The PUB’s July 2001 Order regarding Manitoba Hydro’s proposed rate increase has received quite a bit of media coverage. Pundits have used it to suggest that the government is mismanaging Manitoba Hydro, but their arguments are not defensible, especially in the light of the PUB’s weak analysis regarding Hydro’s export plans and the need to make our own energy supply more secure.
This Fast Facts by Errol Black and Lynne Fernandez explains: 1. why the Order’s recommendations should not be adopted, and 2. how, by cherry picking certain details and ignoring important background information, some pundits have misrepresented both the spirit and context of the Order, allowing them to arrive at inaccurate and sensationalist conclusions.
On July 29, 2011, the Public Utilities Board (PUB) of Manitoba issued an interim Order denying Manitoba Hydro requests to “finalize existing interim rates and for an additional 0.9% rate increase for all customer classes, effective August 1, 2011.” The Order also notes that these requests “…will be further considered and may be adjusted on a final basis in a subsequent Order of the Board.”
The PUB report is a preliminary assessment of Manitoba Hydro’s future investment and development. The documentation supporting the report is extensive, but not complete. Missing are: “…export contracts, financial projections, alternative development scenarios and other information requested by the Board.” Apart from whether the PUB should have access to export contracts with Minnesota and Wisconsin [contracts that were available to the experts consulted by the PUB and therefore reflected in their testimony], which is to be determined in the courts, much of the information requested will no doubt be forthcoming from Manitoba Hydro.
The statement of findings deals specifically with the Keeyask and Conawapa generating stations and the Bi Pole III transmission line. Of particular concern are Manitoba Hydro’s plans relating to market conditions, pricing arrangements and risk management. While some of the questions raised in the statement may merit a response, the statement also includes observations that are acknowledged as highly speculative, and subject to qualification. At no time does the PUB state that its findings are in anyway definitive.
The investment and development plan referred to in the interim Order is one that Manitoba Hydro has been developing for the last decade. It includes major hydro-electric projects that will meet the growing needs of Manitoba and export markets. Wuskwatim, a $1.3 billion project, will be completed in 2012. Keeyask, a $5.6 billion investment, and Conawapa, a $5 billion project, are slated for future development. A new Bi Pole III transmission line ($3.3 billion) to accommodate increases in sales and improve the security of the system is planned for the west side of the province.
Following completion of the East Side Planning Initiative, the Province announced that it would not allow construction of transmission lines through the east-side Boreal Forest, and then announced its intention to protect the Boreal Forest and pursue a UNESCO World Heritage Site designation for the area. CCPA has explained in several publications why this strategy makes sense. The Keeyask generating station got the go-ahead in May upon completion of contracts with utilities in Wisconsin and Minnesota. It is important to note that since all such projects are subject to regulatory approval on both sides of the border, the Province must carry out an alternative hearing before final approval is given. If the project does get final approval, it will be completed by 2021. Conawapa has an estimated in-service date of 2023, but it too must get regulatory approval. Conawapa will only proceed if a transmission line is constructed in Minnesota to carry power to U.S. markets.
The PUB expresses concerns about the sluggish US economy which may reduce the demand and price for hydro power, and the increasing output of shale gas which could also decrease future demand for hydro exports. According to the PUB, this situation may result in Manitoba Hydro ratepayers subsidising the price of hydro power exported to other jurisdictions and states that it may be prudent to defer construction of future projects until we have a clearer idea how these forces will evolve.
However, given existing export commitments already made with Wisconsin and Minnesota and the long-range planning required for new hydro infrastructure, it would be unwise to delay construction. Even if the global economy continues to stumble for the short term, over the medium term it will improve, leading to rising interest rates and a weaker Canadian dollar. Borrowing and construction costs would continue to churn during the time projects are put on hold and may eventually end up significantly higher. Moreover, any delay in our construction plans will result in US utilities seeking alternative suppliers, which could dry up opportunities for export sales in future.
The PUB acknowledges that shale gas extraction is controversial and that the shale gas ‘revolution’ may not unfold as anticipated. The impact of extraction on “the environment, energy, toxic hazards, worker safety, pollution and climate change” continue to proliferate and are likely to curtail, if not derail, the current shale-gas frenzy.
The Board acknowledges the vulnerability of southern Manitoba to outages caused by the failure of Bipole I and/or II and the need to address reliability. But then it justifies delays in construction because there is no guarantee that net export profits will be sufficient to cover the costs of the new transmission, leaving domestic customers to absorb costs through higher rate increases. But if Bi Pole I or II failed, the costs to ratepayers and/or taxpayers would be far greater than any rate increases. Exports and reliability are separate issues; one should not be made contingent on the other.
