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37th PARLIAMENT, 2nd SESSION

Standing Committee on Aboriginal Affairs, Northern Development and Natural Resources

EVIDENCE

CONTENTS

Wednesday, February 5, 2003

1535

The Chair (Mr. Raymond Bonin (Nickel Belt, Lib.))

Mr. John Graham (Director, Institute on Governance)

1540

1545

1550

1555

The Chair

Mr. Brian Pallister (Portage—Lisgar, Canadian Alliance)

1600

Mr. John Graham

Mr. Brian Pallister

The Chair

Mr. Brian Pallister

Mr. John Graham

Mr. Brian Pallister

The Chair

Mr. Yvan Loubier (Saint-Hyacinthe—Bagot, BQ)

1605

Mr. John Graham

The Chair

Mr. Pat Martin (Winnipeg Centre, NDP)

Mr. John Graham

Mr. Pat Martin

Mr. John Graham

Mr. Pat Martin

Mr. John Graham

Mr. Pat Martin

Mr. John Graham

1610

Mr. Pat Martin

Mr. John Graham

Mr. Pat Martin

Mr. John Graham

Mr. Pat Martin

Mr. John Graham

The Chair

Mr. Charles Hubbard (Miramichi, Lib.)

1615

Mr. John Graham

The Chair

Mr. John Graham

The Chair

Mr. Maurice Vellacott (Saskatoon—Wanuskewin, Canadian Alliance)

Mr. John Graham

Mr. Maurice Vellacott

Mr. John Graham

The Chair

Mr. Julian Reed (Halton, Lib.)

1620

Mr. John Graham

Mr. Julian Reed

Mr. John Graham

Mr. Julian Reed

The Chair

Mr. Yvan Loubier

The Chair

Mr. John Graham

The Chair

Ms. Anita Neville (Winnipeg South Centre, Lib.)

1625

Mr. John Graham

The Chair

Mr. Pat Martin

Mr. John Graham

Mr. Pat Martin

Mr. John Graham

Mr. Pat Martin

Mr. John Graham

The Chair

1630

Mr. Clarence (Manny) Jules (Chair, Indian Taxation Advisory Board)

1635

1640

The Chair

Mr. Maurice Vellacott

Mr. Clarence Manny Jules

Mr. Maurice Vellacott

Mr. Clarence Manny Jules

Mr. Maurice Vellacott

Mr. Clarence Manny Jules

Mr. Maurice Vellacott

Mr. Clarence Manny Jules

Mr. Maurice Vellacott

1645

Mr. Clarence Manny Jules

Mr. Maurice Vellacott

Mr. Clarence Manny Jules

Mr. Maurice Vellacott

Mr. Clarence Manny Jules

Mr. Maurice Vellacott

Mr. Clarence Manny Jules

Mr. Maurice Vellacott

The Chair

Mr. Yvan Loubier

Mr. Clarence Manny Jules

1650

Mr. Yvan Loubier

Mr. Clarence Manny Jules

The Chair

Mr. Pat Martin

1655

Mr. Clarence Manny Jules

The Chair

Mr. Pat Martin

Mr. Clarence Manny Jules

Mr. Pat Martin

Mr. Clarence Manny Jules

The Chair

Mr. Julian Reed

1700

The Chair

Mr. Clarence Manny Jules

The Chair

Mr. Maurice Vellacott

The Chair

Mr. Yvan Loubier

The Chair

Mr. Pat Martin

Mr. Clarence Manny Jules

1705

Mr. Pat Martin

Mr. Clarence Manny Jules

Mr. Pat Martin

Mr. Clarence Manny Jules

The Chair

Mr. Charles Hubbard

The Chair

Mr. Clarence Manny Jules

The Chair

Mr. Clarence Manny Jules

1710

The Chair

Mr. Clarence Manny Jules

The Chair

CANADA

Standing Committee on Aboriginal Affairs, Northern Development and Natural Resources

NUMBER 022

2nd SESSION

37th PARLIAMENT

EVIDENCE

Wednesday, February 5, 2003

[Recorded by Electronic Apparatus]

¹ (1535)

[English]

The Chair (Mr. Raymond Bonin (Nickel Belt, Lib.)): Welcome everyone. We are resuming the study of Bill C-7, an act respecting leadership selection, administration, and accountability of Indian bands, and to make related amendments to other acts.

At this time we're pleased to welcome, from the Institute on Governance, the director, Mr. John Graham.

Mr. Graham, welcome. Thank you for responding to our invitation. We will invite you to make your presentation, which will be followed by questions and answers.

The members know that when we allocate a slot of five minutes, it is for the question and the answer. The person who ends up being cut off, if the question is too long, is you. You will have an opportunity for closing remarks.

Mr. Graham.

Mr. John Graham (Director, Institute on Governance): Thank you.

I'm originally from northern Ontario, Mr. Bonin. It's so cold up there that we all talk very quickly, very fast and short. Otherwise, our faces tend to freeze up.

I thought I'd go through a presentation. It may take about 20 minutes. Then I'll leave the rest of the time for questions and answers.

I'll give you just a short note on the Institute on Governance, for those of you who are not familiar with us. Someone asked me once what it was like leaving the public service and going into the non-profit sector. My answer was that every occasion is a commercial opportunity. Therefore, I'm going to give you a very quick overview of our organization.

Our mandate is to promote effective governance through thought and action. In the year 2003, we have about 14 staff and six associates. We're completely self-funded. We don't get any self-sustaining money from any organization, the federal government included. This, we hope, makes us entrepreneurial and responsive.

We work both nationally and internationally. Some of our themes are building policy capacity. We have a very important initiative in biotechnology in governance. One of our interests is actually to try to get parliamentarians more engaged in the biotech issues. If any of you are interested in that particular side of biotechnology, on how parliamentarians can get more engaged in the issue, by all means I'd be happy to talk to you after this hearing is over.

Citizen engagement is another one of our areas of interest, as is ethics and governance.

We're in the top third of Canadian think-tanks. I'd like to think that's quality of information provided, but the more objective measure is revenue.

We have a fairly well-developed website. I'd be happy to give you our web address, if you want.

Now here's my argument in brief. Good governance is critical to positive socio-economic outcomes for first nations. First nations have come a long way since the transformation that started in the early 1950s. I think it's very important to realize that back in the early 1950s, first nations administered practically nothing.

I remember talking to Chief Hill, a former chief at Tyendinaga, who was on the council then. He said that they had a budget of $15,000 at Tyendinaga in the early 1950s. Now we hear, some 50 years later, that Tyendinaga has a budget, of course, in the tens and tens of millions of dollars. There has been a very significant transformation since the early 1950s. It's important not to forget that.

Still, many first nations have poor governance for a variety of reasons. And I want to emphasize here that what I'm talking about is a governance system. This is not an indirect criticism of first nations leaders or, indeed, of first nations administrators. Rather, this is looking at the system as a whole.

First nations are embedded in a very complex system, as many of you know. What I'm talking about here is the system, many of the features of which the first nations, of course, have not had any influence on in terms of shaping.

The First Nations Governance Act is a modest step forward. I want to emphasize “modest”. I will try to make that assertion by showing you what I think are some of the significant governance problems and how the First Nations Governance Act deals with them. Then the final point is that much remains to be done.

What we really need is a new transformation in first nations governance. We really do need some radical new departures from where we're going now, if we really are to have first nations take their rightful place in the Canadian Confederation.

I'm going to go through this very quickly. On governance matters, a raft of international studies support this conclusion.

Here's a quote from Kofi Anan, which I think is worth stating here:

Good governance is perhaps the single most important factor in eradicating poverty and promoting development.

He said “the single most important factor”. Why are these international folks saying these kinds of things?

This graph gives you some indication of what's driving this notion of governance. The x axis, or the horizontal axis, is essentially a measure of aid. As you move along the axis, there is more aid. The vertical axis, the y axis, is the measure of growth. All those points are actually countries.

As you move along, you would expect that more aid should translate into more growth. The curve or the line should be moving from the lower left to the upper right. In other words, the curve should be going something like this. Here you see the line actually being fitted to these points. It's actually moving downward slightly. It is more aid and less growth. It is a very disturbing factor that has come out of a lot of international studies. More aid and less growth is not exactly what aid agencies are about.

¹ (1540)

So there must be something else happening here, and many people believe that what is happening is the notion of governance, and governance matters.

This next slide presents a quote from a Harvard study of American tribes, very much along the same line. This is from Stephen Cornell and Joseph Kalt. I'm sure you have heard of those two Harvard professors. Then some very modest Canadian evidence shows a strong correlation between first nations in British Columbia with low suicide rates and those with significant initiatives relating to self-government.

