Campaign 2000 Puts Forward Its Proposals through the Fall Federal Public Pre-Budget Consultations

Campaign 2000 – Toronto, 20 Aug 08

Why Canada Needs a Poverty Reduction Strategy Now

Submission to Standing Committee on Finance
Pre-Budget Consultation

August 15, 2008

Executive Summary

Campaign 2000 is a non-partisan, cross-Canada coalition of more than 120 national, provincial and community organizations that has worked together since 1992 to end child and family poverty in Canada. We monitor progress on the implementation of the 1989 unanimous House of Commons resolution to end child poverty by the year 2000 and we develop practical proposals to move toward that goal.Campaign 2000 makes the following priority recommendation:

That the Government of Canada, in cooperation with provinces, territories, and First Nations, take leadership
in establishing a poverty reduction strategy for Canada, that includes targets and timetables, commitments to funding and resources and an accountability mechanism to measure progress. We suggest that the first target is 25% reduction in child and family poverty in the next five years and a 50% reduction over 10 years.

Campaign 2000 recommends these key components of a Poverty Reduction Strategy:

1. A Comprehensive Child Benefit System – With the National Child Benefit reaching its announced maximum of $3,200 in 2007, it is important to implement the next phase. A consolidated child benefit of up to $5,100 (2007 dollars) per child/year must be available to all low, modest and middle-income families; this benefit must not be clawed back by provincial governments from those vulnerable families on social assistance. It is estimated to cost $5 billion and would achieve 37% reduction in after-tax child poverty rate.

2. Creation of More Good Jobs at Living Wages – Despite record-low unemployment rates, about one-third (34%) of low income children live in families where at least one parent worked full time for the entire year and still could not rise above the poverty line. We urge the federal government to re-instate its minimum wage and set it at $10 an hour and indexed for inflation. This is an important role model for the provincial and territorial governments which, holding major responsibility, must raise the minimum wage to $10 an hour (2007$) by 2008. Work tax credits must be introduced together with raises in minimum wages; Campaign 2000 calls for federal work tax credits to reach a maximum of $2,400/year in conjunction with re-institution of the federal minimum wage to $10/hour and restoration of Employment Insurance eligibility and protection for all workers.

3. A Universally Accessible System of High-Quality Early Learning and Child Care Services. Early Learning and Child Care services support the development of children across the economic spectrum, allow mothers to work and are a key part of a poverty reduction strategy. The federal government needs to work with provinces, territories and First Nations to sustain existing services while phasing in a federally-funded program that would grow to entitle all children access to high quality early learning and child care services from birth to age 12 based on the shared principles of quality, universality, accessibility and developmental programming.

4. Full and timely implementation of the Kelowna Accord including a focus on Urban Aboriginal issues. Campaign 2000 shares the First Nations’ and premiers’ disappointment with cancellation of the Kelowna accord and urges the federal government to restore it. All governments need to work in good faith to ensure that the complex needs of all Aboriginal peoples are effectively met and sufficiently resourced.

5. Significant Expansion of Affordable Housing – Provinces must work in concert with the federal government and communities to deliver 25,000 affordable housing units built annually over the next five years as the need for affordable housing is immediate and continuous. The federal government must also commit to multi-year funding for a national housing and homelessness strategy.

Why Canada Needs a Poverty Reduction Strategy Now
Campaign 2000 Brief to the Standing Committee on Finance
August, 2008

Introduction

Campaign 2000 is a non-partisan, cross-Canada coalition of more than 120 national, provincial and community organizations committed to working together to end child and family poverty in Canada. We monitor progress on the implementation of the 1989 unanimous House of Commons resolution to end child poverty by the year 2000 and we develop practical proposals to move toward that goal. Since its inception in 1992, Campaign 2000 has viewed the elimination of child and family poverty and the assurance of equal opportunities from birth for all children as key challenges for Canada. Recent experiences in the UK and here in Quebec and Newfoundland & Labrador have demonstrated that a defined poverty reduction strategy with targets, timelines and dedicated resources including public revenues can reduce poverty. The tax system and public revenues, including income transfers, tax credits and adequate public funding for income support systems and essential community services, are key to an effective poverty reduction strategy.

In recent years, healthy economic growth has not been shared equitably as evidenced by a growing gap among rich and poor in Canada. Campaign 2000 contends that a progressive and equitable nation which meets the needs of all of its citizens will ensure that economic gains are widely shared among all segments of society, thereby helping to achieve a social inclusion agenda for Canada. Statistics Canada reports that the real incomes of the richest 20% of families rose by about 10% between 1990 and 2000, while the poorest 20% of families experienced stagnating income. (Garnett Picot and John Myles, Income Inequality and Low Income in Canada: An International Perspective. Statistics Canada. February 2005)

The most recent figures indicate that more than 1 million children – almost 1 child in 6 lives in poverty or 15.8% of all children in Canada (2006 pre-tax LICO figures from Statistics Canada’s Income in Canada 2006).