In spite of the preliminary nature of the PUB report, some pundits are brandishing it as proof that the government is forcing Hydro to make unwise business decisions. Nothing could be further from the truth. The report asks legitimate questions, and in doing so, the PUB fulfills its mandate to protect Manitobans’ investments. But its recommendation to halt construction on major projects—required to meet our contractual obligations with two U.S. states and to secure southern Manitoba’s power supply—should not be heeded. Two major export contracts and a plan to deliver energy security trump speculation about a volatile economy and questionable fracking technology.
We are puzzled as to why the PUB is seeking information that deals with plans for the next ten or fifteen years in order to make a determination on rate increases required to deal with current circumstances. The Board has committed to reassess its findings in a subsequent Order; we suggest that the reassessment focus on Manitoba’s present situation so that Manitoba Hydro can move forward with its long-term plans.
Errol Black is a CCPA Mb. board member and Lynne Fernandez is a CCPA Mb. research associate.
The CCPA-MB extends condolences to the family and friends of Jack Layton, federal leader of the NDP, who passed away early this morning.
Errol Black, chair of the CCPA-MB Board, remembers Jack Layton.
I first met Jack Layton in London, Ontario, when he was the President of the Federation of Canadian Municipalities. I was impressed with him then, and was impressed with him as the leader of the NDP.
Jack was a person who got people excited about progressive politics. He was exuberant and positive and at the same time, he was approachable and open to new ideas. A lot of people in Brandon and in Manitoba supported him. Jack had a voice in North America that was very different, and that brought a new energy to political debate.
Under his leadership, the NDP achieved a big caucus, a diverse caucus, with lots of women, lots of representation from Québec, as well as lots of depth and a large number of people who will be good leaders in the future. Jack leaves the NDP in good shape, and it will continue to be a strong and effective opposition, committed to social democratic values and progressive alternatives.
You can read the CCPA national office’s statement here.
A couple of days ago, Jack Layton wrote a letter to all Canadians. You can read his letter here.
In today’s Fast Facts about the march of inequality making its way throughout the world, Errol Black and Jim Silver use a term I like very much: the INEQUALITY AGENDA. This agenda – to ensure that wealth continues streaming up to an increasingly bloated privileged class – is being pushed by the Harper government and like-minded administrations around the world.
I’m glad that progressives are using hard-hitting, pithy terms like this. These two simple words capture the spirit (agenda) and devastating consequence (inequality) of free-market fundamentalism .
We see the results of income inequality in Canada, with the well-documented growing gap and attendant increases in societal problems. We see the deviousness of the agenda’s design in the “solution” to the US debt-ceiling problem (their solution will exacerbate the problems faced by every-day people). Indeed the very fact that the world’s economic problems are blamed on too much debt is in itself testimony to the ability of the inequality agenda to appropriate a situation, revise it to suit its purposes and then convince a “largely complacent majority” of the public to believe utter nonsense.
The extreme Right has been very effective at this sort of revisionist economics and part of the reason is because they’ve captured terms like “tax burden” and “entitlements” that resonant with the public. We need to use terms like the “inequality agenda” until they become as much of the public discourse as “tax burden”. I recommend that you take a moment to read about the inequality agenda as presented by Black and Silver. And spread the words: Inequality Agenda.
Lynne Fernandez
In June, 1998, Toronto’s Centre for Social Justice published a report by Armine Yalnizyan on the dimensions and implications of growing inequalities in the distribution of incomes in Canada.
In November, 2006, the Canadian Centre for Policy Alternatives (CCPA) established the Growing Gap project to track income trends “and policies that help or worsen the problem of income inequality in Canada.” Since 2006, CCPA has published many studies documenting the persistent growth in inequality, and the government policies that promote it.
There is now a considerable literature, both global and national, confirming the damage done by economic inequality. The evidence is overwhelming. Poor educational outcomes, adverse effects on health, economic dysfunction—all these are a product, in part, of the rise in recent decades of income inequality.
Yet in the May, 2011 federal election the Conservative Party campaigned successfully on a platform that included measures that will increase inequality, including cuts to both corporate taxes, from 18% to 15% by 2012-13, and government spending. Despite evidence that these measures will adversely affect the economy and most Canadians, the proposals and the party were endorsed by most major newspapers save the Toronto Star, which was also the one newspaper that raised the inequality issue during the campaign.
The Conservative government is now pushing ahead with this inequality agenda. The Globe and Mail reported on June 11 that Jim Flaherty intends to “make Canada’s income-tax system flatter by reducing the number of tax brackets – in order to give people more incentive to work.” There is no solid evidence that a flatter tax structure will strengthen the economy and enhance Canadians’ welfare. Indeed, there is some recent evidence suggesting that current compensation packages for corporate CEOs and associated taxation arrangements create perverse incentives that divert resources from long-term investments, to activities that raise share values and enrich senior corporate management.
