February 26, 2019; The Star
With the Canadian federal government of Liberal Prime Minister Justin Trudeau embroiled in the ongoing controversy of the SNC-Laving fraud and corruption affair, significant results from the government’s poverty reduction strategy have been pushed to the back pages. Politics aside, the results of the strategy are certainly worthy of attention—and not only in Canada. They may also offer insight for policymakers worldwide in seeking to strike the right balance between fueling a market economy and investment in social programs.
Announced as a core plank in the Liberals’ 2015 federal election “Fighting Poverty” platform, the strategy revolved around the promised introduction of a new Canada Child Benefit and provided a clear expectation: “Tax-free, tied to income and delivered monthly, this benefit provides greater support to those who need help most: single-parent families and low-income families. It will lift 315,000 children out of poverty.”
The government’s October 2018 release of “Opportunity for All—Canada’s First Poverty Reduction Strategy” also stated that the cumulative impact of a series of policy initiatives would “help lift about 650,000 Canadians out of poverty by 2019.”
Last week, Statistics Canada announced that fewer Canadians are living under the official poverty line than at any time in the last decade. The agency laid the credit for the drop on a combination of a buoyant economy and the Liberals’ signature child benefit.
3.4 million Canadians, or 9.5 percent of the population (including 622,000 children) are living below the poverty line, the lowest number the agency has reported since 2006. Changes since the government took office 2015 were also noted: 278,000 fewer children living below the poverty line in 2017, the first full year of the Canada Child Benefit.
Statistics Canada also reported that there were 826,000 fewer people living in poverty in 2017 compared to 2015—coming up just shy of the 20 percent target announced in the strategy, but with still plenty of time to deliver and exceed the goal before the stated 2019 deadline.
Determining appropriate credit for these advancements is part art, part science. The general state of the economy and employment rates clearly impact the results. At the same time, there is no disputing that measure like the child benefit program are working, in the context of the stated policy goals.
Nonprofit organizations and the academic community have been and continue to be major contributors to the development of the strategy, be it through formal consultations and/or contributions to the public discourse, and most responses to the apparent progress on poverty reduction can be best described as cautious optimism.
University of Calgary economist Ron Kneebone was unsurprised by the child poverty figures.
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“If you’re going to provide more income support for people who have kids, then you’re going to push them above the poverty line,” Kneebone said.
Kneebone warned about focusing too narrowly on rising incomes as an indicator of economic progress, referencing as an example the inflated housing costs of certain Canadian cities, with housing prices expected to worsen, on average, across the country. “If you’re low-income, then most everything you spend your income on is housing, food, utilities, that’s about it. That’s the majority of your spending. So, if housing costs are really high then just because your income went up doesn’t mean you’ve reduced your level of poverty.”
A new poverty line measure has attempted to address many of these concerns by using a “market-based measure” (MBM) which looks at a variety of household expenses. The basket includes items such as healthy food, appropriate shelter and home maintenance, and clothing and transportation, as well as other goods and services that permit engagement in the community.
Sandra Ngo, research coordinator at the Edmonton Social Planning Council, sees value in the MBM as a tool for accurately expressing larger trends (at the national and provincial level) for poverty reduction, but warns that in smaller geographic areas the sample sizes are less accurate. That said, she supports the general claim of progress in the Statistics Canada reports.
“I don’t think that that should detract from the main message, which is benefits have had a good effect on the poverty level,” Ngo said.
The strategy does have its detractors, including The Fraser Institute, a leading Canadian conservative think-tank. They have criticized the child benefit program for fostering dependence on government.
“Essentially, the prime minister is saying the government will take more away from what you earn and give some of it back to certain families. This hardly fits with the government’s rhetoric on hard work and building a better life.”
This contrasts sharply with the views of the Canadian Centre for Policy Alternatives (CCPA), which identifies as a progressive voice for social, economic and environmental justice. CCPA has been a champion for measures like the childcare benefit and will be pushing the government to continue along the path outlined in the overall anti-poverty strategy.
In Nova Scotia, where the Statistics Canada report shows the least progress in reducing poverty (child poverty increased, going against the national trend), CCPA Nova Scotia director Christine Saulnier insisted that “poverty is created by policy decisions.” Given that Nova Scotia had the lowest median after-tax household income in 2017 at just $50,200, almost $10,000 less than the national average, we can speculate with some degree of certainty that it is going to take more than poverty reduction policies alone to improve the lives of Nova Scotians. At the same time, the free market economy is not going to provide a suffering child the food, shelter, and clothing he or she needs for current survival and a healthy future.
The Canadian and American experiences of poverty reduction efforts have taken place in very different historical and political landscapes, but check out this classic 2015 NPQ conversation with Sheldon Danziger, who offers a brilliant dissection of the competing theories that so frequently divide all nations of the world on issues of social and economic fairness.—Keenan Wellar