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Briefing Note on First Nations-Fiscal Relations Bill 2002

Briefing Note on First Nations-Fiscal Relations Bill 2002

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Published by Russell Diabo
Describes the FN Fiscal Institutions Bill championed by Manny Jules in 2002.
Describes the FN Fiscal Institutions Bill championed by Manny Jules in 2002.

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Published by: Russell Diabo on Mar 26, 2013
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 Fiscal Institutions Briefing Note - April 21, 2002 Page #1
 
BRIEFING NOTEInstitutional Fiscal Relations Package
April 21, 2002
Prepared by Michael Sherry 
PENNER REPORT
1. The Penner Report of 1983 was issued by the parliamentary standing committee on IndianAffairs. The chairperson was Keith Penner, an MP from northern Ontario. The committee hadbeen originally tasked to produce a report on the issue on the equalization of women’s statusrights in the
Indian Act 
, vis-a-vis s.15 of the
Charter of Rights 
. There was a process in place todeal with this issue, which eventually resulted in
Bill C-31
of 1985. However, the committeeled by Penner seemed to be more interested in the issue of First Nation self-government. Thecommittee produced a brief report on the status issue, in order to fulfill its formal mandate, andquickly moved on to its real area of interest, i.e. self-government. The committee probablywanted to influence the multilateral constitutional process on self-government, which was thenin full swing, based on the provisions (in particular s. 37.1) of the
Constitution Act, 1982 
.2. The Penner Report made many recommendations that foreshadowed the work of the RoyalCommission on Aboriginal Peoples in the 1990's. In particular, the Penner Reportrecommended a new bilateral fiscal relationship. Increased annual transfers from Canadawould be based on all relevant factors and would be determined through nation-to-nationnegotiations. Echoing this approach, the principal fiscal recommendation of the RCAP Reportwas a massive transfer of new funds to First Nations over a period of 20 years.3. The four institutions (Tax Commission, Finance Authority, Management Board, and StatisticalInstitute) recommended by INAC, ITAB, and the AFN fiscal relations unit completely by-passthe principal fiscal recommendations of the Penner Report and the RCAP. Instead, the fourinstitutions focus on the imposition of expensive accountability guidelines and the generationof revenue through on-reserve property tax.
MULTILATERAL CONSTITUTIONAL PROCESS (1982-1992)
 4. This process featured four multilateral constitutional conferences in the 1980's, the MeechLake Accord of 1989 (?) and the Charlottetown Accord of 1992. The conferences of the1980's were specific to First Nation concerns and ended up focussing on the issue of theinherent right of self-government. Three of the four conferences were required by a processprovision in the
Constitution Act, 1982 
. The Meech Lake Accord and the CharlottetownAccord were driven by the political mandate of the federal government of Brian Mulroney.First Nations were excluded from the Meech Lake process, but played a large part in theCharlottetown process, mostly because of the political support of Ontario Premier Bob Rae.5. All of the conferences and processes (except Meech) focussed on the inherent right of self-government. The most elaborate expression of the right was contained in the Charlottetown
 
 Fiscal Institutions Briefing Note - April 21, 2002 Page #2 
 
Accord of 1992. Oddly enough, none of the processes paid much attention to the financing ofthe inherent right, assuming its entrenchment by constitutional amendment. If any of theprocesses had been successful, the financing of self-government would have to have beenworked out on a going-forward basis.6. The constitutional processes were aimed at entrenching the inherent right, subject to variousconditions suggested by Canada and the provinces. My recollection is that the kinds ofinstitutions in the current fiscal relations package were not a feature of any of the self-government proposals.
KAMLOOPS AMENDMENTS TO THE
INDIAN ACT 
 7. Since the political process attached to the 1969 White Paper, there had been a kind of politicaland psychological understanding between First Nations and Canada that the
Indian Act 
shouldnot be “tinkered” with before the fundamental issues (eg. self-government) had been dealtwith. This understanding was breached with
Bill C-31
in 1985. There was an extensiveconsultation attached to this
Bill 
, but in the end Canada felt obliged to act in order to avoidmassive liability under the equality guarantee contained in s. 15 of the
Charter of Rights 
. Theeffect of s. 15 was suspended between 1982 and 1985 to allow governments to bring theirlegislation up to scratch. Canada believed that the status rules of the
Indian Act 
, particularlyas they affected women, were certain to be struck down by s. 15.8. The breaking of the political barrier with regard to amendments to the
Indian Act 
was quicklyexploited. A group of First Nations in BC spearheaded a drive to amend the
Act 
to clarify thereserve status of conditionally surrendered land and to confirm the capacity of First Nations toimpose property taxes on all reserve land, including conditionally surrendered land. Myrecollection is that the BC First Nations were motivated by a difficult situation peculiar to BC.Some municipalities there were imposing property taxes on conditionally surrendered land.The eventual Kamloops Amendments put an end to this practice. It seems there was anexpectation that the affected First Nations would step into the breach and replace municipalproperty taxes with First Nation property taxes.9. The Kamloops amendment package was successful because of the way it was packaged. Itwas sold as a First Nations driven package, making it difficult for other First Nations to resist.And, as noted, the barrier to change to the
Indian Act 
was broken with
Bill C-31
in 1985.10. The revised s. 83 of the
Indian Act 
still left the Minister of Indian Affairs in charge of approvingproperty taxation bylaws. However, on an administrative basis the Minister created a newadvisory body called the Indian Taxation Advisory Board (ITAB). The ITAB advised theMinister on the adoption of s. 83 bylaws and related matters. It seems that over the years theITAB developed a close working relationship with INAC.11. An objective of ITAB was to promote the use of property tax bylaws across the country.However, in spite of over a decade of effort (1989 to 2001), the ITAB was largelyunsuccessful. The bulk of s. 83 bylaws come from BC First Nations; only a handful ofcommunities east of Alberta have passed such bylaws.12. The ITAB operated largely apart from the AFN until 1997 or 1998. In that period, a closer
 
