NAPO

National 

Anti-Poverty

Organization

ONAP

Organisation

Nationale 

anti-pauvreté

Brief to House of Commons Standing Committee on Finance

October 2003

The National Anti-Poverty Organization (NAPO) is a non-profit organization representing 4.7 million Canadians currently living in poverty. Our mandate is to eradicate poverty in this country. We are most commonly referred to as a national “voice of the poor” because our 19-member board is made up of people who live or have lived in poverty at some time in their lives. Our membership is made up of low-income individuals, organizations that provide direct and indirect services to the poor and other concerned Canadians.

Introduction

Economic Success 

Over the last four years Canada has enjoyed tremendous economic success.  According to figures used by this government and organizations such as the OECD we led the G-8 in growth in 2001 and 2002. Real GDP has grown by approximately three percent from 1997 to 2002. Our economy is projected to grow at 3.5% in 2004 and 3% in following years. Canada’s standard of living has grown faster than any other country in the G-8. Personal disposable income per capita has increased by 13% since 1996.[i] These numbers are impressive and, for some Canadians, they have meant prosperity. (February 18, 2003, Budget 2003: Economic Picture, Budget 2003: Overview)

 Yet for almost 5 million Canadians these figures and statistics have not translated into prosperity or even an adequate standard of living. These statistics do not reflect their daily living conditions and situations. The reality for many Canadians is reflected in a different set of numbers. 

·        the total number of Canadians who are poor has increased from 4.39 million to 4.72 million from 1990-2000 (16.2%)

·        the number of children living in poverty rose by 40,000 from 1990 to 2000 to 1.1 million

·        the number of people using food banks has doubled in the last decade – 40% of food bank users are children

·        immigrant families and children are suffering dramatic increases in poverty

·        in the last 20 years the poverty gap for working-age households has grown by 106%

·        wages for low-income workers have decreased over the last decade 

·        earnings of young workers have declined over the past 20 years

There has been some success in improving people’s living conditions. The poverty rate for lone-parent families has dropped below 50% for the first time in twenty years. The number of seniors who are poor has dropped significantly over the last two decades partly due to recent full CPP payments as well as other income support programs. The overall poverty rate has dropped slightly over the last four years but has increased over the last decade.

 However, there is little question that the prosperity suggested by economic statistics is bypassing significant numbers of individuals, families, children and workers. No matter what the measuring instrument - pre-tax or after-tax LICOs or the new Market Basket Measure, and no matter the statistics, the facts remain. Research clearly shows the rate and depth of poverty is getting worse for many groups. Many of the submissions made to this Committee will have figures to indicate the reality a large number of Canadians are living. In a country of Canada’s wealth there is little excuse for the level of poverty and the degree of disparity we now see.

 This poverty is apparent not only to Canadians but also the international community. The United Nations Human Rights Committee and the UN Committee on Economic, Social and Cultural Rights have repeatedly reprimanded Canada on its performance in the area of poverty reduction. In the past, both Committees have expressed strong concern over

·        the level of homelessness

·        the failure to protect people from discrimination because of their poverty

·        the manner in which the National Child Benefit program discriminates against families relying on social assistance

·        the effect that cuts to social spending have had on increasing women’s poverty and the poverty of single mother’s in particular

 The Committee on Economic, Social and Cultural Rights hearings scheduled for 2004 will again show Canada’s failure to secure a meaningful drop in the rate and depth of poverty.

Past Budget Priorities and Promises

Debt reduction and tax cuts

The priorities of debt reduction and tax cuts have been the focus of the last several budgets. Not only have these objectives failed to help the poor, they have succeeded in increasing the rate and depth of poverty. In the name of debt reduction and tax cuts transfers to the provinces have been reduced, CAP eliminated, funding for affordable housing removed, the Unemployment Insurance system drastically cut to name just a few of the changes. Canadians are still waiting for a national childcare program despite a demonstrated and rising need. The result of these choices is greater homelessness and poverty.

 The Budget Consultation Process

 Developing a budget is about setting priorities. This consultation process is an opportunity for the government to hear from groups and individuals about the priorities they feel should be reflected in the upcoming budget. Fundamentally, it is meant to be a democratic process that ensures elected representatives of government hear and respond to issues raised by the public. NAPO views this consultation process as a way to both establish the political will and make the decisions required to effectively address poverty in this country.

 For the past several years NAPO has presented at these consultations. And for the past several years we have presented the same message – set policies, make decisions and take action that will eliminate poverty. In 1994, we recommended the development of a fair and progressive tax system. In the consultations of 1999 we recommended the Federal government coordinate the rebuilding of the social safety net and show its leadership by developing with the provinces and territories programs that would ensure the basic needs of Canadians are met. In 2001, NAPO recommended the allocation of one percent of revenues to building new affordable rental housing units.

