Government Support Programs Don’t Help Combat Poverty: Fraser Institute

A homeless man sits with his dog on a street in Toronto on Jan. 14, 2021. The Canadian Press/Nathan Denette

A new commentary on Canada’s support system for low-income households says many of the programs perpetuate dependency and don’t help people do what is needed to get out of poverty.

Authored by Christopher A. Sarlo, a professor of economics from Nipissing University for the Fraser Institute, Helping the Poor — A Critical Analysis of Poverty Policy in Canada is part three in a series by the non-partisan research organization that examines the state of poverty in the country.

“The poor are not well-served by policies and programs that disregard the critical role that employment plays in their long-term well-being,” Mr. Sarlo wrote.

“The real solution to poverty is, then, not merely finding ways to bump people over the line but rather to help people become self-sustaining so that they can pull themselves out of poverty.”

In the analysis, Mr. Sarlo looks at Canada’s Old Age Security (OAS) program, affordable housing, and social assistance/welfare.

He noted that changes to the OAS program mean most of the funds are going to seniors who are not considered low-income.

“The bulk of OAS, the OAS grant itself, mainly goes to non-poor senior households. Regrettably, the data is not there to determine to what extent the OAS grant is predominantly a shuffling of monies between middle-income households.”

Mr. Sarlo did note that the Guaranteed Income Supplement (GIS) for seniors does target those in need, but only accounts for 24 percent of the OAS program.

On Nov. 8, the government of  Newfoundland and Labrador announced a basic income program for residents aged 60 to 64. The program is part of the province’s plan to reduce poverty.

“This is in addition to more than $900 million the Provincial Government allocated in Budget 2023 for social programming and support for lower-income families and individuals,” the province says.

Affordable Housing Hassle

Helping families find homes they can afford has become a pressure point for governments at every level.

Recently, the Federation of Canadian Municipalities said municipalities would need $600 billion in infrastructure funding to build 5.8 million homes by 2030.

The Canadian Mortgage and Housing Corporation says Canada needs to build 5.8 million homes to restore affordability.

However, the Fraser Institute analysis says the government’s quest to help Canadians obtain affordable housing could be making the problem worse.

“An Ontario auditor report states that the Province does a poor job of transitioning public housing recipients into employment and market housing,” Mr. Sarlo wrote. “The way the system is structured, the auditor argues, provides little incentive for recipients to become self reliant.”

He also said that one of the biggest challenges to affordable housing is ensuring there is enough to meet demand.

“Various government restrictions and regulations prevent new housing from being constructed where it is most needed,” Mr. Sarlo said.

Welfare Woes

When it comes to social assistance or welfare, Mr. Sarlo said the structure of the support takes away the desire to seek employment for many recipients.

“Financial dependency is identified as a critical problem. More than that, however, is the longer-term damage done to people’s sense of self-worth and of being contributing members of society.”

The Canadian Press and Jennifer Cowan contributed to this report.