What happens to Family Allowances?
We hand out $30 millions worth every month—almost a tenth of our total government spending—to mothers of children under sixteen. Where does it all go? Is the world’s most generous baby-bonus scheme working? Here’s the full story
AROUND the twentieth of this month two million Canadian mothers will receive cheques for thirty ^million dollars. It will bring close to three billions the amount that Canada has distributed in family allowances since the controversial, much-derided, muchapplauded “baby bonus” went into effect almost ten years ago.
In Vancouver Mrs. Ed Diddlecombe, wife of a punch-press operator in a saw-manufacturing plant, will receive $26. She will take the cheque immediately to an insurance office where it will pay the monthly premiums on endowment policies which will help provide university educations later on for her four sons.
In the big red-brick home at 181 Laval Street in Hull, Que., Mrs. Emile Seguin, a slight attractive mother of nineteen living children, five of whom are still receiving allowances, will tuck a cheque for $37 into her purse. Most of it she will spend on children’s clothing but some she will carefully put aside for music lessons for three of her daughters. Family allowances have financed musical training for six of Mrs. Seguin’s daughters.
“When the allowances began ten years ago it was like another son going to work and bringing his pay home,” Mrs. Seguin reflected recently. “In those days I would sometimes take a family-allowance cheque out and buy thirty pairs of shoes and rubbers at one time to fit the kiddies out for the winter.”
One of the biggest cheques sent out this month —$91—will go to a whitewashed log farmhouse near Mattawa, Ont., where it is the principal income with which Mrs. Zillie Minor, forty-one, clothes and feeds her family of eighteen children, fifteen of whom are eligible for the allowance. Her husband, August, is in poor health and only forty acres of his stony, forested 300-acre farm are arable. From this he sells some milk and eggs but most of what the farm produces is needed for food at home.
“The family allowance is practically the only cash we have,” said Mrs. Minor. “The farm feeds us and the allowances buy clothing and foods we can’t grow for ourselves.”
Near Sault Ste. Marie, Ont., there is a mother who, for the first time since July 1945, will receive no cheque this December. Recently she addressed this letter to “The Family Allowance Man, Toronto.”
“Dear Mr.--: Ralph is just about sixteen and
he is the youngest so I guess I won’t be getting no more children’s cheques after November. I never wrote before to say so, but now it’s all over I want to say how wonderful they have been. We had seven little ones and lots of months it was the only money I had. I could always buy rubbers so the children didn’t have to stay home from school on wet days like some of them did before you started sending family allowance. When Ralphie drank the Flit the cheques paid the hospital bill. I don’t know how to thank you.”
In Montreal another mother will receive no December cheque—but for a different reason. Her husband, owner of a small factory, sent the following letter recently. “Sirs: Kindly cancel the family-allowance payments
you are now making to my wife on behalf of our two children. We have decided that the plan is economically absurd and socially harmful and wish to be disassociated from it. You have set up a vast bureaucratic machinery to overtax the public, then pay back the amount of the overtax, less administrative costs, in the form of family allowances. What could be sillier?”
Perhaps these last two observations sum up the story of family allowances as well as it will ever be summed up. It’s a story of chuckles and tears, of thanks, praise and ridicule. It is a story too of fraud, dishonesty and abuse, for not all of that fifteen tons of December cheques will be spent like those cheques described above.
Some unquestionably will be spent on beer or find their way into a poker pot. In the north around Great Slave Lake some Indians will spend theirs on raisins and yeast for the monthly batch of homemade hootch. According to the manager of the women’s clothing section of a Vancouver store there will be a jump in the sale of women’s hats and finery on the day after the cheques arrive. Here and there a husband who has beerumissing for a month will suddenly turn up at home again, get hold of his wife’s allowance cheque, then disappear for another month.
One of the most paradoxical features of the whole operation is that a Government that normally watches its expenditures meticulously will cheerfully hand out its monthly $30-million bonanza with no strings attached and virtually no supervision to see that it is spent on the children for whom it is intended. Officials of the Family Allowances Continued on page 88 Division of the Department of National Health and Welfare are sure that all but an insignificant amount is spent for children and they can point to a number of non-government surveys that seem to bear this out.
