Removing the last vestiges of sexism from the Indian Act will cost the federal government more than $400-million a year and create hundreds of thousands of new status Indians, according to the Parliamentary officer who analyzes the cost of federal proposals.

On Monday, the House of Commons passed a significantly amended version of Bill S-3 that it introduced more than a year ago to address a Quebec court's demand that some of the sexism, which was deemed unconstitutional, be excised from the Act.

Throughout the debate of the bill, frustration was expressed by senators and the government that there was no real understanding of how many people would gain Indian status. Federal estimates ranged between 800,000 and two million. There are now about 820,000 status Indians in Canada, according to the 2011 Census.

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The new analysis released on Tuesday by the Parliamentary Budget Officer (PBO), which was requested by Liberal MP Robert-Falcon Ouellette and independent Senator Marilou McPhedran, says the immediate effect of Bill S-3 will be to allow between 28,000 and 35,000 additional Canadians to register as status Indians, 90 per cent of whom are expected to do so.

The immediate increase to the Indian rolls is expected to cost the government $19-million in one-time administrative fees and $55-million a year for benefits, mainly supplemental health coverage, provided to status Indians, according to the PBO analysis.

But those costs will increase to $407-million annually in the future, when the government acts on a promise to implement a Senate amendment that will make almost everyone with First Nations ancestry dating back to the 1800s eligible for status.

Senator Lillian Dyck, the chair of the Senate committee on Aboriginal peoples, said the price tag estimated by the PBO "does not seem to me to be enormous" and "many people have argued over the years that we should not be using the cost of implementing equality as a reason not to implement it."

As the Senate pointed out, the legislation as drafted would not have removed all of the sexism from the act. Even when Bill S-3 is passed into law, people who were fathered by status men before Sept. 4, 1951, can obtain status and pass it on to their offspring, but status women who married non-status men and had children before that date cannot.

The senators insisted that the government eliminate the sexism in the act and amend the bill. After a standoff of several months, the government said it would do what the Senate wanted, but only after a consultation period with the First Nations that will last for an undetermined length of time.

When consultation ends, and the revisions take effect, the PBO says 670,000 additional people will be eligible to claim Indian status, but just 270,000 are expected to. The remainder, the PBO says, do not have the sort of connection with First Nations communities that would drive them to seek the designation.

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The cost of the government benefits that would be provided to the total number of new status Indians created by Bill S-3 would then rise to $407-million annually, the PBO says, and there would be an additional $71-million in one-time administrative costs.

Some First Nations have protested the changes to the Indian Act that come with Bill S-3, which, they say, could create an influx of people back to their communities and force them to share scarce resources, such as the land on reserves.

But the PBO says just 2 per cent of the people who will gain Indian status when the bill is granted Royal Assent are expected to move to a First Nation reserve. The report says 3 per cent of that cohort already live on reserves as non-status Indians. And few of the much larger group of status Indians that will be created when the Senate amendment takes effect are expected to move to a First Nation.