Why the Canada Disability Benefit won’t end disability poverty, and how it could

Originally published on Policy Options
November 26, 2024

Advocates were rightly frustrated when the federal government revealed earlier this year that the Canada Disability Benefit (CDB) to begin in 2025 will lift only about 25,000 people with disabilities out of poverty.

After all, the benefit had been framed as a solution to reduce disability poverty for this group. But the payments will not be the game-changer that was promised.

This is clear from projections that show how the benefit will affect total welfare incomes across the country. The projections come from us at Maytree, a human-rights organization that advances policy solutions to address poverty and social rights.

Moreover, the proposed design limits eligibility, restricts access and will result in clawbacks of other benefits that could erode its value entirely.

People with disabilities in Canada turn to provincial and territorial social-assistance programs when they have few or no alternative sources of income. Maytree’s most recent Welfare in Canada report found that total incomes – which include all applicable tax credits and benefits in addition to social assistance – remained well below Canada’s official poverty line in 2023.

This was as true for people with disabilities as for other households receiving social support.

Most people with disabilities who receive social assistance live alone and, as shown in the graph below, there was not one province or territory in 2023 where single persons could get enough welfare income to lift them out of poverty. In only a handful of jurisdictions could these households escape deep poverty, which is defined as having an income below 75 per cent of the official poverty line.

Note that the poverty line does not account for the higher cost of living faced by persons with disabilities, so their depth of poverty may be under-represented.

The hope was that the new disability benefit would fill the gap between total welfare incomes and the poverty line. But in its proposed form, it will not meaningfully address that gap.

The graph below shows why. Using design details proposed in the draft Canada Disability Benefit Regulation, we estimated the outcome of stacking the expected CBD amounts on top of total incomes from social assistance and other tax credits and benefits.

Under the proposed design and maximum benefit of $2,400 annually, the CDB would not lift a single example household out of poverty.

Though the benefit will not fill the poverty gap for hundreds of thousands of people, it could still reduce their depth of poverty. That would depend, however, on recipients being able to avoid several obstacles embedded in the payment’s design.

1. Provincial/territorial clawbacks: Unless the provinces and territories exempt the CDB as income when calculating social-assistance benefits, those benefits will be reduced dollar-for-dollar, leaving people no further ahead. At the time of writing, six jurisdictions have said they will exempt the CDB, but even one holdout would undermine its sustainability. The federal government could reduce this risk by making the disability payment a refundable tax credit like the Canada Workers Benefit. Social-assistance programs across the country exempt refundable tax credits when calculating income.
2. Limited eligibility: The federal government plans to determine eligibility using the narrow definition of disability that is applied for the existing disability tax credit. As a result, the government projects that 600,000 people will receive the CDB. Yet nearly 750,000 households receiving social assistance in Canada include at least one person with a disability, according to our calculations, which are based on Maytree’s annual Social Assistance Summaries report, and we know that over 911,000 working-age people with disabilities in Canada live in poverty. The government should develop an eligibility test based on the more appropriate definition of disability in the Accessible Canada Act.
3. Barriers to access: Access to the benefit is of great importance given the many well-documented systemic barriers that routinely marginalize people with disabilities. Currently, the federal government proposes potential recipients go through three steps: (1) Qualify for the disability tax-credit certificate; (2) file a tax return; and (3) apply for the benefit through Service Canada. The latter is an unnecessary barrier. The government’s own cost-benefit analysis shows it will cost about $239 million over 10 years to administer. If the federal government were to make the CDB a refundable tax credit, it could be provided automatically through the tax system.
4. CDB clawbacks: For those who don’t have income from employment, the benefit has a proposed threshold of $23,000 for singles and $32,500 for couples. After that, the benefit amount would be reduced. As shown in figures 1 and 2, single persons with a disability in the Yukon and the Northwest Territories already receive social-assistance benefits that surpass that. A single person with a disability in Alberta receiving Assured Income for the Severely Handicapped (AISH) is close to the threshold and may cross it before the CDB begins. The federal government should substantially raise the amount, preferably by combining it with the separate, additional threshold of $10,000 for those with employment income. That would make the threshold for an individual with a disability $33,000 regardless of source. It would also remove the possibility of clawbacks due to receipt of social assistance.

Even if the above issues are addressed, the benefit, at $200 a month maximum, is inadequate.

If it is intended to fill the poverty gaps in provincial and territorial social-assistance programs, the benefit amount should reflect that. The parliamentary budget officer’s analysis, which draws on Maytree’s 2022 Welfare in Canada report, indicated the maximum benefit would have to increase by a factor of six to close the largest gap between current total welfare incomes and the poverty line across all provinces and territories.

Poverty is a policy choice – one that is inconsistent with Canada’s human-rights obligations.

It has been nearly 50 years since Canada, with the support of all provinces, committed under the UN International Covenant on Economic, Social and Cultural Rights to uphold the right to an adequate standard of living. This commitment was reaffirmed in the specific context of disability when Canada ratified the UN Convention on the Rights of Persons with Disabilities in 2010.

Despite these commitments, we have made little progress in addressing disability poverty across Canada.

It’s time for the federal government to do the right thing and retool the Canada Disability Benefit so that it guarantees dignity and a sufficient standard of living to all who receive it.

This article first appeared on Policy Options and is republished here under a Creative Commons license.