Child benefit to pull record number of kids out of poverty, minister says

The Canada Child Benefit will slash child poverty by a record 40 per cent when cheques begin arriving next month, according to families minister Jean-Yves Duclos.

Thestar.com
June 15, 2016
By Laurie Monsebraaten

Canada’s new child benefit, which will begin arriving in mailboxes after July 1, will slash child poverty by 40 per cent, the largest single drop in the country’s history, according to the federal minister in charge of the initiative.

“It is the most significant policy innovation in a generation,” said Jean-Yves Duclos, minister for families, children and social development in an exclusive interview with the Star.

“It will cut child poverty from about 11.2 per cent to 6.7 per cent ... and lead to the lowest child-poverty rate ever in Canada.”

As highlighted in the Liberals’ election campaign last summer, the Canada Child Benefit will pull about 300,000 children out of poverty. Some 50,000 of them will be in the Greater Toronto Area, the minister told the Star.

“Families of 1 million children in the GTA will get more benefits than the earlier system,” Duclos said. “That’s an average of $2,300 more in non-taxable benefits than before - every year. So it will have a very significant impact for those living in the GTA.”

Ontario, which has a child poverty rate of 14.2 per cent - the country’s highest - will see a drop to 8.8 per cent once the benefit is introduced, according to federal calculations.

The new program, which will cost the government an additional $22.4 billion over five years, replaces three current child benefits with a single monthly payment.

Under the new tax-free benefit, families with children under age 6 will receive up to $6,400 per child annually and those with children between the ages of 6 and 17 will receive up to $5,400.

The maximum benefit will go to families with annual net incomes below $30,000 while payments to those with net incomes above $200,000 will be eliminated. Nine out of 10 families will get something.

Toronto single mother Ava Williams is happy to be part of history. She will receive an extra $4,000 a year under the benefit for her four children, who range in age from 6 to 17.

“It feels amazing,” said Williams, 34, who has relied on social assistance, child benefits and various part-time jobs since she left an abusive relationship in 2007. Despite her struggles, Williams earned a diploma in social work. In April, she started a full-time job in her field which pays about $32,000-a-year after taxes.

The extra child benefit payments will lift her out of poverty and allow her to move out of social housing, instead of “waiting 10 years for a transfer to a larger unit,” she said.

“They have always talked about reducing child poverty but they have never really put action towards it,” she said. “Now they are actually putting their money where their mouth is.”

“For me it’s important,” she added. “It means your child will be able to get more food, be able to do more things in life. Have more opportunities.”

Anti-poverty activists have praised the new benefit for directing more money to lower-income families, calling it a “monumental public policy in the battle against child and family poverty.”

But they wonder why the government is waiting until 2020 to index it to inflation and why provinces haven’t been prohibited from clawing back benefits from families on social assistance.

“It was a discussion in cabinet whether we wanted to go gradually or go with the full scheme on July the 1st,” Duclos said, explaining the decision to introduce the full benefit immediately.

“We will index perhaps next year, perhaps in two years from now. But no later than in 2019,” he said.

During his February meeting with provincial and territorial ministers responsible for social services, none of them indicated they would claw back the benefit, Duclos added.

In interviews this week, activists were reassured by Duclos’s answers. But they are troubled by Ottawa’s use of Statistics Canada’s Low-Income Cut-Off (LICO), after taxes, which they say is an outdated poverty measure that exaggerates the impact of the extra cash.

(Under LICO, a family is considered to be in “straitened circumstances” if it spends 20 per cent more on basic necessities than the average Canadian family. But the list of basic necessities, upon which the LICO is based, hasn’t been updated since 1992.)

Instead, anti-poverty activists want Ottawa to use the Low-Income Measure (LIM) after taxes, a poverty calculation currently used by Ontario, Quebec, the United Kingdom and Europe and which also measures inequality.

(Under LIM, a family is considered to be living in poverty if its after-tax income is 50 per cent less than the median family income, adjusted for family size.)

Under both measures, a single parent with one child in a large city who has an annual income of just over $24,000, after taxes, is living in poverty.

But the two measures tell vastly different stories about child poverty in Canada, activists note. Under LICO, there are currently 750,000 children - or 11.2 per cent - living in poverty. Under LIM, there are 1.34 million children - or 19 per cent in poverty.

“It looks like (the federal government) is using a measure that is giving them the biggest bump,” said Sheila Block, senior economist with the left-leaning Canadian Centre for Policy Alternatives. “Everybody is getting a little shiny-eyed about this government. So it’s important to note exactly what they are doing.”

Campaign 2000, a national coalition aimed at getting Ottawa to live up to its 1989 pledge to eradicate child poverty, has been using the LIM since 2011. The group switched from LICO “because it more accurately reflects the current situation for families and isn’t based on a calculation of necessities that is 26 years out of date,” said national co-ordinator Anita Khanna.

“We hope the government will provide calculations based on the LIM so we can understand the impact of the benefit more fully,” she said.

Statistician Richard Shillington, who has written extensively about the different poverty measures is also wary of the numbers game.

“It’s clearly a step in the right direction under any measure,” he said. “But I’m not sure it would be the lowest child-poverty rate if they were using the LIM.”

Khanna noted that ending child poverty is about more than boosting benefits and wants Ottawa to also address other important issues like precarious employment, the lack of child care and affordable housing.