Mr. Frank Fedyk (Associate Assistant Deputy Minister, Strategic Policy and Research, Department of Human Resources and Social Development):
I'm very pleased to be here to address the committee on the subject of poverty, which is an important issue to the department.
Canada's economic and labour market performance has remained strong in uncertain times. We are experiencing the second-longest period of economic expansion in Canadian history. The unemployment rate is at its lowest level in 33 years, and more Canadians are working than ever before.
However, some Canadians are not benefiting fully from this prosperity and are living in low income. Canada, like most other industrial nations, does not have an official measure of poverty. A suite of low-income measures is used in Canada. We have the market basket measure, the low-income cut-offs, and the low-income measure.
For my comments, we're using the post-tax low-income cut-offs to present some trends of low income over time. HRSDC has developed the market basket measure; however, trend data for this indicator is only available for the period from 2000 to 2004. Overall, about 3.4 million Canadians were living in low income in 2005, based on the post-tax low-income cut-off and using the most recent data. Of these 3.4 million, 790,000 were children, 2.4 million were working-age adults, and 240,000 were seniors.
There are groups of Canadians, such as the aboriginal population, who are much more likely to live in low income at any point in time and for a prolonged period of time. Placed in an international context, Canada's low-income record is comparable to many of our key partners, but not as strong as the Nordic countries. Based on 2000 OECD data, the most recent data available for comparative purposes, Canada ranks 14th out of 25 OECD countries in terms of overall low income.
HRSDC has calculated more recent data, based on 2004 and gathered from individual countries; Canada has a rate comparable to those of Ireland, New Zealand, the United Kingdom, and Australia, and we are lower than the U.S.
Canada's low-income rate for seniors is consistently one of the lowest in the OECD. Finally, research shows that by international standards, Canadian society is characterized by a good deal of intergenerational mobility: low income in childhood does not preordain low income in adulthood.
I'm going to very briefly outline some broad low-income trends and challenges based on analysis and research that has been conducted by HRSDC officials, keeping in mind that this has implications for all levels of government. I'll then briefly mention some federal measures that are addressing poverty.
In terms of key trends in low income, for working-age adults and for their children, low-income rates have tended to follow the economic cycle, although typically there's a bit of a lag. Consistent with the current economic cycle, since 1996 the low-income rate for working-age adults fell from a peak of 15.7% to 11.4% in 2005. For children, the low-income rate fell from a peak of 18.6% in 1996 to 11.7% in 2005.
However, when you compare low-income rates to 1989, a comparable period in terms of economic progress, today's low-income rates are roughly the same. The low-income rate for working-age adults was 9.4% in 1989, while the low-income rate for children was 11.7%, so while there's been significant recent progress over a longer period of time, there are challenges in reducing low-income rates for the working-age population and their children.
The declining low-income rate over the past 25 years for Canada's senior population has been a significant success story. The low-income rate was 6.1% in 2005 for seniors, down markedly from 21.3% in 1980. This decline is the result of the maturation of the CPP, the enhancement of the OAS and GIS, and the increase in private savings.
Looking ahead, while significant progress has been made in addressing poverty in Canada, a number of ongoing and interrelated challenges remain. They are national in scope.
One is the working poor. Many Canadians have a strong attachment to the workforce but are still unable to earn an income that is adequate for meeting the needs of their families. HRSDC analysis has shown that in 2005, 1.6 million Canadians were living in a working poor family, and over 40% of children living in low income were in a working poor family.
These working poor Canadians have a strong attachment to the labour market. On average, they work as many hours as other workers. In addition to having low incomes, the working poor are much less likely than other workers to have access to work-related benefits such as disability insurance, family dental plans, and private insurance plans.
Some groups are vulnerable to persistent poverty. It's worth noting that persons with disabilities, lone parents, recent immigrants, aboriginal Canadians living off reserve, and unattached individuals aged 45 years to 64 years are at a substantially greater risk of persistent low income; that is, they have a cumulative income over a six-year period that is below the cumulative low-income threshold for that same six-year period.
Research on these groups at risk of persistent low income shows that they are more likely to be outside the labour force, to have lower education, to be the sole adult in a family unit, to live in a high unemployment area, and to never have been married.
Now I will discuss the federal government's role. As poverty is complex and multi-dimensional, so too are the responses in place to support low-income Canadians. These range from a progressive income tax system to direct income support and highly targeted programs and services.
The federal government invests significantly in measures to address poverty and the economic security of Canadians. The Speech from the Throne indicated that the government will continue to invest in families and will help those seeking to break free of cycles of homelessness and poverty.
Let me briefly tell you about some of the federal government's investments.
The federal government provides direct income benefits and tax relief to families. For example, the federal government provides over $13 billion annually in benefits for families with children, the vast majority of this going to low- and moderate-income families.
