Introduction
Prime Minister Mark Carney has committed to maintaining the federal government’s momentum on the path to reconciliation. He is also adamant that Canada must become a clean energy superpower, establish new trade corridors, and fast-track energy, resource and infrastructure development projects that serve the “national interest.”
So far, rather than recognizing and respecting First Nations inherent, treaty, and constitutional rights as well as title and jurisdiction, Canada has prioritized the One Canadian Economy Act.1Canada. Parliament. House of Commons, One Canadian Economy Act: An Act to enact the Free Trade and Labour Mobility in Canada Act and the Building Canada Act (Bill C-5, 45th Parl., 1st Sess.), Royal Assent June 26, 2025.
Although the latest speech from the throne was historic for acknowledging and committing to respect the principle of free, prior, and informed consent (FPIC), the One Canadian Economy Act is an example of the new government’s apparent retrenchment on commitments to reconciliation and its stark disregard for FPIC.
The legislation seeks to accelerate major projects deemed to be in Canada’s national interest. Many would involve First Nations’ lands, waters, and resources, yet First Nations rights-holders were provided no opportunity to review—let alone consent to—the Act before its introduction.2First Nations leaders only learned of the legislation in May 2025; the draft legislation was introduced within a week and then rushed through the parliamentary process to receive Royal Assent on June 26, 2025.
There is a prudent, alternative means to pursuing “nation-building”: investments in First Nations’ critical and longstanding priorities would better serve the objectives of the One Canadian Economy Act without bypassing environmental protections and the duty to consult—and without the risk to Canada of incurring ever more court and settlement costs.
Overview
The high cost of the status quo
Canada can no longer afford to neglect First Nations’ funding priorities or fail to address exclusionary laws, policies, and regulations that create and sustain socio-economic gaps between First Nations and the rest of Canada.
The monumental Royal Commission on Aboriginal Peoples (RCAP) report, released in 1996, included an analysis of the “High Cost of the Status Quo,” demonstrating that in addition to the legal and moral imperatives for Canada to finally uphold its obligations to First Nations, there is a sound economic basis for doing so. Indeed, the Commission asserted that Canada could not afford the excess costs that result from policies of the past.
Despite the RCAP and subsequent landmark efforts like the Truth and Reconciliation Commission,3Truth and Reconciliation Commission of Canada, Honouring the Truth, Reconciling for the Future: Summary of the Final Report of the Truth and Reconciliation Commission of Canada, 2015. critical and chronic underinvestment remains the norm. Since 1997, funding for First Nations governance has not increased beyond two per cent annually.4Figure based on internal AFN analysis of Band Support Funding (BSF) from Public Accounts of Canada and Indigenous Services Canada/Indigenous and Northern Affairs Canada departmental plans and reports; from 1997 to 2023, BSF per capita funding fell from $517 to $275 (in 2022 dollars). Much of this is provided through Band Support Funding. Its allocation formula is 30 years old, it was inadequate from the outset to support core governance functions, it has not escalated to keep pace with price inflation and population growth, and it has not been adjusted to account for modern governance functions like basic information technology and management. Consequently, many First Nations governments have become unable to deliver essential services to their citizens.
Back in 1996, the “High Cost of the Status Quo” analysis projected that, through lost earnings and production, and the cost of government assistance and basic services, the total annual cost5Net income loss of “Aboriginal” people, including foregone earned income ($4.3 billion), and total costs to Canadian governments ($6.7 billion), including expenditures on remedial programs and financial assistance to “Aboriginal” people. of the status quo to Indigenous Peoples and Canadian governments would reach $11 billion6This is in 1996 dollars, which would be $20.3 billion in today’s dollars. per year by 2016.
This has proven to be an underestimation: on top of the annual budgets of the departments of Indigenous Services Canada (ISC) and Crown–Indigenous Relations, Canada continues to accrue billions of dollars of “forced” spending on programs such as Jordan’s Principle and reform of First Nations Child and Family Services Program, as well as the settlement of Indigenous claims. Of the total proposed spending in Canada’s Supplementary Estimates for 2024–25, $7.8 billion (61.8 per cent of the total), was spent in this way.
By the end of March 2023, Canada had booked $76 billion in contingent liabilities, mainly set aside for the resolution of Indigenous claims. As of 2024, Canada reported $26 billion in contingent liabilities related solely to unresolved legal obligations to First Nations, with over three million acres owed to First Nations through Treaty Land Entitlement and specific claim settlements. Canada’s 2024 Fall Economic Statement confirmed that, had it honoured promises and fulfilled obligations to First Nations, the federal deficit would be $40 billion instead of $60 billion. It was this economic statement that precipitated the resignation of the minister of finance and, eventually, Prime Minister Justin Trudeau.
