Human Resources Committee on April 28th, 2009

[Dennis Howlett, Coordinator, Make Poverty History]

Thank you very much for this opportunity to share in the important work you're doing at this committee.

I want to start by saying how much we appreciate that this committee has taken up this study. We wish you all the best.

There are more than one billion people who live on less than a dollar a day, and half of the world's population are living on less than two dollars a day. There are more than three million Canadians living in poverty. Depending on what measure you use, between 10.5% and 11.9% of Canadians are poor. One in four first nations children live in poverty, and the unemployment rate in first nations communities is four times the national average.

It doesn't have to be this way. Collectively we now have the resources, the technology, and the knowledge necessary to end poverty, both globally and here at home. We need a plan to make poverty history, both globally and in Canada--and for aboriginal peoples.

There is a global plan to reduce extreme poverty, by the year 2015, by half. It's called the “millennium development goals”.

Where there are democratic governments in place that have made this a priority, where debts have been cancelled, and where efficient aid is available, progress is being made. Even though it is now being threatened by the global economic crisis and by climate change, and we're in danger of reversing that progress, the evidence is there that implementing a plan where you have goals and timetables can work.

I believe success in domestic poverty reduction also requires that we have a plan with a legislated mandate, targets, and timetables. That is why from the time of its inception in 2005, the Make Poverty History campaign in Canada has been calling for the federal government to involve groups where poverty is predominant, such as aboriginal people, women, minorities, and youth, in the design and implementation of a domestic poverty reduction strategy.

The governments of Quebec, Newfoundland and Labrador, Ontario, and most recently Nova Scotia, which represent a whole range of political parties and ideologies, have taken the lead in developing comprehensive poverty reduction strategies. Significant progress in reducing poverty is already evident in Quebec and Newfoundland.

Provincial governments do not have jurisdiction over all the policy tools required to reduce and eventually eradicate poverty. That is why governments, at all levels, including federal, provincial, territorial, municipal, and aboriginal, need to be engaged. But leadership from the federal government is needed to engage all levels of government in the development of a comprehensive poverty reduction strategy for all of Canada.

Poverty reduction strategies need to include a wide range of social and economic policies, including community economic development and job creation strategies, education and training programs, tax policies, as well as improvements to social programs. The point is that it's not just social programs or welfare; a whole range of measures are necessary.

Some of the things the federal government can do include raising the child tax benefit to $5,100 per child; implementing a national housing strategy; implementing a national child care and early childhood education program; improving the employment insurance program, which is very urgent--and Armine will say more about that in a minute; reinstating a federal minimum wage and setting it at an above-the-poverty-line level; ensuring a greater role for non-profit organizations, social enterprises, and cooperatives in economic development and job creation; creating a national pharmacare plan; implementing the Kelowna accord or a comparable plan to narrow the living gap between aboriginal people and the rest of Canada; increasing the guaranteed income supplement; and creating a poverty reduction fund to support provincial initiatives.

Investment in poverty reduction and supporting participation in the labour market through positive incentives will yield many economic and social benefits, including boosting productivity, improving population health, lowering the costs of health care, reducing crime and the costs of incarceration, and boosting the labour market supply to help address the labour shortages that could arise down the road as a result of an aging workforce.

Finally, I want to say a few things about the tax system and what it can and cannot do in terms of helping to make poverty history.

While there are some tax measures that can be a useful part of a poverty reduction strategy, tax measures on their own are not a very effective way of achieving poverty reduction. Tax measures can be a component. Some good examples would be the working income tax benefit, which has been in the last couple of budgets. That's a good thing, but a word of caution: it doesn't fully deal with the cost of moving off welfare and taking a job in the low-income sector. It would be much better to also have a national pharmacare plan, because that's one of the major barriers to people moving off welfare, especially people who need prescription drugs. The Newfoundland government, for example, invested in a pharmacare plan as a way to reduce the barriers for people moving off welfare. Ultimately, they have lowered their costs because they have fewer people left on welfare. So that's a smart strategy.

Similarly, if we don't have an above-the-poverty-line minimum wage, a working income tax benefit can actually just subsidize inadequate levels of income.

Tax measures need to be designed very carefully if they are to contribute to poverty reduction goals. A good case in point is the difference between the child tax benefit and the child tax credit. The child tax credit, announced in the 2007 budget, while providing a modest benefit to families with children who had taxable income, did absolutely nothing for the poorest children whose families have no taxable income at all. It will cost about $1.5 billion a year when fully implemented. It would have been far better to have applied this funding to improving the Canada child tax benefit and the national child benefit supplement, which do provide assistance to a broad range of families. But it provides more benefit to those in greatest need, including those with no taxable income.

