Parliament's budget watchdog warns Canadian families could see their payments slowly erode over time under the Liberal government's new child benefit program.
In a report released Thursday, the parliamentary budget officer says the benefit doesn't automatically adjust to account for inflation, which means the number of families who qualify will also decline in the long run.
The original three benefits that were replaced by the new system — the universal child care benefit, the Canada child tax benefit and the national child benefit supplement — were all indexed to inflation.
The report says the changes that ushered in the Canada Child Benefit removed that index, meaning that over time, inflation will reduce the buying power, or so-called "real value," of the monthly payments.
While 91% of Canadian families are eligible for benefits this year, that will fall to 86% by 2021, and will continue to decline as some families see their income levels rise high enough to no longer qualify for the benefit, the report says.
The PBO predicts that by 2025, the new Liberal benefit will cost less than the three programs it replaced, including the universal child care benefit.
The benefit is expected to cost the government $22.4 billion next year — the first full year it will be in place. In five years, as a result of the declining number of eligible families, that number falls to $21.5 billion, the report says.
If the new benefit was to be indexed to inflation, the net cost over the next five years would have been $42.4 billion, instead of the $17.2 billion the PBO forecasts.
Ottawa has said it will start indexing the Canada child benefit in 2020, a commitment affirmed in a statement Thursday from Social Development Minister Jean-Yves Duclos's office in response to the PBO report.
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