By Michael (Mickey) Posluns, Native Studies Program,
St. Thomas University, Fredericton, N.B., mposluns@stu.ca
The Red Sucker First Nation, a community located in an isolated and remote area near Island Lake in northern Manitoba, has applied to the Manitoba courts alleging both that the Crown has failed to fulfill a principle promise in Treaty No. 5, that they were assured, in their treaty, that they would be treated by the federal government to a standard equal to that of Canadians generally, since “the Queen treats all her children alike.”
This is only one part of an eight part constitutional question which, in turn, forms part of a larger claim arising out of the treatment of Redsucker First Nation at the hands of their supposed fiduciaries, the Crown in right of Canada and the Crown in right of Manitoba.
One of the constitutional questions raised in the Redsucker claim is whether the Government of Canada has an obligation to provide essential public services including social housing to Redsucker (and, by inference to other First Nations) pursuant to s. 36 of the Constitution Act, 1982.
Section 36 (comprising the whole of Part III of the Constitution Act, 1982) provides
PART III
EQUALIZATION AND REGIONAL DISPARITIES
36. (1) Without altering the legislative authority of Parliament or of the provincial legislatures, or the rights of any of them with respect to the exercise of their legislative authority, Parliament and the legislatures, together with the government of Canada and the provincial governments, are committed to
(a) promoting equal opportunities for the well-being of Canadians;
(b) furthering the economic development to reduce disparity in opportunities; and
(c) providing essential public services of reasonable quality to all Canadians.
(2) Parliament and the government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.(19)1
Section 36 (1) makes two kinds of commitments to Canadians in poorer or more disadvantage regions: Subsection 36 promotes (a) equal opportunity, (b) reduction in the disparity of opportunities and (c) provision of public services of reasonable quality. Section 36 (2) is the constitutional guarantee of equalization.
Equalization is, in all likelihood, perhaps the most distinct contribution Canada has made to the vocabulary of English (and French) political discourse. As a formula for redistributing tax dollars the mention of equalization invites a great deal of technical discussion, almost all of which is well beyond my ken.
A more basic way of explaining equalization is that it is a means for redistributing monies to the poorer regions of the country aimed at providing governments of provinces in which the average per capita income is below the national average the money those governments would need to provide services “reasonably comparable to those in other provinces, at reasonably comparable levels of taxation” 2.
The most interesting and unique feature about equalization is that “Equalization payments are unconditional – receiving provinces are free to spend the funds on public services according to their own priorities 3. (emphasis added) In principle, if a “have-not province” spent more money on liquor stores and less money on hospital beds, school buildings or libraries, the complaints about such misallocation of monies would properly be directed to the members of the provincial legislative assemblies (often known as MLAs). Unlike grants-in-aid of specific projects such as the federal share of the Trans Canada Highway there would be no recourse to the federal government.
Although the first formal equalization program was introduced in 1957, these latterday programs can be traced to the statutory subsidies guaranteed to the poorer provinces at Confederation in the Constitution Act, 1867. In 1937, the Rowell-Sirois Commission, an inquiry set up by Prime Minister Mackenzie King had recommended grants to equalize provincial tax revenues in order to ensure provinces could provide basic services. In exchange, the federal government took on the burden of collecting both federal and provincial personal and corporate income taxes and succession duties.
In 1996, the Royal Commission on Aboriginal Peoples (RCAP) [i] said that the equalization principle enunciated in section 36(2) should “extend to the Aboriginal order of government as well.” RCAP took note of the basic reality noted by many commentators who have followed them that “the capacity of Aboriginal governments to raise revenues through instruments such as taxation is considerably less than that of non-Aboriginal governments generally.
Much of this disability, from one end of Canada to the other, arises in large part from the repeated failures of the federal government to protect First Nations interests. Redsucker, for instances, alleges that the transfer of lands within the boundaries of Treaty 5 to the province of Manitoba in 1930 failed to consider and protect the interests of Redsucker Lake First Nation.
In the groundbreaking 1984 Guerin decision, the Supreme Court described the mismanagement of Musqueam lands as late as the 1950s as “equitable fraud.” Redsucker alleges that the federal and provincial governments made huge sums of money from the exploitation of resources in the Treaty 5 area, none of which has been shared with the First Nation.
