Political and Social Affairs Division
23 October 2007
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The Government of Canada has not officially adopted any specific measure of poverty. Nor is there a consensus among Canadians regarding the determination of an official poverty line. Rather, various definitions or measures of poverty exist, and there is an ongoing debate about which of these is most appropriate. Although no measure is perfect, low income is currently the most commonly used indicator of poverty. Before and after-tax income thresholds called the low income cut-offs (LICOs)(1) are released annually by Statistics Canada. The LICOs are based on the proportion of households that spend at least 20 percentage points more of their income than the average household on food, clothing and shelter, and vary with family and community size.(2) These data are used by most stakeholders to determine the prevalence of poverty in Canada.
Certain population groups in Canada are more likely than others to live in poverty or to be at risk of living in poverty. This is particularly true of single parents (particularly women); unattached individuals (mainly those aged 45-64);(3) persons with work-limiting disabilities; recent immigrants, particularly refugees (who came to Canada within the past 10 years);(4) and Aboriginal people.(5) Groups considered at risk of poverty have a higher rate of unemployment, non-standard work arrangements (e.g., part-time, temporary, or self-employed work) and low-paid jobs than other Canadians.
The latest figures released by Statistics Canada based on the after-tax LICOs reveal that 7.4% of Canadian families (an estimated 655,000 families) lived on low incomes in 2005. That same year, about 788,000 children under 18 years of age (11.7% of the total), were living in low-income families. The prevalence of low income was much higher among children living in female lone-parent families and among single persons (33.4% and 30.4% respectively). When a measure based on before-tax low income cut-offs is used, the proportion of Canadian children living in low-income families in 2005 increases to 16.8%, and of those living in female lone-parent families to 47%. The prevalence of low income among people aged 65 and over in Canada is significantly lower. In 2005, 6.1% of Canadians in that age group had an income below the after-tax LICO. The depth of poverty, or average income gap, in Canada is also significant. In 2005, Canadian families living on low incomes needed an average of $7,900 to bring their income above the low income cut-off after tax.(6)
On 24 November 1989, the House of Commons unanimously resolved to eliminate poverty among Canadian children by the year 2000. However, no long-term action plan was developed to meet this goal and monitor progress. Economic growth and investments in social programs during the late 1990s and the early years of the new millennium have resulted in a decline of child poverty in Canada.(7) In 1996, 18.6% of Canadian children lived in low-income families as defined by the after-tax LICOs. By 2001, the prevalence of children living on low incomes had decreased to 12.1%, but then increased to 13% in 2004. According to the most recent data, it appears that the prevalence of low income among children is again declining, reaching a prevalence of 11.7% in 2005. Nonetheless, the rates of family and child poverty(8) are still considered unacceptably high; taking into account Canada’s high quality-of-living standard, the depth of poverty and the inequality of family incomes continue to grow.(9)
The National Council of Welfare (NCW),(10) along with other social policy advocates and anti-poverty organizations, has been calling for the federal government to design and implement a national poverty reduction strategy.(11) Such a strategy, it is argued, would serve to integrate poverty reduction efforts across all federal departments and would support provincial and territorial governments in their efforts to reduce poverty and income inequality in Canada. The call for the establishment of a national strategy to reduce poverty is difficult to answer, as it would require federal, provincial and territorial cooperation. Recognizing the jurisdictional challenges inherent in Canada’s federal system, some advocacy groups have asked the federal government to set specific measurable targets for the reduction of poverty in Canada, to take immediate action within its jurisdiction, and to engage in a dialogue with provincial/territorial governments and advocacy groups representing Canadians living in poverty or at risk of poverty to determine the feasibility of developing a national strategy or other form of partnership toward a common goal of reducing poverty and promoting social inclusion(12) in Canada.
The establishment of a national poverty reduction strategy founded on the principles of the United Nations Convention on the Rights of the Child (13) has also been endorsed by the Standing Senate Committee on Human Rights in its April 2007 report, Children: The Silenced Citizens. As well, the House of Commons Standing Committee on Finance in a recent report on its pre-2007 budget consultations put forth a recommendation asking the federal government to set a specific target and timeline to reduce child poverty in Canada and to “meet with the provincial/territorial governments and groups assisting and/or representing disadvantaged Canadians, among other stakeholders, to develop a strategy for achieving that target.”(14)
Canadians also agree that more can be done to alleviate poverty in Canada. Two recent polls conducted in 2006 – an online questionnaire administered by the NCW and another carried out by Environics Research – revealed that Canadians nationwide are concerned with poverty issues and believe that the federal government could play a bigger role in reducing poverty(15) and in taking action to reduce the income gap between the rich and the poor in Canada.(16)
Many European countries (such as Ireland and the United Kingdom) as well as two provinces in Canada(17) (Quebec, and Newfoundland and Labrador) have adopted comprehensive anti-poverty strategies.(18) Although their details vary, these strategies share certain key elements.
Anti-poverty strategies place poverty reduction and social inclusion firmly on the public policy agenda and are founded on the premise that social and economic development should go hand in hand. The strategies define goals, targets and timelines to reduce or eradicate poverty and social exclusion. Key objectives are to increase the labour market participation of those who are able to work and to enhance income security for those with severe work limitations. To meet these objectives, governments generally adopt a multi-dimensional approach aimed at providing better access to early learning and child care services, affordable housing, health care, essential public services, income supports, high-quality education and training, and jobs that pay a living wage.
