Honouring our ancestors by trailblazing a path to the future

Acknowledgements

We would like to thank the National Chief of the Assembly of First Nations and the Minister of Indigenous Services – without their vision and support, the committee's work would not have been possible. Thank you to Dan Wilson and John Lees who provided facilitation services, technical analysis and writing support. We would also like to acknowledge and thank the many individuals who supported our work, including, Jonathan Dewar, Ainslee Kent, Kara Rideout and the many technicians and administrators from Indigenous Services Canada and the Assembly of First Nations who assisted with coordination, analysis and communications.

Most importantly, we would like to thank our employers and fellow First Nations leaders who supported our involvement on this committee and provided thoughtful input and perspectives.

5.1 Honouring Treaties and Canada's Treaty-related financial obligations

In respect of Treaty rights and entitlements, many First Nations have expressed dismay at the lack of attention paid by Canada to the implementation of its Treaty obligations. While progress is slowly being made through the specific claims process and through implementation of Treaty land entitlement in modern Treaties, many more First Nations have been toiling for generations to see their historical Treaties honoured. Other First Nations have been unable to ratify modern Treaties with Canada that honour and respect their rights, title and jurisdiction. The range of Treaty-related issues is broad and includes:

• failure to deliver promised lands
• erroneous land surveys
• unauthorized granting of privileges to third parties (for example, power lines and transfer of resource rights to provinces)
• encroachment on unceded and reserve lands and resources (for example, unauthorized flooding for hydro power)
• failure to honour promises in relation to education and health services
• failure to fulfill Treaty commitments to First Nations when they agreed to share the land

Where First Nations are in prolonged negotiations or litigation with the federal and provincial Crowns to seek recognition and honouring of their Treaty rights and entitlements, it will be challenging to advance toward a new fiscal relationship. The persistent failures of the federal and provincial Crowns to honour Treaties has led to deep rooted distrust. For these Treaty nations, demonstrable commitments and action are needed to rebuild trust and create the conditions necessary for a new fiscal relationship to advance. These will include acceleration of the resolution of specific claims (that is, claims for dishonoured treaties), conclusion of Treaty land entitlement, return of provincial and federal Crown lands to First Nations, and acceleration of additions to reserve processes.

• Recommendation 1: The committee recommends that Canada engage honourably in discussions with First Nations rights holders to reconcile different interpretations of the spirit and intent Treaties and to agree on Canada's Treaty-related financial obligations (i.e. outside of the courts and specific claims process).

5.2 Recognition of inherent rights, title and jurisdiction

The Government of Canada has committed to a renewed, nation-to-nation relationship with Indigenous peoples based on recognition of rights, respect, co-operation and partnership, and rooted in the principles of the United Nations Declaration on the Rights of Indigenous Peoples. In May 2016, the Minister of Indigenous and Northern Affairs announced that Canada is a full supporter, without qualification, of the declaration.

Articles 3 and 4 of the declaration describe the inherent rights of Indigenous nations to self-determination and fiscal autonomy.

Article 3: 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.

Article 4: Indigenous peoples, in exercising their right to self-determination, have the right to autonomy or self-government in matters relating to their internal and local affairs, as well as ways and means for financing their autonomous functions.

First Nations possess many other inherent rights that have been affirmed by Canada's courts including:

• the right to enter treaties
• Aboriginal title to land
• rights to resources and activities
• the right to self-government
• and the right to practice their culture, customs and language, among others

When Canada's Constitution Act, 1867 established federal and provincial powers in Sections 91 and 92, it ignored the inherent rights and legislative powers of First Nations. Section 35 of Canada's Constitution Act, 1982 sought to correct this by recognizing the existing inherent rights of First Nations, but did not immediately resolve issues related to First Nations jurisdiction. For well over a century Canada's laws and policies have interfered with and prevented the exercise of inherent rights by First Nations and provincial incursion into the jurisdiction of First Nations has further complicated matters.

At present, in practical terms, the Crown claims to hold all First Nations land, either federally or under provincial land systems. There are no land title systems available to First Nations that support First Nations stewardship and obligations to the land.

For most First Nations, the Federal Crown claims to hold the land pursuant to section 91(24) of the Constitution Act of Canada, as "lands reserved for Indians".

For First Nations that have entered self-government agreements with Canada and where First Nations hold non-reserve lands, land is held as fee simple and registered through provincial land registry systems, pursuant to section 92 of the Constitution Act of Canada. A 2014 decision of the Supreme Court of Canada, Tsilhqot'in Nation v. British Columbia, found that "Aboriginal title gives the Aboriginal group the right to use and control the land and enjoy its benefits". In Delgamuukw v. British Columbia in 1997, the Supreme Court of Canada affirmed that, "lands held pursuant to aboriginal title have an inescapable economic component which suggests that compensation is relevant to the question of justification as well. Fair compensation will ordinarily be required when aboriginal title is infringed." As yet, no separate structure exists for the recognition and registration of First Nations title.

First Nations across Canada uphold that their resources have been stolen through unlawful transfers of resource rights to provinces. The Constitution Act, 1867, awarded management rights for natural resources to Ontario, Quebec, New Brunswick and Nova Scotia. Resource rights in other provinces were retained by the federal government when these provinces entered the Dominion. Subsequent and successive natural resources transfer transferred resource rights to the Western provinces in the 1930s without consultation with First Nations and without considering the Treaty rights and title of First Nations. As an example, some First Nation Treaties only agreed to share land to the "depth of a plow" and made no reference to First Nations sharing or ceding subterranean rights, while other Treaties did not speak of land at all. In recent years, some provinces have agreed to revenue sharing agreements for some natural resources and other activities (e.g. gaming and tobacco), but much more progress is needed.

