Baloney Meter: Is the Conservatives' UCCB really a universal benefit?

There is literally no circumstance where anyone could be worse off, because the increase in the universal child care benefit is so large that it compensates for everything else. 

— Employment Minister Pierre Poilievre, speaking last week in Halifax.

It was billed as Christmas in July: in the dead of summer, hundreds of dollars worth of child care benefit payments landed in the bank accounts of 3.8 million families with children aged 17 and younger.

Questions about just how much of it parents would get to keep arrived almost as soon as the money did.

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Asked last week to describe a scenario in which a family would not benefit from the government's largesse, Poilievre was unequivocal: there is none.

Is he right?

Spoiler alert: The Canadian Press Baloney Meter is a dispassionate examination of political statements culminating in a ranking of accuracy on a scale of "no baloney" to "full of baloney" (complete methodology below).

This one earns a rating of "a little baloney" — It's missing information about how much families benefit, and how that's calculated by government.

The facts

The Conservatives introduced the monthly universal child care benefit payment in 2006, shortly after taking office. For nine years, the payments amounted to $100 per month for every child under age six.

This year, the government boosted the monthly payments to $160 for every child under age six, and introduced a new $60 monthly payment for children aged six to 17.

The universal child care benefit is taxed on the lower income earner in the home. The benefit is taxed at a federal rate of about 11.5 per cent, so the average family with one child under six will owe about $220 in federal taxes next April ($1,920 for 12 months of UCCB payments worth $160, multiplied by 11.5 per cent).

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The parliamentary budget officer estimates provincial taxes on the benefit will be worth about half of the $565 million the federal government will take in from the increased benefit.

The government has also eliminated the child tax credit, which in the last tax year would have been worth about $343 in federal tax relief per child in 2015 (the credit is worth $2,293 per child, multiplied by a federal tax rate of 15 per cent).

Even with the loss of the tax credit, the increased child care benefit ensures each home receives more money on the whole, the government says.

What the experts say

"It is hard to conceive of a family that is actually worse off — you'd have to imagine a very odd scenario," said Tammy Schirle, director of the Centre for Economic Research and Policy Analysis at Wilfrid Laurier University in Waterloo, Ont.

In only a few cases could people lose money, Schirle said, but that would require looking at the net effect of the increased benefit on housing subsidies, child care subsidies and old age security payments that could be clawed back for every extra dollar the benefit provides.

The child care benefit doesn't count against income-tested programs delivered outside the income tax system, such as the guaranteed income supplement and employment insurance.

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Families with children for the most part are "not in the hole" financially because of the change, "but they're certainly not as well off as they could have been," said Jennifer Robson from Carleton University in Ottawa.

The government provided The Canadian Press with tables illustrating the benefit to families with incomes between $30,000 to $200,000. The tables assume parents are applying for fitness tax credits, claiming a child care expense deduction — for those who use more formal child care arrangements — and, where they qualify, applying for up to $2,000 in tax benefits from income splitting.

Robson said that to get some of the benefits, parents would have to spend thousands of dollars ahead of time, such as a $150 fitness tax that a single parent earning $30,000 a year would have to spend $4,000 to receive.

On average, families can expect to keep $15 of the extra $60 the government added to the value of the monthly benefit payments, once federal and provincial taxes are taken into account, as well as the loss of the child tax credit, said Fred O'Riordan, a tax expert with Ernst & Young.

The verdict

The statement contains "a little baloney."

Poilievre is correct when he says no one is worse off with the increased benefit because its size alone "compensates for everything else," but experts say the federal government's assumptions are unrealistic for some households.

Methodology

The Baloney Meter is a project of The Canadian Press that examines the level of accuracy in statements made by politicians. Each claim is researched and assigned a rating based on the following scale:

No baloney: the statement is completely accurate

A little baloney: the statement is mostly accurate but more information is required

Some baloney: the statement is partly accurate but important details are missing

A lot of baloney: the statement is mostly inaccurate but contains elements of truth

Full of baloney: the statement is completely inaccurate