A NEW PICTURE OF ANNUITIES
Jean Allard’s push for a modernized treaty annuity lost steam with the election of the Harper Conservatives, but that didn’t mean there was no one looking into the significance of annuity enhancement and whether there was a legal basis to support it. After all, half of Canada’s landmass was covered by pre-1975 treaties that almost all included annuity payments. The significance of annuities mattered, and in ways that the Treaty Annuity Working Group (TAWG) could not have foreseen when the committee wrapped up its efforts in 2005.
When Allard and Harold Cardinal met at Lac Ste. Anne in the summer of 1999, Cardinal had already spent a number of years interviewing Elders from the Prairies who could recall the stories told to them by their Elders about the meaning of the treaties. He and Edmonton historian Walter Hildebrandt asked about the importance of livelihood assistance for chiefs and headmen when they were signing the treaties.
“Scholars,” they said, “have clearly documented that First Nations negotiated for and worked to establish a variety of economic promises/clauses that they believed would ensure their right to a livelihood. First Nations understood that the right to make a living was a fundamental part of what was agreed to in the treaties.”1
The Indigenous leaders knew their traditional means of livelihood were changing with the arrival of settlers and the disappearance of the bison herds on the Prairies. Up to that point, Indigenous people had successfully sustained themselves for several millennia through hunting, fishing, trapping and trading, and utilizing the resources of the land for medicine, food and other necessities. Recall that the Slavey band in northern Alberta continued to live the nomadic, traditional way until the 1950s.2 (Slavey Chief Harry Chonkolay was Canada’s last traditional hereditary chief when he died in 1998. He was buried in the same Treaty suit he received in 1938 from the federal government, the same suit he wore to the 1970 showdown with the Pierre Trudeau cabinet in Ottawa.3)
Treaty-making has a deep history in Canada, and has its foundation in the Royal Proclamation of 1763. It was instituted by the British Crown as a means of heading off further uprisings and Indian wars following the British defeat of the French in North America. It banned any private person from buying (or taking) traditional Indian lands. That land would first need to be purchased from Indians by the Crown at a public meeting, after which the Crown could sell it to settlers or others.4 After the American Revolution, the United States no longer adhered to the Proclamation but the British colony of Canada did.
The requirement to purchase Indian lands soon became a strain on the Indian Department, which was funded out of the Britain’s military budget. After the War of 1812 and the assumption of peace thereafter, London was urging negotiators to reduce expenses.5 One method was to offer annuities to Indigenous communities selling their land, rather than a substantial, upfront payment. Annual presents were already a tradition between Indigenous communities and the Crown to sustain alliances and ensure loyalty in times of conflict. It wasn’t too great a leap to move to annuities.
The first annuity payments were made in three treaties with the Mississaugas on Lake Ontario in 1818.
“After the land had been purchased from the Indians for a small annuity it could then be sold to new settlers, whose interest payments on their purchases could cover the cost of the Indian annuity. In this fashion the British taxpayer would be relieved of the burden of buying Indian land, for the costs were, in effect, borne by the colonists….Agents seeking lands from Indians could argue that by selling land they would receive an annual income which would assist them forever. It was a powerful inducement…”6
In 1850, however, the annuity in Robinson Superior and Robinson Huron treaties changed from a fixed, lump-sum payment to a payment subject to change over time. The whole impetus for the treaties covering lands from the Quebec border west to Fort William, Ontario was to clear the way for mine development following significant discoveries of copper and other minerals north of the lakes. The Anishinaabe chiefs and headmen for the bands bargained hard during the treaty-making process, and ensured that the livelihood of their people was secured by two key provisions: the “full and free privilege” to follow their usual vocations of hunting, fishing and trapping throughout the ceded lands7 (with some limitations), and an annuity for every band member in perpetuity.
