Is Cash Making Reserves Poor?

Is too much cash making reserves poor?

Imagine if you rented everything, and owned nothing (bike, chair, T.V., you name it). As soon as you stop making your rental payments, all of your possessions would be gone. You’d be penniless, homeless, and have nothing to your name. This is basically what we are doing economically on reserves. We have cash, but little wealth. What we need in the long term is wealth.

For the sake of argument I am going to use Opaskwayak Cree Nation as an example here and make some very rough economic generalizations. On OCN we have access to cash, in some cases a lot of cash ($40 million a year), however we do not have a lot of wealth.

Here’s the difference.

Wealth grows, it increases generationally and can be passed down, used to leverage or build more wealth. We currently have wealth in two areas. In our businesses and in our homes that are owned (none of us can own property on reserve … yet).

Here is one way that we can build long term wealth on the reserve.

We have approximately 500 homes on our reserve. If we value these homes on average at being worth $75,000 each (well below average, for the sake of argument), their total value is worth approximately $37.5 million (500 x $75,000 = $37,500,000).


If everyone in these homes is renting, and we maintain their present state through on going maintenance, etc. in ten years their value depreciates. It is like owning a car – as soon as you drive it off the lot its value is decreased substantially. That means in 10 years the communities wealth has increased – zero.

However, if all 500 homes (and the property) were owned by band members their value, (wealth) would grow. Even with fluctuations in the housing market home and property values generally appreciate over time. From the very first payment that was made on the property and the home you would be building up wealth. If we use the Canadian average house price and assume an increase in value well below Canadian averages, over 10 years the average price of a home on OCN would increase by, let’s say 5% per year.

Over ten years a moderate increase in value for a home would be compounded. So a home owned now worth $75,000 in ten years would be worth $122,167. (500 x $122,167 = $61 million). That is an increase in community wealth of 23.6 million dollars over 10 years.

If we moved from zero home ownership currently to 100% home ownership in 10 years (assuming no new homes were built) we would be increasing the wealth in the community by $61 million over 10 years. Over 50 years this would mean a $430 million increase in our community’s wealth. Over 100 years, a $5 billion increase in wealth. With an increase in homes roughly equal to our growth rate this number would increase substantially.

This wealth can be used to leverage other wealth. Collateral on small businesses is a prime example. Home ownership also creates a stable work force (people do not want to miss a mortgage payment and lose their homes so they are more inclined to show up for work, seek a new job if they get laid off etc.).

Homes that are owned also last substantially longer than homes that are rented or given out. On a Mandan reserve in North Dakota for example, in the 70’s homes lasted on average 6 – 10 years. By introducing a simple plan of getting families to help build the homes (it was mandatory for them to contribute and instilled a sense of ownership) they increased the lifespan of their homes to over 20 years. Perhaps most importantly, home ownership instills pride. Anyone that has ever bought a home can tell you this. This sweat equity is perhaps more valuable than other equity.

Cash equals quick instability, fast changes, easy come easy go. Wealth equals stability and long term commitment.

In 100 years, I want my great grandchildren to be a part of a community with billions of dollars of intergenerational wealth, not a community of easy come easy go renters. Home ownership and property rights are a way to get there.



Note: The average Canadian house price increased from $282,583 in Oct 08 to $341, 079 in Oct. 09. (a ~ 20% increase). In Manitoba the average house price rose from $185,558 in Oct. 08 to $204,668 in Oct. 09.

AFN: It's Time to Cut the Apron Strings

In spite of some of the absurd and racist declarations made by Chief Terry Nelson, if one looks under the anti-white rhetoric an intellegent person can decifer flashes of a vision for a better future of First Nations relations with the Federal goverment through a truely representative AFN.

