FINA Committee Meeting

37th PARLIAMENT, 2nd SESSION

Standing Committee on Finance

EVIDENCE

CONTENTS

Thursday, May 1, 2003

Á

1110

The Chair (Mrs. Sue Barnes (London West, Lib.))

Grand Chief Ed Schultz (Council of Yukon First Nations, Whitehorse, Yukon, Yukon First Nations)

Á

1115

Chief Darren Taylor (Tr'ondek Hwech'in, Dawson City, Yukon, Yukon First Nations)

Á

1120

The Chair

Chief Charlie Nitsiza (Chief of Whati, Dogrib Treaty 11 Council)

Mr. Ted Blondin (Negotiator and Land Claims Manager, Dogrib Treaty 11 Council)

Á

1125

The Chair

Mr. Charlie Penson (Peace River, Canadian Alliance)

Grand Chief Ed Schultz

Á

1130

Mr. Charlie Penson

Grand Chief Ed Schultz

Mr. Charlie Penson

Grand Chief Ed Schultz

Mr. Charlie Penson

Grand Chief Ed Schultz

Mr. Charlie Penson

Grand Chief Ed Schultz

Mr. Charlie Penson

Grand Chief Ed Schultz

Mr. Charlie Penson

Grand Chief Ed Schultz

Mr. Charlie Penson

Grand Chief Ed Schultz

The Chair

Mr. Pierre Paquette (Joliette, BQ)

Á

1135

Grand Chief Ed Schultz

Mr. Pierre Paquette

Grand Chief Ed Schultz

Á

1140

Mr. Pierre Paquette

Grand Chief Ed Schultz

Mr. Pierre Paquette

Mr. Ted Blondin

The Chair

Mr. Larry Bagnell (Yukon, Lib.)

Mr. Larry Bagnell

Grand Chief Ed Schultz

Mr. Larry Bagnell

Grand Chief Ed Schultz

Á

1145

Mr. Larry Bagnell

Grand Chief Ed Schultz

Mr. Larry Bagnell

Grand Chief Ed Schultz

Mr. James Harper (Barrister and Solicitor, Pelly Crossing, Yukon, Yukon First Nations)

Mr. Larry Bagnell

Grand Chief Ed Schultz

Mr. James Harper

Mr. Larry Bagnell

Chief Darren Taylor

Á

1150

Mr. Larry Bagnell

Chief Darren Taylor

Mr. Larry Bagnell

The Chair

Mr. Larry Bagnell

Grand Chief Ed Schultz

The Chair

Mr. Colin Salter (Legal Counsel, Dogrib Treaty 11 Council)

Á

1155

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

The Chair

Mr. James Harper

The Chair

Mr. Charlie Penson

The Chair

Mr. Colin Salter

The Chair

Mr. James Harper

Mr. Charlie Penson

The Chair

Mr. Shawn Murphy (Hillsborough, Lib.)

Mr. Shawn Murphy

Grand Chief Ed Schultz

The Chair

Mr. Colin Salter

Mr. Shawn Murphy

The Chair

Mr. Bryon Wilfert (Oak Ridges, Lib.)

Â

1200

The Chair

Mr. Larry Bagnell

Grand Chief Ed Schultz

The Chair

Mr. Larry Bagnell

The Chair

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CANADA

Standing Committee on Finance

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NUMBER 054

l

2nd SESSION

l

37th PARLIAMENT

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EVIDENCE

Thursday, May 1, 2003

[Recorded by Electronic Apparatus]

Á  (1110)  

[English]

    The Chair (Mrs. Sue Barnes (London West, Lib.)): Order, everyone.

    The order of the day is Bill C-28, An Act to implement certain provisions of the budget tabled in Parliament on February 18, 2003.

    We have two sets of witnesses: from the Dogrib Treaty 11 Council, Mr. Ted Blondin, negotiator and land claims manager; Chief Charlie Nitsiza; and Colin Jesse Salter, legal counsel; and from the Council of Yukon First Nations, Grand Chief Ed Schultz from Whitehorse; Chief Darren Taylor from Dawson City, Yukon; and James Harper, who is a barrister and solicitor from Pelly Crossing in the Yukon. Welcome to all of you.

    Who will lead off? Grand Chief Schultz.

    Grand Chief Ed Schultz (Council of Yukon First Nations, Whitehorse, Yukon, Yukon First Nations): Thank you, Madam Chair.

    On behalf of our citizens and members, I would like to take the opportunity to thank you, as well as the members convened here, for the opportunity to speak to you on the bill that you are currently reviewing. Our particular interest is part 9 in reference to the first nations goods and services tax. As you have already indicated, I have two other representatives with me, who will share in the delivery of information with regard to some of the components of this bill that we support.

    By way of background for some of the members, I want to give an overview as to the importance of this bill to our first nations. For those of you who may not be aware, our nations have been undergoing negotiations with Canada and the territorial government over the last 30 years to gain some very significant agreements to bring some certainty to the relationship between Canada and our peoples on the future governance of the territory. As a very positive result, we've derived some orders of self-government, which are relatively unique to Canada and indeed the world. They bring our first nations systems of governance into a partnership with Canada and the territorial government on the management of lands and resources as well as the delivery of public programs and services with regard to health, safety, and economic development and growth.