Ontario’s largest family-allowance cheque ($91) goes to Mrs. Zillie Minor for 15 of her 18 children. They live almost entirely on the allowance. Meals on the Minors’ rocky 300 -acre bushland farm near Mattawa are served in two shifts.
About a hundred of the two million cheques going out this month will be stolen and cashed on forged endorsements. About sixty will be chewed up by dogs, torn up by children or go through the washing machine in a husband’s shirt pocket, and because of this, duplicates will have to be issued later. Another hundred or so will simply disappear, and ten years from now the odd one will still be turning up at banks for payment. Today the Government is still redeeming four or five 1945 cheques per month and at the last count this fall 4,999 cheques worth $49,000 issued in 1945 were still uncashed.
The bitter and widespread opposition the allowances generated at the outset has simmered down until no really organized opposition remains. Prime Minister St. Laurent said confidently a year ago that no future government would dare do away with
them and he was undoubtedly right. There has been no serious criticism of them in parliament since 1946. Gallup polls indicate that the proportion of the Canadian public that approves family allowances climbed from fortynine percent in 1943 before they began to almost ninety percent in 1950 when the last poll was taken.
But. sceptics still occasionally ask the same old questions.
Have ten years of family allowances proved them to be the commendable and enlightened legislation their creators foresaw? Or do they constitute a grandiose economic monstrosity that lends itself to waste and fraud? How are they administered and how much does it cost? Do you know whether you yourself win or lose in the incometax family-allowance seesaw?
First of all, what exactly are they?
Every mother of a child under sixteen receives from the government treasury a monthly payment to help her provide for the child. At a cost of $350 millions a year—almost nine percent of the total government spending —it is by far the most ambitious and costliest social service Canada has ever undertaken.
On the theory that older children cost more to keep, payments increase with age from a minimum of $5 to a maximum of $8 a month. Each child receives a total of $1,188 to help his parents over the economic hurdles of his first sixteen years.
Eligibility requirements are fairly simple. If of school age the child must attend school regularly. He must be maintained by the person receiving his allowance. If not born in Canada, he must reside here a year before payments can begin. He must stay in Canada, although a three-month absence each year for vacation or schooling outside Canada is permitted.
The allowance is paid regardless of a family’s financial means. The basicexemption allowed in income tax for dependent children is. $400 but this applies only to children over sixteen
or to those ineligible for family allowances because they haven’t lived in Canada a year. Children eligible for family allowances rate an exemption of only $150, whether the parents accept the allowance or not.
Most family men who earn $8,000 or more would gain by taking the $400 exemption for their children instead of family allowances, if they could, but the Income Tax Act won’t let them. High-bracket earners can’t make a profit by refusing family allowances for their children.
The cheque usually goes to the mother. Where the mother is dead, or has been deemed incompetent, the cheque is made out to the father. Where misuse is proved allowances sometimes are taken away from a mother and paid to such agencies as the Children’s Aid Society to be administered for the children. When family allowances were first planned it was thought that in French-Canadian Quebec, where husbands traditionally hold the purse strings, payment would have to be made to fathers. However after long debate les mamans won. The dire predictions of family disruption in Quebec didn’t materialize.
One fisherman at Louisport, Nfld., a couple of years ago wrote to the Queen complaining bitterly that the cheque should be sent to him each month because he had voted for Joe Smallwood, Newfoundland’s Liberal premier, and his wife hadn’t. Buckingham Palace sent the letter to Ottawa and Ottawa patiently explained that mothers got the cheques no matter how they voted.
The average allowance per family is a little over $14. At present there are eleven Canadian families receiving more than $90 a month; nine of these receive allowances for fifteen children, and two (one in Nova Scotia and one in Quebec) have sixteen children under sixteen eligible for family allowances. The sixteen-child families receive $98 to $100 a month.
