Political will to lift First Nations funding cap is there, needs time: chief

First Nations leaders have long criticized cap for not keeping up with the population growth in indigenous communities

OTTAWA – Prime Minister Justin Trudeau promised to immediately lift the two-per-cent cap on annual funding increases for First Nations on-reserve programming, but newly released documents show that has not happened yet.

The Liberal government has committed a historic $8.4 billion for indigenous communities over the next five years to address issues such as First Nations education, safe drinking water on reserves and child welfare services.

But the investments are targeted and time-limited, with about $801 million promised for after the next federal election.

Meanwhile, newly released figures from the Indigenous Affairs Department show its base funding for fiscal 2016-17, which is what the two-per-cent annual increase has always been applied to, grew by about $107 million over last year.

That amounts to the same two-per-cent annual increase that has been in place for two decades.

The details were provided this week in response to an order paper question, which is like an access-to-information request for MPs.

New Democrat MP Charlie Angus, the indigenous affairs critic for his party, said the numbers raise questions because communities can only consider the base funding to be guaranteed.

“So what they’re getting are promises, they’re getting press releases and they’re getting a lot of positive talk, but the base funding remains capped at two per cent,” Angus said.

“And if that continues, communities can’t grow the way they need to grow.”

The annual cap on funding increases, which the department refers to as an escalator that was originally intended to provide fiscal predictability, first came into place under former Liberal prime minister Jean Chretien in 1995.

It increased by slightly larger amounts the first two years before the two-per-cent cap came into effect in fiscal 1997-98.

First Nations leaders have long criticized the cap for not keeping up with the population growth in indigenous communities.

The Liberal government has agreed, promising to replace it with a new fiscal relationship to be negotiated with First Nations over the coming year that would strive to provide communities with “sufficient, predictable and sustained funding.”

Indigenous Affairs Minister Carolyn Bennett insisted Thursday the cap had already been lifted and that the base funding was only a start.

“I wouldn’t waste your time on this, because the two-per-cent cap is gone,” Bennett told Angus during a testy exchange Thursday at the House of Commons standing committee on Indigenous and Northern Affairs.

Paul Thoppil, the chief financial officer at the department who appeared with Bennett at committee, was more nuanced, saying there is a time lag between the information that was in the response to the order paper question and escalators that will appear in future spending plans.

“We are in transition and the money is flowing, notwithstanding that (lag),” he said.

The department sent a statement later Thursday pointing out how much more the budget promised above the base funding this year – $1.2 billion beyond the $107 million provided by the scheduled two-per-cent increase – for things such as education, community infrastructure and child and family services.

Perry Bellegarde, national chief of the Assembly of First Nations, said the numbers show there is still a lot of work ahead.

“That’s why we have to keep pushing the Crown to work towards long-term, sustainable, predictable funding that has to be in place,” Bellegarde said.

Bellegarde said the clock is ticking on setting up the promised working group to figure out the new escalator in time for the 2017 federal budget.

“We need to establish that working group as soon as possible so we can work out those details, do the proper research, do the proper analysis and gets to the right number.”

Bellegarde said he welcomed the investments in the budget and believes the rest will come.

“Things take time and I believe the political will is there and it’s my job as national chief to hold them to their promises and to account.”

Other documents The Canadian Press obtained through the Access to Information Act illustrate how the escalator forces the department to move money around to make up for gaps.

“To address funding pressures, the department has had to reallocate funds from program areas, mainly infrastructure, to address pressures in other program areas, particularly education and social development, but more recently only social development,” says a Feb. 2 internal backgrounder on the promise to lift the cap.

“Results are that program integrity issues have emerged, particularly in infrastructure.”

The memo goes on to say that recent investments brought the overall average annual increase in funding to about three per cent, but stressed the need for a more stable solution.

“While these targeted and time-limited investments have helped address immediate needs they have not provided the stability and predictability required for the delivery of basic ongoing services that are subject to annual cost increases,” the memo states.

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