The Impact of the National Child Benefit Supplement on the Low Income Status of Canadian Families with Children: The SPSD/M Results

This report presents the results of a number of simulations with the Social Policy Simulation Database and Model (SPSD/M) of National Child Benefit (NCB) rules, isolating the impact of these rules on low-income or poverty rates and gaps in Canada. According to the after-tax LICO, now the most widely reported measure of low income or poverty, the national poverty rate for economic families with children – after the provincial clawback of the NCB supplement (NCBS) from social assistance recipients and the provincial re-investment in cash or income-support programs (excluding in-kind programs) are factored in – fell 4.6 per cent between 1996 and 1999 because of the introduction of the NCBS. The drop in the poverty gap was even greater: 8.7 per cent. Under the rules set to be in place by 2004, the decline in the after-tax LICO poverty rate is projected to be 11.8 per cent and that in the poverty gap 18.0 per cent relative to the rate and gap that would have prevailed in the pre-NCBS world. The improvement in the economic well-being of low-income families with children would be even larger if the impact of provincial in-kind programs financed by the NCBS through the social assistance clawback were included.