That the Standing Committee on Finance be instructed to undertake a study on income inequality in Canada and that this study include, but not be limited to, (i) a review of Canada’s federal and provincial systems of personal income taxation and income supports, (ii) an examination of best practices that reduce income inequality and improve GDP per capita, (iii) the identification of any significant gaps in the federal system of taxation and income support that contribute to income inequality, as well as any significant disincentives to paid work in the formal economy that may exist as part of a “welfare trap”, (iv) recommendations on how best to improve the equality of opportunity and prosperity for all Canadians; and that the Committee report its findings to the House within one year of the adoption of this motion.
Mr. Speaker, I rise today to introduce my motion M-315, on the issue of income inequality in Canada.
I would like to start by telling the House a bit about my dear friend the late Wallace McCain, a great Canadian who passed away last year. At his funeral, Frank McKenna gave the eulogy, and in describing Wallace, Frank said:
He was a steely-eyed capitalist, competing and winning against the biggest and best in the world. On the other hand, he was also a deeply patriotic Canadian, committed to a caring and sharing society. He believed the government has an important role. He believed in public health care. He believed in early childhood development, he believed in progressive social policies. He believed that we truly are our brother's keeper.
Wallace McCain used to say, “I pay a lot of taxes. I don't mind paying taxes. Everybody's got to pay their taxes. We get a lot for our tax money in this country”.
I share this story about Wallace's vision on the role of government because I do not believe that the issue of income inequality should be reduced to one of class warfare. It should be about creating and protecting equality of opportunity.
Wallace McCain would have wanted Parliament to study income inequality because he would want us to continue to ensure that Canada is a place where we can grow up in Florenceville, New Brunswick, and with education, hard work and a lot of determination, go on to conquer the world. Then when we succeed, it is about giving back. It is about building a Canada where we can hope for a better life for our children, our grandchildren and our neighbours' children and their grandchildren. It is about making sure that regardless of where we start, we can work to make a better life for ourselves and our families, that we have a chance.
As MPs, we have a responsibility to make sure that Canadians can access the tools they need to succeed, regardless of where they start. Unfortunately, in Canada opportunity remains far from equal. Income inequality across Canada is in fact growing. This has been the trend for the past generation under federal and provincial governments of all stripes.
Inequality is growing between Canadian regions as our economy is divided between resource-rich provinces and those without. Inequality is growing between urban and rural Canada, and it is growing between aboriginal and non-aboriginal Canadians. These growing inequalities result in tremendous costs for our economy in terms of lower economic growth and higher demands on health and social services.
The economic cost of growing inequity and inequality for aboriginal Canadians is particularly alarming, and the trend is getting worse. On the issue of aboriginal poverty, we face the growing cost of Canada's youngest and fastest-growing population also being the most economically disadvantaged and socially disenfranchised.
Growing income gaps have been the trend across OECD nations, although some countries are doing better than others. When it comes to the growing gap between rich and poor, no political party in Canada has a monopoly on answers or the blame, but in recent public opinion surveys, Canadians have identified growing income inequality as the most important issue they want their members of Parliament to be working on. That is why I proposed this motion: so that parliamentarians could work together across party lines on ideas to strengthen equality of opportunity for all Canadians.
The issue of growing income inequality in Canada has recently been identified as a major public policy challenge by the OECD, by the Conference Board of Canada and by Canada 2020. The level of inequality in Canada is in fact above the OECD average, and while it is true that the U.S. still has higher income inequality than Canada, income inequality in Canada is now growing at a rate faster than that in the U.S.
Even Bank of Canada Governor Mark Carney agreed that this recent growth in inequality is an important challenge, and Mark Cameron, a Conservative and a former director of policy to the Prime Minister, has argued that addressing the issue of growing income gaps should be a priority for the Conservative government. Let me read from Mr. Cameron's recent paper on the issue:
A society in which a small group is perceived to be benefiting unfairly, or where there are wide gaps between social and economic classes, can lead to dissension, jealousy and anti-social behaviour, even if the less well-off are still making material gains. This, in turn, can lead to increases in crime, loss of participation in social and charitable organizations, and greater demands for government intervention to help deal with these social tensions. Such a scenario should concern not only social democrats or liberals..., but also conservatives who are concerned about maintaining public support for free markets and limited government.
The fact is, equality is good for the economy. Howevever, on that front our economy faces strong headwinds. The problem of Canada's shrinking middle class has been somewhat masked by cheap credit as Canadians borrow more and increase personal debt in order to make ends meet. Canadians now owe, on average, more than $1.50 for every dollar of annual income.
The record levels of debt-financed consumption we see by Canadian households cannot continue forever. The Bank of Canada has already identified Canada's record levels of household debt as the biggest risk to our economy, and it is just a matter of time before rates start to rise. The problems of growing income inequality will grow as rates go up.
Recent studies also show that income inequality is not just growing between individuals; it is also growing between Canadian neighbourhoods. In fact, incomes in the poorest neighbourhoods in Canada are not just stalling: between 1980 and 2005, their incomes actually shrank, making the poor even worse off. However, in the top neighbourhoods, incomes continue to grow rapidly. As a result, Canadian cities, communities and towns are becoming increasingly ghettoized. This division leads to weaker communities, increased crime and worse outcomes for health and education.
