Child-benefits Spending Reduces for Lower-income Families: study

·2 min read

The federal government has shifted the share of overall spending on child benefits away from lower-income families to middle and upper-income families to an even greater degree than previously thought, finds a new study published today by the Fraser Institute.

The Fraser Institute is an independent Canadian public policy research and educational organization that studies effects of government policies.

“While the federal government often claims that child benefits go to Canadian families who need the money the most, the shift in overall spending tells a different story,” said Jason Clemens, executive vice-president of the Fraser Institute and co-author of Adjusting for the Canada Child Benefit’s Tax-Free Status.

In 2016, the federal government replaced two child-benefit programs with the Canada Child Benefit (CCB), which provides tax-free benefits to eligible families with children under the age of 18.

The study, based on data from Statistics Canada, measures the shifts in the share of child-benefit spending due to this change — although unlike previous analyses, this study accounts for the tax-free status of CCB payments (most other government income transfers are taxable).

Specifically, the elimination of the previous two programs and their replacement with the CCB — coupled with a recognition of the CCB’s tax-free status — results in the share of total child-benefit spending on families with incomes less than $60,000 declining from 42.9 percent under the previous two programs to 29.7 per cent.

At the same time, the share of total child-benefit spending on families with incomes between $60,000 and $180,000 increased from 49.2 percent to 66.8 percent.

While the share of total child-benefit spending on families with incomes above $180,000 declined from 7.9 percent to 3.5 percent.

“At a time when Ottawa is running deficits with no end in sight, the CCB is yet another poorly targeted federal program,” Clemens said.

Jenna, a single mother, resident of Milton said that she was dependent on government support to take care of her child, but said that over time the amount received for child-benefits seems to have reduced.

“Especially for single mothers like me, the child-benefits should only be increasing rather than decreasing in real terms”, she said.

Shazia Nazir, Local Journalism Initiative Reporter, The Milton Reporter, Milton Reporter