To flesh out its poverty reduction strategy, Ottawa must improve federal transfers, which help provinces support their poorest citizens.
The government of Canada released Opportunity for All: Canada’s First Poverty Reduction Strategy on August 21, 2018. The good news is that we will finally have an official poverty line that will pre-empt disagreements on the measurement of poverty and help steer the conversation straight to what should be done about it. Targets and reporting are also good.
The bad news is that the strategy completely neglects to talk about the tools the government is already using to reduce poverty: things like Old Age Security, the Guaranteed Income Supplement and the Canada Pension Plan, as well as the Canada Social Transfer. It is initiatives such as OAS, GIS and CPP — put in place in the 1960s and now fully mature — that have moved us from having a poverty rate among seniors of 37 percent in 1970 to a rate of only 6 percent in 2000.
One of the main reasons we have so many poor working-age adults and children in this country is the demise of the Canada Assistance Plan (CAP) in 1995 and its replacement in 1996 by the Canada Health and Social Transfer (CHST), which then became the Canada Social Transfer (CST) in 2004.
This collective forgetting of the role that federal transfers used to play in reducing poverty is an obliteration of our history. It is especially important that the Canada Assistance Plan be recalled today as, until 1995, this was the mechanism used to help provinces and territories cover the cost of social assistance benefits. It is quite likely that the 1.9 million Canadians identified in the federal poverty reduction strategy as living in “deep income poverty” — something now to be addressed — receive provincial, territorial and First Nations social assistance benefits.
By my calculation, in 2017 almost 2.1 million Canadians were receiving social assistance benefits across Canada. Given the abysmally low level of social assistance rates, all are living in abject poverty. Social assistance is mentioned but once in the 2018 federal strategy, referring only to Ottawa’s efforts with regard to on-reserve income assistance. These efforts do not increase benefits for individuals and families; any new federal money that has been allocated is for case management and to promote understanding.
The story is long and complicated but, in brief, the federal government has helped provinces cover part of the costs of supporting their poorest working-age citizens since the 1930s. During the Great Depression, federal grants helped to cover municipal relief costs. Through the unemployment insurance program in 1940, Ottawa took on direct responsibility for people who were then labelled “insured employables.” Four different federal-provincial contributory programs helped cover provincial costs for “uninsured employables” and “unemployables.”
All of these federal contributions to provincial programming were consolidated in 1966 under CAP, which had two formal objectives: to support the provincial and territorial governments in providing adequate assistance and institutional care for persons in need, and to support the provincial and territorial governments in providing welfare services designed to lessen, remove or prevent the causes and effects of poverty, child neglect or dependence on public assistance. “Persons in need” meant people receiving social assistance benefits. Every province and territory designed its own income and assets test to determine eligibility for benefits. “Welfare services” meant services such as child welfare, adoption services, child care, homeless shelters and facilities for women and children escaping family violence.
For almost 30 years CAP contributed 50 percent to provincial and territorial social assistance costs, resulting in a sharp improvement after 1966 in social assistance rates and the professionalization of the service delivery system, as trained social workers were hired. This national program made it possible for the first time for Canadians considered to be “in need,” no matter where they lived, to apply to a provincial, territorial or municipal government office to have their needs assessed and benefits provided if eligible. CAP conditions prohibited provinces and territories from forcing recipients to take work — even jobs specially designed for them — in exchange for their benefits.
Progress stalled in 1990 when the federal government unilaterally placed a “cap on CAP” in the three provinces — Alberta, British Columbia and Ontario — that were not receiving federal equalization payments. It came to a crashing halt in 1995 when CAP was consolidated with Established Programs Financing (which provided federal contributions to provinces for health care and post-secondary education) under a block fund, the Canada Health and Social Transfer, and the overall allocation was reduced. Ottawa no longer paid 50 percent of provincial social assistance costs. Provinces no longer had to report on their social assistance spending.
Figure 1 illustrates how the health transfer has increased, while the social transfer has grown by much less. The Canada Social Transfer is meant to cover federal contributions to provinces and territories for many programs in addition to social assistance: post-secondary education, social services, early childhood development, and early learning and child care. There are no conditions on the CST except that provinces cannot impose a residency requirement for social assistance. In contrast, to receive funding under the Canada Health Transfer, provinces must abide by the five principles in the Canada Health Act.
As a result of the cancellation of CAP and the decrease in federal money, all provinces reformed their social assistance systems in the 1990s, with most reducing benefit rates and applying onerous eligibility criteria to scare people away from applying. Work requirements became intense, which was especially problematic given the rising proportion on the provincial caseloads of persons with disabilities and people with multiple barriers to employment.
By my calculation, federal contributions to social assistance were $6.5 billion, or 34 percent of all federal spending on provincial social transfers, in 1993-94. By 2007-08, as a result of increases in the health transfer, federal contributions to social assistance as a proportion of total transfers had declined dramatically, to 16 percent. By 2015-16 they were 13 percent of total transfers. Clearly, federal contributions to provincial and territorial social programs after 1995 have privileged health care over social assistance.
Recent research has demonstrated that if we want to improve population health outcomes, we should spend less on health care and more on social programs such as social assistance. If the federal government wants to achieve its goal of reducing deep income poverty, the best thing it can do is help provinces, territories and First Nations improve the benefits they pay to support their most impoverished citizens.
Lessons learned from the Canada Assistance Plan suggest the way forward: split the Canada Social Transfer into a post-secondary education transfer and a social transfer; increase the allocation; and place conditions on the social part of the transfer to ensure that any extra federal money goes to increasing social assistance rates through bilateral federal-provincial-territorial agreements. These changes would be easy to make, with political will and an understanding of our history. Improving the Canada Social Transfer would put real flesh on the bones of Canada’s First Poverty Reduction Strategy.
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