    One of the things that we embarked upon in the process of self-government was to get an agreement at the outset that there would be a sharing of revenue generation by governments. Our first nations systems of governance are equivalent to the federal Crown in their law-making authority for all their lands, resources, and citizens in the delivery of public programs and services. One of the things we've been mandated to do by our elders and citizens is to develop a system whereby we can generate as much own-source revenue as possible for the discharge of our responsibilities under these claims. We now have embarked on several initiatives on that.

    Aside from resource royalty sharing and the generation of direct revenue through rents, leases, and so forth, we have embarked on tax-sharing agreements with Canada. One that we've already achieved is the sharing of personal income tax room, tied to residency to our settlement lands. That is already online. There is already a tax-sharing agreement between eight of our communities and Canada. It's a unique agreement for this country and one that goes toward the overall objective, which is to reduce our heavy dependence on fiscal transfer agreements with Canada for the delivery of our authority.

    Coupled with that we continue our negotiations with Canada and the territorial government on other tax streams where we would welcome the sharing of room. The one that is before us today is, of course, on goods and services.

    Our first nations are currently in the process of developing and negotiating capacity for the delivery of all their programs and services. In this particular context one of the things we would like to see happen is that this bill be endorsed by Canada as quickly as practicable so that we can get on with the business of finalizing the arrangements for the sharing of this room on GST. This is particularly important considering the fact that negotiations on capacity building are tied to how much revenue can be generated by first nations. We are looking at a region of the country, the Yukon, that, unfortunately, has probably one of the lowest economic conditions in the country. We firmly believe that, in partnership with our territorial counterparts as well as our federal counterparts, innovations such as this are the building blocks to rejuvenating that regional economy by generating greater financial independence for local communities, which can then give back those benefits to the community as a whole.

    You have our written submission, which is very short and to the point. I would respectfully ask that what I've delivered and what will be delivered by my delegation be part of the record.

Á  (1115)  

    The Self-Governing Yukon First Nations, SGFNs, support the enactment of Bill C-28, part 9, in respect of the proposed first nation goods and services tax, FNGST.

    The SGFNs are the Champagne and Aishihik First Nations, the First Nation of Nacho Nyak Dun, the Little Salmon/Carmacks First Nation, the Selkirk First Nation, the Ta’an Kwach’an Council, the Teslin Tlingit Council, the Tr’ondek Hwech’in, and the Vuntut Gwitchin First Nation. We all are members of the Council of Yukon First Nations.Collectively, we represent approximately 4,000 citizens making up all or part of five different tribal groups in the Yukon territory. All of our citizens residing in Yukon are taxable.

    Under our self-government agreements, each SGFN has direct tax authority concurrent with that of Canada and the Yukon territory, so far as residents of our treaty-based settlement land are concerned. We have engaged with the governments of Canada and Yukon since 1997 in negotiations concerning the co-ordinated exercise of our respective tax authorities. Our objective in these negotiations has been to establish arrangements under which our first nations can occupy the tax field, in order to raise a revenue for self-government, without causing an increase in the total tax burden of our taxpayers.

    The achievement of this objective has required Canada and/or Yukon to agree to share their tax room. We already have accomplished this result with regard to personal income tax. Each SGFN now has in place its own personal income tax legislation and receives what is, to us, significant discretionary revenue from this source. These arrangements went into effect January 1, 1999. They were the first of their kind in the country.

    The FNGST legislation now before the committee enables Canada to enter into similar arrangements with regard to the goods and services tax. So far as we are aware, the proposal that Canada share GST room on a comprehensive basis was advanced first by our SGFNs. We advanced this proposal with the following in mind:

    (a)We need access to a meaningful tax base in order to succeed as governments. We are small governments with wide responsibilities in respect of our lands, our affairs and our citizens in Yukon. We cannot rely, and do not wish to rely, exclusively on federal transfer payments in order to finance our institutions and processes of government, provide our programs and services and look after the land, our people and our interests in the territory.

    (b)We believe that, as governments, we ought to have access to the tax bases in the Yukon to which our residents contribute. We provide governance in our communities, in respect of our lands and interests, and through programs and services within our authority. We believe that our governments ought to have fair and meaningful access to the taxes our residents contribute, however the obligation to pay tax may arise. This, to us, also is a reasonable response to the commitment that our people made, as a matter of treaty, to join the tax mainstream.

    (c)In the Yukon, the location of our communities and the pattern of economic activity are such that the transactions which offer a tax base, and in which our residents participate, largely occur outside our settlement land. Spending by our residents makes a substantial contribution to the economic well-being of the territory as a whole, including the available tax bases. This is particularly so in times of economic downturn. In our view, the reasonable approach in these circumstances is to conclude arrangements which enable our governments to enjoy fair access to the contribution our residents make territory-wide.

    These objectives are consistent, we believe, with federal objectives for first nation self-government and for the future of governance in the Yukon.

