Mr. Speaker, I am very honoured to speak on Bill C-27, first nations financial transparency act, today.
As the title of the bill implies, the bill proposes to make crystal clear to community members exactly who gets paid for what within their band councils as well as any other benefits that go along with the job. The legislation states that first nation leaders shall be open about the salaries and expenses of the chief and councillors of the band council. With that knowledge, first nation residents can determine whether they are getting good value from their elected officials.
The bill might just as easily have been called “the citizens for accountability act” because its overarching objective is to increase accountability and ensure that political leaders are answerable to their constituents for their decisions about financial remuneration.
If we look at the root of the word “accountability”, we have the word “account”. The definition of accountability is the obligation of an individual or organization to account for its activities, accept responsibility for them and disclose the results in a transparent manner. It also includes the responsibility for money and other entrusted property. The legislation comes down to accounting in its classic sense.
First nation leaders are quite literally being asked to open their books so local residents can see how public money is being spent. To be precise, Bill C-27 would require that audited consolidated financial statements of first nation governments be prepared annually. It is worth noting that this includes all sources of funding.
In addition to federal government transfer payments from various departments and agencies, first nations have other sources of revenue. The nature and extent of these sources varies from first nation to first nation. It can include funding from provincial and territorial governments, user fees for services such as garbage pick-up, moorage, rental income for housing and property taxes, as well as other profits from economic development.
I would like to point out to my hon. colleagues that producing annual consolidated financial statements is something that band councils already do. It is a condition of their funding agreements with Aboriginal Affairs and Northern Development Canada.
These agreements not only have requirements for reporting to the government and for members of first nations, but band councils also need to indicate whether funds were used for the purpose intended and whether programs and services were delivered in accordance with the terms and conditions of the funding arrangements. These financial statements, which have to include schedules of remuneration and expenses, must be audited by independent, accredited, professional auditors. Financial reporting is credible when it is based on independent set accounting standards.
What is new with Bill C-27 is that first nation governments would be obliged to disclose these financial statements to community members and the general public. Individuals who want to know what is in those statements would no longer have to ask for permission to see the books and hope that band council members would comply with their requests. First nation residents would be assured that these details would be disclosed publicly in an annual report to the community.
If first nation members have any concerns about the community's money and how the money is being spent, the new accountability standard would assure them of public avenues to have these issues addressed.
Financial reports would include information related to any and all band holdings, which according to generally acceptable accounting principles, need to be consolidated with the first nations' financial statements, but at the highest level of aggregate.
This would include most businesses owned by the band. I want to be clear that we do not expect each individual business to publish detailed financial statements. The only thing being asked for in this act is the publication of audited consolidated financial statements of the first nation as a whole. This would include any entities that, according to accounting rules, are consolidated with the first nation, such as band-owned businesses.
Since these statements are highly aggregated, no proprietary information would be revealed that could undercut the competitiveness of a business or that of its partners. I want to repeat that, because it is really important for the opposition to hear this. Since these statements are highly aggregated, no proprietary information would be revealed that could undercut the competitiveness of a business or that of its partners.
In addition, for the first time, the Department of Aboriginal Affairs and Northern Development would publish the audited consolidated financial statements, including remuneration for all first nations officials, as soon as the information became available. As other members have pointed out, these new requirements are consistent with standard accounting practices employed by all other levels of government—the federal, provincial, territorial and municipal levels. Every other government in Canada routinely discloses audited consolidated financial statements and salaries. Once this act has been passed, it would bring politicians on reserves in line with other elected officials across the country whose salaries are already available to the public.
I can assure the House that accountability in this bill is not simply about bean-counting. As the Auditor General of Canada has defined it, accountability is a relationship based on obligations to demonstrate, review and take responsibility for performance, both the results achieved in light of agreement expectations and the means used. Making it law for first nations chiefs and councillors to open their books is really about good communication. It enhances trust and support for band councils among first nations members, and it increases the confidence of all Canadians in first nations governments.