Indeed, some of the first nations with all of these indicators in self-government have suicide rates that are approximating the provincial average. So governance seems to matter not only internationally but indeed to North American Indians.

Okay. What's the evidence that many first nations suffer from poor governance? This slide shows you a whole series of financial indicators, qualified audits, excessive debt, co-management and third-party management types of arrangements. Potable water is another very strong indicator. The O'Connor commission, which looked at Walkerton, indicated that the water provided on first nations reserves is some of the poorest-quality water in the province.

Indeed, if someone pointed to me and said what is the most significant governance issue facing first nations and the Canadian government, my answer would be water. It is so fundamental. It is the health and safety of our children, of older folks. It is by far the most important governance issue that first nations and the Government of Canada should be dealing with.

Other indicators are few active bylaws, poor enforcement, few active policies. There are many other indicators as well, such as the life of the housing stock, educational levels, and some indications in evidence of corruption and nepotism.

In these next slides I'm going to be talking about what I consider to be some of the issues driving some of these problems, and then for each issue I'll look at how the First Nations Governance Act seems to deal with it or not.

The first issue, I believe, is divisive municipal-style elections. Here is a quote from Walter McKay. Notice the second sentence:

Not only do we have divided loyalties between clans but these election systems have divided families, brother against brother, sister against sister, parents against their own children, and elders against elders.

This is a phenomenon that's again not unique to Canada. Colonial powers in Africa produced the same sort of result using more or less the same first-past-the-post, municipal-style elections, with the same deadly results, in my view.

The implications then point to divided communities, political instability, and low levels of social capital. The social capital I'm referring to of course is the Robert Putnam notion based on research done at Harvard.

In terms of the First Nations Governance Act, it does provide for a leadership selection code with some flexibility. That may result in some reflection. But note that the current Indian Act also has a fairly broad custom election option that first nations could also use prior to this. So the First Nations Governance Act is not a major step forward in terms of dealing with this particular issue.

Then the second issue is membership, categories of residents. There are at least six. Imagine in the communities we are dealing with, of approximately 600 people, having at least six categories of individuals...and eventual extinguishment of status Indians, as now defined.

Both of these problems are being driven by, essentially, out-marriage rates, and for these reasons, as these out-marriage rates increase, with people going to universities, entering the labour force, etc., these problems will only increase. So the implication is that the divided communities problems will intensify, and of course the First Nations Governance Act doesn't deal with membership issues.

Just to give you a little example of this notion of the eventual extinguishment of status Indians, this graph shows you--the one in pink is actually the Indian Act--that the population trend is upward until about 2031. After that it starts to decline and will decline very steeply until ultimately there will be no status Indians.

Other membership rules are even more significant. The one at the bottom of the graph, for example, is a two-parent rule, and that develops the extinguishment of status Indians even more quickly.

The only one that provides some stability here is the one-parent rule, which is at the top of the graph. The problem with that, of course, is that for many first nations it's simply not tenable. What that would allow is someone going to Los Angeles, living there for seven generations, and then coming back to Tyendinaga and saying, “Here I am. I'm one of yours. I'm one of your members.” Of course, for many people in Tyendinaga that would be totally out of the question.

¹ (1545)

The third one is the treatment of aboriginal women, membership issues, matrimonial home, marriage breakup, restraining orders, paying maintenance for minors, etc. I understand you've seen and heard from a lot of aboriginal women's groups and will hear from more, so I'm going to move through this very quickly. I think they are far better able than I am to expound on some of these problems.

On lack of incentives for private investment, many first nation reserves have public housing. The implications for that are poor housing and retarded economic development. Borrowing on housing equity is the primary source of financing for small businesses in Canada, and this option is shut out for many first nations because of the public housing system.

It is possible under section 20 of the Indian Act to have what is called a “certificate of possession”. That allows for some quasi-private ownership, and in some first nations there is actually a market for housing.

The First Nations Governance Act doesn't really deal with this issue. Clause 15 does provide borrowing power, but that does not necessarily get at the public housing issue.

On the dominance of the public sector, most first nation reserves have an undeveloped private sector, a civil society that is undeveloped, and a lack of an independent media. The implications are few checks and balances; reduced choice for individuals; and a risky development strategy, where you are putting all of your eggs in one basket. It intensifies the divisiveness of elections simply because the public sector seems to be the only game in town.

The First Nations Governance Act does provide some checks on the powers of first nation government. There's the mandatory complaints and redress system; the application of the Canadian Human Rights Act; and measures to promote greater transparency. So there are some good things to say about the bill in that respect.

Just to illustrate this a little bit more graphically, this would be typical of Canada or any western country with essentially those three circles: the government, the private sector, and civil society with the media in between. On a first nation reserve this might look like a much smaller private sector, a much smaller civil society, and a media that was not independent of the public sector.

Citizens don't pay taxes to first nation governments. This is not necessarily an argument for first nations to pay taxes to the federal government or provincial governments. But when citizens do not pay taxes to their government, accountability is clearly weakened. One of the clear drivers of good governance must be from citizens themselves, and if they are not paying taxes they are not going to demand good government and good government services as much.

On the implications of this, it weakens accountability and reduces first nation independence. Priorities are set to an important extent by funding agencies. One can make an environmental argument that if you're not paying for your own water, garbage removal, etc., there is no market mechanism to help reduce the amount of environmental waste.

The First Nations Governance Act really doesn't address this, but it may improve accountability to citizens through the adoption of codes, the redress mechanisms, and the like. But there are very few governments in this world where their citizens don't pay at least some taxes or user fees. Without those, first nations will really continue to suffer from significant accountability problems, simply because they will not have a demanding citizenry.

Next is a lack of a sense of political empowerment. Harvard research indicated that the fundamental building block of development was missing in some first nations, i.e., de facto sovereignty or ownership. Economic development on Indian reservations is first and foremost a political problem.

This is getting down to taking ownership of your own development. That is, the decisions about the development of your particular community have to come primarily from your own people and your own government. The opposite of that is the notion of seeing yourself as a victim and blaming others. There are indeed ethical, historical, and legal arguments for why first nations are victims, were victims, and indeed, those arguments are compelling. They've been laid out by the Royal Commission on Aboriginal Peoples.

¹ (1550)

That said, seeing yourself as a victim and blaming others is a lousy development strategy. It inadvertently puts forward the notion that development is in somebody else's hands. That is, you are responsible for why I'm in this terrible position, and it's up to you to fix the problem. Until you fix the problem, I essentially can't do very much.

That's the inadvertent argument. Of course, many first nations have gone well beyond that, but there are indeed some that are into this problem of not declaring de facto sovereignty or ownership.

In the First Nations Governance Act, the removal of the minister's power to approve laws is certainly a step forward, and then there's a modest increase in law-making powers. But here we're dealing with an issue that is primarily attitudinal. This is not something that's going to be fixed through any kind of law.

Finally, coming to number eight, the public service systems are badly underdeveloped--for example, education, regulatory systems, accountability institutions, and enforcement powers.

When you start to examine what goes on in first nations, I think you come away quite shaken because of some of the very fundamental kinds of things we see. Take water, for example. We don't have a regulatory system on reserves dealing with water. As a Canadian, I find it shocking that we do not have a federal act on safe water that applies to first nation reserves. Indeed, when you look at other regulatory issues, you find that the same thing happens. I have a slide that indicates where many regulatory deficiencies occur in first nations government.

What are the implications, then? They are poor results in water and education, etc., risk from regulatory voids, few checks and balances, and a major hurdle to self-government. The major hurdle goes something like this. When we finally get to negotiate self-government agreements, there is so much to build. There is just a massive amount of government machinery to build when you're trying to get into first nations government. Again using the example of water, you're asking first nations to build regulatory systems around water. These communities contain around 600 people on average. So it is an immense challenge when we finally do get into self-government to get into building some of these systems. Because in the past we have not really been aware of how badly underdeveloped these systems are, some existing self-government agreements essentially worsen the situation. They don't improve it.

What happens in the First Nations Governance Act? There are some positives. The Human Rights Commission and the redress mechanism are both trying to improve the institutional accountability aspect of it. There are major improvements in enforcement, which I think is probably the most important part of the bill, and then registry systems, which are basic elements of any good government system. I note Mr. Nault's initiative in education where he's now talking about developing school boards.

I'd like to give you an example again of the kinds of regulatory problems on reserve, which we take for granted in non-aboriginal Canada. You can see that there are all sorts of nuts-and-bolts issues: potable water, sewage treatment, solid waste, fire suppression, bridges, residential housing, education, and parks and recreation. All of these things are very badly underdeveloped public systems on first nation reserves in Canada.

