Preventing poverty would save billions: study
Alberta’s current charity model costs $9 billion and is less humane, coalition says
Failure to address root causes of poverty costs Alberta as much as $9.5 billion each year, a new study says.
The report, published Monday by a coalition of anti-poverty groups, urges provincial leaders to fundamentally rethink their approach to poverty: Instead of spending to alleviate the symptoms of poverty, invest in preventing people from falling into poverty in the first place.
“We have a government that claims to be fiscally conservative, but this report shows that $9 billion a year is what it costs to not fix the poverty problem,” said Vibrant Communities Calgary director Dan Meades.
He hopes the province adopts “a comprehensive poverty reduction strategy that addresses root causes of poverty, as opposed to what they are doing now, which is treating the symptoms of poverty.”
The 39-page report was funded by seven anti-poverty groups including Vibrant Communities, Action to End Poverty and the Sheldon Chumir Foundation.
Study co-authors Alexa Briggs and Celia Lee undertook the same kind of analysis that has been done in other provinces, and looked at how much poverty costs the economy each year.
They discovered that poverty alleviation can unintentionally trap people in poverty, while prevention stops people from falling into poverty in the first place.
“Investing in poverty prevention costs us less, in the long run, than our current strategy of spending to manage poverty,” Briggs said.
“We have a choice. … This is about adopting a charity model, or an investment model.”
Poverty alleviation focuses on food banks, homeless shelters and welfare cheques, while poverty prevention focuses on literacy and education. Alleviation will always be necessary, but the need can be reduced substantially if proper prevention mechanisms are put in place.
To support this argument, the report takes a sweeping look at the many ways in which poverty costs taxpayers money.
For example, the evidence linking income and health is clear: The rich are healthier while the poor are sicker. In Alberta, the study estimates that helping the poorest Albertans earn more could save at least $1.2 billion in health-care costs.
Specifically, raising the incomes of the poorest Albertans could result in 132,000 fewer visits to the doctor’s office and 46,000 fewer days in hospital, saving a combined total of $50.6 million.
Similarly, the study found that addressing the root causes of poverty could save $560 million taxpayer dollars now spent fighting and punishing people for poverty-related crimes, like shoplifting and freeriding on public transit.
The study also found that the “intergenerational costs” of poverty are as high as $531 million.
“Child poverty is a moral issue but also an economic issue,” the report says. “We lose annual economic revenue and taxes by allowing 73,000 Alberta children to live in poverty.”
Of those 73,000 impoverished kids, roughly one in four will grow up to be adults living in poverty. The lost income amounts to $513 million, and as a result the province will lose out on $78 million in income taxes, the study says.
The study estimates the opportunity costs of poverty are at least $4.8 billion, and possibly as high as $7.2 billion.
But the true price of poverty is more than just dollars, but also “lost dignity, choice and possibility for those living in poverty,” the report says.
Bill Moore-kilgannon of Public Interest Alberta explained the power of the paradigm shift using a simple metaphor.
“Imagine you’re standing at the top of Niagara Falls,” he said. “You look down to the bottom of the falls, and it is comforting to see some lifeboats down there to catch you if you fall in.
“But if a really strong wind comes up, what you really want is a good strong guard rail to keep you from going over in the first place.
“Food banks and homeless shelters are lifeboats. This is about investing in guard rails.”