However, the Anishinaabe negotiators, familiar with the higher annuities being paid in the United States,8 wanted an annuity of about $30 per person. It put government commissioner William Robinson on the spot. He was under pressure by the Crown to conclude the treaties but not at the price of such a substantial annuity. Although it appears Robinson was not authorized to do so, his way out was to include an “escalator clause” in the treaties,9 whereby the annuity payment would increase as the value of the ceded lands increased due to development and settlement. 10 The chiefs and headmen accepted a lower initial annuity of $4,000 to be divided among all band members, with the promise of it increasing in the future.11
The lump-sum annuity worked out to about $5 a person. At the time of treaty-writing in 1850, an annuity of $5 meant that the income for a family of five was about one-third to one-half of the wages for an unskilled labourer earning about $60 a year in Toronto or Montreal.12
It was a livelihood assistance that families could build on, if they wished, through wage-labour, farming and other enterprises they might already be involved in, such as producing maple syrup, building birchbark canoes and supplying fuel wood to steamers plying the waters of the Huron and Superior lakes.13 Or they could continue to hunt, fish or trap on traditional lands not occupied by settlers or businesses. 14 However, as the Huron and Superior band populations grew, the lump-sum annuity had to be divided among more and more people. By 1875, the annuities had fallen to between 92 and 99 cents per person, or about $5 per family per year.15
The eleven Numbered Treaties, signed between 1871 and 1921,16 also included the livelihood provisions of the Robinson treaties. They did not, however, contain the “escalator clause” language.
There was considerable pressure on the government negotiators to keep the costs of annuities down. Commissioner Wemyss Simpson, who represented the Crown in negotiations of the Numbered Treaties underway west of Fort William, defended the $3 annuity offered for every man, woman and child for Treaty 1, arguing that Indians could buy goods second-hand.
“The sum of three dollars does not appear to be large enough to enable an Indian to provide himself with many of his winter necessaries, but as he receives the same amount for his wife or wives, and for each of his children, the aggregate sum is usually sufficient to procure many comforts for this family.”17
Treaties 1 and 2 were amended in 1875 to increase the annuity to $5 per person, after the chiefs refused the annuity payments for four years in protest when they found out about higher annuities offered in Treaty 3.18 At $5, a family of five would have $25 in annuity money, which was more than enough for a hunter to equip himself for a year. The Hudson’s Bay Company had been outfitting Indian hunters and trappers in the western interior of Canada for nearly two centuries, and $25 was enough for the ammunition, nets, lines, traps, knives and other goods, with some left over for tea and tobacco,19 and maybe furniture and other “comforts” for the family. In the early 1880s, an annuity of $5 each for a family of five “was equivalent to about one month’s wages as either an Aboriginal farm labourer or a saw-mill worker.”20 The annuity was, in the terminology of that era, specifically for a man and his wife (or wives) and his children.
According to Erik Anderson, a senior researcher with the Strategic Research and Analysis Directorate at Indigenous Affairs, “It is clear from historical evidence that at different times, both Aboriginal and government representatives at the treaty discussions intended and perceived the annuity to be a significant economic benefit….The expectation from both parties was that the annuity would assist in transitioning from a hunting and trapping economy to one based on agriculture, or supplement the continuation of a traditional hunting and fur trade economy.”21
If, over time, the annuities had been regularly increased as land values increased, the annuity payment would have continued to serve its role as a meaningful livelihood support for families. But that’s not what happened.
Anderson believes the evidence is clear. “That these treaties did not deliver on the original intention of providing livelihood assistance for future generations in exchange for land can be demonstrated simply by the socio-economic disparity that continues to exist today. This disparity is likely to continue, unless solutions are rooted in deep historical understanding of the treaty relationships.”22
Anderson concludes that the lack of a common understanding of treaties has tainted the modern relationship between Indigenous and non-Indigenous people, and that understanding the role of annuities was important.
“A re-imagining of the modern treaty relationship must not only recognize and respect the initial intent of the treaties to provide livelihood assistance, but also allow for interpretation of the treaties as living and forward-looking documents.”23
It was unlikely treaty negotiators on either side saw any reason to concern themselves with the erosion of buying power through inflation. Government people were assuming Indians would figure out how to be self-supporting or would become assimilated, so that the livelihood assistance of the annuities would be temporary.24 On the other hand, according to historians, Indigenous people considered their acceptance of an annuity payment each year as the renewal of a treaty relationship that was flexible and changeable. They were assuming that the livelihood assistance offered by annuities was subject to change as required, especially if the value of the ceded land increased.25
The whole impetus for the Robinson treaties was to clear the way for resource development, and certainly Ontario had benefited greatly from significant discoveries of copper and other minerals north of Huron and Superior lakes. However, the Huron chiefs did not trigger the escalator clause until 1874.26 By then, not only had the annuities not been increased since 1850 — despite the obvious wealth produced by mining on the ceded lands — the payment had shrunk to less than a dollar per person.
