US & Canada

Canada overhauls child benefits scheme

Pm Trudeau shaking a kids hand. Image copyright Reuters
Image caption Canada performs badly on many child welfare indexes relative to its wealth.

Canada has overhauled its child benefits system and significantly increased the amount of money the state will pay out to families.

In a new scheme, launched on 20 July, nine out of ten families will see their benefits rise.

The move fulfils a major 2015 election pledge by Prime Minister Justin Trudeau.

But it also comes at a time of budget deficit and economic stagnation in the country.

Child welfare reform has been a pressing issue in Canada since the 1990s, with as many as 14% of the country's children living in poverty, according to national statistics data.

"The new Canada Child Benefit means more money for healthier groceries, kids' summer programmes, and back-to-school clothes," said Prime Minister Justin Trudeau in a statement.

But critics have pointed to the cost - approximately CA$22.8 billion (£13.2 billion) from the federal budget at a difficult moment financially.

Huge wildfires in Alberta have hurt oil production and Canadian exports performed worse than economists expected during the second quarter of this year.

Payments through the scheme are also fixed rate for the next four years, meaning parents will not see their benefits adjusted according to inflation.

Top 5 countries for child welfare

  1. Netherlands
  2. Norway
  3. Iceland
  4. Finland
  5. Sweden

Source: UNICEF

But optimists hope the pros will outweigh the cons.

The government estimates working-class families will receive an extra CA$2,400 (£1,386) a year on average through the new system.

Parents with children under the age of six will be eligible to receive CA$6,400 (£3,698) a year, while parents with children between the ages of six and 17 will be eligible for CA$5,400 (£3,120) a year.

The scheme is also more simple than the previous model, which involved Universal Child Benefit and two other benefits installations in tandem. The new scheme involves a single monthly payment and is weighted according to household income.

"We are punching well below our weight on child poverty," said Iglika Ivanova, Senior Economist for the Canadian Centre for Policy Alternatives, an independent think tank.

"I think this is a very positive step. It's incredibly generous. It's even slightly more generous then what many anti-poverty experts have been calling for."

Image copyright Getty Images
Image caption Mr Trudeau has been visibly active in his efforts to promote left-leaning reform in Canada.

If successful, Ms Ivanova said the new system could cut child poverty by up to 22% within a year, affecting the lives of 230,000 people.

A key test for the reform will be the impact it has on the lives of indigenous Canadians, who suffer greater levels of inequality.

As many as 76% of aboriginal residents in Manitoba and 69% in Saskatchewan live below the poverty line.

The National Post, a conservative Canadian news outlet, has given the new child benefit a lukewarm reception. The biggest change, they argue, will be felt by high-income families.

Those earning more than CA$180,000 (£104,000) a year will see their child benefits phased out entirely under the new initiative.

Economists say the full impact of the reform will not be known for a number of years.

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