Evidence of meeting #52 for Indigenous and Northern Affairs in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was policy.
A recording is available from Parliament.
9:40 a.m.
Liberal
April 6th, 2017 / 9:40 a.m.
Liberal
Gary Anandasangaree Liberal Scarborough—Rouge Park, ON
Thank you.
Welcome this morning.
Mr. Yesno, you indicated that six out of nine communities that you serve are under default management. Can you indicate to us some of the challenges that these particular communities face now and the challenges of getting out of third party management?
9:40 a.m.
Manager, Financial Advisory Services, Matawa First Nations
Four out of those six are remote first nations. They have no access to outsource outside resources, outside funding, other than what comes in through INAC or from the province, and that's all basically just piecemeal.
The other two are road-access communities, which are near larger communities that are off-reserve. They don't have access to collecting taxes, or the ability to create economic development.
Three of our communities right now are involved in a pilot project, which is funded by INAC under the strategic partnerships initiative. One of them, Neskantaga, has been under co-management for nearly 16 years now. In the past year, starting in June with this pilot project, we took a new approach in that the department, along with ourselves at the tribal council and along with community leadership, formed a working group that met regularly to try to determine what was the best way to get them out of it.
The system hasn't worked. It's been 16 years of paying MNP and their predecessors a quarter of a million dollars a year of their band support funding. How are you supposed to get out of it? It's like you mentioned. It's going around in a circle down the drain.
Sixteen years is a long time, and the leadership has said it has to stop. We have to change as well, and it's going to take both sides. That's why we came together. In that time, they've hired a new band manager. They have adopted new financial policies, a new HR policy, a new organizational structure. They've met with their community continuously. They developed a new management action plan, and they have been de-escalated, and now they are managing themselves. We did that in less than a year.
It is because of this funding. It's given us the flexibility, and that's what we need. You can't just say, okay, this is your education pot. This is your health pot. This is your band support funding pot, and you cannot mix, otherwise, you fall into default. Getting this sum of money has given us that flexibility to know where we can direct it. What we have accomplished in less than a year is pretty amazing, after 16 years of being in default.
We're just starting our second community, Marten Falls First Nation. Our third will be Webequie, and we're hoping to repeat that success. If this model works, why can't it be applied all across the country?
9:40 a.m.
Liberal
Gary Anandasangaree Liberal Scarborough—Rouge Park, ON
You're suggesting that rather than putting communities into default management there's a proactive approach to bring all the parties together and provide additional resources in the interim. Is that what you're suggesting?
9:40 a.m.
Manager, Financial Advisory Services, Matawa First Nations
Absolutely, and I think if there's willingness on the community's part to also support that from the leadership and from a strong administration, we've proven it can be done.
9:40 a.m.
Liberal
Gary Anandasangaree Liberal Scarborough—Rouge Park, ON
We've heard a fair bit about the limitations of accessing additional funding when an organization is under default management. For example, CMHC for housing, and so on.
Grand Chief, you had indicated there were 265 housing units that your community needs.
9:40 a.m.
Grand Chief, Swampy Cree Tribal Council
I'll give you an example of the ministerial order guarantee. If I was in default management I wouldn't be eligible for CMHC. I wouldn't even be considered. That's a downfall.
If I was to be given a rent regime in my community, and I have 235 houses.... CMHC is giving that money to communities to run and operate. If I was to be given that formula and a rent regime to seek that, I would get extra revenue to do that. I would be operating my own housing. However, I'm not at liberty, and I'm not given that.
9:45 a.m.
Liberal
Gary Anandasangaree Liberal Scarborough—Rouge Park, ON
During the time you were under default management, what's the loss in infrastructure to your community?
Just in houses, as an example. How many houses should we have built?
9:45 a.m.
Grand Chief, Swampy Cree Tribal Council
I have 1,200 members living in my community, and we have 230 houses. That's how many people are living in those houses. All you have to do is do the math on that.
9:45 a.m.
Liberal
The Chair Liberal MaryAnn Mihychuk
Time is so short, sorry.
This is a system that is very difficult to have a conversation about and move it beyond, but given the structure that we have you did a fine job representing the serious issues that you presented. We want to thank you for your co-operation. That ends our session.
Grand Chief.
9:45 a.m.
Grand Chief, Swampy Cree Tribal Council
I have a final comment. Back when treaties were signed, my members were given five dollars apiece. What was the math at that time, when I was able to afford something, to today's date, 2017? Give me that interest. Up that five dollars to that amount.
9:45 a.m.
Liberal
Mike Bossio Liberal Hastings—Lennox and Addington, ON
Chair, some really valuable information has been shared here today, and I would really encourage you to submit a brief as well, because a lot of the stuff couldn't be captured. If you could do that so we could have that as part of our witness testimony, that would be very much appreciated.
