Finance Canada
Budget 2000 - Budget Plan, Chapter 6: Improving the Quality of Life of Canadians and Their Children - 2
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Investing in Canada’s Children

Improved Support for Families With Children

Parents want the best possible start in life for their children. Current evidence suggests that the early years of childhood are especially vital to a child’s future ability to develop and to learn. Governments help parents meet their children’s needs in two basic ways: by providing them with income support and by offering a range of services.

To support parents and families, this budget further enriches the Canada Child Tax Benefit and significantly reduces taxes for low- and middle-income families with children. It also makes an important contribution to early childhood development by extending parental benefits and reiterating the invitation made in the 1999 Speech from the Throne for all governments to reach agreement by December 2000 on an action plan for early childhood development.

Canada Child Tax Benefit

The federal government’s primary program for helping parents meet the costs of raising children is the Canada Child Tax Benefit (CCTB).

In its last three budgets, the federal government has increased its investment in the CCTB by a total of $2 billion, bringing the total annual commitment to $7 billion. Currently, the CCTB provides families with benefits of up to $1,805 for the first child and $1,605 for each additional child. Beyond a family income of $21,000, these benefit levels are gradually reduced. Families with incomes above $67,000 generally receive no benefits. At present, about 3.2 million families receive the CCTB, including some 80 per cent of children in Canada.

The plan set out in this budget is to add $2.5 billion a year to the CCTB by 2004, bringing the Government’s total annual investment in the CCTB to over $9 billion. The goal, by 2004, is to raise the maximum amount of CCTB benefit to $2,400 for the first child and $2,200 for the second child. This will be done in several steps.

• First, this budget proposes to restore full indexation of the CCTB as of January 2000 so that its value keeps up with inflation. Although all families that receive the CCTB will gain from this measure, it will benefit low-income families proportionally the most.
• Second, this budget proposes to increase the CCTB in July 2000 by $70 per child, including indexation, for all families that receive the CCTB. When combined with the previous increase of $170 per child announced in the 1999 budget, which also takes effect in July 2000, maximum benefits will reach $2,056 for the first child and $1,853 for the second child.
• In July 2001, the CCTB supplement will be increased beyond indexation so that the total benefit for the first child reaches $2,265, on the way toward the final total benefit target of $2,400 by 2004.
• As well, over the next five years, the Government will take a number of steps to increase benefits for middle-income families. It will do so by increasing the income levels where families receive full benefits, and by reducing benefits more gradually for families with incomes beyond those levels.

These measures will improve benefits for all families currently receiving the CCTB. Approximately $1.3 billion in increased support will go to low-income families. In the three previous budgets, about 85 per cent of CCTB increases, totalling $2 billion, were directed to low-income families, where needs were the greatest. With further improvements in the Government’s finances, it is now possible to extend more of the CCTB increases to middle-income families with children: they will receive an additional $1.2 billion in benefits.

Overall, low-income families will continue to receive the greatest support from the CCTB. Of the total investment of more than $9 billion annually, $6 billion will go to low-income families.

As Chart 6.1 shows, benefits for a family with two children and income of $20,000 will increase from $3,963 to $4,832 by 2004. Middle-income families that now receive little or no support from the CCTB will see significant improvements as a result of the higher thresholds and the slower rates at which benefits will be reduced. For example, families with two children and an income of $60,000 will see their benefits more than double from $733 to $1,541 by 2004.

Building on the National Child Benefit System

Since the 1997 landmark National Child Benefit (NCB) System, federal and provincial governments have acted together to combat child poverty by helping to protect benefits for low-income parents who enter and stay in the workforce. In the past, social programs have created a "welfare wall" – parents have had to choose between staying on welfare to retain important benefits for children or taking a job and losing child-related benefits.

To address this problem, in the 1998 budget, the federal government introduced an $850-million NCB supplement to the CCTB, targeted to low-income families. This supplement was increased by another $850 million in the 1999 budget. This enabled provincial governments,¹ in a co-ordinated movement, to adjust their income support programs and redirect funds in order to extend to low-income working parents a range of services and benefits for children formerly available only to families on welfare. For example, in some jurisdictions, parents in low-paying jobs no longer lose services such as dental and vision care when they move from welfare to work.

