The Social Planning Network of Ontario (SPNO) was active and instrumental in making child poverty a major issue in the 2007 election and, in partnership with the Interfaith Social Assistance Reform Coalition (ISARC), SPNO mobilized the Poverty Free Ontario (PFO) network to keep poverty eradication alive in communities across Ontario during the 2011 election. Many of PFO’s cross-community partners revived the “Let’s Vote for a Poverty Free Ontario” election sign campaign in the just concluded 2014 provincial election, which produced a majority Liberal government.
Where does SPNO/PFO go from here with the poverty eradication agenda under the new political scene?
Seven years ago in its spring meeting on Toronto Island, SPNO set an advocacy agenda for active promotion among its member organizations’ communities across Ontario in the provincial election scheduled for October 2007. The record of the Toronto Island discussion clearly states the intent to demand that timelines and targets be established, first for the reduction of child and family poverty within five years and then a plan for its elimination in Canada’s sesquicentennial year 2017. Several major strategies in a poverty reduction and elimination plan were proposed:
In addition, the SPNO members reaffirmed the importance of strengthening the community support base (e.g. early learning, affordable housing, community support services) as an important component of a poverty reduction strategy.
SPNO recognized decent work and putting an end to working poverty as the cornerstone of its child and family poverty reduction agenda. The record of SPNO’s discussion in 2007 clearly addressed the false contentions of the “welfare wall” proponents. SPNO rejected the notion that people had to be kept in destitution as an incentive to leave social assistance to accept low wage work.
While the $100/month Healthy Food Supplement proposal and the Put Food in the Budget (PFIB) campaign would not be shaped for two years, the SPNO meeting in the spring of 2007 laid the groundwork for new benchmarks to end both working poverty and deep poverty, calling for a “just differential” between social assistance rates and the minimum wage. Notes of the SPNO meeting indicate that the goal by 2017 should be to get working people 20% above the poverty line and people on social assistance up to the poverty line, first by making sure no social assistance recipient lived in deep poverty (below 80% of the poverty line).
These commitments among the SPNO membership on Toronto Island in 2007 became the central messages for a cross-community awareness campaign over the summer and fall months running up to the election. Along with SPNO’s report naming Ontario the “child poverty centre of Canada”, the community meetings and media coverage contributed to Premier McGuinty’s promise to develop a child and family poverty reduction strategy within the first year of his new administration, if re-elected.
Since 2007, SPNO’s positions on sustaining employment supplemented with essential income supports to reduce and eliminate poverty have been incorporated into major campaigns focusing on raising the minimum wage (WAC’s Minimum Wage Campaign) and moving social assistance rates towards adequacy (Put Food in the Budget). The Liberal Government has shown movement towards the demands of the Minimum Wage Campaign. And, persistent cross-community advocacy since 2009 has resulted in resolutions expressing support for the $100/month HFS in 25 Ontario municipalities and recommendation by the Social Assistance Review Commissioners, leading to the first real income increase in social assistance rates in the 2013 provincial budget in twenty years.
In recent years, the debate about a Guaranteed Annual Income or Basic Income has re-emerged as it has periodically since the 1960s. The prospect of some kind of clear, simple universal income security program is alluring. Expressions of interest from all parts of the political spectrum suggest a potential political consensus on a guaranteed income, which is as unusual as it is attractive.
Where does SPNO’s position on poverty eradication and inequality fit in this current discourse? Does the Basic Income approach require us to abandon or re-think our public policy stance since 2007? How should SPNO position itself on this issue as the new provincial government takes office and the federal election approaches in 2015?
If “basic” income means establishing a floor of income adequacy that enables individuals and families to maintain their health and dignity by meeting the cost of daily living needs, then clearly SPNO supports such policy. Some part of the population disconnected from the labour market temporarily or permanently by their situation and personal circumstances (e.g. single parents, persons with disabilities) will require income support programs at basic, adequate levels to ensure that they do not live in poverty. Most will depend on some form of paid work to get by. Too many of these community members in part-time and precarious employment at minimum wage levels cannot meet their basic daily living needs with their earnings.
Social policy emphasizing the workforce as the route out of poverty subjects people to low wage and precarious work and promotes “workfare” for those dependent on income supports, while reliance on income support programs only inevitably sets rates well below adequacy in terms of basic living requirements. How can labour market and income support policy work together to ensure that poverty is eradicated for all in Ontario?
