Canada should take a tougher line on Indigenous compensation settlements
Ottawa just added $16B to the national debt to cover future payouts to First Nations
Competition for eyeballs is such that starting a column with the words “contingent liabilities” is probably readership suicide. BUT BEAR WITH ME. This is important.
In this week’s fall economic statement, which no-one got around to reading because of the Shakespearean drama that was unfolding in Ottawa, it was revealed that the deficit for the 2023/24 fiscal year had been revised upward by more than $21 billion.
The reason was largely because of….Indigenous “contingent liabilities” - an accounting standard that basically means the government expects (ie. there is more than a 70 percent chance) that it is going to have to pay out to settle some legal claim or other.
In 2023/24 that amounted to $16.4 billion more than expected.
The government said it has invested more than $200 billion in Indigenous affairs since the Liberals came to power and is now spending triple the $11 million in annual expenditure that it inherited from the Harper government. At $33 billion, Canada now spends as much on Indigenous Services as it does on defence.
As part of the commitment to truth and reconciliation, the government is looking to redress grievances going back 150 years.
The biggest award so far was the $23 billion to compensate First Nations children and families who were subject to under-funding by the federal government’s child welfare program over many years.
The Liberals say they are prioritizing negotiations and working with First Nations to resolve litigation out of court to “address historical wrongs and systemic racism”.
No-one can argue that harms were caused and that under funding took place. I remember then Indian Affairs minister John Duncan admitting to me that there was an education funding gap on reserves in 2010, which was a big concession back then.
Governments should certainly be wary about cutting core funding, lest they open themselves up to future compensation claims. The responsibility of any federal government is to ensure that First Nations have the same access to public services as other citizens.
But the mini-budget this week quoted the Parliamentary Budget Office’s estimate that the stock of outstanding contingent liabilities at March 31 this year stood at $76 billion. As one legal expert I spoke with said, we wail and gnash our teeth about a GST holiday that might cost $2.7 billion (as we should) but nobody is talking about this.
The $16 billion that has been piled on to the national debt is not a one-off. As Robert Asselin, senior vice-president at the Business Council of Canada, pointed out, the impact on budgetary balance is structural and recurring, which will likely be a major concern for the Conservatives and their commitment to balance the books.
The PBO report noted that the outstanding provision of contingent liabilities was just $12 billion in 2016 and has skyrocketed in recent years.
One reason for this is political. In 2021, after claims of the discovery of unmarked graves near a residential school in British Columbia, the New Democrat leader Jagmeet Singh attacked the Trudeau government for “fighting Indigenous children in court”.
The Liberals did not dispute that there was underfunding, or that compensation was due. But they argued that payment should be proportional to trauma, rather than there being mass awards to people who may or may not have been harmed by the shortfall of childrens’ services funding. The Canadian Human Rights Tribunal disagreed and won the backing of the Federal Court.
In the emotional atmosphere of the time, the federal government did not appeal, which it should have done, and the die was cast for mass payouts, without plaintiffs facing the disincentive of lengthy court battles. The prediction by one minister that it would become a “runaway train” has proven to be prescient.
Yet, as Canada stands on the brink of a trade war with the incoming Trump administration and pressures grow to increase military spending, it seems inevitable that there is going to be a tougher line taken on Indigenous settlements. At the very least, the principles of causality and proportionality should be reinstated - that you don’t get compensation just because you have an Indian status card.
“Governments can make a policy decision to fight or not to fight and there are plenty of examples of governments taking a hard line. The policy direction comes from the highest echelons and it could change,” said one legal scholar familiar with the evolution of public policy.
It could and it should.
Not sure an appeal (as you note near the end) would work either since the SCC has been generally very sympathetic to FN claims of any kind. Even those like this one that has bankruptcy potential for the Fed Govt.
I don't know whether or not this could ever happen, but we really need to understand the implications of the Royal Proclamation of Britain, the numbered treaties and the Indian Act. If we founded a country based on selling cheap land to settlers acquired thru means that did not value the land. And now our economy is based on extraction of resources, which can be argued, were not part of the treaties. And while the price tag is high for these settlements, if we can't afford it, then perhaps we need to look at other ways to raise that money, like taxes on resource extraction that is set aside to compensate Indigenous peoples. We all as candadians have fiscally benefited from how the land was "acquired" so it's pretty ironic that when the bill comes due, we plead poverty. I would also point out that status was a product of the Indian Act. Anyways I realize this is a rant, and my views are not expressed well. But it genuinely bothers me that we've got things backwards.