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Playing politics with resource revenue sharing

Northwestern Ontario municipal leader wants mining, forestry benefits deal for all Northern communities
First Nations stand to get a substantial share of revenue collected from resource activities if the Wynne government is re-elected.

Resource revenue sharing is on the minds of Ontario’s three provincial leadership hopefuls as they roll through Northern Ontario during the election.

Allowing First Nations to benefit from mining and forestry operations on their traditional land has been a contentious and unresolved issue for many years.

The Wynne Liberal government revealed a potential landmark deal – pending their re-election – by announcing that agreements had been signed with three First Nations organizations, representing 32 communities across the North.

Lauding the deals as “the first of their kind,” the Liberals said the partnering First Nations will receive 45 per cent of government revenues from forestry stumpage, 40 per cent of the annual mining tax and royalties from active mines, and 45 per cent from future mines in the areas covered by the agreements.

Three agreements were negotiated with Grand Council Treaty No. 3, Wabun Tribal Council and Mushkegowuk Council. Those organizations administer the funds which must be plugged into economic development, education, health, community and cultural projects.

If the Wynne government returns, the agreements would go into effect in the fall of 2019.

Wendy Landry, president of the Northwestern Ontario Municipal Association (NOMA) applauded the signatory communities, calling it a “long time coming.”

Landry, who is the mayor of Shuniah Township, outside Thunder Bay, and a member of the Red Rock Indian Band, categorized the signings as “definitely a win for First Nations after all those years of being have-nots.” 

But she said the province’s largesse needs to be spread around to all communities, some of which are struggling to maintain infrastructure.

“If you’re going to be talking about revenue sharing, you definitely should be talking about it to all the communities in the northwest.”

At NOMA’s annual conference in Kenora in early May, Landry and other mayors tried to pin down the three party leaders to adopt her group’s Fair Share proposal to raise the Harmonized Sales Tax by one per cent to fund work on roads, bridges, transit and maintain other critical community services.

The reductions in industrial and commercial assessments, and fewer provincial dollars in the Ontario Municipal Partnership Fund, have some Northern communities facing exasperating financial issues.

Days before the Liberals delivered their announcement, Progressive Conservative leader Doug Ford kicked off the revenue-sharing talk by promising that all Northern communities would get a significant chunk of the money collected in stumpage, mining taxes and aggregate licences, which, he claimed, could be in the range of $20 million to $30 million.

In the NDP’s Northern Ontario platform, Andrea Horwath inserted a paragraph pledging to “transfer Ontario’s share of mining taxes” to First Nations, without getting into specifics.

Landry said revenue sharing did not generate a great deal of discussion at the conference.

She was reluctant to side with any party until after the election. NOMA intends to lobby the new government for the same type of revenue sharing arrangement for municipalities.

Northwestern Ontario is witnessing a resurgence of resource development activity. 

New mines have opened, existing mines are expanding, and promising gold, base metal and green-tech deposits have been discovered and are advancing toward production in the Rainy River district, Dryden, Red Lake, and along Lake Superior’s north shore.

Forestry companies are reinvesting in their mills and are scrounging to find skilled workers.

“We believe that the future of Ontario is in northwestern Ontario,” offered Landry.

“We may not have the population but in the northwest we have 250,000 and vast natural resources to offer.”

Based on the revenue Ontario collected over the last three years, revenue sharing could be a potential windfall for First Nations, especially if global commodities markets surge.

In mining taxes and royalties, Queen’s Park gathered $155 million in 2014-15, $67 million in 2015-16 and $57 million in 2016-17.

In forestry stumpage, the province took in $32.8 million in 2014-15, $35 million in 2015-16, and $42.3 million in 2016-17.

First Nation communities who've signed on stand to directly benefit from the taxes and fees collected from operations in their area.

“Ontario’s approach to resource revenue sharing will allow communities closest to natural resource development to benefit the most,” stated an email from the Ministry of Northern Development and Mines.

The government is keeping confidential how much it collects in mining taxes and royalties per company, per mine and on a geographical basis from mining camps in Sudbury, Timmins, Kirkland Lake and Red Lake.

Surprisingly absent from the list of First Nation signatories was the Matawa First Nations, a group of communities with territorial claims in the Ring of Fire.

Back in 2014, when Queen’s Park launched its much-heralded Regional Framework Agreement (RFA) with Matawa, resource revenue sharing was identified as one of the four pillars to be negotiated.

The RFA was to provide a guide that would cover all the environmental and economic bases on how the remote James Bay communities would safeguard and participate in industrial development.

If Matawa First Nations CEO David Paul Achneepineskum was miffed by revenue-sharing deals being signed with other communities, he wasn’t letting on.

“We have our own process and I think there’s a greater revenue source through equity ownership of the ongoing mining activities.”  

Achneepineskum congratulated the communities on their agreements, adding that it sets precedence for other First Nations to follow.

“We’ll see how our chiefs are going to approach it.”

According to Achneepineskum, the Regional Framework talks have “stalled,” as jurisdictional issues over control of proposed access roads to the Ring of Fire have taken on greater priority.

“There’s really been no discussion with Ontario at all,” said Achneepineskum of the RFA.

He remains hopeful a revenue-sharing arrangement for Matawa can be reached. For now, everything pauses until a new government is in place.

“We’re not sure what’s going to happen from there. But hopefully discussions will continue once the election has been completed.”

Achneepineskum is not in favour of scrapping the RFA process.

“Regardless of who’s in the government, this process has to continue. It can’t be starting from square one again. There’s too much at stake with the Ring of Fire.” 

The Liberals’ revenue-sharing plan appears to have the support of industry.

Ontario Mining Association president Chris Hodgson was not made available for comment but issued a statement that the government is following their recommendations to use mining taxes and royalties to provide direct benefits to Indigenous communities.

“The commitment to 40 per cent for existing mines and 45 per cent for new mines is a great incentive for newer developments as well as existing mines. These agreements will continue to promote good relationships and understanding among mining companies and Indigenous communities,” said the statement.

Ontario Forest Industries Association policy director Ian Dunn said their membership can get behind the deals if it doesn’t impact forestry companies’ bottomline.

“Once they collect the stumpage, the government can share with whoever they would like as long as there’s no increase in stumpage. We have to maintain Ontario’s competitive operating environment for the forest sector.”

Whether this proposed arrangement on stumpage will negatively impact funding for silviculture and other forestry conversation programs, Dunn replied he was not knowledgeable enough to comment.