The federal government is firing back at the leadership of Attawapiskat, saying the third-party manager assigned to the remote northern Ontario community can't pay teachers until the chief and council provide more information.

On Thursday, the Mushkegowuk Council said the government's intervention threatens their ability to manage ongoing operations in Attawapiskat, including making payroll and other essential payments. The council is the regional leadership that governs communities including Attawapiskat.

Modular homes bound for Attawapiskat began leaving Fredericton Dec. 20. (CBC)

The council said the federal government has seized control of $1.5 million meant for essential services such as education and transferred the money to the third-party manager it appointed in December, BDO Dunwoody.

The cost of the third-party manager to taxpayers is $20,000 per month, the council said. The Attawapiskat First Nation is seeking a court injunction against the third-party manager's appointment and the matter is still before the court.

Aboriginal Affairs Minister John Duncan said in a statement Thursday that the third-party manager has "been vital to the delivery of these necessities [composting toilets, high-efficiency heaters, building supplies, cots, and sanitary products], the retrofitting of the healing lodge, and the purchasing of modular homes."

Duncan says he sent a letter to Attawapiskat Chief Theresa Spence Wednesday about the issue.

"The third-party manager is ready to issue payroll cheques for essential services, such as teachers’ salaries, and will do so as soon as he is provided with the necessary information from the chief and council," Duncan said.

'Punished by the minister'

Spence wrote to ask BDO Dunwoody to release the $1.5 million to "ensure that essential governance and operations can continue without interruption."

The third-party manager refused, citing the federal government's contract to set up third-party management for the community.

"Chief Spence and her council continue to feel as if they are being punished by the minister for the crisis that exists in her community," the Mushkegowuk Council said in a Thursday press release.

A state of emergency was declared Oct. 28 by the chief of the First Nations community near the shore of James Bay.

With winter temperatures plummeting, political leaders and ordinary citizens across Canada were troubled by video footage of families, including young children, living in decrepit shacks or previously condemned homes without adequate heating or running water.

Other residents in the isolated community of 1,800 live crowded into trailers resembling shipping crates, originally intended to be only temporary homes for displaced families.

Healing lodge retrofit complete

Meanwhile, Attawapiskat is several steps closer to both temporary and permanent solutions to its housing crisis, according to the federal government.

Ontario Volunteer Emergency Response Team members load supplies onto a flight bound for the remote northern Ontario First Nations community of Attawapiskat. (Facebook photo)Moira Wolstenholme, a spokeswoman for Minister of Aboriginal Affairs John Duncan, told CBC News on Wednesday in a statement that the retrofit of the community's healing lodge was complete.

"Any of the 25 families currently living in temporary shelter now have access to a safe, warm dry shelter to sleep until the permanent housing modules arrive," her statement said.

Kyle Seeback, a Conservative MP, said on CBC-TV's Power & Politics with Evan Solomon that only six people have moved in.

"The completion was one of the projects the band approved to house their people. And they inspected it and found that it's ready to be inhabited," he said.

"So I'm encouraging all the people in Attawapiskat to look into moving into there."

But NDP Charlie Angus said the heating is not working in some parts of the building.

"This is a building that was never completed. So they've got a lot of issues that have to be dealt with," he said.

Seeback rejected Angus's claim.

Duncan's statement also confirmed that construction of 22 modular homes purchased by the government and the community is complete. The permanent homes are all in transit, set for delivery to the remote reserve as soon as winter ice roads are safe to travel.

"Four of the modular homes have been delivered to Moosonee, Ont., and four are scheduled to be delivered this Friday to Moosonee," according to the minister's office. "The remaining 14 units have been shipped to Val d'Or, Que., and will be transported to Moosonee."

On Dec. 10, the federal government announced that it had purchased and ordered 15 modular homes at a total cost of $1.2 million. Attawapiskat asked for an additional seven homes.

The modular homes measure about 800 square feet and include three bedrooms. Workers at Maple Leaf Homes in Fredericton worked "flat out" to complete the emergency order quickly.

The Ontario Volunteer Emergency Response Team was set to fly out of Oshawa's municipal airport on Thursday morning, on a donated flight packed with some $100,000 in emergency supplies for the community.

Four volunteer team members will be assisting the community's emergency management team with the installation of smoke detectors, as well as the delivery of water purification units and other needed health supplies.

Duncan's office said work is underway to repair the "multi-family unit trailers" to make conditions "more comfortable."