Economic analysis of Canada’s child benefit cash allowance bolsters case for universal basic income

Laurie Monsebraaten, The Star

The Canada Child Benefit has not only lifted kids out of poverty, but it has boosted the country’s economy by $139 billion since 2016, according to a new economic analysis of the initiative being released Thursday.

The benefit, which the report says “acts as a basic income guarantee for families with children” contributes to Canada’s economy and prosperity by increasing family spending on goods and services.

It also shows how a basic income for all Canadians could have a similar payoff, says the analysis, sponsored by UBI Works, a new non-profit initiative led by CEOs from across the country to raise public awareness.

“We believe that basic income is a key pillar in a more human-centred capitalism which I think is going to be needed for us to prosper in the next 50 years with increased automation, globalization and precarious employment,”

said Floyd Marinescu, CEO of C4Media Inc.

“We think basic income is an economic issue as much as it is a social issue and that story also needs to be told,” he added.

Every dollar Ottawa spends in child benefits generates almost $2 in economic activity, says the report by the Canadian Centre for Economic Analysis (CANCEA) an independent, non-partisan economic research firm hired by UBI Works to crunch the numbers.

At an annual cost of $24 billion in 2017-18, the report figures the benefit generated more than $46 billion in economic activity, or about $139 billion in three years.

The analysis, which measures the impact of increased family spending due to the benefit, also shows that 55 cents of every dollar Ottawa distributes is returned to federal and provincial coffers in taxes.

“The primary driver of this economic growth is that lower-income families generally spend the additional income,” said CANCEA President Paul Smetanin.

“This is one way that (the child benefit) is good at making contributions to the economy,” added Smetanin, whose company has provided economic analysis for provincial ministries, municipalities and business groups such as the Ontario Chamber of Commerce.

The analysis, which uses publicly available data, is believed to be the first detailed look at the economic impact of the Canada Child Benefit since it was revamped by the Liberal government in 2016, he said.

The results are in line with the Bank of Canada’s estimate that the child benefit added 0.5 percentage points to economic growth in 2017, a year after it was in place, the report notes.

The Trudeau government has boasted that the benefit, worth up to $6,639 a year per child, lifted about 278,000 children out of poverty between 2015 and 2017.

The report notes the cash payment to 6.4 million children also kept about 588,000 of them out of poverty in 2017, based on the Market Basket Measure, the country’s recently adopted poverty line. (The average poverty line for a Canadian family of two adults and two children was $37,542 that year.)

Among low-income families, the benefit boosted annual incomes by an average of almost $6,000 a year for those with one child and by more than $22,000 for families with four kids, according to the report.

The benefit also helped the middle class. Average annual incomes for middle-income families with one child rose by almost $4,000 and by almost $19,000 for those with four kids, the report says.

Marinescu was among 100 Canadian CEOs who signed an open letter a year ago to protest Ontario Premier Doug Ford’s decision to cancel a provincial basic income pilot project.

The Parliamentary Budget Officer has estimated a basic income, modeled on Ontario’s ill-fated pilot project, would cost Ottawa an additional $43 billion a year.

The Green party platform says it would introduce a national basic income, if elected on Oct. 21. The NDP’s platform says it would work with the provinces to launch a national basic income pilot project and restart Ontario’s canceled experiment. Neither the Liberals nor the Conservatives have mentioned basic income.

Laurie Monsebraaten is a Toronto-based reporter covering social justice. Follow her on Twitter: @lmonseb

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