CARCROSS – Canada has put on hold a controversial policy that clawed back transfer payments to self-governing First Nations that generate their own revenue.

The moratorium will last for “up to three years” as federal and self-governing First Nations negotiate a new “fiscal policy framework” for the transfer of federal funds to all self-governing First Nations.

Carolyn Bennett, the federal minister of Indigenous and Northern Affairs Canada (INAC), made the announcement Tuesday at the recently-opened Carcross/Tagish First Nation Learning Centre in Carcross, on the first day of the Council of Yukon First Nations’ annual general assembly.

But the move to establish a policy for the transfer of funds to self-governing First Nations, which could essentially treat them as a block instead of individual nations in financial transfer negotiations, doesn’t sit well with Chief Richard Sidney of the Teslin Tlingit Council.

“A policy may apply South of 60, a policy may apply to Indian Act bands, we’re self-governing. We have final agreements that describe what we consider acceptable in … the funding levels that we receive as governments,” said Sidney.

He told the federal minister that if the Government of Canada does not want to negotiate transfer agreements that address the specific needs of his government, then the Teslin Tlingit Council will take legal action.

“We don’t need any policy to describe what is acceptable, what is not acceptable. We have final agreements that lay out the framework for how we’re going to negotiate this new relationship, and we want to give respect to those agreements,” he said.

Like it does to the Yukon government, the federal government transfers money to self-governing First Nations so they can provide services to their citizens at levels “reasonably comparable” to those offered to people living in Canadian communities of a similar size.

In addition to funding services and programs that would otherwise be provided by the Yukon government, federal transfers also help pay for the operations of First Nations governments.

The Umbrella Final Agreement (UFA) provides the framework for negotiating land claim and self-government agreements in the Yukon.

Though the UFA is not a legal document, the agreements reached using the UFA, between Canada, the Yukon and each of the 11 Yukon self-governing first nations, are legally binding.

Under the UFA, the intent of any financial transfer arrangement is to determine “levels of Government financial transfers to the Yukon First Nation in question.”

Ken Coates is a professor of public policy at the University of Saskatchewan and was raised in Whitehorse. He specializes in aboriginal rights and northern Canadian history.

Coates said self-governing First Nations want to negotiate with Canada on a bilateral basis – nation-to-nation.

This is in part because each self-governing First Nation has unique circumstances.

“A very isolated community that has no access to resource revenue and other things has a very, very different approach than an urban community like Kwanlin Dün, for example,” he told the Star in an interview this morning.

But the federal government wants simplicity and clarity, Coates added, and from its perspective, a standardized financial transfer arrangement is preferable.

A new transfer payment policy could allow for some “asymmetry,” said Bennett, “but basically, there (would be) a policy that lets everybody know what the rules are, and what is deemed to be fair.”

CYFN Grand Chief Peter Johnston said that self-governing First Nation officials are promoting the view that each needs to be dealt with differently in negotiations with the federal government.

“I would be very surprised if First Nations would accept something that was a completely fixed block,” said Coates. “That would not respect the complexities and the differences between First Nations.”

As governments continue to negotiate financial transfer arrangements, Coates believes Ottawa was right to put a moratorium on clawbacks based on own-source revenue.

Under its own-source revenue policy, Canada reduces transfers to self-governing First Nations based on revenue those governments generate through, for example, taxes and businesses.

According to Ottawa, the aim of the own-source revenue policy is to reduce First Nations governments’ reliance on federal funding.

In practice, however, own-source revenue clawbacks have an adverse effect on Yukon First Nation governments. It meant they couldn’t offer services at levels remotely comparable to those in other communities.

“Own-source revenue was viewed as more than an irritant, but a perverse incentive,” said Bennett. “For us to get that out of the way while we negotiate a new way of going about business was really, really important to having meaningful conversations at that table.” Johnston agreed.

“We’ve made the case over and over that we’re severely underfunded,” he said Tuesday. “We need not only own-source revenue, but the ability to generate wealth in order to provide our own governance system going into the future.”  

Sidney told Bennett that even with the suspension of the own-source revenue policy, his government will still be “drastically underfunded.”

Sidney said his government generated a little under $1.2 million in revenue and had an $18 million operating budget last year. But these amounts fall well below the $28 million to $30 million he estimates his government actually needs.

Transfer agreements with seven Yukon self-governing First Nations were meant to expire at the end of the 2016-17 fiscal year, but were extended in March.

According to the UFA, financial transfer agreements may be renegotiated every five years.