Thank you.
On behalf of the Edmonton Social Planning Council, I am pleased to participate in these hearings. The Edmonton Social Planning Council is an independent, non-profit social research organization that focuses on issues of poverty and low income. Our goal is to build a more healthy, just, and inclusive community. In the past decade, poverty rates have fallen in Alberta because of the strong economy and, in recent years, modest re-investment in social programs. Yet in 2006, at the height of Alberta's recent economic boom, there were still 77,595 Alberta children living in poverty. That's over 1 in 10.
If history is any guide, in the absence of additional investments by federal and provincial governments, it's almost certain that poverty rates will go up in this recession. This increase could be significant—Alberta has seen the number of those unemployed more than double in the past year. Rising unemployment is falling disproportionately on vulnerable groups, including youth, aboriginal people, recent immigrants, and those earning low wages. Seven of Canada's 10 provinces, representing more than two out of three Canadians, are planning or implementing poverty reduction strategies. A multi-sector coalition has been formed in Alberta, which is one of the three provinces that has not yet adopted a strategy. We're urging the Government of Alberta to do so. The federal government should support the development of a national poverty reduction strategy that complements the initiatives under way in the provinces.
How can the federal government most effectively keep the momentum of poverty reduction going while counteracting the effects of the recession? Today I'm going to make a pitch for further investment in the child tax benefit system as an important component of a national poverty reduction strategy. The Canada child tax benefit and the national child benefit supplement already reduce child and family poverty significantly. The Caledon Institute of Social Policy has calculated that existing child tax benefits reduce the number of children living in low income by 38%, more than a third. Child tax benefits are available to all families regardless of the source of income, working poor as well as those on income support. Low-income families receive the maximum benefit, with benefit levels gradually diminishing as family income rises.
This year's federal budget made a modest additional investment in child tax benefits by raising the upper limit on the net family income required to receive the maximum benefit. However, much more could be done as government revenues recover in the coming years.
The Edmonton Social Planning Council proposes that child tax benefits be increased by $400 per child in the next benefit years, starting July 1, 2010. There should be further real increases of $200 per year in the following four benefit years. To help pay for this proposal, the non-refundable child tax credit should be eliminated. It is a poorly targeted program, disproportionately benefiting higher-income families. The $1.5 billion in savings from eliminating the non-refundable credit should instead be invested in the refundable benefit, allowing it to be increased by about $200 annually at no extra cost to government. The ESPC's position is that further increases to child tax benefits should be made to the basic benefits, with indexing of only the NCBS portion in future years. This avoids creating a poverty wall caused by the already steep phase-out of the supplement as family income rises.
We propose that benefit reduction phase-out rates remain the same as those currently existing. Applying the real increases in child tax benefits to the basic benefits will also assist more Canadian families with the cost of raising children, thereby helping to offset the loss of the non-refundable child tax credit.
The universal child care benefit should be retained, in our view, for all Canadian families with children, as it provides extra support to younger families with preschool-aged children. While it is not a child care program as such, it does help younger families pay a portion of their child care costs. Obviously child care costs are an issue with preschool children, so I think there is an argument for retaining the UCCB. It's also worth remembering that the UCCB replaced the supplement for children under seven that existed prior to July 2006. However, the UCCB should be non-taxable, indexed, and better integrated with the overall child tax benefit system.
Unfortunately, I don't believe you have a copy of the table I presented. I'd be happy to answer questions, but I did present a table with an assumed indexing rate of 2.5% and estimated the additional cost of the recommended changes we are proposing to the child tax benefit system. I'd be happy to answer any questions you have in that regard, because it is a little bit hard to kind of explain the numbers in the absence of your having the table in front of you.
One of the things we're proposing is that these benefit increases be phased in over a period of five years, which recognizes the constraints the current economic recession is placing on federal government revenue and expenditure. As the economy recovers, the federal government will have an increasing capacity to make these investments in Canada's children.
Previous research has documented the vital role child tax benefits play in reducing both the incidence and depth of poverty among Canadian families with children. Based on this research, the Edmonton Social Planning Council estimates its proposal could lift an additional one in five Canadian children out of poverty once it's fully implemented.
In conclusion, the Edmonton Social Planning Council congratulates the HUMA committee for its leadership role in studying the most effective ways to reduce and eventually eliminate poverty in Canada. In terms of reducing child and family poverty, there is no better investment or more effective delivery vehicle than strengthening child tax benefits. Our children are worth it.
Thank you.