The Liberal government's promised move to dissolve Indigenous Affairs and Northern Development (INAC) and replace it with separate departments reached a milestone Monday with the creation of two new ministries.

The Department of Indigenous Services (DISC), with Toronto-area minister Jane Philpott at the helm, will now oversee government programs mainly geared toward status Indians, including welfare, education, infrastructure — including the move to end long-term water advisories — housing and the non-insured health benefits program. The First Nations and Inuit Health Branch (FNIHB) has also been formally transferred from Health Canada to the new department, the government said in a news release.

"These structural changes will allow our government to work more effectively with Indigenous partners to provide services that improve people's day-to-day quality of life," Philpott said.

By bureaucratic standards, the creation of DISC has happened relatively quickly, as the announcement to dissolve INAC was only made in August. More than 4,500 employees scattered across the country will find themselves working for either the new department, or INAC's other successor, Crown-Indigenous Relations and Northern Affairs, which will be led by minister Carolyn Bennett.

Bennett is tasked with settling outstanding comprehensive land claims (there are nearly 100 such deals in the pipe with various degrees of completeness), clearing a backlog of grievances at the Specific Claims Tribunal and generally fostering a new era of self-governance. She recently negotiated a landmark deal on education with the Anishinabek Nation in Ontario, a devolution the government hopes to replicate in other jurisdictions.

Bennett will lead the government's continued push to dismantle the Indian Act, helping more communities opt out of provisions that date back to the 19th century.

'Paternalistic structure'

"Today marks an important milestone in Canada's journey towards reconciliation and the dissolution of Indigenous and Northern Affairs," Bennett said in a statement.

"We are tearing down the outdated and paternalistic structure of old designed to enforce the Indian Act and replacing it with new departments that are distinctions-based and rooted in the recognition of rights, respect, co-operation and partnership."

When announcing the creation of the two new departments, the government vowed to consult with Indigenous groups, including the Assembly of First Nations (AFN). As per the government's release, those outreach efforts are still ongoing despite Monday's announcement heralding the creation of the new arm of government.

The government said all existing funding and contractual arrangements remain active. The delivery of services will continue as usual.

And yet some experts warn fundamental reforms of this sort could actually lead to more headaches with Indigenous governance.

"In terms of practical outcomes, I think it might actually have a negative effect," Christopher Alcantara, an expert on Indigenous-settler relations at Western University, said in an interview with CBC News in August.

"It's going to complicate decision-making because now you have two ministers competing for resources around the cabinet table. Instead of an integrated process you're going to have silos, little empires that guard their resources. I worry about this, I worry about the lack of co-ordination," he said.