Many economists argue that the inequality that already exists in Canada, the U.S. and U.K. serves as a drag on economic growth, job creation and rising incomes, which in turn leads to stagnation and slump. For example, in a recent article titled “Inequality and the Great Recession”, Barry Clark argues that the economic collapse of 2008 “has seriously discredited free market fundamentalism”, and that “support for redistribution will grow” as people begin to understand the economic effects of ever-rising inequality. He concludes that to overcome current problems we need to create conditions that will raise wages and reduce inequalities.
Yet the recent “solution” to the debt ceiling problem in the U.S.A is a stunning and irresponsible fiscal package that does the exact opposite, and that will magnify that country’s already massive inequalities. This outcome is the product of a climate of ideas —shared by Canada’s federal Conservative government—that diverges ever further from the real world, and from the clear evidence that we need to reduce, not widen, economic inequalities if our multiple economic and social problems are to be solved.
A big part of the problem is that governments have become, even more than ever before, the captives of big business, promoting policies that pump up the wealth and incomes of big corporations and the rich. These arrangements are then discussed — as if they were reasonable and benefitted the entire population rather than just big business— by the large corporations that comprise the print and electronic media.
Even in those rare cases when the corporate media identify the problem, they draw inaccurate and limpid conclusions that leave people thinking nothing can be done. This is exemplified by a July 20, 2011 article in The Globe and Mail in which Jeffrey Simpson poses the question: “Do we care that Canada is an unequal society?” Simpson presents data from a Conference Board of Canada study showing that from 1980 to 2005, earnings of the top 20 per cent in the income distribution “rose by 16.4 percent while middle-income Canadians’ incomes stagnated, and earnings for those in the bottom group slid.” He also cites some of the evidence showing that over the last 30 years policy changes have contributed to a growth in inequality – a trend that will be much accentuated under a Harper government. In answer to his question Simpson notes that: “Committees of both the House of Commons and Senate have issued reports on poverty: neither stirred much interest. Income inequalities are apparently not deemed important subjects in this self-centered age.”
Simpson’s answer is wrong. Most Canadians do care. This was confirmed in a CCPA survey of Canadian attitudes toward income inequality published November 20, 2006, and has since been elaborated in important work done by the CCPA’s Trish Hennessey. It is the people who have the power in this country who don’t care. They like the new status quo, and so will continue to promote ideas that—in defiance of the evidence about their damaging effects—produce ever-growing inequalities of income.
These political and economic ideas, previously known to be the work of a wacky fringe element, are now taken seriously and are being implemented aggressively by the corporate-funded and media-supported far Right in Canada and the U.S.A alike. The self-interest of the powerful few has pushed aside reason; their political forces have run roughshod over those who would build a more egalitarian and socially just society; their policies will drive us even more rapidly toward economic crisis—and this is without making mention of their equally reckless refusal to deal with climate change.
Pernicious and self-interested ideas promoted by the powerful and fanatical few on one side; equality and social justice supported passively by a largely complacent majority on the other. This is a recipe for ever greater inequality, and all the problems that go with it. The only thing that will change this situation is ongoing demonstrations of outrage by Canadians who care about the future of this country. This needs to start now.
Errol Black and Jim Silver are CCPA Mb. board members.
by Jonathan Hildebrand
Does social mixing as public policy result in more equitable cities, more culturally diverse neighbourhoods, and less social marginalization? These are some of the goals to which social mixing policies have aspired, but they have often fallen drastically short.
In some cases, social mixing policies have even been shown to impede equality and encourage further urban ghettoization. While a more socially just and equitable city is worth working towards, some of the means by which policymakers, planners, and activists have attempted to get there – in this case social mixing policies – deserve close scrutiny.
For example, the US Department of Housing and Urban Development’s “HOPE VI” program, initiated in 1992, aims to introduce social mix in cities by dispersing lower income households across larger geographic areas and into wealthier neighbourhoods, through the demolition or rehabilitation of public housing projects into mixed-use and mixed-income developments. Although the redevelopments usually include some public housing units, most units are converted to market rate rents, meaning that public housing families are involuntarily displaced, and forced to find housing elsewhere. While they can be given subsidies to relocate, this involuntary dispersal doesn’t necessarily result in bringing people of diverse incomes into closer proximity: displaced households often simply move to other neighbourhoods of concentrated poverty, and often report less positive experiences in their new communities (Goetz 2003).
While dispersal programs seek to decentralize and scatter lower income households into more affluent areas, mixed-income development programs aim to bring higher-income groups into economically disadvantaged areas. Proponents of this approach argue that a mixing of incomes in one location ensures that any public housing will fit more seamlessly into that community and will not be viewed as a centre of poverty within an affluent neighbourhood. They also hold that low-income households will benefit from the inclusion of more affluent households, despite the fact that these developments often result in people from diverse income brackets merely living in proximity without much actual social interaction (Goetz 2003).
