Reports
Aboriginal Justice Implementation Commission
Final Report
Report of the Aboriginal Justice Inquiry of Manitoba
Chapter Thirteen
Revenue Generation
In its terms of reference, the Aboriginal Justice Implementation Commission was instructed to recommend "Practical, cost effective and attainable implementation and funding strategies for the activities recommended for priority action." (OC 459/1999)
The AJI had also addressed the issue of funding and made the following recommendations:
As a matter of urgent importance, governments and Aboriginal people, with the assistance of the Aboriginal Justice Commission, negotiate an acceptable process to provide ongoing funding for Aboriginal governments to undertake the initiatives we suggest, in a manner consistent with:
The need of Aboriginal people for an ongoing, consistent revenue base.
The right of Aboriginal people, as original owners of the land, to a fair share of revenue resources from both levels of government.
The greater access to the revenue-generating powers and sources available to federal and provincial governments.
Through extensive and close consultation with those who will be responsible for implementation, the Commission has sought to ensure that its recommended courses of action are practical, attainable, and cost-effective. In addition, the consulting firm, Fiscal Realities Economists, was commissioned to produce a research paper on means of financing Aboriginal programming. "Innovative Provincial Aboriginal Funding Programs" can be found on the Commission's website, and provides a survey of financing arrangements in other provinces, assesses those arrangements, and provides suggestions as to how the recommendations arising out of the Commission's report might be financed.
In general, the arrangements fall into a number of categories:
arrangements whereby provincial sales tax is not collected on reserve purchases by non-Aboriginals, thus allowing First Nations either to impose their own tax, or to use the tax-free status as an economic development incentive
revenue sharing from gambling activities
programs requiring partners
the creation of a fund, either with tax revenues or gambling revenues, that may be accessed for full or partial funding of Aboriginal programs
The report summarizes each of these approaches, and evaluates them in terms of their sustainability, accountability, and their political and economic impacts.
Tax Sharing Arrangements
The sharing of tax-raising room with First Nations, or dedicating provincial revenue room to specific Aboriginal programs, is a developing phenomenon. There are agreements in place currently in Quebec and New Brunswick. The Fiscal Realities paper suggested that such an approach can be helpful in resolving the uncertainty created by undefined treaty rights, resolving issues created by federal off-loading of responsibilities, and in reducing poverty in First Nations communities. The paper concludes that this approach scores well when assessed for sustainability, accountability, and political and economic impacts. However, the paper noted, that "To achieve economic development the relationship between the revenue source and improved economic activity or an improved investment climate must be clear. To ensure accountability and service delivery efficiency the relationship between the revenue source and the expenditures must also be transparent." (Fiscal Realities, page 14)
Gambling
This is a growing area of revenue sharing between provincial governments and Aboriginal organizations. There are ongoing discussions with First Nations in Manitoba regarding the establishment of First Nation casinos. It would appear to be sustainable, and politically acceptable since it involves sharing a growing revenue stream rather than redistributing an existing stream. The economic impacts of increased dependence on gambling revenue depend on the degree to which the gambling patrons are from out of province or from within the province. According to the Fiscal Realities report, "Gaming does not score as well with respect to accountability. In most provinces gaming revenue becomes general revenue and the line of accountability between revenues and expenditures is blurred." (Fiscal Realities, page 13)
Programs Requiring Partners
These are programs under which a provincial government makes a funding commitment to an Aboriginal organization with the stipulation that the money be matched by funding from another source, often the federal government. It arises in part from the provincial government position that the federal government has primary responsibility for Aboriginal people.
Aboriginal communities are not required to limit their search for partners to the federal government. As a result, this policy can result in the creation of links with other business and community organizations. These links may turn out to be of greater benefit than the original program investment itself. This may make the approach attractive to the public. However, the paper noted that "partnered arrangements blur accountability and do not create strong incentives for innovative service delivery. Secondly, these arrangements provide little stability and security since they depend on the continued mutual interests of two and sometimes three orders of government." (Fiscal Realities, page 15)
Perpetual Funds
In 1969 the Government of British Columbia established a $25 million First Citizens' Fund. The interest on the account can be used by the BC Minister of Aboriginal Affairs for "advancing and expanding the culture, education and economic opportunities and the position of persons of North American Aboriginal ancestry who are ordinarily resident in British Columbia." (Fiscal Realities, page 8) This is the only such fund in Canada. Once a significant investment has been made in such a fund, it is sustainable and flexible. However, it was noted that the size of the initial investment is substantial, while the relationship between such a fund and economic development in the province is relatively weak.
Options
The consultants presented two sets of options worthy of further consideration in the short-term.
- Explore tax and revenue sharing arrangements.
- Encourage the Government of Manitoba, the federal government, the private sector, and the Aboriginal governments and organizations to establish a perpetual trust find.
Explore tax and revenue sharing arrangements.
Four potential areas for revenue sharing are:
- consumption taxes collected on reserves
- revenue sharing from Crown corporations
- resource royalty revenue
- the sharing of broad tax room
Encourage the Government of Manitoba, the federal government, the private sector, and the Aboriginal governments and organizations to establish a perpetual trust find.
It was suggested that a portion of the revenues from First Nations gambling be used to establish a trust fund. The fund would be managed by a committee of Aboriginal appointees. As noted above, the recommendation is that the federal government and the private sector be encouraged to contribute to the fund.
The AJIC presents these recommendations, and the paper upon which they are based, as information and a contribution to future discussions over the subject matters identified in the AJI, namely:
- the need of Aboriginal people for an ongoing, consistent revenue base
- the right of Aboriginal people, as original owners of the land, to a fair share of revenue resources from both levels of government
- the greater access to the revenue-generating powers and sources available to federal and provincial governments
Manitoba Government