2023 National Indigenous Peoples Day – Narrowing the Indigenous Wealth Gap

Kristin Ramlal

June 21st is National Indigenous Peoples Day, coinciding with summer solstice, the longest day of the year. It is a traditional time of celebration for many Indigenous communities, and a day for all Canadians to recognize and celebrate the unique heritage and diverse cultures of First Nations, Inuit and Métis peoples. However, acknowledging and supporting our Indigenous people must be a year-long initiative, especially if we want to see change towards equity, inclusion, and minimizing the Indigenous wealth gap.

Kristin Ramlal, B. Comm (Hons.), PFP, CIM, FCSI, RWM™ is the Chair of the Society of Real Wealth Managers.

Who are Indigenous People?  Indigenous Peoples make up a 4.9% of the Canadian population and can be classified into three groups:

• Inuit: Indigenous People who live in the Northern regions of Canada, above the Arctic Circle. 
• First Nations: comprised of ~50 first nation communities living in the non-Arctic regions of Canada. 
• Métis: A distinct group of people and culture which arose from communities of First Nation and European fur traders.

Understanding the Values of Indigenous People.  While all Indigenous nations across Canada are unique and rich in their diversity, there are some value systems which are shared by many Indigenous communities and their people:

• Many of the Indigenous People within Canada view themselves as in relationships with other living creatures and believe strongly in the seven generations principle: the decisions made today should ensure a sustainable future for those who will be living seven generations from now.
• Natural life is viewed as circular, including: the seasons, life cycles, the sun, the moon and the medicine wheel. The circle is also used to represent equity and how everyone should be seen as equals.
• Indigenous Inclusion is about building and fostering relationships and sense of community with Indigenous People and other cultures. This is showcased through community Powwows and cultural celebrations.

The Indigenous Wealth Gap.  Due to historical events, such as residential schooling tragedies, a foundation of distrust, inequality and segregation has contributed to the employment, income, educational and ultimate wealth gap of Indigenous People.

The Indigenous wealth gap is a greater issue than the income gap, because the wealth gap takes into consideration the holistic wealth of Indigenous People and it is a long-term impact to financial wellbeing throughout all life stages and its ability to be sustained throughout multiple generations.

Financial Advice Barriers

Further magnifying the wealth gap includes inaccessibility of basic financial servicers making it difficult for Indigenous People to establish a good credit score, get insurance and get financial advice. For example, due to remote reserve locations, many have historically been led to use payday loans and access high-cost cash machines instead of seeking lending and cash disbursements from financial institution, eroding their wealth even further with high rates of interest and fees.

The move to online financial services has been a great benefit to many, making it easier to access a financial institution virtually from remote Indigenous communities, but we must be aware that some Indigenous People do not own a computer and have limited access to a public computer, subject to regular business hour availability which limits their ability to benefit from online financial resources and services.

More and more Indigenous People want to learn how to better manage their income, borrow wisely, save for retirement, and achieve overall financial wellbeing. However, due to historic events and the challenging circumstances many Indigenous People face, many have felt financial excluded and helpless in narrowing their wealth gap. 

Furthermore, since many financial professionals have limited experience dealing with Indigenous People, especially those in remote northern communities, there is a gap in financial advice due to the misconceptions and misunderstanding Indigenous People’s unique needs and circumstances, further magnifying the Indigenous wealth gap.

A designated Real Wealth Manager (RMW™) is poised to help with a multi-stakeholder approach to the opportunity. By acting as a financial quarterback to Indigenous Communities and their People, a Real Wealth Manager (RWM) can serve as a conduit to gaining access to important tax and wealth management tools to increase financial peace of mind and security.

Income Gap

In terms of income, Indigenous workers have made less on average than the general population. According to 2016 census data, the median income of Indigenous People living on reserve ($20,357) was considerably less than that of non-Indigenous people ($42,930) and this income gap was noticeably wider for Indigenous women who earn an average of 35% less than non-Indigenous men. 

Despite the noticeable income gap Indigenous People face, we must be mindful that the census data does not reflect the activities of those Indigenous people who participate in activities that are not recognized as employment in the formal labour market and those roles that may be seasonal, such as: hunting, trapping, and fishing.

Furthermore, the misconception that meaningful treaty payments supplement Indigenous People’s income is a myth that needs to be broken. Since 1872, the Government of Canada makes treaty annuity payments to status Indians who are entitled to them through registration to First Nations that signed specific historic treaties with the Crown. Most treaty payments are made in cash during treaty payment events in First Nation communities, known as Treaty days. However, despite the misconceptions that many believe, most status Indians receive merely $4 or $5 annually; An amount that has not increased over time to reflect inflation and can be solely seen as a symbolic gesture.

Ultimately, job availability and security are scarce for Indigenous People and low-income status restricts homeownership capabilities, educational opportunities and overall financial wellbeing; magnifying the wealth gap.

The Pandemic Impact on Indigenous People

Over the pandemic, layoffs as a result of business closures, as well as inconsistencies in childcare and school availability amplified the employment disparities between Indigenous and non-Indigenous people. Furthermore, post pandemic employment rates for Indigenous People are recovering at a slower pace than their non-Indigenous counterparts, which may be contributed to the fact that many Indigenous people work in occupations hit hardest by the pandemic, such as transport, trade, retail, and services. This is further noticeable among Indigenous women.

Cost of Living Challenges

Post pandemic we have also seen decade high rates of inflation in Canada, which has had a meaningful impact on all Canadians. However, due to the income gap, Indigenous people are twice as likely to spend more of their incomes (% of) on the basic necessities of food, shelter and clothing than the average Canadian. This is further magnified for Indigenous People in northern rural communities which have a higher cost of living and utility costs. This has no doubt contributed to homelessness rate in Canada, whereby nearly 1-in-3 homeless in Canada is Indigenous People.

