The question that needs to be asked is "Why were indigenous children placed in residential schools to begin with?" This thread by u/enygma9753 may help provide more historical context to what is obviously a complex and nuanced issue.

Crown-indigenous relations in Canada can be traced to the fall of New France and the 1763 Royal Proclamation from George III that was supposed to settle the aftermath of the Seven Years War and, critically, how Britain was to deal with its obligations to safeguard what was then known as Indian Territory west of the Appalachians and the inherent rights of the natives on those lands.

The 1763 Proclamation is considered the "Magna Carta" of Crown-indigenous relations in Canada and any study of the Crown v. native rights in Canada must begin with an understanding of the Proclamation and the Crown's obligations, which the gov't is bound to honour to this day as the Proclamation is part of Canada's Constitution.

The colonial drafters of the proclamation had a more paternalistic view of this relationship -- "caring" for indigenous peoples by placing them on reservations while stripping them of rights, and then after Canada achieved nationhood in 1867, systematically trying to eradicate their culture in the name of "civilizing" them, by forcibly placing their children in residential schools. These were run largely by various Christian denominations and funded by the Canadian government.

The indigenous peoples since 1763 saw the relationship as more of a partnership, where the Crown and the natives would be caretakers of the land and its resources. The Crown viewed treaties as a surrender of natives' rights to their lands, while indigenous peoples saw treaties as the recognition of their rights.

The thread linked above outlines the evolution of such treaties since Confederation and the creation of the residential school system.

The main Protestant demoninations involved in running the schools (about 30-40% of them) have already offered formal apologies for their role and paid out compensation to survivors. The Catholic Church, which ran more than 60-70% of the schools, has so far resisted offering a formal apology and has been laggard in offering compensation to survivors. Their argument is that the church was decentralized in organization and such schools were overseen at a local, diocesan level, thus any claims have to be dealt with at that level. But there are growing calls for the Pope to acknowledge the Church's historic role in running the schools and to offer a formal apology specific to the residential school system (and not just the more general apology a few years ago the Pope had offered in South America to all native peoples of the Americas for the Church's past sins).