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Northern Secwepemc Treaty: An Economic Impact Analysis

Carl Archie

Econ 4990-01 Policy Analysis

Derek Pyne

December 2, 2011

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Abstract

This Essay uses cost/benefit analysis to analyze the present value of the net benefits of a

Northern Secwepemc Treaty if it were signed today. The numbers are based off of the current

offer by the BC and Canada Governments. Many of the assumptions are based on the same

assumptions as made in the PriceWaterhouseCoopers analysis commissioned by the BC Treaty

Commission. Some of the calculations have had to be adjusted or prorated for the population

of the Northern Secwepemc. I would like to thank Robert Androkovich, Faculty, Thompson

Rivers University, for his ongoing input as this essay continued to evolve.

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We demand that our land question be settled, and ask that treaties be made between the

government and each of our tribes, in the same manner as accomplished with the Indian tribes

of the other provinces of Canada, and in the neighboring parts of the United States. We desire

that every matter of importance to each tribe be a subject of treaty, so we may have a definite

understanding with the government on all questions of moment between us and them.

(Secwepemc Chiefs 1910)

The Northern Secwepemc are a political alliance comprising of 2240 members from four

communities in the Cariboo region: Canim Lake Band, Williams Lake Indian Band, Soda Creek

Indian Band, and Canoe/Dog Creek Indian Band. Submitting a Statement of Intent in 1994, and

claiming a traditional territory of 5.6 million hectares, the four communities entered into the BC

Treaty Process amid dynamic political, legal and economic environments (BC Treaty

Commission 2009). The Northern Secwepemc negotiating table has faced a number of

significant challenges over the years including accumulation of debt; however, preliminary

analysis shows a Northern Secwepemc Treaty remains economically viable and will provide

significant benefits to the four First Nations.

The BC Treaty process is a six stage process aimed at negotiating comprehensive agreements

recognizing a First Nations right to self-government, accommodating land claims, and

reconciling Aboriginal Rights and Title with the Crowns assertion of Sovereignty in British

Columbia (BC Treaty Commission 2009). Prior to the Nisga’a Final Agreement in 2000, there

were no Treaties negotiated in the BC Mainland. This resulted in a number of legal challenges in

the Supreme Court of Canada (SCC) (Government of British Columbia 2011). The first of which

was Calder v. British Columbia which was the first time in which the SCC recognized the

existence of Aboriginal Title to land prior to the assertion of Sovereignty by the Crown.

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However, this SCC did not agree whether the Title had in fact been extinguished with one judge

lamenting, “if any attempt was made to extinguish the title it was beyond the power of the

Governor or of the Council to do so” (Canadian Legal Information Institute 1973). In 1984, the

SCC heard the case Geurin v. The Queen. In it, Justices Dickson, Beetz, Chouinard and Lamer

write of the sui generis nature of Aboriginal Title stating “The Indians' interest in their land is a

pre-existing legal right not created by the Royal Proclamation of 1763, by s. 18(l) of the Indian

Act, or by any other executive order or legislative provision.” They further write that Aboriginal

Title is “inalienable” and that the crown has “fiduciary obligations” owing to First Nations

(Canadian Legal Information Institute 1984). The Delgamuukw v. British Columbia decision of

1997 is perhaps the most famous case regarding Aboriginal Rights and Title. In it, Justices

Lamer, McLachlin, and Major confirm the sui generis and inalienable nature of Aboriginal Title

writing “Aboriginal title is sui generis,… inalienable and cannot be transferred or surrendered to

anyone other than the Crown” (Canadian Legal Information Institute 1997). They further define

Aboriginal Title as being held “communally” and “was recognized well before 1982” and

therefor protected by Section 35(1) of the Canadian Constitution Act of 1982 ibid. A final aspect

of the Delgamuukw case is legitimizing the use of Oral Histories as evidence in court. Finally,

the SCC’s 2004 decision upholds the Court of Appeal of British Columbia’s Taku River Tlingit

v. British Columbia decision that the Crown has a “duty to consult and accommodate Aboriginal

peoples prior to making decisions that might adversely affect their as yet unproven Aboriginal

rights and title claims.” However, in all cases, the SCC refuses to award compensation or direct

land awards agreeing with Court of Appeal Justice Lambert who writes “the legal rights of the

Indian people will have to be accommodated within our total society by political compromises

and accommodations based in the first instance on negotiation and agreement and ultimately in

