Native Canadians living on reserves do not have to worry about paying their bills like other Canadians. That's right; they do not have to worry about their credit being ruined or possible fines. This is because section 89 of the Indian Act protects native property and assets located on reserves from any process of garnishee, execution or attachment for debts, damages and other obligations, including taxes, however justly due and owing.

The original intent of section 89 was to protect Indians from exploitation and loss of land due to seizure. However in a modern world this section only serves to scare-off potential investors. Below are two examples of the possible risks investors face.

While working for the Peguis Indian Band, a Manitoba accountant discovered that Manitoba Hydro had been illegally charging the band provincial sales taxes on the power sold to the reserve. In fact, the accountant found that Manitoba Hydro owed the band almost $1-million in wrongfully collected sales tax.

After months of trying to receive payment for services rendered on behalf of the band, the accountant tried to garnishee the amount Manitoba Hydro owed the Indian band before Hydro paid them. The Peguis Indian Band opposed the garnishee and successfully sued the accountant in 1990. The Supreme Court of Canada sighted section 89 of the Indian Act when they ruled against the accountant in Mitchell v Peguis Indian Band.

Another example is Wing Construction Ltd. of Thunder Bay, Ontario. In 1997, Wing Construction signed an agreement with the Sagkeen Education Authority Business Trust to design and build a school on reserve property. After years of trying - the case was even discussed during debate in the House of Commons - the company was unable to collect the $3-million owing and the company went out of business.

There are some people who will say the new First Nations Governance Act, introduced in June 2002, provides legal certainty on a native band's legal capacity to sue or be sued, to contract or to borrow. This is true however; the proposed legislation will not replace section 89 of the existing Indian Act which as demonstrated above, makes it extremely difficult for a business to successfully sue a native band.
In the short-term this "loop-hole" in the legislation may appear to benefit native bands, however in the long-term it will have devastating economic effects.

Due to the risks involved, it is becoming increasingly more difficult for bands to attract the much needed investment to their reserves. Without the ability of liens - attachment to property - investors and financiers are weary of investing in reserves because there is nothing to attach their risk to. In addition, service providers such as contractors or professionals may charge higher rates to compensate for the risk of non-payment.

The "right" of non-payment is not a treaty right or a constitutionally protected right - it is simply a section within an archaic piece of legislation that ought to be changed.

If native reserves are to become economically viable and compete within Canada, they must be subject to the same rules. The Indian Act must be changed to eliminate the blatant inequality and injustice section 89 creates.