HUNGRY FOR CHANGE PRE-BUDGET SUBMISSION

Transcription

1 HUNGRY FOR CHANGE PRE-BUDGET SUBMISSION JANUARY 2007 SUBMISSION TO THE STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS & THE MINISTRY OF FINANCE HUNGRY FOR CHANGE: PRE-BUDGET SUBMISSION 1

2 PUBLICATION INFORMATION Author: Adam Spence Creative: Adam Spence Edited By: Nicola Cernik Ontario Association of Food Banks, January 2007 All inquiries regarding this publication should be directed to: Ontario Association of Food Banks (OAFB) 5 Adrian Avenue, Unit 118 Toronto, ON M6N 5G4 t: f: E: info@oafb.ca W: 2 HUNGRY FOR CHANGE: PRE-BUDGET SUBMISSION

3 EXECUTIVE SUMMARY The Ontario Association of Food Banks (OAFB) recommends investments in the three following areas for the upcoming provincial budget: A. ONTARIO S CHILDREN The provincial government can reduce hunger and poverty amongst our children by: a. creating an Ontario Child Benefit (OCB) for all Ontario s families with children below an established income threshold for $425 million; and b. developing child poverty measures and targets to ensure public accountability at little or no financial cost. EXECUTIVE SUMMARY B. ONTARIANS WITH DISABILITIES The provincial government can reduce hunger and poverty amongst Ontarians with disabilities by: a. hiring additional ODSP caseworkers to guide applicants through a complex process and foster an ethic of care for $14.3 million; and b. increasing the maximum ODSP allowance as a long-term step towards meeting the true financial need of Ontarians with disabilities for $320 million. C. WORKING ONTARIANS The provincial government can reduce hunger and poverty amongst working Ontarians by: a. expanding access to and coverage for the Trillium Drug Program for low-income Ontarians for $100 million; b. implementing a low-wage strategy, including increases to the minimum wage, a lowwage board and a new three year schedule of minimum wage increases at little or no financial cost; c. developing and implementing a quality job development strategy at little or no financial cost; and d. creating an individual development account (IDA) program to allow low-income Ontarians to save for education, homeownership, or business development for $5 million. HUNGRY FOR CHANGE: PRE-BUDGET SUBMISSION 3

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5 INTRODUCTION Ontario is one of the most prosperous provinces in one of the most economically successful nations on earth. But not all Ontarians share in this good fortune. Hundreds of thousands of our fellow citizens are forced to food banks every month. Hunger is a striking characteristic of all communities, from our smallest towns to our largest centres. Food banks have struggled to stem the overwhelming tide of poverty in our province. It is time for our provincial representatives to act. In 2006, the Ontario Association of Food Banks (OAFB) initiated a research agenda to build a better understanding of hunger and poverty in our province and to develop solutions to achieve its reduction. It is hoped that we might be able to develop a framework for the required actions of our provincial and federal representatives. Our pre-budget submission to the Standing Committee on Finance & Economic Affairs and the Ministry of Finance will provide an overview of hunger in Ontario, discuss concerns and outline solutions for three key areas of necessary investment, outline how these investments will be funded, and provide an estimate for investment required for the 2007/08 budget year. AN OVERVIEW OF HUNGER IN ONTARIO INTRODUCTION & OVERVIEW OF HUNGER The image of hunger for many Canadians is simple. It is a very visible scar on our major cities, striking a small but unfortunate group of citizens forced to our streets and back alleys to plea for food and money. But the actual picture of hunger is much different. It hits more than the 190,000 Canadians who are homeless in our nation s major cities. Hunger is urban and rural. It strikes Ontario s children, Ontarians with disabilities and working Ontarians. It affects hundreds of thousands and reaches into our own communities, our own neighbourhoods and our own homes. Hunger lives right next door to all of us. Despite our continued prosperity, hundreds of thousands of our fellow citizens are served by food banks in Ontario. 330,491 Ontarians were served by food banks each month in This represents a small decline over last year of 2.4 per cent. It is hoped that this decline continues, but it is only a short term phenomenon. The five year trend shows that food bank usage is still on the rise in our province. Between 2001 and 2006, the number of Ontarians served by food banks increased by 18.6 per cent. The rate of change is well beyond the overall increases in our province s population, as this five year rate of increase is almost twice the rate of population growth in Ontario. Graph One: Ontarians Served By Food Banks Per Month, 2001 to , , , , , , ,000 NO. SERVED 310, , , , , , , , , , YEAR HUNGRY FOR CHANGE: PRE-BUDGET SUBMISSION 5

