How much fiscal benefit should Canadians with only a short history of residence in Canada receive? Earlier this week, the NDP withdrew a Private Members’ Motionoriginally submitted by Vancouver East MP Libby Davies on this controversial topic. The NDP motion echoed a previous proposal by former Liberal MP Ruby Dhalla in 2009 to make Old Age Security for recent immigrants more accessible.

Ms. Dhalla’s proposal proved so controversial that even her Liberal colleagues disowned it during the 2011 federal election with a dismissive “that’s not going to happen.” Myself, I think the case for restricting Old Age Security to long-resident Canadians deserves some closer examination before we completely dismiss it.

First, let’s review the Old Age Security residency rules.Any Canadian or legal resident age 65 or more who is living in Canada may apply. If residence in Canada over the lifetime is less than 10 years, the person is ineligible. If residence is between 10 and 39 years, a fractional pension is paid. Over 40 years, and the person is eligible for a full pension. Ms. Dhalla’s proposal was to shift the minimum requirement to three years. While I haven’t seen the text of Ms. Davies’s now-withdrawn motion,press reports indicate it would also support the liberalization of the 10 year residence rule.

The argument for a residency requirement for retirement benefits is strongest with an explicit dedicated payroll tax. For example, Canada Pension Plan contributionsappear as a separate line item on pay stubs and the funds flow into an autonomous fund. The benefit formula depends on the same lifetime earnings that were taxed for the earlier contributions. This strong tie between tax and benefit likely explains why no calls have been made for special treatment for short-term residents under the Canada Pension Plan.

The Old Age Security pension is different. When Old Age Security was introduced in 1952, it was funded by a three-pronged tax: two per cent each on personal income, corporate profits, and a sales tax. This continued (with ever-increasing tax rates) until 1972, when these three taxes were removed and rolled into the income tax system and other excise taxes. This move followed the advice of the Royal Commission on Taxation that the Old Age Pension should be financed out of general revenues since benefits did not depend on the amount of taxes that were paid and were complicated to collect.

So, we had twenty years of contributory Old Age Security taxes — but that ended 40 years ago. Assuming work started at age 18, this means no one under age 58 today has ever paid any explicit Old Age Security taxes — and those over age 58 paid explicit taxes only for a fraction of their working lives. Moreover, the proportion of people who never paid the explicit tax will only grow in the future as younger generations reach age 65 with increasingly less work exposure to the 1952-1971 window. This renders the argument about a tax-benefit linkage much weaker for Old Age Security than for the Canada Pension Plan.

A refinement of the argument posits implicit linkages between a lifetime of paying taxes into general revenues and the pension benefits that flow at older ages. This argument seems sound in general, but I find it hard to distinguish why we should impose residency requirements on Old Age Security but not other public benefits or public spending. Why restrict Old Age Security to long-term residents but not public health insurance? What makes Old Age Security so different?

I suspect the public mood against these Old Age Security pension extension proposals stems from a sense that the existing fiscal ‘deal’ for short-term residents is already generous enough and needs no improvement. That’s certainly defensible, but as the short twenty-year span of contributory Old Age Security taxes fades from fiscal memory, the argument for excluding short-term residents from the benefits received by other Canadian seniors will become harder to make.

Kevin Milligan is Associate Professor of Economics at the University of British Columbia

< http://www.theglobeandmail.com/report-on-business/economy/economy-lab/should-recent-arrivals-qualify-for-old-age-security/article2149830/ >

It’s an axiom of politics that the short-term often wins out over smart, long-term policy. Much as a politician might want to take generational issues and fairness into account, it’s tough to ignore immediate pressure and the cohort most likely to vote.

However, as of late, two examples are an exception to the rule. First, the creation of tax-free savings accounts (TFSAs), now in their third year. If, in this tax season, you must choose between a $5,000 contribution to a TFSA or a Registered Retirement Savings Plan (RRSP), choose the first option. You will permanently protect any investment gains from taxation.

That’s one example of farsighted political thinking. Here’s another. How just before Christmas, Ottawa and the provinces ignored a push by those who love all things taxpayer-financed and government-delivered, to double CPP taxes. Instead, they opted to create a Pooled Retirement Pension Plan, where employers must set it up and employees can choose to join or not.

The reason why a CPP hike would have been a bad idea requires some history. The earliest contributors to the CPP made out wonderfully. Those born in 1930 saw a real return of 9.4 per cent annually on their original contributions. In other words, had they invested such money, they would have needed a 9.4 per cent return each year to garner what they did from their CPP payments. Similarly, those born in 1940 obtained a real return of 6.3 per cent.

But the return on one’s CPP taxes become meagre the later one is born. It’s why it resembles a social program and not a true pension plan. Those born in 1950 and soon to retire will see a 4.2 per cent payback. Those who arrived in 1960 and 1970 will receive a three per cent and 2.4 per cent real return respectively. For those born in 1980, 1990 and 2000, a 2.3 per cent real rate of return on their CPP payments is their meagre payback. (All figures are derived from the 18th and 25th actuarial reports on the CPP.)

