The budgets of 1985, 1989, 1992, 1996 and 1997 had very similar themes. Benefits of affluent Canadians would be reduced and the funds used to increase support for "those most in need." There has been a consistency in these various budgets and policy changes, official documents highlight and over-state the increases in support to low-income children and they ignore that child benefits have not been indexed to inflation since 1985.

I have collated a selection of quotes below. These quotes would lead any casual observer to assume that support for poorer children today exceeds that of a few years ago. The reality is that the increases for poor children announced in the 1985 budget were wiped out by inflation by 1990. The only increase since 1989 than has been the Work Income Supplement for the working-poor.

The Child Benefit System 1984-1997 Constructing an Illusion of Fairness

Illusion : Support for the poor is being increased.

Reality: The poorest of children receive less benefit from the Child Tax Benefit (CTB), in 1997 than they did in 1984. The only families whose support has increased are the working poor with incomes between roughly $10,000 and $25,000.

Selected Quotes Supporting the Illusion:

"Changes in these programs which may result from this review should improve benefits for those most in need."
Child and Elderly Benefits - Consultation Paper - January 1985, Health and Welfare Canada, Government of Canada.

"The changes will ensure greater assistance to families with lower incomes, ...". Budget Papers, Finance Canada, May 23, 1985, page 42.

"The federal Government promises less child benefit money in coming years for wealthy families and more for the needy." The Globe and Mail, More child benefits promised for needy, April 26, 1989

"Lower-income families with one child will receive a monthly payment of up to $144, significantly more than the monthly payment of $35 they now receive. Approximately two million families with incomes below $50,000 will receive larger monthly payments than they do now." Health and Welfare Canada, The Child Benefit - A White Paper on Canada's New Integrated Child Tax Benefit, Feb. 1992.

Don't be fooled by this statement above - there was no increase for the poorest of families. The reason that the monthly cheques are increasing was because the Child Tax Credit which delivered its benefit annually was being replaced by the Child Tax Benefit which delivered its benefits monthly. More about this type of deception in other places.

"Mr. Mazankowski's reforms will sharply raise support for low-income families with children. The plan will allow Ottawa to make monthly payments of up to $144 for each child in a low-income family, four times the current family allowance. About two million families with incomes below $50,000 a year will receive larger monthly payments than they now do." Editorial, Globe and Mail, Feb. 26, 1992.

"The most important, and most imaginative, measure in the budget is the continuing reform of Canada’s child-benefit system. The incidence of child poverty in Canada is a disgrace. The current system of family allowances and tax credits does not get enough money into the hands of those who most need it." Editorial, The Globe and Mail, February 26, 1992

"Some 1.4 million families with 2.5 million children would receive higher federal benefits." Working Together Towards a National Child Benefit System, Finance Canada, Feb. 1997.

Illusion 2: De-indexing, the lack of inflation protection, does not erode support.

Reality: Any ad-hoc increase, advertised as an anti-poverty advance, will eventually be wiped out by inflation. The Child Benefit System spending in 1997 is worth about $1 billion less than in 1984. The only increases since 1989 has been for the working poor.

Selected Quotes Supporting the Illusion:

"...., a senior official in the Health and Welfare Department, acknowledged that there will be 'a slippage' in the value of the child benefit. 'There is a loss in each year where the inflation rate is greater than zero'. 'I don't dispute that.' However, the child benefit could be increased 'on an ad-hoc basis ... when the government feels it is necessary.'" Globe and Mail, Report Blasts Child Benefits - Says New System Lowers Incomes, March 10, 1992

There have also been suggestions that families will receive less and less every year under the child tax benefit because of partial indexation of the benefit. This is wrong. The child tax benefit will increase child assistance by $2.1 billion over five years, as I mentioned." "In addition to this increase in assistance, the government is committed to reviewing the level of benefits over time and to increasing them as physical [sic] conditions permit." "Can we guarantee that we will adjust the level of benefits and the cut-off point so that will continue in the future? I do not think we can guarantee it." Finance Official - Senate Committee on Social Affairs, Science and Technology, October 7, 1992.

What happens when advocates are so rude as to mention these secrets. When forced to recognize de-indexation officials and politicians have always responded in the same way - but we have increased support; adjustments will be made as necessary.

Its like a magic trick, funds are added by a federal budget, in 1992 just before the 1993 election and in 1997 just before the most recent election. But it disappears. Where did it go?

De-indexation is the magic trick which allows a slight-of-hand. Despite the increases in these budgets support for hundred's of thousands of poor children is lower now than in 1993 and lower than 1985. Inflation allows things to move which appear stationary; it is basic to the illusion which government support appears to be increasing but is in fact declining.

