Chapter  1  :

Introduction: Background to the report

Chapter  2  :

The Cree-Naskapi (of Quebec) Act: An Overview

Chapter  3  :

Implementation of the Act: The Development of Cree-Naskapi Governments

Chapter  4  :

Implementation of the Act: Fiscal Relations

Chapter  5  :

Implementation of the Act: Bilateral Relations

Chapter  6  :

Conclusions

Chapter 1
Introduction: Background to the report

The Cree-Naskapi (of Quebec) Act is a statute of great significance. It is the first Indian self-government legislation in Canada and its implementation has enormous consequences. On its success, rest the hopes and aspirations of the Cree and Naskapi to preserve their ways of life and live as autonomous, self-governing communities within the larger context of Canadian society. Beyond this, implementation of the Act is establishing patterns and setting precedents which will affect self-government for other First Nations in Canada.

ORIGINS OF THE CREE-NASKAPI (OF QUEBEC) ACT

The Cree-Naskapi (of Quebec) Act is an outcome of two historic agreements: the James Bay and Northern Quebec Agreement² and the Northeastern Quebec Agreement. These agreements, which involve the Government of Canada, the Government of Quebec, three provincial crown corporations and the Cree, Inuit and Naskapi of Quebec, fulfilled the obligation of the Quebec Boundaries Extension Act of 1912³ to settle land claims and other claims of native people inhabiting their traditional territory. By the terms of these agreements, native people surrendered their claims, rights and interests with respect to land, in exchange for other rights and benefits specified in the agreements. These agreements changed the social, political and cultural lives of the Cree, Inuit and Naskapi and altered their relationship with the rest of Canada.

The negotiations which led to these settlements were precipitated by the Quebec Government's decision to build the massive James Bay Hydro-Electric Development Project. The Cree, Naskapi and Inuit maintained a traditional way of life-- based on hunting, fishing and trapping--which depended heavily on the land and its animals. Since they considered themselves the traditional owners of the land and since the project would have a major impact on their way of life, the Cree and Inuit initiated, in May, 1972, legal proceedings in Quebec Superior Court. Mr. Justice Malouf granted an injunction to stop the project.⁴ This decision was overturned on appeal by the Quebec Court of Appeal⁵ and was being further appealed to the Supreme Court of Canada when an Agreement in Principle was reached between the disputing parties on November 15, 1974. This was followed by the James Bay and Northern Quebec Agreement, entered into with the Cree and Inuit on November 11, 1975, and the Northeastern Quebec Agreement, entered into with the Naskapi on January 31, 1978. The two agreements were sanctioned and given legislative effect by both the federal and provincial levels of government.⁶

The agreements are extremely complex legal documents. By the terms of the James Bay and Northern Quebec Agreement, 6,500 Cree and 4,200 Inuit⁷ relinquished Native title to 404,592 square miles of land in return for $225 million, to be paid out over twenty years, together with certain rights over specified tracts of land within a newly created land regime.

The land regime is one of the most significant aspects of the Agreement. Basically, it establishes three categories of land.

• Category I lands are those lands, allocated for the exclusive use of native peoples, in and around their communities. Of 5,403 square miles of Category I lands, 3,250 square miles belong to the Cree. Within this category, there are two further subcategories: Category IA lands, (1,274 square miles) which are subject to federal jurisdiction; and Category IB lands, (884 square miles) which are under provincial jurisdiction.
• Category II lands are those lands over which the native people have exclusive hunting, fishing and trapping rights, but no special right of occupancy. Of 58,500 square miles set aside as Category II lands, 25,130 square miles are allocated to the Cree.
• Category III lands (346,092 square miles) make up the remaining territory under the Agreement. With respect to this area, native people are given more limited harvesting rights and the general public is allowed access and use.⁸ 


The Northeastern Quebec Agreement follows the same format. In return for the surrender of all their native claims, rights, titles and interest, the 420 Naskapi of Quebec are to receive $9 million and land rights similar to those established under the James Bay Agreement. One hundred and twenty-six square miles of Category I-N Lands are allocated for the exclusive use and benefit of the Naskapi under the Agreement. Of these, no more than sixteen square miles can be designated Category IA-N lands under federal jurisdiction. The Naskapi are given exclusive hunting, fishing and trapping rights over an additional 1600 square miles of Category II-N lands.⁹

In addition to this land regime, the two agreements deal with other matters including:

• entitlement of an individual to be enrolled as a "beneficiary" under the agreements;
• local and regional government;
• health and education;
• protection of the environment;
• administration of justice; and
• native economic and social development.

THE CREE-NASKAPI (OF QUEBEC) ACT

Section 9 of the James Bay and Northern Quebec Agreement and Section 7 of the Northeastern Quebec Agreement established a government obligation to recommend to Parliament "special legislation" relating to local government on the lands held by Canada for the use of the Cree and Naskapi bands, that is, Category IA and Category IA-N lands, respectively. Fulfilling its obligation, the Government of Canada tabled the Cree-Naskapi (of Quebec) Act before Parliament. The Act was passed unanimously by both Houses of Parliament.

The Cree-Naskapi (of Quebec) Act applies to Kobac Naskapi-aeyouch (the Naskapi Band) and to eight Cree bands. The eight Cree bands are identified in the Act as: Whapmagoostoo Aeyouch (Great Whale River Band), Chisasibi Eeyouch (Chisasibi Band), Wemindji Eeyou (Wemindji Band), Wapanoutauw Eeyou (Eastmain Band), Waskaganish Eeyou (Waskaganish Band), Nemaskauw Eenouch (Nemaska Band), Waswanipi Eenouch (Waswanipi Band) and Mistasini Eenouch (Mistassini Band).¹¹

As we noted above, the Cree-Naskapi (of Quebec) Act is the first Indian self-government legislation in Canada. The Act replaces the Indian Act¹² and adopts a bilateral approach through consultation in determining, as policy, relationships between government and natives. In passing this Act, Parliament removed from the Minister of Indian Affairs and Northern Development the authority to exercise direct control over the Cree and Naskapi and placed this authority back into the hands of the bands themselves. The Act established new legal and political regimes in the form of local governments accountable to the Cree and Naskapi people.

THE CREE-NASKAPI COMMISSION

The negotiators and law makers of the Act anticipated that implementing a comprehensive piece of legislation concerning a matter as complex as self-government would be problematical. In light of this, Part XII of the Act established the Cree-Naskapi Commission as an independent agency whose primary role is to monitor implementation of the Act. The duties of the Commission, stipulated in section 165 of the Act, are two:

1. to prepare a report every two years on the implementation of the Act. This report is to be delivered to the      Minister of Indian Affairs and Northern Development who will table the report in Parliament; and

2. to receive and investigate representations of interested persons regarding the implementation of the Act and to prepare reports and recommendations on the matters investigated.

In the course of the hearings, all parties expressed general satisfaction with the Cree-Naskapi (of Quebec) Act and certain aspects of its implementation. The Department of Indian Affairs and Northern Development, represented by its Assistant Deputy Minister for Self-Government, Mr. Richard Van Loon stated: ". . . it would be safe to say that the Federal Government is fairly pleased with the overall results."¹⁴

However, the Commissioners also heard numerous complaints from native representatives about problems they have been encountering with respect to implementation, both with the Act itself and with departmental policy. As one might expect, it has not been easy for the bands to assume the mantle of self-government as contemplated under the Act. But beyond this, the Cree have stated:

The Government has not accepted the principle of Cree self-government, has not established the proper way of dealing with Cree local governments and refuses to set aside the necessary resources to meet its obligations.¹⁵

The Department of Indian Affairs and Northern Development has stated that the implementation of the Act rests essentially with the bands and their members.¹⁶

The Commissioners are not surprised to hear conflicting views from the native groups and governmental representatives. The matters at issue are crucial for all parties. We are of the view that if successful implementation is to be achieved by cooperation,all parties must overcome their differences and distrust. In this report, we seek to assist in doing this by identifying the more contentious areas and suggesting solutions.

As a final note, the Commissioners would like to express their concurrence with a statement in the Department of Indian Affairs and Northern Development's brief which underlines the national importance of successful implementation of the Cree-Naskapi (of Quebec) Act:

The Cree-Naskapi (of Quebec) Act is very significant for us because it is the first Indian self-government legislation which has taken a group of Indians outside the Indian Act. Therefore, even with the difficulties we have had in the implementation of the Act, it does serve as an important lesson for future Indian self-government legislation in Canada.¹⁷

Chapter 2
The Cree-Naskapi (of Quebec) Act: An Overview

As we pointed out in Chapter 1, the Cree-Naskapi (of Quebec) Act is an outcome of the James Bay and Northern Quebec Agreement and of the Northeastern Quebec Agreement. The legislation creating the Act was enacted by Parliament in compliance with these agreements. Furthermore, the Act implements the terms of these agreements which call for the entrenchment of certain land rights and hunting, fishing and trapping rights; the establishment of native controlled health and education authorities; the enactment of measures relating to policing and the administration of justice; and the establishment of local self-government. The Cree and Naskapi regard the Act as the cornerstone to achieving full potential of the two agreements, especially with respect to establishing local self-government and a new land management regime. The Act is also the basis upon which the relationship between the Cree and Naskapi and the federal government has been redefined.

Self-government, the central theme throughout the negotiations leading up to the Cree-Naskapi (of Quebec) Act, is clearly reflected in the Act itself. In providing local government for native communities on native lands, the Act allows Cree and Naskapi bands to maintain their traditional ways of life and customary practices while at the same time adapting and incorporating new elements into their governments and institutions.

SIGNIFICANT PRECEDENTS

In addition to the fact that it is the first native self-government law in Canada, the Act establishes significant precedents in two other ways. The first of these precedents is the fact that the Act was developed through close consultation with Cree and Naskapi representatives. This bilateral approach at fashioning a law respecting Indian peoples represented a major departure from previous government policy - typified by the Indian Act - which established native policy unilaterally.

The implications of this bilateral approach to developing legislation are significant. By working together, both parties presume that the resulting legislation will be a reasonable accommodation of both their interests. Moreover, a cooperative approach to developing legislation helps ensure that all the issues and provisions are thoroughly discussed and that each party understands the undertakings, responsibilities and obligations assumed in the resulting Act.

This cooperative approach to creating legislation coincided with a broader political movement underway across Canada to alter and improve Indian and Government relationships. The Cree and Naskapi participated actively in this movement. At the same time as the Act was being developed, the Special Committee on Indian self-government¹ was in the process of conducting hearings and preparing a report on Indian self-government. In their presentations to the Committee, the Cree and Naskapi demonstrated that their efforts and negotiations to realize self-government were not inconsistent with similar efforts of other native people.

