“While there was reason for optimism when parliamentarians from all parties voted in favour of conducting the inequality study, it’s evident that improving the well-being of Canada’s poor wasn’t a priority,” said CPJ executive director Joe Gunn in a Dec. 11 news release.
“The majority of the recommendations urged the federal government to continue on its course of narrow and relentless economic growth. Yet, as the committee’s report itself acknowledges, if Canada continues down this path inequality will continue to grow.”
The report, entitled “Income Inequality in Canada: an overview,” is the response to Motion M-315 that passed the House of Commons June 13, 2012 by a 161-138 vote. The motion specifically called for a review of federal and provincial income tax and income support systems and the identification of any “gaps” in the federal systems “that contribute to income inequality, as well as any significant disincentives to paid work” such as the “welfare trap.”
CPJ was among almost 70 groups or individuals from across the political spectrum that submitted reports to the committee.
One of the difficulties for the committee was assessing the various methods to measure income inequality and whether social mobility, the ability to move up the economic scale out of poverty, mitigated income inequality. The report cited studies which note “income inequality at a point in time is not necessarily an issue if there is a general trend towards reduced lifetime inequality as a person ages from child to adulthood — intragenerational income mobility — or if a child grows up and has an income that exceeds that of his/ her parents — intergenerational income mobility.” Studies show Canadian children “displayed a relatively high degree of intergenerational income mobility” relative to those in other OECD countries, but not as high as those in Nordic countries.
The report did show the disposable income of the top one per cent grew by 77 per cent from 1986 to 2012, while that of the top 0.1 per cent grew 131 per cent during that time frame. However, it was also reported the top one per cent paid 13.4 per cent of all federal and provincial income taxes in 1986 but paid 23.3 per cent in 2007.
One of the difficulties for CPJ and other groups, the report said, is there is no “commonly agreed threshold” to determine when a Canadian is deemed to be “in poverty.”
Demographic changes such as the aging population, the hollowing out of the middle class and the impact of globalization were touched upon in the report. The Canadian Medical Association estimated that 20 per cent of health care spending is related to income disparity. High levels of income inequality could prove destabilizing to society, some witnesses warned.
The report made 24 recommendations in eight areas: youth/ equality of opportunity; First Nations; education; newcomers; tax system; financial regulations; trade/manufacturing/ labour markets; and government supports. The recommendations stress “economic growth and job creation to reduce poverty.” They recommend moving forward with property rights for aboriginal Canadians; removing barriers to interprovincial trade; and encouraging investment and resource development. The government should also “remove disincentive to work,” the report says.
CPJ said it was encouraged to see the report recommend a review of the Working Income Tax Benefit to see if it “could be expanded or modified.” But CPJ’s other proposals to raise the Canada Child Tax Benefit and improve income support for Canadians with severe disabilities were ignored.
“Enhancing programs that assist the poor is the best place for government to start in addressing income inequality,” said CPJ research associate Katherine Scott. “Raising the incomes of these households would reduce the most damaging consequences of inequality and ensure everyone has the opportunity to fully participate in society.”
CPJ released its fourth Poverty Trends Scorecard, coinciding with the committee report. Entitled “Making Ends Meet,” it reveals that the economic recovery “remains modest” and Canada’s poor families are having trouble meeting rising costs. They are resorting more and more to food banks and credit cards and spending a greater proportion of their income on necessities.