Making good on a promise from last year, this year's budget puts $241 million over five years into training programs for young people collecting income assistance.
Half the money will go to setting up the program on reserves, and the other half will only be accessible if welfare recipients agree to participate in the program.
It drew immediate and sharp criticism from Opposition members who said Prime Minister Stephen Harper is imposing unrealistic arrangements on First Nations without any discussion.
"At a time when First Nations are holding out a hand for reconciliation, he's giving them the back of his hand," said NDP Leader Tom Mulcair.
"It's insulting, it's paternalistic and they're the only ones who are getting this kind of proposal."
Shawn Atleo, the Assembly of First Nations national chief, said the budget is a lot of talk but no action in the form of financial resources.
"Budget 2013 makes reference to First Nations in almost every section, which suggests that the unprecedented attention and engagement of our peoples is beginning to be heard," he said in a release.
"But the investment just isn't there. We will continue to press for direct engagement of First Nations themselves on full implementation of commitments in an urgent manner."
The Assembly of Manitoba Chiefs was equally skeptical.
"This status quo budget ensures the rich keep getting rich with tax credits and incentives that generally do not help First Nations individuals or communities," said Grand Chief Derek Nepinak.
"A status quo budget for First Nations people means a continuation of escalating poverty and a continuing failure to meet the basic needs of families in the communities.
"Announcements on re-allocated funding for skills and trade development tied to compulsory program changes is nothing short of coercion and racialized policy implementation."
The money earmarked in Flaherty's budget is divided in two.
The First Nations job fund will get $109 million to provide personalized job training for welfare recipients. Benefits cheques will be dependent on participation in the program.
The rest of the money will go into setting up the services necessary to deliver such a program, including compliance measures and counselling.
"Funding will be accessible only to those reserve communities that choose to implement mandatory participation in training for young income assistance recipients," the budget warns.
The idea has been kicking around since last year's budget amid pleas from some chiefs for the government to do things differently in order to alleviate the high rates of dependency.
But NDP critic Jean Crowder predicted that many bands will balk at the budget telling them to set up new programs that promise a quick fix, and removing assistance unless they co-operate.
"It's a significant comment on the relationship" between First Nations and the federal Conservatives, she said.
"I'm predicting that the response will be outrage and shock, and worry about how they're going to manage these programs on reserve."
The government also allocates $100 million over two years to improve housing in Nunavut, with the money flowing through Canada Mortgage and Housing Corp.
But what has been touted as the big fix for chronic aboriginal poverty is still a way off.
Federal, provincial and First Nations governments have generally agreed that the education system needs an overhaul and better financing, but movement on that consensus has been held up by deep conflict between Ottawa and many First Nations who want a greater say in the process.
Instead of allocating more money for education, the budget commits to more consultation and passing legislation by September 2014 to build a more accountable system that would resemble regional school boards.
The Assembly of First Nations figures bands need about $3 billion to build schools and make up for the shortfall in education. Last year, Ottawa put $275 million over three years toward aboriginal education.
The budget also includes a smattering of initiatives designed to deal with outstanding issues that have stymied large-scale economic development on reserves.
It puts $54 million over two years into renewed efforts to quickly resolve specific land claims, a goal for both the government and First Nations. For years, investors, band members and ministers alike have complained about the uncertainty over who owns what.
It also puts $9 million over two years into a new First Nations land management regime in order to help bands figure out ways to use the new land arrangement to set up new businesses.
And it increases police budgets, responding to complaints from many First Nations that their police forces are so underfunded that many reserves are unsafe for both the officers and the residents.
The budget also commits $52 million over two years for health services — especially mental health services — for First Nations and Inuit communities.
And it allocates a small amount of the Building Canada Fund — $155 million over 10 years — to First Nations infrastructure.
That amount is only a sliver of what many reserves need to live a decent life, said Crowder.Suggest a correction