BC Priorities in the face of an economic downturn

November 1, 2008

Gordon Campbell’s recent 10-point economic plan will have no impact on BC’s most serious problem – persistent and extreme poverty.

BC has the highest poverty rates in the country (by any measure used). Thirteen percent of the population is living in poverty, and for five years running BC has had the distinction of having the highest child poverty rates (16%) in the nation. Poverty rates for certain groups, such as female-headed single-parent families, aboriginal people, recent immigrants, and people with disabilities, are dramatically higher.

In addition, the province has about 11,750 people with mental illness or severe addictions who are absolutely homeless. The depth of poverty is extreme: the average poor person in BC has a yearly income that is $7,700 below the poverty line. The problem of poverty risks getting worse with a recession.

Taking action on poverty is a collective responsibility and should be a government priority – just because it is a moral imperative. But recognizing that morality is not usually what makes governments act, the following argument for change are couched in political and economic terms.

First, poverty reduction is a smart political move. People, in general, deplore poverty and support government poverty reduction plans. A recent Environics poll (commissioned by the CCPA) found 87% of British Columbians want governments to set concrete targets and timelines to reduce poverty. And 74% said they would be more likely to support a provincial political party pledged to make poverty reduction a high priority and propose a clear plan.

The UK, after adopting such an approach, has moved 600,000 children out of poverty and is well on its way to cutting child poverty in half by 2009. Closer to home, both Newfoundland and Quebec have comprehensive anti-poverty strategies. Newfoundland now has the highest social assistance benefit rates in the country and is the first province to index welfare rates to inflation. Both Ontario and Nova Scotia are in the process of developing poverty reduction plans.

BC, however, does not have a poverty reduction plan. Premier Gordon Campbell’s 10- point plan to “improve economic competitiveness and reduce costs for families and business” will not address even one aspect of BC’s most serious problem. Reducing taxes may be a populist political move (which helps explain why even Carol James, sadly, says she’ll match Campbell’s tax cuts), but the tax reductions won’t even be noticed the next time we all do our income tax. The tax cuts also give greater benefits to those in higher income brackets; those making $40,000 a year will get $56, but those making $70,000 and more will get $140.

The $144 million going to individual tax reduction would go a long way if it were instead directed towards low-income families and people who now live on $610 a month (the rate for a single person on social assistance). Bringing all of BC’s poor up to the poverty line would cost about what BC had as a surplus in its last budget.

Neither tax reductions nor more spending for roads and bridges will have as much of an economic stimulus in BC as would using an equivalent amount of money toward poverty reduction. Poor people spend everything on food, housing, and other necessities, most of which is locally based. The impact on their spending would be immediate within a community. This is less the case for people with more money, who are more likely than the poor to buy imported items, spend outside the country, or simply save. Similarly, large infrastructure programs are often undertaken by companies from outside the province with at least a proportion of the labour force and materials imported from elsewhere.

Premier Campbell’s 10-point plan is vague about some issues. We do not know what he means by acting “immediately to rein in avoidable government spending.” If this means what it has meant in the past, it would be the poor who would take the brunt of the cost of the government tax reductions. This should not happen again through reductions in social services. Rather, the poor should be the object of government attention and support.

Marjorie Griffin Cohen and Seth Klein are co-directors of the Economic Security Project, a five-year initiative between the Canadian Centre for Policy Alternatives and Simon Fraser University to study the implications of BC’s public policy on vulnerable populations.