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Confrontation brewing over First Nations Financial Transparency Act

Confrontation brewing over First Nations Financial Transparency Act

On October 27, Thunderchild First Nation in Saskatchewan received a threatening letter from Aboriginal Affairs. It warns of serious consequences if actions are not taken in the next month to comply with the requirements of the First Nations Financial Transparency Act. Among these threats is termination of their funding agreement, court action and public disclosure

On October 27, Thunderchild First Nation in Saskatchewan received a threatening letter from Aboriginal Affairs. It warns of serious consequences if actions are not taken in the next month to comply with the requirements of the First Nations Financial Transparency Act. Among these threats is termination of their funding agreement, court action and public disclosure of their refusal to submit to the new rules, exposed on Aboriginal Affairs’ website for all to see.

The First Nations Financial Transparency Act, Bill C-27, came into effect on March 27, 2013. It forces First Nations to publicly report all income, expenses, and business revenue to the public, imposing standards that far exceed those for municipal, provincial, and federal authorities.

A handful of bands, like Thunderchild, are taking a stand, calling out what they see as blackmail to submit to legislation that serves no purpose other than to discredit their communities and score points for the Harper Government, intent on distracting the public from the real fiscal crisis on reserves: systemic underfunding and the denial of Indigenous economic rights.

The threats from Aboriginal Affairs and Northern Development Canada (AANDC) constitute a starve-or-submit scenario for most bands for whom federal transfer payments are the main source of income for programs and services on the reserve.

Controversial from the start, First Nations have criticized the bill as a public relations stunt, pointing out that band accounts are already fully disclosed to government agencies. The problem, as the Auditor General (AG) identified it, is not a problem of under-reporting so much as a crisis of over-reporting, since bands are forced to file over 160 accounting records annually. The burden of over-reporting is identified in the AG 2003 Annual Report, then again in 2006 and 2011 reports as unresolved.

The most extreme consequence being threatened against bands failing to comply with the Act is the imposition of third party management (TPM).

TPM is the most advanced stage of an intervention policy designed to help bands manage and administer funds when they are at risk of deficit. TPM is supposed to be imposed when all other interventions have failed. Under TPM, AANDC hires external accountants (at the expense of the band) to take over nearly all control and discretion of band spending.

Since the federal government is legally obligated to provide programs and services to First Nations under the terms of the Indian Act, bands who resist compliance with Bill C-27 and have their funds consequently terminated will likely be placed under TPM to facilitate the release of funds by accountants answerable to Aboriginal Affairs.

Thunderchild First Nation was placed under TPM in 2013 for refusing to consent to conditions in their 2013-2014 Contribution Funding Agreement (CFA). A premonition of things to come, the reporting requirements of the CFA included mandatory language of “consolidated audits” and expanded items for public financial disclosure that are central features of the Transparency Act.

Worst off are those bands already under TPM, forced to disclose audited financial statements for spending over which they have had no oversight. In the Barriere Lake Algonquin’s case, they have been engaged in a yearlong struggle seeking transparency from TPM to access their accounting records.

Under TPM since 2006, the Barriere Lake Chief and Council have found it impossible to discover why these accountants – paid around $250,000 / year – have failed in all that time to remedy the Algonquin community’s financial situation. Reports of cheques bouncing to reserve employees are not reassuring.

Interim Band Director, Tony Wawatie, describes the maddening hypocrisy of the Transparency Act, stating that, “The Department has been trying to get this Council to sign off on these consolidated audits, and meanwhile there was never any clear line of authority or agreement between TPM and the Algonquins of Barriere Lake.”

Barriere Lake has decided that they will only submit to the Transparency Act if TPM agree to conditions of transparency themselves. “We’ve been under TPM since 2006 and we’ve never gotten a definite answer on what is the deficit,” Wawatie explains.

This is not the first time in recent years that First Nations have been subject to fiscal coercion and blackmail from the Crown. In their 2013-2014 Contribution Funding Agreements (CFA), bands like Peepeekisis First Nation in Saskatchewan noticed that a clause was included that communities must accept all federal legislation, both current and future, conditional upon receiving funding. This condition was introduced at the height of First Nations protest against the Harper Conservative’s omni-bus Bills C-45 and C-38.

In the Maritimes, bands including Burnt Church First Nation reported that their CFA that year tied eligibility for future funding for improved water services to signing a new “derogation” provision in their agreement. The “non-derogation” provision, previously a staple in CFAs, is meant to ensure that unintended consequences of new legislation will not undermine Aboriginal and treaty rights.

