The government of Canada has made a number of significant investments in improvements to federal income security programs in Budget 2016. After ten years of erosion of government’s commitment in these areas, Budget 2016 reverses the trend of reduction in access and benefit levels, and makes improvements in programs for children, seniors, and unemployed workers. While there is more work to do to fulfill all of the government’s commitments and make substantial progress on poverty, this first Budget represents a sea change in approach to income security in Canada.
The new Canada Child Benefit (CCB) will increase benefits for low-income families with children. For example, a family with one child under 6 and an income of $18,000 will receive approximately $85 per month more than under the current federal child benefit system. Starting in July 2016, the CCB will replace the current Canada Child Tax Benefit and National Child Benefit Supplement and the Universal Child Care Benefit. The Ontario Child Benefit will not be impacted by this change. In its first year, the new CCB represents an investment of $23 billion.
To fund the new program, government will also eliminate two “boutique” tax credits and income splitting, which predominantly benefit families with higher incomes. Redirecting these funds will ensure better support for lower income Canadian families and represents a positive step toward making Canada’s tax system fairer.
An online Canada Child Benefit calculator to help people determine the amount they can expect to receive is available here: http://www.budget.gc.ca/2016/tool-outil/ccb-ace-en.html.
We expect that Ontario will take the opportunity provided by the new CCB to make progress on its poverty reduction commitments, by ensuring that social assistance benefits are not clawed back nor restructured in response to the increase in federal child benefits. In doing so, Ontario could provide the leadership required to ensure all Canadian provinces and territories take the same approach.
Benefits for Low-Income Seniors
The 2016 Federal Budget commits to increasing the Guaranteed Income Supplement (GIS) for the lowest income single seniors, which represents an investment of over $670 million per year. The GIS will increase by $947 annually for those with incomes (from sources other than OAS / GIS) of about $4,600 or less. The increase will be gradually reduced and will phase out at incomes of about $8,400. This change will go into effect in July 2016 and benefits will be increased with inflation quarterly. This will have a particularly positive impact on senior women, who are the majority of low-income seniors in Canada.
The Budget also pledges to restore the age of eligibility for the Old Age Supplement (OAS) to 65 from 67. This will mean that low-income Canadian seniors will not have to wait an additional two years, after the typical age of retirement, to receive OAS benefits. It also means that older Ontarians moving from Ontario Works and Ontario Disability Support Program benefits onto the federal OAS will not have to live for an additional two years on the lower incomes provided by those provincial social assistance programs.
The Budget will also provide higher income benefits to couples who receive both the GIS and the Spousal Allowance benefit but who have to live apart for reasons beyond their control, such as when one person in the couple is living in a long-term care home. In addition, the Budget commits to developing a “Seniors Price Index” that will be used to increase the OAS and GIS to keep pace with the actual costs of living. And consultations will continue with the provinces and territories on enhancements to the Canada Pension Plan, with the goal of reaching decisions by the end of this year.
The Budget commits to making a number of changes to Employment Insurance (EI) that will be of benefit to unemployed workers. These include:
- The waiting period for receiving EI benefits will be reduced from two weeks to one week, effective January 2017.
- People who live in regions of Canada with the most severe increases in levels of unemployment will be able to receive regular EI benefits for five weeks longer, to a maximum of 50 weeks. In Ontario, this will apply to Northern Ontario. And people who live in these hard-hit regions who have worked for one industry or one employer for many years will have the duration of their benefits extended by 20 weeks, up to a maximum of 70 weeks. These extended benefit durations will begin in July 2016 and be retroactive to January 4, 2015.
- The eligibility criteria for people who are new to the labour market or are returning to the labour market after an absence will be changed to be the same as the criteria for other claimants in their region. This will reduce their requirement from the current 910 hours of insurable employment for eligibility for EI. This change will be of particular benefit to young people and women returning to work after leaving employment to raise children.
- Changes made by the previous government to require people receiving EI benefits to accept work at lower pay and with longer commuting times will be repealed.
- Service Canada and call centres will receive increased funding to meet the increased demand for EI benefits.
The Budget also announced that the federal government will explore expanding the Compassionate Care Benefit to cover people who are caring for people with serious illnesses, not only those with illnesses that are likely to result in death, and providing more flexibility in parental leave benefits. We trust that government will move quickly to make these improvements, which were committed to in their election platform.
Other next steps on improving Employment Insurance will also fulfill election commitments. Government should move quickly to fulfill its promise to review access to EI for people who are precariously employed, who are more likely to be refugees, immigrants, and racialized residents. Reducing the hours of eligibility for EI for all unemployed workers is a critical step in ensuring better access to EI benefits for part-time and precarious workers. And government should introduce legislation that will ensure that EI funds are to be used only for EI program benefits, rather than for other priorities like reducing the deficit, as previous governments have done.
Income Security for Indigenous Peoples
While a number of commitments were made in Budget 2016 on issues affecting Indigenous peoples, steps have not yet been taken to ensure income security in the short term. One of the key “Calls to Action” by the Truth and Reconciliation Commission was the implementation of the United Nations Declaration on the Rights of Indigenous Peoples, which guarantees Indigenous peoples the right to improvement of their economic and social conditions, including in the area of social security. The Declaration also enshrines the right of Indigenous peoples to administer social security programs through their own institutions. In a year in which Canada committed to implement the Truth and Reconciliation Commission’s “Calls to Action”, government must move on these recommendations, and commit funding that would permit Indigenous nations to alleviate the deep poverty that affects many Indigenous people across the country.
Next Steps on Income Security
Budget 2016 represents positive change and a recognition by the federal government of its role in ensuring income security for all Canadians. In addition to further action on Employment Insurance reform, a number of next steps are also necessary to move toward greater income security for all Canadians.
Government has not yet made investments to support the development of a Canada Poverty Reduction Strategy, which was directed in the Prime Minister’s mandate letter to the Minister of Families, Children and Social Development. A strategy with targets, timelines, and an investment schedule would provide the framework required for the federal government to support all Canadians to live a life free of poverty.
We also look forward to government announcing that it will repeal provisions introduced by the previous government that would allow the provinces and territories to institute residency requirements for social assistance eligibility for refugee claimants and others without immigration status in Canada. Government should also consider how to return to robust national standards on income security for all.
And we will work with government to encourage a greater role in ensuring income security through increased investments in the Canada Social Transfer, which is the mechanism through which the federal government transfers funds to the provinces and territories to help pay for social assistance benefits. An increase in the Canada Social Transfer, earmarked for direct benefits to social assistance recipients, could assist in efforts to reduce poverty across Canada. It would also respond to recent recommendations from the United Nations Committee on Economic, Social and Cultural Rights that Canada should increase social assistance benefits to ensure a more effective social safety net.