Commentary

A More Balanced Economic Study of Social Assistance

Hamilton has an important opportunity to give some serious thought to the analysis that social assistance provides real benefits as well as costs.

By Bob Wood
Published July 03, 2011

Events scheduled for July 4th in Hamilton got me reflecting on Canada Tax Freedom Day. I think I missed it this year. How about you? Nationwide it occurred on June 6th. On that day we'd be living tax free for the rest of the year.

For those of us living in Ontario, we were able to celebrate two days earlier. If we were lucky enough to call Alberta home, we could set off the fireworks a full five hard-working-taxpayer days in advance of Victoria Day.

The Fraser Institute is responsible for this tool which tries, I suppose, to show us how badly we are doing in moving to the Fraser's vision of "a free and prosperous world." In this world, "individuals benefit from greater choice, competitive markets, and personal responsibility."

The boys of the Institute also note that the Balanced Budget Tax Freedom Day arrives on June 22, 16 days later than Tax Freedom Day.

Enough already.

Significant mainstream media attention treats this tax freedom drivel as serious analysis when it ought to be shuffled off to where it belongs to be served up as news by the Glen Becks and Ben Mulroneys of the world.

What we need really need is some sort of tool that measures how government policies impact our fellow citizens. Something that acknowledges that a significant portion of our populace, through no fault of their own, don't have the income to meet their living costs.

This brings me back to those early July Hamilton events.

City Council hears from Dr. Atif Kubursi and Craig Foye on July 4th. They're talking about helpful analytic tools. Kubursi has one; Foye wants one. Kubursi, of Econometric Research Limited, is presenting a report called The Economic Impact of Social Assistance in Hamilton.

A modelling tool called the Regional Impact Model (RIM) demonstrates that social assistance beneficiaries generate significant impacts in both the local and provincial economies debunking the common assumption that social assistance is a burden to the economy.

Specifically, significant impacts include:

Generating $439.3 million in value added in the provincial economy (in part as a result of the multiplier effect); generating $296.2 million locally. Maintaining 5,441 jobs in Ontario and 3,383 locally.

Generating $144.6 million in provincial and federal taxes and $6 million in local taxes. Increasing salaries and wages by $ 260 million provincially and $162.7 million locally.

Foye, a staff lawyer with the Hamilton Community Legal Clinic, wants an "evidence-based" system for determining social assistance rates. By using real research into what it actually costs to find and keep a place to live and buy basic necessities in Ontario communities an effective system could be developed.

We need such a system, as the rates established 30 years ago and pegged to the real cost of living were severely cut in 1995 by Mike Harris, then Premier and now Fraser Institute Senior Fellow, and have eroded relative to inflation since.

There is a real opportunity to give some serious thought to the ideas being put forward by Kubursi and Foye as the Commissioners appointed by the provincial government to review social assistance and recommend changes are in Hamilton on July 4th. They'll hear from the public on ways to reform Ontario Works and the Ontario Disability Support Program.

Francis Lankin and Munir A. Sheikh, co-chairs of the Commission for the Review of Social Assistance in Ontario, will be in Hamilton to participate in a community forum at the Convention Centre.

The Commissioners' discussion paper envisions an "income security system that enables all Ontarians to live with dignity, participate in their communities, and contribute to a prospering economy." Running to 48 pages, the paper provides useful background info and is designed to elicit public input.

For example, the Commissioners write that there are trade-offs in developing a benefit structure that provides adequate level of support without creating barriers to work. But how should the trade-offs be tackled?

They also want thoughts on fixing the "complex" (some would say stupid) rules-based social assistance system and addressing the "unique circumstances of First Nations people living on reserve, the increasing number of Aboriginal people living off-reserve and Metis people."

The Hamilton Roundtable for Poverty Reduction and community partners are coordinating the visit of the Commissioners and helping to facilitate the Kubursi/Foye presentation.

Bob Wood is a community worker at the Hamilton Community Legal Clinic where he works on the clinic website. He is also a freelance writer who has worked with youth, in housing and served as a municipal councillor in Burlington/Halton from 1991-97 and in 2006.

48 Comments

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By moylek (registered) - website | Posted July 04, 2011 at 07:54:58

Specifically, significant impacts include:

Generating $439.3 million in value added in the provincial economy (in part as a result of the multiplier effect); generating $296.2 million locally. Maintaining 5,441 jobs in Ontario and 3,383 locally.

Generating $144.6 million in provincial and federal taxes and $6 million in local taxes. Increasing salaries and wages by $ 260 million provincially and $162.7 million locally.

You make it sound as if the government has managed to invent a fiscal perpetual motion machine: using tax dollars to generate tax dollars. Which cannot be what you mean, so I must be missing something here.

So can you elaborate a bit on how people who are receiving money from the government are generating revenue for the government? I ask in all earnestness.

