Parliamentary budget watchdog puts new numbers to Liberal child benefit

OTTAWA — The parliamentary budget watchdog says the government’s cornerstone child benefit will end up costing billions more after the next election if its value increases with the cost of living.

The Canada Child Benefit isn’t indexed to inflation for now, and the Liberals haven’t agreed to do that until 2020 — after the next scheduled federal election in 2019.

The parliamentary budget officer has already said the original cost to the government would eventually equal that of the previous Conservative system of benefits and tax credits, which the Liberals replaced with the new, income-tested benefit.

However, in a new report today, the PBO says keeping up with inflation would cost federal coffers an extra $301 million in 2020, rising to an extra $5.8 billion in 2026.

The total extra cost over that time frame? Almost $22.3 billion, if the government in 2020 follows through on the Liberal plan.

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The PBO did the calculation at the request of Conservative finance critic Gerard Deltell.

“We are very concerned that again it’s another demonstration that this government can’t control any spending,” Deltell said.

The new benefit, a central plank in last year’s Liberal election platform, kicked in on July 1. The plan didn’t include indexing the benefit to inflation to maintain the buying power of the monthly payments, or the so-called “real value,” until 2020.

The government has come under pressure from anti-poverty groups to ensure the benefit keeps pace with inflation.

The government wanted to ensure that the benefit rolled out as quickly as possible so that families would benefit right away, said Social Development Minister Jean-Yves Duclos, adding he would stick with the plan outlined in the March budget.

That plan estimates the average family will receive an extra $2,300 a year per child, with a maximum of $6,400 per child under six going to families with net incomes of less than $30,000.

This year, almost 3.6 million families are eligible for benefits, but the PBO has previously forecast that number to decline to about 3.4 million by 2021 and will continue to drop as some families see their income levels rise.

The program is expected to cost the government $22.4 billion next year — its first full year. 

In five years, the PBO predicts spending will drop to $21.5 billion without indexation as lower-income families move into higher income brackets and see the value of their benefits decline.

That level of spending would be equal to the spending last year under the system the Canada Child Benefit replaced.

Jordan Press, The Canadian Press