Obsession with Debt Precludes Action on Poverty

By Dennis Howlett, Executive Director, National Anti-Poverty Organization

First it was an obsession with the deficit. Now it's the debt. Prime Minister Martin doesn't seem to be satisfied with eliminating the deficit and having one of the lowest percentages of government debt in relation to the size of its economy of any industrialized country. He still seems hell bent on paying down the debt as his first priority.

In its Budget 2004, his government set aside $4 billion for debt repayment. And chances are, because of the low-balling of its past surpluses and revenue projections, it will likely end up putting even more towards paying down the debt. It even set a target of lowering its federal debt-to-GDP ratio to 25 per cent within 10 years. This despite any evidence that this will do our economy any good.

It is a bitter pill indeed for Canada's poor, who as a result, get nothing for social housing, child poverty, Employment Insurance reform or other social needs. The budget did offer something for people with disabilities, many of whom are poor. And there was some assistance for children from low-income families to attend university or college, but nothing that would cap or lower rising tuition fees, which is the main barrier to post-secondary education for poor students. There was certainly not enough for the poor to hide the bitter taste of neglect or reverse the trend towards greater inequality.

As the Finance Minister in Chretien's government who brought down the drastic budget of 1995, Paul Martin bears a large share of the responsibility for the unravelling of Canada's social programs that his father helped to put in place. The poor were forced to sacrifice disproportionately in the battle to slay the deficit. But the poor have waited a long time - "Canada will record its seventh consecutive balanced budget" Mr. Goodale bragged in his budget speech - for the government to begin addressing the crisis of hunger, poverty and homelessness that its fiscal policies have created.

Martin's Finance Minister, Mr. Goodale, stated his first objective was, "to demonstrate unequivocally the principles of financial responsibility and integrity". But it is not very responsible to be "paying down the mortgage" if this means you don't have enough money left to cloth and feed your children.

As a society we pay a high price for poverty, not just in the additional costs poverty generates for our health care and prison system but also in the opportunities denied poor people, especially children, youth, women, immigrants and aboriginal people to participate fully in making their contribution to society.

Poverty creates a huge additional burden on the health system. According to a recent Toronto study, hospital admissions and associated costs were almost 50 percent higher from poor neighbourhoods than from rich ones. Professor Dennis Raphael of York University has estimated that since 23.7% of premature deaths from cardiovascular disease can be attributed to income differences, the additional costs to the health care system in Canada for cardiovascular disease alone is about $4 billion a year.

A 2002 National Council on Welfare Report on the Cost of Poverty identifies the cost of incarceration of low income offenders as a major cost to society. It is not that poor people are more likely to commit crimes. But those who are arrested, detained without bail, jailed and given the harshest sentences are people with low income. Canada has a relatively low rate of crime, especially violent crime, compared with other industrialized countries, but we have one of highest rates of imprisonment, especially of young people. Keeping so many people in jail costs the federal government over $1.3 billion annually.

The Report of the Royal Commission on Aboriginal Peoples estimated the costs of inequality and social exclusion of aboriginal people in Canada in 1996 was $7.5 billion. Of this $5.8 billion was estimated as the cost of foregone production because Aboriginal people are not able to fully participate to their potential in the economy and $1.7 billion for extra expenditures on remedial programs to cope with social problems.

Poverty creates huge barriers for children in their ability to get a good education and good jobs. Poverty also condemns children to poor nutrition and increased stress, which causes life-long health problems and shortens their life. While difficult to quantify in dollar terms, the costs of child poverty are perhaps the dearest.

We can stop wasting precious human resources and cut our social and economic costs by eliminating poverty. This is what needs to be the top priority for government, not reducing the debt.

If Mr. Martin wants to be remembered for something other than being the destroyer of Canada's social programs he needs to get busy right away to engage Canadians in a discussion of how we can work towards eliminating poverty and building a healthier and more productive economy. He could strike a parliamentary committee to go across Canada seeking input from Canadians, much the way Mr. Romanow successfully did for re-visioning our health care system. Then he needs to sit down with the provinces and negotiate the terms for a Social Transfer so that together they can begin building the social infrastructure we need for a healthy economy and a healthy society.

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