Indigenous Services Canada falls short in transforming fiscal relationship with First Nations

Press Release

2026 Report of the Auditor General of Canada to the Parliament of Canada

Ottawa, May 4, 2026—A report from Auditor General Karen Hogan tabled today in the House of Commons concludes that Indigenous Services Canada did not effectively implement, monitor, or assess the New Fiscal Relationship initiatives it committed to with First Nations. In 2016, the federal government collaborated with the Assembly of First Nations to co-develop these initiatives to help close persistent socio-economic gaps and advance First Nations’ right to self-determination.

The audit found that more than $6.5 billion in funding has been provided to First Nations and First Nations-led organizations through 10-year grants, a key component of the New Fiscal Relationship initiatives. These grants are intended to provide long-term, predictable funding. However, Indigenous Services Canada did not consistently monitor whether grant recipients remained eligible to continue to receive funding. In addition, the department did not assess whether the 10-year grants were helping to address disparities between First Nations and other Canadians.

Furthermore, Indigenous Services Canada did not deliver on 2 of the commitments under the New Fiscal Relationship initiatives. The first was to focus on developing First Nations’ capacity to prevent financial default, and the other was to establish a mutual accountability framework between First Nations, their citizens, and the federal government. Under a mutual accountability framework, First Nations are accountable to their citizens, and First Nations and Indigenous Services Canada are accountable to one another.

“The New Fiscal Relationship initiatives are an important part of Indigenous Services Canada’s mandate to gradually transfer services to First Nations,” Ms. Hogan said. “The department needs to improve how it implements and delivers these initiatives to meet its commitments to help improve socio-economic outcomes and advance reconciliation.”

The 2026 Report of the Auditor General of Canada, New Fiscal Initiatives With First Nations, is available on the Office of the Auditor General of Canada website.

Please visit our Media Room for more information.

IBF5