Finally, there's the issue of small communities. We're talking about communities that have on average 600 people, but some of them have less than 100. Many of the requirements of this bill apply to communities of that size. The implications are writ large: a very tiny talent pool, especially for the range of responsibilities they have; overlapping roles between public servants and politicians; managing intimacy; and scale problems. The Environmental Protection Agency in the United States believes that to have a quality water operation, you need 10,000 households, which is roughly 40,000 people. Well, no reserve in Canada even comes close to that number. In a sense, then, we really need to look at this whole notion of small communities in a much more systematic and important way.

In terms of the FNGA, there is a delegatory power there that can apply to an aggregation of first nations. Indeed, the codes may help deal with intimacy issues, but really, this is a very significant issue, and it's part of what I'm calling the new transformation. Up to now we have concentrated almost exclusively, although not totally, on small communities in terms of building first nations governance. I think at this point we really need to look at this very carefully and to move away.

¹ (1555)

In summary, the FNGA is a modest step forward. It recognizes that governance is an important issue, and contains some answers to several significant problems. But much remains to be done.

In my closing remarks here, if I were to try to craft what a new transformation would look like, here are some of the lessons that really come from international experience: money is not the principal solution; governance reform should be first nations led, and effective partnerships are essential; and patience is a virtue. There are no magic bullets. Governance takes a long, long time to generate. It is not something that happens overnight; it is a long-term process.

In our future agenda, implementing the act and developing the codes will obviously be important. I think the administration of a governance code will be especially daunting to develop. The complaints and redress mechanisms will be very difficult to implement, especially in small communities. I have some specific suggestions to make on these in the bill. Registry systems and overcoming resistance to the legislation will also be important. Indeed, one can imagine litigation from first nations who are not happy with this. Then, of course, there is the whole question of resources and whether there will be significant resources available for first nations to implement many of the things they are required to do under the bill.

One other thing that's important is looking at other options beside legislative change. Are there other instruments for effecting good governance change that the federal government could be involved in? I think one of them to look at is a voluntary certification system. I think a voluntary certification system could have done many of the things that the codes are trying to do in this bill. Essentially, a properly devised certification system can mean that governance reform is being driven by citizens. That's where you want it to be driven, by the citizens themselves on first nations reserves, rather than being imposed from on high.

I have addressed the fundamental issues and talked about building modern first nations governments. As I said, I think the regulatory system for potable water should clearly be on the top of everybody's agenda for governance reform in this country.

As for rethinking the current approach to self-government, I will go down the list very quickly. Jurisdiction can't rest solely with individual first nations, which we now trying to do now. Instead, I think we need a nation or a provincially based two-tier government. So for the reasons I have talked about, I think part of the required transformation is seeing a provincially based, or indeed, a very large regionally based, two-tier type of government.

In conclusion, Mr. Chairman, governance matters. The FNGA is a modest step forward, but what is really needed is a transformation in first nations governance.

The Chair: Thank you very much for your excellent presentation.

Colleagues, I have 30 minutes, and then a couple of minutes for closing remarks. We will do two rounds. The first round will be four minutes, and the second round will be two minutes. It's the best I can do with the time I have.

Therefore, the official opposition for five minutes.

Mr. Brian Pallister (Portage—Lisgar, Canadian Alliance): Sir, thank you for a very stimulating and thought-provoking presentation.

Your comments about patience being a virtue tell me that you might recognize that the agenda being advanced through this bill does not have a great deal of virtue. It's in a hurry, both in terms of the consultation running up to its presentation here, and in the requirement that these proposals be enacted in a very short period of time. In my estimation, this is not a virtuous approach to the large issues of governance you present.

Among many other things that concern us, there is a danger in moving forward very aggressively on an inefficient and ineffective model without strong community support. I think you restated that nicely in your presentation.

But I'm also concerned when we speak of governance. As much as you spoke with some praise for the idea of redress and enforcement mechanisms, I think we have to address their practicality here. Aren't you concerned that the fundamental underpinnings of good governance, such as experience and responsibility in managing and owning property, the ability to count on democratic rights and freedoms, and these kinds of things, have essentially been held back from aboriginal Canadians for a long time in the protectionist legislation of the Indian Act? How can we have good governance anywhere when people do not share, or are not able to share, in the responsibility of covering the costs of services? How can we have good governance when people are prohibited by protectionist, and some would say, colonialistic, legislative models from participating as equals in the economic structure of our country? And how can we have good governance when the communities' powers rest very, very largely in the hands of very, very few people?

º (1600)

Mr. John Graham: I think in some sense you're restating some of the points I made in the presentation. The government tends to be the only game in town. You have all your eggs in one developmental basket. There are not enough checks and balances. There's the whole notion of public housing. So I don't disagree with really anything you're saying here, and I, like you, have some reservations about the rapidity with which implementation is going to happen here.

I think for small communities this will be a huge undertaking. The redress mechanism, for example, will be a real challenge in some communities, and indeed I'm really quite worried about the powers that this redress mechanism has. I think I would look at that fairly closely. Being able to essentially say that the order of the first nations council essentially rescinds a code or parts of a code, that's a very powerful power, and you wonder about the independence of that redress mechanism in a community of about 100 people.

In a sense, I think it comes down to the basic notion that we have too-small communities here. These communities are too small to really build a modern governance system. I think that's really a fundamental point I'd make.

Mr. Brian Pallister: Do I have some time, Mr. Chairman?

The Chair: A minute and a half.

Mr. Brian Pallister: I think, yes, you've made a lot of good points, sir. Again, I would say we're very concerned that this will exacerbate the problems of the separation that most people feel from power and decision-making.

You talked about the need for attitudinal change and so on, but as one chief said to me, this legislation is about painting the second-floor bedroom when it should be about repairing the foundation.

Mr. John Graham: Right. I would agree that, in terms of my priorities, this would not be it. As I said, I think it's still a modest step forward, but I think there are some huge governance issues, and I'd get at that water thing. If I were the minister, that would be my top priority. We're going to have a Walkerton situation on first nations reserves one of these days.

Mr. Brian Pallister: Thank you for your comments, sir.

[Translation]

The Chair: Mr. Loubier, you have four minutes.

Mr. Yvan Loubier (Saint-Hyacinthe—Bagot, BQ): Thank you, Mr. Chairman.

Mr. Graham, I have a brief remark to make before putting my questions. I am looking at the section in your presentation where you give examples of poor governance by the first nations. This is a comment I would address to all witnesses who draw a rather mediocre picture. You state that approximately 25 per cent of first nations were heavily indebted in January 2000. I am not saying that there are no problems, but your statement actually means that 75 per cent of communities are operating smoothly, and are not heavily indebted. When drawing an overall picture of something, we should be careful not to make things look worse than they really are. I am not saying that there are no problems, but when we look at aboriginal issues we tend to focus on figures that best illustrate the reality.

If we were to compare aboriginal communities with our own, we might say that we have a federal government indebted to the tune of $535 billion. That is as poor as a performance rating can get. In Quebec, our accumulated debt is $135 billion. That is also a very poor performance, since there is a provincial government. So let's be careful with these things. I am not saying there are no problems, but we do have to make sure we interpret everything properly.

I have two questions for you. First, you talk about trying out other instruments in an effort to bring about real change, and suggest a voluntary certification system that would work hand-in-hand with incentive measures. Please give us some examples of what those instruments could be.

º (1605)

[English]

Mr. John Graham: Thank you for your remarks.

You're quite right, indicators on poor governance can be misleading to some extent. For me it's the aggregation of indicators: the fact that you've got financial, and water, and educational indicators, and a whole array suggesting a problem that's fairly significant—more significant than most governments in Canada, certainly in the non-aboriginal world, face.

Concerning the voluntary certification scheme, I have actually written a brief on it that I'd be pleased to give to you. Essentially, this is no different from many ISO-type certification schemes. What I envision is a first nations scheme that is developed perhaps by a first nation non-profit organization. It could deal with financial management; it could deal with other aspects of good governance codes.

The Membertou First Nation in Nova Scotia has an ISO-type certification around management issues. What that has led to, according to the Membertou folks, is better interest rates at banks. So there are some positive incentives for actually doing this.

The whole notion is that the first nation would develop a standard that would be particular perhaps to first nations, and even for different sizes of first nations. You'd have a different scheme for, say, a first nations of 100 people than the one for 8,000 people.

In any event, the reason it would be voluntary is that the citizens themselves, upon hearing the notion that there is a certification scheme like this, would maybe elect politicians as a way to say, listen, I want our first nation certified. I don't want all this nonsense of not having budgets, and wondering about debt, and about who's taking what money, and that sort of thing. I want to be certified, and I'm going to elect politicians who are going to keep us certified.