Canada was not a pioneer in familyallowance legislation. In 1945 when it started its program thirty-three other countries had some sort of familyallowance program already in effect. But today Canada’s is the world’s most generous family-allowance scher, e. The United States is the only major industrial nation which doesn’t have such a plan.
Ten years of birth records show that family allowances have little or no effect on the birth rate. The average number of children per Canadian family was 2.37 in 1945; today it is slightly less. The birth rate per thousand of population climbed when men returned from overseas; hit a high of 28.6 in 1947; then has dropped steadily to around 27 births per thousand today.
Nor have family allowances made big families bigger by encouraging childbearing among lower-income groups, as many opponents predicted. At the 1941 census Canada had 170,000 families with six or more children; by 1951, in spite of increased population, the number of these families had dropped almost to 150,000.
Director of Canada’s family-allowance program since it began is Byrnes Curry, fifty-one, a six-foot youthfullooking former school inspector from Nova Scotia.
One of the first Canadian advocates of family allowances was a FrenchCanadian Catholic priest named Leon Lebel. During the 1930s Father Lebel was almost a lone voice. He lectured, testified before committees, wrote reams, and finally, a frustrated old man, he retired to a Catholic retreat in Montreal. But he made some converts. Among them was George F. Davidson, then Canadian Welfare Council head who a short time later, as Canada’s Deputy Minister of Welfare, was to have the whole family-allowance program in his lap. During World War II Britain’s sweeping Beveridge Report advocated family allowances. Three months later its Canadian echo, the Marsh Report, did the same. Finally a confirmed and lifelong bachelor, Prime Minister Mackenzie King, started the legislative machinery rolling in 1944 to make them law.
The Opposition objected violently. Progressive Conservative leader John Bracken called them a political bribe. Ontario Tory newspapers claimed it was a scheme to milk wealthy Ontario for the benefit of Quebec’s large Catholic families. Ontario’s Progressive Conservative Premier George Drew was quoted as saying in an Aug. 9, 1944, radio speech that “the Government of Ontario intends to do everything within its power to make sure this iniquitous bill does not go into effect.” But he has been reiterating ever since that he was opposed not to the principle of family allowances but to the way the federal government was pushing them through without consulting the provinces.
But the bill’s popular appeal was undeniable and when the showdown came on Aug. 1, 1944, there wasn’t an MP who dared vote against it.
Family allowances are still a favorite political battleground, but now the opposition is trying to jump on the bandwagon with the cry “We thought of it first.” Almost every year there is an exchange in parliament like this one of last January. CCFer Stanley Knowles declared: “Family allowances were on our platform in 1942, two years ahead of the government.” Health and Welfare Minister Paul Martin charged: “It was not. Your party opposed them.” Social Credit leader Solon Low chipped in: “The principle of family
allowances, the idea of making direct gifts of purchasing power to consumers, was advocated by Social Credit twenty years before the government got the idea.” Then CCF leader M. J. Coldwell usually has the last word: “This is
an insult to the memory of a great Canadian. Everyone is trying to steal credit for something that Woodsworth proposed before many of us were born.”
The Progressive Conservative side of the House stayed out of this particular family-allowance squabble but on several other occasions its members have staunchly claimed that they always approved of family allowances; that they voted for them in 1944; and that they are now in favor of increasing the payments. And Leslie Morris, national organizer for the Labor Progressive Party, declared recently that his party had advocated family allowances ahead of the Liberals, that the present allowances are “much too low,” and that the Labor Progressives would increase them and make them payable throughout a child’s school life and not cut them off at sixteen.
But the Liberals, meanwhile, interpret every money saving election promise that Opposition parties make as a warning that family allowances would be cut lay another government.
The truth of course is that no party would dare tamper with family allowances except to make them bigger. And the reason for the political immunity of family allowances is that no legislation has ever been as intimately linked with the everyday lives of the masses of the people.
“No party would dare tamper with family allowances—except to make them bigger”
The beneficial effects of the allowances are reflected in innumerable ways. At the personal level they are reflected in the many letters such as the one from a New Brunswick mother who wrote with homey candidness to director Curry: “Billy wants
me to tell you he has his first pair of flannelette pyjamas. I always made them out of flour sacks before.”
