The Truth About Canada (9 page)

Across Canada, the council said, “No welfare incomes were remotely close to the poverty line, average incomes or median incomes.”

As of early 2005, only Newfoundland and Labrador, Nova Scotia, New Brunswick, Quebec, and Manitoba had not clawed back any of the National Child Benefit Supplement.

In their 2005 report, the National Council of Welfare said,

Welfare incomes were woefully inadequate in 2005, as they have been every year since 1986, when the National Council
of Welfare started tracking them. Welfare recipients are among the poorest of the poor and have to subsist on incomes far below what most people consider reasonable. They are so poor that they cannot access the resources that many of us take for granted — resources such as adequate housing, employment and recreational opportunities.

Welfare incomes were never high, but the recent declines demonstrate that governments are not interested in providing help to people who need it the most.

People don’t turn to welfare because they want to; they turn to it because they have no other options. Who would choose to live on such a meagre income?

In 2005, for couples with two children, the gap between welfare incomes and the poverty line varied from an immense $19,553 in B.C. to $11,434 in P.E.I.

Commenting on the 2006 National Council
Welfare Incomes
report, the
Toronto Star
’s Thomas Walkom writes that the plight of those on welfare in Canada

reflects the deliberate decisions of elected governments — presumably supported by the Canadian public at large — to purge roughly 1.7 million people consigned to welfare from our collective consciousness.

It is shameful. It is pretty much criminal. Successive governments have gutted or eliminated much of Canada’s vaunted social safety net.

And increasingly employers prefer part-time or contract workers who can be fired at will and who are owed neither benefits or pensions.
²

In March of 1995, there were some 3,070,900 men, women, and children on welfare in Canada. Since then, there has been a steady decline, down to 1,678,800 in March 2005. Pretty impressive, but certainly not all
good news. While some of the decline can be traced to low unemployment rates, some of it stems from much more strict eligibility requirements. And those still on welfare are being punished by deliberate government policies in an unprecedented manner.

Economist Lars Osberg of Dalhousie University writes:

Canadian society has become increasingly unequal in recent years, as incomes at the top have grown dramatically, while the least fortunate members of Canadian society have faced a substantially nastier economic reality. Although Canada’s GDP per capita grew by 36 percent from 1986 to 2004, social assistance recipients in all Canadian provinces now have, after inflation, lower real incomes than comparable individuals did 20 years ago.

Canadian society clearly does not care what happens to some of its citizens. Canada may have signed a series of international treaties on human rights that declare adequate housing to be a basic human right — but in reality we do not care.

Canada now has both more “monster homes” and more homeless, while in recent years there has been a substantial erosion in social safety nets.
³

In 1995, Paul Martin and the federal government reduced transfers to the provinces and introduced a lump-sum transfer to include social assistance, health, and post-secondary education. Where once there had been shared-cost accountable programs, there were now different levels of programs across the country, with the provincial governments having full responsibility.

So what did the provinces do? They promptly brought in tough rule changes that made benefits much more difficult to obtain, while at the same time they cut the real value of social assistance benefits. By 2000, recipients were typically getting only about 30 percent of the Statistics Canada low-income cut-off levels.

In Ontario, thanks in large degree to Mike Harris’s drastic cutbacks, the number on welfare dropped from just over 500,000 in 1994/1995 to some 200,000 in 2005, and the provincial government clawed back up to $1,463 from low-income families receiving the federal government’s child benefit supplement. Meanwhile, welfare cuts and inflation cut the purchasing power of benefits by roughly 40 percent.
⁴
Individuals who have to depend on social assistance receive only $536 a month, almost 70 percent below the Statistics Canada low-income cut-off. And while Ottawa sends a monthly cheque for $162 per child to the lowest-income families, Ontario claws back over $121 from children whose parents receive the meagre social assistance.
⁵
In March 2007, Premier Dalton McGuinty introduced a new Ontario child benefit which, by 2011, should end that province’s clawbacks.

Let’s turn to B.C. In the words of the respected Vanier Institute of the Family, “The situation in British Columbia is startling,” with a sharp drop in welfare recipients and a huge increase in child poverty. In B.C., the province with the highest child poverty rate, 90 percent of those who applied for welfare in 2001 were successful. After the Campbell government’s brutal tightening of the eligibility rules, by 2004 only 51 percent were granted assistance. Huge numbers of men, women, and children with a genuine need were left out of the system. Between 2000 and 2005, in a booming economy, child poverty in B.C. increased by almost 8 percent.

As for wealthy Alberta, one can only have bitter contempt for the egregiously low levels of social assistance in a province with no deficit or debt, enormous surpluses, low taxes, and punishingly inadequate welfare programs.

Then there’s our ridiculous federal and provincial tax systems. In a May 2006 editorial, the
Globe and Mail
said,

As it stands, the nexus between welfare and work is a mess. Provincial and federal systems interfere with each other, often to disastrous effect. Suppose a single parent with one child somehow scrounges an extra $10,000. The marginal tax
rate for those extra dollars of income is an incredible 78 percent. And that does not include the potential loss of benefits such as subsidized prescription drugs and housing.
⁶

Yes, difficult as it may be to comprehend, that was
78 percent!

