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The Indian Economy In Saskatchewan

Del Anaquod

SASKATCHEWAN INDIAN      APRIL 1989      p08  
The Indian economy in Saskatchewan is underdeveloped. The land and the people are not utilized to their full potential. The principal source of money for investment is the federal government.

The Indian economy in Saskatchewan is a dependent economy with a net inflow of money from transfer payments such as social assistance, family allowance, etc.

The Indian economy is poor, with average personal incomes of on-reserve Indians about 1/3 those of non-Indian Canadians.

There is little circulation of goods and services within the Indian economy. Most expenditures are made off-reserve; the vast majority of the financial resources of the Indian economy comes from outside through transfer payments, INAC contributions and expenditures of other government agencies.

The Indian economy is a dependent economy in the sense that there is a net inflow of resources from the Canadian economy to subsidize consumption. 1981 Census data reveals that government transfer payments account for the largest single source of income for 40% of on-reserve Indians (15 years of age or older) in Canada.

Data provided by Indian and Northern Affairs Canada on-reserve social assistance shows that social assistance payments have risen from less than $20 million a year in 1980/81 to more than $47 million in 1987/88. Of course, transfer payments must continue on the basis of treaty rights of Indian people and government obligations, but the dependency of the Indian economy on these payments should be reduced and the Indian economy strengthened through growth, diversification and development.

The Indian economy is underdeveloped in the sense that reserve resources- land, labour and capital - are not fully and effectively employed. Labour force and employment data reveals that only about 39% of the on-reserve population of labour force age is in the labour force, compared to 65% of the non-Indian population of Canada. According to the 1981 census, the employment rate for Indians on reserve was 32%, compared to 60% for the non-Indian population.

Saskatchewan and Manitoba had the lowest ratio of the Indian employment rate to the employment rate of other Canadians of all of the provinces. The employment rate of on-reserve Saskatchewan Indians (aged 15 years and over) in 1981 was 29%, compared to 61% for non-Indian residents of Saskatchewan. The recent report of the Saskatchewan Indian Economic Development Task Force estimates that more than 37% of incomes of on-reserve Saskatchewan Indians are derived from non-employment sources, involving transfer payments such as social assistance, family allowances, etc.

The structure of reserve employment is also indicative of the under-utilization of human resources in the Indian economy. Much Indian employment is seasonal and/or part- time. Census data indicates that only 39% of the experienced on reserve labour force worked for the full year, compared to 60% of non-Indian Canadians. At the other end of the spectrum, 17% of the on-reserve Indian labour force worked 1-13 weeks, compared to only 7% of the non-Indian labour force.

Another indication of the underdeveloped of the Indian economy is the predominance of Indian employment in the tertiary (service) sector and particularly in the public sector. The Report of the Saskatchewan Indian Economic Development Task Force summarized census data on the labour force by industry:

Primary industry includes agriculture, forestry, hunting and trapping and mineral extraction industries. A higher proportion of the general Saskatchewan labour force is engaged in primary production than is the Indian labour force.

Twice the proportion of the active Indian labour force is engaged in construction as in the general Saskatchewan economy. Much of this work is seasonal and part-time work, much of it related to on-reserve housing construction.

The low level of activity in the financial, insurance and real estate sector is an indicator of the poverty of the Indian economy, since these services are generally services to wealth. To the extent that Indian businesses and households utilize such services, they obtain them largely from outside the Indian economy.

Trade includes retail and wholesale trade. The data shows that this sector is underdeveloped in the reserve economy compared to the Saskatchewan economy as a whole. Most consumer purchases are made off-reserve.

More than one quarter of the on-reserve Indian employees are employed in public administration more than three times the percentage employed in that sector in the Saskatchewan economy. Public Administration includes Band management and government services, education, policing services, etc. The small total employment in the Indian economy and the high percentage in public administration indicates the small amount of value added production in the reserve economy.

Recent estimates of the size of the Indian public sector have been made by the Saskatchewan Indian Institute of Technologies, working with the District Chiefs Data Centres. Figures extrapolated from the District Chiefs Data Centre information indicate Indian public sector employment at 2,900 at an average salary of $17,000, and a total payroll of $49.3 million. Non-Indians hold about 20% of the jobs in the Indian public sector. 71% are fulltime of the jobs in this sector are full-time; 25% are seasonal are 4% are part-time.

Capital investment in the Indian economy is dependent on government resources. The Report of the Saskatchewan Indian Economic Development Task Force states that "investment on-reserve consists primarily of the construction of public facilities and housing." Capital resources for economic development are inadequate to foster high rates of utilization of labour and production in the Indian economy.

Despite the underdeveloped and dependent character of the Indian reserve economy, the Indian business sector has been growing, particularly since the late 1970's. A survey of Indian businesses in 1987 indicates that there are more than 800 Indian businesses operating in the province. These businesses include both private Indian business and Band business enterprise. More than 400 of them are agricultural enterprises. More than 250 firms operate in the transportation sector, mainly in school bus operations. About the same number of firms are in processing and manufacturing, including handicrafts, arts and crafts, wild rice and smoked meat operations. About 50 firms are in various aspects of the construction industry, especially in housing construction and road construction and maintenance. Another 100 businesses operate in the retail and wholesale trade sector, mainly with small stores, gas stations, restaurants. There are also businesses in the personal services and tourism sector. However, no estimates are available of the total volume of business and net incomes of the Indian business sector.