At the national level the benefits of family allowances are perhaps even more evident. During the first year of allowances milk consumption jumped forty million pounds a month in Canada. The national production of children’s shoes rocketed from 762,000 to almost 1,200,000 pairs per month after a year of family allowances. Montreal milkmen reported that they were leaving milk at slum tenements that never took delivered milk before.
The manager of a Quebec City department store wrote in 1946 that the firm never before had an infants’ wear department but it was installing one because of customer demand. The Hudson’s Bay Company reported it was sending much larger quantities of food to northern trading posts because Indians and Eskimos were rapidly enlarging their diets. One post that sold 98 cases of canned tomatoes and two cases of powdered milk in 1944 sold 1,016 cases of tomatoes and 989 cases of powdered milk two years later.
One of the most dramatic benefits of family allowances has been improved school attendance in Canada. Playing hooky used to be just plain fun; now it can cost the whole family money, because allowances are suspended for children not attending school regularly. When the payments began in 1945 so many children flocked back to school in rural areas of Nova Scotia and Saskatchewan that some sections had to enlarge classrooms. The same problem arose in Newfoundland in 1949 when it joined Canada and allowance payments began there. Ontario courts handled 1,084 cases of truancy in 1944 but by 1952 truancy cases had dropped to 189.
A Prize for Newfoundland
Another benefit, according to economists, is that family allowances are redistributors of wealth from the rich to the poor regions of the nation. Under this heading too, lies the answer to probably the most vexing of familyallowance questions: Does rich, Prot-
estant Ontario have to subsidize poor, prolific, Catholic Quebec?
Ontario does bear the brunt of the bill, but Quebec doesn’t profit nearly as well proportionately as some other provinces.
Ontario through taxation pays fortynine percent of the nation’s family allowances and gets thirty percent back. British Columbia also loses. It pays nine percent of the bill and collects seven and a half percent. Quebec, Manitoba and Alberta gain a little on the deal. All other provinces profit handsomely. Saskatchewan collects twice as much as it pays; New Brunswick and Nova Scotia three times as much; Newfoundland close to four times as much; and Prince Edward Island takes seven times as much out of the family-allowance kitty as it puts in.
(Quebec incidentally doesn’t win the ribbon for big families, either. Newfoundland, New Brunswick and Prince Edward Island, in that order, all average more children per family than Quebec, which comes a poor fourth.)
Perhaps still another national benefit can be attributed to family allowances. They lured a tenth province into Canada. Proud Newfoundlanders had always turned the confederation proposal down cold until in 1948 they learned to their amazement that a big family would receive almost as much in family allowances as the man of the house could earn in a year’s cod fishing. Newfoundland quickly changed its mind and voted to join Canada.
The official entry day was set as April 1, 1949, but Newfoundlanders protested when they learned that this wouldn’t make them eligible for family allowances untif May. Ottawa hastily reshuffled the confederation schedule and Newfoundland officially became a part of Canada one minute before midnight on March 31. For the privilege of having a tenth province for that one minute, Canada paid Newfoundlanders $700,000 in family allowances during April 1949.
How is the enormous job of getting fifteen tons of cheques into the Canadian mails each month accomplished? The operation is decentralized, with a regional office in the capital of each province handling all the files and printing of cheques for that province. There is only a small headquarters staff in Ottawa.
Toronto, with 800,000 cheques a month to mail, does the biggest job. In a dingy old five-story building on Front Street the Toronto staff of about four hundred starts each day by answering three thousand letters. The postage bill—$47,000 a month—is higher than that of the whole city of Kingston.
Letters of complaint and praise come in with all manner of weird addresses. Many are addressed to “The Children’s Cheque Man, Toronto.” A Bradford, Ont., mother who failed to receive a cheque one month wrote a blistering tirade to “The Dept, of Family Warfare.” In 1949 a Toronto mother followed the mailing directions on the application form exactly; she carefully copied on her envelope: “To the
Regional Director of Family Allowances in the capital city of the province in which you reside.”