Another criticism of social mixing initiatives in low-income areas is that they risk pathologizing poorer populations, eventually displacing them altogether. This was demonstrated in a 2008 study by Martine August on Toronto’s Regent Park Revitalization Plan. That particular Plan purported that “Behavioural patterns of lower-income tenants will be altered by interaction with higher income neighbours. For example, social norms about workforce participation will be passed on to lower income residents” (Regent Park Collaborative Team 2002, quoted in August 2008). Such language evokes the overt paternalism of nineteenth-century urban moral reformers more than it does notions of social equality and economic justice.
August’s study also points out that many social mix initiatives, while seemingly motivated by equality and social harmony, are actually more driven by neoliberal economic factors. These factors – attracting capital investment and become competitive, while developing an image of the city as an safe, exciting, innovative, and livable place – often result in social mix policies that displace and exclude certain people in order to “achieve a desired social composition” (August 2008).
Are there any models that come closer to achieving social mix without the baggage of paternalism, gentrification, or elitism? Swedish social mix policies contain some stark differences from other North American and European strategies, particularly in their more general scope directed across all urban neighbourhoods, rather than on specific areas or groups of people. One implication of this wider scope in Sweden is that social mix is to be implemented through normal planning activities as opposed to specialized housing programs. With this focus on building a diverse housing stock for all people in all areas of the city, Swedish social mix policy can be seen as “enabling social mixing in all parts of the city, rather than directly creating it through relocating or directing households to other neighbourhoods” (Holmqvist & Bergsten 2009).
Additionally, unlike policies that have in the past sought to counter the segregation of certain ethnic groups, the Swedish policy is to address socioeconomic segregation, not ethnic segregation specifically. The belief here is that, if socioeconomic segregation is targeted first, then an ethnic mix will follow, since, as one Swedish study pointed out, ethnic segregation of immigrants is rooted largely in their socioeconomic position (Holmqvist & Bergsten 2009). Although this example from Sweden might seem to avoid some of the pitfalls noted in other contexts, it is not without some unfortunate complications. Most notably, social mix goals in that country have sometimes been used to justify the denial of housing for minority groups in ethnically concentrated neighbourhoods (Bolt 2010) – a problem that once again brings up the issues of paternalism present in the social mix policies discussed earlier.
The rhetoric of social mixing seems to indicate a tempting way for policymakers and planners to help foster more equitable and diverse neighbourhoods without displacing people or diminishing affordable housing options. The track record of social mix policies discussed above shows that this might not be the case. Cities are facing issues such as the social and economic discrepancies between inner cities and suburbs, the loss of affordable rental units through gentrification and condominium conversions (under the guise of ‘rehabilitating’ inner cities), and the social and geographic displacement resulting from gentrification. Social mix policies might be a way of addressing these issues, but if cities wish to initiate such policies as a way toward social and economic justice, they should first ask whom might such policies favour, and whom might they ignore?
Jonathan Hildebrand is a graduate student in the City Planning program at the University of Manitoba.
On July 20th, CCPA- BC economist Iglika Ivanova posted her analysis of Statistics Canada data showing a breakdown of incomes in Canada and B.C on the BC blog, Policy Note
We were inspired to examine how the distribution of incomes looks in Manitoba using the same data from Statistics Canada Cansim Table 202-0401. The following table includes all income before-tax (including all government transfers, such as EI, welfare, GST credits) for economic families of 2 and more persons.
Income by Quintile – Canada and Manitoba
|
Canada |
Income Range |
Percent of Families |
Description |
|
Quintile 1 |
Up to $40,000 |
21.1% |
Poor and near poor |
|
Quintile 2 |
$40,000 – $60, 000 |
17.9% |
Lower-middle or modest income |
|
Quintile 3 |
$60,000-$85,000 |
20.4% |
Middle income |
|
Quintile 4 |
$85,000 – $125,000 |
21.4% |
Upper-middle income |
|
Quintile 5 |
Over $125,000 |
19.2% |
High income |
|
Manitoba |
|
|
|
|
Quintile 1 |
Up to $40,000 |
19.8% |
Poor and near poor |
|
Quintile 2 |
$40,000 – $60, 000 |
17.9% |
Lower-middle or modest income |
|
Quintile 3 |
$60,000-$85,000 |
23.7% |
Middle income |
|
Quintile 4 |
$85,000 – $125,000 |
21.5% |
Upper-middle income |
|
Quintile 5 |
Over $125,000 |
17% |
High income |
What does this tell us about Manitobans?
Fully 19.8 percent of Manitoba families of two or more persons are earning less than $40,000, and depending on their family size, are living near the poverty line. 37.7 percent of families are earning less than what would be considered a middle-income. Only 23.7 percent of Manitobans are in fact middle-income earners with the remaining 38.5% of earners in the upper-middle to high-income quintiles. Bottom line? the middle class is not the norm.