The Code Red study in Hamilton, Ontario, looked at the link between income inequality in Hamilton neighbourhoods and the health of its citizens. The results are startling. It found a 21-year difference in life expectancy between those living in the richest neighbourhoods and those living in the poorest. In fact, the poorest neighbourhood in Hamilton would rank 165th in the world in terms of life expectancy.
People living in poorer neighbourhoods also require significantly more time in the hospital. They are more likely to find themselves in emergency rooms.
Healthy birth weights are an important indicator of future health. The average rate of low birth weights in sub-Saharan Africa is 15%. The study found seven Hamilton neighbourhoods where the rate was more than 20%, including one where the rate was, astonishingly, 47%.
The study described some of the poorest neighbourhoods in Hamilton as living with
...Third World outcomes and Third World lifespans—all the more shocking in a city with a major medical school and top teaching hospitals, in a country with universal, publicly funded health care.
Income inequality can be a life-and-death issue. Stats Canada has been looking at income levels and the probability of dying prematurely. The results show a Canadian male in the top 20% of income earners only has a 27% probability of dying prematurely. However, that risk rises to 35% for average-income males and 50% for those in the bottom 20% of incomes. It is 52% for an aboriginal, and there is a 69% chance of premature death for those living in a shelter or rooming house.
The issue is also about hope. For generations, Canadians have prided themselves in calling Canada a land of opportunity, a place where someone can arrive with nothing, but with hard work and perseverance can make a better life for themselves and their family, and while they are struggling to make it, Canada's social safety net will be there with them.
The economic mobility project recently asked Canadians about their current thoughts on economic mobility and their level of hope for the future. Only 47% of Canadian parents—less than half—now believe that their children will be able to match the same living standards of their parents.
As parliamentarians, we should consider that fact carefully. When people no longer have hope for the future and for their children, that is when they start getting into trouble.
When it comes to specific measures that can both reduce income inequality and improve GDP per capita, the focus of the proposed finance committee study, there are some areas in which Canada is already adopting some best practices at both the federal and provincial levels.
I believe one good idea is the working income tax benefit. This refundable tax credit helps remove disincentives to work by bridging the welfare gap faced by low- and modest-income Canadians. It helps the recipients and it helps the Canadian economy. It is an idea that was first introduced by the previous Liberal government in the 2005 fall mini-budget and the subsequent election platform, and it was implemented by this Conservative government in budget 2007 and increased in 2009. It is an idea that builds on successful provincial programs, such as Saskatchewan's employment supplement and rental housing supplement and Quebec's work premium, which are also designed to help Canadians in those provinces climb the welfare wall and get out of the welfare trap.
Another area where investments both grow the economy and help address inequality is investments in early learning and child care. Together with the provinces, communities and parents, we can support initiatives for early learning and child care and help make sure Canadian kids get a good start.
Income inequality is a complex issue. Complex, challenging issues are exactly what we as parliamentarians have a responsibility to take on here. There are groups and individuals with expertise on income inequality. There are faith-based community organizations and churches that are on the front lines of this issue. We can hear from them and learn from them. We can hear from other levels of government to help inform federal policy and help us tackle this problem together.
After 15 years as a member of Parliament, I am not so naive as to believe that a study by the House of Commons finance committee will solve income inequality once and for all, but it will be a start. It will engage Parliament in a constructive non-partisan effort to deal with an issue that Canadians care deeply about. It will help us understand this issue better and put Parliament on a path of progress where we can work with other levels of government and other stakeholders to address it. Canadians want us to deal with income inequality, and we should not disappoint them.
I would like to conclude on a personal note.
Growing up, I went to Dr. Arthur Hines Elementary School in Hants County, Nova Scotia. It is an area where a lot of people face very deep rural poverty. Wendy Elliott of the Kings County Advertiser has written about this issue of rural poverty. She has also written about the fact that Canada is the only G8 country with full day classes and no national school meals program.
The fact is that where I grew up, a lot of the kids went to school hungry. Of the 23 students in my grade 6 class at Dr. Arthur Hines school, fewer than half went on to graduate from high school. Those who did had one thing in common: they had access to some early learning, generally from parents who read to them. Some of the kids did not have that opportunity, not because their parents were bad parents but because their parents had trouble reading.
Today the Hants Shore Community Health Centre provides early learning to local children to help all the local children get a good start. Thanks to pioneers like former principal Hazel Dill and restaurateur Michael Howell, nutritional education is helping kids eat better food. As a result, not only are more kids from Dr. Arthur Hines school graduating from high school in Hants County, they are winning scholarships and going on to post-secondary education as well.
Let us learn from these success stories. Let us approach this with an open mind and open hearts. Let us develop ideas that can help all Canadians. Let us understand this important issue better. This motion and this study are an important step for the Parliament of Canada to understand income inequality better. It is an important step in helping us address income inequality, which is an issue that Canadians say is a top issue they want us to deal with here in Parliament.
I hope that we can, as individual members of Parliament and as political parties, put partisanship aside and approach this issue by supporting this motion. I certainly look forward to this debate now and in the coming weeks. There will not be a vote until June. I would urge all members of Parliament from all parties to keep an open mind and an open heart, and hopefully we can show Canadians that we can make Parliament work for a more equal and more equitable Canada.