Nation to Nation Dialogue: Intergovernmental Fiscal Relationships

Nation to Nation Dialogue: Intergovernmental Fiscal Relationships

Notes for a speech by Michael Ferguson, Chartered Professional AccountantCPA, Chartered AccountantCA, Fellow Chartered Professional AccountantFCPA, Fellow Chartered AccountantFCA (New Brunswick), Auditor General of Canada, 5 June 2017

Eight factors that need to be in place to make federal programs for Indigenous people work

I’m very happy to be here today to tell you a little bit about the audits that we do at the Office of the Auditor General of Canada on federal programs for Indigenous people.

I want to start by saying that I’m an auditor, and I don’t intend any of my remarks today to indicate that I think I’m some kind of expert on Indigenous issues—I’m not.

What I’m going to do this morning is tell you about eight factors that I think need to be in place to make federal programs for Indigenous people work.

These eight factors have come from the results of the audits we’ve done over the past two decades on federal programs for Indigenous people.

When I use examples from our audits to support my premise that these eight factors are necessary, I suspect that you’ll get a sense of my frustration. I am frustrated with the slow pace of change that we see in federal programs for Indigenous people, even though we have told Parliament many times during at least the past two decades about the problems in these programs.

Before I get to the eight factors and the results of our audits, though, I want to tell you a bit about our Office.

In Canada, an Auditor General is appointed for a period of 10 years and cannot be reappointed for a second term. The appointment is made by the Governor in Council after consultation with the leader of every recognized party in the Senate and House of Commons, and after approval of the appointment by resolution of these two chambers.

The Auditor General reports to Parliament and doesn’t report to any Minister or to the Prime Minister.

An Auditor General can be removed for cause only by the Governor in Council on address of the Senate and the House of Commons.

At the Office of the Auditor General of Canada, the way we do our work is designed to ensure that we are independent, objective, and non-partisan.

The Office has three main mandates—we do audits of the financial statements of the Government of Canada and of almost a hundred other federal organizations. We also do special examinations of the control systems in each federal Crown corporation at least once every ten years.

And we do performance audits.

In fact, we’re best known for our performance audits—they’re what get the attention of parliamentarians and the public.

When we do a performance audit, we look at a program that is operated by a government department or agency—and give our opinion about whether it delivered the program efficiently and with due regard to economy.

Some of our performance audits are reported by the federal Commissioner of the Environment and Sustainable Development, which is a position within our Office. So any audit reports that you see from the Commissioner have been prepared to the same standards of thoroughness as our other audits.

While the provinces have their own auditors general who report to the provincial legislatures, the territories do not. So we are also the auditor general for each of the territories.

We do financial statement audits of the territorial governments and their Crown corporations, and we try to do at least one performance audit in each territory each year that deals with the delivery of programs by the territorial governments.

We report on these performance audits directly to the territorial legislatures.

We also do work internationally. Until recently, we were the auditor of the International Labour Organization, which is a United Nations organization, and we are currently the auditor of INTERPOL.

We have about 570 staff who work for the Office, which includes our staff in our head office in Ottawa and our four regional offices in Vancouver, Edmonton, Montreal, and Halifax.

I’ve been in the role of Auditor General of Canada for just over five years, and, as I’ve already said, in that time we’ve looked at a number of federal programs that are of particular interest to Indigenous people.

Most recently in May, we reported on civil aviation infrastructure in the north, a program of Transport Canada.

In 2016, we published two reports: one on the First Nations specific claims process at Indigenous and Northern Affairs Canada, and the other on how Correctional Service Canada prepared Indigenous offenders for release.

In 2015, we published three reports: one reported on the establishment of the First Nations Health Authority in British Columbia; one on the implementation of the Labrador Inuit Land Claims Agreement; and one on the access to health services for remote First Nations communities.

In 2014, we published two reports: one on the Nutrition North Canada program delivered by the then-named department of Aboriginal Affairs and Northern Development Canada, and the other on the First Nations Policing Program at Public Safety Canada.

In 2013, we published one report on emergency management on reserves.

We also currently have an audit under way that we will report on this fall on First Nations and Inuit oral health programs.