 It is our hope that the 2003-2004 budget will truly reflect the interests and priorities of poor Canadians. It is our hope that the government will strengthen and expand initiatives contained in last February’s budget such as increased funding for affordable housing. It is our hope that the government will put into action the all-party commitment to eliminate child poverty made in 1989; that it will live up to Canada’s international obligations under the Covenant for Economic, Social and Cultural Rights to provide secure housing, food and clothing for all Canadians; that it will live up to its obligations under the Convention on the Rights of the Child and the UN Covenant on Civil and Political Rights.

 This submission presents several recommendations that can help the government achieve these goals. If these recommendations are implemented, this government will be able to legitimately claim it is concerned about and actively working to eliminate poverty. It will also be able to demonstrate to the international community that it takes seriously its obligations under international conventions.

Recommendations

Recommendation # 1

 Although we are encouraged by the $935 million dedicated over 5 years to quality child care spaces and services in February’s budget, the government’s contribution of $25 million in the first year is not enough to meet the current demand for spaces. The Canadian Council on Social Development states that 70% of women with pre-school age children work outside the home but only 12% of children have access to licensed care. Research shows that good early education and childcare programs have a positive effect on growth and development of children, especially those in low-income families.[ii]

NAPO recommends the government implement and adequately fund a national childcare strategy. Funding for the first 2 years should be increased to meet at least the current need for spaces. Funding for the strategy should be at least $5 billion over five years. This is only half of the estimated cost of a national strategy.

Recommendation # 2

 The government showed a commitment to addressing family poverty by increasing the National Child Benefit payments in last February’s budget. This commitment would bring the maximum annual benefit for a first child to $3, 243 by the year 1997. NAPO believes this increase is not enough to help low income families meet children’s basic needs, or make a significant difference in the depth and rate of child poverty. The increase will not help families on social assistance in particular.

 Families receiving social assistance have the NCB clawed back. The clawback coupled with frozen and reduced assistance rates - the value of social assistance benefits  has fallen by 23% since 1991[iii] - mean poor families have fallen further behind. Almost seven hundred thousand children who live in families on social assistance live in poverty.

 We support both the Caledon Institute of Social Policy and CCSD’s conclusion that the Canadian Child Tax Credit payment needed to make a noticeable change in child poverty is $4,200-$4,400 per year per child.

 NAPO recommends that the funding to the CCTC be increased through the NCB to $4, 400 per year for each and every child[iv] by January 2004.

Recommendation #3

 An important contributor to poverty is the cost of housing. Four out of every 10 households in Canada live in rental housing. Rents across the country have seen large jumps over the last several years while the income of poor people has stagnated or fallen. Those who rent tend to have considerably lower incomes than those who own. In effect, increased rents have eliminated the extra income received from the Federal government in child benefits.[v] As a result, more families are forced to use emergency housing and shelters than ever before. Approximately 200,000 Canadians are homeless and 1.7 million are in core housing need.[vi]

 The social cost of homelessness and poverty are immense. In the NAPO report Voices: Women, Poverty and Homelessness in Canada, which will be released in November 2003, females across Canada describe what it is like to be poor and without a home. They are the people behind the statistics.

“Being homeless is like being cold all

                                    the time. And it’s like being hungry. People

who are homeless are pushed into those circumstances…If we don’t start changing

things more people are going to end up

on the streets.” anonymous project participant

The women who participated in NAPO’s study on homelessness consistently describe the importance of adequate income support programs, employment training, public funding for and accessibility to post-secondary education, availability of adequate social assistance and unemployment insurance, and social supports. They also describe the impact of reducing and restricting these programs and services.

“Trying to live on the system [social assistance]

is not easy and I got behind on the bills and

everything turned wrong. My rent was $550

and I was receiving $680 from social assistance…

I got behind on the rent because I had to keep

the phone and stuff going. I’ve got to get my

child in subsidized day care before I can decide

 what I’m going to do. You have to wait for a

space to become available. I don’t get help

from my parents. My father couldn’t, he tried,

but he couldn’t help me. And my mother said,

‘You made your bed, you’ve got to sleep in it.’”

Caroline, age 23

In 1996, the Federal government pulled out of the area of affordable housing. Canada is now the only country of its kind lacking a national housing program. The government has taken positive steps to address the problem of lack of affordable housing by allocating close to $600 million over the next several years. However, this money does not approach the amount required to meet the current need for housing let alone the amount needed to increase the supply.[vii] NAPO feels the government should go much further in addressing this very important and well-documented problem.

