Tom Flanagan is professor emeritus of political science at the University of Calgary and a senior fellow of the Fraser Institute. His new report, Property Rights and Prosperity: A Case Study of Westbank First Nation, is available on the Fraser Institute website.
First Nations members living on reserves are the most disadvantaged people in Canada, but some First Nations are finding a path toward prosperity. Scholars, like journalists, often focus on bad news, but we should also study the good news to see what can be learned from success.
Westbank First Nation, located within the city of West Kelowna, B.C., is a prosperous First Nation, and its achievements offer important lessons to other First Nations as well as to Canadian policy-makers. Westbank has combined individual property rights, in the form of certificates of possession, with a system of government enabling these rights to become useful in the economy. The lesson is that neither property rights nor government can succeed on their own, but the two together can become a powerful engine of wealth creation. To be most effective, property rights must be supported by a government that defines and records these rights, enforces them impartially under the rule of law, and supports owners with services and utilities such as roadways, police and fire protection, water and sewerage and other amenities required to make property development attractive.
As reserve land started to acquire potential economic value in the 1960s, Westbank members obtained certificates and used them to grant leases for trailer parks. But governmental institutions were weak, and economic development led to internal conflict, with many charges of secrecy and favouritism. A commission of inquiry, appointed in 1986, set Westbank on the path of governmental reform. The end result was a self-government agreement with Canada enacted by federal legislation in 2005, which allowed the First Nation to escape the strictures of the Indian Act.
Its constitution has made its government open and accountable, with positive affects upon the real estate market. The total assessed value of Westbank lands rose more than 600 per cent (after inflation) from 2005 to 2019. Most of that value has been created by holders of certificates (now known as allotments) leasing their lands for residential development, while the Westbank government has also leased community land for commercial projects such as shopping centres. Leases are typically for 99 years or even longer, giving tenants something close to the certainty of fee-simple ownership. Tenants who are not Westbank members do not have the right to vote for the First Nation chief and council, but they are consulted through a residents’ advisory council that they do elect. Property taxes are assessed according to British Columbia standards in consultation with the First Nations Tax Commission. Thus tenants are not subjected to the sudden and arbitrary tax increases that have sometimes occurred on First Nation lands elsewhere.
The Westbank government has also engaged in other business ventures, with varying degrees of success. Although some have been profitable, there were two notable setbacks – investment in the Northland Bank, which went bankrupt in 1985; and the costly failure of a proposal to build a medical clinic, which led to the defeat of the incumbent chief in 2016. Learning from experience, Westbank has reorganized its business ventures to take investment decisions away from chief and council and place them in the hands of a more independent board –a step toward best practice for government-owned enterprises.
It is sometimes mistakenly asserted that First Nations are inherently collectivist and have no conception of private property, but Westbank members have embraced private property in the forms of allotments and supporting mechanisms such as leases, mortgages, contracts and property tax. The result is a thriving real estate economy that provides benefits both for the First Nation’s members and the far more numerous non-members who now live on Westbank lands. It is a win-win situation, in which First Nation success benefits the larger society.
Each First Nation must find its own path to prosperity; not all will want to follow what Westbank has done. Others may prefer the model of community capitalism (band-owned enterprise) practiced by the Fort McKay First Nation in the heart of Alberta’s oil sands. But these and other paths to prosperity have one thing in common: First Nations move away from dependence on government to self-supporting participation in the Canadian economy.