Good morning, everyone. Thank you for the invitation to speak here today. I'd like to introduce myself. My name is Dawn Madahbee Leach, and I am the interim chair of the National Aboriginal Economic Development Board. I am from the Aundeck Omni Kaning First Nation on Manitoulin Island, and for nearly 30 years now, I've been the general manager of the Waubetek Business Development Corporation.
I'd like to acknowledge that we are gathered on the traditional territory of the Algonquin and Anishinaabe peoples.
As you may know, the National Aboriginal Economic Development Board is an advisory board made up of first nations, Inuit, and Métis business and community leaders from across Canada. The board was formed in 1990, and members are appointed by orders in council. The board has a mandate to provide strategic policy advice to government on how to best promote indigenous economic development and how to respond to the unique needs and circumstances of indigenous people in Canada. I am happy to be here today to share the board's thoughts on default management and prevention policy.
Though we may not know all the process details of this policy specifically, my board colleagues and I have seen first-hand how third party managers or management impacts our communities. I also want to add that I reviewed some of the previous presentations to your committee, and the presenters have eloquently explained the root causes of this default issue and provided some great recommendations.
I am sure we have all by now memorized the Prime Minister's much-quoted commitment, “No relationship is more important to me and to Canada than the one with Indigenous Peoples. It is time for a renewed, nation-to-nation relationship with Indigenous Peoples, based on recognition of rights, respect, co-operation, and partnership.”
In January of this year, our board released its statement on the United Nations Declaration on the Rights of Indigenous Peoples. This document sets out a standard to be achieved in the spirit of partnership and mutual respect that marks Canada's stated commitment to reconciliation. The declaration describes 46 articles by which the international community and Canada as a signatory can work to achieve indigenous socio-economic equality and end the systemic racism that has limited the development of indigenous and non-indigenous peoples for far too long.
Among the articles and of particular interest to the national board is article 3 that states, “Indigenous peoples have the right to self-determination. By virtue of that right they freely determine their political status and freely pursue their economic, social and cultural development.” Indigenous self-determination is foundational to the national board's vision of vibrant indigenous economies that are characterized by economic self-sufficiency and socio-economic equality with the the rest of Canada.
It is the view of the board that a nation-to-nation relationship is only possible where indigenous people reassert jurisdiction over their lands, resources, and people. The existing default management prevention policy is an anathema to our vision. This regressive, designed-to-fail policy must be eliminated and replaced by practices that actually result in improving outcomes for first nation communities.
In February, the national board hosted the first of a series of conferences on reconciliation and economic development. Minister Jody Wilson-Raybould spoke at the event and shared with us the words of the late Nelson Mandela who said, to paraphrase, beyond the necessary healing and truth telling, reconciliation actually requires laws to change and policies to be rewritten.
That's why I'm here today to tell you that this policy of default management needs to be rewritten. It doesn't work. In fact, it hurts the communities it's supposed to help because it increases financial hardship on reserves and does nothing to build financial capacity or financial literacy.
One of the published objectives of the policy is to support community capacity development so that communities continue to increase their ability to self-manage and prevent default and default recurrence.
The on-the-ground reality is much different. First, third party managers are appointed with no requirement or incentive to support a community’s ability to self-manage. In fact, a perverse incentive exists for third party managers to keep a long-term contract going. Third party management is an opaque process that can sometimes go on for decades, but leaves first nations with no more capacity at the end of the process than they had at the beginning. This has actually become an industry unto itself, and is exactly why approximately 25% of our first nations are still currently undergoing some form of the default management process.
Second, first nations are required to pay for a recipient-appointed adviser or third party manager from their band support funding envelope. Reallocating needed resources for third party managers only increases the financial hardship of the community, further limiting revenue-generating opportunities. The lack of dedicated funding to assist in default management results in exactly the opposite of what capacity building and support means, and works at complete cross-purposes from what the policy intends.
As mentioned—and I know you have heard from my colleagues at the First Nations Financial Management Board—there is a new audit and evaluation of the policy coming out soon, which will give you many more specific reasons why the policy doesn’t work. I want to spend my time proposing a few solutions.
First of all, the default management process should be run by first nations institutions. These institutions, including the First Nations Financial Management Board and AFOA, have the mandate to do the work and a commitment to building the capacity, financial management skills, and self-determination of indigenous peoples that is lacking in the current approach. I also want to mention that the First Nations Market Housing Fund also provides an element of capacity building to establish policies and processes.
Third party managers should be first nations individuals who are trained and certified to do the work, and accountable to the community. The First Nations Financial Management Board can undertake the education of these people, provide the oversight to ensure that the work is done in a reasonable time frame, and ensure that knowledge remains in the community. We have our own institutions, and they should be supported in doing the work to help our people. I think that if there is a new industry that exists, at least our people could be part of it in delivering the service.
Second, there needs to be an increased emphasis placed on financial literacy and financial management capacity. In some remote indigenous communities, there are no banking services and poor Internet connectivity, which means that people have literally no exposure or opportunity to learn even simple things like how to read a financial statement. There is a lot of talk about the need for indigenous education and training, and financial literacy and management must be part of that conversation.
Again, our first nations institutions should be supported to help. They are already doing some of the work, but they could be doing more. For example, AFOA Canada is a non-profit organization dedicated to enhancing indigenous finance management practices and skills, and you'll hear more about this with the next speaker. The excellent work of this organization and other indigenous financial institutions like it should be strengthened and used to their full measure.
My third recommendation is to increase the financial management component of the comprehensive community planning process that is part of INAC's partnership approach to community development. These plans have been proven to build capacity and contribute to community resilience, but there needs to be an emphasis on financial management as part of this process. It will go a long way towards building the financial literacy and capacity that is needed.
Finally, I would like to draw your attention to an approach to first nation community financial review by the Ulnooweg Development Group. They work at training the chiefs and councils to better use and understand their community financial information. It is so key to train the chiefs and councils. They prepare a reliable set of standardized and streamlined multi-year financial data. They put it in charts and explain it, so the communities know how much they can lend and what kind of financial commitments they can make. The objective of the process is not to turn chiefs into financial experts, but to build their financial capacity.
I just want to summarize by saying that moving forward in the spirit of reconciliation, rewriting laws and policies means making sure that we are always working together to make sure that policies are not punitive or regressive—