We recommend

·        the government implement and adequately fund a national housing strategy

·        commit 1% of revenues to the construction of new affordable housing units

·        increase transfers to the territories and provinces to be spent specifically on the construction of affordable housing units and the renewal of existing affordable housing

Recommendation #4

 The 2002-2003 Budget made significant changes to the Canada Health and Social Transfer by dividing the Transfer into two distinct entities – the Canada Health Transfer (CHT) and the Canada Social Transfer (CST). While the Social Transfer contains money for social services and post-secondary education, it does not set national standards for the social services as CAP once did. NAPO campaigned hard to save these standards throughout the social security revisions of the mid-90’s and monitored with dismay the federal and provincial cuts that followed. In addition, the Canada Social Transfer will only receive 38% of the total money allocated to the CHST. The Health Transfer will receive 62% of the funds. This means the total funding for the CST will actually drop from 2003-2004 levels.[viii] This approach is puzzling when research shows that reducing poverty decreases health costs. NAPO recommends the Federal government

·        clearly indicate standards for the spending of the Canada Social Transfer. The conditions should be the same as those previously contained in the Canada Assistance Plan. The standards should reinstate the right to an amount of income that meets basic needs, the right to appeal a welfare decision one feels is wrong, the right to income when in need, regardless of the province you are from, the right not to have to work for welfare and, most importantly, the right to income when in need.

·        develop and clearly communicate consequences for any province’s failure to adhere to the standards including the removal of funds

·        ensure the amount of money transferred to the provinces is new money and equal to that provided by the Canada Health Transfer

Recommendation #5

A recent study by the Canadian Labour Congress called Falling Unemployment Insurance Protection for Canada’s Unemployed, clearly shows the inadequacy of the government’s EI program. With each increase in the hours and weeks needed to qualify and corresponding reductions in maximum benefit weeks, insurance coverage has fallen.

The result has been a greater number of unemployed workers without income support. The changes have also impacted heavily on women of all ages, who already have greater vulnerability to poverty.

 Although there has always been a coverage gap between males and females, it has grown significantly since the last four rounds of changes to the unemployment insurance system. Thirty-three percent of unemployed women received benefits in 2001 (down from 30% in 2000) while forty-four percent of men had coverage (down from 46% the previous year).[ix]

 Unemployment insurance is an important income support program for Canadians. It must be returned to an adequate level and accessibility increased so people do not find themselves forced into inadequate-paying jobs or onto social assistance where they must struggle to meet even basic needs. 

NAPO recommends the government

·        loosen EI eligibility requirements so those who require it can access it Currently only 39% of people who are unemployed and require unemployment insurance receive it.

·        use the surplus from the EI program to fund income support for unemployed workers, and effective employment programs and training. Any surplus should not be used to pay down the debt.

Recommendation #6

The idea of a guaranteed adequate income is not new in this country. Canada acknowledged the right to an adequate income as early as 1948 when it signed the Universal Declaration on Human Rights.[x] This government raised the notion of a GAI in 2000. NAPO believes it is time to seriously consider implementing a guaranteed adequate income for everyone. We recommend the government

·        establish a fund for researching current international models and practices of guaranteed income, and the development and implementation of a GAI. The fund should be accessible to poor people, organizations that deal with poverty issues, NGO’s, social justice groups as well as other organizations and individuals

·        any proposed GAI should be set above low income levels

Recommendation #7

Tax cuts implemented by the government since 2000 have benefited corporations and Canadians with the highest incomes.

Income tax rates have dropped 3% for upper middle-income earners and companies while low-income earners have seen only a 1% reduction in their income tax rate.

A fair and equitable taxation system and the current budget surplus can easily generate funding required for social program spending. NAPO recommends the government

·        increase the basic tax exemption for low income people

·        return tax rates for high income earners and corporations to pre-2000 levels

·        use the additional revenue generated by step 2 to help pay for the rebuilding of the social safety network dismantled in the 1980’s and 1990’s

Recommendation #8

In the 2000, budget the government promised to use 50% of surplus revenue to support social services and programs and the remaining 50% to pay down the debt and provide tax cuts. This promise has been repeated by the Prime Minister and successive Finance Ministers. It has yet to be fulfilled. Based on data in the Alternative Budget 2003 since 1997-98, 90% of surplus funds have gone to tax cuts and paying the debt. Only 10% of revenues have been used for authentic program spending increases.[xi]

NAPO recommends the government fulfill the “50/50” promise by allocating 50% of the budget surplus to essential and social programs and services.

Recommendation #9

NAPO also recommends that the government develop and implement a participatory budget process that obliges the government to receive the input of poor and homeless individuals, and groups dealing with these issues. Participants should have the power to make decisions on budgetary matters including the allocation of funds for affordable housing and income support programs.

Conclusion

Six successive budgets have had surpluses. The Alternative Federal Budget of 2003 developed by the Centre for Policy Alternatives, clearly shows that even with a recession, the government has enough revenue to increase spending on social programs and pay down the debt over the next three years. From 2003-2006 the government could increase spending by $1.6 billion while reducing the debt by over $9 billion.[xii]

The economic numbers show we have the resources to eliminate poverty. NAPO encourages the Committee to fulfill the “50/50” promise and rebuild the social safety net. We also strongly urge the Committee to take the priorities of Canadians who are living in poverty and make them priorities of the upcoming budget, and in this way ensure the current economic prosperity is enjoyed by all Canadians.