7 questions about First Nations accountability

From Attawapiskat to Idle No More, when First Nations have been in the headlines this year, accountability issues have been prominent.

Last week former prime minister Paul Martin spoke at a session on accountability at the Aboriginal Financial Officers Association annual conference in Toronto.

And later this month, the Senate will likely vote on Bill C-27, which is meant to "enhance the financial accountability and transparency of First Nations."

John Duncan, who was Aboriginal Affairs Minister until he resigned on Friday, says the "Act would serve as a tool to empower First Nations members by ensuring transparency and accountability of their government."

Harold Calla, head of the First Nations Financial Management Board (FNFMB), told the Senate's Aboriginal Peoples committee last week, "I don't think any of us should be fooled that good financial management and accountability is contained within" C-27.

Calla and Daniel Wilson, a former senior director at the Assembly of First Nations (AFN), were two of the experts CBC News interviewed for the first in this series of backgrounders on aboriginal finance, "How does native funding work?" In this feature, they will shed some light on accountability issues.

First Nation governments spend much more per capita than the other governments in Canada, the result of administering programs and services that are normally provided by federal, provincial and municipal levels.

John Graham, an expert on First Nations governance, told CBC Radio's Michael Enright that First Nations governments have very few checks and balances. "Most of these communities have a very small private sector, they have an underdeveloped civil society and usually the media is a function of the government itself."

The Indian Act places First Nations chiefs and councils in a subordinate role to the Minister of Aboriginal Affairs. It's what's known in the jargon as a "principal-agent accountability relationship," in which the government is the principal and the First Nation the agent.

The Act, according to Tom Flanagan, a former chief of staff to Stephen Harper, "created a paternalistic regime in which Indians were not self-governing citizens but objects of administration."

Wilson describes the relationship today as one in which the government "believes that chiefs are simply employees" or sub-contractors to Aboriginal Affairs and Northern Development (AANDC). The "relationship is widely considered as increasingly inadequate," according to a 2011 report for the AANDC.

Calla says we need to view First Nation leaderships as governments, like the other "governments who receive transfer payments, who receive authority to raise their own revenues and create revenue streams over time."

Canada's auditor general reported in 2006 that the government-First Nations accountability relationship was "unworkable because little legitimacy is attached to it."

Graham co-authored another accountability study prepared for AANDC, which found that, "The emphasis is more on controlling the use of funds than on improving results." The 2008 report, prepared by the Institute on Governance, an Ottawa think tank, also found that there are few incentives to perform well, no consequences for poor performance and an absence of performance measures.

Wilson says there isn't accountability in the other direction, from the government to First Nations. "The fact that they have no standards or objective criteria for funding is proof positive that that's the case," he argues. "They don't consider themselves in any way accountable to 800,000 of their own citizens."

In her 2011 report, then-Auditor General Sheila Fraser reported, "It is often unclear who is accountable to First Nations members for achieving improved outcomes or specific levels of services."

Under the Indian Act, they all operate under the same rules, except for First Nations with self-government agreements.

Calla says it's a "fallacy that 633 First Nations can't move unless they move lockstep." He argues that's not practical, because First Nations are at varying stages of economic development. They also have vastly different abilities to govern.

Because of limited economic development and resources and isolation, Calla says, "some First Nations will always need a greater degree of support, just as some non-aboriginal communities in remote areas need a greater degree of support."

For the Institute on Governance, "This suggests a highly differentiated approach to accountability to reflect these differences."

Yes. It's a requirement of the funding agreements First Nations have with the federal government. AANDC makes them available on their website.

Nevertheless, the Ipsos-Reid polling firm asked Canadians in January whether additional taxpayer money should be withheld from a reserve "until external auditors can be put in place to ensure financial accountability." And 81 per cent of those asked said yes.

Since there are external audits already, the poll angered Wilson. "Neither the pollster or 81 per cent of Canadians understand fundamental facts, and why is that, it's because the government and their friends are pushing the notion."

There have been discussions about creating a First Nations auditor general, which the Royal Commission on Aboriginal Peoples proposed in 1996, and which the AFN pushed for in the Kelowna process a decade later.

Paul Martin's government agreed and "set the machinery in motion," the former prime minister told CBC News.

However, two months later the Liberals lost the 2006 election and the new Conservative government eventually walked away from the Kelowna Accord, and by doing so, walked away from accountability, Martin argues.

