Standing Committee on Indigenous and Northern Affairs

Comité permanent des affaires autochtones et du Nord

For immediate release

Ottawa, May 29, 2017 -

Today, MaryAnn Mihychuk, Chair of the House of Commons Standing Committee on Indigenous and Northern Affairs, presented the Committee’s sixth report in the House of Commons, titled Default Prevention and Management 2017. “Our Default Prevention and Management Policy needs reform because almost everyone agrees that the current approach interferes with band councils’ role in administering programs and services. It is hoped that the direction of this study’s recommendations will yield meaningful improvements for First Nations,” said Ms. Mihychuk.

The report’s eight recommendations address the roots causes that place communities at a higher risk of default, and promote community capacity for financial management. Notably, the report recommends that the Government of Canada revise funding policies to provide adequate funding through long-term and flexible funding arrangements, revise the Default Prevention and Management Policy with a view to transition the delivery of services to Indigenous organizations, and support Indigenous organizations to establish capacity building programs to support financial management in local communities.

The report examined the Default Prevention and Management Policy that applies to the approximately $9.5 billion in funds transferred to First Nations through contribution agreements, and outlines the conditions under which the department may intervene to mitigate financial risks. This policy has been a long-standing grievance among First Nations. Communities can be subject to default management for years, with limited opportunity to improve their internal capacity for financial management.

Recognizing these concerns, the Committee sought to look at the key issues and challenges related to the Default Prevention and Management policy. In particular, the Committee examined the root causes of financial difficulties in First Nations communities, the federal programs that support financial management, the concerns related to the Default Prevention and Management Policy, and the potential alternatives to this policy. Over six meetings, the Committee heard from 32 witnesses and received four written briefs.

The report raises important policy considerations, such as the need to address underlying issues related to the adequacy of funding, the need to support communities to pursue economic development opportunities to promote own-source revenues, and the need to support Indigenous organizations in providing services to local communities.

The report can be viewed online on the Committee’s website.