EISCAL (FINANCIAL) POLICY TO SUPPORT SHUSWAP GOVERNMENT Victor O' Connell, D.Phil. (The Kanata Institute) Shuswap Task Force July, 1986 CONFIDENTIAL FIRST DRAFT FOR DISCUSSION AMONG THE SHUSWAP ONLYEISCAL (FINANCIAL) POLICY To SUPPORT SHUSWAP GOVERNMENT Victor O' Connell, D.Phil. (The Kanata Institute) Shuswap Task Force July, 1986 CONFIDENTIAL FIRST DRAFT FOR DISCUSSION ANONG THE SHUSWAP ONLY Part I THE CONSTITUTIONAL FRAMEWORK SHE CONSTITUTIONAL FRAMEWORK those Indian nations who have made treaty or agreements have 1.2 (4) the bi-lateral talks between Indian nations and the federal government and 1.3 (41) the multi-lateral constitutional conferences which also involve the provinces. 1.4 The position of those nations which have not made treaty or guecteents, such as the Shuswap, is even more of an open question,1.7 The Shuswap Nation insists that in any constitutional, political, economic, fiscal or other agreemsnte it makes with Canada Shuswap sovereignty is non-negotiable. It will be exercised in clearly demarcated areas or Shuswap jurisdiction recognised by Canada and the thee nations of the world. Pecause Shuswap jurisdiction is now, and will always be based on Shuswap sovereignty, the Shuswap will not accept jurisdiction is delegated by the federal parliament or the Provincial legislature. The Shuswap nation could envisage a relationship with canada in which Shuswap and Canadian jurisdictions will co-exist, side-by-side. Part IT 2.4 The government of the Shuswap nation will have two arms: (4) 17 Shuswap Band Governments (ii) 1 Shuswap National Government i: Strong band governments are essential to the long-term Well-being of the Shuswap nation. The jurisdiction of the 37 Shuswap Band Governments will replace the jurisdiction which the Crown presently claims to exercice on Indian aesenves by virtue of the Indian act and other federst acts or through provincial acts of general application. Under the Constitution Act 1982, the federal Parliament and 7 Provincial legislatures representing 50% of che Population gan eliminate aboriginal rights from the Canading Constitution. Therefore, it is important that the Shuswap People have their own National Government which wily Erotect the long-term constitutional position of the Shuswap Nation and present a strong, united front in dealings with the Canadian Confederation and other nations and states in international forums.2.5 2.6 2.7 Also, a Shuswap National Government is required to Spocrdinate the jurisdiction of the 17 bands ic those areas where no individual band has autonomous jurisdiction or where the jurisdiction of two or more bards overlap. sre ohuswap National Government will also deal with any shuswap program which extends beyond the boundarice oe’one Boekel sonnet 28.2 national Shuswap educational,-nealth eed-- — ~Social-seourity systems, Neither the Shuswap Band Governments sor the National Government will be able to exercise jurisdiction without. Tevenues to pay the salaries and expenses of the jegislatures, the chiefs and councillors on other political sthocentatives, the legislative staff, the research and other suppo: che administrative staff of Programs:-~ Rakgonts to be used for either Band governments or for the National government. It is also possible that 4c would seek fo divide various Shuswap governments by Providing money for one but not for the other. The ultimate remedy for this is Solidarity. Therefore, each of the Shuswap governments, will ensUre that all the other Shuswap governments, including the Shuswap National Government, ie adequately financed so that the greater good of the whole Shuswap nation may be properly researched, advocated and defended.PART ITZ THE SHUSWAP TASK FORCE PROPOSAL ON FISCAL POLICY 3-0 The Shuswap Fiscal Policy will be 3.1 3.2 3:3 This policy will have three element: 3.4 3.5 3.6 (a) (b) (i) (ii) ke external fisc: al (financial) arrangements to mal with agencies of the Canadian confederation and pther public and private bodies which ate in keeping with Shuswap sovereignty and fo develop internal and other fiscal arrangements which support Shuswap self-reliance. all federal (and provincial) expenditures which purport to be for the benefit of the Shuswap and Sie esently delivered through programs which ash, goods and Services will be converted offer o; into direct monetary transfer payments Co Shuswap sarnings, incomes, sales and purchases which are lands, natural resourc: trade and commerce in es and wildlife or from Shuswap territories.3.7 (iv) all capital and revenue accounts relating to Shuswap land and Shuswap families and individuals Getived from surrenders, leases, resource pevenues, or from any other sources, will be transferred from the federal government's tcust to a Shuswap trust. PART IV - IMPLEMENTATION OF SHUSWAP FISCAL POLICY As Element (i) Para. 3.4 - Transfer payments Scsment (i) Para. 3.4 - Transfer Payments 4.0 The Public Accounts deal with ESTIMATES, APPROPRIATIONS AND EXPENDITURES. 4.1 ESTIMATES is the figure which the government asks parliament ko approve. APPROPRIATIONS is the figure Parliament actually approves by voting. EXPENDITURES are ore monies which the government departments actually spent from the APPROPRIATIONS in the last fiscal year. 4.2 Estimates of the Department of Indian Affairs for the fiscal rape g{87 are contained in the copy of Public Accounts in Appendix A to this report. 