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The First Nations Governance Act in summary
During the months and perhaps year ahead-while the legislation
is reviewed by a parliamentary standing committee for amendments
or alterations-and until, or if, the bill goes through second and
third reading, is passed by the House of Senate and finally receives
royal assent and proclamation, analysis of the legislation by Indian
organizations and other groups will be exhaustive. The First Perspective will provide coverage and its own analysis
of the legislation during this period. We start off this month by
providing summaries of the major sections of the proposed legislation
in this issue. These summaries appear as presented by Indian and
Northern Affairs. To view the summaries and the Act itself, you
can access at our web-site at www.firstperspective.ca and click
on our first nations governance link, which will also provide further
links to analysis of the legislation as provided by first nations
political organizations and other interested parties. This month we will be focussing on the following sections of the
legislation:
ADMINISTRATION OF GOVERNMENT
CODE Background Under the Indian Act, there are no rules for the development, making and registration of band laws, nor are there rules on conflict of interest or any of the other operational codes upon which all modern governments and their citizens rely. As well, there are no clear distinctions between band governance and administration. Content Under the FNGA, First Nations would have the option of developing
their own administration of government codes. These codes would
set out essential governance elements, such as:
In support of transparent governments, the band council would be
required to make available to band members and residents of the
reserve all administrative rules, policies and directives relating
to operation of the band, including programs and services offered
to members and residents. Under the FNGA, a band council would also be able to withhold moneys
payable to members of the band, to satisfy debts owed to the band
by that member. The FNGA would limit liability for chiefs, councillors and band employees. This is consistent with other legislation that protects executive and administrative officials acting in good faith while carrying out their duties. Practical Application Clear roles and procedures, rights of notification and access, and separation of legislative and administrative functions are basic tools that all governments and citizens rely on for the effective functioning of government. First Nations and their members and residents need them no less than anyone else to ensure stability, certainty and transparency in the operations of government.
Definition Financial management means: the sound management of financial resources;
the regulation of the receipt and expenditure of funds and protection
of First Nation assets; and the establishment of the administrative
organization of the First Nation for these purposes. Under the First Nations Governance Act (FNGA), the concept of financial
accountability includes accountability of First Nations governments
to their members and to governments from whom they receive funding.
There are three principles of financial accountability: transparency, disclosure and redress. First Nation Financial Codes FNGA requirements are intended to ensure that First Nation governments
maintain financial records according to generally accepted accounting
principles and in a manner comparable to other governments in Canada.
• preparation of an annual budget, adoption by council and presentation to members; A band's financial statement would have to be publicly available
within 120 days after the end of the fiscal year. Copies would have
to be provided to requesters upon payment of a reasonable fee. There are also provisions requiring financial reporting, addressing
financial breaches, and the development of recovery plans by council.
As a last resort, the Minister would retain discretion to intervene
and require remedial measures in the following circumstances:
The FNGA would require band councils to make all the administrative
rules, policies, and directives of the band publicly accessible
to band members and reserve residents.These rules and procedures
would form the basis for redress activities. The FNGA financial code model is a practical governance vehicle
for combining an enabling legislative approach with minimum standards.
Practical Application Given its colonial nature, developed when bands were not managing
multi-million dollar budgets, the current Indian Act is silent on
financial management and accountability. As a result, basic financial
management procedures are based on policies and funding agreements
of the various federal departments providing resources to band governments.
Consistent with the First Nations Governance objective to provide
First Nations with tools they need now for effective and financially
accountable governance and economic development, the FNGA would
address the current lack of a legislative base to ensure sound financial
management and accountability to band members. It would provide members the opportunity to be more involved in
the governance of their communities by providing greater access
to financial information, including audited financial statements,
annual expenditure plans and salaries for members of the council.
The FNGA would also help ensure members are informed of any financial
difficulties their First Nation may be experiencing by requiring
notification to members when deficits are incurred. While the overall approach would enable and empower communities, as a last resort, the Minister would retain the discretion to intervene in more serious circumstances, including when the delivery of essential programs and services may be impacted, thereby avoiding a potential threat to the health and safety to communities.