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By Cedrick (anonymous) | Posted July 04, 2011 at 10:18:56 in reply to Comment 65502

An extra dollar going to someone whose already rich won't be spent, it will be invested somewhere, maybe in money markets or whatever. An extra dollar going to someone who doesn't have money will be spent, probably locally, and help support the economy.

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By thoughtful (anonymous) | Posted July 04, 2011 at 19:38:28 in reply to Comment 65507

Investment create jobs and future wealth. We want more of that. Squandering governments generally destroy wealth. We should want less of that.

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By Brandon (registered) | Posted July 04, 2011 at 21:52:19 in reply to Comment 65523

Investment is great, but what if there's no one to buy what you're selling?

Demand is the real job creator.

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By Ryan (registered) - website | Posted July 04, 2011 at 09:17:42 in reply to Comment 65502

Another related issue is the fact that untreated poverty is a false economy. It costs a fair bit to keep people in homes, but it costs even more to let people become homeless.

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By Brandon (registered) | Posted July 04, 2011 at 08:20:51 in reply to Comment 65502

You make it sound as if the government has managed to invent a fiscal perpetual motion machine: using tax dollars to generate tax dollars. Which cannot be what you mean, so I must be missing something here.

It's not a perpetual motion idea, but seriously, what do you think happens to the money given to people on assistance?

Any small business owner will tell you that what drives job creation is demand. Giving money to people who have none is a guarantee that ALL that money is coming right back into the economy.

It's then taxed when it's spent, then that money is used to pay employees where it's taxed again, then they spend it, etc....

I'm certainly not arguing in favour of a luxury lifestyle on welfare, but a system that guarantees at least basic food and shelter can't be seen as a bad thing, can it?

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By mystoneycreek (registered) - website | Posted July 04, 2011 at 08:04:47 in reply to Comment 65502

Not sure if this helps shine some light, but I thought it was relevant: http://www.thespec.com/news/local/articl...

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By WRCU2 (registered) - website | Posted July 04, 2011 at 08:43:48

A balanced economic study of social assistance eh? Good luck! The answer to the question, "how much is just enough?" will always be "whatever the amount, IT is never that much."

Give a man a fish and you'll feed him for a day, teach a man to fish and he'll feed himself for a lifetime.

I've been inadvertently studying social assistance balance for over ten years now simply by living next door to a group home and I know all about dignity or the lack thereof. But I also know about ambition, enthusiasm and passion and that for most assistance recipients these virtues receive little or no ration. But I have a solution which will lead to a well storied balance, in nutrition.

The TracyToob Salad Bar: TracyToob JPG Image

Imagine that, a fresh garden salad everyday right outside the kitchen window. Or perhaps three or four servings per day strapped to a high-rise balcony railing and all 1 has to do is water regularly, IT is simply amazing! And without all those long walks to the food banks folks will have more time for gardening and giving themselves some thanks.

I am all for poor folk living with dignity, this should be a basic human right which goes hand in hand with responsibility and holding the right tools I think they might. I should know, I've beheld them since I was knee-high to a kite:

Corny WRCU2 JPG Image

Happy Fourth of July!

Comment edited by WRCU2 on 2011-07-04 09:12:03

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By Who speaks the truth (anonymous) | Posted July 04, 2011 at 14:15:30

This social assistance Review is another delaying tactic, perpetrated by the governemnt and its allies. In all honesty, how can someone like Mr Foye speak for those who struggle?

It is an abnomination that people who do not struggle, who do not have to go to food banks, those who are homeless, those who are abused everyday by the so called social services sector, or as otheres know it the Poverty Industry.

It is pretty pathetic, that this process will go no where and many who are the roundtable and et al, who do not live in poverty and allow for the fascists to do the talking, all the while oppressing the true voices of the people.

People needed help back in 1995, the poverty reduction bill went no where and now we have a bunch of liberals and NDP types, who think they know it all.

Tax credits and RRSP's take people n where, yet this is what these so called experts are going to push forward.

It is now time for the epople to stand up and speak for themselves, tell the so called righteous, who do not live in poverty to take a hike.





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By struggle (anonymous) | Posted July 04, 2011 at 14:31:42 in reply to Comment 65513

It's disturbing to me that you divide the world in to "those who struggle" and "people who do not struggle", life isn't cut and dry that way.

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By d.knox (registered) | Posted July 04, 2011 at 14:26:43

Great photos, WRCU2.

I have a problem with someone who makes his living from the poverty industry telling me that I shouldn't worry about how much I'm paying in taxes.

I know that all of my taxes don't go to the people who "through no fault of their own" rely on social assistance. But I don't want someone who makes a great living living off these people telling me not to worry my pretty little head and think instead about how much more these people need.

They have enough to live. Enough. Not great, but enough. So enough. There are some barriers to work, yes, but there are also people who are able to work who do a cost benefit analysis to see if it's worth their while getting a job or if they are better off continuing to rely on other people's tax deductions. Being on welfare is a sustainable life, especially if augmented with some bottle scavenging, a little pan, and a few visits to the many food banks in the core.