The Chair: I have to cut in.

Mr. Martin.

Mr. Pat Martin (Winnipeg Centre, NDP): Thank you, Mr. Chair.

Thank you, Mr. Graham. I'm interested in a number of issues, but with only four minutes, it's difficult.

You made a comment earlier that without taxation rights, or without the act of taxing citizens, citizens are less engaged, perhaps, or less demanding of accountability. But really the stats don't bear that out, because currently 96% of all first nations file their audits on time and—of the 633—don't have any problems with accountability issues. Your figure of 58 first nations that are currently under third-party management is a recent figure. Up until this year, it was 27. There's been a rash of them lately, and we believe it's a punitive measure towards those communities that wouldn't cooperate with Mr. Nault's very unpopular first nations governance initiative.

How do you explain that the vast majority of first nations that don't have any taxing authority and don't tax their citizens are accountable and are held accountable by their citizens?

Mr. John Graham: I think you're talking about a couple of different accountabilities here. One accountability, of course, is of the first nations to the federal government, and that's what you're talking about—the audits.

Mr. Pat Martin: Yes, that's what this bill is about. It really isn't about water rights or...although many first nations wish it were, that we were tackling those pressing basic-needs issues. But nothing in this bill deals with the pressing health and education and fresh water issues facing communities.

Mr. John Graham: The bill still, though, deals with this whole issue of the relationship of first nations governments to their citizens. It's not just the relationship of the first nations government to the federal government; it's their relationship to their citizens. This is what these codes are all about, in some sense.

Mr. Pat Martin: It's working on the assumption that they're not accountable to their citizens currently.

Mr. John Graham: Well, again, it's not an either/or thing. On the accountability, I think it's kind of a sliding scale. Some governments clearly are more accountable than others, for a whole variety of reasons.

Mr. Pat Martin: That's the 96%, yes.

Mr. John Graham: But in a sense, what I'm saying is that I think governments will be more responsive to a demanding citizenry: that's the notion. If you have a demanding citizenry, that's the driving force for good governance.

º (1610)

Mr. Pat Martin: I understand that. You mentioned that the implementation will be difficult, especially the implementation of certain aspects of the bill. The budget for implementation of this comprehensive shift in the way business is done in first nations communities—for 633 of them—is $130 million. There have been authorities estimating that this is wildly understated: it could be the Canada's next gun registry, it will be so incredible. The costs of implementation could be as much as $1 billion or more.

Would you agree that the $130-million figure seems naive, almost, in terms of implementing such a fundamental change in the way all first nations communities conduct themselves?

Mr. John Graham: Yes, I must admit, I simply haven't done the figures there. I think you would have to sit down and see.

What I don't have, for example, is a really good sense of just how many first nations have redress mechanisms already. I know some do. For some this will be very simple and almost costless. Others will have some codes.

I can't answer your question. I just haven't done the homework to be able to authoritatively say $136 million is too small.

Mr. Pat Martin: Fair enough.

I have a final question. I can't really tell, but are you for or against Bill C-7?

Mr. John Graham: I think it's a modest step forward. That's how I'd describe it. It would not be my first--

Mr. Pat Martin: Are you aware that the vast majority of first nations leadership across the country is unanimously and vehemently opposed to the implementation of Bill C-7?

Mr. John Graham: Yes. I'm aware that it certainly has a lot of opposition to it. And I think that's a real problem. As I said, generally speaking, the international lessons are that good governance can't be imposed by third parties. That's the general lesson.

The Chair: Thank you.

Mr. Pat Martin: Thank you.

The Chair: Mr. Hubbard.

Mr. Charles Hubbard (Miramichi, Lib.): Thank you, Mr. Chair, and Mr. Graham.

First of all, you mentioned potable water. I think for members, I think we all know that this year, in working with our first nations groups across the country, in fact more than $200 million has been allocated for the improvement of water supply on first nations reserves. So the government is making a very substantial...and that's only their part of the contribution.

I listened quite intently to what you were saying. I'm a little concerned in terms of your presentation.

I see, and as you mentioned, that going back some 50 years, there have been great advances made by our first nations peoples. If I can reflect on how I have seen it over the years, there have been tremendous advances. In fact, all of our people in Canada have made advances. In terms of our native people, they have probably made advances much greater than most of us who are non-natives sitting around this table.

I know there are issues of governance that could be improved upon. We have imposed responsibilities on people under a very old act. Things in the last 150 years have changed dramatically in Canada.

When you look at governance, you mentioned that there are first nations that do have good codes and have ways.

I hope, Mr. Chair, we don't take it that all 630 or more are all in a very sad state of disarray. We have built schools in about 400 different communities. We have made some very big improvements in terms of housing. We talk about water. We talk about all these factors.

Even though we do have people who would rather stand still or look backwards, I think there are a great number of people...and the minister has spent a lot of time, a lot of effort, and a good deal of money trying to get concepts, ideas, and possibilities into the drafting of this legislation.

In fact, going back to when you were chair before, Mr. Chair, in the 35th Parliament, we worked on optional revisions to the Indian Act. So it's a matter of time that we've tried to improve this.

I'm taken with the fact that you have experience and have worked with governance. I was quite amazed with the fact that if you projected the Indian population for another 60 years, there may be no status Indians left. I'm not sure if that would really be a factor or if it's a mathematical conclusion. Regardless of how we accept this, we have over a million people who today are connected with our original people in this country.

Really, Mr. Chair, I know my four minutes are gone and I probably talk too much. We do have an opportunity by having a man here who has worked with governance. Questions have been asked about governance. I believe we could reassess them and could try to work with first nations to come up with codes that would be workable.

Would that be your opinion? I know I have given you very little time.

Thank you, Mr. Chair.

º (1615)

Mr. John Graham: First of all, I agree with you that the transformation in the 1950s that I talked about has been a remarkable transformation. I don't think anybody should forget about this. I agree with you totally that there has been tremendous progress.

I think that what we now need is another step, a new transformation, and a somewhat new vision. I think what we have been doing is going down the road putting all of our eggs in the basket of small communities. At this point, to develop really modern governments, I think we need to go beyond that.

That would be my first point.

On the development of codes and working in partnership, obviously the codes are a good idea if they are essentially demanded by the citizens of first nations governments saying they are important things for them and the government to have. It seems on the surface to be a reasonable kind of thing to do.

They won't be very effective if there isn't that kind of citizenry demand because they are easy to get around. People can write codes and then forget about them.

The Chair: Thank you very much.

Mr. Graham, I understand you offered to share a brief with us. We would appreciate it if you would send it to the clerk so that it can be translated and distributed to all members.

Mr. John Graham: I have a number of briefs I can give you, yes. I have a couple on water, if you're interested, and then one on the system of certification.

The Chair: Thank you.

Mr. Vellacott, you have two minutes.

Mr. Maurice Vellacott (Saskatoon—Wanuskewin, Canadian Alliance): You had some interesting statements on page 12 here, where you talk about the governance issues and the treatment of aboriginal women. In particular, you talk about the negative impact of divided communities and so on and about the problems intensifying. The issues, obviously, of matrimonial real property are pretty crucial from your point of view. We've heard that from others here before, especially as to when there's a breakup of marriage and so on.

Being that it does not deal with the divorce or the land issues in this particular act.... I mean, this is crucial. Is it a major negative oversight, the fact that the bill is not addressing the land issues and matrimonial property?

Mr. John Graham: Again, I just tried to put the bill in perspective. Here's the array of problems. Here's what it's dealing with. I'm not sure any bill can deal with the vast array of them.

This one will be a difficult issue, there's no doubt about it. It will be a very prickly, very difficult issue to come to grips with. Whether the minister and the first nations have plans for dealing with this, I don't know. I'm not privy to that. But certainly it is an issue that has to be dealt with soon.

Mr. Maurice Vellacott: Some of the bands across the country, Mr. Graham, in terms of their really diligent honouring of certificates of possession and so on--Six Nations and other ones--where in fact people can use that to take out a loan to buy a semi-truck or whatever for what their business or line of business would be, and the band actually says, yes, if they're not making payments on it, you can come in and repossess that and so on.... That would not be the norm in a lot of band situations around the country. It seems to be something they feel--they've even fought the department on this--to be crucial to economic development and so on.

Would you be in agreement that certificates of possession and forms such as that, section 89 chattels, are issues that have to be addressed here?

Mr. John Graham: Yes. Again, they're quite right in realizing that home ownership is a major vehicle for providing equity to small business. If you don't have that on a reserve, you really are handcuffed in terms of developing a private sector that's viable. As I said, if you have all your eggs in this huge public sector basket, you don't have the kinds of checks and balances that occur naturally in other market economies, as in the rest of Canada and other western countries.

