Resource Revenue Sharing/Resource Benefits Sharing

In The Journey Together, the Ontario government committed to “engage with Indigenous partners on approaches to enhance participation in the resource sector by improving the way resource benefits are shared.” To honour that commitment, there were a series of negotiations held in August and early fall 2016 that were intended to improve resource benefits sharing. Those talks resulted in a MOU signed in October 2016, which has the intention of operationalizing the Political Accord (2015).

The basic idea of Resource Revenue Sharing (RRS) is that governments collect revenue from natural resources in the form of royalties, and that since the resources are taken from First Nation traditional territory some of the revenue collected is shared with First Nations. However, operationalizing this simple concept is extremely difficult. For one, the words 1) resource, 2) revenue, and 3) sharing are all contested.

There is an important difference between Resource Revenue Sharing (RRS) and Resource Benefits Sharing (RBS). On the one hand, RRS is the sharing of provincial crown source revenues from resource development projects. On the other, RBS is broader, and can include sharing in revenue, professional development opportunities, collaboration, control over resources, and input over decision making.

Currently there is no policy or legislation whereby First Nation communities in Ontario receive any portion of government resource revenue. Instead, the arrangements that do exist are ad hoc and project specific. The most significant current example of RRS is in the Ring of Fire, where Matawa First Nation Management has entered into a RRS agreement. Entering into Resource Revenue Sharing (RRS) agreements with the government could be a fair and equitable way to distribute the wealth. The money would benefit communities and is one way of supporting self-governance and could help in the self-determination efforts of communities by allowing them to fund initiatives to create long-term wealth and sustained opportunities.

Ontario collects revenue from four basic sources: tax, royalties, fees and permits, and sales and rentals. The accompanying chart shows the funding levels from 2010. One area of concern is that Ontario collects by far the least revenue for natural resources because of tax breaks to resource development corporations, so the pool of resource revenue is smaller than in other provinces.

Ontario and First Nations have been working on determining RRS/RBS since 2005, with efforts advancing more quickly after the Ipperwash Inquiry Report (2008) mandated the province to share in the benefits of resource extraction. In 2010/11 discussions, RRC became a joint priority between First Nations and the province. Through these discussions, a proposal was brought to the AOCC for consideration, and it was ultimately rejected. Taking the lead from this decision at the AOCC, the province has since engaged in discussions at the local level, and on a sector-specific basis.

While there were many reasons that the Chiefs in Assembly rejected the proposal, key themes were:

1. Amount - the province offered 5.5% of resource revenue, while many First Nations peoples did not believe equal sharing could be below 50%.
2. Scope - First Nations wanted a wider RBS agreement, rather than the narrow RRS agreement that was proposed.
3. Process - The proposed agreement was province-wide, while many felt that a regional, treaty-based approach to RRS/RBS was appropriate. Furthermore, the Federal government had to be at the table because of the treaty relationships between First Nations and the Crown.

Complicating this further is a question of what constitutes a “resource.” Traditionally RRS or RBS agreements have focused on mining, forestry, or other related sectors. In other words, a resource is a thing that individuals take from the earth for profit. But what about other ways that the province collects revenue? What of carbon offset sales – the province collects money at auction, and as of now that is not considered a resource.

Currently MIRR, COO, and PTOs are working on finding ways to take the framework from the fall and implement it, but there is little publicly available information. Exploratory discussions on Resource Revenue Sharing (RSS) in the fall of 2016 focused on potential principles that would ultimately inform RRS agreements. Some of these principles included meaningful sharing reflective of government-to-government relationship, that any agreement does not override the Duty to Consult, that it does not interfere with private sector partnerships, and that it will not limit other government funding options.

There are also two RRS pilot projects related to forest management in Northern Ontario, with agreements in place between eight First Nations (12 were invited to participate). This project was seen as a venue to test ideas, built trust, and consider longer-term opportunities, all with the limited risk of a short term and non binding agreement. While this project was generally successful, the revenue from forest-sector alone fell short of First Nation expectations, and the relationships between First Nations were more complex than the government staff anticipated.

COO is working with Ontario to develop improved RRS/RBS arrangements using the lessons learned from the rejected 2010 proposal and the recent pilot projects. A meeting is scheduled for the fall of 2017 where COO is proposing that a tripartite table be established to determine the best path forward.