June 30, 1998
To:Community and Neighbourhood Services Committee
From:Commissioner, Community and Neighbourhood Services
Subject:National Child Benefit Supplement
Purpose:
The purpose of this report is to provide information on the recently announced Federal National Child Benefit
Supplement (N.C.B.S.), which will be introduced July 1, 1998. The new Benefit is described, and the implications for
social assistance clients discussed. Implementation issues are identified. Reinvestment of potential social assistance
program savings related to the introduction of the N.C.B.S. are also discussed.
Financial Implications:
Social assistance program savings for the City of Toronto in 1998, based on the five month period August 1 to
December 31, resulting from the introduction of the National Child Benefit Supplement are estimated at approximately
$15 million gross/$3 million net. On an annualized basis, program savings are estimated at $36 million gross/7.2 million
net.
Recommendations:
It is recommended that:
(1)Upon finalization of the Provincial framework governing how municipal program savings achieved as a result of the
introduction of the N.C.B.S. are to be used, the Department will develop a plan for reinvestment of City of Toronto
savings and report back to the Community and Neighbourhood Services Committee in the fall of 1998; and
(2)the appropriate City Officials be authorized and directed to take the necessary action to give effect thereto.
Background:
Effective July 1, 1998, the Federal government will create the new Canada Child Tax Benefit (C.C.T.B.), which
combines existing programs assisting low income families, and introduces the new National Child Benefit Supplement
(N.C.B.S.). The stated objectives of the new program are to:
1.Help prevent and reduce child poverty; and
2.Promote attachment to the workforce - resulting in fewer families having to rely on social
assistance - by ensuring that families will always be better off as a result of finding work.
Appendix 1 displays the amounts provided to eligible families under the new program structure.
This change is the culmination of a number of changes in the past decade to Federal government programs assisting
families with children. In 1987, the Federal government originally introduced the Child Tax Benefit (C.T.B.) with the
aim of providing a more targeted approach to supporting low income families with children. In 1993, the Federal
government introduced a Working Income Supplement (W.I.S.) targeted to working low-income families. Both the
W.I.S. and C.T.B. were considered as non-chargeable incomes for the purpose of calculating social assistance
entitlement.
Effective July 1, 1998, the National Child Benefit Supplement (N.C.B.S.) is being introduced. It is targeted at low
income families, including those who currently receive the W.I.S. The N.C.B.S. effectively displaces some of the
child-related portion of social assistance benefits. The Supplement will be deducted from social assistance payments,
whereas the W.I.S. was not.
All families with children in receipt of social assistance will continue to receive income provided under the C.T.B.,
which will not be deducted from their entitlement.
This report provides an overview of the N.C.B.S., the impact for existing social assistance recipients, implementation
issues, and reinvestment opportunities.
Discussion:
Eligibility for the National Child Benefit Supplement is based on income declared in the previous tax year, and the
number of children in a family. The yearly maximum allowance under this program is $605.00 for the first child, $405
for the second, and $330 for each additional child. It is clear that the intent of the program is to support the incomes of
the working poor.
As noted, the program's design requires N.C.B.S. dollars to be deducted dollar for dollar from the family's social
assistance entitlement. Regulatory changes have been made under the Ontario Works Act to consider the N.C.B.S. as
100 percent chargeable income. As a result, families on social
assistance will not see any improvement in their overall income. Appendix 2 illustrates how the new program will affect
a sole support parent with one child in a range of different situations.
Implications for Families on Social Assistance:
As discussed in the Community and Neighbourhood Services Department's May 11 report to Committee, one critical
effect of the treatment of income under the new Supplement is that families on social assistance with a net entitlement
less than or equal to the N.C.B.S. will no longer be eligible for social assistance (see Appendix 3). As a result of other
changes to program benefits made as part of the new Ontario Works Act regulations, which have been described in a
number of recent reports to Committee, these families will also no longer be eligible for program benefits such as a drug
card. Based on the current caseload, it is anticipated that approximately 400 cases could be affected.
The intention in designing the N.C.B.S. was not to make families worse off. However, this will be the case if families
are no longer eligible for social assistance because they are in receipt of the new N.C.B.S. The Department previously
noted, in its report to Committee dated May 11, that the Provincial government should ensure that provisions are made
in order that no families currently on social assistance will become ineligible. In a recent press conference introducing
the new program, Social Services Minister Janet Ecker stated that "her ministry is prepared to help families who are
'negatively impacted'. The Department will seek further information regarding the Ministry's efforts in this regard.
Implementation Issues:
Of the City's 83,157 total caseload in May 1998, approximately 37,000 cases, involving families with children, will be
impacted by the N.C.B.S. There are a number of important implementation issues related to the introduction of the new
Supplement.
An automatic linkage will be put in place between the federal and provincial data base that will identify social
assistance clients who receive an N.C.B.S. deduction. As a result of this data exchange, in August 1998, the Province
will automatically deduct through the Social Services Division computer system (M.A.I.N.), the N.C.B.S. for 26,000 of
the 37,000 cases on the City's caseload that will receive N.C.B.S. income.
