Financial transparency is a cornerstone of honest and efficient government. Voters must be able to see how their tax dollars are spent to make informed decisions at the ballot box. For First Nations, with over 630 governments spread across Canada, achieving this transparency poses unique challenges.
The First Nations Financial Transparency Act
In 2013, Parliament passed the First Nations Financial Transparency Act to enhance accountability. It required annual publication of audited financial statements, including salaries of chiefs and council members. Initially, compliance was high, though some First Nations objected due to insufficient consultation.
However, before the 2015 federal election, Liberal leader Justin Trudeau promised not to enforce the act, as enforcement mechanisms were discretionary. Without enforcement, compliance steadily declined to just 41% for the latest fiscal year. The Carney government has not signaled a change in policy, and at the current rate, compliance may approach zero, rendering the act ineffective.
Corruption and Inadequate Reporting
Allegations of corruption and mismanagement in First Nations governments persist. While financial transparency reports help, they often fail to reveal issues at the hiring and contracting level, where problems are most likely. An amended or new act is needed to address the growing wealth of First Nations from investments, trust funds, and billions in settlements for historical grievances.
First Nations Should Lead Reform
Ideally, First Nations themselves should spearhead consultations for a new transparency act. Institutions like the First Nations Tax Commission, Financial Management Board, and Finance Authority—supported by all federal parties—could lead the process. Universal publication of audited financial statements must be required, with details like scheduling and depth negotiated between First Nations and the federal government.
The Need for Enforceable Legislation
The issue of financial disclosure has drifted for over a decade. This neglect is unsustainable as First Nations become key players in Canada's economy, particularly as investment partners in major resource development projects. To be trusted partners, they must follow the same transparency and accountability rules as other Canadian governments. Enforceable legislation is essential to ensure this.
Tom Flanagan, professor emeritus at the University of Calgary and senior fellow of the Fraser Institute, is the author of the study "Transparency and Accountability in First Nations Governments."
