Hot! Welfare rules: Keeping people in poverty trap – opinion/editorials
Published On Mon Dec 20 2010.

The recession and the jobless recovery in Ontario’s industrial heartland have opened a window into a world many workers had never imagined: a world where unemployment benefits run out before a new job turns up, and the only recourse is welfare — which for many remains out of reach when they need it most.

The initial shock of having to turn to welfare is compounded by the realization that you are actually not eligible — at least not yet. To qualify for welfare, it’s not enough to have no income (and no unemployment benefits). You also have to have no more than $572 in liquid assets in Ontario, if you’re single. That amounts to destitution.

A report last week by the National Council of Welfare documents the vice-like restrictions that keep people pinned down by poverty. Tougher rules have made it harder to get welfare today than during the last recession of the early 1990s, because Ontario and many other provinces force people to burn through their bank accounts and even their RRSPs before they can get help.

Those asset limits were driven to rock-bottom levels during the Common Sense Revolution of former premier Mike Harris’s government, which claimed it was common sense to make people empty their savings accounts before giving them welfare. But experience shows that notion was too clever by half.

Depriving people of modest liquid assets sets them up for failure and deprives them of any financial cushion when they are trying to cope with life’s ups and downs. That keeps them from escaping the poverty trap and getting back on their feet.

The council tells the story of a Windsor worker who had to cash in her RRSP. When that ran out, she qualified for welfare but could no longer afford her mortgage. Any profit from selling her home would once again disqualify her from welfare. That’s a painful catch-22.

Ontario’s Liberal government has belatedly recognized that this Harris holdover is unsustainable. Earlier this month, the province announced a comprehensive review of social assistance that will look at asset limits and earning exemptions under welfare rules. One place to look is neighbouring Manitoba, where an employable person can keep up to $4,000 while collecting welfare. That’s a common sense example worth following, for a start.

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