Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 10 - Evidence - Meeting of November 7, 2006
OTTAWA, Tuesday, November 7, 2006
The Standing Senate Committee on Agriculture and Forestry met this day at 7:06 p.m. to examine and report on rural poverty in Canada.
Senator Joyce Fairbairn (Chairman) in the chair.
The Chairman: Good evening, honourable senators, witness and all of those who are watching our Standing Senate Committee on Agriculture and Forestry on television.
Last May, this committee was authorized to examine and report on rural poverty in Canada. For too long, the plight of the rural poor has been ignored by policy-makers and by politicians.
Until the end of the year, the committee will hear from a variety of different witnesses who will give an overview of poverty in Canada's rural areas. This work will then serve as the basis for the committee's planned travel to rural communities all across this country next year.
With us this evening is Finn Poschmann, Director of Research, C.D. Howe Institute. We all know about that. Mr. Poschmann has authored many publications relating to public finance, taxation and federal-provincial relations.
Mr. Poschmann, the floor is yours.
Finn Poschmann, Director of Research, C.D. Howe Institute: Thank you, Madam Chairman. I am absolutely delighted to be here. I want to thank you and the committee members for inviting me here tonight.
I am intrigued by your comment about the C.D. Howe Institute and the implications for that. It is the perfect moment for me to say that, while I am Director of Research at the C.D. Howe Institute, all of us who work for the institute speak for themselves and not necessarily for our board of directors or members. With that official disclaimer aside, namely, that we do not take institutional positions, we take very personal ones, I shall march on.
I did not prepare a brief because I think it is important to have a free-flowing discussion and exchange of views. You certainly would not want to sit here on this fine night and listen to me read through such a thing. What I will do is proceed through some of the questions that the committee put to me in preparation for this meeting, share my thoughts on that, and proceed apace with questions afterward.
The first topic that the committee posed for this session is, essentially, what measures of poverty I might recommend. In other words, how should we measure poverty in assessing whatever policy choices we choose to pursue?
The place that I would start is that it is absolutely critical to decide, first and foremost, what it is you want to measure and why. In other words, what is the purpose of the measurement that you are seeking to establish? Is it to measure poverty or is it to measure income inequality? Those are quite different things.
Most of the measures that we see in Canada are one form or another of a measure of income inequality. If we think about the low-income cut-offs or the low-income measures that Statistics Canada provides us, they are very useful measures. They are informative about the distribution of incomes in Canada, but they are measures of inequality all the same. They do not tell us what poverty means or count up for us how many people live in poverty. They are relative measures that say something about the distribution of incomes in Canadian households, but do not answer all the questions that someone might have about what poverty is.
That is my first message, namely, that in recommending a poverty measure, be clear what you want to do with it and the point that you want to establish in referring to a poverty measure and be at least a bit suspicious of those relative measures. Let me be clear. There is a reason I want you to be suspicious of relative measures. It is because if you choose to look at a low-income segment of the population and from one year to the next their income goes up a bit, and you have a higher-income segment of the population and from one year to the next their income goes up more, then by a measure of relative inequality, such as a low-income measure, you may discover that inequality has risen. If you are using a low-income measure or a low-income cut-off to measure poverty, then it may be telling you that the number has gone up and that it has got worse, even if people at the lower end of the scale have done better this year than last. It is a matter of arithmetic. What is driving such an outcome is that people at the upper end of the scale may have done even better than the rest of us. That may not be a helpful message to policy-makers in trying to establish what, if anything, to do about poverty in Canada or rural poverty in Canada.
That is why I say I say be careful of relative measures. It is not that we should not look at them; they are part of the picture. However, be careful about relying on them alone. Instead, consumption measures are a good idea. What do you buy? How much do you buy of what as a family? The reason for doing so is there is a clear linkage between consumption, what you buy, what you can afford, what you deliver to your household, and what we think of as well- being than there is with income.
A consumption measure is generally more stable from year to year. That is because one year people save because they put something aside for the next year and then in the following year, when things look less well or when incomes are down, they will draw down on savings and rely on that to tide the family or the household over until the following year. That is simply the reality. That is something that people do. It is a way of managing household flows. Certainly, Canada's farm families are well known for being a bit forward looking in managing their household finances, in the way that any household should be.
A consumption measure surveys households to assess, again, how much they buy and of what in a given year. That will be much smoother from year to year than an income-based measure of poverty. That is an important quality, because the longer-term measure tells you something about lifetime experiences of the family, which is probably a better guide to policy than something that bounces up and down with current and transitory trends, trends in incomes or in farm prices if you are thinking about rural Canada. The message there is to use a few measures but do not rely only on relative poverty measures.
