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Katherine Scott Canadian Council on Social Development The Vanier Institute of the Family What Kind of Recovery? Directions for Social Policy CLC/CCPA Alternative Federal Budget Roundtable November 2009 What Recession?

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katherine scott canadian council on social development the vanier institute of the family
Katherine Scott

Canadian Council on Social Development

The Vanier Institute of the Family

What Kind of Recovery?

Directions for Social Policy

CLC/CCPA Alternative Federal Budget Roundtable

November 2009

what recession
What Recession?
  • Canada is living through the most significant economic downturn since the 1930s
    • Over 400,000 full-time jobs lost since October 2008
    • Unemployment high, forecast to rise above 10% in 2010; levels of poverty will follow (one forecast: 13.2% in 2010)
    • Proportion of precarious employment and self employment rising
    • Average wages are falling after hard won gains over the past few years – the result of a decline of wage rates and hours of employment
    • Households across the country have experienced significant declines in the value of their savings and their homes

The Vanier Institute of the Family

whose recession
Whose Recession?
  • Behind the aggregate trends, there are important differences – reflecting the differential position of individuals/regions in labour market / economy
    • By gender – men to date have born the brunt of job losses (especially those aged 25-55 years)
    • By age – unemployment among young people has risen quickly (20.9% as of July 2009); at same time, employment levels are rising among those aged 55 years and older
    • By race and immigration status – already high rates of unemployment and underemployment have grown
    • By region – central Canada, Alberta and British Columbia have experienced the largest job losses
    • By income source – those on fixed incomes and/or income security programs are particularly vulnerable to economic shocks

The Vanier Institute of the Family

3

key questions key challenges
Key Questions / Key Challenges
  • A market failure of this magnitude forces us to question and evaluate the effectiveness the systems in place to secure and promote our well-being – at the level of individual households and broader society
      • Are families up to the task?
      • Are public programs / social safety net up to the task?

The Vanier Institute of the Family

4

families up to the task
Families: Up to the Task?
  • For too many, the answer is no
  • Recession taking place against a backdrop of heightened economic insecurity, greater exposure of families to economic / social risk
    • Spending has outstripped after-tax income over past decade – 24.4% vs 11.6% over the 1990-2006 period; Total household debt has risen even faster – average debt loads now represents 140% of disposable income
    • Canadian Payroll Association 2009 survey: six out of ten of Canadians surveyed said that they would be in financial trouble if their pay cheque was delayed by one week

The Vanier Institute of the Family

5

safety net up to the task
Safety Net: Up to the Task?
  • Again, the answer is no.
  • Current recession has revealed shortcomings in:
    • Income security programs, for example, with regard to access to and level / duration of benefits
    • Human capital investments (i.e., active labour market policies, access to PSE, early childhood development, immigrant settlement)
    • Policies / programs providing high quality care and support for children, vulnerable seniors, persons with disabilities
    • Policies / programs that mitigate inequality and insecurity (i.e., social housing, food security, child welfare)

The Vanier Institute of the Family

6

income security programs
Income Security Programs

Flaws / Tensions in Current Programs:

  • Failure of systems modeled on life-long industrial jobs to address needs of population engaged in precarious employment, self employment, cyclical employment
  • Persistent and damaging regional inequities
  • Comparatively low levels of benefits especially for programs targeting working-age adults
  • Lack of supports for low income Canadians whether on income assistance or in labour market
  • Inflexible programs that prohibit mixing employment and benefits

The Vanier Institute of the Family

7

income security programs continued
Income Security Programs (continued)
  • Emphasis on income targeting, conditionality (i.e., workfare) and policing has reduced scope / effectiveness of supports – reinforced inequalities between insurance and need-tested programs
  • Emphasis on policies encouraging individual saving at the expense of investment in public infrastructure and benefits targeting lower income Canadians (i.e., RESPs)
  • Weak regulatory framework for workplace benefits, notably private pension plans

