High Hopes for British Columbia’s first ever poverty reduction plan

26 March 2019

Earlier this month the B.C. government released the provinces first-ever poverty reduction strategy called TogetherBC. The strategy aims to make progress on the 2024 targets introduced in the province’s 2018 Poverty Reduction Strategy Act: 
 

  • 25 per cent reduction in B.C.’s overall poverty rate
  • 50 per cent reduction in the child poverty rate.
The strategy has five foundational elements to be implemented before 2024:
 
1. The new B.C. Child Opportunity Benefit – offsetting costs for families;
2. Increases to the minimum wage;
3. ChildCareBC — making child care more available and affordable;
4. Income assistance and disability assistance rate increases; and
5. Leveraging federal initiatives and supports towards poverty reduction.
 

Highlights relevant to financial empowerment

1. The B.C. Child Opportunity Benefit
 
This is a new benefit to offset costs of raising children: 
  • Families with one child will now receive up to $1,600 per year, those with two children will receive up to $2,600, and those with three children will receive up to $3,400 a year. (There is no indication whether this increases for families with more children). 
  • The new benefit recognizes that families with kids face costs over the long term by extending supports to children up to age of 18. Once this benefit is in place, a family will receive up to $28,800 from when the baby is born until adulthood. For a family with two children, support can surpass $40,000
  • The Benefit is expected to benefit up to 290,000 families in B.C.
2. The Affordable Child Care Benefit

This new benefit will be available to families of children in licensed childcare facilities:
  • Families making up to $45,000 a year can receive the full benefit for each child, up to the full cost of childcare. 
  • The Affordable Child Care Benefit works in tandem with the Child Care Fee Reduction Initiative to make licensed child care more affordable for families of all incomes in B.C. 
  • Some families are expected to save as much as $15,000 a year through this program.
3. Raising minimum wage

The B.C. government is acting on the B.C. Fair Wages Commission’s recommendations by:
  • Increasing the minimum wage annually until it reaches $15.20 by 2021
  • Harmonizing minimum wage rates for service industries (e.g. restaurants and bars)
  • Increasing the minimum wage for farm workers paid by piece rate by 11.5% (as of January 1, 2019), making it consistent with increases to the general minimum wage.
  • This is expected to benefit more than 400,000 people, and 150,000 living below the poverty line (with an increased impact for those in working poverty, when combined with other benefits).
4. Improving social assistance

The province has committed to making improvements to social assistance by:
  • Raising rates: B.C. has increased income assistance and disability assistance rates twice: $100 per month per case in October 2017, and now $50 for individuals and single parent families and $100 for couples and two-parent families in Budget 2019. 
  • Higher earnings exemptions: In October 2017, the province is raising the earnings exemption for people on disability assistance to $12,000 a year, and to $400/month for people on income assistance and $600/month for those with children.
  • Higher asset limits: To be eligible for income assistance, a single person can now have $5,000 in assets (up from $2,000) and a couple can have up to $10,000 (up from $4,000).
  • Allowing people to keep their vehicles: Beginning in summer 2019, people on income assistance will be able to keep/not be required to sell their primary vehicle, regardless of its value.
  • Improving access times: The work-search period for social assistance applicants will be reduced from five weeks to three weeks.
  • Streamlining return to assistance: The province will streamline the application process for clients returning to income or disability assistance, making it easier to have benefits reinstated after a short period rather than re-applying in full (though no details have been provided yet).
  • Expanding access to the ID Supplement: Government will extend the identification supplement to disability and income assistance clients to ensure they can meet program eligibility requirements and access other essential services like a bank account and a BC Services card.
  • Ending the early Canada Pension Plan (CPP) payments requirement: Currently, people aged 60-64 who access social assistance are forced to start CPP payments early. B.C. will eliminate that requirement, saving these clients from the associated financial penalties from taking CPP early.
5. Improving provincial initiatives and leveraging federal initiatives and supports