We don't have a perfect system, but honestly, don't try to tell me that Hamilton is better off because we have a thriving poverty industry. What is the cost of putting off so many people who can't stomach downtown. What is the cost of maintaining a city core with people who can't attract decent stores and businesses. What is the cost of sending people with money out of the city to do their shopping? What is the cost of sustaining a reputation as a city to be avoided?

There are many, many, many great things about Hamilton, but increasing the social assistance rolls isn't one of them. Hamilton is already very attractive to poor people. Enough already.

Oh, and Hi, Grassroots.

Comment edited by d.knox on 2011-07-04 14:28:23

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By Bob Lee (anonymous) | Posted July 05, 2011 at 08:47:00 in reply to Comment 65514

You may be onto something with your argument that welfare rates are not too low, but your jab against the author is totally uncalled for. Same goes for the above comment against Foye. That someone is making an income working on behalf of the poor means exactly zero as to the quality of their argument. Do you really need someone to teach you about the ad hominem fallacy?

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By d.knox (registered) | Posted July 05, 2011 at 10:26:54 in reply to Comment 65538

Hi Bob: I don't think that someone who makes a living in the poverty industry is necessarily creating a poor quality argument. However, the fact that the person telling me that tax-free day is drivel and that a mere 16 days more of tax free living with a balanced budget isn't worth celebrating reveals a bias I'm calling him on.
I think it is quite germaine that Bob Wood works in the poverty industry. And so does he, given that he's used his position to establish credibility. I say that this very position must be considered, and I don't accept his credentials as unbiased. "Community Development" contains within its title a political agenda.

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By RB (registered) | Posted July 04, 2011 at 16:55:05 in reply to Comment 65514

"We don't have a perfect system, but honestly, don't try to tell me that Hamilton is better off because we have a thriving poverty industry. What is the cost of putting off so many people who can't stomach downtown. What is the cost of maintaining a city core with people who can't attract decent stores and businesses. What is the cost of sending people with money out of the city to do their shopping? What is the cost of sustaining a reputation as a city to be avoided?"

Spin it however you like people, but you cannot argue with the above quoted text. Keep on playing the "martyr for the poor", and let me know our cities' reputation in the next 10-15 years.

Nice post, d.knox.

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By Undustrial (registered) - website | Posted July 04, 2011 at 15:20:02 in reply to Comment 65514

They have enough to live.

That's just not true. In many cases, these days, a welfare cheque does not even cover rent for the month, and it certainly doesn't cover a healthy month's food. And for the record, if you're caught earning extra income (ie: panning or collecting cans) without declaring it and forfeiting half, you can lose your benefits altogether for "fraud".

Hamilton is already very attractive to poor people. Enough already.

Because obviously, people decide to become poor since they can make SOOO much money on social assistance...

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By d.knox (registered) | Posted July 04, 2011 at 17:56:27 in reply to Comment 65516

I said several things, Undustrial, but I didn't say that people go on welfare because they can make SOOO much money.

Of course people don't decide to become poor since they make so much money on welfare. People become poor for many reasons. Many poor people are not on welfare.

I take issue with a writer and a study designed to tell us that we get a lot of value for our welfare dollar, so we shouldn't worry about when tax-free day is. Instead, we should have more studies to look at how people on welfare need more money, and presumably then, our tax-free day will come even later.

Then, this is spun into an article about how welfare payments actually generate more money for us than they cost us. Really? So our tax dollars, put into the hands of a welfare recipient, somehow become worth even more than the cost of welfare. The amount of information that has to be left out to arrive at that conclusion strains the boundaries of integrity.

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By Undustrial (registered) - website | Posted July 04, 2011 at 23:04:34 in reply to Comment 65521

What was "enough already" supposed to mean? That welfare recipients are getting "enough", or that we have "enough" people on welfare? You were definitely insinuating that higher welfare payments would bring more people on welfare, and that it would harm our city.

Can government spending drive jobs, spending and tax revenues in society at large? Isn't that the point? Not a terribly contentious notion when it comes to things like schools, hospitals or roads.

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By HMP (anonymous) | Posted July 04, 2011 at 18:26:19

"....through no fault of their own...."

Why are those living in poverty, by default, labelled as hopeless and helpless victims?

There is no question that there are many deserving recipients of social assistance in our city; I have no issue with that. However, my wife and I both have careers that bring us into regular contact with social assistance recipients. The truth is, many who receive welfare (oops, sorry, Ontario Works) have made the CHOICE to live in "poverty."

My wife teaches at an education centre where, theoretically, welfare recipients must attend to receive their cheques. Naturally, there are never any consequences for not attending class; recipients still get their money. Numerous students have threatened my wife for marking them absent (even though there are no financial consequences). Students attend her class high on a regular basis, steal bus tickets from the school to sell them elsewhere, spend the day sleeping in the classroom, openly resist searching for employment, and pregnant students brag that their payments will increase upon the birth of their child.

