PACC Committee Report

HOUSE OF COMMONS
CANADA

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Introduction
Observations and Recommendations
Conclusion

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Pursuant to Standing Order 108(3)(e), the Standing Committee on Public Accounts has the honour to present its

TWENTY-SECOND REPORT

The Standing Committee on Public Accounts has considered Chapter 14 of the September 1998 Report of the Auditor General of Canada (Indian and Northern Affairs Canada ― Comprehensive Land Claims) and the Committee has agreed to report the following:

INTRODUCTION

Comprehensive land claims are claims relating to ongoing Aboriginal title to land and rights that have not been dealt with by treaties or law. Settlement of these claims result in modern treaties.

Between 1975 and July 1997, twelve comprehensive land claims settlements were signed. These settlements involved approximately 48,000 Aboriginal people, full ownership of over a half-million square kilometres of land, and a financial package totalling $1.8 billion, as well as other considerations. In 1997-98, it cost the federal government $279 million to negotiate and implement comprehensive land claims settlements. For 1998-99, it is estimated that these costs will amount to $262 million. At present, there are over 200 First Nations that have actual or potential land claims and treaties under discussion or to be addressed.

In his September 1998 Report, the Auditor General of Canada raised questions about the comprehensive land claims process. These questions related to the way in which the process is managed, settlements implemented, and the results measured and reported by Indian and Northern Affairs Canada, the federal department that bears responsibility in this area.

Given that the comprehensive land claims process is central to accommodating and achieving important aspirations of Aboriginal and non-Aboriginal Canadians alike, and that the costs to taxpayers and the Government of Canada is, and continues to be, substantial, the Committee decided to examine the audit results. Consequently, the Committee met on 24 November 1998 with Mr. Denis Desautels, the Auditor General of Canada, and Mr. Grant Wilson and Mr. Ted Bonder of the Office of the Auditor General to discuss the findings of their audit. Mr. Scott Serson, Deputy Minister, accompanied by Mr. Greg Gauld and Mr. Terry Henderson represented Indian and Northern Affairs Canada (INAC, or the Department).

OBSERVATIONS AND RECOMMENDATIONS

In his Report and testimony before the Committee, the Auditor General acknowledged that the process of negotiating and implementing comprehensive land claims settlements is not a simple one. Nevertheless, his audit revealed shortcomings in three major aspects of the process ― achievements and results, negotiation, and implementation ― and made several recommendations designed to produce a better process and outcomes.

In its initial response (included in the Report), the Department was cautious and made no commitment to implement the Auditor General’s recommendations. However, when departmental officials met with the House of Commons Standing Committee on Aboriginal Affairs on 3 November 1998, they indicated agreement with many of the audit observations and stated that the Department was preparing an action plan that would allow for consultation with its key partners to address the Report’s recommendations.

The Department made a similar commitment when it appeared before this Committee, adding that it would work closely with the Office of the Auditor General in the development of the plan. In response to questioning, Deputy Minister Scott Serson testified that the target date for a draft of the action plan was "some time early in the new year, February or March" and that he was willing to provide a copy to the Committee. (1550)

The Committee wishes to encourage the Department’s decision to adopt a constructive approach to resolving problems brought to light by the audit. It therefore recommends:

Recommendation 1

That Indian and Northern Affairs Canada complete a draft action plan for addressing each of the findings and recommendations made by the Auditor General of Canada in Chapter 14 of his Report of December 1998 no later than 31 March 1999. This action plan must be provided to the Committee immediately following its completion.

Examination of the audit results and discussion with witnesses highlighted several issues that the Committee would like the Department to pay particular attention to as it drafts its action plan. These issues involve: measuring and reporting economic benefits generated by settlements; placing a value, during negotiations, on assets subject to transfer; keeping Parliament informed; and the involvement of non-parties to settlements.

The Department asserts that the promotion of economic development in areas affected by settlements is among the objectives of its current land claims policy (published in 1986). For example, in its Report on Plans and Priorities for 1998-99, the Department informs Parliament that negotiated settlements of land claims "resolve outstanding grievances, establish certainty to land title and access to lands and resources, create a climate that promotes economic development, and avoid time-consuming litigation."