As I said, for me the story of our audits of federal Indigenous programs is a story of frustration.

I feel that the pace of improvement by federal departments is so slow as to be almost imperceptible. I feel that our work, while thorough, appreciated, and insightful, hasn’t caused any political imperative to speed up the pace of change for the sake of the people who feel the impacts of those programs.

And that’s particularly discouraging for me because, in many cases, we’ve found program results that range from “not good” to dismal.

I’ll begin my story of the eight factors that need to be in place to make federal programs for Indigenous people work with a message that was attached to an audit that was issued in 2011 before I arrived at the Office.

It was a message that summed up ten years of audits of federal programs for Indigenous people that were done under the watch of my predecessor, Sheila Fraser.

That 2011 message identified four structural impediments that we said severely limited the delivery of public services to First Nations communities and hindered improvements in living conditions on reserves.

And these four structural impediments are referred to in the Institute on Governance’s discussion paper called Characteristics of a Nation-to-Nation Relationship.

The four impediments were as follows:

Well, it’s 2017, and based on the work we’ve done since this 2011 report, the four impediments we identified are still there.

And while I explain the eight factors that need to be in place to make federal programs for Indigenous people work, I will draw on each of the four structural impediments as we saw them in 2011.

Remember that my perspective on this issue is as an auditor who audits program delivery.

I believe the eight factors that need to be in place to make federal programs for Indigenous people work are as follows:

First, sustained political will.

Second, what the Institute on Governance’s discussion paper refers to as aggregation, which means a unified approach.

Third, appropriate and real consultation about the needs of recipients, the level of service, and the mechanisms of service delivery.

Fourth, clear statements of the level of service to be delivered.

Fifth, an appropriate legislative base that supports the desired level of service.

Sixth, local service delivery capacity with appropriate governance structures and accountability to the Indigenous people receiving the services.

Seventh, appropriate and stable funding to provide the services.

Eighth, and finally, monitoring on the part of the federal government on whether it’s living up to its commitments.

And to be truly successful, all of these factors have to exist within a system of learning and improvement that focuses on the services Indigenous people receive.

I’m now going to go through each of these eight factors individually.

First, political will.

I’ll touch on this only briefly, because it’s dangerous water for an auditor general to wade into.

What I’ll say is that in our 2015 report on establishing the First Nations Health Authority in British Columbia, we said that sustained commitment over a period of almost 10 years by key leaders built a climate of trust and respect. The key leaders were from British Columbia First Nations and the governments of Canada and British Columbia. This climate allowed the parties to discuss how to transfer responsibility for health programs and services to British Columbia First Nations.

I’ll refer to this 2015 report a few times this morning, but I want to make you aware that we didn’t audit how well the Authority was operating. We just looked at how the parties got past the four impediments that we identified in 2011 to establish the Authority.

The other thing I’ll say is that for political will to be sustained, there have to be some successes along the way.

The second factor is aggregation.

As I see it, the first challenge to create a nation-to-nation relationship is to figure out if it’s possible to move away from the current model of disaggregation that exists on both sides of the table. On the one hand, there are over 600 First Nations communities, other Indigenous groups, and other organizations that represent Indigenous people. On the other hand, there are multiple federal departments under no common direction. And let’s not forget, the provinces are also involved in delivering programs to Indigenous people.

In our 2015 report on establishing the First Nations Health Authority in British Columbia, we said that in 2005, First Nations across British Columbia agreed that a unified approach to negotiating with other levels of government would be preferable to negotiating as individual First Nations.

The three political organizations of British Columbia First Nations—the Union of British Columbia Indian Chiefs, the First Nations Summit, and the British Columbia Assembly of First Nations—formed the First Nations Leadership Council. This Council acted as a single point of contact for the federal and provincial governments, and allowed them to work directly with the Council instead of having to negotiate with over 200 individual First Nations across the province.

Unfortunately, I cannot give you an example of a federal department that is creating a single point of contact to make it easier for First Nations to discuss their concerns about a program the department is delivering or funding.

The third factor for better services is real consultation.

Many people know much more than I do about consultations and the duty to consult. But consultation is something that we’ve mentioned in a number of our audits.

