Fixing the welfare system
Ontario PCs have good intentions
The Ontario PC government says it can fix the province’s inefficient social welfare system, and it can do it in 100 days. That would be quite a feat, given that the previous Liberal government picked away at the problem for many years without notable success.
The PCs are right to tackle this because there is plenty of scope for improvement in the plodding social services bureaucracy, starting with rules that former Liberal Community and Social Services Minister Helena Jaczek called “confusing, complicated and intrusive” back in 2016. The provincial auditor general and her predecessor have both examined Ontario’s social assistance system and found it lacking.
Improving and simplifying the structure would make life easier for people who get benefits and save the government money. That’s good, but it would still leave a big problem. Neither welfare, nor disability payments provide enough for a person to live on, and the government can’t afford to fix it.
The Liberals commissioned a panel to tell them what to do and late last year the group recommended that payments go up 22 per cent over three years as the first step of a 10-year plan that would have provided annual welfare support of $22,000, with disability 30 per cent higher.
When the Liberals got over the shock, they promised three per cent a year for three years, less than half what the group had recommended. Now, the PCs are being criticized for being cheap because they have cut the number back to 1.5 per cent, the typical annual increase the Liberals provided before their deathbed conversion to modest generosity.
The challenge government faces is that, while welfare and disability payments are pitifully small, the overall bill is big. About one million Ontarians rely on support programs and the annual cost is about $10 billion, the government says. That’s a lot of money, but a single person on welfare only receives up to $721 a month and a person with a disability gets $1,151. The difference between the miserly PCs and the generous Liberals is about $10 a month for a person on welfare, and $16 for those getting disability.
While the Liberals rejected the increases recommended by their advisory panel, they chose to create false hope for the poor by starting a basic income pilot project. The goal was to discover if more money improved job prospects and quality of life. It was also a fine thing to point to when people criticized the small increases the Liberals were actually providing.
The pilot offered a single person an income of $16,989 a year, nearly 60 per cent higher than the figure the Liberals had already deemed too expensive. Clearly, a basic income was never going to be affordable, and that’s why the PCs have scrapped the project. A senior government official says a basic income program would cost $17 billion a year more than what Ontario spends now.
The Ontario government can’t afford a living income for all those who require it. The solution is to make it easier for people to find work and to allow them to keep more of the proceeds of work.
Ontario’s higher minimum wage ought to be enough to entice people off welfare and into the workforce. As a society, we need them to make that choice because Ontario’s low unemployment and limited population growth tells us that workers will be harder and harder to find. One of the tests of the new PC plan will be how effectively it builds bridges between people on social assistance and potential employers.
For years, Ontario had perverse disincentives to move to employment, requiring people to be nearly broke before they were eligible for help and clawing back employment income at the rate of 50 cents on the dollar.
Fortunately for the PCs, the Liberals worked out a series of smart changes that would eliminate most of those disincentives. Unfortunately for people who would benefit, the PCs have placed those plans on hold.
Phased in over three years, those changes include eliminating limits on how much people can have in Tax Free Savings Accounts and RRSPs; raising limits on cash they are allowed to have; allowing monthly earnings of $400 before the clawback kicks in; further raising the amount of clawback-free earnings to $6,000 a year; and including non-work income such as Canada Pension Plan disability payments.
These changes will encourage people on social assistance to work more and be more financially independent. Given that Ontario’s social assistance amounts are more like a supplement than a living, that makes sense.
If the PCs keep these changes, they will have done the right thing. In the meantime, it’s fair to credit them with good intentions and see what they produce.