Skip to main content

Sean Jones practices aboriginal, environmental and regulatory law at Borden Ladner Gervais's Vancouver office.

A recent federal court ruling may spell the end of the First Nations Financial Transparency Act and the myth that First Nations leaders are not accountable to their constituents. On Oct. 23, a court stayed the federal government's application to compel five First Nations to comply with the act until other litigation determines its constitutional validity.

Prime Minister Justin Trudeau has previously said he would repeal the Act. He should – and then replace it with something that provides First Nations with financial accountability and Canadians with a picture of how First Nations are using their constitutionally protected rights to profit from resource extraction.

The Act didn't add to the financial information First Nations report to Ottawa or the ability of First Nations to compel their leaders to disclose their finances. The average First Nation submits more than 160 financial reports to Ottawa each year. Ottawa already had the right to withhold funding if monies were being misused. Band members also already had the right to go to court to force their band to disclose its finances, including remuneration of chief, councillors and employees.

The Act exacerbated a fractured relationship between First Nations and the government by picking a fight that is now the subject of two lawsuits and five First Nations. It led to media portrayals perpetuating the ugly stereotype of the corrupt or incompetent chief. Few of us heard that despite their distaste for the Act, 98 per cent of First Nations filed the required reports for 2013-14 and 66 per cent have filed for 2014-15.

Nor did we hear that First Nations had a shockingly good success rate: From a pool of well more than 1,000 band councillors, when remuneration from political posts and positions in band companies were combined, only a handful of packages raised eyebrows. Many municipal politicians also work for companies that receive work from their municipality. If they had to report both salaries, we'd be pleased if they performed as well as First Nations have.

First Nations don't object to financial accountability. They objected to the Act being passed without consultation. They objected to posting their consolidated financial statements on the Internet. First Nations function as governments, but also have businesses that compete in the commercial mainstream. Many believe those businesses could face a competitive disadvantage if their financial information is disclosed. In the most recent case, the court found there wasn't evidence of financial harm, but did not rule out the possibility in other instances.

Protecting First Nations' commercial interests from harmful disclosure is a worthy objective. However, it needs to be balanced against broader interests. Since the 2004 decision in Haida Nation v. British Columbia (Minister of Forests), First Nations have been leveraging the government's constitutional obligation to consult on Crown decisions affecting aboriginal rights. It has allowed First Nations to become powerful resource players. Northern Gateway has faced substantial First Nations opposition and we currently await a Federal Court of Appeal decision in the judicial review of its approval.

Meanwhile, Eagle Spirit Energy has proposed an alternative, First Nations-owned pipeline corridor to deliver oil and natural gas from Alberta to British Columbia's coast and vowed "to steadfastly oppose all other oil pipeline proposals."

This project may be a laudable attempt at building a more productive partnership between First Nations and industry. But, with First Nations using their constitutionally protected rights to exercise substantial clout in the regulatory process and the marketplace, their right to protect commercial interests needs to be balanced against Canadians' right to know.

Unfortunately, the Act did nothing to address this. Parliamentary debates didn't even discuss it. Instead, we have an incomplete, piecemeal approach.

Mr. Trudeau has signalled he wants to reset Ottawa's relationship with First Nations. He should not overlook financial accountability when he does so. He should consider appointing a First Nations auditor-general. Any legislative regime should address First Nations accountability to band members and to Ottawa. It should also balance the protection of First Nations' commercial interests with Canadians' right to understand how First Nations are profiting from constitutionally protected rights.