I’ll start with some good news. In our 2016 audit on preparing Indigenous offenders for release, we said that Correctional Service Canada consulted extensively with members of Indigenous communities and corrections experts to ensure that its programs for Indigenous offenders would be effective and culturally relevant.

That was the good news, but unfortunately, Correctional Service Canada didn’t provide the programs to Indigenous offenders early enough in their sentences to prepare them for parole.

Our other examples of consultation are not good.

In our 2016 audit of the First Nations specific claims process, we said that without input from First Nations, Indigenous and Northern Affairs Canada developed a separate process to settle small-value claims.

But because the Department didn’t seek input from First Nations, it created barriers to rather than removed barriers from the settlement process.

Here are some examples:

In another audit, our 2014 audit of the First Nations Policing Program, we said that the principles of the First Nations Policing Policy identified the need to include First Nations in the negotiations of policing agreements, to give them input into the policing model appropriate for their communities.

And Public Safety Canada held a series of community engagement sessions in 2010 as part of a comprehensive review of the program.

During those sessions, communities said that the negotiation of policing agreements was “not a real negotiation.” The communities told Public Safety Canada that they were usually presented with a final agreement and were told that they wouldn’t receive funding for policing services if they didn’t sign it.

So we looked at that, and we found no evidence that Public Safety Canada received input from First Nations in seven of the nine policing agreements we looked at.

In the case of one agreement that we examined, it contained a specific clause that required the parties to begin negotiations in good faith one year in advance of the expiry date of the agreement, with the goal to complete negotiations within six months.

However, that approach wasn’t followed in the renewal of the agreement.

In fact, less than four weeks before the agreement was to expire, Public Safety Canada told the First Nations organization that the federal and provincial governments had negotiated an extension to the current agreement and that the First Nations organization had to sign the extension—another “take it or leave it” type offer.

Furthermore, we found that 30 signatories of policing agreements had less than one month’s notice to complete negotiations of agreements that would have otherwise expired on 31 March 2013.

So I’ve talked about political will, I’ve talked about aggregation, and I’ve talked about consultation.

The fourth factor for better services is the need to have clear statements of the level of service to be delivered.

The lack of clarity about level of service was one of the impediments we identified in 2011.

The federal government supports many services on reserves that provincial and local governments provide off reserves, but it hasn’t clearly defined the type and level of service it supports. And if it does have a service objective, it doesn’t measure whether it’s achieving that objective.

In 2015, we reported on this problem in our audit of the access to health services for remote First Nations communities. In this case, we found that Health Canada didn’t compare the access that remote First Nations communities had to health services with the access that other remote communities had to health services. The Department hadn’t met its objective of ensuring that remote First Nations had comparable access to the clinical and client care services as other provincial residents living in similar geographic locations.

This is an example of a problem we often see in federal programs: a department not doing something—in this case, not determining whether the level of service was comparable—even though the department had a specifically stated objective—in this case, to ensure that First Nations individuals living in remote communities had comparable access to health care services.

If this was Health Canada’s objective, it should’ve been doing something to compare the level of service.

So it’s not always evident whether the federal government is committed to providing services on reserves of the same range and quality that non-reserve communities get from their local and provincial governments.

A clear statement of what level of service the federal government intends to deliver to First Nations and how the government will monitor the comparability of those services is needed to reduce this impediment.

This would also help to estimate the cost to deliver the services.

The fifth factor for better services is the need for an appropriate legislative base that supports the desired level of service.

The lack of a legislative base was another of the impediments we identified in 2011.

Provincial legislation provides clarity about services to be delivered by provinces to the people who live in the provinces.

A legislative base is an unambiguous commitment by government to deliver certain services and that allows funding to be defined and leads to accountability.

The federal government has often developed programs to support First Nations communities without a legislative base for those programs.

In 2011, we said that for First Nations members living on reserves, this meant that there was no legislation supporting programs in important areas such as education, health, and drinking water.

When the federal government’s programs and services for First Nations are supported only by policy and not by legislation, there’s confusion about federal responsibility for funding these programs and services adequately.

In our 2014 report on the First Nations Policing Program, we again identified the problem of ensuring that there is an appropriate legislative base for federal programs for Indigenous people.

