Annual Indigenous spending expected to reach $35.5 billion in 2026, largely due to judicial settlements

Indigenous Spending in Budget 2022

Summary

• Overall spending increases announced in Budget 2022 were more moderate than federal spending increases during the pandemic years of 2019-2021.
• Federal Indigenous spending, however, continues to grow faster than overall spending.
• It is projected to rise from about $25 billion in fiscal 2021-22 to about $35.5 billion in 2026-27, an increase of 42 percent in nominal dollars.
• Indigenous spending continues to rise as a proportion of the federal budget, from 6.1 percent in 2019-20 to 7.7 percent in 2026-27—an increase of 26 percent in seven years.
• Indigenous spending is increasingly driven by the negotiated settlement of class actions, such as those for Indian residential schools, Indian day schools, Indian hospitals, and boil-water advisories on Indian reserves.
• The biggest of these settlements is the $40 billion child welfare settlement announced in December 2021.
• The impact of this settlement upon Indigenous spending is difficult to observe because, under the principles of accrual accounting, much of it is backdated to earlier years.
• The Trudeau government has missed all its previous budgetary targets for Indigenous spending, so the increases announced in Budget 2022 will probably prove to be underestimates, especially if class actions continue to put unpredictable pressures on Indigenous funding commitments.