When a new application arrives it is swallowed up into a vast and complex machinery of checks and cross-checks aimed at pTeventing duplicate payments and fraud. Birth records from the prt>viYicial registrars of births are sent twice a week to the respective family-allowance offices, but the birth verification may not come until three of four months after the mother’s family-allowance application has arrived. In the meantime the office has no proof that the baby exists—he could be no more than a fictitious name on the application form—but they go ahead and start family-allowance payments “on faith.”
Meanwhile, however, the baby’s card has a big white empty space on it waiting for the official birth registration number to be filled in. If the space is still empty after four months, meaning no birth verification has come through from the provincial government, the mother will get a letter asking why. If she doesn’t have a good answer, the baby will be cut off family allowance rolls then and there.
One mother near Toronto who had failed to register her baby was asked for birth registration for the child and when she did nothing about it payments were stopped. She stormed into the office of Harry Thornton, assistant director for Ontario, carrying the baby in her arms. “Here!” she exclaimed. “Does he look as if he’s born yet?” Thornton explained that they still needed some birth record to prevent
duplicate payment should someone else apply for the child. “We can’t file the baby away in a filing cabinet,” he told the mother testily.
Sometimes immigrants must use baptismal certificates or International Refugee Organization registrations to prove birth and age of children. Many war orphans have been brought to Canada by immigrant foster parents and there is no record of who the children are, their age or birthplace. In these cases a statement from a doctor is sometimes requested attesting to the child’s apparent age.
About six hundred new applications per day are processed at the Toronto office alone, and among Ontario’s almost 800,000 families receiving allowances troublesome confusion of names turns up almost daily. Keeping the Smiths, Browns and Joneses sorted out and sending the correct cheque month after month is a nightmarish job. There are nearly a hundred Mrs. Mary Smiths receiving allowances in Toronto alone and every once in a while one of them writes in, signing her name “Mrs. Smith.” There are five thousand Smith family-allowance accounts in Ontario. There are three hundred Mary Browns.
When a Child Goes to Work
New Canadians who discover their foreign names are a handicap in Canada, and simplify or Anglicize the spelling, are always crossing up familyallowance records. One Windsor immigrant mother filed an application for her two children using the name Znotoly. A letter went back saying payment was beginning and asking her to forward a birth-verification document for each child. She misunderstood and made out a new application, but by now they were dropping the “Z” from their name. Since there was no record for “Notoly,” the new application also was approved and payment began. The mother received a double allowance for three months.
Birth verification is only the beginning of the checking system. If a child stops attending school regularly his name will turn up on reports sent monthly to family-allowance offices by school inspectors. If he is placed in a children’s institution and the parents fail to report the fact so allowances can be stopped, the division will soon uncover the fact in their twice-yearlv check of children in institutions. If a child goes to work his name will appear promptly in the list which comes regularly from the Unemployment Insurance Commission showing children under sixteen issued unemployment insurance books. If a child dies and the mother forgets to notify the division, the death will probably be reported immediately anyway by the division’s newspaper-clipping service, but if not the record of it will turn up shortly in the lists of deaths of children under sixteen which, like birth records, come twice, a week from the provincial registrar.
But with all their checking, there is little or no investigation of how allowances are spent to see that they are used as intended for children. The commonest criticism of the allowances is that they are spent on beer, bingo, bonnets and everything else but the kids,
A member of the Toronto allowance staff once saw a woman cash a $5 allowance cheque at a bank and go directly to a hat shop where she bought a $5.39 hat. He accosted her immediately. The woman opened her shopping bag and produced school books and a pair of children’s shoes worth $8 that she had bought ten minutes before.
Officials admit the only wa>' they have of learning of misuse and abuse of allowance cheques is to wait for complaints from neighbors or such welfare agencies as the Children’s Aid Society. Most complaints turn out to be inaccurate, but they are always checked. Last year there were only fifteen hundred misuse complaints against Canada’s two million mothers receiving family allowances and only about five hundred of these turned out to be serious enough to require a warning or suspension of payment.
