Social Policy in Ontario

Child poverty a better target for family relief

Posted on November 8, 2014 in Social Security Policy Context

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TheStar.com – News/Insight
Nov 07 2014.   By: Edward Keenan, Columnist

Let’s imagine you’re a prime minister with $4.6 billion to spend. Do you:

Eliminate child poverty? Or,

Give upper middle-class parents a 1 per cent increase in income?

Interesting choice. On the one hand, you have this longstanding pledge from the government of Canada — made way back in 1989 — to eliminate child poverty. On the other hand, you have a more recent pledge made by your party to deliver an income-tax cut to couples with children who have one high-earning spouse. Which promise do you choose to fulfill?

We know Stephen Harper’s answer. He delivered it last week, when he held an event to announce a series of tax measures and spending increases targeted squarely at parents. The tax proposals will benefit two-parent families of children under 18 in which one spouse earns much more than the other, by allowing them to divide their income for tax purposes. The spending proposal increases the amount of the Universal Child Care Benefit for all parents with children under 18.

The effect, Harper says, will help parents “from across the income spectrum benefit.”

Of course, parents at the top of the income spectrum seem to benefit quite a bit more in absolute terms. According to an analysis conducted by John Geddes for Maclean’s magazine, the total package of measures will give the average family with an income under $60,000 an additional $970 per year, while families with incomes over $180,000 per year will get, on average, an additional $1,452. Those with incomes in between those brackets will, as you might expect, see average returns in between. People without children younger than 18 get nothing. Geddes says the total package should cost the government roughly $4.6 billion per year.

Setting aside the raging debates about fairness stemming from different household childcare and earnings arrangements, what else could we do with $4.6 billion per year aimed at helping children? What if our goal was not to give a little to those from across the income spectrum, but instead to give a lot to those who need it most?

Could we eliminate child poverty? I think we could come close.

According to Statistics Canada, there were 546,000 children living in low-income households in Canada in 2010, using their Low-Income Cut-Off (LICO) measurement. According to analysis by Citizens for Public Justice released last year, the average “poverty gap” for a low-income family of four in Canada’s biggest big cities is $12,046. That’s the amount of money they’d need to reach the LICO and no longer qualify as “low-income.”
That $4.6 billion in federal spending, concentrated on just those children living in low income households, would average $8,424 per child.

I’m finding it hard to get statistics that show the exact composition of low-income households with children and the poverty gap for all of those, but it seems conceivable to me that we could end child poverty, as measured by the LICO, with means-targeted increases to the Child Care Benefit totaling less than $4.6 billion. Or come pretty close.

There are other “poverty line” measures that encompass more children and show higher income gaps, and it would be more expensive to eliminate child poverty using those measures. Obviously, no matter which poverty line we bring people’s income up to, we won’t eliminate economic hardship or the struggles that come with it. A family of fours has to get pretty far above the $36,504 Toronto LICO before they start to feel anywhere close to comfortable.

But as a conceptual frame for how we choose to help parents and children, I think it’s interesting to weigh the possibility of lifting every child in Canada above the poverty line the LICO is often used to represent. It makes clear the size of the difference in people’s lives we could make if we targeted these same budget dollars at poor parents, rather than using some of them to let people earning $180,000 keep 0.8 per cent more of their income.
Eliminate child poverty, or introduce income splitting: Which would you choose? Stephen Harper has chosen for us. I think he chose wrong.

< http://www.thestar.com/news/insight/2014/11/07/child_poverty_a_better_target_for_family_relief.html >

Tags: budget, child care, featured, ideology, participation, poverty, standard of living, tax, women

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