‘Build, Baby, Build!’ in Canada Requires Indigenous Participation

During the recent federal election, the Liberal Party used the campaign slogan “Build, baby, build!” when making promises about housing, urban public infrastructure and major natural resource, energy and transportation projects. But such simple slogans inevitably leave a lot out. For major projects, in particular, this slogan ignores one critical and overarching requirement—Indigenous consent. Most, if not all, major projects will occur on traditional Indigenous territories.

In 2021, the federal government enacted legislation to adopt the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) and its requirement of Free, Prior and Informed Consent (FPIC). UNDRIP and FPIC clarified and strengthened the rights of Indigenous communities over the use of their traditional territories for economic development. Therefore, the federal government should respect these rights and seek Indigenous consent.

To obtain this consent, Ottawa should actively promote genuine partnerships with Indigenous communities who should participate in the ownership of major projects on their traditional territories. As Indigenous property rights have been clarified and strengthened over the last 50 years through constitutional change, legislation and judicial decisions, Indigenous participation in major projects has increased and this participation has evolved from simple to more complex impact-benefit agreements, which specify the financial returns and other benefits (including employment) from the projects to the Indigenous communities, and more recently to Indigenous equity ownership with representation on the project’s board of directors or senior management. Over the last 15 years, major projects with Indigenous equity ownership totalled more than $60 billion.

In many circumstances, Indigenous equity ownership of major projects will generate benefits not only for the Indigenous communities but also for the rest of Canada as it can expedite the development of projects, increase their value, and stimulate economic activity and wealth generation. Indigenous influence on the direction of projects, coupled with their knowledge of the land and their commitment to its preservation, can also promote the environmental sustainability of projects.

However, if Indigenous communities want to increase their participation in major projects and obtain reasonable returns, they must have greater access to sufficient finance to acquire equity ownership and improve their ability to participate effectively in project development.

The federal and five provincial governments have established loan-guarantee programs totalling $13 billion to help increase Indigenous access to finance. In recent months, the federal government and the Ontario government have proposed increasing their program totals from $5 billion to $10 billion and from $1 billion to $3 billion, respectively. These amounts are, however, still relatively small compared to the hundreds of billions of potential investments in such projects. Moreover, these loan guarantees come with political strings attached and the political interests of governments may not always align with those of the Indigenous communities involved.

Therefore, governments should consider other measures to share revenues from these projects with Indigenous communities. The First Nations Tax Commission, for instance, recently proposed an Indigenous “resource charge or tax” wherein the federal or relevant provincial government would cede tax room to Indigenous communities to impose their own levy, creating own-source revenue for them instead of continuing to rely on government handouts. While the cost of such a resource charge would be a reduction in government revenue, it would be partially offset if the revenue earned by Indigenous communities were invested to boost economic activity, with positive spillover effects on the rest of Canada.

A standardized resource tax would also simplify and expedite negotiations between the Indigenous community, the project developer and the governments involved. It would complement Indigenous equity participation in any major project because the stream of income generated by the resource charge could be collateralized to obtain the financing necessary to acquire an equity position in the major project. Moreover, equity ownership coupled with a resource tax would be consistent with the experience of other jurisdictions in Canada, which receive both private financial returns and fiscal income from major projects.

Major natural resource and energy projects are an important source of economic activity and wealth creation for Indigenous people and Canada as a whole. Promoting Indigenous participation in major projects would, in general, not only increase investment, productivity and living standards in Canada, but also foster economic reconciliation with Indigenous peoples. A growing number of Indigenous communities see economic development as the best way to achieve self-determination and the preservation of their culture, heritage and language.