Social assistance requires overhaul

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The Article

Liberals and socialists like to think of themselves as compassionate champions of the poor and the needy, yet over the past 20 years, they have introduced policies that serve only to aggravate and perpetuate the evils of poverty.

Consider, for example, the historical record in Ontario. Between 1986 and 1995, first the Liberal government of David Peterson and then the NDP government of Bob Rae attempted to alleviate poverty by increasing welfare benefits. Results were disastrous.

John Richards, a professor in the graduate public policy program at Simon Fraser, points out in a commentary published by the C. D. Howe Institute that in the 10 years ending in 1995, the percentage of the Ontario population drawing social assistance benefits more than doubled. With a peak of close to 13 per cent of the population relying on the dole in 1994, Ontario had the highest level of welfare dependency in the country.

Meanwhile, in Alberta, Ralph Klein’s newly elected Conservative government proceeded to slash welfare benefits and restrict access to the program by persons deemed to be employable. The results were no less dramatic than in Ontario: By 1998, the percentage of the Alberta population relying on welfare had dropped 4.1 percentage points to barely three per cent, the lowest in the country.

In 1996, the Ontario Progressive Conservative government of former premier Mike Harris followed the Alberta lead, by also cutting benefits and reducing eligibility for employable adults. Within five years, the proportion of welfare dependents among the Ontario population had dropped more than seven percentage points to less than six per cent.

By comparing changes in welfare dependency in Alberta and Manitoba, whose policies have remained quite steady the past 20 years, Richards has demonstrated that the Klein reforms had a significant impact in reducing welfare dependency. The impact of the Harris reforms is more difficult to determine because they came just two years before the Liberal government of Jean Chretien introduced the national child benefit, which has also made welfare dependency less attractive by increasing the incomes of low-income adults who have children and are gainfully employed.

One point is clear: Richards has demonstrated that by acting together to reduce welfare benefits in relation to the after-tax income of workers in low-paying jobs over the past 10 years, the federal and provincial governments have persuaded many potentially employable welfare recipients to move off the dole and into the paid labour force.

Furthermore, as a result of lower rates of welfare dependency and higher rates of employment, there has been a sharp drop in poverty across Canada. Using Statistics Canada’s low-income cutoffs as a poverty measure, Richards notes that the poverty rate for all Canadians declined to 11 per cent in 2005, down from 16 per cent in 1996.

Richards has had a checkered career. As an NDP member of the Saskatchewan legislature and proponent of the radical Waffle movement in the 1970s, he was one of Canada’s leading left-wing ideologues. Today, as a student of public policy, he has come to understand the perverse consequences of the well-meant anti-poverty policies he used to advocate.

Many Liberals and New Democrats remain wedded to the failed policies of the past. For example, the Toronto Task Force on Modernizing Income Security for Working-Age Adults has called upon Ottawa to introduce a negative income tax for low-income adults at an estimated annual cost of $7 billion. As Richards points out, this policy would once again reduce work incentives, increase welfare dependency and foster higher, not lower, poverty rates among employable, low-income adults.

Granted, more should be done for the poorest of the poor in Canada. Richards cites six priorities, including increased assistance for persons with a severe mental illness. Over the past 30 years, successive Liberal, Conservative and NDP governments have kicked most of these patients out of mental hospitals, leaving them to fend for themselves in the streets.

That’s shameful. It’s the alleviation of this kind of real poverty that should rank among the top priorities for every federal and provincial government in Canada.

Rory Leishman
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