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Crown-Indigenous Relations Minister Marc Miller, left, and Indigenous Services Minister Patty Hajdu, along with parties involved in the child-welfare discussions, will hold a news conference today.Justin Tang/The Canadian Press

The federal government has reached a $40-billion agreement in principle related to First Nations child welfare, with half the money earmarked to compensate adults who went through the system as children and the other half directed toward reform.

The parties reached the agreement on New Year’s Eve, on the last day of negotiations, which included the Assembly of First Nations, the First Nations Child and Family Caring Society, and representatives of class-action lawsuits related to Indigenous child welfare. The federal government will reveal details of the non-binding agreement on Tuesday.

Mary Teegee, who represents British Columbia on the First Nations Child and Family Caring Society’s board, confirmed on Sunday that $20-billion will be directed toward compensation and $20-billion to reform.

“The Caring Society’s bottom line has always been about ensuring that the children and the families that [have] been affected are definitely compensated, for one thing, but also to ensure that there are safeguards to ensure that discrimination doesn’t happen again,” she said.

Ms. Teegee said some of the agreement’s details must still be ironed out.

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Cowessess First Nation in Saskatchewan last summer became the first First Nation to strike a deal with Ottawa to return jurisdiction over children’s services to the community. On Sunday, Cadmus Delorme, Cowessess’s chief, said the shift has been successful, albeit with hiccups. The agreement in principle reached on Friday recognizes the harm done in the past and will help bring equality for First Nations children today, Mr. Delorme said.

“Half of it is going to the road behind us. The ones that were in the system, that were not treated right. And so they will be compensated,” he said in an interview. “The other half is the headlights. How do you reform child welfare so that one day there is no children in care? How do you make sure that First Nations control their destiny when it comes to children in care and prevention services?”

Indigenous Services Minister Patty Hajdu and Crown-Indigenous Relations Minister Marc Miller, along with parties involved in the child-welfare discussions, will hold a news conference on Tuesday to provide an update on the agreement.

Ottawa has been keen to reach a settlement on the issue, which has been a source of controversy for the Liberals for years. Opposition parties and advocates have repeatedly criticized the federal government on the matter, arguing its approach is harmful to First Nations children.

In December, the federal government said it would earmark $40-billion to compensate First Nations children and families for the failures of Canada’s child-welfare system and to pay for long-term reform, in hopes of settling the matter of court before the end of 2021.

The $40-billion pledge is related to class-action lawsuits, as well as a court battle over a finding by the Canadian Human Rights Tribunal (CHRT). It required Ottawa to provide up to $40,000 in compensation to each First Nations child unnecessarily taken into foster care because of underfunded government services since 2006. The order also required payments to parents and grandparents.

In October, the government announced it would appeal a Federal Court decision the month before that upheld the CHRT finding, despite calls not to pursue further legal action from representatives from the Canadian Bar Association, the Canadian Medical Association, as well as from opposition parties.

Ottawa also said at the time that it had agreed to put a pause on the litigation while it negotiated outside of court with First Nations groups.

In November, Murray Sinclair, who served as chair of the Truth and Reconciliation Commission and stepped down from the Senate almost a year ago, began facilitating the discussions.

Mr. Miller said in December that if Mr. Sinclair was not facilitating the discussions, they probably would have broken down. Mr. Miller also said progress made in the talks would have taken years in an “adversarial process.”

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