How to fix the Canada Disability Benefit program

In its throne speech two years ago the federal government announced a new Canada disability benefit: a tax-free, monthly payment to low-income, working-age persons with disabilities. Legislation to implement the benefit was introduced in 2021 but died when the Liberals called an election.

Reintroducing the legislation in June, Carla Qualtrough said “This bill could be a game changer in the lives of so many people.” But the details of the program are murky and its future uncertain. In short, it needs fixing.

First, the bill takes the form of “framework legislation”: most of the critical program details won’t be developed until well after it becomes law. Though the government announced the program two years ago, none of its basic rules have been developed, let alone finalized, including eligibility, payment amounts, income thresholds or how the new benefit will interact with provincial disability programs.

The government says developing the rules will take months or even years of study and negotiation with the provinces and territories and consultation with the disability community. The public will be consulted and input solicited from advocacy groups. When the rules are finalized, they will be implemented by regulation, without having to be tabled in Parliament.

The fiscal uncertainty involved in this approach is obvious. Without knowing the design parameters, it is impossible to estimate what the program will cost. Not surprisingly, therefore, cost was not mentioned in either this April’s budget or the recent Fall Economic Statement. Without clear design parameters it is also difficult to determine how many Canadians with disabilities will receive the benefit — which could be a problem at a time of labour shortages — or whether the benefit will really lift them out of poverty.

Adding to the uncertainty, negotiations with the provinces and territories are likely to be daunting. Ms. Qualtrough has said that if the provinces and territories “are not willing to not claw it back, we are not willing to replace the income they already provide.” Another round of federal-provincial disagreements and stalemates evidently awaits us.

The government has used the guaranteed income supplement (GIS) as a model: the disability benefit will end at age 65 when the GIS takes effect and, like the GIS, it will be governed by standalone legislation, not the tax act. But the GIS is really quite different. It is an addon to the federal Old Age Security program, while the disability benefit will supplement provincial disability programs, which vary considerably. Also, the disincentive to work is less a concern for senior citizens under the GIS than it is for working-age persons. And the basic eligibility test is simple for the GIS — are you 65 or older? — but more complex for the disability benefit. The broad human rights law notion of disability needs to be translated into a legally enforceable test that connects disability to poverty and is also fiscally sustainable.

One obvious fix would be to use the Canada Child Benefit (CCB) as a model. It delivers monthly tax-free benefits (in the form of refundable tax credits) for children under age 18 to lower income families as part of their tax filing. It complements a tax deduction for childcare expenses in providing financial assistance to families.

The CCB was built on a national child benefit supplement introduced in 1998 in consultation with the provinces and territories, who agreed to reallocate the savings they enjoyed from Ottawa in effect taking over responsibility for children to other programs and services for low-income families with children.

Why not do the same for Canadians with disabilities? A Ccb-like disability benefit delivered through the tax act and complemented by tax relief for disability-related expenses would go a long way toward reducing poverty.

While negotiations with provinces and territories were being fast-tracked the federal government could change the existing non-refundable credit for mental or physical impairment to a refundable credit to assist low-income Canadians who currently aren’t eligible. The estimated number of low-income individuals with disabilities who could benefit in 2022 would increase from 917,000 to 1.45 million and the credit would later be replaced by the new disability benefit.

It is past time for the federal government to act on its promise to Canadians with disabilities. The Child Benefit is a good model.

ONE OBVIOUS FIX WOULD BE TO USE THE CANADA CHILD BENEFIT AS A MODEL.