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Why poverty reduction? Getting the big things right

Published on 06/05/2015

Welcome address at the Poverty Reduction Summit: Every City, Province and Territory Working Together on May 6, 2015 in Ottawa

We are at a moment in history where there is a flourishing of interest across the country, in the provinces and cities, in coming to the aid of Canadians living in poverty. Not every government, and with one glaring exception, but a rising tide of interest and concern that makes this gathering of politicians, activists, policy makers, and analysts a time of opportunity:

  • Opportunity to share ideas
  • Opportunity to explore effective instruments and practice
  • Opportunity to strategize on the politics involved
  • Opportunity to understand poverty in our communities

Does poverty matter?

Does poverty matter? Not everyone in Canada thinks so. When Senator Art Eggleton and his Senate colleagues were writing their report on poverty, In from the Margins, one of the Senators was told by the editor of a major newspaper that “poverty isn’t an issue.”

But I know this is not a room where I have to make the case for fighting poverty. You are all only too aware of the devastating costs of our continued toleration of poverty. We know of the price we pay as a society in health, justice, social cohesion, and the economy. They have been well documented.

And we know the costs to people who live in poverty, of being consigned to the outskirts of society, of always being on edge, of having confidence shaken many times each day, confidence in being a good parent, a good spouse, a good citizen. Poverty is an assault on human dignity. People don’t choose to be poor. They have hopes and dreams for themselves and for their children. But too often they are victims of things beyond their control:

  • of employers who don’t pay a living wage or whose business succumbs to the vagaries of the market;
  • of an illness or injury that interrupts their earnings;
  • of a broken marriage; or
  • of an international economic swoon that devastates economies.

People don’t choose to be poor.

Constructing and un-constructing poverty

But societies can choose poverty. For poverty is a choice that we make as a society. It is constructed, not inevitable. It is constructed by the economic and social policies we choose, by which voices we choose to listen to, and by which rights we choose to support and which rights we choose to ignore. It is constructed by the choice we make about how well we fund the instruments we create to counter poverty, the safety net of public income supports.

I think this is an important idea, that poverty is something we have chosen to construct as a society, because if it is something we have built, we can also choose to tear it down. We can tear it down because we have decided to believe in human dignity for everyone, in healthy communities, in social justice, in moral fairness, and in shared economic prosperity.

There have been times and people in our history who have engaged in the fight against poverty. We have made progress. At times during the 1930’s, 1960’s and 1990’s the elements of our social safety net have been put in place by governments of various stripes. As a country we learned lessons from other places, and from the devastation of economic downturns like the Great Depression.

We created supports for farmers, for unemployed workers, for children and parents, for seniors, for people living with disabilities. They provide either income supplementation or income replacement. Programs like the Canada Child Tax Benefit and its provincial counterparts and the Working Income Tax Benefit supplement income. Programs like the Canada and Quebec Pension Plans, Old Age Security and the Guaranteed Income Supplement, and Employment insurance replace income.

Most of these programs are designed and work well. They get supports to the people who need them, they tend to work through large public systems like the tax system, and they work at scale. They are indexed to inflation, so that their value doesn’t decline over time. Governments do a good job at running these programs, and they comprise a significant percentage of the federal government budget, and a lesser but important part of provincial budgets. Program design that gets money to where it is needed, through mechanisms like a refundable tax credit, is a more efficient use of public money than those which are not income tested, like the Universal Child Care Benefit, which fails those most in need and rewards those with marginal or no need.

We know where success has occurred. OAS and GIS led to dramatic declines in senior poverty, particular for single seniors where poverty was the most dire. The Child Tax Benefit has led to a 40% decline in child poverty. Observable declines in poverty result from the various instruments we have in place.

Why aren’t the results better if these instruments are so good? Well, one thing they all have in common is that they are underfunded. When such programs are designed, a target is identified which will solve the problem they are trying to solve. In the case of the Child Tax Benefit, for example, the target is $5,700 per child in today’s dollars. It is currently funded at about $3,600, less than 2/3 of the target, and that is after about 20 years of incremental growth. The WITB is currently funded at less than 25% of the target. And we know CPP payouts are inadequate for seniors, which has led to Ontario’s premier first urging the federal government to augment the plan, and when it refused deciding that Ontario needed to take the lead.

