Land Deal Threatens Economic Development

OPINION

B.C.’s First Nations land deals threaten the

economic foundations of the province

TEGAN HILL, JASON CLEMENS AND JOHN BUDRESKI

SPECIAL TO THE GLOBE AND MAIL

Golfers walk on the first hole at Country Meadows Golf Course, which falls within the

boundaries of a Cowichan Nation Aboriginal title claim, in Richmond, B.C., in August,

2025.

Tegan Hill and Jason Clemens are economists with Fraser Institute, and John

Budreski is the executive chairman of EnWave Corp. and a semi-retired investment

banker.

British Columbia’s Eby government has been busy negotiating a series of high-profile

agreements with First Nations, granting them Aboriginal title and or co-governance over

large swaths of land in the province. While these deals have created economic

uncertainty and sparked concerns about property rights, another potential consequence

– the effect on the provincial government’s ability to finance debt – remains largely

ignored.

To recap, in 2024 the B.C. government gave the Haida Nation Aboriginal title over

Haida Gwaii, an archipelago off the coast, where approximately half of the population of

about 5,000 is non-Haida. Consequently, the Haida – not the provincial government –

now control the considerable offshore natural gas reserves and

onshore mineral deposits on this land. The provincial government is also

currently negotiating with the Tahltan Nation in the north for almost 100,000 square

kilometers, representing about 11 per cent of the entire province, including the “Golden

Triangle,” a mineral-rich area with an estimated $1.3-trillion worth of minerals. And the

government is negotiating with First Nations for prime land in Victoria.

Judge will not reopen Cowichan case to hear from private property owners

These agreements (and others in the works) raise real questions about the future flow of

income for the provincial government from any economic activities on the land. If, for

example, major mines are developed on formerly Crown land that’s been granted

Aboriginal title, will the government still have exclusive rights to the mineral royalties or

will they be shared or even exclusive to the First Nations on whose land the mines now

reside? Such considerations could have profound effects on future government revenues and the ability of the government to borrow money.

Like any borrower, for the provincial government to borrow money there must be an

investor willing to lend. The lending side has two groups – bond rating agencies and the

actual lenders. Rating agencies analyze the sustainability of government debt to help

lenders determine credit worthiness and the level of interest they should charge.

There are already worrying signs, with five downgrades of B.C.’s provincial debt by

rating agencies since 2021. And there’s a real possibility that lenders will be increasingly

reluctant – or will potentially outright refuse – to provide debt financing to the B.C.

government as its debt grows and the reality of bilateral agreements, related court cases and provincial legislation regarding Aboriginal title become clearer. This is not

hyperbole. Lenders refused to provide financing to the governments of Nova Scotia

and Saskatchewan in the 1990s and to Greece from 2009 to 2018. And in the early

1990s, lenders were increasingly worried about Ottawa’s debt level, causing marked

increases in interest rates.

Supreme Court of Canada won’t hear appeal of Aboriginal title case in New Brunswick

For the B.C. government (and thus, taxpayers), the financial risks linked with these

agreements and court cases could result in marked increases in the interest payments

lenders demand to compensate them for increased risks. Indeed, a one-percentage point increase in interest costs on the government’s existing debt would equal roughly an additional $1.9-billion this year alone. That means even more borrowing as the deficit

increases. And Victoria has racked up an almost unimaginable amount of debt in recent years, and the scale of the increase is unprecedented. Coming out of the height of the COVID pandemic in 2020/21, total provincial government debt stood at $87.1-billion and is expected to reach $183.4-billion this year (2026/27) and $234.6-billion by 2028/29,

which is a total increase of 169.3 per cent in just eight years.

Meanwhile, the provincial government expects interest payments to total $6.4-billion

this year, up from $2.7-billion in 2020/21, and to reach $8.7-billion in 2028/29. That’s

money unavailable for health care, education or to make fiscal room for tax relief.

The Eby government’s disastrous fiscal policies, coupled with its aggressive agenda for

negotiating bilateral agreements with First Nations across the province, could seriously

imperil provincial finances and the well-being of British Columbians.