Good morning, and thank you for this opportunity to appear before the Senate Standing Committee on Aboriginal Peoples to discuss how to improve First Nation housing outcomes and access to long term infrastructure capital.
My name is Andre LeDressay, and I am the Director of the Tulo Centre of Indigenous Economics, affiliated with Thompson Rivers University in Kamloops, British Columbia.
I have had the pleasure to read your interim report on these matters. You are asking good questions: Why are we not making more progress to improve aboriginal housing and infrastructure? What are the causes of policy failures? How do we build a foundation for more success?
You have collected important information about housing and infrastructure gaps between aboriginals and other Canadians. As you point out, the current policy approaches will never close these gaps.
You have identified important root causes of the problems. First Nation laws, policies and procedures are missing. Administrative capacity needs to be developed to deliver policy change. More fiscal resources and powers are required to raise the quality of services and infrastructure to national standards.
It is good that the Committee’s next report will be about specific achievable recommendations. Once again you are asking good questions. What changes will work? How does Canada support effective aboriginal policy change?
For these questions, I hope some of our research and work is helpful to you. Tulo provides two university accredited certificate programs in First Nation Tax Administration and Applied Economics. These are the first of their kind in Canada and we believe in the world.
Twelve of our courses have original curriculum. They are based on a 15 year economic study on the causes of First Nation poverty. Over 100 students have taken our courses. A few weeks ago we released a free open text book for students and universities who want to learn and teach from our work. Building a Competitive First Nation Investment Climate is now available.
One of our chapters focuses on the requirements to support residential markets on First Nations lands, another on improving First Nation property rights and another on building better infrastructure. I hope this resource is helpful to you in your work.
With respect to housing, we have gathered anecdotal information that the market value of a certificate of possession First Nation home is significantly less than a comparable home off reserve lands. We have found examples where a Certificate of Possession (CP) home has sold for about 10% of a comparable property in a neighboring jurisdiction. Think of how much home equity you would have if you could only sell to other Senators.
This lack of equity has dramatic consequences. It prevents business start-ups. Imagine how many First Nation entrepreneurs have been thwarted by not having access to home equity. It has been estimated that about 50% of business start-ups are financed by home equity.
A lack of home equity, prevents saving. It prevents the cycle of wealth generation that every other Canadian takes for granted. Consider how many First Nation youth have to start from scratch because they don’t receive bequests of home equity like other Canadians.
The current “market” based housing program does not generate home equity for First Nation participants. As such, First Nations continue to forgo the benefits of home ownership that other Canadians enjoy.
We have also found examples where leasehold developments on reserve have equal or higher markets values to comparable lands off reserve. To provide our favourite examples, an acre of land in Westbank First Nation sold for approximately $10,000 in 1989 and today that same acre is leased at over $1 million. In Sun Rivers, an acre sold for $8,000 in 1996 and today that same acre leases for about $700,000.
How did this happen? It was not magic or good luck. It was a simple recognition that First Nations market institutions were largely removed by the Indian Act and that First Nation have to legislate their way back into the economy.
The proof is that the costs of doing business on some of the best located First Nation lands are four to six times higher than off First Nation lands. This is one of our research results that this Committee cited in a previous study.
Market economies need a legal and administrative framework that support property rights, facilitate trade and provides investor certainty. They need a stable fiscal framework that pays for quality services and builds competitive public infrastructure. Our research suggests it can be up to four times harder to finance infrastructure on First Nations lands.
The study of the frameworks that support markets is called institutional economics. It is supported by a substantial literature. It is the basis of a recent bestselling book – Why Nations Fail.
Westbank and Kamloops restored their market institutions and the predictable market results occur. Building the legal, administrative and infrastructure framework to support markets is what our courses are about at the Tulo Centre of Indigenous Economics. It is the purpose of the text book that we wrote.
A question you might ask is if it so easy why hasn’t it happened more often? Implementing change is hard, time consuming and expensive. It took years and millions of dollars for Westbank and Kamloops to complete their work. What can we do to reduce these costs and this time?
Last year, we looked at 15 proposed First Nation policy changes during the last 20 years or so – from the proposed Charlottetown Accord to the proposed First Nation Education Act. These changes were not successfully implemented but others such as the First Nations Land Management Act and the First Nations Fiscal Management Act did create positive changes.
Based on this research, we observed that successful aboriginal policy changes have four elements. First, they are First Nation led. Second, they are optional. Third, the changes are implemented by First Nation administrations and institutions. Fourth, other governments have the political will to support the changes in the face of opposition. Any changes this Committee recommends should meet this test.
Our role at the Tulo Centre is the third requirement for effective change. We are a First Nation institution that helps First Nations implement changes.
We focus on capacity development. By this, I mean the development of specific skills that help First Nation administrations implement changes such as passing laws using modern legislative frameworks like the First Nations Fiscal Management Act. We help students to effectively communicate an agenda that promotes higher property values to Chief and Council and membership. We teach students how to build administrative and tax systems that support residential and commercial developments and finance services and build infrastructure.
In closing, here are four recommendations that I encourage this committee to support and include in its final report:
First, the First Nations Fiscal Management Act was passed in 2005. Amendments have been suggested to increase participation, raise investor confidence and improve administration. The Fiscal Management Act helps First Nation finance infrastructure. This committee should support amendments to this legislation.
Second, many First Nations are suggesting that they should receive a fiscal benefit from resource development in Canada. Many recent reports have suggested greater resource revenue sharing with First Nations. This committee should support fiscal options that provide stable revenues to First Nations to close the legal, administrative and infrastructure gaps.
Third, only an effective First Nation housing market will ever close the gap between First Nation housing demand and supply. First Nation homeowners must have equity and value in their homes. This can only be accomplished with tradable and secure property right and registry systems. This committee should encourage more leasehold housing developments and this committee should recommend the First Nation Property Ownership option being proposed by some First Nation leaders.
Finally, this committee should promote options such as the Tulo Centre of Indigenous Economics certificate programs that build the necessary capacity within First Nations to implement your recommendations.