This is from a larger publication, Alternative federal budget 2026-27: Bridge to independence
Introduction
Effective policy to enhance income security and adequacy would produce strategic advantages for Canadians and for our governments in fulfilling their basic function of supporting the well-being of citizens and residents. It would reduce, and ideally eliminate, poverty, which is a major factor impairing the population’s well-being. It would also decrease insecurity for the nearly six in 10 working Canadians struggling to make ends meet each month.1H&R Block, Nearly 6 in 10 working Canadians struggle to make ends meet each month despite feeling they earn a decent salary—Canadians divided around their financial outlook in 2026: H&R Block Canada Survey, April 22, 2026, https://www.hrblock.ca/blog/nearly-6-in-10-working-canadians-struggle-to-make-ends-meet-each-month-despite-feeling-they-earn-a-decent-salary-canadians-divided-around-their-financial-outlook-in-2026-h-and-r-block-canada-survey. Because income is a determinant of so many outcomes, effective income support policy would improve health and mental health status,2Ambreen Sayani et al., “Income and health in Canada,” Social Determinants of Health: Canadian Perspectives, Canadian Scholars, January 2025, https://canadianscholars.ca/book/social-determinants-of-health-fourth-edition/. Rachel M Thomson et al., “How do income changes impact on mental health and wellbeing for working-age adults? A systematic review and meta-analysis,” The Lancet Public Health, 7(6), June 2022, https://doi.org/10.1016/S2468-2667(22)00058-5. optimize child development,3Kerris Cooper and Kitty Stewart, “Does household income affect children’s outcomes? A systematic review of the evidence,” Child Indicators Research, 14(3), November 4, 2020, https://doi.org/10.1007/s12187-020-09782-0. enhance educational outcomes4Markus Broer, Yifan Bai, and Frank Fonseca. Socioeconomic Inequality and Educational Outcomes, Springer International Publishing, 2019, https://doi.org/10.1007/978-3-030-11991-1. and decrease property crime.5Jens Ludwig and Kevin Schnepel. “Does nothing stop a bullet like a job? The effects of income on crime,” Annual Review of Criminology, 8(1), January 2025, https://doi.org/10.1146/annurev-criminol-111523-122257. These improved outcomes will lead to decreased government costs.
On August 21, 2018, the federal government introduced its first national poverty reduction strategy (PRS): Opportunity for All—Canada’s First Poverty Reduction Strategy.6Government of Canada, Opportunity for All—Canada’s first Poverty Reduction Strategy, 2018, https://www.canada.ca/en/employment-social-development/programs/poverty-reduction/reports/strategy.html. To its credit, the government included the commitment to “by 2030, reduce the poverty rate by 50% from its 2015 level” in this strategy. In so doing, the government acknowledged its ability to significantly influence the poverty rate. Canadians should expect their government to fulfill this commitment. The poverty metric specified by the federal government is the Market Basket Measure, (MBM), Canada’s official poverty line.
This chapter focuses on what actions the federal government must take to meet the target specified in Opportunities for All.
Overview
The Market Basket Measure (MBM) is Canada’s official poverty line. It costs out a basket of goods and services for various geographic regions that a family of two adults and two children would need to have a ‘basic and modest’ standard of living. It is an absolute, consumption-based measure of poverty adjusted to family size. According to the MBM, 4,477,500 persons lived in poverty in 2024. This is a rate of 11 per cent. The rate of poverty in the territories is more than six percentage points higher, at 17.3 per cent.
The Census Family Low-Income Measure, After Tax (CFLIM-AT) is a relative measure of poverty. Relative measures are policy relevant because of their stronger relationship with health and child developmental outcomes.7R. G. Wilkinson, “Socioeconomic determinants of health. Health inequalities: relative or absolute material standards?” BMJ, 314(7080), February 2, 1997, https://doi.org/10.1136/bmj.314.7080.591. Johan Fritzell et al., “Absolute or relative? A comparative analysis of the relationship between poverty and mortality,” International Journal of Public Health, 60(1), January 2015, https://doi.org/10.1007/s00038-014-0614-2. Kyunghee Lee and Liangliang Zhang, “Cumulative effects of poverty on children’s social-emotional development: Absolute poverty and relative poverty,” Community Mental Health Journal, 58(5), https://doi.org/10.1007/s10597-021-00901-x. Closely correlated with inequality, it examines the distribution of income across the spectrum. The low-income threshold is set by the median; anyone with an income below 50 per cent of the median is living in poverty. As income for all Canadians rises or falls, so does the threshold. According to the CFLIM-AT, 6,651,390 people lived in poverty in 2023, 17 per cent of the population. More people are living in poverty now than they were prior to the pandemic.
