Canadian Human Rights Tribunal

Decision Information

Decision Content

Canadian Human
Rights Tribunal

Titre : Tribunal's coat of arms - Description : Tribunal's coat of arms

Tribunal canadien
des droits de la personne

 

Citation:  2016 CHRT 2

Date:  January 26, 2016

File No.:  T1340/7008

Between:

First Nations Child and Family Caring Society of Canada

- and -

Assembly of First Nations

Complainants

- and -

Canadian Human Rights Commission

Commission

- and -

Attorney General of Canada

(Representing the Minister of Indian Affairs and Northern Development Canada)

Respondent

- and -

Chiefs of Ontario

- and -

Amnesty International

Interested Parties

Decision

Members:  Sophie Marchildon and Edward Lustig


Table of Contents

I.Acknowledgement 1

II.Complaint and background 1

III.Parties 3

IV.The hearing, disclosure and admissibility of documents 4

V.Analysis 6

A.AANDC is involved in the provision of child and family services to First Nations on reserves and in the Yukon 8

i.Meaning of “service” under section 5 of the CHRA 8

ii.Evidence indicating AANDC provides a “service” 9

a.Jurisdiction of the CHRA over the activities of AANDC 10

b.Funding can constitute a service 11

c.The “assistance” or “benefit” provided by AANDC 13

d.First Nations children and families are extended the “assistance” or “benefit” by AANDC 18

e.Section 91(24) of the Constitution Act, 1867 24

f.The Crown’s fiduciary relationship with Aboriginal peoples 28

iii.Summary of findings 35

B.First Nations are adversely impacted by the services provided by AANDC and, in some cases, denied services as a result of AANDC’s involvement 37

i.General child welfare principles 37

ii.The allocation of funding for First Nations child and family services 39

a.The FNCFS Program 39

b.Reports on the FNCFS Program 48

c.1965 Agreement in Ontario 76

d.Other provincial/territorial agreements 85

iii.AANDC’s position on the evidence 87

a.The relevance and reliability of the studies on the FNCFS Program 87

b.The choices of FNCFS Agencies and additional funding provided 107

c.Comparator evidence 112

iv.Best interest of the child and Jordan’s Principle 122

v.Summary of findings 138

C.Race and/or national or ethnic origin is a factor in the adverse impacts or denials 142

i.Substantive equality 143

ii.Impact of the Residential Schools system 145

a.History of Residential Schools 145

b.Transformation of Residential Schools into an aspect of the child welfare system 148

c.Intergenerational trauma of Residential Schools 148

iii.Canada’s international commitments to children and Indigenous peoples 152

VI.Complaint substantiated 160

VII.Order 164

A.Findings of discrimination 165

B.Cease the discriminatory practice and take measures to redress and prevent it 166

C.Compensation 168

D.Costs for obstruction of process 170

E.Retention of jurisdiction 170

VIII.Annex: exhibit references 172

 


À la douce mémoire de Réjean Bélanger

In loving memory of Réjean Bélanger


I.  Acknowledgement

[1]  This decision concerns children. More precisely, it is about how the past and current child welfare practices in First Nations communities on reserves, across Canada, have impacted and continue to impact First Nations children, their families and their communities.

[2]  These proceedings included extensive evidence on the history of Indian Residential Schools and the experiences of those who attended or were affected by them. The Tribunal also heard heartfelt testimony from someone who attended and was directly impacted by attending a residential school. At the outset of these reasons, the Panel Members (the Panel) believe it important to acknowledge the suffering of all residential school survivors, their families and communities. We recognize the courage of those who have spoken about their experiences over the years and before this Tribunal. We also wish to honour the memory and lives of the many children who died, and all who were harmed, while attending these schools, along with their families and communities. We wish healing and recognition for all Aboriginal peoples across Canada for the individual and collective trauma endured as a result of the Indian Residential Schools system.

II.  Complaint and background

[3]  Child welfare services, or child and family services, are services designed to protect children and encourage family stability. The main aim of these services is to safeguard children from abuse and neglect (see Annex, ex. 1 s.v.child welfare”). Hence the best interest of the child is a paramount principle in the provision of these services and is a principle recognized in international and Canadian law. This principle is meant to guide and inform decisions that impact all children, including First Nations children.

[4]  Each province and territory has its own child and family services legislation and standards and provides those services within its jurisdiction. However, the provision of child and family services to First Nations on reserves and in the Yukon is unique and is the subject of this decision.

[5]  At issue are the activities of Indian and Northern Affairs Canada (INAC), known at the time of the hearing as Aboriginal Affairs and Northern Development Canada (AANDC), in managing the First Nations Child and Family Services Program (the FNCFS Program), its corresponding funding formulas and a handful of other related provincial and territorial agreements that provide for child and family services to First Nations living on reserve and in the Yukon Territory. Pursuant to the FNCFS Program and other agreements, child and family services are provided to First Nations on-reserve and in the Yukon by First Nations Child and Family Services Agencies (FNCFS Agencies) or by the province/territory in which the community is located. In either situation, the child and family services legislation of the province/territory in which the First Nation is located applies. AANDC funds the child and family services provided to First Nations by FNCFS Agencies or the province/territory.

[6]  Pursuant to section 5 of the Canadian Human Rights Act (the CHRA), the Complainants, the First Nations Child and Family Caring Society of Canada (the Caring Society) and the Assembly of First Nations (the AFN), allege AANDC discriminates in providing child and family services to First Nations on reserve and in the Yukon, on the basis of race and/or national or ethnic origin, by providing inequitable and insufficient funding for those services (the Complaint). On October 14, 2008, the Canadian Human Rights Commission (the Commission) referred the Complaint to this Tribunal for an inquiry.

[7]  In a decision dated March 14, 2011 (2011 CHRT 4), the Tribunal granted a motion brought by AANDC for the dismissal of the Complaint on the ground that the issues raised were beyond the Tribunal’s jurisdiction (the jurisdictional motion). That decision was subsequently the subject of an application for judicial review before the Federal Court of Canada.

[8]  On April 18, 2012, the Federal Court rendered its decision, Canada (Human Rights Commission) v. Canada (Attorney General), 2012 FC 445 (Caring Society FC), setting aside the Tribunal’s decision on the jurisdictional motion. The Federal Court remitted the matter to a differently constituted panel of the Tribunal for redetermination in accordance with its reasons. The Respondent’s appeal of that decision was dismissed by the Federal Court of Appeal in Canada (Attorney General) v. Canadian Human Rights Commission, 2013 FCA 75 (Caring Society FCA).

[9]  A new panel, composed of Sophie Marchildon, as Panel Chairperson, and members Réjean Bélanger and Edward Lustig, was appointed to re-determine this matter (see 2012 CHRT 16). It dismissed the Respondent’s motion to have the jurisdictional motion re-heard, and ruled the Complaint would be dealt with on its merits (see 2012 CHRT 17).

[10]  The Complaint was subsequently amended to add allegations of retaliation (see 2012 CHRT 24). In early June 2015, the Panel found the allegations of retaliation to be substantiated in part (see 2015 CHRT 14).

[11]  The present decision deals with the merits of the Complaint. During deliberations our friend and colleague, Tribunal Member Réjean Bélanger, passed away. Despite his valued contributions to the hearing and consideration of this matter, he sadly was not able to see the final result of his work. While this decision is signed on behalf of the remaining Members of the Panel, we dedicate it in his honour and memory.

III.  Parties

[12]  The Caring Society is a non-profit organization committed to research, policy development and advocacy on behalf of First Nations agencies that serve the well-being of children, youth and families. The AFN is a national advocacy organization that works on behalf of over 600 First Nations on issues such as Treaty and Aboriginal rights, education, housing, health, child welfare and social development. The Commission, in appearing before the Tribunal at a hearing, represents the public interest (see section 51 of the CHRA). AANDC is the federal government department primarily responsible for meeting the Government of Canada’s obligations and commitments to Aboriginal peoples.

[13]  Additionally, two organizations were granted “Interested Party” status for these proceedings: Amnesty International and the Chiefs of Ontario (COO). Amnesty International is an international non-governmental organization committed to the advancement of human rights across the globe. It was granted interested party status to assist the Tribunal in understanding the relevance of Canada’s international human rights obligations to the Complaint. The COO is a non-profit organization representing the 133 First Nations in the Province of Ontario. It was granted interested party status to speak to the particularities of on-reserve child welfare services in Ontario.

IV.  The hearing, disclosure and admissibility of documents

[14]  The hearing of the Complaint spanned 72 days from February 2013 to October 2014. Throughout the hearing, documentary disclosure and the admissibility of certain documents as evidence became an issue.

[15]  All arguably relevant documents were not disclosed prior to the commencement of the hearing. Despite agreeing to complete its disclosure prior to the start of the hearing, and subsequently confirming that it had, AANDC knew of the existence of a number of arguably relevant documents in the summer of 2012 and yet failed to disclose them prior to the hearing. Only after the completion of an Access to Information Act request made by the Caring Society, and shortly before the third week of hearings, did AANDC inform the parties and the Tribunal of the existence of over 50,000 additional documents and an unspecified number of emails, which were potentially relevant to the Complaint, but had yet to be disclosed. As a result, the Tribunal vacated hearing dates in June 2013, re-arranged the proceedings to hear the allegations of retaliation in July and August 2013, and, following a deadline for AANDC to complete its disclosure by August 31, 2013, resumed the hearing on the merits on dates from August 2013 to January 2014 (see 2013 CHRT 16).

[16]  Following the disclosure of over 100,000 additional documents by AANDC, the hearing resumed. However, AANDC did not complete the disclosure of all arguably relevant documents until August 2014 due to an objection under section 37(1) of the Canada Evidence Act. Specifically, certain documents were characterized as being subject to Cabinet confidence privilege. All the parties agreed to have the Clerk of the Privy Council review the documents to determine if the privilege applied. This review process was completed fairly quickly once the Clerk was provided with the documents.

[17]  An issue arose as to how the 100,000 additional documents could be admitted into evidence. The Caring Society requested an order that any additionally disclosed documents upon which it wished to rely be admitted as evidence for the truth of their contents, regardless of whether or not the author or recipient of the document was called as a witness, and whether or not they were put to any other witness. For reasons outlined in 2014 CHRT 2, the Panel ruled as follows:  

a. Rule 9(4) of the Tribunal’s Rules of Procedure will continue to apply. As such, documents will continue to be admitted into evidence, on a case-by case basis, once they are introduced during the hearing and accepted by the Panel;

b. There will be no need to call witnesses for the sole purpose of authenticating documentary evidence. Any issues raised relating to authentication will be considered by the Panel at the weighing stage;

c. For the purposes of Rule 9(4), a document has not been fully “introduced” at the hearing until counsel or a witness for the party tendering it has indicated:

i. which portions of the document are being relied upon; and

ii. how these portions of the document relate to an issue in the case.

d. Should a party wish to rely on evidence during its final argument that was not introduced according to the procedure above (either prior to or subsequent to this order), appropriate curative measures may be taken by the Panel, and in particular, the opposing party may be allotted additional time to adequately prepare a response, including calling additional witnesses and bringing forward additional documentary evidence, in accordance with the principles of procedural fairness. This may result in an adjournment of the proceedings.

[18]  Following the completion of the hearing, further issues arose as to which documents ought to form part of the record before the Tribunal. AANDC raised concerns regarding the admissibility of documents relied on by counsel for the Complainants and Commission, but not referred to orally during the hearing. In 2015 CHRT 1, the Panel ordered:

Documents listed in Appendix B of the Commission’s December 1, 2014 letter (including Documents Referred to Only in Final Written Submissions (which were Adopted Orally) found at page 9) will be considered as forming part of the evidentiary record. The Respondent will be granted an opportunity to respond to the Complainant’s documents listed in Appendix B and supporting submissions with the exception of tab-66. Should the Respondent decide to benefit from this opportunity, the Respondent is to advise the parties and the Tribunal of its intention and form of response by no later than January 21, 2015, following which the Respondent will have until February 4, 2015 to file its response.

[19]  In response to the Panel’s order, AANDC provided written representations with respect to the documents at issue. According to AANDC, the Panel should place little, if any, weight on those documents in determining the merits of the Complaint. It also provided a chart summarizing its position on each of the documents.

[20]  AANDC’s submissions on the documents subject to the Panel’s order in 2015 CHRT 1, along with its other submissions regarding the weight to ascribe to the evidence in this matter, have been taken into consideration by the Panel, together with the submissions of the other parties, in making the findings that follow.

V.  Analysis

[21]  As mentioned above, the present Complaint alleges the provision of child and family services in on-reserve First Nations communities and in the Yukon is discriminatory. Namely that there is inequitable and insufficient funding for those services by AANDC. In this regard, the Complainants have the burden of proof of establishing a prima facie case of discrimination. A prima facie case is “...one which covers the allegations made and which, if they are believed, is complete and sufficient to justify a verdict in the complainant’s favour in the absence of an answer from the respondent” (see Ont. Human Rights Comm. v. Simpsons-Sears, 1985 CanLII 18 (SCC) at para. 28).

[22]  In the context of this Complaint, under section 5 of the CHRA, the Complainants must demonstrate (1) that First Nations have a characteristic or characteristics protected from discrimination; (2) that they are denied services, or adversely impacted by the provision of services, by AANDC; and, (3) that the protected characteristic or characteristics are a factor in the adverse impact or denial (see Moore v. British Columbia (Education), 2012 SCC 61 at para. 33 [Moore]).

[23]  The first element is relatively simple in this case: race and national or ethnic origin are prohibited grounds of discrimination under section 3 of the CHRA. There was no dispute that First Nations possess these characteristics.

[24]  The second element requires the Complainants to establish that AANDC is actually involved in the provision of a “service” as contemplated by section 5 of the CHRA; and, if so, to demonstrate that First Nations are denied services or adversely impacted by AANDC’s involvement in the provision of those services.

[25]  For the third element, the Complainants have to establish a connection between elements one and two. A “causal connection” is not required as there may be many different reasons for a respondent’s acts. That is, it is not necessary that a prohibited ground or grounds be the sole reason for the actions in issue for a complaint to succeed. It is sufficient that a prohibited ground or grounds be one of the factors in the actions in issue (see Holden v. Canadian National Railway Co., (1991) 14 C.H.R.R. D/12 (F.C.A.) at para. 7; and, Quebec (Commission des droits de la personne et des droits de la jeunesse) v. Bombardier Inc. (Bombardier Aerospace Training Center), 2015 SCC 39 at paras. 44-52 [Bombardier]).

[26]  In this regard, it should be kept in mind that discrimination is not usually practiced overtly or even intentionally. Consequently, direct evidence of discrimination or proof of intent is not required to establish a discriminatory practice under the CHRA (see Basi v. Canadian National Railway, 1988 CanLII 108 (CHRT); and; Bombardier at paras. 40-41).

[27]  In response to the Complaint, AANDC led its own evidence and arguments to refute the Complainants’ claim of discrimination. It did not raise a statutory exception under sections 15 or 16 of the CHRA. Therefore, the Tribunal’s task is to consider all the evidence and argument presented by the parties to determine if the Complainants have proven the three elements of a discriminatory practice on a balance of probabilities (see Bombardier at paras. 56 and 64; see also Peel Law Association v. Pieters, 2013 ONCA 396 at paras. 80-90).

[28]  It is through this lens, and with these principles in mind, that the Panel examined the evidence and arguments advanced by the parties in this case. For the reasons that follow, the Panel finds AANDC is involved in the provision of child and family services to First Nations on reserves and in the Yukon; that First Nations are adversely impacted by the provision of those services by AANDC, and, in some cases, denied those services as a result of AANDC’s involvement; and; that race and/or national or ethnic origin are a factor in those adverse impacts or denial.

A.  AANDC is involved in the provision of child and family services to First Nations on reserves and in the Yukon

  i.  Meaning of “service” under section 5 of the CHRA

[29]  Section 5 of the CHRA provides:

5. It is a discriminatory practice in the provision of goods, services, facilities or accommodation customarily available to the general public

(a) to deny, or to deny access to, any such good, service, facility or accommodation to any individual, or

(b) to differentiate adversely in relation to any individual,

on a prohibited ground of discrimination.

[30]  Pursuant to the wording of this section, the Complainants must establish that the actions complained of are “...in the provision of...services...customarily available to the general public”. The first part of this analysis involves determining what constitutes the “service” based on the facts before the Tribunal (see Gould v. Yukon Order of Pioneers, 1996 CanLII 231 (SCC) per La Forest J. at para. 68 [Gould]). In other words, what is the “benefit” or “assistance” being held out (see Watkin v. Canada (Attorney General), 2008 FCA 170 at para. 31 [Watkin]; and, Gould per La Forest J. at para. 55). In making this determination, “[r]egard must be had to the particular actions which are said to give rise to the alleged discrimination in order to determine if they are “services” (see Watkin at para. 33). In this respect, it may be useful to inquire whether the benefit or assistance is the essential nature of the activity (see Canada (Canadian Human Rights Commission) v. Pankiw, 2010 FC 555 at para. 42).

[31]  The next step requires a determination of whether the service creates a public relationship between the service provider and the service user. The fact that actions are undertaken by a public body for the public good is not determinative. In fact, no one factor is determinative. Rather, in ascertaining whether a service creates a public relationship, the Tribunal must examine all relevant factors in a contextual manner (see Gould per La Forest J. at para. 68; and, Watkin at paras. 32-33). As part of this determination, the Tribunal must decide what constitutes the “public” to which the service is being offered. A public is defined in relational as opposed to quantitative terms. That is, the public to which the service is being offered does not need to be the entire public. Rather, clients of a particular service could be a very large or very small segment of the “public” (see University of British Columbia v. Berg, [1993] 2 SCR 353 at pp. 374-388; and, Gould per La Forest J. at para. 68). A public relationship is created where this “public” is extended a “service” by the service provider (see Gould per La Forest J. at para. 55).

  ii.  Evidence indicating AANDC provides a “service”

[32]  Both the Commission and the Caring Society characterize the FNCFS Program, its corresponding funding formulas and the related provincial/territorial agreements as a service provided by AANDC to First Nations children and families on reserves and in the Yukon.

[33]  On the other hand, AANDC submits that its role in the provision of child and family services to First Nations is strictly limited to funding and being accountable for the spending of those funds. According to AANDC, funding does not constitute a “service”. Furthermore, AANDC argues the funding it provides is not “customarily available to the general public”. Rather, it is provided on a government to government; or, government to agency basis.

[34]  In AANDC’s view, the benefit held out as a service is the provincially mandated child welfare services provided to First Nations by the FNCFS Agencies or the provinces/territory. AANDC does not exert control over the services and programs provided. Rather, decisions as to which services to provide, how they will be provided and whether the delivery is in compliance with statutory and regulatory requirements rests with the agencies and the provinces/territory. In this regard, AANDC relies on NIL/TU,O Child and Family Services Society v. B.C. Government and Service Employees' Union, 2010 SCC 45 (NIL/TU,O), to argue that child welfare services are a matter within provincial jurisdiction and that it only became involved in First Nations child and family services as a matter of social policy under its spending power. According to AANDC, its funding does not change the provincial/territorial nature of child and family services.

[35]  As explained in the following pages, the Panel finds AANDC is involved in the provision of child and family services to First Nations on reserves across Canada and in the Yukon. Specifically, AANDC offers the benefit or assistance of funding to “ensure”, “arrange”, “support” and/or “make available” child and family services to First Nations on reserves and in the Yukon. With specific regard to the FNCFS Program, the objective is to ensure the delivery of culturally appropriate child and family services, in the best interest of the child, in accordance with the legislation and standards of the reference province/territory, and provided in a reasonably comparable manner to those provided to other provincial/territorial residents in similar circumstances and within FNCFS Program authorities. This benefit or assistance is held out as a service by AANDC and provided to First Nations in the context of a public relationship.

a.  Jurisdiction of the CHRA over the activities of AANDC

[36]  With regard to the NIL/TU,O decision, the question in that case was whether the labour relations of a FNCFS Agency should be regulated under provincial or federal jurisdiction. Labour relations are presumptively a provincial matter. In this regard, the Supreme Court found the NIL/TU,O Agency was a child welfare agency regulated by the province in all aspects. Neither the fact that it received federal funding, the Aboriginal identity of its clients and employees, nor its mandate to provide culturally appropriate services to Aboriginal clients, displaced the operating presumption that labour relations are provincially regulated.

[37]  The present case raises human rights issues in the context of AANDC’s activities. As opposed to labour relations matters, human rights matters are not presumptively provincial. The CHRA applies to “...matters coming within the legislative authority of Parliament” (see CHRA at s. 2). While the activities of FNCFS Agencies and provincial governments may well be within provincial jurisdiction for labour relations purposes, this does not have any bearing on the Tribunal’s jurisdiction over AANDC’s activities in this case.

[38]  The Complaint is filed against, and is focused upon, the activities of AANDC. AANDC is a federal government department created by Parliament through the Department of Indian Affairs and Northern Development Act. Its mandate is derived from a number of federal statutes, including the Indian Act. Therefore, any actions taken by AANDC come within the legislative authority of Parliament and could be subject to the CHRA.

[39]  The issue in this case is not whether AANDC’s activities fall outside the jurisdiction of the CHRA because they do not come within the legislative authority of Parliament. Rather, it is whether the CHRA applies to AANDC’s activities because its actions are in the provision of a service. The fact that other actors, including provincial actors, may be involved in the provision of the service is not determinative and does not necessarily shield AANDC from human rights scrutiny (see for example Eldridge v. British Columbia (Attorney General), [1997] 3 SCR 624 [Eldridge]). As mentioned above, it is for the Tribunal to consider all relevant factors to determine the nature and extent of AANDC’s involvement and whether that involvement rises to the status of a “service” under section 5 of the CHRA.

b.  Funding can constitute a service

[40]  Similarly, even if AANDC’s role in the child and family welfare of First Nations is limited to funding, there is nothing in the CHRA that excludes funding from the purview of section 5. That is, funding can constitute a service if the facts and evidence of the case indicate that the funding is a benefit or assistance offered to the public pursuant to the criteria outlined above.

