Images are unavailable offline. Minister of Crown-Indigenous Relations Carolyn Bennett visited B.C.'s Musqueam First Nation on Wednesday to mark the decision. DARRYL DYCK/The Canadian Press

The federal government’s decision to forgive more than a billion dollars in loans to First Nations to pursue land claims is a breakthrough that will lift a financial burden from communities and make millions of dollars available for education, economic development and other priorities, say B.C. First Nations leaders.

The decision – announced in the March budget and marked by a visit by Indigenous Relations Minister Carolyn Bennett to B.C.'s Musqueam First Nation on Wednesday – follows years of lobbying from First Nations leaders who argued they shouldn’t have to borrow, and then pay back, money to recover land they had never given up.

“In the past, colonial authorities took our land and we had to borrow money from the same government that took our land – and it’s wrong,” Grand Chief Edward John said after Ms. Bennett spoke to a small gathering.

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“Now we’re in a place where the playing field is a lot more level," he added.

Mr. John is one of three members of the political executive of B.C.'s First Nations Summit, an umbrella group for First Nations involved in B.C.'s treaty process. He said he has been fighting for treaty-loan forgiveness since the B.C. Treaty Commission was founded in 1992.

In the 2018 budget, the federal government announced that loans for treaty negotiations would be replaced by “contribution funding” and that it would consider loan forgiveness.

This year’s budget included that provision.

With the change, outstanding loans will be forgiven and loans that have been paid back – such as those obtained by B.C.'s Nisga’a Nation, which ratified a treaty in 1998 – will be repaid by the government to the First Nation. The total amount to be forgiven is $1.4-billion over seven years, which includes both forgiveness and reimbursement. Of that, $938-million will be forgiven in the current fiscal year, which ends next March, ministry spokeswoman Jane Deeks said in an e-mail.

The change will have the greatest impact in B.C., which has only a few modern treaties and where negotiations have been slow, complex and expensive.

As of the end of March, there was $551.9-million in loans outstanding in B.C., accounting for 61.4 per cent of all outstanding loan debt, Ms. Deeks said. A breakdown of loans was not immediately available.

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Mary-Ann Enevoldsen, a commissioner with the B.C. Treaty Commission and the former chief of the Homalco First Nation, welcomed the shift in policy, saying the loans were divisive and controversial.

“It gave fuel to people who opposed our efforts and it left a negative cloud over the treaty process,” she said.

“The elimination of [loans] has removed this cloud and demonstrates that the government of Canada is serious about reconciliation,” Ms. Enevoldsen said.

Ms. Bennett said she expected any hit to the federal budget from the loan forgiveness to be offset by gains in other areas, including health and economic benefits to First Nations.

“We see it as a huge investment in not only the quality of life, but the progress of communities to get on with their economic development, to get on with investing that money in their communities,” Ms. Bennett told The Globe and Mail following her public remarks.

Ms. Bennett described the loan forgiveness as part of the federal government’s broader agenda for Indigenous reconciliation, which has been cast into question by the resignation of former justice minister and attorney-general Jody Wilson-Raybould and her subsequent expulsion from the Liberal caucus.

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Ms. Wilson-Raybould is a member of the We Wai Kai Nation of British Columbia, which is part of the Kwakwaka’wakw peoples; she is also a former treaty commissioner with the B.C. Treaty Commission and a former regional chief of the Assembly of First Nations. Her senior roles in government raised expectations of significant progress on Indigenous issues.

“We saw her as being our voice in government. Now now that she’s not there, there’s a vacuum. So now we need to count on those we’ve worked with over the years and continue to work with,” Mr. John said.

Reconciliation is imperative for Canada and bigger than any one person, Ms. Bennett said.

“We do have significant momentum now and we will do everything in our power to not have that roll back,” she said.