6 OVERVIEW OF HUNGER Hunger hits families across the province, from the stunning shores of Lake Superior in Northwestern Ontario to the suburbs and centres of the Ottawa Valley. There is a food bank in nearly every village, town, city and major urban centre in our province because hunger and poverty and those who commit themselves to fighting it are everywhere. It is estimated that there are over 1,000 emergency food programmes in Ontario. Unsurprisingly, the majority of Ontarians served by food banks live in our major centres. Food banks in Toronto serve the greatest number of Ontarians by far. According to the Daily Bread Food Bank s Who s Hungry survey, 894,017 persons living in the Greater Toronto Area were served by food banks in Over 80,000 Torontonians are served by food banks every month. Many other major communities serve a very large number of their citizens. Over 10,000 Ontarians are served by food banks in each of Ottawa, Hamilton, London, Kitchener- Waterloo, and Sudbury. But hunger is not just an urban problem. Tens of thousands of Ontarians are served by hard working volunteers in food banks in rural centres, small towns, and farming communities. It is estimated that over 60,000 Ontarians are served by food banks in communities with populations of less than 75,000 persons. Although the absolute numbers in smaller centres may be lower than the totals in Ontario s major cities like Toronto, Hamilton or Ottawa, the prevalence of hunger may be just as great or greater in rural Ontario. In some rural communities like Peterborough, Cochrane and Minden, the rate of hunger is two or three times greater than the provincial average. In general, food banks continue to struggle to meet the needs of those they serve in their own communities. This should be an unsurprising phenomenon, as many food banks are run solely by volunteers, receive no provincial or federal government funding, and rely on uncertain levels of food and financial resources from their own community and beyond. Unfortunately, over 25 per cent of food banks in Ontario saw their ability to meet the needs of those they serve decline in A number of food banks closed or were at severe risk of closing in 2006, including agencies in communities such as Wasaga Beach, Paris and Minden. Food banks have reached a giving ceiling, as demand has far exceeded the ability of local communities to meet the needs of the local food bank. One in three food banks receive greater than 30 per cent of their food from outside of their community. Many food banks also turn to purchasing food, with 29 per cent of food banks purchasing 30 per cent or more of their total food. Beyond the absolute numbers and the breadth of hunger in Ontario s communities, another troubling trend is emerging in our province: Ontario s children, Ontarians with disabilities and working Ontarians are hardest hit by hunger. These three groups represent the vast majority of those served by food banks in Ontario: Ontario s children (40 per cent); Ontarians with disabilities (18.2 per cent); and working Ontarians (16.9 per cent). Graph Two: Selected Population Groups as a Total Proportion of Those Served by Food Banks in Ontario, ONTARIO'S CHILDREN 40.0% ONTARIANS WITH DISABILITIES 18.2% WORKING ONTARIANS 16.9% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% PERCENTAGE OF THOSE SERVED 6 HUNGRY FOR CHANGE: PRE-BUDGET SUBMISSION

7 This is particularly striking as these figures are in opposition to the public image of hunger and poverty. They also represent a segment of our society that we believe is protected and supported by our social safety net or by their own hard work. Ontario s children, Ontarians with disabilities, and working Ontarians are hungry for change. HUNGRY FOR CHANGE: ONTARIO S CHILDREN Ontario s children are the hardest hit by hunger and poverty. Over 40 per cent of those served by food banks in Ontario are children, meaning that well over one hundred thousand children must turn to food banks every month. Despite the current government s commitment to our children, there are still many concerns with child poverty in our province. Fortunately, there are solutions that can have a real impact to reduce child poverty. This commitment, as well as our concerns and solutions are outlined below. ONTARIO S CHILDREN GOVERNMENT COMMITMENT In the Throne Speech following the 2003 provincial election, the current provincial government committed to the following: New measures will be put in place to ensure children get what they need and what they are owed. 3 Your new government understands that for Ontario to succeed in a highly competitive and global economy, we need every Ontarian, from our youngest citizens to our seniors, at their best. 4 CONCERNS There are a number of concerns with the state of our children in Ontario. The concerns are as follows: 1. Child poverty in Ontario and Canada has risen over the past fifteen years. According to the November 1989 resolution of Canada s House of Commons, we were supposed to celebrate the end of child poverty in the year Six years after that date of promise, it is known that the national rate of child poverty is actually higher than it was in The child poverty rate in Ontario has risen by nearly five per cent. This can be seen in graph three. Despite our continued prosperity, nearly one in six or 16.1 per cent of Ontario s children live in poverty. Consequently, there are too many children in Ontario that are hungry and are forced to rely on food banks for emergency relief. Graph Three: Child Poverty Rates in Canada and Ontario, 1989 to ,6 PERCENTAGE BELOW POVERTY LINE 25% 20% 15% 10% 5% 15.1% 11.6% 19.5% 19.8% 18.3% 17.9% 16.9% 14.9% 22.3% 21.9% 22.1% 20.6% 20.4% 19.3% 23.6% 23.1% 22.1% 20.6% 21.1% 19.5% 19.3% 18.3% 18.1% 16.2% CANADA ONTARIO 17.2% 18.0% 17.6% 16.4% 16.1% 15.1% 0% YEAR HUNGRY FOR CHANGE: PRE-BUDGET SUBMISSION 7