These same objectives are repeated in the Department’s Performance Report for the period ending 31 March 1998. But when the Department discusses its performance in the area of land claims settlements, it lists outputs ― agreements signed and implemented ― alone. Achievements related to tangible outcomes ― in this case those related to creation of a climate that promotes economic development ― receive no mention. As a consequence, Parliament and Canadians are unable to fully assess the benefits achieved as a result of the Department’s expenditures on this activity.

The absence of meaningful information on the outcomes of agreements is disappointing but not without explanation. The audit found that the Department had not carried out studies on the economic benefits of land claims and concluded that Indian and Northern Affairs Canada "has not done enough to demonstrate the deemed benefits relating to the economic impact of negotiated settlements." (14.43)

In his opening statement, Deputy Minister Scott Serson went only so far as to indicate that a study of the impacts of treaties, restricted to those signed in the 1970s and 1980s, would be "a major undertaking" but one that "must be considered." (1545) No commitment to conduct such studies for all current and future treaties and to report the results to Parliament was offered. In response to questioning from the Committee, Mr. Serson also indicated that the Department really had not given a great deal of thought as to what sort of mechanism could be used to report such information to Parliament. (1605)

The Committee believes that the Department must conduct studies of the economic benefits resulting from all comprehensive land claims settlements in order to determine the extent to which its policy objectives are being achieved. The resulting information must, in turn, be reported to Parliament. The Committee therefore recommends:

Recommendation 2

That Indian and Northern Affairs Canada establish indicators and a timetable for measuring and reporting the economic benefits produced as a direct result of all current comprehensive land claims settlements and provide them to the Committee no later than 31 May 1999;

Recommendation 3

That Indian and Northern Affairs Canada include specific provisions for timely and periodic impact evaluations in all future comprehensive land claims settlements; and

Recommendation 4

That Indian and Northern Affairs Canada provide information on the outcomes achieved as a result of comprehensive land claims settlements in its annual Performance Reports beginning with the Report for the period ending 31 March 1999. These outcomes must include specific reference to direct economic benefits generated by the settlements.

Typically, the transfer of ownership of and rights to large tracts of land and resources, previously held by the Crown, and the payment of substantial amounts of money to Aboriginal communities are involved in claims settlements. It is essential that the Department, as part of the negotiation process, establish the value of the assets subject to transfer as accurately as possible. In particular, the Department should possess adequate information on the existence and potential value of subsurface resources.

The Auditor General reports, however, that the Department "has not demonstrated that it has always exercised adequate rigour" when determining the nature and amount of assets that may ultimately be included in final settlements. (14.51) Concerns have been raised within the Department itself regarding the reliability of studies of claimed land, the lack of assessment of the impact of transferring such land, and that the determination of resource royalty sharing was done without the use of detailed data on resource potential. (14.52)

In his opening statement, Mr. Serson also touched on the issue of valuation. He told the Committee that although it is difficult to put a price on land and natural resources in the North, the Department intends to continue efforts to find more precise ways to measure the value of treaty components during the negotiation process. As an example, he cited the Department’s practice of commissioning valuation studies when resource potential in a claimed area appears to be significant. (1545) The Committee welcomes the Department’s intentions and recommends:

Recommendation 5

That Indian and Northern Affairs Canada place particular emphasis on the design and implementation of a rigorous valuation process for assets subject to transfer in land claims settlements when it drafts its action plan to address the findings and recommendations of the Auditor General of Canada.