The AFB projects the poverty rate in 2030 based on no changes in federal government income support programs. The average of two estimation methods, which yielded similar results, was used to ensure a valid projection. The first method is based on the average difference when the Market Basket Measure is re-based. Re-basing involves changes in the content of the basket and/or changes in the methodology used to calculate the cost of items. Rebasing generally results in a two percentage point increase in the poverty rate. The federal government has made a commitment to rebase the MBM every five years to ensure accuracy; the MBM will be rebased again in 2028. This analysis projects an 11.3 per cent poverty rate in 2030. The second method used was ordinary least squares linear regression, using the year as the independent variable and the poverty rate as the dependent variable. This analysis yielded a similar projected 2030 poverty rate of 11.8 per cent. We averaged the two estimates to yield a 2030 poverty rate of 11.6 per cent, 4.4 percentage points above the 7.25 per cent promised in Canada’s Poverty Reduction Strategy. Based on the highest medium population growth scenario8Statistics Canada, Table 17-10-0057-01—Projected population, by projection scenario, age and gender, as of July 1 (x 1,000), Government of Canada, January 27, 2026, https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1710005701. for 2030, this would leave 4,935,626 Canadians in poverty—1,903,144 more than if the promised 7.25 per cent rate was achieved.
Actions
The government has four more years to implement the changes necessary to meet the target promised to Canadians.
The AFB proposes changes in programs in the four pillars below to achieve an overall reduction of 50 per cent from the 2015 poverty rate. These are phased in over four years. In addition, the AFB will report resulting changes in the deep poverty rate (75 per cent or more below the MBM threshold) and in the poverty rate, as measured by the CFLIM-AT.
Pillar 1: Children
The Canada Child Benefit (CCB) is a powerful program that protected 581,080 children from falling into poverty in 2023.9Campaign 2000, Investing in Tomorrow: A future without poverty—2025 report card on child and family poverty in Canada, February 25, 2026, https://campaign2000.ca/new-release-2025-report-card-on-child-and-family-poverty-in-canada/. Although this is substantial, it left 1,386,950 children in poverty that same year. The AFB will introduce an End Child Poverty supplement to the CCB (CCB-EndPov) targeted to children in deep poverty and expand eligibility to all children residing in Canada.
The CCB-EndPov must provide a maximum of $9,000 for the first child in a family earning less than $21,000, with scaled reductions for each additional child under 18, to contribute sufficiently to the 50 per cent reduction target. For a family of two young children living with little income, this would amount to an additional $12,700 a year in support over and above the $16,400 in 2027 that the base CCB already provides. Further improvements in the credit may be necessary to hit the 50 per cent reduction target. This would substantially improve family financial stability, especially for lone-mother families and children with disabilities.
The AFB will offset the cost of the CCB-EndPov supplement by more quickly scaling back the benefit amount in the final phase out stage. For families with an income greater than $83,000 reported in 2027, the CCB would be clawed back at rates a quarter higher.
Pillar 2: Adults
Adults between 18-64 represent the largest proportion of people living in poverty. Income supports for this age group are dismally inadequate. The Canada Worker’s Benefit is the main program for this age group but requires individuals to earn working income, leaving out those in deepest poverty. The recently re-named Canada Groceries and Essentials Benefit, while tiny, is not tied to employment and is one of the few income supports for this age group. Some temporary increases over the Goods and Services Tax Credit partially compensate for increased costs. Provincial and territorial income assistance are programs of last resort. They are punitive and stigmatizing, and do not provide a pathway out of poverty. They are also very difficult to access without a disability.
The AFB will create a new Canada Liveable Income (CLI) benefit for working-age adults who do not have children, aren’t students and who do not have disabilities. Low-income adults with children will be eligible for the new CCB EndPov supplement and adults with disabilities would be eligible for the AFB’s improved Canada Disability Benefit (see below). The CLI will not require earned income to be eligible. This new benefit must provide $9,000 per year for individuals and $11,000 per year for couples. Importantly, it will not be subject to claw backs by provincial and territorial assistance programs. A benefit reduction rate of 50 per cent would begin on the first dollar of earned income.
Pillar 3: Adults with disabilities
The Canada Disability Benefit (CDB) for adults with disabilities rolled out in 2025 for the first time. The 2024 federal budget committed a maximum annual amount of $2,400, adjusted to inflation—far short of what is needed to address disability poverty. The 2025 federal budget ensured the benefit is not taxable and added a $150 one-time supplement to subsidize the cost of obtaining the Disability Tax Credit Certificate. Eligibility for the CDB is determined solely by the Disability Tax Credit Certificate, which is costly and time consuming to obtain, even after administrative improvements in the recent spring economic update. It is also much harder to obtain for certain illnesses, such as mental health or episodic disabilities. More than 1.5 million people with disabilities live in poverty. At maturity, the benefit, in its current design, would lift only 25,000 people with disabilities out of poverty on an annual basis.
