Canadian Human Rights Tribunal
A tribunal ordered the government to compensate families who had been denied service, or faced delays.
Indigenous Services Canada had forecast $5.4 billion.
The federal justice rejected a request to push the deadline for payments back.
As many as 54,000 children could be eligible for $40,000 in compensation.
This was the fourth time the tribunal said Canada was not complying with orders.
PM asked why government hasn't complied Canadian Human Rights Tribunal.
A spokesman said the department doesn't know how many people ask for a change in the sex designation annually.
The federal government is grappling with a stern order from the tribunal on welfare services for aboriginal children.
"This government agrees that we can and must do better."
The quasi-judicial body published its findings this morning related to a 2007 complaint from the Assembly of First Nations and The First Nations Child and Family Caring Society of Canada.