First Nations jurisdiction is the right to enact and enforce laws in a domain. Section 91(24) of the Constitution Act, 1867 gives the federal parliament exclusive power to legislate in matters related to First Nations. While the Constitution Act, 1982, recognized and affirmed the existing rights of First Nations in Section 35, it did not define or enumerate these rights. Despite Section 35, the Indian Act continues to interfere with the jurisdiction of First Nations in areas of citizenship, land management, the management of monies, among many other areas. There are countless laws, policies, and structures in the federal, provincial, and territorial governments that impede First Nation jurisdiction. Canada has committed to updating its laws and policies that interfere with Indigenous rights, but little progress has been made in this regard.

While progress is very slow in all of these areas (honouring Treaties and recognizing and respecting inherent rights, title and jurisdiction), it is being made. One example of a commitment to the recognition rights is the federal government's Bill C-92, which proposes to recognize rights of Indigenous peoples in the area of child protection. Bill C-92 seeks to recognize the inherent rights and jurisdiction of Indigenous nations over child and family services (that is, child protection). Recognition of rights and jurisdiction in this and many other public domains is needed for First Nations governments to fully exercise their autonomy and improve living conditions and other socio-economic outcomes for their nations, communities, and citizens.

• Recommendation 2: The committee recommends that the Minister work with federal colleagues to ensure that the inherent rights, title, and jurisdiction of First Nations are honoured, recognized, respected, and protected by all levels of government. At a minimum, this should include the application of the United Nations Declaration on the Rights of Indigenous Peoples to all federal, provincial and territorial legislation. Priority focus should be provided to recognizing First Nations inherent rights and jurisdiction in the areas of governance, judicial systems, citizenship, land and resource title, and essential public and social services.

5.3 Settling and resolving land and Treaty-related financial obligations

It is widely acknowledged that First Nations need increased opportunities for wealth generation. First Nations have difficulty unlocking the economic potential of their territories and generating revenues that would help with furthering economic development. The answer begins with the land. As the Royal Commission on Aboriginal Peoples highlighted, First Nations need land to rebuild their nations, land to call home, a place of cultural and spiritual meaning, land to allow for traditional pursuits, such as hunting and trapping, lands and resources for economic self-reliance, and lands and resources to contribute significantly to the financing of self-government.^Footnotevii

For First Nations to engage in a new fiscal relationship, nation-to-nation, they will want to see progress on Treaty and lands related issues. This includes:

• honouring the spirit and intent of Treaty commitments
• updating annuities
• redressing breaches of treaty
• returning federal and provincial Crown lands to their rightful owners
• compensating First Nations for lands wrongly conveyed to private interests
• implementing Treaty land entitlement
• recognizing First Nations title to unceded territories
• accelerating additions to reserve
• settling specific claims
• negotiating land claims

Where Treaty-related settlements and new land claims are being entered into, it must be in the spirit of honourable Treaty implementation – and not with the underlying objectives of extinguishing First Nations rights and title or releasing the Crown from existing or future Treaty-related claims.

• Recommendation 3: The committee recommends that the Minister engage with the Minister of Crown-Indigenous Relations and Northern Affairs and other federal colleagues to drive work with provinces and advance the resolution of land claims, ratification of revenue sharing agreements, return of federal and provincial Crown lands, implementation of Treaty land entitlement, acceleration of additions to reserve, recognition of First Nations title to unceded lands, and development of a land management regime that enables First Nations to hold title and fulfill their stewardship obligations to those lands.

6.1 Supporting the economic growth and prosperity of First Nations

The significant economic gaps experienced by First Nations are well documented. They include low levels of employment, significant income disparities, and relatively low-levels of participation in resource extraction and harvesting industries. As the Auditor General of Canada pointed out in a 2003 study, "closing these gaps would help reduce poverty among Aboriginal people, resulting in lower social and financial costs."

Some First Nations have experienced remarkable success in growing their economies, businesses and employment, but many more struggle to overcome the barriers to economic growth and labour force participation. Barriers to growth include unresolved land claims, interference with land title and resource rights, uncooperative provinces and territories, lack of access to financial capital, lack of economic development supports, inability to implement regulatory regimes, and a lack of access to employment and procurement benefits, among others. The committee has noted that these barriers exist for both localized development projects and Indigenous participation in projects of national and regional interest (e.g. large energy and resource extraction projects).

The lack of First Nations involvement in these large projects has led to high-profile failures and delays that are both costly and embarrassing for Canada. These failed projects hurt the economic prospects of First Nations and Canadians, including lost revenues and jobs, and greater reliance on social services, income support programs and mental health services.

The committee envisions a series of measures to create the conditions necessary for economic growth in First Nations. These conditions include:

• increased First Nations control of their lands and resources
• government revenue sharing agreements
• industry and government impact benefit agreements
• economic development planning supports
• supports for the institutions that assist First Nations

These measures could build upon actions already taken by the federal government in the areas of land management, oil and gas extraction, and private debt financing. The committee sees a need for consolidation and coherence in federal government transfers for First Nations economic development as well as investments that are equitable in contrast to federal investments in economic development and infrastructure for non-indigenous communities and businesses. The committee also sees the need for consultation, consideration and inclusion of First Nations in decisions and actions related to development and trade.