“This proves one of two things,” says Fred Jackson, the Ontario director. “Either few mothers misuse the allowances or we catch few mothers who misuse them. But we feel certain that ninety-nine percent is spent properly for the children.”
Jean Graham, Ontario family-allowance welfare supervisor, told me that of Ontario’s 800,000 accounts there are now 112 that have been taken from mothers because of misuse and are being paid to local Children’s Aid Societies to administer for the children. “The leading cause is that the mother is incapable of handling money and has got herself in debt,” Miss Graham said. “Liquor is probably the second cause. Usually after a year or two of supervision the allowance can be given back to the mother.”
Sometimes it takes the wisdom of a Solomon to figure out whether a certain expenditure is for the benefit of children.
Some Take Music Lessons
A New Brunswick man complained about allowance cheques being used to put a new roof on his neighbor’s farmhouse. Investigation revealed it was a large family and several children slept in the attic under the leaky roof. Every time it rained they all caught colds. Ottawa ruled the new roof was a legitimate use for family allowances.
In Saskatchewan recently allowances totaling $1,000 had been saved for a family of seven by a welfare agency receiving the payments for them. Ottawa gave its approval and the money was used as down payment on a house to reunite the family.
Recommendations that the allowance cheque be used for the child’s clothing or food were followed literally by a Guelph, Ont., mother. She wrote to the Toronto office: “Would you
please send me another cheque? The baby ate the last one.”
Several government and non-government surveys on the spending of family allowances have been conducted. According to these, about forty percent pool the allowances with other family income and there is no exact record of how it is spent. Only nineteen percent use allowances for one specific purpose like clothing or savings or insurance policies.
The surveys show that large and low-income families tend to use them for basic necessities such as food, clothing and medical care; smaller or high-income families report more often that allowances are saved for educational purposes or are spent on “extras” such as music lessons or summer camps. In a study of five hundred Owen Sound, Ont., families, by Cecilia Eberle, a sociology student from Loyola University, Chicago, nineteen percent of families said they banked allowances or invested them in insurance policies for future education of their children.
In every case, children’s clothing is
They buy food, shoes and a farmhouse roof, and one habv just ate the eheque
the item for which allowances are most commonly spent. This is followed closely by food. Next, and mentioned only about half as often as clothing, is medical care.
Despite the formidable system of checking to prevent paying for ineligible or nonexistent children, the government often gets defrauded. In 1951 the Toronto office discovered it was still paying allowances for a northern Ontario Indian baby that had died shortly after the program began in 1945. The infant’s death had been unreported for six years. Officials say it cannot happen again because a list of children receiving allowances in each Indian family is now sent every year to every Indian agent for review.
To begin with, the Family Allowances Division had to verify the births of all children under sixteen, not just new births as now. The applications kept piling up ahead of birth verifications until in 1947 unverified births hit a peak of two and a half million. Every month the division was paying about $10 millions for children it wasn’t sure existed. And some of them, it was subsequently discovered, didn’t exist.
One disgruntled St. Catharines, Ont., machinist who felt he had paid too much income tax decided to get some back. He had one child, but told his wife to apply and collect allowances for six. It worked for fifteen months and the couple collected $530 more than they were entitled to. Then they got frightened and gave themselves away. The mother wrote a garbled letter to the Toronto office saying the children were no longer living with her. The director became suspicious and sent the RCMP around. Later the father had to pay back the $530 and a $770 fine to boot.
It is a fact that anyone can apply and begin receiving family allowances for a nonexistent child, but for $5 a month it wouldn’t pay. If no birth registration comes through from provincial records in about four months the family-allowance people with the RCMP at their elbows are wanting to know why. Between 1947 and 1951 there were eighteen prosecutions against people who tried to get allowances for fictitious children, or one for every 100,000 families receiving allowances.
One of the toughest disqualifications to catch is nonresidency. When children are out of Canada longer than three months parents are supposed to notify the allowance office and payments are suspended. Sometimes notification isn’t made and allowances continue to go out to the address of a relative long after the family has left the country.