In addition, it was at this time that native leaders from across Canada entered into dialogue with First Ministers. This resulted in greater recognition and protection of their treaty and aboriginal rights in the Constitution Act, 1982. As a result of their participation in this process, the Cree and Naskapi had significant input into the resulting amendment of the Constitution. The rights provided in the two agreements and in the Cree-Naskapi (of Quebec) Act are now given constitutional protection by Section 35(3) of the Constitution Act, 1982.

A second precedent-setting feature of the Cree-Naskapi (of Quebec) Act is that it represents a new concept in relations between natives and government. Under the Act, the Cree and Naskapi assume greater control of the internal affairs of their communities and of the management of certain categories of lands. Local governments are responsible and accountable to their band members rather than to the federal government. As pointed out by the Waskaganish Band in its presentation to the Commission, this rejects previous policy and allows native bands to go beyond the restrictions inherent in the Indian Act:

The elected band council became the head of a legal entity rather than performing a purely administrative function for the Department of Indian Affairs as the case was under the Indian Act.²

AN OUTLINE OF THE ACT

What follows is a brief overview of the legislative scheme of the Cree-Naskapi (of Quebec) Act. The Cree-Naskapi (of Quebec) Act deals exclusively with Category IA and Category IA-N lands and local government on such lands. Category IA lands are lands transferred from the province to the Government of Canada for the exclusive use and benefit of the James Bay Cree Bands. Category IA-N lands are Naskapi Band lands of the same nature.

The applicability of federal and provincial laws on native lands and their order of priority is dealt with in sections 3 and 4 of the Act. Highest priority is given to the James Bay and Northern Quebec Native Claims Settlement Act, the federal statute which gives effect to the James Bay and Northern Quebec Agreement. Next in priority is the Cree-Naskapi (of Quebec) Act, which is paramount over all other federal legislation. With respect to provincial legislation, Section 4 says that the Act and regulations and by-laws under it prevail over provincial laws of general application.

The structure and jurisdiction of Cree and Naskapi local government is outlined in Part I of the Act. By establishing them as corporations, the Act allows individual bands to function as legal entities. The incorporation of a band means that its legal status is clearer: a band has the capacity, rights, powers and privileges of a natural person. Unlike Indian Act bands, the Cree and Naskapi bands can enter into contracts, own property and legal take action in their own names without having specific individuals such as councillors acting on their behalf. All rights, titles, interests, assets, obligations and liabilities pass to the incorporated bands.

Band membership is also dealt with in this part of the Act. Generally, members of Cree bands and the Naskapi band are the beneficiaries under the James Bay and Northern Quebec Agreement and the Northeastern Quebec Agreement respectively. 

The powers and responsibilities of bands are set out in sections 21 to 23. Essentially, a band government has two roles:

• to act as the local government authority over its Category IA and IA-N lands;
• to administer and manage Category IA and IA-N lands as if it were the owner of the lands.

A band exercises its powers and duties through its council. Sections 25 to 78 of the Act therefore outline the functions, powers and composition of the band council. The chief is the band's principal representative and chief executive officer. A band council acts by resolution or by enacting by-laws. It may do this only at council meetings.

The powers of a band to enact by-laws are outlined in section 45 of the Act. By-laws made by Cree or Naskapi bands pertain primarily to Category IA or IA-N lands and apply to all persons onsuch lands. The bands have power to enact by-laws governing a wide range of matters affecting both local matters and the good government of its lands. Generally, the band's powers may be divided into two categories: those affecting the administration of the band's affairs and its internal management, and those concerned with local government. The powers concerning local government are much broader than those provided for under the Indian Act. They include the following areas:

• public order, public health and hygiene.
• land and resource use and zoning. This includes making land use plans, setting rules governing the uses of the lands and resources, and regulating the construction and use of buildings.
• local taxation. These by-laws are subject to the regulations of the Governor-in-Council.
• the establishment, maintenance and operation of local services and the right to charge users for the provision of such services.
• the operation of businesses -including the power to require business licenses or permits.
• the protection of the environment and the prevention of pollution.
• hunting, fishing and trapping. (In accordance with the James Bay and Northern Quebec Agreement these by-laws must be submitted to a coordinating committee and the responsible Minister may disallow them.)

Band elections are dealt with in Part II of the Act. A band may pass by-laws which govern the election of a council and determine its term of office. The band can then, by by-law, outline the council's structure and determine its rules of procedure. This allows bands to institute different procedures of local government which follow their own traditional systems. With respect to eligibility, any person who qualifies as an elector of a band (that is, any person who is a beneficiary under the relevant agreement and is over 18 years old) is eligible to be elected as councillor or as chief. Certain exceptions to the eligibility rule are set out in the Act. 

The conduct of band meetings and referenda are regulated in Part III. A band must hold at least one band meeting every year. Every elector of a band is entitled to one vote on any matter submitted to the band meeting. In some cases, the Act establishes a required minimum percentage of electors who must vote on a question. In these cases, if the required minimum percentage of electors vote and if a majority of those who vote is in favour, the measure is approved. Meetings where such a quorum is required are called special band meetings.

Part IV of the Act provides for the financial administration of bands as local governments. As replacements of Indian Act bands, bands under the Cree-Naskapi (of Quebec) Act receive funds and subsidies, mainly from federal departments, for which they are accountable. Financial provisions of the Act therefore deal with matters such as:

• the preparation and adoption of a budget every fiscal year,
• the authorization of expenditures by by-law,
• the keeping of accounts and financial records,
• the appointment of auditors,
• the authorization of short or long term borrowing by by-law,
• the enactment of by-laws governing the calling of tenders and the awarding of contracts.

Part VI deals with the interest of a band in its Category IA or IA-N lands and provides that a band has rights and interests as if it were the owner of the land. These rights include special rights with respect to soapstone, forest resources and gravel deposits. The Province of Quebec continues to own the minerals and subsurface rights of Category IA and IA-N lands. Persons who held mineral rights prior to the James Bay and Northern Quebec Agreement and the Northeastern Quebec Agreement may continue to exercise those rights. However, no other person may explore for or exploit the mineral resources on these lands without the consent of the band and without payment of compensation agreed to by the band.

The provisions in Part VII of the Act are designed to protect Category IA and IA-N lands to a certain extent from expropriation by the Province of Quebec. These provisions establish a number of principles and conditions which limit such expropriation.

Part VIII addresses the bands' granting of rights and interests with respect to Category IA or IA-N lands. The Act establishes the principle here that all important decisionsrespecting lands must be made by members of the band, not just the band council.

Part IX deals with cessions. Cessions may be made of Category IA and IA-N lands and only back to the Province of Quebec. The Act outlines a specific procedure to be followed in such actions. Since the result of a cession is the relinquishment of individual rights on these lands, the act of cession is a detailed process requiring substantial band membership consent.

Part X provides for a land registry system. The purpose of this system is to permit bands to administer and manage their lands in the most efficient manner. The system provides each band with readily available information on all rights and interests existing with respect to its lands and the buildings on them. This information is to be kept in a local office administered by the band as well as in a central office administered by the Department of Indian Affairs and Northern Development. All persons who receive rights in lands or buildings must have those rights recorded in the land registry system if they wish those rights to be legally protected. The band itself is obliged to submit to the land registry office copies of grants made by it with respect to lands, buildings, commercial forestry, and so on.

Part XI provides a band with the power to expropriate interests in lands and buildings for community purposes but imposes on it the obligation to compensate. The procedure for such expropriation will be governed by regulations passed by the Government after discussions with Cree and Naskapi representatives.

Part XII establishes the Cree-Naskapi Commission. This body is responsible for preparing biennial reports on the implementation of the Act and conducting investigations into complaints and representations relating to its implementation. 

Part XIII on successions deals with the disposition of property of a deceased Cree or Naskapi. The provisions for succession attempt to reflect the system presently used in the communities, especially in relation to traditional property. 

Part XIV covers tax exemptions. Exemptions are similar to those under the Indian Act. These exemptions apply to the interest of an Indian or a band in Category IA or IA-N land and the personal property of an Indian or a band situated on Category IA or IA-N Lands. There are also exemptions on succession duties, inheritance taxes and estate duties.

Provisions dealing with exemptions to the seizure of property (Part XV) are also similar to those in the Indian Act. The property of a Cree or Naskapi situated on Category IA or IA-N lands is not subject to seizure except by another Cree or Naskapi. However, property acquired under a conditional sale agreement may be seized by the seller. The Act also provides the possibility of a band or individual waiving its exemption in certain cases. This waiver allows Cree and Naskapi to offer property either real or personal as security for loans. When such a waiver involves an interest in land, approval of the band is necessary.

Part XVI deals with the matter of policing. Bands may enter into policing agreements with the Province, the Cree Regional Authority or other bodies empowered to provide policing services for them. A contracted police force has the authority to enforce federal and provincial laws as well as band by-laws.

Part XVII which deals with offences under the Act establishes a penalty for breach of the Act. Also, bands have the power to impose fines or periods of incarceration for contravention of band by-laws. The authority of a Justice of the Peace is increased by Part XVIII so that he can hear certain matters under the Criminal Code of Canada.

The Chief and Secretary of a band are allowed under Part XIX to act as Commissioners for the purpose of taking oaths and witnessing signatures of local band members.

The final part of the Act, Part XX, amends other federal legislation so as to accommodate the Cree-Naskapi (of Quebec) Act.

Chapter 3
Implementation of the Act: The Development of Cree-Naskapi Governments

The Act itself provides a legislative basis for the Cree and Naskapi to assume authority and responsibility for their own forms of self-government. In a recent judgment, Judge Ouellette of the Quebec Provincial Court ruled on the constitutionality of the Cree-Naskapi (of Quebec) Act and the powers conferred upon band councils. He stated:

. . . the Band Council constitutes an autonomous level of government when it exercises the powers conferred upon it by the Cree-Naskapi (of Quebec) Act. As long as it remains within the powers so conferred, the Band Council represents a level of government independent from the Canadian Parliament and the Quebec legislature. Its members are the elected representatives of the community who, in giving them their mandate, invest them with powers granted to the band under the Treaty Convention and especially the Cree-Naskapi (of Quebec) Act. It is to the Band members that the Council is accountable for its administration and the exercise of its powers, and not to Parliament, of which it is not an agent. ¹

From the very beginning of negotiations, the purpose of self-government has been evident. The Cree and Naskapi nations wanted the opportunity to grow and develop at their own pace. At the same time, they wanted to ensure that their traditional and cultural practices would be maintained and made secure. Prior to the Agreements and to the Act, when they were recognized under the Indian Act, these people engaged in activities such as hunting, fishing and trapping, spoke their own language and maintained their own levels of government. Today, these traditional pursuits and activities are still of great importance and constitute the way of life of a great number of Cree and Naskapi. Their diet is dependent, in part, on the animals which they hunt and trap and the fish which they catch. The sale of fur pelts represents a source of revenue. The relations between individuals, families and collectivities are still governed by traditional practices and rules. Self-government, therefore, is meant to enable each band to pursueits own alternative way of life.

