AAND Committee Meeting

STANDING COMMITTEE ON ABORIGINAL AFFAIRS AND NORTHERN DEVELOPMENT

COMITÉ PERMANENT DES AFFAIRES AUTOCHTONES ET DU DÉVELOPPEMENT DU GRAND NORD

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, May 9, 2000

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[English]

The Chair (Mrs. Sue Barnes (London West, Lib.)): Welcome, everyone. Bienvenue. Pursuant to Standing Order 108(2), the committee is proceeding to a briefing session on the Indian Act.

Today we have witnesses from the Department of Indian Affairs and Northern Development: Mr. Bill Austin, assistant deputy minister, claims and Indian government; Mr. Gordon Shanks, assistant deputy minister, corporate services; and Mr. Cal Hegge, director, transfer payments directorate. We have a quorum for hearing witnesses right now, so we'll start our meeting.

Gentlemen, please proceed. Who will start off with the presentation? Mr. Shanks? Please go ahead.

Mr. Gordon Shanks (Assistant Deputy Minister, Corporate Services, Department of Indian and Northern Affairs Canada): Thank you, Madam Chairman.

We welcome the opportunity to address the standing committee. As you've noted, I'll be sharing the microphone in the presentation with my colleague, Mr. Austin.

Our objective today is to update you on the management framework used to transfer funds to first nations. Accountability is a critical issue. Members of first nations are demanding it from their governments, both first nations and federal. Canadians alike are demanding it from the federal government. My colleague and I hope to demonstrate how Canada and first nations are working together to realize effective, accountable first nations government and intergovernmental relations.

The Department of Indian Affairs and Northern Development uses funding arrangements as the primary vehicle to support first nations governance and programs. Today, first nations directly manage 85% of DIAND's program budget. A further 11% is transferred to the provinces for the delivery of services to first nations people.

To start, we would like to talk about first nations operating under the Indian Act. Later we'll talk about the progression on the continuum towards self-government.

The Indian Act itself is a very old law that did not anticipate the range of programs of modern governments nor how they would be provided for on reserves. The primary legislative authority guiding DIAND in the use of funding arrangements is the Financial Administration Act. More detailed requirements are set out in Treasury Board policies, which apply to all federal departments. As well, over the years, DIAND has secured cabinet and Treasury Board authorities for the delivery of specific programs and services. These generally follow provincial standards and federal and provincial laws of general application.

Funding arrangements have played and continue to play an important role in the development of first nations people and communities. There are more than 600 first nations in this country, all at different stages of economic, political, and institutional development. Funding arrangements have permitted a flexible response to their individual situations.

Until the late 1950s, first nations existed in a state of dependency, with basic programs being delivered by the federal government and religious and charitable organizations. To help break the cycle of dependency, the federal government launched a process of devolution, or transfer of control over program delivery, to first nations. Addressing dependency was a matter of both improving quality of life of first nations people and positioning them to be fuller players in Canadian society.

The first funding arrangements used to transfer control were highly prescriptive. They stipulated in detail what would be done, how it would be done, and what expenses would be reimbursed. They were an appropriate starting point. The process of transfer accelerated through the 1970s and into the 1980s.

In 1983, the special all-party parliamentary commission on Indian self-government, which produced what became known as the Penner report, was highly critical of funding arrangements used with first nations. It noted that first nations were allowed little decision-making authority by which to direct programs and funds to their particular needs and opportunities. Further, the administrative burden of these arrangements was at a cost to program delivery.

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In response to this, DIAND secured cabinet and Treasury Board authority for alternative funding arrangements, AFAs, in 1986 and flexible transfer payments, FTPs, in 1989. These authorities permit more streamlined funding arrangements with greater local decision-making and accountability. The new arrangements do so by focusing more on the “whats” that are to be delivered rather than on the detailed “hows”. Further, they stress the accountability of first nations governments to their people while recognizing a continuing accountability to DIAND.

In sum, while the funding arrangements of the 1970s stress the building of first nations service delivery organizations and core staff, the 1990s version stresses the building of local governments and the broad-based participation of first nations people in government.

Today DIAND uses two types of funding arrangements with first nations: a basic model known as a comprehensive funding arrangement, or CFA, and a second one known as the Canada-first nations funding agreement. The latter is used with first nations with both the capacity and willingness to accept additional responsibilities implicit in this agreement. In either case, all agreements are prepared using a generic template. This supports equitable treatment of first nations, consistency, simplicity, and integrity of operations.

Both generic agreements are public documents. A typical arrangement may run some 50 pages in length, including schedules, and is supported by separate auditing and program reporting handbooks. To simplify consideration of these complex documents, funding arrangements can be seen as consisting of two components: the funds to be transferred and the terms and conditions to be met. The terms and conditions, in turn, can be considered as consisting of two parts: general and program-specific.

With respect to the funds transferred component, there are two basic approaches: fixed or reimbursement budgets. Since the 1980s, DIAND has moved increasingly from reimbursement to fixed or block budgets. Fixed budgets create an incentive for sound management, as the recipient is responsible for overexpenditures but is also able to apply cost savings to other community needs. Today reimbursement budgets are used to manage high-risk areas in terms of budget volatility. However, they involve a higher level of reporting to justify such expenditures.

Within the comprehensive funding arrangement, one finds a mixture of fixed and reimbursement budgets on a program-by-program basis. In the case of Canada-first nations funding agreements, the vast majority of the funds are transferred as a global fixed amount. This allows first nations the flexibility to move funds between program areas in order to address priorities.

Generally, reimbursement budgets are set on a year-to-year basis. By contrast, global fixed budgets are set on a multi-year basis in order to support and encourage long-term financial planning.

As I mentioned, the second element of funding arrangements is the terms and conditions. The general terms and conditions are similar in all DIAND funding arrangements. For example, there are requirements to maintain accounts in accordance with generally accepted accounting principles as set out by the Canadian Institute of Chartered Accountants and to prepare annual consolidated financial statements and have them audited by an independent professional auditor. There are also requirements for disclosure to DIAND and first nations members, which includes a schedule of salaries, honoraria, and travel expenses for elected officials and senior administrators.

A second example is the requirement for first nations to formally assess their management and accountability frameworks and to develop a plan of action to address weaknesses. This requirement supports continuous learning and improvement as first nations progress. It also promotes sharing of best practices between first nations and joint capacity-building in order to realize effective, timely, and affordable change.

There are also program-specific terms and conditions. These outline who is eligible for services, service delivery standards, and reporting requirements. The earlier mentioned general terms and conditions support the program-specific terms and conditions by making provision for data quality reviews, compliance audits, and evaluations. They also provide for corrective action when problems arise.

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To conclude this discussion of existing funding arrangements, I note that program terms and conditions are generally more detailed in the comprehensive funding arrangements than in the Canada-first nations funding agreements. About 70% of first nations now operate under the CFAs and 30% under the second category, the Canada-first nations funding agreements.

First nations are expected to demonstrate to the federal government and their own community members that they manage resources responsibly. Chiefs and councils are accountable to their members for leadership decisions, sound management of council affairs, and efficient and effective delivery of programs and services. They are accountable to the Department of Indian Affairs and Northern Development for the public funds provided to them.

We are working with first nations and northern people to support open and accountable governments at the community level. Funding arrangements require that first nations meet certain criteria to ensure the continued flow of federal funds. As mentioned earlier, annual audited financial statements are required.

We have received 99% of the audits required for the 1998-99 fiscal year. The vast majority of these audits were unqualified. This means the independent auditor found them to be entirely acceptable according to generally accepted accounting principles.

The cooperative effort to help build capacity was launched two years ago in a concerted way with the tabling of Gathering Strength—Canada's Aboriginal Action Plan. It has resulted in a number of successes.

First nations are building on their traditions of openness and inclusion through in-depth assessment of their management practices. They are developing fiscal bylaws, policies, and systems based on the same principles as other governments in Canada.

Much of the progress in this area does not receive the attention it deserves. Too often, the public hears only about communities with real financial problems. Regrettably, people get the impression that these communities are representative when in fact they are the exception.

In fact, last year about 4% of reserves were placed under third-party management. The simple fact is that most reserves manage their finances properly. This record reflects both the determination of first nations to manage their finances responsibly and the creation of proper checks and balances. When problems do arise, DIAND may intervene in a number of ways depending on the nature and severity of the problem.

For example, we may simply make sure the first nation is aware that there is a problem, encourage it to find solutions, and offer some advice. In other cases, we'll consult with the band more actively, or require that a co-manager be put in place to address the difficulties. In only a very few cases—the 4% I just mentioned—is it necessary to bring in a third party to stabilize the situation and help build the first nation's capacity until they can resume control over their affairs.

DIAND is answerable to Parliament and the Canadian public through the annual audit cycle and program reports. We are working toward more public disclosure of first nations financial information while respecting the Access to Information and Privacy Acts. We are building up our own internal capacity for more effective accountability mechanisms.

We have several initiatives underway to make our departmental practices as effective as possible. Within DIAND, senior managers meet every month to examine our management control framework and monitor the receipt of audits and the status of remedial management plans. We are continually working toward internal improvements. We also work with the Treasury Board Secretariat and the Auditor General's office to develop ways to address accountability issues, and first nations are contributing to this process.

