A Canadian Auto Workers volunteer helps install a new wellhead in Little Salmon Carmacks in 2007. Photo courtesy CAW.

If you were to turn on a tap in the First Nation of Little Salmon Carmacks, Yukon, your cup might run over with gasoline, fecal matter, and worse (yes, there’s worse). It’s been this way for years, at least going as far back as 1991—the first year of comprehensive water testing.

The problems in Little Salmon Carmacks are emblematic of water problems in many First Nation communities across Canada. Drinking water not fit for human consumption has been, and continues to be, endemic in First Nation communities. For northern First Nations problems are made worse by systemic issues rooted deeply in the structure of our government; caught in a jurisdictional no-man’s-land between Indian and Northern Affairs, the territorial governments, and other government departments charged with funding infrastructure and assisting First Nations, their cases get shuffled from one department to another until they are finally dropped.

The Little Salmon Carmacks First Nation is situated next to the non-First Nation municipality of Carmacks, approximately 180 kilometres north of Whitehorse. The self-governing community, home to 400 people, once had two large wells serving the entire community but, as standards were updated, one was declared too dangerous to use and closed. The remaining well serves 96 people; everyone else has to rely on their own, individual wells, each of which provides water to an average of three people.

The village has been on the same boil water advisory since January 2006, though temporary advisories have been issued to certain areas of the town since 2001, and some individual wells have been reporting E. coli and coliform contamination since 1991.

Even though the federal government has spent nearly $1 million on studies, and improvements to well water testing, treatment infrastructure, and operator training, the problems in Little Salmon Carmacks are not clearing up. Government solutions have not dealt with the central causes of contamination, and have proved to be no more than expensive Band-Aids. Disregarding the results of numerous studies it has funded to investigate the root causes of the community’s water problems, the government seems willing to only fund short-term solutions, such as treating the contaminated water with chlorine.

One government funded study notes that “of particular concern are the positive [bacteriological] results for wells which have had their well boxes upgraded and cleaned and wells shock chlorinated.” In particular, it says that from 1991 until the study was conducted in 2004, “positive bacteriological contamination has been reported for 36% of residential wells over the period of record, with 22% reporting contamination within the last year.” Studies have been clear as to why contamination keeps coming back: poorly constructed individual wells are easy to contaminate and hard to maintain. According to a 2008 report, most of the wells in Little Salmon Carmacks are too shallow, too close to septic tanks, and are drilled in sandy, permeable soil. The well heads are also located underground, in pits that let in surface water, which then stagnates and causes bacterial contamination.

Rodent feces, animal remains, and fuel spills also become trapped in the well pits, and when water levels rise, either from rain or spring run-off, the toxic cocktail overflows first into wells and then out of taps. These same wells were built by Indian and Northern Affairs Canada—some of them as recently as the ’90s—who now refuses to maintain them. Neither the federal nor the territorial government will fund repairs or upgrades to wells serving fewer than five people; both levels of government say that this is the responsibility of homeowners. The case continues to circulate INAC internally in a game of bureaucratic hot potato that has left the community in purgatory. Even more frustrating is the fact that the solution, pointed to even by government funded studies, is completely clear: a single pipe system—one big well, with a pipeline servicing most homes in the village—is described as the best and most cost-effective long-term solution to the village’s water problems. But no government department or funding program has accepted the community’s proposals to construct one.

An INAC spokesperson said that the single pipe system is “not considered cost effective to construct and maintain over the long term.” But this directly contradicts an INAC funded study conducted just one year earlier, which concluded that a single pipe system would produce cleaner, safer water—since the water can be treated and monitored from a single, central location—and would incur lower long-term maintenance costs.

Even the ministry’s own statistics are suspect. INAC keeps a database of water quality in First Nation communities, rating water as being at high, medium, or low risk for contamination. After a 2002 study of communities across Canada, Little Salmon Carmacks’s water was rated “high risk.” In 2006, INAC officials downgraded it to “medium risk,” citing new evaluations from 2003 and 2004, which Chief Skookum says never took place. One former INAC employee, who helped develop the database, stated that officials modified the Little Salmon Carmacks rating “without stepping foot” in the community.

In 2007, INAC proudly announced that “in the past 12 months the number of high risk water systems in First Nations communities has been reduced from 193 to 97.” That number has since been reduced to 49. The problem is not simply that the ministry appears to be moving the goalposts for the sake of public relations; a “high-risk” rating automatically obliges the federal government to evaluate water systems and fund repairs. Downgrade the rating, and that financial commitment vanishes, though the problem does not.