The AFB will immediately increase the maximum CDB amount to $9,000 a year and possibly more over the coming years in order to contribute sufficiently to meeting the 50 per cent reduction target.
The AFB will expand eligibility of the CDB to include those who have already been approved for other publicly administered disability income support programs, including the CPP Disability program as well as provincial and territorial disability social assistance programs.
The AFB will examine the possibility of receipt of long-term workers’ compensation, private disability insurance, as eligibility for the purposes of the CDB. The current design of the CDB enables it to be clawed back by provincial and territorial income support programs. Only Alberta claws back the benefit, but nothing prevents others from doing so in future. There are also no safeguards in legislation to prevent private insurance companies from deducting or offsetting the benefit amount from payments provided to an insured person with a disability.
The AFB will convert the CDB to an automatic refundable tax credit to protect it from being clawed back from disability income supports.
The AFB will amend the Canada Disability Benefit Act to include provisions that prevent the CDB from being recovered by private insurance companies.
Pillar 4: Seniors
The poverty rate for seniors has decreased significantly over the past decades. Government income support programs, including the Canada Pension Plan (CPP) and Old Age Security (OAS), provide a foundation of income for most seniors. The non-taxable Guaranteed Income Supplement (GIS) provides an additional supplement to low-income seniors. Despite these programs, seniors’ poverty persists, particularly for single seniors, women, racialized and immigrant seniors.
The AFB will increase the maximum GIS payment by 10 per cent to $12,622 for single seniors and $8,335 for those in couples. These amounts may have to increase further by 2030 as required to contribute to the 50 per cent reduction in poverty.
Immigrant seniors who have lived in Canada for less than 10 years are not eligible to receive the GIS. Given higher rates of poverty and vulnerability of this group, the AFB will broaden eligibility to sponsored immigrant seniors living on low income regardless of the number of years of residency in Canada.
Leaving no one behind
The AFB will strive to ensure low or no-barrier access to income supports.
The AFB will ensure access to income supports to individuals and families regardless of 1) lack of identification like social insurance number (SIN), 2) immigration or citizenship status, 3) a Canada Revenue Agency (CRA) account or a fixed address, or 4) work status (standard versus precarious, casual or home-based work).
Specifically, the AFB will repeal s.122.6(e) of the Income Tax Act, which ties the eligibility of the CCB to immigration status.
Income security supports are delivered through the personal income tax system and, although it is broad, it is not universal. While the AFB applauds the government’s first steps toward automatic tax filing for low-income Canadians, it finds that additional measures are necessary. Community volunteer tax clinics that operate during the tax season support people, often who have low income and face compounding barriers to successfully file taxes and receive benefits they are entitled to. The grants that support these clinics were extended in the 2026 spring economic statement through to the 2028-29 tax season.
The AFB will expand the Community Volunteer Income Tax Program (CVITP) grant to a year-round program that provides free tax filing support to people with low income. It will do this by adding another $5 million to double the size starting in 2026-27 and will make the program permanent.
While these efforts to broaden access to the personal tax system are important poverty reduction measures, some people experiencing systemic marginalization would still face barriers to accessing benefits they are entitled to.
The AFB will develop a parallel direct cash transfer system administered by trusted community-based organizations to ensure income benefits reach those who are without a permanent address or bank account, without identification and those who work in informal, cash-based economies.
The AFB will draw from jurisdictions around the world that experienced success reaching low-income and unbanked populations with various forms of digital and cash transfer systems, using methods that could include mobile wallets or reloadable credit cards. Many community-based organizations are already providing various forms of direct cash transfers to their service users in need; the AFB will partner with these organizations as they are most likely to reach these populations through trusted relationships.
Most income security benefits are assessed annually, after tax filing, but major life events can drive the need for changes to benefits within the year. The pandemic response—the Canada Emergency Response Benefit (CERB)—demonstrated that the CRA does have the ability to assess and deliver benefits quickly throughout the year.
The AFB will immediately cease all prosecutions for CERB payment in error, except in the case of clear fraud.
The AFB will ensure rapid responsiveness and strive to deliver benefits within one month of major life changes, such as the onset of a disability, a family change, etc.
The AFB will use various data points it has to proactively alert residents of benefits they may be eligible for.
