politics

Social Alternatives Vol. 32 No 1, 2013 19 The Politics of Poverty in Canada s hauna m aC k innon Similar to other countries, “poverty” is a highly contested concept in Canada. In spite of Canada’s great wealth and reputation as a kinder, gentler nation than its neighbours to the south, poverty continues to be persistent and pervasive. While most Canadians agree that poverty in Canada is greater than it should be, Canada does not have an official poverty line and there has been much debate in recent years as to how poverty is best measured. This has been somewhat of a distraction from the reality that poverty, regardless of how it is measured, is unacceptable in a country of such great wealth. The problem has only become worse in the post-Keynesian context.

Solutions on offer in the current political milieu focus on short term training to meet labour market needs. All too often this results in low-wage, precarious employment that fails to lift people out of poverty.

Introduction In spite of Canada’s great wealth and reputation as a kinder, gentler nation than its neighbours to the south, poverty continues to be persistent and pervasive. This chapter provides an overview of poverty in Canada including discussion about the major obstacles standing in the way of its elimination. This includes a lack of consensus on how poverty is defined and the absence of an accepted poverty line, underlined by a dominant discourse that dismisses the idea that structural failings create the conditions that leave far too many Canadians behind.

Poverty Discourses Similar to other countries, ‘poverty’ is a highly contested concept in Canada and responses are highly political.

Ruth Levitas (2003; 2005) developed a typology of ‘social exclusion’ discourses that is equally useful to describe the various views on poverty that ultimately guide policy responses in Canada and elsewhere. Levitas (2005: 14) emphasises poverty as a prime cause of social exclusion and she outlines three dominant discourses. The redistributive (RED) discourse builds on the earlier work of Peter Townsend (1979: 32) which understands poverty in terms of ‘people’s ability to participate in the customary life of society…their resources are so seriously below those commanded by the average individual or family that they are, in effect, excluded from ordinary living patterns, customs and activities’ (Levitas 2005). This discourse leads to a policy response that integrates comprehensive approaches to increase income and ensure access to a broad range of resources.

The second view Levitas describes is the social integration (SID) discourse, which focuses solely on exclusion as a result of a disconnection to paid work. Getting people into the labour market is therefore the sole concern and solution to exclusion.

The third model, which Levitas describes as the moral underclass (MUD) discourse, views social exclusion as the result of ‘moral and cultural causes of poverty’. Policies and programs that focus on ‘reform’ of individuals, target ‘youth at risk’, and aim to ‘employ’ single mothers and others who are viewed as acting outside of mainstream norms are often modelled on such a view.

As reflected in Levitas’ RED perspective, poverty and exclusion speak to the limited participation of individuals in all domains of life with the lack of income being central to all exclusion. While access to economic opportunity through employment is the focus of SID, it is but one component of a poverty and social exclusion strategy under the auspices of RED. RED focuses on redistribution of income and wealth, recognising a need for comprehensive measures to address poverty and inequality. Levitas aptly sums up the three discourses. She says, ‘from the RED perspective, the poor and excluded have no money, in SID they have no paid work, in MUD they have no morals’ (2005: 3).

In Canada, the RED model was more evident as the social safety net was weaved after WWII and through to the late 1970s. Since then, there has been a movement away from initiatives that adequately address poverty and social exclusion aligned with the redistributive discourse— ensuring that all citizens have sufficient income, satisfactory housing, accessible child care and access to education and training based on right rather than ability to pay. The SID framework has increasingly become the leading discourse with solutions to poverty at the federal 20 Social Alternatives Vol. 32 No. 1, 2013 and provincial levels, with an emphasis on short-term training in response to labour market needs (MacKinnon 2011). The MUD perspective is also increasingly reflected in policies that systematically create barriers as a result of expectations that are inherently classist, racist and sexist. MUD is very evident in provincial social assistance policies, which have become increasingly restrictive.

Those subscribing to both the SID and MUD approaches view poverty alleviation in the context of the ‘achievement model of income determination’, the conventional and dominant view of poverty that is based on the idea that poverty can be escaped simply by working hard (Bowles et al. 2006), and that poverty is essentially an individual problem. This sentiment was recently articulated by Canada’s Finance Minister Jim Flaherty who defended recent scaling back of Employment Insurance stating:

‘there is no bad job, the only bad job is not having a job…I drove a taxi, I refereed hockey. You do what you have to do to make a living’ (CBC 2012).