As TD Bank Financial Group economists Don Drummond and Gillian Manning pointed out in a 2005 paper, the system in Ontario insanely penalized anyone on welfare who begins to earn an income: “Under the original Harris scheme, a welfare recipient who earned a dollar could lose more than a dollar in benefits.” And even under changes made by the McGuinty Liberal government in Ontario, a social assistance recipient earning a dollar loses 50 cents in benefits, the equivalent of a 50 percent marginal tax rate. In the 2003 provincial election campaign, the Liberals promised to end the Mike Harris clawback of the $122-per-month-per-child national child benefit supplement, a supplement that has frequently meant the difference between food and no food. Four years later, at the time of this writing in 2007, they had still failed to do so.

Tom Walkom writes:

Welfare systems are being asked to fill the gaps left by the lack of affordable child care, dental care and drug coverage. They are also being asked to fill in for an employment insurance system that for reasons both deliberate and circumstantial no longer covers most people out of work.

Economists Drummond and Manning suggest two new federal programs: an earned income supplement for the working poor (in effect a wage subsidy for employers) and a refundable tax credit for the very poor.

What this means is that poor people would file tax returns even if they have no earned income, and the government would send them cheques. As such, it is a variation on the old guaranteed annual income scheme, an idea that at different times has had currency with both the left and the right.
⁷

As Don Drummond has shown, after Mike Harris went to work on Ontario’s welfare system, a single welfare mother with one child could lose as much as 92 percent of the money she would make if she worked 64 hours a week at $7.45 an hour. Because of lost benefits, she would net only $40 extra a week, barely enough to cover the cost of taking public transit to work. Even with some modest reforms by the provincial Liberal government, the same single mother would still face a marginal tax rate of almost 60 percent and, as the
Toronto Star
has pointed out, if she worked even longer hours to try to escape welfare, her tax rate would increase to 71 percent.

If this isn’t ridiculous, I don’t know what is.

The gulf between Canada’s big business leaders and most Canadians on the subject of social policy is enormous, as it is in so many areas covered in this book. Opinion polls show that the vast majority of Canadians continues to support our long-standing social policies and has little or no interest in moving closer to American standards and values. On the other hand, our corporate leaders see their interests best served through even more tax cuts, and they envy their American peers who obviously have little or no interest in effective social policies of the kind found in almost all the other Western democracies. Despite public opinion, successive Canadian governments have chopped federal program spending to levels few ever imagined or supported. (See the chapter on government in Canada for details.)

How has big business reacted? One poll of Canadian CEOs asked, “Where should provincial governments reduce spending?” In response, 43 percent said social programs, more than three times any other category named.

Imagine what we could do if our social spending was raised to only the average level of the other developed Western democracies. Think of what we could do in health care, post-secondary education, cutting back child poverty, public housing, school lunch programs, not to mention research and development for renewable energy.

Where would we get the money? Or, to put it another way, how can we become a more normal developed nation? Some of the answers to this
will be found in what you’ve already read, and more in the tax section in this book. Before you get to that, let me steal from the Canadian Centre for Policy Alternatives’s excellent publication
The Social and Economic Costs of Taxation:
“A very famous U.S. jurist, Justice Oliver Wendell Holmes, once remarked, ‘Taxes are what we pay for a civilized society.’ ”

Despite so much right-wing propaganda to the contrary, the fact is that total tax revenue in Canada as a percentage of GDP put us far down in 21st place among the 30 OECD nations, well below the OECD and EU averages. And this was before the Harper government’s big 2007 tax cuts.

I am not for a moment suggesting that we immediately bring our social spending all the way up to the average of the EU countries. But I am suggesting, in no uncertain terms, that we should be thoroughly ashamed of our own pitiful level of public social support and that we have lots of room to fix it.

What could we realistically do to combat poverty in Canada? In brief, we could raise minimum wages at least to $10 an hour to help provide a more decent standard of living for our 650,000 working poor. We could provide an earned-income supplement which takes into consideration regional cost-of-living factors. We could stop taxing people with very low incomes. We could return to a much more realistic and effective unemployment insurance program. We could stop the provincial clawbacks of child benefits and increase the supplement for low-income parents. We could develop an affordable rental housing program. We could increase social assistance benefits and expand job training. We could develop a national early-education and childcare program and provide more funds to help pay for university and college tuitions and expenses. We could substantially increase such public expenditures, which in 2004 were well below the standards of the Nordic countries, the Netherlands, Germany, France, Switzerland, Spain, and Italy, both in quality and as a percentage of GDP.

As for the Harper government’s 2006 plans for more assistance for disabled children, the media in Canada have somehow been blind to the inadequacies of the plan. Hillel Goelman, of the University of British
Columbia, spelled it out nicely, however, in a letter to the
Globe and Mail:
“Tax breaks do not provide more hours of physiotherapy, tax breaks do not provide more trained, early-intervention therapists, tax breaks help only wealthy parents who have enough income that they can benefit from deductions.”
⁸

Would ending the clawbacks of the national child benefit supplement (NCBS) make a difference to families on social assistance? Just under half of families who go to Toronto’s Daily Bread Food Bank say that the extra $122 a month per child would mean they would no longer have to depend on the food bank. By 2005, some 174,250 families with almost 281,000 children continued to have their welfare or child benefits clawed back by the Ontario government.

In the summer of 2006, a new Statistics Canada study showed that only 26 percent of some $3-billion paid out by the federal government in GST rebates went to low-income families, while some of the balance went to families earning up to $100,000 or more. Once again, if this isn’t ridiculous, I don’t know what is.

Today, all across Canada, rent eats up the vast majority of any welfare or other benefits the poor receive. The very small amount left for food, clothing, transportation, school supplies, hygienic supplies, utilities, and so on, is hopelessly inadequate.

We should be ashamed. Very, very ashamed.

8

IMMIGRATION AND EMIGRATION