Indigenous and Northern Affairs Committee on Oct. 17th, 2017

[The Chair, Liberal, MaryAnn Mihychuk]

Good morning. I'm very happy to have you here.

First, we want to always recognize our history in Canada, and the fact that we are in a process of truth and reconciliation, in particular for this committee, indigenous and northern affairs. We are here on the unceded territory of the Algonquin people.

Pursuant to Standing Order 108(2), we are continuing our study on the specific claims and comprehensive land claims agreements, and we are hearing witnesses.

This morning we have the pleasure of hosting the Office of the Auditor General. We have with us Michael Ferguson, Joe Martire, and James McKenzie.

You will have 10 minutes to present. I'll give some hand signals when we're getting close to the end time, or give you the number of minutes left. Then members will have questions for you. The first round is seven minutes. I'll try to keep you aware of how the session is moving, and if we're coming close to a cut-off time.

I turn the floor over to you. Thank you.

[Michael Ferguson, Auditor General of Canada, Office of the Auditor General]

Madam Chair, thank you for this opportunity to present the results of two of our audits, one on first nations specific claims, and the other on implementing the Labrador Inuit Land Claims Agreement. Joining me today are Joe Martire and James McKenzie, the principals who were responsible for the audits.

I should first note that we completed the work for these audits in July 2016 and September 2015, and we have not conducted audit work on these topics since then.

The federal government has long acknowledged that it has not always meet its obligations to first nations under historic treaties or properly managed first nations' funds or other assets. In 2007, the government started a new process, called Justice at Last, to resolve long-standing grievances more quickly, fairly and transparently—preferably through negotiations.

Our audit on first nations specific claims examined whether Indigenous and Northern Affairs Canada adequately managed the resolution of these claims. We focused on whether first nations had adequate access to the specific claims process, whether claims were resolved in line with Justice at Last, and whether results were reported publicly.

Overall, we found that Indigenous and Northern Affairs Canada didn't adequately manage the resolution of first nations specific claims in line with the new process. For example, the department wanted more claims to be resolved than received each year, but we found the department achieved this objective in only two of the eight years since Justice at Last came into force. Furthermore, the department stated that every reasonable effort would be made to achieve settlements through negotiations. However, we found that more claims were either closed by the department or ended up in litigation than were resolved through negotiation.

We also found that the department's reforms of the specific claims process weren't developed in consultation with first nations, and that the reforms introduced barriers that hindered first nations' access to the process, and impeded the resolution of claims. These barriers included certain practices such as take-it-or-leave-it offers for claims that the department deemed to be valued at under $3 million, significant unilateral cuts in funding to first nations to prepare their claims, and very limited use of mediation services.

The department also did not use available information to improve the specific claims process. This information included concerns raised by first nations and organizations representing first nations about how the department was implementing the new process. It also included the Specific Claims Tribunal decisions, most of which were in favour of first nations.

Finally, we found that the department's public reports did not contain the information needed to understand the actual results of the specific claims process. For example, the department publicly reported that the 2007 reforms were a success. However, we found that most of the settled claims used to support this assertion were already resolved or almost resolved before Justice at Last was implemented.

According to the 2016-17 Public Accounts of Canada, the government has acknowledged an outstanding liability of $5.3 billion for 528 specific claims.

I would like to turn now to our 2015 report on implementing the Labrador Inuit land claims agreement. In this audit, we focused on whether Fisheries and Oceans Canada, Parks Canada, and Indigenous and Northern Affairs Canada implemented selected obligations in the Labrador Inuit land claims agreement and in two related side agreements, one on fiscal financing and the other on the Labrador Inuit park impacts and benefits.

We found that the federal government made progress on some of its obligations under the Labrador Inuit land claims agreement. For example, Parks Canada had managed the Torngat Mountains National Park to provide employment and business opportunities to Labrador Inuit.

However, we found disagreements in some areas, such as fishing and housing. For example, Fisheries and Oceans Canada and the Nunatsiavut government disagreed over the share of the northern shrimp fishery that the Nunatsiavut government was entitled to receive under the agreement. Furthermore, the lack of a federal program for Inuit housing had limited the ability of the Nunatsiavut government to fulfill its housing responsibilities. The failure to resolve differences put a strain on the relationship between these two governments, yet the dispute resolution mechanism contained in the Labrador Inuit land claims agreement was not used to resolve these issues.

Lastly, we found that Indigenous and Northern Affairs Canada did not have an effective system to track the status of the federal government's obligations under the agreement.

Following the tabling of our 2015 and 2016 fall reports in Parliament, all the departments that we audited presented an action plan to the standing committee on public accounts to address our recommendations. Your committee may wish to ask them for an update on the implementation of their commitments.