We already have income support models that recognize the relationship between work and income for vulnerable parts of the population. Old Age Security and the Guaranteed Income Supplement for retiring workers introduced in the 1970s to supplement private pension income and CPP benefits had a major impact on reducing seniors’ poverty to below 4%, and were indexed to protect their purchasing power against inflation. Granted, the GIS and CPP need enhancement now to maintain these gains.
It is possible to extend this supplemental income support approach to other stages of life in which people have varying attachments to the workforce. We can think of strategies for decent work and basic income across all stages of the life cycle, which recognize an appropriate and mutually reinforcing relationship between labour market participation and income support requirements as the following suggests:
This approach does not substitute income for employment earnings, nor does it compel workforce participation in order receive income support. It recognizes that earnings from employment are an important component of maintaining a livelihood, but that that labour market detachment at any stage of the life cycle should not condemn one to poverty. Both wage protections and income guarantees are required.
Since 2007 (and for many of us a decade or more before), SPNO and its cross-community partners in the PFO network have focused a lot of attention on income adequacy – increasing social assistance rates to end deep poverty; raising the minimum wage to get full-time, full-year earners above the poverty line. This concentrated attention has led to some gains and movement of the policy debates in a good direction but we may be allowing ourselves to remain confined to “minimalist” positions when it comes to framing what we think decent work should be. Notably, more communities are not just advocating for raising the minimum wage but are also for work at a “living wage”.
The availability of good and decent jobs should be seen as much of a challenge today as it was at the height of the industrial revolution in the 19th century. Today, in a post-industrial society, good and decent jobs seem a faint hope. Our youth in particular struggle to establish any secure foothold in the labour market, and, even with higher levels of education, remain subject to mostly short-term and precarious employment. In the face of increasing tuition and living costs for post-secondary education, many youth accumulate high levels of debt and graduate into an economy that offers mostly poor paying service jobs. We are at risk of condemning our younger generations in particular to dismal, unfulfilling futures and chronic spells of poverty and exclusion. Productive employment in these formative early years of labour force participation is critical.
While good jobs in the traditional economy appear to be scarce, there is no lack of work needed to create a truly sustainable society. It is time to reframe the notion of good jobs in terms of work that needs to be done to build and strengthen our social and civic infrastructure. We need to re-balance our economy from one tilted heavily towards private wealth creation and concentration to one of collective stewardship of our human and financial resources offering shared opportunity for all.
Quality employment guarantees are critical for youth and younger adults as they enter the workforce supplemented with income programs as they make transitions through their working lives. Government incentives and partnerships with the private sector (retail, commercial, industrial) should be directed toward the creation and support of decent, well-paying, career development jobs. There is hope that the private sector might recognize its role in contributing to a collective purpose that adequately compensates workers while securing a fair return on investment.
Realistically, however, we should look to city governments and the community sector to show leadership, as the City of Seattle is doing by making a commitment to the highest minimum wage ($15/hour) in North America in response to a strong community advocacy movement. Even recently here in Ontario, the Put Food in the Budget campaign mobilized across communities to secure resolutions in support of the $100/month Healthy Food Supplement in 25 city councils, which was cited by the Social Assistance Review Commissioners in their own recommendation in support of the HFS.
After forty years of market-driven neo-liberal social and economic policy, it is time to disengage from the tyranny of global capital and to restore social justice from the ground up with a Civic Declaration on decent work and basic incomes for all. As in Seattle, city governments and the community sector must join their voices to demand senior government support for good jobs in business and in public services. The continued importance of work by nurses, teachers, firefighters and librarians as well as in the social, environmental, recreational and arts and culture sectors must be respected. Governments should support community and civic employment strategies in the public and non-profit sectors that enable youth and younger adults to start life with a solid foundation of productive employment that builds and strengthens our social, cultural and environmental infrastructure. Civic Declarations directed to this collective purpose would both stimulate economic development and grow the next generation of an active and engaged citizenry.