9:45 a.m.
Chief, Swampy Cree Tribal Council
Let's get rid of this archaic concept and build a true nation-to-nation relationship, and we'll all be better.
9:45 a.m.
Liberal
The Chair Liberal MaryAnn Mihychuk
Hear, hear!
You have sympathetic ears here.
Thank you so much for coming out. Safe travels. Meegwetch.
9:45 a.m.
Liberal
The Chair Liberal MaryAnn Mihychuk
We're going to suspend for a few minutes, and our other presenters will come forward. We also have a couple of pieces of committee business we'll try to wrap up at the end.
9:50 a.m.
Liberal
The Chair Liberal MaryAnn Mihychuk
We want to hear from each group. We have three people representing three distinct organizations. We want to move on, and we need to save five minutes for committee business at the end of today.
Pursuant to Standing Order 108(2) and the motion adopted on February 21, 2017, the committee resumes its study of default prevention and management policy.
We have three witnesses. Dawn Madahbee Leach is from the National Aboriginal Economic Development Board. Terry Goodtrack is from AFOA, and Charmaine Stick is presenting as an individual. Each presenter will have 10 minutes to present.
I'm going to suggest that we start with you, Dawn, please.
9:50 a.m.
Dawn Madahbee Leach Interim Chair, National Aboriginal Economic Development Board
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—
10 a.m.
Interim Chair, National Aboriginal Economic Development Board
—but that they are modern and innovative.
Thank you.
10 a.m.
Liberal
The Chair Liberal MaryAnn Mihychuk
I'm sorry. The committee has certain timelines and we do want to hear from everyone.
We are moving on to our second witness, and that is Terry Goodtrack.
10 a.m.
Terry Goodtrack President and Chief Executive Officer, AFOA Canada
Good morning, kola. Hello, friends.
I would like to recognize that we are on the unceded territory of the Algonquin Anishinaabe people. Thank you for inviting me to speak today on the federal government's default management and prevention policy. My name is Terry Goodtrack. I'm a member of the Wood Mountain Lakota First Nation in Saskatchewan. I'm the president and chief executive officer of AFOA Canada.
Today I would like to focus my comments on three areas: one, who we are at AFOA Canada; two, current initiatives that we're undergoing at AFOA Canada; and three, AFOA Canada member input into the default prevention and management policy.
AFOA Canada was founded in 1999. We're a national, not-for-profit, non-political organization with nine chapters across the country. We are a membership-driven organization. We have 1,508 members. AFOA Canada exists because years ago aboriginal people recognized the need for certification and training programs for financial managers, aboriginal administrators, and elected leaders. Over the past 18 years, we have created numerous products built around the pillars of effective financial management, good governance, leadership, and wealth management.
AFOA Canada is proactive. We look at the big picture and the long term. We focus our work of education, research, training, and certification on forging a community of financial and management professionals. AFOA Canada has two professional certification programs, which are recognized and respected in the fields of finance and management. The certified aboriginal financial manager certification, or CAFM, for short, identifies the holder as a highly qualified professional, up to date on the latest and best financial management practices. We align and create a pathway for our certified members toward a chartered professional accountant designation with CPA Canada. We have 596 CAFMs across this country.
Our second designation is the certified aboriginal professional administrator designation, or CAPA, for short. The focus of this certification is first nation senior administrators, CEOs and chief operating officers of indigenous communities, and their successors. We've created a pathway from our CAPA designation to university undergraduate and graduate programs. We have 51 CAPAs across this country. Shortly, we will be embarking upon an elected leader certification program.
Turning to our current initiatives, to maintain these certifications, our CAFMs, our CAPAs, and soon our elected leaders certification, AFOA Canada has a number of capacity-building workshops. Last year, AFOA Canada and its chapters trained over 2,000 people. For example, we have workshops in financial management, community governance, strategic planning, performance measurement, human resource management, and developing an effective management action plan for first nations, to name a few.
In the past four years, we have been working on financial literacy projects for community members. This includes a dollars and sense program for youth in elementary, middle, and secondary schools. We've also completed a workshop on retirement planning for aboriginal Canadians. In addition, we have been piloting financial literacy workshops in four Ontario first nation communities, whereby we coach local teams of volunteers to deliver workshops on access to banking, building savings, and taxes and benefits.
We hold an annual conference for our members every year. The theme of our conference this past February was “Aboriginal Economy—Building a Stronger Future”, and 1,140 delegates attended. Our next conference is October 2 to 5, 2017, in Vancouver, British Columbia. The theme is, “Building Sustainable Communities by Strengthening International Networks”. It's our first inaugural international conference.
