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Chief Clarence Louie of the Osoyoos Indian Band stands in front of the Nk'Mip Desert Cultural Centre in Osoyoos B.C. on September 4, 2007. He says the ability of Canada’s aboriginal people to support themselves has been severely reduced over the centuries by government land grabs.Jeff Bassett/The Globe and Mail

Three years after an economic development board set a decade-long goal of closing the prosperity gap between aboriginal people and the rest of Canada, its new report says key indicators are moving in the wrong direction.

The Aboriginal Progress Report, a sequel to a benchmark study completed in 2012 by the National Aboriginal Economic Development Board, finds First Nations people on reserves drifting further behind non-aboriginal Canadians.

The new report, which will be released Wednesday, uses Statistics Canada census data to compare the progress of First Nations, Inuit and Métis people between 2006 and 2011 – the latest census – on core economic issues such as employment and income and underlying issues such as education and living conditions.

Inuit and Métis people showed some improvements in employment rates, though the Inuit lost ground to other Canadians when it came to postsecondary completion rates and the proportion of their homes in need of major repair.

But for First Nations people living on reserves, the gap widened with the rest of Canada in terms of employment, reliance on government transfers, college and university completion rates and housing.

Clarence Louie, the Chief of the Osoyoos Indian Band in British Columbia's Okanagan Valley and the chair of the National Aboriginal Economic Development Board, says the ability of Canada's aboriginal people to support themselves has been severely reduced over the centuries by government land grabs and experiences such as the residential schools.

But "I am telling First Nations we have to make the economy the No. 1 issue, just like non-native people do. Non-native people don't stand for double-digit unemployment. Neither should we," Mr. Louie said in a telephone interview. "The original treaty relationship in this country was a business relationship. That's what I want to get back to."

One of the largest barriers to aboriginal economic development is the "outdated spending formula" used by the federal government to pay for aboriginal programming, he said, with 96 to 98 per cent of that money going to social spending and only a small fraction available for economic development.

"The government will fund every First Nation for a full-time welfare worker. They will fund every First Nation for a full-time drug and alcohol counsellor. But they won't fund First Nations for a full-time economic development officer," Mr. Louie said.

The federal government, he said, considers economic development for aboriginal communities to be discretionary. "But I don't know which town, city or province would call their economy discretionary. White people don't call their economy discretionary.… We want economic development funding to be non-discretionary. That means it's a focus, it's a priority."

During the years covered by the report, which included a major recession, the national employment rate fell from 62.7 per cent to 61.2 per cent, but for First Nations on reserve it fell from 39 per cent to 35.4 per cent.

The gap in income levels between residents of reserves and the rest of Canada actually narrowed slightly between 2006 and 2011 – but remains wider than it was in 2000. A higher percentage of both groups completed high school, but the gap remained about the same, with only 44.1 per cent of on-reserve students graduating. And the gap in dwellings needing major repairs actually narrowed slightly but remained six times higher for First Nations on reserves.

The board makes a number of broad recommendations for improvement, calling for a stronger effort to improve educational outcomes and for the creation of a federal agenda that sets closing the gaps as a priority. It says the government should support aboriginal businesses with capital and expertise and provide seed money for investment in economic opportunities in aboriginal communities.

"Are there going to be some communities where economic development is tough or really challenging?" Mr. Louie asked. "Well of course there will be. But then why can't we focus on getting 50 per cent of First Nations people on that economic horse? That will go a long way and the First Nations stats will get marginally better in a decade."