We have a common stake in creating communities of shared opportunity for all. Investing in work that protects and enhances our environment, supports civic and community well-being, and grows local economies will produce social and economic benefits for all. Pursuing this path will demand the activation of a collective stewardship that engages all parts of the community in a discussion of how to work together for the common good. What work needs to be done to create and sustain the kinds of communities that we want to live in? What can business, labour, civic and community leaders do to contribute to that shared purpose? How can the role of the non-profit sector be expanded as a source of decent work and sustainable development?
We need to re-frame decent work and basic incomes in terms of solidarity, with a mission to create communities of shared opportunity for all across Ontario, while recognizing the complexity of actual human experience through different stages of the life-cycle. We have an obligation to offer other guarantees, most critically that our younger generations will have the opportunity to make their contribution to sustainable social and economic development through the application of their energies, skills and talents in the public, civic, non-profit, and corporate sectors.
We call on cities and communities to lead the way in framing Civic Declarations for decent work and basic incomes to eradicate poverty within this decade, and to create communities of shared opportunity for all across Ontario.
To this end, it is proposed that the Social Planning Network of Ontario join with its network of community leaders and organizations in Poverty Free Ontario to engage our communities in a discussion of the central tenets of a Civic Declaration, to test its resonance as a herald for structural change, and to explore its implications for both local and cross-community ground-swelling action for social justice in Ontario.
 A 4% increase to the OW Basic Needs Allowance in the 2013 provincial budget ($26/month) was the first real income increase for OW recipients since the 1995 cuts of 22%, all other 1%-2% adjustments since 2003 being for cost of living, and at that were below the annual rate of inflation in several of those years.
 Industrial manufacturing jobs in the 19th century were low paying and conducted in unsafe and unhealthy working conditions until unions organized for collective action among labourers and social reformers introduced public controls and regulations for improved employment
After several years of community advocacy, the Ontario Government finally acknowledged in its 2013 Budget that single adults on social assistance are living in especially severe conditions of hardship and hunger. Once again, the Government adjusted social assistance rates by 1%, the current rate of inflation, but added a $14 top-up for single adults without children on Ontario Works.
Community advocates for a poverty-free Ontario have been campaigning since 2009 for benefit increases that would begin to relieve the tremendous deprivation of single adults living in deep poverty at less than 40% of the official Ontario poverty line. They can finally claim a clear breakthrough with the Government on the plight of single adults, even if the actual rate increases this year are not at the level needed.
Contending that the Government was taking a “balanced approach” to achieving “prosperity” and “fairness,” Finance Minister Charles Sousa actually tips the balance in the direction of continuing austerity.
In March, an assembly of more than 100 Poverty Free Ontario partners from more than 20 communities across the province framed a Six-Point Plan for a social justice budget. Measuring the 2013 Budget against the PFO Plan shows some minimal gestures towards social justice, but no clear leadership or firm conviction to pursue a social justice agenda for the most vulnerable Ontarians living in deep poverty.
1) Increase the Basic Needs Allowance by $100/month for OW and ODSP recipients as the first step towards adequacy in social assistance rates.
Clearly, the Government has come nowhere close to the $100/month rate increase for which PFO has been advocating especially for single adults on OW/ODSP, a group entirely neglected in the 2008 Poverty Reduction Strategy. A $14 top-up for single adults on OW on a general overall adjustment of 1% does, at least, indicate that this part of the social assistance caseload is now on the Government’s radar.
Still, these provisions are again misrepresented in the Budget as rate “increases”, when, in fact, they are partly a cost of living adjustment to maintain the purchasing power of current rates. The additional 1% for 2013 in the Ontario Budget does match the year over year increase in the Consumer Price Index at March 2013 and will provide $6.06 more a month to a single adult on Ontario Works. The $14 top-up will bring the single rate up by $20/month to $626.06, which for the first time since 1995 will be an increase in the real income for single adults (2.3%).
While not the $100/month increase that PFO has been pushing for, this is at least a small step towards real rather than strictly inflationary increases.
ODSP single adults, however, do not appear to be included in the $14/month top-up, the shocking rationale being that this will “begin to reduce the disparity in rates between ODSP and OW recipients.” (p. 91). This is an early signal that the potential future “harmonization” of the OW and ODSP caseloads would be more about reducing benefits to the lowest common denominator than moving all recipients in the direction of decent living standards.
2) Index OW and ODSP rates, starting immediately, to keep up with the annual inflation rate.
