Jul 20, 2012

The case for exempting child support from welfare


Based on recent announcements, it seems that the Ministry of Social Development is in the mood to address some of the long-standing problems within BC’s welfare system (although welfare rates remain distressingly low). Seth Klein recently recapped the Ministry’s June 11th announcement, which set out almost 30 proposed changes to the system. More recently, the Ministry also announced that it will be restoring coverage for some health supplies and medical equipment that it cut in 2010.

As Seth set out in his post, the June 11th announcements contained some positive changes. In particular, the re-introduction of an earning exemption for those in the “expected to work” category of income assistance is a significant policy shift for the Ministry. Since 2002, if recipients in that category earn any income, it has been deducted dollar for dollar from their monthly income assistance. The government’s rationale for this has been that allowing recipients to exempt some earned income creates a disincentive for them to transition off of assistance to employment.

The Ministry’s June 11th announcement seems to acknowledge that policy rationale is not sound, noting that the new $200 per month per family earnings exemption would give “employable individuals a better opportunity to get job skills and experience, take advantage of short-term or temporary work, and better provide for their families while receiving assistance.” That is a big and very positive shift in approach.

Given the Ministry’s change in outlook regarding the balance between a welfare system that provides employable recipients some basic level of dignity and support, and a system that is so cushy that recipients will choose to rely on tax payer support over supporting themselves, this seems like a good time to raise another long-standing concern with the welfare system: child support.

History of child support exemptions

Prior to 2002, recipients could receive up to $100 per month in child support without impacting their assistance. The idea was that a limited exemption would create an incentive for parents to go out and get a child support order against their ex, and to take steps to enforce that order. In 2002, that limited exemption for child support was eliminated and, since then, any penny of child support received by a parent on income assistance has been deducted from their assistance dollar for dollar.

The government’s rationale for the 2002 change was two-fold. First, the Ministry is the payer of last resort and if there is a private source of support available (a parent), a recipient should rely on that instead of welfare. The Ministry will top that amount up if it’s not enough for basic necessities (as defined by the Ministry), but that’s it. Second, the Ministry requires that all recipients pursue any potential income, so recipients are required to assign their child support rights over to the Ministry as a condition of welfare eligibility. There are government funded programs that obtain and enforce family support orders on the recipients’ behalf, so the exemption is no longer required as an incentive in that respect.

The problem with no exemption

A quick look at how Ministry welfare rates work quickly illustrates the difficulties with the removal of any exemption: most of the financial support many recipients receive for their children comes from the federal National Child Benefit program, not the Ministry.

The Ministry provides a portion of monthly assistance geared towards shelter costs and that amount is based on the number of people in a family regardless of age. While a single person gets $375 per month for shelter costs, a two person family gets $570, a three person family gets $660, a four person family gets $700, and so on. The shelter amount continues to increase by $35-$50 per additional family member.  So in terms of shelter benefits, the Ministry is providing some financial assistance for children in a family unit, just because the family unit is larger. The amount of that assistance depends on how many people are in the family, and can be quite minimal in larger families.

The larger problem involves the second portion of monthly assistance provided by the Ministry, which is intended to cover basic living necessities. This portion does not increase based on the number of children in a family. A single person gets $235, and a single person with any number of children gets $375.58. Beyond the increase for simply being a single-parent family with children, there is no additional monthly assistance paid by the Ministry for the children. Instead, most families receive much of the support for their children through the federal National Child Benefit program, which was intended to provide financial support for low income children not tied to eligibility for welfare. The program was designed to assist recipients to transition off of welfare by providing a stable source of financial support for children that a family can continue to receive if they transitioned from welfare to low paying employment.

Long story short, many families are getting only minimal or partial financial support for their children via the Ministry of Social Development, yet the Ministry deducts child support from the benefits it pays out, regardless of the amount of that support.

The bottom line

The level of child poverty in BC is well known. While the remedy to that problem may be multi-faceted, one thing seems certain: low income families with children are struggling and it seems we’re far from a welfare system so lavish that families will choose it over self-sufficiency. The Ministry has a number of tools available to ensure that families receiving extraordinarily high levels of support will not inappropriately rely on the public system, and the federal benefit system has its own eligibility criteria.

The bottom line is, as long as welfare rates remain so low, creating even a partial exemption for child support payments would allow vulnerable families with children increased financial resources to meet basic costs of living.

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