4.3 Between 1971-1981, there was a significant gap between Sppropriations and expenditures in every category except 4.4 (1) the administrative overheads of the Department, which usually exceeded the estimates and 4.5 (44) welfare payments which all Canadians are entitled fo by statute and which is taken from a special statutory reserve. 4.6 As an example, between 1971 and 1981, the Department failed fo spend a total of $79.875 million on Indias Education ~ Appendix B. When the Department fails to spend money which has been voted by parliament, the money remains in the Treasury and is not carried forward cb the next fiscal year. Indians lose it. 4-7 % 1980 independent analysis of DIA expenditures commissioned by the author from financial consultants Suggests that DIA (aoe seuatly spending about 15% on administrative ovethoass (29% in economic development) not the 7% ahick senior DIA5.1 Officials claimed. In 1980, the Auditor General's Report criticised the inadequacy of DIA's accounting, financial augre ung and financial management procedee’ and refused to audit trust accounts on the grounds’ thee the records were fomplex and incomplete. A recent repoct by auditors hired by the Minister of Indian aftairs, Davia Crombie, demonstra- fed, that in the Province of Manitoba the Department of Indian Affairs had kept false and misleading accounts, had gbstructed the Minister's policy with respect to the funding Given the pattern of gverspending on administration and the indications that DIA accounts are on unreliable guide to genuine administrative costs, and given the evidence that "the DIA may not be helpful in carrying out a Policy of GFansferring control to Indians, any proposal for the Shuswap to take-over DIA programs Mii; not rely on DIA estimates, but on an independent costing of administrative Overheads so that the Shuswap will be aeie to afford Estimates for the Department of Indian Affairs for 1986/87 are provided in Appendix c. Estimating the status Indian Population in Canada at 300,000 and the Shuswap as 5,000 and using a very rough per capita formula, the $1.5 billion estimates for DIA would mean that $25 million of DIA expenditures are on account of the Shuswap.. Nevertheless using Public Accounts, figures provided by Departments and the Neilson Task Force Report (1986), it is gotimated that other federal government programs spend a further $1 billion. Using the sone formula as in para 4.0, $16.5 million is on account of the Shuswap, Therefore, total annual federal expenditures for the benefit Of the Shuswap is about $42 million: It is this sum, direst Of it, which the shuswap would went converted into Gitect payments to Shuswap governments in accordance with the fiscal policy as set out in para. 3.4 above,6.2 6.3 6.4 7 Element (ii) para. 3.5 ~ Revenue Collection and Distribution protocols which the Shuswap may, after negotiation, enter nto, There has developed in canada a continuing scheme of federal-provincial equalization payments which are intended te strength the confederacy. Tt does thic by demonstrating Ko all its constituent provinces the economis benefit of membership. The essential idea is that the federal phe Btecise formula used to calculate payments has changed frequently and will continue to change "re has usually involved a per capita calculation, making some of the payments on the basis of the number of people living in a pave-not province. " The Indians living within the boundaries of a have-not province are counted in the total ee capita formula when deciding the payments which aco to be made to that province. Therefore’ the have-not province poceives federal payments on the basis of its Tnaion Population, as well as its non-Indian population, but it is tee required and usually does not transfer those payments to the Indians. Equalization to be implemented directly between che federal Parliament and the Shuswap nation - not through the agency of the province of British Columbia. Federat equalization Payments would be made directly to the Shuswap. The precise formula for the amount for money involved in federal transfer/equalization payments would be arrivedat in negotiations between the Shuswap and the federal government. In principle, however, the Shuswap would want regions of British Columbia, the special needs for building the infrastructure of a Shuswap economy, the demographic profile of the Shuswap peoples and the special costs gesociated with "catch-up" human and institutions? development, and the wealth Canada has derived te the Bhaswont Would derive in the future from the extraction of Shuswap resources and from other profitable activities on Shuswap lands. 6.5 The Shuswap would want to derive new sources of revenue from both Shuswap and non-Shuswap activities on Shuswap lands (see below, paras. 10.0 and 10.1). €~ Blement (iii) para. 3.6 - compensation for Resources a 7.0 Preliminary studies show that in the last ten years Canada has derived more than $2 billion from the extraction of Shuswap resources. The full value of land, land-use and fommercial activities and revenues earned from Shuswap jands since the i9th century by both the provincial and federal governments is much greater and avalte precise quantification. 