If you are a family of two or more with less than $60,000 income before-tax, you are earning less than middle-income. As described by Ivanova, many of the existing and proposed federal government tax cuts benefit those with incomes exceeding $70,000. Add to this the Conservative government’s disinterest in policy measures that will help low and middle income families, such as childcare and adequate pensions, and we will likely see a further increase in disparity between low and high income earners.
On July 12, 2011 long-time CCPA supporter and current board member Kathy Mallett was invested into the Order of Manitoba. In addition to being on the CCPA-Manitoba board of directors, Kathy is the co-director of the Community Education Development Association, and has worked in the Winnipeg Aboriginal community for over 25 years. As a well respected community leader, she is most committed to social and economic justice for Aboriginal people, and has worked in the area of transformative justice, Aboriginal women’s development, and has donated countless volunteer hours to Winnipeg non-profits.
Kathy was also elected in the early 1990s as school trustee for the Winnipeg School Division #1 where she served a three-year term.
In addition to spending her time with the CCPA and CED organizations, Kathy is the mother of two grown women and is the grandmother to three boys and one girl.
The Order of Manitoba is intended to honour Manitoba residents who have demonstrated a high level of individual excellence and achievement in any field, “benefiting in an outstanding manner the social, cultural or economic well being of Manitoba and its residents,” and is the highest honour recognized by the Manitoba Crown.
CCPA Manitoba is honoured that Kathy’s shares her compassion and commitment for social justice with us through her role as a board member.
by Shauna MacKinnon
Over the past ten years we have begun to see provincial governments across the country implement poverty reduction plans in various forms. Manitoba is the most recent to introduce anti-poverty legislation. The Poverty Reduction Strategy Act includes requirements for the government to take its poverty reduction and social inclusion strategy into account when preparing budgets each fiscal year.
The Act does not include the kinds of timelines and targets community groups have called for, but it requires that the government of the day “prepare a yearly statement, to be tabled in the Legislative Assembly along with the budget, which will explain how the strategy is implemented by the budget, what the financial implications of the strategy will be, and what indicators (as prescribed in regulation) will be used to measure the progress of the strategy.”
Although The Poverty Reduction Strategy Act is far from perfect, it moves Manitoba in the right direction. Reducing poverty, inequality and social exclusion will require a complementary mix of policy measures designed and delivered by all levels of government. In particular, it will require the restoration of a strong federal role and a comprehensive social safety that ensures all Canadians have access to things like housing, childcare, extended health benefits including pharmacare and homecare, public pensions and unemployment insurance.
We must also ensure that our provincial and territorial governments implement a transparent process to regularly assess and increase income assistance rates that allow all individuals to live in dignity.
In a report to the Manitoba Legislature in 2008, the Office of the Auditor General (OAG) identified a number of issues regarding Employment and Income Assistance (EIA) rates, including how rates are set. The report recommended that “the Department institute a formal documented process for reviewing and making recommendations for periodically updating basic and shelter rates, income and asset exemptions, and other income assistance allowances in a logical and equitable manner.”
In 2010, the Manitoba Ombudsman’s Report on Manitoba’s Employment and Income Assistance Program endorsed the OAG recommendation, adding that “in that process, program staff be consulted” and that “the rate-setting process be documented and made available to the public.”
Later in 2010, the Manitoba Government put forward the All Aboard Strategy, which highlighted a series of measures taken by the Province to improve the social and economic outcomes of low-income individuals and families. It did not deal with the fundamental issue that social assistance rates are severely inadequate
In a 2011 paper titled Improving the Adequacy of Social Assistance Budgets: A rationale for making current rates more adequate, retired Manitoba Family Services senior policy analyst Harvey Stevens makes a case for clearly defining and pricing budgets for a market basket of goods and the setting of social assistance (SA) rates at levels adequate to purchase those goods. Social justice advocates may have trouble with Steven’s methodology and final costing that leads to thresholds that are significantly below the Market Basket Measure (MBM), which he uses as a base. However, few would disagree with the basic premise of his argument—that we need a systematic process to create adequate social assistance budgets.
The MBM was developed in 2000 by the Government of Canada in consultation with provincial governments. Prior to 2000, the Statistics Canada before- and after-tax Low Income Cut Offs (LICOs) were the most commonly used measures of poverty in Canada, although they have never been accepted as official measures and have not been used to set income assistance rates. The MBM is based on a budget for a reference family of two parents and two children and includes food, clothing and footwear, shelter, transportation and ‘other’ items such as personal and household items, recreation and education expenses. The MBM is priced annually for 49 regions across Canada. While provincial and territorial governments are increasingly using the Market Basket Measure to measure poverty there is currently no standard process in which the MBM is used to set social assistance rates.
