Fix welfare rules that hurt jobless

TheStar.com – Opinion/Editorial – Fix welfare rules that hurt jobless
March 24, 2009

The number of Ontarians living on welfare is rising. Another 18,000 cases were added in the last few months, bringing the total to more than 214,000 cases. That’s nearly 400,000 people living on welfare.

The hard truth is that even these numbers understate the real need for social assistance, given the effects of the economic downturn.

Hundreds of thousands of Ontarians who have lost their jobs will soon run out of severance pay and exhaust their Employment Insurance benefits. Yet many of these recent victims of the economic downturn will discover that they face even more hurdles – and humiliations – because of the punitive welfare rules still in place.

To get welfare, it’s not enough to have lost your job and run out of Employment Insurance (if you’re one of the 30 per cent of unemployed workers who managed to even qualify). You must be destitute.

Premier Dalton McGuinty knows there’s a problem. Last Friday, he admitted these rules “stomp” people into the ground, saying: “I’m not sure that serves anybody’s interest.”

He’s right. Yet instead of saying he would change this, McGuinty said the government needs to keep looking for answers – even while the province is still shedding jobs.

The trouble is that Ontario’s outdated welfare rules could well delay an economic recovery – and hold back future employment. That’s because many of the newly unemployed will be forced to strip themselves of assets before qualifying for welfare – leaving them so demoralized and broke that they’ll stay on it even longer.

That means taxpayers will wind up paying more, not less, because of these rules. That’s a false economy.

The government forces people to liquidate most of their assets by cashing in RRSPs even if they’re severely devalued and selling most of their possessions (they can keep their home and a vehicle worth less than $10,000, but they’ll be hard-pressed to keep up with their bills).

Forcing such destitution on people before providing assistance adds to the difficulty of making a quick exit from welfare.

Reasonable solutions have already been put forward by anti-poverty advocates. Most recently, TD Bank chief economist Don Drummond and Metcalf Foundation fellow John Stapleton have called for changes in the asset rules in Thursday’s budget. They argue persuasively that Ontario should let welfare applicants keep at least $15,000 in RRSPs or in a Tax Free Savings Account.

There are many other welfare rules that keep people down, but a change in the asset rules could easily be included in the budget.

McGuinty has already committed to reducing child poverty by 25 per cent within 5 years. He followed through last Friday with a commendable $400 million boost to the child benefit. But the focus on children has unfairly excluded singles and couples without children. The paltry sum of $572 per month (or $920 for a single parent with a young child) makes it impossible to live with any decency on welfare.

Welfare is supposed to be a safety net that catches people when everything else fails and helps them get back on their feet. Unfortunately, the system we have is a net that traps people and holds them back.

The longer we wait to deal with this reality, the more poor Ontarians will suffer. And the more it will cost taxpayers in future budgets.

 

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