Other Challenges Magnifying the Indigenous Wealth Gap

Poverty, generational trauma passed down in the family through genetics, geographic isolation, and living conditions also represent barriers to narrowing the wealth gap and impacts the financial well being of Indigenous communities. 

Educational Barriers

Many Indigenous communities face socioeconomic and environmental inequalities, creating a gap between the resources accessible to Indigenous versus non-Indigenous People. One significant example of this includes the limitation and inaccessibility of funded educational services.

Furthermore, due to remote locations of Indigenous communities, post-secondary education is often out of reach for many due to geography, lack of funding and financial aide for housing and childcare, and the ongoing increasing tuition costs. Although, many bands can qualify for post-secondary education support from the Government of Canada each year, the amounts provided do not supply enough funding for everyone who wants to attend. Also, a minimum student GPA is required to qualify and there is no guarantee for annual disbursements.

Employment Barriers

For decades, Indigenous People have faced many barriers to employment within Canada magnifying the wealth gap. These barriers have included literacy and education gaps, cultural differences, racism, discrimination, low self-esteem, poverty and/or poor living conditions, no drivers license, transportation limitations and affordable childcare. Furthermore, requirements for proof of identity can even cause an employment and educational barrier for some, especially if they were victims of the Stolen Generations as a result of residential school deployment.

Role of a Real Wealth Manager™ (RWM™) for Indigenous People

Real Wealth is defined as financial peace of mind.  It is achieved through a strategic process for the accumulation, growth, preservation and transition of sustainable intergenerational wealth after taxes, fees and inflation. Thus, if we want to do our part to help Indigenous People narrow the wealth gap, Real Wealth Managers (RWM™) have a substantial role to limit the wealth eroders most impacting our Indigenous People. 

Limiting the Tax and Fee Wealth Eroders

As you may be aware, tax is one of, if not largest, expense in one’s life contributing to wealth erosion over all lifecycles.

Often misunderstood, Indigenous peoples are subject to the same tax rules for income earned off the reserve and subject to GST, PST and HST like non-Indigenous people for most purchases made off reserves (some exceptions apply by province and for purchases made on reserves). For further clarity, for income tax purposes, to qualify for income tax exemption under section 87 of the Indian Act, “Status Indians” must reside and work on a reserve or with registered First Nations government organization.

Due to financial exclusion and limited financial resources available in remote Indigenous communities, many fail to file their taxes and ultimately may not qualify for the benefits and credits entitlements. This is where a Real Wealth Manager (RWM) can help narrow the wealth gap, by providing meaningful support at little to no cost.

By acting as a financial quarterback to Indigenous Communities and their People, a Real Wealth Manager (RWM) can serve as a conduit to gaining access to free financial tools, support and coaching given the resources that the Government of Canada has provided to help improve the accessibility and opportunity of Indigenous People to ensure they get the benefits and credits they deserve. For example, CRA offers many free financial literacy workshops, toolkits, debt assessments, tax clinics, and have even created a “Simple File: Let us help you get your benefits! for ease of filing for indigenous people.

Alternatively, by collaborating with financial professionals servicing remote Indigenous communities such as Indigenous trustees, financial planners, bankers, creditors and tax professionals, Real Wealth Managers (RWM) can ensure that one holistic plan is developed, understood and implemented to help our Indigenous People narrow the wealth gap.

Bottom Line:  Indigenous People require a patient, unbiased and flexible approach to financial literacy and advice, because different communities have different needs, basic level of understand and access to different resources., I encourage financial professionals to continue to make the effort to understanding the unique needs, values, and goals of Indigenous People to best serve our Indigenous communities helping them achieve financial peace of mind and narrowing the Indigenous wealth gap.

How you can help.  By educating yourself on the values, challenges, and opportunities with Indigenous People, you can play a role in building a fair, equitable, sustainable, and respectful environment for all Canadians and help minimize the Indigenous wealth gap. 

Knowledge Bureau is pleased to have partnered with Legacy Bowes to publish the Truth2Action course, which focuses both on understanding the historical truths but also on how workplace standards can be improved to address inequities.  Please enquire about how your workplace can adopt this important educational program in your workplace.

This article was written on the land we recognize as the Province of Manitoba, which has been home to Indigenous Peoples for countless generations: Anishinaabeg, Cree, Oji-Cree, Dakota, Dene, and Inuit. The Society of Real Wealth Managers would like to honour the ancestral people of Manitoba and acknowledge the importance of the Treaties made on these territories and moving forward in partnership with Indigenous communities in a spirit of reconciliation and collaboration.

References:

https://www.creativespirits.info/aboriginalculture/economy/financial-literacy

Taxes and benefits for Indigenous peoples - Canada.ca

Economic Conditions of Indigenous Peoples in Canada | The Canadian Encyclopedia

Improving Financial Literacy in Indigenous Communities - Canada.ca

Aboriginal Income Gap.pdf (policyalternatives.ca)

Indigenous peoples in Canada - Wikipedia

The Gender Pay Gap | Pay Gap in Canada | The Facts (canadianwomen.org)

8 Basic Barriers to Indigenous Employment - #1 of 3 (ictinc.ca)

The Unemployment Crisis of Indigenous People in Canada | Journey to Diversity Workplaces (j2dw.ngo)

Treaty Day | The Canadian Encyclopedia

Indian Status: 5 more things you need to know | CBC News

Economic reconciliation: Supporting a return to Indigenous prosperity - Bank of Canada