8 ONTARIO S CHILDREN 8 2. Child poverty rates in Ontario and Canada are greater than peer jurisdictions. Despite our position as a global leader in economic growth over the past decade, we continue to witness unreasonably high child poverty rates compared to other developed nations. Canada has much higher child poverty rates than countries including Finland, the Netherlands, and Poland. According to UNICEF s 2005 global survey of child poverty rates, Canada ranks 19th out of 26 industrialized nations in terms of child poverty. This status can be seen in graph four. 3. The alarmingly high rates of child poverty have negative impacts on the health of our children. One of North America s greatest emerging health challenges is obesity. Obesity rates for low-income children are much higher than their higher income counterparts. According to a comparative study of obesity in children aged 6-11 in Canada, Norway and the United States, it was found that, the pattern apparent for obesity is remarkably similar to that found for child poverty. 8 Obesity rates for low-income children are over four per cent greater than other children: 19.4 per cent compared to 15.2 per cent. 9 This conclusion is shared by the 1998/99 National Population Health Survey (NPHS), which demonstrated a higher rate of obesity amongst food insecure populations. 10 The 2004 Canadian Community Health Survey also showed that there were higher rates of childhood obesity amongst households where all members have less than a high school education. 11 On average, these families have much lower incomes than those with secondary or post-secondary education. It is likely that these higher obesity rates are the result of the need to purchase lower cost, higher calorie foods to meet the growing appetites of our youngest citizens, coupled with the lack of time and resources for parents to allocate towards physical activities. Beyond obesity, there are many other health impacts of child poverty. These health impacts as gleaned from NPHS are outlined in graph six. They include an increased incidence of depression, multiple chronic conditions, distress, and poor or fair health. All of these health impacts are contributing factors to unprecedented growth in health care spending for governments across Canada. According to figures obtained through Health Canada, we spend over $19.1 billion on direct health care costs for illnesses that are more prevalent in low-income children. Although nutritional deprivation and the other factors associated with child poverty are certainly not the sole cause for all of these cases, it is certainly a contributing factor. Graph Four: Child Poverty in Selected Developed Countries, JURISDICTION Mexico USA Italy UK Canada Poland Austria Germany Netherlands Luxembourg Hungary Belgium Sweden Norway Finland PERCENT BELOW THRESHOLD per cent of median income 50 per cent of median income 60 per cent of median income HUNGRY FOR CHANGE: PRE-BUDGET SUBMISSION

9 Graph Five: Prevalence of Obesity, Children Aged 6-11, Canada 1994, Norway 1995 and United States, UNITED STATES CANADA NORWAY 6.1% 6.3% 15.2% 16.1% 18.2% 19.4% 20.7% POOR CHILDREN 27.1% NOT POOR CHILDREN ALL CHILDREN ONTARIO S CHILDREN 0% 5% 10% 15% 20% 25% 30% Graph Six: Prevalence of Selected Health Outcomes By Food Security Status in Canadian Households, 1998/ % 30% 31% FOOD INSECURE FOOD SECURE PROPORTION OF POPULATION 25% 20% 15% 10% 5% 10% 21% 14% 17% 7% 15% 12% 14% 4% 0% Distress Multiple chronic conditions Poor/Fair Health CONDITION Obese (BMI > 30) Depression 4. The alarmingly high rates of child poverty have negative impacts on the development of our children. Beyond the health impacts, child poverty and hunger can have a devastating impact on the development of our children. Studies have shown that hunger in childhood affects the development of the nervous system and causes problems for emotional and cognitive development, including problem solving, concentration, and organizing memories. 14,15 5. The level of assistance provided through child benefits is insufficient. The level of income supports provided through the provincial and federal governments leave families living on Ontario Works (OW) or working at minimum wage well below the poverty line. A single mother with one child living on social assistance in a small Ontario community needs an additional $455 per month to raise her income above the poverty line. A compounding problem is the interaction between federal and provincial child benefits. The provincial government continues to reduce OW and ODSP payments by the 2003 National Child Benefit Supplement (NCBS) amount of $ for families receiving the supplement. Ontario s provincial child benefits are also well below the combination of assistance that is provided by other peer provinces, such as Quebec, British Columbia or Alberta. RECOMMENDATIONS The following recommendations are offered to begin to address the concerns outlined above and to ensure that our children get what they need and what they are owed in order to succeed: 1. New Ontario Child Benefit. Income supports are one of the best mechanisms for governments to directly reduce poverty. A new Ontario Child Benefit (OCB) would be a new HUNGRY FOR CHANGE: PRE-BUDGET SUBMISSION 9

10 ONTARIO S CHILDREN mechanism to support that aim, as a new income support program for low-income families in Ontario with children. The benefit would vary according to income level, family size and need at a value of $125 per month in new funds for the first child at maximum, and $110 for every child afterwards up to an established maximum family size. In order to ensure this benefit is appropriately targeted, there should be an income threshold that begins to reduce the value of this benefit at roughly $20,000 for each household with a ceiling of approximately $35,000 beyond which no OCB would be received. It is absolutely vital that this new initiative result in a net increase in benefits for all Ontario s families with children. All of the new money that is provided through the OCB must be received by all families: those on social assistance (Ontario Works and the Ontario Disability Support Program) and working families below the established income ceiling. By ensuring this money is received by all families, the OCB will effectively end the clawback for those families receiving social assistance. Some savings could be realized by phasing out the Ontario Child Care Supplement (OCCS), while ensuring that working families receive the OCB for all children below the age of 18. This would increase the amount of assistance received by these families, while providing them with assistance over a longer time period. Case Study: Single Mother with One Child on Social Assistance In order to understand the impact of the new OCB, it is important to review its potential impacts through a case study. This case study examines a single mother on social assistance with one child. This mother would receive the maximum benefit from Ontario Works (OW) of $987 per month, which would be reduced by $ (the clawback) as she would qualify for all of the benefits from the federal and provincial governments. Her current and proposed child benefit package can be seen in the graph seven. If the UCCB was defined as a non-taxable benefit, and the provincial government implements a new Ontario Child Benefit, this family would have an additional $ per month. On a weekly basis, this would allow a family to purchase: 1 kg of apples, 1 kg of bananas, a loaf of bread, a box of corn flakes, 1 kg of ground beef, 2 litres of milk, a jar of peanut butter, a box of macaroni, 1 kg of chicken, 1 kg of carrots, a can of soup and a box of soda crackers. 16 Graph Seven: Proposed Maximum Integrated Benefit for a Single Mother with One Child on Social Assistance vs. Current Benefits $1,800 $1,600 BASIC OW ALLOWANCE CCTB OCCS NATIONAL CHILD BENEFIT UCCB NEW ONTARIO CHILD BENEFIT MONTHLY INCOME $1,400 $1,200 $1,000 $800 $ $84.50 $ $ $ $ $ $600 $400 $ $ $200 $0 CURRENT PROPOSED 10 HUNGRY FOR CHANGE: PRE-BUDGET SUBMISSION