Provincial and territorial governments in Canada are responsible for the delivery of SA programs. Legislation creating SA programs sets out lists of basic needs that SA budgets will provide funding for. But the manner in which provincial governments construct SA budgets is a bit of a mystery and the result has been that SA budgets continue to be far less than what is necessary to cover the basic needs set out in legislation. For example, Stevens (2011) describes the current pricing of social assistance budgets in Manitoba as dating back to a basket of goods including basic necessities identified in the 1970s. The items included were last re-priced in 1996.
As a program of ‘last resort,’ social assistance allowances have never been generous. They declined further in the mid-1990s when the federal government eliminated national standards with the abolishment of the Canada Assistance Plan (CAP), giving the provinces greater flexibility with the Canada Health and Social Transfer (CHST).(1) As social justice advocates predicted, flexibility did not result in improved incomes for recipients.
The Filmon government began their attack on social assistance through a process of cutbacks starting in 1993 that later escalated when the federal Liberal government eliminated CAP. The amendments to the Social Allowances Act in 1993 included (MacKinnon, 2000):
- Reduction in exemptions from $240 a month to $130 for families and from $125 to $95 a month for single people (exemptions refer to theamount of money social assistance recipients are able to earn in addition to their assistance. Money earned beyond the exemption limit is deducted in full from the recipient’s social assistance payment.)
- Elimination of the $205 monthly exemption on child support payments received during their first three months on welfare.
- Elimination of income tax refunds from the list of exempt income.
- Elimination of provincial income supplements of up to $30 a month per child in low income families and a provincial supplement of more than $100 every three months for people 55 and older from the list of exempt income.
Also in 1993, supplemental health insurance coverage for welfare recipients was cut back; medication and services previously covered for recipients were trimmed; major restorative dental services were subject to new dollar limits and new welfare recipients had a three month waiting period imposed on them for non-emergency dental and vision care. Special welfare programs for students ended, resulting in the return of over 1,000 people to social assistance.
Cutbacks continued to mount in 1994. Shelter allowances were cut by $14 a month for employable single people; the $30 supplement received monthly by single people and childless couples was cut; the income definition used to determine tax credits was broadened to include incomes previously exempt (including Social Assistance). In effect, tax credits for welfare recipients were reduced and therefore the supplement paid directly to Social Assistance clients through Family Services was reduced. Grants to welfare organizations, day care facilities and nurseries were cut; special needs policies which included newborn allowances, assistance to purchase appliances, moving expenses, school supplies, household start up needs, bedding, beds and other extraordinary expenses were eliminated; there were further cuts to the range of prescription medication covered by social assistance.
The long list of cutbacks to an already meagre program was highly criticized by anti-poverty activists as being punitive and mean-spirited. The Conservative government’s perception of the poor became most evident with the creation of the Welfare Fraud Line in 1994—a ‘service’ designed to encourage the reporting of suspected fraudulent welfare clients as if welfare fraud rather than the severe cuts was the problem.
The NDP government terminated the Welfare Fraud Line soon after they were elected in 1999. They also ended the clawing back of the National Child Benefit (NCB) supplement, which improved the income of recipients with children. They have implemented minor increases for persons with disabilities and Northern recipients; however they have not responded to CCPA-MB and Make Poverty History Manitoba’s requests that EIA rates be restored to inflation-adjusted 1992 levels and systematically assessed annually.
Both the previous Conservative government and the current NDP government would argue that their actions have served to reduce SA caseloads. However welfare caseload fluctuations are a function of various factors, an important one being economic performance. An increased focus on labour market training programs has likely helped as well, though a longitudinal assessment of the social and economic outcomes of individuals participating in short-term training and employment programs has yet to be done.
Building a Basket Toward Social Inclusion
A closer examination of current EIA caseloads shows a trend that requires a policy shift if we are to substantively tackle poverty and social exclusion.
Stevens’ paper provides data to show that the composition of the SA caseload today is very different than it was in the mid-1990s. A significant number of individuals on social assistance are long-term recipients for whom quick-fix approaches are not suitable. Stevens shows that:
- In six of the ten provinces in 2007, 24 percent of those without a disability had been on SA for more than 2 years during their current spell, while 75 percent of those with a disability have been on for more than 2 years. When all spells on SA recounted over the previous six years, the proportion who have been on SA for more than 2 years rises to 46 percent of single persons without a disability, 60 percent of two parent families, 70 percent of lone parents and 85 percent of those with a disability in Manitoba.
The reality, as Stevens states, is that long-term dependency is “now the rule and not the exception.”