In Little Salmon Carmacks, the government’s lack of serious action proved nearly fatal. In a December 2005 community meeting at which government and First Nation representatives were present, the then Yukon Chief Medical Officer of Health—a territorial government official charged with issuing boil water orders—said, “I am confident that the water is not going to cause immediate health problems … I am convinced that the level of anxiety regarding the wells is too high.” Less than four weeks later, Elder Johnny Sam was airlifted to a Vancouver hospital for treatment of a bacterial infection so severe he had to remain there for four and a half months. His doctors linked his illness to his water consumption, and the First Nation issued its own boil water advisory on January 9, 2006.

“Someone just about died,” said Chief Skookum, who issued the 2006 advisory. “The government has got to show more effort in showing that they can step in and help with the cause and communicate— there’s not much of that at all.”

Chief Skookum isn’t the only one thinking that. A 2005 report by the Commissioner of the Environment and Sustainable Development (CESD) cited lack of government responsibility as a systemic problem directly related to the quality and safety of drinking water for First Nation communities. The CESD recommended that a new regulatory body be created to address the crisis. The government has acknowledged the problem but the steps it is taking have not won the support of Indigenous groups.

On May 26, 2010 the government introduced Bill S-11 in the federal Senate. The proposed legislation would set up a regulatory framework with jurisdictional clarity responsible for setting appropriate standards for the treatment and disposal of water. In its current incarnation, however, it applies only to reservations and not to self-governing nations (like Little Salmon Carmacks), although communities could opt in.

Critics argue that without a corresponding financial commitment, many First Nation communities will lack the resources to meet these guidelines, and fear they could be penalized for it. Irving Leblanc, the acting director of housing and infrastructure for the Assembly of First Nations (AFN), says that “by pushing this legislation forward, the government is setting up First Nations for failure.” He adds, “There’s been no consultation done on this bill.” Though the government has made some effort to discuss the bill with First Nations, many feel that their views and opinions were not heard, much less incorporated into the legislation.

In the meantime, private volunteers have proved to be more effective than the ministry that’s actually responsible for ensuring water quality in First Nation communities. In 2007 Little Salmon Carmacks got in touch with the AFN which, in turn, proposed a well revitalization project to the Canadian Autoworkers union. In May of 2008 CAW members arrived for their first of two summers helping the community upgrade and repair its water infrastructure.

The volunteers—skilled tradespeople, most from Ontario—extended the wells a metre above ground and put caps on them so only well water could enter. This altered the structure of the wells more drastically than previous repairs, elevating and sealing off the once festering, below ground well heads and well boxes. The volunteers also installed heater cables to prevent pipes from freezing in the winter and controllers to maximize energy efficiency. The project was initially supposed to take only one summer. However, at the end of their six weeks of work, only half of the intended 57 wells had been repaired. The union decided to extend the project and volunteers returned to the Yukon the following summer to finish what they started.

Mark McGregor, a millwright who works in Brampton, Ontario, and one of the volunteers during the second summer, says seeing the community and their infrastructure made him realize that “people up North are forgotten about.” He compared Little Salmon Carmacks’s situation to that of Walkerton, Ontario’s in 2000, saying the water was so dirty, “we wouldn’t even shower in it,” and that “sometimes it was brown coming out of the taps.”

The volunteers may have been able to improve the state of the village’s water infrastructure, but the deeper systemic problems remain.

Most critically, there is a shortage of qualified people to operate and repair the wells. A government report notes that there is “a severe shortage … of certified water-treatment systems operators in First Nations communities.” Yukon College offers courses that provide water operators with the knowledge they need to pass the Environmental Operators Certification Program, and the federal government does have funding available to cover the course fees of potential operators from Indigenous communities, but the mathematical requirements seem to be a barrier for many individuals.

“You have to be able to drive a truck and do the math,” Jordan Mullett, Little Salmon Carmacks’ only certified water technician, says. “Most people who are truck drivers are older guys, and they don’t really have their math or their algebra.”

Accordingly, Yukon College has set up a crash-course math course. “You can do it by video conference,” Mullett explains, “five half days in a row.” But despite these efforts, INAC representatives estimate that, for First Nation operators in the Yukon, “the pass rate over the past two years … is approximately 50 percent.”

“We’ve sent lots of people,” Mullett says, “but they always fail. We’ve sent everyone that we possibly can, and some people twice, three times, and they still don’t pass. And even though it’s no cost to us, there’s no point in sending someone for their third or fourth time.”

That leaves Mullett as the only certified operator in the village, one man monitoring dozens of wells—a dangerous ratio. And the story is repeated in communities across the North.

