One hand giveth: The other taketh away

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Former Supreme Court Justice Frank Iacobucci is travelling the country, talking to lawyers, former Indian residential school students, First Nations' leaders and government officials as he gathers data and prepares to make his recommendations on residential school compensation to the federal government.

The highly respected jurist is guided by the federal mandate given to him by the Justice department, which is guided by the political accord signed by Deputy Prime Minister Anne McLellan and Assembly of First Nations National Chief Phil Fontaine on May 30.

Iacobucci is discussing how much compensation former school students will receive, who will qualify and how the money will be distributed, among other details such as a truth and reconciliation process, community-based healing, commemoration, and an appropriate alternative dispute resolution process to address serious abuse claims.

The Assembly of First Nations proposes a lump sum payment of $10,000 per student plus $3,000 per year an individual attended residential school. Some former students say that's a low number. And they warn that if special conditions are not included in the agreement, the monetary compensation received by many of the former students could be clawed back by government through taxation or social programs.

It's happened before. In 1991, members of the Woodland Cree band, an entity that many contend was created by the federal government to undercut the land compensation negotiations of the Lubicon Lake Cree, were promised $1,000 each if the government's proposal on land compensation was ratified. The Lubicons had already rejected the offer. The vote was held, the government proposal was supported and the Woodland Cree got their $1,000 payments.

Later they discovered that welfare payments had been reduced by exactly that amount.

Specialists in the area of needs-based social programs-things like old age security, income support and general welfare-say any spike in income will automatically bring a matching reduction in benefits. Many survivors could be affected by one or more of these clawbacks unless special dispensation is made in any eventual compensation plan.

Will compensation awards be income tax exempt? Windspeaker asked Alexander Swann, spokesman for the deputy prime minister.

"Although it would be premature to speculate on the outcome of the discussions being led by Mr. Iacobucci . . . there is every indication that a payment to former students along the lines referred to in the AFN report would be exempt from federal income tax," he said.

Other areas will fall under provincial jurisdiction.

Diane Richard, researcher and policy advisor for the National Council of Welfare, said each province has a different way of dealing with things.

"Eligibility for welfare is based on administrative rules that vary throughout the country. Once applicants meet the administrative conditions, they go through a needs test. The welfare department compares the budgetary needs of an applicant and any dependants with the income and assets of the household," she told Windspeaker.

When a welfare recipient or pensioner applies for some type of social assistance, their net worth and total income is a factor in setting the level of assistance, she added.

"We know that the needs test examines applicants' fixed and liquid assets. In most provinces and territories, fixed assets such as a principal residence, furniture and clothing are considered exempt.

Most provinces and territories also exempt the value of a car, although some jurisdictions take into consideration factors such as the need for a private vehicle and the availability of public transportation," she said. "Property and equipment required for employment are generally considered exempt. Applicants are usually required to convert any non-exempt fixed assets into liquid assets and to use any non-exempt liquid assets for their ongoing needs before qualifying forwelfare."

Manitoba has announced it will not claw back any residential school compensation awards. Ray Mason, chairman of Spirit Wind, an organization in the province that represents the interests of former residential school students, hopes other jurisdictions will see the wisdom of that decision.

"We made that an issue because if you're on old age income security, we told them we didn't want that to be part of their living subsidy. That's no part of what they're getting today. That's their money. They went through the legacy and they deserve to do what they want to do with their own money," he said.