A Short Review of the
Fraser Institute Report Card: Welfare Reform in Ontario
– December 2004 –
“Delegates at the Republican National Convention this summer cheered President George W. Bush's acceptance speech with a zeal ordinarily reserved for Super Bowl matches. But there was only a smattering of applause for one line: a call for welfare recipients to work longer hours. The lacklustre response showed how an issue that rightists once found rousing has dropped off the radar.”
[Alexandra Starr, Is Welfare Reform Working? Business Week Magazine, November 29, 2004, p.2]
On December 7, 2004, the Fraser Institute issued a Report Card on Ontario’s Welfare System (see the link to the Fraser Institute report at the bottom of this review) and gave the province an overall B- for the efforts of the last decade. The Institute asserts that there is more cutting to be done and cautions against any relaxation of the welfare rules such as those being undertaken by the Ontario Provincial Government in the past twelve months
To set the stage, the Fraser Institute makes the statement that “Welfare is one of the most important issues facing today’s policy makers”. In fact, provincial welfare is now a program (in dollar terms) that now comprises a mere 5% of the $37 billion spent in Ontario on income security- hardly a lion’s share of the public purse. In making a case for further reductions, the Fraser Institute manipulates numbers unfairly and leaves many important facts out to make a claim for further cutbacks to a program which has been stripped to the bone
Making Welfare look bigger than it is by adding people with disabilities to welfare
In attempting to compare the relative welfare expenditures of the Ontario Government with US counterparts, the Fraser Institute lumps the cost and numbers of people receiving disability benefits into its evaluation framework and then proceeds to compare the US Welfare system that does not include people with disabilities to the Ontario system that does.
US cost cutting would not appear quite so dramatic had the costs of disability programs been lumped in with welfare costs.
Ignoring the Facts and Keeping the Spirit of “Welfare Bashing” Alive
The paper then minimizes the extent of the reforms which have already taken place by omitting many of the major cuts that actually occurred after 1995. For example, the authors fail to report many of the benefit cuts that actually took place well after 1995.
The most significant of these include:
STEP (Supports to Employment Program) changes in 2000 that increased marginal
tax rates on earnings to 100%
· Continuous erosion of benefit rates and work exemptions to inflation
· The cancellation of the pregnancy allowance
· The cancellation of discretionary benefits to the working poor; and
· Further cuts in rates to the homeless to a cumulative total of over 65%
The cumulative effects of these changes along with the ones noted in the report actually resulted in caseload reductions amongst the able bodied that are much more spectacular than those noted in the report. One can argue that far from needing more cuts, we have already cut back to much.
The Institute cautions against any relaxation to welfare rules by tying the increase in welfare caseloads during the time period from 1976 to 1989 to relaxed welfare rules.
In fact relentless tightening of UI rules from 1976 through 1989 and the very major coverage reductions of 1993 combined with major recessions such as those of 1982-83 and 1990-1992 likely had more effect on people applying for welfare than any relaxation of welfare rules.
Leaving Welfare for the Good Life
The Institute Report concludes with the observation that “Since June 1995, an estimated 620,000 people have left the welfare rolls, most of who are finding employment and becoming financially better off.” It is true that approximately 60% have left welfare because of a job or to go back to school.
We won’t argue the point that the 60% are not better off. Some may well be. But if 370,000 are better off, where are the 250,000 that are cut off and not better off? Some of them are begging on street corners and others are living over heat vents in urban centres. They populate drop-ins, hostels, and other institutions, they get sick; some have died. There is no mention of the costs of maintaining an underclass of a quarter of a million people but if they are off of welfare, perhaps we are invited to assume that there are no costs.
With welfare now serving a different much smaller, and harder to serve clientele of people who have very real difficulties in achieving self sufficiency (see note 1 below), it is difficult to get worked up about finding new ways to further cut their benefits. When caseloads relentlessly head down and as expenditures shrink further, it is difficult to make even more shrinkage a top priority, especially as we have been able to achieve the same results as in the US without the imposition of time limits. For example, we now have a welfare system (not including people with disabilities) that costs just somewhere between a third and a half what it did ten years ago.
Ultimately, there arrives a time when cutting becomes less of a priority than assessing ways to manage the negative results of the cuts. The first priority should be to shift the hundreds of millions in welfare savings to help those still left behind.
By John Stapleton
Community Undertaking Social Policy (CUSP) Fellowship, St Christopher House (Toronto)
(Mr. Stapleton retired from the Ontario Ministry of Community and Social Services after 30 years of work on the Ontario welfare system)
The object of this critique:
Reform in Ontario: A Report Card (PDF file - 524K, 53 pages)
- examination of welfare policies in Ontario since 1985, "evaluating the welfare reforms initiated under the newly elected provincial government in June 1995. These will be compared with reforms of welfare policies in the United States, which have proven abundantly successful in reducing dependency, increasing employment and earnings of welfare leavers, and lowering poverty rates, as well as with reforms of welfare policies undertaken by other Canadian jurisdictions.
- the evaluation of Ontario's welfare reforms is based upon "six principles that research has found to play a prominent role in effective welfare reform" - these principles are: Ending the entitlement to welfare - Diversion - Immediate work requirements and sanctions - Employment focus - “Making work pay” - Competition for the administration of welfare and for program delivery.
The Fraser Institute
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