First Nations Fiscal Institutions Initiative

What is the FSMA?

What is the FNTC?

What is the FNFA?

What is the FNSI?

What is the FMB?

Where can I learn more about each fiscal institution?

How do the Fiscal Institutions operate?

Are all First Nations eligible?

Why is it so difficult to attract private investment on First Nation lands?

How does FSMA improve private investment?

How does FSMA assist government economic development programs?

Does FSMA affect the Indian Act?

Does FSMA affect Aboriginal and Treaty rights?

Does FSMA affect self-government agreements or Treaty negotiations?

How can First Nations access FSMA?

What is the FSMA?

The First Nations Fiscal and Statistical Management Act is federal legislation that creates four First Nation institutions: First Nations Tax Commission; First Nations Financial Management Board; First Nations Finance Authority; and First Nations Statistical Institute.

The FSMA will reduce two of the barriers faced by First Nations in attracting investment to their lands. The barriers being:

1. It is three times more expensive to finance infrastructure on First Nation lands.

2. It is four to six times more expensive to make an investment on First Nation lands because of poor investor confidence; unreliable, unavailable, or non-comparable statistical and financial information; and scarce investment facilitation expertise.

The FSMA addresses the first barrier by allowing First Nations to finance their infrastructure on similar terms to other jurisdictions in Canada. The FSMA addresses the second barrier by improving investor certainty and confidence, improving the quality of statistics, and reducing the costs of doing business to make it less expensive to attract investment to First Nation lands.

What is the FNTC?

The First Nations Tax Commission approves property tax and other local revenue laws, provides training related to the First Nation property tax system, prevents and resolves disputes between First Nation tax administrations and their taxpayers, certifies First Nation borrowing capacity based on property tax revenues, and conducts research into emerging issues.

What is the FNFA?

The FNFA is a non-profit finance authority that serves First Nation governments. The FNFA improves access to capital by pooling borrowing through greater cooperation among First Nations, creating advantages of size and diversifying risk and revenue streams and by supplying expertise and sophisticated financial opportunities to First Nations. By pooling, the cost of borrowing is significantly reduced, making capital affordable to all First Nations including First Nations with smaller levels of annual revenue. The strength of the pool is based on its size and on the strength of the First Nation government revenues available to repay the debt. The strength of the pool is also maintained by the independent quality assessment of the FMB, the institution responsible for overseeing participation and creditworthiness.

What is the FNSI?

The First Nations Statistical Institute will be a center of statistical expertise for First Nations, helping to evolve an understanding of national statistical collections, building First Nations capacity to use statistics, and providing objective analysis and interpretation of First Nations’ statistical information collected by Statistics Canada and other federal departments.

First Nations will benefit by having an understanding of and representation at national statistical activities and plans, and having the necessary information to plan for their communities and attract investment and economic development.

What is the FMB?

The First Nations Financial Management Board responds to the needs of First Nations who have property tax revenues and are seeking to borrow against these cash-flows. The FMB also supports First Nations in their response to the accountability agenda.

For those First Nations that borrow through the FNFA, the FMB will certifies financial management systems, practices and standards, monitors financial performance, and provides intervention in exceptional circumstances. In terms of improving accountability, the FMB provides, on request, services relating to research and advocacy, policy development, capacity development and partnerships in relation to financial management, and reporting and standards development.

Where can I learn more about each fiscal institution?

For more information concerning the fiscal institutions, please visit each of their websites:

First Nations Tax Commission: www.fntc.ca

First Nations Finance Authority: www.fnfa.ca

First Nations Financial Management Board: www.fnfmb.com

First Nations Statistical Institute: www.firststats.ca

How do the Fiscal Institutions operate?

The fiscal institutions operate as independent arm’s length entities with clear mandates and accountabilities laid out in evaluation frameworks. They report annually on their accomplishments with respect to the goals laid out in these frameworks.

The fiscal institutions are run by CEOs who report to appointed boards. The institutions utilize a transparent policy development process. Policy is developed in consultation with key stakeholders.

Are all First Nations eligible?

Yes. Any First Nation can ask to be added to the FSMA schedule of participating First Nations, and obtain access to a wide range of services offered by the institutions. However, additional requirements must be met in order to access some services, such as the FNFA borrowing pool.

Why is it so difficult to attract private investment on First Nation lands?

A typical First Nation community must commit three times as much revenue to finance the same amount of infrastructure as a typical Canadian community.

Governments use their infrastructure and services to stimulate industrial, commercial, and residential development in their jurisdiction.

A typical First Nation attracts only one-third as much new investment for each dollar of infrastructure improvement as a typical Canadian community.

This means that in a typical Canadian community, $1000 in property tax revenues brings $30,000 into the local economy, while in a typical First Nation community, the same $1000 generates only $3,000 or one-tenth the wealth.

For additional information, see “Ten Times Harder – Economic Development in First Nation Communities” http://www.fnfi.ca/main.phtml

How does FSMA improve private investment?

The FSMA and the fiscal institutions have begun to reduce the barriers to private investment on First Nations lands by:

• improving First Nations access to capital so they can buy infrastructure more cheaply;

• ensuring First Nations get the best infrastructure for their money;

• filling the vacuum of quality statistics about First Nation communities and their investment opportunities;

• promoting these investment opportunities; and,

• inspiring investor confidence in First Nations.

How does FSMA assist government economic development programs?

The fiscal institutions complement existing economic development programs and initiatives aimed at First Nations. If a metaphor might serve, the fiscal institutions are aimed at improving the fertility of First Nation soil. Economic development programs are akin to plowing, seeding, and watering the soil.

The institutions support the development of investment facilitation capacity within First Nations by:

• Providing expertise that individual First Nations often cannot afford to access;

• Providing training programs that improve First Nation administrations; and

• Providing advice with respect to policies that improve the investment climate of First Nations.

The institutions support grant and loan guarantee programs by:

• Improving the information available to public economic development programs;

• Ensuring high quality administrations are in place to support business development;

• Ensuring appropriate infrastructure is in place to service any investment that is induced by a project;

• Improving the ability of First Nations to contribute to infrastructure development programs, and improving the information upon which investments in new infrastructure as well as the maintenance and repair of infrastructure are made; and

• Ensuring that potential investors have confidence in the First Nation government and have access to information relevant to an investment decision.

Does FSMA affect the Indian Act?

No. First Nations can continue to pass s.83 bylaws with the approval of the Minister if they so choose.

Does FSMA affect Aboriginal and Treaty rights?

No. To provide even greater certainty, the legislation contains an explicit non-derogation clause. The legislation is also enabling in nature. It only applies to those First Nations that are on the schedule.

Does FSMA affect self-government agreements or Treaty negotiations?

No. The FSMA does not affect self-government agreements or Treaty negotiations.

However, First Nations that have Treaties or self government agreements, and are operating outside the Indian Act, can, if they wish, come under the FSMA. This would be done through the development of regulations which can adapt the provisions of the FSMA as required for this purpose.

How can First Nations access FSMA?

In order to opt into the property taxation and borrowing provisions of the FSMA, the Chief and Council of an interested First Nation must provide a resolution of Council, to the attention of the Minister of Indian Affairs and Northern Development requesting to be placed on the Schedule. The resolution can be mailed to:

The Hon. Chuck Strahl

Minister of Indian Affairs and Northern Development

21st Floor, 10 Wellington Street

Gatineau, Quebec

K1A 0H4