 Fiscal Institutions Briefing Note - April 21, 2002 Page #3 
 
working relationship between the AFN and ITAB developed. In particular, ITAB assumed aspecial role in the elaboration of the AFN position on fiscal relations. There is no doubt thatthe AFN benefited from the expertise of ITAB in some fiscal matters. However, in retrospectthe wisdom of this relationship on a key policy matter like fiscal relations may be questioned.The ITAB seems to have a profound philosophical inclination toward local taxation andaccountability measures. This agenda is similar to the INAC agenda. This agenda is notsupported by most First Nations in Canada. Not surprisingly, the current institutionalproposals of the AFN fiscal relations unit seem to reflect (at least in part) the view of ITAB.The proposed institutions lean heavily on local taxation and accountability. The proposalshave almost nothing to say about Canada’s responsibilities, including the option of increasedfiscal transfers.13. The ITAB Kamloops agenda of increased local taxation, borrowing, and accountability maymake sense for the handful of First Nations in BC and elsewhere that benefit from significantand secure streams of own source revenue (OSR). However, with respect, the agenda makeslittle sense for the majority of First Nations that rely heavily on straight transfers from Canada.
ROYAL COMMISSION ON ABORIGINAL PEOPLES (RCAP)
 14. The Commission was formed by the Mulroney government in 1993 (?) in the wake of theKanesetake stand-off. The Commission was heavily funded and had a broad mandate to dealwith fundamental First Nation and Aboriginal issues. In 1996 it eventually produced a multi-volume report with hundreds of recommendations, many of a sweeping or fundamental nature.15. The RCAP report was ignored by Canada for over a year for several reasons, including thefollowing: (1) the report was initiated by a Conservative government but was released duringthe term of a Liberal government; (2) the frosty relationship between Minister of Indian AffairsRon Irwin and National Chief Ovide Mercredi; (3) the overwhelming breadth of the report; and,(4) the emerging policy of the federal government to cap spending on First Nations.16. In the fiscal area the RCAP recommended some of the institutional enhancements currentlyadvocated by ITAB and the AFN fiscal relations unit. However, the overriding fiscalrecommendation of RCAP was that the federal and provincial governments should significantlyincrease transfers to the First Nations over a twenty year period. This massive infusion offunds was viewed by the Commission as the only way to get First Nations out of the ThirdWorld in a reasonable period of time.17. With massive surpluses in place for the last couple of years, Canada now has a historicallyunique opportunity to implement the fiscal transfer recommendations of Penner and RCAP.However, the harsh reality is that Canada wants to spend less money on First Nations, notmore. The institutional agenda of ITAB and the fiscal relations unit does not address theprincipal fiscal recommendations of RCAP. There is not even a hint in the institutionalpackage that Canada should increase transfers to First Nations. In contrast, over the lastcouple of years the provinces have made huge financial gains by demanding more moneyfrom Canada. The provinces have sought more money, not more institutions. The institutionalpackage presented to the Confederacy last May is based on the assumption that increasedrevenue for First Nations should be self-generated through local property taxation and lendingbased on this taxation. In my view, this is not a realistic option for nine out of ten First Nations.

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