Backgrounder: New proposed legislative amendments to the First Nations Fiscal Management Act

On March 23, 2023, the Government of Canada introduced new proposed legislative amendments to the First Nations Fiscal Management Act (FNFMA). These amendments were co-developed by the First Nations Financial Management Board (FNFMB), the First Nations Tax Commission (FNTC), the First Nations Finance Authority (FNFA), the First Nations Infrastructure Institute Development Board and the Government of Canada.

First Nations Fiscal Management Act

The First Nations Fiscal Management Act enables First Nations government jurisdiction over:

• financial management;
• property taxation and local revenues; and
• financing for infrastructure and economic development.

The original Act, the First Nations Fiscal and Statistical Management Act, came into force on April 1, 2006, and was officially renamed the First Nations Fiscal Management Act on April 1, 2013. At present, 342 First Nations have chosen to participate in this optional legislation, which supports the creation of jobs, the development of new and sustainable sources of revenues, and an overall strengthening of First Nations economies.

The First Nations Fiscal Management Act contributes to the well-being, economic and community development, and greater self-determination of First Nations. The Act enables First Nations to participate more fully in the Canadian economy while advancing the priorities of signatory First Nations:

• strengthening First Nations property tax systems and First Nations financial management systems;
• providing First Nations with increased revenue-raising tools, strong standards for accountability, and access to capital markets available to other governments; and
• allowing for the borrowing of funds for the development of infrastructure and economic development on-reserve through a cooperative, public-style bond issuance.

After being added to the schedule of the First Nations Fiscal Management Act, a First Nation can begin working with any or all of the First Nations institutions established under the Act:

• The First Nations Tax Commission (FNTC) is a shared-governance institution that oversees and streamlines the approval of property tax and other local revenue laws of participating First Nations, builds administrative capacity through sample laws and accredited training, and supports the reconciliation of First Nations government and taxpayer interests.
• The First Nations Financial Management Board (FNFMB) is a shared-governance corporation that assists First Nations in strengthening their local financial management regimes and provides independent certification to support borrowing from the First Nations Finance Authority for First Nations’ economic development.
• The First Nations Finance Authority (FNFA) is a non-profit corporation that permits qualifying First Nations to work cooperatively in raising long-term private capital at preferred rates through the issuance of bonds, and also provides investment services to First Nations.

Proposed amendments to the First Nations Fiscal Management Act

The co-developed proposed amendments aim to address some of the barriers to economic development through increased supports and tools available to communities for modern fiscal management. These amendments will also establish the First Nations Infrastructure Institute (FNII) under the Act to support improved infrastructure outcomes for First Nations.

Engagement and consultation on the proposed amendments were carried out in three distinct phases. The first phase was co-development with the three First Nations Fiscal Management Act institutions and the First Nations Infrastructure Institute Development Board. The second phase was planned and carried out in partnership with the institutions and the Development Board, and included engagement and consultation with the 342 First Nations that have opted into the legislation. Lastly, the third phase of consultation and engagement included the Assembly of First Nations, Inuit Tapiriit Kanatami, the Métis National Council, the Manitoba Métis Federation, and Modern Treaty and Self-Government Agreement holders.

Proposed amendments include:

• Modernizing the First Nations Tax Commission's mandate to better support First Nations seeking to make local revenue laws beyond real property taxation, strengthen the education and capacity supports available, support local revenue-based service agreements, and broaden access to include advice to self-governing First Nations and other levels of government.
• Expanding the First Nations Financial Management Board's mandate to complete the 2018 expansion of its services and certification standards, thereby broadening access to new clients, including tribal councils and First Nations Modern Treaty and Self-Governing groups.
• Establishing the First Nations Infrastructure Institute (FNII) as a national Indigenous-led organization under the FNFMA to support communities to achieve better and more sustainable infrastructure outcomes. The First Nations Infrastructure Institute will support First Nations and other interested Indigenous groups and organizations with the tools, capacity, and best practices to implement and manage sustainable infrastructure.
• Collecting data to allow the institutions established under the Act to monitor growth and enhance their capacity to support evidence-based planning and decision-making on fiscal and economic objectives.
• Providing First Nations with additional powers to ensure compliance with their local revenue laws.
• Expanding law-making power to enable First Nations to make laws respecting the provision of services provided on reserve lands by or on behalf of First Nations.
• Lifting the Financing Secured by Other Revenues Regulation into the Act to decrease the risk of inconsistencies between the Act and regulations, and to simplify the process through which First Nations access capital through the regime.
• Clarifying the debt reserve fund by combining the fund supported by other revenues with the fund supported by local revenues and clarifying that only borrowing members with outstanding loans could be called upon to replenish the debt reserve fund when necessary.
• Augmenting terms to update the remuneration of the Chairperson of the Financial Management Board to provide adequate compensation and changing the position from part-time to full-time.
• Enabling the First Nations Financial Management Board and the First Nations Tax Commission to hold virtual meetings to conduct their annual meetings in a manner determined by their respective boards, including by partial electronic participation or entirely by electronic means.

For more information on the First Nations Fiscal Management Act, please visit the First Nations Fiscal Management webpage.