Provincial budget reveals no plan for cutting the social deficit

By Josh Brandon, chair of Make Poverty History Manitoba
(A version of this article was originally published in the Winnipeg Free Press, April 19, 2017)

Low income Manitobans were hoping that this year’s budget would offer a plan to help lift them out of poverty. A well-funded strategy with targets and timelines for its implementation and for reducing poverty would give Manitobans confidence that their government is making poverty reduction a top priority. However, despite promising last year that a comprehensive poverty reduction plan would be introduced in Budget 2017, the government has pushed the updated strategy back to the end of the year.

Without a strategy, the budget leaves many questions unanswered, but some of the details that have emerged are distressing. Social housing investments are stalled with $20 million cut from the operating grant to Manitoba Housing Renewal Corporation. Low income workers may see no increase in minimum wage for a second year. There will be more than 500 new child care spaces, but investments here need to be ramped up much faster. As at this rate, it will take 30 years to make up the existing gap in needed child care services.

One bright light in the budget is that the Rent Assist program is being been maintained, and will be continue to be indexed according to inflation, meaning shelter benefits will continue to be available for low income households, including those receiving Employment and Income Assistance (EIA) and working poor and others not on EIA. However, even while making this commitment, Finance Minister Cameron Friesen signalled possible future cuts, warning, “over the next year, we will be reviewing the Rent Assist program to make sure that available benefits are reaching those most in need.” For Manitobans who depend on the program to obtain adequate accommodation, talk of restructuring is concerning.

In the meantime, there is no increase in EIA benefits to cover basic needs.  A single individual on general assistance will still receive as little as $195 per month for food, clothing, transportation and other necessities, with a total income of just over half the Market Basket Measure of poverty. This is an amount hunger advocates have shown provides less than four dollars per day for food, less than half of what is needed for a healthy diet.

Despite no increase in the basic needs benefit, the Budget increases EIA spending overall by $87 million, a 20 per cent increase over 2016. The lion’s share of this increase, as much as three quarters of this spending, will be to cover anticipated increases in caseloads volumes. We are looking for clarification from the department about what is causing these dramatic increases. From the budget, it appears that the government is anticipating an historic rise in the number of new EIA recipients. Higher projected EIA enrollment, without improved benefits, will leave thousands more Manitobans at a subsistence level of income.

These EIA figures are a reflection of the urgent need to develop a comprehensive poverty reduction strategy. Such a strategy should be based on meaningful consultations with community groups and people with lived experience of poverty. It should include investments in housing, child care, mental health, education and training, and community development – priorities already identified through the community-based plan, The View From Here. In the absence of a plan, families are more vulnerable to changes in the economy. Last year, unemployment averaged above 6 per cent for the first time since 1997, driving more families to rely on EIA as a stop gap. Not investing in poverty reduction is neither prudent, nor fiscally sustainable.

Curiously, Budget 2017 identifies indexing of tax brackets and the Basic Personal Exemption as a poverty reduction tool. This will do little to help low income Manitobans, at great cost to the public treasury, while costing $34.1 million. It is higher income Manitobans will receive a disproportionate benefit. There is no plan to replace this lost revenue to government. Some low income households will not benefit at all, while others will get up to $15 annually. Tax measures will do little to tackle the root causes of poverty, and are orders of magnitude below what is needed to help lift people out of poverty.

The Province is also betting that Social Impact Bonds will provide a tool for poverty reduction.  Social Impact Bonds are financial instruments that leverage private sector investment for social purposes. They have been used only sporadically internationally and across Canada. Their record so far has been spotty, with little evidence of their effectiveness. Moreover, there are very few details available about how these instruments will be structured. Until this is clarified, Social Impact Bonds can offer only minimal hope to low income families.

In this year’s budget, the government has focused its concern on Manitoba’s debt. Debt, however should not been managed on the backs of the most vulnerable. This year’s budget also once again demonstrates the futility of cutting the fiscal deficit without regard for the much deeper social deficit, which weighs so heavily on major budget lines like health, justice and child welfare.

Without a clear strategy for poverty reduction, too much effort will continue to be wasted on one-off programs without a clear method for evaluating their effectiveness. However, people in poverty will need to wait another year for the plan they have been anticipating.