Thank you, Mr. Chairman.
Committee members, good morning. My name is John Stapleton. I hold social policy fellowships with the Metcalfe Foundation. It's in St. Christopher House in Toronto. My work is also funded by the Atkinson Charitable Foundation.
I would like to make three observations and recommendations to the committee. The first concerns the federal government's diminishing role in addressing Canada's social safety net. The second relates to poverty reduction strategies at the provincial, territorial, and federal levels. The third concerns social assistance asset limits in particular and what the federal government could actually do about that.
On the first point, in the 1980s the federal government's share of GDP exceeded the total provincial share. It is presently at two-thirds of the provincial share and falling, while the provincial share is rising. At the present rate of decline, the federal share could actually go below the gross municipal share of GDP by 2025, again if present trends continue. This means that the federal government is heading toward a lesser role in setting national standards for social programs, as its spending power and its fiscal presence diminishes over time.
As you know, the federal government's ability to fund its own programs will be sorely tested in the next decade, as baby boomers retire, seniors' benefits increase, and tax revenues diminish. I urge the committee to note these disturbing trends and take them into account in assessing the Government of Canada's future role in setting social policy. The federal government should try to reverse the trend toward erosion of its share of social spending to maintain its leadership role in the future.
The second point is in regard to poverty reduction strategies. Although the Government of Canada has not adopted a poverty reduction strategy itself, the majority of provinces have now adopted such strategies, including Newfoundland and Labrador, New Brunswick, Nova Scotia, Quebec, Ontario, and, most recently, a couple of weeks ago, Manitoba. It's no accident that Canada's two largest provinces have been the first to pass poverty reduction legislation. As provinces grow in fiscal size compared to the federal government, the two largest provinces have the greatest fiscal capacity to address that poverty, at least in part, on their own.
Smaller provinces with lower fiscal capacity and western provinces more influenced by commodity price cycles have yet to adopt such strategies. If this situation persists, it may be the case that poverty reduction will look very different in some Canadian jurisdictions than others. The federal government should not allow this to happen. The federal government should exert its leadership role and set a national poverty reduction strategy at the earliest possible opportunity.
I've also provided you with comments on completion of the national child benefit and the disturbing trend that five of Canada's smallest jurisdictions have not been able to implement an integrated child benefit. This also shows the lack of capacity of smaller provinces and territories.
On the final issue of asset limits and social assistance, Canada's abandonment of its cost-sharing platform for social assistance and services, the Canada Assistance Plan in 1996, is important, but CAP was not only a cost-sharing vehicle; it also set parameters and guidelines in what provinces could and could not do. For example, CAP disallowed workfare and set asset limits for provinces and territories to follow. But with the demise of CAP 13 years ago, many provinces implemented various forms of workfare. They also reduced asset limits by many orders of magnitude, to the point that eligibility for welfare now requires destitution as a standard eligibility requirement.
Make no mistake, there's been no time in the history of Canada's social assistance programs that asset limits have ever been lower and the programs harder to access. This means that in those provinces with low EI protection, whose caseloads are rapidly rising--that's Quebec, Ontario, and B.C.--unlike New Brunswick and Newfoundland, welfare eligibility is very different than it was in previous recessions when welfare caseloads also grew. In previous recessions, recipients were allowed a reasonable cushion of assets to allow them to establish themselves once they were able to leave welfare. Those assets are no longer allowed, and as a result, we'll see a large and costly overhang in caseloads that will persist long after this recession is over.
Here is something the federal government could do, absolutely free. Previous displays of federal leadership show that the provinces and territories can and will respond to federal calls for change in national standards. For example, when Minister of Finance John Manley asked provinces to stop clawing back increments in the federal NCBS in 2003, all provinces complied. When HRSDC asked all provinces to exempt RESPs from welfare payments in 2004, all jurisdictions complied. When Finance Minister Flaherty asked provinces to exempt the working income tax benefit—the WITB—and the registered disability savings plan from welfare payment on December 23 of last year, all complied. However, when no call is issued to exempt either RRSPs or the new TFSA from welfare payments, provinces and territories retain the policies to count TFSAs and, more importantly, RRSPs as assets and income under provincial welfare programs. Only Alberta, Quebec, and Newfoundland and Labrador provide any amount of exemption on these savings vehicles, again as exemplified in some of the comments that John Rae made earlier.
So what's the result? Unemployed workers with a few thousand dollars in RRSPs, who apply for welfare, are told that they have to liquidate them in order to become eligible later on. They cash them out at a low point after the market crashed, spend the proceeds before getting a single dollar of assistance, then face a tax bill in the next year when they can least afford to pay it. For their trouble, they have no savings for their retirement, and they will become even more reliant on programs like the guaranteed income supplement when they turn 65, all as a result of shortsighted policies that will cost all of us dearly.
I therefore call on the federal government to assume its demonstrably successful leadership role and call on provinces and territories to exempt modest RRSP and TFSA amounts.
Thank you very much.