Social Policy in Ontario

Canada urged to spend smarter to cut poverty

Posted on September 28, 2011 in Inclusion Debates

Source: Toronto Star — Authors: Laurie Monsebraaten

TheStar.com – news/canada
Published On Wed Sep 28 2011.    Laurie Monsebraaten, Social Justice Reporter

It would have taken $12.6 billion to give the 3.5 million Canadians living in poverty enough income to live above the poverty line in 2007.

And yet Canadians spent at least double that amount treating the consequences of poverty that year, says the National Council of Welfare.

Clearly, this spending pattern doesn’t make good economic or social sense, the council says in its report “The Dollars and Sense of Solving Poverty,” being released Wednesday.

Instead of focusing on short-term spending that simply enables people to survive or be a little less disadvantaged, Canada should be investing in longer-term plans to permanently lift people out of poverty and prevent others from falling into its grip, says the report.

This would not only improve the lives of those living in poverty, but would benefit all Canadians in reduced costs for health care, education, criminal justice, social service and other areas indirectly affected.

The report is based on a growing body of research into the causes and costs of poverty. It recommends a Canada-wide strategy to solve the problem, sustained investment, a consistent and coordinated approach based on fairness and reasonable reward for work effort, and a forum to share and learn from success.

“We’re hoping Canadians will talk to their politicians and say: ‘Look, this makes sense. Let’s shift our thinking to an investment-based approach. Let’s save dollars. Let’s make sure everyone is better off,’ ” said council chair John Rook.

Canada is well positioned for the task, says the council, a federally appointed advisory board to the minister of human resources. Seven provinces are already engaged in strategies to cut poverty.

Ottawa showed it can be done in the 1960s when it introduced public pensions and the guaranteed income supplement, which helped to cut poverty among seniors from 30 per cent to less than 6 per cent today, the report notes.

Provincially, Quebec’s universal $7-a-day child-care program is credited for cutting the poverty rate of single-parent families by 15 percentage points between 1997 and 2007.

The report cites numerous initiatives across the country that are also showing success, such as Women Moving Forward, a program started in 2005 by Toronto’s Jane Finch Child and Family Centre that helps move single mothers on welfare into education and employment. An economic analysis of the program shows a payback of $3.56 today for every dollar spent on the first graduating class, and a ten-fold return on investment within 25 years.

Cavel Hutchinson, 27, joined the program in its inaugural year. Since then, the single mother has been transformed from a frustrated high-school dropout on welfare with no employment prospects to an optimistic working mother with a college diploma who is juggling two jobs in the social-service sector.

Hutchinson has been able to pay for ballet and tap lessons for her daughter Cinaea, 6, and contributes to an education savings plan for her.

“Women Moving Forward has really helped me move forward with my life,” Hutchinson said. “It’s given me the opportunity to enhance my skills and learn new things and have new experiences.”

But the program, which serves up to 30 moms a year and costs $200,000 annually, has yet to secure stable government funding, said coordinator Heather Miller.

Instead, governments seem locked into spending on welfare programs that provide meagre support and are riddled with complex rules that make it hard for recipients to get ahead, the report notes. As a result, those on welfare face stigma, stress, lack of control, and work disincentives, and often see their problems worsen.

The report’s release during what could become a double-dip recession should be a wake-up call to governments, Rook said.

“When you look at it, it’s not so much about how much we’re spending, but where we’re spending.”

The true cost of poverty

• A low-end estimate on the public cost of poverty in Canada in 2007 was $24.4 billion.

• Poverty costs every Ontario household $2,229 per year, or about 5 per cent of GDP.

• Hospital costs for homeless patients are $2,559 more than patients with stable homes.

• 80% of incarcerated Canadian women are there for poverty-related crimes; 39% for failure to pay a fine.

• It costs $1,400 to incarcerate a woman for failure to pay a $150 fine.

• About 20% of health-care spending can be attributed to socio-economic disparities.

• Compared with the wealthiest neighbourhoods, deprived neighbourhoods have a 28% higher death rate and double the suicide rate. Type-2 diabetes and heart attacks are also more common.

• Failure to recognize the qualifications and experience of immigrants costs the Canadian economy $3.42 billion to $4.97 billion per year.

• About 400,000 more Canadians would be working, earning about $13 billion, if immigrants had the same likelihood of being employed at the average income as people born in Canada.

Source: The Dollars and Sense of Solving Poverty, National Council of Welfare

Benefits from public spending

Canadians enjoy an average benefit of $16,952 from tax-funded public services, most of which comes from health, education and personal transfers.

• In Ontario, a bachelor’s degree holder earns a total of $769,720 more over 40 years than someone with only a high school education.

• University graduates make up 22% of the population, contribute 41% of the income tax paid and receive 14% of government transfers.

• Weekly earnings average 61% higher for university-educated workers compared with those with only a high school education.

• Universal child care for 2- to 5-year-olds would return about $2 for every $1 spent.

Source: The Dollars and Sense of Solving Poverty, National Council of Welfare

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Tags: budget, featured, ideology, participation, poverty, standard of living

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