If we were to fund these programs properly, it would help tear down the poverty we’ve constructed. If we paid attention to the proper design and full funding of these instruments, poverty would begin to crumble.

Of course there are the voices who say we can’t afford to fund these programs fully. I think that is nonsense. We are stuck inside a narrative of scarcity and insufficiency that is laughable in such a rich nation, one of the most blessed places in the history of humanity. We squander private and public money at will. In the public realm alone we can find savings through better military procurement, for example, or through a criminal justice system that incarcerates young people unnecessarily and expensively. The failures in our bail and remand procedures land numerous young, mostly poor, people in jail at great cost, up to $120,000 per person per year. It would be cheaper if we sent them all to Harvard for a year, and the outcomes would be better. There is billions to be saved.

And we waste money on bad program design, like the Universal Child Care Benefit which is neither a refundable tax credit nor indexed. If it was abolished and the money put into the more efficient and fair Child Tax Benefit, we would fully fund that $5,700 per child. And we’d save money by not sending it to people who don’t need it. Badly designed programs waste money.

That narrative of scarcity means that we don’t even attend to what we have, the public pension plans being a case in point. But we neglect many of our institutions in most walks of life and let the quality of their work deteriorate. We have fallen behind in many areas where we used to be ahead, and I’ll cite two: public transit and affordable housing, including supportive housing for people living with disabilities.

Transit and housing are important economic issues for Canada. In fact I think they are the two most important issues facing the country. They matter to people’s ability to connect to work and school, and if people can’t live close to work or it takes them too long to commute, the economy pays the price in turnover and productivity. They are also important social justice issues, because when they are provided well, they support the ability for people to engage in their communities and exercise their rights, not to mention achieve their hopes and dreams. We’ve fallen behind on these key elements of shared prosperity.

Attention returning to poverty

But despite the fact that we’ve fallen behind, and that even when we act we seem content with half measures, I am optimistic. Your presence at this gathering is a significant part of my optimism. And there are other signs. Under the leadership of Senator Eggleton and Senator Hugh Segal the Senate produced In from the Margins in 2009, an excellent report on poverty, part of the long legacy of Senate reports on key issues facing Canada. Some of you will remember the landmark Croll report on poverty from 1971 which began with these words: “The poor do not choose poverty. It is at once their affliction and our national shame.”

Following the publication of In from the Margins, Senator Eggleton was instrumental in the establishment of the Parliamentary anti-poverty caucus with representation from both the Senate and the House of Commons, and all parties. I had a chance to talk to some of those people at the launch of the Caucus and was reminded that for many people the path to Parliament includes stops along the way in community agencies dealing with poverty issues: the United Ways and community foundations, the food banks and youth agencies, the immigrant settlement centres and the mental health agencies. They were excited by having the Caucus as a place to revive that interest, even when their own formal party apparatus was looking elsewhere.

The Occupy movement brought attention to income disparity, with a lot of focus on the 1% at the top. Thomas Piketty’s book Capital in the Twenty-First Century with its focus on wealth disparity was discussed everywhere as well. While we know that discussing disparity is not the same as addressing poverty, Occupy and Piketty have helped to stimulate attention to the lower end of the income spectrum, and the fact that too many people are paid too little for their work. And the fact that people who can’t work in the labour market because of their life circumstance are too often left on their own.

So I am optimistic that our attention is now being turned to the fight against poverty, and that we are here together in Ottawa figuring out what we should be doing. Some of you come from provinces or cities well down the road on poverty reduction, although I’ll wager that even you know there is much more to be learned, and much more to be done.

If I have a challenge to offer, it is this: Let’s make sure that we focus on the big things, and that we get the big things right. There is much good work we can do that is small in scale and scope, and that helps a small number of people in a particular place. I don’t discourage that, and for many people that is the kind of work they prefer to do.

But when provinces and cities develop poverty reduction strategies I think they should focus on the big things that work at scale and that impact a large number of people. I’ve talked about some of the big instruments: the Canada Child Tax Benefit and the Working Income Tax Benefit for example. Because we are such an urban country, most of the clients of these programs live in our cities. When they struggle because these programs are funded below the targets, our cities struggle. A city’s poverty reduction strategy should include using its political clout to get these programs fully funded.

