New child benefit impact on child poverty overblown
In September, I expressed my concerns that the new Canada Child Benefit (CCB) may not be responsible for a 40% reduction in child poverty as claimed by the Minister of Employment and Social Development Canada (ESDC). Using Statcan’s tax modelling software SPSD/M, I calculated that you’d get a 14% drop in child poverty due to the CCB by 2017, not 40%. The only way you’d get a 40% reduction is if you started the clock in 2013 and counted all reductions in child poverty even if they happened prior to the CCB. But I hedged my bets and chalked it up to ESDC using a different model. Turns out, my initial unhedged suspicions were confirmed earlier this week.
Jordan Press, of the Canadian Press, obtained a 20 page Access to Information Request on ESDC’s internal CCB modelling and he shared it with me. The smoking gun was on the second last page of that request and I’ve reproduced it here with some additional calculations based on it:
|Percentage reduction in child poverty since 2013||0%||2.7%||19.6%||30.4%||40.2%|
Source: Projections of ESDC obtained under an Access to Information request by the Canadian Press and author’s calculations
With this table, it’s quite straight forward to see that ESDC is projecting a 40% decline in child poverty between 2013 and 2017. This is a big decline to be sure and something to be trumpeted (although we’re not seeing so dramatic a decline using other poverty measures like LIM-AT). The issue is that most of that decline has already happened prior to the CCB being fully implemented. There is a 30% decline in child poverty between 2013 and 2016, i.e. prior to the CCB being implemented. There is a 10% decline between 2016 and 2017 after the CCB comes into full force.
While it’s certainly correct to say that child poverty is projected to decline by 40% between 2013 and 2017, it’s not correct to say that that was caused by the CCB, as ESDC has been claiming. In fact, 30% of that 40% happened prior to the implementation of the CCB mid-way through 2016. In fact, much of the reduction had already happened prior to the Liberals being elected in late 2015.
All of these issues aside, the Statcan model projects a reduction of 14% due to the CCB, slightly higher than the 10% suggested by the ESDC table above. Frankly a 14% or a 10% reduction in child poverty is good news. But we need to remain transparent about what the CCB is actually responsible for. Clearly it can’t be responsible for reductions that occurred up to three years prior to its implementation.
On a final point, I’m a fan of clear goals for poverty reduction and a 40% reduction in child poverty over a four year mandate is an ambitious goal, although I don’t think this is exactly what ESDC had in mind with this 40% figure. The CCB would get the federal government 10% to 14% of the way there. I hope they keep up their efforts to get to the full 40%.
Economist with the Canadian Centre for Policy Alternatives.