Posted by Nick Falvo under child benefits, Conservative government, corporate income tax, early learning, economic crisis, education, fiscal federalism, fiscal policy, housing, income support, income tax, Indigenous people, inequality, minimum wage, Ontario, poverty, progressive economic strategies, recession, social indicators, social policy, taxation, unemployment.
January 8th, 2012
December marked the three-year anniversary of Ontario’s Poverty Reduction Strategy. While I believe there is much to celebrate, much remains to be done.
The Strategy surprised a lot of observers, especially in light of the fact that it was announced in December 2008, just as Ontario was entering a recession. Its focus was almost exclusively child poverty, and at full implementation (i.e. 2013), it will result in $300 million in new annual spending. This is equivalent to 0.3 percent of total provincial spending in Ontario, which is roughly $100 billion.
One stated goal of the Strategy is to reduce child poverty in Ontario by 25 percent over five years, based on StatsCan’s Low Income Measure. And a major feature of the Strategy is an increase in the Ontario Child Benefit (OCB). The OCB, at full implementation, will be worth up to $1,310 per child per year . The Strategy also includes the implementation of “full-day learning for four- and five-year-olds.”
A Cabinet-level committee has been charged with implementing the Strategy. Every year since the Strategy’s announcement, the provincial government has issued a progress report, which is publicly available. The Strategy’s legislation stipulates that, every five years, there will be a new Strategy (very possibly with a different theme each time; in 2013, for instance, the theme/focus could be Aboriginal poverty, or social assistance, or housing).
Partly in response to advocacy by such people as Cheri DiNovo and PEF Blogger Jim Stanford, the McGuinty government has also increased the Ontario minimum wage from $6.85/hr. to $10.25/hr. Though not officially part of the Strategy, this marks an important move nonetheless.
There have been some important outcomes from the Strategy. For example, even though we have just come out a recession, Ontario’s Minister of Children and Youth Services recently reported the following:
The poverty rate for children in Ontario declined from 15.2 per cent in 2008 to 14.6 per cent in 2009…As well, the poverty rate for children living in deep poverty declined from 8.5 per cent in 2008 to 7.3 per cent in 2009…Poverty rates for children in single mom-led families dropped most dramatically, from 43.2 per cent in 2008 to 35.2 per cent in 2009. It is important to note that data from Statistics Canada lags by 18 months. This means statistics for our income-based indicators are available for only the first year of the strategy.
Let’s not kid ourselves though (pun intended): the Strategy has its shortcomings. First, 0.3 percent of total spending is a relatively modest spending boost when it comes to poverty. Because of the modest new spending made available for the Strategy by the McGuinty government, the Strategy didn’t even attempt to make inroads with respect to Ontario’s lack of affordable housing; that was left to a separate Strategy, which, now complete, did not announce any new social housing units, even though more than 150,000 Ontario households currently sit on housing wait lists. Nor did the Poverty Reduction Strategy attempt to increase social assistance benefit levels, even though single adults without dependents on welfare in Ontario currently receive less than $8,000 a year; rather, it announced the creation of the Commission for the Review of Social Assistance in Ontario.
I think the McGuinty government deserves praise for showing some leadership, most notably with respect to children’s anti-poverty initiatives and the minimum wage. I also think Deb Matthews (the Minister who oversaw and tabled the Strategy in 2008), her staff and advocates in the 25 in 5 Network (which played a watchdog role) deserve praise for making the most of an important opportunity. But I think there are two essential ingredients required if Ontario is to aspire to someday eliminate poverty.
First, the role of the federal government in poverty reduction is crucial, especially with respect to job creation, affordable housing and income assistance. Gilles Séguin has done an excellent job of keeping tabs on the Harper government’s non-interest in this here.
Second, provincial tax rates—both personal and corporate—have come down a great deal in Ontario since the mid-1990s. When the McGuinty government came to power in 2003, tax reductions by the Harris-Eves government had reduced Ontario’s fiscal capacity by roughly $18 billion a year. The McGuinty government has not made a serious attempt to restore this lost fiscal capacity; in fact, Mr. McGuinty signed an agreement with the Canadian Taxpayers Federation in 2003, effectively stating that he wouldn’t. Over the long term, any Ontario government that claims to be serious about poverty reduction should seek to restore at least some of the province’s lost fiscal capacity.