The Vanier Institute of the Family

8

new income security architecture
New Income Security Architecture
  • Need for a new income security architecture that blends public and private income support / insurance programs / private saving provisions over the life cycle:
      • Ensures equitable access and an adequate standard of living
      • Facilitates the blending employment and income support
      • Balances investment in strong public income programs with provisions for private savings
      • Works effectively with support programs including in-work benefits, active labour market programs, child care, affordable housing
      • Works within a strong regulatory framework that privileges the economic security of Canadians and facilitates quality employment

The Vanier Institute of the Family

9

new income security architecture10
New Income Security Architecture
  • Key Principles
    • Works effectively to reduce inequalities, delivering benefits to those who need it most
    • Recognizes the unique challenges of First Nations peoples, racialized minorities and new immigrants, persons with disabilities
    • Recognizes centrality of caregiving and family life

The Vanier Institute of the Family

10

options for change
Options for Change
  • Various options have been proposed to enhance / re-fashion income support for children, working-age adults and seniors

The Vanier Institute of the Family

11

options for change12
Options for Change

Income Support for Children / Youth

  • Builds on policy innovation of past decade (i.e., child benefit, parental leave). Calls to:
    • Provide enhanced benefits to low income children, eliminates inequities in current child tax benefit system
    • Link to pan-Canadian system of high quality, early childhood development programs and other supports for low income families, i.e., housing benefits, drug and dental benefits, attendant care
    • Provide better targeted support for PSE to low income students through expansion of income contingent loans and grants
    • Support work/family balance through improved employment standards, etc.

The Vanier Institute of the Family

12

options for change13
Options for Change

Income Support for Working-age Adults – Short term

  • In the next few years, immediate action is needed to secure household incomes. Calls to:
    • Social Assistance: increase asset limits, streamline application for temporary assistance, increase rates for single adults, substantially improve access to / quality of education and training opportunities
    • EI: ease eligibility, address regional inequities re: eligibility and benefit duration, enhance benefit levels, extend benefits for those in training
    • Address critical housing needs through investment in affordable housing and social housing stock, introduction of housing benefit

The Vanier Institute of the Family

13

options for change14
Options for Change

Income Support for Working-age Adults – Long Term

  • Establish new suite of programs encompassing income support / insurance / private savings vehicles:
    • Short-term earnings replacement;
    • Long-term income support for those in need of substantial human capital investment and/or persons with disabilities
    • New programs – for example: wage insurance; income supplementation for low wage workers; housing benefit; leave for caregivers; registered savings accounts for various kinds; learning bonds; community economic development
    • Expansion of in-work benefits to those in marginal / self employment (i.e., drug and dental plans)

The Vanier Institute of the Family

14

options for change15
Options for Change

Income Support for Seniors

  • Financial crisis jumpstarted national debate on pensions, spurred calls for change. These include calls to:
    • Raise OAS and GIS benefit levels to provide additional support to low income seniors
    • Expand CPP to provide extended coverage especially for those without access to workplace plans (i.e., Universal Pension Plan – CARP
    • Develop a supplemental pension plan (i.e., ABC Plan, Canada Supplementary Pension Plan)
    • Update pension and tax laws and regulations, pension supervision processes
    • Establish national pension insurance fund to protect members of workplace pension plans

The Vanier Institute of the Family

15

long recovery ahead
Long Recovery Ahead
  • Agreement from all quarters that it will take many long years to make up lost ground
    • Consensus that we won’t be able to grow our way out of social / economic challenges any time soon
    • Growing public debt means that stark choices lie ahead between higher taxes or lower spending
    • High levels of inequality shaping the experience of this recession – will be a defining feature of the recovery as well (two-tier prosperity, two-tier recession, two-tier recovery)
    • Imperative to craft new policy and programs challenges of 21st Century – that afford protection and provide for opportunity in a global, knowledge-based economy

The Vanier Institute of the Family

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slide17

Contact Information

For additional information, contact:

Katherine Scott

Vanier Institute of the Family

e-mail: kscott@vifamily.ca

www.ccsd.ca

www.vifamily.ca

(613) 236-8977