7-1 Compensation for past value extracted from Shuswap lands will be subject to negotiation. 8-0 With respect to future payments by the governments of Canada for the use of Shuswap lands and resources, & precise goxmula will be negotiated. In principle, however, the 8.1 After a once-for-all payment in compensation for the past, ongoing compensation, equalization (but not program) Payments might, for example, be consolidated ang calculated(a) remove it from partisan politics and Gonstitutionalise it: (b) show the true relationship between the source of Ggnada's wealth and payments to shuswap: (c) link Shuswap productivity to the general Productivity of the confederation: (a) allow for growing payments in so Zar as the GNP always Stews and the Shuswap percentage would grow with it. 8-2 Program payments would be open to a much more subtle formula 9.4 than that proposed in 8.1 above. The formule would reflect the changing needs and circumstances of the Shuswap peoples. pa the delivery and accounting mechanisms for all payments from other governments to Shuswap governments, the Shuswap Mould insist on efficiency and freedom fron political and | bureaucratic interference. This would be achieved by a | ;biock-funding" formula which would have tne following features: (a) committment for three to five years with a provision | for adjustments based on unforseen need. (b) annual payments: (c) payments directly from the federal parliament to the Shuswap government, eliminating excessive bureaucratic middle-men; (a) accountability to the federal parliament in broad categories only: (©) accountability by shuswap governments to the Shuswap Peoples in great detail: ahe Treasury Board is the Government's accountant. It's main requirement is that moneys are transferred tn accordance with Government regulations. Those regulations fay be changed by Government. The Government hee it’ within its power to instruct the Treasury Bossd te make the kinds $f regulations which will support block-funding as described n 9.0.9.2 10.0 10.2 10 Zhe Department of Indian Affairs sometimes blames the preasury Board for preventing improvements in the methods of payment to Indians. But this is an excuse used by DIA to explain its own unwillingness to improve or it is the recult of DIAls lack of political will to change Treasury board regulations. The Auditor General works for Parliament and his job is to fee that the government spent monies in the way they wore intended to be spent by Parliament. ‘The Auditor Ginecas Would accept any system of accounting which allowed hin to report back to Parliament with certainty about the expenditure of funds. zB addition to any and all payments negotiated and received by the Shuswap Nation from Canada, the Shuswap govermmente will have the power to levy taxes, duties and royaities oo all resources extracted from Shuswap lands, and on ai incomes and on all activities carried out on Shuswap lands by non-Shuswap individuals, corporations or goverment agencies. their sovereignty and their independence, the Shuswap governments will be empowered to levy taxes, duties and Foyalties on all resources extracted from Shuswap lands, sae atte tucomes and all activities carried out on Shuswap lands by the Shuswap peoples. 2 - Element (iv) paras ~ A Shuswap Trust 11.0 Under the terms of its own Indian Act, the federal Parliament presently holds in trust numerous accounts containing the proceeds of surrenders, leases, resource Tevenues, wills and other trusts with respect to Indian jands and peoples. In his annual report of 1980, the Auditor General complained that the way in which those sgcounts have been maintained by DIA has made them difficult fo audit. Much criticism has been expressed by Parliamentarians and others that the government's trustees are not doing a good job. Collectively, those trust funds amount to more than $1 billion. Annual activity on these accounts amounts to about $800 million.PART V - STRATEGIC CONSIDERATIONS aSBS_=-STRATEGIC CONSIDERATIONS 12.0 If the shuswap Nation wishes, at some future date, to enter Anto negotiations with Canada for @ comprehensive settlement of all outstanding issues, including compensation for Canada's past use of Shuswap territories and usurpation of Shuswap jurisdictions, it may wact to include in those Regotiations the question of a new political arrangement: with Canada which will include recognition of Shuswap governments. 12.1 Given this possibility, the Shuswap Nation should consider garefully whether it wants to prosees with prior and thparate negotiations with the fiscal policy outlined in Ghis document. conversely, it shoaia consider carefully whether it would want a fiscal Policy to be included in any, future comprehensive negotiations 42 sucha fiscal Policy has been separately negotiates in advance. 12.2 There are a number of ways of managing this potentially confusing situation: (a) ‘seek comprehensive negotiations and postpone negotiations on a fiscal policy until thens {b) do not seek comprehensive Negotiations but negotiate issues on a piece-meal basis: (c) Megotiate a fiscal arrangement on an interim basis with explicit riders to the effect thac they may not Prejudice subsequent comprehensive negotineions! END OF DRAFT