I think there are some experiments going around. I think Kahnawake, for example, has a way of providing some sort of mortgage funds so a person can get debt financing through the interest they hold in the house so there is a possibility.

The difficulty, of course, is that you can't have a bank seize it or have a non-Indian seize the land. There are, I think, some ways around it, and I think Kahnawake and probably Six Nations have done that.

The Chair: Thank you very much.

Mr. Reed

Mr. Julian Reed (Halton, Lib.): Thank you very much, Mr. Chairman.

Mr. Graham, I'll just deal with one subject. You did bring up water as one example of some of the difficulties in communities that only have an average of 600 souls living in them. I'm wondering why you are so concerned about creating a water delivery system to 600 people. I live on a farm. I'm responsible for my own water and my own pure water. If I don't keep it pure, I get sick.

Now, it seems to me rather bizarre to compare this to a Walkerton situation. It was the utility that broke down. It wasn't a case of individuals who were looking after their own pure water, it was the utility that “cacked”, if you like. What I'm suggesting to you is, where there is a community that can't support a municipal water system, why even propose the thing? Why can't people take responsibility for their own pure water?

º (1620)

Mr. John Graham: Well, there are community water systems on first nations throughout the country. They exist. What about schools? Are you saying that Indian people shouldn't worry about their kids going to schools and what the quality of the water is in the schools? In the band office? In any kind of public building?

Mr. Julian Reed: It's a non-starter argument. I grew up in a school with a well.

Mr. John Graham: Well, I'm sorry, I just disagree. If I am a parent and I'm sending my child to a school, by God, I want that water to be safe and I want to have a high degree of assurance that it is safe. If there isn't a proper regulatory system that allows me to have that confidence, then I am really going to be quite worried. I don't see why Indian people should have to have second-rate water.

Mr. Julian Reed: It's not second-rate.

The Chair: Thank you.

Monsieur Loubier, deux minutes.

[Translation]

Mr. Yvan Loubier: Thank you, Mr. Chairman.

Mr. Graham, I found your presentation extremely interesting. However, it raises issues of great concern to me. You focus on what the bill will not deal with, fundamental issues affecting the first nations. You conclude by saying that this is a step forward, but only a very small step forward, and one that the first nations are not at all happy with. So is this bill worth working on, since the Assembly of First Nations, and the first nations which the Assembly represents, reject it so massively?

If it is only a very small step that in no way solves the fundamental problems facing first nations in Canada, then should we not approach the solution a different way? Should we not do what the first nations have asked us to do, which is to take this bill, scrap it completely, and start again on a basis that deals with the first nations as equals, as partners? They want us to deal with them on nation-to-nation basis. This is what the minister says when he makes those wonderful-sounding speeches, but his speeches do not translate into concrete action, they are not reflected in his bills. Do you believe that the Assembly of First Nations is right? Should we not begin all over again?

[English]

The Chair: Thirty seconds.

Mr. John Graham: I think it's an interesting argument, and I think this committee, going across the country, will have a good sense of just to what extent it is supported or not. You are likely to hear from those who clearly don't support the bill. Those will likely be the ones who will come out in force. I believe there are some first nations across the country and some first nation leaders who will basically support it, but you will probably not hear from them in any great numbers.

So your question is a good one. I think it's a balance, and I think you will have a much better sense, once you have gone across the country, of whether it is really something that should just be rethought.

The Chair: Thank you.

Ms. Neville.

Ms. Anita Neville (Winnipeg South Centre, Lib.): Thank you very much, and thank you for the comments.

You are undoubtedly aware that we are considering this bill after first reading in the House, which allows us the opportunity to make fairly substantial changes and recommendations, which is important.

I'm having some difficulty with your presentation, with following what to me are some of the inconsistencies. You talk about small groups becoming larger, and you talk about a major transformation when small steps are difficult to take. You talk about voluntary certification with incentives. How will all of this happen? I have difficulty seeing it played out.

º (1625)

Mr. John Graham: We have moved along for 50 years and we have taken a number of small steps, and I think overall the results, as many people have pointed out, have certainly improved the situation dramatically for first nations.

But we are reaching a stage now where, as I said, if we want to build modern governments we need a different view, a different perspective. Instead of kind of marching along in single step, I think it's time to reflect back and sort of say, where do we really want to take this if we're going to have modern first nation governments in this country? My view is that we need much bigger units. We probably need some sort of two-tier government system.

If you have that vision that this is where ultimately it makes the most sense to go, that we need a kind of provincial-like government on first nation lands with a lot of smaller-tier government.... Two-tier government is not something we are unfamiliar with in this country; we have lots and lots of two-tier governments of some scale. We would likely make better progress in terms of moving forward on the smaller steps.

I'm sorry about the inconsistencies.

The Chair: Thank you.

Mr. Martin.

Mr. Pat Martin: Thank you, Mr. Chair.

One of the real flashpoints that strikes first nation leaders across the country is that there is no non-derogation clause in this bill. However, it's very standard in pieces of legislation dealing with aboriginal issues to have a very clear non-derogation clause that says nothing in this bill should be interpreted to derogate from or diminish inherent or treaty rights, or something to that effect.

Would you not see it as a gesture or some assurance of goodwill that there should be a non-derogation clause in this bill if they are trying to garner support?

Mr. John Graham: I'm just going to sidestep that issue. I know it is a highly legal issue. It's a constitutional issue on section 35. I know the justice department has problems with previous--

Mr. Pat Martin: Okay. If you're not going to comment, I won't use up my time on it.

The municipalization of first nations, this whole suite of legislation, seems to lead to trying to incorporate first nations as a legal entity or municipality. There, if you borrow $10 million to build a sewage treatment plant and you default on the loan, that non-aboriginal bank might seize the equity, or your land base, or God knows what.

Do you have any comment on that?

Mr. John Graham: That's just not going to be possible. No municipality is going to be seizing federal land.

Mr. Pat Martin: No, the bank would be seizing it.

Mr. John Graham: No bank is going to be seizing federal land. That's just not possible.

So your bill is going to have to...on that question of borrowing, on the collateral side, the land will not be held in collateral. I can assure you on that. It's federal land. Municipal authority is not going to be seizing federal land. It's not possible constitutionally.

The Chair: Thank you.

That concludes this part of our public hearings. We want to thank you very much. It was very informative, and we look forward to receiving your written briefs so that all members can read them.

We will proceed directly to the next public hearing, with the chair of the Indian Taxation Advisory Board.

Colleagues, concerning next week, we had cancellations on Tuesday. I made the decision to move Thursday to Tuesday, in case some of you want to leave earlier. So Thursday next week, there won't be any hearings. I am recommending to you that Tuesday afternoon we invite the department for two hours. I think you have a lot of questions that need to be answered and put on record before we start travelling.

I need a consensus without debate, now, on whether it's okay to invite the department Tuesday afternoon. Does anyone have problems with that?

Therefore, we will do it.

I now invite to the table Clarence “Manny” Jules, and by starting on time, we will end on time.

Welcome, Chair Jules. Thank you very much for accepting our invitation. We look forward to your presentation, which will be--I think you saw the scenario--followed by questions and answers.

With the time I allocate for the question and the answer, if somebody gets cut off, it's always the witness. Sometimes my colleagues take more time asking the question than you have to answer it, but that's the way we operate.

Please proceed.

º (1630)

Mr. Clarence (Manny) Jules (Chair, Indian Taxation Advisory Board): I am Manny Jules, chairman of the Indian Taxation Advisory Board and former chief and councillor of the Kamloops Indian band from 1974 to 2000.

For the last 20 years I have devoted my energies to developing a new fiscal relationship between Canada and first nations, and in particular to the development of the First Nations Fiscal and Statistical Management Act—Bill C-19, soon to be before this committee—a bill that was developed independently of Bill C-7.

Bill C-7 has raised the issue of first nations governance. We need to debate and discuss this issue. I support governance by first nations that clarifies the responsibilities of all governments to our citizens. I support good governance, clear rules, and dispute resolution processes. I recognize that good governance practices must be developed by our communities to be effective.

Governance is an important issue for our communities. We need good governance structures to improve our investment climate, and I welcome the debate on this issue that the legislation will bring.

As I stated earlier, I support building an effective first nations public sector. I support the right of self-determination for each first nation to develop its laws and systems. I realize we need supportive institutions to accomplish this. I support replacing INAC with our own institutions. That is why I am a proponent of Bill C-19.

I support working with you to make sure that federal legislation achieves our shared vision of a strong and more self-sufficient first nations-led system of government. We also need to understand the first nations issues surrounding the content of Bill C-7. I urge you to listen to constructive criticism and improve this legislation, where necessary, through amendments.

