The 2020 Speech from the Throne contained the following passage:
“COVID-19 has disproportionately affected Canadians with disabilities, and highlighted long-standing challenges. The Government will bring forward a Disability Inclusion Plan, which will have:
A new Canadian Disability Benefit modelled after the Guaranteed Income Supplement (GIS) for seniors.”
At best, I believe that a Canadian Disability Benefit (CDB) can place a new floor underneath current programs of every sort except for social assistance programs. Social assistance programs have always successfully installed themselves as last payer.
Unless, of course, the new benefit replaces social assistance.
But before we get into all that, let’s read the tea leaves.
If the CDB is going to be like GIS as the Throne Speech says, we can only hope that it doesn’t look too much like GIS.
Why? Because it will claw back 50% of taxable income from all other sources from the first dollar (like GIS). And there is a special GIS supplement to the GIS that raises the clawbacks to 75% over a zone of low income. Let’s hope there is a threshold of income before the new benefit starts clawing back and let’s hope clawbacks are not worse than those that apply to social assistance.
In addition, GIS does not have any special benefits that apply to children. Of course it wouldn’t since GIS is a program for low income seniors; but if GIS is the model, then children would be left out. Other programs like CPP and social assistance do provide benefits to children – but they are not the model chosen.
Let’s hope too that the benefit will guarantee at least the maximum $11,000 a year now payable under GIS. But notably absent from the Throne speech was any mention of Old Age Security, the program that underpins the GIS program. It pays a base amount of $6,620. The Throne Speech mentioned GIS only, not OAS/GIS, the program combination most often uttered in the same breath.
GIS has a $5,000 a year earnings exemption that applies to both employed and self-employed. Although the GIS is indexed to inflation and is not taxable, the GIS earnings exemption is not indexed. Is that what we should expect in a new CDB?
Then we need to take a closer look at eligibility based on residency in Canada. Sponsored immigrants are not eligible for GIS. Will Canadians with disabilities who are sponsored immigrants be eligible for the CDB? Not if the CDB mirrors the design of the GIS.
For GIS, there is a waiting period of Canadian residency of ten years in approximately 140 countries and one year for the 60 or so countries that have signed social security agreements with Canada. That’s because GIS mirrors the OAS residency rules. Will the CDB work the same way? We can only hope it won’t.
And how will the program mesh with 14 other income security and tax programs/systems in Canada?
- EI sickness,
- Canada Workers Benefit-Disability,
- The Disability tax credit,
- Social assistance,
- Veterans disability benefits,
- Auto accident insurance,
- Private sector plans,
- Workers compensation,
- The Medical Expense Credit
- The Refundable Medical Expense Credit
- The Child Disability Benefit for youth; and
- OAS/GIS for seniors.
Will the new CDB replace all or some of them; partially or fully?
Almost $38 billion was spent in 2018-19 on disability incomes from many sources by three levels of government and the private sector in Canada.
Money to fund those programs comes from insurance premiums, general expenditures, business income & payroll taxes
Disentanglement is difficult.
Pressures will exist hydraulically for the new program to pay more while others pay less.
And what do we do with the social assistance backstop? Although other program areas like disability credits and EI Sickness have grown fastest over the past few years for people with disabilities, social assistance (with its larger base) has grown the most. It has become harder and harder for any new benefit to replace social assistance.
Reading a different set of tea leaves from Canada’s emergency response and recovery programs, will the definition of disability for the CDB be similar to that used for the $600 credit where the eligibility definition only included the definitions for the Disability Tax Credit (DTC), Veterans disability benefits and CPP-D?
If it does, I estimate that up to 50% of Ontario Disability Support Program (ODSP) recipients won’t get the CDB because they won’t be eligible.
And the bulk of those who don’t get the CDB will have mental illnesses (largely psychoses and neuroses) that are harder to get recognized under DTC eligibility criteria.
The unintended consequences are that the new benefit would largely help people with severe developmental and physical disabilities and leave out mental illness and create a two tier (+) system divided along the lines of severity and disability type.
One way to construct the Canada Disability Benefit is to forge an historic agreement with provinces and territories to provide one overall program that dissolves social assistance into a straight income tested benefit that looks like OAS/GIS as opposed to just GIS, construct a realistic income test and go for it.
Chances of that are slim but not ‘none’. It’s worth a try.
js/September 30, 2020. With thanks to Michael Mendelson and Michael Prince for their ideas.