LEADERSHIP SELECTION CODE
Since the Indian Act was passed in 1876, the selection of First
Nations leaders has taken place in one of two ways. The Indian Act contains election provisions that set out the election
rules and procedures for the 261 First Nations that were brought
and remain under these provisions. These First Nations have been
known as "Indian Act bands" or "section 74 bands". Aside from 21 First Nations that are currently under four self-government
agreements, the 330 remaining First Nations currently choose their
leadership outside the Indian Act in a manner according to the custom
of the community. This applies to 196 First Nations that were never
moved into the Indian Act system, as well as to 134 First Nations
that had been under the Indian Act but reverted by request to a
"custom" model. In its 1999 Corbiere decision, the Supreme Court of Canada ruled
that subsection 77(1) of the Indian Act, which restricted voting
rights in Indian Act elections to on-reserve members, violated equality
rights protected by the Canadian Charter of Rights and Freedoms.
The court ruled that members of "section 74 bands", regardless
of whether they live on or off reserve, should be able to vote in
elections and have meaningful input into decisions that affect their
interests. The Corbiere decision did not address other similarly restrictive
provisions of the Indian Act dealing with who is eligible to run
for councillor or who can nominate an electoral candidate. It did
note that given the different interests of on and off-reserve members,
there were a number of potential ways that those interests could
be balanced, for example, through different voting regimes and/or
structure of council. In the first stage, the government simply allowed the discriminating
words "and is ordinarily resident on the reserve" to become
inoperative as a result of the court decision taking affect. It
also amended the regulations to allow off-reserve band members to
vote in band elections and referenda. In stage two, the government decided it would, with further guidance
from the Supreme Court of Canada (Lovelace), the Joint Initiative
(the Department of Indian Affairs and the Assembly of First Nations
initiative examining policy changes to the Indian Act), and consultations
with First Nations and organizations representing off-reserve band
members, develop longer-term legislative options to deal with leadership
selection. Leadership selection then became one of the three main themes of the First Nations Governance Initiative, focussing on the need for a comprehensive elections regime to replace the current regime for those bands operating under the Indian Act. This was necessary in order to respond to Corbiere, while respecting the fact that custom First Nations are not subject to the electoral provisions of the Indian Act. Content of the First Nations Governance Act Indian Act Bands Under the enabling provisions of the proposed legislation, First
Nations presently conducting elections under the Indian Act have
the option of designing their own community electoral code. While
band-designed codes could reflect traditional values and community
practices, they must also include the following minimum elements:
The legislation provides that band-designed codes must be in writing,
must respect the interests of all band members and may balance their
different interests, including the different interests of on and
off-reserve members. It also requires ratification of these codes
by on and off-reserve members. Custom Bands The First Nations Governance Act would establish the following
options, including minimum requirements, for First Nations which
are currently operating under their own custom leadership regimes:
A custom code would also have to be in writing and would also require
ratification by members within the two-year transitional period.
The failure to approve the existing custom rules or create a new
band-designed code within that time will result in the application
of the default regime. Custom bands would have only two years beginning from the date when regulations applying to custom elections come into force, to create written versions of their codes and have them ratified by their members. Default Regime First Nations that did not ratify their own codes within the two-year
transition period would be subject to a default regime to be contained
in the First Nations Governance Act regulations. This regime would
replace the present Indian Act election provisions with a comprehensive
electoral process that includes on and off-reserve members. Consultations
on the specific content of the regulations will be held following
passage of the new Act. The regulations would include provisions addressing the same matters that band-designed codes must include, such as composition of council, eligibility to vote and run for office, term of office, appeals, or removals from office. Practical Application Consistent with the First Nations Governance objective to provide
First Nations the tools they need now for effective and financially
accountable governance, the new Act would ensure that the members
have direct and meaningful input into the choice of their leadership
selection process. The legislation would provide greater certainty and stability for
First Nation members. Band-designed processes would be in writing
and would allow for the adaption of traditional approaches, while
communities operating under their own codes or under the default
regulatory regime would both benefit from the greater consistency
this legislation provides. Bands would have the option of specifying
terms of office (up to five years) instead of the current two years.