I just want to add to that. Did you know that if you experienced poverty as a child, even if later in life you escape poverty, that is more of a predictor of heart disease than whether you smoke or not? Child poverty is an urgent need to really address that scourge, because it has long-term implications.

Finally, I would conclude that tax cuts are generally not a good way to reduce poverty because often tax cuts are unfair. Much more of the benefits of tax cuts in the last few years have gone to the rich. In fact, in the 2006 budget the tax cuts were 12 times as much of a benefit for families with an income of over $100,000 a year than for those with an income of $15,000 a year.

Tax cuts are also often ineffective. Not many child care spaces were created as a result of the child care spaces initiative in the 2006 budget, and RESPs and RRSPs do not work so well in terms of the goal if the goal is to make education more accessible or reduce seniors' poverty.

Finally, tax cuts reduce the options by reducing the amount of money the government has available to invest in social programs and economic stimulation programs that would have a more direct and effective result.

Thank you very much.

[The Vice-Chair, Liberal, Raymonde Folco]

Thank you very much, Mr. Howlett, for keeping to your time schedule.

I'll ask Madame Yalnizyan now to present her paper.

[Armine Yalnizyan, Senior Economist, Canadian Centre for Policy Alternatives]

Thank you, Madam Chair. It is a pleasure for me to be here today. I'm going to speak in English.

I want to say that if I were giving this presentation to your committee six months or a year ago, it would be categorically a different tone from the one I want to use today. I can scarcely underscore enough the urgency with which you meet today to do something about poverty prevention.

You're here to discuss poverty reduction strategies. I want to salute the Member of Parliament from the Soo, Tony Martin, as well as Mike Savage. I want to salute Senator Segal, who has addressed himself to this topic, and the leader of the Bloc Québécois, who has been unremitting in his discussion of the need to fix the unemployment insurance system in this country to be able to prevent massive poverty. And I would like to salute the Senate committees that have talked about rural poverty, urban poverty, poverty among the aged, as well as poverty as a social determinant of health.

The Parliament of Canada has been doing much work to discuss the importance of poverty in the run-up to the recession. Today, you have to actually roll up your sleeves and provide leadership on how we do something about it, not simply talk about it any more.

Let me tell you why I think this is so important. We have said now for over 15 years in this country, maybe 20 years, that the best social policy in this country is a job. What happens when the jobs dry up? Tomorrow we will be releasing through the Canadian Centre for Policy Alternatives a report that shows that this recession is the deepest of any recession that has hit us since the 1930s. The job losses in the opening months of this recession outstrip anything we saw in the 1981-1982 recession or the 1990-1991 recession. We are also more exposed as Canadians to high levels of household debt, which are higher than at any point on record, rates of savings that look more like the late 1930s than anything we've seen since, and an unemployment insurance system that is so stripped back it looks like the 1940s.

We are completely unprepared to deal with the magnum force of what is going to happen in terms of the job losses coming down the pike. Today's unemployment insurance numbers show that the number of claims that were put forward in front of the EI commission this month are the highest at any time since the system was stripped back. We had, I believe, 325,000 claims this month. We haven't seen anything like it since we changed the EI system, with the last round of changes being in 1996.

I want to say that those jobs that are being lost in the hundreds of thousands—and will continue to accelerate in the coming months if this recession is anything like what we've seen previously—will add the nouveau poor to the déja poor.

You know as well as I do that how you count poverty determines how many people you can say are poor. Pick a measure, any measure. The most common measure is the low-income cut-off. Using that measure, we have about 3.5 million Canadians who fall under the low-income cut-off. Regrettably, this now starts to include the working poor, after a ten-year blockbuster juggernaut of job creation in Canada, Canada having outpaced every other G-7 nation in terms of job creation in the last decade. So that has not managed to actually eliminate poverty, though poverty has been cut dramatically in the last ten years.

I want to say that Canadians need your help and need it quickly. There are 300 or so parliamentarians in the House of Commons. Only you can change the unemployment insurance system to help protect Canadians in the event of job loss. What we have right now is six out of ten unemployed Canadians who have no access to jobless benefits. In the last recession, it was only two out of ten Canadians.