BC has committed to reducing costs for households through several initiatives, including:
  • The Climate Action Tax Credit – Benefits from the tax credit are being increased by almost 70% from July 2017 to July 2021, to offset the effect of carbon tax increases on low- and moderate-income families. An eligible family of four will get up to $400 back between July 2019 and June 2020, and up to $500 back per year beginning July 2, 2021. For the lowest income individuals, the enhancements will likely more than offset any additional carbon tax paid due to the higher rates.
  • Fair PharmaCare – As of January 1, 2019, families earning up to $30,000 each year no longer pay deductibles for (approved) prescription medication and get 70% drug coverage immediately. Once people in this net income bracket reach their family maximum, PharmaCare will then cover 100% of their drug costs for the rest of the year. Fair PharmaCare co-payments have been completely eliminated for seniors born before 1940 earning a household net annual income up to $14,000, and for other British Columbians earning $13,750 a year or less.
  • Eliminating Medical Service Premiums (MSP) paid monthly for access to B.C. healthcare, which have already been cut in half and will be fully eliminated by January 1, 2020.
Federal initiatives are essential to meeting B.C. provincial targets, including: 
  • Canada Workers Benefit (CWB) – a refundable tax credit that supplements the earnings of low-income workers and improves work incentives for low-income Canadians. Coming into effect for the 2019 tax year, the CWB is equal to 26% of each dollar of employment income over $3,000, to a maximum credit of $1,355 for single individuals without children and $2,335 for families (couples and single parents). The annual income threshold is $12,820 for a single person without children and $17,025 for families with children. After this, benefits are gradually reduced (by 12% of net income) until the benefit is eliminated. This benefit is indexed to inflation after the 2019 tax year.
  • Canada Child Benefit (CCB) – The federal government introduced the Canada Child Benefit in 2016 to give families more money each month and help them with the cost of raising kids. The CCB is tax-free, targeted to those who need it most, and indexed to the cost of living. The maximum annual benefit for July 2018 to June 2019 increased to $6,496 for each child under age six and to $5,481 for each child between the ages of six and 17. The amount is reduced starting when a family’s net income is more than $30,450.
  • Guaranteed Income Supplement (GIS) Top-Up – The Guaranteed Income Supplement top-up was increased in July 2016 to support the most vulnerable seniors; those seniors who rely almost exclusively on Old-Age Security (OAS) and GIS benefits. Single seniors with an annual income (other than OAS and GIS benefits) of about $4,600 or less will receive the full increase of $947 from July 2016, according to the budget. The amount of the increased benefit gradually declines above this income threshold, and is completely phased out at an income level of about $8,400
More than 1 million people are expected to be helped by these federal measures, which will lift an estimated 20,000 children and their families out of poverty in B.C.
 
6. Consumer protection
 
Prior to September 1, 2018, lenders could charge up to $17 for every $100 borrowed on loans to people in need, when the province introduced tougher rules on payday loans and cheque-cashing fees. Building on this initial work to protect people in short-term financial need, the province is strengthening the rights of borrowers, setting stricter limits on borrowing costs, eliminating certain fees, requiring short-term lenders to be properly licensed to operate and making sure that borrowers are given the information they need to make informed financial decisions. There are no further details yet on how these efforts will be implemented, however.
 
7. Action on homelessness
 
As part of the Strategy, the B.C. government has launched the Office of Homelessness Coordination, to move towards a co-ordinated, effective approach that prevents people from becoming homeless in the first place. The government will be taking a new approach to homelessness, focusing on:
  • Prevention: Making homelessness rare by preventing people from becoming homeless and by helping people who are at risk of homelessness or precariously housed. 
  • Immediate response: If someone becomes homeless, acting to make the experience brief to reduce harm and help prevent chronic homelessness. 
  • Stability: Once a person has a roof over their head, giving them the supports they need to make sure their experience with homelessness is a one-time occurrence. 
  • Working Better Together: Co-ordinating actions across provincial and local government and with community partners. This includes being clear about responsibilities and making sure responses to homelessness are effective in every part of the province.
Announced changes following this approach include:
  • Expanding eligibility for the Rental Assistance Program and Shelter Aid for Elderly Renters for households making up to $40,000 annually, and increasing the monthly subsidy by $67 (a total of up to $472 in rent assistance per month for eligible families). 
  • Restricting rent increases (including increases resulting when property owners match sharp spikes in local rents), and closing rent control loopholes.
  • Investing $10 million in community rent banks to help people keep their homes, removing restrictions to the moving supplement for people on income/disability assistance.
  • Removing restrictions on access to the moving supplement for income or disability assistance clients, and eliminating the “transient” category so income/disability assistance clients without a fixed address are eligible to receive the same supports, supplements, and exemptions as other clients.
8. Studying basic income
 
In July 2018, government announced an expert committee to study the potential for using a basic income approach in its efforts to reduce poverty and prepare for the emerging economy. The committee will oversee independent research to assess the feasibility of a basic income for British Columbia, and assess how basic income principles can be used to improve B.C.’s existing income and social support system. The panel will submit its recommendations to the government in 2020 (but there is no indication of whether the government will commit to a pilot study like Ontario’s former pilot).