From this perspective, poverty is also most often viewed in absolute terms— a lack of adequate food, shelter, clothing and medical care. The problem with absolute measures is that they disregard the broader social and economic context in which poverty exists. For example, while the World Bank definition of ‘a dollar a day’ may be an adequate ‘floor’ from which to measure poverty in very poor nations, it is obviously not an appropriate measure for Canada given our very different social, political and economic capacity to eliminate or at least greatly reduce poverty. Further, as noted by Wilkinson and Pickett (2009) it is necessary that we understand income trends within countries. Relative measures that look at both before- and after-tax incomes allow us to critically analyse whether policies are effectively minimising the negative effects, including extreme inequality, that result from unchecked capitalism.

Measuring Poverty Just as defining poverty is highly contested, so too is how we measure it. Canada does not have an official poverty line and there has been much debate in recent years as to how poverty is best measured. The Statistics Canada Low Income Cut-Off (LICO) has most often been used to measure poverty. The LICO is essentially an income threshold below which a family will likely devote a larger share of its income on food, shelter and clothing than would the average family (Statistics Canada 2010). Using data from the 1992 Family Expenditures Survey as a base, and then factoring in Consumer Price Index (CPI) inflation rates, Statistics Canada calculates both before- and after-tax cut-offs for various family and community sizes resulting in 35 cut-offs (Statistics Canada 2010). Both before- and after-tax calculations are currently available.

Statistics Canada is reportedly phasing out the before-tax LICO arguing that it does not accurately capture the real situation of Canadians that results from redistributive tax policies. Table 1 and Table 2 provide recent calculations of before- and after-tax LICOs. Table 1: Low Income Cut-Offs (Current Dollars, 1992 base) Before Tax – 2009 Source: Statistics Canada catalogue no. 75F0002M –No.

005.

Source: Statistics Canada catalogue no. 75F0002M –No.

005 . Table 2: Low Income Cut-Offs (Current Dollars, 1992 base) After Tax - 2009 While it continues to be the measure most commonly used, the LICO is not a perfect measure and it is often criticised for its flaws. One criticism is that the LICO does not adequately capture differences in costs across the country. For example, housing costs in Winnipeg are far Social Alternatives Vol. 32 No 1, 2013 21 Source: Statistics Canada catalogue no. 75F0002M –No.

005 . Source: Statistics Canada catalogue no. 75F0002M –No.

005.

lower than those in Vancouver and Toronto, yet the LICO does not account for this difference. The LICO is also not applicable to First Nations because LICOs include the cost of shelter, which is generally paid for in First Nations.

The Fraser Institute has lobbied for the elimination of the LICO. It argues that this measure effectively overstates poverty in Canada by making it a ‘moving target’ and that relative measures like the LICO will not allow us to ever alleviate poverty because the threshold is simply too high and constantly rising (Sarlo 1992). The Fraser Institute’s solution is essentially to lower the threshold so that the incidence of poverty will appear much lower than that currently shown by the LICO. In this regard, the Fraser Institute developed an absolute measure of poverty that includes only the barest of necessities and essentially shows Canada to have very little poverty.

In addition to the LICO, the Canadian government uses other measures. For the purpose of making international comparisons to determine how our country ‘measures-up’ against others, Statistics Canada uses the Low Income Measure (LIM). The LIM (Table 3) is basically a fixed percentage (50% adjusted for family size) of median- adjusted family income using the Survey of Labour and Income Dynamics (SLID).

Table 3: Low-Income Measures (LIM) for Household Size of Four Persons, 2008 The Government of Canada has more recently established an absolute measure called the Market Basket Measure (MBM) (Table 4). Governments and some analysts favour the MBM over the LICO because it takes into account regional differences in the cost of living. The MBM includes a broader range of essential goods and services than does the Fraser Institute measure, but it is similarly flawed in that its generosity depends on what goes into the ‘basket’ and how often it is updated.

While the LIM can be useful when comparing different countries and the MBM is useful because it takes factors other than income into consideration, poverty must be viewed in the context of the social and economic conditions of the nation, and social exclusion stems from a lack of access to opportunity as a result of poverty. From this perspective, the LICO, and in particular the after-tax LICO, are suitable for measuring how some Canadians are faring relative to others and how well tax policies are serving to counter labour market inequalities. Table 4: 2008 Market Basket Measure (MBM) Thresholds, Disposable Income (current dollars).Reference Family of Two Adults and Two Children by MBM Region The Extent of Poverty The various measures used to determine poverty in Canada is useful for different purposes. Debates continue on which measure paints the most accurate picture of poverty in Canada. None of these measures are perfect but the squabbling over which is best to use is somewhat of a distraction. What is most important is that we acknowledge poverty exists at unacceptable levels, set targets and timelines to reduce it, and use a consistent measure to track progress over time. 22 Social Alternatives Vol. 32 No. 1, 2013 The LICO is used here to tell the Canadian story because it remains the most commonly used measure with the longest history and is therefore the most useful to measure our progress. As shown in Table 5, there has been a reduction in poverty in recent years as measured by the LICO, both before and after tax. Table 5: Percentage of Persons in Low-Income, CanadaBefore and After Tax 1987 1992 1997 2002 2006 2008 2010 16.0 18.3 19.2 16.2 14.3 13.5 13.5 After Ta x 13.6 16.1 15.8 12.2 11.4 9.3 9.0 Source: Statistics Canada Cansim Table 202-0802 Source: Collin and Jensen, 2009 However, there is a much deeper story to be told. The general trend does not tell us who is poor and where people in poverty are most likely to live. It also doesn’t tell us the depth of poverty, the extent to which Canadians are transitioning out of poverty and how their incomes compare with other Canadians. For example, the prevalence of poverty for Aboriginal people in Canada is far higher than that of the non-Aboriginal population, as shown in Table 6.