These and other code provisions would provide more stability and
transparency in band governance, enabling communities to concentrate
their efforts on more pressing socio-economic priorities. Custom First Nations would have an opportunity to review their
processes and maintain or replace them if they wish to do so. Current
custom systems that are serving their communities well would likely
be affirmed without change, while those that have not been working
well could be improved. The result of this would be that the Minister would have no role in a First Nations leadership selection process of bands which design their own codes under FNGA, and would have a greatly reduced role in the election of bands under the default regime only retaining the discretion to deal with appeals. LEGAL CAPACITY Definition Legal capacity is an important legal concept. According to general
common law principles, only persons (either human beings or legal
entities such as corporations) have sufficient legal personality
to possess legal rights and duties. Typically, any government in Canada has the clear legal capacity necessary to carry on day-to-day operations, such as the ability to sue, to contract, or to borrow. Background Bands under the Indian Act do not have clear legal status. While
the courts have recognized that bands have the capacity to contract,
to sue and be sued, significant uncertainty still exists. Currently
there is a large volume of litigation in front of the courts involving
bands, band members and third parties. Varying court decisions find
that bands have legal capacity for some purposes but not for others.
This legal uncertainty has a negative impact on band government
operations and economic development, especially when some bands
use lack of legal capacity as a defence in contractual disputes.
While some bands have managed to overcome some of these hurdles,
it can be costly in both time and money. Uncertainty on the part
of third parties can cause delays that lead to lost economic opportunities
and/or lead to the need to establish corporations and undertake
special legal proceedings. The FNGA would clarify that a band would have the legal capacity,
rights, powers and privileges of a natural person, including the
capacity to:
The proposed FNGA specifies that this clarification would not affect
the nature of the interest in reserve lands and Indian moneys belonging
to band members in common under the Indian Act, or the application
of that Act in respect of those lands or moneys. It would further
clarify that a band acts through its council in exercising its legal
capacity Practical Application Consistent with the First Nations Governance Initiative objective
to provide First Nations the tools they need now for effective and
financially accountable governance and economic development, clarifying
the legal capacity of bands would allow First Nations to more efficiently
carry out day-to-day operations. These activities include dealing
with third parties, businesses and other governments in matters
such as contracts for goods and services, including contracts for
municipal services and housing. This clarification would also simplify dealings with provinces
and resource companies with respect to important matters such as
resource-sharing agreements, since they would be dealing with a
clearly defined legal entity. It also has the potential to encourage economic development activity
between First Nations and third-party investors who prefer to do
business on familiar legal ground. This clearly has the potential
to improve the quality of life for First Nations people. It also would not adversely impact on Aboriginal and treaty rights, including self-government. In fact, the FNGA clarification of legal status would be similar to that being used in most self-government discussions. Definition Legal capacity is an important legal concept. According to general
common law principles, only persons (either human beings or legal
entities such as corporations) have sufficient legal personality
to possess legal rights and duties. Background Bands under the Indian Act do not have clear legal status. While
the courts have recognized that bands have the capacity to contract,
to sue and be sued, significant uncertainty still exists. Currently
there is a large volume of litigation in front of the courts involving
bands, band members and third parties. Varying court decisions find
that bands have legal capacity for some purposes but not for others.
This legal uncertainty has a negative impact on band government
operations and economic development, especially when some bands
use lack of legal capacity as a defence in contractual disputes.
