Missing the Mark in Child Poverty

In fall 2007, the re-elected provincial government of Ontario campaigned on a platform of poverty reduction. In its provincial budget submitted in spring 2007, it created a new Ontario Child Benefit (OCB), which this government hopes to set as its cornerstone for its poverty-reduction strategy.

In spring 2007, not many details were revealed about the new OCB, other than it would be payable to all low-income families, regardless of participation in the labour force. The OCB was presented as the end to the much maligned “clawback” of the federal National Child Benefit Supplement (NCBS) that has been in place since 1998.

When the NCBS was implemented, Canada’s provinces were allowed to do as they chose when determining if families receiving social assistance were able to keep this money. Their options included allowing families to keep part or all the NCBS or to reduce their social assistance by the same amount each month the NCBS was payable.

As this benefit was negotiated during Mike Harris’ Progressive Conservative government, Ontario (as well as several other provinces) chose to deduct the full amount of this benefit from all families in receipt of any social assistance, whether it was “welfare” or disability benefits while giving “working poor” families the full amount.

During the 2003 provincial election, part of then Opposition Leader Dalton McGuinty’s platform was to end this clawback. Nevertheless, during its first term the McGuinty Government allowed this clawback to continue, although any increases made to the NCBS were passed along in full to families on assistance. This was not good enough. In 2004, a constitutional challenge was filed by several families receiving social assistance regarding the legality of these clawbacks, particularly as it affected families unable to access the labour force.

While the OCB was widely hailed as a positive step when it was put into motion in McGuinty’s spring 2007 “anti-poverty” budget, a number of new questions arose once advocates reviewed the budget in detail and further regulations were passed.

In order to implement the OCB, both welfare and disability rates for families will be “restructured” (or reduced). Both types of benefits are divided in two sections and the amount a family gets in either section is determined by family size, shelter costs and the number and ages of their children. One section is the “shelter” benefit, which is unaffected by the OCB. The second section is ‘basic needs’ which is supposed to cover food, telephone, clothing and other necessities.

When the OCB takes effect in July 2008, families receiving social assistance will get 30% less money on the ‘basic needs’ part of their cheques. The rationale for this change is to “get children off welfare” and ease the transition for parents to re-enter the labour market. Further, benefits received by these families for many years to assist with back to school and winter clothing allowances for their children will also be cut. These benefits will be presumably “rolled into” the OCB, the argument being that ‘working poor’ families need help too and did not receive these benefits in the past.

Nevertheless, many families – particularly those headed by parents with disabilities or care-givers – will be hit the hardest. While the Government argues the total income received by these families will not be cut, advocates are not sure they will benefit either. What is particularly bothersome to some advocates is that families on welfare and disability are in fact paying for at least some of the $2.1 billion price tag of the new OCB, which in a sense appears to be a clawback of a different kind.

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