A warning sign reading “do not stand up” at the top of a wooden rollercoaster.

The Ups and Downs of Social Assistance in Ontario

 in United Insights  tagged Poverty and Income Security

We’ve spent, we’ve cut — where do we go from here?

A warning sign reading “do not stand up” at the top of a wooden rollercoaster.

Photo by David C. Rehner.

This is a post by Maria Erb, a Community Research Fellow with Social Research & Planning Council and United Housing Research Intern.

A Rollercoaster of Investment and Divestment

The history of social assistance in Ontario — cash transfer programs that provide direct financial support to households — is a rollercoaster of investment and divestment. From post-war recovery spending and experimentation, to the decline in benefit spending through an era of austerity, the complacency of the 21st century, and finally COVID, we have arrived at a need for creative solutions. By acknowledging Ontario’s social assistance benefit spending history, we can learn from our successes and mistakes and push for change.

Post-War Recovery and Experimentation

In the 30 years after WWII, Canadian governments were motivated to invest in social assistance. Although various programs had been proposed and implemented in different provinces already, major social reforms had been unsuccessful (often because of disagreements over provincial/federal roles).1 The war proved that governments could coordinate to do big things and command the economy. No one wanted to return to the Depression conditions of the 1930s.

Federal Unemployment Insurance had been introduced in 1940 as workers were mobilized for the war.2 As the war wound down, the federal Family Allowance (child benefit) was introduced as Canada’s first universal welfare program to prevent a post-war crash.3

Despite the many costs of the war, Canada’s economy was strengthened.4 Following international trends, Canadian governments established and reinforced safety nets over the next decades, with cash transfer programs alongside in-kind supports like public healthcare and education. For seniors, Old Age Security (OAS) was introduced in 1951, followed by the Canada Pension Plan (CPP) in 1966, and the Guaranteed Income Supplement (GIS) in 1967.5 The 1956 Unemployment Assistance Act — the first permanent federal funding program for provincial social assistance6 — was followed by the introduction of General Welfare Assistance (GWA) in Ontario, short-term monetary relief for low-income individuals. In 1967, Ontario introduced the Family Benefits Acts (FBA) — long-term benefits for single parents and people with disabilities — shortly after the Canada Assistance Plan, an updated federal cost-sharing program.7

This era is defined by the willingness of Canadian governments to try new things to improve the wellbeing of their constituents.

Escalating Economic Skepticism

In the ‘80s and ‘90s, social assistance programs grew to a point where the amount of government spending invested in these programs created a push for severe cuts in funding. Ontario welfare rates almost doubled between 1985 and 1994, outpacing inflation, and social assistance beneficiaries rose from 5.2% to 12.7% of the population, meaning more people were enrolled in these programs. Between 1987-1994, average dependency rose from 6.5 to 12.5 months receiving benefits for single individuals and 36 to 55 months receiving benefits for single parents.8 Social assistance expenditures increased from $2.39 billion in 1985/86 to $7.94 billion in 1994/95 — more than doubling in inflation-adjusted terms.9 More people were using and reliant on these programs, and the government was spending more and more money.

As social assistance dependence and costs rose, so did an international trend towards neoliberalism — privatization, deregulation, free trade, and free markets — spearheaded by figures like Margaret Thatcher, Ronald Reagan, and Brian Mulroney in Canada.10 These trends came after economic challenges in the ’70s and early ’80s, specifically towering inflation rates and two recessions.11 Facing difficulties with how to balance both issues at once, governments eventually concluded that austerity was the best way forward. Fears of a debt crisis made cutting spending seem the lesser of two evils, as unpopular as it was.12

Even though the party in power changed federally and provincially, this spirit of austerity continued through another recession in the ‘90s.13 The loss of jobs meant that more people were relying on social safety nets, which caused more money to be spent by the government. This escalated economic skepticism over spending amounts, which ultimately led to cuts.

