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Leaders can do more than sleep out

Hey there, time traveller!
This article was published 18/9/2014 (2150 days ago), so information in it may no longer be current.

Thursday night, several dozen business leaders, politicians and high-profile Winnipeggers spent a night at Portage and Main in the annual CEO Sleepout to raise funds and awareness of poverty and homelessness. However, if we as a society are actually going to end homelessness, systemic change is needed.

On any given night in Canada, it is estimated 30,000 people are homeless on the streets, and another 50,000 are "hidden" homeless, living in overcrowded and inadequate housing. The cause of the problem goes back to the federal government's off-loading of responsibility for social housing to the provinces in the 1990s. In Manitoba, the province has managed to create 1,500 units over the past five years and is committed to 500 more, however many more units are needed, which requires public investment. Housing for low-income people has not been, and will not be, created by the private sector, simply because it is not profitable. Public funding is needed.

However, public funding is extremely hard to come by, despite a $6.4-billion federal budget surplus projected for 2015-16 and record profits by the federal housing agency. The Canada Mortgage and Housing Corporation contributed more than $17 billion in profits toward "improving the government's fiscal position" over the past decade. Last year alone CMHC earned $2.4 billion in profits and paid taxes of $584 million.

Despite these profits, social housing in Canada has been starved of federal support. At the height of its commitment to social housing in the 1980s, CMHC supported the construction of between 10,000 and 16,000 units per year. In 2012, it helped build only 603 units, the lowest level in 25 years. During the next 20 years, CMHC plans to phase out funding for operating agreements, which help subsidize low-income housing. This will force non-profit housing providers, co-operatives and provincial housing agencies to somehow find $1.7 billion annually to fill this gap, or stop subsidizing low-income units, which will result in increased homelessness.

The current federal response to homelessness is disproportionate to the scope of the problem. The federally funded homelessness-partnering strategy provides $5 million per year in Winnipeg to organizations -- mainly those that serve a narrow definition of homeless: chronic or episodic users of local shelters. Organizations working with the hidden homeless, which includes a larger proportion of women and those trying to prevent homelessness, cannot get funding.

The CEOs sleeping out at Portage and Main should look at their pocketbooks for the root cause of the problem: the growing gap between the rich and poor. From 1998 to 2012, the average top 100 CEOs' pay increased 73 per cent, adjusted for inflation, compared to the average workers pay, which increased six per cent during the same time period. In fact, the average top 100 CEOs in Canada earn in one day what the average Canadian earns one year.

CEOs are paid extraordinary amounts while corporations are paying less taxes than ever. The federal government cut corporate taxes from 28 per cent to 15 per cent between 2000 and 2012, foregoing $30 billion in revenue over this period. Canada's corporate tax rates are among the lowest in the G8, even lower than the U.S. The corporate community lobbies governments to decrease corporate tax rates, saying this will stimulate economic development.

However this is not the case. Economist Jim Stanford examined historical data on business investment and cash flow from 1961 to 2010 and found no evidence lower taxes have directly stimulated more investment. In fact, spending on public infrastructure instead of corporate tax cuts returns many times the increase in private investment from tax cuts alone. The economic spinoffs of investing in social housing that is energy efficient and creates employment for low-income people are high. In Manitoba, it is estimated for every dollar invested in social enterprises such as Building Urban Industries for Local Development (BUILD), $25 is circulated in the local economy.

The programs funded through the CEO Sleepout are worthwhile, but only skim the surface of the issue. To address homelessness and poverty in a meaningful way requires adequate taxation and substantial government intervention. Societies that have used charity as their primary mechanism for tackling poverty have almost always been associated with high levels of inequality. If the business community were truly interested in alleviating poverty, it would support collective solutions: Funding for more social housing and a basic income and living wage that is sufficient to keep people properly housed and not reliant on food banks.


Molly McCracken is the director of the Canadian Centre for Policy Alternatives, Manitoba office.


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