Manitoba agrees to pay $530M in settlement over children's allowance

WINNIPEG -- The Manitoba government has agreed to pay $530 million to settle three class-action lawsuits over child welfare benefit payments in an agreement that plaintiffs say should send a message to other provinces.

The proposed settlement, which still requires court approval, would compensate an estimated 30,000 children, some of whom have since become adults, for money the province clawed back from federal payments between 2005 and 2019.

Similar lawsuits have been filed in Saskatchewan and Alberta

"(For) the province to assume, with no agreement and no authority and no provision in place, that they could somehow just take this money from the kids was in our opinion theft and wrong," Elsie Flette, one of the lead plaintiffs in the case, said Monday.

Flette was chief executive officer of a regional child welfare authority when, in 2005, the former NDP government in Manitoba started clawing back a federal benefit called the Children's Special Allowance. The money goes to agencies that care for children and mirrors the monthly Canada Child Benefit cheques given to parents raising children across the country.

The province had argued it was right to keep the federal money since it was paying for children in provincial care. At the same time, the number of children in care rose sharply. About 90 per cent of children in the system are Indigenous.

The plaintiffs said the money was supposed to pay for recreation programs, cultural activities, hockey and a host of other items not covered by basic child welfare funding.

"When a child who's in care of an agency needs some funding to visit family members, to travel to visit and participate in ceremonial activities ... that all could have happened with these (Children's Special Allowance) dollars," lawyer Kris Saxberg said.

The former Progressive Conservative government ended the clawback in 2019 but also tried to prevent any legal action via a bill in the legislature. In 2022, a Court of Queen's Bench justice ruled the province was wrong to have withheld the money and struck down the ban on legal action.

The Tories started discussions toward a settlement before losing the provincial election in October to the New Democrats.

The NDP government said Monday it is glad the dispute is headed to a resolution, once a judge approves the settlement.

"That was my number one priority (after being elected), was to make sure that we entered into negotiations in a good way, and that we action reconciliation on behalf of children," Families Minister Nahanni Fontaine said.

"This is righting what was wrong."

More than half the money is to repay what was clawed back over the years, plus interest. The total settlement also includes an extra 20 per cent over what had been kept from the children, Saxberg said, as an award for discriminatory treatment compared with other children.

This report by The Canadian Press was first published March 25, 2024.