There was little argument that the Robinson bands were due increased annuities. The treaties were clear. If the land ceded in the two treaties could be shown to be producing an amount that allowed the government to increase the annuity payment without incurring debt, “the same shall be augmented from time to time, provided that the amount paid to each individual shall not exceed the sum of one pound provincial currency in any one year, or such further sum as Her Majesty may be graciously pleased to order.”27 The limit of the increase to a maximum of $4 appears to have been added later, without the consent of the chiefs.28
The augmented treaty issue came before the House of Commons for a vote in May 1878, and Parliament approved an increase “from 96 cents to $4 per head, for the year ending 30th June, 1879.”29
There appears to have been no consideration of the “as Her Majesty may be graciously pleased to order” by the federal government, or an effort to set up a template for evaluating the increasing value of ceded lands as a basis for future increases. It simply read the limitations of the annuity as “up to $4” and set the annuity at that amount.
The issue of the annuity increases in the Robinson treaties came before the Supreme Court of Canada in 1895. It was not to argue the validity of the escalator clause because that was considered settled. Rather, the annuities were entangled with an ongoing dispute between the Ontario government and the federal government over who was responsible for the annuity arrears incurred prior to Confederation in 1867.30
In the summations, the Supreme Court affirmed the validity of the link between the increased value of ceded lands and the annuity, with one of the justices noting that “the consideration to the Indians for the ceding of their rights was threefold, the cash payment, the fixed annuity, and the further annuity up to a certain amount depending on the proceeds of the land.”31
The Royal Commission on Aboriginal Peoples (RCAP) report of 1996, in describing the economic provisions in the treaties, referenced the Robinson annuities. “Among the clearest and most important provisions is that contained in the Robinson treaties, which contain promises of annuities to be tied to future Crown revenues from ceded lands… Despite the wealth generated from these vast lands, the annuity has been increased only once.”32
This raises some important questions. Way back in 1895, the Supreme Court affirmed that the government had an obligation to augment annuities as proceeds from lands increased. Why didn’t that happen? If annuities were intended as a form of family support, along with the freedom to pursue traditional vocations, why did the value of the annuity never increase again after Parliament voted its approval in 1878?
There are a few clues. When it came to the treaty annuities, the Dominion of Canada adopted a strict application of the monetary law called nominalism.33 That meant the $5 stated in the treaties was $5 in 1880, $5 in 1980, and would still be $5 in 2080. The policy had the effect of freezing the annuities at the nominal amount of four dollars or five dollars and keeping it there. Over time, the livelihood support that was supposed to be secured and enhanced through the treaty relationship was devastated, not just by a failure to link the annuity to increasing prosperity, but by the effects of inflation. The loss of buying power of the annuity from the signing of the treaties was absorbed entirely by First Nations Treaty people, whereas the reduction in real benefits payable accrued to the Crown.34
There was, however, a much larger impediment that prevented Treaty people advocating for annuity increases as the buying power of the $4 or $5 shrank. Recall that the Indian Act was amended in 1929 to prevent Indigenous advocacy groups, band councils and others from hiring lawyers — or even raising money to hire lawyers — to challenge government policy, under threat of fines or imprisonment unless it was pre-approved by Indian Affairs.35 That prohibition remained in effect until 1951.
The Indian Act of 1876 had little to say on annuities,36 referencing annuities in only nine sections. For instance, an Indian woman marrying a non-Indian man “would cease to be an Indian in any respect within the meaning of this Act, except that she shall be entitled to share equally with the members of the band to which she formerly belonged, in the annual or semi-annual distribution of their annuities…” Similarly, enfranchised Indians37 were no longer considered Indians under the Indian Act, but still retained the right to participate in annuities. In other words, eligibility for an annuity payment did not require remaining a treaty band member or even remaining an “Indian” as defined by the Act. Other sections of the Act authorized withholding annuities as a mean of punishment for immorality or imprisonment, with annuities seized and put towards covering legal and confinement costs.
The modern Indian Act of 1985 contains a single sentence38 indicating that treaty moneys are the responsibility of the Government of Canada and are to be paid out of the Consolidated Revenue Fund. That’s it. The words “annuity” and “annuities” are mentioned once each in reference to maintenance of dependents and to women who leave bands.
