(Bloomberg Businessweek) -- The day Tsawwassen Mills opened last October in suburban Vancouver, shoppers lined up before dawn to get a first shot at Canada’s biggest new mall in almost a decade. That weekend, more than 200,000 came through the doors, spending C$150 ($120) on average. The wait to exit the parking lot stretched to four hours.
The crowds never went away: Foot traffic hovered at around half a million people a month through the summer, according to the developer, Ivanhoe Cambridge.
The mall is just one manifestation of the economic boom underway in Tsawwassen First Nation, an aboriginal community about 20 miles from both downtown Vancouver and the U.S. border. Nearby, there’s a master-planned residential development where homes start at C$619,900, fruit of a partnership with the Aquilini family, one of Canada’s richest. A little further down the road, the Tsawwassen are expanding a logistics center serving the country’s busiest commercial port.
It’s the kind of success story that Prime Minister Justin Trudeau needs more of. As Canada marks its 150th birthday this year, the milestone has exposed stark disparities within its population of 35 million people. In a country that credits its prosperity to diversity, some of its most celebrated self-made billionaires are immigrants from Taiwan, India and Italy. But members of Canada’s indigenous groups—who numbered 1.4 million in the 2011 census—trail on almost all socioeconomic measures: Their unemployment rate is double that of the broader population, and their median wage trails by a third. Only 10 percent of aboriginal Canadians earn the university degrees that are increasingly a prerequisite for landing the best-paying jobs.
That has policymakers concerned because the Inuit, Métis, and other groups collectively called First Nations are the fastest-growing segment of a population that is graying rapidly. In 2016, Trudeau’s first year in office, seniors outnumbered children for the first time in Canada’s history, a trend that presages slowing economic growth and ballooning government expenditures.
Canada’s national statistics agency projects that by 2056 there will be one retiree for every two working-age Canadians. Immigration alone is unlikely to address the labor shortage: An estimated 2.6 million jobs may go unfilled by 2021 for the lack of qualified workers, according to projections by the Canadian Chamber of Commerce.
“Making sure that indigenous Canadians have the same quality of education, the same kinds of opportunities, economic and otherwise, is not just about the future of those indigenous communities—it’s about the future of Canada,” said Trudeau at an event organized by Bloomberg News in Toronto in April. A study by the National Aboriginal Economic Development Board concluded that the marginalization of indigenous peoples costs Canada’s economy C$27.7 billion each year.
The 430-member Tsawwassen (the name means “land facing the sea”) provide a model for how Canada’s indigenous can weave themselves into the nation’s economic fabric, without relinquishing their identity. In this pocket of Canadian suburbia, only 39 percent had a full-time job a decade ago. Today, the community is nearly at full employment, according to the office of the chief. The tax coffers have swelled twentyfold in the last five years from C$600,000 to C$12 million. The mall and the logistics center are forecast to create 8,000 permanent jobs, while new housing developments will bring in 6,000 new residents. “They’ve accomplished what every First Nation would like,” says Shane Gottfriedson, the former head of British Columbia’s Assembly of First Nations, which represents the 203 indigenous groups in the province. “Success doesn’t happen by coincidence. They’re talking a new language, which is business.”
The groundwork was laid nearly two decades ago by the Tsawwassen’s newly elected 28-year-old chief, Kim Baird. At the time, the community lacked streetlights, sidewalks, and adequate water supplies—its development frozen by a legal and bureaucratic morass.
Officially, the Tsawwassen were governed by Canada’s Indian Act of 1876, which put decision-making in the hands of federal government bureaucrats in Ottawa, 2,500 miles away. In practice, it blocked the Tsawwassen from the most basic kind of self-governance, such as expanding the water pipeline through their community, because the local utility and municipality wouldn’t negotiate with them. Likewise, real estate investors shied away because there was too much uncertainty surrounding the titling of lands and the process for permitting development.
To raise funds for a bigger water pipeline, Baird began negotiating an urban aboriginal treaty with provincial authorities, which would in effect turn the community into something akin to a new municipality. “I had to convince our members to agree to a 300-page legal document that changed their legal rights forever more,” she says. “It’s not exactly the stuff you talk about over the dinner table. I had to convince them this was something we could accept. The work it took was mind-boggling.”
Baird went door to door, heavily pregnant with her second child, to explain to her neighbors what the treaty would mean. Many Tsawwassen opposed the negotiations in principle, arguing that it was galling to redefine ancestral lands that had never been formally ceded to Canada. Others balked at the more practical implications of relinquishing the reservation’s duty-free status and having to pay taxes on property, income and sales.
Ultimately, more than 70 percent voted in favor of the pact, which came into force in 2009. The day the treaty took effect, the community passed nearly two dozen laws regulating everything from property sales to traffic to social assistance. At 9 a.m. a van full of documents pulled up to the British Columbia land title office to register the Tsawwassen’s 700 hectares, the largest transaction ever recorded at the time.
“It made it very clear-cut to investors,” says John Scott, a senior vice president at Ivanhoe Cambridge, which manages the Mills complex. The regulations, guidelines and permitting processes were similar to those in the rest of the province, which gave companies like his comfort. “It helped an awful lot,” he says.
Fiscal Realities Economists, a Canadian consulting firm, has calculated that the lack of a legal and administrative backbone can raise the cost of investing in First Nation communities by as much as six times for businesses. That helps explain why for years the Tsawwassen failed to attract businesses while investment raced into nearby districts—a phenomena familiar to aboriginal communities across Canada.
When Chris Hartman first drove to the area in 2008 as he was being recruited by the Tsawwassen to head their economic development corporation, he was stunned to find such a large tract of land still undeveloped. “I said, ‘Holy Moly!’ You’ve got a greenfield situation—except that someone has already put in the infrastructure. You’ve got highways, railways, roads, and Canada’s busiest superport two kilometers down the road.”
Businesses spend years looking for such sites in the Vancouver region. Ivanhoe Cambridge searched for seven before it struck a deal with the Tsawwassen for the C$600 million mall project in 2014, the province’s biggest development deal that year outside the mining and lumber industries.
Under the leadership of Bryce Williams, a 28-year-old carver who succeeded Baird as chief in 2012, the Tsawwassen are chasing new opportunities. “We’re open to business,” he says. Hartman, a onetime real estate developer who recently stepped down as the head of the economic development agency and hasn’t been replaced yet, believes the Tsawwassen’s economic development strategy could be a model for other Canadian indigenous groups, though he has one caveat: “I have to recognize one thing: Their great-great-great-great-grandparents knew the phrase ‘location, location, location.’”
To contact the author of this story: Natalie Obiko Pearson in Vancouver at npearson7@bloomberg.net.
To contact the editor responsible for this story: David Scanlan at dscanlan@bloomberg.net, Cristina Lindblad
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