The National Child Benefit Progress Report: 2007

Chapter 2
National Child Benefit Programs and Services for Low-Income Families with Children

The National Child Benefit (NCB) initiative includes federal as well as provincial, territorial and First Nations components. Footnote 5 The federal component, described in Chapter 1, provides benefits to low-income families with children through the NCB Supplement.

Increasing federal investment in the NCB Supplement has made it possible for provincial and territorial governments to adjust the income support to families with children on social assistance without impacting the overall disposable income of these families. Recovering social assistance/child benefit payments produces savings that provinces, territories and First Nations then reinvest to enhance existing programs or implement new programs or services aimed at reducing child poverty and supporting low-income families with children.

Reinvestment funds come from social assistance/child benefit savings and, in some jurisdictions, Children’s Special Allowance (CSA) recoveries (see Appendix 2 for further details). In addition to reinvestments, many jurisdictions make additional investments in benefits and services that are consistent with the goals of the NCB initiative (see Appendix 2 for further details).

Reinvestments and investments in programs and services benefit children in low-income families whether their parents are employed or receiving social assistance. These supports, combined with the NCB Supplement, help reduce the “welfare wall” and aim to make it easier for families with children to become self-sufficient.

This chapter describes the differing approaches to reinvestment used by provinces and territories. It also describes the program areas in which provinces and territories reinvest funds made available through the NCB to provide supports for low-income families. First Nations follow the approach to replacing social assistance benefits for children used in the relevant province or territory. Key areas for First Nations reinvestments and investments Footnote 6 are briefly outlined, with further detail provided in Chapter 3.

The Children’s Special Allowance (CSA)

The CSA is paid by the Canada Revenue Agency for children who are in the care of provincial/territorial child welfare authorities. It mirrors the maximum Canada Child Tax Benefit (CCTB) payments, including the base benefit and the NCB Supplement. Jurisdictions have the option to either recover, or pass on the increased NCB Supplement amount to child welfare authorities for child maintenance costs. In jurisdictions that recover the increase to the NCB Supplement, the amount is included in their reinvestment funds available for NCB-related programs and services.

In 2006-2007, it is estimated that $20.3 million or 3.1 percent of the total reinvestment funds came from CSA recoveries.

Approaches to Replacing Social Assistance Benefits for Children

Since the inception of the NCB initiative in 1998, three distinct approaches have evolved by which provinces and territories replace social assistance benefits for children with the NCB Supplement. These are:

  • the social assistance offset approach;
  • the integrated child benefit approach with adjustment; and,
  • the integrated child benefit approach without adjustment.

Two provinces, New Brunswick and Manitoba, Footnote 7 do not adjust social assistance benefits for children.

As the NCB has matured, child benefits embedded within social assistance have largely been displaced by the NCB Supplement. Therefore, the majority of provinces and territories no longer recover increases to the NCB Supplement, so that the vast majority of children living in low-income families have benefited from recent increases.

The three approaches are briefly explained below. For more details regarding the approaches used in specific jurisdictions, see Appendix 2.

1. The Social Assistance Offset Approach

Under this approach, child benefits remain within the social assistance system, but have been gradually displaced by federal increases to the NCB Supplement. Provinces and territories either deduct the NCB Supplement as an unearned income charge against social assistance or reduce their social assistance rates for children. In the case of income offset, social assistance recipients have the amount of the NCB Supplement they receive deducted from their social assistance entitlement. This approach is used in Prince Edward Island, Footnote 8 Ontario, Footnote 9 Yukon, Northwest Territories and Nunavut. In the case of rate reduction, the social assistance rate is reduced by the maximum NCB Supplement. Alberta Footnote 10 uses this approach. Reinvestment funds under the Social Assistance Offset approach are the savings in social assistance.

