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New Income Security Architecture

New Income Security Architecture. John Stapleton May 30, 2011. The Importance of a Different Lens. 2. The Importance of a Different Lens. 3. Harper’s 4 New Programs: Not going away……………. Working Income Tax Benefit Registered Disability Savings Plan Tax Free Savings Account UCCB.

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New Income Security Architecture

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  1. New Income Security Architecture John Stapleton May 30, 2011

  2. The Importance of a Different Lens 2

  3. The Importance of a Different Lens 3

  4. Harper’s 4 New Programs: Not going away…………… Working Income Tax Benefit Registered Disability Savings Plan Tax Free Savings Account UCCB These programs all have a bias away from entitlement and towards participation.

  5. What should the new program look like? • Children would be provided for through a separate income stream. • Remaining social assistance benefits would be provided for adults only. • Recipients' housing needs would be provided through a special housing benefit that would be provided outside of the social assistance system

  6. What should the new program look like? • The benefit unit definition would adopt the current income tax definition so that new rules would not be separately required. • There would be no asset test and no needs test. • Only income would be tested again using tax definitions. • Recipients with earnings would graduate directly to the Working Income Tax Benefit (WITB) program. • Opportunity planners would administer employment supports and employment testing with the principle of transition to the labour force paramount.

  7. What should the new program look like? • For persons with disabilities, the ultimate goal is to provide a benefit that resembles Old Age Security (OAS) and the Guaranteed Income Supplement (GIS) • Disability rates were the same as those paid to seniors from 1973 to 1975 in Ontario through the GAINS program.

  8. What should the new program look like? • For persons who do not have disabilities, the system would have elements that require participation. • A minimum $10,000 is recommended would not be a guaranteed annual income but would represents a fundamental restructuring of basic income security for persons in need

  9. How do we build a new program? • There are several possible changes that lead from the current complex social assistance system to the simplified income system noted above. • Interim changes to the social assistance system can be accomplished smoothly leading to a new income transfer system for low income working age adults.

  10. How do we build a new program? • Change to the current liquid asset limitation rules to exempt registered savings instruments with higher overall limits • Implementation of a new housing benefit that would replace the shelter component of social assistance • Completion of the child benefit system such that the four elements of child benefits remove all children from the benefit structure • Changes to rules that prevent self-reliance.

  11. For Programs to work, the new model has to have the needed DNA: • create support through a federal tax and EI account, where contributions would result in a minimum level of refundable credits; • create low-income benefits to help alleviate working poverty(eg:WITB) • use instruments to allow low-income adults to contribute money that is redeemable before retirement; • create programs to match contributions

  12. What will stop us ? • From 1973-75, we had a Guaranteed Annual Income System for the aged and persons with disabilities. • The de-indexation of benefits for persons with disabilities implemented in 1975 opened a gap between the incomes of seniors and adults with disabilities over the last 34 years. • The recession of the mid 1970's was responsible for de-indexation but once done, the rates were never re-indexed.

  13. What will stop us ? • Although rates were increased more than the rate of inflation prior to and during the recession in 1990-92, social assistance increases in 1993 slowed and rates began to fall helped along by the 21.6% cuts in 1995.

  14. What will stop us ? • The 'super trend' of generally rising rates has been followed by a second super trend of ever reducing rates. • From 1935 to 1993, rates generally rose in comparison to inflation and have fallen ever since

  15. What will stop us ? • The largest caseload increases occurred following the two recessions. • The government can choose to restructure the system for the future or it can choose to tinker with a social assistance system that was last overhauled in the 1980's and 'shrink-wrapped' in the 1990's. • We can’t afford a social assistance system that traps people for long periods • Caseloads remain at a low point of population and that caseloads grow during times of high unemployment.

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