1. A resolution be submitted to the Ministry of Community, Family and Children's Services requesting that the Province alter its policy regarding the treatment of the National Child Benefit Supplement (NCBS) as income for social assistance recipients.
2. The resolution should recommend that the National Child Benefit Supplement be exempt as income for families in receipt of social assistance.
3. The recommended policy change for the National Child Benefit Supplement should be phased-in over a three year period to enable municipalities to seek alternative sources of funding to support local programming.

PURPOSE

This report has been prepared to advise Committee and Council of the current policy in Ontario related to the treatment of the National Child Benefit Supplement as income for families with children who are in receipt of social assistance. The report highlights the impact of this child benefit on families and makes recommendations related to future policy direction.

BACKGROUND

The National Child Benefit (NCB) was launched in 1998 by the Federal, Provincial and Territorial governments. The NCB provided an increase in child benefits for low-income families with children.

The NCB had two components, the Child Tax Benefit and the National Child Benefit Supplement (NCBS) and the latter component is the subject of this report.

The NCBS was intended to provide a basic level of income support for children regardless of whether their parents were in the workforce or in receipt of social assistance.

The following chart reflects the amount of funding as it relates to the number of children in the household.

The National Child Benefit Supplement has two main program goals, as follows:

• 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

Provinces and Territories were to determine how they would implement the NCBS as long as they utilized the Federal funding to support the two primary program objectives noted above.

There have been a variety of approaches by the Provinces and Territories in implementing the NCBS since its introduction in 1998, as follows:

• Treatment of NCBS as income and thereby reducing benefits provided to social assistance recipients (Ontario, Manitoba, PEI, Nova Scotia (Until July 2001), Yukon, Northwest Territories and Nunavut)
• Reduction in social assistance benefits by the amount of the NCBS (Alberta)
• Restructuring of income support programs and the provision of an integrated child benefit program separate from social assistance. Some Provinces combine the federal and provincial benefits and reduce the Provincial benefit by the amount of the NCBS (Saskatchewan and BC). Others reinvest the NCBS in child benefits but do not pass on the NCBS increases. (Newfoundland and Nova Scotia)
• NCBS is passed on directly to families on social assistance (New Brunswick).

Some Provinces have chosen not to recover the NCB supplement increase. (Newfoundland, Manitoba) Also, in 2001-2002 Manitoba stopped recovering the NCBS for children age six or under)

For those Provinces and Territories reinvesting NCBS savings, they are generally targeted to child benefits and other supports for low-income families such as child care, recreation and early child development programs.


REPORT

1.  Reinvestment of the NCBS at the Provincial and Local Level

Provincial

• The Province has reinvested its 80% share of the NCBS predominantly on the Ontario Child Care Tax Credit which is a benefit provided to low to moderate income families for every child under age seven. In addition, there have been reinvestments in Children's Mental Health programs.

Local

• CMSM's across Ontario have reinvested their 20% of the NCBS savings into a variety of programming targeted to low income families.
• In Niagara, a total of $4 million in NCBS savings has been generated since its introduction in 1998.
• The NCBS savings are predominantly being utilized to fund child care services and supports given the under funding that exists in this area. The result is that families across Niagara receive an increased level of service as a result of the existence of the NCBS savings. In fact, the NCBS may have served to mask the severity of the funding issues in this program area.
• The result of the NCBS reinvestment funds is that the Region has become dependent on this source of funding to ensure the availability of important services such as extended hours of child care and summer camp programming.

2.   Impact of the National Child Benefit Supplement on Child Poverty

• The Federal Government's 2001 report on the National Child Benefit Supplement indicates that there have been improvements in the incidence of child poverty in recent years and that the National Child Benefit Supplement is having an impact.
• A similar general conclusion was reached by Andrew Jackson of the Canadian Council on Social Development in a paper he authored related to child poverty and child benefits.
• However, Jackson's research indicates that although the general trend indicates a reduction in the incidence of child poverty, there are some disturbing trends related to depth of poverty particularly for children of families on social assistance. This trend is the most pronounced in Provinces that have reduced their social assistance benefits during the 1990's specifically in Ontario and Alberta.
• His analysis concludes that the NCBS and an improving labour market, in the latter part of the 1990's, has had a positive impact particularly for working families with children.   However, for non-working families with children, the situation has deteriorated over this same period.
• This finding is very concerning for families with children who are in receipt of social assistance in Ontario. There are very serious implications for child development associated with persisting levels of poverty which NCBS reinvestments cannot alleviate.

3.  Making the Best Investment of the National Child Benefit Supplement
 

• Many CMSM's across Ontario are questioning whether the reinvestment of NCBS savings to support programming for all low-income families is the best or most fair approach given the struggles that families on social assistance are facing.
• Increasingly Municipalities are coming to the conclusion that the best use of the NCBS would be to provide it directly to families in receipt of social assistance. With this approach each family would see a change in their personal circumstances at a time when it is difficult to meet basic needs with the current social assistance rates.
• Some municipalities have passed resolutions asking the Ontario Government to alter its policy regarding the treatment of the NCBS as income for social assistance recipients. (Toronto, North Bay, Kingston, York Region)
• Many of the CMSM's are suggesting a phasing-in of the change in provincial policy to enable them to seek alternative sources of funding for critical services that are currently being supported by NCBS savings.
• Although this approach would be an improvement over the current situation, what is really needed is an increase to social assistance rates, combined with a positive labour market environment. These two factors would make a tremendous difference in the circumstances of low-income families as they work toward achieving economic independence through employment.

CONCLUSION

The National Child Benefit Supplement has had a positive impact for many low-income families who are working. However, for families on social assistance, the depth of poverty has increased, particularly in Ontario where social assistance rates have been reduced.

The reinvestment of NCBS savings into local programming such as child care is a positive initiative that has an impact across many low-income residents in Niagara. Retention of the National Child Benefit Supplement by social assistance recipients would result in a much more direct and significant impact on the circumstances of these families and their children.



Submitted by:   Approved by:





________________________________    __________________________
Susan R. Reid, Commissioner                        Mike Trojan
Community Services Department                   Chief Administrative Officer


This report was prepared by Lorraine Graham-Watson, Director, Social Assistance and Employment Opportunities Division in consultation with Pat Heidebrecht, Director, Children's Services Division.

References:

1.  The Progress of Canada's Children, 2001, Canadian Council on Social Development, March 2001

2.  The National Child Benefit Supplement 2001 Progress Report, Government of Canada, 2002

3.  Jackson, Andrew, The Incidence and Depth of Child Poverty in Recession and Recovery - Some Preliminary Lessons on Child Benefits, June 2001