Despite mountains of evidence, much of it accumulated by its own branches, departments, and agents, the federal government has not acted strongly enough to improve water treatment in First Nation communities. No matter how many times the relationship between water quality and other quality of life issues (education, depression, general health, etc.) is spelled out, often by their own employees, politicians and senior bureaucrats have not taken the necessary steps to improve the quality of water in First Nation communities.

To aboriginal leaders, however, the link between water and overall quality of life is clear. The United Nations backed them up in July when the General Assembly passed a resolution affirming water and sanitation as human rights.

“This resolution establishes new international standards,” said Assembly of First Nations National Chief Shawn Atleo shortly after the vote (from which Canada abstained). It “compels Canada to work with First Nations to ensure our people enjoy the same quality of water and sanitation as the rest of Canada.” So far Atleo’s call has little attention from the federal government, leaving Little Salmon Carmacks, and many communities like it, to rely not on the ministry, but on the kindness of strangers.

Illustration by Peter Mitchell

He’s in the CAW driver’s seat — but where’s he going?

When Ken Lewenza became president of the Canadian Auto Workers last September, he had no idea it would soon be begging for government loans — $14 billion in the U.S. and $3.4 billion in Canada — to stay afloat. Lewenza spoke with This in January about the challenges the CAW faces in these most uncertain times.

This: How did the North American automobile industry end up in the current crisis?

Lewenza: Looking at the market share decline [in recent] years, it was predictable that the market would continue to drop. Foreign vehicles were coming in at unprecedented rates. In the last decade, we’ve lost 15 to 20 percent market share. Thirty percent of the vehicles are [manufactured] offshore. That doesn’t include the transplants [cars made by foreign companies that are assembled in North America]. So I think public policy initiatives, of which deregulation was a big part, systematically destroyed the auto industry. The United States and Canada are open markets. Our biggest threats are Japan and Korea today and China and India tomorrow. They have closed markets. Less than one percent of the vehicles we build in North America go into Korea. Less than five percent go into Japan…because we don’t have access to those markets.

This: Why did the Big Three not foresee the current predicament?

Lewenza: GM and Ford in particular were making significant investments offshore. Ford is huge in Europe. GM is huge in China. They lost focus on their home base. They thought they could make up lost market share by concentrating their investments outside North America. But it didn’t work out.

This: When the federal and Ontario governments say all stakeholders should contribute to solving the crisis, do you think that message is aimed at the CAW?

Lewenza: Absolutely. They used the term “stakeholders,” but in every single interview they referred to the CAW and our collective bargaining.

This: Are you willing to make concessions?

Lewenza: We have already agreed to a three-year wage freeze and given up some of our vacation time. That’s a total over three years of anywhere between $750 million and $900 million out of our members’ pockets. Today we could work for literally nothing and it wouldn’t make a difference [toward solving the crisis]. The total labour rate for a fully assembled vehicle is just seven percent of the cost.

This: But do you agree the politicians need you to make concessions in part because of optics?

Lewenza: Yes. And “optics” is the right word to use.

This: So are concessions going to be made?

Lewenza: It’s hard to predict. In the U.S. they dictated as part of getting the loans that the UAW would roll back their total compensation rates comparable to the transplants in the U.S.

This: Aren’t some of the transplants paying $14 or $15 an hour in the southern U.S.?

Lewenza: They are. And they don’t have to pay for about a million retirees that the Detroit Three have to fund.

This: But when the public sees what a CAW worker gets paid —

Lewenza: Which, with all the benefits and deductions, the total cost of employing a manufacturing worker in Canada comes to be about 68 bucks an hour —

This: — they think that’s a lot and there’s room for concessions.

Lewenza: If [concessions] come, I think they will be in the form of improvements in productivity. New technology. More robotics. It will mean fewer jobs for the CAW, but we won’t oppose the changes.

This: What’s your forecast for the future?

Lewenza: About five years ago the total U.S. vehicle market was about 17 million vehicles in the U.S., which is where most of the cars we make end up. In calendar year 2008 it will be less than 12 million units. I don’t see the numbers increasing in the next few years. Bestcase scenario is over the next five years maybe as high as 14.5 million. So there are going to be casualties and the changes are permanent. The plants that we lose today are not coming back.

This: If you went to a high school career day what would you say to someone who asked if they should become an assembly-line autoworker?

Lewenza: I’d tell them to avoid the auto industry. [Years ago] I told them it was hard work, boring work, but you could earn a good living and support your family. I wouldn’t say that now.

Like any other patriotic, cynical Canadian, I love to see   arrogant politicians get caught with their hands in the cookie jar. But surely I wasn’t the only one left yawning after weeks of banner headlines on the Liberals’ sponsorship scandal.