This includes the $3.7 billion for the national child benefit supplement, the federal government's contribution to the FPT NCB initiative. As a result of the NCB, an estimated 59,000 families with 125,000 children were prevented from living in low income in 2004.
Through old age security, including the guaranteed income supplement for low-income seniors, the federal government provides $30 billion annually to Canada's seniors.
The employment insurance program provides temporary income support to those who are unemployed. Total EI income benefits paid were $12.68 billion in 2005-06. To support low-income working Canadians--that is, the working poor--the government introduced the working income tax benefit, WITB, in 2007. For 2008, the WITB provides maximum benefits of $510 per year for individuals and $1,019 for couples or lone parents, at a cost of $550 million per year.
Over $9 billion is invested annually in a range of programs for Canadians with disabilities, including the CPP disability benefit, a number of tax measures such as the child disability benefit, and the labour market agreements for persons with disabilities.
As this committee knows, having recently completed your employability study, improving the labour market outcomes of vulnerable Canadians is key to their economic success. The federal government has a number of labour market and skills initiatives, many of which are aimed at supporting groups who are underrepresented in the labour market. For example, Budget 2007 implemented a new labour market architecture, including $500 million in annual investments over six years to enhance access to training through labour market agreements with the provinces and territories.
The opportunities fund for persons with disabilities together with the labour market agreements for persons with disabilities aim to help persons with disabilities obtain and keep employment.
The aboriginal human resource development strategy and the aboriginal skills employment partnership aim to increase aboriginal participation in the Canadian labour market and help close the gap between aboriginal and Canadian employment levels.
In light of the current and low unemployment and labour market shortages, vulnerable groups may have many more opportunities to increase their labour market participation, including aboriginal youth in the west.
Finally, one of the department's key targeted initiatives is the homelessness partnership strategy, which was launched in April 2007, and funding of $269.6 million over two years to prevent and reduce homelessness. I also raise, for your information, the recent budget announcement concerning the Mental Health Commission. Recognizing the interconnectedness of homelessness and mental health disorders, Budget 2008 announced funding of $110 million to the Mental Health Commission to support demonstration projects that are focused on mental health and homelessness.
To sum up, it is clear that poverty is a complex, multi-faceted issue. As such, poverty takes the action of many players to successfully address: the federal government, provincial and territorial governments, stakeholders, and the private sector.
We'd like to thank the committee for its attention and let the committee know that HRD officials are at its disposal.
Thank you, Mr. Chair.
Mrs. Sylvie Michaud (Director, Income Statistics Division, Statistics Canada):
My presentation will be in English, but please feel free to ask your questions in either French or English.
I'd like to thank the members of the committee for having us here. I'm with Garnett Picot. He's the director general of the analysis group, and he's the one who can give you more details on some of the findings in the detailed studies, if you're interested.
As has been mentioned by Mr. Fedyk, Canada doesn't have an official measure of poverty, and there's no international standard on the definition or measurement of poverty either. Statistics Canada has always maintained that it is not the role of a statistical office to define and measure poverty; we could lose a bit of the neutrality that is part of the agency.
While there's no consensus on the measure of poverty in Canada, in the early 1960s, Statistics Canada realized there was a need to have something that would show what's happening at the bottom of the income distribution. So since the early 1960s, we've been producing statistics on what we call the low-income cut-offs, the LICOs.
In the supplementary slides at the end of my package, I talk about the LICOs and the LIM, and I give background about what's done in other countries for poverty measurement. But for the sake of simplicity, the LICO is basically spending, on average, 20% more than the average family on food, shelter, and clothing. That's the basic methodology behind the LICO.
We use two kinds of incomes to calculate how much income you need. We calculate a total income before taxes and a total income after tax. We suggest you use the total income after tax because it takes into account the two mechanisms that are used for government for redistributing income, and those are taxes and transfers.
We produce these rates on an annual basis. We also produce the low-income measure. The low-income measure is half the adjusted median income. This measure is usually used for international comparisons. It's a relative measure. It has different statistical properties. So it's not a measure that we feature prominently; it's more something that we use to compare Canada with other countries in the world.
Since the late 1990s, HRDC has produced an alternative measure to our current LICO methodology. It was trying to address two limitations of our current LICO methodology. One is having more detailed geography, and the second is having more of an absolute measure of low income.
While that measure is relatively new, I'll present trends with the LICO and with the MBM, to put the two measures in context.
Mrs. Sylvie Michaud:
If you turn to the slide on page 3 of the handout, you will see a blue line that indicates the trends since 1980.
Sorry, I'll go back to English. I switched to French.
