The Canada Child Benefit is indexed for inflation

Seven years after its creation, the Canada child benefit is hailed for having “lifted children out of poverty”, while families benefit this month from indexation according to the cost of living.

Families eligible for the Canada child benefit received their July benefit on Thursday, with indexation. Most federal benefits and credits rose 6.3% this month to account for inflation from the previous year.

Families can receive an annual total of up to $7,437 per child under age six, and $6,275 per child age six through 17.

The Liberals proudly mark the Canada Child Benefit on Thursday to mark its seventh anniversary — the benefit was announced in their first budget in 2016.

Prime Minister Justin Trudeau traveled to southeastern Ontario on Thursday to speak with families about the impact of this benefit, which he says has reduced poverty across the country.

According to Statistics Canada, 7.4% of Canadians were living in poverty in 2021, up from 12.9% in 2016, when the Canada Child Benefit was introduced.

Robert Asselin, who served as policy and budget director for former finance minister Bill Morneau, praised the success of the performance, which he called a “flagship policy” of the 2015 Liberal election campaign.

The Canada Child Benefit replaced the Universal Child Care Benefit introduced by Stephen Harper’s Conservative government in 2006.

A key difference between the two benefits is that the Harper version was a universal taxable benefit, available to all families, regardless of income.

Net family income

Robert Asselin, who is now senior vice-president, public policy, at the Business Council of Canada, explains that the decision to reform the benefit by taking household income into account has made it possible to better target public policy to families who need it most.

“The decision was made to cut this benefit for people who earn above a certain threshold,” recalls Mr. Asselin. And you know, I think the credit goes to the Prime Minister, who immediately supported it. »

According to the Canada Revenue Agency, the amount of the benefit gradually decreases when the “adjusted family net income” exceeds $34,863.

In an interview, Families Minister Karina Gould touted the positive effects of the benefit, attributing the success in reducing poverty to the fact that the payments are targeted and take into account family income.

“We have really, I think, introduced something that can teach every level of government meaningful lessons about how to lift people out of poverty, how to design a benefit that makes a difference and then has a real impact on families,” Gould said.

Jennifer Robson, associate professor of political management at Carleton University, points out, however, that it is difficult to prove that this benefit is entirely responsible for reducing poverty in the country.

But a look at the data shows that child poverty rates fell more sharply after the benefit was introduced, she acknowledges, pointing out that the “intensity” of poverty was also reduced. This means that the average gap between the low income cut-off and the income of the household where children live in poverty, after taxes and transfers, has decreased.

But Professor Robson points out that we can do better, because children who live in low-income households are on average still around 25% below the poverty line.

“The Canada Child Benefit has probably done a lot for children from low-income families closer to the poverty line, to get them over that line,” Robson said in an email.

“But for those living in deeper poverty, the benefit is probably not yet big enough to get them over that threshold. »

And solving that equation would be difficult, Prof Robson said, because it would be costly to improve the benefit for low-income families without reducing the number of children who receive it or the threshold at which the amount of the benefit decreases with family income.

There are other ways to improve the success of the Allowance, she says, including indexing benefits more frequently to more closely reflect the real-time cost of living.

Some parents are also deprived of this benefit, she recalled, because they do not file a tax return.

Generally speaking, however, Ms. Robson welcomes efforts to make life more affordable for those who want to have children. “It is, in my opinion, good economic policy. The Allowance is one of them. »

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