Work Ethic and Waste

In the ’80s, the Social Assistance Review Committee (SARC) was formed by the provincial government to review and provide suggestions for social assistance programs. In 1988, SARC released Transitions, a detailed report of recent social assistance statistics and recommendations for moving forward, which in the short term included increases in welfare spending, but in the long term began a tangible transition from helping people through money to encouraging people to find work.14 For example, the Supports to Employment Program (STEP) allowed individuals to earn more income without endangering their eligibility for social assistance funding.15 The government was beginning to push individual work ethic over government support. This suggested that everyone should be able to climb out of poverty independently using their existing resources, when this is not always possible.

Additionally, the government began to identify major sources of financial waste. The Social Assistance Review Board (SARB) handled appeals when benefits were denied, cancelled, or reduced. Even if their appeal was ultimately denied, appellants often received interim assistance, which could not be recovered, and by the early ’90s, SARB’s costs were as much as $50 million per year. In the end, it would have been cheaper to pay the appellants in the first place without the ordeal of the appeals process. In 1992, the Auditor General of Ontario stated that FBA fraud cost taxpayers $70-$100 million per year. Further examination of the GWA proved mismanagement, where 8,000 assistance cases were found to have errors, costing $21 million.16

These statistics reinforced negative attitudes towards social assistance programs and recipients, establishing cultural support for further cuts. In 1995, provincial benefit levels for “employable” individuals (those without verified disabilities) were reduced by 21.6%, resulting in $469 million in government savings for the fiscal year and the disqualification of 12,000 low-income earners from STEP. Additionally, welfare eligibility was tightened and a 1-800 hotline for fraud reporting was established. This hotline reportedly saved the government $28.8 million between 1997 and 2000. In 2001, $4.57 billion was spent on social assistance; a 42% decrease from 1994. The over-expenditure of SARB led to its reform and then its replacement in 1998. In 2002, 82,000 single parents were on social assistance, a 59% reduction from 1994.17 Anti-poverty advocates described these changes as a ”war on the poor,” ”brutal,”18 and ”nothing short of disastrous for poor people in Ontario.”19

The Dawn of ODSP and OW

The core social assistance programs created before the ’90s remain, but they function for different purposes and in different ways — more of a transformation than an elimination. A key shift occurred in the late ’90s with the transition from Family Benefits Assistance and General Welfare Assistance (FBA and GWA) to Ontario Disability Support Program (ODSP) and Ontario Works (OW).20

FBA and GWA clients were divided into two distinct categories: ODSP for those who were unable to work due to a disability,21 and OW for those who were presumed able but were either low-income or unemployed. ODSP provides an ongoing benefit while OW “provides temporary financial assistance to those most in need while they satisfy obligations to become and stay employed,” emphasizing the individual’s responsibility. Both provide limited health coverage.22 Under Premier Mike Harris’ leadership, OW benefit rates for “employable” individuals were cut by 21.6%. For the most part, benefit rates have not increased in line with inflation since this transition for either program.

Lower rates were thought to create an incentive for employment, decrease caseloads, and shorten benefit dependency. The philosophy was that poverty is short-lived; if people chose to make the effort and take advantage of the strong economy and expansive employment opportunities that the government was promising to create, poverty would remedy itself.23 This theory seems less likely as the program continues. From 2006/07 to 2016/17, only 9% of single adult clients had employment earnings; caseloads increased by 30%, and average time on benefits was over two years. During this period, at least, low rates did not seem to boost employment, decrease caseloads, or shorten benefit dependency.24

Some Hopeful Changes

Through the early 21st century, government interest in bettering social assistance programs has plateaued. The programs are working as they were intended, but they have their limits when it comes to ending poverty. Poverty rates remain relatively steady. Adhering to trends of social assistance austerity, benefit rates for key programs like ODSP and OW remain well below the poverty line, and have even decreased in value as governments have been reluctant to index to inflation. However, there are some hopeful changes/reinventions that are of note.

