The Kimelman Report was commissioned due to the Sixties Scoop in the 80s, and was finished in 1985. It deals with Manitoba. The report notes:

The legislation which defines children who are in need of protection contains many words and phrases which are value laden - "not being properly cared for", "incompetence", "morals may be endangered", "behaviour", "unable to prove properly", "unable or unwilling," "proper medical.......care" [sic], "emotional or mental development", "unreasonable length of time" and "abuse".

Any judgment made in relation to such terms is bound to be coloured by an individual's own personal background.... Cultural bias in the child welfare system is practiced at every level from the social worker who works directly with the family, through the lawyers who represent the various parties in a custody case, to the judges who make the final disposition in the case.

pp. 184-5

This accounted for the majority of children in care (58.5% in 1984, 71.5% in 1979; the reason for the decrease appears to be connected to changes in the federal Young Offenders Act which effect child apprehensions at a provincial level). At a glance it's not necessarily clear how some these reasons might be inadequate and may be shaped by cultural bias. For example, we might assume that "emotional and mental development" is pretty cut and dry and universal. But behavioural, emotional, moral, and mental development models from psychologists are not necessarily objective truths. A well-known example would be Lawrence Kohlberg's moral development model and Carol Gilligan's feminist critique of that model. These models can be easily skewed based on the subjects of study (if your study uses white, middle-class children, are the results unbiased?).

But at a glance it seems weird that "not being properly cared for" would be an example of an example of cultural bias. I've heard Ray Aldred speak on exactly this topic. He talks about his experience with more traditional Cree child-rearing and how it contrasts to the nuclear family. He discusses the role that natural consequences and the extended family play in disciplining children. This creates situations where parents seem uninterested or lazy because (a) children are expected to learn by suffering the consequences of their actions; (b) the extended family, rather than the immediate family, plays a large role in disciplining children. This creates an issue because it can seem negligent to social workers because: (a) parents let their kids act out rather than arguing with them (because the parents will let the children suffer the consequences of acting out); (b) parents might not discipline a child because they're in a circumstance where it's culturally accepted that grandmothers or aunts will discipline the child, which makes parents look lazy. But it also creates issues if parents are put in a situation where they are removed from their wider social network (their entire method of raising their children needs to change and this creates stress).

The report also contends that

83% to 86% of the children who were alleged to be in need of protection [in St. Boniface, North Winnipeg, Winnipeg, and Portage la Prairie] came into the care of the agencies with the consent of, at least an absence of an objection from, the parents of guardians. These figures would support the possibility of coercion or intimation of parents who are not fully aware of their rights within the judicial system. There is also a significant number of parents who are under the age of 18 who, under the present law, should not be signing consent orders relinquishing custody of children without the advice of either a guardian, guardian ad litem, or the Public Trustee.....

For those of Native descent there has been sufficient history built up to indicate that a parent has little chance of regaining, or retaining, custody of a child once an agency or the agency's lawyers have become involved. By consenting to a child being made a ward, parents may see themselves as succumbing to the inevitable, as well as avoiding the public humiliation that a contested case would cause them to suffer....

Native people have alleged that when they approach a child care agency for help, they are offered only one option - relinquish custody of the child. A review of agency budgets would provide confirmation of this position.

p. (193-6)

So here we have a few issues: first, possible coercion; second, the question of whether teenage parents have the legal right to sign away custody; third, whether historical circumstances have conditioned parents to voluntary give up their children; fourth, whether agencies fail to provide adequate supports to Indigenous families and punish parents for seeking help. These issues are important because on paper it might appear that a lot of children were in care at the request of their parents, but it's not clear that these requests should be considered valid. 20% of Indigenous children were in the care due to "temporary contract provisions" (parents consent to give up custody for 12-18 months; an issue noted elsewhere in the report is delays in hearings could see these times extend to much longer than 12-18 months!) and 4.6% had their parents surrender guardianship within a week of giving birth.

The report also notes that there are circumstances where parents might have temporarily allowed the province or other agencies to be the guardians over their children for valid reason (i.e. children leaving the reserve to seek medical treatment, children being sent to boarding schools) and this would be held against them as if it were proof that they were negligent parents (the report doesn't go into too much detail on these cases, however).

The history of dealing with agencies is also important to note. This report deals specifically with the results of Indigenous interactions with child welfare agencies in particular, but the Truth and Reconciliation Commission notes that:

From the 1940s onwards, residential schools increasingly served as orphanages and child-welfare facilities. By 1960, the federal government estimated that 50% of the children in residential schools were there for child-welfare reasons. What has come to be referred to as the “Sixties Scoop” —the dramatic increase in the apprehension of Aboriginal children from the 1960s onwards— was in some measure simply a transferring of children from one form of institution, the residential school, to another, the child-welfare agency.... Some children had to stay in the schools year-round because it was thought there was no safe home to which they could return. The residential school environment was not a safer or more loving haven. These children spent their entire childhoods in an institution.

The closure of residential schools, which commenced in earnest in 1970, was accompanied by a significant increase in the number of children being taken into care by child-welfare agencies.... In 1977, Aboriginal children accounted for 44% of the children in care in Alberta, 51% of the children in care in Saskatchewan, and 60% of the children in care in Manitoba.

What Have We Learned: Principles of Truth and Reconciliation, pp. 39-40

This historical connection isn't just rooted in the fact that the legacy of residential schools shaped child welfare policies during the Sixties Scoop, but also can be seen in the lives of families.

A man I know, who is a victim of the Sixties Scoop, has talked to me about this stuff. His parents were residential school survivors and abused in the schools; their models for how to parents were abusive nuns and priests. They also dealt with their trauma by drinking. He and his siblings were placed in foster care due to the drinking and abuse. The stories he has are absolutely disheartening. He and his siblings slept in an unheated shack while the foster parents' biological children slept in the main house; he and his siblings having to sneak into the house in the middle of the night to steal food because they didn't get as much to eat as the foster parents' children. In public school he and his siblings were abused and bullied. Now he struggles with the fact that his siblings mirror the abuse they suffered in their foster home and he sees his nieces and nephews raising their children in that same way. At this point there's literally generations of apprehensions and abuse within this one family.

And therein is part of the issue. It's undoubtedly the case that some of these apprehensions were given reasons that may have seemed like valid reasons but were actually rooted in racial/cultural biases. But there are also issues were there are valid safety concerns but there might be underlying reasons that were/are ignored. Likewise, when one's abusive Indigenous parents are deemed inadequate caregivers but the white, abusive foster parents are deemed good caregivers, I'd say it becomes impossible to say that race isn't the actual underlying reason for apprehension.

Part of the difficulty here, though, is even amongst all of these issues, for many individuals in these systems they perceived themselves as actually helping the children. The residential schools bear returning to. I'm sure you know the pithy little phrase used to justify this system: kill the Indian, save the child. The issue of race was seen as a legitimate hindrance to child welfare. One might not have taken the child away because they were "Indian," but they were "neglected" because their parents were "Indian." It becomes difficult to disengage the "legitimate reasons" from race in such instances due to the history of government intervention in Indigenous life, the legacy of the residential schools, and the long-standing biases within Canadian society.