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First Nations Fiscal Management

Empowering First Nations governments to charge service fees and taxes enables them to build revenue for infrastructure and community projects. To this end, the First Nations Management Act enables indigenous governments to secure investments and raise capital through service charges and property taxation.

First Nations Management Act

Enacted in 2006, the act establishes a Finance Authority and Financial Management Board and enables indigenous communities to charge fees and establish a property tax system to aid the provision of services. Under the act, First Nations governments are authorized to levy development cost charges, tax business activities, collect tax revenues, set rates for taxation, and enact laws that allow for the assessment of land value.

First Nations Tax Commission

The tax commission has a number of duties, rights, and powers such as to borrow, invest, and raise capital, enter into contractual obligations, and dispose, hold, and acquire property and right or interest in real estate. The main tasks of the commission are to ensure transparent taxation, facilitate sustainable development, build tax system capacity, and create training programs for administrators. The commission is also authorized to set standards with regard to law approval, enforcement procedures, and the content and form of taxation laws. It is within the powers of the commission to set procedures for dispute resolution, representation of taxpayers’ interests, and approval and submission of laws.

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First Nations Financial Management Board

The board consists of a Vice-Chairperson, Chairperson, and between 9 and 13 directors and is authorized to sue, borrow, invest, and raise money, hold, acquire, and dispose of real estate, and enter into contacts. Its functions and tasks include the provision of third-party and co-management services, financial monitoring services, and certification and assessment services. The board also assists the government with the development of financial relationships with business partners and funding bodies. It is within its responsibilities to set standards, provide training, and certify First Nations. The board offers workshops, training, and advice to enable participants to manage their finances. The Financial Management System Certificate provides good government practices that benefit business partners, lenders, and community members. The certification process involves several steps, including on-site testing of finance and government practices, interviewing staff and Council members, and reviewing documents and policies. Sample policies that councils can implement to become certified include human resources, information management, and governance policies. The latter include procedures regarding reporting of remuneration and expenses, external audits, appointment of officers, audit and finance committees, and delegation of responsibilities. Finance policies that First Nations can adopt focus on:

  • System improvement
  • Operational reporting
  • Cash and account management
  • Spending
  • Procurement
  • Borrowing money
  • Capital projects
  • Capital assets
  • Budgets
  • Financial planning
  • Risk management
  • Strategic and integrated planning

Policies governing local revenues address issues such as investment, reporting, spending, tax rates and property assessment, and tax administration. To become certified, First Nations need to adopt human resource policies on compliance and misconduct, training plans and performance evaluation, and hiring and dismissals. Finally, information management policies focus on information and records privacy and information technology. For the purpose of certification, this data management involves distribution, sorting, and gathering of information from one or multiple sources.

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The future of First Nations

Of all indigenous communities, the First Nations are the largest group and a visible minority, with 634 bands and governments in Canada, about half of which are living in British Columbia and Ontario.

Challenges First Nations Communities Face

About 1.6 million Canadians self-identify as indigenous, about 60 percent of which are First Nations. They typically live in rural areas and are younger than non-Indigenous people. Communities in remote areas with low densities face high transportation costs, more limited access to education and services, and fewer employment opportunities. Remoteness is the main factor why economies in such regions are less diversified and with lower attachment to the labor market. Educational level is strongly correlated with labor force participation. Overall, indigenous people in Canada have lower educational attainment with regard to technology, numeracy, and literacy, especially in Yukon, the Northwest Territory, and Nunavut. Some gains in educational attainment are clearly visible, however. In 2016, 32 percent of off reserve First Nations Canadians had less than a high school diploma compared to 40 percent in 2006. The significant gaps in income between non-Indigenous and Indigenous Canadians persist mainly due to higher unemployment rate, lower educational levels, and lower workforce participation rates. Participation in the subsistence and social economy is a contributing factor. The largest income gap is in the Northwest Territories, Yukon, and Nunavut which also have the lowest literacy levels. In Nunavut, the median income of Indigenous people is $23,000 compared to $84,000 for non-Indigenous.

Future of First Nations Communities

Research projects by the Social Sciences and Humanities Research Council identified several challenge areas that are yet to be addressed. The themes that have been outlined include:

  • Resource rights, Indigenous law, and self-governance
  • Indigenous business and economic self-determination
  • Social and community wellbeing
  • Learning and teaching
  • Culture, language, and arts
  • Indigenous research

Business and Self-Determination

There are some promising trends in the area of business and economic self-determination, and one is that the number of self-employed First Nations members is continuously growing. Some communities in the country’s North have already established cooperative based on their shared environmental, cultural, and social values. Tourism and related activities are a major source of community development, especially in Yukon and the Northwest Territories.

Some propose tourism governance in the form of co-ownership and co-management while others point to the fact that First Nations communities should have their unique business models. This is because indigenous people place more importance on social conditions, community development, and collectiveness.

Learning and Teaching

Studies consistently show that education approaches and systems are not working well for First Nations communities. There is a need for a systemic change, especially with regard to classroom instruction and curriculum. Students who are learning Indigenous practices, histories, values, understandings, and languages are more motivated than those who are not. There is also a need for greater representation of Indigenous administrators and teachers in primary, secondary, and postsecondary education. Some professionals have already called for the establishment of Indigenous school boards. Finally, it is important to borrow from Indigenous knowledge when developing approaches to social work, counseling, and classroom instruction.

Social and Community Wellbeing

The concept of wellbeing goes beyond meeting basic needs and being healthy. For First Nations communities it also has to do with intergenerational culture and knowledge transmission, ways of life and ceremonies, vitality of Indigenous languages, connection to land and nature, ad sense of identity and shared values.  At the same time, Indigenous people often feel that the criteria for wellbeing fail to reflect how they see their ways of life and culture. One example is how children with disabilities are portrayed as having certain deficits while for Indigenous communities al children are unique and contribute to the collective wellbeing. The differences between standard definitions and indigenous perspectives may result in clinical interventions that are not in line with community perceptions about wellbeing, childhood, spirituality, and family-centered ways of life an upbringing. This means that mainstream approaches should incorporate Indigenous perceptions of children’s wellbeing and their development so that they are perceived as legitimate.