Question Period Note: First Nations Financial Transparency Act

Our Government agrees with First Nations who have told us that the First Nations Financial Transparency Act needs to be replaced with a respectful approach that strengthens accountability.
Everyone – including First Nation governments – supports transparency and accountability.
This was a recommendation of the New Fiscal Relationship Report developed with the Assembly of First Nations.
Instead of penalizing First Nations communities and imposing top-down solutions, our Government is working to build community capacity and governance, while investing to close the unacceptable socioeconomic gaps that exist.

On December 18, 2015, the Minister released a statement directing the Department to cease all discretionary measures related to the First Nations Financial Transparency Act. Following this commitment, the Department moved forward with an engagement approach designed to reach out primarily to First Nation leaders, communities and organizations, and gauge the general public’s views towards First Nation transparency and accountability. First Nations financial management institutions have recommended that the Act be repealed entirely and replaced with a community sanctioned accountability policy where reporting is accountable to members and citizens.

First Nations report extensively to Canada on spending, not only under the Act but through reports required by specific programs. The Act does not cover actions by First Nations-owned enterprises.

Under the New Fiscal Relationship, Indigenous Services Canada is working with First Nations to introduce measures to strengthen accountability of First Nations governments to their citizens, and to enhance predictability and flexibility of funding. Under this initiative, First Nations that have demonstrated sound governance could qualify for 10-Year Grants, and First Nations are being encouraged to enact and implement their own Financial Administration Laws based on the standards of the First Nations Financial Management Board. Such Financial Administration Laws include provisions for managing conflicts of interest and misuse of funds.

Accountability issues with specific First Nations

The majority of First Nations have effective governance.
When challenges arise, instead of forcing solutions on communities, we want to work in partnership with First Nations to ensure that the accountability relationship between First Nations leaders and community members is strengthened by building financial management capacity.
We are taking steps to replace the Default Prevention and Management Policy with a new, proactive approach that supports capacity development.

Accountability for 10-Year Grants

To support the new fiscal relationship with First Nations, we have moved forward with the establishment of ten-year grants for qualified First Nations.
Eligibility criteria and accountability provisions for the ten-year grants are based on proven practices co-developed with the Assembly of First Nations and the First Nations Financial Management Board.
These measures will strengthen governance capacity, enhance accountability of First Nations to their citizens, and support a fiscal relationship that is truly nation-to-nation.

Reporting Requirements for First Nations

Our Government is working with First Nations to ensure that the accountability relationship between First Nations leaders and community members is strengthened by focusing on outcomes.
A new fiscal relationship, grounded in the recognition of rights and respect, will support First Nations on the path to self-determination and promote mutual accountability.