Of the $2.5-billion CCTB increase outlined in this budget, a projected $850 million will go to the supplement. By July 2001, the supplement will be increased by $200 per child, increasing federal assistance to families by approximately $500 million annually. Thereafter, the supplement will continue to increase through indexation. By 2004, it is projected that indexation, plus an increase to $35,000 in the threshold at which the supplement is fully eliminated, will provide an additional $350 million. The federal government has consulted with provincial and territorial governments on the supplement and will continue discussions on provincial and territorial plans for further complementary investments in support of services for low-income families with children.

Total support for low-income families resulting from the enrichment of the CCTB will amount to a projected $1.3 billion by 2004. This is composed of the projected $850-million increase in the supplement and that part of the increase to the CCTB base benefit that goes to low-income families.

General Tax Relief for Families With Children

The increase in the CCTB in this budget is not the only measure benefiting families with children. They will also significantly gain from other general measures set out in the Five-Year Tax Reduction Plan.

Taking all these measures together, families with children will, on average, benefit from tax reductions of 21 per cent by 2004, compared to 15 per cent on average for all taxpayers.

• By 2004, a one-earner family of four earning up to about $35,000 will pay no net federal income tax.²
• By 2004, a one-earner family of four with $40,000 in income will have its taxes reduced by $1,623 or 48 per cent. Next year, its net federal income taxes will be reduced by $582.
• By 2004, a two-earner family of four with $60,000 in income will see its taxes cut by $1,546 or 27 per cent. Next year, this family’s federal taxes will be reduced by $501.

Employment Insurance Parental Benefits

To assist parents in balancing work and family responsibilities, the Speech from the Throne made a commitment to give parents the opportunity to take more leave from work to spend with their newborn or newly adopted children. Parental leave under the employment insurance (EI) program will be extended and benefits made more flexible and more accessible.

Including the standard two-week waiting period for benefits, the EI program currently provides up to six months of maternity and parental leave benefits, made up of:

• 15 weeks of maternity benefits for recovery from child birth; and
• 10 weeks of parental benefits available to both adoptive and biological parents.

Maternity and parental benefits are similar to regular EI benefits: they range from 55 per cent of insurable earnings up to a maximum of 80 per cent for low-income families eligible for the Family Income Supplement. In 1998-99, the EI program provided $1.2 billion in maternity and parental benefits.

This budget proposes that the maximum amount of child-related leave be doubled to one year from six months (including the standard two-week waiting period). This will be done by increasing the number of weeks of parental leave (which can be claimed by either parent or divided between them) by 25 weeks, from 10 to 35 weeks. The extended benefits will be available to parents eligible for EI with a child born or adopted on or after December 31, 2000.

In addition, benefits will be made accessible to more parents by lowering the entrance requirements from 700 to 600 insurable work hours. Parents will now be eligible for benefits with as little as 12 hours a week of work over the course of a year. This eligibility change will apply to sickness benefits as well.

Further, parents will have greater flexibility in choosing whether one or both of them spend time at home with a new child. At present, when parents share the leave, two 2-week waiting periods apply. Under this proposal, the second waiting period will be waived.

Finally, parents will be allowed to work part-time while receiving parental benefits. This will help mothers make a gradual return to the workplace following their maternity leave, if they so choose. It will also enable parents to maintain their skills and work contacts while taking parental leave. As is the case for regular EI benefits, they can have earnings of up to 25 per cent of their weekly benefit or $50, whichever is higher, without affecting their EI benefits. All earnings above that limit will be deducted dollar for dollar from their weekly benefit.

These changes will benefit an estimated 150,000 families each year. Their incremental cost is estimated at $900 million per year.

The Government will propose legislative changes so that permanent employees governed by the Canada Labour Code can benefit from the extension of parental leave by making sure that their jobs are protected during the extended leave periods. The federal Minister of Labour will continue to engage provinces in discussions over job security and parental leave.

National Children’s Agenda

While parents and families have the primary role in raising children, communities and community groups all across Canada provide significant support as well. Governments collectively also have a supporting role.

All of Canada’s governments – speaking through their First Ministers in 1997 – agreed to accelerate work on a National Children’s Agenda. As a first step, governments³ together released in May 1999 a Vision Paper to guide the efforts of all sectors of Canadian society – Canadians, communities, employers and governments – in better meeting the needs of children. This vision proposes six priority areas: strengthening the family, early childhood development, economic security, readiness to learn, adolescent development and supportive communities. The federal government will continue to work with provincial and territorial governments on these six areas.