Turning to the default prevention and management policy, in August 2016, AFOA Canada was approached by INAC to gather input on the impacts of financial policy and legislation on first nations across Canada. AFOA Canada conducted online surveys. We held focus groups with our members in Halifax, Montreal, Saskatoon, Winnipeg, and Vancouver. At our AFOA Canada annual conference in February, we presented the draft of our report, including the recommendations, and integrated the written and oral feedback into the final version. This report captures the lived experiences of first nations communities as they interact with federal financial policy and legislation.
I'll now provide you an overview of the findings and recommendations specifically as they concern the default management and prevention policy, and I'll start with the general themes. The first theme, obviously, is funding levels, in particular the need for more capacity development funding. AFOA Canada is very involved in this work.
We see financial and management education and certification as vital investments. We need to be proactive, putting more focus on prevention, and not only prevention of default, which I would say is a minimal standard, but also promotion of excellence in financial management. Without these types of investments in capacity building and supports, the cycle of managing poverty rather than prosperity will continue.
We need to set communities up for success and not for failure. If we invest in these communities, it will pay dividends to the Canadian economy in the future, which is something my colleague Dawn speaks about very eloquently.
A second theme is collaboration based upon a nation-to-nation relationship, which, our members assert, should be the main focus of policy and legislative changes. A commitment to working with first nations as governments, for example on fundamental issues of capacity, is simply a recognition that first nations are partners in a shared public purpose. That purpose involves caring for children, promoting healthy communities, educating future generations, and other priorities that matter to Canadians.
The third thing is reciprocal accountability. The focus groups as well as survey comments agree that the role and reach of a third party manager or recipient adviser should be revised to better serve first nations. We all agree that accountability is important. The principle of reciprocal accountability stresses that the crown should be accountable to first nations just as first nations are held accountable to the crown through their funding agreements. Mutual accountability fosters two-way communication.
Our focus groups told us that INAC must be accountable to first nations if the relation is truly to be nation-to-nation.
In the case of a first nation designated as high risk by INAC, accountability could take the form of an obligation to work with that community so that it may move to a lower risk designation.
Investments in capacity building, collaboration, and reciprocal accountability—these are the three overarching themes.
Turning to our recommendations, the first recommendation focuses on prevention and ensuring that where a community is in default, actual capacity building is delivered to community management. Our members stated that, in communities in default, investments are required to prevent further decline. With today's level of reporting and auditing, we can spot potential defaults through trend analysis. This means we can also address the underlying issues, deficits in specific areas due to management capacity issues, or perhaps even federal policy decisions.
Secondly, our members also stated that there ought to be clear and meaningful metrics by which we can measure and assess the progress of third party managers and recipient advisers. Manager-level mentorships through the period of third party management should be mandatory. There appears to be no incentive for third party management to move a community out of this level of intervention, as Dawn mentioned in her speech.
Thirdly, funds should be allocated to the hiring of qualified, long-term first nation employees or the extensive training of existing staff. These are long-term investments that look far beyond the short-term and mid-term crisis.
Fourthly, in the short term, timelines for third party managers and recipient advisers need to be well defined. We recommend a target of one to five years, depending upon the severity of the default issue. The goal should be to ready the community for financial sustainability at the end of the prescribed time frame. Again, meaningful and concrete metrics should be in place to monitor progress toward this end. In some cases, a recipient adviser has never been in a first nation prior to taking over a community's finances. Focus-group participants noted the lack of collaboration and cultural sensitivity among recipient advisers and third party managers.
Fifthly, our members therefore recommend investments in cultural training for third-party managers. As a matter of principle as well as practicality, we recommend a shift of focus from punitive measures to capacity building, collaboration, and mutual accountability.
When a first nation is flagged and the general assessment is medium-to-high risk, the crown ought to have a positive obligation to provide capacity funding and to work with the first nation to strengthen the financial management processes. This is a proactive, not reactive, measure. A risk assessment helps identify the areas where improvement is possible, even necessary, and where transformative change can begin.
Governing these initiatives, there should be a clear and transparent implementation plan setting out the roles and responsibilities of the partners on the principles of a mutually respectful and mutually accountable nation-to-nation relationship. First nations are your partners in a shared public purpose.
As a CEO in AFOA Canada, I can't overstate the importance of investing now in tomorrow's financial and management professionals.
10:10 a.m.
Liberal
The Chair Liberal MaryAnn Mihychuk
Thank you, Terry.
I am going to ask members to consider putting in an earpiece. Ms. Stick is going to be speaking in Cree. We have a translator who will be available if you need assistance.
Ms. Stick.
