Shiri Pasternak

Fiscal Brutality and Permanent Austerity: How Canada Controls First Nations

Originally published in First Nations Strategic Bulletin, November-December 2014.


Onion Lake Cree Nation recently announced that they will be taking legal action against the Government of Canada for imposing discriminatory legislation on Indigenous peoples through the First Nations Financial Transparency Act. More Chiefs spoke out against the Act at a press conference held at the Assembly of First Nations meeting in Winnipeg this week.

What Canadians should know is that anger over the First Nations Financial Transparency Act is not about Chiefs afraid to get their hands caught in a cookie jar. Rather, this piece of legislation is only the tip of the iceberg in a pattern of financial abuse by the federal government.

Core to this abuse are the basic funding agreements between federal and First Nation governments. From the 1990s until today, numerous audits, evaluations, Royal Commissions, and Auditor General of Canada reports have cited the coercive nature of federal transfer funding to First Nations.

Identifying chronic underfunding as a core concern, evaluations also consistently note that rigidly administered fiscal programs serve to undermine sound, long-term financial planning on reserves.

Despite these widely accepted findings, the poverty created by systemic underfunding continues to be used against First Nations to accuse them of poor financial management. But it is by no means the extent to how the federal and provincial governments use fiscal policies to control and blackmail First Nations into compliance with government agendas. Here is an incomplete list of other coercive Crown-First Nations fiscal relations that form the crucial backdrop for the current anger:

Blackmail in Contribution Agreements

The 2013/2014 federal transfer fund agreements contained language that tied the release of funds to pre-approval of all pending federal legislation. These conditions not coincidentally appeared at the height of Indigenous opposition to omnibus Bills 38 and 45. Under duress of financial hardship, most bands signed their agreement, despite vehement disapproval of the omnibus legislation.

Third Party Management

Third Party Management (TPM) is the most advanced stage of a federal intervention policy designed to help bands manage funds when they are at risk of deficit. TPM is supposed to be imposed when all other interventions have failed. But it has been exercised in many cases as a way to repress political dissent in Aboriginal communities. For example, the imposition of TPM on Attawapiskat First Nation in 2012 immediately followed Chief Spence’s declaration of a national emergency on her reserve due to substandard housing. As the Federal Court heard, departmental officials who were monitoring the situation had never raised an issue with band management or financial administration until the community publicized the housing crisis.

Land Claims Loan Bribery

Within the land claims process, loan bribery has been deployed on several occasions to induce bands to endorse unfavourable terms of settlement. For example, over the course of negotiations, the Lheidli T’enneh First Nation borrowed $7 million from the government in repayable loans. But in 2007, they voted “no” against their Final Agreement, dissatisfied with the terms of settlement. Following the “no” vote, the British Columbia Treaty Commission advised the band council that another vote would secure a stay in repayment of borrowed monies. The band could not afford monthly payments on the loan within the 5-year period required, so they ultimately capitulated and agreed to hold another vote. There are internal discussions within the band but a date for a new vote hasn’t been scheduled.

Pipeline Consent

When fifteen out of sixteen affected First Nation communities agreed to the construction of a natural gas pipeline through their territories in northwest British Columbia (BC), the BC Ministry of Aboriginal Relations and Reconciliation presented a document to the withholding Moricetown Indian Band linking the continuation of provincial funding for child welfare programs to obtaining consent for the proposed pipeline.

Budget cuts to control political dissent

In 2012, as the Harper government was eyeing approval of pipelines as its best bet on Canadian economic development, his government brought in a range of legislative changes designed to gut the environmental consultative approvals processes. At the same time, Harper slashed funding to Aboriginal organizations across the board, in some cases by up to 80 percent. This hobbled their ability to develop research and policy and advocate for Indigenous rights at a national or broad territorial scale, and “incentivized” them to instead become service aggregators for member First Nations.

Opposition by First Nations over the First Nations Financial Transparency Act is part of a revolt against the broader fiscal warfare being waged by the federal and provincial governments against First Nations.

If anything, when bands manage to gain some measure of independence from the stranglehold of federal transfer funds, they paradoxically come under further federal attack.

Here we might end by asking why new Aboriginal Affairs reporting guidelines include investigating Chief and Council’s personal and family incomes or why the Transparency Act legislation gives the government unprecedented license to gain access to bands’ “own source revenue.” Contrary to their rhetoric, in the face of Indigenous assertions of economic rights, it seems that governments prefer dependency.