To put a clear example on why you should think about the value of consumption as a measure of poverty, think about housing. If you own your own house, you do not have a rent expense. If you have no mortgage, you do not have a mortgage expense. If you own your own house, the value that you derive from living in your house during the course of the year is something that is very important to your well-being. That part of the measure of your well-being will not be reflected in an income measure of poverty, that is, counting up how much money you made this year. It will not adjust for whether or not you live in your own home and if that household is paid for.
A perfect example here is the province of Newfoundland and Labrador. Many more people in Newfoundland and Labrador than in other provinces within Canada, for a number of reasons, live in owned homes, and they are more likely than residents of other provinces to live in owned homes without mortgages. This state of nature about communities in Newfoundland and Labrador is something you would want to bear in mind I should think in assessing measures of poverty across provinces.
This leads immediately to a question posed by the committee, which was in assessing low-income or poverty measures, what can we say about the accessibility of government services in rural and then in small-town Canada? Should we try to account for the availability of public services in measuring household welfare?
The answer to that is, yes, you would want to take it into account in your analysis of the broader policy question of what to do about it, but I should not like to get it too tangled up in a question of measuring poverty or income. There are a number of reasons for that. One is straightforward conceptual measurement problems, data problems, trying to say something about the value of government services that are delivered in different communities. While I hate to say it, if you cannot measure something very well, it is hard to extract a strong message about what to do on the basis of that uncertain measurement.
The other thing of course is that there is a certain amount of demand responsiveness of government services. In other words, the level and extent and range of government services that are delivered in a given region will necessarily respond to the demand for those services in that region. To put a clear example on this, in an urban centre such as Toronto or Montreal, there is a large demand for language training for recent immigrants, for settlement assistance, for new members of the community. Those are things that an urban centre like Montreal and Toronto will have to deal with and there is a certain amount of service provision that will come from the provincial level or the federal level in dealing with those needs. A rural community is far less likely to have any need for such government spending simply because immigrants will tend not to settle in a remote or rural community. The fact that such services are not available in that community probably ought not to colour too much the way we think about the role of government services in assessing income. I think that is an important point to make.
The message there is, sure, government services and their availability are important, but not easy to measure and may not capture the thing you are trying to capture in counting up or in assessing the availability of government services.
The next topic from the committee was the agricultural dimension of rural and small-town poverty. Where you are within Canada and what sector you are in matters a lot, to really grapple with that one. If you are in oilseeds in Alberta, your outlook on incomes and the policy response to transitory price shocks, to low versus high prices for what you sell, will be quite different from that of a dairy farmer in Quebec; it will be quite different from a corn farmer in Ontario who is probably going through a pretty rough patch this year and is probably thinking that last year's soil ought not to have been prepared for corn this year but for something else instead. I have not heard all of the witnesses that have come before this committee, but there is a bit of a corn price issue this year. The issues for those households will be quite different from those facing a livestock farmer in Alberta who, in the aftershocks resulting from BSE, had some rough patches to deal with. Again, these things are mostly behind that farmer, and the policy responses for low- income households in rural Ontario would be very different from how we would think about a livestock farmer in some difficulty in Alberta or Saskatchewan or elsewhere.
On the other hand, if you are thinking of forestry-based towns, it is not a happy market in the pulp and paper sector right now and has not been for a while. There, whether you are in Quebec, Ontario or B.C., you are facing a similar cost/price squeeze in the forestry sector. Where you stand on this depends on where you sit. I would not imagine that there is a generic or one-size-fits-all solution for the income troubles or the income shocks that might face households in terms of sectors and places.
What effects are low incomes having on farm communities? There is a short answer to this, which is, "I am not sure yet.'' I cannot tell why or how the situations that rural communities and rural families are facing right now are different from anything they might have faced in past years. We have been through price cycles on a number of commodities. The boon and bane of the farmer's existence is that, from year to year and season to season, prices are high and prices are low, and for different reasons these might both turn out to be bad things for a farm household. The point I want to make is that if there are some price-related issues or difficulties for farm incomes in Canada right now, I do not know how different this is from any place we have ever been before in the economic history of Canada's farm or rural sector.
The next topic that this committee invited comment on was the short- and long-term persistence of rural poverty and the causes of short- and long-term persistent poverty. On this, we turn to at least some statistical work done by Statistics Canada and elsewhere. The evidence there suggests that there is not that much difference between rural communities and larger urban centres as to the short- and long-term shocks. What am I getting at?
Whether you are in an urban or a rural community, what characteristics travel along with the likelihood that you are poor or living in poverty? You are single, you have a low level of education, and you have no job. That is an obvious point to make but one you should never fail to remember. Another characteristic is the low number of jobs in the household relative to the number of people in the household. These are the things that travel along with being poor or living in poverty. They are the same in rural communities as they are in urban communities, at least generally speaking. This, I think, is the very important message to get across.