    As noted, we have been pursuing GST sharing arrangements with Canada for some years already. In the course of that pursuit, we understand Canada took what we proposed for Yukon and turned it into a national initiative. We have engaged in numerous technical exchanges with federal officials along the way. The result is part 9 of Bill C-28 as it stands before the committee today. This is only one step, albeit a very important step, in what for us has already been a long journey.

    The size of the GST base in the Yukon is estimated to be in the range of $25 million per year. In the Yukon context, that is a substantial amount. We estimate the incremental revenue arising from access to this tax base will be significant for our SGFNs. We have permitted our SGFNs to be named in the schedule to part 9 to demonstrate our interest, and, if part 9 is passed, to enable us to get on with the next steps without avoidable delay. We want to proceed as soon as possible this fiscal year with SGFN legislation and related tax collection arrangements with Canada.

    The Yukon self-government arrangements are unique in the country. All parties wish us to succeed. The admission of our SGFNs to meaningful access to the GST stream at the earliest possible date is important to us, and will make an important contribution to our goals.

    We urge you to recommend part 9 of Bill C-28, at least so far as self-governing first nations are concerned.

    Thank you for your interest in hearing from us.

    I don't know how much more I can lend to this, other than to say that the 11 nations we represent, eight of which are self-governing, would very much like to see this legislation endorsed by Canada. They've all written to Canada and are identified in schedule 1 of this legislation as parties that would like to enter into this arrangement.

    At this point we are at your disposal for any questions you might have.

    But, first, I would like to ask Chief Darren Taylor to make some remarks. Chief Taylor represents one of the communities that are self-governing, and he can lend some perspective as to why it's important to his community.

    Chief Darren Taylor (Tr'ondek Hwech'in, Dawson City, Yukon, Yukon First Nations): Thank you, Grand Chief.

    I'd like to take this opportunity to thank everybody on the Standing Committee on Finance for allowing me to make a presentation in front of you today.

    We see this bill as being very important to self-governing first nations. It is one of the many things that needs to be put in place to allow us to generate much needed revenue in order to provide the programs and services that our citizens expect from us as a level of government.

    As Grand Chief Schultz indicated earlier in his presentation, we don't want to rely on financial transfers from government. We want to have the ability to finance our institutions and processes that we have in government within our respective traditional territories. We've come to the realization that transfer payments alone are not enough for us to succeed as governments, especially in light of the transfer payments we are currently receiving. Our governments are responsible for all our citizens regardless of status. What that means for my first nation in particular, where the status and non-status ratio is approximately 50:50, is that we are not receiving adequate funding to provide the level of programs and services that our citizens expect of us as governments.

    Many, if not all, of the first nations within the Yukon have corporations and numerous investments in buildings, the transportation industry, the hotel industry, the construction business, and the fuel supply business, just to name a few. I would say that probably 95% of those investments are off settlement lands. So it's key for us as self-governing first nations that we implement this bill. Again, that would enable us to provide the level of service that our citizens expect from us as governments. With all those investments, I would say that we employ a vast majority of Yukoners, both first nation and non-first nation. We feel that we're major contributors to the Yukon's economy and Canada's economy. That's the reason for the importance of this bill. We feel that with the economy the way it is in the Yukon, if it weren't for first nations and our level of activity with our various investments and employment, the Yukon would be in an economic slump today.

    In closing I'd like to thank you for hearing us. I look forward to the passing of this bill and seek your support in bringing this piece of legislation forward. We still want to contribute to the Yukon's and Canada's economy, and this bill would basically allow us to do that more constructively.

Á  (1120)  

    The Chair: Thank you very much.

    Chief Nitsiza.

    Chief Charlie Nitsiza (Chief of Whati, Dogrib Treaty 11 Council): Thank you, Madam Chair.

    Thank you for this opportunity to be here to share our concerns.

    Let me start by saying where the Tlicho are coming from. The Tlicho are the aboriginal people of the Northwest Territories. We live in the communities of Behcho Ko, Wha Ti, Snare Lake, and Gameti. We are located between Great Bear Lake and Great Slave Lake. Tlicho land is spread out about 25,000 square kilometres. This land represents the history of our people. We live on this land, and it provides us with caribou, fish, and trapping. We live the traditional way of life in our territories.

    Another thing we do is negotiate land claims and self-government. We have been working with this government for a long time, and we will continue to work with this government and the Government of the Northwest Territories.

    We have had success with regard to development in our region. Diamonds now play a large role in the economic situation in our region. Our people are working and making money right now, and our communities are changing.

    We've been negotiating a land claim and self-government for over 10 years. We have worked hard on this Tlicho agreement. It's the first land claim and self-government agreement in the Northwest Territories. The Tlicho agreement will recognize the Tlicho government.

    We, the leaders of the Tlicho, have responsibilities we never had before. We will have to manage the Tlicho land, our people, our culture, and our language, and we will have to pass many laws. But we need to have enough money to make our government work. In the beginning we have to build capacity to run our government successfully. We plan to do this by raising taxes, just like all other governments in Canada or anywhere else. To do so we need to work out a tax-sharing arrangement with Canada.

    I wanted to share this with you.

    Our negotiator, Ted Blondin, will speak about other issues.