No one needs to take it from me. No less of an authority than the World Bank made the same argument in a recent report about accountability through communication. The report states:
As an actor in the public sphere, the state is accountable for its actions in providing service delivery to its citizens. Citizens, in return, provide legitimacy to the state through public opinion. Both the state and citizens have communication processes and tools at their disposal that hold them accountable.... The effective use of structures and processes of communication for accountability can result in better relations between the state and its citizens, improved governance and, in the long run, increased effectiveness of development efforts...
The final point gets to the very heart of the legislation before us today. Bill C-27 is fundamentally about ensuring first nations members' democratic rights can be fully exercised. This expectation is clear in the report of a study group authorized by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants, called “Financial Reporting by First Nations”. It points out that accounting practices and the need for financial reporting are based on social, political and economic circumstances and the accountability relationships that arise from these circumstances.
The report leaves no doubt that first nation governments are accountable at three levels. First, they are accountable to first nation members living on and off reserve, who have a right to select their first nation government's leaders. Second, they are accountable to the federal government departments that provide funding to first nations, as well as to provincial and territorial governments that have established legal or economic relationships with first nations, and third, to capital advisers who are investors.
Beyond these three groups, with whom first nations have direct relationships, they are also accountable to residents on first nation lands who are taxpayers, such as people with leases, whether they are first nation members or not. They are accountable to the various organizations that have contractual relationships with first nations requiring financial reporting; current and potential business partners who will want the information for decision-making purposes; developers, who are involved in residential housing, industry and commercial properties and other capital projects; as well as regulators and agencies monitoring first nations.
However, interest in first nation financial matters does not end there. Credit rating organizations and financial analysts, the news media, public interest groups and the general public may also want to access first nation financial reports. That is why Bill C-27 stipulates that band councils' annual financial information needs to be released not only within the immediate community but also to the wider Canadian public because, as the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants emphasizes in its report, government's goal is to provide services and redistribute resources, not to make a profit.
A government's budget portrays public policy, establishes estimates of revenue, expenses, expenditure and financing requirements, and is an important part of the government accountability cycle. Put more simply, consistent practices and procedures help to keep first nation governments transparent and accountable and make the services that governments provide more reliable and effective.
Equally important, opening the books and demonstrating sound accounting practices is good for business. This is made clear in the board's report and reinforced by practical experience at the community level. The certainty and predictability that comes with generally accepted accounting principles are a definite plus when it comes to attracting private sector partners. Being certain that a first nation government upholds standard accounting procedures and employs sound business practices is vitally important to potential investors. By applying the new accountability measures in this legislation, band councils will be able to demonstrate best practices in their financial operations, which is crucial to creating an environment conducive to job creation and economic growth.
Once a band council inspires confidence among prospective investors, it can attract economic development projects, leading to greater self-reliance and a better standard of living for first nation residents, the ultimate goal of the bill. This goal has been reiterated in every throne speech since 2006. It was powerfully reinforced in the 2011 Speech from the Throne, which committed the government to support transparency for first nation communities by requiring chiefs and councillors to publish their salaries and expenses. I am proud to say that with Bill C-27 we are delivering on this commitment.
The first nations financial transparency act joins a suite of laws and policies that we have developed to advance economic development on reserve, the most recent being the first nations elections act. These two pieces of legislation are the fundamental building blocks to effective first nation governance. Stronger election and accountability systems will result in stronger, more stable governments, which in turn will result in more prosperous communities. Strengthened first nation governments will be in a position to earn the trust of business partners who are willing to make solid business investments. These investments will lead to increased economic development and job creation in first nation communities. Who could possibly argue with that?
Anyone who looks objectively at the facts I have laid out, which are validated by the outside sources I have quoted, can only conclude that Bill C-27 is both necessary and beneficial. The legislation meets the needs of first nation residents. At the same time, it advances the interests of their local leaders, other governments, the private sector and, in the end, all Canadians. As I said at the outset of my speech, as much as the act is about increasing transparency, it is ultimately about ensuring accountability and upholding democracy. That is something all Canadians, aboriginal and non-aboriginal alike, hold dear.
Surely all parties can see the merit in this worthy legislation and will give it their vote of confidence.