Most strategies are supplemented by multi-year action plans with dedicated human and financial resources. Although there is an ongoing debate about the merits of targeting actions toward those most at risk of poverty or who are living in poverty, versus providing services on a universal basis, the various policies and programs implemented under the action plans in the UK, Ireland, Quebec and Newfoundland and Labrador usually adopt the principle that different at-risk groups require different policies and that programs should be targeted toward specific populations such as children, lone parents, seniors, people with disabilities, members of ethnic minorities, and people with a history of low participation in the labour market or who have never been in the labour force.
To measure progress, anti-poverty strategies usually provide for the creation of specific outcome measures and indicators and the establishment of accountability mechanisms. They also establish institutional structures and arrangements to ensure better coordination of activities among government entities, programs and policies aimed at reducing poverty and social exclusion and other linked policy areas. These structures are set up to enhance consultation and cooperation with various interest groups and to ensure that the needs of people at risk of poverty or living in poverty are clearly identified and addressed in anti-poverty strategies.
Canada, like Ireland and the UK, has enjoyed relatively strong economic and employment growth in the last decade. Advocates for the creation of a national anti-poverty strategy believe that the current economic situation offers an opportunity to develop policies that will truly make an impact on the rate of poverty in Canada.(19) However, Canada faces a number of challenges.
The Government of Canada has yet to adopt an official poverty line or other benchmark by which to measure the extent of poverty in the country. There is a need for more information on the actual living standards of Canadians living in poverty or at risk of poverty. Furthermore, the sharing of constitutional powers within Canada’s federal system makes it more difficult to develop and implement an integrated approach to the reduction of poverty and social exclusion. However, joint action on the part of the federal and provincial/territorial governments is required to significantly reduce poverty in Canada.
Although many stakeholders advocate a stronger role for the federal government and better collaboration among all levels of government to reduce poverty and social exclusion, the case for how this new role and partnership could be defined has not been clearly articulated. The Canadian Council on Social Development has proposed splitting the Canada Social Transfer (CST) into two transfers: one for post-secondary education and another for social programs.(20) Nominally intended to support post-secondary education, social assistance and social services, the CST is essentially provided unconditionally, with the exception of the prohibition of minimum residency requirements with respect to social assistance and reporting requirements related to funding for social services. “The CST is also the vehicle through which the Government of Canada provides support to provinces and territories in relation to agreements reached on early childhood development (2000) and early learning and child care (2003) programs and services.”(21) The CST is disbursed under the Federal-Provincial Fiscal Arrangements Act, which allows for the establishment of common objectives and principles that could guide the transfer of federal dollars for post-secondary education and social programs.
The CCSD and other advocacy groups across the country have been calling on all levels of government to reach an agreement on principles and objectives to guide social spending in Canada. For example, the National Council of Welfare called for the following principles and national standards to apply to federal funding of social assistance and social services: accessibility, adequacy, right of appeal, respect for the individual, accountability, full disclosure and simplicity.(22) The federal spending power is a powerful mechanism that has been used to influence social policy and programs delivered by provincial/territorial governments.(23) It has been the basis for a multitude of federal–provincial transfers over the years, including the Canada Health Act. It has been suggested that the Federal-Provincial Fiscal Arrangements Act could be amended, or a new act created, to ensure that portions of funding transferred under the CST could be subject to certain conditions or principles aimed at providing better income security for Canadians.
The Honourable Roy Romanow, who led the Commission on the Future of Health Care in Canada, has suggested that one way to reach an agreement on common principles and objectives might be through administrative arrangements, such as the Social Union Framework Agreement (SUFA),(24) a non-binding political agreement signed in 1999 between the federal government and all provincial/territorial governments, save the Government of Quebec.(25) By signing this agreement, governments made a commitment within their respective constitutional jurisdictions and powers to the following principles: ensuring access for all Canadians to essential social programs and services of reasonable comparable quality; providing appropriate assistance to those in need; and promoting the full and active participation of all Canadians in Canada’s social and economic life, among others.
The importance of public accountability and transparency in strengthening Canada’s social union was also explicitly recognized in SUFA as each signatory to the agreement made a commitment to, among other activities, monitoring, measuring and reporting on social policy outcomes; sharing best practices; using third parties to help assess progress on social priorities; and publicly recognizing and explaining the respective roles and contributions of governments.(26) To enhance transparency and accountability to Canadians of federal monies transferred to provinces and territories for social programs, other stakeholders such as the National Anti-Poverty Organization have argued for the creation of a pan-Canadian body (e.g., a “Canada Social Council”) to measure performance, collect and disseminate information, make recommendations for government action and report publicly to Canadians.(27)
Until the federal and provincial/territorial governments reach some form of agreement to work in a cooperative and coordinated way to fight poverty in Canada, most anti-poverty organizations and social policy advocates will call on the federal government to take immediate action within its jurisdiction. They are asking the federal government to strengthen Employment Insurance, to invest more on federal work tax credits,(28) to increase the Canada Child Tax Benefit and the National Child Benefit Supplement and take steps to end its clawback,(29) to review the adequacy of Old Age Security and Guaranteed Income Supplement payments for seniors, and to substantially increase its investments in early learning and child care, social housing and disability-related supports.