[41]  A similar argument to the one advanced by AANDC was rejected by the British Columbia Human Rights Tribunal in Bitonti et al. v. College of Physicians & Surgeons of British Columbia et al., (1999) 36 CHRR D/263 (BCHRT) (Bitonti). Among other things, the complainants in that case argued that the allocation of funding provided by the Ministry of Health did not provide foreign medical school graduates with a real opportunity to obtain internships. The Ministry of Health responded that the expenditure of funds by the provincial government was a legislative act that was immune from the Tribunal’s review. While the BCHRT ultimately found there was no service relationship between the Ministry of Health and the complainants, at paragraph 315 it was not prepared to accept the Ministry’s argument regarding immunity for funding:

Carried to its extreme, that position would mean, for example, that if the Ministry of Health provided funding for internships but stipulated that it would only pay male interns, that conduct would be immune from review. I am not prepared to go that far.

[42]  Similarly, in Kelso v. The Queen, [1981] 1 SCR 199 at page 207 (Kelso), the Supreme Court stated (emphasis added):

No one is challenging the general right of the Government to allocate resources and manpower as it sees fit. But this right is not unlimited. It must be exercised according to law. The government’s right to allocate resources cannot override a statute such as the Canadian Human Rights Act.

[43]  Indeed, the Supreme Court has confirmed the quasi-constitutional nature of the CHRA on many occasions (see for example Robichaud v. Canada (Treasury Board), [1987] 2 SCR 84 at pp. 89-90 (Robichaud); Canada (House of Commons) v. Vaid, 2005 SCC 30 at para. 81 (Vaid); and, Canada (Canadian Human Rights Commission) v. Canada (Attorney General), 2011 SCC 53 at para. 62 [Mowat]). It expresses fundamental values and pursues fundamental goals for our society, such as the fundamental Canadian value of equality (see s. 2 of the CHRA; see also Mowat at para. 33; and, Canada (Attorney General) v. Mossop, [1993] 1 SCR 554 at p. 615, per Justice L’Heureux-Dubé). Therefore, the CHRA is to be interpreted in a broad, liberal, and purposive manner befitting of this special status (see Mowat at para. 62).

[44]  Conversely, any exemption from its provisions must be clearly stated (see Vaid at para. 81). Again, there is no indication in the CHRA or otherwise that Parliament intended to exclude funding from scrutiny under the Act, subject of course to the funding being determined to be a service. In line with Kelso, where the Government of Canada is involved in the provision of a service, including where the service involves the allocation of funding, that service and the way resources are allocated pursuant to that service must respect human rights principles.

[45]  Therefore, the Panel dismisses the argument that funding cannot constitute a “service” within the meaning of section 5 of the CHRA. In any event, as will be examined in the following pages, the evidence in this case indicates the essential nature of the “assistance” or “benefit” offered by AANDC for the provision of child and family services on First Nations reserves is something more than funding.

c.  The “assistance” or “benefit” provided by AANDC

[46]  AANDC’s FNCFS Program applies to FNCFS Agencies in all provinces and the Yukon Territory, except Ontario. In Ontario, AANDC has a cost-sharing agreement with the province for the provision of child and family services on First Nations reserves. AANDC also has agreements with the provinces of Alberta and British Columbia to provide child and family services to certain First Nations reserves. A similar agreement is also in place with the Yukon Territory. The provision of child and family services to First Nations in the Northwest Territories and Nunavut were not the subject of this Complaint.

[47]  The FNCFS Program were developed to address concerns over the lack of child and family services provided by the provinces to First Nations reserves. Traditionally, assistance to First Nations children and their families was provided informally, by custom, within the network of their extended family. However, over time, this informal assistance became insufficient to meet the needs of children and families living on First Nations reserves.

[48]  The Joint Committees of the Senate and the House of Commons in 1946-1948 and again in 1959-1961 urged provinces to increase their involvement in providing services to First Nations people in order to fill in the gaps resulting from disruptions to traditional patterns of community care. However, provincial governments were reluctant to provide those services for financial concerns and given federal jurisdiction over “Indians, and lands reserved for Indians” under section 91(24) of the Constitution Act, 1867. This led to disparity in the quantity and quality of services provided to First Nations children and families on reserve from province to province, where some provinces only provided services if they were compensated by the federal government or only in life-and-death situations (see Annex, ex. 2 at p. 39 [the NPR]).

[49]  In 1965, Canada entered into the agreement with the Province of Ontario to enable social services, including child and family services, to be extended to First Nations children and families on reserve. Other provinces entered into bilateral agreements whereby AANDC would reimburse them for the delivery of child and family services (see Annex, ex. 3 at ss. 1.1.2 - 1.1.3 [2005 FNCFS National Program Manual]).

[50]  In the 1970’s and early 1980’s, concerns began being raised over the child and family services being provided to First Nations by the provinces. Namely, the services were minimal, not culturally appropriate and there were an alarming number of First Nations children being removed from their communities. This started a move towards the creation of community-specific FNCFS Agencies. AANDC funded these agencies through ad hoc arrangements, but authorities for doing so were unclear and funding was inconsistent (see the NPR at p. 24).

[51]  In 1986, AANDC put a moratorium on the ad hoc arrangements for the development of FNCFS Agencies. This moratorium remained in place until 1990 when AANDC implemented the FNCFS Program (see 2005 FNCFS National Program Manual at s. 1.1.6; and, the NPR at p. 24).

[52]  At section 1.3 of the 2005 FNCFS National Program Manual, the objective and principles of the FNCFS Program are outlined and include:

1.3.2  The primary objective of the FNCFS program is to support culturally appropriate child and family services for Indian children and families resident on reserve or Ordinarily Resident On Reserve, in the best interest of the child, in accordance with the legislation and standards of the reference province.

[...]

1.3.4  FNCFS will be managed and operated by provincially mandated First Nations organizations (Recipients), which provide services to First Nations children and families Ordinarily Resident On Reserve. FNCFS Recipients will manage the program in accordance with provincial or territorial legislation and standards. INAC will provide funding in accordance with its authorities.

1.3.5  The child and family services offered by FNCFS on reserve are to be culturally relevant and comparable, but not necessarily identical, to those offered by the reference province or territory to residents living off reserve in similar circumstances.

1.3.6  Protecting children from neglect and abuse is the main objective of child and family services. FNCFS also provide services that increase the ability and capacity of First Nations families to remain together and to support the needs of First Nations children in their parental homes and communities.

1.3.7  First Nation agencies and other Recipients will ensure that all persons Ordinarily Resident On Reserve and within their Catchment Area receive a full range of child and family services reasonably comparable to those provided off reserve by the reference province or territory. Funding will be provided in accordance with INAC authorities.

[53]  In 2012, following the filing of the Complaint, the wording of the objective of the FNCFS Program was modified, but is still similarly described as follows:

1.1 Objective

The FNCFS program provides funding to assist in ensuring the safety and well-being of First Nations children ordinarily resident on reserve by supporting culturally appropriate prevention and protection services for First Nations children and families.

These services are to be provided in accordance with the legislation and standards of the province or territory of residence and in a manner that is reasonably comparable to those available to other provincial residents in similar circumstances within Program Authorities.

(see Annex, ex. 4 at p. 30 [2012 National Social Programs Manual])

[54]  The other provincial and territorial agreements for the provision of child and family services in First Nations communities have a similar purpose to the FNCFS Program. In Ontario, the Memorandum of Agreement Respecting Welfare Programs for Indians (see Annex, ex. 5 [the 1965 Agreement]), at page 1, provides:

WHEREAS the 1963 Federal-Provincial Conference, in charting desirable long-range objectives and policies applicable to the Indian people, determined that the principal objective was the provision of provincial services and programs to Indians on the basis that needs in Indian Communities should be met according to standards applicable in other communities;

AND WHEREAS Canada and Ontario in working towards this objective desire to make available to the Indians in the Province the full range of provincial welfare programs;

[55]  In Alberta, the Arrangement for the Funding and Administration of Social Services (see Annex, ex. 6 [the Alberta Reform Agreement]) at page 1 states:

WHEREAS:

Canada continues to have a special relationship with and interest in the Indian people of Canada arising from history, treaties, statutes and the Constitution;

Canada and Alberta recognize and agree that this arrangement will not prejudice the treaty rights of Indian people, nor alter any obligations of Canada to Indian people pursuant to treaties, statutes and the Constitution, including any rights protected by section 35 of the Constitution Act, 1982, nor affect any self-government rights that may be negotiated in future constitutional negotiations;

Canada and Alberta recognize that Indians and Indian Families should be provided with Social Services which take into account their cultures, values, languages and experiences;

Canada and Alberta are desirous of developing an arrangement in respect of the funding and administration for Social Services which would be applicable to Indians in the Province of Alberta; and

Canada and Alberta acknowledge that Indians have aspirations towards self-government and both therefore wish to support the establishment, management, and delivery by Indians and Indian organizations of child and family services and other community-based Social Services for Indians in Alberta.

[56]  At section 3 of the Alberta Reform Agreement, Canada’s role is described as:

3.  Canada will by this arrangement and in accordance with Appendix II:

(a)  arrange for the delivery of Social Services comparable to those provided by Alberta to other residents of the Province directly or through negotiated agreements with Indian Bands, Indian agencies, Indian organizations, or with Alberta, to persons ordinarily residing on a Reserve; and

(b)  fund Social Services for Indians and Indian Families ordinarily residing on a Reserve comparable to those provided by Alberta to other residents of the Province; and in particular, reimburse Alberta for those Social Services which Alberta delivers to Indians and Indian Families ordinarily residing on a Reserve.

[57]  In British Columbia, the Service Agreement Regarding the Funding of Child Protection Services of First Nations Children Ordinarily Resident on Reserve (see Annex, ex. 7 [the BC Service Agreement]), which in 2012 replaced a previous memorandum of understanding between the two parties (see Annex, ex. 8 [the BC MOU]), provides:

1.0  Vision

Governments working together in British Columbia to ensure that First Nation children, youth and their families live in strong, healthy families and sustainable communities where they are connected to their culture, language and traditions.

DIAND and MCFD will contribute to this vision through a strong focus on providing funding and effective services respectively, to achieve meaningful outcomes for vulnerable First Nations children, youth and their families ordinarily resident on reserve.

[58]  Finally, in the Yukon, there is the Funding Agreement (see Annex, ex. 9 [the Yukon Funding Agreement]). The Yukon Funding Agreement applies to all First Nations children and families ordinarily resident in the Territory. Pursuant to Schedule “DIAND-3” of the Yukon Funding Agreement, “[t]he Territory will administer the First Nation Child and Family Services Program in accordance with DIAND’s First Nation Child and Family Services Program – National Manual or any other program documentation issued by DIAND as amended from time to time”.

[59]  The history and objectives of the FNCFS Program and other related provincial/territorial agreements indicate that the benefit or assistance provided through these activities is to “ensure”, “arrange”, “support” and/or “make available” child and family services to First Nations children and families on reserve and in the Yukon. Without the FNCFS Program, related agreements and the funding provided through those instruments, First Nations children and families on reserve and in the Yukon would not receive the full range of child and family services provided to other provincial/territorial residents, let alone services that are suitable to their cultural realities. The activities of the provinces/territory alone were insufficient to meet the child and family services needs of First Nations children and families on reserve and in the Yukon.

[60]  Therefore, the essential nature of the FNCFS Program is to ensure First Nations children and families on reserve and in the Yukon receive the “assistance” or “benefit” of culturally appropriate child and family services to that are reasonably comparable to the services provided to other provincial residents in similar circumstances. The other related provincial/territorial agreements provide a similar “assistance” or “benefit”. AANDC extends this “assistance” or “benefit” to First Nations children and families on reserves and in the Yukon Territory.

d.  First Nations children and families are extended the “assistance” or “benefit” by AANDC

[61]  First Nations and, in particular, First Nations on reserve, are a distinct public. AANDC extends the assistance or benefit of the FNCFS Program and other related provincial/territorial agreements to this public through FNCFS Agencies and/or the provinces/territory.

[62]  Section 1.5 of the 2005 FNCFS National Program Manual defines the roles and responsibilities of AANDC’s headquarters and regional offices in ensuring the safety and well-being of First Nations children ordinarily resident on reserve. At section 1.5.2, the role of Headquarters includes: “to provide [...] funding on behalf of children and families as authorized by the approved policy and program authorities”; “to lead in the development of FNCFS policy”; and, “to provide oversight on program issues related to the FNCFS policy and to assist regions and First Nations in finding solutions to problems arising in the regions”.

[63]  The role of AANDC’s regional offices is outlined at section 1.5.3 of the 2005 FNCFS National Program Manual and includes: “to interact with Recipients, Chiefs and Councils, Headquarters, the reference province or territory”; “to manage the program and funding on behalf of Canada and to ensure that authorities are followed”; “to assure Headquarters that the program is operating according to authorities and Canada’s financial management requirements”; and, “to establish, in cooperation with Recipients, a process for dealing with disputes over issues relating to the operation of FNCFS”.

[64]  The role of the FNCFS Agencies is, among other things, “to deliver the FNCFS program in accordance with provincial legislation and standards while adhering to the terms and conditions of their funding agreements” (2005 FNCFS National Program Manual at section 1.5.4). The provinces mandate, regulate and oversee the FNCFS Agencies (see 2005 FNCFS National Program Manual at section 1.5.5).

[65]  In a more summary fashion, the 2012 National Social Programs Manual defines the differing roles of AANDC, the provinces/territory and the FNCFS Agencies as follows, at page 30:

1.2 Provincial Delegations

Child welfare is an area of provincial responsibility whereby each province, in accordance with their legislation, delegates authority to FNCFS agencies to manage and deliver child welfare services on reserve.

The FNCFS agencies, delegated by the province, provide protection services to eligible First Nation children, ordinarily resident on-reserve in accordance with provincial legislation and standards.

The Program funds FNCFS agencies to deliver protection (out of the home) and prevention services (in-home) to First Nation children, youth, and families ordinarily resident on reserve.

[66]  AANDC has a “Shared Responsibility for Child Welfare” with the FNCFS Agencies and the provinces/territory (see the NPR at p.88). It not only provides funding, but policy and oversight as well. It works as a partner with the FNCFS Agencies and provinces/territory to deliver adequate child and family services to First Nations on reserves. It is not a passive player in this partnership, whereby it only provides funding: it strives to improve outcomes for First Nations children and families. In this regard, Ms. Sheilagh Murphy, Director General of the Social Policy and Programs Branch of AANDC, testified about the goal of AANDC social programs:

Well, I mean we have this broad objective or goal to make sure that First Nations on Reserve -- men, women, and children -- are safe, that they are healthy and that they have the means to become productive members of their communities and can contribute to those communities and to Canada more generally as citizens.

(StenoTran Services Inc.’s transcript of First Nations Child and Family Caring Society of Canada et al. v. Attorney General of Canada (for the Minister of Indian and Northern Affairs Canada) (CHRT), Ottawa, Vol. 54 at pp. 17-18 [Transcript])

[67]  The FNCFS Program is one of the social programs meant to achieve this objective. A “Fact Sheet” developed in October 2006 and previously posted on AANDC’s website (see Annex, ex. 10 [Fact Sheet]), demonstrates how the department previously held out the FNCFS Program:

The First Nations Child and Family Services Program is one component of a suite of Social Programs that addresses the well-being of children and families. The main objective of the Program is to assist First Nations in providing access to culturally sensitive child and family services in their communities, and to ensure that the services provided to them are comparable to those available to other provincial residents in similar circumstances.

[68]  AANDC works directly with its partners, including First Nations, to ensure the objectives of the FNCFS Program and other related provincial/territorial agreements are being met. The 2005 FNCFS Program Manual provides for consultation among AANDC and First Nations communities with regard to disputes over the program (see ss. 1.5.2-1.5.3). The Alberta Reform Agreement specifically provides for consultation with First Nations communities in reviewing the effectiveness of the arrangement (see ss. 13-14). Similarly, the agreements in British Columbia and the Yukon provide for evaluation and review by AANDC of the effectiveness of the programs, services and activities it funds (see ss. 9.2 and 10.1 of the BC Service Agreement; and, s. 13.4.1 of the Yukon Funding Agreement).

[69]  In its previous website Fact Sheet, AANDC held out this partnership as follows:

The Government of Canada is committed to working with First Nations, provincial/territorial, and federal partners and agencies to implement a modernized vision of the First Nations Child and Family Services Program, a program that strives for safe and strong children and youth supported by healthy parents.

[70]  Ms. Murphy provided some insight into the nature of AANDC’s role and partnership in ensuring adequate child and family services to First Nations reserves:

I mean, we continue to be a funder, we don't espouse to be experts in the area of child welfare practice. I mean, our role I think has changed in some ways in that when you look at the progression of this program -- we do audits and we do evaluations, the Auditor General looked at this program in 2008 and again in 2011. We do need to have – we don't just want to be writing cheques, we actually do have a genuine interest in making sure that First Nation Agencies are delivering the program according to the legislation and regulation, that they have the capacity to do that, that we are getting to outcomes.

So we are not a passive player in terms of being interested in how First -- I mean, it's program risk management, it is financial risk management, to make sure that they are delivering the program that is within the authorities, that they are paying for the right things that we have been given the money for.

(Transcript Vol. 54 at pp. 51-52)

[71]  As the above indicates, AANDC plays a significant role in the effort to improve outcomes for First Nations children and families residing on reserve. While AANDC argues that it does not control services, the manner and extent of AANDC’s funding significantly shapes the child and family services provided by the FNCFS Agencies and/or the provinces/territory. This will be further elaborated upon in section B of this Analysis below. For the purposes of this “service” analysis, suffice it to say AANDC’s involvement in the FNCFS Program and other related provincial/territorial agreements determines whether and to what extent child and family services are provided to First Nations reserves and in the Yukon.

[72]  For example, a document entitled First Nations Child and Family Services British Columbia Transition Plan (Decision by Assistant Deputy Minister – ESDPP) authored by three AANDC employees and signed by the Assistant Deputy Minister at the time, Ms. Christine Cram (see Annex, ex. 11), at page 2, explains the ultimate consequence that AANDC’s funding can have on FNCFS Agencies:

For the majority of these FNCFS agencies, a permanent reduction of unexpended maintenance balances and the absence of additional resources for operations on a go forward basis will render them financially unviable and will likely result in many agency closures.

[73]  It is AANDC that created the FNCFS Program and its corresponding funding formulas, and who negotiated and administers the provincial/territorial agreements. While the FNCFS Program is set up to work in a tripartite fashion, and the other agreements in a bilateral fashion, at the end of the day it is AANDC’s involvement that is needed to improve outcomes for First Nations on reserves and in the Yukon. AANDC holds a considerable degree of control in this regard. Again, this will be elaborated upon in section B of this Analysis. However, by way of example, in a document entitled Reform of the FNCFS Program in Québec (Information for the Deputy Minister), at pages 1-3 (see Annex, ex. 12), two AANDC employees explain the Department’s decision not to transition Québec to a new funding methodology:

INAC has been in discussion with the First Nations of Québec and Labrador Health and Social Services Commission (Commission) and Québec’s Ministry of Health and Social Services since June, 2007 regarding transitioning the Quebec FNCFS Agencies to an enhanced prevention approach.

The three parties have developed a Partnership for Results Framework that outlines the strategic direction, key outcomes and performance indicators for FNCFS on reserve in Québec. Both the First Nations leadership and the Province have submitted letters of endorsement for this initiative.

In November of 2007, a number of issues were raised by the First Nations of Québec and Labrador Health and Social Services Commission. The issues largely pertain to the overall funding formula that was proposed as a model for the Québec First Nations agencies (See Annex A for detailed list of concerns and our proposed action).

A decision was made in December 2007, to move forward in the transition to the enhanced prevention focused approach without Québec in order to give the Department time to address First Nations’ concerns with the transition process.

The Department has not yet informed Québec First Nations and the Province of Québec of the decision to delay the transition to the Enhanced Prevention Focused Approach in Québec.

[...]

There is a risk that once the Commission and Québec First Nations are informed of the decision that was made; they will not want to proceed with the transition to the new enhanced prevention-focused approach. It is hoped that the delivery of messaging from a senior official will reassure the First Nations of the Department’s commitment and enable the working level to address concerns raised and move the transition forward.

[74]  This document is an official position to be adopted by AANDC’s Deputy Minister, informed by high level AANDC employees. It illustrates that, despite a tripartite relationship where its partners support a new funding approach, AANDC is the one who controls the process and makes the final decision in determining the approach to be taken.

[75]  Furthermore, AANDC has the power to withhold funds if FNCFS Agencies and/or the provinces/territory do not comply with its funding requirements. This could result in agencies closing their doors and, as a consequence, inadequate child and family services being provided to First Nations children and families on reserves and in the Yukon (see testimony of William McArthur, Manager, Social Programs, British Columbia Regional Office, AANDC, Transcript Vol. 64 at pp. 45-47).

[76]  All the above indicates a public relationship between AANDC and First Nations children and families in the provision of child and family services. In sum, AANDC extends the FNCFS Program and other related provincial/territorial agreements as a partnership, including with First Nations, to improve outcomes for First Nations children and families on reserve. Ultimately, through the FNCFS Program, its funding formulas and the related provincial/territorial agreements, AANDC has a direct impact on the child and family services provided to First Nations children and families living on reserves and in the Yukon Territory.

[77]  This public relationship between AANDC and First Nations on reserves and in the Yukon in the provision of child and family services is reinforced by the federal government’s constitutional responsibilities and its special relationship with Aboriginal peoples.

e.  Section 91(24) of the Constitution Act, 1867

[78]  The fact that AANDC does not directly deliver First Nations child and family services on reserve, but funds the delivery of those services through FNCFS Agencies or the provincial/territorial governments, does not exempt it from its public mandate and responsibilities to First Nations people. AANDC argues that child welfare services fall within provincial jurisdiction and that it only became involved as a matter of social policy to address concerns that the provinces were not providing the full range of services to First Nations children and families living on reserves. However, that position does not take into consideration Parliament’s exclusive legislative authority over “Indians, and lands reserved for Indians” by virtue of section 91(24) of the Constitution Act, 1867.

