Winnipeg has been named Canada's most racist city. Winnipeg also has the highest Native population.
Coincidence? I don't think so... I think racism is bred by inequality. In this case, non-natives might think what the hell makes Natives so special that they don't have to pay tax, pay tuition, etc? Just because their Great great grandfather happened to live here when England and France invaded they somehow have privilege now?
If the government wanted to counter racism, the only way to do it is to make everyone equal... not some more equal than others.
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You forget that it's partial pay back for taking their land and killing off many of their ancestors. Did the Japanese Canadaians get full compensation after WW2? Not much.