The federal government forecasts that, in the coming decade, investments of more than $650 billion will be made in natural resource projects, a majority of which will occur on or near Aboriginal traditional lands. Whether these projects proceed, and under what conditions, increasingly depends on the level and quality of Aboriginal participation.

Recent court decisions have required governments to consult and accommodate Aboriginal interests (486 kB, 85 pages) when contemplating resource developments on traditional territories. The rulings suggest that Aboriginal people have the legal leverage to delay or even halt development until their legal interests are meaningfully reconciled with non-Aboriginal interests.

In this regard, resource revenue sharing is seen as a critical component, both by industry leaders (160 kB, 20 pages) and Aboriginal groups (43 kB, 4 pages), for addressing Aboriginal interests and providing a degree of certainty for investment and development to occur.

Across the country, federal, provincial and territorial governments have negotiated a variety of arrangements with Aboriginal groups to share public revenues – that is, taxes and royalties – generated from resource development.

These initiatives, which are distinct from the more common impact and benefit agreements between private sector project proponents and Aboriginal groups, are described in this HillNote.

Federal initiatives

Federally, resource revenue–sharing arrangements are negotiated within the context of the comprehensive land claims (or modern treaty) process. In regions of the country where historic treaties have been settled, no formal process exists to negotiate resource revenue sharing.

In addition to providing shared governance of natural resources, land claims agreements also provide for a share of resource revenues. Most northern land claims agreements follow a standard formula, capping the total royalty benefit; under some agreements, beyond a certain threshold, the royalty income is taxable. None of the agreements stipulates the purpose for which the funds must be used.

In 2003, the Government of Canada and the Deh Cho First Nations concluded an Interim Resource Development Agreement, providing the Deh Cho with 12.25% of the first $2 million in royalties and 2.45% of any additional royalties. Although revenues are to be paid out once a final land claims agreement is concluded, the Deh Cho can access up to 50% of the annual total for economic development purposes to a maximum of $1 million.

Further, in 2003, in an effort to reinvigorate the British Columbia Treaty negotiations process, the Government of Canada agreed to share the cost of future resource revenue–sharing arrangements in final treaty settlements on a 50/50 basis with British Columbia. The 2006 Maa-nulth First Nations Final Agreement (335 kB, 7 pages), for example, provides signatory First Nations with a share of resource revenues derived from traditional territories for 25 years. Canada and British Columbia share the cost of these payments, estimated at $1.2 million annually. Similar to the northern land claims agreements, resource revenue–sharing payments are capped.

Key provincial/territorial initiatives

British Columbia is the only province to have established formal resource revenue–sharing policies. It currently provides First Nations with a share of forestry revenues based on harvesting activity levels within each traditional territory. Since 2008, the province has also shared direct revenues generated from new mining operations with individual First Nations on a project-by-project basis. Unlike revenue-sharing provisions in land claims settlement agreements, under these arrangements, First Nations are required to use forestry and mineral revenues for community and economic development purposes.

In 2002, the Government of Quebec and the Cree Nation concluded the Paix des Braves Agreement (781 kB, 112 pages), putting an end to litigation surrounding implementation of the 1975 James Bay and Northern Quebec Agreement (1.79 MB, 454 pages). The 2002 agreement provides for revenue sharing and joint management of forestry, mining and hydroelectric resources on Cree lands. With more than $3.5 billion in resource payments over 50 years (up to $70 million annually in royalty payments), this agreement represents the largest revenue-sharing package related to treaties in Canada.

The Government of the Northwest Territories has committed to sharing up to 25% of its resource revenues with participating Aboriginal governments upon conclusion of its devolution agreement. These revenues would be in addition to the resource revenue–sharing provisions under existing land claims agreements.

Pursuant to land claim obligations, the Government of Newfoundland and Labrador has negotiated agreements for 5% of revenues from the Voisey’s Bay mining development with the Nunatsiavut Inuit (4.11 MB, 17 pages), as well as with the Innu (90 kB, 21 pages) of Labrador.

Following the 2007 report of the Ipperwash Inquiry, the Government of Ontario (41 kB, 2 pages) signalled that it would develop a resource revenue–sharing policy that would see all First Nation communities benefit from natural resource development in the province. In 2009, Ontario set aside $30 million to reaffirm its commitment to the process. The province has yet to finalize a policy.

Both Saskatchewan and Alberta have indicated that they will not share resource revenues with Aboriginal communities.

Conclusion

A number of Canadian jurisdictions have taken steps to develop governance frameworks and share revenues generated from resource development with Aboriginal communities. However, a consensus around the principles and guidelines for a harmonized and consistent approach to resource revenue sharing across jurisdictions does not yet exist. Unlocking Canada’s full resource potential may require further efforts in this regard.