To a certain degree, individuals must take responsibility for their actions. I understand povery; it was a part of my young life for many years. However, I decided to stay in school and resisted the urge to get a neck tattoo and sit on my ass in Gore Park during working hours (nothing against neck tattoos, it just seems to be a prerequisite for people my age loitering in Gore Park).

Ryan is correct when he says that it is far more costly to allow people to become homeless than it is to support them through social assistance, but we are obviously dealing with a terribly flawed system. In many cases, money is being directed to the wrong individuals (another one of my favourite examples of our flawed system is an individual my wife has taught who collects disability because he cannot fall asleep before 4am....ever heard of the night shift?? The poor guy deals weed to supplement his social assistance).

Basically, I've grown tired of blanket sympathy statements about individuals living in poverty in our city. There are many people who are in legitimate need, and they deserve to live lives filled with support (of many kinds) and dignity. The rest have made their own bed.

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By Sky Flame (anonymous) | Posted July 04, 2011 at 21:42:44

Man that is a totally bummer and a load of negative energy! Are you telling me that these people are living the high life (pun intended) because they just didn't have the gumption you did to pull yourself out of the gutter and live? My main man Undustrial will lay it on you about stereotyping people who are on benefits and break it down for you about how EZ it is for people to be thrown off OW. Just the amount of letters they send out cutting people off could save many a forest and probably feed a whole country with just less postage.

"Tax the rich and feed the poor!"

Someone labeled me a "poverty celebrationist" once. Yeah, making big bucks shilling for the poor.

Real bring down man!

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By HMP (anonymous) | Posted July 04, 2011 at 23:16:20 in reply to Comment 65526

Hey "Man,"

I fail to see how my previous post was "stereotyping people on benefits." I was simply sharing some of my personal experiences with students/clients my wife and I have worked with over the past ten years to illustrate what I believe are problematic issues within the Ontario Works program. I sincerely hope that those who are deserving and in need of assistance receive all the support they require, but not all of the individuals receiving social assistance deserve it. That is my argument, and it is certainly naive of you, or anyone else, to believe that the welfare system is not being taken advantage of by many (NOT ALL) recipients. Based on my experiences, it is not "EZ" enough for some undeserving (fraudulent) recipients "to be thrown off OW."

As for pulling myself out of the "gutter," I most certainly was not seeking your praise or admiration. Although, yes, I do believe that SOME of the people I have personally known to be on welfare do lack "gumption." Is that a stereotype?

Sorry for bringing you down, "Man."

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By A Smith (anonymous) | Posted July 05, 2011 at 00:40:33

From 1985-1998, interest payments on Canada's debt (fed and prov) never dropped below 8% of GDP. In that time period, nominal GDP averaged 4.99%/year, while Toronto home prices increased by an average of 4.39%/year.

From 2000-2011, interest payments have gone from just over 7% of GDP to around 3.9%. In this time frame, Canada's nominal GDP has grown by an average of 4.42%/year, while the average house cost has increased by an average of 6.2%/year.

If we look at the time period between 1991-1994, when deficits were very high (averaged around 7.25% per year), nominal GDP averaged only 3.18%/year. That's bad, right? Maybe not.

When we consider that home prices FELL an average of 3.78%/year during this period, it meant that the average Canadian could purchase a home with less debt, which more than made up for the slower growth in nominal GDP (incomes). In other words, Canadians actually produced MORE in real goods and services during this period, even though the headline GDP numbers suggest they produced less.

It may just be that deficits, welfare and tax cuts, all which appear to be free lunches for Canadians, are actually just catalysts for higher productivity.

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By mystoneycreek (registered) - website | Posted July 05, 2011 at 06:59:12

It's fascinating to me how this subject seems to reveal levels of entrenched rhetoric on both sides as much as the whole walkability-drivability discussion does. Additionally fascinating...as it is in the other area...is that personal experience is often readily dismissed. It's as if what people cling to so desperately beliefs-wise trumps real-Life observation. Surely this is a slippery slope.

Just as surely, the topic warrants a less clenched approach, doncha think...?

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By RB (registered) | Posted July 05, 2011 at 10:08:35 in reply to Comment 65534

No kidding re: "personal experiences is readily dismissed".

People want to believe whatever makes them sleep better at night; reality be damned!

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By Ryan (registered) - website | Posted July 05, 2011 at 07:08:34 in reply to Comment 65534

personal experience is often readily dismissed.

The plural of "anecdote" is not "data". As a general principle of public policy, we should all be aiming to set aside personal experience and consider the issue based on good empirical evidence.

