Open Letter to the Prime Minister

January 16, 2001

The Right Honourable Jean Chrétien
Langevin Block
80 Wellington Street
Ottawa, ON
K1A 0A6

Dear Prime Minister,

I write on behalf of the CCSD, one of Canada's leading social policy research and advocacy organizations.

I would like to start by praising the federal government for its intention to review the income security system with the aim of making it more effective in terms of eradicating poverty, particularly for children. We applaud the idea of a comprehensive review, and would expect to actively participate. The CCSD has a strong record of research and advocacy on poverty issues, and has close links to the social policy, voluntary sector and social services communities across the country which would like to be engaged in such a process.

In this letter, I should like to offer some preliminary thoughts on what are the key gaps in the Canadian income security system and how they might be addressed.

In 1997, it would have taken about $20 Billion or roughly 2% of national income to raise the total incomes of the poor in Canada above the poverty line (defined by the pre tax LICO measure), of which the great majority ($18 Billion) represented a shortfall in the incomes of the non elderly. This is, of course, a substantial number, but 'eradicating poverty' would not be such an expensive undertaking as is often assumed.

The poverty gap has likely shrunk significantly since 1997 as unemployment has fallen and as low income persons have found more weeks of work in the year. As and when the working poor gain access to better jobs, they will receive higher incomes, pay more in taxes, and draw less on social programs such as EI and social assistance.

The CCSD shares the view of the government that good economic policy to create more and better jobs is fundamental to good social policy, and can greatly reduce the amount of social expenditure needed to 'eradicate poverty.' However, there are grounds for concern that the growth of precarious and low pay jobs in the 1990s may have undercut to some degree the traditional connection between an economic recovery and poverty reduction. We need to continue to reduce unemployment, and take measures such as increasing minimum wages to reduce the incidence of low pay.

Economic and social policy have to work hand in hand. It is important to emphasize that income security and social policy should not be driven by labour market policy alone. Even in a high employment economy, there will remain individuals and groups within the working age population who are highly vulnerable to poverty, and whose incomes either need to be met from social programs, or to be supplemented by social programs.

The high risk groups are those who have the greatest difficulty gaining access to decent jobs - aboriginal people, persons with disabilities, single parents with children, and a more varied group with low or unrecognized skills which includes some recent immigrants, youth who have dropped out of school, and some older workers. These groups are vulnerable because of partial exclusion from good jobs, combined with major gaps in our social programs. Those in marginal jobs often do not qualify for EI, and tend to cycle back and forth between social assistance and low paid jobs. Canada risks seeing a growing underclass of Canadians who simply appear to be redundant to the working of the Canadian economy.

Social assistance is a long-term trap for many. Single parents with children often find that a low pay job does not provide sufficient resources to maintain a family, particularly in the absence of affordable, high quality child care. Persons with disabilities face major barriers in terms of accessing employment, as do recent immigrants. Supports and services could make a major difference, but, even if available, the problem of low pay in too many jobs remains a key cause of poverty. The poor are either inside or outside the social assistance system, and few programs exist to supplement the incomes of the long-term working poor.

What we need above all in Canada are programs which recognize that some individuals and groups will be unable to gain an adequate income from the labour market alone, and deserve support as they access job opportunities and make a productive contribution to society.

To be sure, recent and pending increases in the Canada Child Tax Benefit will make a major difference for working poor families with children, complementing the major role that the federal government already plays in reducing poverty among the elderly. In our view, CCTB benefits should be considerably increased to a maximum of more than $4000 per child, and the provinces should pass on the full benefit to families in receipt of social assistance.

While an important improvement has been made to child benefits, no major federal or provincial programs exist to supplement the incomes of the disabled and the single working poor, who are vulnerable to deep poverty because of recurrent labour market problems combined with the inadequate and residual nature of provincial social assistance programs.

There are three fundamental problems with social assistance programs across Canada. First, they provide very low cash incomes compared to the poverty line, as regularly and extensively documented by the National Council of Welfare. Second, social assistance eligibility is usually only gained once resources have been exhausted, and programs can be deeply humiliating and stigmatizing to recipients. Third, programs offer inadequate supports and services such as child care and training and disability supports to help recipients move into jobs, and few, if any, benefits continue with the transition into employment. These generalizations are valid, though it must be acknowledged that there are significant differences between provinces.

Prior to the 1994 Budget and the introduction of the CHST, the federal government was a full partner in social assistance and associated social programs through the mechanism of the Canada Assistance Plan which offset half of provincial costs. This program set some very loose national standards for income support, and provided financial support for the expansion of both income and services.

In our view, a minimal objective of income security reform would be to increase social assistance incomes and services through increased federal transfers to the provinces, combined with some shared development of national standards. This could and should be complemented by federal tax initiatives which parallel the approach of the CCTB, providing income supplements directly to working poor and modest income households. The CCSD has strongly supported increases in existing federal tax credits (the CCTB and GST credits), and creating a new refundable tax credit for persons with disabilities. Active consideration could also be given to an Earned Income Tax Credit to supplement the incomes of non elderly single Canadians who work but fall under the poverty line.

These are only some of the issues that need to be looked at and avenues that should be explored. The CCSD looks forward to the opportunity to discuss economic security reform with the federal government in the coming weeks and months. Should you have any questions, please do not hesitate to contact our Executive Director, Mr. Marcel Lauzière at the CCSD office.

Yours sincerely,

Hector Ouellet

Hon. Jane Stewart
Hon. Paul Martin
Edward Goldenberg
Paul Genest
Claire Morris
Kevin Lynch


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