Table 6: Prevalence of Poverty Aboriginal/Non-Aboriginal, 2006 Census Other groups are also more likely to live in low-income including lone parents, persons with disabilities, recent immigrants and especially those who are refugees. A major concern is the increasing depth of poverty. The poor are in fact getting poorer. The rise in homelessness and food banks is evidence of this and statistics confirm the trend. As described by Osberg, while the rate of poverty has declined, the average poverty gap is on the rise both before-and after-tax. For example, measured in 2007 dollars, the before tax poverty gap per poor individual has increased by 11%, ‘from $4,490 in 1980 to $4,770 in 2003 and $4,920 in 2005’ (Osberg 2008: 40).

Public Policy Responses The public policy response to poverty is increasingly focused on labour market attachment. There has been a steady shift from ‘passive’ to ‘active’ measures in recent years. This means that programs that provide benefits to those not in the labour market, such as employment insurance and social assistance, are on the decline in terms of both breadth and depth of support, and these and other programs have become increasingly difficult to access. Policy changes align with the ideological shift from Keynesianism to neoliberalism that has evolved over the past 30-some years.

The ideological shift from Keynesian to neoliberal government policies began in the 1980s under the Conservative government led by Prime Minister Brian Mulroney. Since then policies that emphasise market mechanisms and individual rather than collective approaches to solving or handling economic and social problems have become commonplace. Government policies in neoliberal welfare states take a narrow approach to poverty and social exclusion through policies aimed at the labour supply in direct response to labour market need.

There is significant research to demonstrate that quick- fix, supply-side strategies are an insufficient response to poverty. But it is also true that addressing poverty is ultimately not the intent of supply-side strategies. The intent is simply to match workers with market need as efficiently as possible. The fact that many of the jobs created pay low-wages, provide little opportunity for advancement, and do not serve to raise the standard of living of workers is inconsequential. This policy response is grounded in neo-classical economic labour market theories that are based on narrow assumptions that disregard many non-economic factors affecting employment and income outcomes. In spite of neoliberal claims and dominant labour market theories, participation in the labour market does not always lift people out of poverty (MacKinnon 2011).

Prospects for Poverty Reduction as a Priority on the Public Policy Agenda In the late 1990s, several European countries began to recognise the societal impact of social exclusion and moved toward implementing comprehensive social inclusion strategies. The extent to which they were comprehensive in practice is debatable and in many ways now mute as countries previously leading the effort to increase inclusion have moved away from comprehensive policy approaches in the wake of the global economic crisis. The new mantra is ‘austerity’. Governments are cutting back rather than building social safety nets and this means the scaling back of social benefits and programs designed to address poverty and social exclusion. Proponents justify this as a necessary response to reducing growing government debt and to stimulate ‘investor confidence’. However, there is growing evidence that in some countries, austerity measures are creating more harm than good (OECD 2012). This will come as no surprise to Nobel prize-winning economist Joseph Stiglitz.

In 2011 he warned, ‘Austerity is an experiment that has Social Alternatives Vol. 32 No 1, 2013 23 been tried before with the same results, cutting budgets in low-growth cycles leads to higher unemployment and hampers recovery’ (Schwartzkopff 2011).

While Canada’s Conservative government is taking full advantage of austerity propaganda to justify cutting back rather than bolstering social supports. It is also true that for countries like Canada and the U.S, comprehensive poverty and inequality reduction approaches have not been placed high on the policy agenda for a very long time. This is unlikely to change anytime soon. While some provincial governments have implemented poverty reduction strategies, they are few and far between, and the absence of a federal plan weakens the effectiveness of the most ambitious regional efforts. In the most recent Canadian federal election (2011), poverty and inequality were nowhere mentioned in the Conservative government’s policy platform and once elected, the Conservative government moved rapidly to move in the opposite direction, scaling back important economic security programs including Employment Insurance and Old Age Security. In spite of the growing evidence of housing insecurity, the Conservative government continues to ignore calls for a national housing strategy.

