Indigenous and Northern Affairs Committee on March 20th, 2007

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

Indeed.

[Michael Wernick]

Here is what we do. The maximum votes granted to us by Parliament totals slightly more than $6 billion. If we knowingly spend one dollar more than that, then I am in deep trouble. As the manager responsible, I cannot spend over that amount.

However, by following the rules established by law and Treasury Board, we try to maximize each dollar. We strive to find projects and investments, settle cases, speed things up and make use of every dollar that Parliament allocates to us.

At the end of each fiscal year, we do not quite know whether we can settle a file or launch a construction project, because we do not have all the permits, for example. We then make use of the margin available to us and spend almost every dollar granted to us by Parliament, but not one dollar more.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

Given that today is March 20 and there are only 11 days remaining this month, can we agree that some allocated funds will not be spent and could be allocated, reallocated or transferred to those who currently most need them? We know that they exist and, in any case, you have them listed.

[Michael Wernick]

All I can tell you is that all available amounts of money will be spent in accordance with the law and relevant policies. We cannot break the rules. There has to be a contract, a commitment, a settlement or a construction project. Within the rules established for our programs, and approved by Treasury Board, we will try to maximize our efforts.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

Can you give a single example? In concrete terms, given what we are reallocating today, could you, within the next 11 days, authorize the construction of a hospital or repairs to a school? Can you give us a single example? Could I invest something in such a project? For example, we have just heard today that there was a settlement or a treaty in such and such a place.

[Michael Wernick]

Funds set aside for claims cannot be spent for any other purpose. Together with our negotiation partners, we try to settle things, when possible. Yes, there are two, three, four tables with which we hope to achieve settlements by March 31. That does not amount to a lot of money, but is nevertheless important. If we succeed, that will relieve the pressure over the next fiscal year and free up funds for other projects.

With regard to construction projects, it is not easy to launch a construction project to build a school because there are all kinds of decisions that a community has to make. We act as a financial partner. First nations are responsible for managing their projects.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

Thank you.

[The Chair, Conservative, Colin Mayes]

Madam Crowder.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Thank you, Mr. Chair.

I want to thank you for coming before the committee today. I would echo the previous comments, that it's disappointing the minister couldn't find time.

To give a bit of context, back on November 2 when the minister appeared before the committee, he indicated that the supplementary estimates would be used to take additional steps to enhance the quality of life in the first nations communities. That was his statement to the committee.

In a briefing note to the minister around the financial situation in 2005-06, the department had identified an issue, saying that Indian and Northern Affairs' financial situation is constrained. It went on to say that the situation exists because “new funding neither covers program growth (price and volume) nor does it allow the Department to fully address such pressures as emergency management assistance, social assistance or educational funding pressures.” That was advice in which the department acknowledged it was having some trouble in its ability to meet a growing need identified in the communities.

Then we had on February 22 a news release by both the Minister of Canadian Heritage and the Minister of Indian Affairs announcing substantial funding. This was on February 22. These were funds that, in my understanding of it, in some cases needed to be expended by the organizations by March 31, so there were roughly four or five weeks to spend significant amounts of money.

Then the supplementary estimates, in the English version on page 82 under the health department, talk about the fact that some money from health—My understanding of it is that this funding was being deferred because of delays in the development of an implementation plan for the aboriginal health human resources initiative.

Those are just a couple of examples of where money that seems to be needed in communities either was very late coming in the fiscal year or has been deferred because of delays in moving forward with initiatives.

When we know there are such pressing needs in communities around housing, around water, around child welfare—the list is endless—I wonder if you could comment on why there are delays in getting money out so that it's almost impossible for organizations to spend it so late in a fiscal year, and why initiatives like this human resources health initiative were not moved on earlier in the fiscal year, so that we'd actually have results in this fiscal year.

[Michael Wernick]

I can't comment on what Health Canada may or may not have done. You'll have to take that up with Health Canada. And I can't comment on a briefing note I haven't seen. If you'd like to table it with me, I'd be happy to write comments on it.

