The federal government appears to be hedging on its threat to hold back non-essential funding from First Nations that didn't disclose financial information online, at least for now.

The deadline for First Nations to post their financial information online came and went on Tuesday, and days later about a third have yet to submit their financial reports.

"The department and minister are committed to working with First Nation communities to determine why they are unable to be compliant," said Tory MP Kelly Block. "That's the first step before we would move to the second step of withholding funding for non-essential services."

First Nation financial disclosure became mandatory last year under the First Nations Financial Transparency Act, a law authored by Block, but it remains unclear what "non-essential services" entail and how much funding could be cut.

Block's explanation? "What is deemed non-essential is anything that has not been identified as essential."

In Manitoba, about 65 per cent of the province's First Nations have not complied with the new legislation.

Brokenhead First Nation is one of them, and while they are planning to submit those numbers, Chief Jim Bear said they aren't happy about it.

"If we're going to be going into competition on a similar venture with whoever — whether it's in the community or off the community — those individuals will have access to our financial situation," he said. "We don't have access to their financial information. It puts us in an uneven [position]."

The new law also requires First Nations to post revenues from non-taxpayer-supported enterprises, such as band businesses, which Bear says is out of bounds.

"We're more than willing to post what the federal government, in terms of revenue, they give us. We're willing to be transparent there," Bear said. "But when we have our own source funding — whether it's from the casino, from VLTs, from our stores or other businesses —  that should be up to us, the government and our own people, not the general public."

That complaint is being echoed across the country. As of Friday, 182 First Nations were in non-compliance.

Assembly of First Nations National Chief Perry Bellegarde said the legislation is punitive and prejudicial.

"I think it's pretty heavy-handed and that needs to be revisited because you're basically hurting communities that are very poor," he said. "In a lot of cases, you're not going to continue operations."

Canada's Department of Aboriginal Affairs did not respond to requests for comment.