A careful look at the longer-range statistics shows that we have yet to overcome the entrenchment of child poverty in Canada. Child poverty rates have historically fluctuated according to economic cycles. While it is encouraging that the child and family poverty rate went down from 2005 to 2006, more than 1 million children and their families still live in straightened circumstances. That’s about the population of Calgary. The reality is that despite the economic ups and downs throughout the past 20 years, child and family poverty rates have hovered at around 1 in 6 children.

Children’s poverty is family poverty. And some families are more vulnerable than others as reported in the 2001 Census (2006 data not yet available):

Children of recent immigrants (’96-’01): 1 in every 2 children lives in poverty
All immigrant children: 40% live below poverty line
Aboriginal children (off-reserve): 40%
Aboriginal children on reserve – situation likely worse but is not measured by Statistics Canada
Visible minority children: 34% live below the poverty line
Children with disabilities: 28%

The poverty rate tells only half of the story. The other half is the depth of poverty families face. On average, two-parent low income families, for example, would need an extra $10,300/year just to reach the poverty line (2006 before tax LICO). The depth of poverty is a key indicator of distress for many families that must rely on income assistance when they are not able to participate in the labour force due to health–related issues, disability of either the child or parent(s), family responsibilities and/or the lack of accessible, reliable early childhood education and care (ECEC) services. The extent of deprivation is also reflected in stubbornly high rates of food bank use. More than 278,000 children per month – about 39% of all food bank users are children (Canadian Association of Food Banks. Hunger Count 2007).

Why Canada Needs a Poverty Reduction Strategy Now

Child and family poverty is persistent

Despite periods of strong economic growth and high rates of employment, the child and family poverty rate in Canada has remained stubbornly high since 1989. Canada’s child poverty rate ranks as the 19th highest out of 26 OECD nations as reported by UNICEF (Child Poverty in Rich Nations. 2005). Despite some very important and effective achievements in child benefits, early learning and child care services and affordable housing in several provinces, governments in collaboration with communities have a great deal of work left to do to reduce child poverty. The child poverty rate is virtually the same as it was at its lowest level in 1989. The downward trend of the past few years is encouraging. Too many low income families still struggle far below the poverty line, even though the majority of parents and guardians are in the paid labour force. This is not the Canada that most Canadians want.

It must be stressed that low income children are not responsible for their situation and that child and family poverty is not inevitable. Indeed, many OECD nations have succeeded in bringing child and family poverty levels down to 5% or less while still maintaining competitive economies.

Canada’s child population is barely growing

The demographic projections show us that Canada needs each of its children to grow and thrive, not merely survive. Canada has an aging population that will increasingly put pressures on the public health care, financial and support systems during retirement. The rising wave of retirements of the baby boom generation is expected to peak in 2020. The number of working-age Canadians in proportion to seniors has decreased and the decline is expected to continue. Research shows that robust support programs for families such as accessible child care and paid parental leave are linked to higher birth rates while allowing mothers to participate in the paid labour force.

At the same time, the number of children and youth under 25 is expected to decline to 9.3 million from the current 10 million by 2020. Children and youth will also account for a smaller share of Canada’s population, from 32% in 2004 to 26% by 2020 (Canadian Council on Social Development. Progress of Canada’s Children and Youth 2006). We will need to support and nurture all of our young people beginning in the early years and continuing through adolescence and youth as today’s children, as well as immigrants, will provide the skills and energy for the workforce of tomorrow.

Many industrial sectors are already beginning to experience labour shortages, most notably in the trades. We cannot afford to continue to eliminate young people from the skilled labour force because they cannot overcome the barrier of poverty.

Poverty is making us sick

Poverty is a key determinant of health; with lower poverty, there is a healthier population of Canadians who will be ready and able to participate in society, will achieve educational goals and will replenish our labour force, becoming our teachers, trades people, doctors, business leaders and parents of tomorrow.

Reducing child and family poverty rates by increasing family incomes helps to improve the health of the population and reduce the likelihood that people will need health care interventions. Reducing poverty is a strategic investment that will reduce health care and social services expenditures over the long term. Studies including the National Longitudinal Study of Children and Youth demonstrate that low income children are more than twice as likely to have problems of vision, hearing, speech, mobility, dexterity, cognition, emotion and pain. Improved family incomes would also mean that low income children would not have to rely on food banks to achieve food security and good nutrition, a key component of good health.

