How Bill C-69 will end up punishing Indigenous Canadians most of all

Across our country, workers, communities and businesses have been telling senators that Bill C-69, the proposed legislation on impact assessment, threatens to destroy the resource industry. Investment is fleeing, projects are being cancelled and jobs are being lost.

Often lost in the noise are the negative impacts C-69 will have on Indigenous peoples. I see those impacts firsthand as an energy CEO who works closely with First Nations. While the bill was drafted in part, as a response to Canada’s commitment to nation-to-nation partnership and reconciliation, it is First Nations who are being hurt first and foremost by C-69. Let me tell you how.

First, you need to understand that Indian Oil and Gas Canada, which regulates oil production on First Nations lands, has a policy of charging a higher royalty for oil produced on reserve lands than the royalties charged on Crown land in B.C., Alberta and Saskatchewan. So in times of a downturn, capital exits Indigenous lands first, in order to be deployed in areas with lower royalty payments. According to IOGC itself, new First Nations leases are down 95 per cent in the last four years. Simply stated, exploring on First Nations’ lands is essentially shut down.

Second, when prices are low, as they are now in Canada because of the lack of export pipeline capacity, First Nations must give back some of their royalties to the producer just to prevent a well from being taken out of production as uneconomic. This is a standard arrangement. However, it means the landholder — the First Nation — suffers more than the producer. First Nations’ oil royalties and fees have dropped from $250 million to just $50 million since 2012.

Third, with government policies such as C-69, investors and companies are simply moving their capital from Canada to friendlier jurisdictions. We’ve seen investment fall by $40 billion per year in the energy industry. International companies have sold over $55 billion in Canadian assets with proceeds to be deployed elsewhere. Big Oil can move its capital. But First Nations can’t move their territories. They are left in an uncompetitive market.

Fourth, Indigenous jobs are being lost. Unfortunately, Indigenous unemployment in Canada is high, for a number of reasons. Statistics Canada data show Indigenous workers are often the first to be laid off — without a massive severance package — and the last to be rehired in a recession, since they’re more likely to be seasonal or contract workers, often with less education or less time with a company. While job losses from the energy sector downturn have affected the whole country, they’ve hit our First Nations workers and communities hardest.

Fifth, First Nations-owned businesses have earned much of their market share and profits in sub-contracting, where they rely on new construction and growth. But C-69 stops new growth. Existing projects will shift into caretaking mode and cut costs to make money, but it’s the small businesses — the trucking, catering and the construction trades — that will be devastated.

There were many decades when energy and mining companies didn’t consider impacts and didn’t share benefits with First Nations, and it was unacceptable. Those days are long gone. Our goals today are more aligned than ever. First Nations are no longer told what to do. They have negotiating power.

The industry is working hard to consult and engage with First Nations. That was a call to action from the Truth and Reconciliation Commission and we have taken that responsibility seriously, far outpacing the federal government in many ways. Indigenous employment is now 7.8 per cent for extractive industries compared to the federal government, where it is at just 4.7 per cent. We also procure more Indigenous services than the Government of Canada does. Since 1996, Suncor alone has procured $1.7-billion more in Indigenous services than has the entire federal government.

It seems like C-69 was based on the misconception that Indigenous communities are victims of the resource industry and that they need the federal government to protect them. From my perspective, that’s a paternalistic and out-dated style of thinking. The truth is, they are increasingly part of the industry, as shareholders, employees and contractors. First Nations want to be project owners themselves. An expensive, burdensome, and uncompetitive regulatory environment hurts their economic prospects too.

First Nations have the most to lose from this legislation. They’re already being harmed by the uncertainty C-69 is causing in the resource industry. While that may not have been the government’s intention, it is the effect. It needs to be fixed.

Brian Schmidt (Aakaikkitstakii) is an honorary chief of the Blood Tribe, CEO of Tamarack Valley Energy and a former board director of Indian Oil and Gas Canada.

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