Aboriginal economy surging

Canadian economists are beginning to notice what members of the Whitehorse business community have observed for years: the growing importance of aboriginal business.

Canadian economists are beginning to notice what members of the Whitehorse business community have observed for years: the growing importance of aboriginal business.

Total income for aboriginal people, governments and businesses was about $24 billion in 2011, according to a recent study by economists at TD Bank and the Canadian Council for Aboriginal Business (CCAB). If strong growth forecasts pan out as hoped, the aboriginal economy will be bigger in 2016 than Newfoundland’s.

And while both aboriginal households and governments have been growing their top line steadily, it is aboriginal business that is growing the fastest. This is particularly true in the West, where aboriginal businesses have taken advantage of the boom in resource and construction projects.

In a recent survey of the CEOs of aboriginal development corporations, 78 per cent said they forecast revenue growth in 2011. Many CEOs were highly confident, expecting to grow more than 20 per cent. As part of this, two-thirds planned to boost capital investments, which usually translates into more jobs too.

Aboriginal development corporations are increasingly important in communities across Canada. The typical enterprise has more than 180 staff and around $28 million in revenue. TD economists estimate around 250 of these companies exist across the country. If so, a disproportionate number are here in the Yukon. There are also now over 25,000 aboriginally owned small businesses in Canada.

Leaving aboriginal business to look at personal aboriginal incomes, these rose 7.5 per cent per year over the last decade, about double the national figure. This was driven by both higher average incomes as well as higher participation rates, which is what statisticians call the percentage of a population in the workforce. Incomes were highest among off-reserve, urban aboriginal people, although on-reserve and rural First Nations incomes all went up faster than the national average over the last decade.

In fact, on-reserve and off-reserve incomes went up at similar rates. It was the urban/rural split that was more decisive, with rural aboriginal incomes rising most slowly. This parallels the non-aboriginal economy, where rural areas have been stagnating relative to faster growing cities for many years.

Strong aboriginal economic growth is a very positive trend, and one at variance to the more gloomy discussions you often overhear in aboriginal political and legal circles. Strong and successful aboriginal communities, less dependent on government, are in the in the interest of all Canadians. And it is tough to be strong and independent without the incomes and tax revenues that come from successful businesses and high employment.

There are many examples of successful aboriginal businesses that are major assets to their First Nations. The Squamish First Nation has a wide range of businesses, including a marina, driving range, gravel pit and lucrative Greater Vancouver real estate. Chief Clarence Louie, of the Osoyoos First Nation, travels the country telling the story of his nation’s business successes, which include a vineyard, gravel pit, gas station, ski hill and several other businesses. In Juneau, the development corporation owned by 3,300 Tlingit and Haida members has a marina, hotel, forestry assets and owns the scenic tramway frequented by cruise ship visitors.

None of this will be a surprise to Yukoners who shop at a wide number of aboriginally owned ventures here.

Of course, the aboriginal economic statistics are not all positive. The fast growth rates in personal and business incomes are possible because they start from relatively low levels. The Canadian Centre for Policy Alternatives reports median incomes for aboriginal Canadians were 30 per cent below the national figure in 2006.

According to the Yukon Statistics Bureau, aboriginal unemployment in 2009 was 21 per cent versus three per cent for non-aboriginals. The participation rate was 56 per cent compared to 79 per cent for non-aboriginals.

Statistics Canada reports than in the economic dip in 2008 and 2009, aboriginal people suffered a sharper drop in employment. In 2009, for example, aboriginal unemployment surged four points to 14 per cent while non-aboriginal unemployment went up just two points to eight per cent.

A key driver of this is education. The percentage of aboriginal Canadians without a Grade 12 diploma is double the national average, and the proportion with a university degree is one-third that for non-aboriginal Canadians. The Yukon Department of Education reports First Nation students scored an average of 49 per cent on the Yukon’s English 9 tests versus a 61 per cent for all students. For Math 9, the First Nation average was 43 per cent versus 57 per cent for Yukon students overall. (These figures are for the 2008-09 school year; the department did not report First Nations performance separately in its 2009-10 report.)

Despite these caveats, in the big picture the solid and sustained economic growth in First Nation communities over the last decade is a very positive story. Especially for young First Nation people, who can aspire to running their own businesses or managing a band-owned venture.

Perhaps Chief Louie sums it up best of all: “We are very focused on the future, and we realize that we create this future by our actions. The single most important key to First Nation self-reliance is economic development.”

Keith Halliday is a Yukon economist and author of the Aurore of the Yukon series of historical children’s adventure novels.