Make poverty reduction the focus of economic stimulus plans

April 30, 2009

A growing chorus of voices from across BC is calling on all political parties to commit to a provincial poverty reduction plan with legislated targets and timelines. Some wonder, however, whether such a plan is affordable, particularly in a recession.

The answer is yes.

In a recession, poverty risks getting worse unless governments take focused action to protect the vulnerable. And combating poverty isn’t just the right thing to do, it makes solid economic sense. At a time when all governments are talking about economic stimulus packages, a poverty reduction plan is exactly the kind of investment we need. It concentrates money among those who don’t have the luxury of saving, and who spend all they have in our local communities. This is where we get the maximum economic bang for our stimulus buck.

Other governments understand this. Ontario’s provincial government recently adopted a poverty reduction plan. Despite the recession and a large deficit, it has committed to reduce child poverty by 25 per cent in five years. On March 11, the federal House of Commons unanimously passed a motion calling for G8 and G20 leaders to make combating poverty a priority in national economic stimulus plans.

And the public gets it too. In a recent Environics poll (commissioned by the CCPA just as the recession became dominant in the news), a large majority of British Columbians (77 per cent) agreed that, in an economic downturn, it is more important than ever to make helping the poor a priority.

As for affordability, consider this: The total amount of money needed to take everyone in British Columbia who is below the poverty line, and raise their income to the poverty line, is about $2.4 billion (known as the “poverty gap”). That’s a lot of money. But it is about 1.3 per cent of provincial GDP. We can afford to do this. Surely, in a province as wealthy as ours, with an annual gross domestic product of almost $200 billion, closing a poverty gap of $2.4 billion should not be seen as insurmountable. Much of the task will fall to government, but the private sector also has a vital role to play, most notably by raising the wages of low-wages workers (as a majority of poor British Columbians are working in the low-wage labour force).

On the other side of the equation is the realization that inaction also costs money. A recent Ontario study put an actual dollar value on the cost of poverty in that province – it measured the higher health, social service and justice system costs and lower economic productivity. The bottom line? Poverty costs Ontario between $32 – 38 billion every year, or about 6 per cent of its GDP.

Similarly, study after study has shown that, as a society, we spend more on services for the homeless than it would cost to actually provide them with housing. Clearly, there is a false economy in our failure to act.

Too often, people feel forlorn in the face of poverty and homelessness – that this is the new normal; that nothing can really be done. But if we commit to a bold plan, a dramatic reduction in poverty and homelessness within a few short years is a perfectly achievable goal.

If you want to join the call for a BC poverty reduction plan, visit

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Seth Klein is BC Director of the Canadian Centre for Policy Alternatives, and co-author of the CCPA report A Poverty Reduction Plan for BC.