As assistant deputy minister of corporate services, I led a team of senior officials to examine ways to ensure consistency in the implementation of our accountability framework across our departments, regions, and headquarters. The result of this is a visible improvement in our funding agreement processes and practices.

We also want to ensure the quality of the data related to processing controls. We use an automated transfer payment management system to monitor both financial and non-financial aspects of the transfer payment system.

At present, we are following up on a series of recommendations made by the Auditor General last spring. For example, the Auditor General identified a need for us to be more proactive in addressing allegations and complaints of wrongdoing often raised by first nations members.

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Two years ago we appointed allegations and complaints coordinators at each of nine DIAND regional offices. A national coordinator is at work in our headquarters to develop national standards, policies, and guidelines. A national data bank has been set up to record allegations and complaints coming into DIAND. We will analyse these to see if any significant trends are emerging.

It should be noted that any allegations of a criminal nature are provided without delay to the proper police authority, such as the RCMP. We have a workshop arranged at the end of this month with the RCMP to review the existing protocol for managing allegations.

In taking this action, we want to exercise due diligence in managing individual allegations or complaints of wrongdoing. The review of individual allegations and complaints is neither a statement of support for the complainant, nor against the accused. It is an action to ensure that all allegations and complaints are handled fairly.

Some first nations are not waiting for DIAND to take the lead on this. For example, in Saskatchewan there has been a motion before the FSIN assembly to create an ombudsman's office. In Alberta, interest has been expressed in setting out protocols for the handling of allegations and complaints. The Assembly of First Nations is launching research and consultation on this subject.

I would like now, Madam Chairman, to turn to my colleague, Mr. Bill Austin, who will speak about some future directions that are underway.

The Chair: Go ahead, Mr. Austin.

Mr. Bill Austin (Assistant Deputy Minister, Claims and Indian Government, Department of Indian and Northern Affairs Canada): Thank you very much.

As discussed by Mr. Shanks, since the 1950s, funding arrangements have helped first nations assume responsibility for program delivery. In the 1980s, new types of funding arrangements gave first nations more say over how these programs are delivered.

These arrangements can be seen, at least conceptually, as the front part of the continuum leading toward self-government. They are helping first nations grow the capacity needed to manage their own affairs and work with other governments. They are now encouraging a broader view that sees first nations peoples playing an important role in the operation of their own governments and building stronger relationships with other governments.

As first nations governments have been assuming greater control over local decision-making, educational attainment on reserve has also progressed. A better educated and more informed citizenry now challenges first nations governments. These members are close to the action and have a vested interest in the sound operation of their governments.

Women are also making gains and are found, for example, to hold more than 50% of the senior first nations financial management positions. A high priority is now being given to the development of local reporting systems. Whereas in the past first nations reporting has focused on the needs of funding agencies, they now must consider the needs of citizens. It is first nations themselves who are taking on the challenge to meet the needs of their own people.

For example, in 1998, the Assembly of First Nations entered into a partnership with the Certified General Accountants Association to deal with accountability issues. A priority is helping first nations build reporting systems. These developments will support the move toward self-government by bringing into place needed tools for effective governance, as well as building experience and confidence in their operations.

In 1996, the report of the Royal Commission on Aboriginal Peoples reminded us that first nations have always held the right of self-governance. When the Government of Canada unveiled its response, Gathering Strength—Canada's Aboriginal Action Plan, in 1998, the rejuvenation of the government-to-government relationship lay at its very core. Gathering Strength is the cornerstone of DIAND's evolutionary policy direction. Its overall goal is to build stronger and more self-sufficient aboriginal communities. It has accelerated work in dealing with governance and accountability issues.

I'd like to highlight a number of these projects for you.

The first of these is the creation of the national Aboriginal Financial Officers Association—AFOA. This is a professional association that was formed in July 1999 based upon the innovative work in British Columbia and Manitoba. The Aboriginal Financial Officers Association is dedicated to improving the professional skills of first nations people and the professional support available to first nations leaders. It has benefited from the work of the AFN/CGA accountability project I mentioned just a moment ago.

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To date, a new certified aboriginal financial management designation has been developed, based upon a competency profile completed for senior first nations financial officers. In September 2000 it will offer a new training program nationally, by which first nations people may obtain this new designation. It will be offered online and at more than 40 colleges and universities that have expressed interest in being involved, as student enrolment permits.

The program is based on key mainline business and accounting courses enriched for first nations management issues. Graduates will thus be employable on and off reserve and will be able to use the credits they earn toward a college, university, or accounting designation. It all starts with a mentoring program for first nations students.

It's important to note that this initiative is entirely first nations owned and driven. The AFOA already counts 400 members and has awarded 26 designations. It held its first national conference in February of this year to hear National Chief Fontaine and Mr. Denis Desautels speak to accountability and new fiscal relations. The Auditor General mentioned how encouraged he was by this development.

This month the AFOA is launching its drive for associate members in making 400 contacts with the public and private sectors. This will help it become self-sufficient and create opportunities for first nations people.

A second initiative under Gathering Strength—Canada's Aboriginal Action Plan is the work of the Alberta chiefs steering committee on financial accountability. This committee has developed a joint statement of undertaking, setting out shared expectations regarding accountability, and has an ambitious work plan.

For example, in 1999-2000 a major research project was completed to benchmark the federal and provincial financial management systems. Thereafter a template was prepared as to key features of this system that should be considered in the development of first nations financial procedures, policies, and rules, also known as codes. Four demonstration projects have been successfully completed and a further ten are being planned for. Other regions are becoming involved as well as Alberta.

Further work is also proceeding in Alberta on access to information and privacy codes and codes of ethics, again drawing on expert advice. All these projects may be seen as building significant elements of self-government regimes. Again, they are all owned and driven by first nations.

A third example is the regional governance and accountability workshop in Saskatoon, which was held in April 1999. This workshop brought together 250 participants over three days, including first nations, federal and provincial officials, elders, members of first nations citizen groups, and the media. Accountability workshops, following various formats, are occurring right across the country.

This work is becoming more systemic nationally and also at the local level. At the national level, the Government of Canada and the Assembly of First Nations entered into an MOU December 1999 establishing a national table on fiscal relations. The purpose of it is to work together to develop models of government-to-government transfer systems.

In Saskatchewan, the province, the Federation of Saskatchewan Indians, and Canada are also engaged in discussions on developing a new fiscal relationship.

Together we're considering ways and means to develop new fiscal relationships that support transparent and accountable governments with improved revenue generation capacity. These include the development of new fiscal institutions and policy frameworks to support local government and effective intergovernmental relationships. At the local level, the accountability and management assessment process is supporting first nations in considering their current and future management needs, and ways and means to address them.

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All these initiatives I've mentioned are typical of a new attitude and a new generation of aboriginal leadership. More and more first nations recognize the benefit of preparing themselves to conduct their internal affairs in a more transparent and accountable manner. First nations governments know that being accountable means managing well. That is why they are leading a number of these key initiatives aimed at building even stronger capacity for accountability. They know that responsible accountable spending is critical to the ability of their communities to function in a healthy and effective way.

Good governance brings certainty, stability, and community well-being. Stable and effective governments create an environment that leads to economic development. Sustainable governance structures and policies will allow first nations to manage the economic and other affairs of their communities in an effective and responsive way.

This concludes our presentation. We'll be pleased to respond to any questions from the committee, Madam Chair.

The Chair: Thank you very much. We'll start with Mr. Conrad for about five minutes, please.

Mr. Derrek Konrad (Prince Albert, Canadian Alliance): Thank you, Madam Chair. Thank you for your presentation.

As I followed along, I saw with some interest that there has been a motion to create an office of ombudsman in Saskatchewan. That's news to me, in a sense. Is that a Métis action or is that for status Indians? What was the input of the Department of Indian Affairs and Northern Development in putting this together? Did any other departments have any impact on the development of this? Is HRDC involved?

That should do for a start.

Mr. Gordon Shanks: Thank you, Mr. Konrad. That initiative is completely internal to the Federation of Saskatchewan Indian Nations. It was a motion put forward in their assembly, where their membership asked for their public servants to develop this proposal for them. It had no input from other government levels or departments. As far as I know, the province or other federal departments were not involved in this. It's an idea they had in terms of internal self-government.

Mr. Derrek Konrad: So it would be run simply in Saskatchewan, if it starts up. We had a similar initiative put forward in Ottawa. As you're well aware, no doubt, it went down to defeat in the House of Commons.

Do you support that kind of idea, or am I asking you to be political here?

Mr. Gordon Shanks: Well, I think you are on that. This idea the FSIN has put forward would apply only in Saskatchewan.

Mr. Derrek Konrad: Are you aware of any studies into an ombudsman office here in Ottawa, by either the department or other departments that deal with Indian Affairs matters?

Mr. Gordon Shanks: I'm not aware of any.

Mr. Derrek Konrad: Thank you.