If we go back to the low-income trends since the early 1980s--in blue you have the LICO after tax rate--as Mr. Fedyk has mentioned, you see that there were two peaks following the two recessions in the early 1980s and in the 1990s, when low-income rates rose significantly. The message is that basically in the late 2000s, the low-income rate is roughly back to where it was in 1980. There are more people above the low-income rate because there is an increased population, but the rate was roughly the same in 2004 as it was in 1980. There was a slight decrease in 2005. We'll see next year if that trend is continuing.
I've talked about the MBM as being a relatively new measure. At the Canada level, if we look at the transfer of the MBM from 2000 to 2004, the Canada level gives roughly the same picture of a low-income rate slightly declining in the beginning of the 2000s.
If we move on to page 4, this apparent stability in the low-income rates masks some trends that are different among age groups. Again, this has been mentioned by Mr. Fedyk from HRSDC. The most noticeable trend is the significant decrease in the low-income rate, based on income after tax for seniors, from 1980 to 2005. That's the green line. You can see that there's been a significant decrease in the low-income rate.
There has been a slight increase for working-aged people, 18 to 64. It is about the same level for low-income rates for children under 18.
The source of the data we produce for our low-income rates is actually a longitudinal survey. That means you follow people through time. This allows us to see from year to year how many people move in and out of low income. People are followed for six years.
So if we look at our last six years of data, our last panel, which is from 1999 to 2004, basically 80% of Canadians were not below the low-income level in any of these six years. Twelve percent were under the low-income level for one or two years; 4.3% were there three to four years; and 3.7% were there five or six years, which may be more the group that you would call persistent low income.
There has been some research that has shown--and it was mentioned again before--that there are some persistent low-income groups, which are highly concentrated among five at-risk groups: unattached individuals aged 45 to 64, persons with a work-limiting disability, recent immigrants, lone parents, and aboriginal Canadians living off reserve.
With the current source of data, the survey of labour and income dynamics, because of sample size, I'd say there are some groups I'd prefer not to give statistics on. Our census of the population May 1 will release the income data from the census. You'll have a lot more detailed information. So if the committee is interested, there are more updated numbers, and following the May 1 release of the data, we'd be happy to provide you updated information.
I'm going to give you some trends on two groups in particular: lone parents and recent immigrants. The trend you have on the top line is that for lone-parent families. The overall message is that while low-income rates of lone-parent families have decreased from the early 1980s to what we see in 2005, they remain significantly higher than the low-income rates for families with two parents and children.
The next slide shows that for low-income families there's been an improvement, though it's still much higher. But there is a group, which we call the recent immigrants, particularly immigrants who have arrived in the last five years, for whom conditions have not actually improved.
For this we used a slightly different methodology. I have here not the low-income rates of recent immigrants, but more the relative position of low-income rates of recent immigrants compared to Canadian-borns. If you look at the chart on the left, it tells you that in 1980 the low-income rate of immigrants who had arrived in Canada in the last five years was roughly 1.4 times higher than the low-income rates of the Canadian-born population.
That ratio--the relative deterioration of the relative positions of recent immigrants--meant that by 1995, immigrants who arrived in Canada in the five years prior to the 1996 census had a low-income rate that was 2.7 times higher than the low-income rate of the Canadian-born population.
The last year for which we have census data is 2000. There was a slight improvement from 1995 to 2000, but using administrative data--a slightly different methodology—part of the decrease seems to have been due to the qualifications of some of the immigrants who came in, particularly one group where there were more in some of the high-tech and engineering groups. The situation improved a bit for some between 1995 and 2000, but because of the slowdown in high tech in early 2001, it has increased again. So the relative position of low-income rates of recent immigrants in 2002 has increased again to be close to 1995 rates. In the last two years it seems to have improved, but it hasn't quite recuperated yet.
I've talked about the market basket measures and the LICO. If you were looking at trends for children, seniors, and working-age adults, most of the trends are similar if you use the LICO or the MBM. However, if we look at provincial ranking and how provinces fare, the two measures give different levels and trends. If we look at 2004, which is presented on slide 4, you can see that on the blue line you have what is typically produced with low income after tax. On the red you have the market basket measure. You can see that Quebec, for example, which has one of the highest low-income rates under the LICO, has the lowest rate using the market basket measure of low income.
Why is there such a difference between the measure you choose for low-income rates between the LICO and the MBM? They are two very different methodologies. They don't use the same income measure for how much income you need. One uses income after taxes; one uses an MBM disposable income. There are also fundamental differences. The MBM is more a measure of cost of living.
If you look on slide 10, the methodology that was used with the LICO shows that you require the same amount of money for all cities that have 500,000 people or more. It would be the same for eight large cities in Canada, including Montreal, Toronto, Calgary, and Vancouver. Under the MBM, because it's more of a cost of living measure that is based more on geography, you actually reflect that the median rent in Montreal is about $5,000 less than the median rent in Toronto or Vancouver. So if you are looking at geographic background, that is why the MBM gives a very different picture than the LICO at the provincial level.