11 The new harmonized child benefit package would be a big step towards putting food on the table and filling the poverty gap. But it would not be enough to lift this family out of poverty. A sole support mother with a child in a small community would still need an additional $330 per month to raise her income to the poverty line. A single mom in a big city would need an additional $880 per month. This is a clear sign that additional reforms would need to be implemented to other programmes including Ontario Works to bring all Ontario s families out of poverty. Ideally, this benefit would be one component of a new integrated federal-provincial child benefit programme, creating one benefit package for all Ontario s children. This package would have a fair division of financial responsibility, a simple application process, and fair eligibility and appeals mechanisms. Conceptually, an integrated child benefit programme would be modeled on integrated federal-provincial student loans program as well as the Canada Pension Plan (CPP). The estimated cost of the Ontario Child Benefit (OCB) is $850 million once fully realized. The benefit would be phased in over three years, front end loaded with at least half of the value (at least $65 per child per month in new funds) provided in Therefore, the budgetary investment for 2007 would be $425 million. ONTARIO S CHILDREN 2. Child poverty reduction measures and targets. Measures and targets for the reduction of poverty would ensure that benefits are meeting their intended aim and increase public accountability to Ontario s children. The study and measure of poverty is defined in both absolute and relative terms. It is believed that the Low-Income Measure (LIM) may be the best relative metric for Ontario as it is in roughly line with other measures such as the Low-Income Cutoffs (LICO), and it presents the opportunity for international comparisons as it is used by both the UN, OECD and many European nations. The best absolute measure may be the Market Basket Measures (MBM) defined by Statistics Canada in 2000, but not updated since that time. This measure could be updated and maintained with the assistance of experts and policy makers within and outside of government. It is quite reasonable to recognize the need for both an absolute and relative measure. Many European nations employ multiple measures of absolute and relative poverty. And just as important, once we are able to establish an official measure or measures, we can eliminate, or at least significantly reduce, the time spent arguing about the measure, and focus our efforts on the actions needed to reduce poverty. The establishment of targets and associated research could be performed by a small Poverty or Domestic Development Secretariat, or a newly created unit within the Ministry of Community and Social Services. This recommendation has a limited financial cost. HUNGRY FOR CHANGE: ONTARIANS WITH DISABILITIES Tens of thousands of Ontarians with disabilities face the spectre of hunger on a daily basis. Almost 20 per cent of those served by food banks in this province are persons with disabilities. Despite the current government s commitment to Ontarians with disabilities, there are still many concerns with hunger and poverty amongst these citizens. Fortunately, there are solutions that can have a real impact to ensure that Ontarians with disabilities are able to live in dignity. This commitment, as well as our concerns and solutions are outlined below. GOVERNMENT COMMITMENT In the Throne Speech following the 2003 provincial election, the current provincial government committed to the following: Your new government will work with Ontarians with disabilities on meaningful legislation that will allow them to fully participate in building a stronger province. 17 HUNGRY FOR CHANGE: PRE-BUDGET SUBMISSION 11

12 ONTARIANS WITH DISABILITIES CONCERNS There are a number of concerns with the status of Ontarians with disabilities. The concerns are as follows: 1. Persons with disabilities living with hunger and poverty comprise greater than their expected share of the population. The need for support and the level of support required for low-income Ontarians with disabilities is much greater than the rest of the population. They are not receiving that necessary support. Ontarians with disabilities represent 13.5 per cent of the total population of Ontario, yet they represent almost 20 per cent of those served by food banks in Ontario The application process for ODSP support is extremely difficult for many Ontarians. It is a challenge to any individual s dignity to reach out for income to assist for the very basics in life. This challenge is only compounded by the complexity and a lack of an ethic of care present within the Ontario Disability Support Program (ODSP). Many Ontarians will opt out of the process before it is complete, leaving them on even less sufficient OW income. More specifically, the Income Security Advocacy Centre has identified the Disability Determination Package (DDP) as the most serious barrier to the successful completion of an ODSP application. As they note, in 2000/2001 fiscal year, almost 40 per cent of applicants referred to the DAU [Disability Adjudication Unit] did not, ultimately, submit a DDP package. 19 There are two reasons for this high non-completion rate the complexity of the DDP, and the extremely short period of time given to applicants to complete its various components. 3. The maximum ODSP allowance falls below all poverty benchmarks. The primary reason for hunger amongst Ontarians with disabilities is the inadequacy of supports provided through the Ontario Disability Support Program. Put simply, Ontarians on ODSP do not have enough to pay their rent and grocery bill. As such, the program drives dependence on food banks and locks recipients in a dehumanizing cycle of poverty. This fact is made clear when examining ODSP support in comparison to poverty benchmarks, including LICO, Market Basket Measures (MBM), and the provincial government s own estimates through Settlement.org. For example, the maximum monthly allowance for a single person on ODSP living in a major Ontario city is $476 below LICO, $560 below MBM, and $658 below an estimate by Settlement.org. This gap can be seen in graph eight. RECOMMENDATIONS The following recommendations are offered to begin to address the concerns outlined above and ensure that Ontarians with disabilities are able to fully participate in building a stronger province: Graph Eight: Monthly ODSP Allowance Support for Single Person vs. Established Poverty Lines in Major Ontario Centres, 2005 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $959 $1,435 $1,519 $1,617 $0 MAXIMUM ODSP SUPPORT LICO MBM Settlement.org ESTABLISHED POVERTY LINES 12 HUNGRY FOR CHANGE: PRE-BUDGET SUBMISSION

