Conservatives Launching Consultations with First Nation and Industry to Establish Resource and Revenue Sharing Models

Author: Ron Gersh & Jacob Blum

The federal Conservative leader, Pierre Poilievre, Member of Parliament for Carleton, announced in Vancouver on Tuesday, Jan 24, 2023, that he's launching ‘countrywide consultations and listening’ between First Nations and industry leaders to develop a framework for Revenue Sharing generated by resource development on First Nations Lands. In a recent quote, Poilievre states that the resources revenue sharing process is ad hoc, bureaucratic and clouded with uncertainty.

Willing First Nations could choose to collect more resource revenues from projects on their lands, Poilievre said, suggesting the federal government could offset the extra costs incurred by the resource sector by "ceding tax room" to them.

“Payments by resource companies to First Nations should be offset by the federal government ceding tax room,” stated Poilievre in his speech. 

“The effect of this would be to redirect revenues from the federal government to First Nations governments that would make sure the projects are actually economical, that they would actually happen.”

Batchewana First Nation Chief Dean Sayers Lays Out His Vision/Position For First Nation Resources and Revenue Sharing Models

“Areas like Ontario as part of Canada have unextinguished pre-confederation treaty relationships, rights and obligations with the crown now represented by Canada and Ontario. 

In a lot of instances, First Nations in Ontario continue to maintain the right to say yes or no to any project. And that foundation needs to be adopted by the Federal Canadian government.  I believe first Nations should be in the driver seat and determine when and where there will be an extractive industry implemented in a sustainable way. First Nations provide the permitting and the environmental assessment decisions. 

Most First Nation should be able to say Yes or No to any project in Ontario.  Additionally, in those contemplations, we determine what royalty is paid to us as part of the overall value of the project. We also reserve the right to be involved in an equitable partnership and other benefits that come with development. I believe the Conservatives, the Liberals, and the New Democrats, all of those partisan leaders need to understand that First Nations are in the driver-seat. We shouldn’t be asked if we want to share of the money after an industry is setup in our territory without our permission. We should first of all be able to determine if we want that industry on our lands and if not and it’s already there,  it needs to be moved and the land restored. 

No means no. 

Consultation after the fact with any government is misaligned with our reserved rights as a Nation. We determine what happens on our lands.”

Grand Chief Abram from Association of Iroquois and Allied Indian Summarizes the Stalemate To-Date on These Type of Agreements:

Speaking to Grand Chief Joel Abram from Association of Iroquois and Allied Indians, he indicated that this is a very complex issue that will have many hurdles for First Nation communities and leadership.

“Getting 600 or so First Nations to agree is a tough task in and of itself.  You have to get proper formulas and agreements surrounding funding.

If you look at the Ontario First Nation Lottery Program (OFNLP), there are many unhappy First Nation communities that argue they haven’t received enough; maybe the fact that everybody is not happy with the formula means the government got it just right.” He quipped.

He went on to add:

“The challenge with resource revenue sharing, especially in the north where the northern communities have resource rich commodities such as diamonds, platinum and, more importantly, cobalt (which is a resource needed for electrification of the automotive sector, handhelds, etc) is the underlying reason for disparity between the value of resources on each First Nation land. 

Communities that don’t have much resources on their land might agree but the northern communities or resource rich First Nations that have desired commodities will want to negotiate their own impact benefit agreement with industry.

If industry wanted to make a broader arrangement regarding revenue sharing without asking individual First Nations to abdicate their rights for First Nation Impact Benefit Agreements for their own lands, that would obviously be widely accepted by First Nations.” 

Industry Frustration Grows - Seeking Investment Certainty Remains the Allusive Unicorn

Speaking to Industry, specifically Ontario Stone, Sand & Gravel Association (OSSGA) members, who’ve been asking for clarity from government on the process of Impact Benefit Agreements, they’ve stated the following:

“We have tried to take the reigns on this challenge and provide our own industry solution.

 Our industry proposed a revenue model that is the same as The Ontario Aggregate Resource Corporation (TOARC) right now.  We would add $0.03 tonne to all aggregate in the province, TOARC would collect it and then, annually, send the collected amount in each territory to them. 

It was approved fully by Industry members but the various territory groups turned it down as they couldn’t agree who actually gets the funds.”

In order for industry to continue making investments into Ontario, they need governments to provide clarity on the process so that they are able to assess their investment risk.

Uncertainty and lack of a clear, defined process for these impact benefit agreements add to the challenge of securing capital and the overall cost of the project when assessing investment potential for Canadian projects. 

Why is This  Time Any Different? - Skeptics Argue

With all that is stated above, it’s no surprise that Poilievre’s announcement was met with collective media skepticism: 

“Why is this time any different?” 

Poilievre believes the consultation process will raise healthy questions.  He points to the First Nations Tax Commission as the "most promising outline" for his policy. 

Is there a ‘Ray of Hope?’

Mindsets are changing.  The landscape is changing.  The BC First Nations Energy & Mining Council points to three key factors bolstering Poilievre’s optimism.   

1. First Nation Resolve. 
2. Duty to Consult. 
3. Investor Confidence.

Further, Poilievre says participation in any revenue sharing program should be voluntary and welcomes provinces and the territories to participate. 

At is foundation, Poilievre’s emphasis is for any revenue sharing program be driven by the principles of fairness, equity and respect for First Nations’ rights. 

Suggested Next Steps by TheCCSGroup

TheCCSGroup recommends First Nation Communities get active!

Why get active?

• When governments seek to clarify their policy, input from stakeholders in the process can impact the proposed direction of the policy.Once ideas are formed, it’s harder for stakeholders to amend the settled policy. 

If you are seeking to get involved in the discussion with the Conservatives, this should be an important priority that should be flagged for March and April, 2023.

Looking for some further insights within Parliament Hill and some advice on your government relations challenges?

Feel free to connect with one of our Senior Consultants