First nations want what many Canadians take for granted: employment opportunities, good healthcare, a stable income and decent housing, reliable public services, good roads, healthy water and sewer systems, and a better future for our kids. I know members of this committee share these aspirations.

As the original people of Canada, why are we not sharing equally in its bounty? I have grappled with this question my whole life.

Our people are not the problem. We are as innovative, entrepreneurial, and public-minded as other Canadians. Our problem is that the Indian Act has stymied the development of our own institutions of government. First nations lack a public sector supported by modern legislation and standards.

The first nations public sector includes first nations governments and first nations institutions. This public sector is critical to economic development, self-sufficiency, and healthy communities. Today when people think of the first nations public sector they are more likely to think of the Department of Indian Affairs than of our own governments and institutions. In fact, when people want to do business with us, they have to spend as much time or more responding to the regulatory requirements of the Department of Indian Affairs and other government departments than to those of our own administrations. These layers of bureaucracy are a burden. This has been affirmed by the Auditor General.

The result is that it takes five times longer to complete a development on our best lands than it does in the rest of Canada. This helps to explain some of our poverty. The system created by the Indian Act, currently in force, has shut us out of the economy. At best, it has ruined our investment climate; at worst, it has stolen the hope of our children. Everyone recognizes that there is a need for change.

It seems we have entered a period of ten-year planning horizons. In ten years we will implement the Kyoto Protocol; in about ten years we hope to host the Olympics; in about ten years we hope to have a four-lane highway coast to coast. We must share a vision to build a real partnership between Canada and first nations that is achievable in ten years.

I see a future in ten years where there is no Indian Act; it has been replaced by first nations legislation. I see a future in ten years where there is no longer a purpose for the Department of Indian Affairs; it has been replaced by our own first nations public institutions that protect national standards and provide a third order of government.

º (1635)

In ten years there can be no uncertainty about the place of the first nations public sector. It has been defined by a new fiscal relationship that assigns powers, responsibilities, and revenues among all three orders of government.

I see a future in ten years where we are full participants in the Canadian economic union. I see a future in ten years as bright as yours.

In my vision, first nations have been restored as true partners in the federation. We participate in the global economy. We have become more self-sufficient as governments. I believe we all share this vision.

Our journey will be marked with challenges and resistance. Never doubt that a small group of thoughtful and courageous people can change the world. Indeed, it is the only thing that ever has.

I support working with the federal government to develop first nations legislation. Partnership provides us with an effective avenue of change. I recognize that legislation allows an orderly transition of power from your government to ours. I recognize that legislation provides certainty and confidence to investors and the market.

Others will disagree with this approach. They believe the magic wand of constitutional change will perfect our rights and deliver us to the promised land. Constitutional change may be necessary, but recognizing our rights alone will not improve our infrastructure, build our systems of government, or attract job-creating investment. We need practical and timely solutions.

Some may argue that by developing institutional approaches we are reducing first nation autonomy. All I can say is that, first, participation in our institutions will be and has to be optional. So choosing to belong will itself be an expression of first nation autonomy. Second, it is a common practice for governments around the world to surrender some autonomy when it's in their interests, and they surrender it for the simple reason that it makes them better off.

Many years ago, which side of the road you drove on was a personal choice. Until about 1920, we drove on the left side of the road in British Columbia, but in the end we decided to adhere to the same standard as our neighbours, and drive on the right. Personally, I'm glad we did. Every time I'm stuck in traffic, I think it would be a lot worse if every driver were autonomous.

When it comes to participating in the economic and social union, first nations are like a little country that has just got cars and roads. We are just learning the value of standardization and commitment to principles that trading blocks and federations now take for granted. We have discovered that it does not make sense to tell one another where to build roads or what kind of cars to buy, but it does make sense for everyone to use the same kinds of highway signs and drive on the same side of the road.

Therefore, I support the principles of autonomy and realize that without them, first nations would not be free to pursue those opportunities that they alone can best identify. I also know that if we are to capitalize on those opportunities, we all need to adhere to some basic rules and operate within a framework that lets investment flow just the way rules of the road let traffic flow.

I support the principle of accountability. Most first nations do as well. The organization that I chair, ITAB, has been a leader in promoting improved financial management systems. In the early 1990s, the Kingsclear First Nation in New Brunswick and the Shuswaps of Skeetchestn in British Columbia each faced issues related to the local financial management. In both cases, communities responded by developing a financial management bylaw. ITAB approved these bylaws for ministerial approval.

For taxing first nations, these are the kinds of laws we now want moved under Bill C-19.

Financial administrative laws were one of the many developments not envisioned in the Indian Act. ITAB accepted this role out of recognition that it was an essential component for developing sound first nation tax administrations. We developed the model bylaw and a comprehensive training course based on the Skeetchestn and Kingsclear laws.

Over the past three years we have delivered this course to over 20 first nations in support of the development of financial bylaws. This is what first nations institutions do. These laws are about more than financial management. They are about the other pillar of accountability--political responsibility. For example, in Skeetchestn financial administrative law, a deficit means the chief has to resign.

º (1640)

I am confident that, as a first nations institution, ITAB has promoted a financial management standard much higher than other governments in Canada. We offer this standard and model of institutional support to you for your consideration. The handbooks are here. I would like to present this training package as a model for financial administrative law to the standing committee.

I support the development of first nation institutions to support first nation governments. I hope there is a first nation-led institution that helps us build effective governance structures.

Our institutions will ensure that standards are created and maintained. They will provide training and support to our governments. They will begin to replace the Department of Indian Affairs. And they will reduce the cost of government because they will overcome the long legacy of mistrust of and frustration with the federal bureaucracy. They will support first nation economic growth and first nation economies.

Thank you for your time and for inviting me to appear before this committee.

The Chair: Thank you very much for an excellent presentation.

We can do a first round of five minutes, and a second round of four minutes.

Therefore, Mr. Vellacott, seven minutes.

Mr. Maurice Vellacott: Thank you, Mr. Jules, for being here today.

I guess I want to better understand where you are at presently. Some of it may be implemented; more of this may be down the road, the ideals that would be put into place over the course of time here. As I understand it, you presently deal more with property taxation bylaws. Would that be the case?

Mr. Clarence Manny Jules: We deal with real property taxation bylaws as well as financial administrative bylaws, and also business licensing and a number of other areas as well.

Mr. Maurice Vellacott: Just to get really basic then in terms of your property taxation, who is paying the taxes? Being as it's owned in a corporate manner on the reserves, or together as a community, if you will, who is paying the taxes? Let me understand this very simply.

Mr. Clarence Manny Jules: Non-Indians residing on and doing business on reserve lands across the country.

Mr. Maurice Vellacott: Okay. Is the regime, then, mostly in terms of a taxation of non-aboriginal people doing business on the reserve or owning property...? Well, they don't own the land on the reserve, but you're saying a house, a business, or whatever?

Mr. Clarence Manny Jules: That's right. They generally have some type of a lease-holding trust. In some cases they have what is called a “buckshee” lease. That's primarily our area of bylaw development, if you will.

Mr. Maurice Vellacott: Right. Would there be a possible extension to aboriginal people where there would be taxation in terms of...? You're taxing your own people here, of course, not some outside body and not the federal government. Is that in the mix here? Is that a contemplation as well?

Mr. Clarence Manny Jules: Nothing in the Indian Act nor in the proposed Bill C-19 prevents a first nation from.... When you occupy the jurisdiction, you have to occupy it all. And first nations have administratively attached the bylaw, if you will, to other sections of the Indian Act, primarily sections 87 and 89.

Mr. Maurice Vellacott: In terms of the issue of accountability, the gentlemen previously mentioned that it's going back to no representation without taxation. You can flip it the other way, I guess, and get a scenario, too.

Do you feel that, in terms of paying for services, taxation--or some form of it--is something Indian bands are open to or even desirous of? Would they see it as a mechanism for greater accountability?

º (1645)

Mr. Clarence Manny Jules: When I was elected as a council member in 1974, the very first issues I had to deal with related to accountability and went back a couple of terms. So what we did initially was begin to develop our own sets of bylaws so we didn't have to repeat that.

Accountability is something you have to look at not only from a financial perspective but also from a political perspective and not just limiting it to on reserve, so to speak, meaning just the chief and council. You have to look at the role of the federal government and how it's accountable to first nations, as well as the provincial and in some cases municipal governments as well.

