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In its first large-scale Canadian galleries revamp since opening nearly 30 years ago, the National Gallery seeks a balance of the past. The results, Kate Taylor writes, are both breathtaking and heartbreaking

Daphne Odjig’s Conflict of Good and Evil, 1966

Conventional histories of Canadian art often included, early in their pages, simple portraits painted by itinerant "limners" – usually European-born artists who went from place to place in the colony recording the image of anyone who could afford their fee. The implication was that these naive paintings were not great art but were important because they marked the first portraits executed in the place that would become Canada.

The truth, of course, is that people had been representing the human face for centuries before Europeans arrived. The new installation of the permanent collection at the National Gallery of Canada in Ottawa, titled Canadian and Indigenous Art: From Time Immemorial to 1967, begins with a flat stone marked with an elongated oval at the bottom and two smaller circles at the top. The thousand-year-old petroglyph by an Assiniboine artist, on loan from the Royal Saskatchewan Museum in Regina, is instantly recognizable as a picture of a face.

Prudence Heward Rollande, 1929 oil on canvas

This moving work – there is something profoundly touching about ancient evidence of the continuous human quest for representation – is part of an introductory room that mixes historical and contemporary Indigenous art to great effect. In one display case, there's a find from the Devil's Lake-Sourisford burial complex in North Dakota and Saskatchewan dating somewhere between 850 and 1350: a flat stone inscribed like the shell of a turtle becomes a sculpture of the animal. Nearby, there's a rather spooky pair of boots made from moose hooves in the 1970s by Florence McConini – as though the wearer might somehow take the form of the beast.

The juxtaposition of the ancient and the recent speaks tellingly of an unbroken Indigenous art history.

The room also includes Luke Parnell's bitterly witty 2007 work A Brief History of Northwest Coast Design. It's a series of wood panels painted with the highly recognizable black and red animal graphics of the Haida and Tsimshian, but in the central section, the polychrome planks have been whitewashed, the Indigenous imagery literally painted over. The encounter between Indigenous art and Canadian art that follows in the subsequent rooms will not necessarily be an easy one.

Joseph Légaré’s The Battle of Sainte-Foy, c. 1854 oil on canvas

Part of the challenge for the National Gallery in reconfiguring its Canadian galleries in this way – the first large-scale redo since it opened them in 1988 – is that it has never collected much work outside European traditions. It has some excellent examples of Indigenous contemporary art and some Inuit prints and carvings dating back to the mid-20th century, but to pair 18th-, 19th- or early 20th-century Canadian art with contemporaneous Indigenous art, the gallery has relied heavily on select loans from private collectors and public institutions – in particular the Canadian Museum of History, across the river in Gatineau.

Sometimes, the results are breathtaking – both aesthetically and for what they say about the cultural relationship between Canada and the First Nations.

Isa Paddy Aqiattusuk's Hunter, c. 1950-1954

In one large room, a series of Group of Seven landscapes featuring strong shapes in muted colours face off against a salon hanging filled with smaller, gentler views of the landscape or pretty portraits and genre pieces created by artists who had yet to grasp the place in which they lived.

In the middle of this faceoff, like the referee at a hockey game, sits a birchbark canoe created by an Algonquin artist in the early 20th century, on loan from the Canadian Canoe Museum in Peterborough, Ont.

The Group advanced Canadian art by embracing the landscape, yet their paintings failed to recognize that this was not an empty land.

After that provocative encounter, it's a real disappointment to see that Emily Carr's distinctive works, including The Welcome Man and Blunden Harbour, have not been matched with contemporaneous Indigenous art that would offer some original version of the totems she depicted. Instead, they hang limply in a crowded area into which Marvin Tallio's large, colourful and more recent Transformation Mask has been squeezed alongside a collection of Indigenous footwear, mainly from the Bata Shoe Museum in Toronto. Assembling by function a series of practical objects from a vast range of different cultures, the display of beaded moccasins and sealskin kamiks seems to revert back to the anthropological approach that the National Gallery has otherwise eschewed.

Emily Carr's The Welcome Man, 1913 oil on cardboard, mounted on masonite

If that room feels as if it's a missed opportunity, some of the other combinations are heartbreaking. The gallery has borrowed from the Royal B.C. Museum in Victoria and the Canadian Museum of History a collection of late 19th- and early 20th-century wooden carvings by the Haida artist Charles Edenshaw – rare pieces that would speak more clearly to Carr's work – and placed them in the midst of a room full of paintings by Canadian impressionists of the same time period.

The work of these artists, heavily influenced by their travels in Europe, include Henry Sandham's view of St. Mark's, Venice and William Brymner's A Wreath of Flowers, that familiar image of little girls on a hillside seen from below and at a steep angle. It's an old favourite of many visitors, but in this context, the lack of connection between the two practices and the Impressionists' insistence on looking back to Europe for inspiration feels hollow and sad.

More powerfully, there are two rooms full of juxtapositions of Inuit carving with postwar modernist painting, with Paul-Émile Borduas's 3+4+1 providing a graphic black-and-white backdrop to the equally simple lines of the sculptures. Here, the unexpected visual connection swats away hierarchies of Western painting over Indigenous craft with a single bold gesture.

And by the time you get up to 1967 and its aftermath, the effect is joyful: What a revelation to see the Woodlands School, represented by Norval Morrisseau's Artist and Shaman Between Two Worlds, hung alongside the work of London, Ont., artists Jack Chambers and Greg Curnoe, including Curnoe's colourful View of Victoria Hospital, Second Series. Both represent regional practices that insist aggressively on an art of the here and of the we. Optimistic dialogues like this one make the whole reinstallation project seem hugely worthwhile.