1. New Fiscal Relationship with First Nations
Building a
New Fiscal Relationship with First Nations
Presentation by
Paul Thoppil
CFRDO, ISC
Ontario Joint Gathering
May 3, 2018

2. Purpose The Journey swo Far
The Report: shared understanding of challenges
Key messages from local regional engagement
Priority commitments to First Nations in
Ongoing Co-development Agenda

3. The current fiscal relationship is not working
Shared understanding of challenges:
Insufficient funding – socio-economic gaps grow wider
Unpredictable, inflexible funding – First Nations can’t plan based on their priorities
Compliance-based reporting – focus on program outputs, not community outcomes
Default prevention and management policy punishes low-capacity First Nations
Governance capacity programs and approaches designed with minimal input from First Nations
Canada controls program rules and purse strings – no space for co-development
One-way-street accountability: First Nation citizens limited in holding leaders accountable, First Nations unable to hold the Government of Canada accountable
The Colonial approach needs to change

4. The NFR journey so far
July 2016 – Memorandum of Understanding with the Assembly of First Nations
– Co-development activities including:
Technical working groups - sufficiency, predictability, and mutual accountability
Main partner: Assembly of First Nations
Other Indigenous partners: First Nations-led institutions, community leaders
INAC/ISC/CIRNA employees across sectors and regions
Other federal departments with Indigenous program, central agencies
Fall 2017 – Regional Engagement
December 2017 – Final Report under the MOU
Recommendations accepted by AFN Chiefs-in-Assembly
Ministerial response sets priorities for implementation:
10 year grants for qualified First Nations
Default prevention reform
Advisory body to support ongoing co-development

5. Shared vision: Self-determination
Consistent with Principles Respecting the Government of Canada’s Relationship with Indigenous Peoples
Support for different paths to self-determination (Principle 5)
Nisga’a – First Nations self-government
Mi’kmaq of Nova Scotia – sectoral education agreement
Miawpukek – grant since 1986
BC First Nations Health Authority – tripartite public authority
We need a new model to achieve a new fiscal relationship

6. Key messages from regional engagement
New Fiscal Relationship Engagement sessions organized by Chiefs of Ontario
Ottawa – October 23, 2017
Toronto – November 20, 2017
Key Takeaways
Insufficient funding is the most urgent concern
Effective outreach to First Nations needed to build confidence in the co-development relationship
Transparency in funding models would help build trust
First Nations need flexibility to spend as they see fit; interest in provincial transfers model
Balance national and regional approaches

7. Priority commitments to First Nations in 2018-19
Building on Minister’s December 6th announcement
Grants based on mutual accountability
Co-developed eligibility criteria, accountability provisions and risk management
DPMP/governance capacity reform
Advisory body
Via Ministerial Appointments, 2 year mandate
Mandate to co-develop options for a permanent advisory function

8. 8 Current – fiscal and program policies set by the Department
Future – transformed fiscal relationship led by First Nations F
Short-term and targeted funding determined unilaterally by the Government of Canada
Funding levels do not address needs and opportunities
Inconsistent funding practices across the country
New fiscal policy model that includes global funding escalators
Creation of a permanent advisory body
Funding Sufficiency
Enhanced funding predictability and flexibility, including access to 10-year grants
Co-developed criteria for grants and other funding arrangements aligned with internationally recognized risk management framework
Support for innovative service delivery models
Inflexible funding based on Government of Canada’s priorities, not First Nations’
Funding streams not aligned with needs of communities
Unpredictable funding limits long-term planning
Funding Flexibility
Extensive imposed program-based reporting burden
Accountability is compliance-based and does not support closing socio-economic gaps based on community priorities
Accountability relationship between First Nation governments and First nation citizens is undermined
Results focused Accountability
First Nations governments report to their citizens
Mutual Accountability Framework based on UNSDG- framed community outcomes 8
Default prevention and management policy punishes low- capacity First Nations
Governance capacity programs and approaches designed with minimal input from First Nations
Lack of coordination between federal approaches and First Nations-led institutions
Reformed default prevention policy, supported by capacity development
Priorities articulated in community plans, supported by appropriate funding envelopes
First Nations-led institutional support systems (financial, audit, statistics, and others) instead of the federal government
Strong Governance 8

