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Working families also need a wide range of social and healthservice supports to enhance their parenting capacity, ease the conflictsbetween work and home, and help deal with problems that income alone cannotsolve. Child care, early childhood development and supplementary healthcare are key items among a range of positive supports for families withchildren.

Another problem arises from the fact that prospective workersoften are blocked from entering the labour market because of the costsassociated with return to work. These include transportation for jobinterviews; work clothing; license to drive a vehicle for work purposes or tooperate equipment; professional dues or license fees; and work tools orprotective gear. There is a need for financial assistance for thetransitional period during which the unemployed establish themselves in thelabour market.

In short, the key policy responses with respect to the reform ofsocial assistance lie outside social assistance. Canada’s approach in this regard isdiscussed in the next section.

Overhaul of SocialAssistance

and ChildBenefits

Almost all major social programs in Canada have undergone or arein the process of experiencing changes in the transition from the universalistto post-welfare state. Some of these shifts have been incremental, thougha series of such seemingly modest changes over time can add up or lead to moresignificant structural reform. Other changes have been more immediate andradical.

The most dramatic reform in income security in recent yearsinvolves an overhaul of the social assistance and child benefits system inCanada. As noted, social assistance has been plagued by numerous problemsover the years and is the subject of ongoing attack  both by governments thatsupport it and by a public that, for the most part, resents the expenditure oftax revenues for this purpose.

The child benefits system required reform for differentreasons. It was a patchwork of several programs intended to achievevarious purposes.

The reform discussed below has resulted in a reconfigured socialassistance and child benefits system. It means that the bulk of incomesecurity benefits paid to Canadian families are delivered on an income-testedbasis. Income testing has become, in effect, the central organizingprinciple for a major income security program (the Canada Child Tax Benefit)which provides financial assistance to nearly eight out of ten Canadianhouseholds.


Social assistance (commonly known as ‘welfare’) is Canada’s income program of last resortand is delivered by the provincial governments. It provides financial aidto individuals and families whose resources are inadequate to meet their needsand who have exhausted other avenues of support. While welfare generallyis directed toward persons who are unemployed, it also can assist workinghouseholds whose needs exceed their resources.

Each province sets its own rules that govern eligibility and levelof assistance. Despite their differences, all jurisdictions have severalfeatures in common. Applicants generally qualify for welfare on the basisof three factors: provincial definitions, the value of their liquid assets anda needs test.

Provincial definitions set out the rules for the types ofindividuals and families that may apply for welfare. For example, mostjurisdictions do not allow strikers to receive social assistance except undercertain limited conditions. There are also rules regarding theeligibility of full-time students at postsecondary educational institutions andparental dependants.

A second component of eligibility is known as the ‘liquid asset exemptionguidelines.’Liquid asset exemptions refer to the amount of cash or cash-convertible assetsthat a given household may have and still be eligible for welfare.Allowable limits vary by jurisdiction. There are also rules regarding themaximum value of fixed assets  e.g., house, furniture, car or equipment.

The central eligibility criterion for welfare in every province isthe needs test. A needs test takes into account a household’s basic needs such as food,clothing, shelter and utilities. It also considers thehousehold’s specialrequirements such as medication, health-related diets or equipment for adisabling condition.

The needs test then identifies the resources available to meetthose basic and special needs. Resources include earnings, governmentbenefits, private savings, support payments, insurance claims, pensions andincome derived from any other source.

A household may be eligible for social assistance if it qualifiesaccording to the various rules and its needs exceed available resources.Each province employs a unique set of rules to determine the rates ofassistance provided in their respective jurisdiction. Rates vary on thebasis of family size, age of children, marital status of the family head,employability of the family head and other factors, such as the presence of adisabling condition.

Earnings exemptions guidelines are another key component of socialassistance. ‘Earnings exemption guidelines’ refer to the amount of incomethat welfare recipients may earn from outside employment without affectingtheir welfare entitlement. Once their earnings exceed a specified limit,their welfare cheques are reduced by a designated amount.

These guidelines vary throughout the country. In someprovinces, such as Quebec, earnings exemptions take the form of a flat-rateamount. Welfare cheques are reduced by one dollar for every dollar ofincome earned over and above that amount. In other jurisdictions, such asYukon, exemptions are expressed as a percentage of earnings. Recipientsmay keep a certain percentage of their employment-related earnings to adesignated maximum before their welfare cheques are reduced.

Most jurisdictions employ a combination of flat-rate and variableexemptions. Recipients may earn up to a certain level as well as anadditional amount that represents a percentage of their earnings. Welfarepayments are reduced beyond that point.

Despite the variability in social assistance benefits, alljurisdictions pay benefits that fall below commonly accepted definitions ofpoverty.

Welfare benefits for a single parent with one child, for example,ranged from 70 percent of the poverty line in Newfoundland, 60 percent inPrince Edward Island, 63 percent in Nova Scotia, 62 percent in New Brunswick,57 percent in Quebec, 60 percent in Ontario, 50 percent in Manitoba, 59 percentin Saskatchewan, 50 percent in Alberta and 60 percent in British Columbia(these are the latest available figures for 1999, published by the NationalCouncil of Welfare). Poverty line comparisons are not available for theTerritories because the poverty line standard used for these calculations doesnot apply to the northern regions of the country.

