Investing in (ending) poverty

Simon's picture

As CPJ’s recent pre-budget submission to the federal Finance Committee illustrated, economic recovery and promoting the well-being of all Canadians, including those living in poverty, are not mutually exclusive. It is possible to re-allocate priorities in a way that bolsters the economy while pursuing the common good. We can actually save money by investing in people.

Growing fundsOver 3 million Canadians continue to live in poverty, more or less the same percentage of the total population as 20 years ago. This group includes people who are disabled, recently unemployed, elderly, those living with mental health issues, immigrants whose credentials aren’t recognized, refugees lacking support networks, Aboriginal peoples who have endured generations of systemic abuse, children, and the working poor. Poverty can touch anyone, most often through no fault of their own.

For those caught in the cycle of poverty, it can be next to impossible to get out. Forced to rely on inadequate and short-sighted social programs that often result in choosing between paying rent and buying groceries, people living in poverty rarely have the chance to get ahead and live in dignity as God intended. Rather than lift people out of poverty, our current social programs trap people in poverty.

There is little doubt that something needs to be done. But what?

At the end of September, the National Council on Welfare (an independent but federally-funded agency) released a thought-provoking report designed to help Canada re-think its response to the persistence of poverty. Entitled, "The Dollars and Sense of Solving Poverty", the 105 page report makes the case that, rather than viewing poverty as an inevitable reality and, therefore, an inevitable expenditure, Canada needs “an investment approach” that provides people with a better chance of getting out of poverty. In addition to lowering poverty rates, such an approach could dramatically reduce the significant cost of poverty borne by taxpayers.

The council estimates the total cost of poverty in Canada to be more than $24 billion a year. This figure includes direct spending on social programs, income support measures, emergency shelters and so forth, but it also takes into account the indirect and societal costs resulting from poverty such as those incurred by the health care and justice systems, lost productivity and a decreased tax base.

As Senator Hugh Segal commented at the release of the council’s report, “Poverty is very costly; we can’t afford not to act. We don’t need to spend more; we need to spend it wisely”.

Take the following illustration: in 2007 it would have taken approximately $12.6 billion to raise the income of all Canadians above the poverty line. Yet, in that same year, double that amount was incurred by taxpayers with no reduction in poverty rates. While raising the incomes of people in poverty is only part of the solution the point is clear: wiser spending decisions are needed. We must move from half-measures and Band-Aid solutions to poverty to approaches that can lift people out of poverty and benefit everyone as a result.

Or consider this example: a 2009 study in Calgary cited in the report found that keeping a person in a homeless shelter could cost up to $42,000 a year while prison or psychiatric hospitals can run up to $120,000 a year. Between the stress of living in overcrowded environments, a subsistence livelihood, and oftentimes punitive welfare rules that provide little incentive to work, chances are that person will be no better off, perhaps even worse, in a year’s time. Offering supportive housing to that person, though, would cost substantially less: $13,000 - $18,000 a year. With housing and other supports in place, that person might then be able to concentrate on getting back on their feet and contributing to society. Building affordable housing would also create jobs. But instead of making this wise economic investment, our current system tends to trap people in poverty, something that comes at a greater social and economic cost.

Unsurprisingly, the report concludes that, “Canadians are paying the most in the least productive areas.” We could invest in affordable medicine, but instead we bear the exorbitant cost of emergency room visits. We could invest in childcare, but instead bear the cost of keeping single-parents who want to work on welfare. We could invest in housing, but instead bear the cost of shelters.

Investing in ending poverty makes good economic sense. It’s time for a national conversation about the true cost of poverty and the need to take action.

Simon is CPJ's Socio-Economic Policy Analyst.

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