Education is vitally important for younger members of the community entering the workforce. That is true everywhere. What economists refer to as entry and exit from low income is strongly driven by family formation and family breakup. If you are a single person with no education, with no spouse, especially if you also have children, you will likely have low income. The steps we want to take as policy-makers are to help people not arrive in that situation in the first place. There is not very much difference between urban and rural households.
In conclusion, the last question the committee offered was the following: What policies would I recommend for dealing with some of these issues? That is absolutely a terrific question, but not an easy one at all. The first answer is probably what is not the answer, that is, money is probably not the answer — in other words, short-term transfers or short-term government assistance to households. It is very important to those families. If you are short of cash income to feed the household, a lot of government transfers will help, but if you are worried about long-term poverty and persistence of poverty, it seems probably an unfruitful route, given what we know about the causes of poverty.
Think about what it is that makes cities richer. Why are cities richer than rural communities? Much of it has to do with the relationships between people and businesses in cities and not in rural areas. The fact that you have good service support in the city and you have good access to financial and architectural and engineering expertise, all of these things make you more productive in the workplace or in your ventures or entrepreneurship. These things are available to you in cities in a way that they are not in rural communities. There is a tremendous interplay in denser communities simply because of the density of those communities and the ability of people to work with each other. They build each other up within urban communities. It is not that rural communities do not do that, just that there are fewer of them. The skills are less dense, and the tools are less readily available for building growth.
It is very hard to fight market signals. If you are in a little mill town in Central or Northern Ontario and your community of a few hundred has been relying on a sawmill with a few saws and not much more, or a small pulp and paper operation, you are in deep trouble. There are no two bones about it. In fact, there are probably not very many of those as we speak. The inability to make an economic go of it for very small operations is absolutely real and not something that is readily within the grasp of government to fix. I would caution governments about looking for fixes that rely on fighting market forces, because that will prove to be very difficult to do. In fact, there was a terrific presentation by Professor Ilan Vertinsky last week in British Columbia, because the British Columbia government is wrestling with what to do with the single industry town problem in B.C. because there are a lot of forestry-based towns in B.C. and they are under intense pressure, as we are here. The harsh message that some of these towns are receiving is that we do not think we can readily address that.
I am sorry if I went on rather long with this, but I was enthusiastic about some of these topics. I will close there.
The Chairman: We have enthusiastic senators who want to ask questions, beginning with Senator Mercer.
Senator Mercer: Thank you for being here tonight. We do appreciate you taking your time to do so. I read in your biography that recently you published on the tax treatment of retirement savings. How do you react to the new government's income trust changes? How do you see that affecting rural Canadians specifically? Many rural Canadians are older and may be counting on this. Do you have any opinion on that?
Mr. Poschmann: That is a very interesting question. I have strong opinions on it. I have to confess that I would not have expected to address that question in the context of dealing with rural poverty in Canada, except for events of the past few weeks. In that context, it certainly is reasonable that it should come up.
The government's decision on this front has certainly caused upset in a number of rural Canadian households, as elsewhere, and upset to a number of corporate Canada's boardrooms. It is understandable it should do so because it was certainly a bit of a policy shock to the community.
I feel especially — I am not sure what the right word is. I am concerned about the welfare of households who relied on investment advisors to put a large share of their assets into a particular product whose financial viability depended on narrowly constrained aspects of the tax code.
This does not help them very much. I will be careful to stipulate that I am not an investment advisor. Nonetheless, such households would be very well advised not to allocate a huge portion of their portfolios to a particular type of asset and certainly not to devote a large portion of their assets to an asset whose accounting is very difficult to understand, is rather unclear as to disclosure standards, whose governance operates outside of business or corporate law writ large in Canada and whose financial prospects depend entirely on a certain set of favourable treatments under Canada's Income Tax Act.
Senator Mercer: I would suggest that perhaps the unplanned consequence was the creation of more problems in rural Canada; it was not done intentionally by any means. It is one of those things that occur when you create a policy that may or may not be an effective one. There are always people who are affected by it.
I was intrigued by your comments on Newfoundlanders and the fact they are more likely to live in homes that they own, many of which are mortgage free. Debt management is always an issue when we talk about poverty, whether urban or rural.
Is there a difference in your mind in rural versus urban debt and their ability to manage that debt? Does it change from the city to the country?
Mr. Poschmann: The pressures that may bear on households are similar as between those communities. In other words, all of us face an imperative to manage finances and to manage debt from day to day, from year to year and over the course of our lives, and also to establish a decent household savings level for financing retirement.