The 2013 Ontario Budget once more provides a discretionary one-year commitment to a cost of living adjustment but does not index social assistance rates to the cost of living in the same way that seniors’ benefits are adjusted annually to the rising cost of living. Especially in a year when the actual increased cost of living is low compared to previous years (1% compared to the 2%+ range in previous years), the Government missed an opportunity to show not only a strong gesture towards fairness but also a confidence in its economic recovery program to cover off cost of living adjustments for social assistance recipients in future years.
3) Ensure that all increases to social assistance or changes arising from the proposed integration of the current programs do not lead to any reductions in basic needs and housing allowances for persons currently receiving ODSP and Ontario Works, or to cuts in benefits such as the Special Diet Allowance or the Disability Worker’s Benefit.
There is nothing in the 2013 Budget that indicates any of the provisions will be implemented at the cost of existing programs such as the Special Diet Allowance or the Disability Workers’ Benefit. This is encouraging, although measuring success by what programs are saved is a comment in itself on our state of mind in an austerity climate. The community should remain vigilant that these programs are not threatened as budget provisions become implemented.
4) Introduce an earnings exemption for social assistance recipients with working hours so that a 50% clawback on earnings does not apply on at least the first $200/month earnings, and preferably not on the first $500.
It has been known for several months that the Government intended to allow social assistance recipients with working hours to keep the first $200/month of earnings without a clawback on their OW/ODSP benefit. This is one of the minor recommendations of the Social Assistance Review, and will make a difference in the lives of social assistance recipients with some working hours. To its credit, the Government will clawback earnings higher than $200 monthly at a rate of 50% and not 57% as recommended by the Social Assistance Review Commissioners. Frankly, it is unconscionable that any clawback applies to recipients who find work until their earnings begin to approach the poverty line.
5) Commit to the principle that the minimum wage should ensure a full time, full year worker earns an annual income 10% above the Ontario Income Poverty Line [LIM 50], and to an implementation plan that will achieve that goal.
The 2013 Budget makes no changes in the minimum wage and promises only to study the issue for possible future action by setting up an Advisory Panel. It is difficult to take the Government’s commitment to job creation seriously if it allows minimum wage earners working full-year, full-time to still fall about $1,000 below the poverty line annually. The Raise the Minimum Wage campaign has made the case definitively for bringing the minimum wage to 10% above the poverty line, and there is more than enough evidence that this will stimulate the economy and not cost jobs.
The Government shows only timidity here when it should be showing leadership and bold action. The community should call for the terms of reference of the Minimum Wage Advisory Panel to include a plan for raising the minimum wage over a reasonable period of time to 10% above the official poverty line for full-time, full-year earners.
6) Index the minimum wage immediately to keep up with the annual inflation rate.
Without any action on point #5, there was, of course, no action on this front either.
The 2013 Ontario Budget contains other measures related to PFO’s Six Point Plan:
There was hopeful talk during the lead-up to this Budget that the Government may be considering some actual moderate increases in taxes or restoration of corporate taxes that have cost the public treasury so much in recent years. It is disappointing that the 2013 Ontario Budget promised to retain the tax cuts that have been implemented, while boasting that for yet another year its deficit is projected to come in under original projections by several billion dollars.
A truly balanced approach between prosperity and fairness would acknowledge that the Government has some fiscal room for greater fairness to the most vulnerable in Ontario by its faster than anticipated progress in reducing the deficit. Applying even less than one-third of the resources available from the ahead of schedule deficit reduction to Ontario’s poorest citizens would not only improve their health and well-being but would also contribute significantly to stimulating local economies across the province.
Social assistance reform was proposed by the Government in its 2008 Poverty Reduction Strategy. After five years of study and consultations and as the Government sets up another Cabinet Committee to develop a second Poverty Reduction Strategy as required by legislation, it is a sad commentary that such minimal progress on social assistance reform has been made. The path to real improvement in the material living conditions of Ontario’s poorest is proving to be long and tortuous. It demands a Government and Parliament with both the conviction and the courage to show strong leadership on a social justice agenda.
Community advocates for people living in deep and working poverty across the province can take some credit for the small gains made in the 2013 Budget. We got the Government’s attention. We now need to help embolden its commitment to further serious reform.
