Mr. Speaker, with regard to the government’s claims that the new Canada child benefit will lift 60 000 Quebec children out of poverty, and question (a) specifically, the Canada child benefit, CCB, poverty reduction impacts were estimated through an ESDC micro-simulation model. The model is static in nature, which means that it does not take behavioural responses to policy changes into account. The impacts are estimated by employing a counterfactual method of calculating the effects of a change of policy on a family’s after-tax income. In short, this signifies that a family’s income can be compared under two scenarios (that is, scenario 1 under the existing child benefit system, and scenario 2, under a proposed child benefit system such as the CCB) to determine whether a family whose income would be below a given threshold under scenario 1 would no longer be in that situation under scenario 2. The poverty reduction impact is estimated as the difference between these two scenarios in the number of children below the low-income cut-offs, LICO. Using this approach, it was estimated that nearly 60,000 children would be lifted above the LICO in Quebec as a result of the CCB.
This estimate was produced with an ESDC micro-simulation model that was benchmarked to the child low-income population as it is known through Statistics Canada’s published data (the “Survey of Labour and Income Dynamics” is used as the foundational database for the ESDC model). At the time that the estimate was produced, the “Canadian Income Survey”, Canada’s official source of income data, reported a total number of 163,000 children living below the LICO in 2013. An assumption was made that the number of low-income children would remain unchanged beyond 2013. The system of child benefits that existed in 2013 was therefore chosen as the baseline child benefit system for purposes of the counterfactual analysis.
After doing this, it was estimated that the CCB would result in 60,000 children being lifted above the LICO.
With regard to (b), low income is measured by comparing a family or individual’s income for an entire year to a pre-set threshold such as the LICO for that year. Therefore, it is not possible to tell how many individuals or children are in poverty on a specific day.
The latest low-income statistics available from Statistics Canada are for the year 2014, which reported there were 105,000 children in Quebec below the LICO in 2014. Statistics for 2015 and 2016 are not yet available.
With regard to (c), as mentioned in the answer to question (b), low income is not measured as a specific point in time situation, but rather over an entire year.
Under the assumptions and methodology laid out in answer to question (a), that is, a starting point of 163,000 children below the LICO, reflective of the most recent data available at the time the estimate was performed, ESDC has estimated the number of children below the after-tax LICO to be 103,000 for 2017. The actual number of children in low income for that year will be known when the 2017 “Canadian Income Survey” will be released by Statistics Canada, which may not be until 2019. (For reference, the “Canadian Income Survey, 2014”, was released in July 2016.)
There is significant volatility in the figures of low-income children published by Statistics Canada from one year to the next. Estimates for 2017 are provided because it is the first full year of implementation of the CCB. However, the further in the future that estimates are made, the higher the uncertainty that is associated with these estimates becomes, and estimates beyond 2017 would not be sufficiently reliable at this point.