Madam Chair, this concludes my opening statement. We would be pleased to answer any questions the committee may have.

Thank you.

[The Chair, Liberal, MaryAnn Mihychuk]

Thank you very much.

The first round of questions goes to the Liberal side, and we will open with Mike Bossio.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

Thank you so much for being here this morning, Auditor General. It's greatly appreciated. We appreciate all the work you've done on this file and looking at the history of land claims as it relates to the “Justice at Last” report.

We've had a number of meetings already with a number of indigenous groups. We travelled across the country and met with a number of them around specific and comprehensive land claims. There are a number of issues that are coming up again and again. Many of them relate to funding in two respects, funding for research to carry out the land claims process and funding to participate as part of the land claims process, and the amount of debt that groups incur to be a part of that process.

I wonder if you could elaborate on these claims that have been made by different indigenous groups and whether you have any findings around those areas.

[Michael Ferguson]

Certainly, when we looked at the specific claims process, one of the obstacles that we identified, one of the barriers that we felt prevented the Justice at Last program from functioning the way that it was intended to function was that the Department of Indigenous Affairs had reduced the budget that it provided to first nations to do their research.

I believe the people that did the research told us that they were only able to do...at least one group of researchers who dealt with a number of first nations said that they would only be able to research one claim every 10 years for each of those first nations they represented.

It certainly was an issue. We identified in the report that the funding the department had provided in 2013-14, funding provided for research to first nations was $7.8 million. By 2015-16, that had dropped to $4.7 million. That is a significant reduction in the amount of money provided to first nations to do the research. That certainly was a barrier we identified.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

Was there a direct correlation between that barrier and the resolution of specific claims as a result of reduction in the ability of first nations to actively participate in the process?

[Michael Ferguson]

As I said, we identified a number of different barriers that we felt meant the program didn't work the way it was intended to work. One of them was the fact that there wasn't the funding available.

Another that we identified, again, I think as I mentioned in my opening statement, was that the department decided that, if something was a low-value claim—and the department themselves identified what a low-value claim was—anything that they thought would take less than $3 million to settle, essentially they didn't get into negotiations. They just sent a letter to the first nations to say, “Here's what we're willing to provide you”, and there wasn't any offer of negotiation in that letter.

There was a mediation service that was established. If a first nation wanted to go to mediation because they felt their claim wasn't being evaluated the right way by the department, there was a mediation service; however, the department had set up that mediation service within the department itself, so the first nations didn't see it as truly independent. Therefore, it was used only once in the process that we saw.

Also, the department didn't share the information. When they did an assessment about a claim, they didn't share that information with the first nation.

I can't draw a specific correlation between the budget reduction and the lack of success in the program. What I can say is that it was one of the barriers we identified among many barriers that meant the program didn't achieve what it was intended to.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

Were you able to identify the number of claims that weren't funded as a result of the cut in funding?

[Michael Ferguson]

No, we didn't look at it at the individual level as to which first nations would have liked to research a claim but didn't have the funding. We didn't look at it with that level of granularity. What we were looking at was whether the program achieved what it was supposed to. Again, as I said in my opening statement, they said that they wanted to resolve more claims than they received, but they were only able to do that twice.

Overall our issue was that the program didn't achieve what it was intended to achieve, and there were a number of reasons for that.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

The second area that I'd like to focus on that also was a big concern—there are so many, but we're running out of time—is around negotiations and negotiators.

In the negotiations process, as we've seen in many testimonies, it goes on and on. Then it's an on-again, off-again type of process. The level of debt—once again, reflecting back to the funding formula—the amount of debt that's accumulated.... This on-again, off-again process ensues. I guess the lack of determination to find an outcome that both organizations could agree to is almost like it was intentional to draw out the process to increase the level of debt through the funding program.

Then, finally, there's the lack of mandates of the negotiators to truly be able to negotiate a final settlement. They didn't have that mandate, nor were the negotiators from all the different departments who needed to be at the table present.

Can you elaborate on those issues that have arisen?

[The Chair, Liberal, MaryAnn Mihychuk]

In 15 seconds.

[Michael Ferguson]

I'll ask Mr. Martire to deal with it.

[Joe Martire, Principal, Office of the Auditor General]

Thank you. I'll try to be brief.

On the specific topic of negotiations, covered in paragraphs 6.39 through 6.44, again, that's an area that was considered a barrier, the way they conducted negotiations specifically for small claims. They imposed some unilateral changes as part of the reforms, for example, the take-it-or-leave-it offers for claims that were valued at $3 million. The $3 million amount is determined by the department without consultations with the first nations.

