Poor plan for poverty reduction

The first three years of Manitoba's All Aboard poverty-reduction strategy ended in May 2012. Statistics Canada this week released data that demonstrate its failings.

In May 2009, then-finance minister Greg Selinger and then-family services minister Gord Mackintosh announced the three-year poverty-reduction strategy with great fanfare. While the government claimed to make $212 million in new investments, Selinger claimed "Everything we do as a government, from budgeting to social policy decisions, is weighed for its ability to reduce poverty and increase the inclusion of low-income Manitobans in all aspects of community life."

The Doer and Selinger governments have refused to set targets for poverty reduction and have not even declared what measures they will use to evaluate it.

Statistics Canada, however, this week released Incomes in Canada 2010, which contains the data needed to evaluate the first 19 months of All Aboard.

It seems reasonable to take 2008 (the year before the strategy was announced) as a base year for comparison. Unfortunately, Canada has no official poverty line, and Statistics Canada publishes four measures. No matter which measure is used, however, the first 19 months of All Aboard seem to be a dismal failure when it comes to reducing the poverty rate.

First, using the after-tax, low-income measure (poverty defined as less than half the median disposable income), the 2008 Manitoba poverty rate for all persons was 13.5 per cent. By 2010, it had gone up to 14.3 per cent, an increase of 5.9 per cent.

Meanwhile, in Canada as a whole, this rate had gone down from 13.2 per cent to 13.0 per cent, a decrease of 1.5 per cent over the same period.

This is concerning because the low-income measure, which takes into account social exclusion and effects on physical and mental health as well as material deprivation is arguably the most comprehensive measure.

The market basket measure focuses only on material deprivation. The federal and provincial governments developed it as an indicator of the goods and services Canadians require to live a decent life. It is priced in several locations in most provinces, and poverty is defined as having too little money to purchase the goods and services in the market basket.

In 2008, Manitoba's poverty rate using this measure was 7.7 per cent. By 2010, it had gone up to 8.7 per cent, an increase of 13 per cent. In Canada as a whole, this rate went up from 9.3 per cent to 9.9 per cent, an increase of only 6.5 per cent.

The picture is the same with low-income cut-offs, which identify income levels at which households spend a much higher percentage of their incomes than the average Canadian household on food, shelter and clothing. (63.6 per cent or more) leaving little for anything else.

In Manitoba, the poverty rate for income before taxes in 2008 was 13.2 per cent. In 2010, it had gone up to 13.5 per cent, a small increase of 2.3 per cent. But, in Canada as a whole it remained stable at 13.5 per cent.

Did Manitoba do better when after-tax incomes were taken into account? Not at all. The low income cut-off after-tax rate went from 8.5 per cent in 2008 to 9.2 per cent in 2010, an increase of 8.2 per cent. Meanwhile, in Canada as a whole, this rate went down from 9.3 per cent to 9.0 per cent, a decrease 0f 3.2 per cent.

The Selinger government has renewed the All Aboard strategy for another four years, which is a good thing. It has many useful features, but the investments in them may be too small to make a real dent in poverty.

But the failure of the first three years points out several changes that should be made.

First, the personal income tax system should be used more to redistribute income. This should involve increasing its progressivity so upper income earners pay more and increasing subsidies and refundable credits for modest and low income earners.

Second, there should be more of an emphasis on creating well-paying jobs.

Third, why not collaborate more with people living in poverty? They know a lot about what works.

We all have an interest in making the All Aboard investment pay better dividends.

Sid Frankel is an associate professor in the faculty of social work at the University of Manitoba.

Republished from the Winnipeg Free Press print edition June 22, 2012 A13