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By WRCU2 (registered) - website | Posted July 05, 2011 at 08:38:24 in reply to Comment 65535

Seeing is believing Ryan and I've got all the empirical evidence I need; Increased consumption of soda pop, potato chips and cigarettes combined with heavily chair-pressed buttocks are not a healthy boost to an already flabby economy. You can come over here and feast your eyes on my neighborhood's stock if you wish or you may simply and empirically, trust me!

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By d.knox (registered) | Posted July 05, 2011 at 08:38:15

Public policy is driven by philosophy. That's just the way it is. One person's solution to increasing social assistance numbers is to throw more money at the problem. Another's is to cut funding. Another's is to put conditions on the funding.

I don't see the benefit of putting aside personal experience in favour of "good empirical evidence" when we aren't actually talking about the same problem. Do we want to make life easier for people on social assistance - give them better health care and easier access to housing - or do we want to make life harder for people on social assistance so that it is less of a viable option for them to stay on social assistance? The former option hasn't worked out so well for Britain, and any reading of Theodore Dalrymple's essays will give you lots of personal anecdotes to supplement the empirical evidence of the success of the welfare state in Britain.

What is good for people on social assistance is not necessarily good for Hamilton.

It's very hard to talk about solving the problem when we can't agree on what the problem is. What we do know is that low-cost housing attracts poor people. Yes - attracts. A density of poverty attracts social services which in turn attracts more people who need social services which increases the density of poverty. I don't need to lecture anyone on how Hamilton has fared on this measure. WINNING.

At this point, philosophy takes over.

Here's where I'm coming from: Hamilton has lower rents and housing costs than all other cities that are as well-serviced or better serviced in Ontario; Hamilton has cheaper bus fares than most other cities with as many services; Hamilton has shorter wait times for subsidized housing than many other cities with as many services; Hamilton also has the highest property taxes of any other city with as many services. There is a correlation that is more than coincidental.

Hamilton does not have greater moral imperative than any other city in Ontario to take care of poor people. So, until all of the costs for social services are shared equally by everyone in this province, we should stop stepping up to the plate to do more. We have done enough.

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By RB (registered) | Posted July 05, 2011 at 10:10:31 in reply to Comment 65536

Couldn't agree more.

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By Ryan (registered) - website | Posted July 05, 2011 at 08:52:38 in reply to Comment 65536

Do we want to make life easier for people on social assistance - give them better health care and easier access to housing - or do we want to make life harder for people on social assistance so that it is less of a viable option for them to stay on social assistance?

I would assume we want to do what demonstrably works. To determine that, we need data, not just this or that observer's personal impressions.

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By TnT (registered) | Posted July 06, 2011 at 00:34:59 in reply to Comment 65539

Here here! That is the kind of evidence always trotted out by right wing persons: My neighbor is a bum, so I'm an expert on bums.

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By d.knox (registered) | Posted July 05, 2011 at 10:12:17 in reply to Comment 65539

There are lots of things that could work, Ryan. Which one you choose depends on your political philosophy.

My choice means that I'll choose the option that doesn't keep increasing my property taxes. And throwing money at this problem and then wrapping it all up in a nice fairy tale about how my tax money is actually better spent by someone who didn't work for it is offensive.

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By WRCU2 (registered) - website | Posted July 05, 2011 at 10:36:42 in reply to Comment 65546

throwing money at this problem and then wrapping it all up in a nice fairy tale about how my tax money is actually better spent by someone who didn't work for it is offensive.

That's putting IT mildly;-)

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By HMP (anonymous) | Posted July 05, 2011 at 09:37:27 in reply to Comment 65539

Perhaps. I would never suggest that changes in policy be based upon personal impressions. However, I will always trust what I have seen with my own eyes and experienced over the past decade while working with "at-risk" individuals over questionably compiled data.

Numbers can be misleading, and they are not the solution to all of our problems.

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By WRCU2 (registered) - website | Posted July 05, 2011 at 09:30:41 in reply to Comment 65539

Here's an empirical personal impression for you and I have to be careful so as not to cause trouble. EMS visits are a regular occurrence next door and as we well know, Hamilton taxpayers support EMS services AND there have been more than a few Code Zero's lately.

To begin, an EMS visit to this particular group home is NEVER a single ambulance my friend, there is usually a second ambulance and there is always an accompanying fire truck with a few burly firefighters to assist if necessary. Would anyone care to share how much cost such a visit is billed to Hamilton taxpayers?

Next, I have on numerous occasions offered the staff and owner of the home my help creating a community garden in their spacious underutilized backyard. I was hoping to provide my neighbors something practical and productive to do with their lives. Nobody has ever taken me up on the offer. WHY? Because there is a revolving door for staff and the property has changed hands through private sales three times in ten years. In addition, rumour has IT the place is soon to change hands again I fear.

I will stop now because if I continue, I will most certainly begin causing trouble. Many of you do not believe a Poverty Industry actually exists in Hamilton's social assistance bubble.