Mr. Maurice Vellacott: Would you have agreed with some of the points made by the presenter just prior to you? He made the point that a possible weakness to Bill C-19 is that it needs to address taxes, as in aboriginal people to their own governments. You have the link then because there is a greater ownership, if you will. There is a direct link to the services rendered because the people who use them paid for them in part and are therefore going to hold others to account in terms of the lack thereof or a deficiency in services.

Mr. Clarence Manny Jules: When I first started promoting this whole concept of real property tax and taxation, I was over six feet tall....

What you end up dealing with in first nations communities, just like with the Canadian public, is a reluctance on the part of all of them to begin to discuss the issue or to begin to implement it.

I'm saying, in the proposed legislation, there would be nothing precluding a first nation from making that decision. As a matter of fact, they've made it in such a way as to exempt their members right now. But there's nothing in the proposed legislation--

Mr. Maurice Vellacott: That's right.

Mr. Clarence Manny Jules: --or for that matter, in the existing Indian Act, to do that.

Mr. Maurice Vellacott: On a personal basis, in terms of your wide knowledge and the study you've done in this area, do you have a particular bias or inclination one way or another? From studying aboriginal governments from around the world and elsewhere and over the course of history, what's your sense on that?

Mr. Clarence Manny Jules: I will answer in this regard. There are very few self-governing countries in the world that don't have a tax regime. I believe there may be some in the Middle East, that have a lot of oil revenues.

So it's something that first nations have to grapple with, and that's why I chaired and had proposed the new fiscal relationship with Canada, so that we can have the benefit of input from first nation governments right across the country in terms of addressing not only that issue, but health, education, and the whole range of approaches that first nations have to consider when we talk about a new fiscal relationship.

So when you get into the real deal, if you will, about a new fiscal relationship, that means, ultimately, we're going to have to be providing resources for our own benefit. There's no way that Canada or anyone else can do this on their own. First nations have to come forward and say we're prepared to contribute to our own benefit.

Mr. Maurice Vellacott: Right. So when you have the resource base and the revenue flow, then at such transitional time you can consider that---

Mr. Clarence Manny Jules: I personally would like to have those discussions within the context of developing a new fiscal relationship. I think if you don't deal with it in that manner, you end up just talking esoterically about section 87 or section 89. You don't get the full grasp of what it means on the national basis and how you intend to fund your own government ultimately.

Mr. Maurice Vellacott: Thank you very much.

The Chair: Monsieur Loubier, cinq minutes.

[Translation]

Mr. Yvan Loubier: Thank you, Mr. Chairman. I have two questions for Mr. Jules. First of all, did you play an active role in preparing Bill C-7 and Bill C-19? The two bills are somewhat interdependent. Were you actually involved in drafting those bills?

[English]

Mr. Clarence Manny Jules: Regarding Bill C-7, I wasn't involved at all in the drafting of that particular piece of legislation. As you notice, I had said in my opening address that I was a council member and the chief of my community until the year 2000. What I decided to do in the upcoming election was to not seek re-election as chief, so that I could dedicate my time to the development of a particular piece of legislation. That outcome is Bill C-19.

º (1650)

[Translation]

Mr. Yvan Loubier: I see. According to what some witnesses have said, the two bills—C-7 and C-19—combined would be applied in a fairly inequitable fashion to different first nations. Some first nations would be in a position to benefit from its new provisions, while others—particularly small communities—would not be able to take advantage of any potential benefits that might flow from the bills. How do you feel about this, and what could be done to remedy the problem?

[English]

Mr. Clarence Manny Jules: I had worked with their government back from about 1985 until 1988, which saw the passage of Bill C-115, an amendment to the Indian Act that allowed us to get into real property tax.

So under that particular amendment, we have about 100 communities across the country involved in taxation and its various approaches. Those communities range in size from the smallest, of around 50 or so, to quite substantial reserves, with a population of over 2,000.

When we first started to get into real property tax, we realized very quickly that we couldn't lever those funds to get any other economic development happening. We couldn't, in essence, take it to the bank. So what we decided to do, working with one particular first nations community, Westbank in south-central British Columbia, was to use this model of the Municipal Finance Authority of British Columbia so that we could, as a cooperative, so to speak, pool our money so that it would benefit small communities as well as large communities to access the public debentures and bonds.

So the approach has to be, when you develop self-government institutions, to have them flexible enough and representative enough to be able to take into account small communities, isolated communities, urban communities, and the like.

There has been criticism levied saying that all this is only going to benefit those large communities with no benefit to my community, as an example. That's completely false, because, as we've proved through the enactment of Bill C-115, this has broad application for first nations. The fundamental area people are afraid of is what they call the “slippery slope”. As well, it's based on this notion of tax immunity, meaning that nobody has the ability to tax first nations, and in some cases even first nations governments.

The Chair: Mr. Martin, five minutes.

Mr. Pat Martin: I want to thank you, Mr. Jules, for a very interesting brief. I spent a day on the Skeetchestn reserve, in the Kamloops area, as a guest of Ron Ignace a few months ago. I was exposed first-hand to some of the incredible work there. He invited me down there to show me what some communities are doing in terms of accountability, and it really does stand as a model for the country, I think, in terms of your balanced budget legislation and your financial management bylaws.

I should also ask, at the outset, if perhaps you would pass on our sympathies to Ron Ignace for the terrible personal tragedy he suffered recently.

Starting with Bill C-7, all of what you did was possible under the existing Indian Act. You've proved that. You introduced these changes that go beyond what Bill C-7 calls for. First nations leadership were telling us that they resent the eurocentric colonial attitude of imposing this whole regime upon communities when there is nothing stopping them from adopting measures that you took in your community. I want to ask about Bill C-19 later, but how do you respond to the overwhelming majority of first nations leadership who are opposed to having this imposed, to put it that way?

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Mr. Clarence Manny Jules: I think the debate really is fundamentally based on mistrust. There is absolutely no trust amongst first nations leadership. And if you look at the legacy, there are reasons for that. The unfortunate fact is that if we don't engage the federal and provincial governments and become an active partner in the federation, we're going to be condemning ourselves to poverty not only for the next decade, but for successive generations.

My approach always has been to try to facilitate those discussions. As a matter of fact, there have been several reviews done of the Indian Act, even preceding 1969. So there has been lots of discussion. There is a consensus that the status quo cannot remain the same, that there has to be change. And so what you have to do, as I said in my brief, is provide the courageous leadership that's required to make those changes. My dad taught me a long time ago that you can't fix a flat tire by shouting at it. Unfortunately, that's the situation that I see happening.

My preference is, let's sit down and do this work. If we have a disagreement, it's not insurmountable. The costs are too high for our communities and for our country to do this.

Going back to Skeetchestn, it's a neighbouring community of Kamloops. When Ron started to develop the financial bylaws, a lot of it was aimed at the fact that they occupied a real property taxation field that brings $700,000 into that community. That allows them to have the flexibility to make sure they have a balanced budget.

But what we found, Pat, is that when we had that jurisdiction, we couldn't lever those funds. You know, we're all dependent on the federal government. We have to have our hands out saying we want infrastructure dollars; we want a water system.

When you negotiate for ten years to put in a water system and it isn't adequate enough to provide services for economic development and growth, how do you solve that? Well, you solve it by using the revenues you have at your disposal to flip that. You have your own investment to increase that water flow so that you can put in a gas station, you can put in more houses, and have more development, and you have an economic benefit in the long term.

That's what I'm proposing.

The Chair: You have 30 seconds.

Mr. Pat Martin: Would introducing a non-derogation clause in Bill C-7 put people's minds at ease, at least somewhat, that nobody is trying to undermine existing inherent rights?

Mr. Clarence Manny Jules: We proposed a non-derogation clause in Bill C-19.

Mr. Pat Martin: I saw that in the JMAC report.

Mr. Clarence Manny Jules: I had discussions with some of the individuals, and I asked if a non-derogation clause would help. So we advanced it. Even when we had it in our consultative draft, a lot of those same individuals said they were still not going to support it. So you have to reach a conclusion as to what, fundamentally, underlines that opposition. Is it federal legislation, period, or is it any approach that could change their minds?

I personally feel we should have a non-derogation clause in the federal legislation, in one piece of omnibus, or some type of approach to allay people's fears, but only on the basis that first nations agree that there has to be fundamental change. Because even if we put in a non-derogation clause, if it doesn't compel them to sit at the table, to make constructive changes, we are going to be in the same boat.

The Chair: Mr. Reed.

Mr. Julian Reed: Thank you, Mr. Chairman.

First of all, Mr. Jules, I apologize for being called out for a quorum call and not getting back in here until the last half or so of your speech.

I want to say, Mr. Chairman, I've sat in this room and in many others on many committees for the last nine years, and I think this is the first time I've heard a presentation from someone with vision. And whether you agree with this gentleman's vision or not, I believe all of us, whatever political party we represent, must pay attention to these words that were said.