In light of this evidence Stevens proposes a policy focus on improving benefits for those incapable of finding employment; improving the SA program to ensure that basic needs budgets for long-term recipients include access to a broader range of everyday goods and services like replacement of household goods, entertainment, recreation, education supplies and services; and building capacity to adequately assess recipients with barriers to employment who do not ‘fit’ the existing suite of employment training programs which are focused mainly on the employable. Stevens takes the position that recipients of assistance for less than one year need less than those on assistance for extended periods. This sets in motion a policy proposal and costing method that comes with some challenges but nonetheless offers a useful contribution to the policy debate.
Developing an adequate social assistance budget using a market basket approach requires two important elements. First, it requires that the basket of goods include items that individuals and families need not only to survive, but also to participate fully in society. Second, it must be accurately costed and adjusted regularly. As Stevens points out, this has not been the case and the result is that “SA budgets bear little or no relationship to actual cost of purchasing the basic needs items they contain.”
Who decides, who deserves, and what should the rate be?
There is a political challenge when it comes to costing welfare budgets that dates back to the inception of income support for the unemployed. The policy tradition has been to keep rates meager, especially for those who are deemed ‘employable,’ to ensure that social assistance remains a program of last resort.
Stevens proposes that Manitoba adopt systems similar to those in place in Alberta and British Columbia, which differentiate between long-term, short-term and disabled recipients. BC, for example, has a three-tier structure that includes one rate for ‘employables,’ one for people designated with Persistent Multiple Barriers to Employment (PPMB), and one for people with disability status. BC anti-poverty advocates are critical of the model, which sets the rate for people with PPMB marginally higher than the basic rate. The three-tier categorization also raises concerns that those deemed to be ‘employable’ or ‘undeserving’ become further marginalized and not awarded the dignity that all individuals have a right to. So while the three-tier approach might seem pragmatic, it also moves away from a social justice approach to income security, toward the less humane model introduced through the British Poor Laws in the early 19th century, which were designed to punish people who were poor.
Although the idea of further categorization muddies the debate, the compromise that Stevens puts forward is an honest attempt to seek ways to reduce the number of Manitobans living in poverty. The OAG and the Manitoba Ombudsman concur that welfare budgets in general have not been regularly reviewed and revised. For example, rental allowances for all EIA recipients are far below market rental rates. The basic housing allowance for individuals in the single employable category is $243.00 per month while the current median market rental rate in Winnipeg is $665.00. EIA recipients who rent in the private market commonly frequent food banks and soup kitchens because they need to draw on their food budgets to cover the cost of rent. It should also be noted that many of these individuals are in the short-term category and are vulnerable to eviction, as are long-term recipients, especially in markets where the vacancy rate is less than 1 percent, as is the case in all Manitoba cities. When people lose their homes they are at greater risk of becoming dependent on social assistance. And this, as shown in the report The Cost of Poverty in BC, ends up costing us much more in the long-term.
It should also be noted that the three-tier approach begins with the assumption that providing a livable social assistance allowance is a deterrent to work. While this is a commonly held assumption, it is not clear that it is based on anything more than ideology. In fact a recent analysis of the 1970s basic income experiment in Manitoba (Forget 2009) shows that providing people with a basic livable income does not deter them from working.
Aside from the concerns with recipient categorization and concerns with the contents and costing of the basket that Stevens assembles (what it includes and how prices are determined) he, the OAG, the Ombudsman and social justice advocates agree that a process and method must be established to regularly price social assistance budgets. The Government of Manitoba has made positive steps forward with the All Aboard Strategy which has now been further enhanced by the Poverty Reduction Strategy Act. The next step will be to work closely with advocates for those living in poverty to ensure that income assistance rates are brought back to a level that allows all individuals to live in dignity.
(1) The CHST was later separated into two programs – the Canada Health Transfer (CHT) and the Canada Social Transfer (CST).
Shauna MacKinnon is the director of Canadian Centre for Policy Alternatives – Manitoba
References
CCPA-MB. (2010). The View From Here: Manitobans call for a poverty reduction plan. Available at www.policyalternatives.ca
Forget, Evelyn. (2009) Life in a Town Without Poverty. www.cihr-irsc.gc.ca/e/40308.html.
Ivanova, I. (2011). The Cost of Poverty in BC. Sparcbc, Public Health Association of BC, CCPA-BC. Available at www.policyalternatives.ca
MacKinnon, Shauna. (2000) Workfare in Manitoba, in Solutions that Work, Jim Silver Editor. Winnipeg: Fernwood
Manitoba Ombudsman. (2010) Report on Manitoba’s Employment and Income Assistance Program. Government of Manitoba.
Office of the Auditor General of Manitoba (2008). Report to the Legislative Assembly – Audits of Government Operations. Government of Manitoba.
Stevens, Harvey. (2011) Improving the Adequacy of Social Assistance Budgets: A rational for making current rates more adequate and a methodology for pricing budgets. Winnipeg: Social Planning Council of Winnipeg.