While some bands have managed to overcome some of these hurdles,
it can be costly in both time and money. Uncertainty on the part
of third parties can cause delays that lead to lost economic opportunities
and/or lead to the need to establish corporations and undertake
special legal proceedings. The FNGA would clarify that a band would have the legal capacity,
rights, powers and privileges of a natural person, including the
capacity to:
The proposed FNGA specifies that this clarification would not affect
the nature of the interest in reserve lands and Indian moneys belonging
to band members in common under the Indian Act, or the application
of that Act in respect of those lands or moneys. It would further
clarify that a band acts through its council in exercising its legal
capacity Practical Application Consistent with the First Nations Governance Initiative objective
to provide First Nations the tools they need now for effective and
financially accountable governance and economic development, clarifying
the legal capacity of bands would allow First Nations to more efficiently
carry out day-to-day operations. These activities include dealing
with third parties, businesses and other governments in matters
such as contracts for goods and services, including contracts for
municipal services and housing. This clarification would also simplify dealings with provinces
and resource companieswith respect to important matters such as
resource-sharing agreements, since they would be dealing with a
clearly defined legal entity. It also has the potential to encourage economic development activity
between First Nations and third-party investors who prefer to do
business on familiar legal ground. This clearly has the potential
to improve the quality of life for First Nations people. It also would not adversely impact on Aboriginal and treaty rights, including self-government. In fact, the FNGA clarification of legal status would be similar to that being used in most self-government discussions.
RATIFICATION and AMENDMENT OF Overview The First Nations Governance Act (FNGA) would give bands the authority
to design, pass and amend their own governance codes with respect
to the administration of government, leadership selection, and financial
management and accountability. Content of First Nations The First Nations Governance Act would require ratification of
codes by secret ballot. A simple majority of eligible electors who
vote would have to approve the proposed codes and more than 25 percent
of the eligible voters must have voted to approve them. An eligible voter is described as any member of a band, residing
on or off the band's reserve, who is 18 years of age or older. The Act would also require codes to include an amendment process.
However, the details of the process would be developed by the band
and contained in the codes themselves. The Act would require codes to be registered both in a band's own
registry and in anational registry to be established by the Minister.
Codes would come into force at the beginning of the day following
the day on which they are registered in a band's registry or at
such later date as the code may specify. If bands do not choose to pass their own governance codes within the two-year transition period following the passage of the regulations supporting the legislation, or repeal their existing codes without replacing them, or if their codes are declared invalid by the courts, they would be governed by the default regulatory regime under the FNGA. However, even after bands were operating under the default regime, they would continue to have the ability to develop and ratify band-designed codes and may, of course, enter into self-government negotiations at any time. Practical Application Consistent with the First Nations Governance Initiative objective
to provide First Nations the tools they need for effective and financially
accountable governance and economic development, the FNGA would
provide for an effective and practical code ratification process.
The proposed approach is intended to be consistent with the principles
of the Corbiere decision of the Supreme Court of Canada, as it requires
that codes respect the interests of both on and off-reserve members.
Since proposed codes are required to contain an amending formula,
all members would, through exercising their right to vote, have
an opportunity to ensure their interests in future amendments are
appropriately protected. The standard for determining membership consent would strike a
balance between the need for a representative threshold of membership
approval and the realities facing all electorates, which is that
it is difficult to "get the vote out". Since First Nations
face particular challenges because of the large off-reserve population,
a higher consent threshold would effectively create a bias in favour
of the default regime. A lower level, on the other hand, may not
respect the significance of the subject matter being voted upon.
The proposed approach therefore supports the adoption of enabling
codes, consistent with the objective of First Nations empowerment.
The ratification process is intended to provide for membership
engagement, be inclusive of off-reserve members and otherwise provide
a meaningful opportunity for all members to provide their informed
consent through the receipt of relevant information and other means.
In the event a code is not in place for any of the reasons noted above, the default regime would apply, thereby avoiding governance gaps in First Nations communities.
Background By-laws, largely section 81 of the Indian Act, are outdated and insufficient to run modern communities. The Minister is often forced to disallow otherwise good laws because of a lack of modern authorities in the Indian Act. Enforcement problems exist as courts do not always take judicial notice, and penalties are well below those of other governments for similar infractions. Bands also do not have access to the necessary authorities, such as ticketing schemes. Content Under FNGA the wording of current band law-making powers under
section 81 of the Indian Act would be modernized and made more general
in a number of cases to provide greater flexibility to bands. As
well, these powers would be split into two clear groups of authorities:
those related to local on-reserve matters and those relating to
the conduct of band affairs. A new law-making section relating to
the operations of government would also be added. First Nations
would be required to register their laws publicly , as outlined
in the Registration, Commencement and Notice of Band-designed Governance
Codes fact sheet. Under the present Indian Act, the Minister can disallow First Nation
by-laws, which is an inappropriate intrusion into local matters.
