The link between oilsands development and First Nations prosperity

Mark Milke and Lennie Kaplan, National Post, March 10, 2020

When Teck Resources cancelled its proposed Frontier oilsands project last month, this country lost more than the government revenues and blue-collar jobs the mine would have created. The loss of this project was also a blow to northern First Nations communities.

It is true that, on average, people who live on First Nations reserves are struggling, compared to people living in other parts of the country. For example, on reserves across Canada, the median employment income for those working full-time jobs year-round was $35,676, as of the 2016 census. Off-reserve, employment income for Aboriginal-Canadians was higher, at $47,596, but still lags compared with the $53,431 median income for Canadians as a whole.

These statistics are in sharp contrast with the Fort McKay First Nation, which has been involved in the oilsands industry since the 1980s. Those living on Fort McKay’s northern Alberta reserves had a median employment income of $61,248 as of the last census, 15 per cent higher than Canadians as a whole and 42 per cent higher than the median employment income for all First Nations reserves.

The overall lower employment incomes on reserves are a result of multiple factors, including the fact that a greater proportion of Aboriginal-Canadians live in rural Canada. By the same token, their average educational attainment is lower when compared with the general population because institutes of higher education are often located far from reserves.

In that sense, those who live on First Nations near the oilsands are typical. Fort McKay, for example, is located 500 kilometres north of Edmonton, far from most of the economic and educational opportunities that are available to urban residents across Canada.

But First Nations involved in the oilsands have higher incomes and rates of employment compared with many First Nations across Canada and, in select cases, even when compared with the general population. Fort McKay’s median employment income is higher than of nine of the 10 provinces, where median incomes range from $45,183 (Prince Edward Island) to $55,696 (Newfoundland and Labrador). Only Alberta, with a median employment income of $64,090, is higher than Fort McKay.

Likewise, across Canada, the average unemployment rate on reserve was 24.8 per cent, according to the last census. Yet three of the four First Nations that we recently profiled in a research brief for the Canadian Energy Centre, all of which are heavily involved in the oilsands, had unemployment rates between 17.2 per cent (Chipewyan First Nation) and 23.5 per cent (Mikisew Cree First Nation). Those rates still look high, but the census data is based on 2015 statistics, right when oil prices collapsed, thus reducing oilsands employment. Even then, these three First Nations recorded lower unemployment rates than the national average for all First Nations.

The critical importance of oil and gas extraction to First Nations prosperity also becomes clear when we compare rates of employment and incomes across industries. Self-indentified Aboriginal-Canadians who work in the aerospace and motor vehicle manufacturing sectors have a median income of $64,631 and $78,019, respectively; while those who work in pipelines and oil and gas extraction have median incomes of $142,883 and $144,034, respectively.

Across all industries, Indigenous-Canadians represent 3.9 per cent of the workforce. The aerospace and motor vehicle sectors record Aboriginal participation at 1.5 per cent and 2.5 per cent, respectively. The pipeline sector records 3.8 per cent Aboriginal participation. For oil and gas extraction, Aboriginal participation clocks in at 5.2 per cent of the workforce.

First Nations that are involved in the oilsands also tend to be less reliant on government funding. Three of the First Nations we profiled reported the amount of government transfers — the money citizens receive from all three levels of government, such as Canada Pension Plan, Employment Insurance, social assistance, etc. — in the last census and, it turns out, all three are less reliant on government transfers than citizens in five provinces.

The Fort McKay, Fort McMurray and Chipewyan Prairie First Nations recorded median government transfers of between $4,224 and $6,096. Meanwhile, the five provinces more dependent on transfers range from Quebec ($7,301) to Newfoundland and Labrador ($9,306), with Nova Scotia, New Brunswick and Prince Edward Island falling within that range, as well. Those living on the Fort McKay First Nation ($4,224) are less dependent on government transfers than those living in eight provinces. Only citizens in Ontario and Alberta, with median government transfers of $4,172 and $4,079, respectively, are less dependent on government.

The broad lesson from the data is that resource development can positively affect rates of employment and levels of income, while reducing reliance on government transfers, for Aboriginal-Canadians. The specific lesson is that any stall, disinvestment or policy that hurts oil and gas development will harm Indigenous-Canadians as much as anyone else.

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Mark Milke is executive director of research and Lennie Kaplan is chief research analyst at the Canadian Energy Centre. They are the authors of “Canada’s oil sands and local First Nations: A snapshot.” Image credit: Canadian Energy Centre.