It’s time to end the erosion of public assistance in Ontario
TheStar.com – opinion/commentary – Welfare has eroded to the point that it would take a 56-per-cent rate increase to bring the single rate back to where it was in 1993.
Apr 26 2013. By: John Stapleton
We had three prime ministers, including our first woman leader in Kim Campbell. Bob Rae was premier. The Blue Jays won the World Series. Bill Clinton became president of the United States. The North American Free Trade Agreement was ratified and Jurassic Park was box office gold.
The year was 1993 and it marks another milestone — something few will remember. It was the last time social assistance in Ontario increased in real (inflation-adjusted) terms.
For the record, the Rae government established a single welfare rate of $663 a month in 1993 — the high water mark. He then froze social assistance rates in both 1994 and 1995, the first two-year freeze since 1973. Mike Harris cut rates by 21.6 per cent, establishing a single rate of $520 a month and let it stay there until Dalton McGuinty took over eight years later. That low $520 single rate, if adjusted for inflation, would now be $617 a month but the current rates stands at just $606 a month.
For the last 20 years, social assistance has eroded to the point that it would take a 56-per-cent rate increase to bring the single rate back to where it was in 1993.
For a single person with disabilities, a 22.2-per-cent increase would be required to restore purchasing power to levels paid in 1993. Harris and Eves did not cut rates for people with disabilities but they didn’t raise them either.
Back in 1993, single welfare recipients could keep $50 in earnings each month before their allowances were reduced. Now their earnings are reduced from the first dollar of earnings.
In 1993, a lone parent with one child could have $5,500 in assets. Now she would be disqualified if she had half that amount in the bank.
In 2012, Frances Lankin and Munir Sheikh released their report called Brighter Prospects. Brighter Prospects calls for the reinstatement of full earnings exemptions on some of the earnings of social assistance recipients. It calls for higher benefits and it calls for higher asset limits. In layman’s terms, the report calls for changes that would allow our poorest residents to earn more, keep more and to get more.
These days, asking for more of anything sounds impossible. We live in tough times. But social assistance costs and the number of people receiving assistance have moderated. The scare of high caseloads that began the erosion of benefits did not materialize in the worst recession since the Great Depression.
At the onset of the recession in 2008, the percentage of Ontarians who relied on social assistance hovered around its postwar mean of approximately 5 per cent of the population — roughly 725,000 men women and children receiving Ontario Works (OW) and Ontario Disability Support Program (ODSP) benefits out of a population of about 12,900,000. By the end of 2008, the storm clouds were gathering as the percentage of population receiving OW and ODSP nudged up to 5.6 per cent of Ontario’s population.
With unemployment and EI claims rising spectacularly, much was made of predictions that social assistance would do what it did in the 1990s: rise to Depression levels of people on assistance. Ontario relief rolls topped out over 15 per cent of the population in 1932 while social assistance recipiency hit almost 14 per cent of population by March 1994. Would it happen again?
The answer turned out to be a decided No. Contrary to most predictions, social assistance recipients as a percentage of population topped out at 6.6 per cent in August 2012. By February 2013, it stood at 6.5 per cent. With less than 900,000 people receiving social assistance, the total post-recession increase in social assistance recipients was exactly one percentage point above where it was in mid-2008.
So what happened? On the good side, minimum wages had increased in Ontario from $7.45 an hour (2005) to $10.25 an hour (2010), an increase of 38 per cent measured against inflation of 9 per cent over the same period. New child benefits were put in place like the Ontario child benefit that resulted in spectacular ongoing reductions in the number of lone parents receiving assistance. It only proves that good social policy works.
On the bad side, the Harris-vintage workfare approach to basic social assistance minted in the later 1990s survived almost intact through the whole of the McGuinty era. This made entrance to social assistance extremely hard and kept many from receiving assistance that they would have received during other recessions. It’s simple really. Bar the door and it’s harder to get in.
It is safe to say that the post-recession round of social assistance increases is largely at an end. Despite stubbornly high unemployment, many key bellwethers peaked in March and May 2012 and ODSP experienced its first decline in over 150 months in December 2012.
But although we have the post-recession increases behind us, the same is not true for either hardship or poverty.
Social assistance reform is urgently required but at least we don’t face the spectre of “retooling during peak production.”
We can now hope that Ontario’s May 2 budget will take the opportunity to get on with the unfinished business of real social assistance reform.
John Stapleton, an Innovations Fellow at the Metcalf Foundation, worked for the Ontario government for 28 years in the areas of social assistance policy and operations and was research director for the Task Force on Modernizing Income Security for Working-Age Adults in Toronto.
< http://www.thestar.com/opinion/commentary/2013/04/26/its_time_to_end_the_erosion_of_public_assistance_in_ontario.html >