Under the FNGA, the Minister would have no disallowance power. As
a result, the FNGA would contain a main clause for each of the three
law-making authorities that explains which federal acts and regulations
prevail in the event of a conflict. Band by-laws which were enacted and enforced under the Indian Act shall still apply under the FNGA. Laws for Local Purposes Law-making would be modernized and updated to give band councils
the authority to make laws for local purposes, at least comparable
to other local governments in Canada, that apply on the bands' reserves.
The wording of authorities in this area is such as to provide a
general purpose heading, rather than detailed listings obviating
the need for frequent changes to legislation in this area. In addition to the modernization of authorities in the current
section 81 of the Indian Act, the FNGA provides First Nations new
local purposes authority to enact laws related to landlord-tenant
relationships. This is important, as equivalent provincial laws
do not currently apply on reserve lands. The band council would have the authority to make laws for band
purposes which include all similar matters in section 81 of the
Indian Act in addition to new general purpose authority for management
of community natural resources within the reserve such as wild rice,
timber and herbs. First Nations would also benefit from a new authority to pass laws
for the preservation of their culture and language. These law-making authorities have been distinguished (relative to their treatment in the Indian Act) from local purpose authorities to make it clear that bands are more than municipalities recognizing the communal nature of lands and resources, and that membership is not defined by geography. Operation of Band Governance The Indian Act contains no provision enabling bands to establish
boards, bodies and other entities by delegating some or all of their
powers. Under the FNGA, this would change to allow a band council
to establish a housing committee, health board or other entity to
act on behalf of a band. It can also be used to delegate functions
in the FNGA (e.g. redress body) to an external agency if that would
be more practical. Currently the Indian Act does not provide for access to information
and privacy rules for First Nations governance with respect to information
held by the band, nor does it contain conflict of interest rules.
The FNGA enables First Nations that wish to pass laws with respect
to access to information and privacy to do so. These are normally
part of open and transparent government operations across Canada.
There is also a need for authority to develop detailed rules governing
elections to council and elections to bodies established by council,
pursuant to leadership selection codes. The authority for the joint establishment of a body by two or more bands recognizes that some bands may need or want to join together to govern their communities more efficiently. This, as well as the delegation function, will be particularly useful in small communities where capacity limitations might otherwise impede the implementation of the FNGA and the realizable benefits to communities. Enforcement of Laws The FNGA would give band councils increased modern enforcement
powers, comparable to other governments in Canada. It would also
provide that the courts may take judicial notice of band laws. The FNGA would provide for fines of up to $10,000, or a term of
imprisonment up to three months, or both, for most infractions,
and up to $300,000, or imprisonment of up to six months, or both,
for matters causing adverse affects to the environment. The current
fine of $1,000 under the Indian Act has not proven to be an effective
deterrent, especially given the nature of modern-day activities
on reserves across Canada where the minor fines and the unwillingness
of courts to take judicial notice have often meant that band laws
have gone unenforced. The FNGA would also provide a ticketing scheme that councils may
use to enforce laws. First Nations communities would be able to
collect and retain proceeds. Councils could also appoint band enforcement officers who would
have the power to investigate an alleged breach of a band law, search
on-reserve premises, seize evidence and issue orders and notices.
The FNGA does not diminish the authority of peace officers, who
are still able to perform their current functions, if deemed necessary
by a band council. Practical Application Consistent with the First Nations Governance Initiative objective
to provide First Nations the tools they need now for effective and
financially accountable governance and economic development, the
proposed measures combine to strengthen First Nations councils and
their citizens by providing increased power and authority over day-to-day
local matters. The modernization and addition of new authorities
would also enable bands to put in place more effective program and
services for their communities. Band councils would have improved law enforcement tools to deal
more effectively with problems that arise in their communities and
the authority to establish more enforceable meaningful penalties. In keeping with the increased powers and authorities of band councils, the federal government would have significantly reduced involvement in matters that are more efficiently and appropriately addressed at the community level.
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