Now I have a further question, since I still have time. You say on page 5 that you will analyse allegations to see if any significant trends are emerging. It's been two years now since the coordinators were appointed. Has any analysis been started yet? If so, are there any trends developing?

Mr. Gordon Shanks: No, Mr. Konrad. We now have the system in place. It is now up and running. The department intends to make its first report on that system in the report on plans and priorities to Parliament next year, which will come out at the end of March.

Mr. Derrek Konrad: I have another question. I'm still within my five minutes, am I?

The Chair: Yes. You have two minutes left.

Mr. Derrek Konrad: Thank you.

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Have any allegations been handed over to the RCMP for investigation? In relation to what is termed aboriginal justice, which I really don't understand all that well, who makes the decision? Is it a decision of the allegations coordinators, or is the RCMP making the decision? How is that determination made when the RCMP should be involved?

Mr. Gordon Shanks: We've attempted to categorize allegations and complaints in this way. Allegations are information that suggest criminal wrongdoing. We transfer that information immediately to the RCMP. They determine whether in fact it's a criminal investigation and they follow up, as in all other police investigations. If they take it on, we are completely removed from the process and have no tracking.

I do not know the answer to your question of whether any allegations have been filed, but I believe we should be able to provide that to you in writing.

Mr. Derrek Konrad: All right.

The Chair: If anything is provided in writing, I'll just say for the record again that it goes to the clerk for distribution to all members of the committee.

You have another 30 seconds, if you like.

Mr. Derrek Konrad: You say the process is in place. Is some of this disclosure to the band and first nations available to the public when they find things out? Are salaries, honoraria, and travel expenses made public? We hear a lot about it.

Mr. Gordon Shanks: As I believe Minister Nault mentioned when he was here a few weeks ago, at this point in time that information is public to the first nations membership. It's not publicly available right now to the general public. The minister is looking at ways and means of making things more public, but at this point in time they're not.

The Chair: Thank you.

[Translation]

Mr. Bachand, please.

Mr. Claude Bachand (Saint-Jean, BQ): I appreciated your presentation because it just confirmed, in practical terms, what I have thought for a long time: Aboriginal communities are capable of governing themselves. You provided a statistic which I find extremely interesting. You told us that only 4% of reserves were placed under third party management to help them administer their affairs, no doubt because there is a problem in their reserve.

Who is this third party? Is this an official from the Department of Indian Affairs and Northern Development or do you contract out? This could be an accountant or someone you know in the region and to whom you have said that there's a problem in a certain reserve and that this person needs to go there in order to assist with the administration or to correct the situation.

My second question is, in my opinion, even more important. A few years ago, it seems to me that the Auditor General had questioned the way that money provided by the government during land claim negotiations was being audited. We are talking about very significant amounts of money. If I understood your presentation correctly, this money is provided through programs. Programs for education and health. This money is given to the reserves. What will happen, for example, to the $200 million turned over to the Nisga'as? Can anyone here tell me what type of follow- up is being done on this money, or is no follow-up done as soon as the money is turned over?

Other Aboriginal nations are receiving quite significant amounts of money. The Yukon received money as a result of the land claim agreement and this money is often provided as compensation for the natural resources that have been extracted from these regions. These people requested compensation which was given to them, and we are talking about significant amounts of money. What type of follow-up do we do in order to determine, with the auditors, if the taxpayers money is being managed properly or do you no longer concern yourself with this money once it has been turned over? That may be the answer. I would like to hear what you have to say.

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Mr. Gordon Shanks: I will attempt to answer the first question and Mr. Austin will answer the second.

First of all,

[English]

third-party manager. When we come to the conclusion that the financial situation of a first nation is such that the local administration cannot handle it, it's a decision the department will take over the management of those programs.

We would normally contract with a firm with management expertise, normally in the financial area, such as an accounting firm, the large firms we're all familiar with, such as KPMG or Price Waterhouse, those types of firms. It would be done on a competitive basis. There would be a timeframe established for how long we expect this to happen.

One of the elements we look for is the capacity building in the community. It doesn't do any good to simply take over the community and then not try to build the capacity back up. So one of the elements would be to find a firm that is able to work side by side with the community and re-engage their local administration, so that the financial and other management problems can be corrected and the community can in fact go back to self-administration.

I'll ask Mr. Austin to respond to your question on claims expenditures.

Mr. Bill Austin: Funds that flow from the various types of claims we have in general will flow to a specific fund that is established as part of the agreement that is signed. So there is a separate fund, which is audited and managed by a board usually, a board of trustees if you will. Those moneys are segregated from the normal basic needs types of funds that you're more familiar with perhaps for education and health, as you mentioned.

The auditor would be required to review that special trust account or that trust fund and report. Those reports would be available to the citizens of the community or the beneficiaries of the claim.

[Translation]

Mr. Claude Bachand: Are these reports accessible to Canadian taxpayers?

[English]

Mr. Bill Austin: I don't believe so, no.

[Translation]

Mr. Claude Bachand: You are, therefore, telling me that $200 million may be turned over to the Nisga'as and that, even if this money comes from Canadian taxpayers, they do not have access to the audit reports to determine how this money is being spent.

Mr. Bill Austin: Yes, that is right.

Mr. Claude Bachand: I have no further questions.

The Chair: That is all for now.

Ms. Hardy, you can begin.

[English]

Ms. Louise Hardy (Yukon, NDP): Thank you for coming out today.

When the minister was last here, I asked him about the department's practice of paying less than the minimum wage in different areas, and I know certainly of one person. They said there would be follow-up, but I haven't been able to find out if the pay will be paid, if people working for the department are going to be paid at least minimum wage. And where they haven't been, they need to be paid retroactively. I was wondering if you would be able to follow up with that in your department and make sure it's happening.

I have a few questions. I'll go over them for you.

Mr. Gordon Shanks: Let me respond to that one right now. I believe the information has been collected just in the last day or two, and I believe the minister's office is expecting to respond to you shortly through the committee.

Ms. Louise Hardy: You mentioned the Gathering Strength document in your presentation quite a bit. But the Royal Commission on Aboriginal Peoples said the department, because of historical wrongs, wasn't in a position to act in a position of trust with first nations any longer. So with Gathering Strength, what exactly is the department doing to be able to implement the whole idea of this document in the face of the department's history with first nations people? Again, in Gathering Strength one of the highlights was that the department would negotiate rather than litigate, but we have thousands of residential school cases, there's the Musqueam situation that's being taken to court, there's the Lubicon Band, and the list just goes on and on and on about litigation rather than negotiation.

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Mr. Gordon Shanks: On the first question, certainly the royal commission commented on the history of first nations people, other aboriginal people, and Canadian society in general, and it pointed out that there are some serious issues of trust. The first thing the government did in responding to that issue was to issue the statement of reconciliation. There was clearly an understanding and acceptance of the viewpoint that we had to put the basis to rebuild the trust. One of the main pillars of Gathering Strength is rebuilding the relationship between aboriginal people and the rest of Canadian society.

The Chair: Excuse me for a second. I want to point out that if people are leaving right now, I was hoping to do one round of questioning, and, as I announced last week, we would try to get our next series of briefings set up, as this committee wishes. I do know we have enough people in the room but I thought, Mr. Bachand, you may be leaving, and I know it's very important for me to have you here because you have given good input to this committee.

[Editor's Note: Inaudible]

Mr. Claude Bachand: —

The Chair: What I will do is give you back that time. I will go to our side for one round, and then I will break, with the indulgence of our witnesses, hopefully for about five or ten minutes. Then we don't have to gather again just for the simple reason of choosing our next sets. We can get that accomplished, as we discussed last week.

Forgive my interruption, Ms. Hardy, I was afraid we were going to lose our quorum when I see that we had one.

Thank you.

Mr. Gordon Shanks: Thank you.

As I was saying, the notion of rebuilding trust is central to Gathering Strength, recognizing that re-establishing a firm basis on which to build the future is very important. The statement of reconciliation recognized that the historic activities are not something Canadians are necessarily proud of, and it went so far as to indicate, on the residential schools piece in particular, an apology for the suffering people went through in terms of sexual abuse at the schools.

The response to the statement of reconciliation was by and large very positive. When it was presented, the national chief of the Assembly of First Nations accepted an apology and indeed committed to working with governments in the future to build that relationship. That's the second piece, that the government has engaged with all of the aboriginal groups to develop plans of action to move forward together. We have an action plan with first nations, there is a plan with the Inuit, and we have arrangements with the Congress of Aboriginal Peoples. So Gathering Strength has given us the opportunity to work on rebuilding that level of trust.

On the question of litigation versus negotiation, as you indicated correctly, it's certainly the government's preference to negotiate issues rather than litigate them. Unfortunately, it's not always possible to reach negotiated settlements, and sometimes the proponents of a particular issue become impatient with negotiations. We would never want to close off the avenue that people have in Canadian society to go to the courts to resolve a dispute if they choose to do so. What we won't do is run two tracks in parallel, because if you're going to go to court, you tend to have to be very specific and deal with issues that way. But it's not our choice.

