COVID-19 benefits suggest income transfers could further reduce child poverty: report

Pandemic benefits rolled out to cushion the blow of COVID-19 lockdowns on workers had the positive side effect of dramatically reducing poverty levels overall.

Now, advocates want to see the federal government build on that success.

A new report by an anti-poverty group published Tuesday says child poverty fell across the country in 2020. The analysis by Campaign 2000 found that 13.5 per cent of Canadian children were living in poverty that year. That is down from 17.7 per cent in 2019 and 24.2 per cent 20 years earlier.

The group notes that this was the largest annual decline since the federal government pledged to end child poverty in 1989. The change seen over a single year accounted for nearly half of the decline in the poverty rate over two decades.

Campaign 2000 is offering 50 recommendations to further reduce poverty, including creating a supplement to the Canada Child Benefit that would target the poorest families.

“We cannot go backwards. Poverty is a policy choice, and the federal government has the choice to build back better,” said Leila Sarangi, the national director of Campaign 2000, during a news conference on Tuesday.

A Statistics Canada report published last year also highlighted how pandemic benefits helped narrow income inequality, as lower-income households saw their after-tax income grow at a faster rate than others.

0:57 Calls for B.C. government to help in child poverty reduction

Between 2015 and 2020, the low-income rate recorded its largest decline, falling from 14.4 per cent to 11.1 per cent. Statistics Canada said the decline was largely driven by higher government transfers both through pandemic benefits and the Canada Child Benefit.

Miles Corak, an economics professor at the City University of New York, said the COVID-19 benefits successfully reversed inequality caused by the pandemic.

“If you look back at the data, we haven’t seen such a powerful role for government transfers pushing against these forces since about the mid-1990s,” Corak said.

This shows income transfers are an effective tool for smoothing out inequalities, he said.

Even if poverty reduction was a secondary goal of the pandemic-driven transfers, the progress builds on the federal Liberals’ 2018 pledge to dramatically reduce poverty in Canada.

5:30 New report provides snapshot on well-being of children and youth in NS

Using 2015 as a benchmark, the government committed to a 20 per cent reduction in poverty by 2020, and 50 per cent by 2030.

Ottawa has already met and surpassed its 2020 goal, but the National Advisory Council on Poverty warns that the progress could be reversed.

The council, which advises the federal government on poverty reduction, said in its 2022 progress report that the recent improvement was largely attributable to benefits that no longer exist.

“As governments move to phase out emergency supports, some groups will face renewed precarity,” the report warned.

The council offered a set of recommendations, including working with provinces to establish an income floor above Canada’s official poverty line.

However, Corak said lifting Canadians out of poverty requires more than just increasing income transfers. It also requires improving labour market outcomes for workers, he said.

Corak is among many economists who caution against expanding temporary foreign worker programs, which help businesses bring in workers from abroad to fill vacancies. Given that these jobs tend to be low-paying, economists are concerned the programs suppress wages.

“The government should think about how it’s going to shape the (labour) market to higher productivity,” he said, and more economic growth for traditionally lower-income workers.

“Because there are limits to the fiscal transfer capacity of governments.”