The early, high rates of return are not because CPP contributions were invested in a manner to make Warren Buffett look like a rank amateur. The low contribution rates for the pre-baby boom generation had everything to do with demographics. Over the decades, successive governments kept retirement contributions artificially low. That’s because a plethora of young workers existed to finance the pensions of relatively few seniors already (or soon to be) in retirement. That’s why the CPP is often referred to a partial Ponzi scheme. Those in first did great; those who came later, not so much.

The demographics explain why combined CPP employer-employee premiums were only 3.6 per cent until 1986. After that, premiums rose slowly, with a sharper increase after the 1997 reforms to hit 9.9 per cent by 2003. At some point, reality had to be accounted for and it was.

The 1997 reforms were meant to address both the unfunded liability in the CPP and partially address the generational imbalance. In that sense, the reforms succeeded. Before the reforms, those born in recent decades were on track to see negative real rates of return.

< http://www.calgaryherald.com/business/hikes+idea/4232385/story.html >

The phrase “personal responsibility” has been bandied about commonly in recent decades. In past eras, when one was personally responsible for more or less everything in life, the phrase would have carried little meaning.

Up until the late 19th century, with rare partial exceptions, the state took almost no responsibility for citizens; and indigence was considered morally indistinguishable from law-breaking. Poor houses operated by local governments, and alms houses operated by churches, provided elemental care only on a random basis, and certainly not as a matter of right nor in such quantities as to assure that no one starved. At times of acute economic hardship, there were very large numbers of beggars, thieves, or down-and-out exemplars of what Thomas Gray called the “short and simple annals of the poor.” Ireland lost half its population in the great famine of the 1840s, mainly to emigration, but largely also to starvation. “Ye shall always have the poor with ye,” was the Biblical wisdom, and Mr. Micawber’s home-economics aphorism that happiness and misery were determined by whether income or expenses prevailed by a farthing, was believed.

The great pathfinder was the German Imperial chancellor Bismarck, who in the 1880’s promoted health and accident insurance, and workers’ pensions, all in the name of increasing productivity and luring the working class away from the enticements of the socialists. (However, he was careful to avoid unemployment insurance, legislatively improved working conditions, or anything that would promote conflict in the workplace or alienate the conservatives, upon whom he depended.) The British chancellor of the exchequer, David Lloyd George, fending off the rising Labour Party, produced the People’s Budget of 1909 and sequels, which copied and surpassed Bismarck’s insurance and pension initiatives. Later, Britain added universal medical care under the Attlee government after 1945.

In Canada and the United States — naturally rich countries largely peopled by immigrants fleeing the repression and hardship of Europe, who considered the existence of opportunity the only welfare system they needed — the redefinition of individual responsibility to provide for themselves and their dependents progressed more slowly. There were labour agitations from the latter 19th century in North America, and a few gestures of truth in packaging and assured standards of retail food in Theodore Roosevelt’s administration (1901-1909). But the onset of the Great Depression was required to bring forward comprehensive reforms in which the state declared and shouldered a responsibility to care for everyone.

In the United States, though exact figures were not kept and are still disputed, unemployment approached 33% in the winter of 1933. When FDR was inaugurated in March of that year, machine-gun emplacements were established at the corners of the great federal buildings of Washington for the first time since the Civil War. Working weeks were reduced, child labour rolled back, factory conditions were legislatively improved, and both cartels to raise prices and collective bargaining to raise wages were encouraged. Bank deposits were guaranteed, residential mortgages refinanced, the banking and stock and commodity exchange systems, which had collapsed, were reestablished on firmer foundations. Farm production was rolled back and farm prices were raised to levels that would sustain the rural population. Most of the unemployed were put to work in infrastructure and conservation projects, and unemployment insurance and contributory old age pensions were instituted .

Economic conditions gradually improved, but Roosevelt cut back on out-lays in the warmest months (“No one starves in this country in the summer”). He also refused to allow cabinet officials to refer to the program participants as “clients” because he did not want any thought of permanence. Only if they could not find employment, even in the workfare programs, were there direct cash payments to the unemployed. The administration was not prepared to pay people for idleness. Even John Maynard Keynes offered the famous example of paying the unemployed to dig holes in the ground and then fill them up, rather than to do nothing.

In Canada, the Conservative government of R.B. Bennett, elected in 1930 on the first wave of the stock market crash, dabbled for several years in the usual remedies of exhortation, low interest rates, and some public works. As election day approached, Bennett sprang for a comprehensive package of social reforms that were ridiculed as imitative of the United States, were eventually deemed unconstitutional, and did not spare the government defeat at the polls. Almost all the ingredients of the Bennett program were enacted by the returning King government, after appropriate consultation with the provinces. By this time, there was a general recognition that in extraordinary times of economic devastation, the average blameless person had to be relieved of complete responsibility for making ends meet, and assisted.

Benefits to veterans, especially in the United States (university tuition and loans to buy farms or found small businesses), virtually transformed the working class into a middle class after World War II. In war-ravaged Europe, and American-governed Japan, iron corset welfare systems and hammock-level social safety nets were put in place as the countries rebuilt from the rubble, with huge American (and Canadian) assistance, in fear, for notorious reasons, of discontented masses of workers and small farmers.

