First Nation government. These funding agreements are intended to allow for longer-term planning and budgeting. For example, in the Nisga'a Treaty, it is agreed that the parties will attempt to reach agreement on funding every five years or as agreed. Funding for the first five years to the Nisga'a Lisims government is $16.1 million (1999 dollars).

For example, funding may be negotiated to develop laws and a First Nation constitution, or to determine eligibility for treaty benefits, and to undertake enrollment and ratification for treaty purposes. Including funds for training and transition, the Nisga'a Nation received for treaty implementation $40.6 million (1999 dollars).

The Task Force further recommended that "Although recognition of past and current uses is important, detailed calculations would be technically difficult, costly and time consuming. The Task Force encourages the parties to reach a negotiated solution by bargaining in good faith in the determination of compensation."

Compensation is a tough issue for treaty negotiations. First Nations feel they should be compensated for land they are being asked to give up and wrongs done to them in the past; the governments of Canada and BC want to avoid focusing on the past and use treaties to build stronger relationships for the future.

Canada, BC and the First Nations Summit are working together to find creative solutions to compensation and other common fiscal issues.

When the tax exemption came into effect under the 1876 Indian Act (Section 87), First Nations did not have the right to vote, own property or practise many cultural traditions. First Nations did not gain the right to vote in federal elections until 1960.

The Indian Act has made economic development on reserves difficult. Because it stipulates that reserve lands cannot be seized to enforce payment of a debt, these lands have never been available for use as collateral. The same is true of all real and personal property of aboriginal people or bands on a reserve.Negotiated cash and land settlements will provide First Nations people with the capital they need to begin businesses and create jobs and industries.

Through treaties, First Nations will acquire a land base and establish a government with powers to access revenues, borrow, receive transfers from other governments and levy taxes. The governments of Canada and BC seek to gradually eliminate tax exemptions as First Nations move towards greater economic self sufficiency. For example, under the Nisga'a Treaty transaction taxes such as sales tax will be eliminated eight years after the effective date and all other taxes, including incomes tax, after 12 years.

Many First Nations in the BC treaty process are reluctant to give up their tax exemption when most other First Nations in Canada will continue to have these exemptions —including those that have signed treaties in the past. Canada, BC and the First Nations Summit are working together to find creative solutions to taxation and other common fiscal issues.

A study conducted by Price Waterhouse estimated that uncertainty surrounding unresolved aboriginal rights and title could cost B.C. $1 billion in lost investment and 1,500 jobs a year in the mining and forestry sectors alone. Completing treaties is expected to will bring a net financial benefit of between $3.8 billion and $4.7 billion and generate up to 17,000 jobs in British Columbia over the next 40 years (Grant Thorton, 1999).

The BC government's share of the overall cost is estimated at $2 billion, or $50 million annually over 40 years, plus rural Crown land with a notional value of $2.8 billion to $3.5 billion. BC's annual portion is equal to about 25 cents of every $100 in the current provincial budget.

The Treaty Commission allocates negotiation support funding so that First Nations can prepare for and carry out negotiations on equal footing with the provincial and federal governments. Since opening its doors in May 1993 the Treaty Commission has allocated approximately $325 million in negotiation support funding to more than 50 First Nations— $260 million in the form of loans and $65 million in the form of contributions.

Contrary to popular belief, the Commission is not a big bureaucracy. We have 13 full-time staff in addition to the five commissioners—four of whom are part-time and regularly travel throughout the province. The Treaty Commission's operating budget for 2004/5 was $1.99 million. Canada funds 60 per cent of the Treaty Commission's operating costs and BC funds 40 per cent. The Treaty Commission's total operating costs from 1993 to March 31, 2004 are $24,220,00.

Canada funds 60 per cent of the Treaty Commission's operating budget, and BC funds 40 per cent.

Eighty per cent of negotiation support fundinig to First Nations is provided as loans from the federal government, and 20 per cent as contributions from the federal and provincial governments. The federal government provides 60 per cent of the contribution funding and the provincial government provides 40 per cent.