Within that broad scope, there are not huge differences. I do not think you would find higher debt relative to income for a typical household in rural Canada as opposed to urban Canada. However, if you were to subdivide out farm households as a subset of rural households, you might find higher debt level in those households, but that would tend to go along with higher assets. I am not certain that for farm households the net financial balance would be in a weaker position than for urban.
Senator Mercer: It would be very helpful to us for analysis purposes if you had any empirical data on that. I am not sure what the answer is, but it seems that people in rural Canada, because incomes are lower, must manage their lives much better than those of us who do not live in rural areas. I live part-time in rural Canada and part-time in urban Canada, so I guess I am an anomaly.
My final question is probably a more challenging question. If there were three policy changes that you could recommend to the federal government and we could implement tomorrow that address the issue of rural poverty, what would they be? You may only have one or two suggestions.
Mr. Poschmann: I think I would refer back to my earlier comments. At least one of my bits of policy advice would be not to place a huge amount of stock in the ability of policy to deal with some of these issues. I am answering in part by way of the negative. Markets change the ability of different communities to survive change.
I can tell you about communities that I know very well. When I referred to the small town sawmill example, I had a particular image of a Canadian community in my mind. The mill there is simply unviable. There is not an economic or policy measure I could possibly conceive that would make a mill of this small scale and location and with the capital and skills available to its owners or to its management make a go of it. Some of these things are not fixable as markets change, and I think we should recognize it.
This is not all bad news. I would never want to just wear a black hat and say that there is nothing we can ever do to help Canadians. There are things we can do — one of which would absolutely be a focus on education. Admittedly, education is primarily a provincial responsibility, but the federal government has a role here in ensuring that decent standards of education are available or financable across provinces and regions. We must recognize that this actually ends up increasing mobility.
If you educate the youth in a community, which is absolutely the right thing to do, you have just boosted the likelihood that they will move away from that community as they grow up, if it is a poor rural community.
Therefore, this comes back to the beginning of my comments. Think about what your goal is and what you are trying to get at. Your policies may do well by youth or by younger workers, and that would be the right thing to do from their point of view, but it may not help you if you said your goal was, for example, to save or preserve this community as a community, as opposed to improve the welfare of the people who live within it.
The third point is to ensure, and this one comes back to a negative, not to get in the way of people moving or pursuing opportunity. We have an employment insurance system that went through brutal reforms in 1971-72. They were partially undone in the 1996 reforms. Since then, there has been a fair amount of rollback on that initiative. Those reforms permitted, sustained and, I would argue, ultimately encouraged reliance on seasonal work in rural communities. There are a lot of Canadians to this day who are living in rural communities with not particularly auspicious conditions, and for whom not having made those reforms in the early 1970s would have been better. We have created a seasonal culture that I think in the long haul has not been good for the welfare of Canadians.
Senator Tkachuk: I am sorry that I missed the first part of your presentation, as I was late. I apologize for that.
I did hear the last part of your presentation, however. You delved into a couple of topics that have always interested me about this issue. We have been finding that the numbers between urban and rural poverty are not that much different. That surprised me. I thought there would be more of a difference. However, the numbers we have been given to date from Statistics Canada really have not been that different.
There was an American writer who was talking about the ghetto. His positive message was that female children who do not get pregnant, do not drink or abuse drugs and who finish Grade 12 statistically have a very good chance of getting out of there. Those are the very things we hear about here. We hear about the lack of education and single parents, which means the divorce rate is a problem, and also that teen pregnancy is a problem. Although people do not talk in rural areas about it, my guess is that drug and alcohol abuse is as prevalent in rural areas as it is in any impoverished city neighbourhood. These are social issues. They are things we have to attack in a different way. They involve questions of culture.
I know you are an economist; as such, you want to improve the economy. You want to get people off the dole; you want to get people being productive. Is this not the way to go, rather than giving tax breaks and all the other stuff that you hear about? Do we not have to attack those cultural and social issues?
Mr. Poschmann: I know the line, senator, that you are referring to. For the U.S. economy, it seems to be quite accurate: Graduating from high school, getting married, and not having children before you do at least one of those things, and probably both — these things make a huge difference to your later welfare and that of your children. That is the crucial point. The issue there is the intergenerational transmission of poverty, which is a cultural issue. It is not necessarily a rural or a farm issue at all. It is a cultural issue.
The intergenerational transmission of poverty is a problem for urban Canada. It is a problem for rural Canada where it exists, which may or may not be in farm-based populations. I would suspect generally it is not. However, I do not have data to point to on that front.