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accordance with the sovereign will of the community as a whole” ibid. It is with the backdrop of

legal uncertainty that British Columbia, Canada and First Nations have entered into the modern

Tripartite BC Treaty Process. The BC Treaty Process consists of six stages. Stage one is the

stage in which the First Nations must submit a Statement of Intent outlining which communities

they represent and their mandate for entering into the Treaty Process. The four Northern

Secwepemc communities entered into this stage in 1994 (Commission 2009). Stage two is the

stage in which the three parties are assessed for their readiness to negotiate (BC Treaty

Commission 2009). They must be able to “demonstrate that they have a commitment to

negotiate, a qualified negotiator, sufficient resources, a mandate and a process to develop that

mandate and ratification procedures.” The Northern Secwepemc negotiating table was declared

ready in April 1996 ibid. The BC Treaty Commission refers to stage three as the “table of

contents” of a Treaty in which the parties decide what will be negotiated and how long it is

expected to take. This stage was completed in 1997. The Northern Secwepemc are currently in

stage four of the BC Treat Process – the Agreement in Principle stage ibid. Most of the First

Nations in BC are currently in this stage and aim to “reach agreement on each of the topics that

will form the basis of the treaty” ibid. Stage 5 is stage and which negotiations take place to “to

finalize the technical and legal aspects of the Treaty”. Because the Treaty is a “constitutional

instrument” under Section 35(1) under the Canadian Constitution of 1982, the Treaty must be

signed and formally ratified in the Legislature, House of Commons and by First Nations before

they are implemented, which is stage six ibid.

Unresolved Rights and Title claims by First Nations have resulted in economic uncertainty as

well. With ongoing negotiations and the crowns duty to consult, development projects such as

logging and mining must be postponed temporarily or, in the case that Aboriginal peoples

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disagree, indefinitely. A major problem with the BC Treaty Process is that it has produced few

agreements in nearly 20 years. In their 2011 Annual Report, the BC Treaty Commission (BCTC)

reports that there are only two Treaties that have been implemented. There are an additional three

First Nations who have concluded Final Agreements but which have not yet been ratified and

two which the BCTC considers close to concluding Final Agreements (BC Treaty Commission

2011). Even though it is the Crown which bears a Fiduciary duty to First Nations, the slow pace

of the BC Treaty Process has led to corporations negotiating agreements directly with First

Nations. Locally, Stk’emlups te Secwepemc Nation has (SSN) signed Resource Revenue Sharing

Agreements with the Province of British Columbia and New Gold Inc, the proponent of New

Afton Gold Mine near Kamloops, BC (The Province News 2010). Provisions of the Agreement

include Mining royalties and jobs provided to citizens of SSN. The Williams Lake Indian Band

recently signed a Protocol Agreement with Spanish Mountain Gold with the company

“committing to consult” with the First Nation (Sona Resources Corporation 2010). Corporate

willingness to negotiate on their own behalf with First Nations underscores their recognition of

Aboriginal Rights and Title and their desire for certainty with respect to Title of land in BC. The

slow pace of the BC Treaty process is its biggest flaw resulting in economic uncertainty

estimated to cost the economy $1 Billion per year and 1500 lost jobs in the Forestry and Mining

Sectors (Treaty Negotiations in British Columbia:An Assessment of the Effectiveness of British

Columbia’s Management and Administrative Processes 2006).

A key to resolving uncertainty in British Columbia and part of the BC Treaty Process is

negotiating many jurisdictional issues including self-government of First Nations and

governance of Natural Resources. The self-governance aspect of their Treaty will give the

Northern Secwepemc law-making authority over such things as citizenship, services, education,

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health services, and regulation of businesses. Governance of Natural Resources will recognize

First Nations rights to govern, among other things; lands, roads, forests, water resources and

fisheries (PriceWaterhouseCoopers 2009). It is from the clarity and certainty of jurisdictions, my

analysis assumes, that the financial impacts of a Northern Secwepemc will flow.

Based on many of the same economic assumptions as a 2009 PriceWaterhouseCoopers Impact

Analysis of Treaty Settlements in BC, this analysis estimates that, if a Treaty were signed today,

the Net Present Value of Net Benefits would be $342 million to the Northern Secwepemc over

the next 40 years. Starting the day a Treaty is signed, benefits begin accruing to the Northern

Secwepemc which are: One time capital transfer of $30 million over 10 years; 25 years of

benefits which accrue from Resource Revenue Sharing; after 12 years, Northern Secwepemc

begin collecting Income Tax from members and people residing on Northern Secwepemc Lands;

Northern Secwepemc begin collecting Consumption taxes after 8 years from all transactions on

Northern Secwepemc lands; ongoing funding from Federal Government to fund core institutions.