And of course provinces have the capacity to make sure their components of such programs are properly funded.

Cities also have enormous leverage to exercise around paying people adequately for work. Cities can begin by being good examples, by adopting fair minimum or living wage rates that they pay to their own employees. Most cities in fact do this well, in good part because their employees are part of collective bargaining units. But cities can go beyond their own practice and require fair pay practices of their suppliers, and the agencies and corporations related to the city. As you know this is a growing practice in major cities, including London in the U.K. It works.

Our experience with getting employers to change their practices has been encouraging. Maytree initiated the Toronto Region Immigrant Employment Council to help skilled immigrants find the jobs for which they have experience and training. Part of it is helping the immigrant, and part is helping the employer change their HR practice to get good at hiring immigrants. Once employers understood that they could get a competitive advantage by changing, they got on board. Evidence has shown there are rewards for being the employer who pays better and values workers more, rewards in loyalty and effort.

I’ve already mentioned transit and affordable housing as big issues. I know that cities lack the fiscal capacity to undertake these major issues on their own, being restricted largely to the property tax for revenue, whereas the federal and provincial governments have access to the larger taxes on income and sales. But mayors and leading councillors employ some of the biggest bully-pulpits in the country, and have regular contact with many more Canadians than other politicians. They can build a groundswell of support, voices demanding fair fiscal treatment for cities. We must find a way to put affordable housing back into the public budgets, including for the upkeep of the stock we already have. And the same for transit. They are critical parts of municipal and provincial anti-poverty agendas.

And we must insist on good design in our anti-poverty instruments, including refundability and indexing, and we must insist that they be costed properly so they will really work.

And we must insist on some political realism. I favour advocating for the possible, because I know that in the complex world of political leadership it is really only feasible to focus on the next doable thing. Doable financially, legally, and politically. Poverty reduction strategies might have great goals and noble aspirations, and these are necessary to raise our sights, but they must contain the practical steps to get us there, the things that can actually be done. At Maytree and Caledon we exercise what we call “relentless incrementalism”: we recognize that you must take a step at a time towards your goal, but we are prepared to be relentless in insisting that the next doable step follow the last one, time after time. We understand the importance of being in this work for the long term.

I believe we can reach our goals. As I said, I’m optimistic. And the fact we are meeting here on common ground is part of it. I encourage us to work at getting the big things right, to work together on this common ground. Let’s not find ourselves battling at the edges. Let’s not agree on ninety percent of what needs to be done, and then let the remaining ten percent divide us. Let’s not make the perfect the enemy of the good. Our fellow Canadians living in poverty can’t afford it.

To illustrate what I mean, I can give you some reasons that I don’t think a guaranteed annual income is what we should be fighting for. But I’m not going to fight the people who think it is the right instrument. Some of us think living wage is preferable to minimum wage, and vice versa, but their common ground is making work pay.

Let’s agree to be solution focused. Many advocates spend much of their energy describing problems and assigning blame. I call this the “culture of complaint.” Of course it is important to describe problems, so we know what we’re dealing with. But we must then move on to identifying the solutions. Identifying the solutions so we can bring the politicians, public servants, and employers something they can say yes to.

Let’s agree to share our data, a commodity in decline in Canada due to the killing of the long-form census. Let’s share the information we have, and the knowledge that arises from it.

Let’s take as a principle goal helping each other succeed. Good heavens, we know that there will be plenty of people who oppose the work we want to do: people with different ideas, different agendas, different interests, and different ideologies. We don’t need to sap our energy in battle with those in our own camp, when we have more formidable foes arrayed against us.

Let me recall again Senator David Croll: Poverty is our national shame. We are gathered here in our nation’s capital with the opportunity to put an end to our shame. We have the right people. We have the right tool kit. And this is the right moment.

Summary

Welcome address at the Poverty Reduction Summit: Every City, Province and Territory Working Together on May 6, 2015 in Ottawa

Topic(s)

Cities and communities, Poverty