But was it really the most sleazy, offensive, wasteful and criminal thing the federal government did during Jean Chrétien’s three terms in office? Not even close. Clearly, the only reason this particular affair got so nauseatingly much air time was because it jibed nicely with the ideological predisposition of the corporate media and the right-wing opposition—namely, that the main function of government is to steal money from taxpayers and give it to their friends.

There are lots of other examples of the willingness of politicians to waste taxpayers’ money and line their friends’ pockets. There are lots of scandals out there that sucked up far larger sums of government cash than sponsorships ever did.

It’s just that, in these other cases, the friends getting their pockets lined are the rich and powerful of the land—the ones who also own newspapers and fund conservative parties. So these abuses don’t get nearly the attention—from the media, from the opposition, even from the Auditor General—that a bit of baksheesh for Liberal bagmen generated. And in contrast to the pious pledges of a beleaguered Paul Martin to usher in a new era of financial integrity in Ottawa, these other scandals are treated as water under the bridge.

So in case I am ever appointed Auditor General (not much risk of that—I can’t keep track of my grocery money), here are my five favourite financial abuses perpetrated by the federal Liberals since 1993. These aren’t just things the government did that I disagree with. They are programs or policies that were decidedly dishonest, shady and manipulative, and through which Ottawa delivered tens of billions of dollars to friends in high places, never coming clean to taxpayers about what was going on.

The total cost of each scandal on my list is symbolized by little bags of money. Each bag represents $100 million—the maximum unaccounted value of sponsorship funds over the whole 1997–2001 period, before the program was reined in. If they were really after missing bags of money, the Auditor General, the media and the opposition should have been sniffing around in some of these closets. But then, maybe that isn’t the point.

THE EI SURPLUS Workers in Canada pay two percent of their first $39,000 in wages into the Employment Insurance system, supplemented by a slightly larger contribution from their bosses. It’s a regressive tax, since income above $39,000 isn’t taxed. Even this would be okay if the money were used for its intended purpose: paying benefits to working stiffs when they are laid off. Problem is, thanks to repeated cuts in benefits, most unemployed workers (close to 60 percent at last count) don’t qualify for benefits. The result is a huge but artificial EI surplus every year since 1994 that has now reached $50 billion in total. The government says it is a cushion for EI payouts in a future recession, but its own actuary says it needs only $15 billion at most for that. At any rate, Paul Martin has pledged that his government will never run a deficit (even one resulting from EI payouts during a recession), and this implies he plans to hold on to the EI surplus forever. The Liberals used this money to fund other priorities (especially debt repayment and tax cuts). It was stolen from the pockets of unemployed Canadians as surely as any crooked ad agency skimmed cream off a sponsorship contract. Total Scandal: $40 billion excess surplus since 1994.

CAPITAL GAINS If you make money flipping burgers at McDonald’s, you have to declare every grease-covered dollar on your tax return. But if you make money by flipping stocks and bonds, guess what? You only declare half, thanks to the “partial inclusion” of capital gains. Since the wealthy (by definition) own most financial assets in Canada (especially those not sheltered in RRSP accounts, for which the capital gains exemption is meaningless), they pocket most of the value of this strange tax loophole. Incredibly, almost half the value of the exemption is claimed by those 100,000 lucky Canadians (0.5 percent of taxpayers) who earn over $250,000 per year—there’s no other loophole more targeted by the ultra-rich. When Paul Martin doubled the exemption to 50 percent (from 25 percent) in 2000, his officials estimated it would cost the government $600 million in lost taxes by 2004. But the cost of the exemption has actually ballooned by $2.5 billion (to $4.5 billion per year today from $2 billion in 1999). In other words, this measure is costing Ottawa almost $2 billion more per year than Paul Martin said it would. That’s a cost overrun that makes the BC fast ferries project ($500 million over budget) look like a marvel of fiscal probity. So why does Martin continue to enjoy a reputation as a tight fiscal steward? Total Scandal: $4.5 billion per year in lost personal and corporate taxes.