At the same time, self-government is meant to form the basis for new relations with non-native governments, in particular, the Government of Canada and the Government of Quebec.

In examining the development of local governments the Commissioners cannot presume to pass judgment on the benefits of the Act or the appropriateness of the forms of local governments that have been adopted. Only the native peoples who are directly affected are in a position to make such judgments. We are, however, in a position to review and comment upon the efforts of native people to cope with the new systems which have been established.

A CAREFUL APPROACH TO IMPLEMENTATION

In establishing their governments, the Cree and Naskapi have adopted a careful approach. They have done this for several reasons. The m st important of these appear to be their unfamiliarity with the new systems and their lack of adequate financial resources. This point is made by Naskapi Chief Joe Guanish:

We have experienced many difficulties in assuming our responsibilities of local government under the Cree-Naskapi Act. A major part of this problem has been the insufficiency of financial resources but I will speak more of this later.

Of great significance however, is the process of adaptation and learning which the band members have had to undergo and are still undergoing in order that they can effectively carry out their responsibilities and exercise the powers of a local government under the Cree-Naskapi Act.

It will put the matter into perspective for you if you realize that prior to the coming into force of the Cree-Naskapi Act, the Naskapis had not even exercised their power to enact by-laws under the Indian Act. It was only during the process of the negotiation of the Northeastern Quebec Agreement that the Naskapis started to think about what self-government would mean to them. You can appreciate, therefore, that there have been tremendous demands of adaptation made upon those Naskapis who have formed the local administration since the coming into force of the Cree-Naskapi Act.²

Although not insurmountable, these matters of financing and adaptation have presented obstacles to the full and efficient implementation of various aspects of the Act.

Given this cautious approach, most bands have concentrated their efforts and resources on properly establishing the administrative and financial policies and systems necessary to support government activities and provide services to band members. Many statements were made to this effect by band representatives during their presentations to the Commission. For example, the

Nemaska Band stated:

We have taken a very cautious approach to implementing the full range of powers under the Cree-Naskapi (of Quebec) Act at the local level. What we have concentrated on is getting the administration firmly in place, making sure that the newly acquired funds are properly administered and learning to manage the personnel that we have, which have both increased quite substantially.³

In the two years since the Act has been in force, all eight Cree bands and the Naskapi Band have been incorporated and have assumed the specific administrative functions which arise in assuming powers under the Act. The adoption of by-laws, rules and procedures, relating to band elections, band council meetings and membership has resulted in new or additional responsibilities. Of course, each band is proceeding at a different pace. Some bands are still concentrating their efforts on solidifying their administrative structures while others are eager to exercise more fully the range of self-government powers available under the Act. All of the bands have had to adapt or adjust to the burdens of administration.

LACK OF TRAINING AND PROPERLY QUALIFIED PERSONNEL

One obstacle to implementation of self-government has been a lack of training and a lack of qualified, skilled personnel. The Nemaska Band spoke on this issue in their presentation:

. . . Nemaska is a small and isolated Cree community and as such qualified local human resources are quite limited which are basically needed for any administration.⁴

The Naskapi band provided a notable example of problems with personnel in their attempt to establish administrative structures. The band sought the services of a non-native consultant to design a local administrative structure. The consultant was recommended by the Department of Indian Affairs and Northern Development and appeared to have the requisite paper qualifications. However, the results were less than satisfactory. In fact Chief Guanish stated that "the experience with this consultant was a complete disaster for the Naskapi Band,"⁵ since the Band was put into a position of extreme financial vulnerability. To remedy the situation, the Band sought the assistance of the Northern Quebec Claims Implementation Secretariat and a native consultant who had experience in Indian band financial and administrative matters.⁶ Chief Guanish stated that progress to date on this matter has been encouraging.

Appropriate training and properly qualified personnel are essential if the bands are to develop management styles and administrative structures which reflect their objectives. The bands require assistance and training from people not only who are expert in the required areas of administration, but who are sensitive to the concerns the Cree and Naskapi have and the kinds of difficulties they encounter in assuming the responsibilities of self-government. For example, the bands now handle significant amounts of money for the administration of local government and the provision of services. Moreover, they are obliged to adopt financial systems in accordance with the provisions of the Cree-Naskapi (of Quebec) Act. These duties are new and complex and the availability of trained personnel varies from band to band. The Nemaska Band is a case in point:

It is very hard to believe that just seven years ago, the Nemaska Band Council had one three-quarter time Band employee with an operation budget of $25,000 per year. Today, we have over twenty full-time Band employees with an operation maintenance budget in excess of one million dollars plus the management of community development funds of approximately over $3 million.

However, this does not necessarily mean that we should not have anymore problems but in fact creates more problems of which we are endeavouring to solve constantly at the local level.⁷

In addition to the administrative tasks associated with local government, the bands are required to administer and manage property registration and the estates of deceased band members at the local level. Here again, the bands require specialized and trained personnel. With respect to this matter, the Department of Indian Affairs and Northern Development has recently adopted land registration regulations. These regulations provide for a system for the registration of the rights and interests in lands and buildings on the IA and IA-N lands. The information on all such rights and interests are to be kept and maintained in a band's offices and in a central office of the Department of Indian Affairs and Northern Development. Since land registry regulations have now been adopted, bands must establish their local offices and comply with registration requirements. But at this time, the bands have no adequately trained personnel to carry out these functions. So far, each band has been granted $2,000 to buy office furniture and supplies. Operating budgets have not yet been approved and no money has been allocated for training.⁸

With respect to the administration of estates, Chief Abel Kitchen pointed out, the Waswanipi Band has adopted by-laws under Part XIII of the Act dealing with successions:

We have also been told that estates relating to deceased members of the Band have to be settled at the Band level with no relative training and no funding, to adequately handle these matters.⁹

The Commission believes this lack of provision for training will prove to be a major weakness of the land registry system and in the administration of estates.

In sum, training and qualified personnel constitute a primary need for the creation and establishment of Cree and Naskapi public administration.

LAW ENFORCEMENT

The Cree-Naskapi (of Quebec) Act gives bands the power to make by-laws of a local nature on Category IA and IA-N lands. However, aside from adopting by-laws relating to administration and financial systems, bands have been reluctant to adopt by-laws which deal with substantive matters such as hunting, fishing and trapping; access to and residence on IA and IA-N lands by non-band members; the regulation and licensing of business activity; health and hygiene; public order and safety; and the protection of the environment. This reluctance largely stems from the lack of resources to enforce such by-laws if they were in place. Essential enforcement mechanisms - a police force and a justice system within band jurisdiction - are presently deficient.¹⁰

The matter of policing is provided for in the Act but only insofar as it authorizes band councils to enter into agreements with bodies empowered to provide policing services. Such police authorities have the power to enforce all laws whether they be federal, provincial or band by-laws.¹¹ The present situation is that all the bands under the Act have Special Constables, known as Cree Units. These are recognized as sub-detachments of the Quebec Provincial Police, an arrangement in accordance with the James Bay and Northern Quebec Agreement and the Northeastern Quebec Agreement. Special Constables are appointed under the Quebec Police Act and as such receive regular training and perform the same duties as other police officers. However, bands have identified manpower, training and equipment as matters which require review and further consideration. Some of the smaller bands have only one constable. This presents a problem since the constable cannot be on duty twenty-four hours a day and is required to patrol a large area. There is also a problem of the additional training required by constables simply to keep up with new policing techniques and practices. The fact that some bands have only one constable means they cannot take full advantage of on-going training since the constable's presence is required in the communities. The presentation of the Mistassini Band also revealed that there are no wildlife conservation officers who could police hunting, fishing and harvesting activities if the bands adopted such by-laws. Clearly, additional financial resources are necessary to hire and train such officers.

With respect to the administration of justice, the Act confers additional authority for justices of the peace to hear certain matters under the Criminal Code. The James Bay and Northern Quebec Agreement and the Northeastern Quebec Agreement establish that the Minister of Justice of Quebec is responsible for the administration of justice throughout the territory. An itinerant provincial court without a regular schedule is in use as the local justice system for the bands. The court sits in a community when the number of offences and cases pending warrants it. In most instances, the interval between court sittings in the communities is three months. The Commission discovered that provincial Crown prosecutors are not available to prosecute band by-law offences. The bands themselves must retain a lawyer to conduct prosecutions on their behalf. This creates an additional financial burden for which there are presently no resources.¹²

According to the Mistassini Band, these deficiencies in the administration of justice "....carry the potential to cause serious harm to the respect our people would otherwise hold for a justice system that is quite foreign to us to begin with."¹³ The Commissioners are alarmed at this prospect and therefore have approached provincial authorities to bring these matters to their attention.

LONG TERM PLANS AND MAJOR UNDERTAKINGS

Another matter highlighted in various presentations at the hearings involved the difficulties bands were having obtaining band consent for major undertakings and in making long term plans. Major undertakings have had to be put in abeyance until the bands are able to comply with procedural requirements in the Act. For example, some band council resolutions or by-laws require approval by a majority of eligible voters. Since a significant number of band members still pursue traditional harvesting activities for extended periods in areas that are distant from their communities, they are not available to cast their votes or be present at meetings. The Waswanipi presentation, in particular, indicated a need for an amendment to the Act to establish a process to overcome this situation.¹⁴

All of the bands stated that their ability to make long term plans for land use, capital projects, housing and budgeting are frustrated because of the uncertainty of funding from the federal government. The bands have been relegated to budgetary and planning guesswork. The issue of funding is common to all of the bands and has been identified as the single most important obstacle to the full implementation of the Act. Because this matter is of considerable complexity, it will be dealt with in the next chapter.

PROGRESS TO DATE

With respect to changes and advances made so far as a result of the Act and with respect to the potential which is yet to be realized under it, many bands spoke favourably in their presentations. These remarks of Chief Abel Kitchen of the Waswanipi Band are typical:

This Act, which is before this commission has taken years to come to this stage. At the local level, we have had many discussions, and feel that this Act is adequate and reflects the needs and aspirations of the council and the people of Waswanipi. It gives the Waswanipi Band the essential tools to deal with our own affairs and yes even to make our own mistakes.¹⁵

In embracing the authority and power conferred by the Act, the bands have developed and strengthened the structures and institutions of self-government. The bands are incorporated legal entities, maintaining membership lists; recording meetings, resolutions and by-laws; hiring staff and personnel; designing and implementing administrative and financial policies and systems; adopting election by-laws; and conducting general and special meetings on a regular basis.