There are also other differences, such as how we handle transportation. That shows fewer differences between rural and urban with the MBM than with the LICO. Basically, the MBM assumes that in cities you will use public transportation. That's usually not available in rural areas, so because of that, low-income rates in rural...you need to have a car, so expenses are more. That's why the thresholds are higher, and that explains some of the differences.
Mr. Garnett Picot:
I'll make this quick.
Why are low-income rates declining among lone parents? We asked that question, and after so many years we noticed that employment earnings were rising and employment rates were rising among lone parents. Why was that? Basically we found two things. One, the change was concentrated among older lone parents, those over 40, in Canada. Secondly, it had a lot to do with demographic change.
Lone parents are very different kinds of people now as compared to 20 years ago. They're much better educated and have more work experience since they're older. Those two factors had a lot to do with the improvement in earnings and the improvement in employment. More highly educated people tend to seek jobs, tend to be more employed, and of course earn more money. A lot of the decline in low income among lone parents had to do with changing demography. That's the main message there.
Internationally, Canada's relative low-income rate stands in the middle of the pack. We're talking about relative low-income rates here, so it's relative to the median income of that country. When you measure it in that way, which is a standard way of doing it internationally, we have a lower low-income rate overall than do the United States and typically the U.K. quite frequently, but much higher that what we find in most western European countries, and certainly the Nordic countries. We're sort of in the middle of the pack.
As far as what's been happening to the decline among the elderly in low-income rate goes, as was mentioned earlier, that is truly a success story in Canada. Back in the 1970s we had one of the highest low-income rates among the elderly, and we now have one of the lowest internationally. That's an important dimension of that.
The third issue, which I've mentioned, is intergenerational transmission of earnings among poorer families. In the supplementary slides there is slide 13, if you wish to go to it. It asks what will happen to the sons of a father who is in the bottom one-quarter of the earnings distribution--that is part of the one-quarter of the population earning the least--when they become adults. Are they going to find themselves at the bottom of the earnings distribution as well?
What this study found was that about one-third of them will. Of all the sons of the fathers who are in the bottom of the earnings distribution, or the sons who are in poorer families, about one-third of them remain in poorer families when they grow up and start earning money themselves in their early thirties, but the rest move up.
There were two comments here. First, there is more mobility, more movement up the earnings distribution than we expected to see. Second, there is more mobility up the earnings distribution in Canada than we see in the United States or in the U.K. If you're born in a poorer family in Canada, you have a better chance of moving up than would someone in a similar situation in the U.S., for instance. We are sort of in the same ballpark in terms of intergenerational mobility as are the Nordic countries. They have a lot of mobility as well.
There are many mechanisms whereby people move up. One of them is education. A big difference between us and the Americans, for instance, is in terms of education and access to education. If a child grows up in a poorer family in Canada--that is, a family in the bottom one-quarter of the income distribution--the probability of them going to university or college is much higher in Canada than it is in the U.S. That may be part of the reason we see this intergenerational transmission. They're more likely to acquire education, which allows them to move up the income distribution.
At the higher levels, if you come from a richer family, you're more likely to go to university in the United States than you are in Canada. It's the opposite at the top. Since we're concerned with the bottom of the income distribution, that may be part of the story.
I'll leave it there.
Mr. Garnett Picot:
As Sylvie pointed out, we observed—lots of people, lots of researchers have observed—that outcomes for recent immigrants, and immigrants in general, have been deteriorating since the early 1980s. That's in spite of the fact, as I think you probably all know, that the educational attainment of immigrants has risen dramatically. About half of the immigrants who come to Canada now have a university degree. Back in the early 1980s, that was about 17%. So there's been a tremendous rise in educational attainment.
Many more of them are now in the economic class; that is, they're brought in for economic reasons. You'd expect things would improve, given those kinds of changes, but in fact they continue to deteriorate.
People have been asking why. Through the 1980s and 1990s, a lot of it had to do with what economists refer to as “declining returns to foreign experience”. When you enter the labour market, if you have some work experience you expect to be rewarded for that. What we were finding with immigrants was that that used to be the case before 1980, but during the 1990s that totally disappeared. So an immigrant entering with some foreign experience basically receives zero benefit for that. And that was one of the major reasons why we saw this decline in outcomes.
Another one was that labour market entrants, in general, through the 1980s and 1990s, were having a tougher time. For instance, we saw the earnings of young males fall in the labour market. Recent immigrants are, in a sense, just a special case of a new labour market entrant. So they got caught up in this tendency toward poor outcomes for labour market entrants.
That was true in the 1980s and 1990s. Post-2000, we were hoping, frankly, to see some improvement in outcomes for entering immigrants and we didn't see it. There, the reason is quite different. Sylvie has already alluded to the fact that it had a lot to do with technology and engineering.
