22 October 1998
L. Denis Desautels, FCA
Auditor General of Canada
Mr. Chairman, thank you for this opportunity to present the results of our audit of Comprehensive Land Claims - Chapter 14 in my September 1998 Report.
Comprehensive land claims is a very significant and complex topic to many Canadians. The stakes are high from moral, legal, social and economic perspectives. And the impacts of settled and unsettled claims can be far-reaching.
It is noteworthy that the settling of these claims directly affects thousands of people, whether or not they are direct participants in a claim. It is equally noteworthy that settlements seek to address unresolved issues that have lingered since the birth of our country and even prior to that.
At the time of the audit, 12 settlements had been reached between 1975, when the first one was finalized, and 1997. Indian and Northern Affairs Canada plans to spend $262 million on comprehensive claims in 1998-99.
The settlements involve 48,000 Aboriginal people, full ownership of over a half million square kilometres of land, direct payments by the Government of Canada of almost $2 billion and various rights and obligations of the parties, with attending costs.
Although these settlements are very significant, they may reflect only the tip of the iceberg. This is because there are over 200 First Nations that have actual or potential land claims and treaties still under discussion or to be addressed.
The challenges to successful settlements are enormous. They involve complex issues and require the goodwill of several parties and many non-parties to a claim.
I believe that negotiating fair settlements is far preferable to the lingering threat of, or actual, litigation. I also believe that the nature of the relationship between First Nations and the Government will, in a large measure, reflect the way in which settlements are reached and outcomes are achieved.
As long as there are outstanding grievances and unsettled land claims, the relationship may suffer, thereby impeding the parties’ attempts to achieve socio-economic progress through a multitude of programs funded by Parliament for Aboriginal peoples.
We know, for example, that many First Nations are in a catch-up position in terms of the quality of life enjoyed by other Canadians. Factors that contribute to the gap include:
In addition, demands for services on reserves can be expected to climb dramatically because of the young average age of community members and the high on-reserve birth rate.
Consequently, the gap in living conditions between Aboriginal and non-Aboriginal communities has the potential to widen. Increased funding alone is not a viable long-term solution. To begin, the parties need to "clear the air" by settling old grievances and by reaching an understanding on the expectations, responsibilities and obligations of both the Government and First Nations.
It is against this backdrop that I am attaching an Appendix to this opening statement. The Appendix summarizes selected issues from audits reported from 1991 through 1997 that I believe will be helpful to the Committee.
Turning to the September 1998 report on comprehensive land claims, there are a few highlights that the Committee may wish to consider. First, the audit was performed in the context of the Department’s objectives to provide certainty and clarity to ownership and use of land and resources through negotiated settlements, thereby encouraging socio-economic development.
In this regard, the audit focussed on the Department’s role and sought to identify opportunities for improvements in the way claim settlements are reached, implemented and reported.
We found that certainty achieved under settlement agreements can mean different things to different parties. The risk is that the parties may have agreed on the negotiated outcomes, but have different expectations of the benefits and obligations set out in the signed agreements.
In addition, the audit found that:
Furthermore, it is questionable, notwithstanding the complex issues, that 20 years or more have been taken, or will be taken, to settle some claims. In my view, protracted settlements do not contribute to cost effectiveness and may result in less desirable outcomes for all concerned.
Although the audit recommendations are directed primarily to the Department, a consistent, co-operative effort by all parties is needed in order to achieve the necessary goals, and to achieve them in a fair and expeditious manner.
In its response to the audit, the Department did not explicitly address the audit recommendations. Consequently, there is no commitment to specific remedial action against which it can be held accountable.
The Department suggests that under its current comprehensive land claims policy of 1986, things have improved and therefore the audit observations apply to approaches used prior to that date.
I wish to bring to the Committee’s attention that the audit included a review of settlements reached under the current comprehensive land claims policy. Further, because some claim settlements have taken 20 years or more to reach, and all are still being implemented, the audit issues need to be addressed regardless of which policy the Department wishes to apply.
In conclusion, Mr. Chairman, this audit provides suggestions for improving the claims process and results for the benefit of all Canadians. With the encouragement of the Committee, I am hopeful that improvements will be made.
Mr. Chairman, I would be pleased to answer the Committee’s questions.
This chapter reported on health programs directed at First Nations and delivered by Health Canada, with annual expenditures of approximately $1 billion. The audit identified significant weaknesses in the management of pharmacy benefits under the Non-Insured Health Benefits program.
In particular, the chapter draws attention to prescription drug misuse and the serious implications for First Nations health. The audit also identified the need to improve the management of community health programs financed by separate contribution agreements. The report noted that a sound framework for the transfer of health programs to community control has been developed but not yet fully implemented.
The audit determined that current and planned funding arrangements with First Nations, having an approximate value of $3 billion annually, needed significant improvements in several areas. These included major accountability issues, design and use of funding arrangements and input from First Nations, risk assessments, and disclosure of financial and activity information. Many funding arrangement implementation issues were also identified.
First Nations participants recognized the importance of effective accountability, but found that current practices were not working well for them. Participants emphasized a two-way perspective - accountability between partners or equals - as an essential ingredient in the relationship.
The audit determined that on-reserve infrastructure development needed improvements in such areas as accountability, basis of funding allocation, risk management, and performance information.
The audit expressed concern over the high rate of dependency on social assistance within reserves and identified needed improvements in program delivery and initiatives to reduce dependency. In addition, the audit reported a high rate of non-compliance to social assistance criteria.
The Strategy belonged to three federal departments - Indian Affairs and Northern Development, Employment and Immigration (now Human Resources Development) and Industry, Science and Technology (now Industry Canada).
Leadership and planning for implementing the Strategy needed strengthening. The departments could not demonstrate that the methods of funding and the amounts provided to Aboriginal groups were appropriate. After spending $900 million the departments could not show that they were meeting the Strategy’s objectives. The lack of evaluation and performance information impeded the necessary accountability to Parliament.
Indian Forest Management - Timber regulations are inappropriate and unenforceable. There was inadequate information to make effective decisions about Indian forest lands. Significant sustainable social and economic benefits would be possible if Indian forests were better managed.
The Manitoba Northern Flood Agreement - Hydro-electric development projects have adversely affected over 2,000 square kilometres of land, including 67 square kilometres of reserve land that is home to 10,000 status Indians.
The Agreement, signed in 1977 by the governments of Canada and Manitoba, Manitoba Hydro, and five Indian Bands, provides for flood compensation to the communities. However, there were many ongoing failures in implementing the Agreement, including the use of a lengthy arbitration process instead of a co-operative, co-ordinated effort by all parties. Although federal departments had spent $115 million under the Agreement, total costs of implementation had not been captured and future costs of implementation were unknown.
The audit found weaknesses in departmental accountability for some $2 billion provided to Indian Bands or Tribal Councils.
The audit reported that the provision of housing on reserves was severely backlogged at an estimated cost of $840 million. Although it is departmental policy to provide housing, the department had not determined whether this is a discretionary benefit or a right, as claimed by Indian organizations.
The audit noted that it was estimated to cost over $2 billion over ten years to implement the provisions of Bill C-31 (1985), relating to new status registrants. The costs are to meet increased demands for housing, education, health and dental care. The department does not have a quality control system to ensure the accuracy of band membership data.
There were 600 specific claims by First Nations against the Department, alleging mismanagement of Indian assets, failure to discharge treaty obligations and other deeds. Over fifty percent of the claims received during the past 20 years, were unresolved at the time of the audit.
Indian Oil and Gas Canada could not demonstrate satisfactorily the level of production assurance it obtains respecting royalties.