October 31, 2000
The federal elections were called over a week ago. It is our hope that this will be an occasion for a major public debate on social issues, and on the relative priority to be given to new social investments. It's in this context that the CCSD has drafted a short commentary entitled Time to Debate Social Canada.
We hope that this piece will be useful to you in participating in the debate that should be taking place right now. Canadians should be prompting the candidates to talk about what their respective parties intend to do on the social policy front, and we should be urging the media to give this proper coverage in the coming weeks.
In 1993, former Prime Minister Kim Campbell argued that elections are no time to talk about social policy, a blunder for which she paid a hefty price. It turned out that Canadians do indeed think elections should provide an opportunity to debate our collective social future.
This time around, competing social visions are not hard to find. But we must push the parties to be much more concrete about how they plan to turn their rather abstract visions of fairness and equal opportunity into reality.
Canada faces two particularly serious social challenges: poverty and mounting income inequality.
Evidence is mounting that, despite the strong recovery, a significant minority of Canadians, a potential underclass of about 1 in 10 working age households, are being left behind in deep and continuing poverty. Their ranks disproportionately include single parent families, some recent immigrants, persons with disabilities and aboriginal Canadians. Largely excluded from the job market because of family circumstances, disability, lack of skills or the 'welfare wall' created by low wages, they have been hard hit by recent provincial social assistance cuts.
The near poor, about 2 in 10 households, have benefited from recent job gains. But far too many of these new jobs pay low wages, provide few benefits, and are insecure in a world of considerably reduced access to EI benefits. The working poor and their families tend to cycle in and out of poverty as they move between low benefits when out of work and low employment incomes.
For the relatively secure middle-class, accounting for a good half of households, recovery has brought greater job security and a lower risk of unemployment. But most are still struggling to secure significant real income gains.
The most recent Statistics Canada data show that, in the recovery period from 1993 through 1998, the share of total after tax income received by the top 20% of families has grown (from 37.2% to 38.8% of the total) at the expense of the bottom 80%. The higher up the income scale one goes, the higher has been the percentage gain in income. This trend, which is unusual in a recovery, has been driven by an increasingly unequal distribution of earnings, combined with cuts to income support programs.
High unemployment through the 1980s into the mid 1990s resulted in a remarkably low increase in after tax inequality, as the employed paid high and rising taxes partly to support redistributive EI and welfare benefits. In this context, some politicians painted the poor as lazy and shiftless authors of their own fate, and tapped deeply into a growing vein of middle-class resentment. From the mid 1990s, provinces such as Ontario and Alberta delivered tax cuts tilted to the relatively affluent at the expense of social assistance benefits and public services, and the federal government made major reductions to EI.
In imposing these transfer cuts, governments often invoked values which are shared by most Canadians, most notably the dignity of work. Advocates of a strong social safety net rightly defended legitimate rights to income support for the unemployed and unemployable, but perhaps insufficiently emphasized the central importance of decent paid work, above all to those who do not have it.
The starting point for social policy today should be how to create real ladders of opportunity to good jobs, while recognizing the need for adequate support for those who cannot work.
What governments have largely failed to do to date is make the significant social investments which are needed to create real ladders out of poverty: affordable child care for single parents; continuation of health and housing benefits as people move from welfare to work; supports and services for persons with disabilities; and genuine training opportunities as opposed to punitive workfare.
The first-term Liberal fight against the deficit and the dynamics of the federal-provincial social policy process saw the end of a national framework for social assistance, and a general federal government withdrawal from training and housing programs. These policy areas have been left to the provinces, with predictable patchwork results and far too little overall progress.
That said, an important start in some of these areas was made over the course of the most recent federal government mandate. Provincial supports and services for lower income families with children have been advanced under the terms of the Child Tax Benefit, and through the recently announced Early Childhood Development Agreement. Federal transfers to the provinces are now growing.
Most social advocates would like to see much greater federal support for child care and early childhood education, affordable housing, training, and supports for persons with disabilities.
The key question we should be debating is to what extent the surplus will be used to finance new initiatives and support the provinces in these areas. The provinces which really want to move forward on a positive social agenda will support, if real, a strong commitment from the part of the federal government for the children, the low income families and the handicapped. The real choice is not between centralization and decentralization, but between constructive co-operation and inaction on the part of the federal government.
The second major social policy challenge is how to deal with growing earnings inequality and the low wages of the working poor. Unfortunately, far too many of the most enthusiastic advocates of the virtues of work have failed to propose measures to ensure that jobs pay a reasonable wage, or to equalize very unequal outcomes and opportunities in the job market.
The introduction of the Canada Child Tax Benefit (CCTB) has been something of a breakthrough, recognizing that, in today's job market, work in and of itself will not end low income for families. A significant cash supplement is now provided to the market incomes of low and middle income families. But this is just a starting point.
Social advocates would like to see a maximum CCTB which would meet the actual costs of raising children, phased out slowly with rising income so as to provide significant benefits to middle income families. As importantly, now is the time to discuss income support for other groups at high risk of low income and of falling behind. Enhanced GST credits are needed for low income single households, and we should be seriously debating a refundable tax credit for persons with disabilities.
This kind of agenda boils down to delivering tax relief much more in the form of targeted support for those in need, as opposed to broad cuts for the reasonably affluent.
The prevailing wisdom of the day seems to be that across the board tax cuts should take precedence over social investment as part of a needed 'growth agenda'. But we should not forget that low income and growing inequality carry a major economic price.
Studies show a direct link from social conditions to better health and better education and skills outcomes. There is a very strong argument that more equal societies, not winner-take-all societies, provide the best conditions for the growth of a 'knowledge-based' economy.
Our politicians should be pressed to confront the evidence of growing inequality, and to tell us what they intend to do about it.