Through the late 1990s, we started to bring in a lot of engineers and IT workers, information technology workers, in response to the demand for labour. Through the late 1990s, you'll recall the high-tech boom. During that period there was a lot of demand. And then suddenly we were hit with the high-tech downturn, post-2000. Since immigrants were so highly concentrated in these two professions, engineering and IT, they really got hit by that downturn, and it seems as though they haven't recovered. So that's a big part of the story post-2000.
I'll leave it there.
Ms. Sheila Regehr (Director, National Council of Welfare):
I would just add that Diane is our expert on welfare incomes, which is one of the things we haven't touched on yet.
On behalf of our chairperson, John Rook in Calgary, and the members of the council, I want to thank the committee very much for this opportunity and really commend your efforts to find solutions to the tragedy of poverty in this rich country.
As others have said, 10 minutes.... I'm going to have two sentences on everything too. These are quite complex matters. I'm not going to give you a lot of statistics. We're well known for this. You'll see some of them in your package; you've heard a lot today. So we're not going to do that, but of course we'd welcome any questions or further explanation you might have on the presentation, or any of the numbers in the extensive package we've provided.
I'm assuming you're generally aware of the council's history and its publications, including the regular poverty profile and welfare income series that we've been putting out for about a quarter of a century, and our recent report on solving poverty, which really turns things towards finding solutions.
So I'll draw on these and the work of lots of other people as well and offer some insights into what I understand are the key questions that are of interest to the committee. There are basically five areas: the current situation in Canada; populations most at risk; federal roles; a bit about measures and indicators; and some discussion of financing the solutions.
First, let's look at the current situation. As others have indicated, we have to begin with the essential question of what is poverty. There are lots of statistical answers. I won't go into that because others have covered it. But I want to highlight the trends they talked about as to the difference between what has happened with seniors and with the rest of the population, and not just from a statistical perspective, but to look at that from a policy perspective, because in this case we can see very clearly what the policy impact has been on this population. It's much harder to determine what impact different policies are having on other populations. We hear about much of the money that's going into them, but we really don't know how the outcomes are following through.
So beyond the numbers, I want to focus a bit about what we're really talking about in human terms, and it's a continuum of problems. People have talked about “depth of poverty” and “persistence”. People have been looking to Ireland; they have something called a “consistent poverty measure”, or something like that. And we've been hearing different terms and different things. They're all part of the continuum of poverty, misery, insecurity, inequality, exclusion, and even desperation. So I'm not going to go through them all, but in the presentation there are some example scenarios. I didn't put any labels on them, but they give you some hint at real lives and real individuals and how different their circumstances are.
One of the things I'd really like to highlight is the difference between the seniors and most of the others, in relation not just to their level of income but to the security of income and the source of income and how that affects their dignity and their ability to do anything about their circumstances.
One of the most striking things I've read lately--and it's why I included it as an example, and I've heard it from several sources--is how worried people are about aboriginal gangs. There are very clear reasons for that, which we can see if we look beyond the numbers.
Another part of the problem, as I mentioned, is figuring out why we're really not getting results when we've got so many programs and we're putting so much money into things. It seems that's where we really need to focus now.
So one of the things that the National Council of Welfare did in 2006 was to run a questionnaire about poverty and income security. We got a wide range of responses, and they indicated that this array of programs is working. There's no magic about it. There is an array of programs that are really important, some more so than others. Some are really not working, and social assistance tops that list outstandingly. There's no comparison. But student loans and employment insurance follow closely behind as areas that are important valued assets for Canadians, but they really needing improvement.
Aside from direct income support--and we have to look at poverty as income and other things as well--there's a range of social programs and services related to housing, child care, wage laws. All of those things were highly valued as well, and many of them are also in need of improvement.
So in brief, there's no doubt that we have a complex, persistent problem, but we also have elements in place to help us find the way out.
I want to say just a few words about populations most at risk. Again, my first paragraph is irrelevant because it's already been stated. We know statistically who they are. But sometimes we run into the trap of looking at these people as the problem when we do it that way, so I'd encourage the committee to turn around and look at it on its head, look at it in a different way: what factors are putting people at risk? The answer to this is a little bit different, because it includes things like racism and gender discrimination, violence, divorce, illness, accident, disease, low wages, lack of education or qualifications—many of the things we've talked about. Having a child is an economic risk to women, much more so than to men. We really don't have a serious program addressing that.
Another important point is that risk increases when multiple factors are involved. It's not very often just one thing that's going to tip people over. I think it's also important to highlight that almost all of us are part of this lottery. I think if we start asking friends and relatives, it becomes really clear, because it's really often some trauma or some series of incidents--again, not often one thing but a series of things. It doesn't take long to fall into poverty, and to fall into deep poverty, in this country now, given how easy it is to not qualify for employment insurance. Having to quickly go to what should be the last resort is too often becoming the first resort for many people.