The Canada Child Benefit (CCB) was introduced in 2016 by consolidating and expanding existing child benefits.25 The CCB was indexed to inflation in 201826 and represents one of the biggest government-funded cash transfer programs (alongside CPP and EI). It has had significant impacts on low-income families.27

The Ontario Basic Income Pilot demonstrated an alternative to existing social assistance programs. From 2017 to 2019, 4,000 participants from the ages of 18-64 were given an annual benefit of up to $16,989 for single individuals and up to $24,027 for couples, with a monthly top-up for individuals with disabilities.28

The pilot was discontinued early, after around 18 months, when the provincial government changed. Although formal data was never collected, community-gathered data from the Hamilton-Brantford area showed positive impacts on physical and mental health, as well as other aspects of well-being. The employment-related findings were mixed, with some individuals finding work, some losing work, some changing jobs, and some leaving work in favour of education, potentially improving their long-term employment outcomes.29

The Canadian Emergency Response Benefit (CERB), introduced during COVID, could be compared to a universal basic income (UBI).30 Along with other pandemic benefits, CERB led to a dramatic drop in poverty in 2020.31 CERB was beneficial for those who received it, 70% of whom stated that it positively impacted their financial situation. It also helped them cope with stress, care for ill family members, and pursue skills building and education.32

CERB wasn’t perfect. For those on the lower-income side, if qualified, CERB was not enough to both pay bills and afford caretaking/upskilling/education.

Many social assistance recipients were ineligible for CERB, which required the recipient to have $5,000 of earned income from the previous fiscal year. As a result, only 19.7% of recipients already on ODSP or OW were eligible. Throughout the pandemic, the maximum OW and ODSP benefits remained frozen well below the poverty line.33

ODSP recipients could receive monthly pandemic top-ups ($100 for individuals, $200 for families) from April to July of 2020, but only 39% of ODSP recipients received this top-up, possibly because of a lack of both advertising and access to case workers.34

However, the experimentation of the CERB program has given us a legitimate example of how UBI might act in a large-scale implementation. Now, amendments can be made accordingly. Nothing works perfectly on the first try!

Time to Brainstorm

The COVID era exposed many flaws in the existing federal and provincial income support programs. The idea that low rates lead to less reliance on social assistance and more employment has been undermined, but the persistence of this philosophy has led to inadequate benefit rates and an individualistic narrative — both harmful to those who need help. Instead, low rates have kept people in a cycle of poverty, leaving recipients with barely enough to survive and not enough to support life-stabilization.

In September of 2022, ODSP rates were raised by 5% (from $1,169 to $1,228 monthly for a single individual),35 and Ontario committed to indexing ODSP to the rate of inflation beginning in the summer of 2023.36 The Government also increased the ODSP earnings exemption from $200 to $1,000, allowing recipients to earn $800 more per month before reducing their benefits.37 These are the only major steps that the Ontario government has taken to strengthen the financial safety net. Although ODSP rates were indexed to inflation, OW rates were not, reinforcing the idea that those who can work are motivated by low rates and are less deserving of help than those who can’t. The federal government has tinkered with smaller benefits like the Canada Workers Benefit, Canada Disability Benefit, and Canada Groceries and Essentials Benefit, each valuable, but not valuable enough to change life circumstances for social assistance recipients.

Our provincial and federal leaders are prioritizing spending on infrastructure projects instead of social assistance projects. An overhaul of the Canadian and Ontarian social assistance programs is not the priority of the current leaders. We may see smaller attempts to tweak the current system to meet present needs, but larger, impactful changes seem unlikely even as members of our community are facing effects from recent inflation. Housing markets are ridiculous, food prices are way up, and it is harder for any individual or family to find sufficient, reliable income. With our neighbours in poverty, we must continue to ask more of our governments.

The 30 years after WWII saw a flurry of new social assistance programs, resulting in key parts of the financial safety net that are still in place in some capacity today. As the Ontario Basic Income Pilot and CERB showed, a new idea can only be proven if it is attempted. If it wasn’t obvious before, it is now: it is time to brainstorm new solutions and for our governments to enthusiastically attempt them until effective programs are found.

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Citations

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