    Mr. Ted Blondin (Negotiator and Land Claims Manager, Dogrib Treaty 11 Council): The Tlicho agreement represents a new relationship between the Tlicho, the federal government, and the Government of the Northwest Territories, with a new distribution of governing responsibilities. As Chief Nitsiza has indicated, we've been negotiating for the past 10 years. We've been negotiating with Annie Carrier. We've put together a new tax relationship.

    We're hoping that the agreement will be ratified on June 27. We've been working with the Prime Minister's office to have him come to Rae to officially sign the agreement on August 22. That date is significant because 81 years ago Treaty 11 was signed in Rae on August 22. So we're hoping that the Prime Minister will be there for that.

    The Tlicho government will have significant responsibilities with regard to the land, the people, the resources, and the culture, language, and heritage.

    I should say that five years ago, before the mining industry came into our area and when we were near the completion of the land claims agreement, we had about three students in universities across Canada. Today we have about 120. So in five years we've really moved up in the area of investing in our younger generations.

    We also will be embarking on capacity building. The capacity building and the powers that will be in front of the Tlicho government require a meaningful tax base in order to be successful. Tlicho citizens pay taxes, like everybody else in Canada. We've agreed to do this so that we can work toward self-sufficiency. We have our own-source revenues, which will be taken into account and will reduce the tax base funding. Fiscal responsibility is part of the financing agreement. Eventually, when enough of our revenues are generated, the Tlicho government will be self-sufficient. This will be largely due to the taxes we would raise.

    Everyone is looking for this agreement to be successful. Tax-sharing arrangements will play a significant role in terms of how successful we are. So we urge you to recommend the acceptance of part 9 of Bill C-28.

    I now make ourselves available for any questions any of you would ask. Thank you very much.

Á  (1125)  

    The Chair: Thank you very much for your presentations.

    We will go to Mr. Penson for up to eight minutes, nine minutes if you need it.

    Mr. Charlie Penson (Peace River, Canadian Alliance): Thank you.

    I'd like to welcome the delegations here this morning.

    The idea of less dependency on transfers and self-sufficiency are, I think, worthy goals, which we all should be trying to help with. So I commend you for that outreach.

    There are a couple of things I'd like to ask about. I'll go to Mr. Schultz first. In terms of trying to move away from the transfers to a bigger tax base as a result of this agreement, what are we talking about here for displacement versus the kind of revenue you might generate from this and other taxes you're collecting on the reserve?

    Grand Chief Ed Schultz: That's a very good question. The system of governance that we're developing is not too dissimilar to other orders of government in contemporary times. Revenue generation would be part of a larger picture of own-source revenue generation. First nations governments have the ability, as I indicated, to look at non-refunded rents, leases, user fees, licences, and permits, all those normal types of procedures from governments, but also the various tax streams. We already have personal income tax room. We're also on the cusp of looking at sharing GST room. We are also engaged in negotiations with regard to property tax room. We will be looking at commodity taxes and other types of things for which we could also hopefully negotiate some amiable arrangements. We also are looking at the royalty sharing, which we also have with Canada and the territorial government, for natural resources throughout the territory. So all these revenue streams are coming into the system.

    We have built into our fiscal transfer agreements, which are not too dissimilar to the federal-provincial relationships, a financial offset on own-source revenue. I think it's 0.7. Mr. Harper will be able to clarify the exact amount, because I misquoted it. The offset is similar to that for the provinces. Whenever they generate their own-source revenue, the fiscal transfer is reduced by a calculation to the offset, and we have the very same arrangement.

Á  (1130)  

    Mr. Charlie Penson: Under this arrangement, when would you hope that the revenues from your taxation base will make you less dependent on the transfers so that you would not require them and the conditions that go with them and you would be self-sufficient? Do you have a timeline that you are looking at?

    Grand Chief Ed Schultz: As soon as the bill is enabled, we would be engaged with Revenue Canada on the particulars as to how that sharing would occur and how it would be calculated under the formulas we already have under the transfer agreements. I don't have a firm sense from a political perspective as to how quick that would be. We want it as soon as practicable.

    In terms of the overarching question of when we anticipate that we will be totally unreliant on fiscal transfers, I don't think that day is coming any time soon. I don't think that any province exists that doesn't have some measure of financial transfer from Canada. I know that from a regional perspective, local, regional, district, and municipal governments can't survive at all without fiscal transfers from either a provincial or territorial government or the Crown.

    Mr. Charlie Penson: Give me a ballpark figure. What are we talking about, 10%?

    Grand Chief Ed Schultz: This generates about $25 million in GST annually in the Yukon, and the portion for our first nations at this point in time would probably be around $2 million, as a guesstimate. It's $2 million divided amongst eight first nations communities. That number would then be calculated into the formula I stated.

    Mr. Charlie Penson: I appreciate that it's just one of the revenue sources you are looking at. I see from your brief that you are responsible for about 4,000 people. So that revenue, the $25 million, would be GST from the purchase of goods and services--

    Grand Chief Ed Schultz: I'll get Mr. Harper to speak on that.