What do these quotes suggest: - support for poor children is being increased. - the losers are affluent and wealthy families - bankers wives. - federal spending in this area is being increased.

What government documents and commentary by politicians and officials never mention: - the erosion in the value of spending due to inflation. - the number of poor children who's support level is eroding. - the fact that support level for modest income families, $27,000-$45,000 is declining.

One notes, for the record that full indexation of the Seniors Benefit was announced in the 1996 Budget. It's hard to escape the conclusion that while child poverty is a priority, protecting support for seniors is a greater priority.

The Change in the Child Benefit System, 1985-1997

Family Income		Value of the Child Benefit Systema			Reduction in value between 1985 and 1997
In 1985	in 1997	1985 value	1985 value in 1997 dollars	1997 value
$ 0	$ 0	$1,484	$2,152	$2,040	$ 112
$10,000	$14,500	$1,484	$2,152	$2,040b	$ 112
$10,000	$14,500	$1,484	$2,152	$3,050c	$ -898
$20,000	$29,000	$1,673	$2,426	$1,886	$ 540
$30,000	$43,500	$1,621	$2,350	$1,161	$ 1,189
$40,000	$58,000	$1,177	$1,707	$436	$ 1,271
$50,000	$72,500	$1,048	$1,520	$ 0	$ 1,520
Note: an inflation rate of about 45% between 1985 and 1997. a) If the family had children under seven with no child care deductions they would be eligible for additional support of up to $213. b) This figure assumes that the family has no earnings. c) This figure assumes sufficient earned income for the new maximum of $3,050 proposed for 1998. Source: 1985 values are from Budget Papers, Finance Canada, May 1985. 1997 Values are calculated by the author based on the data in Working Together Towards a National Child Benefit System, Finance Canada, Feb. 1997.

Let's take a minute to review the table above. I have taken the level of support as reported in the Budget of May 1985. Compared them to the support levels that would exist in 1997. I have inflated the 1985 figures by 45% to calculate the 1997 values.

The first line refers to a family with no income. They received about $1,484 in 1984 which would be worth about $2,152 in 1997. They get about $2,040 in 1997. Less. The family which earned $10,000 in 1984 would do well do earn $14,500 in 1997. Their benefits in 1984 was again $1,484. But in 1997 the support is different comparing those with earnings and those without...

Consider the next line for a minute. An income of $20,000 in 1984 translates to about $29,000 in 1997 - $1,673 in 1984 is worth about $2,426 in 1997 much more than the $1,886 that they get in 1997 - about $540 less. When did the government decide to reduce assistance to these families?

This table demonstrates that despite the occasional modest increases in the Child Benefit System since 1984 that much more has been taken out by inflation. About $ 1 billion per year has disappeared.

Testimony as it was given the the House of Commons Standing Committee on Human Resource Development:
M. Paul Crête is an MP; Ms. Margaret Biggs is a federal official.

M. Paul Crête: Dernière petite question. En 1984, le gouvernement fédéral consacrait 6,7 milliards de dollars pour les prestations fiscales pour enfants ou pour les programmes équivalents et, en 1996, on en est à 5,1 milliards de dollars. Donc, comment peut-on dire que le 850 millions qui va s'ajouter c'est une solution à la crise alors qu'à l'intérieur de 12 ans il y a une diminution de 1.6 milliard? Est-ce que les 850 millions qui viennent s'ajouter ce n'est pas trop peu, trop tard? Et est-ce que ça ne prendrait pas un investissement beaucoup plus significatif?

[English]

Ms. Margaret Biggs: I'm not sure, sir, about the first number. I'd have to check on it. I'm not sure that there has been a reduction of that order. I believe that when the child tax benefit was increased which integrated the child tax credit in the family allowance to create the child tax benefit there was an infusion of new resources at that time.

[Français]

M. Paul Crête: Les chiffres que je vous donne sont ceux de Caledon Institute ## de Ken Battle ##. Une étude qui a été menée par le Caledon Institute ## juste pour votre recherche.

Ms. Margaret Biggs: I'll follow up on that source, sir. I think the government recognizes in the budget of 1997 and indicated that the $850 million which was to be targeted towards low-income families was a first step. It was a downpayment. You saw a second commitment in the Speech from the Throne. I believe that the government realizes that this is something that as all major social programs, we have to build over time.

There has been about one billion dollars removed from Child Benefits since 1984.

With out indexation the $850 million is mostly illusion. See discusion in CBS Indexation

Richard Shillington
Feb. 7, 1998

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