[79]  In Canada, legislative power is divided between the federal government and the provincial/territorial governments. As stated by the Supreme Court in Canadian Western Bank v. Alberta, 2007 SCC 22 at paragraph 22 (Central Western Bank):

...federalism was the legal response of the framers of the Constitution to the political and cultural realities that existed at Confederation.  It thus represented a legal recognition of the diversity of the original members.  The division of powers, one of the basic components of federalism, was designed to uphold this diversity within a single nation.  Broad powers were conferred on provincial legislatures, while at the same time Canada’s unity was ensured by reserving to Parliament powers better exercised in relation to the country as a whole.  Each head of power was assigned to the level of government best placed to exercise the power.  The fundamental objectives of federalism were, and still are, to reconcile unity with diversity, promote democratic participation by reserving meaningful powers to the local or regional level and to foster co‑operation among governments and legislatures for the common good.

[80]  The Supreme Court also noted that “the interpretation of these powers and of how they interrelate must evolve and must be tailored to the changing political and cultural realities of Canadian society” (Central Western Bank at para. 23). This is referred to as the “living tree” doctrine.

[81]  The legislative powers defined in the Constitution Act, 1867 are deemed to be exclusive to the extent that, even if Parliament does not legislate in its fields of jurisdiction, the provinces/territories are not allowed to do so (see Union Colliery Co. of British Columbia v. Bryden, [1899] A.C. 580 (P.C.) at p. 588). However, the Court has indicated clearly that this doctrine of inter-jurisdictional immunity is to be construed narrowly, among other reasons, so as not to allow any legal vacuum. It is used “...to protect that which makes certain works or undertakings, things (e.g., Aboriginal lands) or persons (e.g., Aboriginal peoples and corporations created by the federal Crown) specifically of federal jurisdiction” (Central Western Bank at para. 41). As also noted in Central Western Bank at paragraph 42:

Canadian federalism is not simply a matter of legalisms.  The Constitution, though a legal document, serves as a framework for life and for political action within a federal state, in which the courts have rightly observed the importance of co-operation among government actors to ensure that federalism operates flexibly.

[82]  Despite the doctrine of inter-jurisdictional immunity, cooperative federalism can exist in situations where federal and provincial authorities connect. In the recent case of Quebec (A.G.) v. Canada (A.G.), 2015 SCC 14 (Canadian Firearms Registry), where Quebec challenged the constitutionality of the federal government’s decision to destroy the firearms registry, the Supreme Court found itself divided on the scope of cooperative federalism. Nonetheless, the majority in Canadian Firearms Registry held that cooperative federalism cannot override or modify the constitutional division of powers:

[17] Cooperative federalism is a concept used to describe the “network of relationships between the executives of the central and regional governments [through which] mechanisms are developed, especially fiscal mechanisms, which allow a continuous redistribution of powers and resources without recourse to the courts or the amending process [...] From this descriptive concept of cooperative federalism, courts have developed a legal principle that has been invoked to provide flexibility in separation of powers doctrines, such as federal paramountcy and interjurisdictional immunity.  It is used to facilitate interlocking federal and provincial legislative schemes and to avoid unnecessary constraints on provincial legislative action [...] With respect to interjurisdictional immunity, for example, the principle of cooperative federalism has been relied on to explain and justify relaxing a rigid, watertight compartments approach to the division of legislative power that unnecessarily constrains legislative action by the other order of government: “In the absence of conflicting enactments of the other level of government, the Court should avoid blocking the application of measures which are taken to be enacted in furtherance of the public interest” (Canadian Western Bank, at para. 37).

[18] However, we must also recognize the limits of the principle of cooperative federalism. The primacy of our written Constitution remains one of the fundamental tenets of our constitutional framework: Reference re Secession of Quebec, [1998] 2 S.C.R. 217, at para. 53. This is especially the case with regard to the division of powers:

. . . the text of the federal constitution as authoritatively interpreted in the courts remains very important.  It tells us who can act in any event.  In other words, constitutionally it must always be possible in a federal country to ask and answer the question — What happens if the federal and provincial governments do not agree about a particular measure of co-operative action?  Then which government and legislative body has power to do what?

(Emphasis added; footnote omitted)

[83]  Instead of legislating in the area of child welfare on First Nations reserves, pursuant to Parliament’s exclusive legislative authority over “Indians, and lands reserved for Indians” by virtue of section 91(24) of the Constitution Act, 1867, the federal government took a programing and funding approach to the issue. It provided for the application of provincial child welfare legislation and standards for First Nations on reserves through the enactment of section 88 of the Indian Act. However, this delegation and programing/funding approach does not diminish AANDC’s constitutional responsibilities. In a comparable situation argued under the Canadian Charter of Rights and Freedoms (the Charter), the Supreme Court stated in Eldridge at paragraph 42:

...the Charter applies to private entities in so far as they act in furtherance of a specific governmental program or policy.  In these circumstances, while it is a private actor that actually implements the program, it is government that retains responsibility for it.  The rationale for this principle is readily apparent.  Just as governments are not permitted to escape Charter scrutiny by entering into commercial contracts or other “private” arrangements, they should not be allowed to evade their constitutional responsibilities by delegating the implementation of their policies and programs to private entities.

[84]  Similarly, AANDC should not be allowed to evade its responsibilities to First Nations children and families residing on reserve by delegating the implementation of child and family services to FNCFS Agencies or the provinces/territory. AANDC should not be allowed to escape the scrutiny of the CHRA because it does not directly deliver child and family services on reserve.

[85]  As explained above, despite not actually delivering the service, AANDC exerts a significant amount of influence over the provision of those services. Ultimately, it is AANDC that has the power to remedy inadequacies with the provision of child and family services and improve outcomes for children and families residing on First Nations reserves and in the Yukon. This is the assistance or benefit AANDC holds out and intends to provide to First Nations children and families.

[86]  Parliament’s constitutional responsibility towards Aboriginal peoples, in a situation where a federal department dedicated to Aboriginal affairs oversees a social program and negotiates and administers agreements for the benefit of First Nations children and families, reinforces the public relationship between AANDC and First Nations in the provision of the FNCFS Program and the related provincial/territorial agreements.

f.  The Crown’s fiduciary relationship with Aboriginal peoples

[87]  Furthermore, AANDC’s commitment to ensuring the safety and well-being of children and families living on reserves and in Yukon must be considered in the context of the special relationship between the Crown and Aboriginal peoples.

[88]  The Complainants submit that the relationship between the Crown and Aboriginal peoples is a fiduciary relationship that gives rise to a fiduciary duty in relation to the FNCFS Program. While AANDC acknowledges there is a general fiduciary relationship between the federal Crown and the Aboriginal peoples of Canada, it argues that fiduciary duty principles are not applicable to the Complaint.

[89]  It is well established that in all its dealings with Aboriginal peoples, the Crown must act honourably (see Haida Nation v. British Columbia (Minister of Forests), 2004 SCC 73, at para. 16 [Haida Nation]). It is also well established that there exists a special relationship between the Crown and the Aboriginal peoples of Canada, qualified as a sui generis relationship. This special relationship stems from the fact that Aboriginal peoples were already here when the Europeans arrived in North America (see R. v. Van der Peet, [1996] 2 SCR 507, at para. 30).

[90]  In 1950, in a case about the application of section 51 of the Indian Act, 1906 and concerning reserve lands, the Supreme Court stated that the care and welfare of First Nations people are a “political trust of the highest obligation”:

The language of the statute embodies the accepted view that these aborigenes are, in effect, wards of the State, whose care and welfare are a political trust of the highest obligation. For that reason, every such dealing with their privileges must bear the imprint of governmental approval, and it would be beyond the power of the Governor in Council to transfer that responsibility to the Superintendent General.

(St. Ann's Island Shooting And Fishing Club v. The King, [1950] SCR 211 at p. 219 [per Rand J.])

[91]  However, this “political trust” was not enforceable by the courts. This changed when the Supreme Court moved away from the political trust doctrine. In the context of a case dealing with the sale of surrendered land at conditions quite different from those agreed to at the time of the surrender, the Supreme Court qualified the relationship between the Crown and Aboriginal peoples as a fiduciary relationship in Guerin v. The Queen, [1984] 2 SCR.335, at page 376 (Guerin):

The fiduciary relationship between the Crown and the Indians has its roots in the concept of aboriginal, native or Indian title. The fact that Indian Bands have a certain interest in lands does not, however, in itself give rise to a fiduciary relationship between the Indians and the Crown. The conclusion that the Crown is a fiduciary depends upon the further proposition that the Indian interest in the land is inalienable except upon surrender to the Crown.

[92]  This special relationship is also rooted in the large degree of discretionary control assumed by the Crown over the lives and interests of Aboriginal peoples in Canada:

English law, which ultimately came to govern aboriginal rights, accepted that the aboriginal peoples possessed pre-existing laws and interests, and recognized their continuance in the absence of extinguishment, by cession, conquest, or legislation: see, e.g., the Royal Proclamation of 1763, R.S.C. 1985, App. II, No. 1, and R. vSparrow, [1990] 1 S.C.R. 1075, at p. 1103.  At the same time, however, the Crown asserted that sovereignty over the land, and ownership of its underlying title, vested in the Crown: Sparrowsupra.  With this assertion arose an obligation to treat aboriginal peoples fairly and honourably, and to protect them from exploitation, a duty characterized as “fiduciary” in Guerin v. The Queen, [1984] 2 S.C.R. 335.

(Mitchell v. M.N.R., 2001 SCC 33, at para. 9)

[93]  After the entry into force of section 35 of the Constitution Act, 1982, in R. v. Sparrow, [1990] 1 SCR 1075, at page 1108, the Supreme Court further confirmed and defined the duty of the Crown to act in a fiduciary capacity as thegeneral guiding principle” for section 35:

In our opinion, Guerin, together with R. v. Taylor and Williams (1981), 34 O.R. (2d) 360, ground a general guiding principle for s. 35(1).  That is, the Government has the responsibility to act in a fiduciary capacity with respect to aboriginal peoples.  The relationship between the Government and aboriginals is trust‑like, rather than adversarial and, contemporary recognition and affirmation of aboriginal rights must be defined in light of this historic relationship.

[94]  This general guiding principle is not limited to section 35(1) of the Constitution Act, 1982, but has broader application as confirmed by the Supreme Court in Wewaykum Indian Band v. Canada, 2002 SCC 79, at paragraph 79 (Wewaykum).

[95]  First Nations children and families on reserves are in a fiduciary relationship with AANDC. In the provision of the FNCFS Program, its corresponding funding formulas and the other related provincial/territorial agreements, “the degree of economic, social and proprietary control and discretion asserted by the Crown” leaves First Nations children and families “...vulnerable to the risks of government misconduct or ineptitude” (Wewaykum at para. 80). This fiduciary relationship must form part of the context of the Panel’s analysis, along with the corollary principle that in all its dealings with Aboriginal peoples, the honour of the Crown is always at stake. As affirmed by the Supreme Court in Haida Nation, at paragraph 17:

Nothing less is required if we are to achieve “the reconciliation of the pre-existence of aboriginal societies with the sovereignty of the Crown”:  Delgamuukw, supra, at para. 186, quoting Van der Peet, supra, at para. 31.

[96]  That being said, it is also well established that this fiduciary relationship does not always give rise to fiduciary obligations. While the fiduciary relationship may be described as general in nature, requiring that the Crown act in the best interest of Aboriginal peoples, fiduciary obligations are specific, related to precise aboriginal interests:

This sui generis relationship had its positive aspects in protecting the interests of aboriginal peoples historically [...]

But there are limits.  The appellants seemed at times to invoke the “fiduciary duty” as a source of plenary Crown liability covering all aspects of the Crown-Indian band relationship.  This overshoots the mark.  The fiduciary duty imposed on the Crown does not exist at large but in relation to specific Indian interests.

(Wewaykum at paras. 80-81)

[97]  The Supreme Court has relied on private law concepts to define circumstances that can give rise to a fiduciary obligation because, although the Crown’s obligation is not a private law duty, it is nonetheless in the nature of a private duty, susceptible of giving rise to enforceable obligations :

It should be noted that fiduciary duties generally arise only with regard to obligations originating in a private law context. Public law duties, the performance of which requires the exercise of discretion, do not typically give rise to a fiduciary relationship. As the "political trust" cases indicate, the Crown is not normally viewed as a fiduciary in the exercise of its legislative or administrative function. The mere fact, however, that it is the Crown which is obligated to act on the Indians' behalf does not of itself remove the Crown's obligation from the scope of the fiduciary principle. As was pointed out earlier, the Indians' interest in land is an independent legal interest. It is not a creation of either the legislative or executive branches of government. The Crown's obligation to the Indians with respect to that interest is therefore not a public law duty. While it is not a private law duty in the strict sense either, it is nonetheless in the nature of a private law duty. Therefore, in this sui generis relationship, it is not improper to regard the Crown as a fiduciary.

(Guerin at p. 385)

[98]  Guerin stands for the principle that a fiduciary obligation on the Crown towards Aboriginal peoples arises from the fact that their interest in land is inalienable except upon surrender to the Crown. In another case where the Supreme Court found that the Crown has a fiduciary obligation to prevent exploitative bargains in the context of a surrender of reserve land, in Blueberry River Indian Band v. Canada (Department of Indian Affairs and Northern Development), [1995] 4 SCR 344 at paragraph 38, it referred to private law criteria to define a situation that could give rise to a fiduciary obligation:

Generally speaking, a fiduciary obligation arises where one person possesses unilateral power or discretion on a matter affecting a second "peculiarly vulnerable" person: see Frame v. Smith, [1987] 2 S.C.R. 99; Norberg v. Wynrib, [1992] 2 S.C.R. 226; and Hodgkinson v. Simms, [1994] 3 S.C.R. 377.  The vulnerable party is in the power of the party possessing the power or discretion, who is in turn obligated to exercise that power or discretion solely for the benefit of the vulnerable party.  A person cedes (or more often finds himself in the situation where someone else has ceded for him) his power over a matter to another person.  The person who has ceded power trusts the person to whom power is ceded to exercise the power with loyalty and care.  This is the notion at the heart of the fiduciary obligation.

[99]  The present case does not raise land related issues. The Panel is aware that fiduciary obligations have yet to be recognized by the Supreme Court in relation to Aboriginal interests other than land outside the framework of section 35(1) of the Constitution Act, 1982 (see Wewaykum at para. 81). However, the Panel is also aware that in Frame v. Smith, [1987] 2 SCR 99, at paragraph 60, Wilson J. held that fiduciary duties did not apply only to legal and economic interests but could extend to human and personal interests:

To deny relief because of the nature of the interest involved, to afford protection to material interests but not to human and personal interests would, it seems to me, be arbitrary in the extreme.

[100]  In fact, in Wewaykum the Supreme Court noted that since the Guerin case the existence of a fiduciary obligation has been argued in a number of cases raising a variety of issues (see at para. 82). While it did not comment on these cases, the Court in Wewaykum, at paragraph 83, did state that a case by case approach would have to focus on the specific interest at issue and whether or not the Crown had assumed discretionary control giving rise to a fiduciary obligation:

I think it desirable for the Court to affirm the principle, already mentioned, that not all obligations existing between the parties to a fiduciary relationship are themselves fiduciary in nature [...], and that this principle applies to the relationship between the Crown and aboriginal peoples.  It is necessary, then, to focus on the particular obligation or interest that is the subject matter of the particular dispute and whether or not the Crown had assumed discretionary control in relation thereto sufficient to ground a fiduciary obligation.

[101]  Recent case law from the Supreme Court confirms that a fiduciary obligation may also arise from an undertaking. The following conditions are to be met:

In summary, for an ad hoc fiduciary duty to arise, the claimant must show, in addition to the vulnerability arising from the relationship as described by Wilson J. in Frame: (1) an undertaking by the alleged fiduciary to act in the best interests of the alleged beneficiary or beneficiaries; (2) a defined person or class of persons vulnerable to a fiduciary’s control (the beneficiary or beneficiaries); and (3) a legal or substantial practical interest of the beneficiary or beneficiaries that stands to be adversely affected by the alleged fiduciary’s exercise of discretion or control.

(Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24, at para. 36 (Elder Advocates Society); see also Manitoba Metis Federation Incv. Canada (Attorney General), 2013 SCC 14, at para. 50 [Manitoba Metis Federation])

[102]  AANDC argues that there must be an undertaking of loyalty by the Crown to the point of forsaking the interests of all others in favour of those of the beneficiaries for a fiduciary obligation to apply (see Elder Advocates Society at para. 31; and, Manitoba Metis Federation at para. 61).

[103]  However, in Elder Advocates Society, at paragraph 48, it should be noted that the Supreme Court held that the necessary undertaking was met with respect to Aboriginal peoples:

In sum, while it is not impossible to meet the requirement of an undertaking by a government actor, it will be rare. The necessary undertaking is met with respect to Aboriginal peoples by clear government commitments from the Royal Proclamation of 1763 (reproduced in R.S.C. 1985, App. II, No. 1) to the Constitution Act, 1982 and considerations akin to those found in the private sphere.

[104]  In view of the above and the evidence presented on this issue, the relationship between the federal government and First Nations people for the provision of child and family services on reserve could give rise to a fiduciary obligation on the part of the Crown. Arguably the three criteria outlined in Elder Advocates Society have been met in this case.

[105]  The FNCFS Program and other related provincial/territorial agreements were undertaken and are controlled by the Crown. This undertaking is explicitly intended to be in the best interests of the First Nations beneficiaries, including that the "best interests of the child” and the safety and well-being of First Nations children are objectives of the program. The Crown has discretionary control over the FNCFS Program through policy and other administrative directives. It also exercises discretionary control over the application of the other related provincial/territorial agreements as First Nations are not party to their negotiation. The FNCFS Program and other related provincial/territorial agreements also have a direct impact on a vulnerable category of people: First Nations children and families in need of child and family support services on reserve.

[106]  The legal and substantial practical interests of First Nations children, families, and communities stand to be adversely affected by AANDC's discretion and control over the FNCFS Program and other related provincial/territorial agreements. The Panel agrees with the AFN, Caring Society and the COO that the specific Aboriginal interests that stand to be adversely affected in this case are, namely, indigenous cultures and languages and their transmission from one generation to the other. Those interests are also protected by section 35 of the Constitution Act, 1982. The transmission of indigenous languages and cultures is a generic Aboriginal right possessed by all First Nations children and their families. Indeed, the Supreme Court highlighted the importance of cultural transmission in R. v. Côté, [1996] 3 SCR 139 at paragraph 56:

In the aboriginal tradition, societal practices and customs are passed from one generation to the next by means of oral description and actual demonstration.  As such, to ensure the continuity of aboriginal practices, customs and traditions, a substantive aboriginal right will normally include the incidental right to teach such a practice, custom and tradition to a younger generation.

[107]  Similarly, in DoucetBoudreau v. Nova Scotia (Minister of Education),  2003 SCC 62 at paragraph 26 (Doucet-Boudreau), the Supreme Court stated the following with regard to the relation between language and culture:

This Court has, on a number of occasions, observed the close link between language and culture. In Mahe, at p. 362, Dickson C.J. stated:

. . . any broad guarantee of language rights, especially in the context of education, cannot be separated from a concern for the culture associated with the language. Language is more than a mere means of communication, it is part and parcel of the identity and culture of the people speaking it. It is the means by which individuals understand themselves and the world around them.

[108]  In certifying a class action based on the operation of the child welfare system on reserve in Ontario, Justice Belobaba on the Ontario Superior Court of Justice, in Brown v. Canada (AG), 2013 ONSC 5637 at paragraph 44, expressed his views on the existence of a fiduciary duty based on the discretionary Crown control over Aboriginal interests in culture:

it is at least arguable that a fiduciary duty arose on the facts herein for these reasons: (i) the Federal Crown exercised or assumed discretionary control over a specific aboriginal interest (i.e. culture and identity) by entering into the 1965 Agreement; (ii) without taking any steps to protect the culture and identity of the on-reserve children; (iii) who under federal common law were “wards of the state whose care and welfare are a political trust of the highest obligation”; and (iv) who were potentially being exposed to a provincial child welfare regime that could place them in non-aboriginal homes.

[109]  The Panel agrees with the Caring Society that it is not necessary for the purposes of this case to further define the contours of Aboriginal rights in language and culture or a fiduciary duty related thereto. It is enough to say that, by virtue of being protected by section 35 of the Constitution Act, 1982 indigenous cultures and languages must be considered as “specific indigenous interests” which may trigger a fiduciary duty. Accordingly, where the government exercises its discretion in a way that disregards indigenous cultures and languages and hampers their transmission, it can breach its fiduciary duty. However, such a finding is not necessary to make a determination regarding whether or not AANDC provides a service; or, more broadly, to determine whether there has been a discriminatory practice under the CHRA.

[110]  Suffice it to say, AANDC’s development of the FNCFS Program and related agreements, along with its public statements thereon, indicate an undertaking on the part of the Crown to act in the best interests of First Nations children and families to ensure the provision of adequate and culturally appropriate child welfare services on reserve and in the Yukon. Whether or not that gives rise to a fiduciary obligation, the existence of the fiduciary relationship between the Crown and Aboriginal peoples is a general guiding principle for the analysis of any government action concerning Aboriginal peoples. In the current “services” analysis under the CHRA, it informs and reinforces the public nature of the relationship between AANDC and First Nations on reserves and in the Yukon in the provision of the FNCFS Program and other provincial/territorial agreements.

  iii.  Summary of findings

[111]  Overall, the Panel finds the evidence indicates the FNCFS Program and other related provincial/territorial agreements are held out by AANDC as assistance or a benefit that it provides to First Nations people. The FNCFS Program and other provincial/territorial agreements were created and negotiated on behalf of First Nations by AANDC, a federal government department with the mandate and mission to do so. First Nations are a distinct public, served by AANDC in the context of a unique constitutional and fiduciary relationship. AANDC has undertaken to ensure First Nations living on reserve receive culturally appropriate child and family services that are reasonably comparable to the services provided to other provincial residents in similar circumstances. Therefore, the Panel finds there is a clear public nature and relationship with First Nations in AANDC’s provision of the FNCFS Program and other related provincial/territorial agreements.

