Feds to contain costs on self-government deals

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A leaked memo appears to reveal that bureaucrats at the highest level of authority in the federal government are issuing orders to keep spending on Aboriginal matters as low as possible, despite the recent promises made by politicians "to close the gap between Aboriginal and non-Aboriginal Canadians."

And, in one case, officials in the department of Indian and Northern Affairs Canada's (INAC) implementation branch discussed imposing new and lower limits on self-government agreements that have already been negotiated.

Known as the "central agencies" or simply "the centre" within government, senior bureaucrats at the Ministry of Finance, Treasury Board, the Prime Minister's Office and Privy Council Office oversee all the line departments and ensure that government policy is followed in all parts of government.

The memo, authored by a senior INAC manager in the self-government implementation branch, recaps a recent meeting held to discuss "what central agencies will be expecting regarding adjustors in future agreements."

Adjustors in self-government agreements set out limits on funding that will vary over the years as factors such as population, inflation or the cost of providing services change.

Brian McCoy, director of INAC's fiscal policy directorate, attended the briefing session with federal self-government implementation negotiators to deal with concerns raised by the central agencies.

The memo's author reveals that officials in INAC's self-government branch are working on a memo to cabinet (MC) that will contain a detailed request for new funding to carry out the commitments made by the government in First Nation self-government agreements.

MCs are the way that the various government departments put their plans forward for approval at the highest level of government-the cabinet.

"[As] part of the sustainability MC (which is an effort on [self-government] branch's part to obtain new incremental funding for implementation of self-government), central agencies have pointed to the need to restrict cost increases that are forecast to be associated with self-government," the memo reads.

As bureaucratic discussions about the final wording of the MC were conducted, the central agencies informed the INAC officials that cost certainty could not be attained if funding amounts were allowed to rise as the population of the community under self-government rose over time.

"In response to this pressure, Brian's shop has come up with the following proposal to bring cost certainty to the incremental costs of self-government, and which has been proposed to central agencies. Limit the overall adjustor based on price plus population growth up to a combined total adjustor of not more than 3.5 per cent [and place] a numerical upper limit on the adjustor based on price (say, three per cent)," the memo read.

The proposed approach developed by the fiscal policy unit also called for government negotiators to propose slightly higher initial levels of funding that would then fall significantly in later years.

The plan called for "a downward sliding scale of the governance top-up from the current fixed amount of eight per cent to an initial amount of 12 per cent, sliding over time down to five per cent by year 17, and staying at that level thereafter," the memo reads. "Brian believes that this package will meet the needs of central agencies in terms of cost containment, and will also allow for deals to be made with First Nations, with extra emphasis on the higher governance levels when these First Nations (presumably) need it the most."

The self-government implementation official asked the fiscal policy director a number of questions at the meeting, the memo said.

"How would this change in approach be implemented in the context of renewals where near-full price and population has already been applied (and I explicitly mentioned Yukon)?"

The answer provided by Brian McCoy was: "Under a renewal, t was most probable that the adjustor would need to be lowered to the maximum of 3.5 per cent."

When asked how INAC negotiators would "operate in contexts where price and population had already been offered at the table," the memo stated that "Brian didn't really have much of an answer to that. But I suspect that we might have bad faith negotiating issues if we were to try and 'retroactively' get an adjustor back to 3.5 per cent from 'full' price and [population], if that has been offered anywhere (Meadow Lake Tribal Council?)."

The implementation branch manager wrote that reining back First Nation expectations years after a self-government agreement had been finalized would not be easy.

"The governance amounts are typically included in the [financial transfer agreements] which have a term of five years. If we have a governance amount that declines over a 17-year period, that will require negotiators to impose reductions in these amounts at the renewal negotiations at years five, 10 and 15. That could be quite a challenge."

In summing up, the memo's author revealed that funding is expected to be approved, once the central agencies concerns have been addressed and cabinet approval achieved, in the fiscal year 2006-07.

"Needless to say, this will have some fairly significant impacts on how we negotiate with First Nations, and will also impact on renewal negotiations both in the short-run (Yukon) and in future renewal negotiations where the increased governance amount will need to be lowered. If approved, these changes will presumably be implemented at the same time that the new funding will flow from central agencies, which is supposed to be in the 2006-07 fiscal year."