With the assistance and collaboration of the Cree and Naskapi, the Department of Indian Affairs and Northern Development has drafted and adopted by-laws dealing with the long-term borrowing powers of the bands, the form of an instrument of land cessions, and land registry regulations. In addition, work is preceding on the Cree-Naskapi band election regulations, expropriation regulations, instrument of succession regulations, and band meeting and referenda regulations. ¹⁶

THE OUJE-BOUGOUMOU BAND

A matter of special note are developments concerning the Ouje-Bougoumou Band who made a presentation during the Special Implementation Hearings. The band is presently being established and will be the ninth Cree band. For many years the Cree of Ouje-Bougoumou have made numerous representations to be recognized and formally established as a distinct Cree Band. The Quebec Government has formally agreed to the principle of setting aside Category IA, IB and II lands for the Band. The precise areas and locations of such lands will be negotiated between the Band, the federal government, the Quebec Government and the Mistassini Band which will cede a portion of its lands for the use and benefit of the Ouje-Bougoumou Cree.¹⁷

Chapter 4
Implementation of the Act: Fiscal Relations

We are . . . concerned that the continuing viability of our local government is jeopardized by the failure of the Government of Canada to provide us with adequate funding as negotiated in the funding formula and the repeated vacuum created in our budgetary planning process resulting from Indian Affairs' failure to provide us with the available budgetary amounts in advance of our fiscal year.¹

In its written submission to the Hearings, the Department of Indian Affairs and Northern Development states:

The government is honouring all of its funding commitments under the Cree-Naskapi Act and will continue to do so.²

With respect to financial matters, the positions of both sides have become hardened and relations between them bitter.

It is important to note that strikingly similar differences of opinion, held with equally strong conviction, between the Cree and the Department of Indian Affairs and Northern Development occurred over the implementation of the James Bay and Northern Quebec Agreement during the period 1975 to 1980. On November 18, 1980, the then Minister, the Honourable John C. Munro, tabled in the House of Commons a report on the implementation of the James Bay and Northern Quebec Settlement Act which stated ". . . as far as the federal government's responsibilities are concerned, the implementation process has been relatively smooth."³ Four months later, on March 26, 1981, the Grand Council of the Crees (of Quebec) remarked to the Standing Committee on Indian Affairs and Northern Development that ". . . the Native people are experiencing great problems with the federal government in the implementation of the Agreement."⁴ A federally sponsored review of the James Bay and Northern Quebec Agreement⁵was launched in 1981 to examine major implementation issues and ease the tensions which had built up since 1975 and which had intensified considerably in 1979 and 1980. One of the outcomes of this review was a Government decision to allocate an additional $32.4 million to alleviate some of the most serious difficulties facing the Crees and their communities. A similar amount was also made available to the Quebec Inuit.

With respect to the current situation, the Commission believes that the fiscal disputes and the tensions and hostility to which they have given rise must be decisively addressed. The Commissioners wish to emphasize, therefore, the extent to which they have gone to examine fiscal matters. We have taken a very close look at presentations, testimony and documents and held meetings with key representatives to determine what has led to each party's entrenched position. We have also considered the views of authorities on Government and emerging First Nations fiscal policy and arrangements. The Commission's Special Implementation Hearings provided a unique opportunity for the Cree and Naskapi bands, the Cree School Board, the Grand Council of the Crees and the Government of Canada to explain their concerns and perceptions about implementation of the Act. One after the other, they told us about the origins of the conflict and its history as seen by each party. We were given not only analyses of immediate problems, but, in many instances, assessments of the long-term effects of sustained budgetary deficiencies on public services, community development, and local government operations.

What emerged was an understanding of the serious consequences of these disputes and the urgency with which solutions must be found. We are struck by the persistent planning and budgeting problems, the cash flow management difficulties and other financial troubles these northern communities face as a result of the unresolved disputes. As we prepare this report, both the Great Whale Band and the Naskapi Band are under tremendous financial stress and face the undesirable prospects of band indebtedness and staff lay-offs. Over the past two years, other bands have had to reduce services and defer plans. The result has been lower standards and poorer quality in essential public services for communities already faced with poor social and economic conditions.

We are unable here to recount all the issues that were raised during the Special Implementation Hearings and during our follow-up review and it would be unwise for us to try and prescribe solutions to every problem. Clearly, however, in raising and describing each issue, the parties, both native and Government, were underlining the urgency of the situation and the necessity of solutions. The native parties wanted important Canada - Cree and Naskapi fiscal matters brought to the attention of Parliament and, with them, fresh thinking from the Commission on just what to do about the many outstanding disputes. The solutions we offer are intended to restore harmonious bilateral relations between the autonomous, yet fiscally dependant, Cree and Naskapi governments and the Government of Canada and in turn to enhance opportunities for the Cree and Naskapi governments to further mature.

CREE AND NASKAPI FISCAL CONCERNS

During the Special Implementation Hearings, the Cree andNaskapi bands outlined many of the serious fiscal problems affecting their communities and their efforts to implement the Act. These problems, as the bands see them, include the following.

• The Naskapi Band spoke of the Government of Canada's unwillingness to compensate for the extra costs of providing local government services due to the closure, in 1984, of Shefferville. Services previously provided in the town must now be obtained elsewhere at considerably increased costs. Because closure of the town was unforeseen, original budget projections have had to be significantly altered.⁶ The Band also noted its lack of resources to enforce Band by-laws.⁷
• The Waswanipi Band pointed out that lack of agreement with the Department of Indian Affairs and Northern Development during the last two years on its capital works program--at both the projects and budget levels--has made it impossible for the Band to plan even one year ahead with any certainty. The Band also noted that the shortage of training and development funds has hampered personnel development. As well, the efficiency and effectiveness of local services and internal government operations have been reduced.⁸
• The Nemaska Band stated that the Department of Indian Affairs and Northern Development refused to finance construction of a six mile access road to the preferred location of the Nemaska Community. About three years ago, 95% of the Band's Category IA lands were burned by a major forest fire, including the settlement site recommended by the Department. Under these circumstances, the Band sought reimbursement from the Department for the settlement compensation funds it expended to build the road. The Department rejected these requests on the grounds that the Band refused to situate its community on the Department's recommended site.⁹
• The Mistassini Band drew attention to serious housing problems. A housing backlog of 10 years exists in the Mistassini community. It is estimated that $42 million is required to eliminate the shortage. A further $16.8 million is required to replace 118 homes--constructed by the Department of Indian Affairs and Northern Development--which, though now occupied, have been condemned. Despite these conditions, the Band is convinced that the federal government plans to reduce the housing budget in 1987-88.¹⁰
• The Great Whale River Band spoke of energy costs. Before the Cree-Naskapi (of Quebec) Act was in place, the Northern Housing Program subsidized energy consumption to offset the very high costs of heating oil and electricity. These subsidies were cut off after the Act came into force. No special funds to offset energy costs were set aside in Cree-Naskapi funding and the Department of Indian Affairs and Northern Development, after over two years of discussions, has not decided whether to subsidize these costs as it does for the neighbouring Inuit community. The Band wants to be repaid the $377,000 spent to date on energy. In addition, it wants assurances of being eligible for energy subsidies under the Northern Housing Program.¹¹

THE STATEMENT OF UNDERSTANDING: BACKGROUND

The single most contentious fiscal disagreement between the federal government and the Cree and Naskapi Bands stems from the negotiated funding package which accompanied the Cree-Naskapi (of Quebec) Act. This is a disagreement which was raised directly in almost every brief to the Commission and which is still very.much in dispute. The funding package is called the "Statement of Understanding of Principal Points Agreed to by the Cree-Naskapi (of Quebec) Act Implementation Working Group."¹² It is included in its entirety in our report as Appendix A. The Statement is a companion document, a bilateral arrangement developed and negotiated along with the Act itself, which transfers financial resources from the federal government to the band corporations so that the Cree and Naskapi can implement the new Act. Without it, the Cree and Naskapi would not have supported the proposed legislation. This fact was emphasized at the Implementation Hearings and was confirmed by statements made in the House of Commons by the Honourable John Munro, then Minister of Indian Affairs and Northern Development, at the tabling of the Cree-Naskapi Bill.¹³

The necessity of such a funding package was paramount. The Cree-Naskapi (of Quebec) Act established a new relationship between the federal government and the nine newly-constituted band corporations and fundamentally altered the responsibilities of each. It gave powers and duties to these new governments never before available to any other Indian group in the country. Old fiscal arrangements neither could satisfy the requirements of the new legislative and political scheme nor were they appropriate for government-to-government dealings. New arrangements were necessary to protect the fiscal autonomy of these governments and to secure financial resources so that the Act could be implemented. Thus, the Act's financial provisions provide for clear band autonomy over budgeting, accounting, contracting, controlling expenditures and borrowing. Federal responsibilities are restricted to matters such as making regulations in consultation with the bands and appointing administrators in cases of serious financial disorder.

Moreover, the Cree and Naskapi had first hand experience with the constraints and deficiencies of the old funding arrangements and did not want them to plague their new local government operations. The old arrangements, mostly contribution fund arrangements,were strictly administered and controlled by officials of the Department of Indian Affairs and Northern Development. Such restrictive and outmoded arrangements were unacceptable to the Cree and Naskapi because they believed such arrangements would impede the evolution of their self-governing communities. Their views are shared by the Special Committee on Indian Self-Government in Canada. It found the following about funding arrangements with bands under the Indian Act:

Present funding arrangements effectively deny Indian band councils and tribal councils control of the programs they administer; they exclude Indian people from policy-making; they place impossible accountability burdens on band councils that have assumed responsibility for administering programs; and they generate an excessive federal administrative and monitoring superstructure. In short, they inhibit the development of Indian Self-government. The Committee is convinced that the federal government, in establishing a new relationship with Indian governments must take a radically different approach to its fiscal arrangements with them.¹⁴

Such deficiencies and impediments were recognized by the native parties and the federal government at the outset of negotiations in January, 1982, and both wished to avoid these kinds of problems in the new relationship. A principle concern to the Cree and Naskapi was that whatever form of self-government was finally negotiated, the financing of essential public services at reasonable levels would have to be assured. It became clear that the new local governments would require more than the $3.7 million provided to the bands in 1983-84. It was imperative to the Cree and Naskapi that assured financing be guaranteed either in the legislation or in a binding, negotiated agreement. Up to this time, neither approach had been attempted with Indian bands. If a binding, negotiated agreement were to be used, a multi-year fiscal arrangement funded through an unconditional transfer payment to the bands was preferred. Such an arrangement would avoid the expense and frustrations of the continuous negotiations process which usually results when funding cannot objectively be settled up front. 

All parties involved in the negotiations were aware that the fiscal arrangement they agreed upon would be key to the implementation of the Act and to its final acceptance. The agreement would be the centrepiece of a new fiscal relationship.