On the residential schools, for example, we have settled by far the lion's share of cases outside of the litigation process. Very few have actually gone to trial out of the many hundreds that are before us. We are working out alternate dispute resolution mechanisms to deal with the many cases dealing with the residential schools. It remains our fond hope that we will be able to negotiate these, rather than litigate.

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The Chair: If you wish, you can ask another question.

Ms. Louise Hardy: Just on the Musqueam situation, I can't see the department's action there as being beneficial to first nations, because there has been a huge backlash, particularly in B.C., against the first nations people because of Bill C-49. It is an overall benefit to them, but they're going to pay a price one way or the other just because they're first nations and because people took out leases and built homes on that land and dealt with the department over the issue. Now it gets thrown into the lap of the first nations, and they're the ones who have to wear the hardship of that decision. I think the department should have to explain itself over those sorts of decisions that affect the first nations people in such a negative way.

Mr. Gordon Shanks: I'm not sure I got the point of the question.

Ms. Louise Hardy: For example, on litigation, the Musqueam people went through Bill C-49 in order to control their own land. But there were people who weren't first nations who had homes on their land, and there's a whole legal entanglement over the leases and the value of people's properties and what they thought the department had offered them or what they believed their living situation was. It got turned on its head, and now the first nations people in B.C. are facing a backlash against them, and in some cases just outright racism, because they are now exercising what is their legal right to do. How could that situation have been prevented? It's a terrible mess for them. It's a mess for everybody involved.

Mr. Gordon Shanks: I wish I could give you a simple answer to that. I don't have one. Unfortunately, as you know, this is a case that has gone before the courts at two levels and is scheduled to be heard by the Supreme Court on June 12. I'm afraid I can't comment any further on that at this point.

The Chair: Thank you.

Mr. Finlay, five minutes, please.

Mr. John Finlay (Oxford, Lib.): Thank you, Madam Chair.

I think today's report, gentlemen, is very encouraging, because we have heard for years about these sorts of things not being done. Some of us around this table were present at the briefing when a young first nations person told us about the certified general accountants, about the forming of the professional society, and about first nations people looking after their own financial affairs. This report would suggest, certainly to me, that we're very much on the right track.

I have three short questions. The first one refers to the first page, third paragraph, where it says:

Today, First Nations directly manage 85 percent of DIAND's program budget. A further 11 percent is transferred to the provinces for the delivery of services to First Nations people.

Is that for education and health, or just what is involved? Is it simply that the federal government transfers it to the provincial government and they hand it over to the first nations, or do they have something to do with delivering it?

Mr. Gordon Shanks: For example, in the Province of Ontario, social assistance is delivered by the province to first nations, so we would transfer the money to the Province of Ontario based upon their delivery of social assistance to first nations people in this province. That's an example of how that would work.

Mr. John Finlay: Does that mean there are officials of the provincial government that administer it on the reserve, or does it simply mean that the money is transferred and...

Mr. Gordon Shanks: It would vary. There would be situations where there would be provincial officials that deliver programs. By and large the provinces would have devolution in the same way the federal government does.

Mr. John Finlay: Thank you.

In the second last paragraph on page 3 you say:

About 70 percent of First Nations now operate under the first category and 30 percent under the second.

• 1625

I take it that the ones who operate under the first category, the comprehensive funding arrangement, have a little less freedom to operate than those under the Canada-first nations funding agreements. Am I right? I'm going by what you said earlier.

Mr. Gordon Shanks: That's correct.

Mr. John Finlay: So 30% are at this level and 70% are approaching that level.

Mr. Gordon Shanks: That's correct.

Mr. John Finlay: I also notice that the last sentence in the next paragraph says:

They are accountable to the Department of Indian Affairs and Northern Development for the public funds provided to them.

That's why the department can assist them if they get too far out of line and can put someone in to look after that.

Mr. Gordon Shanks: That's correct. The funding agreements are essentially a contract between the Department of Indian Affairs and the first nation. For the dollars received, they agree to deliver programs to a certain standard. If they're not able to do that on our behalf, we would withdraw that authority and deliver them ourselves.

Mr. John Finlay: You mentioned somewhere in your first presentation that the higher level of training and education on more and more reserves leads to the ability of the first nations people to question their leadership and to be concerned about how these funds are spent. On the very last page you say:

Sustainable governance structures and policies will allow First Nations to manage the economic and other affairs of their communities in an effective and responsible way.

We received from the minister some information about the Harvard study in the United States. Having read that study, it makes that same point, that education, knowledge, and responsibility are what will lead to good governance in first nations communities. You nod, so you must be aware of that project and have taken a page from that book.

Mr. Gordon Shanks: We're very much aware of it, and we've had many discussions on this with the people from Harvard. Their thesis is that good governance and economic development go hand in hand. That's very much where Minister Nault is moving in trying to build good governance that allows for economic development to take place.

Mr. Bill Austin: Only to echo the sentiment, there is a tremendous synergy that is possible. I'm pleased to hear that you've had an opportunity to read some of those studies, because I think they're quite profound. It really goes to the heart of what I think Gathering Strength is trying to do as well and the government's policy at this point in time.

Mr. John Finlay: I would agree with you. Thank you.

Thank you, Madam Chair.

The Chair: Thank you.

Madam Hardy had to go up to make a speech in the House, but she will be rejoining us.

Seeing that I have a quorum right now of nine people in the room, I'm going to take this opportunity between the rounds of questioning to put on the table the suggestions we had talked about the last time to see whether our clerks and researchers can line up our next sets of witnesses.

The Harvard study and the Auditor General's reports were on the table. I wanted to let you know that I've also been in contact with the Indian Claims Commission. They sent me this book and their report. They've called me to say that they would like to appear before us and tell us what they've done. I've never met with them. I wouldn't mind hearing from them, if it's the will of the people around this table.

The other person who wrote to the clerk, myself, and the two vice-chairs was the Auditor General. He referred to the recently released chapter 4 on Indian and Northern Affairs Canada, elementary and secondary education. It contains answers to some of the questions we raised that some of the people who have been before us weren't able to answer. So that's a potential witness for us.

• 1630

It has been brought forward by Mr. Bachand in the past that maybe we should be listening to the AFN. In the presentation last week we heard about the joint initiative for policy development. Perhaps it might be an appropriate time, even though that's not a finished process, for us to get the AFN in to say where they are, because I think around this table we all agree there's a partnership going on. With all due respect to the department, there is another voice, and that needs to be heard by this committee.

Essentially we have five, potentially six, weeks left. We did a year's worth of hearings when we did the Nisga'a Treaty. But at the same time I'm advised that one of our parties around the table is likely to have a change of critic, and some of the people may not be here as we resume in the fall. So I'm quite willing to start a study as chair, but this is the group of people that decides where we're going, as far as I'm concerned. If we feel as a group that our time would be best spent filling the information so that we can start fresh at a later date, that's fine, or if you want, we can start a piece of the study right now.

Mr. Konrad, I believe you had asked that some of the Auditor General chapters with respect to the accountability process, if I'm correct in my memory, also be laid on the table.

That's where we are. My preference is, rather than going at this one by one and wasting a lot of time, if anybody has any objections to all of those or... I think we could get all of those things I've just mentioned on the table. I don't know if somebody wants to start adding right now, but can I get at least agreement...

Yes, Mr. Konrad?

Mr. Derrek Konrad: I have one other name, but you're looking for agreement on—

The Chair: I'm looking for agreement to have our clerks and researchers bring in these people as a minimum before the end of the year.

Mr. Derrek Konrad: Then I have one more to add.

The Chair: Well, could we get the agreement on these ones before we start, and then go to the next?

Mr. Konrad, go ahead; try to add another one.

Mr. Derrek Konrad: “Try to add” is...

The Chair: Well, we all have to agree, right? I don't vote, but—

Mr. Derrek Konrad: When the minister was here, I tabled a report of the First Nations Accountability Coalition, and I would like to see us invite Leona Freed, who is the head of it, to come here. She's done a significant amount of work right across Canada in talking to people who are affected by the policies, rather than to the policy-makers only. So I would like her to be added to the list.

The Chair: All right.

I'm going to put this as a list of six, and if the list of six is agreed to, then we're done. If it's not, then I will do the list of five and a list of one. But for right now I see benefit in hearing all of these voices.

Monsieur?

Mr. Claude Bachand: I want to add some other voices. Can I do it now or do I wait?

The Chair: Oh, okay. Well then I'm going to, as chair, at least go for the five. If we're going to get into that...

On the five I mentioned originally, is anybody confused about what they are?

Mr. John Finlay: You might review them, Madam Chair.

The Chair: Review again.

They are the Indian Claims Commission; the Auditor General on chapter 4 of the report, which is on education; something on the Harvard study, and I take it that's from our own officials as they understand the Harvard study, as opposed to bringing in the outside at this point in time, because it's for information purposes; the AFN on the joint initiative for policy development; and then the Auditor General on the accountability chapter. There was one accountability chapter. Which chapter is that?

A voice: There have been many accountability chapters over the years.

The Chair: Okay, well, the last accountability chapter is the...