Comment edited by WRCU2 on 2011-07-05 10:42:07

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By shaddupsevenup (registered) | Posted July 05, 2011 at 10:49:26

This is all opinion, no empirical data, so feel free to cruise on by. But the last several months of living in Hamilton are making small "c" conservatism look good. I got a zero raise from the City, and my property tax went up anyway. Meanwhile, EMS got 8% raise, inflation went up 3.7% and I'm reading articles like this, and the one in the Spectator that suggest I give more of my money to taxes because it creates an economy, and like d.knox said, these articles suggest that welfare recipients are better at choosing where to spend my money than I am. I'm going on a four month "no spend" budget, and if my partner wasn't moving in, I'd have to consider selling my house, and that is no exaggeration. So instead of my spending my money in restaurants and shops on James N, OW and ODSP recipients can spend it on reserve cigarettes and the Dollarama. Sorry - but I can't see how this is viable.

So my options, as I see them, are to vote "c" or move to a Real City (which is a vote of another kind.)

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By A Smith (anonymous) | Posted July 05, 2011 at 20:51:58 in reply to Comment 65555

>> the Spectator that suggest I give more of my money to taxes because it creates an economy

Nobody said anything about raising your taxes, just increasing welfare.

The Ontario 3 year bond is currently yielding only 2.15%, which indicates that the market is almost begging the provincial government to borrow MORE, in order to create some economic activity.

In 2001-02, interest payments were 2.28% of Ontario's GDP. As of the latest budget, they were down to 1.68%.

On a total government level, we used to pay between 8-9.5% (of GDP) on interest payments (1985-98). This is now down to about 3.75%.

Even in the 8 years prior to Paul Martin making his war on the deficit, in 1993, debt charges had ranged from 8.28% to 9.45% of GDP. In the years 1993-1998, after Martin had slowed spending dramatically, debt charges still ranged from 8.25% to 9.57%. For all of his austerity, not much happened to our debt charges.

This changed after 2000. Since then, federal corporate tax rates have fallen from 28% to the current 16.5%, even while welfare payments have also fallen in real terms.

In fact, prior to 2000, it was a rare year that corporations were net lenders to Canada's economy. Since that time, as average Canadians have taken on larger debts, they have accumulated around $400 billion in cash on their balance sheets.

All of this points to why it's a good idea to increase welfare (without raising your taxes). It will give corporations something to do with the money they are currently sitting on.

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By BobInnes (registered) - website | Posted July 06, 2011 at 23:31:27 in reply to Comment 65585

Whatever happened to the Libertarian Small Gov't A.Smith I used to know? Amazing line of reasoning from you of all people. But I think we are about to find out just how far you can take your logic. Give it a few years or have a look at recent bond rates for the PIIGS and then tell us what our debt payments will be under similar conditions. Conditions that I believe will pertain as soon as this ridiculous bubble pops and bondholders go on strike or get screwed. Either way, your logic freezes up and the free lunch is over.

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By A Smith (anonymous) | Posted July 08, 2011 at 02:51:37 in reply to Comment 65675

>> Give it a few years or have a look at recent bond rates for the PIIGS and then tell us what our debt payments will be under similar conditions.


Here is a counter example...

In 1990, 20.7% of the general budget of Japan went to paying for the national debt. Since that time, as the value of government bonds/GDP has gone from 36.8% to 138%, national debt charges have only moved to 23.3% and that is down from 24% in 2000.

In the U.S., debt charges are 2.85% of GDP. In 2000, they were 3.64% of GDP.

In Canada, debt charges were over 7% from 1982-2000. Today, they are around 3.75%.

As of May 2011, there were 469,902 people receiving public assistance in Ontario. That's 3.56% of the population. Even if it went to 10% and each of these people got $1,000/month, it would still only cost the province $15.8 Billion/year. In the most recent quarter, Ontario's GDP was $614.4B. That means the high end welfare cost would be 2.57% of the economy.

Even in the last seven years, as McGuinty has expanded central planning in the province, nominal GDP has increased by an average of 3.24%/year.

In other words, if the goal is to keep debt/GDP constant, you can do that with much higher welfare spending than we have today, PLUS have 0.67% of GDP to spend on other items, such as health or education.

There really is no fiscal rationale to not increase welfare. Moreover, I would argue that welfare spending is far better for the economy than spending on health and education, since at least welfare cash encourages business competition.

According to wikipedia, people on welfare in Germany receive 359EUR/month + the cost of adequate housing, along with health care.

If you look at the German economy, it is currently the best in Europe, exports more per capita than Canada and has a housing market that is one of the most affordable in Europe...

http://blog.emap.com/boris/files/2009/06/property-bubble.jpg

According to the CIA Factbook, Germany collected $17,128/person in revenue in 2010. In Canada, where welfare benefits are lower, the government collected $17,799/person.

Even the bond market likes "higher welfare" Germany better than Canada. Their 10 year bond yields 3.01%, while Canada's yields 3.12%.

