Economic crisis highlights need to address poverty

Published in the Catalyst, Vol. 32, No. 1 - Winter 2009

Michael was an average sort of guy. He worked hard. He played hard. Then, in 1993 he was diagnosed with cancer. He was told it would be the toughest fight he would ever fight. But when he could no longer work, he began to slide into poverty. It was then that the real battle began.

For 14 years, he was stripped of his dignity and shackled by the chains of poverty. He was forced to make impossible decisions like whether to buy “new” used clothes or a pair of winter boots, whether to pay his phone bill or buy a bus pass to get to his doctor’s appointments.

Over the past 25 years, poverty rates in Canada have remained roughly steady. With the exception of seniors, who benefited from targeted policies begun in the 1960s, the poverty rates for every other age group have stayed relatively close to 15 per cent. Currently, more than 3.4 million Canadians live in poverty.

Poverty is an affront to the human dignity of people created in the image of God, and inaction on the issue runs counter to the biblical call to seek justice and to serve the poor. Failure to take action on poverty is also a violation of human rights.

The stark reality of poverty in Canada is reflected in hunger and housing insecurity. In just one month of 2007, 720,231 Canadians turned to food banks to meet their basic food needs. One in four Canadian households pays 30 per cent or more of their income on housing. A nationwide affordability crisis is emerging as tenant incomes are falling and rents are rising faster than inflation.

In Vancouver, the number of homeless people more than doubled from 2002 to 2008. The 2007 Ottawa Report Card on Ending Homelessness showed more children in families stayed in shelters, reflecting more families experiencing homelessness.

The Canadian Economy

Canada experienced strong economic growth between 1995 and 2005, with Gross Domestic Product (GDP) increasing by 27 per cent when controlling for inflation. The unemployment rate during this period dropped to levels not seen in 30 years.

Yet poverty rates did not decline at the same rate. Indeed, in 2005, child and family poverty rates remained higher than in 1989, when the House of Commons unanimously declared its support for eliminating child poverty in Canada by the year 2000.

The hard reality is that even during a period of economic strength, the majority of Canadian households were working longer hours simply to maintain the standard of living that households had in the 1970s. On average, Canadian families with children were putting in 200 hours more each year at work. But only the top ten per cent of households have seen a real increase in their incomes. The bottom 40 per cent have been working longer but actually earning less than households earned a generation ago.

Figures from Statistics Canada have confirmed what Canadians already know: we are heading into a recession. After stalling in October 2008, GDP fell 0.7 per cent in November. Employment levels also went flat and then declined, increasing the number of unemployed Canadians by 234,000 between November and January.

The poor are the first to lose their jobs and find it harder to get new work. Social assistance and Employment Insurance (EI) are inadequate to prevent people from living in poverty. As the Canadian economy continues to slump, it is clear that the difficulties faced by poor Canadians will increase. And more Canadians will slide into poverty.

Federal Budget 2009

With the recent federal budget, the government had the opportunity to announce an economic stimulus package that would protect the most vulnerable Canadians and implement lasting policies to create a poverty-free Canada.

In our December 17 letter to Finance Minister Jim Flaherty, CPJ called for the 2009 Federal Budget to include a “visionary stimulus package” with a federal poverty reduction strategy at its core. Such a package, we said, “would be designed to limit unemployment and strengthen the stability of families, create a more ecologically sensitive infrastructure, and construct a fairer and more secure global economy.”

Unfortunately, the Conservative government failed to deliver for Canada’s poor. The budget contained no poverty reduction strategy, and the measures aimed at “low-income” Canadians provide far too little for those that need it most:

• Funding announced for social housing does not include any of the desperately needed new construction.
• The access cut-off for the Working Income Tax Benefit remains so low that someone working full-time, year-round at minimum wage will not qualify.
• There was no benefit increase in the Canada Child Tax Benefit and the National Child Benefit Supplement.

According to David Macdonald of the Canadian Centre for Policy Alternatives, “only 5% of [the] budget is actually devoted to tax measures to help vulnerable low income Canadians.”

Perhaps the most egregious deficiency in the budget was the failure to reform EI. Only 40 per cent of unemployed Canadians qualify for EI, and benefit rates are low. The budget announced a freeze on premiums for the next two years and a five week extension of available benefits. These paltry reforms do little to address the pressing challenge of unemployment.

On the positive side, the budget allocated $1.5 billion for re-training that will include some unemployed Canadians who do not qualify for EI. However, as the recession continues to deepen, it is unconscionable that 60 per cent of unemployed Canadians will still not have access to EI, and those struggling to find new work will only have five extra weeks to look for a job.

Provincial Poverty Reduction Strategies

Despite federal inaction, provinces are making steady progress. Following the lead of Quebec (2002) and Newfoundland and Labrador (2005), the Ontario government, making good on an earlier election promise, introduced a poverty reduction strategy in December 2008. The Ontario strategy aims to reduce the number of children living in poverty by 25 per cent in five years.

Exciting new provincial initiatives are also in the works. The “Social Inclusion and Anti-Poverty Act” has had its first reading in the Manitoba legislature. Consultations are under way in New Brunswick. The Nova Scotia government is currently considering recommendations from a Poverty Reduction Strategy Working Group. Strategies are expected in both New Brunswick and Nova Scotia by the fall of 2009.

In PEI, the multi-sector Poverty Reduction Network counts the provincial government among its members. Community groups and social justice organizations in BC, Alberta and Saskatchewan are all calling for poverty reduction strategies in those provinces.

These tremendous advances have been accompanied by an urgent call. Shawn Skinner, former Minister of Human Resources, Labour and Employment in Newfoundland and Labrador, and Dalton McGuinty, Premier of Ontario, have both said that provincial strategies will only be successful if the federal government supports them.

The Need for Federal Action

In 2007, Michael signed up for the 12-week training program offered by Voices from the Street, a Toronto organization that helps people living in poverty reclaim their voice. Inspired by the courage he saw in others as they shared their own struggles, Michael began his personal fight out of poverty.

Through his engagement with Voices from the Street, he has regained his dignity. He is not a victim, but rather a courageous advocate for change. Michael now sits on the Board of Directors of Canada Without Poverty (formally the National Anti-Poverty Organization) and is actively engaged in helping to make Canada poverty-free.

The efforts of individuals like Michael are essential as we work towards the goal of a poverty-free Canada. The role of community organizations and faith groups, as well as provincial governments cannot be underestimated. Still, it is clear that we need the support of the federal government and that diverse initiatives must be coordinated through a federal poverty reduction strategy.

Everyone deserves to live in dignity: to have self-esteem, to be valued, and to be a part of a community. Hunger, homelessness and unemployment all rob people of their dignity. While challenging to be sure, the current global recession has provided the Government of Canada with an opportunity to do things differently.

Strong federal action aimed squarely at addressing the needs of Canada’s most vulnerable could make a difference. It could move Canada towards eliminating poverty. And it could ensure dignity for all.

 
Did you know?

• 83% of all Canadians are worried about the rising cost of living
• Over 50% are concerned about their financial futures
• 39% believe that they are only “one or two paycheques away from being poor” themselves
• 77% agree that in a recession, it’s even more important to prioritize helping poor Canadians
• 90% say it is time for “strong leadership” to reduce the number of poor Canadians
• 89% say both the Prime Minister and Premiers need to “set concrete targets and timelines” as part of reducing poverty

Figures from Ready for Leadership: Canadians’ Perceptions of Poverty, published by the Canadian Centre for Policy Alternatives