I don't know what kinds of things have to happen to people in terms of running through their savings, selling what assets they have, and looking for cheaper places to live, which is in very short supply, unless you're prepared to act. We are looking at a massive wave of economic dislocation, a disaster in the making that is utterly preventable.

I hope I have made with some force my sense of urgency that you consider very seriously, as part of poverty prevention, things that you could do today, things that do not require an act, do not require long-term thinking but can prevent poverty today, so that when you do get around to doing something about poverty reduction, you're not starting from a higher level of poverty.

If the government's number one job is anything in a time of recession, it is to stop the decline. That is something that absolutely you can do. The government has acted with great haste to back up the banks, by providing $125 billion for the banks and CMHC to protect mortgages.

There are also 32% of Canadians who live in rental housing, and when they lose their jobs, they are just as likely to lose where they live. We need to be thinking very seriously about what we can do on the housing side as well, in this recession, to prevent, as I say, an unnecessary and utterly preventable wave of economic dislocation, the likes of which we will not have seen since the 1930s.

We are here to discuss poverty reduction. I'm an economist, and I want to raise a point about the costs of poverty should you do nothing. The Ontario Association of Food Banks put out a document that was co-authored in part with contributions from Don Drummond, the chief economist from the Toronto Dominion Bank. That document showed that the poverty-related cost in Ontario alone for health care costs strictly connected to the treatment of poor people was $2.9 billion. Lost production in the province of Ontario was between 5.5% and 6.5% of GDP because of poverty, which amounts to $25 billion to $30 billion, and lost revenues to both the federal and the provincial public purse were in the order of $4 billion to $6 billion. So you see, there is a real cost to not addressing poverty. Forget about the human costs; there is a macro cost to it.

We are an aging society, and I think it is to our great shame that of all the demographics in this country, of all the rates of poverty, the rate of child poverty is the highest. I have to say that we in Canada have made the most progress, not only in the last decade but in the last several decades, on reducing the poverty among those over the age of 65. Child poverty remains stubbornly high. In 1989 there was a unanimous declaration by parliamentarians in this place to say that child poverty was an affront in a nation that is as rich as Canada. Canada, by the way, is still the ninth-largest economy on the surface of the planet, with a fraction of the population. We are an aging population, and we can ill afford to dismiss 11% of the children who will be supporting us, in this room, in 15 to 20 years' time.

It is time to deal with child poverty. And I just want to say that when you look at poverty rates across Canada, using the measure I'm using consistently--the low-income cut-off of Statistics Canada--you will see great variation among jurisdictions, and you will see great variation among jurisdictions for different demographic groups.

It has already been mentioned that the greatest progress in reducing poverty in this country has been in Quebec and Newfoundland and Labrador. That happened for child poverty. Quebec reduced child poverty by 22.4%, down to 9.7%, in the space of ten years. That's pretty impressive. In Newfoundland and Labrador an 18.2% rate of child poverty went down to 9.3%. Newfoundland and Labrador has a seniors' rate of poverty of 2.3%. Quebec, which has seen such a dramatic rate of decline in seniors' poverty, has a 9.3% rate of poverty among seniors. There's huge variation from jurisdiction to jurisdiction, which tells us that poverty reduction is not just contingent on an economy, because if you're reducing child poverty or senior poverty it's not because the best social policy is a job. We're doing something, other than requiring people to work, to reduce poverty.

The second thing that I have to say is that it's not contingent on economic growth, because some of these jurisdictions achieved very strong rates of economic growth and others did not. So there is something to be said about the “yes, we can” principle. Yes, we can reduce poverty--but will we?

I have left with the clerk of the committee our stimulus package, which the Canadian Centre for Policy Alternatives helps co-author. Every year we do an alternative federal budget, which is a coalition process. This year, in early January, we floated a stimulus package. A number of measures were adopted by the Conservative government, and there's still room to move to prevent further poverty and to actually stimulate the economy, which will have to happen in the coming months.

I want to say that in the three-week period from late September to mid-October, the Canadian Centre for Policy Alternatives contracted with Environics to do a national poll of what people's perception of poverty was and how you could reduce poverty. This is precisely the time when we were having a federal election and when the economic storm was hitting North America and the world. In the midst of this recession, across the country from coast to coast, irrespective of political stripe, 77% of Canadians said the recession is the best time to deal with poverty-reduction measures. This is exactly the time at which we all have the same risk in common.