The committee notes that there are many barriers to First Nations labour force participation and entrepreneurship, not exclusively the lack of economic opportunities and jobs in First Nations communities. These other barriers include:

• literacy and education gaps
• systemic discrimination
• inadequate housing
• untreated mental health issues
• untreated and unacknowledged trauma
• lack of transportation
• lack of affordable child care, among other issues

While the committee's advice and recommendations are not directly focused on these critical issues, they must be acknowledged and resolved for First Nations to prosper and achieve wellbeing for their nations, communities and citizens. It is the committee's view that matters within the control of First Nations governments will be addressed through self-determination and fiscal autonomy. Progress on removing barriers will also be needed by Canada and Canadians – to remove the barriers instilled over generations of discrimination against First Nations people. The Calls to Action of the Truth and Reconciliation Commission of Canada provide recommendations in this regard.

• Recommendation 4: The committee recommends that the Minister work with federal colleagues to adopt a coherent and consolidated federal approach to funding and supporting First Nations economic development and economic infrastructure, including investments that are equitable in contrast to Canada's investments in non-Indigenous communities and businesses.
• Recommendation 5: The committee recommends that the Minister engage with federal colleagues and, where necessary, involve the provinces and territories to assure First Nations of an appropriate place in decision-making processes for economic development projects impacting their territories and equitable participation in the development to which they contribute.
• Recommendation 6: The committee recommends that the Minister engage with federal colleagues and, where necessary, involve the provinces and territories to ensure that First Nations businesses and individuals achieve equitable representation in government procurement and employment opportunities.
• Recommendation 7: The committee recommends that the Minister engage with federal colleagues to drive work to increase federal recognition and protection of First Nations tax jurisdiction, aligned with their inherent rights.
• Recommendation 8: The committee recommends that any actions, legislation, policies, directives, agreements or other legal documents contemplated in connection with a new fiscal relationship, must not derogate or abrogate from First Nations' Inherent and Treaty rights, title, or jurisdiction in any way.

6.2 Ensuring First Nations governments have sufficient funding for administration, governance and the delivery of public services

The committee notes that more federal investments are needed to ensure that First Nations governments have the fiscal and governance capacities to pursue their priorities for development and ensure that their public services and infrastructure fully contribute to the living conditions and well-being of their nations, communities, and citizens. This includes sufficient funding for delivery, measuring and monitoring quality and performance, evaluating effectiveness and efficiency and continuously adjusting and improving programs and services. Changes are also needed to federal funding agreements that restrict the exercise of autonomy by First Nations governments and increase service delivery costs. Most notably, these restrictions include unnecessary program requirements that stifle innovation in the delivery of public services and infrastructure, excessive compliance and reporting requirements that consume the capacity of First Nations public servants and funding restrictions that limit the ability of First Nations to serve all of their citizens (that is, no funding for citizens resident off-reserve and for non-status citizens).

The committee notes that the challenge of determining First Nations funding needs for the delivery of public services and infrastructure is very complex. Further, achieving provincially comparable funding levels will not provide First Nations with sufficient funding to eliminate accrued deficits in services and living conditions, nor will it achieve the closure of gaps in socio-economic outcomes. Setting First Nations funding levels based on provincially comparable programs and support levels is flawed for many additional reasons. Firstly, provincial programs are not designed to meet the distinct needs of First Nations and are not necessarily the best approaches for achieving wellbeing of a given First Nation and its communities and citizens. Secondly, promoting and funding specific programs can interfere with First Nations self-determination by restricting how funds are spent and failing to recognize the distinct needs or priorities of each First Nation. Thirdly, program-based funding ignores that First Nations are entitled to a fair share of the wealth generated from their lands and resources and the economic development to which they contribute. For these reasons, the committee discourages funding parsed out as federal programs.

For public services and infrastructure, the committee has a transformational vision that includes an optional regime of statutory transfers. These statutory transfers would need to be sufficient to provide First Nations governments with the financial means to achieve wellbeing for their nations, communities and citizens and to close socio-economic gaps at the outcomes level. The committee's vision for statutory transfers is described in section 6.3. Recognizing that it will take several years to implement statutory transfers, the committee also sees the need for immediate funding increases to support the delivery of public services and infrastructure and the administration and governance activities of First Nations governments.

For the immediate term, the committee encourages the continuation of sector-based discussions (that is, health, housing, community infrastructure, social services, education, etc.) to address funding deficiencies for the delivery of public services, housing and community infrastructure.

In respect of general governance and administration activities of First Nations governments, the committee sees a need for immediate funding increases, based on the best available information. While many First Nation-specific studies and internal ISC studies have examined the costs of First Nations governance, no fulsome independent costing studies have been performed to estimate need and quantify funding gaps in this area. Nonetheless, it is abundantly clear that significant funding deficiencies exist. Basic calculations using publicly available federal government statistics and financial data show that funding to First Nations governments for general governance and administrative expenses is 6 times less per capita than the federal government's spending on these expenditures, 3 times less than provincial and local governments, and more than 20 times less than territorial governments.

Statistics Canada gathers data on the "general public services" costs of the federal, provincial, territorial and local governments in Canada. When these statistics^Footnoteviii were last published in 2017, the general administrative costs of the federal government were $1,425 per capita. Figures in the financial tables of the ISC 2019 to 2020 Departmental Plan show planned spending of $316 million for programs supporting Indigenous governance. If we conservatively estimate that 80% of this funding will flow to First Nations governments, funding for First Nations general administrative and governance costs is $259 per capita, using Census 2016 population figures for First Nations population.