Welfare benefits for single persons considered able to work wereeven lower. In 1999, rates ranged from nine percent of the poverty linein Newfoundland to a ‘high’ of41 percent of the poverty line in Ontario. Benefits for single personswith disabilities went from a low of 42 percent of the poverty line in Albertato a high of 70 percent in Ontario in 1999. For two-parent families withchildren, 1999 welfare incomes ranged from a low of 45 percent of the povertyline in Quebec to 62 percent in Prince Edward Island.

Welfare benefits are considered inadequate not only in absoluteterms - that is, theiractual value. They are also inadequate in relative terms because they arenot indexed to increases in the cost of living. Increases tend to bespotty and erratic. While the cost of living has risen over the years,welfare benefits have been frozen or reduced in most jurisdictions.

In addition to providing benefits that are low in both absoluteand relative terms, most provinces have introduced new rules which make it moredifficult for certain households to get on or remain on welfare. Thepurpose of these tightened eligibility rules is to reduce the size of thewelfare caseload.

Quebec, for example, was the first jurisdiction to bring in aparental contribution. Adults 18 years of age and over who have not yetdeclared their independence (e.g., they are not married; they have no childrenof their own to support) are considered dependent. Their parents arerequired to contribute maintenance and support.

Ontario announced in 1995 that an employable person quitting orlosing a job without just cause was disqualified from applying for welfare forthree months. Several provinces have reclassified single parents withyoung children as employable - which means that they can remain on social assistance only for ashort period before they are expected to start participating in ‘active,’ work-related measures.

Some provinces, such as Ontario, have completely revamped theirwelfare systems. In 1997, the province replaced two existing welfare lawswith Ontario Works, intended for employable welfare recipients, and the OntarioDisability Supports Program for persons with long-term disabilities.Ontario Works has been particularly controversial. It was the first timethat any province had introduced a program which made it mandatory forrecipients to participate in work-related or community serviceprogram.

Other jurisdictions have not undertaken as fundamental a reform asOntario. But over the past few years, they all have introduced some typeof ‘activeprogramming’ a concept promotedby the OECD.

While these programs vary, they typically follow the same generalpattern. They seek to provide welfare recipients with the supports andskills they need to move off the program as quickly as possible. Theassistance may take the form of job search,preparation of résumés,literacy training, skills development, academic upgrading and referral toemployment.

In addition to the active measures that focus on work skills andrequirements, provinces have introduced various supports  such as earnings supplements,extended health benefits or child care subsidies  designed to encourage workforceparticipation. Jurisdictions have brought in these measures in respect ofthe National Child Benefit reinvestment strategy, discussed below.

Child Benefits

Canada is undertaking a major restructuring of its principalfederal and provincial child benefit programs through a jointfederal-provincial initiative called the National Child Benefit. Theinitiative is at the leading edge of the transition from the universalist topost-welfare state in Canada.

In Canada, child benefits historically have pursued twofundamental objectives. These can be characterized as the ‘anti-poverty’ and ‘horizontal equity’ objectives.

Under the anti-poverty objective, child benefits help fill the gapbetween the earnings of low- and modest-wage parents and theirfamilies’ incomeneeds. The need to fill the gap is based on the fact that a marketeconomy does not vary wages and salaries to take into account the number offamily members dependant on that income. The horizontal equity objectiveviews child benefits as one way for society to provide some financialrecognition for the fact that families at all income levels with children facecosts that childless households at the same income level do not.

These twin objectives are linked. Both assume that societyhas an obligation to help parents with their childrearing costs becausechildren are viewed at least partially as a ‘public investment.’ Children grow up to becomeworkers, taxpayers and citizens. It is in the interest of everyone including thosewithout children that parents not face undue financial strain in their childrearing ‘work.’ Parents do thiswork, in part, on behalf of everyone.

The anti-poverty objective acknowledges that lower-income familieshave the least financial capacity. This objective also seeks to reducethe higher personal and societal risks of child poverty in terms ofchildren’s immediateand long-term health, learning capacity and educational performance.

For low-income families, the anti-poverty and horizontal equityobjectives of child benefits are basically the same. Concern about thehorizontal equity objective typically has focussed on non-poor families, whichhave suffered a substantial decline in their child benefits since themid-1980s. (For some high-income families, child benefits havedisappeared altogether.)

The anti-poverty and horizontal equity objectives of childbenefits are fundamental to the universalist conception of social policy.But they remain central to the post-welfare model as well. The key issueis not the validity of the objectives of child benefits  which are as valid andimportant today as they were a century ago. The major issue is how bestto achieve them. The National Child Benefit seeks to construct a moreeffective and efficient means of pursuing the anti-poverty and horizontalequity objectives of child benefits.

The rise of income-tested targeting

The long-term trend in Canadian child benefits has been towardgreater ‘targeting.’ This means that child benefits are geared to need asmeasured by family income. Since the late 1970s, the anti-povertyobjective has been accorded greater weight at the expense of the horizontalequity objective.

However, while Canada’s child benefits system calculates the amount of payments on thebasis of family income, it is not targeted narrowly to the poor in terms ofeligibility. Rather, it is a broad based system that covers the largemajority of families (eight out of ten households with children).

In recognizing the need to restore the child benefitsystem’s horizontalequity capacity, payments are now being increased for non-poor families.Coverage will expand to more than 90 percent of all families with childrenwithin the next few years.

The history of Canadian child benefits can be divided into fivemain periods. The first phase, between the two World Wars, can becharacterized as ‘regressive targeting.’ The personal income tax system provided achildren’s taxexemption that delivered its benefits in the form of tax savings whichincreased with taxable income and excluded families that did not owe incometax. In fact, most families were excluded in those times of widespreadpoverty and low average incomes.

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