    Mr. Charlie Penson: Just let me just finish, and then I'll ask Mr. Harper to comment. What I'm asking is, is it anticipated that the goods and services tax scheme that you want to have put in place would cover the goods and services acquired by the residents who are part of your group, the 4,000 people, and the amount of money generated by the goods and services tax would then go to your organization rather than to the federal government?

    Grand Chief Ed Schultz: It would be revenue generated for the purposes of governance. Our system of governance is not like an institution or an Indian Act band. It is recognized, under a piece of legislation enacted here in Parliament, as a third order of government in the territory. It generates money for the public good. In other words, for the 4,000 citizens you mentioned, we are responsible for the delivery of public programs in health, education, and safety, all the typical programming that a government would deliver. The money that would be generated through all the tax streams would go into the first nations governance revenue. The use of that revenue generation is guided by financial laws that have been created by that first nation under--

    Mr. Charlie Penson: I understand that, Mr. Schultz, but what I'm getting at is--

    Grand Chief Ed Schultz: I'm not getting it, then.

    Mr. Charlie Penson: --the amount of money you are talking about, the $25 million, is based on the tax that is realized from the goods and services purchased by the 4,000 people.

    Grand Chief Ed Schultz: No, that's for the whole of the Yukon, not just the 4,000. I'm sorry.

    Mr. Charlie Penson: Those are all my questions.

    Grand Chief Ed Schultz: Otherwise, we would be paying a lot more than 7%.

    The Chair: Thank you very much.

    Next is Mr. Paquette.

[Translation]

    Mr. Pierre Paquette (Joliette, BQ): Thank you, Madam Chair.

    I would like to begin by thanking all the advocates of self-governance for being here today, and by telling them that the Bloc Québecois, that I represent, is quite responsive to their arguments on the issue.

    We have supported the “Paix des braves”, an agreement between the Quebec Government and the Cree Nation, as well as the Common Approach, a negotiation framework laid out with some of Quebec’s Innu communities. Although the issue has given way to a lively debate amongst the members of our party, we maintain our support for this approach. The argument that you bring forth seems to follow these lines; in the pursuit of self-governance you must first and foremost seek to reach financial autonomy, or in the very least, attempt to do so. However, my understanding is that the two groups ask that we recommend the enactment of Part 9 of Bill C-28.

    Mister Schultz, at the end of the French version of your brief, you state that:

“We ask insistently that Part 9 of Bill C-28 be recommended, at least as far as the self-governing First Nations are concerned.”

    This is a notion I am unfamiliar with. I would like to know what distinguishes a self-governing First Nation from one that is not self-governing. It might be as a result of a translation problem, and I do not have the English version at hand. Thus, I have never heard of this concept and I would appreciate it if you could explain it to me.

Á  (1135)  

[English]

    Grand Chief Ed Schultz: I'm not sure that I clearly understand it from the translation. Is the question what does it mean to be self-governing or to become self-sufficient?

[Translation]

    Mr. Pierre Paquette: I see that in English you speak of “self-governing First Nation”. I would like to know what differentiates a self-governing First Nation from a simple First Nation.

[English]

    Grand Chief Ed Schultz: Thank you. Merci.

    The distinction for our purposes is those nations that are now operating under a final self-government agreement and a final land claims agreement, which they have negotiated over a 30-year period between Canada and the territorial government.

    The distinction in a nutshell is that nations that are still under the Indian Act have a very small amount of land set aside for their use and benefit. It's held in trust by the Crown. Usually, there are no natural resources attached to it. Not only that, but there isn't an ability to generate revenue, particularly from an Indian Act status. The powers of authority for an Indian Act band are limited to bylaw powers at best, and they need to be concurred in by the minister and/or his representatives.

    A self-government community has the full responsibility, equivalent to the federal Crown, for the delivery of any number of programs and services, which our citizens dictate, under our constitution, not by a piece of legislation from Parliament. It's a constitution created by the people. It creates their system of government, including the checks and balances and accountabilities required for the delivery of programs and services and also the expenditures.

    The self-governing communities retain 16,000 square miles of the Yukon territory. A first nation from my community, as one of the self-governing, for example, went from less than 0.75 kilometres of land set aside to 1,000 square miles in terms of actual land that they can control and manage. It's not only the land itself, but also 600 square miles of the subsurface interests as well as all of the surface interests, including timber. This gives them an ability to actually develop initiatives to generate more revenue for their communities.

    They also have the ability to share tax room, as we indicated. In the Indian Act we don't see that. I know that there have been some discussions under the new governance bill, and there has been concern about that. We're not looking at that. We've gone way beyond the measures that are being contemplated under the governance bill. We want to look progressively forward. The ability to generate own-source revenue is the big distinction between self-government and the Indian Act band.

    Self-government, although it's a coined phrase, doesn't mean that we're totally autonomous in relation to every other government around us. The framework of our agreements is based on the principle of partnership with Canada, the territorial government, and also the local municipality.

    I don't know whether that addresses your question.

Á  (1140)  

[Translation]

    Mr. Pierre Paquette: Most certainly, in fact, you have also addressed my second question. As I was saying, you are in favour of this proposition for taxes on the products and services delivered by the First Nations. In fact, both groups are.

