Opening Statement to the Standing Committee on Public Accounts

Sustaining Development in the Northwest Territories

(Chapter 4—2010 Spring Report of the Auditor General)

5 October 2010

Sheila Fraser, FCA
Auditor General of Canada

Mr. Chair, thank you for this opportunity to discuss our Office’s work related to Chapter 4 of my Spring 2010 Report—Sustaining Development in the Northwest Territories. With me today are Scott Vaughan, Commissioner of Environment and Sustainable Development, and Frank Barrett, the Principal responsible for this audit.

The federal government has a mandate to promote political and economic development in the Northwest Territories and to protect the environment. Our audit looked at whether responsible federal departments have laid the foundations for sustainable and balanced development in the Northwest Territories. Our audit work was completed in November 2009. The audit focused on whether Indian and Northern Affairs Canada, Environment Canada, and Human Resources and Skills Development Canada had adequately implemented key measures to prepare for sustainable and balanced development.

These measures included

  • settling comprehensive land claim agreements and self- government agreements,
  • establishing and implementing a regulatory system that protects the environment, and
  • supporting appropriate economic development and skills training programs for Aboriginal peoples in the Northwest Territories.

Comprehensive land claim agreements and self-government agreements set out governance rights and the ownership of land and resource rights. These agreements help to provide a level of certainty and predictability for business, industry, communities and governments. Almost all of the Northwest Territories either lies within settled land claim areas or is the subject of ongoing negotiations.

At the time of our audit, four land claim agreements had been finalized. One of them—the Tlicho Agreement—was also a self-government agreement. Four other land claim agreements and ten self-government agreements were under negotiation. We found that Indian and Northern Affairs Canada, or INAC, had made constructive efforts to negotiate these agreements and had followed the established processes for their negotiation. As well, INAC had used alternative approaches when negotiations appeared to be stalled. While much remains to be done, in our view the efforts to settle land claim and self government agreements represent a significant achievement and an important step towards sustainable and balanced development in the Northwest Territories.

However, we also found difficulties with the annual funding process by which INAC supports Aboriginal communities to enter into self-government negotiations. The nature of this process makes it difficult for communities to receive funding at the beginning of the fiscal year within which it must be spent. On average, the agreements we looked at were signed more than six months after the beginning of the fiscal year, and several were signed in the last month before the agreement expired. First Nations officials told us that this situation has resulted in overdraft charges and penalties, damaged business relationships, delays in meeting payroll, and the loss of experienced staff. These issues can affect First Nations’ ability to participate in negotiations.

Mr. Chair, we also looked at the environmental regulatory system. Protecting the environment is important particularly because Aboriginal communities in the Northwest Territories depend on wildlife, water, and land for subsistence and for economic development opportunities. We examined whether INAC and Environment Canada had established and implemented an adequate regulatory system in the Northwest Territories. We found that, in regions with settled land claim agreements, there are systems and structures that support land use plans and provide a means of adequate consultation with communities.

In regions without comprehensive land claim agreements in place, however, there is uncertainty about Aboriginal title to the land, how it may be used, and who should be consulted to make development decisions.

Moreover, in regions without settled land claims, we noted a lack of specific mechanisms for developing land use plans. Without a formal land use plan, development decisions must be made on a case-by-case basis. Decisions related to project approvals may therefore take longer because it has not been determined where different types of development should take place and what conditions should be applied.

INAC also has specific responsibilities for monitoring the cumulative impact of development. This information is important because it provides co-management boards with environmental information to support informed decision making on development proposals. We examined whether INAC had established priorities for monitoring cumulative impact and had implemented a plan to do so. We also examined whether Environment Canada had supported INAC in these responsibilities.

We found that, 11 years after receiving a mandate to do so, INAC had not yet put in place a program to monitor cumulative impact. Similarly, funding for Environment Canada’s program that would support cumulative impact monitoring ended in 2007. As a result, neither department had implemented this program.

Mr. Chair, our audit also examined skills training and economic development programs for Aboriginal communities. We examined two Human Resources and Skills Development Canada, or HRSDC, programs aimed at supporting skills training. We also looked at four INAC programs aimed at supporting economic development for Aboriginal peoples in the Northwest Territories.

We found that HRSDC had established clear objectives and targets for both programs we examined and that it had reported on progress toward their short-term objectives. However, the Department had not assessed the progress these programs had made toward their longer term objective regarding sustainable employment for Aboriginal peoples.

We found that INAC’s economic development programs did not have clear objectives. Instead, the programs shared a number of broad objectives that were both general and vague. We also found that INAC did not monitor its programs’ performance or review information reported by funding recipients. During our audit, the federal government established the Canadian Northern Economic Development Agency and transferred to it the delivery of INAC’s economic development programs for the Northwest Territories. We recommended that CanNor take action to improve these programs.

Overall, we concluded that Indian and Northern Affairs Canada and Environment Canada had not adequately implemented key measures designed to prepare for sustainable and balanced development in the Northwest Territories.

We made eight recommendations, most of which were addressed to INAC. INAC, Environment Canada, Human Resources and Skills Development Canada, and CanNor have agreed with all of our recommendations. The Committee may wish to ask each Department for their action plan and the actions it has taken to date.

Mr. Chair, this concludes my opening statement. We would be pleased to answer the Committee’s questions.