Give Canada’s working poor a raise

When Ottawa slams the door, Ken Battle opens a window. When Queen’s Park yanks down the sash, Sherri Torjman approaches the municipalities, the private sector and the public to spearhead the fight against poverty.

They refuse to give up. That is what has kept the Caledon Institute on Social Policy going for 20 years. Battle is its president; Torjman is vice-president.

The think-tank produces ideas that are pragmatic, suited to the tenor of the times and compatible with the objectives of the party in power.

Its latest campaign, launched this month, is to win parliamentary support for an increase in the Working Income Tax Benefit, a refundable tax credit introduced by Finance Minister Jim Flaherty in 2007. Its purpose is to “make work pay” by topping up the earnings of the low-wage employees.

An estimated 1.5 million Canadians receive the benefit. It costs $1.1 billion a year.

Anyone with an earned income between $3,000 and $17,477 a year can apply. The maximum payment is $970 for an individual, $1,762 for a family. How much a worker receives depends on his or her earnings, other income, marital status, number of dependants and province of residence.

The benefit has been a godsend to the working poor. When it was introduced, it delivered a maximum of $500 to individuals and $1,000 to families. Three years ago, rates were raised to the current level.

But there is still one problem: It doesn’t lift most low-wage households out of poverty. The Caledon Institute outlines three ways to rectify that:

 • Increase the maximum benefit.

 • Broaden the eligibility criteria to include all minimum wage households.

 • Combine the two adjustments.

“Caledon has always been conscious of the cost of any proposal and we recognize that this is a tough time to be recommending new expenditures,” Battle and Torjman point out in their 16-page policy paper. “But there are several areas of wasteful spending which deliver substantial benefits to high-income households. We believe these funds can be better directed toward packing a solid punch on poverty.”

To limit the impact on his 2013 budget — or any budget — Flaherty could phase in the improvement gradually, they add. That was the approach he took on Ottawa’s other main income supplement program, the Canada Child Tax benefit.

“The Working Income Tax Benefit is a promising instrument to help recipients get off welfare and improve the incomes of the working poor,” the authors conclude. “But it is still too lean in benefits and limited in its reach.”

The figures in their paper are credible; they’re all drawn from government sources. The arguments are rational. And the delivery mechanism — the tax system — is the finance minister’s preferred vehicle for rewarding desirable behaviour.

Flaherty could dismiss the proposition as unaffordable, as he has done with other initiatives advanced by the Caledon Institute: a national disability benefit for Canadians with severe impairments; a temporary job-seeker’s loan to fill the gap between employment insurance and welfare; an expansion of Ottawa’s extremely modest caregiver benefit.

He could study it, as he’s done with various pension reform schemes for the past three years.

Or he could simply ignore it.

But he can’t deny the Caledon proposal addresses a fundamental weakness in 21st-century market economics. A job is no longer “the best social program.”

Battle and Torjman know Flaherty wants to cut — not increase — spending. They know social policy is near the bottom of Prime Minister Stephen Harper’s priority list. And they know public support for the poor and vulnerable is dwindling.

But they can’t stop churning out progressive ideas, hoping to reignite the compassion that once defined Canada.

Original Article
Source: the star
Author: Carol Goar