• Recommendation 9: The committee recommends that immediate funding increases be provided to First Nations governments to support general government administration and governance costs (that is, based on the best available information).
• Recommendation 10: Subject to extensive engagement with First Nations, the committee recommends that Canada and First Nations undertake a comprehensive cost study to determine the funding needs of First Nations to cover general administrative and governance costs.

6.3 Ensuring sufficient, predictable and long-term funding through optional statutory transfers

The committee envisions a new fiscal relationship where eligible First Nations can opt-in to a regime of statutory transfers. These statutory transfers would be sufficient to enable First Nations governments to deliver the public services and infrastructure needed to improve living conditions, achieve wellbeing and close socio-economic outcomes gaps for their nations, communities and citizens – regardless of their place of residence or status. Periodic reviews through a coordinated national process would ensure continued sufficiency of funding levels. The details of the statutory transfers and funding formulas would need to be developed with First Nations and entrenched in federal statute to provide the requisite authority to the federal government. Administrative arrangements would be necessary (that is, arrangements between First Nations, provinces, territories, and local governments) to facilitate the coordination of service delivery and billings for First Nations citizens who receive services outside of their communities and for services delivered by First Nations to non-citizens. Implementing a regime of this nature would likely require multilateral negotiation between the federal government, First Nations governments, and provinces.

In arriving at its determination that statutory transfers are a necessary part of a new fiscal relationship, the committee noted that the Government of Canada can only be legally authorized by the Parliament of Canada to transfer funds in two ways, statutory transfers and non-statutory transfers. Statutory transfers are pre-authorized through enabling legislation and do not require an annual vote of Parliament or funding allocation decisions by federal departments. Non-statutory transfers, however, require an annual vote of Parliament (in other words, the budget process and Appropriations Acts) and generally rely on federal departments to make funding allocation decisions.

The committee has observed that, while approximately two-thirds of the transfer payments made by the Government of Canada are statutory transfers, virtually all transfers to First Nations are non-statutory. The main exception is transfers to First Nations with self-government agreements, which are enshrined in federal legislation. The committee notes that statutory transfers provide recipient governments more predictable and longer-term funding (statutory transfers are typically authorized for 5 to 10 years). It is worth noting that, while some of the existing non-statutory funding provided to First Nations is transferred through long-term agreements, all funding in these agreements is subject to change at any time. Statutory transfers are more predictable and stable because changes to funding levels can only be made with an act of parliament that repeals or amends the supporting legislation. While it is always possible for a future federal government to pass such a law, changes cannot be made without highly politicized debate in Parliament and the media.

The committee reviewed transfer payment regimes utilized in Canada (that is, for federal transfers to provinces and territories) and in other countries where formula-based statutory transfers were used to calculate transfers to sub-national governments. The committee found that there are some interesting transfer payment approaches used in Sweden, Norway, Germany, and Australia – all uniquely designed to meet the specific context of each country. These statutory transfer regimes included formula funding based on demographic factors, cultural and linguistic factors, socio-economic indicators and structural differences between regions. While these regimes sought to address inequities between regions, none were designed to enable self-determination and close socio-economic outcomes gaps.

The committee is of the perspective that the design of statutory transfers to First Nations, including the different envelopes of funding and associated funding formulas, would need to be thoughtfully crafted to account for the diversity of Canada's First Nations (for example, diverse needs and socio-economic challenges, different cost structures, varied levels of access to economic development opportunities, etc.)

Additionally, the committee notes that many Treaty groups have longstanding disputes with Canada about the interpretation of Canada's Treaty obligations. The committee believes that many of these disputes will likely resolve themselves if base statutory transfers are adequate to meet all of the needs of First Nations citizens. Nevertheless, there may be some financial Treaty entitlements that are not satisfied by the statutory transfers and the committee envisions the possibility of additional Treaty-based funding for Treaty rights holders to ensure all Treaty entitlements are fulfilled. In addition, the committee believes that such transfers must be acknowledged by Canada as part of its international legal obligations to First Nations under Treaty.

Subject to extensive engagement, the committee is suggesting that First Nations and Canada consider a regime of statutory fiscal transfers with 5 elements:

1. Base transfers to fund public services, political and administrative governance, housing, community infrastructure, and administration of justice. These transfers would be statutory, formula-based, and designed to provide First Nations governments with sufficient core funding to meet the needs of all of their citizens. These transfers would provide First Nations with the financial means to be self-determining in their pursuit of well-being for their citizens and communities. More specifically, the formula should account for a First Nation's population, citizen demographics, geographic location, landmass, and various other cost drivers.
2. Structural equalization transfers to supplement base transfers for First Nations with higher financial requirements. These transfers would be statutory and provided to First Nations that have unusually high expenditure requirements and/or lower economic development levels. These transfers could consider a wide range of circumstances (for example, significant socio-economic outcomes gaps, community infrastructure deficiencies, high rates of disease, remoteness costs, population dispersion, levels of economic development, extraordinarily high per capita delivery costs, adverse environmental conditions, climate change-related costs, etc.)
3. Supplemental treaty-based transfers to fulfill Crown-Treaty obligations that are not satisfied through the base and structural equalization transfers. Treaty First Nations would need to decide whether these transfers should be statutory, requiring federal legislation, or non-statutory.
4. Emergency and crises management transfers to fund the actual expenditures incurred by First Nations to prepare for, mitigate, respond to, and recover from emergencies and crises (for example, natural disasters, health crises and social emergencies).
5. Annual adjustments to all of these transfers to keep pace with First Nations population growth, inflation, and other cost drivers. The committee envisions a growth factor that assures First Nations of funding adjustments linked to Canada's GDP growth.