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By RB (registered) | Posted July 05, 2011 at 11:30:50 in reply to Comment 65555

I'm already thinking of moving out of this town. As much as I love it here (almost 5 years now), I hate the idea that being on welfare is a viable solution for it's residents to improve our economy. It's just another way to welcome more social service recipients.

Ludicrous... and I can just hear what residents in other cities are saying regarding this news. Must be a good laugh.

Oh, and how about an NHL team? Who wants to move to Welfare City? Yay!

At least business's such as Tim Horton's, convenience stores, Money Marts, Beer Stores, Dollarama & fast food joints will prosper... you know; the kind of business that really aids in the economic recovery and prosperity of our city.

YAY!

I wonder if the people who generated this report even live in Hamilton? Anyone know?

Comment edited by RB on 2011-07-05 11:45:09

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By Stop the poverty pimps (anonymous) | Posted July 05, 2011 at 15:23:25

D Knox: Public policy is shaped by philosphy? Not really, it is shape by those who are in charge of things, the power brokers. They set an agenda, which in the last 16 years or so, the poor cause all the problems.

I get a kick out of the property owners who cry about their property taxes going up, yet, it seems they had no cajones to speak out or stand on a line when the federal government, then the provincial cut back transfer payments and laid it on the backs of the municipalities.

I went to the social assistance review event last night and it was more of the same old crapola, that was spoken the last time about four years ago when they were circulating around for the poverty reduction bill. Same old masters spewing the crap, same old politicians, same old parties, nothing moves forward. They are protecting their own status in the community and wages as well.

Som for the psoter who was talking about their spouse teaching some sort of subject, tends to place blame on the victims, yet very little at attacking the very process that puts social assistance recipients into useless programs, that lack any reality of the the job market today and the clear lack of jobs.

All agencies must comply under the WORKFARE ruless, it is in the Ontario Works Act 1997.

So like the city worker who is not unionized, whining that they got no raise and their property taxes went up, boohoo, do I feel sorry for you, not in the least, you are a product of your own environment. Organize, do not blame others for your lack of initiative to actually stand up and fight for something.

Thosw who struggle can be part of the solution, they can offer input, that would be more reflective of what is needed oppose to those who earn an living in the poverty industry, shooting thier big mouths off. Many of them in the poverty industry are tyrants, do not beleive in any democratic process, yet are always yapping about a whole lot of nothing. meanwhile many go without food, shelter or any visible assistance to the world in which they find themselves.

Never been on the system, you have nothing to say period!









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By Brandon (registered) | Posted July 05, 2011 at 21:47:35 in reply to Comment 65574

Thosw who struggle can be part of the solution, they can offer input, that would be more reflective of what is needed oppose to those who earn an living in the poverty industry, shooting thier big mouths off. Many of them in the poverty industry are tyrants, do not beleive in any democratic process, yet are always yapping about a whole lot of nothing. meanwhile many go without food, shelter or any visible assistance to the world in which they find themselves.

Never been on the system, you have nothing to say period!

So what's the answer? You've demonstrated that no one else here is capable of providing an acceptable solution, so ante up.

Here's your opportunity to present a workable solution...

Or are you just happier railing away at the injustice of it all?

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By shaddupsevenup (registered) | Posted July 05, 2011 at 16:41:27 in reply to Comment 65574

Grassroots, You're the one who doesn't know what they're talking about. I am unionized, and I'm an activist who has traveled North America to protest status quo entrenchment. And I've also been "on the system" and worked like crazy to get off. I was a homeless teen in Toronto. And I go broke trying to educate myself at work and at Mac, so that I NEVER have to live such an undignified life again. So EXCUSE me, Ms Pot, but this kettle is tired of seeing acquaintances on ODSP take trips to CUBA while I have a staycation in my backyard. Talk about people who yap without thinking!

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By moylek (registered) - website | Posted July 05, 2011 at 15:56:57 in reply to Comment 65574

D Knox: Public policy is shaped by philosphy? Not really, it is shape by those who are in charge of things, the power brokers. They set an agenda, which in the last 16 years or so, the poor cause all the problems.

Of course policy is shaped by philosophy. In the end, most decisions about such things - for citizens and policy makers - come down to our view of "the good" or "the good life". And that's philosophy, kids.

Never been on the system, you have nothing to say period!

Come now, Grassroots ... only welfare recipients can have a voice in discussions of welfare? So only prisoners can talk about crime and punishment? Only teachers can discuss education? Only those who pay tax can speak of public expenditure? Only the dead can speak of murder?

