Poverty costs Ontario up to $33B annually, new report says

Posted on October 4, 2019 in Social Security Policy Context

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CBC.ca – News/Canada

Feed Ontario says 1.57 million people in Ontario live in poverty, including 382,000 children

A new report released on Tuesday by an organization called Feed Ontario concludes that poverty costs the province between $27.1 billion and $33 billion a year.

The study, entitled The Cost of Poverty in Ontario, examines the relationship between poverty, poor health, the justice system and lost productivity. It makes the economic case that investing in people by reducing poverty is not only socially responsible but financially sound.

The loss of what’s known as “opportunity income” accounts for the largest chunk of the cost of poverty — $19.4 to $25 billion — followed by health care with $3.9 billion.

Michael Maidment, chair of the Feed Ontario board of directors, says opportunity income refers to the loss of personal revenue when people are unemployed or underemployed, along with the resulting loss in tax revenue.

“What we are looking at is if people were employed, these people would be participating in the economy and when they start to participate in the economy, of course they’re spending money,” Maidment told CBC News.

“They’ll earn that income but they’re also going to spend that income and so the economy is going to benefit from people being employed and it’s going to benefit when people have more appropriate income.”

Maidment said the report shows that maintaining people in poverty is expensive, and that proven reduction investments not only benefit communities, but carry significant cost savings and revenue opportunities for the provincial government as well.

Report highlights, trends

  • Using Canada’s Low Income Measure (LIM), 1.57 million people in Ontario live in poverty, including 382,000 children.
  • Between 2012-2015, the Ontario Child Benefit (OCB) brought a 24-per-cent reduction in child poverty and 37-per-cent reduction in children living in deep poverty.
  • The Canada Child Benefit (CCB), which topped up the OCB, also played a significant role in moving families with children out of poverty.
  • In contrast, poverty rates have increased overall for unattached adults and families without children by 24 per cent over the same period.

While the overall poverty rate has started to decline, particularly with the introduction of the Ontario Child Benefit, poverty rates have increased for unattached adults and families without children, the report finds.

Further, it argues that those living in poverty are experiencing deeper levels of poverty than before.

“This trend is echoed in our food bank use data, which indicates that unattached adults or single-person households are one of the fastest growing groups of food bank users in the province,” Maidment said.

“Further, not only is a single person more likely to require the support of a food bank throughout the year, they are more likely to visit more often.”

‘Why aren’t we doing more?’

Daily Bread Food Bank CEO Neil Hetherington said he was surprised to learn the full cost of poverty in Ontario.

“When you look at those numbers and you start to say to yourself, ‘It’s almost $30 billion as the economic cost to Ontario,’ you start to ask the question: ‘Why aren’t we doing more?” he told CBC News.

“The one that struck me, which was the largest number, is the lost opportunity cost.

When you think about individuals who are in poverty, if they get the next stage up … what the economic benefits are to Ontario, what the benefits are to them individually — the happiness quota, the satisfaction, the joy of living, the dignity — those items aside from the economic benefits just make a compelling case that we need to do more,” Hetherington added.

The report also examines the recent changes that the provincial government has made in its approach to poverty alleviation and reduction, and argues that while it has maintained commitments to invest in affordable housing and job creation, it has prioritized reducing Ontario’s deficit through decreased spending on a number of social services and programs.

The report goes on to argue that pursuing this strategy may actually work against the intended outcome by incurring greater health-care expenses, depriving itself of tax revenue and the means to address the deficit, and delaying the growth of the economy and progress of the province.

“Cost analysis and case studies have shown that investing in people improves the quality of life for everyone, not just those living in poverty, as well as our economic bottom line,” Maidment said.

“And, perhaps even more significantly, arguably shows that, long-term, it costs more to keep people in poverty than it does to eliminate it.”

The study concludes by making key recommendations that encourage the provincial government to build on the success of the Ontario Child Benefit by expanding similar support to unattached adults, as well as by investing in people and the province through proven poverty reduction strategies, such as a basic income, which have demonstrated significant cost savings and increased opportunity for economic growth.

“We believe that our vision of ending poverty is shared by all levels of government, but that this vision will not be achieved without an intentional and committed approach to taking action against poverty,” Maidment said.

With files from CBC’s Jasmin Seputis and Catherine Paradis


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