In Canada in the 1960s and 1970s, when social programs became a defining feature of national identity, as well as a weapon against Quebec separatism, there was much discussion, even in the Progressive Conservative Party, of guaranteed annual incomes, effectively paying salaries to citizens whether they are employed or productive or not. In the United States, more arithmetically sober heads prevailed, but Europe now faces the problem, with aging and problems attracting assimilable immigration, of only 30-some percent of the population working while everyone else draws benefits of some kind. The system collapsed in Greece last year, and is wobbling badly in much of the rest of Europe.

One of the less successful federal party leadership campaigns of my time was Professor Jim Gillies’ run for the Conservative leadership in 1976. But his speech contained, I thought, except for a few of Claude Wagner’s and John Diefenbaker’s comments, the most memorable words of any of the convention’s endless parade of speakers: “I have nothing but admiration for all who work; nothing but sympathy for those who can’t work; and nothing but contempt for those who won’t work.”

That appears to be as much responsibility as society has to require from individuals, with as much latitude as it can afford to allow.

National Post
cbletters@gmail.com

< http://fullcomment.nationalpost.com/2011/01/22/conrad-black-individual-responsibility-and-the-welfare-state/ >

It was 40 years ago that a former mayor of Windsor, former provincial minister and Ontario senator issued one of the greatest challenges to Canada’s citizens and leaders. Sadly, however, the centrepiece of the lifelong work of David Croll remains unfulfilled and his challenge remains unaddressed.

In the introduction to his 1971 report of the Senate committee on poverty, Mr. Croll stated bluntly: “Poverty is the great social issue of our time. The poor do not choose poverty. It is at once their affliction and our national shame. No nation can achieve true greatness if it lacks the courage and determination to undertake the surgery necessary to remove the cancer of poverty from its body politic.”

Mr. Croll, one of Canada’s greatest Liberal parliamentarians, made his clarion call for the establishment of a guaranteed annual income (GAI) in that report. It was, the committee concluded, the most efficient and least wasteful mechanism for lifting millions of Canadians out of poverty. He was right four decades ago, and he is still right today.

In 1972, the future lieutenant-governor of Ontario, Hal Jackman, introduced Mr. Croll to a well-heeled Toronto Empire Club audience: “For a minister in power [under Ontario premier Mitch Hepburn], David Croll’s identification with the dispossessed naturally caused certain uneasiness in government circles, and in 1937, the real crunch came when events so determined themselves that David Croll was forced to choose. In depression-torn Oshawa, housewives were doing alternate duty on bread lines and picket lines, and the issue was whether the government was justified in sending in militia troops and provincial police to break up the pickets of the automobile workers, whose only fault was that they wanted to have their own union. David Croll handed in his resignation and in so doing issued this statement, which has now become part of the folklore of Canadian politics: ‘Thousands of working men and women of the province of Ontario have come to look to me as their protector and their champion. I feel that I cannot now fail them. In my official capacity I have travelled the middle of the road, but now that you have put the extreme alternative to me, my place is marching with the workers rather than riding with General Motors.’ Croll resigned from the government, but he would not admit that he was beaten.”

Mr. Croll remains an inspiring figure to me and many colleagues in the Senate, particularly members such as Liberal Senator Art Eggleton, who chaired the standing Senate committee on social affairs, science and technology, cities sub-committee, of which I was vice-chair. Mr. Croll’s work and his words encouraged us and our report, “In from the Margins: A Call to Action on Poverty, Housing and Homelessness,” which was released just over a year ago and was passed unanimously and unaltered by the Senate. Those from both parties who worked on that report called on the government to embrace a basic income floor for the disabled and initiate a green paper on welfare reform through a refundable tax credit-based basic income floor.

Very soon, when Parliament resumes, the federal government will have just such an opportunity. Finance Minister Jim Flaherty will rise in the Commons and deliver the government’s budget. In that budget there could and should be a green-paper proposal on how to modernize income security once and for all and to put Ottawa on the path of addressing the core challenge that Mr. Croll championed 40 years ago.

Mr. Croll’s description of the situation Canada faced in the 1970s still echoes: “If the social welfare business of Canada had been in the private sector, it would have long ago been declared bankrupt. The reasons are not hard to find. Resistance to change, a stubborn refusal to modernize its thinking, a failure to understand the root causes of poverty, inadequate research and the bureaucracy digging in to preserve itself and the status quo, are some of the basic causes of the dilemma in which we find ourselves today.”

Forty years later, despite an annual total federal and provincial expenditure of $160-billion on income security, the gap between the most wealthy and the lowest income group has worsened. Liberal and Conservative federal governments, NDP, PQ and other provincial governments have not addressed the challenge at its source. Expensive service and welfare bureaucracies, however well-meaning, run costly, rules-based, micro-managing programs with strong 19th-century anti-poor biases that all fail to reduce poverty in any coherent way. As we celebrate the 40th anniversary of the Croll report, advanced by a proud son of Windsor, we must refocus on the humanity for which he struggled.

Forty years ago Mr. Croll said: “The children of the poor (and there are many) are the most helpless victims of all, and find even less hope in a society where welfare systems from the very beginning destroy their chances of a better life.” Forty years later, the time for action on the GAI is upon us. Leaving the challenge of poverty to the side is to deny the essential decency and balance Canadians have always shared.