For further information contact:
Prior to her election as Leader of the Ontario Liberal Party and becoming the new Premier of Ontario, Kathleen Wynne declared that she wanted to be known as the “social justice premier”. This statement raised some hopes and expectations among community advocates for low income people for serious action on social assistance reform and the minimum wage.
Since assuming leadership of the Government, Premier Wynne has not been very specific about her social justice agenda. The Throne Speech in March included only a few brief references to affordable housing and several recommendations in the recent social assistance reform report by Commissioners Lankin and Sheikh. Besides generally referring to interest in helping social assistance recipients move into employment, the only specific recommendation that the Premier has expressed an interest in acting on is the $200 per month earnings exemption for social assistance recipients with working hours before implementation of the clawback on their earnings.
Neither has either opposition party leader has shown any greater interest in serious social justice action to this point. Mr. Hudak’s policy proposals harken back to the worst visions of workfare and punitive practices of the Mike Harris days. Ms. Horwath has shown no inclination to go beyond the earnings exemption recommendation in her negotiation on the spring provincial budget with the Premier. Social justice for the most vulnerable is searching for a champion among our political leadership in Ontario.
It has been almost five years since the social assistance reform was announced as one of the cornerstones of the Government’s Poverty Reduction Strategy. Such lengthy research, consultation and study were not required for an earnings exemption to be the only specific measure under consideration.
The budget to be delivered in April offers an opportunity for the Premier to show “good faith” in her expressed intention to be the “social justice premier” for all Ontarians. To that end, Poverty Free Ontario invited Premier Wynne to meet with PFO delegates from across Ontario for a discussion of their proposals for a social justice agenda. Sadly, the Premier’s Office has not formally acknowledged nor responded to the invitation.
Still, more than 100 PFO leaders from more than 20 communities all across Ontario came together in Toronto for a day on March 8. They discussed and endorsed the following Six Point Plan for a Social Justice Agenda:
The PFO community leadership assembled on March 8 asked that invitations be made to the Premier and Opposition Leaders for meetings with a cross-community PFO delegation prior to the budget to discuss a social justice agenda based on the preceding Six Point Plan.
For further information contact:
It is fitting to footnote here that Commissioners Lankin and Sheikh’s recommendation for the $200 earnings exemption in their report actually proposes that the clawback on additional earnings be increased from the current 50% to 57% — not indicated in the body of their report but in footnote #46 on page 73, reducing the benefit to recipients of even this minimal measure of reform.
The NDP released its anti-poverty platform on Friday, September 16, 2011. Perhaps anti-poverty advocates should be grateful for any nod in this direction, given electioneering by all the parties that is otherwise concentrated on middle class, pocketbook issues.
But any anti-poverty policy is not equivalent to the policy necessary to end poverty in Ontario. The NDP’s commitment to building 50,000 affordable housing units over ten years is certainly commendable as is the promise of a new emergency dental care program for 50,000 low income adults.
The reference, however, to a housing benefit for 200,000 low income individuals and families at a cost of $240 million a year when fully implemented is worrisome. In its policy platform, the Liberal Party also says that it will “consider delivering a new housing benefit for Ontarians who are struggling”. The plan that the Liberals are entertaining is the same that the NDP has committed itself to.
A housing benefit of this limited scale in a province with 1.7 million people living in poverty does not begin to address the real issue. That issue is the woefully inadequate core incomes of almost 600,000 adults on social assistance and about 800,000 low wage workers who do not earn enough to meet their basic monthly living costs.
A single individual on social assistance lives in deep poverty, $11,300 below the poverty line annually; a single mom with one child lives $9,500 below the line set by the Ontario Government as our official poverty measure. Even a full-time worker earning minimum wage for the whole year falls more than $1,000 short of the poverty line.
These figures indicate that basic incomes for all the necessities of life are inadequate and require increases in social assistance and the minimum wage over the next two-three years to enable low income people to live with some measure of health and dignity. Unfortunately, until Government job creation strategies reduce the social assistance caseloads and create better paying jobs, the cost of ending deep poverty will be much higher than $240 million for a housing benefit that will go to somewhere between 15% and 20% of the population in need.
But the cost of income supports to end deep poverty would still be just one-sixth as much as the $4.2 billion in corporate tax cuts that will be fully implemented in Ontario by 2013.
