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