Aboriginal title and competitive advantage

We tend to think about land ownership in a black-and-white way. Either you own a piece of land, and can do whatever you want with it, or you don't. Reality is more complicated, and getting more so.

We tend to think about land ownership in a black-and-white way. Either you own a piece of land, and can do whatever you want with it, or you don’t.

Reality is more complicated, and getting more so. This has some potentially huge implications for the economy, particularly in rural areas of Canada where the resource economy is critical.

Thanks to some controversial court rulings, land tenure in Canada is catching a lot of attention. Izaak de Rijcke, a surveyor and legal expert who teaches at York University, gave such a mind-bending speech on the topic at a recent surveying conference in Winnipeg that Tim Keopke invited him to Whitehorse to speak about it last week.

De Rijcke started by reminding us that land ownership is different. If you own a watch, he said, you can do whatever you want with it. With land, however, there are layers of other interests that put “qualifiers” on your ownership. We are used to many of these. So used to them, in fact, we hardly even think in terms of how they limit our freedom to use and enjoy our land as we see fit.

You may own fee simple title to your land. But you don’t own the minerals underneath it (unlike some places in the U.S.). You might be zoned residential and not allowed to open a business. The power company might have an easement.

And we in the Yukon are familiar with other kinds of land tenure. You might have a trapping concession, which allows you to build a cabin and some trails but not much more. Or an outfitter concession, also allowing use of the land but not the construction of permanent luxury resort. Placer claims have their own set of rights to use the land, also different from fee simple ownership.

De Rijcke likens these to a stack of pancakes on a plate. The plate is the land, and each pancake is a different layer of “ownership” with some kind of right or power over the land.

This is where aboriginal title comes in. While news to many Canadians, the courts interpret it as a pancake in the stack that was always on the plate but unjustly ignored for decades by governments, business and individual Canadians.

Consider the Grace Islet dispute in B.C. Somebody bought the island in 1990. It was zoned “residential” at the time. The owner obtained a building permit in 2011 and started constructing a house.

It turns out that the island was used for centuries as a burial site by aboriginal people.

After the ensuing litigation and controversy, the half-constructed house was dismantled.

Legal scholars will debate these issues for years. For the rest of us in the real world, what does all this mean from an economic point of view?

For companies and entrepreneurs, it means that any business plan involving land is more complicated than 25 years ago. Just buying property and getting a building permit is not enough. The same is true for logging permits, mining permits, pipeline rights-of-way and so on. Ditto for leasing government land for, say, an eco-tourism resort.

You must now take into account the existence of the aboriginal title “pancake” in the stack.

This is fair, in my opinion. Our history is full of episodes where aboriginal rights and interests were trampled by non-aboriginal projects, many of which made far more money for their shareholders than was ever shared with local people.

Projects that don’t want to end up like the house on Grace Islet must build relationships with aboriginal people, share the benefits, and adjust their projects to mitigate local impacts.

Recent court cases are clearly “wins” for aboriginal people. They gain more control over the land in question, and can use this leverage to negotiate economic benefits or mitigate negative environmental impacts.

What does this mean for jobs and economic growth in the long run, for both aboriginal and non-aboriginal people?

The “bad news” scenario involves fears that unintended consequences will sideswipe the economy. Projects requiring access to land in rural parts of Canada will suffer a “freeze,” under this thinking, as claims of aboriginal title, lawsuits and lengthy negotiations add delay and uncertainty to business plans. The net effect would be less investment, fewer jobs and smaller business opportunities for all.

Remember that the rural areas of Canada, heavily dependent on resource industries, have already been suffering decades of stagnation. According to Statistics Canada, the population of “rural” Canada was 5.4 million people in 1951, while 8.6 million lived in urban areas. Fast forward to 2011, and rural Canada’s population had gone up just a fifth to 6.3 million. Over the same time, the urban population more than tripled to 27.1 million. Rural Canada doesn’t need anything that encourages more jobs and people to migrate to cities.

The “good news” scenario is that governments and big companies, finally, wrap their heads around aboriginal rights. They invest more time and money in building partnerships and working collaboratively with First Nations. Instead of being a growth-inhibitor, aboriginal title is a catalyst that leads to job-creating projects going ahead (with the benefits shared more fairly) rather than getting hung up for years in the courts.

It will likely play out differently in different parts of Canada. Your call is as good as mine as to which path the Yukon will go down.

Effective partnering with First Nations, including recognizing aboriginal title, will become a competitive advantage for provinces, territories and private companies. A project backed by an old-school company in an old-school province won’t get far enough to ever make money for its investors. A forward-looking company in a forward-looking jurisdiction would have a much better chance. Companies already have to deal with the uncertainties of zoning, environmental permits and tax changes. Handling aboriginal title would be similar: a challenge, but not one beyond a well-paid executive to resolve.

We in the Yukon have already seen some mining companies handle these issues much better than others, with a major effect on their business success.

De Rijcke called on our leaders, aboriginal and non-aboriginal, government and business, to move quickly to sort this out. It will require non-aboriginal governments and companies to do business in new ways. They will have to live the word “partnership” and not just put it in press releases. It will also require aboriginal leaders, if they haven’t already, to shift gears from winning in the courtroom to building institutions that foster growth and jobs in their regions. The biggest challenge of all may be that it requires lawyers on both sides to negotiate agreements that are clear and facilitate economic activity.

Our leaders should get started now to make the “good news” scenario a reality. If the “bad news” scenario plays out, you can expect to continue to see talented young people – aboriginal and non-aboriginal – move to the big cities in search of jobs.

Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He won this year’s Ma Murray award for best columnist. You can follow him on Channel 9’s “Yukonomist” show or Twitter @hallidaykeith

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