home about us services news employment faq contact

The First Nations Fiscal & Statistical Management Act
FREQUENTLY ASKED QUESTIONS

The First Nations Fiscal and Statistical Management Act

FSMA – How Does It Work?

FSMA – Improving First Nation Economies

FSMA – Use of Legislation

FSMA – Aboriginal and Treaty Rights

 

 

 

 

 

 

 

 

 

What is the FSMA?
The FSMA is a federal legislation that establishes four First Nation institutions: the First Nations Tax Commission, the First Nations Finance Authority, First Nations Financial Management Board, and the First Nations Statistics Institute. Collectively, these institutions will improve the First Nation property tax system and facilitate the rapid development of First Nation economic infrastructure.

 

What is the FNFMB?
The First Nations Financial Management Board will respond to the needs of First Nations who have property tax revenues and are seeking to borrow against these cash-flows. The FMB will also support First Nations in their response to the accountability agenda.
For those First Nations that borrow through the FNFA, the FMB will certify financial management systems, practices and standards, will monitor financial performance, and will provide intervention in exceptional circumstances. In terms of improving accountability, the FMB will provide, on request, services relating to research and advocacy, policy development, capacity development and partnerships in relation to financial management, and reporting and standards development.

 

What is the FNTC?
The First Nations Tax Commission will approve property tax and other local revenue laws, provide training related to the First Nation property tax system, prevent and resolve disputes between First Nation tax administrations and their taxpayers, certify First Nation borrowing capacity based on property tax revenues, and conduct research into emerging issues.


What is the FNFA?
The FNFA is a non-profit finance authority that serves First Nation governments. Under FSMA, the FNFA will improve access to capital by pooling borrowing through greater cooperation among First Nations, creating advantages of size and diversifying risk and revenue streams and by supplying expertise and sophisticated financial opportunities to First Nations. By pooling, the cost of borrowing will be significantly reduced, making capital affordable to all First Nations including First Nations with smaller levels of annual revenue. The strength of the pool will be based on its size and on the strength of the First Nation government revenues available to repay the debt. The strength of the pool will also be maintained by the independent quality assessment of the FMB, the institution responsible for overseeing participation and creditworthiness.

 

What is the FNSI?
The First Nations Statistical Institute will be a center of statistical expertise for First Nations, helping to evolve an understanding of national statistical collections, building First Nations capacity to use statistics, and providing objective analysis and interpretation of First Nations’ statistical information collected by Statistics Canada and other federal departments.
First Nations will benefit by having an understanding of and representation at national statistical activities and plans, and having the necessary information to plan for their communities and attract investment and economic development.

 

Where can I learn more about each fiscal institution?
For more information concerning the fiscal institutions, please visit each of their websites:
First Nations Tax Commission: www.fntc.ca
First Nations Finance Authority: www.fnfa.ca
First Nations Financial Management Board: www.fnfmb.com
First Nations Statistical Institute: www.firststats.ca

 

Where did it start?
The origin of the FSMA is the 1988 Kamloops Amendment to the Indian Act. This created the modern form of First Nation property tax authority and the Indian Taxation Advisory Board. To realize the infrastructure financing benefits of property tax, the First Nations Finance Authority (FNFA) was created in 1995. To realize increased investment from improved infrastructure and to obtain financing at improved rates, the Financial Management Board and Statistics Institute were created through the National Table on Fiscal Relations in 1999.

 

What is the purpose of the FSMA?
The FSMA will reduce two of the barriers faced by First Nations in attracting investment to their lands:
1. It is three times more expensive to finance infrastructure on First Nation lands.
2. It is four to six times more expensive to make an investment on First Nation lands because of poor investor confidence; unreliable, unavailable, or non-comparable statistical and financial information; and scarce investment facilitation expertise.
The FSMA addresses the first barrier by allowing First Nations to finance their infrastructure on similar terms to other jurisdictions in Canada. The FSMA addresses the second barrier by improving investor certainty and confidence, improving the quality of statistics, and reducing the costs of doing business to make it less expensive to attract investment to First Nation lands.

 

How will the Fiscal Institutions operate?
The fiscal institutions will be established as independent arm’s length entities with clear mandates and accountabilities laid out in evaluation frameworks. They will report annually on their accomplishments with respect to the goals laid out in these frameworks.
The fiscal institutions will be run by CEOs who will report to appointed boards. The institutions will utilize a transparent policy development process. Policy will be developed in consultation with key stakeholders.

 

Are all First Nations eligible?
Yes. Any First Nation can ask to be added to the FSMA schedule of participating First Nations, and obtain access to a wide range of services offered by the institutions. However, additional requirements must be met in order to access some services, such as the FNFA borrowing pool.

 

 

Why is it so difficult to attract private investment on First Nation lands?
A typical First Nation community must commit three times as much revenue to finance the same amount of infrastructure as a typical Canadian community
Governments use their infrastructure and services to stimulate industrial, commercial, and residential development in their jurisdiction.
A typical First Nation attracts only one-third as much new investment for each dollar of infrastructure improvement as a typical Canadian community.
This means that in a typical Canadian community, $1000 in property tax revenues brings $30,000 into the local economy, while in a typical First Nation community, the same $1000 generates only $3,000 or one-tenth the wealth.
For additional information, see “Ten Times Harder – Economic Development in First Nation Communities”

 

How will the FSMA enable First Nations to attract private investment??
The FSMA and the fiscal institutions will begin to reduce the barriers to private investment on First Nations lands by:

  • improving First Nations access to capital so they can buy infrastructure more “cheaply”;
  • ensuring First Nations get the best infrastructure for their money;
  • filling the vacuum of quality statistics about First Nation communities and their investment opportunities;
  • promoting these investment opportunities; and,
  • inspiring investor confidence in First Nations.

 

Why is federal legislation required?
Legislation is required

  • to improve the credit rating on the debenture issues and maximize the benefits to First Nation communities;
  • to provide certainty and stability for investors and First Nation taxpayers; and
  • to enable the federal government to vacate jurisdiction and transfer it to First Nations. With these institutions, First Nations are occupying powers currently held by the federal government.

Without federal legislation, these institutions would not have the requisite authorities. Infrastructure would have to be financed at higher rates, all laws would have to be approved by the Minister, and the Statistical Institute would have less access to First Nation information held by the federal government

 

Will FSMA affect the Indian Act?
No. The amendments to the FSMA during the previous legislative session will ensure that s.83 of the Indian Act remains intact. First Nations can continue to pass s.83 bylaws with the approval of the Minister if they so choose.

 

Does FSMA affect Aboriginal and Treaty rights?
No. To provide even greater certainty, the legislation contains an explicit non-derogation clause. The legislation is also enabling in nature. It only applies to those First Nations that are on the schedule.

 

Does FSMA affect the fiduciary relationship between the federal Crown and the First Nations?
No. There is no explicit or implicit connection between the FSMA and the fiduciary relationship.

 

Does the FSMA affect self-government agreements or Treaty negotiations?
No. The FSMA does not affect self-government agreements or Treaty negotiations.
However, First Nations that have Treaties or self government agreements, and are operating outside the Indian Act can request to be added to the schedule and utilize the services of the FSMA and the fiscal institutions.

 

 

 

HOME | ABOUT US | SERVICES | NEWS | EMPLOYMENT | FAQ’S | CONTACT US

© FNFMB 2008 ~ All rights reserved ~ site design by Topshelf Creative
WEB Hosting Service Provided By; Aboriginal Communications