13 1. Additional ODSP caseworkers. The provincial government should invest in staff resources to provide assistance in the completion of the ODSP application. These individuals should be put in place in communities across the province in order to achieve a real ethic of care and ensure that applicants receive consistent support from a single caseworker. In order to achieve a desired 1:200 ratio of caseworkers to applicants, it is estimated that an additional 150 caseworkers would need to be hired. Given an average salary of $70,000 with a 22 per cent benefit load and 15 per cent for infrastructure, the estimated annual cost of this investment would be $14.3 million. 2. An increase in the ODSP support package. ODSP should provide assistance at levels that, at minimum, meet the levels provided to seniors, and ideally, supports that would allow them to live at or above the poverty line. These changes are necessary, and can be implemented over a reasonable time frame. According to the Ministry of Community and Social Services (MCSS), it is estimated that for every one per cent increase in OW and ODSP rates, a new investment of $80 million is required. It would be unjust to increase ODSP rates without recognizing the need to increase OW rates. Therefore, in order to achieve the aim of an inflationary increase for OW, while advancing ODSP at a greater rate given the greater financial need, an average four per cent increase is recommended for 2007 at minimum. More specifically, this would represent a roughly five per cent increase for ODSP and three per cent for OW. For single ODSP recipients, this would move their maximum allowance up to $1,007 per month, providing them with an additional $50 per month in supports. This increase would allow recipients to purchase more nutritious foods for themselves or their families. The total cost of this increase would be roughly $320 million in Roughly half of this increase would be funded by increased unrestricted transfer payments from the federal government or by an increase to the federal government s Canada Social Transfer (CST). If the provincial government does not receive these investments after pressing the federal government for this change, the province should cover the full cost of the increase. It should be noted that progressively greater rates of increase beyond inflation will be required beyond 2007 to ensure that Ontarians with disabilities are able to live in dignity and meet their needs. ONTARIANS WITH DISABILITIES HUNGRY FOR CHANGE: WORKING ONTARIANS We would like to think that an honest day s work will be rewarded with enough money to feed yourself or your family. Yet the number of working Ontarians served by food banks continues to rise per cent of those served were employed in 2006, compared to 14.5 per cent in In 2006, over 60 per cent of food banks witnessed an increase in the number of working Ontarians that they served. Despite the current government s commitment to hard working Ontarians, there are growing and alarming concerns with hunger and poverty for these citizens. Fortunately, there are solutions that can have a real impact to ensure that working Ontarians are able to put food on their tables and make ends meet after an honest day s work. This commitment, as well as our concerns and solutions are outlined below. GOVERNMENT COMMITMENT In the Throne Speech following the 2003 provincial election, the current provincial government committed to the following: A commitment was made to help hard-working families make ends meet before they reach their wits end. That commitment will be kept. 20 HUNGRY FOR CHANGE: PRE-BUDGET SUBMISSION 13

14 WORKING ONTARIANS CONCERNS There are a number of concerns with the status of tens of thousands of working Ontarians. The concerns are as follows: 1. There are too many working Ontarians living with hunger and poverty. Over 55,000 working Ontarians are served by food banks every month. 21 But this may only be the tip of the iceberg. There may be over one million persons defined as working poor in Canada This makes up a very significant proportion of the overall labour force. The proportion of all wage earners who are low-paid and live in low-income is between five and nine per cent In Ontario, this would mean that there were up to half a million low-income workers in This figure does not include all those persons that are affected by low-income as a result. One must also consider the entire household of the low-income worker. It is estimated that if family members are also included, the working poor represents approximately 50 per cent of all lowincome Canadians, or 1.5 million citizens, one-third of whom are children below the age of The number of working Ontarians living in poverty is on the rise. There are many populations that seem to be witnessing a significant increase in poverty rates despite their continued work. For example, two-parent families with a single earner have seen significant growth in their poverty rates well beyond the Canadian average. Between 1980 and 2003, the poverty rate for two-parent families with children and one earner increased by over eight Graph Nine: Canadian Poverty Rate vs. Poverty Rate for Two-Parent Families with a Single Earner, 1980 to % ALL PERSONS PERCENT BELOW POVERTY LINE 28.7% 29.5% 30% TWO-PARENT FAMILIES WITH 28.1% 28.3% 28.3% 27.2% CHILDREN (ONE EARNER) 26.9% 24.3% 24.8% 24.8% 25.3% 25.2% 25% 23.8% 22.5% 23.1% 22.4% 21.8% 18.9% 20.2%21.2% 21.0% 19.6% 20% 18.1% 16.9% 20.6% 20.1% 19.3% 18.6%18.7% 18.3%19.3% 18.6% 18.6% 17.2% 17.5% 17.3% 15% 16.0% 17.5%16.4%16.0% 16.2% 16.4%15.5% 15.9% 16.2% 15.9% 15.1% 14.0% 10% 5% 0% Graph Ten: Canadians Living in Poverty as a Proportion of Population in Selected Ontario Cities, 1980 to 2000 YEAR 10% 9.3% % 8% 7% 7.3% 8.0% 8.7% 6.5% 7.5% 8.1% 7.1% 6.5% 7.3% 7.3% 8.6% 7.0% 6.7% 6.6% 6.7% 6.4% 8.4% POVERTY RATE 6% 5% 4% 5.5% 5.7% 5.5% 5.8% 5.2% 5.4% 4.7% 5.5% 5.9% 3% 2% 1% 0% CANADA OTTAWA- HULL KINGSTON TORONTO HAMILTON LONDON THUNDER BAY WINDSOR SUDBURY 14 HUNGRY FOR CHANGE: PRE-BUDGET SUBMISSION