    I wanted to know, is there a link with Bill C-7? This bill is currently being intensely debated upon within the Committee; so much that they have spent the whole night discussing it two days ago. As far as you are concerned, you have already gone beyond this, you thus consider that there is no contradiction between the support for this proposition and the debate on Bill C-7 that is currently taking place.

[English]

    Grand Chief Ed Schultz: That's correct. We don't see any direct correlation with that bill.

    Some of the agreements have already been concluded. One initialed their agreements just recently. Another one anticipates doing it soon. All the remaining nations within the council have a vision to move to this new system of governance. Therefore, they come under separate legislation outside of Bill C-7.

[Translation]

    Mr. Pierre Paquette: I would like to know if you also think there is no correlation between the proposition concerning GST for First Nations and the present discussion concerning Bill C-7?

[English]

    Mr. Ted Blondin: We're in a similar situation. As I say, we're hoping to ratify the agreement fairly soon. The Tlicho agreement is the first land claim and self-government agreement in the Northwest Territories. Other groups in different regions, I believe, have just initialed self-government agreements. So this puts us in a similar situation as the Yukon. In our agreement we don't rely on the Indian Act. We're looking at a new relationship here.

    The Chair: Just for a further point of clarification, my understanding is that this whole part 9 is voluntary. Your people can either take it up or not take it up as they wish.

    Mr. Bagnell, you have up to nine minutes.

    Mr. Larry Bagnell (Yukon, Lib.): Thank you, Madam Chair.

    I don't know why one would not take up money that was offered.

    I'd like the clerk to put me down for the second round, because I'm sure I won't get in all of my questions in the first round. I have lots.

    A voice: So make them as succinct as you can.

    Some hon. members: Oh, oh!

    Mr. Larry Bagnell: I'd like to welcome the Tlicho, especially the Wha Ti. Because I'm not as familiar with your situation, a lot more of my questions may be directed to you.

    For anyone in the room who doesn't understand, I just want to make clear that the agreements, which are protected under the Constitution, are creating 14 new governments in the Yukon, which in some ways are more powerful than the provinces. We're dealing with an order of government, and it obviously needs revenue. Of course, I'm here to support the Department of Finance and the witnesses here with regard to a source of this financing.

    Chief Schultz, could you tell us what percentage of first nations the Council of Yukon First Nations represents?

    Grand Chief Ed Schultz: Within the Yukon itself there are 14 aboriginal communities. Eleven of them are members of the Council of Yukon First Nations, which I currently represent as grand chief. Eight of the eleven are self-governing, and they are identified in the schedule under part 9 of this bill.

    Mr. Larry Bagnell: You wanted your written submission read into the record. Charlie brought up the important point in the second paragraph on page three where you talk about the $25 million. Of that, roughly $2 million to $3 million is the part that is related to the 4,000 first nations people. Perhaps we need to clarify that.

    Grand Chief Ed Schultz: That's a very rough guesstimate. There is no hard and fast science that we've put to those numbers. It was only prepared as a guesstimate so that you have an order of magnitude of what we're talking about. For the record, I don't want to be married to those numbers.

Á  (1145)  

    Mr. Larry Bagnell: I just want to make it clear to the people reading this that $2 million to $4 million or so are related. It's not the whole $25 million.

    Grand Chief Ed Schultz: No.

    Mr. Larry Bagnell: I wanted to get that into the record.

    Chief Schultz, could you quickly explain to me the income tax sharing arrangement.

    Grand Chief Ed Schultz: Maybe I'll ask Jim to respond to that.

    Mr. James Harper (Barrister and Solicitor, Pelly Crossing, Yukon, Yukon First Nations): Mr. Bagnell, under arrangements already in place with regard to personal income tax, which we worked on in the late 1990s and which took effect in January 1999, Canada has agreed to share 75% of the personal income tax room for a period of 10 years, rising to 100% after 10 years, as I recall. As well, Yukon has agreed to share 95% of their room. So, effectively, we have a net share to the first nations of 81 2/3%, given the relative weighting as to the personal income tax paid by residents of our land.

    Mr. Larry Bagnell: Could you just reiterate this point, which I think you also made in response to Mr. Penson. The increased revenues that you do receive from the GST, $2 million to $4 million or whatever it is, will result in some reduction of cost to the federal government because it will come off the transfer payments they're having to make at the moment to run your programs and governments.

    Grand Chief Ed Schultz: If I may, I'll ask Jim to elaborate on the point, which was raised by the other member as well, about the offset and how to calculate it.

    Mr. James Harper: Under our current financial transfer arrangements with Canada, which provide transfer funding to us for certain governance and program service functions, we have an arrangement with regard to own-source revenue that will be liable to offset; in other words, a recovery, if you like, by Canada against their transfers.