THE STATEMENT OF UNDERSTANDING: A SUMMARY

The Statement of Understanding is an eleven page document signed on August 9, 1984, by a Minister of the Crown, the then Minister of Indian Affairs and Northern Development,the Honourable Douglas Frith; and by Cree and Naskapi representatives, the former Grand Chief of the Crees, Mr. Billy Diamond, and Chief Joseph Guanish of the Naskapi Band. In summary:

• The Statement is a negotiated agreement produced from over two years of dialogue between representatives of the Department of Indian Affairs and Northern Development and representatives of the Cree and Naskapi bands. 
• It is supported by a very thorough analysis of community needs, conditions and detailed cost estimates as well as a comparative analysis of the operating costs of other similar northern communities.
• It establishes a base-year federal subsidy level of $11.83 million (based on the fiscal year 1984-85) for operating and maintenance costs. It specifies the method of payment: a grant to each band paid out on the basis of a 75%-25% schedule.
• It indicates that annual adjustments will be determined through a formula with a set of six cost factors.
• It specifies that one-time funding, approved by the Federal Cabinet, in the amount of $7.22 million, will be made available to the bands to take care of start-up and conversion costs.
• It defines other key terms, conditions and understandings for the flow of funds under the agreement.
• It provides a commitment to undertake further joint work on outstanding issues relating to the Act; specifically to:
1. determine how the administration of statutory obligations under the Act will be carried out (reports, finances, membership, regulatory powers, etc.);
2. finalize regulations called for by the Act;
3. finalize and set up the Cree-Naskapi Commission;
4. finalize matters related to the Act (land transfers, costing of one-year operations and maintenance amounts, trust accounts, transfers, etc.);
5. develop suitable methods of funding for projects and capital funding; and
6. develop a method of coordinating funding and funding methods with other federal departments and agencies.

The disagreements surrounding the Statement of Understanding centre on the question of whether or not the agreement is binding on the Government of Canada. The Cree and Naskapi are absolutely convinced that it is. They stated at the Special Implementation Hearings and during the follow-up review that they were led to believe and that they do believe the negotiated arrangement is fully binding. They have produced substantial documentation to support their claims, some of which is presented later in this chapter. We should add here that we can find no instance where the Cree or Naskapi have asked for a basic change to the Statement; they have, however, sought and, with the assistance of federal representatives, obtained clarification to certain parts of it.

The Department of Indian Affairs and Northern Development on the other hand has taken a contrary position. In their presentation, on October 30, 1986, at the Implementation Hearings, Mr. Van Loon stated: "The Government of Canada does not recognize [the Statement of Understanding] as a fully binding undertaking."¹⁵ This same position is expressed in a letter dated October 23, 1986 to Grand Chief Ted Moses from the Honourable Bill McKnight, Minister of Indian Affairs and Northern Development. The Minister writes:

Your advisors know and, I hope, will have informed you that the memorandum [the Statement of Understanding] is not viewed by the Government of Canada as a legal obligation but we have, to the maximum extent possible, used it as a guideline in our financial relations.¹⁶

This difference in attitude towards the Statement of Understanding is the main source of dispute. Before considering more fully the central question of whether or not the Statement is binding on the Government of Canada, we will examine two related disputes which have been the source of considerable aggravation between the parties.

TRANSFER OF THE ANNUAL SUBSIDY

The first dispute involves transfer of the annual subsidy for operating and maintenance costs. Here the Statement of Understanding has been interpreted first quite flexibly and then, later, quite rigidly. The Statement indicates that 75% of the annual payment is to be disbursed at the start of the fiscal year and the 25% balance at the beginning of the fourth quarter, that is, on January 1.¹⁷ The Cree sought clarification about this, claiming that an earlier release had in fact been contemplated. They cite a letter dated June 7, 1984 from the then Minister, Honourable John Munro, to Mr. Billy Diamond, Grand Council of the Crees (of Quebec), which refers to the matter;

Twenty-five percent (25%) of approved funding for any one year will be held back until accountability requirements under the Act respecting the full payment for the previous year have been met. The relevant accountability requirements are set out in the Act itself and have been agreed upon between us. There will not be any other conditions attached to the payment of funds appropriate to the Act. ¹⁸

In this instance, the Cree convinced the Department that a release date earlier than January 1 was necessary and further that such a release date met the requirements of the Statement. A letter dated September 20, 1985 from Mr. Rem Westland, former director of the Northern Quebec Claims Implementation Secretariat, to Mr. Norman D. Hawkins, the Crees financial consultant, confirms this understanding. Mr. Westland writes:

On the face of August, 1984, Memorandum of Understanding, the Minister's letter to Mr. Diamond of June 7, 1984, and his statement in the House of June 8 (thanks for the copy) could still be interpreted more restrictively. This argues for a clarification of the funding arrangements, such as you and other Cree representatives have often requested.

You and Mr. Clarke's recall of intentions, however, together with then Minister Munro's public undertakings, argue convincingly for early release of the 25% installment after final audited statements confirm there are no financial problems. I will therefore proceed on this basis."¹⁹

With this understanding, the final 25% portion of the funds was released for the fiscal years 1984-85 and 1985-86 immediately after the required audited statements were prepared and explained to the bands and copies were sent to the Minister. This did not occur for 1986-87, however. The Department reverted to the strict wording of the Statement and withheld the funds until January 1. It appears that the Department took this more rigid position despite the previous understanding with the Cree and Naskapi because it did not have sufficient cash reserves to release the full amounts and therefore had to wait for approval of 1986-87 Supplementary Estimates (A) to make these payments. This does not explain, however, why funds could not be found from within departmental budgets or secured from Treasury Board's contingency reserve to honour an understanding so clearly reached with the Cree and Naskapi.

ANNUAL ADJUSTMENT TO THE FEDERAL SUBSIDY AND THE PROBLEM OF REVENUE SHORTFALLS

The second dispute where the Statement of Understanding has been the source of disagreement concerns the annual adjustments to the federal subsidy for operations and maintenance. The Cree and Naskapi contend that the formula which determines these yearly adjustments must include the six cost factors negotiated into the Statement,²⁰ namely:

1. population increases; 
2. inflation rates; 
3. increases in uncontrollable major costs in northern isolated communities, such as: fuel, transportation and utilities; 
4. additions to housing and infrastructure; 
5. reinstatement of enfranchised band members; and 
6. adjustments reflecting special needs.

They also claim that the funding levels offered do not meet other key requirements of the Statement. For instance, the native parties have requested that the annual federal subsidy be revised to offset unexpected shortfalls in user fee revenues. When the Commission examined this issue, it found that the negotiated 1984-85 federal subsidy was determined by taking total local government expenditures and then deducting estimated revenues.²¹ While expenditures were derived from a detailed analysis followed by bargaining between the parties, revenues could not be determined in any such way. The reason for this was that revenues depend on future negotiations with other parties, including the Province of Quebec. Because the bands were not able to control or predict potential revenues and could not begin negotiations for them until after a federal agreement was reached, provision was made in the Statement²² for a review of the operating subsidy. Although vulnerable, the bands were convinced that this "immediate review" clause of the Statement would enable them to return to the bargaining table with the federal government if major shortfalls were encountered.

The arrangement has not worked in the way that the Cree and Naskapi anticipated. Despite shortfalls in revenues and despite negotiations which have resulted in resource proposals to Treasury Board no financial resources have been made available to the bands.

What is at stake in this dispute are both the primary fiscal arrangement between two levels of government and large financial resources. According to the Crees,²³ the current and projected revenue shortfall in the federal operating subsidy--the difference between the levels proposed by the Cree the Naskapi and the Department, and the most recent Treasury Board approved levels--is estimated at $11.72 million over the four year period 1985-86 to 1988-89. While such sums may seem insignificant on the broader federal fiscal scene, they are critical in the context of Cree and Naskapi general operating accounts.²⁴ To the Cree and Naskapi, the availability of an assured federal subsidy is central to the operation of local government. Quite simply, the difference over the four years between the federal subsidy offered and what the Cree and Naskapi claim could be as high as 20% of total Cree-Naskapi budget levels for the period 1985-86 to 1988-89. No government can afford such possible losses of planned revenue without far reaching effects on its performance and the level of services it offers. And it is important to emphasize the breadth of public services these subsidies support. As specified in the Statement,²⁵ they include: general local government operations and administration; maintenance of public buildings, equipment and utilities; airport services, public safety, police and fire protection; forest fire protection on IA lands; housing administration; road and walkway maintenance; environmental health, public health; culture and recreation; benefits and financial counselling; environment and land management; economic development; human resource development; and centralized support services. Without assured financing, such wide-ranging services cannot be maintained. That this dispute over the annual adjustment is still raging late in the third year of a supposed five year arrangement is regrettable.

These fiscal disputes arising out of the Statement of Understanding have great significance for implementation of the Cree-Naskapi (of Quebec) Act. For a start, current financial difficulties of Cree and Naskapi bands require immediate attention. Continued wrangling over these matters does nothing to solve real financial problems. Furthermore, many of the implementation issues which must be dealt with in the near future are much larger in scope and in financial magnitude. It is estimated that the housing and capital funding issues alone could involve hundreds of millions of dollars over the next fifteen years. More important perhaps, the disputes have caused growing distrust and worsening relations between the native and federal governments and are very damaging to the implementation of native self-government under the Act. If these matters cannot be reconciled without resorting to the courts, a course of action under active consideration by the Cree, then the chances of settling other implementation issues are unlikely. This does not augur well for future bilateral relations, not just with the Cree and Naskapi but with other First Nations as well. We believe there are compelling reasons to settle these disputes in the immediate future. A breakthrough on these Statement of Understanding disputes would solve current financial problems, ease bilateral tensions and foster better relations overall.

THE STATEMENT OF UNDERSTANDING: A BINDING OBLIGATION?

We turn now to the question of whether or W not the Statement of Understanding is legally binding on the Government of Canada. In order to make a finding, the Commission examined the sequence of events that led to the current impasse. We outline these events as follows.

1. On April 25, 1984, Cabinet made a decision to proceed with the Cree-Naskapi (of Quebec) Bill and according to the Statement of Understanding it appears that Cabinet also ratified the principal points in the Statement of Understanding. ²⁶
2. On May 3, 1984, acting Grand Chief of the Cree, Mr. Philip Awashish, wrote to the Minister of Indian Affairs and Northern Development, the Honourable John Munro. He asked Mr. Munro for written confirmation of his oral assurances that cabinet had approved the negotiated funding levels and arrangements.²⁷
3. On May 25, 1984, the Cree-Naskapi (of Quebec) Act Implementation Working Group signed the Statement of Understanding. (It is identical to the one signed by the Minister, the Honourable Douglas Frith on August 9, 1984, a copy of which is appended to this report).
4. On May 31, 1984 and June 7, 1984, Mr. Munro forwarded letters to Grand Chief Billy Diamond confirming that the principal points reached in the negotiations had been recommended to and approved by Cabinet.²⁸
5. On August 1, 1984, Treasury Board approved financial resources for the Cree and Naskapi local governments at the negotiated levels subject to certain conditions, namely that:
1. the agreement between the Department and the Cree-Naskapi is to specify that the liability of the federal government will not be increased if the revenues or recoveries do not materialize; and
2. the negotiation of the formula for adjustment to the base-year level is to take into account that:
1. the local governments must contribute a percentage of the costs of governing, either through existing revenues or through the introduction of some forms of revenue raising;
2. the funding provided for administrative overhead of the local communities is to be negotiated up to a maximum amount or percentage; and
3. the formula is subject to Treasury Board approval.²⁹
6. On August 9, 1984, at an annual general assembly of the Crees in Eastmain, Quebec, the then Minister, the Honourable Douglas Frith, along with Grand Chief Billy Diamond and Chief Joseph Guanish, signed the Statement of Understanding. At this meeting, federal cheques in the amount of $19 million³⁰ were handed to the Cree and Naskapi. These cheques cover a special one-time payment as well as the 1984-85 fiscal year payments for the federal operating and maintenance subsidy.

