As First Nations Business Revenues Grow, Where Does the Money Go? - C.D. Howe Institute

TORONTO, Oct. 14, 2015 /CNW/ - Revenues from First Nations business activities have grown substantially over the last generation. In Ontario, they now comprise nearly one-third of First Nation government funds. Where does the money go? A new C.D. Howe Institute report, "First Nations Own-Source Revenue: How Is the Money Spent?" makes use of new data to analyze band finances.

"Over the past generation, several favourable Supreme Court of Canada decisions, combined with the rise in natural resource prices until recent years, have encouraged the growth of First Nations commercial activities," commented author John Richards. "We think that First Nations groups – as well as other Canadians – would be interested in knowing how the funds are being allocated between spending priorities, such as economic development, government and administration, and education and health."

Looking at a large sample of First Nations communities in Ontario, they find for every $1,000 increase in own-source revenue:

• spending on economic development rises $240 per capita;
• spending on education and health rises $100 per capita; and
• spending on government administration rises $650 per capita.

"Whether large increases in this last category are warranted is an important question for members of First Nations to address," remarked Richards.

While the results are admittedly a first look at the data derived from the audited statements, two obvious policy conclusions emerge from the analysis.

• First, since the the recently passed First Nations Financial Transparency Act  is intended to help First Nations assess the financial activities of their respective communities, one simple policy recommendation is to introduce more uniform and informative accounting protocols, which would considerably aid those interested in undertaking this task.
• Second, since most First Nations communities do not consider it appropriate to use own-source revenue to finance basic education and health services, the onus for education funding will continue to fall squarely on the federal government.

Richards concludes: "In the end, of course, it is up to First Nations people themselves to determine their financial priorities and hold their councils to account."

The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. It is Canada's trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review. It is considered by many to be Canada's most influential think tank.

For the report go to: https://www.cdhowe.org/first-nations-own-source-revenue-how-money-spent

SOURCE C.D. Howe Institute

John Richards, Professor, School of Public Policy, Simon Fraser University and Fellow-in-Residence, C.D. Howe Institute; or Benjamin Dachis, Senior Policy Analyst, C.D. Howe Institute, 416-865-1904 or email: [email protected].