2. The Integrated Child Benefit Approach with Adjustment

In the mid- to late-1990s, several jurisdictions restructured their social assistance systems. In two provinces, children’s benefits are now delivered through a separate income-tested child benefit program that is integrated with the CCTB. Under this approach, increases in the NCB Supplement are offset in full or in part against the provincial child benefit. In British Columbia, the savings from this offset become the province’s reinvestment funds. In Saskatchewan, the amount of reinvestment funds is set at the amount that was being used for basic child benefits under the social assistance system at the time the system was restructured.

3. The Integrated Child Benefit Approach without Adjustment

Other jurisdictions chose similarly to restructure their social assistance systems. Basic benefits for children were removed from the social assistance program and are now provided through a separate income-tested program integrated with the CCTB. In these cases, however, there is no offset of the NCB Supplement against provincial child benefits. In Newfoundland and Labrador Footnote 11 and Nova Scotia Footnote 12 the amount of reinvestment funds is set at the funds that were being used for basic child benefits under the social assistance system at the time the system was restructured and has remained the same for subsequent years.

NCB Reinvestments and Investments 2006-2007 to 2007-2008

In 2006-2007, the eighth full year of the NCB initiative, provincial, territorial and First Nations reinvestments and investments are estimated at $833.6 million. Footnote 13 It is estimated that reinvestments and investments will total $836 million in 2007-2008. Table 3 provides a breakdown of each jurisdiction’s expenditures over two full fiscal years of the initiative: 2004–2005 and 2005-2006. Estimates are given for 2006–2007 and 2007-2008, as final data are not available for many provinces and territories.

In deciding which benefits and services to support through NCB reinvestments and investments, provinces and territories are guided by a national reinvestment framework that was agreed to by the Ministers Responsible for Social Services. Under this framework, jurisdictions have the flexibility to direct reinvestments and investments to meet their own priorities and needs, provided they support the objectives of the NCB initiative.

Many provinces, territories and First Nations base their reinvestment decisions on consultation with their residents, or have included such consultation as part of an overall redesign of their income-support programs.

Under the reinvestment framework, reinvestments and investments are providing new or enhanced supports for low-income families with children. These supports are categorized in six key areas:

  • child/day care initiatives;
  • child benefits and earned income supplements;
  • early childhood services and children-at-risk services;
  • supplementary health benefits;
  • youth initiatives; and,
  • other NCB programs, benefits and services.

Table 3 - NCB Reinvestments and Investments by Jurisdiction and Fiscal Year ($ millions)

NCB Reinvestments and Investments by Program Area

Child/Day Care Initiatives

Accessible and affordable child care allows low-income parents to enter and stay in the labour market. Provincial/territorial NCB reinvestments and investments in child care have taken a variety of forms. In 2006-2007, child/day care programs accounted for the largest share of NCB initiative funding. About 55 percent of the total NCB-related child care expenditures are for a single program: the Ontario Child Care Supplement for Working Families.

Some jurisdictions provide funding through subsidies to child care facilities. These subsidies allow facilities to offer low-income working families access to child care at a more affordable price. Other jurisdictions provide assistance directly to families. This reduces families’ share of child care costs while allowing them to choose the form of child care that best meets their needs. Some jurisdictions combine both approaches. Each of these forms of support is designed to help low-income families cover the costs of child care associated with being employed. Table 4 provides data on child /day care reinvestments and investments.