The lack of safe, affordable housing is the most often cited issue raised by low-income households. A national childcare plan, which was close to becoming a reality prior to the Conservative's election in 2006, is no longer on the political radar. Other important programs have been clawed back or eliminated, affecting the most vulnerable Canadians. For example the Conservative government has eliminated important health benefits for refugees; cancelled funding to several Aboriginal organisations, and funding for prevention programs supporting vulnerable youth have been cut.

Conclusion Sadly, the prospects for poverty reduction as a political priority in Canada are not great. Poverty reduction will not become a priority unless elected officials feel political pressure to make it a priority. What we do know for sure is that there is a lot of work to do to convince the voting public that poverty reduction is important to the overall health and well being of Canadians and that it is in everyone’s best interest to greatly reduce it.

References Bowles, S., Durlauf, S.N. & Hoff, K.R. 2006 Poverty Traps, Russell Sage Foundation and Princeton University Press, New York.

CBC News Canada. "There are no bad jobs", Flaherty says, May 15 2012. Available at www.cbc.ca/news/ canada/story/2012/05/15/flaherty-no-bad-job.html Collin, C. & Jensen, H. 2009 A Statistical Profile of Poverty in Canada, Government of Canada, Library of Parliament, Ottawa.

Levitas, R. 2003 The Idea of Social Exclusion. Paper presented at the Canadian Council for Social Development Conference on Social Exclusion.

Available from www.ccsd.ca/events/inclusion/papers/ rlevitas.htm.

Levitas, R. 2005 The Inclusive Society? Social Exclusion and New Labour (2nd ed.), Palgrave Macmillan, Basingstoke.

MacKinnon, S. 2011 The Effectiveness of Neo-Liberal Labour Market Policy as a Response to the Poverty and Social Exclusion of Aboriginal Second-Chance Learners, Ph.D Dissertation, University of Manitoba, Winnipeg.

Organization for Economic Cooperation and Development 2012. Economy: Global Economy Recovering, but Major Risks Remain. Available at http://www.oecd.

org/newsroom/activecharts2.htm.

Osberg, L. 2008 A Quarter Century of Economic Inequality in Canada: 1981-2006, Canadian Centre for Policy Alternatives, Ottawa.

Sarlo, C. 1992 Poverty in Canada, Fraser Institute, Vancouver.

Schwartzkopff, F. 2011 Nobel Winner Stiglitz Warns Job- Killing Austerity Measures Hurt Economies. Available from http://www.bloomberg.com/news/2011-05-13/ nobel-winner-stiglitz-warns-job-killing-austerity- measures-hurt-economies.html.

Statistics Canada 2010 Low Income Lines, 2008 – 2009, Catalogue no. 75F0002M--No.005. Available from www.

statcan.gc.ca/pub/75f0002m/75f0002m2010005-eng.

pdf.

Townsend, P. 1979 The International Analysis of Poverty, Harvester Wheatsheaf, Milton Keynes.

Wilkinson R. & Pickett, K. 2009 The Spirit Level: Why More Equal Societies Almost Always Do Better, Penguin Group, London. Footnotes 1. Aboriginal identity refers to those persons who reported identifying with at least one group that is, North American Indian, Metis or Inuit, and /or those who reported being a Treaty Indian or a Registerd Indian, as defined by the Indian act of Canada, and/or those who reported they were members of an Indian band or First Nation Statistics Canada Aboriginal peoples in Canada in 2006: Inuit, Metis and First Nations, 2006 Census, Cat.no.97-588-XIE, p.51).

Author Shauna MacKinnon, PhD, is an assistant professor in Urban and Inner-City Studies at the University of Winnipeg. Shauna was the Director of the Canadian Centre for Policy Alternatives, Manitoba office (CCPA- MB) from 2005 to 2013 and continues to work with CCPA as a research associate. Shauna is co-investigator of the Manitoba Research Alliance, Partnership for Change- Community Based Solutions for Aboriginal and Inner- City Poverty, a seven-year research project funded by the Social Sciences and Humanities Research Council.

Shauna is a long time anti-poverty advocate and has written extensively on poverty issues in her home province of Manitoba. In 2009 Shauna co-authored the CCPA publication, The View From Here: Manitobans Call for A Poverty Reduction Plan. R epro duce d w ith p erm is sio n o f th e c o pyrig ht o w ner. F urth er r e pro ductio n p ro hib ite d w ith out p erm is sio n.