< http://www.theglobeandmail.com/news/opinions/opinion/lets-refocus-on-a-guaranteed-annual-income/article1875023/ >

_______________________________________________________________________________________

Published Wednesday, Oct. 20, 2010 11:04AM EDT

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/the-economists/guaranteed-annual-income-with-transfer-and-clawback/article1765068/?from=1875023

Fifty years ago this month, the Liberal Party of Canada was broke, demoralized after two consecutive defeats, and fighting off threats from other parties to take over their core progressive base.

Yet, starting on Sept. 6, 1960, when 200 individuals paid a fee of $25 and their room and board at Queen’s University to debate each other for five days in what was billed as a “Study Conference on National Problems,” the Liberal party began an astonishing comeback.

The conference, organized to engage non-partisans, was followed within three months by a national party rally where thousands of Liberals, in turn, debated and prioritized ideas. Then with its thinking clear and the party re-energized, a “leader’s advisory committee” took the results of this work and transformed them into a platform of 75 proposals.

Six months after Kingston, the Liberal party was competitive again. In the 1962 election, it humbled the Conservatives, and in 1963 formed a government that passed into law the platform mix of social and economic policies that have governed us ever since. Six months of sustained party effort eventually changed Canada. Today’s Liberals, in not nearly as desperate a predicament as their predecessors, should take heart.

Many contributed to the Liberal comeback, but the driver was Walter Gordon, a prominent Toronto businessman. First, he raised money to pay back a bank loan that was immediately due. Next, he made a series of policy speeches that eventually became Troubled Canada, a book which served as the de facto Liberal economic platform. He then hired Keith Davey to put organizational muscle and communications shine on the new policy framework. The modern Liberal party is Walter Gordon’s most enduring legacy.

The issues debated at Kingston were largely the same as those that preoccupy us today — trade, employment, social security, skills training, the role of cities, food quality and effective defence. Gordon spoke at a panel on “how independent can we be?” Only the absence of any discussion on the environment dates the relevance of the proceedings.

The first thing that Gordon’s team got right at Kingston is that they knew that thinking is not emoting. A party is not built on tweets. At Kingston, the delegates were stimulated by outstanding papers from Maurice Lamontagne on “Growth, Stability and the Problem of Unemployment” and Tom Kent’s “Towards a Philosophy of Social Security.”

These two presentations were based on a key philosophical point — the need to move from “negative” liberty, or the absence of constraints, to “positive” liberty where opportunities are accessible to all. These ideas were provocative — in part because the authors thought they would be presenting to a closed room before Lester Pearson decided to open the proceedings to the press — but coherent. The policy Rubicon was crossed. The Liberal party from now on would be an activist party.

Self-congratulation is equally the enemy of serious thought. To avert that malady only one member of caucus — Jack Pickersgill — was invited to speak there. There was much grumbling from the old guard about “non-Liberals” taking over the party, but the new voices who participated, like John Turner, Jean Marchand, Alastair Gillespie and Judy LaMarsh, eventually joined and became leaders themselves.

Ideas, too, are not enough. They have to be communicated and put into an appealing political package. The 1961 policy rally took the ideas of Kingston and encouraged thousands of grassroots Liberals to ponder the results. One large change resulted. Pensions were not a major theme at the Kingston conference, nor was the subject highlighted in the working papers to the 1961 rally. But the Liberal delegates had other ideas — they insisted that, along with medicare, pensions have the highest priority in the forthcoming Liberal platform. The Canadian Pension Plan is the result.

The relevance of the Kingston conference is this: In 1960, like today, the conventional wisdom is that governments defeat themselves. Opposition is enough. But the reformers argued instead that a positive plan had to complement the negative parliamentary attack. Liberals had to think as well as react. And such thinking had to be informed by a coherent philosophy and a clear narrative. The great reform plan of 1961 was not poll-driven. Gordon did not even hire Lou Harris to do Liberal polling until months after the policy framework was in place.

Serious thought, new voices and party engagement committed to improving the life chances and choices of every Canadian were the strength of Kingston. It is a formula still relevant today.

Thomas S. Axworthy is a distinguished senior fellow at the Munk School of Global Affairs.

< http://www.thestar.com/opinion/editorialopinion/article/859633–how-six-months-can-change-a-party >

Brian Lee Crowley’s thesis in his book Fearful Symmetry: The Fall and Rise of Canada’s Founding Values (excerpted in the Post on Sept. 18 and 19) sets forth the proposition that Canada broke with its past from the 1960s onward. He relates this “fearful” evolution to two factors: first to the surge in the labour supply in the 1960s following the baby boom after the Second World War. Canada repudiated its pro-market tradition to assume the statist responsibility of finding jobs for the baby boomers. The second force in action was the rise of Quebec separatism and the consequent attempt by the federal government to appease Quebec by creating the welfare state through its transfers.