During the Assembly of First Nations leadership campaign of 2009, Chief Nelson's platform was to remove the AFN from being dependant on the Canadian federal government. In his normal adversarial role, in an interview with John Ivison of the National Post, he says, "“As long as the AFN is dependent on government funding, it will be ineffective,” adding that he would explore funding from the Chinese government, which is interested in resource extraction on native land. “

Contrary to the attention seeking militant Chief Nelson, the leader Chief Nelson is 100% correct. This is a prime example of a much needed vision and boldness in First Nations politics. An organization that gets $7 million from the federal government annually has no business lobbying the federal government directly. They have, in essence, become a branch of the federal government.

Which brings me to the announcement made this week by the Treasury Board of Canada, the people that hold the purse strings for government. In a letter to all senior government administrators the TBC states,"Crown corporations, departmental corporations and shared governance organizations for which the Government of Canada has direct responsibilities or which expend funds reported as Government assets in the Public Accounts of Canada should not engage consultant lobbyists to communicate with the Government of Canada." In other words,
people that are funded by the government should not use that same government money to hire lobbyists to work on their behalf to get even more government money. The letter goes on, "... the use of consultant lobbyists for this purpose is unnecessary and an inappropriate use of public funds." Pretty straightforward and clear.

Is the $7 million the AFN receives every year an inappropriate use of public funds? My guess is Terry Nelson would say so. Well in effect he did say so. In effect Chief Nelson is asking, 'who does the AFN really work for?', 'Does it work for us First Nations people, or the government of Canada?'

Some might say that this is a conflict of interest. Back in the days of Liberal government, when many of the AFN senior political advisors were ex Liberal policy advisors and active party members, it would be hard to deny this.

The best way to avoid this potential perceived conflict of interest is to have First Nations fund AFN directly. If First Nations funded the AFN directly, the AFN would be held accountable not to the federal government, but to us Native people. When you spend your own money on something, you make damn well sure that it is being used effectively. Our elected chiefs could then set clear achievable goals for the AFN to accomplish on our behalf.

If the over 600 First Nations in Canada each contributed directly to the funding of the AFN it would roughly cost them $11,000 each. If the contribution amount was per capita (as First Nations voting for National Chief should be, but I won't get into that), this amount would of course vary. As would the demand for results.

The AFN needs to represent and work for First Nations peoples. If we want to assert our 'Nation' status, move towards greater independence, and govern ourselves, it is time that the apron strings were cut.

One Aboriginal athlete at the Olympics beats 200 token dancers

I think we would all agree that prevention is better than treatement, especially when it comes to health. The costs are uncomparable.

There was a time in Canada when Aboriginal people were barred from amateur competition because it was thought we held an unfair racial advantage over our competitors (Native athletes were put in the same category as 'professional athletes').

How times have changed.

Today the situation is scarcely any better – our participation within national sport programs is either entirely lacking or non-existent. Demographically we represent one of the unhealthiest groups in Canadian society with rates of diabetes, obesity, heart disease, resporatory disease, and suicide significantly above national averages.

It is LONG past time that we had a comprehensive strategy to deal with the health of Aboriginal people. One place we can start by working with Aboriginal and northern athletes.

Here is my thoughts on how Canada can address this problem:

1) Instead of showing off Aboriginal culture at the 2010 Olympics in Whistler, through dance, regalia and cultural appropriation, Canada should support a short and long term strategic initiative to identify and develop Aboriginal athletes. One athlete representing Canda in 2012 means more than 200 token dancers in 2010. We have young people in northern Canada that are capable of achieving elite levels of performance ... if they are given the opportunity.
Role model posters don't cut it.

2) Assembly of First Nations support elite level coaches that work with Aboriginal athletes through a monthly stipend. Quebec supports national team coaches that coach QC athletes with a significant yearly incentive - the implications of this policy ripple from elite level selection to grassroots development.

3) Canada work towards having a set number of Aboriginal persons representing Canada on all future Olympic teams (through the above strategies and others).

4) If any Aboriginal regalia, ceremonies, legends etc. are to be used in showcasing Canada at international sporting events, that Aboriginal athletes be supported in a drive to reach competitive levels at those competitions. No athletes - no dancers.

