A better way to pay

TheStar.com – opinion/editorials
Published On Tue Aug 09 2011.

With City Hall so desperate to find money that councillors may soon find themselves searching underneath office couch cushions for petty cash, it’s little surprise that Toronto is moving ahead to replace welfare cheques with cheaper, reloadable debit cards.

The bigger surprise is that, done right, it will good for the poor too. It is rare that administrative savings and the best interests of welfare recipients go hand in hand.

Getting rid of paper cheques, which are increasingly expensive to administer, will save the city at least $1 million a year, according to the manager of social services. For the some 35,000 welfare recipients who can’t get bank accounts, it will mean a welcome end to paying high cheque-cashing fees.

Money Mart, for example, charges a $2.99 processing fee plus 3 per cent of the cheque total. Those fees add up to several hundred dollars a year, a significant wasted sum for those living on the margins.

At $592 a month, a single person on welfare already receives far less than it costs to keep a decent roof over head and food on the table. They cannot afford to lose any of it through exorbitant costs at a payday lender.

But nor can they afford to pay fees for using the new debit cards they should have in hand before the end of the year. After all, what’s the point of saving people from cheque-cashing fees just to slap them with ATM and merchant charges instead?

That’s why the winning vendor, to be chosen shortly, must be committed not only to reducing the city’s costs, but the recipients’ costs as well. There should not be fees for using these debit cards. As well, the cards should be indistinguishable from a regular ATM card to reduce the stigma associated with welfare.

Ultimately, the biggest problem with welfare is not the cheque itself but the sum, which is too low to live on with any dignity, and the punitive, rules-bound system that impedes a recipient’s transition to the workforce and self-sufficiency.

Changing all that, though, is up the province. By adopting a debit card system Toronto is doing what it can to make at least one improvement in the lives of some welfare recipients.

< http://www.thestar.com/opinion/editorials/article/1037143–a-better-way-to-pay >

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