Early Childhood Development

In October 1999, Canada’s federal, provincial and territorial Ministers of Social Services undertook to work with their health colleagues to move forward as quickly as possible on the early childhood development component of the Children’s Agenda. As the next step in advancing the Children’s Agenda, the federal government, as it did in its 1999 Speech from the Throne, invites all governments to work together to reach agreement by December 2000 on a national action plan to support early child-hood development. This plan would set out common principles, objectives and fiscal parameters for all governments to increase their support for early childhood services.

Family Law

When families break up, the needs and best interests of children must be the highest priority. The 1996 budget announced the Child Support Initiative to benefit children by helping parents, lawyers and judges establish fair, predictable and consistent child support in divorce cases.

The federal government plans to work with the provinces and territories to improve family law so that it always puts the needs and best interests of children first. To facilitate this work, this budget allocates $29 million to extend for two years the financial assistance it provides to the provinces and territories for family-related services such as parenting information and skills development, mediation and court-based support programs.

Opportunities for Canadians With Disabilities

Some Canadians have unique needs and require special support. Approximately 4.2 million Canadians – one in six Canadians of all ages – have a disability. The federal government is committed to helping Canadians with disabilities participate in the labour force and deal with medical and care-related costs.This budget builds on numerous measures in previous budgets.

Opportunities Fund for Persons With Disabilities

This budget provides $30 million a year to ensure continuation of the Opportunities Fund. The federal government introduced the Opportunities Fund in the 1997 budget as a pilot project to help persons with disabilities prepare for, find and keep jobs. The Fund has been well received by groups representing persons with disabilities. These groups have worked together with the federal and provincial governments and the private sector to develop projects that contribute to the Fund’s objectives.

Health and Activity Limitation Survey

This budget provides funding of $11.5 million over three years for the Health and Activity Limitation Survey. The survey will be carried out as part of the 2001 national census by asking detailed questions to persons who indicate that they experience some level of disability. Similar surveys were done in the 1986 and 1991 censuses.

The survey provides information to help governments make more informed policy decisions on disability issues and evaluate the impact of programs over time. For example, it provides information on the use of and need for various disability supports, the employment patterns of persons with disabilities, their sources and levels of income, and barriers experienced in their working and everyday lives. Groups representing persons with disabilities have been closely involved in the design of the survey and have expressed support for its continuation.

Access to Canada Study Grants for Persons With Learning Disabilities

The federal government will ensure that no student with a severe learning disability who would otherwise be eligible for a Canada Study Grant⁴ is denied access because of a lack of up-to-date documentation demonstrating the student’s disability. The Government will recognize 75 per cent of the costs of one diagnostic assessment for learning disabilities (to a maximum of $1,200) as an eligible expense under the Canada Study Grant for persons with disabilities. Students will pay up front for the assessment and be reimbursed through the Grant.

Enhanced Tax Assistance for Persons With Disabilities

The federal government uses the tax system to help persons with disabilities meet expenses and participate as fully as possible in all aspects of life. The disability tax credit (DTC) provides tax relief in recognition of the general costs arising from a severe disability, while the medical expense tax credit (METC) recognizes specific medical- and disability-related expenses. In recent budgets, the federal government has substantially improved tax assistance for medical expenses and introduced a new tax credit for caregivers.

This budget provides increased tax relief to persons with disabilities by broadening and enhancing the DTC and recognizing additional specific disability-related expenses.

• A supplement to the DTC of up to $500 will be introduced to better recognize caregivers of children with severe disabilities. Eligibility for the DTC will also be broadened to include individuals with severe and prolonged disabilities requiring extensive therapy on an ongoing basis. Finally, the transfer rules for the DTC will be broadened to allow the transfer of unused amounts to an expanded list of supporting relatives (such as a brother, sister, aunt or uncle).
• In order to better recognize specific disability-related costs, the list of expenses eligible for the METC will be expanded to include the cost of modifications made to new homes to assist individuals with severe mobility impairments.
• To better recognize the generally higher costs of child care for children with disabilities, the limit on the child care expense deduction will be increased to $10,000 from $7,000 for children eligible for the DTC. To assist students with disabilities, the attendant care deduction will be expanded to include those attending an education institution.

These measures will increase tax assistance to persons with disabilities by an estimated $45 million annually.

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