Creating a Better First Nation Fiscal Relationship – Utilizing the FMA

In the video featuring Councillor Dalyn Bear, he speaks about not agreeing to the proposal from the federal and BC governments to remove the First Nations Fiscal Management Act (FMA)  from modern treaties and self-government agreements. This brief note provides a deeper explanation into why this is not acceptable to many First Nations.

The Success of the FMA

Both Canada and First Nations are committed to a nation-to-nation framework.  However, “nation-to-nation” is more than just a phrase.  It means both parties have powers which they can implement without needing the consent, or being subject to the oversight, of the other. 

Two conditions must be met for this to happen.  First, you need to have paramountcy over some legislative powers.  Second, you need to have the revenue raising capacity to operate these powers so that you are not subject to transfer conditions. 

The FMA has met both conditions.  (1) It has provided First Nations with powers they can implement without federal or provincial consent.  They are not subject to federal or provincial conditions or oversight.  (2) It has provided revenues to implement these powers.  These revenue powers are not controlled by other governments through conditions, caps or other claw backs.

The FMA has proved that nation-to-nation works.  It has been one of the most successful First Nation legislative initiatives of all time.  Independent evaluations have confirmed that it has supported the development of First Nation economies, infrastructure and administrations.  It has created opportunity for people and turned First Nations into major contributors to regional economies.  It has provided real reconciliation by supporting the integration of First Nation governments into the Canadian system of government.  It has facilitated regional cooperation.  Most importantly, by bringing decision making power home, it has unlocked the potential of people’s imaginations.

The FMA worked because it created, on a small scale, a jurisdiction based fiscal relationship.  And that is the only type of fiscal relationship that is consistent with nation-to-nation relations.  This relationship has three attributes:

  1. Tax powers.  The FMA provided tax powers to First Nations that are not subject to caps, transfer offsets or other claw backs.  As a result, First Nations in the FMA can devote more time to creating revenues, rather than asking for them.  
  2. Unencumbered service responsibilities.  FMA First Nations use FMA revenues to fund associated service responsibilities.  They are therefore free to set their own priorities, rather than negotiate them.  They can deliver their responsibilities without the conditions or oversight of other governments.  As a result, they are more responsive to changing circumstances and opportunities.  They can move at the speed of business.
  3. Institutional support.  It is expensive and time consuming to build tax systems and economies from scratch.  For interested First Nations, the FMA institutions have helped to reduce costs and time.  Collectively, the FMA institutions helped First Nations create laws, implement systems, access capital and train their administrations.  They continue to help with access to capital, the delineation of jurisdictional boundaries with other governments, and, advancing new initiatives. The FMA institutions provide the advantages of scale and provide access to expensive expertise and services for free to interested First Nations.