Children of parents who receive CCB benefits today will ultimately pay for program

Since 2015, the Trudeau government has shown a clear preference for providing Canadians benefits today, financed by debt that imposes costs on the next generation, and a disinterest in targeting assistance to those in need. Given the state of federal finances and their future path, the government must make hard decisions about several programs including the Canada Child Benefit (CCB), one of the Trudeau government’s signature reforms.

The CCB provides tax-free benefits to eligible families with children under the age of 18. Before the 2015 election, the Harper government expanded two existing programs—the Universal Child Care Benefit (UCCB) and the Canada Child Tax Benefit (CCTB)—to provide larger benefits and cover more families, increasing the total cost of the programs from $14.2 billion to $18.0 billion.

After the winning the election, the Trudeau Liberals scrapped the two programs and created the CCB in 2016. The estimated cost of the new program was significantly higher than the previous two programs—even after their expansion. For instance, the previous two programs were to cost an estimated $18.7 billion in 2019-20 compared to the CCB’s actual cost of $24.1 billion, an increase of almost 30 per cent.

As a new analysis demonstrates, all of the increase was financed by borrowing. Indeed, the increased spending on the CCB between 2015 and 2019 (pre-recession) is the single largest dollar increase of any federal program or department.

Of course, while it’s never described as such, financing the increased spending by borrowing effectively means that children of the parents who receive CCB benefits today will bear the costs of the program in the future. And it’s also important to understand how the Trudeau government used the increased spending on the CCB.

Contrary to the government’s rhetoric, the CCB does not target those in need—in fact, it provides benefits to roughly 90 per cent of Canadian families. A near universal program (again, which covers 90 per cent of families) can’t be described as “targeted to those in need.”

More specifically, only 16.2 per cent of the total money spent on the CCB is for families with incomes below $40,000. Indeed, more than half of total CCB spending (50.3 per cent) goes to families with incomes of $70,000 or higher.

For more evidence, compare the new CCB to the two programs (UCCB and CCTB) it replaced. Under the UCCB and CCTB, 21.8 per cent of total spending went to families with incomes below $40,000. Today, that percentage has fallen to 16.2 per cent.

And families with incomes between $50,000 and $120,000 previously received 44.4 per cent of the total benefits whereas they now receive 56.9 per cent. Clearly, the new CCB was designed to benefit middle-income and even some upper-income families rather than target assistance to lower-income families.

And again, the Trudeau government has financed the increased CCB spending entirely by borrowing, which means the children of Canadians currently benefitting from the program will ultimately pay for it.

The magnitude of Ottawa’s current borrowing, which has produced a federal budget deficit estimated at more than $340 billion, coupled with concerning expectations for Canada’s fiscal future—specifically that Ottawa won’t balance its budget for at least 30 years—requires a thorough evaluation of federal spending. The government should reform programs such as the Canada Child Benefit to better focus on Canadian families genuinely in need.