9. Plan for Ten Year Grants (Co-development partners: Assembly of First Nations, First Nations Financial Management Board)
The proposed grant will include core program/service funding streams.
Co-developed Eligibility Criteria:
Financial Administration Law (FAL): A financial administration law is a set of governance and financial practices that assist a First Nation government in making informed financial decisions. First Nations would have the option of passing a FAL under the First Nations Fiscal Management Act or the Indian Act.  
Financial Performance (FP) : A First Nation government’s financial statements for the preceding 5-year period must meet certain financial performance standards.
Minimum FAL Implementation Provisions :
As of today these are still subject to some ongoing co-development discussions.
First Nations would be asked to ensure that certain provisions of their FAL are supported by policies and procedures that have been implemented.
These could include: audited consolidated financial statements available to First Nation citizens, establishment of a Finance and Audit Committee, and community plans and annual reports to citizens.
Mutual Accountability Framework: Community Outcomes
A shift from program compliance to community outcomes based reporting by First Nations to citizens, framed around the UNSDGs through community plans and annual reports

10. Re-capping Budget 2018
$188.6M over five years starting in 2018–2019 to better support First Nations communities, support strong Indigenous institutions, and advance the new fiscal relationship with First Nations. These investments include:
$127.4M over two years to support First Nations communities in building internal fiscal and administrative capacity, including $87.7M over two years to:
ensure that communities under default management are able to move forward on projects that form part of their management action plans
support pilot projects in order to strengthen governance and community planning capacity in First Nations
ISC is committed to working with First Nations applying for grants to provide governance capacity support in order to meet grant eligibility requirements.
ISC will also co-develop reforms to default prevention and governance capacity programs to align with the vision of the New Fiscal Relationship.
Other New Fiscal Relationship measures include:
$2.5 million over three years to support the First Nations Information Governance Centre's design of a national data governance strategy and coordination of efforts to establish regional data governance centres
$8.7 million over two years to continue and broaden work with First Nations leadership, technical experts, researchers and community representatives on the new fiscal relationship
Budget 2018 provided:
Clean and safe drinking water: $172.6 million over three years
First Nations Child and Family Services: $1.449 billion over six years
Support for distinctions-based housing strategies: this funding is provided through a combination of Budget 2017 and Budget 2018
First Nations on reserve: $600 million over three years
Inuit: $400 million over 10 years
Métis: $500 million over 10 years
Indigenous health: keeping families healthy in their communities – $1.497 billion over five years
Indigenous Skills and Employment Training Program: incremental funding of $447 million over five years
Helping Indigenous nations reconstitute: capacity development towards rebuilding nations – $101.5 million over five years
Permanent bilateral mechanisms – $74.9 million over five years
Improving access to the Canada Child Benefit and other benefits: $17.3 million over three years
Métis post-secondary education: $10 million in
Eliminating tuberculosis in Inuit Nunangat: $27.5 million over five years
Indigenous research and data capacity: $7.6 million over five years
Supporting Indigenous history and heritage: $23.9 million over five years
Indigenous sports: to expand the use of sport for social development – $47.5 million over five years
To support the expansion of the First Nation Land Management Act: $143.5 million over five years
Increased health supports for survivors of Indian Residential Schools and their families: $248.6 million over 3 years
Polar Knowledge Canada: strengthening Arctic science and innovation – $20.6 million over four years
To support reconciliation initiatives through the Gord Downie & Chanie Wenjack Fund: $5 million in 2018–19

11. Proposal Phase 2: ongoing co-development
Framing sufficiency: Escalators, service population definition, remote and northern considerations
Expanding grants to include aggregation entities
Reforming default prevention and governance capacity programs
Strengthening mutual accountability – outcomes-based approaches, First Nations-led institutions
Audit functions to replace the First Nations Financial Transparency Act
Supported by co-development tables and the proposed temporary advisory body

12. Immediate Next Steps Any questions?
Send outreach letter on grants to First Nations– May-June 2018
Assess eligibility with support of First Nations-led institution – July-Aug 2018
Finalize budget planning (Treasury Board submission, Annual Reference Level Update) – Sept-Nov 2018
Grant: April 1, 2019
Continue fiscal relationship co-development
Any questions?
Paul Thoppil

13. Annex: Sufficiency Ambitious 2018-19 Agenda
Possible ISC B2019 requests and supports a second NFR public report outlining current successes and making forward-looking recommendations.
Escalator (2% cap)
Remoteness
Fiscal Policy Framework
Includes service population work
Sufficiency support role to areas with links to NFR
Reviewing proposal-based programs for ongoing funding consideration
Band Support Funding (possible action in Budget 2020)
Infrastructure O and M