In October 2013, APTN reported that the Canadian Revenue Agency was putting the squeeze on Elsipogtog at the height of anti-fracking highway blockades to repay a three-year old debt under threat of freezing federal transfer funds.

Most recently, the Globe and Mail reported that when fifteen out of sixteen affected First Nation communities agreed to the construction of a natural gas pipeline through their territories in northwest British Columbia (BC), the BC Ministry of Aboriginal Relations and Reconciliation presented a document to the withholding band linking the continuation of provincial funding for child welfare programs to obtaining consent for the proposed pipeline.

The First Nations Financial Transparency Act may not directly achieve a right-of-way for a pipeline, the dismantling of a blockade or even consent to repressive federal legislation. The purpose of Bill C-27 seems largely to distract the public from underlying sources of poverty on reserves.

But this distraction serves a deeper purpose. It allows for the perpetuation of a ‘starvation’ mode of federal underfunding that grinds people down from demanding land and treaty rights. Instead, the government wants to replace these rights with offers of the kind AANDC gave Peepeekisis in meetings last week about Bill C-27 compliance: federal self-government policies and the First Nations Land Management Act. In other words, trading demands for inherent and treaty rights for new land management regulations that would be governed under provincial jurisdiction.

“Permanent austerity” describes the deliberate underfunding of First Nations’ reserves. It speaks to a profound continuity of fiscal policy over the past two centuries of Crown-First Nations relations. This fiscal policy has been to deliberately impoverish reserves in order to push Indigenous peoples off the land and to assimilate, through urbanization or wage labour, into Canadian society.

On December 3, Thunderchild First Nation will go to Federal Court for a judicial review of the Minister of Aboriginal Affairs’ imposition of TPM on the band. The grounds for their application are that the Minister acted without the jurisdiction to intervene in this matter.

The Chief of Thunderchild has made clear that the band took the stand that they did because it was the right thing to do in order to protect their rights. In a 12-point declaration on the Thunderchild website that explains their terms of refusal, point 12 reads: “We refuse to sign an agreement to accept colonial double-standards that treat us as incompetent. The day before Treaty, we had everything and the Crown had nothing – Nothing. We consented to share lands for immigration and settlement. Period. We are prepared to negotiate fiscal arrangements which recognize these indisputable historical and legal facts.”

Meanwhile, their resilience will continue to be tested when actions by AANDC around their refusal to comply with the Transparency Act will take effect after November 26.

A treaty alliance is forming across the prairies to support abstainers and to advocate on behalf of all the chiefs who signed their CFAs and complied with the Transparency Act under duress. As Okimaw Fox of Onion Lake Cree Nation has stated: “It is state sanctioned blackmail… pure and simple.”

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3 Comments

  • Glen
    November 20, 2014, 12:04 am

    corruption will always plague the worlds finest recognised first peples from any nation. We live under a government that is no better than the walking eagles we know as C&C from coast to coast. There are nations that follow protocal and desearve a pat in the back, sad to see residential school generates not healing from there past and creating havok among their own reaching to far in the cookie jar devastating future generations following. As long as the grass grows and the water flows was an agreement made but being twisted now by a man who hides in closets. Follow through with what is law by the bill and let it pass, he cant hide in the closet forever amd things will change in the near future. The youth are the future and the future is now, dont shame them and come clean doing the right thing.
    Idle No More.

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  • corie A
    November 19, 2014, 5:39 pm

    So we lost most of our lands and lots was stolen and then they started charging PST and taking away our rights like healthcare and underfund our kids by 1/3 compared to non-aboriginals….they continue to give us our $5 every year with a fat smile yet our people are the poorest of all Canadians, the poorest of the people in the Western World, underfunded, neglected, murdered and missing, over represented in jails, welfare lines and underrepresented in schools and the workforce. NOW OUR CHIEFS and COUNCIL want to take a stand on THIS ISSUE? I get it, but it seems pretty self serving after not taking a stand for so many better reasons for so many years.

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  • pauline
    November 19, 2014, 3:52 pm

    I see both sides and the problem is there are some First Nations DO have corrupt practices thats why some are in third party and if a reserve is doing good and exceeding the government doesn’t want that so whats the middle ground? I see our leaders get in council for years and years and all have their own businesses and to me then run your business and stop being on council. The focus is not on their people because even on reserves the rich are getting richer and the priviledged or their family all have jobs. That is the problem I see.

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