15 Graph Eleven: Proportion of Low-income Workers in Canada with Access to Life or Disability Insurance, % % WITH ACCESS TO LIFE OR DISABILITY INSURANCE % WITHOUT ACCESS TO LIFE OR DISABILITY INSURANCE WORKING ONTARIANS 82% Graph Twelve: Percentage of Family Members in Selected Canadian Households with Access to Work-Related Benefits, % 85% 75% 65% 55% 45% PERSONS IN LOW-INCOME FAMILY WITH AT LEAST ONE WORKER PERSONS IN NON LOW-INCOME FAMILY WITH AT LEAST ONE WORKER 74.6% 74.6% 35% 25% 26.6% 25.6% 15% 5% -5% % WITH ACCESS TO A HEALTH OR MEDICAL CARE PLAN % WITH ACCESS TO A DENTAL PLAN per cent, while the average poverty rate decreased by 0.1 per cent. This troubling trend can be seen in graph nine. Many other studies have shown an overall trend of worrying increases in the number of working poor in Canada and Ontario. This is evident when examining the number of working poor in Canada and many cities in Ontario over the past twenty years, as seen in graph ten. According to a Statistics Canada study looking at working persons living on less than half of median income, the proportion of working Canadians living in poverty has increased by 1.4 per cent between 1980 and This trend is more pronounced in many of Ontario s largest cities, with increases of 1.8 per cent in Kingston, and over two per cent in Sudbury and Thunder Bay Low-income workers have fewer supplementary health and other benefits. Beyond low wages, low-income workers have to contend with fewer supplementary benefits from employment. Very few low-income workers receive life or disability benefits, supplementary health, vision or dental coverage, or registered pension plans per cent of non low-income workers have access to life or disability insurance. However, only 18 per cent of low-income workers have access to those same benefits. This can be seen in graph eleven. Low-income workers are also much less likely to receive other work-related benefits such as supplementary health or dental insurance. In low-income families with at least one worker, only one-quarter of the family members may receive supplementary coverage, compared to 75 HUNGRY FOR CHANGE: PRE-BUDGET SUBMISSION 15

16 WORKING ONTARIANS per cent in other households. This disparity can be seen in graph twelve. Beyond supplementary benefits, there is also a significant gap in the provision of retirement benefits to working poor families. In 2001, only 15.1 per cent of low-income workers were offered a pension plan by their employer, compared to 48.7 per cent for non low-income workers Labour force growth in Ontario is being driven by low-wage and non-standard occupations. Over the past year, Canada and Ontario experienced record high employment rates. This is reflective of economic growth across the country over the past decade. Unfortunately, recent labour force growth has been driven by lower wage occupations. Ontario has lost a large number of middle and high wage occupations in the past fifteen months, including 56,900 jobs lost in occupations unique to manufacturing, processing and utilities, 26,700 jobs lost in management occupations, and 22,000 jobs lost in trades, transport and equipment operators and related occupations. There has been a net gain in employment, but this has been mainly through an increase 161,900 jobs in sales and service occupations. This trend can be seen in graph thirteen. The newly created sales and service occupations are at the bottom of the wage scale at an average of $13.55 per hour by December And their wage growth has also been lowest of all occupation types. Wages in sales and service occupations have only grown by 0.37 per cent in the past fifteen months. This can be seen in graph fourteen. This is reflective of a longer term trend. The proportion of the labour force employed in manufacturing has declined by 5.4 per cent between 1986 and This would be the equivalent of losing 350,000 manufacturing jobs during that time period. Between 2002 and 2005 alone, Canada lost 149,000 jobs in manufacturing. 39 The proportion of the labour force employed in sales and service occupations has also grown by roughly two per cent between 1991 and The number of new employees who find themselves in temporary jobs has increased dramatically. 40 Between 1997 and 2003, temporary employment accounted for almost one-fifth of overall growth in paid employment between 1997 and This is not a recent trend: growth in temporary employment has occurred since the 1980s. The overall proportion of the labour force employed in temporary positions has increased by four per cent since The greatest change has been felt by new employees: those employees that have recently joined the labour force. In 1989, 11 per cent of new employees held temporary positions with Canadian firms. By 2004, the proportion skyrocketed by ten per cent, meaning that 21 per cent of all new employees were now temporary workers. This trend can be seen in graph fifteen. Graph Thirteen: Labour Force Growth in All Industries in Ontario Over Past Fifteen Months (October 2005 to December 2006) 34-56,900 Occupations unique to processing, manufacturing and utilities?(3) -26,700-22,000-12,100 Occupations unique to primary industry Occupations in art, culture, recreation and sport Health occupations Business, finance and administrative occupations Natural and applied sciences and related occupations 600 M anagement occupations Trades, transport and equipment operators and related occupations?(3) Occupations in social science, education, government service and religion 1,200 8,300 18,700 18,800 Sales and service occupations 161, ,000-50, , , , ,000 CHANGE IN LABOUR FORCE 16 HUNGRY FOR CHANGE: PRE-BUDGET SUBMISSION