 

A video cassette recording of this signing was submitted by the Grand Council of the Crees as evidence at the Special Implementation Hearings. Certain statements from this recording constitute important findings. The video tape shows that the Minister, Mr. Frith, made general declarations about the process of negotiations according to the James Bay and Northern Quebec Agreement, the passing of legislation for Cree and Naskapi Self-government [the Cree-Naskapi (of Quebec) Act] and the fact the whole process required considerable financial resources, which he called "economic tools." The Minister also declared it "important that the federal government live up to its commitment to the Cree-Naskapi Agreement [that is, the Statement of Understanding] and the Cree-Naskapi Act," and announced that $19 million was madeavailable to the Cree and Naskapi, $11.8 million as operations and maintenance funds for the next year and $7.2 million as a one-time contribution towards cost of implementing the Cree-Naskapi (of Quebec) Act. For his part, Chief Billy Diamond said that it took three years of negotiations to develop a funding scheme and that the $19 million was only for the first year of operations of the Cree-Naskapi (of Quebec) Act. He then asked the Minister if he would sign and commit the federal government to those figures negotiated and arrived at. The Minister replied that he was prepared to do so and added: ". . . show me the piece of paper and I will sign.... Otherwise, it is going to be a lot slower." The Minister then signed the Statement. A transcript of this recording is reproduced as Appendix B of this report.

7. In January, 1986, after protracted negotiations, agreement was reached between the Cree, Naskapi and the Department of Indian Affairs and Northern Development on an operating and maintenance adjustment formula. This agreement was rejected by Treasury Board on February 13, 1986. Nonetheless, interim funds of $836,665 were approved to cover operating expenses of the Cree and Naskapi and an amount of $346,341 was approved for employee fringe benefits starting in 1986-87. The Minister was asked by Treasury Board to return to it with a revised formula.³¹
8. On June 26, 1986, Treasury Board approved a formula. This was not, however, the revised formula negotiated with the Cree and Naskapi. The Treasury Board formula did not yield the same level of resources the Cree and Naskapi had negotiated.³² Further, certain cost factors were left out and other fiscal matters related to the Statement of Understanding were deferred.
9. Based on the Treasury Board formula, a federal offer of an increase to the federal subsidy for 1985-86 and 1986-87 of $1,804,362 (less the $836,665 already allocated) was made. This was rejected by the Cree and Naskapi because, in their view, it violated essential requirements of the Statement of Understanding. They objected to two conditions placed on the release of the funds, namely:
1. The bands must sign acceptance of the Treasury Board revised formula as the basis for the yearly adjustments; and
2. Other unresolved disputes about the federal subsidy (a $938,687 contribution to cover education user fee shortfalls and an annual economic development increase of $200,000) would be dealt with by a broader "mediation/negotiation process" proposed by the Government, but rejected by the Cree and Naskapi.³³ (The "mediation/negotiation process" refers to a federal proposal to have issues in the implementation of the James Bay and Northern Quebec Agreement resolved by way of a two part process: a federal negotiator, with a government-wide mandate; and a mediator who is to bring the parties together to negotiate an implementation plan. The mediation/negotiation process is described more fully in the following chapter.)
10. Finally, on October 23, 1986, the Department of Indian Affairs and Northern Development formally stated its position that the Statement of Understanding is neither binding nor a legal obligation of Canada. This statement was made in writing by the Minister, Mr. Bill McKnight, in his letter to Grand Chief Ted Moses. The position was reiterated in the Department's presentation to the Commission at the Special Implementation Hearings on October 30, 1986.

Having carefully considered the above facts and evidence, the Commission is of the opinion that the Statement of Understanding is both a moral and a legal obligation of Canada. Moreover, the Commission considers the Statement the principal fiscal arrangement which ties both Canada and the Cree and Naskapi nations to their financial obligations. The evidence is substantial and convincing. The Statement is a negotiated settlement which was intended to be binding, the Cree and Naskapi have been led to believe in letters from the Minister that it is binding, it was signed in public by a Minister of the Crown, negotiations have been entered into and agreements reached based on it and millions of dollars have been transferred in accordance with it. 

The Department of Indian Affairs and Northern Development bases its opposing position on the argument that, even though the Minister signed the Statement, it is not binding on the Government of Canada until it receives Treasury Board approval. Because it has not received such approval it is not a legal obligation of Canada. It is for this reason that the negotiated adjustment formula reached with the Cree and Naskapi could be overruled by Treasury Board and replaced by a formula in which not all the costs factors specified in the Statement had been accounted for.

The Commission asked the Department to provide a legal opinion supporting its position. The Commission felt that if the Department intended to diminish the standing of a negotiated agreement on the grounds that the Minister could not, on his own, bind the Government then, at the very least, it should provide an independent legal opinion. The Department informs us that no such opinion has been sought. In the absence of a legal opinion from the Department, the Commission decided to obtain its own legal opinion about whether the federal government is bound by the Statement of Understanding signed by the Minister on August 9, 1984. At the request of the Commission, the Montreal legal firm of Piche, Emery examined the facts in this dispute and considered the case law on such matters. It concluded that the Government of Canada is legally bound by the Statement and is legally obligated to negotiate in good faith an adjustment formula for the federal subsidy which considers all the cost factors of the Statement. This legal opinion supports the Commission's own views on this matter.

Given our findings, we must state that we find the Department of Indian Affairs and Northern Development's judgment in matters relating to the Statement of Understanding questionable. Surely, relations with the Cree and Naskapi on such vital matters deserve more care and consideration than exhibited by the Department. It is difficult to believe that a federal department responsible for negotiating and implementing self-government arrangements with Indian nations, and charged with improving their conditions, could persistently misinterpret a negotiated arrangement of this nature. The Department's attempt to circumvent clear obligations, by relying exclusively on its own interpretation of the financial Administration Act--the act which calls for Treasury Board approval of financial arrangements--without independent legal opinion, and without considering the facts of the matter and the principle of fairness, is unjust and must not be allowed to continue. Such actions cannot be dismissed as merely an honest difference of opinion. The Cree and Naskapi were clearly led to believe that the Statement of Understanding was binding and on this understanding accepted it as satisfying one of their main preconditions for agreeing to the Cree-Naskapi (of Quebec) Act.

Although there may be differences of opinion over whether the Statement of Understanding is legally binding, we are convinced that it is, both in equity and in fairness. Matters arising out of it must be negotiated in good faith. The immediate matters to be considered are the 75%-25% payment schedule of the annual federal subsidy, the formula for annual adjustment to the subsidy, the problem of revenue shortfalls, and agreement on a five year funding arrangement. It is our recommendation that these matters be discussed within the framework of a workable, bilateral process and resolved within the terms of the Statement of Understanding. These matters should not be deferred to the untried mediation/negotiation process proposed to deal with James Bay and Northern Quebec Agreement implementation issues, especially since that process has already been rejected by the Cree and Naskapi. We also recommend that the Treasury Board approved increase to the federal subsidy of $967,697 be transferred immediately to the bands without the release conditions now stipulated by the Department. We are convinced the Statement of Understanding contains all the ingredients required to restore good relations and resolve disputes. All that need be done now is that the Federal Government honour the Statement and that both parties guide their conduct by it.

Chapter 5
Implementation of the Act: Bilateral Relations

Unfortunately, when the parties left the negotiating table they went away without a framework for the orderly implementation of the Cree-Naskapi (of Quebec) Act and the harmonious evolution of their new relationship. The detailed implementation of the Act, like that of the agreements which gave rise to it, was left to be worked out at a later date. As is commonly the case, the enthusiasm which prevailed during the negotiations did not carry into the implementation stage.

THE ROLE OF THE DEPARTMENT OF INDIAN AFFAIRS AND NORTHERN DEVELOPMENT IN THE IMPLEMENTATION OF THE ACT

In the absence of an implementation process, general responsibility for the Cree-Naskapi (of Quebec) Act fell to the Department of Indian Affairs and Northern Development. Within the Department, this matter was assigned specifically to the Northern Quebec Claims Implementation Secretariat which had been set up on a temporary basis to deal with the implementation of the James Bay and Northern Quebec Agreement and the Northeastern Quebec Agreement. It is the position of most native groups that the Secretariat has played a helpful role. In the submission of the Naskapi, for example, John Mameamskum pointed out that the Secretariat played "a key role"¹ in helping the band council identify its financial management problems during the first eight months of 1985.

The Secretariat, however, is subject to and operates within the policy and decisional constraints of the Department generally. It is a commonly held view of native representatives that these constraints, combined with its lack of authority and financial resources, have diminished the Secretariat's overall effectiveness. Again, John Mameamskum of the Naskapi:

However, we have often found that the officials in the Secretariat have their hands tied by the bureaucracy within the Department of Indian Affairs and Northern Development and in this way the effectiveness of the Secretariat is diminished.²

Moreover, the Commissioners understand that the mandate of the Secretariat officially expired in 1986. This leaves the Cree and Naskapi peoples without any special process whatsoever within the Canadian Government to deal with implementation of the Act.

Beyond the diminished effectiveness of the Secretariat as a mechanism of implementation, the Commission has identified two more general concerns of native groups with respect to the Department of Indian Affairs and Northern Development's role in implementing the Cree-Naskapi (of Quebec) Act.

The first is that the Cree and Naskapi do not believe that the Department is structurally geared toward implementing self-government. This view was put forward during the hearings by Chief Abel Bosum of Ouje-Bougoumou Band:

It seems to us that once having passed the legislation putting the Cree-Naskapi Act in place, the Federal Government was not really prepared, organizationally, to cope with it. In as much as the structure of the Department of Indian and Northern Affairs is geared to dealing with Indian bands in the context of the Indian Act, the existing offices and personnel of the Department had no experience in implementing, financing or operating programs for bands which operate on a different basis.³

With respect to this concern, it is important to note that the Department has recently undertaken a major reorganization, creating a new section to deal specifically with self-government. The question is whether this will bring about a sufficient reorientation within the Department to accommodate new self-government arrangements with the Cree and Naskapi, as well as other First Nations. Although Cree-Naskapi leaders are not optimistic that it will, the Commissioners think that it is too early to judge the matter. We have no reason to doubt that the reorganization will make the Department of Indian Affairs and Northern Development better able to deal with self-government. However, it is unlikely to address those implementation problems of the Cree-Naskapi (of Quebec) Act which pertain to matters beyond the scope and mandate of the Department.

