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Trudeau Liberals cutting Canada Child Benefit by $3.7 billion

Chrystia Freeland’s economic update released earlier this week reveals that the Liberals plan to cut Canada Child Benefit by an average of $740 million a year over the next 5 years.

Earlier this week, Canada’s finance minister, Chrystia Freeland, released the 2021 economic and fiscal update. And while spending was up in some areas (such as the health transfers to provinces), there are some areas where they plan to lower spending, compared to what they outlined in previous budgets.

For example, here is what they’re projecting on spending on the Canada Child Benefit over the next 5 years:

2021–2022$26.4 billion
2022–2023$25.5 billion
2023–2024$25.8 billion
2024–2025$26.5 billion
2025–2026$27.3 billion

When you add it all up, that’s $131.5 billion, which seems like quite a lot.

But there’s something you should know about these amounts.

Here are the Canada Child Benefit numbers from the 2021 budget, which was released this past April.

2021–2022$27.2 billion
2022–2023$26.3 billion
2023–2024$26.6 billion
2024–2025$27.2 billion
2025–2026$27.9 billion

And that comes to $135.2 billion. Which seems like a bigger number than the one released this past Tuesday.

Let’s compare the two.

April
budget
Dec
update
Difference
2021–2022$27.2 billion$26.4 billion-$0.8 billion
2022–2023$26.3 billion$25.5 billion-$0.8 billion
2023–2024$26.6 billion$25.8 billion-$0.8 billion
2024–2025$27.2 billion$26.5 billion-$0.7 billion
2025–2026$27.9 billion$27.3 billion-$0.6 billion
Total$135.2 billion$131.5 billion-$3.7 billion

Over the next 3 years, the federal Liberal government plans to cut the the Canada Child Benefit by nearly $1 billion in each year. And while the cuts in the 2 subsequent years will be smaller, they’ll still be cuts.

And after 5 years, that amounts to $3.7 billion less than what they were planning on spending just 8 months ago.

This past summer, when the Trudeau government announced they were increasing spending on the Canada Child Benefit, they claimed that the benefit is paid out to about $3.5 million families.

That means, that on average Canadian families will lose out on over $200 a year, assuming the number of families accessing the benefit never increases.

The economic update tries to paint how much the government will be spending by saying that it will be increasing by 2.5% a year, since it’s indexed to inflation.

Which is nice and all, but if the 2.5% annual average increase is based on a number that’s lower than originally planned, it’s going to make all the other numbers shrink, even if they are growing at 2.5%.

So, why the cuts to the benefit?

Well, in the economic update, the federal government said that they expected that everyone is going to be making more money.

. . . adjustments to major transfers to persons reflect the impact of higher expected inflation, to which the Canada Child Benefit and elderly benefit rates are indexed, which is offset somewhat by lower expected usage of Canada Child Benefits due to higher projected income growth . . .

If we’re all getting raises every year for the next 5 years, then I guess that’s a good thing.

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By Kim Siever

Kim Siever is an independent journalist based in Lethbridge, Alberta. He writes daily news stories, focusing on municipal, provincial, and federal politics, specializing in investigative journalism and critical analysis from a leftist political lens. He also writes regular editorials on general politics and social issues.

One reply on “Trudeau Liberals cutting Canada Child Benefit by $3.7 billion”

Hi Kim. It doesn’t sound like the federal government is planning to cut the Canada Child Benefit (CCB) by $3.7B, as that suggests that they will be reducing the amount of benefit a family can receive under the program. Rather, it sounds like they are simply expecting that the total amount of CCB they will be required to pay out to families over the next 5 years will be lower than previously expected due to incomes being higher, as the CCB is an income-tested benefit. These higher income expectations may, at least in part, be a result of factoring in the impacts of the new $10 per day childcare program, which is expected to result in more parents (particularly women) returning to the workforce, but may also end up reducing the total amount of child care expenses claimed as deductions in computing the adjusted family net income amounts which are used to determine the amount of CCB each family is entitled to receive.

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