[112]  This finding is similar to the one made by the Federal Court in Attawapiskat First Nation v. Canada, 2012 FC 948. In discussing the nature of funding agreements similar to the ones at issue in the present Complaint, the Federal Court stated at paragraph 59:

the [Attawapiskat First Nation] relies on funding from the government through the [Comprehensive Funding Agreement] to provide essential services to its members and as a result, the [Comprehensive Funding Agreement] is essentially an adhesion contract imposed on the [Attawapiskat First Nation] as a condition of receiving funding despite the fact that the [Attawapiskat First Nation] consents to the [Comprehensive Funding Agreement]. There is no evidence of real negotiation. The power imbalance between government and this band dependent for its sustenance on the [Comprehensive Funding Agreement] confirms the public nature and adhesion quality of the [Comprehensive Funding Agreement].

[113]  As a result, and for the reasons above, the Panel finds AANDC provides a service through the FNCFS Program and other related provincial/territorial agreements. In the following pages, the Panel will examine the impacts of AANDC’s service and, specifically, how AANDC’s method of funding the FNCFS Program and related provincial/territorial agreements significantly controls the provision of First Nations children and family services on reserve and in the Yukon to the detriment of First Nations children and families.

B.  First Nations are adversely impacted by the services provided by AANDC and, in some cases, denied services as a result of AANDC’s involvement

[114]  Before dealing with how the FNCFS Program and other related provincial/territorial agreements are funded, it is helpful to have a basic understanding of how child welfare services are provided in Canada. Dr. Cindy Blackstock, Executive Director of the Caring Society, provided helpful testimony in this regard (see Transcript Vol. 1 at pp. 110, 112, 124-129, 132-136, 138-142 and 151; see also Annex, ex. 1).

  i.  General child welfare principles

[115]  As indicated earlier, child welfare in Canada includes a range of services designed to protect children from abuse and neglect and to support families so that they can stay together. The main objective of social workers is to do all they can to keep children safely within their homes and communities. There are two major streams of child welfare services: prevention and protection.

[116]  Prevention services are divided into three main categories: primary, secondary and tertiary. Primary prevention services are aimed at the community as a whole. They include the ongoing promotion of public awareness and education on the healthy family and how to prevent or respond to child maltreatment. Secondary prevention services are triggered when concerns begin to arise and early intervention could help avoid a crisis. Tertiary prevention services target specific families when a crisis or risks to a child have been identified. As opposed to separating a child from his or her family, tertiary prevention services are designed to be “least disruptive measures” that try and mitigate the risks of separating a child from his or her family. Early interventions to provide family support can be quite successful in keeping children safely within their family environment, and provincial legislation requires that least disruptive measures be exhausted before a child is placed in care.

[117]  Protection services are triggered when the safety or the well-being of a child is considered to be compromised. If the child cannot live safely in the family home while measures are taken with the family to remedy the situation, child welfare workers will make arrangements for temporary or permanent placement of the child in another home where he or she can be cared for. This is called placing the child “in care”. The first choice for a caregiver in this situation would usually be a kin connection or a foster family. Kinship care includes children placed out-of-home in the care of the extended family, individuals emotionally connected to the child, or in a family of a similar religious or ethno-cultural background.

[118]  The child welfare system is typically called into action when someone has concerns about the safety or well-being of a child and reports these concerns to a social worker. The first step is for the social worker to do a preliminary assessment of the report in order to decide whether further investigation is called for. If the social worker concludes that an investigation is warranted, he or she can meet with family members and can interview the child. The child is not removed from the home during the investigation unless his or her safety is at risk. The social worker will develop a plan of action for the child and his or her family in coordination with the child’s extended family and professionals such as teachers, early child care workers and cultural workers. A whole range of services may include personal counselling, mentoring by an Elder, access to childhood development programs or to programs designed to enhance the homemaking and parental skills of the caregiver.

[119]  There are circumstances, however, when the risk to the child’s safety or well-being is too great to be mitigated at home, and the child cannot safely remain in his or her family environment. In such circumstances, most provincial statutes require that a social worker first look at the extended family to see if there is an aunt, an uncle or a grandparent who can care for the child. It is only when there is no other solution that a child should be removed from his or her family and placed in foster care under a temporary custody order. Following the issuance of a temporary custody order, the social worker must appear in court to explain the placement and the plan of care for the child and support of the family. The temporary custody order can be renewed and eventually, when all efforts have failed, the child may be placed in permanent care.

[120]  The major categories of child maltreatment are: sexual, physical, or emotional abuse, or exposure thereto, and neglect. For First Nations, the main source of child maltreatment is neglect in the form of a failure to supervise and failure to meet basic needs. Poverty, poor housing and substance abuse are common risk factors on reserves that call for early counselling and support services for children and families to avoid the intervention of child protection services.

  ii.  The allocation of funding for First Nations child and family services

[121]  AANDC funds child and family services on reserves and in the Yukon in various ways. At the time of the complaint, there were 105 FNCFS Agencies in the 10 provinces across Canada (104 at the time of the hearing). The FNCFS Program, applies to most of the FNCFS Agencies in Canada, uses two funding formulas: Directive 20-1 and the Enhanced Prevention Focused Approach (the EPFA). In Ontario, funding is provided through the 1965 Agreement. In certain parts of Alberta and British Columbia, funding is provided through the Alberta Reform Agreement and the BC MOU and, since 2012, the BC Service Agreement. Finally, in the Yukon funding is allocated pursuant to the Yukon Funding Agreement (see testimony of Ms. Barbara D’Amico, Senior Policy Analyst at the Social and Policy Branch of AANDC, Transcript Vol. 50 at p. 141). Each method of funding is addressed in turn.

a.  The FNCFS Program

[122]  Beginning with the FNCFS Program, AANDC’s authorities require that, before entering into a funding arrangement with an FNCFS Agency (or Recipient), an agreement be in place between the province or territory and the agency that meets the requirements of AANDC’s national FNCFS Policy (see 2005 FNCFS National Program Manual at s. 4.1). Thereafter, funding is provided through a comprehensive funding arrangement (CFA), which is “...a program-budgeted funding agreement that [AANDC] enters into with Recipients...” (2005 FNCFS National Program Manual at s. 4.4.1). According to the 2005 FNCFS National Program Manual at section 4.4.1:

[A CFA] contains components funded by means of a Contribution, which is a reimbursement of eligible expenses and Flexible Transfer Payments, which are formula funded. Surpluses from the Flexible Transfer Payment may be retained by the Recipient provided the terms and conditions of the CFA have been fulfilled. The FNCFS program expects that all surplus money will be used for FNCFS. It is also expected that Recipients will absorb any deficits.

[123]  Funding for FNCFS Agencies is determined in accordance with AANDC “authorities” (see 2005 FNCFS National Program Manual at s. 1.4). Those “authorities” are obtained from the federal government through Cabinet and Treasury Board and “...are reflected in the [...] Program Directive” (2005 FNCFS National Program Manual at s. 1.4.5). The Program Directive, also called Directive 20-1 and found at Appendix A of the 2005 FNCFS National Program Manual, “...interprets the authorities and places them into a useable context” (2005 FNCFS National Program Manual at s. 1.4.5). Directive 20-1 is AANDC’s “...national policy statement on FNCFS” (see definition of “Program Directive 20-1 CHAPTER 5 (Program Directive)”, 2005 FNCFS National Program Manual at s. 7, p. 51). It is also:

...a blueprint on how INAC will administer the FNCFS program from a national perspective, it is also intended to be a teaching document, for new staff at both INAC Headquarters and Regions. The combination of the national manual and the regional manuals should create a clear picture of INAC’s role in FNCFS in Canada

(2005 FNCFS National Program Manual at Introduction, p. 2)

[124]  Prior to 2007, around the time of the Complaint, all provinces and the Yukon, except Ontario, functioned under Directive 20-1. Currently, New Brunswick, British Columbia, Newfoundland and Labrador and the Yukon are subject to the application of Directive 20-1.

[125]  In line with the FNCFS Program, the principles of Directive 20-1 include a commitment to “...expanding First Nations Child and Family Services on reserve to a level comparable to the services provided off reserve in similar circumstances [...] in accordance with the applicable provincial child and family services legislation” (see 2005 FNCFS National Program Manual at Appendix A, ss. 6.1 and 6.6). Furthermore, Directive 20-1 supports “...the creation of First Nations designed, controlled and managed services” (see 2005 FNCFS National Program Manual at Appendix A, s. 6.2). Under Directive 20-1, funding for FNCFS agencies is determined through two separate categories: operations and maintenance.

[126]  Operational funding is intended to cover operations and administration costs for such items as salaries and benefits for agency staff, travel expenses, staff training, legal services, family support services and agency administration, including rent and office expenditures (see 2005 FNCFS National Program Manual at s.2.2.2 and at Appendix A, s. 19.1). It is calculated using a formula based on the on-reserve population of children aged 0-18 as reported annually by First Nations bands across Canada. The calculation of the operations funding is done annually by AANDC as of December 31 of each year, based on the population statistics of the preceding year (see 2005 FNCFS National Program Manual at s. 3.2). FNCFS Agencies are eligible to receive a fixed administrative allocation pursuant to the following formula:

A fixed amount $143,158.84 per organization + $10,713.59 per member band + $726.91 per child (0-18 years) + $9,235.23 x average remoteness factor + $8,865.90 per member band x average remoteness factor + $73.65 per child x average remoteness factor + actual costs of the per diem rates of foster homes, group homes and institutions established by the province or territory.

(see 2005 FNCFS National Program Manual at Appendix A, s. 19.1(a); see also 2005 FNCFS National Program Manual at ss. 3.2.1-3.2.3)

[127]  The adjustment factor is multiplied by $9,235.23, the remoteness factor is multiplied by $8,865.90 times the number of bands within the agency’s catchment area and the child population (0 to 18 years) is multiplied by $73.65 times the remoteness factor (see 2005 FNCFS National Program Manual at s. 3.2.3). The remoteness factor takes into account such things as the distance between the First Nation and a service centre, road access, and availability of services. It can range from 0 to 1.9. If multiple communities are served by an FNCFS Agency, the remoteness factors of each of the communities is averaged to come to the ‘average remoteness factor’ (see testimony of W. McArthur, Transcript Vol. 63 at pp. 28-29).

[128]  The amounts in the operational funding formula are based on certain assumptions emanating from the time it was put in place in the early 1990’s:

  • On average, 6% of the on reserve child population is in care;
  • On average, 20% of families on reserve require child and family services or are classified as multi-problem families;
  • One child care worker and one family support worker for every 20 children in care;
  • One supervisor and one support staff for every 5 workers;
  • Wages based on average salaries in Ontario and Manitoba

(see Annex, ex. 13 at pp. 7-8 [Wen:De Report One]).

[129]  According to Ms. D’Amico, the 6% assumption regarding children-in-care is based on the 2007 national average and it provides FNCFS Agencies with stability. That is, even if an agency has or later achieves a smaller percentage of children-in-care, their budget is not affected. The 20% of families requiring services is determined using an assumption that there are on-average three children per family. By dividing the total on-reserve child population by three, AANDC arrives at the number of families it believes would normally be served by the applicable FNCFS Agency. It then takes 20% of that population calculation as a variable in determining the FNCFS Agency’s budget (see testimony of B. D’Amico, Transcript Vol. 51 at pp. 25-31).

[130]  In the first four years of operation of a new FNCFS Agency, the funding formula is gradually implemented at a rate of 75% in the first year, 85% the second year, 95% the third year and 100% in the fourth year [see 2005 FNCFS National Program Manual at section 3.2.1 and Appendix A, s. 19.1(c)]. Furthermore, for agencies that serve less than 1,000 children, the fixed maximum amount of $143,158.84 is decreased as follows: $71,579.43 (501-800 children); $35,789.10 (251-500); and, regions with a child population of 0 to 250 receive no administrative allocation [see 2005 FNCFS National Program Manual at Appendix A, s. 19.2(b)]. However, in British Columbia, the full allocation for population begins with at least 801 children (see testimony of W. McArthur, Transcript Vol. 63 at p. 23).

[131]  Maintenance funding is intended to cover the actual costs of eligible expenditures for maintaining a First Nations child ordinarily resident on reserve in alternate care out of parental home. Children must be taken into care in accordance with provincially or territorially approved legislation, standards and rates for foster home, group home and institutional care. FNCFS Agencies are required to submit monthly invoices for children in care out of the parental home and are to be reimbursed on the basis of actual expenditures (see 2005 FNCFS National Program Manual at ss. 3.3.1-3.3.2 and Appendix A, s. 20.1).

[132]  Until 2011, FNCFS Agencies in British Columbia were funded on a per diem structure, but have since transitioned to reimbursement for maintenance expenses based on actual costs. However, if funding based on actuals provides for less funding, the previous per diem funding levels are maintained as part of a plan to eventually transition FNCFS Agencies in that province to the EPFA (see testimony of W. McArthur, Transcript Vol. 63 at pp. 35-36; and, testimony of B. D’Amico, Transcript Vol. 51 at pp. 150-151).

[133]  FNCFS Agencies also have the option of applying for “flexible” funding for maintenance under Directive 20-1 (see 2005 FNCFS National Program Manual at Appendix A, s. 20.2). This option allows agencies to receive a payment of their total operational funding allocation, along with a historically based estimate of their maintenance costs. This flexible funding option is meant to provide FNCFS Agencies with increased flexibility to re-profile maintenance funding to provide increased resources for prevention. To access this flexible funding option an FNCFS Agency must undergo an assessment and receive approval from AANDC’s regional office, along with approval from AANDC Headquarters. In 2006, only 7 out of 105 FNCFS Agencies utilized the flexible funding option (see Annex, ex. 14 at p. 5 [2007 Evaluation of the FNCFS Program]).

[134]  The monetary amounts reflected in Directive 20-1 reflect 1995-1996 values and have not been significantly modified since that time, despite the directive providing for them to be increased by 2% every year, subject to the availability of resources (see 2005 FNCFS National Program Manual at Appendix A, s. 22.00; and, testimony of W. McArthur, Transcript Vol. 64 at pp. 3-4). Furthermore, maximum funding by AANDC is 100 percent of eligible costs. FNCFS Agencies may be required to repay funds to AANDC if their total funding from all sources, including from voluntary sector sources, exceeds eligible expenditures and when AANDC’s contribution thereto is in excess of $100,000 (see 2012 National Social Programs Manual at p. 10, s. 11.0 [the stacking provisions]).

[135]  Since 2005, an 8.24 percent increase has been applied to each FNCFS Agency’s total allocation under Directive 20-1 (see testimony of W. McArthur, Transcript Vol. 63 at p. 32; and, testimony of B. D’Amico, Transcript Vol. 51 at p. 17). Additional funding is also provided in New Brunswick for the Head Start program and for in-home care as a precursor to the transition to the EPFA (see testimony of B. D’Amico, Transcript Vol. 51 at pp. 169-173).

[136]  That is, since 2007, AANDC has transitioned the funding model for certain provinces under the FNCFS Program from Directive 20-1 to the EPFA. An agreement was reached to implement the EPFA in Alberta and Saskatchewan in 2007, Nova Scotia in 2008, Québec in 2009, Prince Edward Island in 2009 and Manitoba in 2010.

[137]  Under EPFA, prevention is included as a third funding stream to operations and maintenance. Prevention services are “...designed to reduce the incidence of family dysfunction and breakdown or crisis and to reduce the need to take children into Alternate Care or the amount of time a child remains in Alternate Care” (2012 National Social Programs Manual at p. 33, s. 2.1.17; see also p. 38, s. 4.4.1). Eligible expenses under this prevention funding stream include: salaries and benefits for prevention and resource workers, travel, paraprofessional services, family support services, mentoring services for children, home management services, and non-medical counselling services not covered by other funding sources (see 2012 National Social Programs Manual at p. 38, s. 4.4.2).

[138]  Implementation of the EPFA begins with tri-partite discussions between the province, First Nation community and AANDC. From the tripartite discussions, a Tripartite Accountability Framework is developed outlining the goals, objectives, performance indicators, and roles and responsibilities of the parties. Using the Tripartite Accountability Framework as a benchmark, the FNCFS Agency prepares an initial 5-year business plan, which is subject to AANDC review and acceptance by the province. The business plan is a pre-requisite in order to receive funding under the EPFA (see 2012 National Social Programs Manual at p. 37, s. 4.3; see also testimony of B. D’Amico, Transcript Vol. 50 at pp. 146-152).

[139]  Once the framework and business plan are in place, the costing discussions take place. According to the 2012 National Social Programs Manual, funding for operations and prevention services are based on a cost-model developed at regional tri-partite tables and are consistent with reasonable comparability to the respective province within AANDC’s program authority (see 2012 National Social Programs Manual at p. 38, s. 4.4.1). That is, the EPFA is to be tailored to each jurisdiction using a formula made-up of line-items that are identified at tripartite tables. The determination of staffing numbers and which line items to include in the formula, and the dollar values assigned to each of those line items, is based on variables provided by the province (for example staffing ratios, caseload ratios, and salary grades). Those amounts are then worked into AANDC’s operations and prevention cost-model. A cost-model is utilized because the provinces do not always use a funding formula that AANDC can replicate (see testimony of B. D’Amico, Transcript Vol. 50 at pp. 56, 150-151; and, Vol. 51 at pp.18-66, 153-154).

[140]  Similar to Directive 20-1, the formula for the EPFA is based on the child population served by the FNCFS Agency and the assumptions that a minimum of 20% of families are in need of child and family services and that 6% of children are in care (although in Manitoba an assumption of 7% of children in care is used in the EPFA formula). The prevention focused services component of the EPFA formula is largely based on the salaries needed for service delivery staff, where the amount of staff needed is calculated based on the assumed amount of children in care and families in need of services. The estimated amount of children in care is calculated by multiplying the child population served by the FNCFS Agency by the assumed percentage of children in care. As mentioned above, the number of families in need of services is calculated by taking the total child population served by the FNCFS Agency, dividing it by the average amount of children per First Nation family (3), and then multiplying that number by the assumed percentage of families in need of prevention services (20%) (see testimony of B. D’Amico,  Transcript Vol. 51 at pp. 24-31).

[141]  The calculated estimates of children in care and families in need of care are then used to determine the amount of service delivery staff needed for the FNCFS Agency. Similar to Directive 20-1, provincial ratios in terms of social workers per children in care or families in need, supervisors per amount of socials workers, and support staff per amount of workers are used to estimate the staff needed for specific positions. The average salaries for those positions within the province, at the time EPFA is implemented, then make up the bulk of funding provided for the prevention focused services component of the funding formula (see testimony of B. D’Amico, Transcript Vol. 51 at pp. 32-79). As Ms. Murphy explained:

We are from a funding perspective, so how the provinces fund is what we want to stay comparable with, not the types of services that the province funds -- or provides, excuse me.

[...]

And the only way that we could find that, a way to be comparable, was to identify the variables, those calculation variables; so the salary grids, the ratios – the staffing ratios, the caseload ratios. Those were the only funding tools that we could find to be comparable, and that is why we had incorporated that into the EPFA formula.

(Transcript Vol. 51 at pp. 178-179)

[142]  Eligible expenditures for maintenance and operations under the EPFA are outlined at sections 3.4 and 3.5 of Directive 20-1 (see 2012 National Social Programs Manual at p. 38, s. 4.4.1). AANDC expects FNCFS Agencies to manage their operations and prevention costs within the budgets they have (see testimony of S. Murphy, Transcript Vol. 54 at p. 170). However, the EPFA does allow agencies flexibility in moving funding from one stream (operations, maintenance or prevention) to another “...in order to address needs and circumstances facing individual communities” (2012 National Social Programs Manual at p. 38, s. 4.4.1).

[143]  Under EPFA, funding for prevention and operations is determined at the beginning of a five year period on a fixed cost basis (see testimony of B. D’Amico, Transcript Vol. 53 at p.16). EPFA funding is then rolled-out over a 3-4 year period, where the FNCFS Agency receives 40% of funding in year 1, 60% in year 2 and between 80% and 100% in year 3. The full funding amount is provided by year 4 (see testimony of B. D’Amico, Transcript Vol. 52 at pp. 145-146). Once EPFA is fully implemented, the only revision in the funding formula from year to year is to account for the child population served by the FNCFS Agency. EPFA does not provide additional funding for increases in operations or prevention costs over time, such as for changes to professional services rates or incremental increases in salaries (see testimony of B. D’Amico, Transcript Vol. 52 at pp. 147-150; see also 2012 National Social Programs Manual at p. 37, s. 4.1)

[144]  For example, in Alberta, where the EPFA was first implemented in 2007, the average salaries for service delivery staff from that initial implementation of the EPFA, based on 2006 values, are still being applied eight years later to the calculation of 2014 budgets (see testimony of B. D’Amico, Transcript Vol. 52 at p. 153; and, testimony of Ms. Carol Schimanke, Manager of Social Development, Child and Family Services Program, AANDC Alberta Regional Office, Transcript Vol. 61 at pp. 115-116). According to Ms. D’Amico, the rationale behind this is as follows:

Because what the idea of EPFA was that if you placed more money in prevention and did a lot more early intervention work, your maintenance costs would go down. When those maintenance costs go down, that money could be reinvested into operations.

So the idea -- and this is not in practice, but the idea behind this was for it -- for the Agencies to be self-sufficient and be able to move the monies from one stream to another. So that's why there was no escalator included in here.

This is an issue we are now reviewing about what happens after year five if the maintenance isn't supplying the operations anymore, or never did, so, what if that theory doesn't work?

(Transcript Vol. 52 at pp. 150-151)

[145]  Ms. D`Amico specified that in practice, given that some FNCFS Agencies are doing more intake and investigations as part of their prevention strategies, this has led to more kids in care and no reduction in maintenance costs (see Transcript Vol. 51 at pp. 91-92). The EPFA funding formula also does not include funds for intake and investigation.

[146]  Maintenance funding under the EPFA is budgeted annually based on actual expenditures from the previous year (see 2012 National Social Programs Manual at p. 38, section 4.4.1). AANDC “re-bases” an agency‘s maintenance budget each year. For example, if an agency‘s maintenance budget is $100 in year one, but its expenditures for that year total only $80, AANDC will reduce its maintenance budget in the second year to $80. If in the second year that agency‘s number of children in care increases unexpectedly, the agency must work within its existing budget to manage those costs in the interim.

