Welfare system forcing people into destitution: Report

A combination of low welfare rates and outdated limits on what recipients can earn or own has created a "perfect" poverty trap for many Canadians, especially single people, says a new national report.

The report, released Monday, also says social assistance is harder to get now than it was 20 years ago, and that more people – many made jobless by the economic recession – were forced into destitution to qualify for welfare in 2009.

The National Council of Welfare, which has issued annual reports on the state of social assistance across Canada since 1986, says that despite some improvements, most welfare incomes in 2009 remained "far below most socially accepted measures of adequacy."

Only lone parents in Quebec, Newfoundland and Labrador and Saskatchewan have "cracked" or come close to the poverty lines, it said.

For single employable people, annual incomes from social assistance ranged from a low of $3,773 in New Brunswick to a maximum of only $9,593 in Newfoundland and Labrador.

The range for persons with a disability went from $8,665 in New Brunswick to $12,905 in Ontario. Lone parents received between $14,829 in Manitoba and $19,297 in Newfoundland and Labrador, while couples with two children got from $19,775 in New Brunswick to $24,045 in Prince Edward Island.

The incomes of single recipients were only 15 per cent to 38 per cent of the average after-tax income for Canadian singles overall, "making it apparent how excluded some social assistance recipients are from mainstream Canadian life," the report said.

John Rook, chairman of the council, says many Canadians learned – after they exhausted their employment insurance benefit – that they couldn’t qualify for social assistance until they had depleted almost all their savings and got rid of most of their assets.

The report says asset exemption levels were generally very low, ranging from $150 to $200 for a single person for most provinces. The range was significantly higher in Saskatchewan, Quebec and New Brunswick.

Manitoba is a striking exception, allowing $4,000 worth of assets per person for all family types, thereby reaching $16,000 for a couple with two children.

"Over time, many asset exemption levels have eroded," the report said. "When indexed for inflation, 1989 amounts were often higher than 2009 amounts."

In a statement accompanying the report, Don Drummond, former chief economist of TD Bank, said the report shows Canada’s welfare system is a "box with a tight lid" that requires people to become destitute before they can qualify for assistance.

"But the record shows once you become destitute you tend to stay in that state, Drummond said. "You have no means to absorb setbacks in income or unexpected costs. You can’t afford to move to where jobs might be or upgrade your skills."

The report says there is wide variation across the country on how much income someone can earn and still qualify for social assistance. The gamut ran from full to partial to no exemption at all for earned income.

In other words, the report says, getting a job is not the answer it should be.

Five provinces – Nova Scotia, New Brunswick, Ontario, Saskatchewan and British Columbia – reduce a welfare applicant’s benefit by the full amount of the earnings.

The welfare council is an independent body established to advise the federal government on poverty and social policy issues.