The National Council of Welfare has tracked welfare rates since 1986. In all those years, we have had very little opportunity to announce any good news. From the beginning, the Council was concerned about how low welfare incomes were. Welfare incomes have never reached the poverty line for any family type at any time anywhere in Canada.

But the news got worse. In 1990, the federal government opened the door with its infamous "cap on CAP," cutting the federal transfer program that supported the welfare system in Ontario, Alberta and British Columbia. In the early 1990s, the economic recession opened the door a little further. The federal, provincial and territorial governments took the opportunity to make wholesale cuts to the welfare system. By the mid-1990s, several provincial and territorial governments embarked on a series of welfare reforms that made the system more demeaning for even less support. Despite increasing awareness of the importance of early child development and the damaging effects of child poverty, families with children on welfare were not spared when governments cut social programs.

The one ray of hope was the federal government's investment in the Child Tax Benefit. The Council was encouraged to see that the federal, provincial and territorial governments identified income support for poor families with children as one of its priorities when it issued its Report to Premiers of the Ministerial Council on Social Policy Reform and Renewal in March 1996. We were encouraged to learn that the two levels of government were prepared to put aside their differences and create a new system for improving the situation of families with children.

We were very pleased to learn that the federal government's investment in this new program would be substantial. When the new Child Tax Benefit was announced in 1997, the federal government committed $850 million a year. The 1998 budget announced a further $425 million a year beginning in July 1999 and another $425 million beginning in July 2000. As of July 2000, the total commitment by the federal government is worth $1.7 billion a year.

After years of cuts to social programs, the Child Tax Benefit represented a major effort to improve the conditions of poor families with children. Unfortunately, the new arrangement came with a condition that allowed the federal government's support to bypass the families that needed the money the most: those families with children that were forced to rely on welfare. What the federal government gave, the provinces and territories could take away.

When the Child Tax Benefit was negotiated with the provinces and territories, the federal government allowed the provincial and territorial government to take part of the money away from those low-income families that rely on welfare. The money the provincial and territorial governments claw back must be reinvested in programming related to children, but the criteria for these reinvestment programs is loose. Programs that are funded by the money that is clawed back from families on welfare do not necessarily reach families on welfare. Another condition was that those families whose welfare income was clawed back by the amount of the supplement to the Child Tax Benefit were supposed to be no worse off.

66

Only Newfoundland and New Brunswick decided not to exercise the option of taking money away from families on welfare. Manitoba announced that it would no longer take awat increases in the supplement to the Child Tax Benefit as of July 2000.

This year's edition confirmed our fears about the clawback. Welfare incomes for families with children have declined across the country – except in the two provinces that chose not to claw back the supplement to the Child Tax Benefit. In all cases, the federal government is now paying a greater share of welfare incomes than ever before, but welfare incomes remain far, far below the poverty line. While the federal government poured money into efforts to reduce child poverty, the provinces and territories were allowed to syphon it off.

Not only did the money bypass the families that needed it the most, the value of welfare incomes for families declined. No provincial or territorial government that cuts its welfare costs by letting the federal government pick up more of the tab was going to raise welfare rates for families with children. Inflation eroded the value of welfare incomes and families ended up worse off than before.

The Council has seen no convincing evidence that taking money away from the poorest of poor families provides will motivate parents to enter the work force. What we know helps parents to provide for their children are a series of family supports such as job training, better minimum wages, and labour policies that help parents to balance their responsibilities to their children with their responsibilities to their jobs. Good, integrated family policy must also include early child development programs that provide the best possible early education for children while providing the dependable, affordable child care that allows parents to participate in job training and to take jobs.

The National Council of Welfare has expressed its deep concern about the clawback on many occasions. In our opinion, any program that is intended to support poor families, but bypasses the poorest families has missed the boat. Until the federal government puts a stop to the clawback, the value of the federal government's enormous investment in this important source of family support is badly compromised. The National Council of Welfare still has hope that the National Children's Agenda can plug this leak.

When the federal budget was announced in February 2000, we were disappointed that the federal government chose to defer action on the Children's Agenda until the end of this year. When the Children's Agenda is finally announced – and we hope that this will be soon – the National Council of Welfare will be looking to see that supports go to the families who need help the most, those families with children who are so poor that they are forced to depend on welfare. Ending the clawback to the Child Tax Benefit should be among the first items of business in any serious effort to provide family supports.

67