This is why I mentioned education several times. The role of education is absolutely central to the outlook for children. You are more likely to graduate from high school if your parents have graduated high school; you are more likely to graduate university if your parents have graduated university. It is more likely that their children will have higher incomes than otherwise. They will have fewer and shorter spells of unemployment than otherwise. These are all the realities.
Ensuring the availability of education is something that governments can be fairly good at addressing. Indeed, it is because of the cultural transmission issue that I keep coming back to education.
Senator Tkachuk: Kids can leave school at the age of 16. However, they cannot join the army until they are 18; they cannot go into a bar until they are at least 18. They can drive a car at 16, however. We let them quit school and drive a car when they are 16 years old. This increases their chance of them being a burden on the rest of the taxpayers.
What is your opinion of upping the age from 16, saying that kids have to finish Grade 12? "We will provide streams of opportunity and that is what you have to do,'' we could say to them. We cannot let them be irresponsible and say, "I am 16, I am out of here. See you mom. See you dad.''
Mr. Poschmann: I am suspicious that question was a plant because my institute has published a paper on raising the school-leaving age. There are some cons to the idea. There are cons to keeping people in school who do not want to be there. Keep in mind it costs money. You do not know whether you will get the benefits you are looking for. People who do not want to be in school at an older age can be disruptive. That said, our author came to the conclusion that there probably were economic benefits to be had by raising the school-leaving age. It is as simple as that.
Senator Tkachuk: I want to address something else you touched upon. Senator Gustafson talks about it, as do I. Senator Gustafson talks about wanting to keep his son on the family farm to take it over. I want my kids to stay in my province. We are sending all the wrong messages. We want to give our dependents a culture of mobility. It is good to move away and go to where the opportunities are. That same kind of adventure brought people to North America in the first place. I am sure there were a lot of parents back in Europe saying, "Do not go. Do not go.'' However, when there is nothing to eat, you have to go somewhere. That is where they went.
There is a way to instill that culture, if we are prepared to argue for it and if we are prepared to propose and advertise it. Mobility is good. Moving is good. Experience the country. If you do not have a job here, find one somewhere else. That would be a positive way to start. We would not want to force people. We want to make them easily adaptable to that.
Mr. Poschmann: Families are different in the way they approach these questions. It is necessarily going to be a little bit anecdotal. However, you will have households where the message is, "Get off the farm and get the heck out of town.'' You will have other households where there is a strong family imperative that someone in the family should take over the farm, which may or may not be a good thing.
To give you a relatively positive perspective on that, the farm that the next generation takes over stands a good chance of being larger in terms of acreage and with more equipment on it than the previous generation's farm. There is a tremendous amount of farm consolidation that is important to making farms viable businesses. The size of a viable farm in Canada in this decade is probably a fair bit larger than one in the last. What happens is that you do have this intergenerational transfer of farm assets. However, they will probably end up being larger than they were before.
Senator Callbeck: Thank you for your presentation. I want to continue on with education because the importance of it has been raised several times. You mentioned that education is under provincial jurisdiction but that the federal government has a role to play. In my province, roughly 29 per cent of the population have not finished high school. However, it is improving. In 1996, 10 years ago, the figure was 36 per cent. We still need to do more to encourage people to increase their level of education. You have pointed out the importance of that.
What should be done? What should the federal government be doing here to help encourage people to improve their level of education?
Mr. Poschmann: That is a terrific question, senator, and not an easy one to answer. Our Canadian understanding is that if the federal government's role in education is anything, it is primarily in the post-secondary education field. That does not say very much about the crucial steps of getting people through primary and secondary education, having them brought up to a common standard, a high standard so that they perform well at the post-secondary level, if the post-secondary or community college track is appropriate for them.
I am not entirely sure that I would like to propose a reshuffling of responsibilities. The federal focus on post- secondary education is probably the right one, in part because the provinces, when they spend a lot of money on post- secondary education, especially eastern provinces, stand a hefty risk of losing their investment in those students as and when they leave the province. In other words, Nova Scotia or New Brunswick or Prince Edward Island may say, "Education is really important to us,'' and put all kinds of money into getting people into post-secondary and graduating them, and lose the people anyway. It is not a great message to send to the provincial government that they are blowing this investment. This is, I think, a good reason why the federal government is at the post-secondary level. It can operate across borders and offset the fact that provinces may lose their investment in people as the people themselves move.
Financial tools are available to the federal government to encourage provinces to meet standards of other levels of education. They are not used. I am suggesting the possibility that there could be such tools that would tie financial support to the provinces demonstrating performance standards at the high school level. I simply raise it as a possibility. I am a little uncomfortable about it because of the implications for the allocation responsibilities as between the federal and provincial levels and also the ability of the federal government to competently execute a policy at that detail level. It is not the federal forte. We do not have at the federal level the institutions, the people and the mechanisms for seeing that we deliver on that front. I am hesitant about that, but I lay it out as an option. Seeking to establish a performance level for the provinces is one way to go about it.
