Ottawa’s new benefit for people with disabilities risks becoming an indirect financial transfer to many of the country’s provinces and territories if more jurisdictions don’t take steps to avoid automatic clawbacks of social-assistance payments that will be triggered by the federal income support, experts warn.
The Canada Disability Benefit, or CDB, will provide up to $2,400 a year – or $200 a month – to eligible low-income beneficiaries, the federal government announced in its April budget. The amount was far below what many people with disabilities and their advocates had expected from a program the Trudeau government had promised would lift hundreds of thousands of vulnerable Canadians out of poverty.
But recipients of the new income support who live on social assistance will stand to see little or no financial benefit at all without amendments to provincial and territorial regulations that currently would trigger a reduction of their welfare incomes for every dollar they receive from Ottawa, experts say. Without those changes, the federal funds would simply translate into lower spending on social assistance, padding regional government coffers rather than helping those with disabilities.
While the CDB would deliver only a modest financial boost for eligible welfare recipients, clawbacks could save the provinces up to hundreds of millions dollars a year, according to Alexi White, director of systems change at Maytree, an anti-poverty think tank.
Understanding and accessing Canadian disability benefits
“This is not a rounding error for provinces – particularly larger provinces and even for smaller provinces,” he said.
So far, only four jurisdictions – Manitoba, Newfoundland and Labrador, Nova Scotia, and Nunavut – have publicly committed to avoid reducing social assistance for recipients who will also get the federal benefit. Disability and anti-poverty advocates hope the other provinces and territories will follow suit.
“It would be a pretty sad failure in executive federalism if premiers and senior cabinet ministers wouldn’t be able to agree on that for one of the most vulnerable groups in the country financially,” said Michael Prince, a professor of social policy at the University of Victoria.
But many provincial and territorial governments have so far kept mum about how they’ll handle the new federal payments, even after Ottawa recently released draft regulations for the CDB that provided much-needed insight into its design, Mr. White said.
The issue, he said, is that the federal government is proposing to deliver the financial aid as a benefit rather than as a refundable tax credit, which would have likely avoided the problem.
But, Mr. White added, there’s a relatively straightforward fix that provinces and territories could implement, and in short order: amendments to their own regulations that would exempt the CDB from the automatic reductions.
Sheltering the CDB from welfare clawbacks would ensure the new benefit delivers at least some financial relief for many working-age Canadians with disabilities who live in deep poverty.
While Canada’s official poverty line varies across jurisdictions, social assistance for people with disabilities falls short of that threshold by an average of around 40 per cent, according to a study by the Parliamentary Budget Office. To close the largest gap, Ottawa would have had to deliver more than $14,000 a year to eligible beneficiaries through the CDB as of 2024, the PBO calculated.
The announcement in the latest federal budget that Ottawa was contemplating a benefit that would provide just $2,400 a year left many aghast, including Prof. Prince, who resigned from a federal advisory group on disability over the low figure.
Critics have also lambasted the Trudeau government for tying eligibility for the CDB to the Disability Tax Credit, or DTC, which has notoriously been difficult or impossible to access for many Canadians with disabilities.
Around 1.1 million people with disabilities aged 15 and older lived below the poverty line in the country in 2022, according to data from Statistics Canada. But just 600,000 are expected to be eligible for the CDB, according to federal budget figures. And last month, Ottawa released new estimates showing it expects the program will lift only around 25,000 adults out of poverty – far short of what the government had originally promised.
Only some people who receive social assistance for disabilities have successfully applied for the DTC and will be able to receive the CDB, Mr. White said, adding that it’s proven hard to estimate the precise overlap between those welfare programs and the new federal support.
Prof. Prince argues the focus of Ottawa’s discussions with the provinces should broaden from the issue of clawbacks to allowing anyone who qualifies for social assistance because of disabilities to also access the CDB.
“That would have sent a way better message to Canadians with disabilities,” he said.