In general, I guess I would answer with sort of a variation on my answer to Mr. Lemay. We have the funds that Parliament gives us, and it's not responsible for me to authorize or encourage spending one dollar more than that. But we do try to maximize the use of the dollars Parliament gives us. We are constrained—I don't hesitate to use that word—because we have $6.3 billion—

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Could I interrupt here for a second? I wasn't asking you to spend more money; I was asking you why money was already allocated, and in February we were asking organizations to spend it by the end of the fiscal year. I'm not asking you to spend more money; I'm asking you why organizations were given such a brief period of time, when we know that organizations need to organize to getting money out. And when they're given such a short period of time—

[Michael Wernick]

You'd have to give me a specific case. It would depend on what the program was, what the initiative was. Sometimes the program there—

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Okay. For ITK there is $447,907, and this was money that was coming out for the aboriginal peoples program to support the day-to-day operations and annual general assembly of the ITK. There's a specific example.

[Michael Wernick]

They would have made an application, we would have assessed it, we would have provided advice to the minister, and the minister would have made a decision on it. That's how contribution agreements work. We have over 5,000 of them. We wouldn't be giving them 12 months of money to spend in three months; we would be giving them four months of money to spend in four months.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

This wasn't four months of money to spend in four months. This was money that was announced on February 22, and they were expected to spend it by March 31. My understanding, from talking to some of these organizations, is that this was a problem for them. I guess what I would suggest is that, like any good financial manager, we do forecasts and we allocate money and we deal with organizations, yet what we're hearing from organizations is that money is coming out very late.

Is there anything the department can do to address that, so those organizations can also be fiscally responsible? They have financial obligations to meet. I'm just asking if there's any mechanism in place or consultation happening to help these organizations and the department to expend money in the fiscal year in which it's allocated.

[Michael Wernick]

I'm not quite sure how to answer that. There is an ongoing relationship with the people who tend to use the programs. We have 40 or 50 grant contribution programs. We have over 5,000 agreements. There was a problem last year, because the election and the new government led to some slowdown. There wasn't a nice sort of continuity from year to year; it took a little while for some programs to get reconfirmed. This is a problem we have every year in the sense that we have authorities that sunset and have to be renewed, and so on.

All I can do is try to provide you some assurance that we try to be as efficient as possible, and the burden shouldn't be on the applicant or on the recipient. Our due diligence processes should be as fast as possible.

At the end of the day, the tool we use most is the contribution agreement. That's how we get money out to people. We spend $5 billion through contribution agreements. It's not an ideal tool for doing some of the things we do, and that's why I referred, in my opening remarks, to the very important work of the blue ribbon panel on grants and contributions, which deals with the challenges you've raised right across civil society and the third sector and voluntary groups and first nations. It has recommendations and it has findings on dealing with first nations recipients. The government has broadly endorsed the direction of the blue ribbon panel, and we see that as an immense opportunity to maybe make a simpler, leaner, more efficient way to fund people.

[The Chair, Conservative, Colin Mayes]

We'll go to Mr. Albrecht on the government side.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Thank you, Mr. Chair.

It's quite obvious to me, in conjunction with Mr. Lemay's comments about the complexity of the entire system here in terms of the estimates and supplementary estimates, and I certainly don't pretend to understand it all—

I do want to refer, though, to one of the comments you made on page 8 with regard to Aboriginal Business Canada being transferred to INAC. Certainly, I think this committee is very concerned about and wants to see economic development as one of our central points in the work we do on behalf of all aboriginal peoples in terms of creating efficiency and effectiveness.

I wonder if you could give us a bit of a progress report as to how this transfer is going, what point we are at in the process, and what obstacles we may have run into—an overall picture as to the success of this initiative.

[Michael Wernick]

Thank you for the opportunity to give you a progress report. It's a little bit of a coming-attractions trailer too, in terms of progress.

There are two kinds of trends that happen in the organization of the Government of Canada over time. One is that things tend to collect at INAC, and you take on responsibilities as an aboriginal department because it's more efficient or effective to have things under one roof. And the other trend is that you want to drive a sensibility and interest in first nations or aboriginal issues into other departments. So there are significant aboriginal responsibilities at Health Canada, CMHC, and Industry Canada, and so on and so forth.

At another time, Aboriginal Business Canada was set up in Industry Canada with the theory that Industry Canada, in its overall suite of supporting small business, would put some special effort into aboriginal entrepreneurs. It's a very successful program that delivers about $30 million of assistance to aboriginal entrepreneurs. It has an advisory board that goes with it, and so on.