"Just think how much further ahead we would be if the current government had agreed with the appointment of an aboriginal auditor general," Martin says.

In her 2002 report, the auditor general estimated that each reserve was required to file 168 reports annually to just the top four federal organizations receiving their reports.

The government conceded the seriousness of the problem and promised action. "Despite many initiatives, we have not seen a significant reduction in the reporting burden," Sheila Fraser reported in 2011.

Fraser found that "it remains unclear whether this degree of reporting helps make First Nations accountable, or whether it assists either the Department or First Nations with their management responsibilities," adding that "some of these reports may serve little purpose and may interfere with First Nations’ ability to meet the needs of their members."

In a November 2012 report, AANDC confirmed what the auditor general had been saying. "First Nations and other organizations that receive funding from the Government of Canada are caught in a complex web of reporting requirements, some of which are of dubious usefulness to them or to the organizations seeking the reports," according to a report by the deputy minister.

The DM claims they have reduced the number of reports and are now following a policy that requires First Nations evaluated as lower risk to file fewer reports.

Audits are one part of that accountability, another is band elections.

For Wilson, that question is "the essential missing discussion in the public discourse." He argues that First Nations need to become accountable to their citizens rather than "an indifferent government" in Ottawa.

"First Nations are willing to work on ways of reversing the current system so that they would report on what they received, and how they spent it, to their citizens," Wilson says.

The DM report claims AANDC is "shifting the accountability bargain away from reporting to government for the use of funds, toward accounting to communities and program clientele for results."

The bill, now before the Senate, requires First Nations to publicly disclose audits and the remuneration of chiefs and councilors, something that many bands have been doing.

In 2010, AFN passed a non-binding resolution that called for chiefs to publicly disclose their salaries and expenses.

But C-27 also allows the government to withhold funds from bands that do not comply, which does not happen with any other grant recipients, according to the AFN.

Phyllis Sutherland, a band member of the Peguis First Nation, the largest reserve in Manitoba, and the woman who spurred the tabling of C-27, told CBC Radio's Karin Wells that although Peguis band members have the right to see band financial documents, "of course it doesn't happen" because the band office sdoesn't follow their own rules.

Karin Wells' CBC Radio documentary, Phyllis and the Chief

Calla tells CBC News that, "It would be better if First Nations developed their own financial administration laws. It would be better if First Nations developed financial management systems and had their financial performance reviewed by an independent body like the FNFMB," which Calla chairs. Another federal Act that went into effect in 2006 created the FNFMB.

Last week, Calla told the Senate committee most First Nations "do produce adequate financial information and that the communities that do not, need capacity development and business expertise more than audit compliance. All an audit does is give you a throat to choke, it does not improve the situation," he tells CBC News.

Calla and Wilson, and the AFN as well, do not deny that corruption may exist in aboriginal communities. But they argue it is no worse than in other sectors of society and government.

Paul Martin says that "in most cases where there is a problem of accountability it's because of a lack of capacity, which is why when the government cuts the funding for administration they make that capacity issue even more difficult to resolve."

How does native funding work?

Manitoba Grand Chief Derek Nepinak told Wells that, "A lot of our community people who are raising issues about accountability have a very legitimate reason to do that but with that said, it's being taken advantage of, it's being exploited by governments that want to push through their agenda."

First of all, it's worth noting that Bill C-27 does not apply to the 23 or so First Nations operating under self-government agreements, or to Inuit.

With self-government, a First Nation establishes its own internal governance systems and oversees economic development, health, education and social services.

According to AANDC, "These agreements have unlocked numerous economic development opportunities and enabled these Aboriginal groups to become more self-sufficient, to make concrete decisions within their communities and create new businesses and job opportunities for their citizens."

Each agreement has a unique system in place. While they are no panaceas, and some of the First Nations argue that the government is not living up to the agreements, or their treaty rights, self-government seems to be where things are headed.

But slowly. Reaching a self-government agreement sometimes takes more than a quarter-century of negotiations. AANDC says that on average, it takes 15 years to reach a final agreement.

The Harvard Project on American Indian Development found that "When tribes take responsibility for what happens on reservations and have the practical power and capacity to act on their own behalf, they start down the road to improving reservation conditions."

Indigenous self-government is also supported by the United Nations.

Calla argues it's the major change that needs to happen. "We need to move away from the concept of relying on the parliamentary appropriations process to provide programs and services and we need to become more self-sufficient, we need to be able to raise revenues the way other levels of government do... and become a government like every other government."