The second concern with the Department's role in implementation is that, in the opinion of native groups, the Act establishes a government-to-government relationship and places obligations upon Canada as a whole. According to Grand Chief Ted Moses of the Grand Council of the Crees, the responsibility for Canada's specific obligations falls upon many different departments:

They are obligations of not just the Department of Indian Affairs and Northern Development; there is National Health and Welfare, there is Transport, there is Secretary of State, Energy, Mines and Resources; Economic and Industrial Development.⁴

In principle, therefore, Cree and Naskapi leaders see it as inappropriate that responsibility for the Act's implementation be given to any single department. Moreover, they feel that the Department of Indian Affairs and Northern Development lacks the influence to effectively coordinate inter-departmental interests and responsibilities in the implementation of the Cree-Naskapi (of Quebec) Act. This latter point was also made by the Auditor General in his most recent report.⁵

THE MEDIATION/NEGOTIATION PROCESS

The Government clearly acknowledges the legitimacy of these concerns about the Department and, for this reason, as its most recent effort toward implementation of the Act, proposed "the mediation/negotiation process." In July 1984, when the Act was passed, there was already a recognized need for a process to deal with many of the difficult outstanding issues involved in implementation of the James Bay and Northern Quebec Agreement and the Northeastern Quebec Agreement. The enactment of the Cree-Naskapi (of Quebec) Act only added to this need. In response, the then Minister of Indian Affairs and Northern Development, the Honourable David Crombie, during a meeting with the Cree in December of 1985, agreed to appoint a special negotiator.⁶ Finally, in May of 1986, after a series of sessions before the Standing Committee on Indian Affairs and Northern Development, the Minister stated that there should be a two track process involving both mediation and negotiations, that is, a mediation/negotiation process. Mr. Crombie obtain Cabinet approval for this process and confirmed it in a letter to Grand Chief Ted Moses, dated June 27, 1986.⁷

During the hearings of this Commission, Mr. Richard Van Loon, Assistant Deputy Minister of Self-Government, discussed, from the Department's standpoint, the broad principles which were to govern the mediation/ negotiation process. Speaking of the appointment of a federal negotiator, he said:

First of all, there is an acknowledgement, . . . that this is not an obligation of the Department of Indian Affairs and that the entire Government of Canada must be involved.

Secondly, there is an acknowledgement that the federal negotiator speaks on behalf of the whole Federal Government and is not just an appointee of the Minister of Indian Affairs and Northern Development.

Thirdly, when we have agreed upon the financial obligations which are necessary in order to implement the Agreement, we will obtain approval for new funds to implement those arrangements. Those new funds may be disbursed through one department or another, but they will be to a large extent new funds.

Fourth, we have an internal process which requires that, first, there be established an inter-departmental committee at my level, at the Assistant Deputy Minister level, to examine the mandate of the federal negotiator, to receive frequent reports from the negotiator as to the progress of the negotiations, to acknowledge and recognize departmental obligations in fulfilling the terms of the Agreement. Fourthly [sic] . . . the Agreement will be approved by the Cabinet, not by the Minister of Indian Affairs and Northern Development acting alone. again an acknowledgement that it is an obligation of the entire Government of Canada.⁸

As to the role of the mediator, Mr. Van Loon stated:

. . . the Cabinet at least felt that having a mediator present in the negotiation process f rom the start might very well serve to mitigate the difficulties that had surrounded the negotiation process in the past. Therefore, the suggestion was that the negotiation process should have a mediator involved from the outset, but the objective of the negotiations is to arrive at an agreed upon implementation plan....⁹

Unfortunately, the mediation/negotiation process failed before it began. A series of discussions were held between the Deputy Minister of Indian Affairs and Northern Development, Mr. Bruce Rawson, and native groups to develop a framework for the process. From these discussions, the Deputy Minister produced terms of reference. The Cree-Naskapi, however, objected to these terms of reference on two grounds.¹⁰ First, they did not expressly state that the process was to take account of the spirit and intent of the James Bay and Northern Quebec Agreement and the Northeastern Quebec Agreement. Second, and more importantly, the time frame provided in the terms of reference limited potential negotiated agreements made between August 1986 and May 1987, "to the extent this is possible within departmental mandates and budgets". " In other words, any problems which reached beyond the mandate and budget of the Department would not be resolved within this period of time.

The terms of reference were submitted to and approved by Cabinet. According to the Grand Council of the Crees, however, this was done despite its objections. Furthermore, according to the brief of Mr. Ted Moses:

The Department then went before Cabinet, misrepresented the Cree position and obtained authority to proceed with negotiations with the Crees on their proposed unacceptable principles. This misrepresentation to Cabinet was confirmed by Mr. McKnight directly to me.¹²

This is a serious allegation upon which the Commission has not made a finding. We wish to point out, however, that Mr. Van Loon was given an opportunity to address the Cree brief. Although he took advantage of this opportunity by providing written remarks on many points raised by the Crees, he did not attempt to refute thisspecific allegation.¹³

THE NEED FOR A MECHANISM OF IMPLEMENTATION

As a result of a series of events, including the dispute over the Statement of Understanding, described in Chapter 4, and the failure of the mediation/ negotiation process just described, relations between Canada and the Cree and Naskapi are currently at an impasse. Clearly, the absence of an implementation mechanism for the Act is one of the major reasons for this. In the view of the Commissioners, the absence of such a mechanism is one of the major shortcomings of the Cree-Naskapi (of Quebec) Act and has significantly impeded its implementation. Moreover, both federal and native representatives generally agree on this point.

This deficiency is compounded by the fact that there is still no mechanism in place for the implementation of the James Bay and Northern Quebec Agreements and the Northeastern Quebec Agreement with which the Act is inextricably connected. The lack of an implementation plan for these agreements has been the subject of much comment. In 1981, a full federal review was undertaken as a result of a number of serious concerns expressed by the native parties. On the subject of an implementation mechanism, the Review concluded as follows:

Lack of proper mechanisms, structures and attitudes regarding implementation has been a major impediment to the smooth and efficient implementation of the Agreement. The establishment of more effective systems for implementation can do a great deal to prevent the build up of the type of conflict and tensions which, in recent years, have consumed time and resources that could be used much more productively in achieving the aims and objectives of the Agreement. ¹⁴

The Auditor General also has commented upon the need for such an implementation plan for the agreements in his 1986 report.¹⁵

What form should an implementation mechanism for the Cree-Naskapi (of Quebec) Act take? It is not possible within the confines of this report to put forward a detailed implementation plan. Instead, we state two general features such a mechanism should have, outline the form it should take and propose a set of principles which should guide the implementation process.

First, a mechanism of implementation should have a government-wide mandate to deal with native concerns. Native groups express great dissatisfaction over the absence of a representative of the Government who has such a mandate. After a careful review of all submissions and the circumstances surrounding implementation of the Act, the Commissioners find that native dissatisfaction on this point is justified. This absence, of course, is at the centre of the controversy, described in Chapter 4, over the Statement of Understanding which was signed by a Minister of the Crown and subsequently dismissed by federal officials as not being a legal obligation. When the Cree and Naskapi sit down and negotiate with someone in the Government, they want the security of knowing that person has the authority to make decisions.

Second, virtually all Cree-Naskapi submissions indicate a desire to have a special process established outside the Department of Indian Affairs and Northern Development to deal with the implementation of the Cree-Naskapi (of Quebec) Act. The Crees of Waswanipi think that this forum should be "at a very high level within the Government of Canada,"¹⁶ and the Naskapi believe it should have "access and responsibility directly to the Prime Minister."¹⁷ We are not prepared to say that the implementation of the Act should be removed from the Department entirely. However, we think there is merit in assigning the general responsibility for Canada - Cree-Naskapi bilateral relations to a representative who is outside the Department.

RECOMMENDATION: A SPECIAL REPRESENTATION OF THE PRIME MINISTER

We therefore recommend the creation of new machinery of government, linked to the Prime Minister's Office, for the implementation of the Cree-Naskapi (of Quebec) Act. It is our recommendation that this take the form of a Special Representative of the Prime Minister. Moreover- although it is not within our mandate generally to comment upon the agreements--we suggest that the Special Representative also be responsible for the implementation of the James Bay and Northeastern Quebec Agreement.

For this recommendation to work, the appointee must have the confidence of cabinet and the full authority to bind the Government of Canada. Needless to say, his or her authority would not be limited to the existing scope and mandate of the Department of Indian Affairs and Northern Development, but must encompass the mandates of other ministries as well. The Special Representative should have direct access to the Prime Minister and Cabinet.

In principle, this recommendation is not a great departure from the process which has already been approved by Cabinet. As described by Mr. Van Loon, the "negotiations" branch of the mediation/ negotiation process contains some of the same elements which we are proposing.

We have no doubt that institution of this recommendation would do much to satisfy the concerns of native groups. In support of this, we note the success of a similar representative in the Quebec Government. During the negotiation of the James Bay and Northern Quebec Agreement, Premier Robert Bourassa appointed a special representative, the Honourable John Ciaccia, who was given full authority to negotiate on behalf of Quebec. The Cree have expressed much satisfaction with the role he played in these negotiations. Recently, Mr. Ciaccia was responsible for the successful conclusionof another multi-million dollar agreement, the La Grande ( 1986) Agreement, with the Cree. These accomplishments, where there has been such a special representative at the provincial level, suggest the likely success of our recommendation at the federal level.

We also recommend that the Special Representative be guided in the fulfilment of his duties by the following broad principles.

1. The Cree-Naskapi (of Quebec) Act has a constitutional character which must be respected. This constitutional character derives from the Act's connection with the James Bay and Northern Quebec Agreement and the Northeastern Quebec Agreement which are "recognized and affirmed" in the Canadian Constitution.¹⁸
2. The Cree-Naskapi (of Quebec) Act creates a new government-to-government relationship between the Cree and Naskapi nations and the Government of Canada. This relationship is fully acknowledged by the federal government. The Act places a responsibility on both parties to eradicate the ghosts of the Indian Act which continue to trouble their relations.
3. The obligations within the Cree-Naskapi (of Quebec) Act cannot be separated from those contained in the James Bay and Northern Quebec Agreement and the Northeastern Quebec Agreement. In accordance with the findings of the James Bay and Northern Quebec Agreement Implementation Review of 1982,¹⁹ both should be honoured in their spirit as well as their letter.
4. The Cree-Naskapi (of Quebec) Act, as well as the James Bay and Northern Quebec Agreement and the Northeastern Quebec Agreement, are flexible agreements which allow problems to be solved through bilateral negotiations. This is in accordance with the findings of the Implementation Review, which stated that the James Bay Agreement ". . . was not intended to be a fixed and static legal document but rather a flexible agreement which would allow problems to be worked out through ongoing interaction."²⁰

Chapter 6
Conclusions

We will speak of the accomplishments first. At the Special Implementation Hearings, the Department of Indian Affairs and Northern Development indicated much progress in substantive areas such as the development of regulations. The Cree and Naskapi drew attention to their achievements in establishing local governments and in acquiring the techniques of management and administration. Of particular note is the positive feelings the Cree and Naskapi people have for their new autonomy. Removing authority from the federal government and placing in the communities where it belongs has created in the Cree and Naskapi a new satisfaction and new sense of self-esteem. The Cree and Naskapi are very proud of their accomplishments and are determined to make the Cree-Naskapi (of Quebec) Act work.