We talked about demographic trends. We talked about the maturation of CPP and OAS, and how important that was to the question of poverty in seniors. But the other trend that's really key there is women's earnings. That's huge, and it's a demographic change that has to do with other programs related to employment equity and child care, and things that many women feel are threatened now. So in many respects the two-income families become a de facto social safety net, and if you don't fall into that, you really are vulnerable.
I want to concentrate now on federal roles, and I think there are several.
I'm conscious of the time. I'm taking a little bit longer than I thought as well.
Ms. Sheila Regehr:
Agreed. Yes, I've got a lot to cover, and it's going slowly, it feels to me.
There's a lot in the work the National Council has done on solving poverty that looks at things more from a governance model, which means that anything in there applies to any order of government or even communities. Most Canadians, when we talked to them about these things—we thought they were going to be considered esoteric or too complicated or something—understand, too, that you have to have a vision of where.... Even at a household level, when you're raising your children, you have to have a vision of what you want down the road. You have to have some plan in place to get there. You have to assign some resources. You have to figure out who's responsible. You have to do all of those things. You have to involve the people. As your children get older, you involve them in your own plan for their future.
All of these things are important, no matter at what level of government. So solving poverty, as people have mentioned, is a national issue. The federal government has to be involved if it's going to work.
It's also really important, I think, especially for the federal government, to recognize that people who are already marginalized have to be involved and that poverty has to be seen, as most European countries see it, in the context of larger social and economic objectives, not something on its own.
I want to reinforce that Canada has already made commitments in human rights instruments, both nationally and internationally, to do the work that most poverty advocates say needs to be done. Leadership also involves recognizing a good idea and running with it. The federal government did this with Tommy Douglas's idea for medicare, but it wouldn't have happened on a national level if the federal government hadn't picked it up. CPP is a similar kind of situation. Another leadership role is that you don't have to be the first out with the good idea, but the support and the championing matters.
I won't talk a lot, either, about the direct action role the government has, because my colleagues here in HRSDC have talked about that. I think one of the things we really have to look at carefully, and I understand some committee members are doing this, is the role of the income tax system. That deserves a little bit more mention, and I think I'll talk about that later, in the next section.
Again I want to stress that income matters, but income can't replace services like health care or a child care system, just as individuals are never going to build the system of highways. So that matters tremendously.
There are many areas. When I started outlining this presentation, I thought, “Okay, let me see, where are the direct federal actions and where are the really, really clear provincial things?” It's not clear, and it's not clear to most Canadians. Quite frankly, most Canadians we've heard from are just fed up with how complex it is. It's more and more complex the less and less income you have, because you don't have anybody to help you sort it out. So that really matters.
On measures and indicators, a lot has been debated. I think our bottom line on this is that there's been enough talk. Let's pick a small selection. Let's just decide, do them, learn as we go, get better, and have some official measures. The council would agree that this is not Statistics Canada's role; this is part of our governance structure, and governments need to decide that.
There's also a role for things like the kind of reporting the employment insurance system does, so you know who's getting benefits, how much they're getting, who qualifies, who doesn't. We get a sense of what kind of impact this is having. I think something similar to that in many more program areas would be valuable, and that leads directly into my final section, which is about financing the solutions.
Here we would encourage the committee members to read our Cost of Poverty report. There's a more recent example that's very interesting as well that the United Way of Calgary has done on the external costs of poverty, and by “external” it means that this is the amount of money it takes, not to pay welfare recipients but to pay for the costs of increased crime, obesity rates, diabetes, and health care problems. And things that we don't prevent come back to haunt us later on, so I think sometimes we don't do a full enough accounting of things.
I also want to give a few examples of how we need to think of it outside the box. There are good examples of things we've already done, which some of us know about but which are not well known. One that strikes me is a study I know about lone parents, which was done by Gina Browne at McMaster University. She found, I think, rates of something like--and don't quote me on this--80% for clinical depression among a group of lone parents she was working with in this particular project. They looked at what kinds of different solutions there were. The obvious one would be to send these people into the health care system and to psychologists and psychiatrists, and that would cost a fortune. What they discovered was if they could get their son into a football program, or if they could get their daughter into a ballet class, and somebody else looked after their child for a few hours a week, their mental health problem was not a mental health problem. So we really need to ask the right questions.
The NCW's Justice and the Poor report, I think, is really valuable too. We didn't bring it, but it's one of our most highly requested publications, and we're almost out of copies. It shows just how easy it is when you're poor to get incarcerated, and then your learning comes from all the other criminals around you. It's quite astounding how that perpetuates the kind of thing we don't want, whereas prevention would save us all a lot of money.