It has been assumed that population of the Northern Secwepemc will grow at a rate of 1.3% over

the 40 years, which is consistent with INAC projections (PriceWaterhouseCoopers 2009). Figure

1 shows that the population of the Northern Secwepemc grows from 2240 currently, to 3755 by

the year 2051.

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Figure 1

40 Years0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

From this we can calculate the overall employment rate. PWC assumes that the employment rate

will increase from 55% currently to 61% over the first ten years post-treaty ibid. The increase in

employment is due mainly to jobs which are currently being occupied in forestry and mining by

non-aboriginals to being occupied by Northern Secwepemc ibid. Furthermore, Northern

Secwepemc will require a greater number of Administrators and Leadership to run a new level of

Government which will be created by their Treaty.

Figure 2 shows the increase in Employment over the next 40 years:

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Figure 2

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 390

500

1,000

1,500

2,000

2,500

Employed

Employed

It is further assumed that post-settlement wages will increase 3% per annum over the next 40

years from the current average wage of $27,000 for BC First Nations ibid. Figure 3 shows the

wage income generated by Northern Secwepemc citizens over the next 40 years:

Figure 3

1 4 7 10 13 16 19 22 25 28 31 34 370.00

50,000,000.00

100,000,000.00

150,000,000.00

200,000,000.00

250,000,000.00

Employment Revenue over 40 Years

Employment Revenue over 40 Years

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With aggregate income of $201 million in year 40, personal income will become the single

largest asset to the Northern Secwepemc. The Net Present Value of Income and Consumption

taxes are $321,645,634.70 amounting to 94 percent of the total benefits over the horizon of this

analysis. In comparison, the final settlement is less than 20% of one percent of the present value

of the benefits from a Northern Secwepemc Treaty signed today. Furthermore, with ongoing and

time limited funding tied to income generated by Resource Revenue Sharing Agreements,

Northern Secwepemc would become entirely self-sufficient after 31 years, no longer receiving

any funding from Canadian governments.

Further benefits to the Northern Shuswap, but which were not included, are land transfers and

job transfers in the resource sector – both of which would require in-depth analysis with

information not readily available. The land analysis is challenging owing to a difficulty in

quantifying the cultural value Secwepemc people place on land. After all, Secwepemc literally

translates into “spread out people” because we have the largest traditional territory of any

Aboriginal Nation in British Columbia. Furthermore, there are additional scarcity rents which

would accrue due to the limited availability of Northern Secwepemc land from which to choose

relative to the land mass’ of British Columbia and Canada. Although job numbers in the resource

sector are available, the Northern Secwepemc territory encompasses a number of forestry

districts. PWC estimates that 80% of higher paying natural resource sector jobs in the region will

be occupied by First Nations displacing current employees (PriceWaterhouseCoopers 2009).

However, further benefits will accrue from Northern Secwcepemc equity in Natural Resource

corporations. For example, Sona Resources reports that they have granted the option for Canoe

Creek Indian Band to purchase 10% equity of their corporation as part of a Partnership

Agreement announced in 2010. It is not clear whether equity options will become common for

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such partnership agreements or what impact such agreements will have on business practices of

resource corporations.

With a number of economic assumptions found in the PriceWaterhouseCoopers study Financial

and Economic Impacts of Settlements in BC commissioned by the BC Treaty Commission, this

analysis shows that the economic benefits to the four Northern Secwepemc First Nations of a

Treaty signed today are tremendous. Furthermore, the initial cash settlement of $30 million and

current estimated debt of $22 million is miniscule compared to income tax to be generated by

Northern Secwcepemc citizens over 40 years post-treaty. Negotiations seeking increases to the

rates of taxes returned to Northern Secwepemc would see economies of scale greater than

benefits of a larger initial lump settlement. As a result of the time-value of money, these benefits

would continue to diminish the longer it takes for settlement of a Treaty. Further sensitivity

analysis could be done to estimate the impact of longer settlement periods on the benefits

received by the First Nation. Although this analysis didn’t provide estimations, additional

analysis would reveal that Net Benefits to British Columbia would be less than the benefits to the

Northern Secwepemc because many of the costs are borne by BC and Canada.

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Appendix A

Excel Spreadsheets

Bibliography

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