By Jonny Sopotiuk
Canada’s 41st general election was one of the most exhilarating elections in recent years and the result is unprecedented change in the political landscape. The obliteration of the Bloq, decimation of the Liberal party and surge of the NDP had even the most seasoned political observers in shock. With a total of 167 seats, Stephen Harper’s Conservative government has found the elusive majority his party has been chasing for years. That Conservative majority has lead many to call for a unification of the political parties of the left, namely the NDP and Liberals. The entrenched interests in both parties have effectively put these calls to rest for the time being. However, the debate around how to stop future Conservative majorities, possibly through a party merger, ignores the important reality that only 61.4 percent of the voting population bothered to cast a vote in this election.
In the weeks leading up to voting day, observers and pundits were projecting voter turnout increases due to the heightened engagement and excitement of the campaign period. Student-led ‘vote mobs’ swept across the country and social media was buzzing with youth-created videos and election debate. Elections Canada reports that 14.7 million, or 61.4%, of 23.9 million Canadians voted this year. This is just slightly up from the lowest ever voter turnout in Canadian history during the 2008 election where only 59.1 percent or 13.8 million Canadians voted. Although youth turnout for the 2011 election has not yet been reported, based on previous trends the results do not look promising. In 2004 only 43.8 percent of youth between the ages of 18 to 24 voted. In 2008 that number dropped to 37.4 percent. It’s likely that youth numbers stayed relatively the same with only a slight increase in 2011. So what happened?
Cynics will be quick to suggest that youth are apathetic, unengaged and uninformed. But myself and many of my peers see the results as a reflection of something else. The results show that many Canadians, especially young people, are disenfranchised by the electoral system itself. In my many conversations with young people I hear the same response over and over: they didn’t vote because they believe their vote wouldn’t make a difference or count.
So would a merger between the so-called political parties of the left solve these problems? Absolutely not. The idea completely disregards the existence of the Green Party and the many other smaller left of centre political movements and ignores the fact that many progressive people view the Liberal party as a right-of-centre governing party. As concerning as consecutive majority Conservative governments are, the real issue lies within the electoral system itself.
Across the ocean, a debate on electoral reform has been raging within the United Kingdom. In early May, 2011, a referendum was held to move away from the first-past-the-post (FPTP) electoral system, the system that Canada is currently modeled upon, to the Alternative Vote (AV) system that Australia has been using since 1918. The referendum ultimately failed with around 68 percent of UK voters rejecting the proposed AV system. During the campaign the anti-AV and pro-FPTP status quo campaign gained considerable support. Many progressive voices ignored the campaign altogether and criticized the AV model as being nothing more than a hybrid of the FPTP system. Criticisms of the system aside, the UK debate is at least focused on the right topic: electoral reform.
Fair Vote Canada, the leading voice on electoral reform in Canada, analyzed a report by political scientist Arend Lijphart that studied democratic models of political systems across the world. The study split the systems into two groups: the majoritarian model, the kind the Canadian system is based upon; and consensus democracies, the kind that countries including the Netherlands are based upon, which use proportional representation.
Lijphart’s study found that the consensus democracies have a diverse and increased range of political parties, increased voter turnouts and create an overall greater satisfaction with democratic systems compared to those countries that use majoritarian models. It was also notable that Lijphart found that the consensus democracies had higher percentages of women elected and represented within the governing systems.
The electoral reform movement is nothing new to Canada but it hasn’t received the attention and support it deserves. A referendum on scrapping the FPTP system in exchange for a Single Transferable Vote System was held and defeated in British Columbia in 2009. That same year, Fair Vote Canada launched a new initiative called Students and Youth for Fair Voting. SYFV is a self-directed and democratically governed campaign working with Fair Vote Canada to push for electoral reform. Following the recent election results, Fair Vote Canada held a national day of action on May 14, 2011. The event received little attention from both the mainstream press and from progressive movements across the country. Whether this can be attributed to a lack of excitement around the issue, election burnout and fatigue or general lack of vision or knowledge of an alternative system is hard to say.
So this election leaves progressives and young people with few options: we invest our energies in electing an NDP-led government, we admit defeat and boycott the system, or we work to change it. We cannot rely on the entrenched interests and mainstream political parties to start that conversation. If we cannot mobilize youth to participate in the existing system we need start engaging them in conversations and campaigns on electoral reform. It’s time for progressives to shift the debate and for youth to lead the charge. Whether the solution is a new system based on AV, proportional representation or some other model needs to be explored. But in the meantime, any solution that falls short of electoral reform is no solution at all.
Jonny Sopotiuk is a full-time student activist and artist living between Winnipeg and Vancouver. You can follow his writings and work at jonnysopotiuk.ca
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