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Tom Flanagan is professor emeritus of Political Science and distinguished fellow at the School of Public Policy, University of Calgary. He is a former campaign manager for conservative parties.

The First Nations Fiscal Transparency Act (FNFTA), which came into effect last year, requires each First Nation to publish the compensation paid to chief and council. More than 90 per cent of First Nations have now complied. Three are suing to have the legislation declared unconstitutional, while the federal government is suing to make the holdouts fall into line. Meanwhile, the data are sufficient to justify some preliminary observations.

At first glance, First Nations governance seems expensive, considering that the average community is only slightly over 1,000 people in size. The average tax-free payment (including salary, honorariums, per diems, and travel costs) to chiefs and councillors is about $60,000 each, and the mean total per First Nation is $392,000. There is much variation across the country, but the real outlier is Alberta, where average individual compensation is $133,500 and the average band cost is about $1-million. Many Alberta First Nations, like the provincial government, have substantial revenues from oil and gas, which tend to increase the cost of government.

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One example: the Kainai (Blood tribe) Nation, population 12,000, pays $2-million a year to its chief and 12 councillors, whereas the nearby city of Lethbridge, with more than 90,000 residents, pays about $425,000 to a mayor and eight councillors. The comparison, however, is not straightforward, because First Nations often run a wider range of institutions. The Kainai Nation, for example, has its own police force, school system, and community college. Off reserve, such entities are usually run by other local authorities or by the province, not by mayor and council.

Also, many First Nations now have substantial business operations, including casinos, hotels, golf courses, residential complexes, trust companies, and airlines. Being a council member often involves playing an executive role in managing these band assets, which brings extra compensation. Such interweaving of politics and business would be considered a conflict of interest elsewhere, but may be unavoidable in the small world of aboriginal communities.

Sponsors of the FNFTA hoped that publication of salaries would lead to a reaction among band members, causing them to demand more economy in government, but thus far resistance to high salaries has surfaced in only a couple of instances. There was grumbling after the revelation that the chief of the Kwikwetlem First Nation took a fee of $800,000 when he and one other councillor negotiated an $8-million payment from British Columbia for infringement of its aboriginal claim to Burke Mountain. Also in British Columbia, the chief of a Shuswap band and a member of council (his ex-wife) were voted out of office after disclosure that they were being paid more than $200,000 apiece.

However, several cases of very high compensation, more than $200,000 or even $300,000 a year, appear to have caused no controversy. These come from entrepreneurial First Nations whose band governments have launched successful business enterprises. In such instances, chiefs and councillors often double as business executives, but the data reported under FNFTA usually don't separate governance and business responsibilities. Members can take action, if they wish, against high compensation; but for the time being they seem happy with the benefits – jobs without having to leave home, and better services on-reserve paid for by business earnings. Such mingling of politics and business seems to be the most viable path forward for many First Nations.

The FNFTA has been a useful step forward in the direction of transparency, but it would be even more useful if the reporting requirements were more carefully designed. If payments for elected office were reported separately from payments for business functions, First Nations people as well as the wider public could make a more informed judgment about whether money is being well spent.

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