Mr. John Finlay: I have a point of information, Madam Chair. The Auditor General is going to be appearing before the public accounts committee on the particular chapter regarding accountability of first nations, so I don't know whether we want to repeat the work or whether we want to invite the members who are concerned to come to the public accounts committee and listen to things there. I only make the suggestion. I happen to be on both committees. I'm not sure I want to sit through it both times, but I guess that's up to me.

• 1635

The Chair: Those are the five right now, including the accountability chapters. If we want to do them one at a time, we can do that. It's the pleasure of the committee.

[Translation]

Mr. Bachand.

Mr. Claude Bachand: Madam Chair, I agree with at least part of the five, but could you explain why you would agree to having the Indian Specific Claims Commission come to make a presentation. Have they made such a request? I do not know whether you are aware of this, but the Indian Claims Commission is strongly opposed and the government agreed, along with the Assembly of First Nations, to set up an independent tribunal because the Indian Claims Commission has a backlog of 400 or 500 cases. We are in the process of changing the system, and I feel that we would be giving the Commission a special status were we to invite it here. I would like to see how the government is going to resolve the issue. They are still waiting for a response from the Minister. Consequently, I am wondering whether it would not be a bit premature to have the Indian Claims Commission come here in order to make a presentation.

I would also like to take this opportunity to tell you that section 35 of the Constitution Act of Canada provides for three Aboriginal groups: the Assembly of First Nations, as well as the Métis and the Inuit. We often tend to forget these groups and we're often told, when we go into these communities, that we invite only the Assembly of First Nations. If it were up to me to make the decision, I would drop the Indian Claims Commission and I would add to the list the Inuit and Métis of Canada, the two other groups recognized by the Canadian Constitution. I would like to hear what my colleagues have to say on this matter. I am sure that Nancy will agree.

[English]

The Chair: It is very clear to me that we cannot vote on them as five, so what I will do is call them one at a time, and then it will go with the will of the committee. We may end up doing this procedure again another time. It has worked successfully for us to date, so I'm quite satisfied in doing that.

Maybe I'll try to go to something that is not so controversial: the Harvard study. All those in favour of hearing a discussion on the Harvard study, please indicate.

Some hon. members: Agreed.

The Chair: It's unanimous.

Next is the Auditor General's recent report on primary and secondary education, chapter 4. All those in favour?

Some hon. members: Agreed.

The Chair: When we have the Auditor General's report, we may want to have the department in to do the response to that report, but for now, it's the Auditor General's report on that activity.

If the AFN wishes to comment, this is an invitation to them. Just because we ask, it's not like the department where we know they'll say yes. We'll put that invitation out there. This is on their joint initiative for policy development. All those in favour?

Some hon. members: Agreed.

The Chair: Those interested in the Auditor General's report with respect to the accountability...

Mr. Derrek Konrad: Are those the transfer arrangements?

The Chair: It's the transfer arrangement chapters. This is the one you put forward, Mr. Konrad.

All those in favour?

Some hon. members: Agreed.

The Chair: So we'll do that as one. There's more than one chapter, but they can address it as one, one day. This is on the Indian Claims Commission. The reason I put it forward is because they contacted me and sent things in.

I realize the validity of what you're saying, so I'm just putting it forward as an idea, and it's your will as to whether you think it's premature or not.

• 1640

All those in favour at this time? It's opposed.

Mr. Bachand, we will wait.

Did you wish some comments from your colleagues before we vote on the Métis? To say you want to talk about Métis and the Inuit of Canada, that's a pretty large subject. Did you want to be more specific, then, in your—

[Translation]

Mr. Claude Bachand: No, I did not want to be more specific. I would like them to appear before us and explain how they see the Aboriginal issue in Canada at present, and I would like them to provide us with some guidelines as to how to resolve the Aboriginal issue with respect to the Inuit and the Métis.

I recently met with Mr. Morin from the Métis of Canada. The Métis are currently negotiating in Ottawa. I do not know what is going on. I would like to have the Métis come once a year. This time it would be more than once a year because we haven't heard from them in at least two years. I would like the Métis to tell us how they are progressing in terms of their negotiations and status. These are, after all, one of the peoples recognized in section 35 of the Constitution.

They know that we are examining relevant issues, and I wouldn't want the Indians of the Assembly of First Nations to be the only ones invited. I would also like to hear from the Inuit and the Métis.

We are talking about two meetings that would last approximately two hours each. This is about the same amount of time we have allocated for the department. This is not asking too much. I would like us to set aside two hours for the Inuit and two hours for the Métis. I would like to ask them how they see the future and what they think the committee should be working on. I feel that it would appropriate to do things in this fashion.

[English]

The Chair: Are there comments from anybody else around the table on that particular point before we take it to a vote?

Mr. Konrad, go ahead.

Mr. Derrek Konrad: I would like to bring the Métis in, but I would like to discuss it in terms of HRDC, because there are a number of HRDC programs, and see how they're faring. If we're talking accountability, a lot of money goes out for training programs under Métis-sponsored HRDC programs.

The Chair: Go ahead, Mr. Finlay.

Mr. John Finlay: I want to make a comment on that. At HRDC, there's a committee that looks after that too. I think what my colleague Mr. Bachand is talking about is getting a little picture of where things are vis-à-vis the Métis and then the Inuit with respect to aboriginal governance, because they are, under the Constitution, one of our aboriginal peoples, and I think that's what we should stick to. I think that's what we should learn about.

The Chair: I am going to call Mr. Bachand's question, with a view to seeing the correctness with respect to... Do you want the Métis and the Inuit on the same day or separate days?

Mr. Claude Bachand: No, it could be separate. It should be—

The Chair: I think it should be two separate days. We will do that on what you called, and then, Mr. Konrad, do you want to take that as an amendment to your position, as an amendment to the suggestion, and then we'll vote on the amendment first to see if that goes? That would seem to be logical to me. Otherwise we're going to have one vote and then try to get a specific down.

Mr. Derrek Konrad: I guess I can talk about whatever I want to when the time for questions comes.

Mr. Claude Bachand: Exactly.

The Chair: Yes.

Mr. Derrek Konrad: Why don't you just put the question?

The Chair: Okay, I'll put the question. I'm trying to be extremely fair here, Mr. Konrad.

All those in favour of having two separate meetings, one on the state of Métis relationships in governance in Canada, if that's a good way of putting it, and then a separate meeting on Inuit governance within Canada.

Some hon. members: Agreed.

The Chair: Thank you, and again, those are invitations out to those organizations. We'll have our researchers and clerks work on that for us, and hopefully those will be accepted.

Mr. Konrad, would you like me to put yours to a vote too on the specific...

Mr. Derrek Konrad: On the first nations, the accountability provisions...

The Chair: You wanted to do it as a questioning, as I understood your last comment.

Mr. Derrek Konrad: That's okay.

The Chair: Thank you.

Have I missed anything that anybody has put on the table?

Mr. Konrad wished to have Leona Freed.

Is this the lady who was in Homemakers' magazine recently?

Mr. Derrek Konrad: Yes.

• 1645

The Chair: Okay. There's the First Nations Accountability Coalition. Does anybody need further information on that? Does everybody understand what we're talking about here around the table?

Mr. John Finlay: No, I don't.

The Chair: Mr. Konrad, would you enlighten us?

Mr. Derrek Konrad: Leona Freed, as you said, was written up in Homemaker's magazine as one of the aboriginal women who's making a difference. She's highlighting accountability issues on reserves. She has held meetings right across Canada and has this coalition.

I don't know whether you have seen the report I tabled the day the minister was with us. I would like her to come to highlight some of the things that have been going on.

I hope we're looking at accountability as well, and not just simply asking questions for our own benefit. After all, when we look at aboriginal statistics they are terrible, say what you will—suicide rates, substance abuse, family violence, family breakdown, unemployment, poverty, the whole works. She's seen it as a person who has lived that life, and I think it would be to our advantage and to the advantage of all first nations people to hear what she has to say.

The Chair: I will put the question to the table.

Mr. Finlay.

Mr. John Finlay: Excuse me, Madam Chair.

Mr. Konrad, what's this person's responsibility vis-à-vis first nations?

Mr. Derrek Konrad: We want to know how first nations government is working. That's part of what we said. This is a copy of the Homemaker's magazine. She's featured in it and talks about the way things have been going for her. She would be a knowledgeable person to help us understand the way things are on reserves for many people.

The Chair: Mr. Sekora, and Mr. Bachand.

Mr. Lou Sekora (Port Moody—Coquitlam—Port Coquitlam, Lib.): Madam Chair, the fact is we can bring in all kinds of witnesses with different views. You need to bring in someone with real expertise, rather than somebody who's been written about in a magazine and has been travelling across Canada. If you wanted to bring in all kinds of witnesses from all sides, you could do so.

[Translation]

The Chair: Mr. Bachand.

Mr. Claude Bachand: Mr. Konrad, I am not very receptive to that. I will tell you how I perceive Ms. Freed. I know that your colleague, Myron Thompson, recently moved a motion about creating an ombudsman position and I know that the coalition was sitting in the gallery and was very much in support of this motion. Furthermore, I think that this motion was voted down by a very strong majority because all the parties, with the exception of yours, voted against it.

