Bill C-2 (39th Parliament, 1st Session) Committee on May 17th, 2006

[Richard Jock]

Thank you.

Where we're at.... This has received general support. It's an idea that's been presented to the chiefs and assembly. We have been directed to develop the idea more fully, including the appropriate reporting relationships, items like what is the scope of independence and responsibility, all of those details; how it would be implemented potentially in an incubation process through the existing Auditor General; and to report to the chiefs and assembly with a full implementation plan. So it's at the stage of further developing that idea and going for a full mandate. But it has been very well received as a concept by chiefs and assembly, and we envision approximately a two-year timeframe to fully implement that in an appropriate and considered fashion.

[Benoît Sauvageau, Bloc, Repentigny, QC]

It seems to me that your amendment to Bill C-2 is intimately connected with the discussions and negotiations with the Office of the Auditor General aimed at providing effective accountability for first nations.

I saw but haven't read your document entitled: “Accountability for Results—Executive Summary.” The Auditor General said that you have about 250 reports, if not more, to do every year. In your opinion, is the Department of Indian and Northern Affairs Canada sufficiently accountable and is its accountability effective? Do you think that the accent should be placed on your communities or on the department that provides grants and contributions to your communities?

[Richard Jock]

I think there are a couple of parts to that. One is that part of the plan for accountability for results is really to develop as well a whole series of different approaches that contribute to accountability. One of the ideas that is important within that is mutual accountability--that the department is as responsible for good outcomes at the community level as we are, and further, that communities are directly responsible for their citizens and should be transparent in terms of fully accounting for the resources that are received on their behalf.

Under that we have a number of initiatives that are key to a sustainable and continued accountability process. A key part of that is reporting--but relevant reporting. What is envisioned is that we take a look at those reports in order to streamline them so that they can be really useful--eliminating numbers of reports and coalescing into more outcome-style reporting, so that what we are doing is more effective in terms of communicating.

We also have initiatives under way to develop and implement financial management standards. There are some very interesting developments and institutions. The first nations finance association is developing a whole model and certification process for community financial officers. This is an important part of the capacity building that is a key to effective accountability, as well.

We also have developed ideas about an ombudsman, which would be an important way to assure that important information is collected with respect to potential allegations of service, to deal with those in a straightforward and clear way and to accurately report on those. We see that as a benefit to all levels of government in terms of clarity and making sure the facts of individual instances are very well looked at, as well as looking at how to restructure the actual process of payments so that it actually makes sense.

I would also ask my colleagues to address any areas that I may have not covered.

[Daniel Wilson, Special Advisor, Accountability, Assembly of First Nations]

To answer your last question, we could add the fact that yesterday, the Auditor General commented on the efforts of the Department of Indian and Northern Affairs Canada

to provide accountability to the Government of Canada and their failure, but also the failure of the Government of Canada to provide true accountability to first nations.

These were points that I think came very clearly through not only her description of 35 years of initiatives that have not succeeded, but also through her review of 37 recommendations, dating as far back as 2000, of which 15 have not been acted on in a satisfactory manner and 34 have not been completed. This is a failure of INAC to provide accountability to its government through your officer, the Auditor General, and it's a failure of the Government of Canada to provide accountability to first nations, for whom those programs are actually designed.

[The Chair, Conservative, David Tilson]

Thank you.

Mr. Martin.

[Pat Martin, NDP, Winnipeg Centre, MB]

Thank you, Chair, and thank you to the witnesses for being here.

It seems to me that the government must be starting from a couple of assumptions in the clause that they recommend for the Auditor General to be able to oversee the spending. The first is that they must view the money transferred to first nations as the government's money, that you're just spending the government's money and they have some right to comment on how it's spent.

The second assumption seems to be that the appalling social conditions in many first nations communities must be due to maladministration, corruption, or some combination of the two.

I'd like you to set the record straight on both of those facts, because personally I find it offensive, given the denial of the historic relationship between first nations and the federal government, on behalf of the Crown in the first case, and denying the....

Well, I'll let you speak.

[Bob Watts]

Thank you for that question.