Senator Gustafson: We have concentrated on education here. Right now, it is very difficult to get a good bricklayer. It is very difficult to get a good plumber, if you can get one, or a small mechanic. Our immigration policy 20 years ago brought many of those people in. If I wanted some bricks laid, I would go to Winnipeg and get someone that has just come in as an immigrant and was a wonderful bricklayer. Maybe our emphasis is wrong. What is your comment on that? Not everyone can be a doctor or a lawyer. Many of our immigrants are that calibre of people. They have the money needed to come here. We are not solving the problem at the grassroots.
Mr. Poschmann: Are you getting at the immigration aspect, senator?
Senator Gustafson: I am getting at both the immigration aspect and the educational aspect.
Mr. Poschmann: No, a Fine Arts degree is not for everyone, and there would be quite an economic disaster in Canada if we acted as if it were. We need to be realistic about people's ranges of interests and our economic interest in people pursuing the line of work that suits them. Spending money on university educations for people who neither want nor need it, nor will not find jobs in the field, would not make a lot of sense unless we felt it was just plain good for them to be in those classes, and that is one line of argument that wears out after a certain point or a certain level of education.
This is a common concern that I hear from business people as well as educators across Canada. We should not imagine that there is only one route to success in the Canadian economy. The people who have chosen the bricklaying, the machining or other routes in Canada are doing quite well, except they are all in northern Alberta and Saskatchewan. That is why you cannot find them.
Senator Gustafson: They are doing better than people in other areas. However, not too many want to do it.
Mr. Poschmann: We have the market speaking and saying that we have avenues for growth in some lines of business that will make this particular sort of education, in this case skills or trades education, more valuable than at other times. Are governments good at steering people one way or another? Probably not. We do not have a lot of good experience to point to of governments managing what lines of education should be pursued by students. However, one thing we can do is let funding travel with the students rather than the institutions, so that when a student leaves high school and makes a choice as between university, community college and different lines of work, the funding travels with the student, and we let their estimate of the market outlook steer funding rather than drive it top down through the institution. There is quite a direct financial implication.
Senator Mercer: It is interesting that this discussion has come around to education, a subject that I find important. Canada is the only industrialized country in the world that does not have national education standards. Most other countries do.
One issue that has been addressed by student groups, political parties and other groups across the country is the need for dedicated education transfers to the provinces from the federal government, similar to the transfers that are dedicated to health care. These transfers would be dedicated to post-secondary education. Do you have an opinion on that?
Mr. Poschmann: Yes. The facts as you describe them are correct, as far as I am concerned, in that Canada obviously does not have a particular national standard. I am not sure how good or bad that is, but I do believe that the federal government does have a useful role to play in ensuring that financing is available to students at the post-secondary level. Does that mean there should be a labelled education transfer to the provinces? Probably not, especially given the line of thinking I have just mentioned. For instance, if you think that governments are not good at figuring out what people ought to do and that people are better at figuring out what they ought to do with their lives, then you would let more of the money travel with the student as opposed to the institution. That would make it even less likely that the province needs to be funded rather than the student or the institution. Ensuring that the money arrives at the right place and finances the right thing is something that happens more easily when the funding travels with the student as opposed to the institutions or the governments. I understand the point, and I accept it.
The other part of that is that money does not come with labels. If the federal government gives cash to the provinces, you do not necessarily know that it is steered to education as opposed to anything else that provinces might feel is important to them to pursue in support of their own interpretation of the needs of their population.
Senator Peterson: I read somewhere that somewhere between 37 per cent and 42 per cent of the Canadian population are literacy challenged. What do we do about that? Numerically, that percentage of the Canadian population cannot fill out forms or do a number of things.
Mr. Poschmann: I would hope that number does not apply to people coming up now through the Canadian education system, because if it is true that would be quite an indictment of the level of performance of the Canadian system. I am not familiar with the numbers to which you refer. I would hope it includes an older population, the immigrant population, and to that extent is not as strong a message about our educational performance. However, to the extent that I am worried about literacy and numeracy — and indeed I am — there are some provinces in Canada that do not perform at all well on this score, then I would encourage provinces to think a bit harder about doing this very important thing that they are intended to do.
Literacy and numeracy are primary school stuff and to a lesser extent secondary. This is something that the provinces, the boards and the municipalities that answer to them are intended to deliver on. If they are not doing it, we should hold them to account.