A start on the path to income adequacy for people on social assistance would be a $100 a month Healthy Food Supplement for the almost 600,000 current welfare recipients. For the working poor, minimum wage increases over the next three years could bring the full-time worker above the poverty line.
When a government commits to a strategy that deals with the fundamental issue of basic income inadequacy, then a complementary measure such as a housing benefit could support all individuals and families with higher housing costs that threaten to draw from their household budgets for healthy food and other daily necessities.
Poverty Free Ontario has a clear position on the proper place of a housing benefit within its overall plan to poverty eradication:
It is time to move beyond partial measures that avoid the structural basis for the intolerable levels of poverty in this wealthy province. Only commitment to a serious and comprehensive poverty eradication plan combining immediate action on core income adequacy with specific and concrete steps over the next three to four years will end poverty in Ontario in this decade.
Poverty Free Ontario is an initiative of the Social Planning Network of Ontario (SPNO). The objectives of Poverty Free Ontario are:
Poverty Free Ontario is a non-partisan initiative. Although the election campaign is only a day old, none of the political parties and very few of the electoral candidates running under party banners have given any indication that a commitment to ending poverty within a reasonable timeframe and with a clear and serious plan is a priority issue in this election. None of the published party platforms give any prominence at all to poverty or its elimination.
While Poverty Free Ontario and the SPNO do not endorse or encourage that Ontarians vote for any particular party or candidates, we do urge Ontarians to question all electoral candidates on their commitment to ending poverty and to make their own individual choices about which candidates and political parties they believe will act to end poverty in this province.
That is why the Poverty Free Ontario campaign is getting its message – “Let’s Vote for a Poverty Free Ontario” – up in signs posted on the properties of supportive individuals and organizations in 16 communities across the province. The faith community, recognizing the moral and ethical issues of letting 1,689,000 Ontarians live in poverty, is taking some leadership in getting this message in front of the public in many of these communities: www.faithtoendpoverty.ca.
Elections are critical times for citizens to exercise the democratic option of choosing who will govern them. Everyone is encouraged to participate in the democratic process of debate, discussion and voting. SPNO, a non-profit network of 20 community-based social and community development councils across Ontario, is proud to participate in this democratic process in a non-partisan way through the Poverty Free Ontario initiative.
For further information contact:
Is it going to be about the leader of the governing party winning a third mandate?
Is it going to be about the leader of the opposition party claiming power with a tax-cutting agenda?
Is it going to be about the third party leader riding the momentum of her federal cousins to power or significant gains?
Is the election going to be all about the fortunes of political leaders and their respective parties?
Or, is it going to be about the people of Ontario and the issues that affect their quality of life? Education, health, the environment, jobs, living conditions.
We in the Poverty Free Ontario initiative and representing twenty communities across this province are concerned that 1.7 million children, parents, and individuals in Ontario are living in poverty, the highest poverty rate in the province in the last thirty years.
Only a few short years ago, many of these people never imagined that they would be unemployed, losing their homes, applying for social assistance, and visiting food banks.
What is this election going to be about?
We believe that some part of the election debate must be about the hunger and hardship that so many living in poverty experience daily, weekly, monthly.
And we believe that this discussion must happen during this election not only for their right to live with some measure of health and dignity but also because a poverty-free Ontario would:
What is this election going to be about?
Poverty Free Ontario is not a political party and we will not be running candidates for elected office.
But, we are convinced of the decency and compassion of the Ontario electorate and that Ontarians will support policies that ensure no one is left behind.
If our politicians and parties will not talk about an agenda to end poverty in this province, then we will bring the question to Ontarians directly.
We will display our support for a Poverty Free Ontario in our election signs and campaign pamphlet during the campaign.
We will encourage people to visit www.povertyfreeontario.ca and see how poverty in this province could be eradicated within this decade if our provincial government starts to act now.
We will ask our candidates in local debates, on our doorsteps, and through the media: “If elected what would you and your party do in the next four years to end poverty in Ontario?”
We will give our best efforts to make this election, not about the fortunes of political leaders and parties, but about the health and dignity of an Ontario where everyone belongs and all are included.
That’s what this election should be about.
In 2010, when questioned by supporters of the Put Food in the Budget (PFIB) campaign about where the $100 a month Healthy Food Supplement (HFS) was in the Ontario Government’s agenda, Finance Minister Duncan offered “everything is on the radar but we have to know how to pay for it”.
