A taxing solution.

The first budget introduced by the Conservative federal government contained some interesting features. Being a minority government, the Conservatives avoided some of the most divisive issues in their Party platform. How can anyone object to the Universal Child Care Benefit that will pay mothers $1,000 per year for each child under five years of age? While calling it a "child care" program, it is really a renewal of the family allowance program which the Liberals ended in 1993.

One item in the budget arouses our special interest. It is a brief statement about "reducing barriers to paid employment." The government sees a labour shortage developing in Canada and views the welfare rolls as a resource for dealing with this problem. The Harper government indicates that it wants to work with the provinces to remove tax disincentives that welfare recipients face when they take jobs. More than one economist claims that people dependent on social assistance face punishing income tax levels when they take even modest paying jobs. They also lose other benefits that come with social assistance--such as dental care and prescription drugs.

This approach is typical of conservative governments everywhere. They treat welfare issues as a tax problem and usually prefer to avoid service programs wherever possible. Good as they are, tax incentives are usually not sufficient to deal with welfare and labour issues. (We assume for the moment, that this is not a prelude to reducing the Canada Health and Social Transfer.) The Harper government now faces a far more complex set of issues.

According to the 2005 report of the National Council on Welfare, 1.7 million Canadians were dependent on provincial social assistance programs. In the 1990s, welfare benefits were reduced and eligibility restricted. Recipients were encouraged, pressured or forced into work, study or community service programs. The changes of the 1990s reduced the number of people dependent on social assistance by half. Today approximately 5% of Canadians remain dependent on social assistance.

We know something about the people who were forced to leave social assistance. All but a few entered very low paying, irregular jobs, increasing the numbers of the working poor. Many became or continued as clients of food banks to make ends meet. They rarely qualify for employment insurance to support them between jobs and a substantial number entered the ranks of the homeless.

Today, we know little about those who are on the welfare rolls. The last time we had a reasonably comprehensive picture was in 1988 when the Ontario Social Assistance Review Committee, headed by George Thomson, examined the province's welfare system. They asked why in a fairly prosperous time, welfare rolls did not decline. Among their findings was that a large part of the welfare system supported unskilled, poorly educated people whose employment in low-income jobs was not steady. They did not work long enough to qualify for unemployment insurance, as it was then called, and turned to welfare to support themselves between jobs. Others came and went as their mental and physical health affected their ability to hold a job. The Review Committee found a social assistance system that was a revolving door between paid work and unemployment. The welfare system had become something it was never intended to be--an income security program for almost 20% of Ontario's population.

The Review Committee of 1988 proposed comprehensive measures that included training and educational upgrading programs to create more marketable skills, child care services, extended health benefits for people taking jobs, counselling and mentoring, and graduated income supports. The proposals promised to cut the welfare rolls dramatically and improve living conditions in the long term. But the Committee's recommendations had one drawback: they required a $4 billion investment to get them up and running. No Ontario government has yet picked up the challenge.

Prime Minister Stephen Harper should not limit the solutions of welfare to the manipulation of tax rates. This is a complex issue that requires an examination of related federal and provincial education, social and income security programs. Coordination and reorganization is long overdue and of course, it will cost in the short run. In the long run, however, this investment will pay big dividends. If we mean to finally address this inequitable and long overdue problem, the time is now.