Thank you very much. It is a great pleasure to be here with you.
With my colleague Senator Segal, I was chair of the committee that prepared this report. He was the vice-chair of the committee, and we're partners. We go around talking about our report to those who are interested in it because we think quite passionately that it's an important subject for us to deal with.
To give you a bit of a background, over the past two years the Senate Subcommittee on Cities, of the Senate Standing Committee on Social Affairs, Science and Technology, in its study on poverty, housing, and homelessness, has held some 35 hearings, hosted five round tables, and visited 20 agencies in nine cities across Canada. We had the opportunity to hear from close to 200 witnesses, some living in poverty and homelessness themselves, others working for community agencies or serving as analysts in university and voluntary organizations.
Quite frankly, what we heard was appalling. We found that a staggering one in 10 Canadians live in poverty. That's 3.4 million people, the equivalent of every man, woman, and child in Nova Scotia, Newfoundland and Labrador, New Brunswick, Prince Edward Island, and Saskatchewan all combined. For these people, our fellow citizens, every day is a battle with insufficient income, unaffordable housing, inadequate clothing, and unsatisfactory nutrition. Every day brings wrenching decisions about whether to buy groceries or pay the rent, whether to buy new shoes for the kids or make a mortgage payment, or whether to drop out of school and get a job to help the family. Just struggling to get by, these families can't even dream about getting ahead.
What's particularly disturbing is that approximately 800,000 of those living in poverty are children, a statistic that is all the more deplorable given the House of Commons' commitment in 1989 to eliminate child poverty by the year 2000. Instead we've hardly made a dent, with double-digit rates of child poverty in most provinces. It goes up, it goes down, but now is one of its higher periods.
Now we all understand the moral arguments against poverty, the jarring juxtaposition of suffering and want in a land of plenty, the unacceptable toll in terms of lives diminished, dreams deferred, and potential denied. What I don't think many people in this country realize is the economic cost of poverty: how it is costing each and every one of us, forcing up our tax bills, depressing the economy, increasing health care bills, and breeding alienation and crime. Today I want to examine those economic costs and outline some of the measures that we proposed in our report to lower them. Because make no mistake: with the demographic and economic challenges before us, we simply can't afford poverty any more.
A recent Ontario study guided by economists and policy experts such as Don Drummond, Judith Maxwell, and James Milway estimates that poverty costs this country about $7.5 billion every year in health care and between $8 billion and $13 billion in lost productivity. And when you add up some other factors, it brings the poverty bill to over $30 billion annually. That's more than half of the current federal deficit. Imagine what eliminating poverty would mean to our fiscal situation, to our ability to pay for education, innovation, health care, to our capacity to care for the elderly.
A recent report by the Canadian Chamber of Commerce puts the looming demographic challenge in stark terms. As our population ages and the growth in the working-age population slows, we're going to face significant labour shortages. A third of the entire workforce is set to retire over the next two decades. Put another way, we'll have about half the ratio of people working, paying taxes, contributing to pensions and health care as we do today.
In its report, the Canadian Chamber of Commerce also said that in order to address the coming shortages in our labour supply, we need to tap into the underutilized segments of our society: older people, aboriginals, the disabled, and new immigrants. Those are the very groups, along with lone parents, which is mainly lone mothers, that our study found are the most vulnerable to poverty. It turns out the very same groups that are languishing in poverty are the very ones we'll need to fill the jobs and pay the taxes of the future.
So here we have the intersection of two great challenges facing our society: the ongoing economic costs of poverty and the demographic time bomb of aging. The good news, and the tremendous opportunity, is that we can address both at the same time. Give more people a way out of poverty and we'll help fill the jobs that we need filled. Give more people a way out of poverty and we'll save billions of dollars that poverty is costing us all.
Now, it's not as if we're not doing anything about poverty. According to Statistics Canada, we spend $150 billion every year in federal and provincial transfer payments to individuals. That doesn't include education and health care costs. So what are we getting for our $150 billion? The short answer is not enough. Those numbers on children--for example, 800,000 living in poverty--are not just sterile statistics. They are a flashing red light.
We know, for example, that a child born poor has a greater chance of dying in infancy, and that if he or she lives, it's likely to have a lower birth weight and more disabilities. As they grow old, they're more likely to suffer from poor nutrition, poor health. They'll miss more school and slowly but surely fall further and further behind. Not surprisingly, they're less likely to do well and they're more likely to drop out of school. As adults, they will have higher rates of chronic illness. With poorer education, they'll earn less, they'll pay less in taxes, be less productive workers, have more health problems, and use more social services. All of that means higher costs to society.
Our committee also discovered something else, something more systemic about poverty in this country. We saw that decades of social policy-making by all levels of government, well meaning as it may have been, have resulted in two equally devastating results. First, even when all the programs are working as they should, the resulting income is often only enough to simply maintain them in poverty. Second, at their worst, existing policies and programs actually entrap people in poverty, creating unintended but nonetheless perverse effects that make it almost impossible to escape the reliance and income security programs or homeless shelters.
Here's the situation. We spend $150 billion a year. We have almost 3.5 million people living in poverty, including 800,000 children. Now, any corporation that spent $150 billion on programs without achieving its goal would conclude that it needs reworking, and we should too.
