Seniors, renters and low-income workers to get financial boost from government to help survive inflation

Millions of Canadians will get more money this year from the federal government as part of its plan to fight inflation, including a $500 payment for almost one million renters, and up to $766 more for more than three million seniors.

Deputy prime minister and minister of finance Chrystia Freeland announced Thursday an $8.9 billion plan to help Canadians deal with record-breaking inflation.

The plan includes enhancing subsidies for workers and pensioners, cutting child-care fees, and a boost for low-income renters. It also includes the first stage of a promised dental care plan for Canadians earning less than $90,000.

Here's what you need to know about Canada's Affordability Plan.

Who benefits?

The Macdonald-Laurier Institute's Aaron Wudrick said while everyone is feeling the squeeze of inflation, the government is targeting specific groups to try and address the most vulnerable among Canadians, such as low-income workers and renters, and older seniors. These funds will help a lot of people a little bit, he said, but they won't ease the pain of inflation in the long run.

I think we're in for a rough ride for the next six months to a year," he said.

This will help a little bit. But the things that are causing inflation have not gone away."

It's important to note that Thursday's announcement is not a suite of new boosts to federal programs, but rather a re-packaging of funds already included in the latest federal budget, said David Macdonald, a senior economist with the Canadian Centre for Policy Alternatives (CCPA).

However, that doesn't mean these measures won't help individuals and families struggling with inflation, he said - in particular, lowering the cost of child care will help many families.

Inflation by the numbers, and what's next

Inflation rose by 6.8 per cent in April year over year, with grocery prices seeing the largest increase since September 1981 at almost 10 per cent. Gas was a key driver of inflation, up 36 per cent, and experts said if the war in Ukraine continued - which it has - consumers should expect high prices to continue at the pump and the grocery store, as the war has impacted gas prices and cereal products in particular. Meanwhile, wages grew at half the pace of prices.

The Bank of Canada has been hiking its overnight rate at a breakneck pace in an attempt to cool the housing market to balance out inflation in other areas.

Wudrick said inflation in May, data for which comes out next week, will continue to be high, with gas and food the main drivers as the war in Ukraine continues.

At a speech in downtown Toronto on Thursday afternoon, Freeland pointed to Canada's low unemployment rate as proof of a strong economic recovery from COVID-19.

But despite strong employment, Freeland acknowledged that inflation is making it difficult for Canadians to afford daily life.

Jobs are plentiful and business is booming, but it is also harder for a lot of Canadians to pay their bills at the end of the month," she said.

We will take real and tangible steps to get inflation under control and to make life more affordable for Canadians."

Low-income workers get up to $1,200, and renters get $500

Under the government's plan, the Canada Workers Benefit - a refundable tax credit for low-income workers - will be enhanced by $1.7 billion. That means around three million Canadians will receive up to $1,200 more per person, according to the government, or $2,400 for a couple.

Meanwhile, almost one million low-income renters will get a one-time payment of $500 this year.

Seniors get an extra boost this summer, up to $766 more - plus benefits are indexed

For seniors 75 years and older, the Old Age Security (OAS) pension will increase by 10 per cent in July 2022. This is on top of the 4.9 per cent increase to OAS and the Guaranteed Income Supplement (GIS) which are indexed to inflation.

A number of benefits are indexed to inflation, namely OAS, GIS, Canada Pension Plan, the Canada Child Benefit, and the GST Credit.

Macdonald said while the major federal programs are indexed to inflation, there are substantial delays in that indexation, meaning recipients won't see payments go up right away.

For OAS and GIS, the indexation is three to six months behind, while for other benefits it takes a year, said Macdonald.

They will eventually catch up," he said.

But he thinks the government should have sped up the indexation of those programs to help recipients in the shorter term.

Families stand to save thousands in child care and dental coverage

Improvements to dental coverage and child care were already in the works, but Thursday's announcements gave more details on changes to come.

Now that agreements have been reached with all 13 provinces and territories, child-care fees are expected to drop by an average of 50 per cent this year, according to the government. This will mean thousands of dollars in savings for Canadian families in 2022, the government estimated, up to $6,000 in British Columbia, with plans for an average fee of $10-a-day for all regulated child-care spaces across Canada by 2025-26.

Our plan makes work and life more affordable for middle-class Canadian families," said Freeland."

Meanwhile, the dental coverage plan for Canadians earning less than $90,000 a year will begin in 2022 for children under 12.