The Act is essentially silent on annuities, and does not define who is eligible for annuities or speak to rules for payment or distribution. The language varies slightly in the Numbered Treaties, but each specifies the amount of the annuity and that every man, woman and child of treaty bands is eligible. All the rest of the rules and regulations governing annuities are IA departmental policies, and those policies are subject to change depending on the objectives of the government of the day. The idea that annuities must remain $4 or $5 because that’s the number used in the treaties is a policy, not a law.
The value of an annuity has long since degenerated to a point where it is meaningless as a livelihood support, but it has continued to be a powerful symbol.
Nearly three-quarters of people eligible to claim the annuity do so,39 many showing up at Treaty Days on reserves or at a Treaty Tent set up in the urban centres to collect their five-dollar bills. Some, like those who have never lived on a reserve, consider the annuity as a link to the signing of the treaties and an affirmation that they are still officially Treaty people. Others might show up every few years or so when enough money has accrued to make it worth the effort. If it costs $2.50 for a bus ticket across the city to pick up a five-dollar bill, what’s the point?
At the Treaty Tent at The Forks in Winnipeg in June 2017, a number of people who agreed to be interviewed seemed perplexed when asked why the annuity was still five dollars and had never been increased.40
“We don’t even think about it,” said a young mother from a northern reserve who lined up for the annuity payments with her small children. “Nobody questions it. Nobody asks why. We just accept what they give us. It makes the kids happy. The get their five dollars and they’re excited.”
An older woman who lived in the city got in line to pick up several years’ worth of annuities. She didn’t know why it was still five dollars either. “I’ve never thought about it. I guess it’s always been that way.” When asked who should be responsible for increasing the annuity, those who had an opinion agreed that it was up to “the government.”
A reporter from the The New York Times attended the same event in June 2017, talking to people lined up at the Treaty tent about why the annuity payment was still $5 and what they thought about still receiving such a meagre amount.
“It’s not about the money,” said a seventy-one-year-old woman who collects payments every eight years. “I’m proud of being an Indian and this is a chance to see my people.”41
A retired social worker said, “I come and get it because they owe me.” He added that the five-dollar annuity should really be $5,000.42
The social worker might well have heard about the Treaty Annuity Working Group proposal for modernizing annuities. And so had others.
Unanticipated consequences
The lesson some FN leaders took from the idea of modernized annuities was that if it could be argued that annuities should be modernized today, then they should have been increased all along. Even if the increase was only for inflation, a claim for arrears could trigger a windfall of potentially billions of dollars, and all of it going to the band councils.
First out of the gate were two chiefs from Treaties 1 and 2 in Manitoba.43 Their claim was for underpayment of annuities, and they were seeking certification for a class action lawsuit against the Crown. A class action suit is a legal mechanism for individuals who feel they have been harmed in a similar way to join together to seek compensation in a single court case. The certification in this case was denied because “Aboriginal claims pursuant to treaties can only be classified as giving rise to collective issues.”44
Other legal claims followed, but went nowhere. The annuities are supposed to be an individual right, not a collective one. However, the arguments put forth by government lawyers in subsequent claims for arrears payments sought to have it both ways. If the claim was for class action certification for Treaty individuals, the lawyers argued that annuities were a collective right.45 If the claim was made on behalf of the collective, government lawyers argued the opposite, saying that annuities were an individual right.46
Given the continuing confusion over whether treaty annuities are a collective right or an individual right, how did the Justice department’s lawyers figure out what stand to take when arguing cases? A spokesperson for the Department of Justice Canada declined to answer and referred the question to Indigenous Affairs.47
A spokesperson for IA responded by stating, “Annuities are both a collective and individual rights issue in that an individual annuitant is entitled to collect the annuity by virtue of being a member of a collective, a First Nation treaty signatory.”48
In other words, a Catch-22 situation had developed where annuities were both an individual and a collective right, and could be either/neither/both based on who was arguing which side of a legal case.
That changed when the Robinson Huron chiefs stepped through the door left open by the Supreme Court 120 years earlier. In 2014, the chiefs of twenty-one Anishinaabe bands filed a Statement of Claim with the Ontario Superior Court of Justice against the governments of Ontario and Canada for failing to live up to the terms of the treaty, citing the “escalator clause.”49 The claim put the onus on the courts to calculate the revenue generated from the treaty territory — from North Bay west to Sault Ste. Marie and north to Kirkland Lake, with Sudbury in the middle — since 1879.
The concept of increased treaty annuities tied to the value of the land was finally going to be tested in the courts.