[147]  In other words, if maintenance costs are greater than the set amount of maintenance funding, the FNCFS Agency must recover the deficit from its operations and/or prevention funding streams. If there is still a deficit in maintenance, AANDC has some funds that it holds back centrally at the beginning of each fiscal year to help manage those types of situations. When that fund is depleted, AANDC reallocates money from other programs within AANDC to cover the maintenance costs. If an FNCFS Agency has a surplus from its maintenance budget, the agency can keep it and re-apply it to other eligible expenses (see testimony of C. Schimanke, Transcript Vol. 61 at pp. 91, 96-98; testimony of B. D‘Amico, Transcript Vol. 50 at pp. 174-181; and, testimony of S. Murphy, Transcript Vol. 54 at pp. 167-168, 172-174).

[148]  AANDC receives a 2% increase in its budget for Social Programs every year. However, for the FNCFS Program, that 2% increase is calculated based on the budget of the FNCFS Program prior to the implementation of the EPFA, at about $450 million. Ms. Murphy estimated the current budget of the FNCFS Program, with the implementation of the EPFA, to be approximately $627 million. In her words:

So the difference in that, between that 450 million has been made up of some of the two percent -- the portion of growth, some of it's the incremental investments that have come to the Department through the EPFA for those six jurisdictions and the rest of it is resource re-allocations.

(Transcript Vol. 54 at pp. 177, 189-191; see also, Vol. 55 at pp. 188-189)

b.  Reports on the FNCFS Program

[149]  The FNCFS Program has been examined in multiple reports: the First Nations Child and Family Services Joint National Policy Review, referred to above as the NPR, in 2000; three related studies from 2004-2005 referred to as the Wen:De reports; and, two Auditor General of Canada reports in 2008 and 2011, along with follow-up reports thereon by the House of Commons Standing Committee on Public Accounts.

First Nations Child and Family Services Joint National Policy Review Final Report

[150]  The NPR was published in 2000. It is a collaborative report by AANDC and the Assembly of First Nations. Although the NPR pre-dates the complaint by about 8 years, its study of the impacts of Directive 20-1 is still relevant given that the funding formula still applies to many FNCFS Agencies and in the Yukon. The report also outlines a rigorous methodology and consultation in arriving at its conclusions. The Panel finds this early study of Directive 20-1 informative and a useful starting point in understanding the impacts of AANDC’s funding formula on First Nations children and families on reserves.

[151]  The NPR describes the context of First Nations child and family services as including several experiences of massive loss, resulting in identity problems and difficulties in functioning for many First Nations and their families. These experiences include the historical experience of residential schools and its inter-generational effects, and the migration of First Nations out of reserves causing disruption to the traditional concept of family (see NPR at pp. 32-33). As the NPR puts it at page 33:

First Nation families have been in the centre of a historical struggle between colonial government on one hand, who set out to eradicate their culture, language and world view, and that of the traditional family, who believed in maintaining a balance in the world for the children and those yet unborn. This struggle has caused dysfunction, high suicide rates, and violence, which have had vast inter-generational impacts.

[152]  According to the NPR, “Program Directive 20-1 was developed to provide equity, predictability and flexibility in the funding of first nations child and family services agencies” (at p.10). A principle of Directive 20-1 is that AANDC is committed to the expansion of child and family services on reserve to a level comparable to the services off reserve in similar circumstances (see NPR at p. 20). This is AANDC’s own standard and it expects FNCFS Agencies to abide by it:

FNCFS Agencies are expected through their delegation of authority from the provinces, the expectations of their communities and by DIAND, to provide a comparable range of services on reserve with the funding they receive through Directive 20-1.

(NPR at p. 83, emphasis added)

[153]  However, the NPR found the funding formula under Directive 20-1 inhibited FNCFS Agencies’ ability to meet the expectation of providing a comparable range of child and family services on reserve for a number of reasons:

  • The formula provides the same level of funding to agencies regardless of how broad, intense or costly, the range of service is (at p. 83).
  • Variance in the definition of maintenance expenses from region to region, resulting in AANDC rejecting maintenance expenses that ought to have been reimbursed in accordance with provincial/territorial legislation and standards (at pp. 13-14, 84).
  • Insufficient funding for staff and not enough flexibility in the funding formula for agencies to adjust to changing conditions (increases in number of children coming into care; development of new provincial/territorial programs; or, routine price adjustments for remoteness) (at pp. 13-14, 65, 70, 92-93, 96-97).
  • There has not been an increase in cost of living since 1995-1996 (at pp. 18, 26).
  • Funding only provided to new FNCFS agencies for 3 year and 6 year evaluations; however, provincial legislation requires on-going evaluations (at p. 11).
  • First Nations have to comply with the same administrative burden created by change in provincial legislation but have not received any increased resources to meet those responsibilities, contradicting the principle of Directive 20-1 (at p. 12).
  • Unrealistic amount of administration support to smaller agencies, often compounded by remoteness (at pp. 14, 97).
  • The maximum annual budgetary increase of 2% did not reflect the average annual increase of 6.2% in the FNCFS Agencies (at p. 14).
  • The average per capita per child in care expenditure was 22% lower than the average in the provinces (at p. 14).
  • The formula does not provide adequate resources to allow FNCFS Agencies to do legislated/targeted prevention, alternative programs and least disruptive/intrusive measures for children at risk (at p. 120).

[154]  The NPR made 17 recommendations to address these areas of concern with respect to Directive 20-1, including investigating a new methodology for funding operations. It was recommended that the new funding methodology consider factors such as work-load case analysis, national demographics and the impact on large and small agencies, and economy of scale (see NPR at pp. 119-121). A further recommendation was to develop a management information system in order to ensure the establishment of consistent, reliable data collection, analysis and reporting procedures amongst AANDC, FNCFS Agencies and the provinces/territory (see NPR at p. 121).

The Wen:De Reports

[155]  The NPR led to the establishment of the Joint National Policy Review National Advisory Committee (the NAC) in 2001. The NAC involved officials from AANDC, the AFN and FNCFS Agencies. One of the tasks of the NAC was to explore how to change parts of Directive 20-1 in line with the NPR recommendations. Funded by AANDC, the NAC commissioned further research in order to establish that revisions of the FNCFS Program and Directive 20-1 were warranted. Three reports were produced on the subject: the Wen:De Reports. Each of the three reports outlines clearly the methodology used to arrive at its findings and explains those findings in great detail. Three important contributing authors of the Wen:De reports, Dr. Cindy Blackstock, Dr. John Loxley, and Dr. Nicolas Trocmé testified at length about the reports at the hearing and confirmed the findings in these reports.

[156]  The objective of the first Wen:De report in 2004 was to identify three new options for FNCFS Agency funding and the research agenda needed to inform each of those options (see Wen:De Report One at p. 4). The authors explain how they reviewed pertinent literature from Canada and abroad; conducted interviews with informed observers and participants, including the Operations Formula Funding Design Team; and met with six FNCFS Agencies representing differing agency sizes, service contexts, regions and cultural groups (see Wen:De Report One at p. 6).

[157]  The authors noted that the concerns and challenges expressed by the FNCFS Agencies that it interviewed were in line with the NPR findings and recommendations, such as the lack of funding for prevention services, legal services, capital costs, management information systems, culturally based programs, caregivers, staff salaries and training, and costs adjustments for remote and small agencies (see Wen:De Report One at pp. 6, 8).

[158]  Notably, the report found FNCFS Agencies “...are not funded on the basis of a determination of need but rather on population levels” resulting in “...significant regional variation in the implementation of Directive 20-1 as funding officials within the department adapted to their local context” (Wen:De Report One at p. 5). As a result, it concluded:

Overall, our findings affirm that the findings and recommendations of the NPR which was completed in June of 2000 continue to be reflective of the concerns that FNCFSA are experiencing today. [...] All agencies agreed that immediate redress of inadequate funding was necessary to support good social work practice in their communities.

(Wen:De Report One at p. 6)

[159]  Wen:De Report One presents three options to address this conclusion: (1) redesign the existing funding formula; (2) follow the funding model of the province/territory in which the agency is located; or, (3) a new First Nations based funding formula that funds agencies on the basis of community needs and assets, along with the particular socio-economic and cultural characteristics of the communities and Nations which the agencies serve (see Wen:De Report One at pp. 7-13).

[160]  The second Wen:De report analyzed the three options presented in the first report (see Annex, ex. 15 [Wen:De Report Two]). To do so, the various authors of the report conducted literature reviews and key informant interviews with twelve sample FNCFS Agencies. A key method was to conduct detailed case studies of the twelve sample agencies and the provinces using standardized questionnaires administered by regional researchers. The research approach involved specialized research projects on the incidence and social work response to reports of child maltreatment respecting First Nations children, prevention services, jurisdictional issues, extraordinary circumstances, management information services and small agencies (see Wen:De Report Two at pp. 7, 9-11).

[161]  Wen:De Report Two begins by examining the experience of First Nations children coming into contact with the child welfare system in Canada. It notes that the key drivers of neglect for First Nations children are poverty, poor housing and substance misuse. The report underscores that two of those three factors are arguably outside the control of parents: poverty and poor housing. As such, parents are unlikely to be able to redress these risks and it can mean that their children are more likely to stay in care for prolonged periods of time and, in some cases, permanently (see Wen:De Report Two at p. 13). On this issue, Wen:De Report Two indicates:

  • There are approximately three times the numbers of First Nations children in state care than there were at the height of residential schools in the 1940s (see at p. 8).
  • Aboriginal children are more than twice as likely to be investigated compared to non-Aboriginal children (see at p. 15).
  • Once investigated, cases involving Aboriginal children are more likely to be substantiated and more likely to require on-going child welfare services (see at p. 15).
  • Aboriginal children are more than twice as likely to be placed in out of home care, and more likely to be brought to child welfare court (see at p. 15).
  • The profiles of Aboriginal families differ dramatically from the profile of non-Aboriginal families (see at p. 15).
  • Aboriginal cases predominantly involve situations of neglect where poverty, inadequate housing and parent substance abuse are a toxic combination of risk factors (see at p. 15).

[162]  Overall, with regard to funding under the FNCFS Program, at page 7, Wen:De Report Two found that:

First Nations child and family service agencies are inadequately funded in almost every area of operation ranging from capital costs, prevention programs, standards and evaluation, staff salaries and child in care programs. The disproportionate need for services amongst First Nations children and families coupled with the under-funding of the First Nations child and family service agencies that serve them has resulted in an untenable situation.

[163]  Based on its research findings, the report indicates that Directive 20-1 would need substantial alteration in order to meet the requirements of the FNCFS Program and to ensure equitable child welfare services for First Nations children resident on reserve. There are a number of issues causing an inadequacy in funding. The lack of an adjustment to funding levels for increases in the cost of living is identified as one of the major weaknesses of Directive 20-1. Although Directive 20-1 contains a cost of living adjustment, it has not been implemented since 1995. According to Wen:De Report Two, not adjusting funding for increases in cost of living “...leads to both under-funding of services and to distortion in the services funded since some expenses subject to inflation must be covered, while others may be more optional (at p. 45). Wen:De Report Two calculates prices increased by 21.21% over the ten year period since Directive 20-1 was last adjusted for cost of living (see a p. 45). To restore the loss of purchasing power since 1995, it found $24.8 million would be needed to meet the cost of living requirements for 2005 alone (see Wen:De Report Two at p. 51).

[164]  Similarly, Directive 20-1 contains no periodic reconciliation for inflation. For example, since Directive 20-1 was introduced in 1990, there has been no adjustment for salary increases. Two thirds of FNCFS Agencies participating in Wen:De Report Two reported funding for salaries and benefits was not sufficient (see at pp. 35, 57). Wen:De Report Two estimates the loss of funds due to inflation for the operations portion of Directive 20-1 to be $112 million (at p. 57). It adds, any increases in funding only come with increases in the number of children served. Therefore, in the circumstances, “either the quality of services must have declined if child and family needs grew proportionately with population or, increases in costs of services can have been covered, if at all, only from a reduction in the proportion of children or families receiving services” (at p. 121).

[165]  The population thresholds were also found by all agencies to be an inadequate means of benchmarking operations funding levels. Approximately half of the respondents to the study stated funding should be based on community needs not child population. Some added that the entire community population should be taken into account, not just that of children, since it is the entire family that needs support when a child is at risk or is unsafe. In fact, small agencies (those serving child populations of less than 1,000) represent 55% of the total number of FNCFS Agencies. According to 75% of the small agencies who participated in Wen:De Report Two, their salary and benefits levels for staff were not comparable to other child welfare organizations (see at pp. 46-48, 213).

[166]  In addition, Directive 20-1 provides no adjustment for the different content of provincial/territorial legislation and standards. While the FNCFS Program includes a guiding principle that services should be reasonably comparable to those provided to children in similar circumstances off reserve, it contains no mechanism to ensure this is achieved (see Wen:De Report Two at p. 50).

[167]  Aside from the above, Wen:De Report Two found consensus among FNCFS Agencies it canvassed that Directive 20-1 makes inadequate provision for travel, legal costs, front-line workers, program evaluation, accounting and janitorial staff, staff meetings, Health and Safety Committee meetings, security systems, human resources staff for large agencies, quality assurance specialists and management information systems. Furthermore, Wen:De Report Two comments that funding has not reflected the significant technology changes in computer hardware and software over the past decade. Moreover, liability insurance premiums have increased substantially over that same period and are not reflected in Directive 20-1 (see at p. 122). Wen:De Report Two also identified management information systems as not meeting minimum standards in the vast majority of cases (see at p. 57).

[168]  Of particular note, funds for prevention and least disruptive measures were identified as inadequate, along with 84% of reporting FNCFS Agencies feeling that current funding levels were insufficient to provide adequate culturally based services (see Wen:De Report Two at p. 57). In this regard, the report found that “the present funding formula provides more incentives for taking children into care than it provides support for preventive, early intervention and least intrusive measures” (Wen:De Report Two at p. 114). This is because the funding formula provides dollar-for-dollar reimbursement of “maintenance” expenditures and prevention services are often not deemed to fall under “maintenance” (see Wen:De Report Two at p. 19-21). As a result, prevention funding was identified as being inadequate, in spite of the fact that such services are mandated under most provincial child welfare legislation (see Wen:De Report Two at p. 91). On this basis, the report states:

This means that agencies in this situation effectively have no money to comply with the statutory requirement to provide families with a meaningful opportunity to redress the risk that resulted in their child being removed. More importantly, the children they serve are denied an equitable chance to stay safely at home due to the structure and amount of funding under the Directive. In this way the Directive really does shape practice – instead of supporting good practice.

(Wen:De Report Two at p. 21)

[169]  Wen:De Report Two concludes option three, a new First Nations based funding formula that funds agencies based on needs and assets, is the most promising way to address these deficiencies because of the “...possibility of re-conceptualizing the pedagogy, policy and practice in First Nations child welfare in a way that better supports sustained positive outcomes for First Nations children” (Wen:De Report Two at p. 9). In sum, Wen:De Report Two recommends: targeted funding for least disruptive measures; funds for adequate culturally based policy and standards development; ensure that human resources funds are sufficient; increased investment in research to inform policy and practice for FNCFS Agencies; and, introduce financial review and adjustment to account for changes to provincial child welfare legislation (see Wen:De Report Two at p. 56).

[170]  The third Wen:De report involved the development and costing of the recommended changes arising from the second report (see Annex, ex. 16 [Wen:De Report Three]). A national survey instrument was developed and sent out to 93 FNCFS Agencies. Thirty-five surveys were completed, representing 32,575 children, 146 First Nations and $28.6 million in operating funds. This covered 38% of all FNCFS Agencies, 49% of all bands, 31.4% of all children 0-18 and 28.7% of all funding for operations (see Wen:De Report Three at pp. 9-10).

[171]  Wen:De Report Three reiterates the weaknesses in Directive 20-1 as follows at pages11-12:

1) uncertainty in what the original rationale was underlying the development of the formula 2) regional interpretations of sometimes vaguely worded guidelines, 3) a failure to implement certain elements of the formula such as the annual inflation adjustment and 4) a failure of the policy to keep pace with advances in social work evidence based practice, child welfare liability law and the evolution of management information systems and 5) the policy appeared to leave out some child welfare expenses altogether or fund them inadequately such as the failure of the policy to support agencies to provide in home interventions to abused and neglected children to keep them safely at home as opposed to bringing them into care.

[172]  Despite these weaknesses, Wen:De Report Three also indicates Directive 20-1 has some positive features, including that it is national in scope, has undergone two national studies, has enabled the development of FNCFS Agencies throughout Canada, and offers a baseline for judging the impacts of possible changes to the current regime.

[173]  These reasons were the principle basis forming the recommendation in Wen:De Report Three to implement both options 1 and 3. That is, redesign Directive 20-1 now, with a priority on funding prevention services and providing redress for losses in funding due to inflation, while providing a foundation for the development of a First Nations based formula over time (see Wen:De Report Three at pp. 11-12). In also pursuing option 1, the report noted the development of a First Nations funding model would not provide a quick fix to the problems with the existing funding formula (see Wen:De Report Three at p. 14).

[174]  Option two, tying FNCFS Agency funding to provincial formulae, was found to be the least promising option, notably because in several provinces it is not clear what their formula is and First Nation communities do not have the same degree of infrastructure of programs, services and volunteer agencies. Moreover, provincial funding traditions are not based on the particular needs and conditions faced by First Nation families living on reserve, including that it costs more to service First Nations children and families due to their high needs levels (see Wen:De Report Three at p. 13).

[175]  In recommending reforms to Directive 20-1, Wen:De Report Three noted that “[a] shift in funding mentality is vital” (at p. 20). That is, as stated at page 20 of Wen:De Report Three:

An approach that invests in the community and engages the community at all levels – children, adolescents, youth, parents and Elders means directing resources at growth and development of the people rather than the breakdowns of the people in the community. This approach demonstrates long term commitment to the growth of a child and family and invests in the future of contributing members to society.

[176]  Furthermore, at page 15, Wen:De Report Three provides the following caution:

Although each suggested change element is presented as a separate item, it is important to understand that these elements are interdependent and adoption in a piece meal fashion would undermine the overall efficacy of the proposed changes. For example, providing least disruptive measures funding for at home child maltreatment interventions without providing the cost of living adjustment would result in agencies not having the infrastructure and staffing capacity to maximize outcomes. Similarly, these recommendations assume that there will be no reductions in the First Nations child and family service agency funding envelope. Situations where funds in one area are cut back and redirected to other funding streams in child and family services should be avoided as our research found that under funding was apparent across the current formula components.

[177]  Wen:De Report Three recommends certain economic reforms to Directive 20-1, along with policy changes to support those reforms. The recommended economic reforms from Wen:De Report Three, include: a new funding stream for prevention/least disruptive measures (at pp. 19-21); adjusting the operations budget (at pp. 24-25); reinstating the annual cost of living adjustment on a retroactive basis back to 1995 (at pp. 18-19); providing sufficient funding to cover capital costs (buildings, vehicles and office equipment) (at pp. 28-29); and, funding for the development of culturally based standards by FNCFS Agencies (at p. 30).

[178]  Of particular note, Wen:De Report Three recommends a new funding stream for prevention/least disruptive measures (at pp. 19-21). At page 35, Wen:De Report Three indicates that increased funding for prevention/least disruptive measures will provide costs savings over time:

Bowlus and McKenna (2003) estimate that the annual cost of child maltreatment to Canadian society is 16 billion dollars per annum. As increasing numbers of studies indicate that First Nations children are over represented amongst children in care and Aboriginal children in care they compose a significant portion of these economic costs (Trocme, Knoke and Blackstock, 2004; Trocme, Fallon, McLaurin and Shangreaux, 2005; McKenzie, 2002). A failure of governments to invest in a substantial way in prevention and least disruptive measures is a false economy – The choice is to either invest now and save later or save now and pay up to 6-7 times more later (World Health Organization, 2004.)

[179]  For small agencies the report found that the fixed amount per agency or the provision for overhead did not provide realistic administrative support for two reasons. The first is that no agency representing communities with a combined total of 250 or fewer children receives any overhead funding whatsoever. The second problem is that available funding is currently fixed in three large blocks: 251-500 = $ 35,790; 501-800 = $ 71,580; and, 801 and up = $143,158. A slight increase or decrease in child population can result in a huge increase or decrease in overhead funding available to an agency (see Wen:De Report Three at p. 23).

[180]  Therefore, Wen:De Report Three recommends two reforms. First, that overhead funding be extended to agencies serving populations of 125 and above. The report proposes a minimum of $20,000 be made available to the smallest agency representing 125 children. Thereafter, the second proposal is to give agencies additional funding for every 25 children in excess of 125. Under this approach, 6 agencies would still be too small to receive any fixed amount; 8 small agencies which never before received a fixed amount of overhead funding would now do so; 23 agencies of medium size would receive funding increases; and, 56 large agencies would receive no change in their funding. In the future, Wen:De Report Three believes a minimum economy of scale for small agencies will be required to provide a basic level of child and family services (see at p. 23-24).

[181]  In terms of the remoteness factor in Directive 20-1, Wen:De Report Three identified a number of weaknesses, including that the average adjustment is considered by 90% of the agencies canvassed to be too small to compensate for the actual costs of remoteness; and, that the remoteness index is usually based on accessibility to the nearest business centre, which are not necessarily able to offer specialized child welfare services. According to Wen:De Report Three, these weakness have led to some communities receiving less than their population warrants and some receiving more. As such, it proposes an across the board increase in remoteness allowances and to adjust the index from the current service centre base to a city centre base (see at pp. 25-26).

[182]  Other policy recommendations from Wen:De Report Three include: that AANDC clarify that legal costs related to children in care are billable under “maintenance”; that support services related to reunifying children in care with their families be eligible “maintenance” expenses, since they are mandatory services according to provincial child welfare statutes; validation of the need for research and mechanisms to share best practices at a regional and national level; and, that AANDC clarify the “stacking provisions” in Directive 20-1 in order to make it easier for First Nations to access voluntary sector funding sources (at pp. 16-18).