It is not too much to suggest that the chief cause of poverty amongst the First Nations in Canada has been the unshared exploitation of resources by federal and provincial governments together with repeated instances of equitable fraud by officials of those governments.
Equalization for First Nations would not excuse the monstrous historic mismanagement of First Nations lands and resources by Canada or the enormous greed and arrogance of the provinces that sought control of agricultural lands and lands rich in minerals while leaving First Nations on scrub, bush and marsh.
Equalization would, however, provide a financial basis for First Nations self-government. It would also allow First Nations governments to become fully responsible and accountable to their own citizenry and free those governments of the excessive accounting requirements imposed by Indian Affairs. (Successive Auditors Generals’ Reports, as far back as 1980, have described the accounting requirements imposed on First Nations governments beyond anything required of local non-Aboriginal governments as a needless drain on First Nations resources.)
Because equalization is the outcome of protracted negotiations between federal and provincial governments it has taken on a flexibility that is not found in most other formulas for overcoming regional disparities within large federated states. “If equalization were extended to Aboriginal governments account would be taken of both the fiscal capacity and the fiscal need of [First Nations governments] – how much capacity they have to tax and how much revenue they need to provide required services.
A handful of First Nations, primarily in Alberta with a couple of British Columbia and Saskatchewan have considerable wealth from oil and gas revenues. Some have sizeable agricultural lands despite the best efforts of Ottawa and the provincial governments. Many are as poor as typical third world countries. Since the goal is to ensure services at the national average each would receive the difference between their own capacities and the national average. The federal Finance Department says that “Equalization ensures that all provinces have access to revenues of al least $6,126 per resident to fund public services.”
Much of what keeps so many First Nations in third world conditions is their inability to develop the infrastructure needed both for higher living standards and to attract industry. Equalization would allow First Nations to develop services while also leaving them the freedom to establish their own priorities. Both RCAP and the 1983 Penner Report on First Nations Self-Government noted that 19th century colonial policies had often fragmented First Nations into uneconomic units. Equalization would provide an incentive for First Nations in each region to consider both with whom they might want to consolidate and the terms of any local federation.
This is a particularly opportune time to revive these RCAP recommendations for two reasons. First, Paul Martin’s Minister of Indian Affairs, Andy Scott, has reintroduced a bill previously sponsored by Chrétien’s last long term Indian Affairs Minister, Bob Nault. This bill would establish a fiscal institutions regime under which a panel appointed by the Minister would coach First Nations governments on appropriate tax regimes for raising revenues by leasing parts of their reserved lands to non-indigenous residents, and commercial and industrial tenants. Although the government describes this and many other proposals as “optional” it is quite apparent that any First Nation which applies to Ottawa for financial help with any kind of project will be assessed for its capacity to contribute “own-source funds”.
The definition of “own-source funds” will be one laid down in Ottawa. A First Nation would not, in fact, have the option of taxing less in order to attract industry, for example, or to tax more in order to increase revenues. Nothing in Nault-Scott bill resonates with the kind of freedom enjoyed by provinces to reflect their own values and to establish their own priorities in their tax regimes.
Secondly, Ottawa has just concluded agreements with two of the poorer provinces – Newfoundland 4 and Nova Scotia – both of whom have recently acquired considerable wealth in the form of offshore oil and gas 5. After the requisite histrionics from federal and provincial politicians, a deal was struck in January under which both Newfoundland and Nova Scotia would continue to receive equalization for at least the first eight years in which oil and gas revenues were making them “have” provinces.
This point deserves special consideration. Ontario’s Premier, Dalton McGuinty, was heard loudly complaining that his traditionally wealthy province should not have to continue to contribute to Newfoundland and Nova Scotia once they cease to be “have-not”. This possibility was, in fact, contemplated when it was first agreed to allow the provinces to take control of offshore mineral wealth. The Canada-Newfound Atlantic Accord stated, in 1987, that “the two governments recognize that there should not be a dollar for dollar loss of equalization payments as a result of offshore revenues flowing to the Province.”
