The third stage of the Robinson Superior Treaty annuity trial resumed this week at the University of Sudbury with the testimony of David Hutchings, an economist who specializes in conducting economic analysis in complex tax, securities and antitrust matters.
Presenting his report on behalf of the Anishnaabe people of the Superior area Feb. 13 and 14, and continuing next week, Hutchings offered his report as a reply to the economists who testified on behalf of the Crown.
While there are two treaty annuity trials currently before the courts, the Robinson Huron Treaty (RHT) people are currently in negotiations with the province. The Robinson Superior Treaty (RST) annuity’s case is currently being heard in Sudbury by Ontario Superior Court Justice Patricia Hennessy.
After the first two phases of the Robinson Superior trial, Hennessy ruled that the federal and Ontario governments had to pay an increased annuity that reflected a “fair share,” so long as there were enough resource-based revenues to do so without incurring a loss. She also made this ruling in regards to the Robinson Huron case.
In both, the province’s Court of Appeal mostly upheld those decisions. But while the federal government let both rulings stand, the Province of Ontario is taking the decisions to the Supreme Court of Canada.
Earlier this year, the provincial government entered into settlement talks with one of the treaty groups — Robinson Huron, but not Robinson Superior.
Both communities are in court seeking billions of dollars in compensation after almost 150 years of receiving small annual payments in return for ceding much of Northern Ontario to the Crown. But the provincial government is arguing they are owed nothing, or at most $34 million.
Led by the Red Rock and Whitesand First Nations, who are part of the Robinson-Superior Treaty, the trial has come to a battle of the experts with the testimony given in the last days coming from economists.
The Ontario government’s experts argued that the government's “colonization” expenditures — everything from healthcare to railways and roads — are actually “investments” in Indigenous communities and the amount spent exceeded revenue from natural resources in one of the treaty areas to the tune of almost $8 billion.
After 170 years of virtually unchanged payments, the province says, those treaty members are owed just $35 million.
In their report, government experts Robin Boadway, a Queen’s University professor emeritus, and University of Toronto economist Michael Smart estimate the government's net revenues from resource extraction in the area were $12.7 billion for Robinson Huron, but they argue there was no revenue generated for Robinson Superior. Instead, they say extraction in that area came at a loss of $7.9 billion.
When the risk incurred by the government due to the uncertainty of future revenue is factored in, said Smart and Boadway, that means Robinson Huron is owed $2.4 billion in annuity payments, and Robinson Superior, $35 million, the government report argues.
Their argument is that the government's colonization expenditures in the area actually exceeded revenues in one of the treaty areas.
“These patterns reflect the fact that Crown resource revenues were relatively stagnant in recent years, while resource-related expenditures continued to rise,” said their report.
The Robinson Superior Treaty leaders have called that analysis “ludicrous” and they have expert economists who agree.
In his testimony last week, Joseph Stiglitz, a Nobel prize-winning economist and a former vice president of the World Bank, said Ontario’s argument that resource extraction in the Robinson Superior area operated at a loss “doesn’t make sense.”
He said government expenses in the treaty region were related to far more than just the hewing of wood and extraction of minerals, and certainly didn’t result in deficits, he said.
“Was the Crown so irrational that it had all these losses and said, ‘Give us more losses year after year’?” asked Stiglitz. “The (province’s) numbers don’t make sense.”
The real value of resource development in one of the treaty areas — above salaries, profit and other costs — is $126 billion, Stiglitz testified, and at least 84 per cent of that should go to Indigenous communities. Those communities have received about $300 million since 1850, according to Ontario government figures.
The real value of resource development is the focus of Hutchings’ report as well, especially the Net Crown Resource-based Revenue (NCRR), including that from mining, forestry, transportation, hydroelectric and land use sales.
“We have the same data set, and agree, with a few exceptions, on the Crown revenue,” said Hutchings of the other economists, Boadway and Smart.
“But it’s the expenses that we differ on.” Referring to his differing treatment of forestry, he told the court it's a matter of methodology used by each expert. Boadway, Smart and Hutchings all agree on the revenue from 1850 to 1945. It is 1946 on that they disagree.
So far, his tabulation of the NCRR is, in today’s dollars, $1.044 billion, compared to the Boadway and Smart NCRR, which was minus $1.619 billion, a loss.
As he stated, Hutchings included and excluded some factors used by Boadway and Smart; for instance, what Hutchings referred to as “Spectrum.”
Essentially, he believes electromagnetic waves, like radio and cell phone frequencies, also take from the land; most notably through the use of cell and radio towers.
Because high-frequency waves do not travel far, the maximum usable range of a cell tower is 40 kilometres; but the typical coverage radius of a cell tower is only five kilometres and in dense urban environments, only two kilometres, before a user’s connection moves to another nearby cell site. That means that there needs to be more towers, closer together, taking up land space.
As well, unlike Boadway and Smart, Hutchings did not include as expenses what he called “colonization roads,” those that did not help the Anishnaabe but instead offered government benefits through access. This is true of railway costs, as well.
He also allowed for what he called the “Treaty Territory Deflator,” noting that land in the Robinson Superior treaty territory was sold much cheaper than Crown land and the amount should be reflected in the report.
He focused, he said, on direct expenses related to those revenues — identifying them, allocating them by geography, and attributing those revenues and expenses to the RST territory.
The matter continues at the University of Sudbury on Tuesday, Wednesday and Thursday of next week.
Jenny Lamothe and Heidi Ulrichsen are reporters at Sudbury.com.