The Auditor General expressed concerns about the length of time that it takes to negotiate settlements, which in some cases has amounted to twenty years. As he testified, "protracted settlements do not contribute to cost effectiveness and may result in less desirable outcomes for all concerned." (1540) There are factors beyond the Department’s control, which can produce a lengthy process, and there is no clear guideline on what an ideal timeframe might be. However the audit found several deficiencies in the management of the claims process for some settlements, which contributed to lengthy negotiation. (14.63)

Departmental witnesses also expressed concerns about the time it takes to negotiate treaties but said that improvements are taking place. They pointed out that since 1986, framework agreements have established responsibilities and timetables, but that these can change over the course of a negotiation. Nevertheless, a commitment was made to focus on this concern in order to find solutions (1600) and Mr. Serson testified that the Department is exploring ways to accelerate the treaty negotiation process with its partners. (1540)

The Committee agrees with the Auditor General that lengthy negotiations are detrimental to cost effectiveness and recommends:

Recommendation 6

That Indian and Northern Affairs Canada include specific proposals to expedite the settlement negotiation process in its draft action plan.

The audit revealed gaps in the Department’s monitoring and evaluation of, and reporting on, the implementation phase of settlement agreements. The monitoring conducted by the Department tended to focus on activities and processes, rather than on results and costs. Evaluations examined by the Auditor General did not cover all key implementation aspects and had not been carried out on a timely or periodic basis. As a consequence, reports on settlement agreements do not contain the full range of information needed to properly assess implementation.

The Committee agrees with the Auditor General that settlement agreements by themselves cannot be considered successful resolutions of claims unless they are properly implemented. In order for this to happen, the Department must assiduously monitor implementation, conduct thorough evaluations, and report on the results. Accordingly, the Committee recommends:

Recommendation 7

That in its draft action plan Indian and Northern Affairs Canada specify how it will improve its monitoring and evaluation of, and reporting on, the implementation of comprehensive land claims settlements.

The Audit demonstrates that the Department could provide a more detailed reporting of the costs of reaching and implementing land claims settlements. For its part, the Department asserts that it already "meets all the usual requirements in terms of disclosure to Parliament," but that it is "prepared to undertake a review" of its financial cost projections to see if improvements can be made. (1545) The Committee believes that both the Department and Parliament need more complete cost information in order to determine the effectiveness of the claims process and therefore recommends:

Recommendation 8

That Indian and Northern Affairs Canada report the complete costs of reaching and implementing comprehensive land claims settlements in its annual Performance Reports, beginning with the Report for the period ending 31 March 1999. These costs should include the potential value of transferred land ownership and access rights, consolidated costs of other federal departments involved in the process, costs of various projects under implementation plans and responsibilities under the agreements, and costs of revenue and resource sharing. Where actual costs cannot be determined, this should be disclosed and estimates provided instead.

During the meeting, some Members of the Committee expressed strong concerns that non-parties to land claims settlements are affected by agreements but not adequately included in consultations. In his Report, the Auditor General draws attention to the lack of input afforded certain types of enterprise in affected areas in decisions on land allocation and other provisions in settlement agreements. (14.100) A successful land claims process depends on the support of all of those directly affected by the outcome. The Committee therefore recommends:

Recommendation 9

That Indian and Northern Affairs Canada design a strategy for closer consultation with non-parties in the land claims process in areas affected by settlement agreements. This strategy must include an implementation timetable and a discussion of how the Department will respond to the concerns of non-parties, and be submitted to the Committee by 31 May 1999.

CONCLUSION

The comprehensive land claims process is clearly a complex one that affects the lives of many Canadians, Aboriginal and non-Aboriginal alike. It is thus incumbent upon all participants in the land claims settlement process to ensure that it is carefully managed. Indian and Northern Affairs Canada, which represents the federal government and has fiduciary responsibilities for Aboriginal peoples, has important responsibilities to ensure that the process is fair, transparent, and skillfully managed. The Committee is confident that the Department, in preparing its action plan, will clarify how it balances the interests of those it represents and will carefully address the Committee’s concerns as well as those of the Auditor General, thereby enabling it to better fulfill its responsibilities.

Pursuant to Standing Order 109, the Committee requests that the Government table a comprehensive response to this Report.

A copy of the relevant Minutes of Proceedings (Meeting Nos. 46 and 54) is tabled.

Respectfully submitted,

JOHN WILLIAMS,

Chair