They also changed the way they would negotiate in terms of the development of plans that would guide the negotiation process. Prior to Justice at Last, there was a plan that was mutually agreed to. That was discontinued. That was also something the first nations talked about.

Thank you.

[The Chair, Liberal, MaryAnn Mihychuk]

We'll go to the next round. We're moving to MP Cathy McLeod.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thank you, Madam Chair.

Thank you to the witnesses.

Clearly, I think the intention of Justice at Last was a good one. I think your audit report clearly identified some issues in terms of it achieving what it was supposed to achieve. Certainly in the next hour we'll look forward to hearing from the officials in terms of what their recommendations were and how they have actually moved forward since that time. That, of course, is going to be a very important part of this meeting.

I do want to start with the Labrador Inuit land claims agreement. You talk about issues with Fisheries and Oceans Canada about the share. In your minds, was the agreement very clear about how that share should be apportioned? Was it something that was just not moved forward, or was there ambiguity within the agreement itself that made it complicated to move forward on that issue?

[Michael Ferguson]

Thank you, Madam Chair.

I think both the federal government and the Nunatsiavut government—

[The Chair, Liberal, MaryAnn Mihychuk]

Excuse me. We'll pause the meeting for a few minutes.

[The Chair, Liberal, MaryAnn Mihychuk]

We'll recommence the meeting.

It was our library analyst, a young man, Olivier. This was his second day on the job. We wish him well and thank the responders and especially MP Cathy McLeod. Her nursing experience came to the forefront as she looked after the situation.

Let's recommence. We do have important business. I understand the agreement is that we will continue for this hour as scheduled, so it leaves approximately 25 minutes for questions and answers.

We had just moved to MP Cathy McLeod.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thank you, Madam Chair.

If you recall, I was looking at the issue of clarity within the agreement that was easily interpretable versus a lack of clarity, which made it more difficult for the Labrador Inuit land claims agreement.

[Michael Ferguson]

Thank you, Madam Chair.

We found the federal and the Nunatsiavut governments had different interpretations of what the federal government had committed to on the fishery side. We talk about it in paragraph 3.38 of the report. It starts at 3.38 and goes on for a number of paragraphs. I think the way to characterize it is the Nunatsiavut government felt that they were entitled essentially to 11% of the harvest of shrimp in the particular zones and the federal government felt that this wasn't always the case. They felt there were certain circumstances under which the Nunatsiavut government's quota should increase and others where it should not increase; whereas the Nunatsiavut government's view of it was any time there was a change, they should get 11%.

I think the department's position, for example, was that if they issued new licences, then the Nunatsiavut government would be entitled to an increase in quota. They didn't increase licences, but I believe they increased quota under some of the licences and the Nunatsiavut government felt that meant they should also get an increase, but the Department of Fisheries felt that because they hadn't issued new licences, even though they had increased the overall quota, this didn't trigger the increase for the Nunatsiavut government.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Should that have been more specific and clear within the actual agreement and would we have circumvented that as an issue, or is there some very compelling reasons that the flexibility needed to be required and that there was this disconnect?

[Michael Ferguson]

I think that's always the problem with agreements. You can't always foresee every situation that is going to come about. Obviously it's best to have agreements that cover as many situations as you can think of and cover them clearly so there's never any dispute, but some situation always arises.

I think the issue for us, and we mentioned it in paragraph 3.56 of our audit, was that a dispute mechanism was built into the land claims agreement to resolve a certain number of issues, but that dispute mechanism was never used. I think it's about having a clear agreement but then also having a dispute mechanism that's going to work, because there are always going to be some disagreements.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

The other comment you made that I found interesting, and we have heard this...I had always presumed that a system would be in place to track the status of the obligations under the agreement. We have a number of agreements across the country. I know in our travels concerns have been raised. Is that specific to this agreement or do you have anything to indicate in any more general way that there is a lack of systems, as you stated in your opening comments in paragraph 14?

[Michael Ferguson]

We cover this in our report on implementing the Labrador Inuit land claims agreement, starting really, I guess, in paragraph 3.85. We note there that the department of what was then Aboriginal Affairs and Northern Development Canada had a plan to expand their capabilities to track the obligations. At the time we did the audit, they had the treaty obligation monitoring system. We felt that they were still having problems getting all of the obligations into the system and weren't tracking what the benefits were from implementing the obligations. At the time we did the audit, then, we felt that the department was not sufficiently tracking the obligations associated with these treaties.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thank you.

I want to turn now to the specific claims. As we indicated, there were good intentions.

You had eight recommendations. If you were going to be us in the next panel, which one of your recommendations would you deem to be the most important for us to question officials on to ask whether they have acted upon it?