McGuinty’s outcry against allowing Newfoundland and Nova Scotia a catch-up period before they are required to give up any claim to equalization was not taken up by many other political leaders across Canada. On the contrary, most people took for granted that Nova Scotia and Newfoundland would need some period of time before the benefits of their newfound wealth takes firm hold in the daily lives of their citizens and the income tax returns those people are able to file.
The principle of a catch-up period also has a place in the Canadian Charter of Rights and Freedoms. Section 15, after first prohibiting “discrimination based on race, national or ethnic origin, color, religion, sex, age, or mental or physical disability” goes on to provide, in subsection 2 that nothing in the non-discrimination provisions of 15(1) “does not prelude any law, program or activity that has as its object the amelioration of conditions of disadvantaged individuals or groups.” In short, Canada, unlike the United States, has a constitutional entrenchment of affirmative action.
Equalization has often been said to be a very Canadian kind of institution. It ensures that every province is able to provide a basic standard of services while not putting the otherwise have-not provinces in the position of having to come to Ottawa begging for basic resources.
So we need to ask whether the historic exclusion of First Nations from the benefits of equalization is also a very Canadian kind of institution. The more so, when we observe how many First Nations have been pushed aside, once the better part of their lands were surrendered, and while every effort was made to assimilate their people, little or no effort has been made to bring those nations to the table of Confederation.
120 years ago, when St. Catharine’s’ Milling wanted to know whether they needed a provincial or a federal permit to cut timber on lands recently surrendered by the Saulteaux Ojibway of Treaty 3, Mr. Justice Samuel Strong wrote a lone dissent in the Supreme Court. Strong observed that the surrendered lands had to stay in federal hands if the promises made in the treaty were ever to be fulfilled. He observed that it was most unlikely that Parliament would ever vote the monies needed to honor Treaty 3. Putting the royalties from resources exploitation into a trust was the one realistic way in which the treaty obligations might be honored.
Reading the grievances of Treaty 5, across the Manitoba line from Treaty 3, suggests that excluding First Nations from the benefits of Confederation may indeed be a Canadian institution. One small step away from that institution would be to stop including First Nations tax figures as part of the overall tax figures of the surrounding province. All provinces have an interest in “playing poor” when their tax revenues are calculated for purposes of equalization. The rich pay less and the poor gain more. The result is that the very provinces that see themselves having nothing to gain by taking over programs and services to First Nations are quite keen to absorb the poverty of First Nations (at least on paper) for purposes of benefiting their own position in the next round of equalization.
The Official Opposition in Parliament has long played the game of embarrassing the government by identifying the waste and mismanagement in First Nations communities. Interestingly, neither the news media nor the Official Opposition pursue the observations of the Auditor General about how little of the money appropriated by Parliament ever reaches First Nations and how excessive are the demands for accounting.
Equalization for First Nations would be the surest and most certain sign that Canada was ready to welcome First Nations at the table of Confederation. First Nations governments would become much more accountable to their own citizens when they are freed from the shackles of excessive accounting to the federal minister. Once First Nations were engaged in calculating their position relative to the national average, their figures would no longer be subject to appropriation (both intellectually and financially) by the provinces.
Equalization is an alternative to keeping First Nations in the position of perpetual supplicant, having to justify each prefab house and every health measure delivered to their people. Most important of all, the vast number of First Nations living at third world levels in Canada could, under terms similar to those recently agreed upon for Newfoundland and Nova Scotia, begin to move toward the Canadian norms for public and social services.
FOOTNOTES
1. Department of Finance Canada, “Federal Transfers, Equalization Program, “What is Equalization” www.fin.gc.ca/FEDPROV/eqpe.html.
2. Ibid.
3. Georges Erasmus and Justice René Dussault, Seven Generations, Report of the Royal Commission on Aboriginal Peoples, published on CD-ROM by Libraxus, Ottawa, 1997.
4. Properly called “Newfoundland and Labrador”.
5. Under Trudeau’s Canada Lands Act in the 1980s, off shore lands were classed as “Canada Lands” and the mineral wealth on or under those lands was declared federal. Later parliaments repealed the Canada Lands Act and agreements were negotiated for provinces to become the beneficiaries of the offshore oil and gas