Closing the infrastructure gap
This stream of expenses is unlikely to subside of its own accord, as First Nations infrastructure is another area where Canada’s underinvestment is likely to prove profoundly uneconomic. The last major federal infrastructure investment for buildings and utilities was in 1994-96; for transportation-related infrastructure it was 1980.
First Nations compelled former Prime Minister Justin Trudeau to mandate several cabinet ministers to collaborate to close the infrastructure gap in all First Nations, across all asset categories, by the year 2030. To support Canada to meet this commitment, the Assembly of First Nations (AFN) partnered with industry-leading engineering and consulting firms, Indigenous Services Canada, and the Conference Board of Canada to publish a series of reports identifying the costs and benefits of investing to close the infrastructure gap for all First Nations.
The first report7The Conference Board of Canada, Benefits for All Canadians (Part 1): Economic Impact of Closing the Infrastructure Gap, presented to the Assembly of First Nations, August 30, 2024.was a 2023 national cost estimate showing that $349.2 billion in capital and operations funding were required to close the gap across all asset categories, including housing, safe drinking water, roads and highway structures, housing repairs and new unit construction, community buildings, climate adaptation, net-zero carbon, power supplies, and others. It was based on community-specific data provided directly to the AFN and ISC through surveys administered to more than 400 First Nations.
Two other reports, published in 20248Ibid. and 2025,9The Conference Board of Canada, Benefits for All Canadians (Part 2): Long-term Socio-economic Impacts of Closing the Infrastructure Gap by 2030, presented to the Assembly of First Nations, May 15, 2025. detailed the direct and downstream impacts associated with the $349.2 billion investment. These include generating $308.9 billion in GDP, propelling Canada from last to first among G7 nations in per capita GDP growth; creating 338,300 full-time jobs per year; and boosting federal, provincial, territorial, and municipal revenues by a combined total of $86.8 billion. The reports estimated that 90.7 per cent of the jobs would be held by non-First Nations workers at the current skills-ready standard, due to demographic size.
The long-term benefits of these investments cannot be understated. They include better health and mental wellness due to safer housing and clean water; higher graduation rates and more skilled workers through better access to schools and all-season roads; cultural strength and language revitalization supported by community centres and digital connectivity; climate resilience and sustainability, with First Nations leading environmental stewardship; and reduced isolation and stronger economies through improved transportation and broadband access.
Infrastructure planning and delivery must happen through recognition and respect for the rights of First Nations. First Nations are seeking to decide when and how control over infrastructure development, including housing, can shift from federal to First Nations responsibility, with the necessary attention to governance arrangements, skills development, and funding. From a funding perspective, First Nations infrastructure projects must be accompanied by a transformation in how First Nations infrastructure programming is delivered by the Government of Canada.
To accelerate this, Canada must work directly with First Nations to move away from a federal year-to-year, pay-as-you-go approach to infrastructure funding. Infrastructure projects are complex and require significant capital investments with rolling budgets to drive progress through multi-year planning, design, and construction phases. Reliable, self-determined funding will also support First Nations to keep the administrative momentum moving forward and sustain projects to completion.
Bill C-5: One Canadian Economy Act
Unfortunately, rather than prioritize these nation-building investments, Canada fast-tracked Bill C-5, the One Canadian Economy Act. This is in violation of its commitments under the United Nations Declaration of the Rights of Indigenous Peoples, including Article 19, which requires states to obtain the free, prior, and informed consent of Indigenous peoples “before adopting and implementing legislative or administrative measures that may affect them.”
The Act received royal assent on June 26, 2025, less than three weeks after the Government of Canada tabled the legislation in the House of Commons. The Building Canada Act forms Part 2 of the legislation, the purpose of which is:
…to enhance Canada’s prosperity, national security, economic security, national defence and national autonomy by ensuring that projects that are in the national interest are advanced through an accelerated process that enhances regulatory certainty and investor confidence, while protecting the environment and respecting the rights of Indigenous peoples.10Canada. Parliament. House of Commons, One Canadian Economy Act: An Act to enact the Free Trade and Labour Mobility in Canada Act and the Building Canada Act (Bill C-5, 45th Parl., 1st Sess.), Royal Assent June 26, 2025, Part 2, s.4.
The Act enables the governor in council to identify certain projects as being in the “national interest” and authorizes the governor in council to pass regulations to exempt national interest projects from the application of certain laws and regulations, including the Impact Assessment Act. The broad powers contained in Bill C-5 may impact opportunities for First Nations to participate in regulatory processes and will likely be used to shorten project timelines. This has significant implications for the protection of Aboriginal and treaty rights.
Factors that the governor in council may use to decide whether a project is in the national interest include the following:
- The project strengthens Canada’s autonomy, resilience, and security.
- It provides economic or other benefits to Canada.
- It has a high likelihood of successful execution.
