Fiduciary, tax exemption not affected, says chief

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Former Kamloops Indian band chief Manny Jules, the driving force behind the proposed financial institutions act, explained the details of the initiative to chiefs gathered at the Confederacy of Nations held May 8 to 10.

Four institutions would be created by the act, said Jules. A statistical agency that compiles and analyzes economic information in First Nations is "absolutely critical to fiscal development." A tax commission, which is designed to be the successor to the Indian Taxation Advisory Board, a group also lead by Jules, would be a national office that can deal with First Nation taxation powers. A First Nations finance authority will make it easier for First Nations to get access to capital, and the First Nations Financial Management Board will be used to develop "our own" methods of accountability.

Even though the act is being prepared to go to Parliament at the same time the federal government is preparing other legislation that will have an effect on First Nations, "this comes from us," Jules insisted in an impassioned sales pitch to the chiefs.

"We were legislated out of the economic field because people didn't want to see us compete in their economy," he said. "And then they wonder why we're having the difficulties we're having today, why our people are facing the poverty that our people are facing. Because of federal legislation."

He said the development of a First Nations financial institutions act is "breaking down those legislative barriers preventing us from having access to capital, from having the opportunity to have our own economies within our own homelands."

Jules said the root causes of most First Nation problems are related to the economic and governance limitations imposed on First Nation councils by the Indian Act.

"So what we've started to do as building blocks to develop a new fiscal relationship not based on program delivery, not based on somebody else's needs but our needs . . . we have the youngest population in this country. We have a dynamic youth that have no opportunity. How can we begin to deal with the increasing pressures that our communities are going to face immediately down the road within the next five to 10 years? If we don't begin to deal with the economic situation of our people, you can imagine the kind of issues we're going to have to deal with," he said.

He insisted the time was ripe for First Nations to get their economic acts together because the general Canadian population's dependence on government will grow as the baby boomers age. He sees an opportunity for the relatively young First Nations population to become a major economic engine for Canada as a result of this aging trend in the mainstream.

In order to capitalize on this opportunity, he added, First Nations must stop the fiscal leakage that occurs in the communities because most services are located off reserve.

"Still we're facing the reality that 80 to 90 per cent of the dollars that come into our communities immediately leave," he said. "We call that bungee economics. An economic situation that benefits all others, except us."

Jules has been on the receiving end of a lot of criticism since his early involvement with the Indian Taxation Advisory Board, and that criticism continues with the taxation component of the financial institutions act.

"I've caught a lot of heat over the years about tax, but tax is a fundamental jurisdiction," Jules said. "The Supreme Court of Canada recognizes that we have this (power), not only deriving from federal legislation, but inherently, this is one of our powers."

He attempted to reassure the chiefs that the tax-exempt right recognized in the Indian Act will not be affected by the financial institutions act.

"There's no way under this proposed legislation that we're dealing with Section 87 or Section 89 of the Indian Act. As a matter of fact, we've had some very difficult discussions with federal officials about that," he said. "Because they say, 'Why don'tyou deal with this?' We say, 'This isn't what we're talking about. That's for some other discussion and there's no mandate from the chiefs for entering into those discussions, anyways.'"

Jules used an on-going confrontation in the community of Chief Stewart Phillip, who left the Confederacy to return home after Elders occupied his Penticton Indian band office to protest the band's financial deficit, to explain the need for the management board component of the act. Phillip is also the president of the Union of British Columbia Indian Chiefs.

"All of our communities, and I myself, have been accused of a lot of stuff by members and others. A lot of times, these individuals have no place to go other than the media, other than the Department of Indian Affairs. And they're not going to help. They love it. They love the fact that they're going to be embarrassing the president of the UBCIC," Jules said. "They don't care about the economic situation in Penticton or the other 58 communities across the country that are under third party management. They love conflict, conflict that has no end. So what the First Nations management board is all about is creating an institution that our people and our First Nations governments can [take] charge of that issue, ourselves. Not leaving it in the hands of the federal government or the Alliance or anyone else.

"Again, the problems we're facing in terms of this issue are not of our making. It's because we don't have the jurisdictional tools at our disposal and we don't have the resources to adequately provide the level of service that other Canadians take for granted."

Jules then dealt with objections to his initiative, dismissing them as "myths."

He said the act is not part of the federal agenda and is not designed to end the government's fiduciary obligation.

"The fiduciary is unchanged," he stated. "In fact, the institutions provide the tools to enable First Nations to monitor the federal government's fiduciary obligations."

It has been suggested the Act includes inadequate transfer arrangements for federal funding to flow to First Nations.

"In fact," Jules argued, "it provides the framework to provide that transfers can be increased and made more flexible, thereby increasing confidence in First Nations governments."

Opponents of the initiative fear that First Nations will be turned into municipalities and Aboriginal title will be extinguished.

"The reality is that we will be able to improve access to financing, improve revenue options, improve accountability. First Nations are not municipalities and the institutions will not change this," Jules said. "It will help strengthen Aboriginal governments, thereby providing effective tools to enable First Nations to implement Aboriginal and treaty rights. The institutions will not extinguish Aboriginal title, Aboriginal rights and treaty rights."

In closing, he urged the chiefs to remember the inadequacy of the current situation.

"Remember that the under-development of our people costs us $5 billion a year. Nobody can stand that kind of loss. There are strong economic interests, not only amongst ourselves but the federal and provincial governments, to resolve this," he said. "This has an incredible impact on issues like the social union. Right now the federal government is going to be transferring billions of dollars to the provincial governments. And they benefit two ways. They benefit first from our numbers and then they benefit from our poverty without any obligation to provide any service to us. There's no doubt in my mind that we need to begin this journey and we need to begin it together."

No approval-yet

A presentation at the Assembly of First Nations Confederacy of Nations that began with endorsements from British Columbia vice-chief Satsan (Herb George) and National Chief Matthew Coon Come, failed to convince the chiefs to put their seal of approval on the First Nations financial institutions act.

Many chiefs weren't prepared o take Manny Jules, the driving force behind the act, at his word as he tried to expose the "myths" surrounding the initiative.

Larry Sault, grand chief of the Association of Iroquois and Allied Indians (AIAI) in Ontario, has led the AFN's national task force on access to capital since 1995. He said he wants no part of the taxation component of the act.

"I cannot sit here and be silent on the resolution, even though I understand the pressures we have with respect to access to capital. But the issue of taxation is a major issue for us in Ontario. I met the national chief almost a year ago at the 1850 Robinson Huron Treaty discussions that we had in Ontario. At that time I raised a number of issues because my association is one of the organizations in Canada that is specifically fighting (for) the tax exemption because we want to protect the tax exempt status that we have in Ontario," he said.

"At the time we met with the national chief, we said, 'If you have an Indian Taxation Advisory Board within the Assembly of First Nations that is advocating tax in different areas, then we want a parallel process in Ontario because we are against taxation in a majority of our communities.' We have an issue to deal with when it comes to pushing taxation onto our people, whether it's access to capital or any other means. We have to deal with this very sensitive issue. I'm trying to respect other regions as well but the fact is, the national chief has assured us that he would seek a parallel process for First Nations that are against taxation because we're trying to protect our treaty right on exemption to tax."

Sault noted that there was no mention of any parallel process in the resolution regarding the new act and said he wasn't comfortable dealing with it.

"I'm not in a position to support this particular resolution. We haven't even examined in minute detail the business plan and we want to accept this in principle? Maybe that's one of our problems that we have at the na