PFIB supporters and leaders on the Poverty Free Ontario initiative in communities across the province need to be prepared with some arguments about the inevitable questions on how to finance the kinds of proposals for which we are advocating, even though we realize that the basic issue remains the inequitable sharing of the great wealth that exists in this province and country. On March 10, Anglican Bishop Linda Nichols reminded us of that. Speaking at a PFIB public event at Queen’s Park after a meeting with Finance Minister Duncan, Bishop Nichols said:
“We don’t accept the argument that Ontario can’t afford to help the poor. That’s a morally bankrupt position. We live in a wealthy society.”
We know that allowing people to live in poverty costs our healthcare system in Ontario about $2.9 billion annually (OAFB Cost of Poverty Report, 2008), which is about 18% of the 2011 Ontario deficit.
Research at the University of Toronto by Ernie Lightman, Andrew Mitchell and Beth Wilson tells us that a $1,000 increase in annual income to the poorest fifth of households in Ontario will result in 10,000 fewer chronic conditions and 6,600 fewer disability days lost at work every two weeks (Poverty Is Making Us Sick, 2008).
Notably, PFIB’s proposed Healthy Food Supplement (HFS) would provide $1200 in increased annual income to social assistance recipients, which would produce the scale of savings to the healthcare system noted above by the U of T study.
Since Health is one of the Ontario Government’s priorities, the personal as well as the economic benefits should put the HFS on the government’s radar. Since there are almost 600,000 adults currently on social assistance, this would cost about $700 million. This is a very high caseload because of the recent recession and would be expected to come down as the economic recovery helps more recipients leave the system.
It is hard, of course, to convince politicians with arguments of long-term pay-offs when their horizons do not extend beyond the date of the next election. Hard economic times and affordability are used as excuses for inaction, even though there was no political resolve to address the issue when the economy was doing well either.
In good or bad economic conditions, governments always have fiscal options. High tax Nordic countries with the lowest levels of poverty and strong economies have demonstrated that committed and competent governments can work on multiple priorities at the same time. Candidates for elected office in the upcoming provincial election can be challenged to consider the fiscal options that exist to implement measures like the Healthy Food Supplement in the short-term and to end poverty in Ontario in this decade.
The 2009 Ontario Economic and Fiscal Outlook presented by Finance Minister Duncan projected a $4.5 billion cut to corporate income taxes between 2009 and 2013 as a way to make Ontario business more competitive in the North American market.
Actually, we will be more competitive by 2013 than we were in 2009, when our combined federal and provincial tax rates at 33% were already below all rates projected for the USA (39.5%) and the Great Lake States, our main jurisdictional competitors. Last year a KPMG competitiveness study placed Canada second only to Mexico and way ahead of the United States on a list of “tax friendly countries for business” (Toronto Star, May 12, 2010).
The Ontario Government’s objective is to reduce rates by a further $2 billion so that by 2013 the combined federal (also coming down) and provincial corporate tax rates will be 25%, making Ontario’s rate more competitive than even the lowest corporate rate in the US – the State of Texas (36%).
Surely business in Ontario can compete on more than just “price” (e.g. education, skill and quality of workforce, state of public infrastructure like the education and healthcare systems). A “Walmartian” competitive strategy based on the lowest “prices” (i.e. corporate taxes) will only further drain the Treasury to the point that it will erode the competitive advantages that we now have in the quality of our public institutions and services.
Do we really have to have corporate tax rates 15% below the American rate by 2013? Even if Ontario were to forego the $2 billion in this corporate tax cut schedule not yet implemented, we would still be 8% below the American rate – reclaiming about $2.0 billion or so to be available for important measures like increasing social assistance so that people in deep poverty can live with some measure of health and dignity.
Cutting taxes for individuals and family households also, of course, promises to be a major part of the upcoming provincial election campaign, and, it appears, that the three major parties will do battle on “taxpayer pocketbook” issues.