[183]  Finally, Wen:De Report Three found jurisdictional disputes between federal government departments and between the federal government and provinces over who should fund a particular service took about 50.25 person hours to resolve, resulting in a significant tax on the limited resources of FNCFS Agencies. As a result, it recommends the immediate implementation of Jordan’s Principle for jurisdictional dispute resolution and its integration into any funding agreements between AANDC and the provinces. Jordan’s Principle asserts that the government (federal or provincial) or department that first receives a request to pay for a service must pay for the service and resolve jurisdictional issues thereafter (see Wen:De Report Three at p. 16).

[184]  Total costs of implementing all the reforms recommended in Wen:De Report Three were estimated at $109.3 million, including $22.9 million for new management information systems, capital costs (buildings, vehicles and office equipment) and insurance premiums; and, $86.4 million for annual funding needs (see at p. 33).

[185]  The EPFA was designed in an effort to address some of the shortcomings of Directive 20-1 identified in the NPR and the Wen:De reports. However, despite Wen:De Report Three’s caution that the recommended changes are interdependent and adoption in a piece meal fashion would undermine the efficacy of those proposed changes, this is in fact the approach AANDC took. This becomes clear in reviewing the Auditor General of Canada’s 2008 report on the FNCFS Program and AANDC’s corresponding responses, along with the rest of the evidence to follow.

2008 Report of the Auditor General of Canada

[186]  Following a written request from the Caring Society, the Auditor General of Canada initiated a review of AANDC’s FNCFS Program and reported the findings to the House of Commons in 2008 (see Annex, ex. 17 [2008 Report of the Auditor General of Canada]). The purpose of the review was to examine the “...management structure, the processes, and the federal resources used to implement the federal policy...” on reserves (2008 Report of the Auditor General of Canada at p.1).

[187]  The 2008 Report of the Auditor General of Canada echoed the findings of the NPR and Wen:De reports. Namely, that “[c]urrent funding practices do not lead to equitable funding among Aboriginal and First Nations communities” (2008 Report of the Auditor General of Canada at p.2). The findings of the 2008 Report of the Auditor General of Canada include:

  • The funding formula is outdated and does not take into account any costs associated with modifications to provincial legislation or with changes in the way services are provided (see at p. 20, s. 4.51),
  • AANDC has limited assurance that child welfare services delivered on reserves comply with provincial legislation and standards. Funding levels are pre-determined without regard to the services the agency is bound to provide under provincial legislation and standards (see at pp.14-15, ss. 4.30, 4.34).
  • There is no definition of what is meant by reasonably comparable services or way of knowing whether the services that the program supports are in fact reasonably comparable. Furthermore, child welfare may be complicated by other social problems or health issues. Access to social and health services, aside from child welfare services, to help keep a family together differs not only on and off reserves but among First Nations as well. AANDC has not determined what other social and health services are available on reserves to support child welfare services. On-reserve child welfare services cannot be comparable if they have to deal with problems that, off reserves, would be addressed by other social and health services (see at pp. 12-13, ss.4.20, 4.25).
  • There are no standards for FNCFS Agencies to provide culturally appropriate child welfare services that meet the requirements of provincial legislation. The number of FNCFS Agencies being funded is the main indicator of cultural appropriateness that AANDC uses. According to AANDC, the fact that 82 First Nations agencies have been created since the current federal policy was adopted means there are more First Nations children receiving culturally appropriate child welfare services. However, the Auditor General found that many agencies provide only a limited portion of the services while provinces continue to provide the rest. Further, AANDC does not know nationally how many of the children placed in care remain in their communities or are in First Nations foster homes or institutions (see at p. 13, ss. 4.24-4.25).
  • The formula is based on the assumption that each FNCFS Agency has 6% of on-reserve children placed in care. This assumption leads to funding inequities among FNCFS Agencies because, in practice, the percentage of children that they bring into care varies widely. For example, in the five provinces covered by the report, that percentage ranged from 0 to 28% (see at p. 20, s. 4.52).
  • The funding formula is not responsive to factors that can cause wide variations in operating costs, such as differences in community needs or in support services available, in the child welfare services provided to on-reserve First Nations children, and in the actual work performed by FNCFS Agencies (see at p. 20, s. 4.52).
  • The formula is not adapted to small agencies. It was designed on the basis that First Nations agencies would be responsible for serving a community, or a group of communities, where at least 1,000 children live on reserve. The Auditor General found 55 of the 108 agencies funded by AANDC were small agencies serving a population of less than 1000 children living on reserve who did not always have the funding and capacity to provide the required range of child welfare services (see at p. 21, ss. 4.55-4.56).
  • The shortcomings of the funding formula have been known to AANDC for years (see at p. 21, s. 4.57).

[188]  As certain provinces were transitioned to the EPFA at the time of the report, the 2008 Report of the Auditor General of Canada also comments on the new funding formula. It found that while the new funding formula provides more funds for the operations of FNCFS Agencies and offers more flexibility to allocate resources, it does not address the inequities noted under the current formula. It still assumes that a fixed percentage of First Nations children and families need child welfare services and, therefore, does not address differing needs among First Nations (see 2008 Report of the Auditor General of Canada at p. 23, ss. 4.63-4.64).

[189]  Overall, the Auditor General of Canada was of the view that:

the funding formula needs to become more than a means of distributing the program’s budget. As currently designed and implemented, the formula does not treat First Nations or provinces in a consistent or equitable manner. One consequence of this situation is that many on-reserve children and families do not always have access to the child welfare services defined in relevant provincial legislation and available to those living off reserves.

(2008 Report of the Auditor General of Canada at p. 23, s. 4.66)

[190]  The Auditor General further noted that because the FNCFS Program’s expenditures were growing faster than AANDC’s overall budget, funds had to be reallocated from other programs, such as community infrastructure and housing. This means spending on housing has not kept pace with growth in population and community infrastructure has deteriorated at a faster rate. In the Auditor General’s view, AANDC’s budgeting approach for the FNCFS Program is not sustainable and needs to minimize the impact on other important departmental programs (see 2008 Report of the Auditor General of Canada at p. 25, ss. 4.72-4.73).

[191]  The Auditor General of Canada made 6 recommendations to address the findings in its report. AANDC agreed with all the recommendations and indicated the actions it has taken or will take to address the recommendations (see 2008 Report of the Auditor General of Canada at p. 6 and Appendix). AANDC’s response to the 2008 Report of the Auditor General of Canada demonstrates its full awareness of the impacts of its FNCFS Program on First Nations children and families on reserves, including that its funding is not in line with provincial legislation and standards. Furthermore, despite the flaws identified with the new funding formula, AANDC still viewed EPFA as the answer to the problems with the FNCFS Program:

4.67 Recommendation. Indian and Northern Affairs Canada, in consultation with First Nations and provinces, should ensure that its new funding formula and approach to funding First Nations agencies are directly linked with provincial legislation and standards, reflect the current range of child welfare services, and take into account the varying populations and needs of First Nations communities for which it funds on-reserve child welfare services.

The Department’s response. Indian and Northern Affairs Canada’s current approach to Child and Family Services includes reimbursement of actual costs associated with the needs of maintaining a child in care. The Department agrees that as new partnerships are entered into, based on the enhanced prevention approach, funding will be directly linked to activities that better support the needs of children in care and incorporate provincial legislation and practice standards.

(2008 Report of the Auditor General of Canada at pp. 23-24, s. 4.67)

[192]  The flaws with Directive 20-1 and the EPFA would subsequently be scrutinized by the Standing Committee on Public Accounts.

2009 Report of the Standing Committee on Public Accounts

[193]  In February 2009, the House of Commons Standing Committee on Public Accounts held a hearing on the 2008 Report of the Auditor General of Canada. This hearing was held with officials from the Office of the Auditor General of Canada and AANDC “[g]iven the importance of the safety and well-being of all Canadian children and the disturbing findings of the audit” (Annex, ex.18 at p.1 [2009 Report of the Standing Committee on Public Accounts]).

[194]  The Committee noted the 2008 Report of the Auditor General of Canada made 6 recommendations and that it fully supports those recommendations. As AANDC agreed with all the recommendations, “the Committee expects that the Department will fully implement them” (2009 Report of the Standing Committee on Public Accounts at p. 3).

[195]  AANDC’s Deputy Minister Michael Wernick acknowledged the flaws in the older funding formula and pointed to the new approach:

What we had was a system that basically provided funds for kids in care. So what you got was a lot of kids being taken into care. And the service agencies didn't have the full suite of tools, in terms of kinship care, foster care, placement, diversion, prevention services, and so on. The new approach that we're trying to do through the new partnership agreements provides the agencies with a mix of funding for operating and maintenance--which is basically paying for the kids' needs--and for prevention services, and they have greater flexibility to move between those.

(2009 Report of the Standing Committee on Public Accounts at pp. 7-8 [footnote omitted])

[196]  Assistant Deputy Minister Christine Cram’s testimony before the Standing Committee echoed that of the Deputy Minister:

We currently have two formulas in operation. We have a formula for those provinces where we haven't moved to the new model. Under that formula, we reimburse all charges for kids who are actually in care, and that's why the costs have gone up so dramatically over time. There were comments made about the fact that under the old formula there wasn't funding provided to be able to permit agencies to provide prevention services. That's a fair criticism of the old formula. Under the new formula, as the deputy was mentioning, we have three categories in the funding formula. We have operations, prevention, and maintenance. So those are each determined on a different basis.

(2009 Report of the Standing Committee on Public Accounts at p. 8 [footnote omitted])

 

[197]  With regard to the continued application of Directive 20-1 in many provinces and in the Yukon, the Standing Committee expressed concern:

The Committee is quite concerned that the majority of First Nations children on reserves continue to live under a funding regime which numerous studies have found is not working and should be changed. According to the Joint National Policy Review, “The funding formula inherent in Directive 20-1 is not flexible and is outdated.” The 2005 Wen:de report, which undertook a comprehensive review of funding formulae to support First Nations child and family service agencies, found that the current funding formula drastically underfunds primary, secondary and tertiary child maltreatment intervention services, including least disruptive measures. The report writes, “The lack of early intervention services contributes to the large numbers of First Nations children entering care and staying in care.” An evaluation prepared in 2007 by INAC’s Departmental Audit and Evaluation Branch recommended that INAC, “correct the weaknesses in the First Nations Child and Family Service Program’s funding formula.” The OAG concluded, “As currently designed and implemented, the formula does not treat First Nations or provinces in a consistent or equitable manner. One consequence of this situation is that many on-reserve children and families do not always have access to the child welfare services defined in relevant provincial legislation and available to those living off reserves.”

Yet, this funding formula continues. As the Auditor General puts it, “Quite frankly, one has to ask why a program goes on for 20 years, the world changes around it, and yet the formula stays the same, preventative services aren't funded, and all these children are being put into care.”

While the Committee appreciates the efforts the Department is making to develop new agreements based on the enhanced prevention model, the Committee completely fails to understand why the old funding formula is still in place. Moving to new agreements should in no way preclude making improvements to the existing formula, especially as it may take years to develop agreements with the provinces. In the meantime, many First Nations children are taken into care when other options are available. This is unacceptable and clearly inequitable.

(2009 Report of the Standing Committee on Public Accounts at pp. 9-10 [footnotes omitted])

[198]  With regard to the new EPFA funding formula, the Standing Committee agreed with the Auditor General’s comments regarding the fact that this new formula does not address the inequities of Directive 20-1 (i.e. the assumptions built into the formula regarding the percentage of first nations children and families in need of care):

The Committee could not agree more, especially as the Department has known about this problem in the old formula yet has repeated it in the new formula. The Committee is very disturbed that the Department would take a bureaucratic approach to funding agencies, rather than making efforts to provide funding where it is needed. The result of this approach is that communities that need funding the most, that is, where more than six percent of the children are in care, will continue to be underfunded and will not be able to provide their children the services they need. The Committee strongly believes that INAC needs to develop a funding formula that is flexible enough to provide funding based on need, rather than a fixed percentage.

(2009 Report of the Standing Committee on Public Accounts at p. 10)

[199]  Finally, with regard to the Auditor General’s finding that AANDC has not analyzed and compared the child welfare services available on reserves with those in neighbouring communities off reserve, the Standing Committee made the following observations:

Nonetheless, it should be possible to compare the level of funding provided to First Nations child and family services agencies to similar provincial agencies, and given their unique and challenging circumstances, it would be reasonable to expect First Nations agencies to receive a higher level of funding. Yet, when asked how the funding for First Nations child and family service agencies compares to agencies for non-natives, the Assistant Deputy Minister said, “I'm sorry, but we don't know the answer.” The same question was put to the Deputy Minister and he replied, “Our accountability is for the services delivered by those agencies to the extent that we fund them.”

The Committee finds these responses quite disappointing. The Deputy Minister’s response was unsatisfactory because the issue under discussion is the extent to which the agencies are funded. Also, to not know how the funding compares to provincial agencies makes the Committee wonder how the level of funding is determined, and how the Department can be assured that it is treating First Nations children equitably.

[...]

As the policy requires First Nations child welfare services to be comparable with services provided off reserves and the Committee believes that First Nations children should be treated equitably, the Committee believes that INAC must have comprehensive information about the funding level provided to provincial child welfare agencies and compare that to the funding of First Nations agencies. This does not mean that INAC should adopt provincial funding formulae for First Nations agencies as the needs for First Nations agencies are unique and often greater. Nonetheless, at the very least, INAC should be able to compare funding.

(2009 Report of the Standing Committee on Public Accounts at pp. 5-6 [footnotes omitted])

[200]  After hearing from the officials of the Office of the Auditor General of Canada and AANDC, including Sheila Fraser, the Auditor General of Canada, Michael Wernick, Deputy Minister of AANDC, and Christine Cram, Assistant Deputy Minister of AANDC, the Standing Committee on Public Accounts made 7 recommendations of its own. Those recommendations include: that AANDC provide a detailed action plan to the Public Accounts Committee on the implementation of the recommendations arising out the 2008 Report of the Auditor General of Canada; that AANDC conduct a comprehensive comparison of its funding under the FNCFS Program to provincial funding of similar agencies; that AANDC immediately modify Directive 20-1 to allow for the funding of enhanced prevention services; that AANDC ensure its funding formula is based upon need rather than an assumed fixed percentage of children in care; that AANDC determine the full costs of meeting all of its policy requirements and develop a funding model to meet those requirements; and, that AANDC develop measures and collect information based on the best interests of children for the results and outcomes of its FNCFS Program (see 2009 Report of the Standing Committee on Public Accounts at pp. 4-12).

[201]  In response to the Standing Committee’s report, presented to the House of Commons on August 19, 2009, AANDC generally accepted the recommendations, although with some nuances (see Annex, ex. 19 [AANDC’s Response to the 2009 Report of the Standing Committee on Public Accounts]). For example, AANDC generally responded:

The Standing Committee on Public Accounts’ recommendations speak to the link between provincial comparability, revising Directive 20-1, moving to a needs based formula and to determining the full costs of the FNCFS Program nationally. This suggests INAC should undertake a one-time simultaneous reform of the program in all provinces. INAC is in fact undertaking similar steps towards reform, however, it is being done province-by-province. Rather than taking a one-size-fits all approach that would overlook community level needs and compromise partnerships and accountability, INAC is addressing provincial comparability, including a needs component in the formula and finalizing the process with a full costing analysis for each jurisdiction. All of this is done at tripartite tables ensuring buy-in by all partners, reasonable comparability with the respective province and sound accountability aimed at achieving positive outcomes for children and their families. As well, INAC is committing to review Directive 20-1.

(AANDC’s Response to the 2009 Report of the Standing Committee on Public Accounts at Introduction)

[202]  With regard to the recommendation that AANDC conduct a comprehensive comparison of its funding to provincial funding, AANDC responded:

INAC agrees with this recommendation on the understanding that a comparative analysis can only be provided with the limited data we have access to and on a phased basis. This review will require a substantial amount of time and work with the provinces and First Nations. The information available in provincial annual reports is general and the funding provided under their children’s services often includes programs beyond child and family services. Overall, these provincial reports do not contain the level of detail required to make the kind of comprehensive comparison expected by the Committee. Relationships must be strengthened with provincial partners as they are key in providing INAC with the necessary information concerning the funding of their child welfare programs. This is what INAC is doing as it proceeds with the Enhanced Prevention Focused Approach. Provinces must also agree to allow INAC to make this information available to the public.

It should also be noted that due to the complexity of child welfare service delivery across the country, comparability between FNCFS agencies and provincial child welfare providers on-reserve, is challenging. Specifically, child welfare services in the provinces are delivered in a variety of ways. The services can vary by jurisdiction based on need; be provided directly by the province; or by provincially delegated authorities or regional/districts. A province can also fund agencies to deliver the services and/or contract third parties.

Therefore, INAC cannot commit to conducting such a comprehensive review nor can it be done for all jurisdictions by the timelines required by the Committee. INAC would be able to provide a basic comparison of jurisdictions that are currently under the Enhanced Prevention Focused Approach and where INAC has basic information on salary rates and caseload ratios. INAC expects to complete this first phase by or before December 31, 2009.

As INAC moves forward on transitioning other jurisdictions and as relationships are built with each province at the tripartite tables, INAC will be in a better position to conduct a comparison of funding between FNCFS agencies and provincial systems. This phase will consist of the provinces with whom INAC has not yet developed or completed tripartite accountability frameworks. This phase is expected to be completed by 2012.

(AANDC’s Response to the 2009 Report of the Standing Committee on Public Accounts at Recommendation 2 – Provincial Comparison)

[203]  In response to the recommendation that AANDC revise the funding formula to provide funding based on need, AANDC responded:

It is important to note that the 6% average number of children in care calculation is one of many factors used only to model operations funding which includes the number of protection workers. This is then translated into a portion of the operations funding that agency receives. This 6% number was arrived at through discussions with First Nations Agency Directors and provincial representatives, and was thought to be fairly representative of the overall needs of the communities. Under the Enhanced Prevention Focused Approach, FNCFS agencies have the flexibility to shift funds from one stream to another in order to meet the specific needs of the community. This costing model provides all FNCFS agencies under the new approach with the necessary resources to offer a greater range of child and family services.

Through discussions with provincial and First Nations partners, it is clear that they preferred to create a costing model that would provide recipients stable funding for operations. The majority of partners indicated they would not be supportive of a model that generated more resources for Recipients based upon a higher percentage of children in care. Also, this model ensures that FNCFS agencies supporting communities with lower populations are provided with sufficient funding to operate both prevention and protection programs. Without the fixed percentage formula used to calculate and fund Operations, agencies with a very low percentage of children in care would not have the necessary resources to operate. Moreover, if the operations budget were based upon need rather than a fixed percentage, the agencies could find themselves with widely fluctuating operations budgets year to year which would hamper their ability to plan and provide services. The new costing models provide a stable operating and prevention budget that does not rely on the number of children in care as one of its determinants.

(AANDC’s Response to the 2009 Report of the Standing Committee on Public Accounts at Recommendation 5 – Funding Formula based on Need)

[204]  AANDC’s response to the recommendations of the 2008 Report of the Auditor General of Canada and the 2009 Report of the Standing Committee on Public Accounts would be revisited in 2011 by the Auditor General.

2011 Status Report of the Auditor General of Canada

[205]  In 2011, the Auditor General of Canada assessed AANDC’s progress in implementing the recommendations from the 2008 Report of the Auditor General of Canada and the 2009 Report of the Standing Committee on Public Accounts (see Annex, ex. 20 [2011 Status Report of the Auditor General of Canada]).

[206]  With regard to comparability of services, the Auditor General noted that while AANDC had agreed to define what is meant by services that are reasonably comparable, it had not done so. The Auditor General stated that “[u]ntil it does, it is unclear what is the service standard for which the Department is providing funding and what level of services First Nations communities can eventually expect to receive” (see 2011 Status Report of the Auditor General of Canada at pp. 23-24, s. 4.49). In addition, the Auditor General found AANDC had not conducted a review of social services available in the provinces to assess whether the services provided to children on reserve are the same as what is available to children off reserve (see 2011 Status Report of the Auditor General of Canada at p. 24, s.  4.49).

[207]  Concerning the new EPFA funding formula, the Auditor General reiterated its previous finding that it did not address all of the funding disparities that were noted in the 2008 Report of the Auditor General of Canada. While the Auditor General acknowledged that the EPFA enables additional services beyond those offered by Directive 20-1, it noted that:

without having defined what is meant by comparability, the Department has been unable to demonstrate that its new Enhanced Prevention Focused Approach provides services to children and families living on reserves that are reasonably comparable to provincial services.

(2011 Status Report of the Auditor General of Canada at p. 24, ss. 4.50-4.51)

[208]  With respect to the recommendation that AANDC determine the full costs of meeting the policy requirements of the FNCFS Program, the Department agreed to regularly update the estimated cost of delivering the program with the new EPFA funding approach on a province-by-province basis and to periodically review the program budget. The Auditor General reported that AANDC had identified the costs it would have to pay for services in each province before transitioning to EPFA. AANDC determined that it needed an increase of between 50 and 100% in its funding for operations and prevention services in each of the provinces that transitioned to EPFA. With all cost components taken into consideration, on average, EPFA led to an increase of over 40% in the cost of the FNCFS Program in the participating provinces (see 2011 Status Report of the Auditor General of Canada at pp. 24-25, ss. 4.53-4.54). In this regard, the Auditor General noted the FNCFS Program budget has increased by 32% since the 2005-2006 fiscal year, partly reflecting the increased funding levels needed to implement EPFA (see 2011 Status Report of the Auditor General of Canada at p. 25, s. 4.55).

[209]  On the comprehensive comparison of funding to FNCFS Agencies with provincial funding to similar agencies requested by the Standing Committee on Public Accounts, the Auditor General reported that AANDC had compared some elements of child and family services programs on and off reserve, such as social workers’ salaries and benefits in preparation for framework negotiations with the provinces. However, AANDC did not provide any information about social workers’ caseloads, stating that it is not public information. In addition, AANDC asserted certain services provided by the provinces, such as services related to health issues and youth justice, were not within AANDC’s mandate (see 2011 Status Report of the Auditor General of Canada at p. 25, ss. 4.56- 4.57).