In today's presentation, we were told that only 4% of the reserves were experiencing difficulties. I think that Ms. Freed and her current entourage, whom I have met, are not people who have been elected to positions in the band councils. Often these are people who were defeated during the band council elections, I am very cautious about people who were defeated in the band council elections and who then raise a hue and cry throughout the country stating that everything is going wrong.

Personally, I do not think that everything is going wrong. We had proof of this today. Although I have not checked but I think that the people who made the presentation were acting in good faith. I am somewhat reluctant to invite this woman who is going to tell us that things are going poorly in all of the reserves. We were told the opposite today.

I recently visited some reserves and I know that this coalition is making its voice heard. It is recruiting people who were defeated in the election and who are dissatisfied with the way that the new team is managing community affairs. It is for this reason that I am very reluctant to invite what I consider to be a group that is lobbying against the Aboriginal communities themselves. Ninety-six percent of these communities don't have any problems, according to today's presentation.

[English]

The Chair: Ms. Karetak-Lindell, please.

• 1650

Mrs. Nancy Karetak-Lindell (Nunavut, Lib.): On page 7 we saw some very interesting things, like the Aboriginal Financial Officers Association, which is working to improve accountability. If we're going to be seeing witnesses on how things can improve, this is one of the groups we would want to see, or maybe the Alberta chiefs steering committee on financial accountability.

I think our role as members of this committee is also to see how we can improve things and how we can get accountability at the community level. As a committee member, I am more interested in how these two groups can take their models and apply them to different people's needs and requirements. If we are going to add people to the list, these are the types of people I want to see, who have positive structural models they can share with us to improve accountability.

I don't know if there are constructive models that can come out of seeing someone like that.

The Chair: Okay. We have our witnesses here. We have enough right now to go forward for a little while. If you like, Mr. Konrad, I will take the vote before I start adding more to the list, because otherwise we'll be wasting the time of the witnesses we have here today. I know Mr. Scott and others need to do a second round of questioning.

Mr. Derrek Konrad: Let's leave it then. I can talk to some of these people after—

The Chair: Okay. Maybe another day, is that it?

Mr. Derrek Konrad: Yes, I'll bring it back.

The Chair: Hold your powder for another day, okay.

Ms. Karetek-Lindell, will you do the same maybe on your next round?

Okay, thank you very much, ladies and gentlemen. That gives us more for our group to work ahead on.

Mr. Scott, we're going back to the regular questioning. Thank you for your patience, gentlemen at the end of the table. Go ahead.

Mr. Mike Scott (Skeena, Canadian Alliance): Thank you. My question is for Mr. Shanks.

Mr. Shanks, you and I have known one another, not well, but for a long period of time, and you appeared before this committee many times when I was sitting as a member. So you will forgive me if I'm a little bit skeptical, or maybe a lot skeptical, about some of the things the department is saying here today, simply because I've heard these things before going back to 1994, 1995, 1996, and so on.

I can give you an example. In 1997, we obtained a report that was prepared by the department in 1995. It was an internal report that the department chose not to release publicly, but we did obtain a copy of it. It was prepared by an outside contractor and it was to do with social assistance on reserve. I can't remember the name of the report right off the top of my head, but I'm sure you know the report I'm referring to.

That report found that nationally, 50% of bands were in non-compliance with the department's accountability requirements, and that level was as high as 70% in Saskatchewan. That was completely inconsistent with what DIAND and the minister were saying at that time. The minister and DIAND were saying it was 3%. You will forgive me, but when you talk about 4% right now, I frankly don't believe that number.

You will also recognize that the Auditor General has stated since 1994—since I've been a member of Parliament—that your department cannot properly account for funds expended on reserve in the areas of social assistance, economic development, health care, and, most recently, education. The Auditor General has consistently said that your department cannot properly account for the money that's being spent and cannot explain to me, as a member of Parliament, and to the Canadian taxpayers why the desired results of these programs are not being achieved.

For example, spending on aboriginal education is about $10,000 per student per year, which is $3,000 a year higher than in the non-aboriginal population of Canada. Yet the Auditor General says aboriginal students are 20 years behind the rest of Canada. He sees no hope, in his report that was tabled a month ago, that this is changing.

So you will forgive me, sir, if I tell you I just don't believe you have a handle on what you're doing. I think you are consistently trying to downplay and deny the scope of the problem. I do not believe the department has the proper controls in place. I do not believe you seriously intend to put those controls in place. I believe you are hiding behind a 1988 Federal Court decision that is, in my estimation, something the government and the department could easily override if it chose to do so. But you hide behind that in an attempt to not provide any more information than you absolutely have to.

• 1655

I think, sir, what the department is doing and what the government is doing is a terrible disservice to aboriginal people as a result. I don't expect that you want to answer that. You know, Mr. Shanks, that my criticism has been harsh and outspoken about your department for a long period of time, and I think I have very good reason to be that way. I do not believe the department is serious about changing. This is not a personal attack on you or anybody. It's just an observation made after long years of study of the department and its policies.

I do believe the political apparatus that controls the department does not have the will or the inclination to change things, and I think the people who are paying the price for that are aboriginal people living on reserve.

The Chair: We have a minute and ten seconds, if you would like to comment.

Mr. Gordon Shanks: Madam Chair, I didn't hear a question. As Mr. Scott suggested—

The Chair: That's fine, then.

Mr. Mike Scott: We've asked you a lot of questions over the years, Mr. Shanks, and we've had the answers, but frankly, the answers we got from you don't jibe with the reality we see when the Auditor General brings in more reports and says the same thing in 1999 or the year 2000 that he did in 1994. Why should we believe the department? There's the question.

[Translation]

The Chair: Mr. Bachand, please.

Mr. Claude Bachand: I had a question, but I think that I will change the approach. I tend to believe that what is said is true. One way to do this would perhaps determine whether or not this is public. Earlier, you stated that the Department of Indian Affairs' reports with respect to the money given to the reserves, are made public, as are the audits carried out by certified accountants.

Could we know which reserves are experiencing difficulties? Is there any way that we could obtain the list showing the 4% of reserves where there are problems?

[English]

Mr. Gordon Shanks: You're correct. The audits are not public, and, as Mr. Scott pointed out, the courts have told us they are not accessible under the current legislation.

The information on expenditures is public. All of DIAND's expenditures are listed in the national accounts of Canada. All of the contribution agreements are listed in the national accounts of Canada. That's public information and publicly available.

Minister Nault indicated to this committee a few weeks ago that he is looking for ways to provide public information more readily to members of Parliament and the general public.

On the question of the financial situation for first nations, we can provide information in regional terms, for example, how many first nations in a particular region are under co-management and how many are under third-party management. That information is public.

[Translation]

Mr. Claude Bachand: Mr. Shanks, I would like you and I to change places, so that you could come and sit in my seat and I could sit in yours. As an elected representative of Parliament, I would like to know how I can check the figures that you have provided. How can I check these figures? Is there any other way that you could demonstrate these figures for me other than noting them in a report? Is there any way that I can ensure that things are going well in 96% of the reserves and that there is a problem in 4% of the reserves?

[English]

Mr. Gordon Shanks: We can provide the committee with the statistics on the numbers of...

[Editor's Note: Technical Difficulty]

...remedial management plans, the number of communities under co-management, the number of communities under third-party management.

As I indicated in the remarks, there are different levels of difficulty. The third-party management is the level where the department replaces the local administration, and that can be for a combination of reasons. There are instances below that where there will be financial difficulties, where we believe action has to be taken.

• 1700

Our normal key for initiating an action is when we look at an audit and the debt ratio of the community is greater than 8% of its annual revenues. When that instance comes in, we would then ask the community to undertake a remedial management plan.

Now that doesn't indicate that they're in serious financial difficulty at all; it simply suggests that we are concerned they could be going down that road. So we can provide the committee with those statistics.

[Translation]

Mr. Claude Bachand: The statistics that you want to give to us are statistics broken down by region, etc. If I understood you correctly, you do not want to name the communities. Was Mr. Scott telling us the truth when he stated that, as a result of a 1998 court decision, you are not allowed to do this?

Mr. Gordon Shanks: That's right.

Mr. Claude Bachand: Is that right?

Mr. Gordon Shanks: That's right. It is because of the court decision.

Mr. Claude Bachand: What decision is this?

Mr. Gordon Shanks: In order to be clear, I will have to speak English.

[English]

What the court said was that consolidated audits include confidential information. In passing, the court said it did not believe the public information included in the audits was a problem, but the court was not asked to address that. The judge did say, however, that he did not believe you could simply cross out some lines in the audit to protect the private information and then release an audit with blackouts. It doesn't work—

Mr. Claude Bachand: What decision is that?

Mr. Gordon Shanks: It's called the Montana decision.

Mr. Claude Bachand: The Montana decision.

Mr. Gordon Shanks: Yes.

Mr. Claude Bachand: Okay. Thank you.

The Chair: That's it.

Ms. Hardy, please.

