November 23, 2009
A Quiet Revolution in Northern British Columbia
First Nations allows members to become economic players
A quiet revolution of sorts has taken place recently in British Columbia, this where a self-governing First Nation in British Columbia has made history by allowing its members to enter into the modern economy.
The Nisga’a government approved a law to allow individual Nisga’a residents to own land in fee simple. That means it is owned completely by the individual and can be transferred or sold to whomever that individual chooses. That title to land will then be registered and protected in a Nisga’a land registry. With time, many hope the land can then be registered in the B.C. land registry office, which would give it more security.
This is revolutionary for a First Nations reserve, though not for the rest of us, as “fee simple” is exactly how the rest of us can buy and sell property. It is important because such property ownership is foundational for wealth creation. For example, most businesses nowadays are financed through loans obtained by placing an entrepreneur’s home up as security. So, this means Nisga’a may now put their home as security with a bank or other lending institution. As a result, Nisga’a can start and expand businesses and raise their incomes.
Amidst so much Native poverty across Canada, poverty reduction can now become a reality for this indigenous community.
For most First Nations under the Indian Act, title to reserve land is held by the Crown and is controlled by band councils. Not so for the Nisga’a. As a signatory to modern treaty (British Columbia did not enter into historic treaties like other parts of Canada), Nisga’a lands were transferred to the Nisga’a government, which could transfer it to individuals, which it has done in this case.
For bands governed by the Indian Act, it is possible to receive individual allotments of land. However, measures like customary rights and band-issued certificates of possession to individuals are insecure and weak, as often they cannot stand up in courts or they can be taken away by band leadership. These tools are not capable of bringing First Nations into the economy.
The difference with the Nisga’a is this property ownership can be taken to the bank. This is land that can be used as security as it can be seized for non-payment. After three years of consultation, the Nisga’a decided this was the only way to ensure lending institutions would risk lending to their community members.
The Nisga’a people are no strangers to trailblazing. The treaty they signed with the federal governments gave them unprecedented law making powers, which is still controversial in many circles, even generating a court challenge that the treaty creates an unconstitutional third order of government.
That dispute aside, this recent change is positive. Enforceable and transferable private property rights are the backbone of our economy. Hernando de Soto, a Peruvian economist shortlisted for the Nobel Prize, commented that without legal title to assets, like homes and other physical objects, they cannot be converted into capital that can perform meaningful economic activities.
In The Mystery of Capital, de Soto said the free market does not work as well in developing countries because assets owned by the poor were not recognized by the government and if the poor wanted to conduct business, they had to do it illegally.
Despite owning buildings and assets, the poor could not go to the bank or a lender to seek financing for a business or an expansion. They could only rely on family and neighbours to recognize their title. De Soto calculated that in developing countries and former communist nations, over $9.3 trillion existed in “dead capital.”
This was real estate and other properties the poor could not access in the economy in order to improve their well being. De Soto found this was more than those countries received in foreign aid.
This move by Nisga’a is revolutionary and will allow members to access their “dead capital.” Disadvantaged community members can now become economic players.
Most importantly, it is the start of a conversation for all First Nations. This move by the Nisga’a was initiated by the First Nation itself. It is voluntary, as members have to choose to accept land in fee simple estate. It is limited as the parcels can be more than 0.5 hectares (half an acre) and must be zoned as residential. Moreover, this land, even if owned by outsiders, will be subject to Nisga’a law. The scaremongers who say this is about tracts of traditional territory becoming alienated are wrong.
First Nations across Canada can see how Nisga’a benefit and adopt their own systems. There is no reason to for Aboriginal leaders to deny native Canadian their rightful place within the economy.
The Search for Aboriginal Property Rights (Policy Series)
is a policy analyst at the Frontier Centre for Public Policy who focuses on aboriginal matters and property rights. Based in Lethbridge, Alberta, he is from the Sudbury region of Northern Ontario, and has Metis ancestry from Quebec. He graduated from McGill University in 2001, majoring in political science and history. He specialized in Canadian and American politics, with an emphasis on constitutional law. He is completing a master of journalism degree at Carleton University, where he is specializing in political reporting. For two years, he covered House standing committees, as well as Senate committees. His career in journalism includes several stints at community newspapers in Northern Ontario, including Sudbury and Espanola. He also completed internships at CFRA 580 AM, a talk radio station in Ottawa and the Cable Public Affairs Channel. He writes a weekly column in the Winnipeg Sun and contributes to the Taxpayer, the flagship publication of the Canadian Taxpayers Federation. Quesnel's policy commentaries have appeared in the Lethbridge Herald, Vancouver Sun, Globe and Mail, Financial Post, and the National Post, among others.