[210]  In general, the Auditor General’s review of programs for First Nations on reserves, including its follow-up on the status of AANDC’s progress in addressing some of the recommendations from the 2008 Report of the Auditor General of Canada, was as follows:

Despite the federal government’s many efforts to implement our recommendations and improve its First Nations programs, we have seen a lack of progress in improving the lives and well-being of people living on reserves. Services available on reserves are often not comparable to those provided off reserves by provinces and municipalities. Conditions on reserves have remained poor. Change is needed if First Nations are to experience more meaningful outcomes from the services they receive. We recognize that the issues are complex and that solutions will require concerted efforts of the federal government and First Nations, in collaboration with provincial governments and other parties.

We believe that there have been structural impediments to improvements in living conditions on First Nations reserves. In our opinion, real improvement will depend on clarity about service levels, a legislative base for programs, commensurate statutory funding instead of reliance on policy and contribution agreements, and organizations that support service delivery by First Nations. All four are needed before conditions on reserves will approach those existing elsewhere across Canada. There needs to be stronger emphasis on achieving results.

We recognize that the federal government cannot put all of these structural changes in place by itself since they would fundamentally alter its relationship with First Nations. For this reason, First Nations themselves would have to play an important role in bringing about the changes. They would have to become actively engaged in developing service standards and determining how the standards will be monitored and enforced. They would have to fully participate in the development of legislative reforms. First Nations would also have to co-lead discussions on identifying credible funding mechanisms that are administratively workable and that ensure accountable governance within their communities. First Nations would have to play an active role in the development and administration of new organizations to support the local delivery of services to their communities.

Addressing these structural impediments will be a challenge. The federal government and First Nations will have to work together and decide how they will deal with numerous obstacles that surely lie ahead. Unless they rise to this challenge, however, living conditions may continue to be poorer on First Nations reserves than elsewhere in Canada for generations to come.

(2011 Status Report of the Auditor General of Canada at pp. 5-6)

2012 Report of the Standing Committee on Public Accounts

[211]  In February 2012, the Standing Committee on Public Accounts issued a report following the 2011 Status Report of the Auditor General of Canada (see Annex, ex. 21 [2012 Report of the Standing Committee on Public Accounts]).

[212]  Deputy Minister of AANDC, Michael Wernick, testified before the Committee and “...agreed, without reservation, with the OAG’s diagnosis of the problem...” (2012 Report of the Standing Committee on Public Accounts at p. 3). Mr. Wernick stated to the Committee:

One of the really important parts of the Auditor General's report is that it shows there are four missing conditions. The combination of those is what's likely to result in an enduring change. You could pick any one of them, such as legislation without funding, or funding without legislation, and so on. They would have some results, but they would probably, in our view, be temporary. If you want enduring, structural changes, it's the combination of these tools.” He also said, “With all due respect, I want to send the message that, if Parliament demands better results, it has to provide us with better tools.

(2012 Report of the Standing Committee on Public Accounts at p. 3 [footnotes omitted])

[213]  With specific regard to the FNCFS Program, the Deputy Minister stated:

We have fixed the funding formula. We make sure resources are available for prevention services. And we've put in place these kinds of tripartite agreements, because these are creatures of the provincial child protection statutes. In six of the provinces, I think it is, we have $100 million or more in funding over several budgets. They go at the pace at which we can conclude agreements with the provinces--I can certainly provide the list--but we're now covering about 68% of first nations kids with this prevention approach.

(2012 Report of the Standing Committee on Public Accounts at p. 9 [footnote omitted])

[214]  The Standing Committee concluded its report with the following statements:

The Committee notes that the government is taking a number of concrete actions to improve conditions for First Nations on reserves, and the Deputy Minister of AANDC expressed his commitment to address the structural impediments identified by the OAG. Like the Deputy Minister, the Committee is optimistic that progress can be made, but it will require significant structural reforms and sustained management attention. The Committee believes that AANDC, in coordination with other departments, needs to develop and commit to a plan of action to take the necessary steps, and the Committee intends to monitor the government’s progress to ensure that First Nations on reserves experience meaningful improvements in their social and economic conditions.

(2012 Report of the Standing Committee on Public Accounts at p. 12)

[215]  The then Minister of AANDC, Mr. John Duncan, responded to the 2012 Report of the Standing Committee on Public Accounts (see Annex, ex. 22 [AANDC’s Response to the 2012 Report of the Standing Committee on Public Accounts]). Of note, Minister Duncan acknowledged the following:

I would also like to acknowledge the work of the Office of the Auditor General in providing Parliament, the Government of Canada, and Canadians with valuable insights into Canada’s approach to program delivery for First Nations on reserves. I consider the six-page preface to Chapter 4 of the 2011 Status Report of the Auditor General of Canada to be an important roadmap for Parliament in moving forward on First Nation issues.

[...]

I agree that many of the problems faced by First Nations are due to the structural impediments identified – the lack of clarity about service levels, lack of a legislative base, lack of an appropriate funding mechanism, and a lack of organizations to support local service delivery.

[...]

Through the Enhanced Prevention Focused Approach for First Nations Child and Family Services clarity about service levels and comparability of services and funding levels have been addressed at tripartite tables with the six provinces that have transitioned to the new approach.

[...]

The Office of the Auditor General observed that there are challenges associated with the use of contribution agreements to fund programs and services for First Nations. For instance, agreements may not always focus on service standards or the results to be achieved; agreements must be renewed yearly and it is often unclear who is accountable to First Nations members for achieving improved outcomes. In addition, contribution agreements involve a significant reporting burden, and communities often have to use scarce administrative resources to respond to the numerous reporting requirements stipulated in their contribution agreements.

The Government of Canada recognizes that reliance on annual funding agreements and multiple accountabilities when funding is received from multiple sources can impede the provision of timely services and can limit the ability of First Nations to implement longer term development plans.

To address these concerns, Aboriginal Affairs and Northern Development Canada is implementing a risk-based approach to streamlining funding agreements, and reporting requirements. The General Assessment tool supports increased flexibility by assessing the capacity of recipients to access a wider range of funding approaches, including multi-year funding agreements. In addition, a pilot initiative with 11 First Nations communities is currently being implemented using a new approach to reporting which is increasing transparency and accountability at the community level by using the First Nations website as a reporting tool and addressing capacity issues created by the reporting burden.

(AANDC’s Response to the 2012 Report of the Standing Committee on Public Accounts)

[216]  The NPR, Wen:De reports and the Auditor General and the Standing Committee reports all have identified shortcomings in the funding and structure of the FNCFS Program. This was further demonstrated in other evidence presented to the Tribunal and to which the Panel will return to below. First, however, we will outline the evidence advanced with regard to the funding of child and family services under the 1965 Agreement in Ontario, along with the other provincial agreements in Alberta and British Columbia.

c.  1965 Agreement in Ontario

[217]  There is also evidence indicating shortcomings in the funding and structure of the 1965 Agreement in Ontario.

[218]  In 1965, the federal government entered into an agreement with the Province of Ontario to enable social services, including child and family services, to be extended to First Nations communities on reserve. Around the same time, child welfare authorities in Ontario began the large-scale removal of Aboriginal children from their homes and communities, commonly referred to as part of the “Sixties Scoop”. Ms. Theresa Stevens, Executive Director for Anishinaabe Abinoojii Family Services in Kenora, Ontario, described how buses would drive into communities and take all the children away (see Transcript Vol. 25 at pp. 28-30). As will be explained in more detail below, the collective trauma experienced by many First Nations in Ontario as a result of the Sixties Scoop informs the climate for the provision of child and family services in the province. The Panel acknowledges the suffering of Aboriginal children, families and communities as a result of the Sixties Scoop.

[219]  The 1965 Agreement is a cost-sharing agreement where Ontario provides or pays for eligible services up front and invoices Canada for a share of the costs of those services pursuant to a cost-sharing formula. Eligible services for cost sharing under the 1965 Agreement are described in its Schedules. Mr. Phil Digby, Manager of Social Programs at AANDC’s Ontario Regional Office, testified at the hearing and explained how the 1965 Agreement works. At the beginning of each fiscal year, Ontario provides AANDC with a cash flow forecast. Once approved, AANDC provides Ontario with a one-month cash advance, followed by monthly instalments. There is a 10% holdback on the payments, which is paid out (with any adjustments) at the end of the year after an audit. There is no overall cap on expenditures under the 1965 Agreement.

[220]  The cost-sharing formula is set out at clause 3 of the 1965 Agreement and is based on two elements: the “per capita cost of the Financial Assistance Component of the Aggregate Ontario Welfare Program provided to persons other than Indians with Reserve Status in Ontario”; and, the “per capita cost of the Financial Assistance Component of the Aggregate Ontario Welfare Program provided to Indians with Reserve Status in Ontario”.

[221]  According to Mr. Digby, social assistance is the area where there was the best data that gave a good proxy for the proportionate share of costs and relative share of costs in First Nations communities vis-à-vis the rest of Ontario. As of 2011-12 the average cost of providing social assistance to persons living off reserve was approximately $200. For First Nations living on reserve it was about $1,200. AANDC’s share of the costs is calculated by taking 50% of the average cost of providing social assistance to persons living off reserve (200 x 0.50 = 100) and dividing it by the average cost of providing social assistance to persons living on reserve (100/1200 = 0.0833); subtracting the average cost of providing social assistance to persons living off reserve from the average cost of providing social assistance to persons living on reserve (1200 – 200 = 1000) and dividing that amount by the average cost of providing social assistance to persons living on reserve (1000/1200 = 0.8333); and then, adding those two numbers together to arrive at the cost-sharing ratio (0.0833 + 0.8333 = 0.9166). Pursuant to these numbers, AANDC paid approximately 92% of the eligible costs under the 1965 Agreement in 2011-12. According to Mr. Digby, the 1965 Agreement cost-sharing formula recognizes the higher per capita costs of providing social assistance to First Nations on reserves and AANDC’s agreement to take the financial responsibility for these additional costs (see testimony of P. Digby, Transcript Vol. 59 at pp. 24-28).

[222]  There are two mechanisms used by the province of Ontario to provide child welfare services on reserve: (i) child welfare societies, including provincial child welfare agencies and FNCFS Agencies; and (ii) service contracts for prevention services. There are seven fully-mandated FNCFS Agencies in Ontario and they are funded according to the same funding model as provincial child welfare agencies in Ontario. There are also six pre-mandated FNCFS Agencies who do not have a full protection mandate and are in the process of developing their capacity to become fully-mandated FNCFS Agencies. There are also approximately 25 First Nations reserves that receive prevention services via service contract.

[223]  The 1965 Agreement has never undergone a formal review by AANDC. The sections of the agreement dealing with child and family services have not been updated since 1981, and the Schedules to the agreement have not been updated since 1998. This is significant given in 1984 Ontario implemented the Child and Family Services Act, which incorporated elements from other pieces of legislation (for example, youth justice and mental health) to address the child and family services needs of Ontarians. At that time, the Government of Canada took the position that AANDC did not have the mandate or resources to start funding justice and health programs, as those types of programs would fall under a different department (see testimony of P. Digby, Transcript Vol. 59 at p. 69).

[224]  In 2000, the NPR recommended a tripartite review be done of the 1965 Agreement (see at pp. 18 and 121). The 2008 Report of the Auditor General of Canada also noted that there are provisions in the 1965 Agreement to keep it up-to-date and that they could be used to ensure both the 1965 Agreement and the services that the federal government pays for are current.

[225]  The fact that the 1965 Agreement has not been kept up-to-date with Ontario’s Child and Families Services Act was highlighted by Mr. Digby in a 2007 discussion paper (see Annex, ex. 23 [1965 Agreement Overview]). The Panel finds the 1965 Agreement Overview document to be relevant and reliable, especially given Mr. Digby’s involvement in its authorship. According to the 1965 Agreement Overview discussion paper, at page 4, issues raised by various stakeholders with regard to the 1965 Agreement and its implementation include:

Concern that the agreement is bilateral, not tripartite, since First Nations were not asked to be signatories in 1965. While clause 2.2 of the 1965 Agreement indicates that bands are to signify concurrence to the extension of provincial welfare programs, this does not reflect the type of intergovernmental relationship sought by many First Nations.

[...]

First Nations and the provincial government have, from time to time, expressed interest in INAC cost-sharing additional provincial social service programs to be extended on reserve. INAC has generally not had the resources to ‘open up’ new areas for cost-sharing. [...] There has been no update to the agreement schedule with regard to cost-sharing child welfare. As several programs within the provincial Child and Family Services Act (CFSA) fall outside of INAC’s mandate, the department is not in a position to ‘open up’ discussion on cost-sharing the full CFSA.

[226]  In 2011, the Commission to Promote Sustainable Child Welfare (the CPSCW) prepared a discussion paper regarding Aboriginal child welfare in Ontario (see Annex, ex. 24 [CPSCW Discussion Paper]). The CPSCW was created by the Minister of Children and Youth Services in Ontario to develop and implement solutions to ensure the sustainability of child welfare. It reports to the Minister thereon. In light of this public mandate, the Panel finds the discussion paper relevant and reliable to the issue of the provision of child and family services to First Nations on reserve in Ontario.

[227]  The CPSCW Discussion Paper, at page 4, begins by noting the impact of history on many Aboriginal communities:

The combination of colonization, residential schools, the Sixties Scoop, and other factors have undermined Aboriginal cultures, eroded parenting capacity, and challenged economic self-sufficiency. Many Aboriginal people live in communities that experience high levels of poverty, alcohol and substance abuse, suicides, incarceration rates, unemployment rates, and other social problems. Aboriginal children are disproportionately represented in the child welfare system and in the youth justice system. Suicide rates for Aboriginal children and youth surpass those of non-Aboriginals by approximately five times. Aboriginal youth are 9 times more likely to be pregnant before age 18, far less likely to complete high school, far more likely to live in poverty, and far more likely to suffer from emotional disorders and addictions.

[228]  Despite these specific risk factors for Aboriginal peoples, the CPSCW Discussion Paper notes that many provincial child welfare agencies give little attention to the requirements for providing services to Aboriginal children set out in Ontario’s Child and Families Services Act (see at p. 26). Specifically, the discussion paper points to sections 213 and 213.1 of the Child and Families Services Act whereby a society or agency that provides services with respect to First Nations children must regularly consult with the child’s band or community, usually through a Band Representative, about the provision of the services, including the apprehension of children and the placement of children in care; the provision of family support services; and, the preparation of plans for the care of children.

[229]  According to the CPSCW Discussion Paper, Band Representatives can be crucial and tend to fulfill the following functions: serving as the main liaison between a Band and Children’s Aid Societies [CASs]; providing cultural training and advice to CASs; monitoring Temporary Care Agreements and Voluntary Service Agreements with CASs; securing access to legal resources; attending and participating in court proceedings; ensuring that the cultural needs of a child are being addressed by the CAS; and, participating in the development of a child’s plan of care (see at p. 26).

[230]  The CPSCW Discussion Paper indicates that, in the past, First Nations were funded on a claims basis by the federal government to hire a Band Representative. However, since 2003, that funding was discontinued. Therefore, some First Nations divert resources from prevention services to cover the cost of a Band Representative, while others simply do not have one (see CPSCW Discussion Paper at p. 26).

[231]  Providing child welfare services in remote and isolated Northern Ontario communities was also identified by the CPSCW Discussion Paper as a challenge for CASs. Those challenges include the added time and expense to travel to the communities they serve, where some communities do not have year round road access and where flying-in can be the only option for accessing a community. In fact, one agency was required to make up to 80 flights in a day.

[232]  Another challenge for remote and isolated communities is recruiting and retaining staff, especially qualified staff from the community. The legacy of the Sixties Scoop and the association of CASs with the removal of children from the community have caused some First Nations community members to resent or resist CAS workers and can create a hostile working environment.

[233]  Other challenges for remote and isolated communities are a lack of suitable housing, which makes it difficult to hire staff from outside the community and to find suitable foster homes; limited access to court; and, the lack of other health and social programs, which impacts the performance and quality of child and family services (see CPSCW Discussion Paper at pp. 28-29). On this last point, the CPSCW Discussion Paper emphasizes that “[p]romoting positive outcomes for children, families and communities, requires a full range of services related to the health, social, and economic conditions of the community: child welfare services alone are not nearly enough” (at p. 29).

[234]  The CPSCW Discussion Paper also notes that there are many distinct differences between designated Aboriginal and non-Aboriginal CASs: they serve significantly larger and less inhabited geographic areas with lower child and youth populations, they have significantly larger case volumes per thousand, they serve more of their children and youth in care versus in their own homes, and they have smaller total expenditures, but significantly higher expenditures per capita and higher expenditures per case (see CPSCW Discussion Paper at p. 29).

[235]  Finally, in discussing the federal-provincial dynamics of providing child and family services on reserve, the CPSCW Discussion Paper comments that instead of working collaboratively towards providing effective service delivery to Aboriginal peoples, the federal government has devolved some of its responsibilities for Aboriginal peoples to the provincial governments, which contributes to some confusion over ultimate jurisdiction (see CPSCW Discussion Paper at pp. 34-35).

[236]  On this last point, in 2007 the Ontario Ministry of Children and Youth Services wrote to AANDC expressing their concern over AANDC’s decision to no longer provide funding for Band Representatives: “with the withdrawal of federal funding, many First Nations do not have the financial resources required to participate in planning for Indian and native children involved with a children’s aid society or to take part in child protection legal proceedings” (Annex, ex. 25 at p. 2).

[237]  In 2011, the Ontario Ministry of Children and Youth Services again wrote to AANDC on the issue of funding for Band Representatives:

The paramount purpose of the CFSA is to “promote the best interests, protection and well-being of children.” The band representative function supports not only the purpose of the Act but also the other important purposes and provisions to which the Act pertains. A lack of sufficient capacity within First Nation communities limits their ability to respond effectively and in accordance with legislated times frames for action. The withdrawal of [INAC’s] funding for band representation functions has eroded First Nations’ ability to participate as intended in the CFSA.

(Annex, ex. 26 at p. 2)

[238]  Despite the discordance between Ontario’s Child and Families Services Act and AANDC’s policy to no longer fund Band Representatives, Minister Duncan indicated that “it falls within the responsibilities of First Nation governments to determine their level of engagement in child welfare matters” and “we do not foresee the Government of Canada providing funding support in this area” (Annex, ex. 27 at p.1).

[239]  Ambiguity surrounding jurisdiction for the provision of mental health services to First Nations youth has also been a cause for concern. When the Anishinaabe Abinoojii Family Services agency sought a mandate to provide children’s mental health services, an AANDC employee prepared a document to provide information to the Regional Director General and Assistant Regional Directors General on the issue (see Annex, ex. 28 [Abinoojii Mental Health Services Mandate]). The Executive Director for Anishinaabe Abinoojii Family Services, Ms. Stevens, testified as to the content of the document (see Transcript Vol. 25 at pp. 174-178).

[240]  According to the Abinoojii Mental Health Services Mandate document, there are waiting lists for First Nations children served by the Abinoojii Family Services agency who require mental health services. The document adds that while there is some cooperation between mental health service organizations and the Abinoojii agency to manage these waiting lists, there is also a need for more resources and culturally appropriate assessment tools and counsellors. The Ministry of Children and Youth Services has a Mental Health Policy for Children and Youth and has some resources for mental health counselling, but the needs outstrip the funding (see Abinoojii Mental Health Services Mandate at pp. 1-2).

[241]  In considering the request, the Abinoojii Mental Health Services Mandate document states that AANDC does not have a mandate for mental health services and that these expenditures are not eligible under the 1965 Agreement. Rather, Health Canada has the federal mandate on mental health and provides funding through a number of programs. However, those programs focus more on prevention and mostly deal with adult issues. Health Canada programs do not specifically deal with children in care and do not cover mental health counselling (see Abinoojii Mental Health Services Mandate at p. 2).

[242]  In a roundtable meeting between Abinoojii Family Services agency, AANDC, Health Canada and the Ministry of Children and Youth Services for Ontario, Health Canada recognized a need to look at the whole system as services/programs tend to work in silos and raised the possibility of re-prioritizing resources or seeking additional funding. AANDC indicated that the province is the lead on child welfare and Health Canada is the lead on health issues at the federal level, but that it supports the work on examining existing programs, outlining gaps and working together to ensure First Nations receive services that are comparable and culturally appropriate (see Abinoojii Mental Health Services Mandate at p. 2).

[243]  In 2012, the Ontario Association of Children’s Aid Societies (the OACAS) produced a report regarding trends in child welfare in Ontario, including in Aboriginal communities (see Annex, ex. 29 [Child Welfare Report]). The OACAS is an advocacy group representing the interests of 45 CASs member organizations. Governed by a voluntary board of directors, OACAS consults with and advises the provincial government on issues of legislation, regulation, policy, standards and review mechanisms. It promotes and is dedicated to achieving the best outcomes for children and families (see Child Welfare Report at p. 2). Given the OACAS’s mandate and focus, the Panel finds its report relevant and reliable.

[244]  According to the Child Welfare Report, the current funding model does not reflect the needs of Aboriginal communities and agencies for several reasons including: insufficient resources for services, where they tend to be crisis driven; shortage of funding for administrative requirements; lack of funding to establish infrastructure necessary to deliver statutory child protection services, while operating within the extraordinary infrastructure deficits of many of the communities they serve; and, insufficient funds to retain qualified staff to deliver culturally appropriate services (at p. 7). Among other things, at page 7 of the Child Welfare Report, the OACAS asked the Ontario government to:

Establish an Aboriginal child welfare funding model and adequate funding to support culturally appropriate programs that encompass the unique experiences of diverse Aboriginal populations – on-reserve, off-reserve, remote, rural, and urban. Invest in capacity building to enable the proper recruitment, training and retention of child welfare professionals in emerging Aboriginal Children’s Aid Societies.

[245]  In terms of infrastructure and capacity building, the 1965 Agreement has not provided for the cost-sharing of capital expenditures since 1975 (see testimony of P. Digby, Transcript Vol. 59 at p. 93). Ms. Stevens explained the impact of this on her organization: many high-risk children are sent outside the community to receive services because there is no treatment centre in the community. Abinoojii Family Services spends approximately 2 to 3 million a year sending children outside their community. According to Ms. Stevens, there are not enough resources to build a treatment centre or develop programs to assist these high-risk children because those funds are expended on meeting the current needs of those children (see Transcript Vol. 25 at p. 32).

