Photo taken on Aug. 10, 2021 shows a memorial at the site of the former St. Paul Indian Residential School in North Vancouver, British Columbia, Canada. Three British Columbia First Nations said they will work together to investigate the disappearance of indigenous children at the site of the former St. Paul's Indian Residential School in North Vancouver on Tuesday.(Phhoto: Xinhua)

Canada on Tuesday earmarked C$40 billion ($31 billion) to compensate indigenous children who suffered discrimination in foster care, in a fiscal update touting a quicker-than-expected economic recovery from a pandemic slump.

The money has been set aside to settle a lawsuit that found the government had underfunded indigenous children's services compared to those for non-indigenous.

Finance Minister Chrystia Freeland said half of the funds would go to compensate children and their families and the other half would be spent on reforming the system.

"We know that paying our historic debt to indigenous peoples is paramount and that we must act to ensure these injustices do not happen again," she said in a speech.

A tribunal in 2019 ordered the government to pay C$40,000 to each child removed from their parents after 2006 and placed in foster care outside of their indigenous community.

Ottawa asked a federal court of appeal in September to overturn the ruling, while it sought a negotiated deal.

Against this backdrop, discoveries of more than 1,300 unmarked graves at former indigenous residential schools have put a spotlight on a push for reconciliation with Canada's 1.7 million indigenous peoples.

AFP