I congratulate you, sir, and I'm very honoured to have been able to spend this bit of time.

I really don't have any questions. I'm more anxious to listen to Mr. Jules and his responses. I've learned something here today.

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The Chair: Thank you. Being this brief will allow Mr. Jules more time for closing remarks.

On repairing a flat tire, yelling at it won't fix it, but a few choice words sometimes releases frustration, and that allows you to fix it.

Mr. Clarence Manny Jules: That's right.

The Chair: Mr. Vellacott, you have four minutes.

Mr. Maurice Vellacott: I'm done, thank you.

The Chair: Monsieur Loubier.

[Translation]

Mr. Yvan Loubier: I have nothing further.

[English]

The Chair: Mr. Martin, you have four minutes.

Mr. Pat Martin: I never say no to an opportunity, I guess.

One of the criticisms of Bill C-19...and I know we're really here to talk about Bill C-7, but I don't think you can deal with them in isolation. It's really a suite of legislation--Bill C-6, Bill C-7, and Bill C-19.

Our reading of it is that instead of diminishing the discretionary authority of the minister, it actually expands the discretionary authority of the minister. For all four of the new financial institutions and the tax commission, the minister shall appoint all of the directors, and not even at the recommendation of the first nations; they will choose.

Those commissions will be held to a higher standard than the federal government will be in that they have to submit estimates, and the audit at the other end. Even our federal government only has the auditing done by the Auditor General, or the public accounts committee.... We don't have a system where a minister has to submit estimates and prove what they want to spend. First nations will be held to that higher standard.

How do you respond to the critics who would say that, if anything, the minister will be more involved in the day-to-day spending than he is now?

Mr. Clarence Manny Jules: I understood that some of those roles were undertaken by Treasury Board, that various federal departments have estimates on their budgets. They make those presentations to Treasury Board and the government appropriates adequate funds, theoretically.

You know, one of the other issues that has been controversial is this whole issue of a gun registry. And I would say to you, Mr. Martin, that first nations certainly will do a better job of regulating themselves than the federal government has ever done, or the provincial governments.

I listened to your presentation in the House about a week ago. Quite frankly, I was a little bit disappointed, because I don't think you quite grasp the history of the development of Bill C-115 and how it has evolved into Bill C-19.

When there was a commitment by the federal government, which was the Progressive Conservative government in 1988, there was an agreement that we would go right into the House. The man who stood at the front steps and ensured that Bill C-115 was dealt with was MP Jim Fulton. Also with him was Nelson Rees. I worked with Mr. Penner, Minister McKnight, and Minister Siddon to ensure that this work was done.

So the history of how this particular piece of legislation arose...and this is the other thing that disturbs me, quite frankly. I'm not saying that it is you directly--it's because of the briefings you've had--but you seem to be under the impression that individuals such as I have no imagination, that we can't come up with concepts ourselves and have a thought process that says, “This will work.”

I have 26 years of practical experience in my community that have led me to believe we need practical solutions. I've been involved in lots of protests. I've been involved in lots of discussions and federal processes that hopefully would lead to a change. What I've learned during that time is that if you don't take the leadership and convince government that this is necessary, it'll never happen.

If I had just sat back and waited for the Department of Indian Affairs or some minister to say we should develop this concept of real property tax and have our own statistical institute, financial management board, and financial authority, Mr. Martin, it wouldn't have happened.

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Mr. Pat Martin: The point is, though, we heard from the leadership of the Assembly of First Nations and Roberta Jamieson, in my office as recently as the other day, telling me that they are opposed to Bill C-7 and Bill C-19 for the very reasons you cited, that they're not being allowed to have full participation in the development of these bills.

You apparently have been fully involved in the development of Bill C-19. I applaud that. You are convinced it's the right thing to do. They, as the elected leadership, the Parliament of first nations, the AFN, have said they have not been consulted, they have not been allowed to participate.

That's my point. I'm voicing their concerns.

Mr. Clarence Manny Jules: Let me clarify the genesis of this particular piece of legislation. After Bill C-115 was passed in 1988, we worked with the provincial government in B.C. for them to pass enabling legislation to vacate the tax field. We also worked with the Quebec government concerning Bill C-67, so that municipalities would vacate the tax room so that first nations could occupy the field.

By 1996, after several years of discussions, we had proposed principles on which a new fiscal relationship would develop and evolve. Then we developed a chiefs committee on fiscal relationship that further entrenched that notion. All of those are chiefs representative of their communities. Every one of them sits on an advisory panel of all of the institutions, if you will, under Bill C-19.

So to say that there are only elected leadership from the Assembly of First Nations and none that have been actively involved in the development and drafting of Bill C-19 is totally erroneous and totally false.

Mr. Pat Martin: I think I was referring more to Bill C-7, to be fair.

Mr. Clarence Manny Jules: Well, then I want to make it clear on Bill C-19; that's what I'm talking about.

This is what I have to put up with: e-mails of me, Bobby Nault, and Johnny Chrétien, saying, “Runaway Train”, and “Indian land for sale”. This is because I have the courage to stand up and say the status quo is completely unacceptable.

The Chair: Mr. Hubbard.

Mr. Charles Hubbard: Very briefly—thank you, Mr. Chairman—I would like to reiterate the comments my good friend Mr. Reed has made. I'm very impressed with the presentation and the background experience you have had. I couldn't help but think, Mr. Chair, of Martin Luther King and his famous speech, “My vision is....” I think we all have to have a vision.

But just to mention what Mr. Martin said, the AFN have never been denied the possibility of being involved in the study that brought about Bill C-7. I think, Mr. Martin, they decided they would not participate; it was their decision. I'm not sure whether it was a decision of 600 or more first nations people or a group representing them, but certainly the opportunity was there. I don't want the record to reflect that somehow the minister left them out on his decision.

But I'm very impressed and I hope you will continue your efforts.

As well, Mr. Chair, in our committee we will hear people across this great country of ours, and after having done that we will come back. Mr. Martin undoubtedly will have some amendments to make, as will Mr. Loubier and probably Mr. Vellacott, and hopefully we will try to develop a legislative pattern or bill or act that will reflect the needs of all the people across this country.

So I really appreciated this presentation. It was very well done. Good luck in your work.

The Chair: Thank you, Mr. Hubbard.

Mr. Jules, you have the closing remarks and you can take as long as you want. We enjoy listening to you.

Mr. Clarence Manny Jules: You never say “as long as you want”.

The Chair: If you take too long I may be the only one sitting here, but you can take as long as you want.

Mr. Clarence Manny Jules: I want to close by saying that I was in Mont Tremblant when President Clinton gave a speech, and it was akin to a Martin Luther speech. It was at this particular time that I realized it is incumbent on all of us to begin to address in a very fundamental way our place in Canadian society, and that in order to achieve that, we have to be part, and a fundamental part, of the federation known as Canada.

Again, in order to achieve that, we have to be an absolutely important part of Canada's economy. So when you look at and reflect on the Indian Act, which in 1918 made us non-people, it set up a minister who said, you can do this or you can that. This has led to the situation where for over 130 years we haven't had our own public institutions. We haven't been able to make decisions on our own that affect us as a people. It's left us out of the Canadian economy.

You see that reflected in the Marshall decision down east, where first nations have been denied access to the fishery. And what happened? What were the consequences? You see it in forestry issues, or diamonds north of 60. All of those areas are critically important for us to make sure that we're part of the economy. But in order to achieve that we have to define together our place in Canada's federation.

So when I think about our place and the journey that first nations people have undertaken since we populated this land and have spread, and how we have given so many gifts to the world, whether it be corn, whether it be the buffalo, whether it be the tomato, or whether it be chili peppers, I believe all of these gifts that first nations people gave to Canada, and the United States, and the Americas cannot be forgotten. As a matter of fact, in order for us to achieve the freedom that we all so dearly want and the ability to be able to stand on our own feet, we can't do it if we don't do it together. Canada's economy is such that you can't do it on your own. You're trying to do it with one cylinder not firing.

When you look at all of the countries that have an indigenous population, including Australia, Brazil, the United States, New Zealand, etc., Canada has the largest. And so it's incumbent on Canada to begin to accommodate our hopes and aspirations within the federation so that we can achieve the greatness that Canada has sought.

I hope I do it with all your support--including Mr. Martin's.

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The Chair: As you've been told here, we are all very impressed with your presentation. In ten years my grandchildren will be 16, 15, 14, and 12, and I will tell them the story about Clarence Jules and his vision.

Thank you very much.

Mr. Clarence Manny Jules: Thank you.

The Chair: The meeting is adjourned.