Before entering a regime of statutory transfers, First Nations citizens will likely expect their respective governments to have certain capacities, structures, and processes in place. Further, Canada and First Nations governments will need to have laws, policies, and structures in place to support the roll-out of statutory transfers. Once these foundational elements are in place, the committee envisions statutory transfers as a new funding option that First Nations and their governments can pursue, should they wish and each at their own pace. The committee sees it as necessary that First Nations participating in a regime of statutory transfers agree to share data on their living conditions and other outcomes, and agree to work with a First Nations Auditor General. These commitments are needed to support continuous improvement of the fiscal relationship and are further explained in sections 8.2 and 9.2, respectively.

• Recommendation 11: The committee recommends that First Nations and the Government of Canada develop a regime of optional statutory transfers to be made available to First Nations governments. The committee further recommends that eligibility for statutory transfers be tied to a commitment by First Nations to collecting and sharing statistics on living conditions and other outcomes and being subject to performance audits by a First Nations Auditor General.

7.1 Investing in the institutions that support First Nations

All high-performing governments, organizations, and professionals leverage institutional supports. These supports include training, knowledge sharing forums, sharing of best practices, and advice and services where First Nations cannot sustain capacities in house. For example:

• internal training programs for professionals and trades
• monitoring water and wastewater systems
• legal and technical expertise for pursuing economic development projects and negotiating impact benefits agreements
• designing and hosting information systems
• performing complex financial and legal tasks
• designing program delivery processes and systems

Many First Nations institutions and service providers have emerged to meet these needs, yet most lack the core funding and coordination necessary to fully realize their potential.

The federal programs aimed at supporting professional and institutional development, while never sufficient, have been eroded and funding redirected to other priorities. While some First Nations institutions have managed to become self-sufficient in spite of funding deficiencies, many more are chronically underfunded and struggle to maintain basic staffing levels. To ensure that First Nations governments have the supports they require to be self-determining, First Nations institutions need stable funding and support. Additionally, many of the institutions that do exist are constrained by virtue of their funding agreements to focus on First Nations within the borders of a province or small geographic area, leaving many other First Nations unserved.

In the immediate term, the committee sees an urgent need for stable core funding for the non-political institutions that provide capacity supports to First Nations governments, moving away from proposal-based and time-limited funding. These investments are needed for them to attract and retain the skilled personnel needed to provide high-caliber supports to First Nations governments.

Additionally, the committee sees opportunity to better leverage First Nations institutions to support First Nations governments that are experiencing crises and distressful situations. Currently, the ISC Default Management and Prevention Policy establishes the protocols and approaches for handling situations where First Nations governments falter. The committee sees a need for the abolition of this colonialist policy and a transitioning of these support services to First Nations institutions.

First Nations citizens deserve high-quality public services. Well-resourced governments employ evaluation, quality management, and accreditation regimes to ensure ongoing quality and continuous improvement in the delivery of public services. These supports are typically obtained from specific associations and respected certification and accreditation bodies. Poor access to supports of this nature impair the ability of First Nations governments to achieve excellence in the delivery of public services.

Additionally, some First Nations lack the economies of scale to efficiently and effectively govern, manage, and deliver public services. In recent years, cuts have been made to some of the institutions (for example, Band Councils, Tribal Councils and various other First Nations institutions) that provide services to First Nations governments that cannot afford to sustain in-house technical and administrative capacities. Achieving economies of scale in administrative and management costs can free up scarce resources for the delivery of public services. Innovative services and delivery models are needed to achieve these economies of scale (that is, shared services models, outsourced administrative arrangements, hosted systems and services, technology solutions, aggregate procurement and investment, etc.)

• Recommendation 12: The committee recommends that, in the immediate term, sufficient and stable funding be provided to the existing institutions providing capacity-building supports to First Nations governments and professionals, including moving away from proposal based and time-limited funding.
• Recommendation 13: The committee recommends that a strategy be developed with First Nations to expand and strengthen the institutions that provide capacity-building supports, program accreditation, program evaluation, and outsourced service-delivery supports to First Nations governments. It will be important that this strategy, and these institutions, be national in scope to ensure that the needs of all First Nations are met.
• Recommendation 14: The committee recommends that the Minister abolish the ISC Default Management and Prevention Policy, including the use of third party managers, and replace it with a system of capacity building supports provided by First Nations institutions.

7.2 Rethinking how core funding is distributed to non-political institutions

The current approach of having the federal government dictate which First Nations institutions receive funding is untenable. Only First Nations can identify the needs and imagine the opportunities and possibilities for First Nations institutions. Only First Nations can hold their institutions accountable and ensure that they continue to deliver high quality supports to First Nations governments and individuals. When these institutions are undermined by policy and budgetary decisions of the federal government, tragic consequences can result for First Nations governments and citizens. For these and other reasons, a new approach is needed.

Some options for distributing funding to non-political institutions that provide supports to First Nations, include:

• Option 1: transfers distributed through a national First Nations body and process
• Option 2: transfers are provided to First Nation governments, and they allocate funds to the institutions they choose to support
• Option 3: a blended approach whereby core funding is distributed through a national process and supplemental funding flows from First Nations governments (for example, fees for training, conferences, services, etc.)

While each of these approaches has some merit, the committee strongly prefers Option 3. This option ensures the stability of First Nations institutions while also ensuring that these institutions continuously adjust their service offerings to meet the needs of their clients. The committee expects that some First Nations will find that a national body and process for allocating core funding interferes with their autonomy. While this may be true to some extent, the committee sees it as essential that First Nations collaborate to ensure that stable and capable institutions are in place to serve all First Nations. The committee notes that such an approach does not limit the national process from distributing funding to regional institutions, where this is the preferred approach.