Unfortunately, successes in implementation have been overshadowed by major problems in the area of fiscal relations. Principal concern here is with the disagreement over the legal standing of the Statement of Understanding of August 9, 1984. After much reflection, the Commission has come to the firm conclusion that this agreement is legally valid and binding. The Statement of Understanding is integral to the implementation of the Cree-Naskapi (of Quebec) Act. Although financial commitments were not expressly made part of the Act, evidence clearly indicates that native representatives wanted them to be. They relented on this matter only after they received assurances from the federal government that commitments outside the Act would be reliable. Clearly, the Cree and Naskapi would not have accepted the legislation had firm financial guarantees not been made. Further to this, the Statement of Understanding was negotiated with the Department of Indian Affairs and Northern Development and was formally executed by a Minister of the Crown. In our opinion, it is a legal and moral obligation, fully binding on the Government of Canada.

In the course of Canadian history, a notion persists that governments make promises to induce natives to surrender their lands and other rights and then routinely break these promises, frequently hiding behind legal technicalities. Regrettably, the evidence supporting this notion is extensive. In a recent case in the Supreme Court of Canada, for example, Mr. Justice Dickson as he was then, addressed this very point:

The Crown cannot promise the Band that it will obtain a lease of the latter's land on certain stated terms, thereby inducing the band to alter its legal position by surrendering the land, and then simply ignore the promise to the Band's detriment.^l

The Commissioners hope that the Statement of Understanding will not become one further instance of this unfortunate notion borne true. Therefore, we strongly urge the Department of Indian Affairs and Northern Development to reconsider its position on the Statement of Understanding. Furthermore, we urge the Government to act at the earliest possible date and carry out our recommendation that it establish a Special Representative of the Prime Minister to oversee implementation of the Cree-Naskapi (of Quebec) Act. The first duties of this representative should be to carry out fully the Statement of Understanding and to develop a detailed plan of implementation for the Act itself. The Government has at this moment a unique opportunity to reaffirm its commitment to fairness and trust, in the eyes of native people. It must not let this opportunity pass.

Finally, we believe it our duty to call upon both federal and native representatives to use their collective talents, wisdom, resources and good will to reconcile their differences and to focus their efforts on ensuring that Cree and Naskapi communities grow and flourish on their lands. The success of the Cree-Naskapi (of Quebec) Act can be achieved only by the cooperation and determination of all parties in the coming years. The Commissioners realize that under the best of circumstances problems and difficulties arise. These must be dealt with honestly and fairly. We dedicate our efforts in monitoring the Act and in offering advice to fulfilment of the noble aims which underlie the Cree-Naskapi (of Quebec) Act and we call on both government and native people to do the same.

Appendix A
Statement of Understanding of Principal points Agreed to by the Cree-Naskapi (of Quebec) Act Implementation Working Group

Background

Pursuant to the 1980 Cabinet Decision with regard to the development of the proposed Cree-Naskapi (of Quebec) Act in close consultation with the Native parties, work proceeded on the development of draft legislation. This legislation will fulfil the Government's obligations under Section 9 of the James Bay and Northern Quebec Agreement and Section 7 of the Northeastern Quebec Agreement.

In January 1982, this working group was formed to deal with implementation matters and in particular finance and financial administration matters related to the realization of the new form of local government contemplated by the proposed legislation. It was also decided at that time to deal with matters which had been raised during the federal review of the implementation of the James Bay and Northern Quebec Agreement but had been left to be resolved in the ongoing work to implement Section 9 of the Agreement.

The necessity of a firm assurance of adequate funding for the implementation of the Cree-Naskapi Act before it is tabled in the House was stated by Grand Chief Diamond in his letter of June 23, 1983 to the Minister, the Honourable Mr. Munro.

Impact of the proposed legislation

At the outset the working group arrived at a shared understanding as to the implications and impact of the proposed legislation which can best be summarized as follows:

The Cree-Naskapi (of Quebec) Act is the cornerstone to the achievement of the full potential of the James Bay and Northern Quebec and Northeastern Quebec Agreements. The new structures which were created by the Agreements were meant to interface with properly constituted local governments. The Cree-Naskapi Act is also the basis upon which the relationship with the Federal Government will be redefined. By way of the new Cree-Naskapi Act, the Cree and Naskapi will be able to go beyond the restrictions inherent in the Indian Act and thereby assume full control in the administration of their communities and management of Category IA and IA-N lands.

The new administration, under the Cree-Naskapi (of Quebec) Act, will require new and appropriate interface mechanisms with the Federal Government. One of the most important parts of such a mechanism relates to the means by which funding is provided. The method to be employed had to be consistent with the spirit and intent of the legislation. With this is mind, the Implementation Group developed certain principles with respect to the delivery methods and mechanisms for funding. It was determined by the Group that such mechanisms were applicable to the delivery of funds for the ongoing operations contained in the funding package related to the Cree-Naskapi Act and to the one-time implementation funds. All other funds which flow to the Cree and Naskapi bands and the Cree regional administration, were understood to be similarly appropriate for disbursement by way of the funding mechanisms as created for the Cree-Naskapi Act monies. It was agreed that the new funding and administration arrangements must be completely implementated so as to be logically consistent with the new Cree-Naskapi/ Federal government relationship, thus giving meaning to the concept of local government.

Objectives

The group agreed on the following objectives:

Suitable local government funding presupposes that adequate financial resources are provided to ensure stable autonomous local governments, the safeguarding of community infrastructures, the delivery of essential services, the management of Category IA and IA-N lands and effective implementation of the Cree-Naskapi Act.

Thus, a second objective had to be the determination of funding requirements through a detailed and realistic analysis of Cree and Naskapi community needs and conditions without being constrained by existing program structures. On the other hand, potential revenues from other sources such as user fees had to be a part of the equation. 

A third objective was that the method adopted for funding had to respect local autonomy and the determination of priorities at the local level as well as the elimination of administrative requirements which were not consistent with the new functions and responsibilities of local governments.

For example, in the context of the new legislation, the local governments should be responsible and accountable primarily to their band members rather than to the Federal Government.

It flows from the above that new funding methods had to be devised which would permit the band immediate access to, and effective control of, the funds destined for local government. It was also agreed that a suitable funding method should provide for block type funding paid as an overall operating subsidy rather than on a program by program basis and that the method should allow for longer term planning based on firm knowledge of future funding levels.

Finally, it is important to attempt to ensure the co-ordination of funding from programs of general application available to the Creesand Naskapis including funding from other federal departments and agencies, on a basis and through methods consistent with the new local government operation funding arrangements.

Approach

The working group met on a regular basis to exchange findings and viewpoints and to reach agreement on a number of issues. A Department representative visited several of the Cree communities to view conditions first-hand. In addition, a fact finding mission was conducted in Yellowknife regarding local government operations and service delivery in the Northwest Territories.

The determination of the amount of funding required was based on a thorough analysis of community needs and conditions and detailed cost estimates as well as a comparative analysis of operating costs of other northern communities, all of which were contained in a submission made to the Department in April 1983. The Department representatives conducted a detailed review and then the final amounts were arrived at through negotiations.

Agreement on funding methods and related matters were reached following research and discussion as to which method available to the Federal Government was the most appropriate in the circumstances.

1. Matters upon which a consensus was reached
1. The working group agreed that funding under the Cree Act would be through an unconditional grant. As a matter of interest the Report on Indian Self-Government independently arrived at the same conclusions for similar reasons. The payment schedule agreed to was: Seventy-five percent of the total was to be disbursed at the beginning of the fiscal year and twenty-five percent was to be disbursed at the beginning of the fourth quarter.
2. Such grants are to be a "specific recipient class of grants" subject of course to Parliamentary appropriations. This grant is to be listed in the estimates as an item under the Native Claims Program Settlements. There will thus be a new "recipient class of grant" for the Crees and Naskapis.
3. The amount of the grant to be submitted to Parliament for yearly appropriation will be based on five year funding agreements.
4. No conditions will be imposed in virtue of the funding agreements. On the other hand, the local governments will have to comply with the provisions in the Cree-Naskapi Act regarding financial administration.
5. Consistent with the right of the Cree and Naskapi bands to determine their own priorities, the grants will not stipulate how the funding provided is specifically to be used. Consequently, the bands will be able to use the funding in accordance with their own priorities with the understanding that there is compliance with the Cree-Naskapi Act and the funds are generally used for services identified in the submission of April 1983, with the subsequent addition of forest fire protection.
6. Subject to the provisions of the Cree-Naskapi Act, the bands will determine their own accounting, reporting and financial systems. Nonetheless an effort should be made by the bands to ensure a certain uniformity in the classification of accounts, financial statements and other relevant financial data.
7. The funding for the Cree and Naskapi local governments in relation to operation, maintenance and administration has been established and approved by Cabinet using Base Year Estimates. The first Base Year is the fiscal period April 1, 1984 to March 31, 1985.
8. The funding levels for the first Base Year are as follows and include the following components:

BASE YEAR FUNDING APRIL 1, 19984 TO MARCH 31, 1985
	Cree	Naskapi
Total estimated expenditures for local operations and regional support	$16,716,718	$975,000
Less estimated revenues and other funding;
User fees charged to residents and commercial establishments	212,968	32,500
Permits and licences	7,500	1,500
User fees charged to institutions under provincial responsibility	3,413,579	42,550
Department of Transport for airstrip operations -	579,436
Province of Quebec funding for environmental programs	81,983
Continued DIAND funding for CRA CORE funding and implementation and the Cultural Education Centre in Chisasibi	730,000
Other funding for various programs	175,000	121,740
Cree contribution to regional support costs	462,495
	5,662,961	198,290
Net operating subsidy from Federal Government to be effected by grant	$11,053,757	776,710

The services contemplated in the estimated expenditures are as follows:

General local Government operations and administration; 

Maintenance of public buildings, equipment and utilities (with the exception of the diesel powered electrical generators); 

Airport services; 

Public safety, police and fire protection (the cost of police services provided by the Province of Quebec are excluded); 

Forest Fire Protection on IA lands 

Housing administration; 

Road and walkway maintenance; 

Environmental health; 

Public health; 

Culture and recreation; 

Benefits and financial counselling (excluding welfare and other transfer payments); 

Environment and land management (exclusive of the central land recording office and the services to be provided by