- It advances the interests of Indigenous Peoples.
- It contributes to clean growth and to meeting Canada’s objectives with respect to climate change.
First Nations leaders across Canada have pointed out that these objectives would be better served by investing to close the infrastructure gap in First Nations. In addition to creating jobs and generating economic growth directly through the construction of assets, this would allow Canada to demonstrate real progress in meeting its commitments and obligations to First Nations and avoid incurring legal costs.
As it stands, this legislation marks a reversal on the path to reconciliation. The recent First Nations Drinking Water Class Action, Robinson Huron Annuities, First Nations Child and Family Services, Jordan’s Principle, and countless land claim settlements are signals of what may be to come as Canada has also neglected its fiduciary obligations to First Nations in the areas of health, education, housing, policing, and public safety. Each of these areas requires significant investment to enable infrastructure.
Actions
The AFB will invest $90 million over three years to support collaboration between the Government of Canada and First Nations to establish an evidence-based assessment of specific claims research funding needs.
The AFB will invest $15 million over three years to support First Nations’ engagement on specific claims policy reform. This includes transitioning the control of the policy to an independent centre for the resolution of specific claims.
The AFB will invest $53 million over three years to renew and enhance current additions to reserve (ATR) funding to support ongoing engagement on and co-development of ATR policy re-design, and to address the backlog of existing ATR proposals. First Nations require adequate funding to support the development of their technical and legal capacity to participate in the ATR process.
The AFB will invest $40 million over two years11This is in addition to the Budget 2024 investment of $96.5 million over two years for this purpose, which, although welcomed, was inadequate to meet the needs of all interested First Nations. to support all interested First Nations to participate in rights-based negotiation tables.
The AFB will invest $18 million over three years to support First Nations-led implementation of the United Nations Declaration on the Rights of Indigenous Peoples ActAction Plan Measures 23 and 24, to repeal and develop alternatives to policies on comprehensive lands claims and inherent rights.
The AFB will invest $3.99 billion over three years12Current funding for First Nation governance amounts to just over three per cent of expenditures, whereas most governmental organizations operate in the 10–15 per cent range. It is regularly estimated that only about 30 per cent of First Nations financial governance needs are met by ISC funding, therefore an immediate tripling of BSF funding is warranted. to enhance Band Support Funding to adequately support First Nations governments to perform the basic functions of modern governance.
The AFB will transition from 10-year grant funding under the New Fiscal Relationship to statutory funding for First Nations governments. Starting this fiscal year, the AFB commits to providing the necessary capacity and funding support for First Nations to participate in engagement, negotiation, and co-development of a statutory funding framework.
The AFB will create a framework forinvesting $349.2 billion over seven years to close the infrastructure gap for First Nations and deliver on the Government of Canada’s nation-building aspirations for First Nations and all Canadians. To accelerate the planning and construction of First Nations infrastructure projects, the Government of Canada commits to co-developing a First Nations–led approach that includes long-term, reliable funding for planning, construction, and ongoing operations and maintenance for First Nations infrastructure projects. This includes $20.79 billion for climate adaptation of all First Nations assets by 2080, and $12.71 billion for achieving net-zero carbon by 2050.
The AFB will support the establishment, within this fiscal year, of a self-governed First Nations Infrastructure Bank to meet the unique investment, capacity building, and customer service needs of First Nations in closing the infrastructure gap. This will be capitalized by re-profiling the $10 billion Indigenous Loan Guarantees Program.
The AFB will invest $2.34 billion over three years13Based on the Assembly of First Nations Cost Estimates Related to First Nations Homelessness, 2023, which draws primarily on: Office of the Parliamentary Budget Officer, Federal Spending to Address Homelessness, 2024, https://www.pbo-dpb.ca/en/publications/RP-2425-005-S–federal-spending-address-homelessness–depenses-federales-matiere-itinerance. See also: Eric A. Latimer, David Rabouin, Zhirong Cao, Annie Ly, Geoffrey Powell, Tim Aubry, Jino Distasio, Stephen W. Hwang, Julian M. Somers, Ahmed M. Bayoumi, Craig Mitton, Emma E. M. Moodie, and Paula N. Goering, “Cost-Effectiveness of Housing First With Assertive Community Treatment: Results From the Canadian At Home/Chez Soi Trial,” Psychiatric Services, 71(10), 2020, https://doi.org/10.1176/appi.ps.202000029; and Homeless Hub, “Housing First,” Homelesshub.ca, 2021, https://www.homelesshub.ca/solutions/housing-accommodation-and-supports/housing-first. to fully address chronic homelessness affecting First Nations citizens. It will provide enhanced, distinctions-based funding streams under the Reaching Home program directly to First Nations regional delivery organizations to design and deliver First Nations–led approaches to addressing homelessness.