And again, the problem existed even though one of the key principles of Public Safety Canada’s First Nations Policing Policy was that “First Nations policing services should be founded on a legislative framework that enables First Nations to establish, administer, and regulate their policing services, and appoint police officers, consistent with provincial norms and practices.”

We found that in Alberta and Manitoba, the policing agreements we looked at clearly required policing services under the First Nations Policing Program to comply with provincial policing legislation and standards.

But we found that for the two agreements we examined in Ontario, there was no requirement for First Nations self-administered policing services to comply with provincial policing legislation and standards.

For example, the agreements didn’t require post-recruitment training for police officers as was required by provincial policing standards.

Also, the Ontario Police Services Act requires compliance with provincial standards for infrastructure like communication systems and policing facilities, but the policing agreements in Ontario that we looked at didn’t require compliance with these infrastructure standards.

And that’s important because substandard policing infrastructure is a safety issue.

The sixth key factor for better services is local service delivery capacity with appropriate governance structures and accountability to the Indigenous people receiving the services.

The lack of organizations to support local service delivery was one of the impediments we identified in 2011.

Over the decades, provinces have established many organizations and structures to support local delivery of programs and services to communities. For example, provinces have school boards, health service boards, and social service organizations.

In 2011, we said that there were few similar organizations to support service delivery within First Nations communities.

The federal government established each First Nation as an autonomous entity and provides separate program funding to each. Many of the more than 600 First Nations across Canada are hampered by a lack of expertise to meet the administrative requirements for delivering key programs within their reserves.

But even when local service delivery organizations are established, they will be successful only if they have appropriate governance structures in place.

The discussion paper, Characteristics of a Nation-to-Nation Relationship, quotes Stephen Cornell of the Harvard Project as saying that “at the end of the fight for self-determination there is a prize for the winners: it’s called the governance challenge.”

In our 2015 report on establishing the First Nations Health Authority in British Columbia, we were able to show that, in establishing the Authority, the parties were able to overcome the four impediments we identified in 2011 to create the health services delivery organization. However, we found problems in the Authority’s governance framework.

Some of the Authority’s policies—for example on conflict of interest, recruitment, personnel security, administrative investigations, financial information and disclosure, and employee relocation—were not strong enough, and the Authority did not fully comply with some of its own policies.

Once local delivery organizations are established, a well-designed, implemented, and functioning governance system, with transparency and accountability to Indigenous people, is critical to the long-term success of organizations.

The seventh factor for better services is appropriate and stable funding to provide services.

The lack of an appropriate funding mechanism was one of the impediments we identified in 2011.

In 2011, we said that the federal government used contribution agreements to fund the delivery of services on First Nations reserves. In our view, this caused several problems. We noted that most contribution agreements had to be renewed each year, and we said that funds may not often be available until several months into the period that the funding was for. One reason for this was that new agreements could not be finalized until departments had reviewed documentation and confirmed that funds from the previous period were used appropriately. This meant that First Nations had to reallocate funds from elsewhere to continue meeting community needs for some services like health care and education.

We also said that the use of contribution agreements between the federal government and First Nations inhibited appropriate accountability to First Nations members.

But I think it’s important to realize that, while the contribution agreement approach is fragmented and problematic, there can also be issues in more comprehensive funding arrangements as well.

So moving from funding through contribution agreements to a more comprehensive approach is not simple. The funding instrument doesn’t create the problem on its own. The critical part is to make sure that the funding provided is in line with the services to be delivered and that the funding is stable.

For example, look at our 2015 audit on implementing the Labrador Inuit Land Claims Agreement.

This agreement was signed in 2005 by the Labrador Inuit and the governments of Canada and Newfoundland and Labrador. It was a comprehensive land claims agreement that settled Indigenous title and ownership of lands and resources, and set out the future relationships and obligations of the three signatories.

And it was supported by a five-year Fiscal Financing Agreement, which provided financial support to the Nunatsiavut Government. But even though the Nunatsiavut Government had responsibilities under the agreement for housing, it had received only some funding for housing through the Agreement and other one-time funding sources.