The committee also notes that First Nations institutions need stable and predictable funding, that grows over time and is protected from discretionary federal government budget cuts. This could be resolved through federal legislation that authorizes statutory transfers to a national First Nation's body and ensures annual increased tied to growth in Canada's GDP or total federal government spending.

Lastly, a regime of review and audit will be needed to ensure that First Nations institutions are fully accountable to First Nations governments and citizens. The committee recommends that any First Nation institution receiving funding through a national process be subject to review and audit by a First Nations Auditor General (see recommendation 21).

• Recommendation 15: The committee recommends that core funding to non-political First Nations institutions be calculated, allocated and distributed by a national First Nations body through a First Nations-controlled process to be established with First Nations. Further, the committee recommends that federal legislation be enacted to authorize a statutory transfer to this national body with annual funding increases tied to Canada's GDP.

8.1 Measuring and reporting on the closure of socio-economic gaps

A shared commitment to improving living conditions and closing the socio-economic outcomes gaps experienced by First Nations citizens requires clear definition of the shared outcomes that the parties agree to pursue. To this end, the committee sees a need for national goals and targets, developed jointly by First Nations and Canada, to guide the closure of socio-economic gaps and improve living conditions for First Nations. Such a framework would allow First Nations and Canada to set goals and targets and hold one another accountable for providing the investments and making the progress necessary to achieve them. This framework would in no way limit or impinge upon First Nation governments developing their own objectives, goals and indicators. Investment in capacity building, capacity supplementation and systems development should enable both the achievement of local progress by individual First Nation governments as well as the management of the fiscal relationship more broadly.

As the First Nations Information Governance Centre describes it, the autonomy to define community wellness and the right of First Nations to own, control, access, and possess (known as the First Nations principles of OCAP®, a registered trademark of the First Nations Information Governance Centre) information about their peoples is "fundamentally tied to self-determination and to the preservation and development of their culture." The First Nations Information Governance Centre describes the OCAP® principles as a set of standards that establish how First Nations data should be collected, protected, used, or shared. They are the benchmark for how to work with First Nations when their information is involved. OCAP® asserts that First Nations have control over data collection processes in their communities, and that they own and control how this information can be used (see Annex B for more detail).

First Nations across the country are pursuing wellness and advancing their self-determined goals for wellbeing through community-driven, Nation-determined, and Treaty-based processes. The committee views it as imperative that the definition and measurement of national-level outcomes-based indicators not interfere, but support and coordinate with these important processes. The committee notes that, while a national indicators framework is essential for advancing the fiscal relationship and measuring its effectiveness, this framework would not impact upon the ability of First Nations to be self-determining in setting their own objectives, outcomes, and indicators for achieving well-being.

The committee principally sees national goals and outcomes-based indicators as a means for Parliament and First Nations to hold the Government of Canada accountable for delivering on its responsibilities. It allows for broad measurement, research, and evaluation into the effectiveness of Crown-First Nation fiscal relationships. It serves to measure the degree to which fiscal relationships are contributing to the closure of gaps in socio-economic outcomes between Canadians and First Nations citizens, signaling to First Nations and Canada when additional investments or modifications to the fiscal relationship are needed.

A joint process between First Nations and Canada is fundamental for the development of a national outcomes-based indicators framework. Canada's current indicators of community and individual well-being stem from a non-Indigenous world view. Indicators of First Nations outcomes must reflect First Nations ways of seeing, knowing, and understanding. The indicators must reflect the way of life that creation intended for them, including their stewardship role for the land, waters, and all living things.

In arriving at its determination that an outcomes-based indicators framework is needed, the committee reviewed and considered other methods of defining and measuring the performance of fiscal relationships. These other methods included comparability of funding levels (for example, ensuring equal funding levels), comparability of service levels (for example, access to, type and nature of services available in neighbouring jurisdictions), and comparability of outputs (for example, number of patients screened for a disease, number of students attending school). The committee concluded that none of these other measures of comparability would ensure sustained attention on the improvement of First Nations well-being and the closure of socio-economic gaps, because none measure living conditions and the well-being of First Nations and their communities and citizens.

The committee examined sustainability and outcomes frameworks at the international, national and First Nation community levels and noted some common themes. The committee found that the United Nations Sustainable Development Goals and other frameworks consistently included goals and indicators in the areas of health and wellness, protection of vulnerable citizens, education, sustainable economic growth, environmental protection and preservation, public infrastructure and safety. Indigenous frameworks also included emphasis on culture and language. The committee encourages Canada and First Nations to consider these existing frameworks in establishing shared goals and indicators, and to be mindful of the Truth and Reconciliation Commission of Canada's Call to Action #19 which proposes areas of focus for health-related indicators.

The committee notes that some guiding principles would be helpful to support national engagement and joint-development of goals and indicators. For example, principles could include:

• Goals and targets must reflect and align to a First Nations world view
• Goals, targets and timelines must be mutually agreed upon by First Nations and Canada
• While regions and nations will also set and define their own goals and targets, there is great benefit to First Nations of having of a core set of nationally-defined goals and targets that are consistently defined and measured by all First Nations
• The numbers of goals, targets and indicators must be kept to a minimum so as not to place undue data collection burdens on First Nations people and governments
• There is great benefit in having targets and indicators that permit comparison to non-Indigenous populations, where appropriate
• To allow for gender, diversity, and inclusion statistics, it is necessary to gather data on gender, disability, ethnicity, region, and other such attributes
• The goals, targets and indicators must be periodically reviewed and refined to ensure continued relevance and maximum benefit

• Recommendation 16: The committee recommends that First Nations and Canada establish national goals, targets and timeframes for improving living conditions and closing the socio-economic gaps experienced by First Nations people and communities including, but not limited to health and wellness, education, protection of vulnerable citizens, sustainable economic growth, environment, public infrastructure, safety, language and culture. This will require outcomes-based indicators to allow First Nations and Canada to measure and report on their shared goals. The committee further recommends that First Nations and Canada establish guiding principles to guide these efforts.