There are quite different performance levels among provinces. It may not be as well understood as it ought to be that, in Canada, Quebec and Ontario do very well indeed. Ontario is doing a little better than it used to. What is most striking about these results is that in Alberta's case, for example, there is a range of institutions that are available to students.
As I suggested, in the post-secondary context money tends to follow students. There are many ways that the curriculum is delivered to students in Alberta and there is a tremendous competition among institutions to serve the student clientele. And guess what? Alberta's performance, if you treated Alberta as a country on literacy and numeracy among youth, would stand out. They are absolutely near the top of the ranks. This is something that we should note.
Senator Peterson: Assuming I was correct in these numbers, where would we start? What would you suggest we do in dealing with this problem?
Mr. Poschmann: I would look hard at the provinces and ask them why they are not performing better. This is not all provinces, however. Some are performing less well than others. Others are performing very well indeed. I would say we should ask the provinces why they are not performing as well as they should be performing. This may lead to tougher questions about what it is that the federal government finances and how and under what terms financing is delivered to provinces.
As I suggested earlier, I am very hesitant about this. I am hesitant in getting the federal government keenly or deeply involved in delivering in provincial areas of responsibility. That is what we are talking about. I am uncomfortable with that. However, if you, Madam Chairman, and senators were to ask, "Can the federal government do this? Is it something that is within the realm of possibility that we could impose standards on provincial performance and attach monetary implications to meeting those standards?'' it could be done but I am not sure that we would be good at it. It is certainly not impossible.
The Chairman: When you started to answer Senator Peterson, you stated that one of our literacy problems in Canada was that it happened in primary schooling. If I may, one of the largest difficulties is that it happens within the families before you get to primary school and it very much is an adult issue as well. In Canada, 42 per cent of our adults are having difficulty daily in levels of reading, writing and numeracy that we all take for granted. In the province of Alberta, my province, with all its wealth, the number is 33 per cent, which is a very large number. It is in that sense I think, perhaps, that Senator Peterson is also asking.
We are trying to deal with this in Canada. It is one of those issues that require every level to be working together. Sometimes that is uncomfortable or difficult. We are having that debate right now. It starts with the difficulty in the home and not just at the school level. That is why we must now get to those people and have programs that enable them to help their children at the earliest stages to get a good start. It is a very complicated thing, and one that is not necessarily easily put into any level of government; it is every level of government.
I thank you very much for coming here tonight. We could keep going on this for some considerable period of time, but it has been very good to have you here, Mr. Poschmann.
Our next witness, joining us from Vancouver via video conference, is Mr. Michael Goldberg, former research director for the Social Planning and Research Council of British Columbia.
Mr. Goldberg is considered to be an expert in the areas of child poverty, child benefit and social security in Canada. He is the voluntary chair of First Call, the B.C. Child and Youth Coalition, and he is a member of the steering committee for Campaign 2000.
We welcome you, Mr. Goldberg. We have one hour tonight to discuss this important issue with you. I invite my colleagues to keep their questions as brief as possible, to allow our witness to fully respond and for everyone to be able to contribute to the discussion this evening.
Michael Goldberg, Chair, First Call: BC Child and Youth Coalition, as an individual: As the first speaker mentioned, I am pleased to be invited to appear as a witness before the committee. I am sorry that I could not be there in person. I know it would be better if that were possible, but, unfortunately, that could not be arranged at this time.
There were elements from the first speaker's points that I am not sure are absolutely correct. I will define the concepts of measuring poverty and then how they relate to the economy. I will show you some data and information that indicates a difference from what the previous speaker had mentioned.
In Canada, as elsewhere, there are primarily three ways of measuring poverty in our country. This is to address the first question posed to us. There is an item referred to as the low-income measure. This is a relative measure of income as compared to other incomes. Your speaker was right in terms or that it is a relative measure. It is the measurement used most frequently when we look at international comparisons of how countries are doing one to the other.
This measure of poverty uses a standard family — in this case, a family of four — and is based on that family having an income that is half the median income, which is established at 50 per cent. Presently in Europe, that is being somewhat challenged. Europe is now using closer to 60 per cent median incomes as their measure of poverty.
The second measure, and the one used most frequently in Canada and is unique to Canada, is the low-income cut- off, LICO. It is a mixture of an income and a consumption measure and is based on the ratio of what people spend on three essential goods — food, clothing and shelter. They take the average family expenditures and add 20 percentage points to the current base level, which is about 40 per cent more in spending for low-income families on those three goods. It does not include transportation and other things. That is your average family.
Again, this is the measurement most often used by policy groups, primarily because we get very good time series, and it is a measure that is sensitive to what happens in the economy.