Ms. Louise Hardy: On page 5, you talk about the allegation and complaint coordinators. My office has been trying consistently over the last few months to find out who is actually in these positions, how we can contact them, if we can get their names and their job descriptions. I was wondering if you could make that available to the committee members. I think it would be really helpful. We have so many people who come to us on these issues, and if we can at least have a person to refer them to, to take their complaints, or their allegations...

Mr. Gordon Shanks: Certainly. The department will provide that to the committee, if we haven't done so already.

The Chair: Even if you have done so, maybe—

Mr. Gordon Shanks: Certainly, we will do that, yes.

Ms. Louise Hardy: The other question is this. Where bands haven't signed off their claims—they're not involved in their own self-government at this point—but the department is responsible to see that they get services, how do you do that? People who are eligible for social assistance have come to me, because in this case they are not getting what they're supposed to get. They go through every single step they're advised to go through and absolutely nothing happens.

Mr. Cal Hegge (Director, Transfer Payments Directorate, Department of Indian and Northern Affairs Canada): The process we have set up, which goes back to the allegations and complaints coordinators that have been set up in each region, is that if our department gets a complaint from a member, that complaint will be thoroughly investigated. We protect the identity of the complainant, and we'll work with the first nation to determine if the complaint is valid and ensure they take corrective action, especially if it's a case of social assistance, which is essentially a needs-based program, not being met.

So if you have any evidence that someone is not getting their complaint addressed and you let us know, we'll certainly follow up on it.

Ms. Louise Hardy: My other concern is, for so many of these communities that are so small, how can you possibly keep the complainant's name confidential?

Mr. Gordon Shanks: We can do it in terms of a formal complaint that comes into our system, whether it's verbal or written. We track them on a separate system that has been verified to be confidential, so there is no way a departmental employee using the system can track back. The system they're using is as secure as we can make it at this current time.

Ms. Louise Hardy: I actually wasn't questioning that part of it. The question I have is about back in their communities. Their communities are small. How is that dealt with in a way that—

Mr. Gordon Shanks: As Mr. Hegge pointed out, we attempt to do it as anonymously as possible, so we would not go to the administration and say person X or Y has lodged a complaint and we want this to be investigated. We would do it in a manner that, to the extent possible, protected that complainant. If it were a social assistance case, we would go in and look at how social assistance is being delivered, what policies they have in place, and attempt to ensure that everybody who was eligible for that program was given access to it. I appreciate what you're saying. In some very small communities that's a difficult thing to do.

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Mr. Cal Hegge: I could just add that because many first nations are under the comprehensive funding arrangement that was outlined in the presentation and are therefore on a reimbursable basis for social assistance, we actually do fairly detailed compliance checks in terms of whether the social assistance is following provincial practices. That's another opportunity to verify that proper procedures are being followed.

Mr. Gordon Shanks: Just to follow up on Mr. Hegge's comment, as we mentioned in the management framework, what we do require in funding agreements is a management assessment of the community. What that assessment does is it looks at the various program requirements. For example, if a community is delivering social assistance, does it have policies in place that are fair, equitable, and transparent?

Through the management assessment process and the development plan, we're working with the communities to build that capacity to minimize those kinds of things happening. That's something that's been a requirement of the funding agreements for the past four years. We have been working diligently in the past two years with communities. Under Gathering Strength, resources have been provided by the government to the department. We're now spending about $20 million a year on capacity development, so it's directed to those kinds of issues.

The Chair: You can have more time if you wish.

Mr. Grose.

Mr. Ivan Grose (Oshawa, Lib.): This is not in the form of a question. As some of you well know, I haven't been a good attendee lately, so I'm a little bit out of the spin. I've had obligations elsewhere.

The only comment I'll make is that I've been exposed to the media and other reports while I haven't been here, and I'm having a problem accepting this. Now, note I said “I'm having a problem”. After studying it again tonight, I may have no problem. I don't feel it would be fair of me to ask a question on the report at this point. I'm hoping I'll be happy with the report when I review it again.

Thank you.

The Chair: Mrs. Karetak-Lindell, would you like to have the balance of that time?

Mrs. Nancy Karetak-Lindell: No.

The Chair: No, not at this time.

Monsieur Konrad.

Mr. Derrek Konrad: Thank you.

I have a quote here from page 2:

The new arrangements do so by focusing more on the “whats” that are to be delivered rather than on the detailed “hows”.

I presume the “whats” are determined by band councillors consulting with people, with band meetings with band members. From there they develop a budget, probably a line-item budget, I suspect. Am I correct there?

Mr. Gordon Shanks: Maybe I could just answer you.

Mr. Derrek Konrad: It's kind of a leading question.

Mr. Gordon Shanks: Okay.

Mr. Derrek Konrad: I'm going to go somewhere else with that.

Mr. Gordon Shanks: It depends. Yes, normally a community would develop a budget by programs, yes.

Mr. Derrek Konrad: Thank you. By programs or by items?

Mr. Gordon Shanks: Well, they would do items within programs. If you had education, they would have a budget that dealt with busing, school books, teachers' salaries, and that sort of thing. It would be line items under—

Mr. Derrek Konrad: School books in the whole item. All right.

Now, you talk about flexibility and other things here. Then it seems that the “whats” change according to the whims of chief and council after the budget has been prepared and submitted and the appropriations made. How is that handled?

Mr. Gordon Shanks: Well, let's just review what you've said.

The difference between the “whats” and the “hows” is really that we still, in contractual terms, determine in large measure what is going to be done. The contract is not that open ended. There are minimum conditions for resources provided. Social assistance must be provided to recipients at rates generally comparable to the province in which they're situated. Education must be delivered according to minimum standards.

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So the “what” is still defined. In terms of how they do it, though, we do not prescribe how social assistance would necessarily be delivered.

Mr. Derrek Konrad: I think I can understand all of that. I'd like to save a little of my time to get my questions in.

Mr. Gordon Shanks: Sure.

Mr. Derrek Konrad: Are chiefs' and councils' salaries included in the budget?

Mr. Gordon Shanks: Yes.

Mr. Derrek Konrad: So when a chief writes in $300,000, as is happening in the Akwesasne reserve, that's just added and the additional amounts are transferred? The money isn't taken out of social or housing programs or anywhere else? The money is transferred, whatever they decide they're taking for councils' salaries?

Mr. Gordon Shanks: You should be aware, Mr. Konrad, that Indian Affairs is not the sole source of revenue to first nations. I think on average we provide about 75%, and there are many instances where the departmental resources would be 40% or 50%. There are other sources of revenues to pay officials.

We provide a grant, the Parliament votes a grant for band support funding for first nations, based on a formula. It's not an excessive formula. It provides for the payment of chiefs, councillors, and administrators. If the band can augment that from other sources, we don't have any control over that.

Mr. Derrek Konrad: What other sources might they have?

Mr. Gordon Shanks: They would have economic development ventures.

Mr. Derrek Konrad: And those come through what department?

Mr. Gordon Shanks: They may be external. In the case of Nova Scotia, for example, most of the first nations have arrangements with the Province of Nova Scotia to share gaming revenues. We do not have any management or control over that. In Ontario, the Casino Rama distributes revenues to all first nations. We don't have any control over those moneys. There would be businesses that could be operating—

Mr. Derrek Konrad: Okay. So if a band had a completely operative economy on the reserve that should provide a livelihood for each one, that's all outside of your control and you'd still be providing money for all these other things?

Mr. Gordon Shanks: The current policy structure is that the social programs that are listed in the departmental mandate are provided on a formula basis. We do not subtract for the own-source revenues, with one exception. As Mr. Hegge pointed out, programs such as social assistance are based on repayment so that if social assistance rates drop, obviously the government's payments for social assistance drop on programs that are based on the actual expenditures.

Mr. Derrek Konrad: The only reason I bring up some of these things is that it has come to my attention many times since I've been elected that there is a road through a particular reserve that is never constructed up to the standards of the provincial road on both sides of the reserve, even though the funding is always on the budget for the Indian reserve. The money always goes to some other purpose. What's the situation when it comes to that? How is that dealt with? Are the local, rural municipalities and the province just told, too bad, we have the flexibility and never mind what the budget said?

Mr. Gordon Shanks: It would depend on the specific circumstances. Major capital projects are done through a procurement process and they are funded according to the estimates of the project. Money flows according to the project design. There is no ability to shift resources from those projects.

On minor capital projects, the first nation is required to provide a plan of how that money will be expended. I would have to say that the resources that are provided on many of these programs are not necessarily 100% of the cost. Many of the federal programs are in fact subsidy programs where the department is providing 70% or 80% of the cost. If there are no other resources available to fill the other percentage, there are sometimes possibilities of trying to create 100% of the project with 80% of the money.

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[Translation]

The Chair: Mr. Bachand.

Mr. Claude Bachand: Mr. Austin, I would like to go back to the money associated with land claims. With respect to this money, I was told that if there is a $200 million agreement with, for example, the Nisga'as, the money given to the Nisga'as over a given period of time comes directly from Treasury Board. This is what I think. This is not money coming from the Indian Affairs budget. Am I right?

Mr. Bill Austin: No, Sir. This money comes from the Department of Indian Affairs.

Mr. Claude Bachand: Does this money comes from the department?

