Confusion over the First Nations Financial Transparency Act

According to Aboriginal Affairs, nothing but good will come from the First Nations Financial Transparency Act. They say the Act will help create stronger, effective and more self-sufficient communities.

Not only will it help First Nation communities become prosperous, the Department says the Act will bring transparency and accountability to First Nation members and to Canadians at large.

The Act received Royal Assent on March 27 and forces First Nation governments to publish their annual audited financial statements, including Chiefs and councilors’ salaries and expenses.

Joseph Quesnel welcomes the new legislation. He’s a policy analyst at the Frontier Centre Public Policy and says First Nation leaders needn’t worry about exposing their goods.

Quesnel points to Chief Glenn Hudson of Peguis First Nation as a prime example of how the Act should work. Hudson is a First Nation leader who once had an exorbitant salary but is now earning a modest pay cheque after the band’s finances were made public.

Between 2008-09, Chief Hudson reportedly earned more than $200,000.

“All it took was one unveiling of the information and he reduced it,” says Quesnel. “It didn’t irreparably damage him.” Chief Hudson was recently re-elected.

But not everyone thinks the legislation is necessary.

Prior to the Act, many communities such as Sawridge, Fishing Lake, and Wabigoon Lake First Nations already had their own mechanisms in place that provided a level of transparency and accountability to their members.

After every audit, the Wabigoon Lake First Nation presents the information at their annual general meeting. The audit is also available on an individual basis to those who request it.

“That process has been there for years,” says Chief Cantin.

But some say the First Nation Transparency Act actually goes against Canada’s Privacy Act, meant to place limits on the government’s ability to disclose personal information.

Two court rulings — Sutherland (1994) and Montana (1988) — reaffirmed such limits when it came to First Nations financial statements.

Kris Klein is an Ottawa-based privacy lawyer who says the First Nations Transparency Act is in direct conflict with the spirit of the Privacy Act.

“I don’t know if you want to call it a loop hole or not but the Privacy Act says that the government or whoever has the information can disclose personal information if another law requires it,” says Klein.

“As soon as they passed this piece of legislation there won’t be a conflict with the Privacy Act.” 

Chief Cantin believes the transparency act has its roots in a scathing report released by the Canadian Taxpayers Federation (CTF) in 2010. The CTF published documents allegedly showing that some First Nation Chiefs were earning more than the Prime Minister of Canada.

Brad Regehr from the Canadian Bar Association says the CTF’s report was nothing more than inaccurate data and computations — but he says the Canadian government bought it.

“The concern was to get good public relations out of this to make it look like they [the government] were doing something,” says Regehr.

“This is simply an easier reaction to some criticism they got from the Canadian Taxpayer Federation and maybe some other groups who painted this alarmist picture.”

Regehr is still left wondering why the government wanted to pass the Act given their existing powers under ‘contribution agreements.’ First Nation governments receive band funding for community governance and delivery of services provided by Aboriginal Affairs. The details of that funding is laid out in the ‘contribution agreements.’

If a First Nation government does not comply with the rules outlined in the contribution agreements, Aboriginal Affairs can impose conditions, claw back funding and even appoint third-party managers. Attawapiskat First Nation was at the receiving end of this back in 2011.

“It seems that some of the attempt is to embarrass people,” says Regehr.

Klein says it speaks to the political landscape.

“Maybe it has to fit in with this particular government’s belief in open government and transparency in the way public money is spent,” wonders Klein.

But for some, the public tax dollar argument is up for debate. Chief Cantin says the money First Nation communities receive is from resources extracted from their traditional territories.

“There’s no resource revenue sharing ever since the treaties were signed and I feel the treaties were broken,” says Chief Cantin.

“If we had our legal share of all the resources that has been extracted, we wouldn’t have this relationship, we’d have our own legislative body to manage that money.”

But Quesnel disagrees.

He says number treaties in particular were based on surrendering title and privileges to non-reserve lands for the sake of non-Aboriginal settlement.

“There is historic evidence that First Nations signatories at the time understood they were giving up land and resource rights to non-reserve lands when they signed treaties,” says Quesnel.

While more transparency mechanisms tighten for First Nation governments, Regehr is left wondering if more needs to be done at the federal level.

“It seems kind of hypocritical in light of all sorts of news reports as for an example, now we’re paying way more for the navy’s new ships than any other country would pay or billions of dollars of anti-terrorism funding not being accounted for,” says Regehr.

As of July 29, 2014, First Nation governments will be required to disclose their audited financial statements.

“I am definitely hoping for the best,” says Quesnel.

“It will be interesting to see what happens once the information is available and how the members will response to that. I think it will put the ball in their court.”