Poverty Reduction

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					     Poverty Reduction

     From bankers to the unemployed, everyone is          the Assembly of First Nations, and disability
     concerned about the fragility of the recovery be-    organizations.
     cause 63% of the economy is reliant on consumer          Today the political momentum to tackle
     spending — yet Canadian consumers face record        poverty is undeniable. Six provinces — Quebec,
     levels of indebtedness. Going into the recession,    Newfoundland and Labrador, Ontario, Nova
     the average Canadian household owed $1.40 for        Scotia, New Brunswick, and Manitoba — have
     every dollar of disposable income. By mid-2009,      poverty reduction plans in place or in develop-
     that figure had reached $1.45, placing millions of   ment. At the federal level, however, the Harper
     households in jeopardy should they lose a job, or    government has failed to take poverty reduction
     face rising interest rates.                          measures, even though the House of Commons,
         A recent report on pensions raised concerns      last November, passed a motion with all-party
     that significant numbers of middle-income reti-      support directing it to “develop an immediate
     rees face serious declines in living standards in    plan to eliminate poverty in Canada for all.” And
     the coming years.1 The looming spectre of eco-       a recent report from the Senate Subcommittee
     nomic ruin and decline haunts an increasing          on Cities also urged the federal government to
     number of Canadians.                                 “adopt as a core poverty eradication goal, that all
         Spearheaded nationally by organizations and      programs dealing with poverty and homelessness
     coalitions such as Make Poverty History, Canada      are to lift Canadians out of poverty rather than
     Without Poverty, Citizens for Public Justice, and    make living within poverty more manageable,
     Campaign 2000, civil society groups across the       and that the federal government work with the
     country are demanding that the federal govern-       provinces and territories to adopt a similar goal.”2
     ment step up with a concrete strategy. Comple-           Clearly, the political terrain is shifting.
     menting these efforts, important work is under-          While provincial governments have taken
     way by organizations representing those sectors      the lead, the job can’t be completed without the
     of society where poverty is most acute, such as      active partnership of the federal government. In
                                                          fact, it is the Government of Canada’s responsi-

84   c anadian centre for polic y alternatives
bility to lead the poverty reduction charge with      (just as the recession was taking root), 90% of
respect to Aboriginal poverty, seniors’ poverty,      Canadians say it’s time for strong leadership to
child poverty, and poverty among recent im-           reduce the number of poor people in Canada; 89%
migrants and people with disabilities. The eco-       say both the Prime Minister and the provincial
nomic security of these people, and all citizens,     Premiers need to set concrete targets and time-
should not depend on the part of Canada in            lines to reduce the number of poor Canadians;
which they reside.                                    and 77% of Canadians say that, in a recession,
    Historically, the federal government has          it’s more important than ever to make helping
played a key role in alleviating poverty in Cana-     poor Canadians a priority.
da. For every dollar spent by provinces and mu-
nicipalities on social assistance, the federal gov-
ernment spends six dollars on Old Age Security,       National poverty reduction plan
the Canada Child Tax Benefit and Employment           The need for a national poverty reduction plan
Insurance. In addition, the federal government        is clear. In 2007 (the latest year for which we
supports the incomes of the poorest Canadians         have statistics), the national poverty rate was
through the Working Income Tax Benefit and            9.2% (using Statistics Canada’s after-tax low-
the GST credit. But much more needs to be done.       income cut-off), or 10.1% (using the federal gov-
    There is nothing inevitable about poverty in a    ernment’s Market Basket Measure — arguably a
society as wealthy as ours. Evidence from coun-       superior measure that captures the actual cost
tries such as England, Ireland, Sweden and the        of living in communities across the country). Ir-
Netherlands demonstrates how governments              respective of the measure used, over three mil-
that commit to bold action plans get results.3        lion Canadians — more than 600,000 of them
Canada also had a similar experience when we          children — lived in poverty, even before the re-
chose to tackle poverty among the elderly in the      cession began. For these Canadians, the issue
1960s: as a result, the lowest rate of poverty for    is not just making ends meet, but being able to
any demographic group in Canada has been, by          plan for the future, develop skills, or participate
far, that for seniors. When there is a plan to get    in the social, cultural, and political life of the
something done, progress gets made.                   community. Temporary bouts of poverty may
    Consider this: the AFB proposal for a feder-      be easier to overcome, but evidence shows that
al poverty reduction plan this year would cost        the duration of poverty is lengthening, leaving
$2 billion. That’s a mere 0.2% of national GDP,       a scarring legacy on individual lives and com-
and little more than 0.8% of federal program          munities across the country. Persistent poverty
spending. By what economic logic, in a nation         represents a violation of basic human rights, and
with a total annual income of about $1.7 trillion,    a squandering of human potential.
are we unable to afford to take a serious run at          As people struggle to find permanent, well-
poverty, knowing the payoff from these initia-        paying jobs and deal with unsustainable levels of
tives will benefit citizens and public treasuries     debt, this recession will add hundreds of thou-
for years to come? It is a hopeful sign that some     sands of the nouveau poor to the déjà poor. For
provincial governments are waking up to these         those experiencing unemployment, poverty and
realities. It is time for our federal government      homelessness, the crisis is far from over. And,
to do the same.                                       as the unemployed exhaust their EI coverage,
    Another hopeful sign: the public desire for       they are discovering a provincial social assist-
action is very strong. According to polling con-      ance system that is a shadow of what it was in
ducted in late 2008 by Environics for the CCPA        the recession of the early 1990s. Real social as-