I think it would be the position of most first nations in Canada that the moneys they receive are part of a payment with respect to an historic relationship between the Government of Canada and first nations. It may be with respect to education as a treaty right; it may be health care as a treaty right; it may be housing as a treaty right. So all the payments that first nations are receiving, although voted through Parliament, are part of an historic and ongoing relationship between the Government of Canada and first nations that's as alive today as it was ten years ago, as it was a hundred years ago in many of our communities.

In regard to the idea that somehow or other moneys that are voted for and sent through contribution agreement to first nations are somehow being diverted or used for purposes other than what they've intended, as the Auditor General pointed out, and has pointed out time and time again, moneys sent to first nations are accounted for over and over and over again. The problem isn't a question of reporting and accounting; the problem is with respect to program design, of putting controls in the hands of first nations to ensure that the programs and services are designed to meet the needs of their people.

A very low percentage, less than 3%, of first nation audits raise any concerns. Most of those are dealt with right away. It may be that some papers were missing from the audit, it may have been something that had been overlooked, and that's rectified immediately. So it's a much smaller percentage than 3% that raise any real concerns with respect to how money is handled in first nation country.

[Pat Martin, NDP, Winnipeg Centre, MB]

So looking at it the other way, 97% of all first nations file their mandatory audits on time and without incident.

[Bob Watts]

It's a stellar track record.

[Pat Martin, NDP, Winnipeg Centre, MB]

It's better than most government departments, I would respectfully point out.

The appalling social conditions, many of us would argue, are because of a lack of resources more than a mishandling of those resources, but we don't probably have time to go into that a great deal.

There's a famous study, which perhaps some of my colleagues haven't seen, by a Dr. Stephen Cornell, from Harvard University, where he studied best practices among a number of first nations all over North America, Canada and the United States, and what he found is that there was a direct proportionality between those communities with the healthiest economic and most stable economic picture and the degree of self-determination, autonomy, and self-governance. Can you help us to make that link?

[Bob Watts]

I believer Dr. Kalt and Dr. Cornell have appeared before parliamentary and House committees here over the last few years and have gone over that report. As you've indicated, sir, their findings draw a direct line between healthy economies and healthy people and the degree of self-reliance and self-determination, having programs and services that are designed for the people, by the people, having culturally appropriate institutions that support those programs and services. There's a direct line between all those things.

The Auditor General in fact I think helped support that yesterday when she talked about how there's a direct relationship between the involvement of first nation people in programs and service design and the likelihood that those programs and services will meet the needs of first nation people. While perhaps those things may be like common sense, she also indicated 35 years of difficulty making that happen here in Canada.

[Pat Martin, NDP, Winnipeg Centre, MB]

I think it's worth pointing out, in what little time I have left, that a lot of people think the $7 billion or $8 billion, or whatever it is, in total spending from all government departments must be a massive amount of money. I think it works out to about $7,800 per head, which is about what we spend per high school student per year in high school, but that has to meet housing, health, education, roads, infrastructure, sewer and water systems.

It boggles my mind, frankly, how this myth has been allowed to foster throughout the country, but I don't find it helpful, in this context, to imply by this clause that the problem of the appalling social conditions must be mismanagement, somebody must be squandering or stealing that money.

What do the affiliated chief and councils that you deal with have to say about that point of view?

[Richard Jock]

One of the key points is that, as you've pointed out, really since 1996 there hasn't been relevant inflationary or per capita increases to keep pace with our young and burgeoning population. Essentially it's led to this situation where our per capita costs for the things that you've described as being regular kinds of service that every person would expect in this country....

In a sense, we're getting a much lower expenditure level. That then creates the kinds of difficulties and problems that you've described. We agree, and we've published a study on the myths. We can send copies of this report to this committee. In fact, we are planning to send it to all parliamentarians.

So it is one of those misconceptions that we think is not helpful overall in terms of being able to then make plans and address those same problems.

[The Chair, Conservative, David Tilson]

Thank you, Mr. Martin.

Mr. Jock, you're welcome to send anything you wish to the committee. If you can send it to the clerk, she'll distribute it to members of the committee.