While we can point to the opportunity cost to reducing and ending poverty of foregoing corporate tax revenue, it is important to point out that personal income tax cuts also have their social costs. The reduction of the cut in the provincial tax rate from 6.05% in 2009 to 5.05% in 2010 on the first $37,100 of individual earnings cost the Ontario Treasury about $1.3 billion. This is a socially inefficient use of scarce fiscal resources. Persons with taxable incomes of $37,100 or more each get $370 in tax savings ($740 in households of many wealthy and advantaged couples). In contrast, people on social assistance get nothing. A single working poor parent with a taxable income of $15,000 gets a more limited saving of $150.
This distribution of tax benefits is socially regressive and unrelated to need. It is a poor use of $1.3 billion in tax revenue, when a Healthy Food Supplement would cost half as much, be directed to those most in need, and provide immediate benefit to local economies in communities across Ontario.
An economist has calculated for the PFIB campaign that it would cost the average Ontario taxpayer $100 a year to fund the HFS – i.e. provide every adult on social assistance with $1200 more annually. While there is political resistance to this investment in the health and well-being of the poorest part of the province’s population, there is no hesitancy to give tax credits to the broad middle class and to broadcast the action. In 2010, a half-page ad in the Globe and Mail proudly informed middle class families making a household income of $125,000 a year that they will be receiving a $790 tax credit in the form of a rebate because of the introduction of the Harmonized Sales Tax.
Even allowing for some level of tax credit related to the HST change, one wonders if middle class families with household incomes well over $125,000 would be terribly averse to getting only $690 of that rebate if they knew that it would support 579,000 people on social assistance to live with more health and dignity. This might even be more compelling to the taxpaying public if it understood the cost savings to the overall healthcare system that a reduced personal tax credit would bring.
But, the Government does not choose to advertise or promote that kind of understanding to the wider public. Rather, it chooses to maximize the benefit of the tax cut to the broad middle class for its own political advantage and there is no contrary evidence that a Government of another political stripe would have acted differently.
The Full-Day Early Learning Program launched last year fit the Ontario Government’s clearly expressed Education priority. In announcing the implementation of this program at a cost of $1.5 billion over three years, the Government gave no indication that it had made any special provision to pay for it.
Therefore, it must be factored into the Government’s deficit financing – that is, the program’s cost is being covered as part of the Government’s deficit management over the next three to five years. The Government is prepared to let this program add to its deficit and extend its deficit reduction period because it believes that Education is an important priority with returns far down the road in terms of the benefits of early stimulation and learning for child development. It might take a little longer to return to a balanced budget, but the benefits to Ontarians are considered worth the delay.
Similarly, the Government could decide to take the same approach with the HFS or any measure to end poverty in Ontario. It could even legitimately argue that an investment in poverty elimination is one way that it is adhering to its Health priority. As pointed out earlier, in the case of the HFS this is practically “self-financing” over time, given the clear relationship between poverty and costs to healthcare system.
The preceding arguments for financing the Healthy Food Supplement and other needed measures to end poverty in Ontario are compelling. We are under no illusions, however, that they will be readily accepted by the political parties and candidates running for office this October. Even the 21 sitting MPPs who completed the Do the Math survey last year and acknowledged on average that the cost of basic monthly living necessities for adults on social assistance were more than $750 higher than what they received on Ontario Works have taken no serious action to promote the HFS in their caucuses.
Paying for the HFS is not an issue of not having the means or fiscal options to act – it is an issue of the political will to include Ontario’s most vulnerable within a government’s expressed policy priorities.
The alarms are sounding, however, and not from the usual sources. Just this week, the Conference Board of Canada alerted the business community and the public to the growing inequality in our nation (How Canada Performs: Is Canada becoming more unequal? http://www.conferenceboard.ca/hcp/hot-topics/canInequality.aspx ). The gap between the lower and middle income groups and the highest income groups has grown significantly over the last 20 years. The Report shows that government tax and transfer programs have had an important effect in reducing income inequality, but these programs have been seriously eroded since the mid-1990s, leading to higher levels of inequality.
Poverty is a collective issue demanding the concerted effort of all governments. The Provincial Government is responsible for social assistance and labour market policy. Poverty Free Ontario has proposed measures in these areas that would end deep poverty in the province (i.e. 80% or lower of LIM-AT) and bring the general poverty rate down to levels comparable to the historically lowest poverty jurisdictions in the western world (4% or lower). We contend that there are viable fiscal options to finance this collective commitment as outlined in this Bulletin.