In the 1930s, what propelled us out of that was “there but for the grace of God go I”. We need protections for us all. We need social insurance for us all. That gave rise to the unemployment insurance system in the first place.

Today we see we are in a similar position. So I ask you, please, there is no time to waste and there is broad consensus on how we can change EI reform and how we can protect Canadians in the eye of the economic storm. This disaster in the making is utterly avoidable, and we call on you, our elected representatives, to make the difference for all of us.

Thank you.

[The Vice-Chair, Liberal, Raymonde Folco]

Thank you, Madame Yalnizyan, for this very impassioned but also very logical and very serious presentation.

Thank you to all of you.

We'll now go to the questions. For the Liberal side, I'll start with Madame Minna, and you have seven minutes, question and answer together.

Madame Minna.

[Maria Minna, Liberal, Beaches—East York, ON]

Thank you very much, Madam Chair.

And thank you, all of you, for your presentations, and those eloquent words.

I've said before that part of my frustration is of course that I've been around this block, as many of us have been. We've discussed this issue, and Madame Yalnizyan and I have had long discussions with respect to women and poverty and so on. I agree with everything that's been said. I think if we sat down with the solutions, we'd probably agree on all of them.

Given the emergency and the situation we're living with right now, we obviously need to establish a national anti-poverty strategy. There's no question of that in my mind, so that's a given. So the only question I have right now is, as we're in the process of doing that, what would be the immediate things we could be doing to address some of the issues immediately, like today and tomorrow?

EI comes to mind for me as one, and the increasing of the child tax benefit is the other that could be done immediately. I'm sure you have others. Could you maybe put some of those on the table? Some of us might start pushing and working for those immediate things. Two of them I've mentioned. You may have a couple of others we could do as we then develop and restructure the whole of it.

That's my only question, because I have no disagreement with any of what was said. And then I have a whole lot I could add to that as well.

[Kelly Law]

I'll just briefly start off the answer to this question and then my colleague Dr. John Courtneidge will finish off.

We strongly believe that an immediate solution to this could be the creation of a poverty commissioner, followed by the creation of a poverty-focused office with staff who focus on the issue of looking towards a poverty reduction strategy. This is something that won't take any time. It is an immediate solution. It can be for a short term.

John, I'll turn it over to you to carry on.

[Dr. John Courtneidge]

I think Ms. Minna wants to respond.

[Maria Minna, Liberal, Beaches—East York, ON]

Yes, I'm sorry. I've had ideas with respect to a commissioner, and I know that would take time.

In addition to that, which would help us establish a strategy, I'm looking for immediate measures that we could take to address some of the urgent issues and then start working on a strategy as well. We need to do a two-track thing at this point, given the situation we're living with.

[Dr. John Courtneidge]

Yes, indeed, and the first quick point that we can do is to understand how the problem occurs and look at the five-mechanism model for poverty: theft, rent, interest, profit, and unequal pay for work. And then recognize that Canadians, people worldwide, need an as-of-right base income.

This committee could well re-examine its involvement in the Mincome initiative in Manitoba in the 1970s.

I was at the Gow lecture that Hugh Segal gave on Friday evening. You will know that he is a passionate supporter of--in his terminology--a negative income tax or a guaranteed annual income. For me, it's assistance income. The reason I say this is that I am now a Canadian citizen, as of February, so I have two nationalities, two citizenships. And if we want Canadians to be active citizens in their own jurisdiction, we need to give them the resources. And a citizen's income would be the way to do that. So within 12 months I hope this committee will constitute a panel and hear on that.

I also have in front of me a petition that has been signed by 300 people online, and this combines the notion that we should refresh all of the income supplement programs for working-age adults--EI and so on--as well as introducing this citizen's income or guaranteed annual income idea.

[Maria Minna, Liberal, Beaches—East York, ON]

And the others?

[Dr. John Courtneidge]

I could provide this if you wish.

[Dennis Howlett]

In terms of the measures that could be taken right away, I would say that in addition to employment insurance, which is the top priority, and raising the child tax benefit--and again, the system is already in place, so it really doesn't take much to raise it, and it would deliver the assistance to those who need it most--the other one would be a national housing strategy.

There was the beginning of that; I think we must give credit to the last budget. There was money for retrofitting a lot of the stock of social housing, but not very much at all for building new affordable housing. That needs to be improved, and we need money for building new affordable housing as well. This is something that the federal government can play a role in and help to make it possible.