                                                                alternative feder al budget 2010            85
     sistance benefit rates are much lower and new         fewer hours, or were impermanent. These shifts
     rules have made assistance much less accessible,      in the labour market resulted in a smaller mid-
     often forcing people to liquidate their savings be-   dle class, and a Canada of greater extremes at
     fore help is provided.4 Those in desperate need       the top and bottom.
     of income support, due to the loss of a job, the          Canada needs a plan that prevents and re-
     loss of a spouse, the loss of good health, old age,   duces poverty — a plan that restores the resil-
     or any number of other life circumstances, find       ience of its middle class. For that plan to work,
     that the social safety net meant to catch them        everyone has to buy in. For poverty to decline,
     has been shredded.                                    inequality has to decline, too.
         For hundreds of thousands of Canadians, the
     purported economic recovery is a fiction. Many
     economists believe Canada is likely to experi-        Affordability
     ence a jobless recovery for some time. We can’t       As Canada struggles through the global eco-
     wait for economic growth to start trying to re-       nomic downturn, our governments need to rec-
     duce poverty.                                         ognize that a poverty reduction plan is where we
                                                           are likely to see the maximum stimulus bang for
                                                           the buck. That’s not just AFB analysis. That’s the
     Inequality                                            message from the IMF, the World Bank, and the
     Without question reducing poverty is a matter of      United Nations.
     urgency. But inequality shapes our view of that           Income support programs can be boosted
     urgency. Decades of international research have       easily, and can quickly get money into the pock-
     now revealed an important link between poverty        ets of those in greatest need, concentrating that
     and inequality: the higher the rate of inequal-       assistance in the communities hardest hit. And,
     ity among people, the higher the rate of poverty      unlike middle- and upper-income households,
     that is tolerated.5 That could explain why poverty    low-income households do not have the luxury
     didn’t decline in Canada in the past decade, even     of saving: they spend everything they have, pri-
     though the economy was firing on all cylinders.       marily in our local communities.
         Between 1997 and 2007, the Canadian econo-            Many of those in poverty rely on social assist-
     my enjoyed the most sustained period of robust        ance, and live thousands of dollars a year below
     growth since the 1960s, resulting in a gradual        the poverty line. Nearly half of those living in
     decline in the prevalence of poverty — but also       poverty, however, are employed in the low-wage
     unprecedented growth in income inequality.6 By        workforce, and over half of poor children live in
     2007, the average after-tax income of the rich-       homes where the adults are employed,7 but their
     est 10% of non-elderly households was 21 times        earnings are not enough to lift them and their
     that of the average incomes of the poorest 10%.       children out of poverty.
     That’s much higher than during the depths of              The story of poverty in Canada is not only
     the recession in the 1990s, when average incomes      one of inadequate and inaccessible income sup-
     of the richest were 15 times that of the poorest.     ports (welfare, EI, and Old Age Security), but
         Two recessions in as many decades (1981–82        also, importantly, a low-wage story. A compre-
     and 1990–91) have knocked the stuffing out of         hensive poverty reduction plan must address
     the bottom half of the distribution, while those      both these dimensions.
     at the top barely felt a thing. Thousands of good-
     paying middle-class jobs disappeared after both
     recessions, replaced by jobs that paid less, had