There are over 1.3 million Aboriginal people within Canada. We know that these challenges can be met, as they have been with other countries that have large Aboriginal populations (populations that have been historically underrepresented at international competitions); there were 11 Indigenous athletes representing Australia on the 2004 Olympic team, while New Zealand’s 2004 Olympic team had 16 Maori members. Both of these countries developed national programs to identify and develop Aboriginal athletes.

There is a valuable opportunity for Canada to initiate programming that will ensure Aboriginal Canadians are given equal opportunity to represent Canada at international competitions in the future. Canada's national teams should represent all of Canada. The positive spin offs of identifying and developing Aboriginal athletes in Canada will go way beyond the interests of the specific future stars, the ripples will go towards preventing the many health issues faced in Aboriginal Canada.

Canadians can learn from US charter schools

Canadians should pay heed to Wednesday's Wall Street Journal which discusses current education research out of the United States. Researchers are finding education outcomes from US charter schools are not only outpacing public schools, but that public schools results are being positively influenced by having charter schools located nearby (No Child Left Behind: New evidence that charter schools help even kids in other schools, Wall Street Journal November 4, 2009)

The option of having publicly funded charter schools open to all parents is influencing public schools to be more effective.

"Stanford economist Caroline Hoxby recently found that poor urban children who attend a charter school from kindergarten through 8th grade can close the learning gap with affluent suburban kids by 86% in reading and 66% in math. And now Marcus Winters, who follows education for the Manhattan Institute, has released a paper showing that even students who don't attend a charter school benefit academically when their public school is exposed to charter competition.
Mr. Winters focuses on New York City public school students in grades 3 through 8. "For every one percent of a public school's students who leave for a charter," concludes Mr. Winters, "reading proficiency among those who remain increases by about 0.02 standard deviations, a small but not insignificant number, in view of the widely held suspicion that the impact on local public schools . . . would be negative." It turns out that traditional public schools respond to competition in a way that benefits their students.
Imagine that. Competition works."

This is good news for students in the U.S. and it is especially interesting news for educators in Canada that are currently operating in systems that are failing to meet the educational needs of disadvantaged students, Indigenous students in Canada being a prime example. With funding rates that are 20 - 30 % below our provincial counterparts; overcrowding; and a historical mistrust of education systems in Canada dating back to the residential schools era, Canada's on reserve First Nation's schools are falling further and further behind. Provincial public systems are fairing no better when it comes to meeting the needs of off reserve Indigenous students - with graduation rates that are significantly below mainstream averages.

If you are unfamiliar with Charter Schools, as most Canadians are (Alberta is the only province that supports charter schools) they are essentially publicly funded schools that have loosened regulatory oversight in exchange for clearly defined achievement and accountability outcomes attached to their mandate (their charter). Parents that live in an area with a charter school can apply to send their child to the school at no cost to themselves. Many charter schools focus on themes in their programming. There are fine arts, science, theatre and culture based schools. Culture based charter schools including such schools as the Cesar Chavez Public Charter School, the Hmong College Prep Academy, Kua O Ka La Public Charter School (Native Hawaiian) and numerous Native American equivalents that are demonstrating significant improvements in closing the gap between disadvantaged students and mainstream students.

These culture based charter schools are including cultural learning outcomes in their school improvement plans and parents (of a variety of cultures and ethnicities) are choosing to send their children there. Some of them are also significantly noticing that beyond the stand alone importance of continuing cultural retention and transmission that increased exposure to and inclusion of culture in the schools is increasing core academic outcomes. Kamehameha Schools in Hawaii conducted research that concludes culture based education positively influences student performance outcomes on state assessments for math and English. This is a key factor for Canadian educators of all stripes to notice.

The lessons to be learned from Canadian educators are twofold. Public systems need to open themselves to competition and the increased results, cultural, linguistic and academic that this encourages. Charter schools need to be encouraged. Further Indigenous parents, educators and students need to support the idea of locally driven collaborative schools, with accountability measures attached, in competitive environments that have stimulated such growth in learning outcomes for disadvantaged students in the US.

Note: Alberta has three publicly funded charter schools with an Indigenous focus.