May 24, 2018

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Opinion

Urban reserves a tool to build Indigenous prosperity

Can urban reserves support Indigenous economic development?

A quick review of the province’s 63 First Nations communities reveals incomes and earnings well below Manitoba averages. The proportion of income received from social assistance by residents in First Nations communities often exceed 50 per cent, compared to the Manitoba average of 13 per cent. Little doubt exists about the relative economic deprivation and dependency that exists within these communities.

Many advocates promote urban reserves as a remedy for this economic discrepancy. As an economist, I can support this with a resounding “maybe!”

Let’s start with a quick review of the legal foundations for this idea. The editorial page of this paper has the following phrase on its masthead: “Published since 1872 on Treaty 1 land and homeland of the Métis.” Such recognition reflects a constitutional arc starting with the Royal Commission on Aboriginal Peoples two decades ago and culminating in the recent Truth and Reconciliation Commission.

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Can urban reserves support Indigenous economic development?

A quick review of the province’s 63 First Nations communities reveals incomes and earnings well below Manitoba averages. The proportion of income received from social assistance by residents in First Nations communities often exceed 50 per cent, compared to the Manitoba average of 13 per cent. Little doubt exists about the relative economic deprivation and dependency that exists within these communities.

Many advocates promote urban reserves as a remedy for this economic discrepancy. As an economist, I can support this with a resounding "maybe!"

Let’s start with a quick review of the legal foundations for this idea. The editorial page of this paper has the following phrase on its masthead: "Published since 1872 on Treaty 1 land and homeland of the Métis." Such recognition reflects a constitutional arc starting with the Royal Commission on Aboriginal Peoples two decades ago and culminating in the recent Truth and Reconciliation Commission.

The Supreme Court has upheld the basis for the treaties between First Nations and the government of Canada. This constitutional recognition forms an essential step in the re-establishment of Indigenous rights, but this is only a first step. Unless followed by second, third and fourth steps, little will change for Indigenous peoples in Canada. This is where urban reserves offer promise.

The significance of the Truth and Reconciliation Commission is beyond doubt. But like most analyses of Indigenous economic development, it has critical limitations. It does not reflect the economic reality faced by Canadians, and especially by Indigenous persons living in remote communities.

Few of Manitoba’s First Nations communities benefit from natural resource development. Most also lie far from urban centres. Contrast this with the Tsawwassen and Musqueam First Nations near Vancouver in British Columbia — two communities that have earnings and real estate income that are well above those of the average B.C. resident.

They have won the "lottery" by being close to the hottest real estate market in North America.

So, can we create more Indigenous winners in Manitoba by starting urban reserves?

An urban reserve typically emerges as an expanding urban centre encroaches on an existing First Nations community, or when one is created within or immediately adjacent the urban centre. Manitoba has several urban reserves, one of the more recent being the Petro-Canada gas station managed as Long Plain Madison Reserve No. 1 near Polo Park.

A review of urban reserves in Saskatchewan, by Western Economic Diversification, found many potential benefits both for the First Nations communities involved and the surrounding non-Indigenous communities. However, these benefits require specific conditions.

First, the urban reserve needs to strike appropriate revenue-sharing and service arrangements with the nearby municipality. It rarely pays to duplicate basic urban services available from the larger municipality. While an urban reserve has all the legal independence of any First Nation community, acceptance of such a proposal by the wider Winnipeg population, especially the 160 acres of the Kapyong Barracks in Tuxedo, will also require that zoning and land use is compatible with the adjoining areas.

Second, an urban reserve works best as an economic development zone, involving non-Indigenous business partners. A small urban reserve that starts a gas station can be successful without partners, but a larger reserve benefits from an integrated plan.

Finally, the urban reserve needs to develop land at its "highest and best use." With land values conservatively set at $200,000 per standard city lot, the total value of Kapyong Barracks in single family residential use exceeds $5 million. Creating a trailer park there makes no economic sense and any rational owner will attempt to maximize economic benefits.

Two important issues temper enthusiasm for urban reserves. First, if the band council of the First Nation sponsoring the urban reserve acts solely as a developer, profits may flow solely to a small number, limiting the creation of a broad base of economic benefit within the community. Second, thus far it seems that two First Nations, Peguis and Long Plain, have been associated with discussions regarding Kapyong Barracks. Developing this with such limited sponsorship will attenuate benefits for other First Nations in Manitoba.

Urban reserves represent an important opportunity for economic development for certain First Nations. But the impacts are likely to be narrow.

Gregory Mason is an associate professor in the department of economics of the University of Manitoba.

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