Table 4 - NCB Reinvestments and Investments by Program Area ($ millions)
2004-2005 2005-2006 2006-2007 2007-2008
Expenditures Expenditures Estimates Estimates
Child/Day Care Initiatives
Provincial/territorial expenditures $251.7 $267.4 $263.8 $253.2
Percentage of total NCB reinvestments and investments 28.0% 30.7% 31.6% 30.3%
Child Benefits and Earned Income Supplements
Provincial/territorial and Citizenship and Immigration Canada expenditures $217.5 $149.4 $104.6 $89.7
Percentage of total NCB reinvestments and investments 24.2% 17.2% 12.5% 10.7%
Early Childhood Services and Children-at-Risk Services
Provincial/territorial expenditures $150.8 $153.2 $161.9 $161.3
Percentage of total NCB reinvestments and investments 16.8% 17.6% 19.4% 19.3%
Supplementary Health Benefits
Provincial/territorial expenditures $53.8 $61.0 $64.3 $68.7
Percentage of total NCB reinvestments and investments 6.0% 7.0% 7.7% 8.2%
Youth Initiatives
Provincial/territorial expenditures $41.0 $43.9 $47.0 $48.0
Percentage of total NCB reinvestments and investments 4.6% 5.1% 5.6% 5.7%
Other NCB Programs, Benefits and Services
Provincial/territorial and Citizenship and Immigration Canada expenditures $130.4 $136.6 $138.5 $160.3
Percentage of total NCB reinvestments and investments 14.5% 15.7% 16.6% 19.2%
  • Note from the above table Note: First Nations reinvestments and investments are reported separately in Chapter 4.

Child Benefits and Earned Income Supplements

Child benefits and earned income supplements provide important financial support to low-income families through monthly cash payments to the parent or guardian of the child. These benefits improve the financial stability of low-income families by helping to make up for the relatively low wages that often come with entry level jobs, and by supporting parents to stay in the labour market and work toward higher wages in the future.

A number of provinces and territories are now providing child benefits outside of the social assistance system, so that families receive these benefits regardless of the parents’ employment situation. Several provinces have completely restructured their social assistance systems so that they now provide child benefits to all low-income families with children, while benefits for adults continue to be provided through social assistance. As a result, families in these provinces keep their provincial child benefits—in addition to the NCB Supplement—when parents make the transition from social assistance to work. Several other jurisdictions provide child benefits that top up the amount that families receive through social assistance in support of their children. In most of these cases, the provincial or territorial child benefit is combined with the federal CCTB in a single monthly payment, which is administered by the Canada Revenue Agency.

Some jurisdictions also provide low-income working families with children with an earned income supplement in order to provide incentives to work. Eligibility is tied to earning a certain minimum amount from employment. Earned income supplements top up family-earned income for low-wage earners, helping families to cover the added costs of employment.

In 2006-2007, child benefits and earned income supplements accounted for the third-largest portion of NCB reinvestments and investments (see table 4).

Early Childhood Services and Children-at-Risk Services

Experts on child development agree that the first six years of life are critical to a child’s development and future well-being. Several jurisdictions are focusing NCB reinvestments and investments on services that provide early support to children in low-income families in order to optimize child development and give young children a healthy start in life. These programs range from prenatal screening to information on mother and child nutrition and parenting skills. Children-at-risk services, ranging from early literacy classes to recreation programs, can make a positive difference in the lives of these children.

Programs in this key area accounted for the second-largest share of NCB initiative funding in 2006-2007 (see table 4).

Supplementary Health Benefits

Supplementary health benefits include a range of benefits that go beyond basic medicare coverage, such as optical care, prescription drugs, dental care or other benefits. The nature of these benefits varies among jurisdictions, many of which have long provided similar benefits to families with children receiving social assistance. Now, NCB reinvestments and investments in some provinces and territories are providing these benefits to all children in low-income families. These programs ensure that families do not lose important health benefits for their children when they move from social assistance to the labour market.

The health benefits that are provided as NCB reinvestments and investments vary among jurisdictions. Approximately 40 percent of the NCB -related Supplementary Health Benefits can be attributed to Alberta’s Child Health Benefit, which was the largest program of this type in the country in 2006-2007 (see table 4).

Youth Initiatives

Youth initiatives include a range of benefits and services that are designed to assist and support youth, with particular attention to youth-at-risk. These programs are valuable in providing youth-at-risk with support to help them develop in positive directions. Youth initiatives, ranging from alcohol and drug strategies to transitional support for youth leaving child welfare, can make a positive difference in the lives of these young people (see table 4).