Growth of governments and the welfare state

As a rough measure of government growth, the share of public expenditures in the GDP have surged in most countries since the early 1930s. In Canada specifically, total government expenditures as a share of GDP gained as much from 1926 to 1939 as in the 1970s. They rose more rapidly in the 1950s than in all previous and following decades. The empirical record is inconsistent with the author’s position that government growth was caused by the concern for creating jobs for baby boomers after 1960.

In the years preceding the war the composition of the voting majority had changed. In most democracies including Canada, until after the first decades of the 20th century, numerous restrictions were placed on the voting franchise, including owning property and being 21 years of age. These conditions implied that, over more than a century of democratic implantation in the Western world, the per capita income of the majority of voters was higher relative to the rest of the population. This condition ruled out this “great fiction through which everybody endeavoured to live at the expense of everybody else.” The surge of government budgets in the decade before the war and after 1950 was mostly to enlarge favours to an emerging majority that had below average income because it was younger, composed of more women (also excluded from the vote) and less propertied. Finding jobs for the baby boomers came later as a political concern and only as one of several favours to a new majority. Diversification of the economy also led to a wider range of interest groups.

Federal transfers and separatism

All provinces seek more money they do not have to earn. The equalization program began in 1957; separatism for its part did not appear as a political force until the 1970s. A related fact is that over the period covered by the book, the Maritime provinces were more addicted to federal largesse than Quebec. In 1976, when the separatist Parti Québécois was first elected, the share of equalization payments as a percentage of provincial revenues was of 15% in Quebec, and 24% to 34% in the Maritimes. Per-capita equalization in those provinces was not only two to three times higher but in some decades increased more rapidly than in Quebec. From 1976 to 2005-06, per-capita equalization payments were multiplied by 3.9 in Quebec and by 4.7 to 6.0 in the Maritimes. The proposition that separatism caused the federal government to abandon its laissez-faire principles in favour of budget and transfer expansion to appease Quebec is not empirically validated.

Statism more widespread in Quebec

Except for the survival of the French language, the left-wing message in Quebec does not essentially differ from the one in English Canada, in Europe or even in the U.S. In 1972, the late Irving Kristol wrote that “in the New Politics” emerging in the U.S., we must “care” and “be concerned” and “be committed,” with little concern for positive results. As widespread anti-Americanism confirms, English-speaking Canadians have not hesitated to define themselves as caring more about social justice.

But Crowley is right in holding that faith in the role of government as promoter of the common good became more widespread in Quebec in the 1960s? As French Canadians, we have only a short tradition of classical liberal institutions and practices. Prior to the 1960s, we were more committed to the rule of our authoritarian church than, as Crowley suggests, to limited government and the rule of law. For most of our history, we have lived first under the “ancien régime,” then as a minority in a rural environment. In an extension of our French origin, we were more prone to believe in top-down bureaucratic design, rather than bottom-up spontaneous order arising from social interactions. When Quebec became an industrialized province after the first decades of the 20th century, it was only natural, in conformity with the fashion of the time, to opt for another authoritarian system but this time with power embodied in the state. This may explain the higher growth rate of Quebec interventionism. As an important component of Canada’s electoral basin, Quebec may have contributed to the rise of welfarism in Canada, but Crowley’s thesis that the threat of separatism caused the explosion in federal budgets and transfers is not empirically sustained.

Regional growth and convergence of real income

Economists can hardly disagree with the picture that Crowley paints of the disastrous statist landscape built by Quebec over the last half century. On the other hand, interregional adjustments in the integrated Canadian economy take the form of people mobility rather than regional price or per-capita income changes. Differential growth is simply capitalized in the price of land. This adjustment process continues until real per-capita income is equalized across all regions. This conclusion is validated in all integrated national economies that we have examined, including the U.S., England, France and Canada. Thus, it is true that in terms of published GDP per capita, Quebec lags behind Ontario by 10% to 16%, but the cost of living in 2006 in Montreal was 14.7% below Toronto. In spite of Quebec’s dismal growth over the last half century, the lower cost of living in Quebec almost perfectly compensated for the lower nominal GDP per capita. Because there is no significant gap in real per capita income between slow-growth provinces and other regions, equalization programs have no basis in analysis.

How is this reasoning relevant to Crowley’s thesis? The author holds that per-capita income declined in Quebec relative to the rest of Canada, because federal funding programs magnified regional income disparities by preventing workers from moving to their most productive location. But observed real income convergence invalidates the conclusion that interregional income disparities were changed by such practices. What this all means is that residents of a province do not bear the full cost of provincial policies that hurt them. Quebec’s policies have contributed to its low overall growth, but outmigration maintained its per-capita income at the Canadian level.

While income convergence occurs whether there are federal transfers or not, the fact remains that receiving provinces have more resources at their disposal. Federal aid encouraged receiving provinces to evolve more rapidly toward spending more on welfare policies, on language restrictions, on everything. The distribution of the population across the country was arbitrarily altered, but in the final analysis, separatism did not cause the rise in government budgets and transfers. Rather, the reverse causation took place: Federal transfers encouraged the rise of separatism and other costly policies in Quebec and other receiving provinces. Competitive federalism in the presence of federal aid programs is not as powerful as traditionally assumed in containing government growth.

