9 September, 2005. 06:37 AM
National Affairs Writer
Now, even a bank slams workfare TD report pokes holes in welfare and
policies, offers new blueprint for safety net.
The worm turns. Old ideas gain currency again. Now, even hard-headed
people are beginning to realize that taking a sledgehammer to the welfare
was a bad, bad idea.
The latest evidence is a remarkable paper released yesterday on how
governments should deal with welfare, poverty and unemployment.
The conclusions of the paper are not in themselves remarkable: the
out that former Ontario premier Mike Harris's workfare scheme didn't
that the 1995 decision by former federal finance minister (and now
Minister) Paul Martin to gut the employment insurance system made matters
worse. Many have said that.
The paper's authors also recommend a concerted federal effort to expand
reform the social safety net so that the very poorest are guaranteed
live and the working poor get a little bit extra. We've heard these
What is remarkable is the report's provenance. It was written by the
Financial Group, a big, rich bank. And it appears destined to form
the basis of
recommendations that a joint panel of business, labour and anti-poverty
activists is to present to federal and provincial governments next
Specifically, the TD report, authored by the bank's chief economist,
Drummond, and fellow economist Gillian Manning, analyzes the problems
Ontario Works workfare scheme introduced by Harris in 1995. Harris's
cuts and reforms were immensely popular with Ontario voters, so much
when Dalton McGuinty's Liberals took power in 2003, they decided to
The McGuinty Liberals did raise welfare rates for the first time in
but only 3 per cent. They also made some changes to reduce the hefty
that discouraged welfare recipients from getting jobs.
The TD paper gives the McGuintyites faint praise for those moves,
but notes that
" on balance we can't give the final result a high grade."
The reason, Drummond and Manning say, is that Ontario's system is
flawed. It's too hard to get welfare. (They blame the former NDP government
Bob Rae for that, as well as the Harris Tories.)
In fact, they conclude, welfare rolls declined in Ontario during the
because the Harris reforms encouraged social assistance recipients
work, but because benefit criteria were made so strict, most poor people
But their main critique of Ontario workfare is far deeper.
First, it fails at a fundamental level: It doesn't encourage social
recipients to seek work. That's because the system overly penalizes
welfare who starts to earn income.
Under the original Harris scheme, a welfare recipient who earned a
lose more than a dollar in benefits. Now, even with McGuinty's changes,
social assistance recipient earning a dollar loses
50 cents in benefits, the equivalent of a 50 per cent marginal tax
Usually, only the very well-to-do have income taxed so severely.
But the second, and much more insidious problem, the paper concludes,
welfare is being asked to do too much.
It is no longer the last resort for those who have run out of options.
the authors say, government cuts in other areas of social spending
provincial welfare systems into "providers of first resort."
Welfare systems are being asked to fill the gaps left by the lack
child care, dental care and drug coverage.
They are also being asked to fill in for an employment insurance system
for reasons both deliberate and circumstantial, no longer covers most
who are out of work.
The deliberate reasons date back to the mid-'90s when then-finance
Martin, as part of his effort to reduce the federal deficit, slashed
insurance benefits and made it more difficult for the out-of-work to
But Drummond and Manning figure that was only part of the problem.
important, they say, is the changing nature of work. More people are
technically self-employed, which means they don't qualify for employment
insurance. In some cases, self-employment is voluntary; in many others,
it is a
status forced on low-wage workers by bosses anxious to avoid paying
benefits due regular employees, such as holiday pay and Canada Pension
As well, new immigrants do not qualify because they have not worked
long enough. Drummond estimates this new immigrant factor is largely
responsible for the fact that only 22 per cent of Toronto's jobless
So what is to be done? The TD economists make the sensible point that
only one part of the poverty problem. The only way to grapple with
overall is through a coherent government effort that encourages people
and ensures that those who do work earn enough money to get by.
The economists suggest two new federal programs: an earned income
the working poor (in effect a wage subsidy for employers) and a refundable
credit for the very poor.
What this means is that poor people would file tax returns even if
owe any income tax, and the government would send them cheques. As
such, it is
a variation on the old guaranteed annual income scheme, an idea that
different times has had currency with both the left and the right.
Ideas, of course, are cheap. Old ideas are cheaper. But it's possible
old ideas may have some traction. They are being pitched not only by
bank but a big bank working closely with the Canadian Labour Congress,
anti-poverty groups and other large businesses.
The formal name of this unlikely coalition is the Task Force on Modernizing
Income Security for Working Age Adults. It is self-appointed, financed
by the Atkinson Charitable Foundation.
Still, no government may be able to completely dismiss something that
imprimatur of the TD Bank, Noranda Inc., the CLC, the pro-business
Institute and the left-liberal Caledon Institute.
"It's been quite surprising," said
task force co-chair Susan Pigott, the head of
Toronto neighbourhood centre St. Christopher House. "If someone
had told me
eight months ago that the Toronto Dominion Bank was interested enough
poverty to write this, I would have said they were dreaming.