A Budget Geared Toward Reducing Poverty

A BUDGET GEARED TOWARDS REDUCING POVERTY

Presentation made to Honourable Victor Boudreau, Minister of Finance By Linda McCaustlin, Co-Chair of the N. B. Common Front for Social Justice

Riverview, January 28, 2008

We wish to thank the Minister of Finance for the opportunity to offer some input as part of his pre-budget consultation process. We will speak on behalf of those who unfortunately could not afford to be heard during the public meetings. I will speak on behalf of those who could not be here to be heard. It is unfortunate as they were probably the ones who had the most to say. The upcoming budget will affect their daily lives more than anyone else in the province.

During the last election campaign, we were given to understand that should your party be elected, the have-nots would not be falling behind in any way, but would gain a lot by having a caring government looking after them. This was stated in the Charter for Change platform, published in September 2006 by the Liberal Party. If we are here today, it is because this is not happening.

The Common Front is a coalition of about 40 different organizations, labor, religious and community groups. Our mission is to promote policies which respond better to the needs of the most vulnerable in society. Our strategy is focused mainly on the employment standards, income security, unemployment insurance and wage equity.

We believe that there should be a better distribution of wealth and the social security net should be strengthened so that they have a better protection. For that, however, there is a need to have a clear strategy aiming at the reduction of poverty in this province and the upcoming budget should reflect this objective.

There are 18% of the children in this province who live in poverty which is due, in our opinion, to the inequity which seems to be gaining ground. We ought to reverse this trend and ensure that public policies sustain the low earners, the most deprived and disadvantaged so that they may become first class citizens and live in dignity.

The present government strategy, at least as we see it, is to reduce taxes, ignore poverty issues, and deregulate. It also relies on corporate goodwill and communities to take over its responsibility with regard to the reduction of poverty. This approach is counter-productive and solely results in an increase in poverty. What we propose is a change in focus and a strategy which promotes equal opportunity for all, a vision which seems to have been set aside. Efficiency and cost effectiveness, competition and productivity, self-reliance and self-development seem to be the present values. They only create more poverty. They ought to be offset by social values such as state responsibility, social protection, and common good.

Poverty, as we see it, is a direct result of a problem with the economy. The economy needs periodic adjustments to maximize opportunities for everyone. Income Tax Credits are of no use to the low earners since they are usually exempted from paying taxes, their income being far less than the basic personal exemption.

There has been a 3 % reduction in the social assistance recipients over the past 10 years in this province. A reduction in the number of recipients is not indicative of a more prosperous economy. It simply means that the number of individuals living in poverty has increased by 3%.

There has been a major effort by government to re-enter people in the job market. This initiative, however, has not been successful due to the fact that many had various limitations preventing them from being employable. They are incapable of doing even light work. Those who could work were integrated into minimum wage jobs and they still needed a medical card and assistance for medical transportation as their income was insufficient. It should be pointed out that 24% of all the employed workers in the province earn less than $10 an hour. This is considered to be a low pay because a single individual working full-time all year would need at least this amount to reach the poverty line.

The main obstacles for many people in going back to work is lack of skills to do the work, health problems, the lack of child care. Working at minimum wage means getting further deep into debts.

Finding a job does not mean getting out of poverty. In Canada, 41% of the children living in poverty come from families where the parents work full time all year. Working does not guarantee a decent family income.

A THREEFOLD STRATEGY

It is not possible to overcome poverty unless government comes up with an objective, a plan of action, and a strategy. We recommend that the strategy be threefold:

A. More financial security

1. Give more assistance to those in need by raising the rates (so they be at par with the average in the Atlantic Provinces). 2. Provide assistance to help those on a fixed income, at minimum wage or on social assistance to pay their fuel costs during winter (the heating supplements of $110 per month allowed to those on social assistance are insufficient; the present government broke a promise made by the previous government to exempt the GST on fuel costs and replaced it with an allowance of $100 per year). 3. Raise the minimum wage to make it a "decent living wage" (the minimum wage in the province is $7.25 per hour while the Canadian average rate is $7.60). 4. Index the social assistance rates and minimum wage to the cost of living (the cost of food, housing, heating, electricity and personal needs cost about $20,000 a year for a family of 4 while social assistance is about $10,000). 5. Provide emergency assistance (special items) to families in critical situations. 6. Improve the social assistance policies to take away the disincentives and repressive components. 7. Provide pay equity in all activity sectors, both private and public

B. Proactive services to families and individuals

1. Make a commitment, as elected government leaders, to end the erosion of public services. 2. Provide assistance for transportation for medical reasons (in rural areas those who do not have any means of transportation cannot access services). 3. Give direct, personal services to families in need of support (not through Internet!). 4. Offer a comprehensive home care program. 5. Ensure universal access to child care services services by subsiding the child care centres adequately rather than by granting partial support to some parents. 6. Offer more preventative services (they cost 10 times less than correcting the unresolved problems).

C. A more balanced taxation system

1. Redistribute public funds so that the low earners and social assistance recipients receive their due share. 2. Allow a fair distribution of public funds not only on health and education, but also on transportation, social assistance, job creation, housing, social services and home care. 3. Impose less taxes on essential goods and services and demand higher income taxes for the richer citizens as well as increased taxes for the corporations which are now getting away with less than they should pay. 4. Reduce the income tax for the low-income earners

CONCLUSION

Basically, we are recommending that more direct financial assistance and personal services be provided and that they be financed through a balanced taxation system. Government should thus focus its upcoming budget on improving the lot of the economically disadvantaged while correcting the fiscal inequalities which are at the root of the impoverishment.