Judge sides with Indigenous CFS agencies, rules Manitoba government misused benefits meant for kids in care

A judge has found the Manitoba government improperly withheld hundreds of millions of dollars in federal benefits meant for children in care.

The years-long case relates to the federal government's Children's Special Allowance, which is meant to ensure children in care get the same federal funding that other children get through the Canada Child Benefit and Child Disability Benefit.

From 2006 to 2019, the Manitoba government required Child and Family Services agencies to give the money from the benefit to the government, arguing that it belonged to the government since it was paying the cost of looking after the children. 

A group of Indigenous Child and Family Services agencies and authorities took the province to court over the practice in 2018.

Another constitutional legal challenge was later filed by 19 Indigenous CFS agencies and authorities and the Southern Chiefs' Organization against legislation, passed in 2020, that made Manitoba immune from legal action over the clawback.

Earlier this week, Manitoba Court of Queen's Bench Justice James Edmond ruled those actions were unconstitutional because they undermined federal law. 

He also agreed with the plaintiffs that these policies discriminated against Indigenous children in Manitoba, given that close to 90 per cent of children in care are Indigenous. 

Further, Edmond said the policies disproportionately impacted Indigenous children in care living off reserve. Funding for foster children living on reserve is considered the responsibility of the federal government, so the special allowance benefits weren't clawed back in those cases. 

"We're very happy that someone who has the power, a judge, said this is theft and it's going to stop," said Shawn Scarcello, one of the plaintiffs' lawyers. 

Children deprived of options: advocate

The ruling confirms what Indigenous advocates have been saying for years, and acknowledges the hardship caused by not having access to funds meant to give children in care a better quality of life, said Cora Morgan, First Nations family advocate for the Assembly of Manitoba Chiefs.

Prior to 2006, the funds would typically be used to help pay for extra things children in care might want or need, such as playing sports, learning an instrument or buying clothes, she said. 

Agencies would also hold back some of the funds to create a trust for children so they would have some money to help them get started in adult life once they aged out of care, she added. 

"And so for all that period that that money is being taken, they were deprived of those options," Morgan said. 

She also noted foster children in Manitoba historically face worse outcomes than other kids, such as higher rates of incarceration and homelessness. That doesn't support the government's argument it was using the funds to help kids in care, she said.

"If Manitoba was doing right by these children while they were in care, these outcomes would be far better than what they are."

Lawyers representing the plaintiffs in the case estimate the province illegally took over $334 million — including $251 million from Indigenous Child and Family Services agencies — meant for children in care.

The next step will be pushing a related class-action lawsuit forward to ensure those who should have received the benefit are compensated, the plaintiffs' lawyers say.  

Indigenous agencies and leaders said Thursday that they hope the Manitoba government won't appeal the decision. 

"Stop wounding our children by perpetuating historical disadvantages on the backs of our children," said Trudy Lavallee, executive director of Animikii Ozoson Child and Family Services, an agency that serves families living in Winnipeg who have ties to Ontario First Nations.

"Pay the children the benefits that you stole from them."

Pine Creek First Nation Chief Derek Nepinak, who is a board member of West Region Child and Family Services, said he expects an appeal "because it's about money to government, and unfortunately that's how things are." 

Province reviewing decision: minister

Asked to comment on the ruling, Families Minister Rochelle Squires noted the practice of clawing back the Children's Special Allowance began under the previous NDP government. It continued for three years under the PCs until it was discontinued in 2019.

The Progressive Conservative government "is committed to protecting the most vulnerable children in care" and has "taken steps to transform the child welfare system and reduce the number of children in care in the spirit of reconciliation with Indigenous peoples," Squires said via email.

 "We thank Judge Edmond for this ruling and are currently in the process of reviewing the decision." 

In question period Thursday, neither the Progressive Conservatives nor the Opposition NDP took responsibility for the policy. 

The Tory government attacked the NDP for starting the clawback in the first place, while the NDP went after the Tories for trying to pass legislation to prevent the government from being sued. 

When asked by reporters about the issue, Ian Bushie, the NDP critic for Indigenous reconciliation, hesitated to call the policy a mistake, saying he couldn't speak on behalf of past governments. 

However, NDP Leader Wab Kinew said his team has been clear in its position that the clawbacks shouldn't have happened. 

"Moving forward, the situation should be remedied. And I think the decision here is certainly welcome, because it charts forward a path," he said.