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Former Innu leader Peter Penashue is sworn in as Intergovernmental Affairs Minister at Rideau Hall on May 18, 2011.Sean Kilpatrick/The Canadian Press

Of all the repositioning unveiled in the Harper cabinet shuffle, none may have such lasting consequences as a simple name change.

The department that had been called "Indian Affairs" since before Confederation has been rebranded as "Aboriginal Affairs."

At first glance, Prime Minister Stephen Harper's reclassification appears to be in keeping with prevailing moves toward political correctness: replacing a label that doesn't have much relevance any more with one more widely accepted. "Indian" is dated, in much the same way as Inuit are no longer called Eskimos. But there is power in naming. The semantic shift could have all sorts of consequences for native people from the laws governing their treatment, the services they get, and even their identities.

Leading the tension is the fact that the legislation that governs how natives are treated retains the old term. The 19th-century Indian Act definition centred around blood lines and band rules, and continues to divide families and communities, yet past attempts at reform - even by majority governments - have failed.

The name change is meant to show that the department's role has expanded to serve a greater number of people - like Métis and Inuit - who do not fall into the classification of status Indian. This could help the Harper government reach out to those feeling unconnected to both Canada and their own history.

However, even though many first nations people don't call themselves "Indians," some expressed concern after Wednesday's announcement that the change could dilute what it means to be an Indian and threaten their long-held rights.

Anishinabek Nation leader Patrick Madahbee issued a statement on Wednesday accusing the Conservatives of "slighting first nations citizens" with the name change.

Shawn Atleo, national chief of the Assembly of First Nations, said that while "Indian" is not the preferred term for some first nations, many still use it and it is important in terms of protecting rights.

"It's a little bit like a double-edged sword," he said. "If this discussion helps us to get to a better level of understanding, then it's something that would perhaps prove helpful. But understandably, first nations greet changes most quickly with suspicion about what it might mean, in an adverse or a negative way, so I think it's incumbent on me to go ahead and find out exactly what's intended."

Even before the name change, the Harper government was working on changing the relationship with natives. Across Canada, aboriginal groups have been drafting proposals for new "citizenship" rules and Indian Affairs is in discussions with native groups on an "exploratory process on Indian Registration, Band Membership and Citizenship."

But the department's talks and the name change suggest an incremental approach.

Vancouver Island's John Duncan is still in charge, but he's now the minister of Aboriginal Affairs and Northern Development. The term Indian Affairs will eventually be removed from the department's website, stationery and signage. The Indian Act and its definition of Indian remain.

The term lives on because of its legal value. It also carries major financial implications for federal spending.

Census data list about 1.2 million Canadians as aboriginal, but only about half of those (53 per cent) are registered Indians under the Indian Act. The rest are Métis (30 per cent), non-status Indians (11 per cent) and Inuit (4 per cent). Ottawa is responsible for providing services otherwise supplied by the provinces - such as health care and education - to status Indians living on reserves. The rest of Canada's aboriginal population gets them largely from the provinces and territories.

The Conservative government insists the name change will not affect these legal relationships, but some have questions. First nations chiefs fear Ottawa's increasing use of the term "aboriginal" will undermine their legal relationship with the Crown via historic treaties, which used the word "Indian."

Andrew MacDougall, a spokesman for Prime Minister Stephen Harper, said the name change is motivated by a desire to update the language.

"Changing the term used in the minister's title from 'Indian' to 'aboriginal' better reflects the scope of the minister's responsibilities with respect to First Nations, Inuit and Métis," he wrote in an e-mail. "This title is more up to date and inclusive, consistent with the government's focus on moving forward in our relationship with Aboriginal peoples."

The Prime Minister's new cabinet includes two aboriginal MPs. Health Minister Leona Aglukkaq is an Inuk - the term for an Inuit person - and new Intergovernmental Affairs Minister Peter Penashue is a former Innu leader from Labrador.

Not all native representatives were wary, however. Betty Ann Lavallée, national chief of the Congress of Aboriginal Peoples, has long advocated on behalf of non-status Indians who do not qualify for the wide range of services that governments provide to status Indians. She hopes the name change will further that discussion.

"I haven't stopped smiling," she said on Wednesday when asked for her reaction to the name change. "I love it."