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Minister of Aboriginal Affairs John Duncan speaks during question period in the House of Commons on Parliament Hill in Ottawa on Tuesday, February 7, 2012.THE CANADIAN PRESS/Sean Kilpatrick

Aboriginals will get an injection of cash to help improve the lot of their students, many of whom spend their days in deteriorating classrooms with sub-standard teaching and limited access to libraries and computers.

And a program to improve water systems will be extended to help remedy the deplorable conditions on reserves, some of which have been compared to the worst of the developing world.

Still, the federal budget released Thursday does not eliminate the 2 per cent cap on increases that applies to most on-reserve spending – a cap that has been in effect since 1996, which aboriginal leaders blame for their deteriorating standard of living.

Overall spending at the Aboriginal Affairs department will be cut by $26.9-million this year, $60.1-million next year and $165.6-million in 2014-15. That represents about 2.7 per cent of the money within the department that was up for review – one of the smallest trims demanded as part of federal cost-cutting efforts.

According to the budget, the cuts will come through restructuring, operational efficiencies and changes to business processes.

But some aboriginals have been warned that they could see cuts to health transfers and other services they consider essential as bureaucrats determine how to meet the deficit reduction demands.

The budgetary trims come at a time when the government has agreed that the poverty, the sub-standard living conditions on reserves, and the poor educational achievement of Canada's aboriginal people must be addressed.

Education has also been a major focus for Shawn Atleo, national chief of the Assembly of First Nations, who points to the fact that high-school graduation rates for children on reserves average below 50 per cent.

The budget promises new investments of $100-million over three years to pay for literacy programs as well as other supports and services for aboriginal schools and students.

In addition, Ottawa has promised $175-million over three years to help build and renovate schools on reserves. That is actually a reduction from the amount provided in 2009 when the government offered $165-million over two years as part of its economic stimulus program.

The government also says it will introduce a First Nations Education Act to set standards and demand accountability for on-reserve education. That could become a point of contention with aboriginal leaders who are increasingly resentful of what they perceive to be Ottawa's meddling in their affairs.

Mr. Alteo said the AFN knew the government would be cutting expenditures and lobbied hard for the cuts to be made from the department rather than the money that flows to first nations.

This budget proves that the government has listened to the report of a national panel on first-nations education which said reserves schools are in desperate need for increased funding, he said. In addition, Mr. Atleo said, the government is continuing to invest in clean drinking water but also committing to jointly developing regulations with first nations.

That suggests that the message of the January first nations-Crown gathering "of returning to a full partnership with first nations, perhaps has some momentum in that direction," he said.

Chief Derek Nepinak, the Grand Chief of the Assembly of Manitoba Chief, said the money for education is a relatively small amount considering the size of the problem. "It is a good will gesture towards addressing some of these longstanding issues," he said.

But the decision to increase the age at which Canadians can collect Old Age Security benefits from 65 to 67 will hit first nations people particularly hard, said Mr. Nepinak. "It is premised on the idea that Canadian people are living longer," he said, "but that can't be said to hold true for first nations people."

The biggest pot of money provided to aboriginal people in the 2012 budget is $330.8-million over two years to build and renovate on-reserve water infrastructure.

The Conservative government introduced legislation earlier this year that will require aboriginals to meet a new set of regulatory standards for water to homes in their communities. But many leaders complained they could not possibly meet those standards without a huge injection of cash.

Since 2006, the government has spent about $2.5-billion on the construction, maintenance and operation of water and wastewater systems in aboriginal communities. But many, particularly in northern Manitoba, do not have running water or sewers.

The government is also committing to aligning income assistance programs on reserves with those offered by the provinces.

And it says it will explore the possibility of legislation to allow private property on reserves for those aboriginals that are interested in the option.

There are also a number of other smaller programs announced in the budget to address specific problems facing aboriginal people. They include:

  • $27-million over two years to help aboriginal people living in urban areas
  • $11.9-million this year to address family violence on reserves
  • $33.5-million to integrate aboriginal fishing enterprises into existing commercial fisheries