86   c anadian centre for polic y alternatives
We all pay for poverty                                  in recognition that poverty is concentrated
Many Canadians feel a sense of shame about              within these populations.
the poverty and homelessness in our midst, but        • In two years, ensure every person in
too often they accept the claim that we cannot          Canada has an income that reaches at least
afford more help for the poor. In fact, the oppo-       75% of the poverty line.
site is true: we cannot afford not to take action.
                                                      • In two years, ensure no one has to sleep
    Study after study links poverty with poor-
                                                        outside, and end all homelessness within
er health and higher health care costs, higher
                                                        eight years by ensuring all people who are
justice system costs, more demands on social
                                                        homeless have good quality, appropriate
and community services, more stress on fam-
                                                        housing.
ily members, and diminished school success. A
recent study published by the Ontario Associa-        • Reduce the share of Canadians facing
tion of Food Banks calculated the cost of poverty       “core housing need” — those who pay
in Ontario to be between $10.4 and $13.1 billion        more than 50 per cent of their income on
for the public treasury, and between $32.2 and          housing — by half by 2015.
$38.3 billion for society at large (or about 6% of    • Reduce the number of Canadians who
Ontario’s GDP).8 Clearly, refusing to act doesn’t       report both hunger and food insecurity by
save us money. Doing nothing is a false econo-          half within two years.
my, and an increasingly unaffordable posture as       • Reduce the share of low-wage workers.
we look into the future and see looming labour          Canada should seek to reduce the share of
shortages that will compromise our standard of          workers earning less than two-thirds the
living and quality of life.                             median wage every year.

                                                        In order to achieve these targets, the AFB
Setting clear targets                                will take action in the following key policy areas:
and committing to a plan                              1. Provide adequate and  
A meaningful poverty reduction plan must                 accessible income supports. 
have clear targets and timelines, using multiple         Priority Actions:
and widely accepted measures of progress. The
                                                          • Legislate an Act to reinstate minimum
benchmarks for the timelines must be concrete
                                                            national standards for the adequacy
enough, and frequent enough, that a government
                                                            and accessibility of provincial income
can be held accountable for progress within its
                                                            assistance.
mandate. The AFB adopts the following indica-
tors, targets, and timelines:                             • Ease the rules governing EI eligibility,
                                                            increase EI benefit rates, and extend the
 • Reduce Canada’s poverty rate by 25%                      duration of EI coverage.
   within five years (by 2015), and by 75%
                                                          • Increase the Guaranteed Income
   within a decade.
                                                            Supplement for low-income seniors by
 • Ensure the poverty rate for children, lone-              15%.
   mother households, single senior women,
                                                          • Double the refundable GST credit.
   Aboriginal people, people with disabilities,
   and recent immigrants likewise declines                • Increase the Canada Child Tax Benefit
   by 25% in 4 years, and by 75% in 10 years,               to $5,000 per child.



