Eligible Non-Participation in Canadian Social Welfare Programs.
To be effective in meeting their policy or political goals, social programs must reach the intended target groups. Many social programs, however, have low take-up rates. We examine three illustrative federal programs targeted to lower income Canadians and note that efforts by government agencies to serve all they intend to serve vary considerably.
In this paper we discuss the sources of eligible non-participation and present estimates of its extent. We point out that the Canada Revenue Agency (CRA) plays a critical role in all three Canadian social welfare programs. We find that the legislative framework governing the CRA may be at odds with the mandate given to the Minister of National Revenue to improve access to federal benefits. While automatic enrolment emerges as the preferred approach to improving take-up of benefits, we also consider alternate approaches, including information campaigns, the use of technology, and a role for third party intermediaries.
Afin de rencontrer efficacement leurs objectifs politiques, les programmes sociaux doivent parvenir a rejoindre les groupes vises. Plusieurs programmes sociaux, toutefois, ont un faible taux de souscription. Nous examinerons a cette fin trois programmes federaux qui visent les Canadiens a revenu modique et nous noterons que les actions entreprises par les agences gouvernementales afin d'ameliorer le taux de souscription varient considerablement.
Dans cet article, nous aborderons les sources de la non-participation des personnes eligibles et nous presenterons des estimations de son etendue. Nous soulignerons que l'Agence du revenu du Canada (ARC) joue un role critique au sein des trois programmes canadiens d'assistance sociale. Nous venons a la conclusion que le modele legislatif gouvernant l'ARC est peut-etre en contradiction avec le mandat donne au Ministere du revenu national d'ameliorer l'acces aux benefices federaux. Bien que l'inscription automatique emerge comme etant l'approche favorisee afin d'ameliorer le taux de souscription aux benefices, nous considerons aussi des approches alternatives, notamment les campagnes informatives, le recours a la technologie et le role des tierces parties intermediaires.
Introduction I. The Theory of Eligible Non-Participation II. The CRA and Tax Filing in Canada A. Overview of the CRA's Role B. Tax Filing in Canada: What Do We Know? III. Eligible Non-Participation in Three Social Welfare Programs A. Working Income Tax Benefit 1. What Do We Know About WITB/CWB Take-up? 2. How Does the WITB Take-up Compare to Similar International Examples? 3. What Has the Government of Canada Done to Address Eligible Non-participation in the WITB? B. Canada Learning Bond 1. What Do We Know About CEB Take-up? 2. What Has the Government Done Recently to Improve CEB Take-up? C. Old Age Security 1. Automatic Enrolment IV. Potential Solutions and Conclusion A. Automatic Enrolment B. Third-party Intermediaries C. Informational Campaigns D. Two Practical Innovations E. Positive Obligations Introduction
In the 2018 federal budget, the Government of Canada announced major changes to a tax benefit for low wage workers, including changes that would increase benefits, increase eligibility and make enrolment automatic. (1) These, and similar changes to other public benefits, will have important effects on take-up rates of national social programs. Those take-up rates were also highlighted when the Prime Minister made increasing them a priority in his mandate letter to the Minister of National Revenue. More precisely, the Prime Minister instructed the Minister of National Revenue to "[ejnsure that CRA is a client-focused agency that will [...] proactively contact Canadians who are entitled to, but are not receiving, tax benefits." (2)
Social programs aim to deliver cash transfers or services to those who are eligible for the offered benefits. To the extent that those eligible do not receive benefits, however, that goal is not realized. We demonstrate here that, while the agencies administering social programs make efforts to serve all those who are eligible, the intensity and effectiveness of their efforts vary considerably.
Low participation rates may make it more difficult for the social program to achieve its goals. (3) But for at least two reasons, governments might not want 100% participation in some kinds of programs. First, some of those eligible may not want to participate. For example, some might feel that getting benefits from the government compromises their independence. Others might feel that the available benefits do not justify the costs of applying for them. Second, 100% participation could greatly increase the current cost of some programs.
This second consideration affects the behaviour of government program administrators. Canadian government departments and agencies must make annual requests to Parliament for funding to administer social programs, even for those programs that are statutory and not at the discretion of the Crown. (4) This means that governments must make certain assumptions and projections about participation and the likely cost of cash benefits. In Canada's expenditure management system, requesting more money than will be spent is treated as wasteful, just as requiring additional funding to cover unexpected costs is treated as a failure to plan. (5) Both overspending and underspending may attract unwanted attention from the opposition or the media. At an individual level, the performance pay of public service executives may be tied to managing an annual program budget to within a small range above or below funding allocated by Parliament, discouraging them from taking actions that might substantially increase the cost of the programs under their management. (6) Both at a micro level and at a whole of government level, there seem to be real disincentives to increasing participation in social programs if it results in program spending above historic trends.
Even if governments aim for 100% participation by those who are eligible, several kinds of barriers stand in the way. One kind of barrier is that many, if not most, programs require those eligible to apply for the benefits. If applications are complicated, if awareness of the program is low, or if the applicant must take intermediate steps as part of the application, some of those eligible will likely not apply.
In this paper we present case studies of three social programs in which the barriers to 100% participation take different forms. Each of the programs is a cash transfer of some kind, aimed at lower or modest income Canadians, and each is targeted to a different age group. In all three cases, as we describe in the later Parts of this paper, the federal government has no positive legal obligation to ensure access to eligible Canadians but has made some efforts to increase participation. Taken together, these programs offer an illustrative, though not exhaustive, set of examples of social programs in which voluntary non-participation is a challenge for policymakers. Brief introductions to these programs are as follows:
* The Working Income Tax Benefit (WITB) is administered by the CRA and requires that potential beneficiaries file an income tax return. As part of that return, they must fill out a form specific to the WITB. That intermediate step--filing a proper tax return--seems to prevent a non-trivial number of potential participants from receiving the benefit.
* The Canada Learning Bond (CLB) is essentially "free money" available to the parents or guardians of young children. But participation is low, partly because the program is not well-known and partly because those eligible must set up a Registered Education Savings Plan (RESP) account in order to receive the money.
* Old Age Security (OAS) is Canada's universal old age pension. Associated with OAS is a supplement for those with low income known as the Guaranteed Income Supplement (GIS). In these areas the government has partially implemented one of the most often mentioned solutions to high rates of eligible nonparticipation--automatic enrolment.
We define eligible non-participation as the share of the eligible target population that is not enrolled in a social program that would otherwise provide a financial benefit or social service. Non-participation, also referred to as under-subscription or as a take-up gap, may be voluntary (in which those eligible actively decide not to apply for the program) or involuntary (in which those eligible have not actively made such a decision and may not even be aware of the program's existence).
We present descriptions of these three programs and outline what federal governments have done to increase participation by eligible Canadians. Canada's taxation department, the CRA, plays a role in all of these programs even though it administers only one of them. We therefore highlight its role. We also take account of the legislation underlying these programs in order to see if there is a legal obligation to serve all those eligible. Finally, we discuss several ways to increase participation, including automatic enrolment and supporting third-party organizations' efforts to enrol those eligible.
The Theory of Eligible Non-Participation
Significant numbers of people who are eligible for social benefits do not take them up. The academic literature seeking to explain eligible non-participation has generally focused on the United States (US) context and began in earnest with studies of non-participation in the federal welfare program once known as Aid to Families with Dependent Children (AFDC). In the early 1980s, Professor Robert Moffitt proposed an economic model of take-up in which potential recipients weigh the costs and benefits of participation and decide to participate only when the benefits exceed the costs. (7) Moffitt then emphasized "stigma" as the primary cost of participating in AFDC, arguing that for some people the cash benefits are...
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