[246]  Again, the above evidence on the 1965 Agreement identifies shortcomings in AANDC’s approach to the provision of child and family services on First Nations reserves in Ontario. In the provision of child and family services, the Panel finds the situation in Ontario falls short of the objective of the 1965 Agreement“...to make available to the Indians in the Province the full range of provincial welfare programs”.

d.  Other provincial/territorial agreements

[247]  As mentioned above, two other provinces have agreements with AANDC for the provision of child and family services on reserve: Alberta and British Columbia. While in the Yukon, the Yukon Funding Agreement applies.

[248]  As mentioned above, the Yukon Funding Agreement applies to all First Nations children and families ordinarily resident in the Territory. Schedule “DIAND-3” of the Yukon Funding Agreement provides for the application of Directive 20-1 to the funding of child and family services to those First Nations children and families.

[249]  In Alberta and British Columbia, AANDC reimburses the provinces for the delivery of child and family services to certain First Nations communities on reserve where there are no FNCFS Agencies. In Alberta, six First Nations communities are served by the Alberta Reform Agreement for child and family services. In British Columbia, seventy-two First Nation communities receive services under the BC Service Agreement.

[250]  Pursuant to the Alberta Reform Agreement, AANDC reimburses Alberta for the costs of providing various social services, including child welfare services, to certain First Nations reserves in the province. For those child welfare services, funding is provided at the beginning of the fiscal year based on a funding formula using year-end costs of the preceding fiscal year. Adjustments are made based on actual expenditures during the fiscal year (see Alberta Reform Agreement at Schedule A, s. 1).

[251]  In British Columbia, the BC MOU was in place from 1996 to 2012. Under the BC MOU, AANDC reimbursed the province for eligible maintenance expenses based on a per diem formula which accounted for the province’s administration, supervision and maintenance costs (see BC MOU at s. 5.0; and Appendix B and D). The per diem rates could be adjusted annually and the province could receive an adjustment to the previous year’s per diem rates based on actual expenditures (see BC MOU at Appendix C). Those adjustments included rate increases based on inflation and increased emphasis on prevention services. For the fiscal year 2006/2007, the recalculation of per diem rates resulted in an invoice to AANDC for over $5 million dollars (see Annex, ex. 30).

[252]  In 2012, the BC MOU was replaced by the BC Service Agreement. The BC Service Agreement now provides for reimbursement of maintenance expenses based on actual expenditures. It also provides funding to the province for operations expenses based on a costing model agreed to between the province and AANDC (see BC Service Agreement at s. 7; and Appendix A). For fiscal year 2012-2013, operations funding amounted to $15 million.

[253]  The Alberta Reform Agreement, the BC MOU and the BC Service Agreement provide reimbursement for actual eligible operating and administrative expenditures, including retroactive adjustments for inflation and increases for changes in programming. This is quite different from FNCFS Agencies in those provinces, including under the EPFA in Alberta, where there is no such adjustments for those types of increases in costs (see testimony of C. Schimanke, Transcript Vol. 62 at pp. 53-54). As expressed in the 2008 Report of the Auditor General of Canada at page 19, these adjustments and reimbursements for actuals are linked directly to provincial child welfare legislation:

4.49 INAC funds some provinces for delivering child welfare services directly where First Nations do not. INAC has agreements with three of the five provinces we covered on how they will be funded to provide child welfare services on reserves. We found that in these provinces, INAC reimburses all or an agreed-on share of their operating and administrative costs of delivering child welfare services directly to First Nations and of the costs of children placed in care. [...]

4.50 INAC funding to cover the costs of operating and administering First Nations agencies is established through a formula. Although the program requires First Nations agencies to meet applicable provincial legislation, we found that INAC’s funding formula is not linked to this requirement. The main element of the formula is the number of children aged from 0 to 18 who are ordinarily resident on the reserve or reserves being served by a First Nations agency. [...]

[254]  The Panel will return to this comparison in the section that follows.

  iii.  AANDC’s position on the evidence

[255]  AANDC argues the evidence above is not sufficient to establish adverse treatment in the provision of funding for First Nations child and family services, including that there is a lack of specific examples to support the allegation of a denial of such services. In sum, it claims the reports and evidence regarding the FNCFS Program above should be given little weight, that the choices of FNCFS Agencies in administering their budgets should be considered in evaluating any adverse impacts, along with any additional funding they receive beyond Directive 20-1 or the EPFA, that comparing the federal and provincial/territorial funding systems is not a valid comparison under the CHRA, and, even if it were, such comparative evidence is lacking in this case. Each argument is addressed below.

a.  The relevance and reliability of the studies on the FNCFS Program

[256]  AANDC views the various studies of the FNCFS Program outlined above as having little weight. It questions the comprehensiveness of the studies, noting the experience of a few agencies does not establish differential treatment.

[257]  The Panel finds the NPR and Wen:De reports to be highly relevant and reliable evidence in this case. They are studies of the FNCFS Program commissioned jointly by AANDC and the AFN. They employed a rigorous methodology, in depth analysis of Directive 20-1, and consultations with various stakeholders. The Panel accepts the findings in these reports. There is no indication that AANDC questioned the findings of these reports prior to this Complaint. On the contrary, there are indications that AANDC, in fact, relied on these reports in amending the FNCFS Program.

[258]  In its October 2006 Fact Sheet (see Annex, ex. 10), AANDC acknowledged the impacts and findings of the Wen:De reports, along with the NPR, and committed to refocusing the FNCFS Program to improve outcomes for First Nations children and families on reserve:

Currently, Program funding is largely based on protection services, which encourage Agencies to remove First Nation children from their parental homes, rather than providing prevention services, which could allow children to remain safely in their homes.

· Program expenditures were $417 million in 2005-2006 and are expected to grow to $540 million by 2010-11 if the program continues to operate under the protection-based model.

· From 1996-97 to 2004-05, the number of First Nation children in care increased by 64.34%.

· Approximately 5.8% of First Nation children living on reserve are in care out of their parental homes.

Current Issues: First Nation children are disproportionately represented in the child welfare system. Placement rates on reserve reflect a lack of available prevention services to mitigate family crisis.

[...]

Changes in the landscape: Provinces and territories have introduced new policy approaches to child welfare and a broader continuum of services and programs that First Nations Child and Family Services must deliver to retain their provincial mandates as service providers. However, the current federal funding approach to child and family services has not let First Nations Child and Family Services Agencies keep pace with the provincial and territorial policy changes, and therefore, the First Nations Child and Family Services Agencies are unable to deliver the full continuum of services offered by the provinces and territories to other Canadians. A fundamental change in the funding approach of First Nations Child and Family Services Agencies to child welfare is required in order to reverse the growth rate of children coming into care, and in order for the agencies to meet their mandated responsibilities.

The Future: A Joint National Policy Review on First Nations Child and Family Services, completed in 2000, recommended that the federal government increase prevention services for children at risk-services that must be provided before considering the removal of the child and placement in out of home care-and that it provide adequate funding for this purpose.

· Indian and Northern Affairs Canada funded research undertaken by the First Nations Child and Family Caring Society of Canada in 2004 and 2005. The reports: WEN: DE: We are coming to the light of day, and WEN: DE: The journey continues, included recommendations for investments and policy adjustments required to address the shortcomings of the current system. This research will form the basis of Indian and Northern Affairs Canada’s request for investments and policy renewal.

[...]

· The Government of Canada is committed to working with First Nations, provincial/territorial, and federal partners and agencies to implement a modernized vision of the First Nations Child and Family Services Program, a program that strives for safe and strong children and youth supported by healthy parents.

· The strategy is to refocus the program from a protection-based approach towards a preventive-based model, promote a variety of care options to provide children and youth with safe, nurturing and permanent homes, and build on partnerships and implement practical solutions to improve child interventions services.

[259]  Ms. Murphy and Ms. D’Amico also testified about AANDC’s reliance on the NPR and Wen:De reports in implementing the EPFA (see Transcript Vol. 53 at pp. 46-47; and, Vol. 54 at pp. 50-51).

[260]  Internal AANDC documents presented at the hearing also support the department’s adherence to the findings in the NPR and Wen:De reports. AANDC submits the Panel should rely on the testimony of its witnesses rather than what is found in internal documents, given that many of the authors did not testify before the Tribunal in order to provide context and the documents may merely reflect the opinion of employees at a specific time. Therefore, AANDC submits that the Tribunal should assess the weight of documents contextually, with reference to oral evidence regarding their proper interpretation, and considering the scope of the author’s authority to prepare the document in question.

[261]  The Panel has considered these arguments in weighing the evidence and finds the documents relied upon below to be straightforward and clear. Many of these documents are presentations prepared for, or delivered to, high level AANDC officials. The Panel finds these presentations highly relevant and reliable given they are the means by which information on the FNCFS Program is provided to AANDC management, including Deputy or Assistant Deputy Ministers, in order to inform policy decisions or future requests to Cabinet (see Transcript Vol. 54 at pp. 159, 166; and, Vol. 55 at p. 199). Furthermore, the other AANDC documents referred to below corroborate the information found in those presentations.

[262]   A 2005 presentation to the ‘Policy Committee’ refers to the NPR by stating: “[a] 2000 review of FNCFS found that Indian Affairs was funding [FNCFS Agencies] 22% less, on average, than their provincial counterparts” (see Annex, ex. 31 at p. 2 [Policy Committee presentation]). The Policy Committee presentation, at page 3, goes on to state that, despite maintenance expenditures increasing by 7% to 10% annually, the Department only receives a 2% annual adjustment to the departmental budget. According to the Policy Committee presentation at page 3, “[a]dditional investments are now required for further stabilization for basic supports with respect to Enhanced Organizational Support, and Maintenance Volume Growth.”

[263]  The 2005 Policy Committee presentation also indicates FNCFS Agencies are threatening to withdraw from service delivery because they cannot deliver provincially mandated services within their current budgets. The presentation continues by stating that provincial governments have written to the Minister of AANDC indicating their concern that the department is not providing sufficient funding to permit FNCFS Agencies to meet provincial statutory obligations. As a result, the Policy Committee presentation warns that provinces may refuse to renew the mandates of FNCFS Agencies or give mandates to new agencies (see at p. 4).

[264]  In line with the NPR and Wen:De reports, the Policy Committee presentation states: “In addition to enhanced basic supports for First Nation Child and Family Services, fundamental change in the approach to child welfare is required in order to reverse the growth rate of children coming into care” (at p. 5). In this regard, the presentation proposes transformative measures be put in place to allow investment in prevention services according to provincial legislation and standards (see at p. 6). This “[e]nables the availability of a full spectrum of culturally-appropriate programs and services that would eventually reduce the over representation of First Nations children in the child welfare system” (Policy Committee presentation at p. 6). It also “...addresses immediate critical funding pressures and would stabilize the child welfare situation on reserve” (Policy Committee presentation at p. 6). Finally, according to the Policy Committee presentation, “[i]ncreasing the budget for basic services would enable [FNCFS Agencies] to retain and train staff and meet the increased costs of maintaining operations (e.g. cost of living adjustment, legal fees, insurance, remoteness)” (at p. 6).

[265]  Similarly, in another document entitled “First Nations Child and Family Services (FNCFS) Q’s and A’s”, it states:

Circumstances are dire. Inadequate resources may force individual agencies to close down if their mandates are withdrawn, or not extended by the provinces. This would result in provinces taking over responsibility for child welfare, likely at a higher cost to Indian and Norther Affairs Canada.

[...]

Over the past decade the trend in child welfare has been towards prevention or least disruptive measures. INAC recognizes that the current funding formula is not flexible enough to follow this trend and needs to be revised. [...]INAC received authority in 2004-2005 to implement a Flexible Funding Option for Maintenance resources. This will permit some agencies to reprofile Maintenance resources to allow for greater flexibility in how these funds are utilized by placing greater emphasis on prevention services.

Incremental Operations funding will assist agencies to a very limited extent in providing additional prevention services. Additional Operations resources will assist agencies in coping with funding pressures resulting from increased legal fees, insurance costs and other operational expenses that have not been adjusted for since Program Review was implemented in 1994-1995.

(Annex, ex. 32 at pp. 1-2, 5)

[266]  Similarly, the 2005 National Program Manual, at page 14, section 2.2.3, outlines some of the cost pressures experienced by FNCFS Agencies in terms of their operational funding:

Although the authorities are clear on what to be included in the operations formula, First Nations have expressed a concern that because the formula was developed in the late 1980's, legislation, standards and practices have changed significantly. Although the following items are included in the Operations, First Nations have stated that Recipients are under increasing pressures due to changes over time with respect to:

· Information Technology: In the late 1980's, use of computers was limited. Today, however, they are vital to operating social programs and services.

· Prevention (Least disruptive measures): Recent trends in provincial and territorial legislation have placed a greater emphasis on prevention. Although prevention resources were included in the current formula, the level of funding may not provide enough resources to meet current needs.

· Liability Insurance: As with prevention, the Operations formula includes funding for insurance. However, since September 11, 2001 (9/11) insurance costs have increased dramatically.

· Legal Costs: Although legal costs are included in the Operations formula, they have become a larger issue than planned for when the formula was developed. A higher incidence of contested cases plus changes in provincial practice requiring cases to be presented by legal representatives rather than social workers has resulted in higher costs. Further, litigation on behalf of injured children can be very expensive, even when adequate liability insurance is carried.

It is anticipated that the review of the Operational formula will address these issues. At the present time, however, the current authorities must be applied.

(Emphasis added)

[267]  In another document dealing with AANDC’s expenditures on Social Development Programs on reserves it states that, despite the federal government acting as a province in the provision of social development programs on reserve, federal policy for social programs has not kept pace with provincial proactive measures and thus perpetuates the cycle of dependency (see Annex, ex. 33 at pp. 1-2 [Explanations on Expenditures of Social Development Programs document]). The document describes AANDC’s social programs as “...limited in scope and not designed to be as effective as they need to be to create positive social change or meet basic needs in some circumstances” (Explanations on Expenditures of Social Development Programs document at p. 2). It goes on to say that if its current social programs were administered by the provinces this would result in a significant increase in costs for AANDC. The document provides the example of the Kasohkowew Child Wellness Society in Alberta, where it would cost an additional $2.2 million beyond what AANDC currently funds if social services on that reserve reverted back to the province of Alberta (see Explanations on Expenditures of Social Development Programs document at p. 2).

[268]  Correspondingly, a 2006 presentation regarding AANDC social programs on reserves, including the FNCFS Program, describes those programs as being remedial in focus, not always meeting provincial/territorial rates and standards, and not well-integrated across jurisdictions (see Annex, ex. 34 at p. 5 [Social Programs presentation]). With specific regard to the FNCFS Program, the presentation states that “efforts have been concentrated on child protection and removal of the child from the parental home with the result that the children in care rate continues to increase” (see Social Programs presentation at p. 5).

[269]  In general, the Social Programs presentation states that “[m]any First Nation and Inuit children and families are not receiving services reasonably comparable to those provided to other Canadians” (at p. 3). Relatedly, the presentation notes that “[p]rovinces/territories have been critical of [AANDC] funding levels as they do not enable First Nation service providers to meet the standards stipulated in provincial/territorial legislation” (Social Programs presentation at p. 6). According to the presentation, the delivery of social programs on reserves is hampered by the absence of legislation, inadequate funding and a division of responsibilities between federal departments which impedes comprehensive program responses (see Social Programs presentation at p. 3).

[270]  In another presentation, AANDC describes Directive 20-1 as “broken”:

The current system is BROKEN, i.e. piecemeal and fragmented

The current system contributes to dysfunctional relationships, i.e. jurisdictional issues (at federal and provincial levels), lack of coordination, working at cross purposes, silo mentality

[...]

The current program focus is on protection (taking children into care) rather than prevention (supporting the family)

[...]

Early intervention/prevention has become standard practice in the provinces/territories, numerous U.S. states, and New Zealand

INAC CFS has been unable to keep up with the provincial changes

Where prevention supports are common practice, results have demonstrated that rates of children in care and costs are stabilized and/or reduced

(Annex, ex. 35 at pp. 2-3 [Putting Children and Families First in Alberta presentation])

[271]  The Putting Children and Families First in Alberta presentation touts prevention as the ideal option to address these problems at page 4:

Early prevention and child-centered outcomes are the missing pieces of the puzzle for FN children and families living on reserve

Early prevention supports the agenda for improving quality of life for children and families thereby leading to improved outcomes in the areas of early childhood development, education, and health

[272]  Finally, the Putting Children and Families First in Alberta presentation states at page 5:

The facts are clear:

· Wen:De Report - Early intervention/prevention is KEY

[...]

· First Nation agencies have been lobbying Canada since 1998 to change the system

[273]  AANDC’s Departmental Audit and Evaluation Branch also performed its own evaluation of the FNCFS Program in 2007 (see Annex, ex. 14 [2007 Evaluation of the FNCFS Program]). The findings and recommendations of the 2007 Evaluation of the FNCFS Program reflect those of the NPR and Wen:De reports. Of note, at page ii, the 2007 Evaluation of the FNCFS Program makes the following findings:

Although the program has met an increasing demand for services, it is not possible to say that is has achieved its objective of creating a more secure and stable environment for children on reserve, nor has it kept pace with a trend, both nationally and internationally, towards greater emphasis on early intervention and prevention.

The program’s funding formula, Directive 20-1, has likely been a factor in increases in the number of children in care and Program expenditures because it has had the effect of steering agencies towards in-care options - foster care, group homes and institutional care because only these agency costs are fully reimbursed.

[274]  In response to these findings, the 2007 Evaluation of the FNCFS Program made six recommendations at page iii, including that AANDC:

1. clarify the department’s hierarchy of policy objectives for the First Nations Child and Family Services Program, placing the well-being and safety of children at the top;

2. correct the weakness in the First Nations Child and Family Services Program’s funding formula, which encourages out-of-home placements for children when least disruptive measures (in-home measures) would be more appropriate. Well-being and safety of children must be agencies’ primary considerations in placement decisions;

[275]  The 2007 Evaluation of the FNCFS Program goes on to state that the first step in improving the FNCFS Program is to change Directive 20-1 by providing FNCFS Agencies with a new funding stream that ensures adequate support for prevention work (see at p. 35). In discussing the costs and benefits of increasing the FNCFS Program’s focus on prevention, the cost estimates provided in Wen:De Report Three are outlined, including the $22.9 million for new management information systems, capital costs (buildings, vehicles and office equipment), and insurance premiums; and, the $86.4 million for annual funding needs for such things as an inflation adjustment to restore funding to 1995 levels, adjusting the funding formula for small and remote agencies, and increasing the operations base amount from $143,000 to $308,751 (see 2007 Evaluation of the FNCFS Program at pp. 35-36).

[276]  In a September 11, 2009 response to questions raised by the Standing Committee on Aboriginal Affairs and Northern Development, Deputy Minister Michael Wernick described the EPFA as an “...approach that will result in better outcomes for First Nation children” (Annex, ex. 36). Mr. Wernick’s response indicates AANDC’s awareness of the impacts that the structure and funding for the FNCFS Program under Directive 20-1 has on the outcomes for First Nations children.

[277]  Similarly, at the hearing, Ms. Murphy described the EPFA as follows:

MS MacPHEE: Okay. And I think you touched on this earlier, but I wanted to get you to elaborate a little bit more. Could you tell us a little bit how, more specifically maybe, the new Enhanced Prevention Focused Approach was developed? You know, what was the impetus for developing this new approach?

MS MURPHY: We weren't getting good outcomes. MS MURPHY: We were having challenges with First Nations, we were having challenges with the number of children in care, and we wanted to reduce that number and we wanted to have kids be safe and we wanted to avoid having kids having to come into care. I mean, the challenge for first Nations communities -- and I'm sure this has already been outlined here by others, is that, especially for small, remote communities, when child needs to be taken into care, sometimes there's not community-based options, so the child may not stay in that community. And taking a child away from their family and from their community has impacts for sure. So we wanted to find community-based solutions so kids could stay in their communities, be close to – and hopefully have the families be able to be reunited. So we wanted to do that early intervention work which would actually avoid having to have the children actually being removed from their parental home and perhaps being located outside at a distance from their community.

(Transcript Vol. 54 at pp.49-50)

[278]  However, as the 2008 Report of the Auditor General of Canada, the 2009 Report of the Standing Committee on Public Accounts, the 2011 Status Report of the Auditor General of Canada, and the 2012 Report of the Standing Committee on Public Accounts pointed out, while the EPFA is an improvement on Directive 20-1, it still relies on the problematic assumptions regarding children in care, families in need, and population levels to determine funding. Furthermore, many provinces and the Yukon remain under Directive 20-1 despite AANDC’s commitment to transition those jurisdictions to the EPFA.

[279]  AANDC argues the 2008 Report of the Auditor General of Canada, and the 2011 Status Report of the Auditor General of Canada, should also be given minimal weight since the authors of the reports were not called to substantiate the documents or provide the context of statements or opinions contained therein. Additionally, AANDC argues these reports are not probative of the facts in issue.

[280]  The Panel rejects AANDC’s arguments concerning the 2008 Report of the Auditor General of Canada and the 2011 Status Report of the Auditor General of Canada. The Auditor General of Canada did not testify before the Tribunal as she or he is not a compellable witness (see section 18.1 of the Auditor General Act). Nevertheless, the Panel is satisfied the 2008 Report of the Auditor General of Canada and 2011 Status Report of the Auditor General of Canada are highly reliable, relevant, and clear. They are written to report findings in a comprehensive manner so as to allow Parliament and all Canadians to understand its recommendations. As stated at section 7(2) of the Auditor General Act, reports of the Auditor General of Canada are filed annually with the House of Commons in order to “...call attention to anything that he considers to be of significance and of a nature that should be brought to the attention of the House of Commons...”.

[281]  Given that the Auditor General is an independent public office in Canada, serving the interests of all Canadians, it would be unreasonable to expect the Panel give little or no weight to the report and findings in the 2008 Report of the Auditor General of Canada and the 2011 Status Report of the Auditor General of Canada, especially given the fact that many findings in the reports are specific to the FNCFS Program. In addition, as was outlined above, AANDC publicly accepted the recommendations emanating from the 2008 Report of the Auditor