National Post

Jean-Luc Migué is senior fellow, Fraser Institute. Gérard Bélanger is economics professor, Laval University.

< http://network.nationalpost.com/np/blogs/fullcomment/archive/2009/10/05/jean-luc-migu-233-and-g-233-rard-b-233-langer-what-really-caused-canada-s-fearful-evolution.aspx >.

Dear Friends and Members,

Over the past two years the CCPA has released numerous reports about the growing gap between the rich and the rest of us. Now we are pleased to launch a video that draws on these reports to tell the story of Canada’s income gap.

< http://e2ma.net/userdata/34091/images/medium/e1249490012.jpg >.

Help us spread the word by forwarding this video to your friends and colleagues, or post it to your social networking profiles.

Yesterday The Toronto Star ran ‘Now, more than ever, Canadians count on Premiers’ leadership to reduce poverty,’ an op-ed by Laurel Rothman and Trish Hennessy that calls on the provinces’ Premiers to pressure the federal government to improve employment insurance and reduce poverty.

The editorial be found on the CCPA website and is also pasted below.

All the best,

Bruce Campbell, Executive Director
Canadian Centre for Policy Alternatives
410-75 Albert Street, Ottawa, ON K1P 5E7

tel: 613-563-1341 fax: 613-233-1458

email: info@policyalternatives.ca
http://www.policyalternatives.ca
—–
Now, more than ever, Canadians count on Premiers’ leadership to reduce poverty

Canada has been plunged into a worldwide recession that is harsher than any economic downturn since the Great Depression. Now, more than ever, citizens are counting on their governments for vision, compassion, and leadership.

This week’s upcoming Premiers’ talks create a vital opening to start now on an economic recovery plan that reduces poverty, prevents more Canadians from falling into poverty, and puts all of Canada’s provincial economies back on steady footing.

The recession hit Canada last October, and since then, about 370,000 Canadians have been thrown out of work. But the federal Employment Insurance (EI) program isn’t there for half (52%) of the nation’s unemployed.

As Premiers, the fallout from this recession is landing squarely on their shoulders. Without an adequate EI program, Canada’s unemployed will be turning to social assistance, food banks, homeless shelters, and other provincially funded programs. Provincial poverty rates are bound to soar – with dizzying speed in some regions.

For too long, there has been a leadership void at the federal level. We urge Canada’s Premiers and Prime Minister to do everything it takes to bring the federal government to the table, and to act in a cooperative, coordinated way to address poverty before the situation gets worse. According to an Environics poll, 89% of Canadians say the Prime Minister and the provincial Premiers need to set concrete goals and timelines to reduce poverty.

Four out of 10 children living in poverty have at least one parent working full time. Unfortunately, there are few income supports for that family when the parent loses a job or cannot find work. In the 1980s and 1990s recessions, there were more and better supports. Employment Insurance and provincial social assistance programs were available and accessible. Not so today. Nine months into recession, Canada is still not recession-ready. An immediate increase to social assistance rates and a relaxation of the rules on asset limits would help many families gain economic independence.

The burden will fall on Canada’s Premiers to deal with the aftermath. Some are implementing poverty reduction strategies in their province. Newfoundland & Labrador, Nova Scotia, New Brunswick, PEI, Quebec, Ontario and Manitoba — representing more than two-thirds of Canada’s population — are planning or implementing poverty reduction strategies. This leadership is welcome but it is still not visionary enough to ensure Canada is positioned for a return to prosperity post-recession.

Most Canadians agree: the persistence of child and family poverty is unacceptable. An Environics poll reveals 90% of Canadians say they would be proud if their Premier took the lead in reducing poverty in their province; 88% want Canada to be a leader in poverty reduction; and 77% say a recession is all the more reason to act now. Even in recession Canadians’ desire for their governments to act on poverty and inequality reduction remains strong.

Poverty robs us of critical talent and denies young people the opportunity to succeed. As we approach November 24 — which marks 20 years since the unanimous 1989 all-party resolution to end child poverty in Canada — nearly 680,000 children and their families live in poverty (Income in Canada 2007). That’s 9.5% of all children – about one out of every ten. And that was before this recession. As acknowledged in the Kelowna Accord, for First Nations, Métis and Inuit children the poverty rate is substantially higher. We can, and must, do better.

There are other, non-recessionary pressures on provinces and territories as well. The demographic shift is on our doorstep as baby boomers begin the biggest wave of retirement this nation will have ever experienced. Pressures on our future labour market in the context of a globally competitive post-recession environment means Canada needs every citizen to be at his or her working best. Persistent poverty acts as a barrier to future prosperity – it exacts punishing hardships on those who live it and it keeps Canada from realizing its full potential.

The cost of political inaction is steep. Recent analysis by the Ontario Association of Food Banks estimates the cost of poverty at $38 billion a year. Repeating the “belt-tightening” method of the 1990s will only deepen recession-driven hardships.

Canadians are counting on every Premier in this country to act now to reduce and prevent poverty. And they’re counting on the Premiers to rise above jurisdictional differences and bring the Prime Minister on board for a coordinated recession-fighting poverty reduction plan. Our Premiers have a heavy responsibility but also hold tremendous power. We trust they will exercise that power during their upcoming talks.
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Laurel Rothman works at Family Service Toronto and is National Coordinator, Campaign 2000. Trish Hennessy is director of the Canadian Centre for Policy Alternatives’ Inequality Project.

