Health benefits alone could cost another billion dollars

2025 ended with the country overlooking the most wide-reaching potential change to come to Indigenous law in 40 years.

The question of who can be registered as a legal “Indian,” to use the proper constitutional language, has been contentious as far back as this octogenarian can remember. The federal government, under the Brian Mulroney government, led a major change in 1985 to, quite properly, promote equality between Indian men and women in obtaining status. But other changes aimed at cleaning up issues in the Indian Act also created new dilemmas, making sections 6 through 8 of the Indian Act almost impossible for the layman to decipher.

Last year, the federal government introduced Bill S-2, “An Act to amend the Indian Act (new registration entitlements),” in the Senate to make some more modest changes to legislation first introduced in 2022, which had died on the order paper due to the 2025 election. The bill was sponsored by Senator Marc Gold, of the Independent Senators Group. If passed, it would have conferred Indian status upon an estimated extra three to six thousand people.

By introducing it early in the new legislative agenda, the government hoped to “reiterate” its “commitment to reconciliation” and to “eliminating…colonial legacies.” It passed the Senate unanimously in December.

However, Bill S-2 was radically amended in the Senate committee, and those amendments were accepted in the version now introduced into the House of Commons.

Leaving aside some minor points, the main issue is the repeal of the “second generation cutoff,” which had been legislated in 1985. Those amendments conferred Indian status upon the children of an Indian and a non-Indian, but such children could not transmit Indian status to their own children unless they parented with another Indian. This limitation was added to appease chiefs who were worried that their nations might be swamped with people having very little Indian ancestry.

The second-generation cutoff admittedly created some real problems, including differential treatment of family members. However, this new fix creates even bigger problems because it is essentially a single-parent rule. Under it, Indian status can be transmitted indefinitely as long as one parent is a registered Indian. Knowingly or not, the Senate has created a Canadian version of the notorious “one drop” rule legislated by some southern American states in the early 20th century to define who was black, the aim of which was to perpetuate segregation.

A key difference, however, is that being black in the American South carried many severe disadvantages, but being a registered Indian in contemporary Canada carries numerous privileges. Now, “one drop of Indian blood” will convey these privileges across an unlimited number of future generations. To mention only three of the “Benefits for Indigenous People” listed on a Government of Canada website:

• The Post-Secondary Student Support Program, which is not universal but pays up to $53,000 a year for those lucky enough to receive it.

• The opportunity for registered Indians to work tax-free on reserve, which will be rewarding for many who get a superior education growing up off reserve, and whose professional and technical skills will be in demand to help run the band government.

• Perhaps the most lucrative is the Non-Insured Health Benefits Program, which is a “Cadillac” supplementary medical insurance program offered free of charge to all registered Indians (and Inuit). Other Canadians must pay out of pocket to purchase similar health insurance.

Federal statisticians have estimated that ending the second-generation cutoff will increase the number of registered Indians by about 300,000, plus or minus an unknown margin of error, by 2066 (about 17 percent of the 2021 population).

The average cost of the Non-Insured Health Benefits Program, accounting for inflation, would be about $3,000 per capita by 2066, so an additional 300,000 clients will cost close to a billion dollars. The government estimates approximately 3,500 individuals will be entitled to registration just in the first five years.

It would be one thing to take on these additional fiscal responsibilities if the federal government were running a surplus, or if there was compelling justification for expanding Indian status, as happened in 1985 to treat women equally with men, but the Canadian government is deeply in the red with no realistic plan to get out. All these benefits for newly registered Indians will have to be paid for with borrowed money, adding to both the deficit and the debt at a time when Canada should be planning to reduce both.

With the bill currently in second reading in the House of Commons and the NDP and Bloc supporting it, it appears Conservatives are largely in favour, albeit concerned about implementation.

“If Bill S-2 passes, thousands of people may become newly eligible for registration. That is a positive development, but it comes with real demands. Band governments will need support. Indigenous Services Canada must be equipped to process applications in a timely and fair manner,” said Conservative Senator Yonah Martin. She noted that as of March 2024, nearly 12,000 applications were backlogged, with almost 1,500 of them delayed for more than two years. “It must ensure that the rights it affirms can be realized in practice consistently, equitably, and with dignity.”

The looming fiscal implications are bad enough, but an even worse consequence of ending the second-generation cutoff is to convert Indian status into a purely racial marker passed on by DNA. How long will it be until other Canadian groups wish to emulate that status and ask the government to create hereditary benefits of their own? Pushed to the logical extreme, Canada would become a country where your worth is defined by who your ancestors were, not by your character and achievements. Is that what we really want?

Tom Flanagan is a senior fellow at the Aristotle Foundation for Public Policy. He is the author of the Aristotle Foundation study, “The Section 87 Indian Act taxation exemption: An analysis.”