VICTORIA: The Canadian Taxpayers Federation (CTF) today responded to the federal government's proposed native financial institution legislation. "The key to generating wealth and prosperity is easily identifiable individual property rights. Until natives living on reserves have accountable governments and are given the same property rights as other Canadians, these government policies and legislation will be nothing more than band-aid solutions," stated Tanis Fiss, director of the CTFs newly created Centre for Aboriginal Policy Change.

The federal government claims they will not back the bonds. "Native bands will collectively guarantee each other's credit using future revenue such as money that comes from the federal government. This future revenue continues to be tax dollars. In addition bands will use revenue generated from property taxes, which are often raised from taxing non-natives who live on reserves, as is the case on the Musqueam reserve in Vancouver," said Fiss.

One of the objectives of the proposed legislation is to reduce the dependency native bands currently have on federal government financing. "This is well intentioned legislation, but it may very well have the opposite effect since bands will be relying on federal funding as future revenue to guarantee their credit," Fiss added.
Another goal of the proposed legislation is to set up a financial management board to help the bands produce budget documents that gain the confidence of investors and increase the likelihood of attracting financing. This board will also provide peer reviews "To ensure investor confidence in this scheme, let's hope the peer review of the budget standards set out by a board is not akin to an Arthur Anderson review. In other words, the fox guarding the hen house."

A firm dollar figure to set up four institutions that will run and support the bond system for natives has yet to be announced. Fiss asks, "What will this program cost taxpayers Taxpayers have a right to now how much and where their money is being spent."

The proposed Financial Institution Act is intended to deal with the often high rates of interest bands face. "The reason the interest rates are so high for bands is due to the risk involved. This is because the Indian Act shelters native property and assets located on reserves from any process of garnishee, execution or attachment for debts, damages and other obligations. Lenders and investors rightfully demand a risk premium to deal with this lack of security," Fiss stated.

The CTF intends to apply to appear before public consultations that Ottawa plans to hold on the financing package.