8.2 Collecting the data to support measurement of First Nations living conditions and socio-economic outcomes

Statistical and administrative data will be needed to measure, monitor and report on the achievement of shared goals and targets. More importantly, First Nations and their institutions require data to support the effective and efficient delivery of public services, their accountability reporting to their citizens, and their own research and evaluation activities. The First Nations Information Governance Centre is working with First Nations groups across the country on a National Data Governance Strategy to establish a vision for advancing First Nations data sovereignty, according to the OCAP® principles.

The First Nations Information Governance Centre and First Nations leaders in the field of data sovereignty advocate that the best way for First Nations to achieve the OCAP® principles is through stewardship of their own data, but this is not always possible. Currently, First Nations data stewardship is complicated by provincial and federal legislation that limit who can hold data and how it can be used, often restricting First Nations access to their own data. The Royal Commission on Aboriginal Peoples notes that "The gathering of information and its subsequent use are inherently political. In the past, Aboriginal people have not been consulted about what information should be collected, who should gather that information, who should maintain it, and who should have access to it. The information gathered may or may not have been relevant to the questions, priorities and concerns of Aboriginal peoples."^Footnoteix

First Nations across the country are working with the federal, provincial and territorial governments to ensure that barriers to First Nations data stewardship and OCAP® are removed and their rights to free, prior, and informed consent are protected. Where First Nations cannot repatriate their data for reasons such as capacity and legal limitations, they are engaging in partnerships and legal agreements with the current stewards of their data to enforce governance over that data. The United Nations Expert Mechanism on the Rights of Indigenous Peoples remarked that the right to free, prior, and informed consent "is one of the most important principles that Indigenous Peoples believe can protect their right to participation. It is embedded in the right to self-determination. The duty of States to obtain Indigenous Peoples' free, prior, and informed consent entitles Indigenous people to effectively determine the outcome of decision-making that affects them, not merely a right to be involved." The right and standard of free, prior, and informed consent is applicable in all domains, including the collection, use, and dissemination of First Nations data.

To advance the principles of OCAP®, and to ensure free, prior and informed consent is upheld, the committee believes that a national First Nations statistical institution is needed that is First Nations-governed and independent. This institution would assume responsibilities from Statistics Canada for the collection of survey and census data related to First Nations citizens, communities, and development. The committee notes that a national First Nations Statistical Institution is necessary to ensure nation-wide comparability and credibility of statistical information.

In arriving at its conclusion, the committee was mindful of the most recent attempt to establish a First Nations statistical institute. The First Nations Statistical Institute, created in 2005, saw its funding fully cut and enabling legislation repealed when it was deemed to have failed to achieve meaningful change. The committee notes that the organization's failure to quickly define and implement a First Nations statistics function challenged its relevance. A number of issues that hindered the success of the institute would need to be addressed to ensure the success of this new institution. Firstly, as a Crown Corporation, the institute's board of directors was appointed by the Government of Canada, which impeded its accountability relationship with First Nations citizens and their leaders. Secondly, the institute's reliance on annual federal funding challenged its de facto independence, and therefore impaired its credibility with First Nations leaders. Thirdly, the legislation to create the institute did not address fundamental issues in federal law and governance systems (for example, the institute was subject to the Access to Information and Privacy Act, which conflicts with OCAP®) or alignment issues with Canada's existing institutions (for example, Statistics Canada was not mandated to turn over First Nations data to the institute or to work with and align to the institute's mandate), preventing the organization from gaining the broad support of First Nations leaders.

Considering the institute's experience, careful consideration is needed to ensure that the new First Nations statistical institution is appropriately structured, that necessary reforms are also made to Canadian laws and institutions, and that its funding model provides for its de facto independence. Further, considering the proven capabilities and credibility of Statistics Canada, the committee sees an opportunity for a new First Nations statistical institution to work with and draw on the expertise and capacity of Statistics Canada in establishing and implementing its strategy and plans for First Nations statistics. Lastly, the committee notes that, while the long-term aim for all First Nations institutions is to have them constituted and governed under First Nations law, this legal regime does not exist at present. In the immediate term, the governance and independence of the new statistical institution will need to be achieved under federal law, with thoughtful protections implemented to ensure it is First Nations-governed, well supported and politically independent (in order to ensure that it is well positioned to protect First Nations data against unauthorized access and use).

• Recommendation 17: The committee recommends that a national First Nations statistical institution be mandated and funded to work with First Nations in defining, collecting, analyzing, and disseminating statistical data related to First Nations citizens, communities, and development. Careful consideration will be required in respect of the legal structure, governance, and funding model of this institution to ensure it is First Nations-governed, well supported, and politically independent.
• Recommendation 18: The committee recommends that sustained funding and attention be paid to supporting First Nations in their pursuit of data sovereignty, and ensuring respect for the principles of OCAP®. This will also require changes to federal legislation, institutions, policies, data holdings, and data practices to ensure alignment with OCAP®, including assigning a federal government body to monitor and enforce the compliance of federal departments and agencies.