                                                               alternative feder al budget 2010            87
     2. Improve the earnings and working                   The AFB will also introduce a new federal
        conditions of those in the low-wage            transfer payment to the provinces, tied to help-
        workforce.                                     ing them achieve their poverty reduction goals
        Priority Action:                               and helping them meet new minimum national
         • Re-establish a federal minimum wage         standards. This innovative transfer will be worth
           (set at $11 and indexed to inflation).      $2 billion in both the first and second year, over
                                                       and above the costs associated with the federal
     3. Address the needs of those most likely to      measures outlined above. It is specifically de-
        be living in poverty.                          signed to assist provinces and territories to meet
         • The plan focuses its efforts on those       clear poverty reduction targets and timelines.
           groups with higher poverty rates,               In the first year, there are no strings attached
           such as Aboriginal people, people           to the amounts transferred. In subsequent years,
           with disabilities and mental illness,       however, only provinces that can demonstrate
           recent immigrants and refugees, single      improvement in income supports and show
           mothers, and single senior women.           progress on a significant number of other out-
                                                       come indicators will continue to receive federal
     4. Address homelessness and the lack of           support. The intent of this transfer is to ensure
        affordable housing.                            that the lion’s share of these funds help provinces
        Priority Actions:                              improve social assistance and disability benefit
         • Pass a National Housing Strategy (as        rates and eligibility.
           proposed by Bill C-304).                        The Government of Newfoundland and Lab-
                                                       rador has aimed to be the province with the low-
         • Immediately start building new
                                                       est poverty rates in Canada by 2014. It is well on
           units of social housing (not counting
                                                       the way to achieving that do-able and inspiring
           conversions, rental subsidies, or shelter
                                                       goal. As the Chair of the National Council on
           spaces).
                                                       Welfare put it: “If every province and territory
     5. Provide universal                              sought to match or exceed what Newfoundland
        publicly-funded child care                     and Labrador has already done and intends to
                                                       do, there would be that much more reason for
        Priority Action:
                                                       confidence that poverty can be drastically re-
         • Within one year, develop a
                                                       duced and eventually eliminated in Canada.”9
           comprehensive plan and timeframe
                                                           If we commit to a bold plan, a dramatic re-
           for the implementation of a high-
                                                       duction in poverty and homelessness within a
           quality, universal, publicly-funded
                                                       few short years is a perfectly achievable goal.
           Early Learning and Child Care
           program. Initial phase-in should start
           immediately.
                                                       Notes
                                                       1 Janet MacFarland, “Lower living standard looms for
     6. Provide support for training  
                                                       many high-income Canadians”, The Globe and Mail, De-
        and education                                  cember 18, 2009.
        Priority Action:                               2 The Standing Senate Committee on Social Affairs, Sci-
         • Immediately increase the availability of    ence and Technology, December 2009. In from the Margins:
           post-secondary grants for low-income        A Call to Action on Poverty, Housing and Homelessness.
           students.                                   Report of the Subcommittee on Cities.



88   c anadian centre for polic y alternatives
3 See for example, Jane Waldfogel, 2008 (September). “Im-       7 Human Resources and Skills Development Canada (2009),
proving Policies for the Working Poor: Lessons from the UK      Low Income in Canada: 2000–2007 Using the Market Bas-
Experience.” Policy Options.                                    ket Measure. (August)
4 For a full review of provincial social assistance rates and   8 Nathan Laurie (2008), The Cost of Poverty: An Analysis
eligibility rules, see: National Council of Welfare (2008),     of the Economic Cost of Poverty in Ontario, Toronto: On-
Welfare Incomes, 2006 and 2007.                                 tario Association of Food Banks.
5 Pierre Fortin, “Quebec is Fairer”, Inroads, Winter/Spring     9 Government of Newfoundland and Labrador, Press Re-
2010, Issue No. 26, pp. 58–65.                                  lease: “First Progress Report Shows Significant Results in
6 Statistics Canada, Incomes in Canada 2007, Catalogue          Province’s Fight Against Poverty”, December 14, 2009
No.75-202-X, June 2009; Armine Yalnizyan, The Rich and
the Rest Of Us, Canadian Centre for Policy Alternatives,
March 2007. The rate of child poverty in 1989 was 11.7%.




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