    In the Yukon arrangement it's a little different from what the Dogrib have on the table there. We have an arrangement under which for the first two years of access to a tax base, and in one case three years, we have zero offsets. After that it rises. For us it starts at 0.3. So 30¢ on every dollar will wind up coming back to Canada as a reduction in the transfers otherwise indicated. Under our current financial transfer arrangements, which expire on March 31, 2005, that will rise on a graduated basis to 0.5. Then we'll see where we negotiate from there. I think that Dogrib have a similar scheme with different numbers involved. That's what's current with regard to the self-governing first nations north of 60°. You have a negotiated level of transfer of payment and then a transfer offset for own-source revenues. In the Yukon case the own-source revenue offset is presently restricted to first nations taxes. Again, that might be different in the Dogrib case.

    We anticipate a full discussion with Canada when the renewal comes around, of course.These revenues that we're talking about, the $2 million, let's say, for the eight that are there now, which will rise, of course, as more first nations come on stream and as the economy strengthens and our incomes rise, will be subject to offset two years from now on a rising basis. We can see that for sure.

    Mr. Larry Bagnell: I'd like to ask Mr. Taylor a question. If the recently announced changes to the placer regime were implemented, it's my estimation that the federal government would lose a heck of a lot more in tax revenue than this $2 million to $4 million, which wouldn't even be $2 million to $4 million because there's an offset. Would you concur with me on that?

    Chief Darren Taylor: Yes, I would agree with that statement. Particularly in my community, placer mining is a major contributor to the economy. As a self-governing first nation, during the land claims process we in fact selected lands for mineral potential. Through negotiations and visits to the various lands we wanted to select, we strategically selected lands for timber and mineral potential and development in general. Tourism does play a part in our economy, but I would think that placer mining plays the major role. As I indicated earlier, our first nation government has investments in numerous businesses, which cater to the placer community. So this would have a negative ripple effect on all Dawsonites, the first nation, and the Yukon as a whole.

Á  (1150)  

    Mr. Larry Bagnell: It would be fair to say that even your second biggest industry, tourism, would be attracting people to come and see the placer mining.

    Chief Darren Taylor: Exactly. Right now we're working on the tourism industry and trying to attract people from across Canada and the world to look at things besides placer mining operations. We're trying to enhance our first nation and to display that to the rest of Canada and the world. We're trying to invite people into our community to see what we have to offer as a first nation. I would say that right now the majority of the people who do come to the Klondike and Dawson City do so to view placer mining operations, to get a feel of the gold rush and what has happened in the past.

    Mr. Larry Bagnell: Do I have time for one more question?

    The Chair: Yes.

    Mr. Larry Bagnell: This would be to both groups. If the federal government has foregone 100% of its GST and 100% of its federal part of the taxes and assuming that money went to pay for things the federal government has to pay for, such as doctors, the army, and ambassadors, how do you foresee the federal government maintaining its responsibility to pay for these things?

    Grand Chief Ed Schultz: I can give a political answer to that. I don't know if I can give a technical one. It's clearly evident, as the books can demonstrate from the very inception of the territory, that the territory at no point in time ever generated enough revenue for Canada for the expenditures made.

    I made the following point when I spoke at an armed forces orientation session for Canadian officers, which took place shortly after the American submarine was found to be in Canadian waters in the Arctic. At that time we were also arguing the point of sovereignty over the Arctic. We have to look at the foundation of this agreement overall. This is part and parcel of a much broader agreement. The broader agreement is a partnership between indigenous peoples in the north and Canada, which provides Canada with the legitimate argument in the international arena that they do have sovereignty in the north. However, and I said this quite frankly there, if Canada is going to declare the sovereignty, it has to have not only the relationship with the indigenous peoples from this region, but also to make the necessary investment. If they're not prepared to make the investment in that region, then it's hard to justify declaring sovereignty over the land.

    I don't think there's going to be a point any time soon where Canada's expenditures in the north will be the same as they are in other jurisdictions. What I'm saying is that the foundations of what we're building right now lead us to where we ultimately need to go, where, eventually, the Yukon as a whole will be generating to the greatest extent possible its own-source revenue and will be less dependent on the federal transfers. I don't think there will ever be a day soon, probably not in my lifetime, where we won't see a significant need for Canada's ongoing contribution.

    The Chair: Mr. Salter.

    Mr. Colin Salter (Legal Counsel, Dogrib Treaty 11 Council): The Tlicho agreement provides certainty to a set group of land. As Ted Blondin explained, a number of diamond industries are being created. The agreement and the tax-sharing arrangements reflect a balance as to how that certainty has been brought to bear. For Tlicho citizens on Tlicho lands, the Tlicho government would be able to access those GST revenues, but for diamond mines that were outside of Tlicho lands, those revenues wouldn't be something that the Tlicho would be seeking to take a share of. What this represents is the balance and certainty that comes with reaching these kinds of fundamental agreements.

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    The Chair: Thank you very much.

    Mr. Charlie Penson: I have a point of order. It occurred to me when Mr. Harper was speaking that it would be helpful for the committee if the two groups could provide the arrangements for the offset, the schedule. He gave a bit of information, but I don't think it's as clear as it could be.

    The Chair: That's not a point of order. But it's noted by the witnesses. If the witnesses wish to submit something, they can do so through the clerk. I take it that this is not an immediate need for you.

    Mr. Charlie Penson: No, I just think it would be helpful for the committee, Madam Chair.