17 Graph Fourteen: Wage Growth in All Industries in Ontario Over Past Fifteen Months (October 2005 to December 2006) 35 Sales and service occupations Occupations unique to primary industry Occupations unique to processing, manufacturing and utilities Business, finance and administrative occupations $13.50 $13.55 $14.57 $15.38 $17.22 $17.89 $19.15 $19.70 October 2005 December 2006 WORKING ONTARIANS Trades, transport and equipment operators and related occupations All occupations Occupations in art, culture, recreation and sport Health occupations Occupations in social science, education, government service and religion Natural and applied sciences and related occupations M anagement occupations $19.53 $20.30 $20.29 $20.74 $20.24 $21.71 $23.56 $24.98 $26.58 $26.70 $28.57 $29.71 $31.05 $32.99 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 WAGES PER HOUR An increase in the number of temporary workers is not inherently problematic. It is troubling considering the characteristics of temporary work. Wages for temporary workers are often much lower than in permanent positions. In 2003, temporary workers in Canada earned an average of 16 per cent less per hour than permanent employees. 43 Wages may be even less depending on the type of temporary position. This can be seen in the associated graph. For example, earnings for persons using an employment agency may be 40 per cent less than their permanent counterparts Income supports and protections are insufficient and fall behind other peer jurisdictions. Canada and Ontario fall well behind other peer jurisdictions in the provision of supports and protections for low income workers. Despite the evidence of its benefits, there is no national working income tax benefit allowing low-income Canadians or Ontarians to earn more or save more. A significant number of U.S. states, European nations, and a number of provinces have a targeted working supplement or tax credit. The value of the minimum wage in Ontario in comparison to average household income is also behind a number of provincial counterparts, as well as many European nations. This trend can be seen in graph seventeen. And if proposed U.S. federal minimum wage legislation passes, Ontario will fall behind the minimum wage in all U.S. states. There is also a large gap in terms of skills development and quality job strategies when comparing Ontario and Canada to other jurisdictions. The European Union and some U.S. states have comprehensive strategies that target the working poor and improvements to ensure quality employment opportunities. The provincial government did recently announce a Jobs and Skills Renewal Strategy in the last provincial budget, which is slated to cost $2.1 billion by The strategy focuses on the details related to the signing of Labour Market Agreements with the federal government in November 2005, with efforts made to integrate federal and provincial efforts on retraining, HUNGRY FOR CHANGE: PRE-BUDGET SUBMISSION 17

18 WORKING ONTARIANS basic education, language training, and apprenticeship training. 46 The plan also highlights efforts to provide incentives to employers and employees for training, such as an Apprenticeship Training Tax Credit. 47 The Jobs and Skills Renewal Strategy seems to say the right things, but it is severely lacking in many respects. The plan appears to include very few specifics, lacks any established targets or goals for improvement beyond investment commitments, lacks any details regarding worker supports and protections, and does not address the issue of quality employment opportunities for all Ontarians. There is also no clear link between the Jobs and Skills Renewal Strategy and the province s broader economic growth strategy. Although the stated investment is sizable, there is also not a great deal of detail regarding how those funds will be allocated beyond the fact that it will be targeted at: unemployed workers, new Canadians, apprentices, workers requiring skills upgrading, social assistance recipients, youth, working poor, workers lacking literacy skills, and underemployed workers. It is certainly encouraging to see investment targeting these groups, but without any details, it is unclear how they will be assisted or what opportunities they may now have. Graph Fifteen: Proportion of Temporary Workers Compared to Total Workforce in Private Sector, 1989 to % % 21% 20% 16% 15% PERCENTAGE 10% 7% 8% 9% 11% 5% 5% 3% 5% 3% 5% 0% ALL EMPLOYEES NEW EMPLOYEES OTHER EMPLOYEES Graph Sixteen: Temporary Workers Earnings vs. Permanent Counterparts, % -5% CONTRACT EMPLOYEES CASUAL WORKERS SEASONAL WORKERS THOSE USING EMPLOYMENT AGENCIES -10% -8% -15% -20% -25% -30% -35% -24% -28% -40% -45% -40% 18 HUNGRY FOR CHANGE: PRE-BUDGET SUBMISSION