Mr. Poilievre.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Thank you for being with us today.

I am intrigued by the apparent consensus amongst first nations regarding the need for a first nations auditor general. What is unclear to me is that if we need a first nations auditor general, then presumably that first nations auditor general would be doing something that is not already being done. And that's what worries me. You're suggesting that first nations do need a pan-national auditor to complete work that is not currently being done, but on the other hand you're not prepared to have the Auditor General do it in the interim.

I do see that as a bit of a contradiction. Perhaps you can unravel it for me.

[Richard Jock]

Part of the interest here is that, as accountability is becoming a more important issue nationally, this is a first nations accommodation, if you will, to what seems to be a national interest. At the same time, it's respecting the idea that was described within The Harvard Project, which talks about the cultural match for institutions, that we not simply take institutions, apply them, and expect success. We've seen that this does not work.

This is a way to look at accountability, to look at all the elements of accountability that are necessary to have appropriate capacity, provided and funded at the local level, and to provide for some of the standards and tools to measure that accountability. This would be part of an overall process and overall plan that we see as being important. I would point out that it's not one single element.

So we don't see it in conflict. We see it as a way of evolving it to be consistent with Canada's agenda but to be parallel and distinct and appropriate with that agenda.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

You're saying that it would be more appropriate, given the cultural differences of first nations, to have a uniquely first nations auditor general. Did I hear you right?

[Richard Jock]

That would be the opportunity to design that institution. To have that examined and then theoretically, or hopefully, approved by the chiefs in Canada, that would be the process.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Are you saying the reason you'd rather not have the Auditor General of Canada and would rather have a first nations auditor is due to a cultural difference?

[Richard Jock]

That's part of it—a “cultural match”, not the cultural part of it.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Are the generally accepted principles of accounting culturally dependent? Do they change from one culture to another, or are they not principles that can work for financial management in any culture?

[Richard Jock]

What we would say is that all of the elements of accountability need to be addressed as well, and those would need to be recognized. For example, with the Auditor General of Canada there's a very clear management structure, as expressed through departments; there is very clear funding provided for the financial structures, for all of the accounting provisions; there's the Department of Finance. What we would say is that all of those elements would similarly need to be financed and put in place as well for a truly accountable system of first nations government. To look at audit in exclusion would be incomplete.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

I understand that, and we're not trying to look at it in exclusion. But the point this Accountability Act tries to get at here is that you have recognized the need for a first nations auditor general. This individual would presumably be doing some sort of job. In the absence of that position right now, presumably that job is not being done. You can tell me you're filling out all kinds of forms and filing an assortment of audits, but if that were sufficient you wouldn't need a first nations auditor.

Finally, if 97% of the forms are filled out and audits are completed on time and without incident, I don't think you'd have anything to worry about with the Auditor General. She'd have no particular reason to conduct specific audits of specific reserve accounts or activities. If everything is perfect as it is, in the way money is spent, you shouldn't have any concern whatsoever about the Auditor General having this rarely exercised power, should you?

[Bob Watts]

I think it's important, as Richard has commented as well, that we're not talking about a comptrollership function with first nations; we're talking about an auditor general who looks beyond finances at questions of outcomes, of how programs are designed, of appropriateness. All of those things need to be taken into account.

What we're talking about here through Bill C-2, and from what we've looked at, is the development of a different ethics infrastructure, if you will, in Canada. We've already started working on that. We have our own cultures and traditions to draw on to add to that ethics infrastructure in Canada, and we want to do it and we're going to do it. That's part of what we're talking about in terms of our contribution.

I also want to quote this from the Auditor General's testimony:

It's really about establishing relationships. It's also putting the practices and the institutions in place in those communities that will support their own development and will support their accountability to their people.

That's why we have been supportive of the idea of a first nations auditor general; it goes to the whole idea of building institutions. For us, those institutions are going to be supportive of our governments, of our people, and we'll have relationships with other institutions in Canada so that we have the best practices and the best programs and services for our people.

[The Chair, Conservative, David Tilson]

Thank you, Mr. Watts.

Mr. Owen, do you have some questions?