Madam Speaker, the motion before us recommends that the federal government review the level at which the child benefit is indexed. I believe this is a laudable goal. The Government of Canada fully supports the broader goal of increasing assistance to families with children.
The government initiated a national system to prevent and reduce child poverty more effectively than ever before when it introduced the national child benefit system in the 1997 budget, scheduled to take effect on July 1, 1998. The system has been designed to co-ordinate child poverty programs across Canada and to provide additional assistance to low income families working to provide for their children.
While programs have existed to assist low income families, the system has created disincentives and barriers to working. In the past when parents chose to leave social assistance and join the job market they lost badly needed social services such as health, dental and prescription drug plans. This clearly is a disincentive and is not acceptable.
The national child benefit system is an enriched and improved federal child benefit which will complement provincial-territorial programs to provide more effective assistance for low income families. These services will be made available to all low income families, the working poor and those on social assistance. I applaud the objectives of the national child benefit system to prevent and reduce child poverty, to improve work incentives and to simplify administration.
Governments have clearly recognized there is a significant problem in terms of child poverty. It has increased about 50% since 1989. The motion before us asks for a feasibility study on indexing child tax benefits.
The difficulty is that the potential fiscal costs of such a measure cannot be supported at this time. The financial impact of the proposal with the current inflation rate of approximately 1.6% per annum would cost the federal government about $160 million per year of indexation, that is $160 million in the first fiscal year, $320 million in the second and so on.
The child tax benefit allows for partial indexation to help address the severe fiscal problems facing Canada. The policy applies broadly in the tax system to spousal credit, basic personal credit, tax brackets, et cetera.
It would be difficult to apply full indexing to some tax parameters and not to others. It is estimated that the cost would be about $850 million per year. This would have a major impact on the government's ability to restore fiscal balance.
The government, however, has made a commitment to review the policy of partial indexation once it in a fiscal position to do so. In the meantime, the government has made it clear that it is targeting additional assistance in priority areas.
The prime minister stated in June 1997 that the government will double spending aimed at reducing child poverty once the government gets it fiscal house in order. He stated “We would like to double the funding when we have the means”.
The 1997 budget created a child tax benefit at a cost of $850 million. Since July 1997, over 720,000 low income working families have received increased benefits as a result restructuring and enrichment of the working income supplement.
Maximum benefits increased from $500 per family to $605 for the first child, $450 for the second child and $350 for each additional child. For the lowest income families the increases in the child tax benefit represent a 50% increase in federal benefits. Starting July 1998 these benefits will be extended to all low income families as a result of the national child benefit system.
The federal government is assuming a larger role in providing basic income support to families which children. We are moving in the right direction. We are assuming our responsibilities.
We believe in a society that is compassionate and cares for the less fortunate. It is interesting to note that Campaign 2000, a non-government anti-poverty organization, has abandoned its goal for the elimination of child poverty by the end of the century. It is taking up the need for sound fiscal management and furthering the interests of children. In November 1997 it stated that the social policy community in Canada had a high stake in becoming public interest guardians of the fiscal stability of federal finances.
Campaign 2000 commended the government for being particularly articulate and passionate in its concerns for children. It went on to say that strong fiscal stabilizers are an essential part of a sustainable social investment strategy for children and youth.
The government has demonstrated that it is committed to this important issue. Ken Battle of the Canadian Institute of Social Policy stated in February 1997 that a national child benefit system has the potential to be the most important social policy innovation since medicare.
The Globe and Mail stated in May 1997 that in difficult times it made sense to focus government generosity on those who most need it. The proposed child benefit is a good way to do it.
Yes, the government recognized the plight of those families that need support. The government has chosen to act, to demonstrate its commitment that this is a priority. A full review of the policy of partial indexation will take place once it is fiscally appropriate to do so. This is a commitment. This is our promise to the Canadian people. For those reasons, I cannot support the motion before us.
I believe I have demonstrated that this government is moving in the right direction, that it is the beginning of a process, not the end. We will see our obligations to the end.