19 Graph Seventeen: Full-time Minimum Wage as a Proportion of Median Household Income in Ontario, Peer U.S. States and Canadian Provinces, and Selected E.U. States, 2006 JURISDICTION FRANCE UNITED KINGDOM QUEBEC B.C. FLORIDA ONTARIO NEW YORK U.S. FEDERAL MINIMUM WAGE CALIFORNIA ALBERTA TEXAS MASSECHUSETTS MICHIGAN 17.1% 16.4% 20.6% 20.2% 20.0% 19.0% 18.8% 23.1% 22.4% 28.8% 27.2% 37.7% 47.0% WORKING ONTARIANS 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% PROPORTION RECOMMENDATIONS The following recommendations are offered to begin to address the concerns outlined above and ensure that working Ontarians are able to make ends meet before they reach their wits end: 1. Expansion of the Ontario Trillium Drug Program. The Trillium Drug Program and other benefit supports are extended to social assistance recipients transitioning from social assistance to work. In some cases, others may also qualify if they have demonstrated need and live on low-income. But those qualifications are hardly universal, and there are associated costs. Therefore, it is recommended that the provincial government expand access to and coverage for the Trillium Drug Program to ensure that low-income workers have improved prescription drug, health and vision care coverage. The benefits that are provided should offer better coverage than what is provided to social assistance recipients, with an established income threshold of $25,000 per year, depending on family type. There should also be no deductible for this new coverage. The estimated cost to eliminate the deductible and increase the services covered through the Trillium Drug Program is $300 million annually. 48 In order to make sure the program is working for those it serves, the additional coverage could be phased in over three years. Therefore, the budgetary cost for 2007 would be $100 million. 2. Implementation of a low-wage strategy. It is clear that our minimum wage is inadequate by national and international standards. This inadequacy has been recognized with modest increases to the minimum wage over the past three years after an eight year freeze. But it is not enough. There is a great difference of opinion on the appropriate level of minimum wage. Some small business and corporate groups already believe that it is too high, and any increases would have a negative impact on their businesses. Other groups believe that it is alarmingly low, and that ten dollars per hour is a sufficient wage threshold. In the fall of 2006, the provincial New Democratic Party (NDP) has used this support to introduce legislation to immediately increase the minimum wage rate to ten dollars per hour. There are others who recommend a middle ground. Canadian Policy Research Networks (CPRN) recommends a quick increase to $9 per hour. 49 The Modernizing Income Security for Working Age Adults (MISWAA) noted in their proposals that for their recommendations to ensure Ontarians live beyond a set income threshold, the minimum wage would need to be $9.02 HUNGRY FOR CHANGE: PRE-BUDGET SUBMISSION 19

20 WORKING ONTARIANS per hour. 50 Given this difference of opinion, it is believed that minimum wage should be increased to at least nine dollars per hour in 2007, and efforts should be made to evaluate the effects of an increase to ten dollars per hour in If minimum wage were increased by one dollar per hour, an individual working 35 hours per week would earn an additional $140 per month. This policy change should be coupled with the creation of a Low-Wage Board and a new three year schedule of minimum wage increases. A provincial Low-Wage Board would be modeled on the Low Pay Commission in the United Kingdom. It would be comprised of representatives from industry, labour and the third sector, and would be responsible for recommending the schedule of minimum wage levels to the provincial government. The Low-Wage Board would also have a small Secretariat to conduct research on low-income workers in Ontario, conduct jurisdictional comparisons, and offer other recommendations on how to improve the lives of low-income workers. These increases and support through the low-wage board must be accompanied by a longterm approach to low-wages. The current provincial government has employed a key feature of a reasonable minimum wage policy for both employers and workers: predictability. There has been schedule of increases since 2003, starting at $6.85 and increasing to $7.75 today. This process of scheduling increases must be continued beyond 2007 with a three year timeline for implementation, and these increases must meet or surpass the rate of inflation. This new schedule must also start at least at the $9 per hour threshold. 3. Provincial quality job development strategy. The provincial government has an employment strategy. But it is insufficient, as many working Ontarians are being left behind. A new provincial quality job strategy must include improved supports and protections, promote the growth of human capital, and establish targets for improvement. It is also vital that this job development strategy is integrated with an overall economic growth plan. Ontario s job development strategy should follow a similar model to the European Union s jobs and growth strategy, with a coordinated system of social protection, lifelong learning, labour market development and economic growth. Accordingly, a provincial quality job development strategy should have the following features: 1. the inclusion of measures to improve low income worker supports and protections; 2. measures that will provide social protections to those who cannot work and those who are transitioning in or out of the labour force; 3. a discussion on the establishment of a minimum income threshold for Ontarians; 4. linkages between the jobs and skills renewal strategy and the province s overall economic growth strategy; 5. linkages between the common responsibilities of government departments and Ministries towards economic growth and worker protections; 6. targets for the creation of quality jobs in sectors that align with the overall economic growth strategy; 7. a focus on training and retraining investments and the expected results of those investments; and 8. targets for the number of Ontarians who will be involved in training and retraining opportunities including: basic education and literacy, apprenticeships, and language training. This recommendation has a limited financial cost, and can be achieved through work done to support the implementation of the Labour Market Development Agreement (LMDA). 4. Individual development accounts (IDAs). Following similar models in the United States and elsewhere, the provincial government should create an individual development accounts (IDA) programme for low-income families in Ontario. Individual development Accounts (IDAs), are, savings accounts, supplemented with matching funds from state, federal, and other public and private sources, designed to help low-income and low-wealth families 20 HUNGRY FOR CHANGE: PRE-BUDGET SUBMISSION