Re: When `poorhouse’ wasn’t only an expression, Jan. 3

I’m not sure the 1877 Wellington County Museum and Archives structure is the “oldest surviving example of a poorhouse in Canada.” Toronto has a House of Industry at 87 Elm St. designed by architect William Thomas and built in 1848. It was enlarged in 1858 and 1899 (by architects Joseph Sheard and E.J. Lennox respectively).

Since becoming a seniors residence in 1947, the building has been known as Laughlen Lodge. The City of Toronto Archives has extensive information on this building and it has been designated under the Ontario Heritage Act.

Marta O’Brien, Architectural Historian, Toronto

Deserted by her husband, she begged for shelter then lay down on the street. Surrounded by a crowd of boys, it was where she gave birth to her third child.

Three days later, Mrs. Wellesley Knowles, clutching her newborn baby, climbed 24 steps to the front door of an imposing limestone building. Etched above the entrance were the words “County Poor House.”

Knowles’ two older children, about two and five, had already been taken to the house by horse-drawn wagon. Each time, members of the family were accompanied by the township reeve.

“You couldn’t just come and knock on the door of the poorhouse. You had to be accepted as the `deserving poor.’ It was the reeve and township council that decided who the deserving poor were,” said Susan Dunlop.

Dunlop is curator of the Wellington County Museum and Archives, which is housed in the 19th century building in the rolling countryside between Elora and Fergus, where Knowles, who’d immigrated just six months earlier, was taken on Sept. 23, 1884.

“In the poorhouse” wasn’t just an expression in Canada.

Though more commonly associated with Victorian England and novels by Charles Dickens, such as Oliver Twist, the poorhouse was part of Canada’s social fabric for more than 60 years and one of its earliest legislated responses to poverty.

“Poorhouses have been forgotten,” said Dunlop. “They are part of our local history.”

These “houses of industry and refuge,” as they came to be known, were shelters of last resort for the destitute, homeless, “feeble-minded” and elderly. In exchange for their labour, they were provided with spartan accommodation, clothes and simple food, much of it grown themselves. At Christmas, there might be small gifts, perhaps a handkerchief, a pipe or an orange.

The oldest surviving example of a poorhouse in Canada is in Wellington County. The building, a national historic site, opened in 1877, a time when “pauperism” was considered a moral failing that could be erased through order and hard work.

The poorhouse system was the foundation for today’s government-funded social assistance programs.

It was also something Lieutenant-Governor John Graves Simcoe had very much wanted to avoid when he arrived in Upper Canada in 1791.

In his native England, more than 100,000 people were swallowed up in work houses, funded by a “poor tax” on landowners and criticized for being costly and creating cycles of dependency.

“When he came over to take up his position here, he was absolutely convinced he wasn’t going to allow anything like that to develop,” said David Wood, a professor emeritus of geography and urban studies at York University’s Atkinson College.

Yet poverty was inescapable. Crops failed. People starved. On farms and in cities, as the province slowly started to become industrialized, many couldn’t work because they were sick or injured or old.

The only option for indigent people in the province’s earliest days was to seek shelter for a night or two at the local jail, said Wood, who has written on the legislative history of Ontario’s poorhouse system and admissions in Wellington County.

Dunlop ran across a newspaper account from the early 1870s of one elderly man who was living in a hollowed-out log on a farmer’s field in a township outside Fergus, partly paralyzed and in danger of freezing to death. The council was debating what to do.

Across Canada, elected officials were struggling with similar problems. Handouts of food or clothing known as “outdoor relief” became common and, in New Brunswick, one solution was to auction off care of the poor to the lowest bidder at “pauper auctions” that were compared to slavery in the American south.

In Ontario, the province passed the Houses of Refuge Act in 1890, which provided county governments with grants of up to $4,000 to purchase at least 45 acres of land and construct a suitable building.

By 1903, new legislation required every county in Ontario to have a house of refuge.

Much earlier, in 1876, Wellington County officials had purchased 50 acres of land between Fergus and Elora for a poorhouse, intended to function as a self-sufficient industrial farm. Residents, who were called “inmates,” a term used at the time to describe anyone living in an institution, tended livestock, looked after 30 acres of crops, an orchard, a garden and a strawberry patch.

Their labour provided most of the food for the 70 inmates and staff.

As new inmates arrived, it was entirely possible they might see the body of another inmate, such as 70-year-old George Kerr, who died in the fall of 1892, making its final journey to the poorhouse cemetery for burial in an unmarked grave.

Dunlop, along with archivist Karen Wagner and conservator Patty Whan, have documented these stories after poring through admission and discharge records, medical files, council minutes, old newspaper stories and tracking down relatives to find out more about the people who lived there.

Since they died more than 30 years ago, their names can be used, which Dunlop and her colleagues felt was important for appreciating the history.

“Poverty doesn’t often have a face or a name or the (documented) family connections you see here,” Dunlop said, standing near photographs of the Everson family of Harriston, near Mount Forest, whose story helps illustrate poverty’s generational cycles.

