The federal government is forcing the troubled Attawapiskat First Nation to pay a private-sector consultant about $1,300 a day to run its finances — even though the government's own assessments say the third-party management system is not cost-effective.
Aboriginal Affairs officials told The Canadian Press they have an agreement to pay Jacques Marion of BDO Canada LLP a total of $180,000 to look after the reserve's accounts from now until June 30.
The money comes from the Attawapiskat First Nation's budget.
That rate over the course of a year would run up to $300,000 and easily pay for at least one nice, solid house, notes Mushkegowuk Grand Chief Stan Louttit.
"And [Aboriginal Affairs] should pay for this over and above First Nations existing budgets," he said.
Instead, the band will soon find itself cutting off educational assistants and aides for special-needs children in order to scrape together the money to pay the consultant, said New Democrat MP Charlie Angus, whose northern Ontario riding includes Attawapiskat.
"What they've done is taken $300,000 out of this band's limited budget for political cover to pay for the mistakes of an incompetent minister," Angus said. "They have to shut down programs to pay for this guy."
Prime Minister Stephen Harper defended the move in the House of Commons Thursday.
"Not only is the government already spending millions of dollars in this particular community, it is also spending additional monies on particular emergency needs, because of mismanagement," Harper said in question period.
"It is the absolute responsibility of the government to ensure that those needs are met and to ensure the management steps are taken to make sure those needs are met."
Interim Liberal party leader Bob Rae asked the PM if the government realized the heavy financial burden this has placed on the band council. He added that the problems are a result of Ottawa's "own failure to provide appropriate housing and education."
"How can the government continue talking about management problems in Attawapiskat, when it is clearly the government that is responsible for mismanagement of conditions in these reserves?" he said in question period.
Greg Shisheesh, who lives in Attawapiskat, told CBC News he was open to third-party management after the move was first announced.
But reached Thursday, he was offended that the band has been forced to pay the bill.
"It's ridiculous," he told CBC News. "Like, if I explained that to my elderly parents, I think they're going to shake their head and say, 'What is going on here?' We wanted the federal government to clean up, not to spend more money."
Marion's daily fee is about a month's salary for educational assistants, Angus said.
Aboriginal Affairs told CBC News, however, that the First Nation reserve can choose to use the federal funds it gets for band administration to pay toward the third-party manager, rather than take it out of other programs.
Standard fee range
The price tag is well within the going rate, say those familiar with third-party management of First Nations.
Assembly of First Nations officials say per-diem rates for third-party managers are between $1,000 and $3,000, plus expenses.
Stan Beardy — the grand chief of Nishnawbe Aski Nation that includes Attawapiskat — says that communities in the James Bay region would normally have to pay $200,000 and $300,000 a year for such a government appointee.
Per diem rates vary widely to reflect the difficulty of the job at hand, said a spokeswoman for accounting firm KPMG. The firm does a lot of business with First Nations, but is not involved in the Attawapiskat contract.
Neither KPMG nor BDO would comment on specific rates, nor would Marion explain what he would do in return for the fees. "We will not respond due to the confidential nature of our arrangements," Marion said in an email response to questions from The Canadian Press.
However, Aboriginal Affairs is now making some of the details public.
In a statement to The Canadian Press, the department said the appointee has been instructed to put the community's health and safety first, and to continue financing all building projects that support that aim.
"The work of the third-party manager will support the department's first priority which is to address the community's immediate health-and-safety issues," said a note from departmental spokeswoman Genevieve Guibert.
Marion has been told to assess the need for housing, and then provide "safe, warm shelter" to anyone living in a temporary home, until other housing options are identified.
Aboriginal Affairs Minister John Duncan said Thursday that the government has a plan for Attawapiskat.
"We are committed to ensuring residents, especially children, have warm, dry places to sleep," his office said in a statement. "It is clear that significant investments in this community have not resulted in adequate living standards for residents. We have placed Attawapiskat under third party manager in order to address urgent health and safety needs."
On Wednesday, Duncan wrote the band's chief to say the government would consider evacuation or retrofitting the local arena and treatment centre for shelter until 15 new modular houses could be trucked in on the winter road.
The appointee is also supposed to be working "on site," the department email says.
However, for now, Marion is not there because the band council sent him packing when he arrived on Monday.
Band Chief Theresa Spence has argued vigorously against intervention, saying it is an attempt to discredit her leadership during a housing crisis that requires immediate measures — and not the long-term accounting advice that generally comes from third-party management.
Aboriginal Affairs has three different levels of intervention when a band is having financial trouble, and third-party management is for the very worst cases. The latest tally shows 12 bands are currently being run by government appointees. Before now, Attawapiskat was already in the second-ranked arrangement, with the department "co-managing" band finances.
Third-party management is usually triggered by glaring financial irregularities or a default on payment, but can also be prompted by a threat to the health and safety of a band's inhabitants. That was the trigger in the case of Attawapiskat.
The band has annual revenues of about $17 million, and a budget of about half a million dollars a year for housing.
A recent departmental review of the intervention regime concluded that the third-party management system is not cost-effective, and hurts a band's ability to govern itself.
"Considerable time and effort is required from [Aboriginal Affairs] and recipients to implement the intervention policy," says the November 2010 evaluation.
"The cost of co-managers and third-party managers affects the availability of band support funding for governance and administration in recipients."
The review points out that third-party managers are not able to use surpluses to pay off debt.
The review also said the arrangement is applied inconsistently across the country, making measurement of success or failure difficult. Some third-party arrangements drag on for up to 10 years, with no evident plan to graduate to a more independent financial arrangement.
The auditor general has also repeatedly criticized third-party management for not being properly monitored by the government.