Other NCB Programs, Benefits and Services

The flexibility of the NCB enables provinces and territories to address particular challenges facing their jurisdictions, and investments are made in other areas.

Ontario municipalities, which share responsibility for social assistance with the province, provide a wide array of reinvestment and investment programs and services, which are included in this category. These range from early intervention and child care to employment supports and prevention programs. Other reinvestments and investments account for the fourth-largest share of NCB initiative funding (see table 4).

Citizenship and Immigration Canada

Citizenship and Immigration Canada (CIC) administers the Resettlement Assistance Program (RAP), which provided refugees with $33.2 million in income support in 2006-2007, reflecting the amounts that jurisdictions provide through social assistance. This includes $2.1 million, which is the NCB reinvestment portion of the RAP program. CIC reinvestments fall into two of the six key areas of investments and reinvestments: child benefits and earned income supplements, and other NCB programs, benefits and services.

First Nations

First Nations follow a reinvestment framework administered by Indian and Northern Affairs Canada (INAC). First Nations reinvestments and investments are estimated to be $52.7 million in 2006-2007, and constituted approximately 6.3 percent of total reinvestments and investments. However, First Nations’ NCB reinvestments cover a wider range of program areas than those of the provinces and territories according to local needs, and are therefore discussed separately in Chapter 3 as well as Appendix 2.


  • 5 This report does not include data for Quebec. Quebec residents benefit in the same way as other Canadians from the Canada Child Tax Benefit. Moreover, they benefit from substantial investments made by the Quebec government, in the context of its family policy, in services for families with children. Return to reference 5
  • 6 Indian and Northern Affairs Canada reimburses Saskatchewan and the Yukon for the portion of provincial/territorial children’s benefits paid to all low-income families living on reserve. Return to reference 6
  • 7 Effective July 2000, Manitoba discontinued recovering increases in the NCB Supplement for families receiving income assistance. Effective July 2001, Manitoba stopped recovering the NCB Supplement for children age six or under. Effective January 2003, Manitoba stopped recovering the NCB Supplement for children age seven to eleven; and effective January 2004, it stopped recovering the NCB Supplement for children age 12 to 17 years. Return to reference 7
  • 8 Since 2001, any increases in the NCB Supplement have been used to fund an increase in the Healthy Child Allowance, which is a social assistance benefit. Return to reference 8
  • 9 The 2004 through 2007 increases to the NCB Supplement were flowed through to social assistance recipients. The 2007 Ontario Budget announced that all future NCB Supplement increases would flow through to social assistance recipients. Return to reference 9
  • 10 Since 2003, Alberta has enhanced the mix of income and in-kind benefits and services to families receiving assistance through the Alberta Works - Support for Independence program by flowing through full increases to the NCB Supplement. Return to reference 10
  • 11 Newfoundland and Labrador redesigned its income support program in 1999–2000. All basic benefits for children have been removed from the newly created Income Support Program as these benefits are now provided through the combined CCTB and Newfoundland and Labrador Child Benefit. As a result, Newfoundland and Labrador does not adjust its Income Support benefits for increases in the NCB Supplement, nor does it adjust the Newfoundland and Labrador Child Benefit. Return to reference 11
  • 12 With the advent of the NCB Supplement in 1998, Nova Scotia enhanced the supports available for children of low-income families by introducing the Nova Scotia Child Benefit as a provincial reinvestment initiative. In 2001, children’s benefits were removed from the province’s income assistance program, substantially increased and fully integrated with the CCTB to establish a single, non-taxable monthly payment for all low-income families with children. At the same time, Nova Scotia ensured that any future increases to the NCB Supplement flowed directly through to families receiving income assistance. Return to reference 12
  • 13 This amount includes $2.1 million in NCB reinvestments by Citizenship and Immigration Canada. Return to reference 13