Avoid a claw back by delivering the Choice in Child Care Allowance through the Child Tax Benefit

March 13, 2006

By Dennis Howlett, Executive Director, National Anti-Poverty Organization

There is a danger the Conservative ’s Choice in Child Care Allowance could be clawed-back by some provincial governments from some of the poorest families, namely those receiving social assistance.

As a recent commentary paper by Ken Battle from the Caledon Institute of Social Policy, The Choice in Child Care Allowance: What You See is Not What You Get, explains unless there are specific exemptions negotiated with the provinces, these payments would most likely be treated as income.  Social assistance benefits could be reduced by the equivalent amount.   The poorest families and children would then get absolutely no benefit from this program.

If the intent of this allowance is to recognize the additional costs families incur when they have young children and provide some social support to help them with these expenses then the Conservative government needs to ensure that this payment will be available to all families, especially the poorest.

The best way to deliver this allowance, in our view, would be through the existing Child Tax Benefit. The Child Tax Benefit (the base amount) is a non-taxable benefit that is already exempt from being counted as income by provincial welfare programs and therefore not subject to claw-back from social assistance recipients.

There is still a problem with many provinces clawing back the National Child Benefit Supplement, the additional benefit available for low-income families, but that is another issue.

If the government chooses to target an additional benefit to families with children under 6, rather than to all children up to age 18, or make this additional benefit universal (available to all families regardless of how high the income) they can still do so for this additional amount with minor adjustments to the Child Tax Benefit system.

The Child Tax Benefit is a proven program that has helped to reduce the extent and depth of child poverty and it would be great to improve it. Any increase in benefits would be welcome, even if it doesn't come up to the $4900 per child that the National Anti-Poverty Organization, Campaign 2000 and the Make Poverty History campaign have called for as a key part of a plan to end child poverty in Canada.

There are significant efficiency arguments in favour of delivering the Choice in Child Care Allowance in this way as well. The Child Tax Benefit system is already set up with over 90% of families with children registered and it is already delivering monthly cheques. Setting up a whole new program and sending out two separate cheques each month to families with children would be a wasteful use of resources.

NAPO believes that the Choice in Child Care Allowance does not replace the need for continued daycare funding. We believe the early learning and childcare agreements negotiated with provincial governments should be honoured. The lack of quality day care spaces in many communities is a major barrier, especially for poor single parents, to getting work that could help them escape poverty. It should be possible to both provide additional support to families with young children and support the development of a national early learning and child care program.