In general, the Indian economy is an underdeveloped, unbalanced, dependent economy. Consumption expenditures and savings leak out of the reserve economy. To the extent that there are savings within the Indian economy, these leave the reserve and are held in non-Indian financial institutions, such as banks and credit unions.

The Indian economy is characterized by low rates of employment, low incomes, and by socio-economic correlates of under-developed such as low rates of educational attainment, low life expectancy, poor housing and health conditions, etc.

These facts are cited over and over again and have become familiar to all observers. They show a systematic bias of Canadian society and economy against Indians, and in particular, on-reserve Indians. These facts cannot be adequately accounted for by rural location and small population size. They testify to the need for a large-scale, sustained development effort.

Size difficult to estimate

It is difficult to estimate the size of the Indian economy. Yet a ballpark estimate will be valuable in order to estimate the need for financial intermediary services of the Indian economy. Figures have been compiled from various sources to help provide a picture of the size of the Indian reserve economy in Saskatchewan.

The main source of funds flowing into the Indian economy is the Department of Indian Affairs and Northern Development (INAC). Total INAC payments to Bands in the Saskatchewan Region in 1987-88 totalled slightly more than $178 million.

These funds are disbursed in the following manner: A disbursement of approximately $40 million for the first quarter is made in April, and monthly payments are then made each month from July to December, averaging $22.3 million. This method of disbursement does not provide Bands with significant financial resources surplus to short-term needs. There will be only a small fund available for deposit, and that usually for 30 or 60 days.

Indian Bands receive funds from other government programs. For example, Canada Employment and Immigration had Indian contracts in the Saskatchewan Region under the Canadian Jobs Strategy of $6.14 million in 1985/86 and $9.03 million in 1986/ 87. These will likely exceed $10,000,000 in each year, 1987/88 and 1988/89.

CMHC had a commitment on 103 Urban native housing units in Saskatchewan in 1987, for a total of 1,440 since 1981; and a commitment of 112 on-reserve Indian housing units in Saskatchewan in 1987, for a total of 997 since 1981. Mortgage payments for on-reserve housing are subsidized, and mortgages covered by Ministerial guarantee. As of December 31, 1987, the mortgage principal balance of Silver Sage for its 125 urban Indian units is about $36,500. At continuing levels of 100 units per year, urban Native housing mortgage requirements will exceed $6,000,000 a year, while a similar level of on-reserve housing will be $3,650,000 for an annual mortgage market requirement of $10,000,000.

Estimates are not available on the on-reserve expenditures of Health and Welfare Canada.

Total on-reserve personal incomes are estimated at $56,000,000 by the Indian Economic Development Task Force, based on extrapolation from a partial survey in 1981. But this figure seems low. This appears to be an estimate based only on employment income. But we know that the payroll of the Indian public sector is $49.4 million, and that 75-80% of band employees are Indian. Direct transfer payments also add to personal incomes. In 1987/88, social assistance expenditures on reserve in Saskatchewan were projected at more than $47,000,000. Family allowances, pensions and other transfer payments add to personal income in the Indian economy.

This does not include the incomes of Indian business. Nor does it take into account that the financial flows in the Indian economy include business income from sales off reserve or expenditures of Indian businesses off reserve.

Potential for Growth

The main observation concerning trends in the Indian economy is that the Indian business sector has the potential for continuing growth over the medium term period. Social and economic conditions have been prepared for business growth

The climate for economic development - business development in particular - is improved by infrastructure expenditures which have taken place on some reserves in the past decade. A number of Bands and District organizations have created development corporations to foster viable Band and individual business efforts.

On-reserve development efforts include increased agricultural

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Labour Force Chart INAC Payments Chart

Payments to Bands Chart Personal Incomes Chart

The Indian Economy In Saskatchewan

Del Anaquod

SASKATCHEWAN INDIAN      APRIL 1989      p09  
activity and some processing of agricultural products for oft-reserve markets as well as reserve-based construction, retail, and service businesses to meet the demand of on-reserve Indians and Bands for goods and services. These businesses require financial services which are not now adequately provided by the non-Indian private sector. Such services include management advisory services for newly established entrepreneurs and financial intermediaries to handle deposits and meet short-term liquidity needs of Indian businesses.

One important trend in the Indian economy, related to increased Indian control, is the growth of Indian institutions. In Saskatchewan, Indian institutions include: the Saskatchewan Indian Federated College, the Saskatchewan Indian Institute of Technologies, the Saskatchewan Indian Agricultural Program, as well as regional institutions such as Development Corporations. These institutions together with Band Administration and District Chiefs organizations, account for a significant share of the resources of the Indian economy.

The Indian economy will also continue to rely heavily on Government for a major part of incomes and expenditures in the Indian economy for the foreseeable future.

On the level of socio-economic conditions in the Indian economy, especially the on-reserve Indian economy, rapid population growth, the demographics of the Indian economy requires high rates of growth of employment and incomes just to maintain existing employment rates. Statistics Canada estimates that the registered Indian population in Saskatchewan will grow by 13% over the decade 1986-96. The number of registered Indians of labour force age (15 years and over) will Increase by nearly 30% between 1986 and 1996, from about 35,000 to about 45,000. This poses a huge challenge for development efforts. New job creation efforts must be greatly stepped-up if the dependency of the Indian reserve economy is to be reduced.

The continued growth of the Indian economy will depend, in part, on conditions in the Canadian and world economies, and on regional economic conditions, particularly in the agricultural sector.