A $40 Billion Settlement for Indigenous Child Welfare: Is Anyone Minding the Fiscal Store?

Main Conclusions

• The federal government recently announced a $40 billion settlement of First Nations child-welfare claims though previous maximum amounts were in the range of $6–$8 billion.
• The original complaint, launched in 2007, took issue with the First Nations Child and Family Welfare program, which came into effect in 1991 and is now being phased out under new legislation.
• The essence of the claims, which were adjudicated by a Canadian Human Rights Tribunal, is that the federal program was underfunded in comparison to provincial child welfare programs, and thus discriminatory under the Canadian Human Rights Act.
• The settlement will provide $20 billion for improvement of services for the next five years, and $20 billion for compensation to First Nations children living on Indian reserves who were taken into care from 1991 onwards.
• Compensation will also be paid to these children’s caregivers—parents or grandparents.
• No concrete harm to individual children was ever demonstrated in the litigation; the harm was said to be the discriminatory underfunding of the program.
• The two unelected lawyers who constituted the Canadian Human Rights Tribunal nullified long-standing government policy without any consideration of how to replace it and what that might cost.
• This $40 billion settlement sets a new benchmark for Indigenous claims far higher than the previous maximum amounts in the range of $6–$8 billion.
• Settlements of this magnitude increase the incentives for law firms to bring ever more numerous and larger class actions seeking compensation from government for alleged historical wrongs.