Thank you, Mr. Chair, and thank you for the invitation to appear.
Sherri and I are both going to speak, so we'll have to skip the wonderful introduction we wrote and just jump right into the meat of it.
Our basic argument is that the federal government has the dominant role to play in tackling poverty reduction in Canada. It can reduce poverty, it does reduce poverty, and it should reduce poverty a lot more.
Unlike some jurisdictions, both provincial and abroad, the federal government does not have a formal poverty reduction strategy replete with analysis evaluation, reform initiatives, and targets. However, the federal government does have at its disposal some potentially powerful instruments to help reduce poverty, which can service key elements of the full-blown poverty reduction strategy.
This morning we want to briefly discuss a few examples of federal programs that can help reduce poverty and offer some suggestions for improving their poverty reduction capacity. We distinguish here between incremental improvements to existing programs and deeper changes to the architecture or structure of social policy.
While the federal role in poverty reduction takes mainly the form of income security programs, it also has roles to play in supporting the services provided by provinces and territories. Ottawa can also help create an enabling environment that supports community interventions to reduce poverty.
Let me start with the biggest success story in poverty reduction at the federal level, and that's with seniors. As you may or may not know, Canada has made enormous progress in reducing poverty among the elderly. The rate went from 29% in 1976 to 5.4% in 2006. In fact, Canada ranks third-lowest among 23 industrialized nations in the poverty rate for seniors.
This huge reduction in poverty is due largely to improvements in public pension programs such as old age security, the guaranteed income supplement, and the Canada and Quebec pension plans, as well as the historic rise in the labour force participation of women. They are increasingly becoming eligible for pensions in their own right from the Canada and Quebec pension plans and, for a minority, employer-sponsored plans.
There are two ways we could make further progress against reducing poverty among seniors. I should point out that when we look at unattached seniors, there is a higher poverty rate than for seniors overall. It's 16.1% for elderly women and 14% for elderly men, and many more live just above the poverty line.
The most obvious program to further reduce poverty among seniors is the guaranteed income supplement. This received a few improvements a couple of years ago--the first ones in a generation. If we want to make further progress with poverty for seniors, we could make further increases in this program.
Another possibility is to take the age credit, which is a non-refundable credit, and make it a refundable credit. Then it would serve seniors who have income so low that they're below the taxpaying threshold.
Another area of progress against poverty in Canada is in child benefits. The Canada child tax benefit, which was the federal government's part of the federal-provincial-territorial national child benefit reform, has seen very large increases in recent years. Maximum payments for the first child went from $1,520 in July 1996 to $3,416 in July 2009. That's a very large increase. Caledon and a number of other groups have set a maximum of a $5,000 Canada child tax benefit as a target for a mature child benefit system.
Child benefits take a hefty whack out of the poverty statistics. If there were no federal child benefits, the low-income rate for families with children would be 15%. Under the current system of federal child benefits, the low-income rate for families with kids is 9.3%, and under Caledon's proposal for a $5,000 maximum CCTB we would reduce that further, to 8.3%. We'd see similar reductions in the numbers of low-income families and the depth of poverty.
The answer to further progress against child poverty in terms of child benefits is a simple one: the Canada child tax benefit is there. All we need to do is make further incremental improvements and we can reach the $5,000 target.
A new program that came in a couple of years ago is the working income tax benefit. This is support for Canada's working poor. This filled a big hole in the architecture of income security, because prior to this the working poor had no support from the federal government.
WITB has two major objectives: to reduce disincentives to work for Canadians who are stuck behind the welfare wall, and to enhance incentives to work among the working poor. The initial WITB program was extremely small--very modest. It was so modest in fact that it wouldn't even serve people working full-time at low wages.
Thanks in part to emphasis from our organization and others, the finance minister saw fit in the most recent budget to substantially improve the working income tax benefit by increasing the maximum benefit and also pushing the income level eligibility higher up for this program. This is an extremely new program, but it's potentially very important in terms of reducing poverty among the working poor, who make up about half of low-income Canadians.
Employment insurance is a troubled program, to say the least. As you may or may not know, virtually all employees pay EI premiums but only a minority are able to draw upon the program's income benefits and employment services when they become unemployed. In fact, coverage of the unemployed fell from 83% in 1990 to 43% in 2008, which is the lowest number since 1976.
There is a gender gap in EI. Only 39% of unemployed women received EI at last count, compared to 46% of men. And that gender gap has widened over the years.
Benefits are by no means generous. The maximum benefit has declined from $595, in inflation-adjusted terms, in the mid-nineties, down to $447 in 2009. Average benefits for women amount to $4,544 below the poverty line. Even if you manage to qualify for EI, which most unemployed people don't, you don't get a very generous benefit.
What should we do? Most progressive organizations have called for an end to the variable entrance requirement. This is the regional aspect of EI whereby your eligibility for benefits and the length of time you get benefits varies by the regional unemployment rate. Groups have called for that to be substantially reduced and indeed removed. The earnings replacement rate could be increased. It's only 55% of insurable earnings; this could be up to 60% or 75%. And extend the duration of benefits.
We have supported these kinds of changes as a stopgap measure because of the recession. As you know, all the budget did was increase the maximum duration of benefits by five weeks. This doesn't help the majority of unemployed who don't even qualify for benefits.
Groups are asking for a restoration of EI. We have done that, but we don't think that's enough. We think we need more major structural changes in EI so that it can better meet the needs of the non-standard workforce, which now makes up about 40% of all workers.
We have been working on a new architecture of benefits over the last couple of years that would see changes to welfare and unemployment insurance. With unemployment insurance, we would end the regional aspect; increase the earnings for replacement capacity of EI; and create a new program, a temporary income program, which would be an income-tested program funded out of general revenues. It would be a federal program, which would meet the needs of unemployed Canadians who are never going to be eligible for EI. We would actually create a two-part EI system.
I'll now turn it over to Sherri, who will talk about disability income.