Canada's Indian Act keeps native Canadians in poverty by preventing them from exercising identifiable private property rights. Unfortunately, legislation recently introduced by the federal government merely props up the oppressive Indian Act, thereby limiting economic growth and perpetuating poverty.

The draft First Nations Fiscal and Statistical Management Act will enable native bands to borrow funds for local infrastructure such as water and sewage. Native bands will collectively guarantee each other's credit using future revenue from the federal government. It is difficult to see how this well intentioned legislation to reduce the dependency native bands currently have on federal government financing will be successful, when it will likely have the opposite effect since bands will continue to rely on federal funding as future revenue to guarantee their credit.

In addition to the federal government handouts, bands will use revenue generated from property taxes. At present only 90 of the 630 native bands levy property tax. Most of the property tax is levied against non-native leaseholders. These non-native leaseholders, although contributing to the coffers of the native communities in which they live, have no vote in community elections. Where's the accountability for them

Another goal of the proposed legislation is to set up a financial management board to help the bands produce budget documents that gain the confidence of investors and increase the likelihood of attracting financing. This board will provide peer reviews of native bands' budget documents. To properly ensure investor confidence in this scheme, external audits would be preferred to peer reviews, as peer reviews are often likened to the 'fox guarding the hen house'.

This initiative also intends to deal with the often high rates of interest bands face. The reason the interest rates are so high is due to the risk involved. This is because the Indian Act under section 89 shelters native property and assets located on reserves from any process of garnishee, execution or attachment for debts, damages and other obligations. Lenders and investors rightfully demand a risk premium to deal with this lack of security. But rather than addressing why the bands face such high interest rates - lack of property rights - the federal government continues to avoid the issue.

But, there is a glimmer of hope. This fall, the draft legislation will be subject to public debate and a series of reviews before being passed into law. It is not likely the proposal will be made into law before June 2003. The federal government has an opportunity to stop ignoring the issue of private property rights for native Canadians living on reserves.

The key to generating wealth and prosperity is easily identifiable individual property which can be leveraged for loans and wealth creation. Most Canadians can borrow against their own private property and thus capital is gained to invest in new business ventures. Capital formation allows the expansion of the economy and accumulation of wealth. But without property as collateral, individuals on reserves have difficulty getting credit or doing deals with outside investors. Therefore the wealth of the land is under utilized.

Although well intended, the proposed legislation does nothing to amend the lack of genuine property rights for native Canadians living on reserves that the Indian Act currently ignores.

As long as the Indian Act remains and native bands continue to receive federal government handouts, the legal straightjacket that prevents native Canadians from assuming all the rights and responsibilities allowed other Canadian citizens, will remain firmly fastened.