The new government decided to go the other way and bring the responsibilities under one roof. So what we're doing is taking that organization and its programs and authorities and grafting them onto what's around in the Indian affairs department—which tend to work with the communities, rather than entrepreneurs, on readiness for investment issues. We do have a budget for economic development and activity.

It took until December to get the approvals. The organization moved over on December 1, I think it was. Because I knew it was coming, I created an assistant deputy minister position to work full time on economic development issues. That's filled by Mr. John McKennery, who is on duty and has been working ever since and running around the country talking to aboriginal groups and private sector people, and so on. There was quite a significant event in Saskatoon, as you probably know, an economic development summit involving first nations and aboriginal groups and the private sector, and we were very active in that.

So that's where we are. We are in discussions with the minister about appointments and revitalizing the advisory board and putting some prominent people from first nations and Aboriginal Business into the advisory board. So it's a work in progress. I have hopes and aspirations that over the next year we'll be able to give the minister and the government some proposals for more energized and more vigorous economic development strategies we could pursue, because the premise of your question, if I read into it, is that we're not really going to make a dent in the social conditions if we don't have underlying economic activity and employment in the communities.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

What kind of uptake has been expressed to you on the part of aboriginal communities across Canada in terms of the change? Has there been a positive response?

[Michael Wernick]

The response is positive, based on what I have heard at the Saskatoon event. There was a similar event in Quebec, at Mashteuiatsh. It is one of one of the most active areas, actually, in first nations country, if I can put it that way. In these discussions about economic development, the national chief has posed a challenge to the private sector to step up and get involved in partnership agreements.

So there are a lot of good ideas out there in the communities and the private sector, and some very encouraging partnerships. We're seeing some very big players step up, like EnCana and Siemens and others. My worry, frankly, is that we'll have a flood of good ideas and applications, and Parliament has only given us so many resources to cope with them.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Thank you.

If I have some time left, I'll share with Mr. Blaney.

[The Chair, Conservative, Colin Mayes]

Mr. Blaney.

[Steven Blaney, Conservative, Lévis—Bellechasse, QC]

Good morning, and thank you for being here.

My question deals with something you said during your presentation. It was in response to initiatives by the Office of the Comptroller General. You created a chief audit and evaluation executive position that reports directly to you. I would like to commend you on that because I myself have worked at Indian Affairs, and substantial efforts were made with regard to accountability. You face a considerable challenge, because the funds are not managed by Indian Affairs, but are mostly transferred to aboriginal communities. The funds are transferred to aboriginal communities and are managed by a third party, on the one hand, and on the other, there is an added difficulty in connection with the autonomy or governance of first nations with regard to the management of their funds. Nevertheless, those funds are transferred under particular agreements.

I would like to hear your views on the means that have already been taken and the improvements you will bring about so that the communities that manage the money that is transferred to them do so by applying the same accountability criteria that you use in your department.

[Michael Wernick]

That is a fundamental question, Mr. Blaney. As accounts manager, I think that my challenge, and yours, as a parliamentarian, is to find the right balance between two principles. One of those principles is to be accountable to Canadian taxpayers for public funds. Are those funds used in the best manner possible? Parliamentary committees oversee our operations and the Auditor General assists us greatly in terms of managing those funds and making the most efficient use of taxpayers' money.

The other principle that you raise is maximizing the autonomy of first nations and communities. We learned hard lessons in the past, namely that we cannot achieve results solely with money from Ottawa. Communities have to truly manage and pilot their future. As I have said, our preferred vehicle is a contribution agreement by which we fund third-party activities. Most of the time, they are not our schools or our programs. Our funding is done in compliance with a number of principles that support the activities of aboriginal organizations.

I believe that the bridge between the two principles is the capacity and governance of first nations, as well as their capacity for planning and management. We make efforts, and sometimes things are not that easy. We want to assist and encourage them, facilitate things and support them, but we do not want to dictate our partners' efforts. For the current fiscal year, we have allocated $10 million, I believe, to support the financial management capacity of first nations. There is an organization today that is called Aboriginal Financial Officers Association of Canada. There is a truly aboriginal public service: there are thousands of people working to manage and plan programs. We try to assist them, not dictate to them. I believe that that is the bridge between those two principles.