Social Policy in Ontario

Ontario’s failed approach to poverty

Posted on January 29, 2013 in Policy Context

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NationalPost.com – FullComment

Jan 24, 2013. Tasha Kheiriddin

Ontario will soon have a new premier, but unfortunately, it appears as though she will have the same old attitude to poverty reduction. A survey of the Liberal candidates’ positions on the issue, published this week by a group called the 25 in 5 Network for Poverty Reduction, reveals that the two frontrunners, Sandra Pupatello and Kathleen Wynne, both endorse developing Ontario’s next Poverty Reduction Strategy. This, despite the fact that by any rational measure, its predecessor has been an abject failure.

In 2008, the Liberals implemented a series of policies, which sought to cut child poverty by 25% over a five year period. The government increased child benefits and social assistance rates. It spent $18-million on nutrition programs and provided free dental care to 33,000 kids. It made college more affordable for 200,000 post-secondary students. In other words, it threw bits of help and money at the problem, and hoped that together, the result would be greater than the sum of its parts.

Not surprisingly, they weren’t. As the five-year plan comes to an end, the Network claims the programs pulled 29,000 children out of poverty — a mere 6% of affected kids. According to the government, the figure is 40,000, or 8% of the province’s 480,000 children living in poverty, (defined in 2008 as a family of four taking in less than $37,000 a year).

Why the pitiful results? Critics claim the problem was — surprise, surprise — not spending enough money. A group called the Ontario Common Front published a study claiming the province came in “dead last” in per-person spending on programs and services.

Religious leaders chided the government for going “off-course” in 2010, when it froze the Child Benefit and refused to increase the minimum wage. (Now that the provincial government’s deficit projections are $3-billion rosier, watch for these groups to step up their demand that more resources be redirected to the poor, Drummond report be damned.)

So why are Liberal leadership hopefuls pledging to continue — or even expand — a policy that has clearly failed to meet its goals? Because it’s easier than facing the truth, which is that increased income redistribution won’t reduce poverty — more jobs will.

It’s a reality the Progressive Conservative government of Mike Harris knew well back in 1995. Instead of boosting welfare rates, the Tories cut them by 22%, while reducing income taxes by 30%, to rein in the size of the state and boost job creation. From 1995 to 2000, the province saw its unemployment rate drop from 8.7% to 5.8%, before inching up again to 6.9% in 2003.

Conversely, under Dalton McGuinty’s Liberal government, the unemployment rate stayed static from 2003 to 2008, after which it ratcheted up to 9% in 2009 before falling back slightly to 7.8% in 2012. Yet unlike the Conservatives, the Liberals raised taxes on health care, small businesses and consumer products, while increasing government spending by 34% between 2003 and 2008. By 2010, that figure hit 55%, according to a report on provincial fiscal performance issued by the Fraser Institute.

In other words, taxing and spending failed to do the one thing that’s guaranteed to alleviate child poverty: create jobs for parents. Lifting kids out of poverty is not accomplished by free dental care, better cafeteria food or higher social assistance rates. Tax and regulatory policies that make Ontario a more attractive place to invest, and social assistance rates that do not discourage recipients from seeking entry-level jobs are the key. Here’s hoping that even though Ontario’s next Liberal premier hasn’t got that message, the province’s next elected leader will.

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Tags: budget, ideology, poverty, standard of living

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