The last example I want to give is a series of examples. This is a publication from 1976, so all of the data in it is obviously really old, but it's called The Hidden Welfare System, and the subtitle is about the personal income tax system in Canada. It shows that compared to how much money we distribute in welfare to the very lowest-income Canadians, we're distributing so much more and so much more security to people who already have lots of resources.
In terms of financing the solutions, I think there's a combination of things that includes better planning and policy design, some reallocation of resources, and some new investments that provide a good return over time, which actually result in cost savings. One of the arguments the Calgary United Way paper makes is that no matter what you feel about the causes of poverty--and you may feel that a lot of people have brought their own misfortune upon themselves--the cost of poverty is so high to so many people that finding solutions is worth it to you.
It really is about values, about vision, about leadership. What we need as a country can't be accomplished by individuals, families, charities, or communities, even though all of those things are important. Ensuring that ordinary citizens are treated fairly and can live with decency and respect is the responsibility of democratic governments.
Mr. Garnett Picot:
That's a good question.
The measure everyone uses, and the one that I and other people have talked about, is a relative measure, which means it's relative to the median. So a country like the United States, which has a very high median income, is going to have a very high low-income cut-off, which means it's easier to be poor, if you wish, in the United States. You can be poor in the United States with a higher income than you could in, say, Denmark, because it's relative to the wealth of that nation, and the U.S. is a wealthier nation.
Some people have tried to move to a more absolute measure, and as far as I can tell, they found roughly the following. This isn't so much a low-income rate as it is what people earn at, say, the tenth percentile. That is, if you take a look at the people who are in the bottom tenth of the income distribution, what are their earnings--the people who are right at the tenth percentile, if you follow that.
Generally, what people have found is that when you do it that way, the Americans tend to line up pretty well with the Europeans. So although they have a higher relative low-income rate, when you look at absolute purchasing power, at the bottom end among the poorer families it's about the same in the United States as it is in the Nordic countries, for instance.
Is that okay? Are you with me on that?
Ms. Sheila Regehr:
If I could just add to that a little bit, yes, as these people have said, the other countries went out and, to my knowledge, a number of the.... The United Kingdom, for example, did a major consultation and asked people about measures. They were looking for one, and they realized very quickly that it wasn't going to happen either.
Most of the countries have decided on a core, and it's usually quite small; it's usually about three. It's something that gets at the kind of thing the LICO does, where you're really close to the line and you might be doing okay, but it won't take much to really put you into hardship; and then something that reflects a real depth, a real persistence of poverty, the more chronic kinds of things; and then others have been combinations of things to get at different aspects of poverty.
So they've adopted those as official measures. But they're not an abstract; they are a goal. Our goal, despite whatever measure you pick, is that each of those three things has to start coming down or we're not doing our job properly. So it's linking the objectives to the measures, and then, as Frank said, there is a whole other array of indicators and statistics that can be used by different people for different things.
Market basket measure is being used and adapted beautifully by Newfoundland and Labrador to very specific geographical locations and in a very transparent way, so people know what their communities look like and the sort of income distribution and poverty issues they're dealing with.
One of the things that has been a preoccupation with the National Council of Welfare for a long time is the fact that social assistance rates are set according to nothing that anybody can determine. To us, there would be a tremendous advantage to having something like a market basket measure, so that it's a commitment to the population that says, “We think this is what a reasonable standard of living is”, and welfare rates should have something to do with that. They shouldn't just be a number pulled out of a hat.
That's the other value of measures and indicators, so that people can understand why things are the way they are, why your cheque is this much money and not something else. So there are governance and transparency issues involved in all of these.
Mr. Garnett Picot:
Perhaps I could add to that.
From an analytical point of view in trying to figure out what's happening, this is not from what should be our official poverty line because we're not going to choose that.
As Sylvie has said, the market basket measure, because it's more of a cost-of-living-based measure, is definitely more useful when comparing cities or provinces in Canada, for instance, than the LICO, because the LICO doesn't really account for cost of living differences, and that's important. The MBM is good for that.
The LICO has the time series and you can see a long history. If you want to see what's happening now as compared to 20 years ago, you're pretty well stuck with the LICO.
There are two other measures that I would definitely pay attention to. One is the persistent low-income measure; that is, using longitudinal data to ask who is in chronic low income. A lot of people who show up in the LICO, for instance, may be in low income only for a few months or a year. Who are the people who are in low income for four or five years? I would definitely want to focus on chronic low-income measures, and that's exactly what HRSD has done in the identification of those five groups.
There is one other measure we haven't mentioned here at all today. We've been talking in terms of the measurement issue about the low-income cut-off, or what the line is below which you are said to be in stricken economic circumstances. We haven't talked about the depth of low income.