Dr. David Butler-Jones, Canada’s Chief Public Health Officer, highlighted child poverty as one of the three key challenges for Canada. In the first Report on the State of Public Health in Canada 2008, he reminded us that as a well-endowed nation, Canada has the “necessary means and talent” to ensure that individuals achieve their goals and that Canada realizes its full economic and social potential (Government of Canada. The Chief Public Health Officer’s Report on the State of Public Health in Canada 2008. p. 68).

Governments have the know-how to reduce poverty

Lessons from other industrialized nations can assist Canada in developing a poverty reduction strategy that has the potential to succeed just as Canada’s concerted policies for seniors instituted in the 1970s have substantially reduced poverty among those over 65 years. Poverty reduction requires explicit commitments by governments to lower levels of poverty. UNICEF (2005) has called for rich countries to adopt targets and timetables for the progressive reduction of child poverty. For countries with two-digit levels of poverty such as Canada, the UN calls for a two stage process of poverty reduction. In stage one, two digit countries would lower their poverty levels to one digit (that is, below 10%). In the second stage, one digit countries would strive to lower their poverty rates to Nordic levels of 5% or less.

Progress in the UK and Quebec and promise in Newfoundland & Labrador, Ontario, Nova Scotia

Former Prime Minister Tony Blair’s daring initiative, now strongly supported by Prime Minister Gordon Brown, set out a twenty-year mission beginning in 1999 to end child poverty as part of his vision to make the UK globally competitive. The vision included partnerships with the non-governmental sector and the private sector to ensure families have income security through public benefits and through work; essential training and skills up-grading, a balance of the rights and responsibilities of those receiving benefits and a guarantee of “work for those who can, security for those who cannot.” (Blair, Tony. Beveridge Lecture. 1999. as quoted in Elisa Minoff. The UK Commitment: Ending Child Poverty by 2020. Center for Law and Policy. January 30, 2006. p.2) Blair and his Labour government went on to set defined targets: end child poverty by 2020 in phases; reduce it by 25% by 2004 and by 50% by 2010. Additional targets to strengthen the quality of affordable housing, education and health services were also put forth. From 1999 to 2004, the UK succeeded in removing 600,000 children from living in poverty. While the target was 700,000 fewer children in poverty, the UK achievement remains impressive and exemplary.

Quebec’s 2004 Action Plan to implement its Anti-Poverty Law built on important trends underway. Beginning in 1997, the child and family rate of poverty in Quebec has steadily declined from a peak of 22% in 1997 to 14.7% (before tax LICO) in 2006. New family supports including expansion of a universal affordable early learning and child care system, an increased child benefit and improved parental leave are key planks in Quebec’s anti-poverty strategy.

Newfoundland and Labrador’s Poverty Reduction Plan announced in 2007 is well-articulated and soon results will enable a fair assessment. The government of Ontario’s commitment to develop a Poverty Reduction Strategy with targets and measures, facilitated by a Cabinet Committee on Poverty Reduction, will be released by the end of 2008. In Nova Scotia, too, there are encouraging developments as government departments review recommendations for poverty reduction that were developed by a working group consisting of community members and government officials

Government of Canada’s role is central in poverty reduction

Canada, too, has successfully used tax measures and government transfer payments to influence poverty rates. The effectiveness of measures like the GST credit, the Canada Child Tax Benefit (CCTB), and Employment Insurance must be highlighted. Without these public investments the poverty rate for low income families with children would have been much higher at 26% (before tax LICO) in 2005, in contrast to 16% (before tax LICO) after government transfers (Statistics Canada. Survey of Labour and Income Dynamics (SLID) masterfile (1993-2005).

The key lesson is that the impact or outcome depends on how much is invested. The Canada Child Tax Benefit (CCTB) reached its announced maximum of $3,200 in July 2007. It is important to implement the next phase by increasing public investment in the National Child Benefit) to a maximum of $5,100 (2007 dollars) per child per year in order to achieve significant and sustained reduction in child poverty. Campaign 2000 estimates this would cost an additional $5 billion and would achieve a 37% decline in the after tax child poverty rate (LICO-AT).

The recently-introduced Working Income Tax Benefit attempts to assist low income workers but does not go far enough. Work tax credits must be introduced together with raises in minimum wages; if not, the work tax credits become subsidies to employers paying poverty level wages. Campaign 2000 calls for federal work tax credits to reach a maximum of $2,400/year in conjunction with re-institution of the federal minimum wage to $10/hour. Campaign 2000 has also urged provinces to increase minimum wages expeditiously. Restoration of Employment Insurance eligibility and protection is essential to the prevention and reduction of poverty rates.

Campaign 2000 recommends these key components of a Poverty Reduction Strategy:

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Contact: Laurel Rothman – laurelro@familyservicetoronto.org – tel: 416-595-9230, ext. 228

Campaign 2000 Puts Forward Its Proposals through the Fall Federal Public Pre-Budget Consultations

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