Resourcing First Nation Communities for the Future

Fiscal Relations Secretariat Archive

The fiscal relationship that is negotiated as part of Treaty arrangements will determine a First Nation’s access to capital, whether it is able to receive its fair share of funding and the extent to which it is able enjoy the benefits of any jurisdiction, land or settlement cash. Fiscal Relations concerns the ongoing funding a First Nation government will have access to – whether through transfers or directly through resource or taxation revenues. It also concerns the responsibility for providing programs, services and infrastructure to people (members and non-members) living on Treaty Settlement Lands.

The First Nations Summit Fiscal Relations Secretariat (FRS) was formed in order to provide support on fiscal relations issues to First Nations engaged in the BC Treaty Process. The members of the First Nations Summit passed resolutions to form the Fiscal Relations Secretariat (Summit Resolution #0600.06) and a Fiscal Relations Committee (Summit Resolution #0900.13). The Fiscal Relations Committee was formed to provide guidance to the Fiscal Relations Secretariat.

The tripartite Fiscal Relations Working Group (FRWG) was a regional forum that was established to explore options for a new First Nation fiscal relationship. The participants in the FRWG were the government of Canada, government of British Columbia, and the First Nations Summit. The BC Treaty Commission performed a valuable role as keeper of the process by facilitating these discussions.

The FRWG made a Report to the Principals (the Summit Task Group, the Minister of Indian Affairs, and the Attorney General) in June 2003. The BC Treaty Commission has recommended that further work take place in the context of table negotiations. The tripartite FRWG no longer meets regularly.

The Fiscal Arrangements User Model

The Fiscal Arrangements User Model is a Microsoft Excel based spreadsheet model that enables a First Nation to input its own demographic, government, financial, economic, and treaty settlement data, to examine the financial implications of proposed fiscal arrangements over a 20-year timeframe. British Columbia currently holds the copyright to the Fiscal Arrangements User Model.

The model is not an economic forecasting tool but rather a comparative policy analysis tool. It will be able to illustrate the difference between different fiscal options but should not be relied upon to provide accurate results over 20 years. The results provide an indication of magnitude and direction only (trend) and will not provide precise point forecasts. However, a user can develop alternative scenarios in order to identify a range of possible outcomes or vary specific variables in order to undertake risk and sensitivity analysis.Since its initial release in March of 2003 several First Nations have participated in a ‘beta testing’ of the Fiscal Arrangements User Model. A number of changes have been incorporated into the 31.03.04 version to reflect their comments and input. Furthermore, a number of small errors and technical problems have been addressed. It is recommended that all users update to this latest 31.03.04 version.

Download the Fiscal Arrangements User Model 31.03.04

Download the User Guide

Download the User Guide Errata Sheet

For further information – fiscalrelations@fns.bc.ca

Data Requirements

The Fiscal Arrangements User Model uses a data input sheet with approximately 400 lines. The main types of data required to operate the model include:

  • Demographics
  • Audited financial statements
  • Assessed values for land
  • Resource inventory
  • Treaty settlement details
  • Descriptions of new governance responsibilities and estimates of expenditures
  • Expectations of future trends and activities

 

Fiscal Relations Questions and Answers

Q1: What are fiscal relations?

 

A1: Fiscal relations are the financial arrangements under which governments finance their activities. They can be summed up with four basic questions:

  1. Which government provides what services?
  2. Which government pays for these services?
  3. Who is eligible for what services?
  4. Which government collects what revenues?

 

Q2: Why are fiscal relations important to treaty negotiations and self-government?

A2: The fiscal relationship is the single most important factor in determining the quality of future government services and infrastructure for members.

A fiscal relationship is one of three critical components for self-government in a Treaty. Together with self-government arrangements and the land and cash settlement, it determines how much a First Nation can share the income earned off the land, and to what extent it can independently exercise its authority. The fiscal relationship is also the single most important factor in determining the quality of future government services and infrastructure for members.

Success in negotiating land and cash settlement through Treaty requires a supportive fiscal relationship.

  • The value of the cash settlement can be reduced if the fiscal relationship results in those monies being needed to meet service obligations, or it allows income earned by the settlement to be used as a justification for reducing transfers from other governments.
  • The value of land received by a First Nation will depend upon how much tax jurisdiction it holds over that land and its control over the revenues generated by its businesses and leases. All these issues are specified in a fiscal relationship.

Success in negotiating autonomy and expanded jurisdiction requires a supportive fiscal relationship.

  • If the revenues that pay for the exercising of a jurisdiction or the delivery of a service are controlled by other governments, then that jurisdiction can be subjected to conditions and reporting requirements of other governments. This simply waters down the jurisdiction and leaves the funding government in control.

Success in bringing services and infrastructure up to the standards enjoyed elsewhere depends upon the fiscal relationship.

  • The fiscal relationship will determine how much money a First Nation has to meet its expenditure obligations and provide infrastructure.
  • The fiscal relationship also determines the extent to which other governments are obliged to provide services and infrastructure.
Q3: What was the tripartite Fiscal Relations Working Group?

 

A3: The First Nations Summit participated with Canada and British Columbia in a non-negotiating, without prejudice working group called the Fiscal Relations Working Group or the FRWG. The objective of the FRWG was to explore options for an improved fiscal relationship in a treaty context. To accomplish this task an interest-based approach was used, options were explored and then tested both qualitatively and quantitatively.

The FRWG made a Report to the Principals (the Summit Task Group, the Minister of Indian Affairs, and the Attorney General) in June 2003. The BC Treaty Commission has recommended that further work take place in the context of table negotiations.

Q4: What is the Fiscal Arrangements User Model?

A4: The Fiscal Arrangements User Model is a Microsoft Excel based spreadsheet model that enables a First Nation to input its own demographic, government, financial, economic, and treaty settlement data, to examine the financial implications of proposed fiscal arrangements over a 20-year timeframe.

Q5: Who would be interested in using the Fiscal Arrangements User Model?

A5: Any First Nation that needs to understand the financial implications of proposed fiscal arrangements offered during Treaty Negotiations will likely be interested in obtaining the Fiscal Arrangements User Model. The model requires technical expertise (with Microsoft Excel) and an investment of time and effort to be used effectively.

Q6: When is a good time to use the Fiscal Arrangements User Model?

A6: The Fiscal Arrangements User Model can be used in preparation for and during Agreement-in-Principle negotiations to assist negotiators in examining different fiscal relations options and economic development scenarios. The model can also be used as a tool to discuss some of the questions that membership may be asking during Agreement-in-Principle community consultations.

The model will likely become even more useful during Final Agreement Negotiations once some parameters of treaty settlement have been negotiated. It will help negotiators in analyzing different scenarios and options. It will also help treaty negotiators, chiefs and councillors to respond to questions from membership during community consultation.

The model can also be used once a Final Agreement has been negotiated and implementation begins. At this point even more parameters will be known and can be input into the model.

First Nations can also use the model without any consideration for treaty settlement – they can simply use it as a strategic financial planning tool.

Q7: What are the risks of using the Fiscal Arrangements User Model?

A7: The model is not an economic forecasting tool but rather a comparative policy analysis tool. It will be able to illustrate the difference between different fiscal options but should not be relied upon to provide accurate results over 20 years. The results provide an indication of magnitude and direction only (trend) and will not provide precise point forecasts. However, a user can develop alternative scenarios in order to identify a range of possible outcomes or vary specific variables in order to undertake risk and sensitivity analysis.