There are some good signs, however. During our work we found examples of promising practices and programs--largely community-based--that actually do work, that do get people out of poverty and homelessness. We identify and we celebrate these initiatives in our report. But sadly these examples are pockets of promise in an otherwise dysfunctional system that must be overhauled.
Our committee studied the whole range of income security programs, from tax breaks to social assistance, from employment insurance to old age security and the guaranteed income supplement, and we make a number of specific recommendations--actually 74 in all--for improvement. We've suggested a number of specific changes to employment insurance to make it both fair and more effective.
On education and training, as you well know, success in today's fast-moving job market often depends on having the right skills. Simply put, there is a clear connection between the level of education achieved and the level of income received. Yet here we find a classic catch-22. For many, poverty keeps them from acquiring the kind of education and training they need and their lack of skills keeps them from getting the jobs that would lift them out of poverty.
Breaking this cycle is critical and breaking it begins in the earliest years of life. Study after study confirms that children who arrive at school ready to learn become adults prepared to succeed. Among our recommendations, therefore, is a nationwide federal-provincial initiative on early childhood learning. I emphasize learning, education, as opposed to just day care or babysitting by itself. Referring to early childhood development programs, Canada's Chief Medical Officer of Health recently reported that a dollar invested in the early years saves between three and nine dollars in future spending on health and criminal justice systems as well as social assistance.
We also witnessed firsthand the importance of middle school support for vulnerable children, for high school completion, as well as literacy upgrading for young adults and skills building at every age. That is why we propose offering additional tax support for post-secondary education for students in groups, like aboriginals, who are underrepresented in those institutions, as well as for initiatives that keep disadvantaged young people in school. According to one study, if aboriginal Canadians were able to increase their educational attainment to the level of other Canadians, our cumulative economic output would grow by an additional $179 billion by 2026 and government tax revenue would be $3.5 billion higher. That would be good for aboriginal peoples; it would be good for all Canadians.
We also looked at health, because there's a strong connection between being poor and having poor health. The poorest quarter of Canadians uses twice the health care services as those in the wealthiest quarter. In fact, according to Statistics Canada, poverty reduces life expectancy even more than cancer.
In our study we've also seen examples of tax credits that work well. The national child benefit supplement, for example, is putting money into the hands of low-income individuals and households. As a critical step to eradicating child poverty, we propose increasing the national child benefit to $5,000 by 2012 from the current level of $3,400.
The working income tax benefit, which supplements earnings for those with very low incomes, is another tax measure that holds great promise by making work pay. We recommend increasing this benefit so that no recipient would fall below the poverty line.
Because our seniors also deserve dignity in their retirement, we also recommend increasing the guaranteed income supplement so that no one there falls below the poverty line.
I'll just say a quick word on those struggling with disabilities. As a group, persons with disabilities are highly marginalized. They face exclusion from quality education, have lower employment rates, and are more likely to be poor. We believe what is needed is to provide a basic income guarantee for people with severe disabilities and, at least in the short run, to make the disability tax credit refundable.
Just as the guaranteed income supplement lifted tens of thousands of seniors out of poverty, a guaranteed income for those with severe disabilities would immediately take about 500,000 people off social assistance rolls.
Let me turn very briefly to housing and homelessness. I think all of us understand intuitively the importance of having decent shelter. A home anchors a person or a family. It provides the foundation for higher educational attainment and leads to greater stability in the workplace. Health experts also tell us that adequate housing is a key determinant of health and long-term health outcomes.
Today in Canada, at least three million are struggling to find affordable housing. When I say affordable, I am using CMHC's standard rule of 30% of income. We need to do better, and we need leadership from the federal government. Specifically we recommend adequate and sustained funding through the affordable housing initiative to increase the supply of affordable housing. We need to make the residential rehabilitation assistance program permanent, and we need to make housing programs longer-term to reflect planning and development timelines at the local and provincial levels.
Addressing the issue of homelessness is not just about doing what is morally right; it's also about dollars and cents. The fact is that it is more expensive for all of us to leave someone on the street than it is to provide them with decent housing and support services. Just last week, Premier Stelmach of Alberta said that on average a homeless person costs society roughly $100,000 a year, including health costs. The annual cost per person drops to about $35,000 annually if that person is given a long-term home. These are Alberta statistics.
So we need to do a better job on both housing and homelessness. It's time the federal and provincial governments finally came to grips with this issue and developed a national housing and homelessness strategy.
Madam Chair, in closing, underlying our report is a simple common-sense premise that social programs should lift people out of poverty and not keep them there. It is time to give people the tools they need to lift themselves out of poverty. Poverty is not benign. It affects us all. It costs us all. We spend a lot of money and don't get the results we should. We don't need to spend more. We're not advocating spending more money. We need to spend smarter, more efficiently, and effectively.
In today's global economy, with the looming demographic challenge of an aging society, the importance of creating those opportunities and unleashing the creative contribution of those trapped in poverty is more important than ever. In a very real sense, the future level of our prosperity depends on addressing the current level of our poverty. Simply put, we can't afford poverty any more.
Thank you.
