Gov't documents for INAC minister show impacts of underfunding First Nations
Feds warned on native funding - Spending cap is eroding services, minister warned in pre-budget briefing document
Sun Apr 8 2007 - Paul Samyn - paul.samyn@freepress.mb.ca
OTTAWA -- Indian Affairs Minister Jim Prentice's department issued a pre-budget warning that a growing cash crunch for basic services is shortchanging the country's growing First Nations population.
Federal documents obtained by the Free Press show departmental officials red-flagged the long-term impact of a two-per-cent cap on funding increases that has resulted in less money for capital projects like schools, housing and welfare.
The tracking of the cumulative effect of the government's failure to keep up with both inflation and native population increases shows that funding for basic services is down six per cent in real terms from 1996 to 2006.
And that shortfall, the department says, comes with a price:
- erosion of on-reserve infrastructure;
- health and safety issues;
- risk of legal exposure;
- inability to match provincial standards.
According to the department, maintaining a two-per-cent cap on funding increases results in a $50-million shortfall each year, whose cumulative impact is now more than $300 million less in real terms.
The warnings issued in November 2006 and February 2007 follow a secret memo to Prentice that was prepared for him when he took over the department after the Tory election win in 2006.
"Numerous policy and program pressures are beyond the capacity of the substantial $6-billion departmental budget which primarily funds provincial-type services for northerners and First Nations on-reserve communities,'' says the three-page briefing for Prentice.
Prentice has been under fire from aboriginal leaders in two successive budgets. The first Tory budget essentially gutted the $5.1-billion Kelowna accord for aboriginals, while natives barely merited a mention in the second budget with only $370 million in new spending over three years announced. Prentice's budget will rise by less than 0.6 per cent this year to $6.3 billion.
Prentice has repeatedly argued after the Mar. 19 budget that total government spending on aboriginals will top $10 billion this year -- which he says is $1 billion more than the Liberals ever spent.
Prentice spokeswoman Deirdra McCracken said the documents reflect a long-standing cap on funding increases that began while the Liberals were in power. But McCracken said more money will not solve the problems facing First Nations and that Prentice is looking at structural changes to improve their lives.
"What Minister Prentice has said from the beginning is that the solution to improving the lives of First Nations is not pouring more money into the top of the funnel," she said.
However, Liberal native affairs critic Anita Neville said Prentice is misleading Canadians by rolling in money spent on native land claims and other legal obligations to reach his $10 billion spending total.
Neville (Winnipeg South Centre) said the documents make clear the extent of the real problem facing First Nations, which Prentice is not prepared to admit to or take deal with.
"The bureaucracy is giving him the real picture and what he is doing is not responding,'' Neville said.
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Breaking down the numbers - HOW has Indian Affairs dealt with a two-per cent cap on funding increases?
Departmental documents show reallocation has been a key part of the coping strategy with the following basic services seeing the following cumulative reductions by 2005:
- capital is down $293 million
- housing is down $81 million
- income assistance is down $51 million
- post-secondary education is down $13 million.
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Unrealistic funding cap hurting First Nations
Doug Cuthand, The StarPhoenix
Published: Friday, April 27, 2007
There is a "secret" document circulating that shows the federal government knew about the state of First Nations living conditions and budget shortfalls prior to its latest budget.
It warns the minister of Indian Affairs about the damage that a cap of two per cent on First Nations funding has created, including the serious cumulative impact it has on the health and safety of people. The internal department memo outlines the need to respond with a one-time payment of $500 million and an annual budget increase of $50 million thereafter.
Budget increases for Indian Affairs were limited to two per cent a year, starting in 1997. The rate of population and price increases has been four per cent annually for the same period. Indian Affairs receives an annual budget of about $6 billion, which, as the report points out, is four per cent of total federal expenditures.
As a result of the cap, certain statutory budget items that have grown in size have to be covered by diverting money from other areas. For example, tuition agreements with provincial schools increased $100 million in 2005. This is a statutory item that must be paid. But in order to pay this increase, money had to be taken from non-statutory items such as capital and housing spending.
The report also mentions that First Nations have coped with the shortfall by limiting growth in various areas, including staff salaries and benefits. Nothing was mentioned about the salaries and benefits of Indian Affairs staff. However, the report's appendices noted that First Nations' employees benefits are funded at 12.5 per cent, compared to 20 per cent for Indian Affairs employees.
The memo warns the minister that continuing with the cap is costly in terms of eroding on-reserve infrastructure, deteriorating health and safety of people, risking legal exposure and making it hard to maintain provincial standards.
Only 23 per cent of the budget spending is considered "discretionary" -- meaning the money can be allocated to other items. The bulk of the department's budget consists of "transfer payments," or money for provincial-type services such as child and family services and education.
Also considered discretionary and being cut back are "transformative programs" such as post-secondary education, housing and economic development, which are meant to improve socioeconomic disparities. This means that the department's budget is focused on basic maintenance, not development.
The report also notes that the department's northern affairs branch is unable to respond to pressures of economic growth and resource development.
There are funding pressures associated with "extraordinary" items such as the "Kashechewan emergency." In addition, over the past five years the department has had to reallocate funding to cover federal government priorities such as the environmental cleanup of contaminated sites.
The result of this cap on spending is that the budget is woefully inadequate to respond to the basic services First Nations communities require. The following is the result of reallocating funds: Capital is down $293 million, housing is down $81 million, income assistance is down $51million and post-secondary education is down $31 million.
This is a sad reflection of how some people are made to bear the brunt of funding cutbacks at a time of budget surpluses.
This report did not come from a group of disgruntled political leaders. It came from within the department, by the very bureaucrats who administer Indian programs. They know from the inside the sorry state of first Nations finances.
When the folks at the colonial office get worried, then First Nations know we are in real trouble.
The attachments to the report are dated Feb. 2, although the report itself isn't dated. Diedra McCracken, Indian Affairs Minister Jim Prentice's spin doctor, told me that this was an old document presented to Prentice when he took over the portfolio. If that's the case, two budgets have been presented without the minister responsible acting on advice from his officials.
In any event, the report's call for a one-time increase of $500 million and annual increases of $50 million were not followed. Instead, there was a miserly increase of $370 million in new money, which is to be spent over three years. There was $300 million for a housing trust, but even its administration is yet to be worked out. This was a bright spot in the budget and a welcome change from band-owned housing.
Prentice was running around the hinterlands this month, generously announcing money for capital projects. Among the announcements was $14.5 million for Saskatchewan alone. In light of the fact that close to $300 million was taken from capital spending last year, it appears that Prentice was bribing us with money we rightfully should have got in 2006.
Most of the funding went into constituencies held by opposition MPs. Strange, that. Maybe it's starting to dawn on the government that the aboriginal vote means something.
But this issue cannot be dismissed as merely partisan. The cap was put in place under the Liberals and continued by the Conservatives. Both have some explaining to do.
We have First Nations in debt and under-funded today. It's time to take a serious look at providing adequate funding for First Nations and not place us in a position where our leaders have to beg for basic services.