A Toronto mother of five children who moved to the United States in 1948 thought her children remained eligible as long as they remained Canadian citizens. For almost two years the grandmother in Toronto continued to accept and cash the cheques, sending the cash to the United States. When the Family Allowances Division finally got wise, the mother had to pay a $100 fine and refund $571 she had pocketed in allowances.
Since allowances began ten years ago many millions of dollars have been spent in overpayments but most of it is collected again afterwards. Today, with almost $3 billions distributed, there are overpayments outstanding of $320,000, about one dollar of every $10,000 distributed. Of this, $145,000 is regarded as collectible; the rest has been written off as uncollectible. Two thirds of the outstanding overpayments are in Quebec. Officials say this is due to Quebec’s relatively inefficient system of registering births and infant deaths, which lets overpayments continue undetected for longer periods.
A criticism often heard about Canada’s family-allowance system is that the government wastes money paying the allowance to high-income families who neither want nor need it, then each year goes to a great deal more expense to take it back through income tax.
It is argued that if this merry-go-round were eliminated, the administration costs thus saved would make it possible to pay a bigger allowance to families that really need it.
Whatever the answer for Canada as a nation, the individual Canadian can use a rule of thumb to determine whether he personally wins or loses.
Unless he earns $10,000 or more, his income tax is probably only one third to one quarter of all the taxes he actually pays the federal government. Multiply his income tax by three and a half and this is roughly what he
contributes to the government’s revenue. Since nine percent of the government revenue goes into family allowances, it can be assumed that nine percent of an individual’s contribution to the government goes into the national family-allowance pot.
A man with three children and an income of $7,000 pays $840 income tax. When he multiplies this by three and a half to cover sales taxes, liquor taxes, tobacco taxes and his share of corporation taxes, he discovers that he is paying the government $2,940 a year. Nine percent of this is $264.60, his
contribution to the national familyallowance fund. For three children his wife receives a family allowance of $18 a month, or $216 a year. Hence family allowances cost him $48.60 more a year than he receives. In other words he is paying his own family allowance and contributing another $48.60 to someone else’s allowance.
Would that $48.60 go further if the government didn’t go to the expense of collecting and paying back the other $216?
“On the surface it seems pointless to pay family allowances to high earners and then take it back again,” says Byrnes Curry, national director. “But the Government has decided that is the cheapest and fairest way of running it. Any change would require a means test and the cost of administering and policing a means test would be more than the present cost of paying allowances and collecting them back again.”
The staff of nine hundred that administers family allowances also handles Canada’s old-age security program. The two programs together cost under $6 millions a year to administer. This is a cost of about seventy cents for every $100 sent out in family allowance or old-age pension cheques.
One strange inconsistency in familyallowance eligibility regulations is that Canadian servicemen posted overseas, if their children go with them, lose family allowances; but alien U. S. servicemen posted to Canada whose wives and children reside here the required year can collect allowances. Many U. S. servicemen’s families in northern Canada and Newfoundland were receiving allowances a couple of years ago, but now they are ordered by their commanding officers not to apply.
Do many people refuse to accept the allowances because of principle?
The division has no way of determining accurately. Officials know the total number of births in each province, and they know that the number who apply for allowances is about one in a hundred less, but in this one percent are all babies ineligible for family allowances because they go immediately into institutions or because their parents take them out of the country to live. Parents who don’t apply on principle are therefore much fewer than one in a hundred.
Under the existing income-tax structure, however, parents are paying for the allowances whether they accept them or not. In effect, the allowances are a rebate on income tax, and many persons may take the allowances for this reason, although possibly opposed to the whole idea. In a 1947 survey of 416 prairie families, six families, or one and a half percent, disapproved of family allowances, although some were taking them. Only one group in Canada refuses them for religious reasons —the Hutterites, whose communal religion does not permit an individual or family to have exclusive possessions, money or otherwise.
But the opponents might as well settle down to a long session of grinning and bearing. Family allowances appear to be here to stay. All the arguments for and against become insignificant beside the one overshadowing factor that insures their continuance—the government that would try to abolish them would be risking political suicide. Governments don’t do that. ir