Archived - The National Child Benefit Progress Report 2004
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What is the National Child Benefit Initiative?
The National Child Benefit (NCB) is a joint initiative of federal, provincial and territorial governments to support Canadian children living in low-income families. The initiative takes a multifaceted approach, which recognizes that both income support and a variety of benefits and services are critical to sustained success.
The NCB initiative has three goals:
- to help prevent and reduce the depth of child poverty;
- to promote attachment to the labour market by ensuring that families will always be better off as a result of working; and
- to reduce overlap and duplication by harmonizing program objectives and benefits, and through simplified administration.
The Welfare Wall
Governments deliver a variety of benefits and services to people receiving social assistance to help address their family needs. These include basic income benefits for children, financial work incentives for parents, and extended drug, dental and optical benefits.
Before the NCB was introduced in 1998, there was minimal coordination between the federal system, which delivered child benefits through the income tax system, and provincial/territorial systems, which delivered child benefits through social assistance programs.
At that time, leaving social assistance for employment often meant that low-income families with children lost many or all of their benefits when they took paid employment. Families on social assistance who found paid work often saw their overall disposable income increase only slightly, and in some cases would see a decline. In addition to forfeiting child benefits and other non-monetary benefits, they also needed to pay taxes and employment-related costs out of their typically low wages3. As a result, parents were often reluctant to seek employment because they were financially worse off working compared to being on social assistance. Thus, government programs had inadvertently created a “welfare wall” a set of disincentives to labour force participation that made it financially less attractive for parents to leave welfare for work.
The NCB in Action
The NCB is intended to help lower this welfare wall by making sure that families leaving social assistance are better off as a result of working. It is designed to support parents leaving social assistance for work, and to help low-income parents already in the labour market to stay there by reducing the role of social assistance in providing children's basic income support.
Federal, provincial and territorial systems of income support for children are being integrated to build a national platform of income-tested child benefits available to both social-assistance families and low-income working families. The initiative combines two key elements: monthly payments to low-income families with children, and benefits and services designed and delivered by the provinces, territories and First Nations to meet the needs of low-income families with children.
A Venn diagram illustrates the relationship between the Canada Child Tax Benefit (CCTB) and the National Child Benefit (NCB).
The CCTB is targeted to low-and middle-income families with children, while the National Child Benefit Initiative is aimed at low-income families with children.
The diagram is composed of three circles aligned horizontally. The left-most circle illustrates the base benefit of the CCTB; this circle does not intersect with any other circle. In 2003-2004, the Government of Canada provided $5.5 billion through the base benefit of the CCTB.
The middle circle illustrates the NCB Supplement, and the right-most circle illustrates the NCB Investments and Reinvestments by provinces, territories and First Nations. The middle (NCB Supplement) and right-most circle (P/T Investments and Reinvestments) intersect; this intersection illustrates the NCB Reinvestments.
In 2003-2004, the Government of Canada provided $2.7 billion through the NCB Supplement (middle circle). The right-most circle represents the provincial, territorial and First Nations component of the NCB initiative. This circle overlaps with the NCB Supplement. The area of overlap represents NCB reinvestments, which totalled $696.6 million in 2003-2004. The remainder of the right-most circle represents additional NCB investments by provinces, territories and First Nations, which totalled $182.8 million in 2003-2004.
* Reinvestment funds comprise social assistance/child benefit savings and, in some jurisdictions, Children's Special Allowance recoveries. Please see Appendix 2 for further details.
** Investment funds comprise additional funds that some jurisdictions spend on NCB initiatives, over and above the reinvestment funds. Please see Appendix 2 for further details.
The Government of Canada's Contribution to the NCB Initiative
The Government of Canada contributes to the NCB initiative through a supplement to the base benefit of the Canada Child Tax Benefit (CCTB). This base benefit is targeted to both low- and middle-income families with children, while the NCB Supplement provides extra support to low-income families with children. Both the base benefit and the NCB Supplement are paid on a monthly basis and are income tested using information provided when a parent files an income tax return. The benefits from the CCTB base benefit and NCB Supplement are provided to eligible families regardless of whether the parents are working or receiving social assistance.
Provincial, Territorial and First Nations Contributions
Under the NCB initiative, the coordinated approach to delivering child benefits to low-income families with children has also provided provinces and territories with the option to modify their income-support systems in the manner that best meets the needs of low-income families with children in their jurisdictions.
Provinces and territories have the flexibility to adjust social assistance or child benefit payments by an amount equivalent to the NCB Supplement. First Nations follow the approach of the relevant province or territory. As a result, families with children on social assistance maintain at least the same level of benefits as before, while funds resulting from such adjustments support new or enhanced programs benefiting low-income families with children.
Since the introduction of the NCB initiative, a number of approaches to adjusting social assistance and child benefits have evolved. A detailed discussion of these approaches is included in Chapter 3.
Provinces, territories and First Nations may also invest additional funds in benefits and services consistent with the objectives of the NCB. Reinvestment and investment funds are used by provinces, territories and First Nations to finance NCB programs and services. These programs and services are in addition to other long-standing programs and services that provinces and territories have had in place to advance child development and help low-income families with children. In 2003—2004, investments and reinvestments through the NCB initiative for provinces, territories and First Nations are estimated to be $879.4 million.4
Provinces and territories provide programs and services that are organized in six categories:
- child-/day-care initiatives;
- child benefits and earned income supplements;
- early childhood services and children-at-risk services;
- supplementary health benefits;
- youth initiatives; and
- other NCB programs, benefits and services (e.g. literacy, employment support programs).
First Nations reinvestments cover a broader range of programs, and are categorized in five key areas:
- child/day care;
- childhood nutrition;
- early childhood development;
- employment opportunities/training programs; and
- community enrichment.
The NCB initiative has provided the flexibility for provinces, territories and First Nations to tailor their programs and services to the specific needs of their low-income families with children. As a result of reinvestment and investment funds, provinces, territories and First Nations have enhanced existing programs and/or introduced new programs and services designed to meet the specific needs of families within their jurisdictions, while fulfilling the objectives of the national initiative.
In addition, program and service design have significantly benefited from shared knowledge and experience across jurisdictions. Provinces, territories and First Nations now offer new and enhanced programs designed to provide all low-income families with children the services and supports that reduce the impacts of child poverty and promote attachment to the labour force.
3K. Battle and M. Mendelson, "Benefits for Children: Canada" in Benefits for Children: A Four Country Study, K. Battle and M. Mendelson, eds. (Ottawa: Caledon Institute of Social Policy, 2001) pp. 93-186.
4This amount includes $1.9 million in NCB reinvestments by Citizenship and Immigration Canada, as described in Chapter 3.
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