Mr. Bill Austin: Yes, that's right. The money comes from our budget. You can see that next year or this year.

Mr. Claude Bachand: Are the agreements with the Nisga'as, the Yukon and the Cree included? Could we examine all of this there?

Mr. Bill Austin: Yes.

Mr. Claude Bachand: I would like to know whether or not the department is aware of the following problem. I am one of those people who advocated giving more and more responsibilities to the Aboriginal people and I think that we can do this through land claims, to ensure a certain degree of self-sufficiency, and also through self-government.

Often, when the government reaches such agreements with the First Nations, financial compensation is allocated. For instance, there is the $200 million allocated to the Nisga'as. This is a typical example. But as soon as it becomes government policy to transfer responsibilities to the Aboriginal nations, to transfer jurisdictions through self-government, to transfer land to them to provide them with self-sufficiency and to provide them with money to compensate for the losses that they have sustained, it seems to me that the money under government control evaporates. The Auditor General may conduct some internal audits within the department, but if the money is paid out as a result of land claim agreements, it is impossible.

Are we not witnessing a situation where $5 or $6 billion are being transferred to the Department of Indian Affairs and where, within 10 years, the budget will be slashed? Nobody will be able to check where the money allocated to the First Nations went and nobody will be able to check how much money will have been spent. That is the problem I have. Has the government given any thought to the increasing withdrawal of the Department of Indian Affairs and to the total control that will be given to Aboriginal nations without setting up any safety guard rail or anything whatsoever?

There is not one single Canadian taxpayer who will be able to say, in 10 years, that the Department of Indian Affairs had $6 billion, that this money was turned over to the Aboriginal peoples and that we continue to pay without having any say whatsoever in the matter. I am not saying this because I do not trust Aboriginal people, because I do trust them, but it seems to me that, in order to clarify the situation, to achieve transparency and to ensure that the Canadian taxpayer knows that the money is being invested properly, we have to establish some parameters in order to monitor the situation. Have you given any thought to this issue?

Mr. Bill Austin: We have thought about it, yes,

[English]

but I think the system is built such that there is transparency and there is accountability. If you take a look at the amounts of money that may go into a claim where there has been a settlement for a claim, the money will go into a claim for a period of time, whether it's a specific claim or a comprehensive claim. It may be shorter for a specific claim.

Those moneys are set up in a management regime, which is governed by the agreement that the community votes on. As beneficiaries to that claim, they understand how those moneys are going to be controlled. There will be a trust account and probably a board, or a number of people, to govern the accountability of those funds to the beneficiaries. In my opinion, those beneficiaries are very cognizant of the benefits that would flow from the claim, how they're being spent, and who they're being spent on. They have a very direct interest, as you can well understand. That, to a certain extent, is part of the elements of self-government and accountability.

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As you well know, many of the comprehensive claims take a great deal of time and effort. There is considerable community involvement, consultation, etc. I submit to you that they're very watchful and very knowledgeable about the benefits of the claim and how those things are being managed.

The Chair: I understand you have a point of information on this particular point, Ms. Karetak-Lindell.

Mrs. Nancy Karetak-Lindell: I just want to add a little bit about the Nunavut Land Claims Agreement. Every year Nunavut Tunngavik Inc. has to publish a report of how the money was spent, and then they have to have a public meeting, plus we as beneficiaries can request of them how those funds are being used. But every year they do publish financial statements, as required by all of the agreements. So it's not as if no one has access to how those funds are being used. They do have a reporting system.

The Chair: Thank you very much.

We'll go to Mr. Finlay, and then if there's time, I'll ask one question. Go ahead.

Mr. John Finlay: Thank you, Madam Chair.

I had a question in my mind about page 2. It's sort of historic, but just so you can clear things up... In the second paragraph you say:

DIAND secured Cabinet and Treasury Board authority for Alternative Funding Arrangements (AFA) in 1986 and Flexible Transfer Payments (FTP) in 1989.

They were to streamline operations and provide greater decision-making and accountability and so on.

Two paragraphs down you say:

Today DIAND uses two types of funding arrangements with First Nations—a basic model, known as a Comprehensive Funding Arrangement, and a second known as the Canada-First Nations Funding Agreement.

We talked earlier about that one. Are those just new names for the 1986 and 1989 arrangements, or are they the son of Sam?

Mr. Gordon Shanks: The first is the formal authority we use from the government. It is a flexible transfer payment authority. The comprehensive funding arrangements and the Canada-first nations funding agreements are the manifestations of those authorities. They are the most current type of arrangement we use under the flexible transfer payment authority.

It's probably no clearer.

Mr. John Finlay: I think so. But certain principles are involved in the AFA that—

Mr. Gordon Shanks: It's an evolution, and we are using that basic authority to build some further flexibility. The one feature of the Canada-first nations funding agreement that has just been introduced is that it is multi-departmental. The Auditor General, as has been noted, has looked at the issue of funding arrangements for some time and had long requested that we try to build something that was a single window for first nations. So for this year we have some agreements that include Health Canada. There's an example in Nova Scotia where the Department of Fisheries and Oceans is involved with Health Canada and DIAND in an agreement. The attempt is to move down that stream as well, so that, hopefully, first nations will eventually deal with one funding agreement from the Government of Canada that includes all of the resources. That's the main feature of our latest evolution.

Mr. John Finlay: Thank you. Thank you, Madam Chair.

The Chair: With just a few minutes left, I'd like to follow up. I understand that the AFN-CGA accountability project was a two-year project, and it wraps up, I believe, in July of this year. Has there been any discussion about a furtherance of that project? Is there an evaluation process for it? Can you just expand a little bit on your understanding of where we are on that right now?

Mr. Cal Hegge: You're right that the original scope was two years, but we're extending it for a certain period of time to allow them to finish up some of the very important and useful work they haven't quite concluded. So there will be some additional funds flowing to that group out of this fiscal year, again from Gathering Strength funding. Basically, the work they have initiated will to a large extent be taken on now by the Aboriginal Financial Officers Association, which they were very instrumental in creating.

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The Chair: What was the take-up on that program? Was it across the country equally, or did certain areas participate better than others?

Mr. Cal Hegge: Do you mean in the AFOA?

The Chair: Yes, in the project itself.

Mr. Cal Hegge: The AFN-CGA project, as the opening remarks indicated, was largely responsible for creating a certified aboriginal financial management certificate program. That has been largely based in western Canada. I think Capilano College was front and centre in starting the program. But it's designed to be portable. You can take it through a distance learning mode, etc. So the take-up across the country is going to increase fairly dramatically, we think.

The other work they've done, of course, is around the accounting standards for first nations. They have produced what is basically a disclosure document at this stage, which is being reviewed by first nations, on their recommendation for accounting standards for first nations. They essentially parallel or resemble very closely the public sector accounting standards. That work hasn't quite concluded. This extension of the project will allow for some of that.

The Chair: How long was the extension for?

Mr. Cal Hegge: To July of this year. So it's just an extension for seven months or so.

The Chair: Mr. Austin, go ahead.

Mr. Bill Austin: There is an annual report, I believe, coming forward from that to the minister, and once we get that, if there's interest, that would certainly be available.

The Chair: Actually, I think there would be interest.

Mr. Bill Austin: I'm not sure it's in yet. A two-year summary will be coming forward, so it may be the fall before we get that.

The Chair: Maybe you could put on your to-do list to see that at that time that list gets circulated through the clerk to the committee members.

Mr. Bill Austin: Sure.

If I may, I did have the pleasure of attending the first meeting of the national gathering in Winnipeg, and I personally, as was Denis Desautels, the Auditor General, was struck by the large number of people who were present and their activity and their enthusiasm for the activity. So I think it is a step that we could commend the CGA and the AFN for having taken. It's quite a development, not only for the career development of aboriginal people, but also in setting a set of standards, rules, or procedures for financial management. It has been a very successful process.

The Chair: As we're going to have Mr. Desautels here on accounting matters, we can probably follow that up directly. I know that the last accounting chapter was in 1996. So we can follow up with him. In 1999 there was a chapter entitled Funding Arrangements for First Nations: Follow-up. I'll have Mr. Desautels or his representatives come before us on both of those so that we can question on both of those subjects. That would make sense, I think, for a way of examining that.

Just as a comment, I remember that when we were doing our Nisga'a negotiations, one of our witnesses from inside the first nations was a female chief from either the Gitanyow or the Gitksan who is a CA. I think we're very cognizant of the fact that there are already professionals within the aboriginal population. It's not always just training more. There are some already in existence, maybe not in this instance a CGA, and I think we have to make that very clear to the public.

Does anybody else have anything further? No.

I want to thank you for your presentation. I also want to thank you again for your indulgence. Most of our members, as you are aware, have more than one committee. I believe that what we accomplished during your rest period there was useful to the work of the committee. Thank you very much.

Depending on the availability of witnesses, I will try for Tuesday and Wednesday of next week and Tuesday and Wednesday for the next three weeks so that we can hear from the six if they are available. I give you that information so that, hopefully, you can sort of plan something. Thank you very much, members.

The meeting is adjourned.