However, due to the inherent design features of this system, caseworkers will be required to manually input the
N.C.B.S. deduction for an estimated 11,000 cases per month, where other income sources are also deducted. In addition,
caseworkers will be required to enter the N.C.B.S. deduction for new cases, and any of the 26,000 existing cases where
there has been a change in reported income, for example, where a client's earnings have fluctuated.
As well, the N.C.B.S. benefit is based on the family's income and number of dependents as reported in their previous
year's tax return. However, social assistance information is based on current financial and family circumstances.
Therefore, it is inevitable that there will be discrepancies between these sources of information. For example, in their tax
return, a family may have reported two dependents. However, in the intervening period, one child may have turned 18,
and is no longer eligible for the N.C.B.S. In such situations, caseworkers will be required to ensure that information is
consistent and up-to-date.
For these reasons, implementation of the N.C.B.S. will significantly increase the administrative workload facing front
line staff. Training is also being provided to staff throughout the Division. Ultimately, this change, in conjunction with
the implementation of the administratively intensive new social assistance regulations and directives, will make it
difficult for staff to spend the time needed to actively assist clients seek and obtain work. This represents an ongoing
problem, given that the focus of O.W. is to move clients into employment as rapidly as possible.
Reinvestment of Provincial and Municipal Savings:
The Federal and Provincial governments have worked together to create the National Child Benefit Supplement. In
effect, because N.C.B.S. income will be deducted from families on social assistance, the Federal government will free up
resources that the Provinces/Territories currently spend on welfare benefits for children. All Provinces and Territories, in
turn, have agreed to reallocate these savings to help fund their own programs for low-income families with children -
both working families and those receiving social assistance.
The Provincial and Federal governments expect and require that all net savings be reinvested in a manner consistent
with N.C.B.S. program objectives. All provinces and territories have agreed to re-allocate savings to fund programs for
low income families with children. The Ontario government has extended to municipalities the expectation that their
savings be invested in a similar manner. Therefore, municipal discretion to reinvest savings will be contingent on the
Provincial framework governing the types of programs that can be funded. This information has not yet been made
available to the Department. Within this framework, the Department will explore the range of program options that are
eligible and report back with recommendations for reinvestment.
An accountability process is being developed which will include the participation of municipalities to ensure that,
without exception, Provincial and Municipal savings are directed to programs that benefit children.
Municipal Savings:
Social assistance program costs are cost shared 80 percent by the province and 20 percent by the municipality. In
Ontario, it is estimated that the Provincial share of program savings will be up to $150.00 million annually, which will
subsequently be available for reinvestment purposes.
Given the information currently available to the Division, it is estimated that Toronto's maximum total program savings
for the period August 1, 1998 to December 31, 1998 will be $15 million gross/$3 million net in the Ontario Works
program. On an annualized basis, program savings are estimated to be $36 million gross/$7.2 million net. Additional
savings to the City may be realized in 1998 under the Family Benefits program, given that benefits for a substantial
number of sole support parents continue to be delivered by the Province. However, at this time, it is not possible to
accurately calculate the final savings from this source.
These estimates have been predicated on families with children receiving the maximum N.C.B.S. amount which is then
deducted from their entitlement. However, approximately 10-15 percent of both the City's and the Family Benefit
caseload will not have a deduction from their social assistance entitlement for one year. This is due to the Provincial
decision to grandparent families on the caseload who are working, and who were previously in receipt of W.I.S.
Therefore, actual program savings will be somewhat less than the above estimates.
Conclusion:
Overall, the new National Child Benefit Supplement represents a positive effort to assist working poor families in
Canada. The co-operation demonstrated by the Federal and Provincial governments in pursuing this policy initiative is
commendable. However, with respect to the impacts on O.W. clients, the Department remains concerned that there will
be a number of families who will no longer qualify for assistance, and will lose important benefits such as a drug card,
due to the introduction of the N.C.B.S.
The Department is also concerned that the implementation of the N.C.B.S. will generate increased administrative
workload for front line staff. The Department has previously noted in its assessment of the recent changes to the social
assistance legislation and regulations that the depth and scope will make it difficult for staff to move clients into
employment as rapidly as possible.
The Province is currently developing a framework that establishes the parameters governing how municipal social
assistance program savings are to be utilized. Working within these parameters, the Department will develop a plan for
reinvestment of City of Toronto savings and report back to the Community and Neighbourhood Services Committee in
the fall of 1998.
Contact Name:
Heather MacVicar, General Manager
392-8952
General Manager, Social Services Division
Commissioner, Community and Neighbourhood Services
Appendix I
Canada Child Tax Benefit
N.C.B.S. chargeable income$ 50
Family remains eligible for social assistanceFamily is no longer eligible for assistance
because with the N.C.B.S. chargeable income the net assistance is a negative amount.