    The Chair: If you have some details on the fiscal arrangement, you could forward that information to the clerk, and the clerk will distribute it to all members of the committee.

    Do you have any problem with that, Mr. Harper?

    Mr. James Harper: Not at all, Madam Chair.

    The Chair: Thank you.

    Is it just from Mr. Harper, Mr. Penson?

    Mr. Charlie Penson: Perhaps the other group has the same information, although they may be different arrangements.

    The Chair: Mr. Salter or Mr. Blondin.

    Mr. Colin Salter: Keep in mind that the Tlicho agreement has not yet been finalized. But there are drafts--

    The Chair: You would have estimates but not permanent financial data. Yours would only be of a temporary nature because the fiscal arrangement could change over time. Is that right?

    Mr. James Harper: It's to be negotiated starting a year or so from now, Madam Chair. We'll provide the offset schedule. That's what I understand you're asking for.

    Mr. Charlie Penson: Yes, that's all I'm asking for.

    The Chair: So Mr. Harper will send the offset schedule to the clerk. If you could do that expeditiously, it would be appreciated. Thank you.

    We'll now go to Mr. Murphy.

    Mr. Shawn Murphy (Hillsborough, Lib.): Thank you, Madam Chair.

    I want to thank both delegations for coming today.

    Most of my questions were actually taken up by Mr. Paquette.

    I just want to clarify this. I take it there's no part of Bill-7 that really involves your nations. You're not following it, and you don't wish to comment on it. That's fine with me.

    Mr. Shawn Murphy: Outside of the Indian Act.

    There's a second issue I'd like clarified. Perhaps I'm confused myself. This provision is part of Bill C-28, the Budget Implementation Act, and you're asking us to support it. Do you have any indication that anyone is against it?

    Grand Chief Ed Schultz: Not to my knowledge. No one has made any representation to me in person or by letter that they were opposed to what we're advancing here. Certainly, I'm more than willing to hear anyone who is, but no one has come forward.

    The Chair: Did anybody else wish to comment on that?

    Mr. Colin Salter: The reason we're here is simply because it's so important to the success of self-government.

    Mr. Shawn Murphy: That's everything for me, Madam Chair.

    The Chair: We'll give Mr. Wilfert some time.

    Mr. Bryon Wilfert (Oak Ridges, Lib.): I'll be very short as well.

    I apologize for being a little late. The finance minister got a little held up this morning.

    The reason there should be no objections is that the minister has been working with interested first nations who would like to see this legislation come about. It's really to help facilitate first nations in a manner consistent with our national tax system. I want to emphasize why this is important and why I'm pleased that the delegations are here today. We would like to get this through as soon as possible in order to bring to fruition, if you will, the discussions we've had up to this point.

    The decision is very much voluntary. It'll only apply to those first nations that in fact request it. If they don't request it, they won't be subject to it.

    I would also point out that in terms of double taxation, there'll be no charge in terms of the GST if the first nations GST applies. So we won't be double taxing.

    Just a slight clarification. On the personal income tax, we will share up to 95%, not 100%.

    As you know, the GST is subject to the cap.

    I just wanted to say that I'm pleased that the delegations are here. This has nothing to do with Bill C-7. This is something that has been worked on with the Department of Finance. It's an empowerment issue. If the first nations request it, once the structure has been put in place, they can then participate. If they don't want to participate for whatever reason, they don't have to.

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    The Chair: Does anybody else have any questions?

    Mr. Bagnell.

    Mr. Larry Bagnell: Before I give up my right to ask questions, I was wondering if anyone wanted to add anything with regard to the various points that have been raised.

    Grand Chief Ed Schultz: I appreciate the time. I recognize that you are all very busy individuals, and I commend you on your dedication to Canada and to our issues. In this morning's endeavour you are fulfilling some obligations outlined in an agreement, which was negotiated between Canada, the territorial government, and our first nations over a 30-year period.

    I have had 16 years of service with my people. I'm very pleased and honoured to have had the opportunity to sit here with you to address your concerns and issues. This is the fulfillment of a dream and a vision. Something I have already said to a Senate committee this morning on another bill is that the Yukon is doing some cutting-edge work in terms of building some positive relationships. I think that the more we can continue this innovation, the sooner we can reduce some of the friction between our peoples and all can mutually prosper. So thank you very much.

    The Chair: Mr. Bagnell.

    Mr. Larry Bagnell: I'd just like to reinforce what Mr. Schultz is saying about the governments that are self-governing and the differences for those who have signed these agreements and are now governments. It's just like night and day.

    Before there would be a little cabin and maybe a band manager, and that would be about it. Now you see modern government buildings. They are full-fledged governments providing services to their own people, with government as close to the people as possible. I think there has been remarkable progress, and this will help finance that progress even more. I think it's great.

    Thank you.

    The Chair: I would like to thank each and every one of you for coming here today and representing so well all of the people who have had input into this process. On behalf of the committee I'd like to wish you well in your future endeavours. I appreciate the fact that you have come before this committee today, and on behalf of all the members I thank you.

    I will remind my colleagues that we will have clause-by-clause on Tuesday at 3:30 in room 253D in the Centre Block.

    We are now adjourned.