Comment edited by moylek on 2011-07-05 15:59:23

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By whatever (anonymous) | Posted July 05, 2011 at 18:28:30

Hey shaddup: I do what I am talking about and gee, well, others have worked hard, gotten education, and yet still have not found a better life or have been lifted from poverty, considering the change in the job market, lots of precarious work, with no protection, period. You want to exchange stories, at least you have a union, you can file grievance, which many other workers out there cannot do that. My objective is to move back to the old days, direct action, workers engaging in general strikes, that is how the labour movement started, it is unfortunate, that the labour movement has moved away from their grassroots. How many union members actively go to their meetings, I hear mostly only when collective bargaining is an issue that the majority of unionized workers give a rats ass about issues that affect them.

I wonder did you take part in the train the trainer sessions at the local district CUPE office held a couple of months back?

Moylek: if you never have had experience going on welfare, then what experience can you relate to? Do you not agree that having lived experience tells a lot more about a situation then if you do not have that lived experience.

The whole system is degrading, some of the workers will try their best to assist you within the horrible confines of the system they must administer, while others are absolutely heartless and there seems to be no policy statement from the city, that would encompass what workers are being trained and if they fail to follow the training, what avenues are open to the general public to enact justice for their abusiveness?















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By shaddupsevenup (registered) | Posted July 05, 2011 at 19:45:38

Grassroots, I'm not really open to subjecting myself to a lot of scrutiny. I've already said more about myself on the internet than I ever planned to. Rest assured that I volunteer a little of the small amount of free time I have, to help those in our local community who need it, and that I donate to charity out of each and every paycheque I earn.

I will also say that I think collectivism is a good philosophy, and works well in theory, but sometimes, when put into practice .. meh. Same goes for capitalism I guess. It's been my experience that identity politics grind productive conversations to a halt, and so for that reason, I'm going to back out of this line of discussion with you.

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By Undustrial (registered) - website | Posted July 05, 2011 at 23:11:49

The article doesn't state that welfare is a miracle cure to economic ills. It simply accounts for the money that is being spent at the moment, and the impacts it's having (by standard economic measures). This is money which is being spent, and in most cases it just wouldn't be there otherwise.

You may not like many welfare recipients, but the fact is that many people rely on it to survive, and you can't easily weed out individuals who make a profession of "working the system" without cutting off a lot of "innocent" people as well. Many people on OW I know today have ended up in situations where their total benefits don't even cover their rent. In such situations, welfare "fraud" becomes a requirement of having a roof over your head.

Are there downsides to living in an area with a poverty problem? Yeah. Would cutting benefits fix the problem? Of course not. Attempting to discourage poverty by making life worse for poor people in the area is only going to make the problems associated with poverty far worse.

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By Grassroots Schmassroots (anonymous) | Posted July 06, 2011 at 17:25:07

"Many people on OW I know today have ended up in situations where their total benefits don't even cover their rent. In such situations, welfare "fraud" becomes a requirement of having a roof over your head." - Undustrial

I didn't realize those on OW had it so bad. I've always made a note of the ridiculously high concentration of satellite dishes(!) belonging to residential units along King Street East and beyond in Wards 2 and 3 (arguably the most impoverished areas of the city). Count them for yourself the next time you're in the area; the satellite to resident ratio would put the wealthier suburbs or neighbourhoods to shame. The odds suggest that more than a few of them belong to OW recipients (in fact, I know they do). Are these the same individuals who "need" higher welfare payments to keep a roof over their head? To purchase healthy food? Seems to me as though priorities are often a little out of whack.

What percentage of welfare recipients smoke and are able to purchase cigarettes? What percentage of welfare recipients purchase alcohol on a regular basis? What percentage of welfare recipients, on a daily basis, search for practical educational opportunities or drop off resumes? According to some previous posts, data is of utmost importance; this is the data I would like to know.



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By Undustrial (registered) - website | Posted July 07, 2011 at 23:45:24 in reply to Comment 65666

My (rented) house came with a mounted satellite dish, as do most others, rented or owned, nearby. Don't know anybody who's ever actually used theirs, though. I've certainly never paid a cent for mine.

Perhaps you might be a little less angry about the world if you didn't jump to quite as many conclusions.

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By Grassroots Schmassroots (anonymous) | Posted July 08, 2011 at 16:06:17 in reply to Comment 65790

I'm not an angry person. I'm curious. I ask questions. I believe that these are perfectly fair and valid questions for taxpayers to ask.

I'd also like to know what percentage of benefit recipients possess a cell phone? What percentage of recipients have had additional children while already receiving benefits? What percentage of recipients have received benefits for more than one year? Two years? Three years? More?

(I must admit that to a certain extent, these are rhetorical questions. I will not concede that you are the resident expert on OW. I'm not currently sitting in the west wing library of a 5,000 square foot home on Lakeshore, casting judgement upon thousands of tragically poor Hamiltonians while I sip Cristal and bathe in $100 bills; perhaps others have just a little experience with OW and social services as well. I'm not suggesting that those on OW live a luxurious life; they don't. But even the staunchest supporters of OW (which I am, believe it or not) would have to admit that there are a lot of misspent and misdirected benefit payments. I can admit this. What's the solution?)

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