The federal government has unveiled its $40-billion agreement in principle to provide compensation to First Nations children and their families harmed by an underfunded child welfare system and establish long-term reform.

As a result of the largest class action lawsuit in Canadian history, Ottawa will provide $20 billion to children on reserve and in the Yukon who were unnecessarily removed from their homes between April 1, 1991 and March 31, 2022. This extends to their parents and caregivers. Compensation will also be provided to those impacted by the narrow definition of Jordan’s Principle between Dec. 12, 2007 and Nov. 2, 2017.

Children who didn’t receive essential public services between April 1, 1991 and Dec. 11, 2007 will also be eligible for financial reparation.

The second half of the funding will go towards reform of the First Nations Child and Family Services Program, to be spread out over five years.

Approximately $20 billion will support young First Nations adults transitioning out of the child welfare system, as well as bolster prevention mechanisms to keep children at home, in their communities – work that’s expected to start in April, 2022.

This preliminary agreement is contingent on the approval of the Federal Court and the Canadian Human Rights Tribunal (CHRT), which have both ruled that the federal government discriminated against First Nations children.

“It's an acknowledgment of the extreme harms and grief that too many families continue to live with each and every day,” Indigenous Services Minister Patty Hajdu said in a press conference.

One Manitoba woman told Âéśš´ŤĂ˝ that she was taken from her home at age two under the system and placed in foster care.

“It was up until I was 20, I didn't know if I was Cree, if was Anishinaabe,” she said. “My foster parents didn't really tell me much about my family other than the bad parts.”

If green-lighted, the agreement would put an end to a years-long legal battle that has splintered successive governments’ relationship with Indigenous Peoples in Canada.

In February 2007, the Assembly of First Nations and the First Nations Child & Family Caring Society filed a complaint before the CHRT alleging that the federal government discriminated against First Nations children on the basis of race, national or ethnic origin, by providing inequitable funding of child welfare services on reserve.

In 2016, the CHRT ruled in their favour and ordered the government cease the discriminatory practice and take measures to redress and prevent it and to fully implement Jordan’s Principle.

Jordan’s Principle aims to ensure that First Nations children are given the same access to publicly funded programs and services as all other Canadian children without delay or denial. It applies to children on and off reserve.

Three years later the CHRT ordered the government to pay $40,000 to every First Nations child, parent, and/or grandparent (if the primary caregiver) affected by the underfunded First Nations Child and Family Services since 2006.

The CHRT also decided that eligibility under Jordan’s Principle should be expanded to include two new categories of children under the legal requirement.

In their terms, a child without Indian Act status who is a citizen or member of a First Nation, and a child without Indian Act status but who has a parent or guardian who is eligible for status, should also be entitled to unimpeded government services.

In September, the Federal Court dismissed Ottawa’s appeals of the CHRT compensation ruling days before the first National Day for Truth and Reconciliation. A month later, the government announced that another round of appeals was still on the table but that resolution talks with relevant parties had been launched.

Murray Sinclair, a former senator and chairman of the Truth and Reconciliation Commission of Canada, has led the negotiations.

“I want to thank all parties for their work over the last few months on behalf of First Nations children. The Agreements-In-Principle are an important milestone,” he said in a statement to Âéśš´ŤĂ˝ on Tuesday.

"I'm looking forward to collaborating over the coming months to secure a positive final outcome.”

Indigenous Services Minister Patty Hajdu, Crown-Indigenous Relations Minister Marc Miller, a host of Indigenous leaders including Cindy Woodhouse, the AFN regional chief for Manitoba, and legal counsel representing class members made the joint announcement on Tuesday.

Woodhouse said more than 200,000 children and families are impacted by the compensation agreement.

“This wasn’t and isn’t about parenting, it’s in fact about poverty, and First Nations children being removed from their families and communities instead of being provided help with food, clothing, or shelter,” she said.

“Today is about a plan for the future with First Nations defining and determining a path forward grounded in our rights and the common goal to have our children succeed.”

The government confirmed that $40,000 – the maximum allowed under the CHRT– is the base line amount to be delivered to those affected. Some may receive more based on the level of harm inflicted.

“$40,000 is not enough to make someone whole but it certainly is a step in the right direction of acknowledging the harm that’s been experienced by individuals,” said Hajdu.

In a subsequent press conference, Cindy Blackstock the executive director of the First Nations Child and Family Caring Society, reminded Canadians the agreement is non-binding and that continued pressure on the government to act is necessary.

“Public pressure, litigation, and all of us paying attention has made a world of a difference. But these are simply words on paper. It is not time to look away, and it’s not time for any of us to exhale,” she said.

Class counsel David Sterns said there are several steps ahead before money can start flowing to eligible families.

First, consultation with First Nations communities, the AFN, and others is required to ensure the distribution of funds is done in a culturally-sensitive manner and in a way that recognizes the “vulnerability” of many members in the class.

Next, they will seek legal approval.

The hope is to accomplish these steps and begin distribution of the largest settlement in Canadian history within the calendar year.

The government also noted they intend to drop their appeal of the CHRT rulings.

At the Cowessess First Nation in Saskatchewan, where hundreds of unmarked graves were discovered at a residential school in 2021, work has already begun to take over responsibility for child welfare.

Chief Cadmus Delorme told Âéśš´ŤĂ˝ that includes “success stories of repatriating children with their families, investing in mothers so that they can make sure that their children remain with them, investing in grandparents so that they can have a little respite.” ​

With files from CTV National News Senior Political Correspondent Glen McGregor.