[Maria Minna, Liberal, Beaches—East York, ON]

Could we, in the short term, subsidize individuals as opposed to units? It will take time--

[Dennis Howlett]

I'm concerned that there is a real shortage of available affordable housing, so just subsidizing it may not be good enough.

[Maria Minna, Liberal, Beaches—East York, ON]

We need both, but I'm saying in the interim, to make sure there is more--

[Dennis Howlett]

Yes.

[Maria Minna, Liberal, Beaches—East York, ON]

Okay. Sorry.

Ms. Yalnizyan.

[Armine Yalnizyan]

I would like to just reinforce that there are specific things we can do. There is wide consensus that to have a uniform entrance rate of 360 hours across the country would let a lot more people in from the storm. Similarly, benefit levels are quite low at 55%. As the report that I'm releasing tomorrow will show, a large number of women cannot live on 55% of their earnings.

In the past we have had variable levels of benefits. We started off the UI program in 1942 with seven different categories of benefit receipts, from as low as 33% to as high as 75%, and with rates for dependants. We can fix the EI system to support families that have dependants so that they are not in poverty at 55% of whatever their previous rate of earnings was.

Similarly, Dennis has spoken of some of the measures in the last budget to support housing. The budget also announced that housing would be receiving $1.1 billion in the spreads between what the banks held as mortgages and what could be saved with the lower interest rate that the federal government offered.

The stimulus package that we put forward said we should use all of that money, $1.1 billion, and help cities across this country buy affordable housing stock. There is a glut of condos that are not moving. The prices are just going to fall for the condo developers, and they are in the hottest markets across the country, where just a few months ago there was a real hue and cry for affordable housing.

The Prime Minister himself said that there are deals to be had in this recession and, indeed, this is the time to purchase a stock of already built affordable housing with the money that we are getting in helping the banks.

[The Vice-Chair, Liberal, Raymonde Folco]

Thank you.

Madame Beaudin.

[Josée Beaudin, Bloc, Saint-Lambert, QC]

Thank you very much, Madam Chair.

Good morning and welcome to all of you. What you say is absolutely extraordinary. I can also understand your impatience in wanting an anti-poverty plan. You're right: fighting poverty is economically more cost-effective than trying to resolve its devastating effects on our society. I come from Quebec, which has had a framework law for this purpose since 2002. We're seeing its positive effects on measures.

Ms. Yalnizyan, you said there were differences, gaps between the provinces. What could the federal government's contribution be, in view of those gaps between the provinces?

[Armine Yalnizyan]

Thank you, Mr. Beaudin. I forwarded to the clerk a document that—

Sorry, I can't do this in French. I was going to try.

I left a document with the clerk saying that w hen we were designing the stimulus package we indicated that we felt the federal government had a leadership role to play in EI, in housing, on the GST refundable tax credit, and in WITB. There's a number of things the federal government can do without the provinces, but the provinces are where there have been the most dramatic commitments to poverty reduction, particularly in Quebec, Newfoundland and Labrador, and now Ontario. It looks like Manitoba is coming onstream. It looks like Nova Scotia is contemplating something. There is some momentum.

In our stimulus package, we said that we believed the federal government had a supporting role to help those provinces that are moving forward, much as the federal government did in the 1960s with social assistance, with cost-shared programs. This would be a conditional cost-shared transfer. It's outlined in some depth in the document I have left with the clerk of the committee, who is getting it translated. You will have it in your hands. I'd be happy to answer any specific questions about the nature of that transfer.

[Josée Beaudin, Bloc, Saint-Lambert, QC]

That's indeed the document that we received.

[The Vice-Chair, Liberal, Raymonde Folco]

No. The document is in English only, and I can't distribute it.

[Josée Beaudin, Bloc, Saint-Lambert, QC]

All right, we haven't yet received it.

[Dr. John Courtneidge]

The federal government could also be involved in expanding the social economy and the solidarity economy, to follow the lead of Quebec.

One of the key ways of doing this is to look at the way the banking system operates here in Canada. It's the case that ten cents out of every dollar of Ontario taxes goes to simply servicing the provincial debt. People from other jurisdictions will know their own figures.

It is perfectly possible for the Bank of Canada to operate an interest-free revolving loan fund for the creation of affordable housing and the development of the social economy and the solidarity economy. So these are specific federal acts that could be done to facilitate the social and solidarity economy and introduce, through the Bank of Canada, an interest-free loan fund to develop social housing and other green infrastructure.