The lack of a federal program for Inuit housing south of the 60th parallel limited the Nunatsiavut Government’s ability to fulfill the housing responsibilities it received by signing the agreement.

Both service delivery and appropriate accountability would be enhanced if there was certainty of funding.

The eighth, and final, factor for better services is for the federal government to monitor whether it’s living up to its commitments.

A common problem that we find with many government programs—not just those that result in services to Indigenous people—is the difficulty in determining whether the programs are doing what they are supposed to do.

In fact, we find that in many cases, the measurement of results is based on what is easy to measure rather than what is important to measure.

An example was the measurement strategy for the Nutrition North Canada program.

In our 2014 audit of that program, we found that the measurement strategy of the then-named department of Aboriginal Affairs and Northern Development Canada established performance indicators such as the weight of food shipped and Revised Northern Food Basket prices. But there was no indicator to measure whether the full subsidy on food reached the consumers.

We found that the Department reported, for example, 25.6 million kilograms of food subsidized in the 2012–13 fiscal year and the change in the cost of the Revised Northern Food Basket. However, this information didn’t let the Department know whether the full subsidy was being passed on to consumers, because prices in the Food Basket included subsidized and non-subsidized items. Furthermore, the costs of the Food Basket could fluctuate for reasons unrelated to the subsidy.

So they were measuring what was easy to measure—such as how much food was shipped—and not measuring what was important—such as whether food got to the intended beneficiaries of the program, and what the effect of the program was on the price of the subsidized food.

So these are the eight factors that have shown up in our audits. To recap them:

First, sustained political will.

Second, aggregation.

Third, real consultation.

Fourth, clear level of service.

Fifth, a legislative base.

Sixth, local service delivery capacity.

Seventh, stable funding.

And eighth, monitoring.

I know that I’ve thrown a lot of information at you this morning and that I’ve referred to a lot of findings from a lot of audits—I think this illustrates the extent of the work we do in this area—and I suspect that I went too quickly over some of our findings. So if you’re interested in the details, refer to the audit reports on our website.

To sum all this up, in 2011 we said that change is needed if meaningful progress is to be realized.

We said that despite the federal government’s many efforts to implement our recommendations on First Nations programs, we saw a lack of progress in improving the lives and well-being of people living on reserves.

Conditions on reserves were still poor.

We also said there needs to be stronger emphasis on achieving results.

As I said earlier in my remarks, it’s now 2017, not 2011, and I’m still frustrated with the approach the federal government takes on programs for Indigenous people.

But it’s also important for everyone to recognize that my mandate is to audit federal government programs, and that’s why my remarks have been so hard on the government.

I don’t know what problems exist on the Indigenous side of the table, because we don’t audit Indigenous organizations.

In 2011, we closed by saying that the federal government and First Nations will have to rise to the challenge or else living conditions will continue to be poorer on First Nations reserves than elsewhere in Canada for generations to come.

In a Message from the Auditor General that I issued in 2016, I lamented that our audits come across the same problems time and time again, and that when we come back to audit the same area again, we often find that program results haven’t improved.

In just five years, with some 100 performance audits and special examinations behind me since I began my mandate, the results of some audits seem to be—in the immortal words of Yogi Berra—“déjà vu all over again.”

Near the end of her mandate, my predecessor summed up her impression of 10 years of audits and related recommendations on First Nations issues as “unacceptable.” When you add the results of the last five years of audits to those we reported on in the past, I can only describe the situation as it exists now as beyond unacceptable.

I said that this is now more than a decade’s worth of audits showing that programs have failed to effectively serve Canada’s Indigenous people.

Delivering effective programming requires leadership. By leadership, I include federal, provincial, territorial, and First Nations levels—with most of the responsibility falling on the federal government, though all levels have some responsibility.

And this is the final thought I want to close on. All of the studies, reports, conferences, audits, lists of impediments, and lists of success factors are very nice. But for any of them to be useful, they have to operate in an environment that has mostly been missing the one real resource that is needed—a problem-solving mindset.

Until a problem-solving mindset is brought to these issues to develop solutions built around people instead of defaulting to litigation, arguments about money, and process roadblocks, this country will continue to squander the potential of much of its Indigenous population.