If the low-income cut-off, for the sake of argument, is $20,000, but most of the poor people are at $18,000, that's one situation. You could still have a 10% low-income rate. If the low-income cut-off is at $20,000 and you still have 10% of the population below that but they're at $10,000 average income and not at $18,000, that's a very different situation. Those people are much poorer. Nowhere, if you're only talking about low-income cut-off, do you actually see that, because it's going to look the same; those two scenarios will look the same at a 10% low-income cut-off. So the other issue is the gap or the depth of low income.
Another reason that's important is that a lot of government programs, such as social assistance, for instance, will often increase their income. They stay below this cut-off sometimes, but their income rises. If you're only looking at the low-income rate, you won't see that improvement. You have to look at the depth of low income or how far below the cut-off people tend to be.
That's another measure I would pay attention to if I were trying to figure out what's happening.
Mr. Réal Ménard (Hochelaga, BQ):
I am delighted to share this information, particularly since, for the last 10 years now, I have been tabling an antipoverty bill in the House of Commons. I am confident that this time it will work. I am no. 123 on the list; I am sure that my time has finally come.
I have three questions and a request. I would like you to give us an outline. We might have to join the statistics with your service. There would be two columns on the chart. Ms. Collin has already given us food for thought, but I think it might be interesting to hear the pros and cons for each one of the measures. For example, I know that the national council uses low income thresholds in its documents, but that you are very critical of these thresholds because one type of measurement takes into account one's real income while the other one only represents what people require to meet their needs.
My position is closely related to that of Mr. Gourde. For example, Quebec has adopted a rather special and ground-breaking approach. The two provinces with legislative strategies to combat poverty have dropped the low income thresholds. Report after report, the United Nations criticize Canada, which has signed the two comprehensive treaties relating to economic and cultural rights, because no measures have been forthcoming. It would be nice to have a chart to demonstrate the pros and cons, not only as they relate to policies, but rather to the statistical point of view. I think that would be useful.
Secondly, I liked what Ms. Sheila Regehr had to say when describing how the people who study income security are unable to explain how one arrives at the amount of $3,000 for a single person living in British Columbia and $6,000 for the same person living in Quebec, or vice versa.
In a document, you were able to determine how much it would cost to raise everyone above the poverty threshold. I remember reading a figure, and I would like you to remind me of what the amount is. I do not want to hazard a guess, even if one does come to mind. I would like you to repeat it before the members of this committee.
How are we going to solve this problem? For example, could we use the federal government's Canada Social Transfer — to which, of course, all taxpayers contribute — and make the transfer conditional on it being used specifically for income security? We are very jealous of the prerogatives that Quebec enjoys. With respect to the effort that will have to be made to raise workers above the low income threshold, could you provide us with the figure and tell us what you think would have to be done?
I will now move on to my second question, so that I will not have to come back to it later. I would like to ask either the people from HRDC or from the council to answer it. Two provinces have adopted legislation, and a third one is in the process of doing so. I would like you to tell us how you feel about these measures. It is my understanding that what has truly helped people to rise above the poverty level in recent years...
Canada has improved its lot. For example, in the 1980s, whenever we spoke of poverty, we thought of the elderly. In fact, that is what was on the first page of the Senate report. Now, the people who are having the hardest time are the heads of single-parent families. We also say that things are better for children in Canada now, mainly because of the Canada child tax benefit which has increased every year. I would like you to tell us if there is really a correlation between the increase in the Canada Child Tax Credit and the improved conditions for children.
Those are my three questions, and I would like to see that chart. Of course, I am not expecting it before we finish our work.
The Canada Pension Plan, CPP, has been heralded this morning as one program that we put in place that lifted all the boats, lifted everybody to a certain level. In fact, out there you really can't see the difference, although we're beginning to chip away at it a little bit now, with the cost of living and whether it matches....
We had EI, which was a program that did somewhat the same sort of thing, but we've changed the rules now, based on a perception, I think, that the EI program was too rich and it got in the way of people actually going out and getting work. There was a sense that some people were living on EI as opposed to going to work.
Also, when it comes to welfare and social assistance, there's this concept of the welfare wall that often gets in the way of any movement and progress. In fact, it was used as the reason, for example, to cut welfare in Ontario by 21.6% in 1995.
I wanted some comments from people as to the impact and how we should be looking at this, and that kind of thinking where EI or social assistance is concerned.
I have a comment on the WITB, which was talked about. It actually accrues to only a small number of people, because, for example, somebody working for minimum wage, full-time, all year, doesn't qualify for the individual allotment. We did the analysis here. A family, a couple, working full-time all year would not qualify either, so there are a whole bunch of people who, really, are living in poverty, who just are not able to take advantage of that.
Anyway, those are just a few issues I'd like comments on, particularly on the concept of the welfare wall and this notion that somehow EI gets in the way of people actually wanting to go out to find some work.