At eight months pregnant, Mary Jane Everson entered the home in 1889 with her children, Julia, 7, Leonard, 5, and George, 3. Her husband, Alfred, had become sick, couldn’t work and spent more than a year in Guelph General Hospital. The family had no source of income.

Everson’s baby, John, was one of three children born in the house. The family had returned to Harriston to live, possibly when Alfred had recovered, but Mary Ann and her older children were eventually readmitted to the house.

Leonard and George were apprenticed out as farm labourers at ages 12 and 13, as was Julia. But in her case, it didn’t work out and she remained at the poorhouse for the reset of her life, dying at age 67 in 1948. Her mother and brother, William, born in 1894, both discharged, continued to write and send Julia family photographs. (George later enlisted with a county battalion and was killed in action three months before the end of World War I).

Meanwhile, Mary Ann’s parents, George Hollingshead, 82, and his wife Ann, 80, were admitted to the house in 1907 because of “old age and destitution” and died there.

Much like today, misfortune seemed to hit society’s most vulnerable people the hardest – the unskilled, the elderly, the disabled and children.

Leonard Howson of Eramosa Township entered the house in 1877 at age 9 and drowned on the property in May, 1903, at age 35, while searching for a lost fish hook.

During his 26 years there, Howson would have only walked through the front doors once. After arriving, inmates were required to enter and leave through the back doors.

Photographs show male residents wearing patched trousers and women in dresses made from the same bolts of cloth. Uniforms were sewn by inmates and staff.

Men and women, even elderly married couples, were housed in separate sections of the building, in dormitories at times so crowded the only way to get into bed was by climbing in from the end.

A stone washhouse was erected in 1877 and served as a laundry, a woodshed and “dead house,” or morgue. Three jail cells were sometimes used for temporarily housing inmates suffering from mental illness or what today would be known as dementia. The staff weren’t trained to deal with these challenges.

A hospital wing was added in 1892, with the help of a $4,000 provincial grant and the physical labour of inmates such as Jimmy “the giraffe” Allen, so nicknamed because of his height and bright red hair, who operated a lime kiln during construction.

A hospital wing was needed because the composition of the inmate population was changing, partly as a result of society’s attitudes toward poverty itself.

With the advent of the poorhouse system had come recognition, for the first time in Ontario, that governments had a responsibility to provide for the less fortunate. Other social programs aimed at reducing poverty and dependence on the poorhouse followed, including a children’s aid system and early forms of worker’s compensation, as well as legislation to improve workplace safety.

While women and children continued to seek sanctuary in these institutions, they were increasingly becoming senior citizens homes and, by 1947, Wellington County’s House of Refuge had officially been renamed the Wellington County Home for the Aged. It remained such until 1972, reopening three years later as a museum.

While Canadian society has evolved and a sophisticated social safety net has developed to ease the burdens of those who’ve fallen on hard times, Dunlop is struck by how some attitudes toward poverty remain the same.

“Sometimes when people go through the exhibit, they say `Things haven’t changed very much’ and I can understand their thinking,” Dunlop says.

“They see, I think, the harshness and sometimes the judgments (society made about the poor.) I think we still carry that ideological base…that if you are not successful in work you are morally a failure. Those are strong roots in our western society.”

For directions to the museum and more information go to www.wcm.on.ca
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Rules for the ‘inmates’

Social chaos (poverty and rootlessness) could only be eradicated through order and hard work. The daily routine of the inmates, regulated by the ringing of the bell, was designed to teach middle class values regarding moral and social conduct.

At the ringing of the morning bell, every inmate in the House (the sick and those in confinement excepted), must rise, dress, wash and be in readiness to proceed to work.

The bell will ring 10 minutes before each meal, when all will leave their work, and be in readiness with clean hands and faces for the ringing of the second bell, when they will repair to the dining rooms, and take such seats at the table as are assigned to them by those in charge, where they must observe silence, decency and good order.

At the ringing of the slow bell after meals every inmate shall repair to work. At nine in the evening, at the ringing of the returning bell, the inmates must secure the fires, put out the lights, and retire to bed in their respective apartments.

Any inmate guilty of drunkenness, disobedience, immorality, obscenity, disorderly conduct, profane language, theft, waste, or who shall absent himself or herself; or who shall be guilty of defacing any part of the House or furniture…shall be punished as the case may seem to demand.

In solitary confinement, the prisoner shall be debarred from seeing or conversing with any person except the Inspector, the Keeper…and the food shall consist solely of bread and water.

Any inmate who shall have communication with any one thus confined without permission shall be subject to punishment by a like confinement. No inmate shall go beyond the limits of the Industrial Farm, unless by the permission of the Keeper, nor remain out beyond the time specified by the Keeper.

The Sabbath Day shall be strictly observed, and no irreligious diversion or unnecessary labor shall be indulged in.

Every person previous to admission as an inmate of the House shall be examined and searched by the Keeper or one of his assistants.

All persons aggrieved may prefer their complaints to the Inspector when he is visiting the House or to a member of County Council.

Wellington County By-Law 410, passed 8th June, 1888