9.1 Fiscal policy constitution for treasury, coordination and sustained attention to gap closure

The committee envisions a new fiscal relationship that will be evaluated and improved upon continuously. This will require regular research, analysis, and evaluation to identify issues and challenges and propose solutions for closing socio-economic gaps and improving the living conditions of First Nations. It will also require regular reporting to First Nations citizens and the Parliament of Canada to ensure action is taken when issues are identified. Currently, these functions are performed by the Parliamentary Budget Officer, federal research councils, and the evaluation functions of federal departments. The committee sees the need for a First Nations Fiscal Policy Institution to coordinate these activities with and for First Nations governments and technical experts.

As part of this institution's regular duties, it would be made responsible for preparing an annual report to First Nations citizens and the Parliament of Canada on the measures taken and progress achieved in closing socio-economic gaps and improving First Nations living conditions. To ensure appropriate attention is paid, the committee views it as necessary to institute federal legislation requiring that the Prime Minister report annually to the Parliament of Canada on measures taken and results achieved. In arriving at its determination that the Prime Minister should be responsible for reporting to Parliament, the committee was mindful of the federal government's recent step to make the Minister of Indigenous Services responsible for annual reporting (that is, Bill C-97, which is currently before Parliament). Further, the Committee notes that the head of the First Nations Fiscal Policy Institution would be the most appropriate official to present the institution's report to the Chiefs-in-Assembly each year, and at other regional First Nations gatherings as requested.

The committee also envisions this institution will assume certain treasury functions, including the distribution of funding to First Nations institutions that are non-political (that is, institutions that provide capacity building and capacity supplementation supports) and to First Nations governments that opt-in to statutory transfers. Additionally, the committee sees the need for an institution to ensure the coordination between the institutions and activities of a new fiscal relationship, bringing people and information together to ensure a holistic approach to the process, thereby greatly improving the likelihood of success.

Recognizing the importance of stability in both the mandate and funding of the First Nations Fiscal Policy Institution, the committee believes the Fiscal Policy Institution would need to be formally recognized by First Nations and Canada. As such, the creation and mandate of such an institution would require resolution by First Nations and federal legislation. The committee envisions federal legislation that ensures sufficiency and predictability of funding, and a periodic review process (for example, every 5 to 10 years) to ensure that the mandate and funding levels of the institution are adjusted over time.

• Recommendation 19: The committee recommends that a First Nations Fiscal Policy Institution be established and funded to perform treasury, coordination, research, evaluation, reporting, and continuous improvement activities in support of Crown-First Nation fiscal relationships. The committee further recommends that the mandate and ongoing funding levels of this institution be reviewed every 5 years by First Nations and Canada through a joint-process.
• Recommendation 20: The committee recommends annual reporting to First Nations and the Parliament of Canada on measures taken and progress achieved by First Nations and the Government of Canada in closing socio-economic gaps. The committee recommends that reporting to the Parliament of Canada be made the legal obligation of the Prime Minister of Canada. Further the committee recommends that the head of the newly created First Nations Fiscal Policy Institution be mandated by resolution of First Nations to report annually to First Nations leaders and citizens.

9.2 First Nations Auditor General to ensure oversight and drive change

Impartial oversight mechanisms, such as an auditor general, promote trust in institutions and de-politicize relationships. The committee believes it is necessary that a First Nations auditor general function be instituted to provide independent, objective, and professional assurance on the efficiency and effectiveness of the institutional processes and structures that support Crown-First Nations relationships. For the National First Nations Statistical Institution, the First Nations Fiscal Policy Institution, and the processes supporting statutory transfers to First Nations, the committee sees a need for reviews and audits of performance, audits of legal and policy compliance, and audits of the effectiveness and efficiency of governance and administrative practices.

Virtually every nation, and most sub-national and local governments in developed nations, have an auditor general function. Public resources belong to a nation's citizens, and public sector compliance and performance auditing supports and reinforces a government's fundamental responsibility to be accountable to its citizens for the use of public funds and delivery of results. For countries around the world, having an auditor general function is, simply put, part of nationhood. The committee believes that First Nations governments and their citizens also deserve access to the objective and independent assurance of an auditor general function.

Consistent with resolutions already passed by Chiefs-in-Assembly and by one regional collective of First Nations, the committee envisions an optional regime whereby First Nations may choose to work with a First Nations Auditor General. For the regime of statutory transfers described in sections 5.3, the committee sees it as necessary that First Nations governments participate in such a relationship with an auditor general.

Recognizing that it is neither financially viable nor operationally feasible (for example, due to limited access to Indigenous professionals) to establish nation-level or regional auditors general in the near-term, the committee believes that the first priority for federal funding should be to build a national First Nations Auditor General institution. Subject to engagement with First Nations, the committee notes there is an opportunity to include provisions in the First Nations resolutions and federal statute which create and recognize the First Nations Auditor General for a review in 5 or 10 years (that is, to review the mandate and funding levels and consider the merits of funding regional auditor general functions).

In arriving at its advice, the committee also considered whether it would be feasible to have a First Nations Auditor General perform the financial statement audits for First Nations institutions and First Nations governments. The committee concluded that it would detract focus from performance auditing. Further, there are capable public accounting firms that already perform financial statement audits for First Nations governments and existing First Nations institutions.

• Recommendation 21: The committee recommends that a First Nations Auditor General be established to provide independent, objective and professional advice and assurance for First Nations institutions, First Nations governments that opt-in and the processes supporting implementation of statutory transfers.