INCOME TRUSTS There’s a gaping loophole in Canada’s tax system that allows businesses to avoid paying corporate income taxes. If it restructures as an “income trust,” a corporation becomes non-taxable—even if its real operations do not change a bit. In recent years, financiers have marketed the concept of trust conversion to businesses ranging from oil producers to hotel chains to the Yellow Pages. Every new conversion generates millions in new commissions for Bay Street brokers—but costs the government even more in lost taxes. Income trusts are now worth $90 billion, and are growing fast. Lost taxes are valued at $400 million per year for the federal government (and more for the provinces), and are growing just as fast. Yet government looks the other way as the boondoggle continues. Federal Finance Minister Ralph Goodale proposed some timid limits in his 2004 budget on income trust investments by tax-sheltered pension funds (a stance that would have only slightly slowed the future growth of the tax drain). Bay Street protested, and Goodale backed off. The power of high-rollers to preserve this rich, bizarre trough provides an insightful lesson for all of us in how Canadian democracy works. Hundreds of thousands of Canadians can protest loudly for years to have EI monies spent on their designated purpose (namely, EI benefits for unemployed people) to little avail. Yet all it takes is a quick, powerful twist of the backroom screws by Canada’s financial elite to send our finance minister running for cover. Total Scandal: $400 million per year in lost taxes, and growing.

BUDGET SURPLUSES The Liberals crow about how much they have reduced Canada’s public debt since 1997, when the budget was balanced. Since then, the government repaid $54 billion in debt through six successive budget surpluses. The debt ratio declined from more than 70 percent of GDP in 1994 to less than 40 percent at present (second-best in the G7). But five-sixths of that decline would have occurred anyway, thanks to economic growth and balanced budgets. Even with no debt repayment, the debt burden would be 45 percent of GDP today (still second-best in the G7). What’s scandalous about repaying public debt? About $3 billion per year of this debt reduction was “honest”: that’s how much the government sets aside each year in a “contingency fund,” explicitly earmarked for debt repayment unless required for some fiscal emergency. All the rest, however, was engineered through phony and manipulative accounting tricks. Finance Canada consistently underestimates Ottawa’s revenue; it also overestimates its costs. The end result is a budget so padded with wiggle room that an “unexpectedly large” surplus is inevitable. Then the finance minister gets to stand up in the House of Commons, to roaring applause from his backbench, and announce that—yet again—the government has exceeded its budgetary targets (thanks to phony fiscal projections, not tight fiscal control). The result: Ottawa allocated $36 billion more to debt reduction than it budgeted for. Convenient, isn’t it, that debt repayment is a fiscal goal that ranks near the top of Bay Street’s agenda (mostly because of its bullish effect on bond prices), but doesn’t rank in the top 10 priorities for average Canadians. I guess that’s why Ottawa had to lie about what it was doing with the $36 billion. Thanks to those lies, today our debt load is 40 percent of GDP (not 45 percent). Meanwhile, hundreds of thousands of Canadians have to boil the drinking water that comes out of their taps. Total Scandal: $36 billion in “unplanned” debt repayment between 1997 and 2003.

PRIVATIZATIONS In the world of IPOs, a “successful” privatization occurs when all the new shares are snapped up by drooling investors who subsequently bid up the company’s share price. This generates trading gains and commissions for the brokers, profits for the investors and lots of good publicity for the government. But does this mean the privatization is “successful” from the point of view of the taxpayers who used to own the company? Hardly—especially when government deliberately undervalues the companies it is selling off, in hopes of generating this sort of feeding frenzy in the financial markets. There’s growing evidence that Ottawa has sold off many prize assets for billions less than they were truly worth. Think of CN Rail, for example. Sold for $2 billion in 1995, it is now worth $15 billion on the stock market. Sure, Paul Tellier’s ruthless layoffs and cost-cutting explain some of that rise in value, but CN’s share price was soaring within hours of the privatization—not because of Tellier’s magic, but because savvy investors recognized a fire-sale when they saw one. The sale of the air navigation system to NavCanada was similarly rigged: Even the Auditor General estimated that taxpayers received $1 billion less than they should have. Petro-Canada is a more complex case; it was some years before its post-privatization market value took off. But even this later success can be traced in part to profits from mega-projects (like Hibernia) whose initial development was underwritten by the company when it was a Crown Corporation. The gurus of privatization argue government can’t manage economic resources efficiently. But what’s efficient about selling those assets off for less than their true value, just to make the privatizers look good? Total Scandal: At least $5 billion from undervalued privatizations.

There are oodles more cases of government waste and corruption waiting to be uncovered by a forensic accountant with a social conscience. In every case, the main beneficiaries were the wealthy and the privileged: investors, brokers and the high-income earners who capture most of the benefit from tax cuts. In every case, the government’s actions were disguised by manipulative accounting and cronyistic politics.

But don’t hold your breath waiting for a public outcry when these abuses are brought to light. Because when government waste and corruption benefits the rich and powerful of the land, it’s truly a “dog bites man” story.

Jim Stanford is an economist with the Canadian Auto Workers.