We can break this down into three points.
First, federal support for First Nations is already not keeping up with inflation and population growth. The fiscal reality is that competition for federal revenues is going to grow substantially over the next twenty years because of cost pressures on age driven programs such as health care and old age security. The demographic reality is that the requirements of First Nations are going grow at the same time because of a higher birth rate. The political reality is that increased First Nations need is going to be competing politically with demands from people who are seeing themselves grow poorer. We believe that a strategy based on increasing federal contributions is going to be extremely difficult in that political context.
A strategy based on developed on economic and fiscal powers now, will on the other hand find a growingly receptive climate. The appetite for initiatives which can be demonstrated to improve productivity is going to grow. The federal government is also going to be forced out of the current system of bureaucratic oversight and control because its per capita costs and personnel requirements dwarf the oversight afforded to local governments. The emerging fiscal and economic crisis is going to eventually lead to an acceptance of new a real reassignment of fiscal powers and responsibilities. Government is going to conclude that the present system of Departmental oversight and responsibility is simply unaffordable.
Second, First Nations are a younger population than Canada as a whole. They are going to pay a relatively higher price as a population for past policies which transferred wealth from young to old.
Finally, the Budget has framed the productivity challenge quite well. What it doesn’t say, but is nonetheless well understood, is that the First Nations share of this labour force is growing. If First Nations people remain underemployed the prospects of Canada growing collectively poorer will also grow. The government appears to recognize this and this likely provides a partial explanation for why it has chosen to actually increase funding for First Nations education at a time when many program areas are facing modest restraint.
We believe however that no First Nations development strategy is going to be truly effective without a strategy for allowing the market to work on First Nation lands. The former USSR was successful in educating population but not in raising living standards simply because it did not let the market work. A market strategy requires a new regime of property rights for First Nations, greater clarification of First Nation responsibilities and greater authority at the local level. At the present time, First Nations and Canada are simultaneously paying substantial bureaucratic oversight and the resources to navigate that bureaucratic system. It is generating some successes in developing First Nations. However, it is doing this one project at a time. This needs to change and the First Nations Property Ownership Act will change it, and it will change it in a way that requires less government.
We are only at the beginning of what is going to be a long and potentially divisive process of addressing the implications of an aging society. Simply put, if we can’t improve productivity substantially, we are going to get poorer collectively. There are already substantial constituencies betting on this outcome and working towards ensuring that they don’t become poorer individually. We believe that the country would be better off having the question out in the open. People need to understand that full indexing of government salaries and double and triple dipping doesn’t enhance everyone’s economic security. In fact, it will make some people a lot worse off.
If the pain is equally shared, there will be greater support initiatives which make us collectively better off and less towards strategies which divert the pain from one group to another. If the pain is shared equally then there will be broad support for strategies that rethink government in a way that improves productivity and efficiency. If the problem is fully understood, there will be a growing appetite for initiatives which lead to better educational outcomes for First Nations or increased participation by First Nations in resource development.
However, we should all recognize that “who pays?” is going to be a big question for Canadian politics over the 20 years and people who pretend it’s not happening are likely thinking, “you, not me”. This fundamental question may never be explicitly stated, but this doesn’t mean it won’t be answered. The people who don’t understand the question, for what it really is, are going to like the eventual answers the least, and pay the most.