The third measure, which the previous speaker mentioned, is a newer — one that has been made available through HRSDC — called the market-basket measure, the MBM. It is purely a consumption measure. At SPARC, we developed a market-basket measure for British Columbia and updated that to indicate a way in which you define the levels of consumption that families need to get by in day-to-day life.
The market-basket measure was first introduced in 2000 through HRSDC and has recently been updated in 2001 and 2002. It is our understanding that the data for 2003 and 2004 should be available either at the end of this year or at the beginning of next year.
The MBM is also unique in terms of trying to determine how many families are poor. They take the base measure, this basket measure, and determine how many families have disposable incomes remaining in order to meet that basket, taking into account that some families will have extraordinarily high health care costs, child care costs or some other costs that are deducted at the point of income tax. Then there is a way of being able to determine, in terms of the measure, the number of families who do not have disposable income below that amount.
In the briefing notes I sent, there is a set of tables that looks at what these measures actually produce for a family of four in 2002. We are comparing the same year using three different measures for the same size family.
As that table indicates, for a family of four the LIM — the low-income measure produced by Statistics Canada indicating before- and after-tax measures — has about a $4,000 difference. The thing unique about the LIM is that there is no variation across rural communities or in different parts of the country. It is a common measure right across. It is very simple to apply because you take it right off of your tax data. That is why it is probably used most frequently for international measures.
The low-income cut-offs, on the other hand, measure the thresholds. When we refer to measure, we are talking about the income threshold. There are 35 of them, based on five community sizes ranging from rural to census metropolitan areas, or CMA, and three in between, and families ranging from one to seven persons in size. You can see that there are very large differences between what the rural community before and after income tax threshold is compared to what the large metropolitan community is.
In the after-tax measure, it indicates about $20,000 in 2002 compared to $30,000 in the large city. That is a very large difference. There are similar differences, about $4,000 to $5,000 more, in the before-tax measure.
The third measure is the market basket measure, and it is very sensitive to location, particularly by province. I have indicated with the MBM what the rural and CMA measures are for each of the provinces, ranked lowest to highest for the rural area.
You can see that, for Saskatchewan, which has the lowest income threshold, the MBM — the disposable income that would be needed to purchase this basket of goods and services — was just under $24,000 in 2002. The highest was in rural British Columbia, and it was $27,500. Interestingly, they all cluster around a common average of $25,300. When you look at the large cities, you get a similar kind of range and a similar kind of average. It is a little higher in the large cities but not significantly. This measure takes into account the unique differences between, say, Prince Edward Island or Quebec and British Columbia in terms of the cost of goods and services respective to those provinces.
That is the nature of the three measures. What I find interesting here is that somewhere between the before and after tax in consumption measures we have a clustering that seems very common of around $25,000 to $26,000 for a family of four. When we get into this discussion as to what the income thresholds should be, I think it is time to move beyond that to try to find a common measure we could use. We could make that the official line on which we determine how many people are poor and accept something that is common to all three of these in that area of around $25,000 to $28,000 for a family of four in 2002 dollars. It would be a little higher now in 2006.
The second question is around the measure — and this is not in the notes, but I wanted to add this. How do you take into account the access to services? It is true that in rural communities services are less available. I would not use the example that Mr. Poschmann used in terms of language services; I would use something like health care.
One of the things we know in terms of rural communities is that the cost of getting to care is high. Many families in rural communities are taken out by medevac to larger hospital areas and a family member goes with them. That cost is often borne in whole or in part by the family whereas in the cities the biggest cost is getting two miles down the road to that same emergency hospital or facility that rural families are being brought into. That creates an inequity. The MBM addresses that by saying that those costs are then deducted from the total income of the families for whom we determine the levels of poverty because extraordinary health costs can be an income-tax deduction.
The other material I gave you takes a look at some of the after-tax income. Again, I think we do want to look at an after-tax measure. If you are looking at poverty in terms of employment income, you want to use before-tax income; if you are looking at it in terms of consumption, you want to use something like the MBMs. What these particular files give you is a set of information that you may obtain from Statistics Canada. They are a summation that takes a quick look at where families or different occupations are at.
As you can see, for farming incomes in total, the average after-tax income shows that farm families have the lowest after-tax income of just about $22,000. This will not be a surprise to those of you who come from farming families. That has nothing to do with family size. These are individual earners. The highest after-tax income — no surprise here — would be among the professions, which average $65,000. There is a lot of data that I tried to take from a 180-page report and put into one page. The bottom part of that table shows where there are some major sources for various tax filers based on their occupation or employment area.
I would now like to talk about some of the policies. I am not an expert in terms of the issues around farm incomes per se. I would agree with your previous speaker that poverty in rural communities is similar to poverty in urban communities. It is all about people not having enough resources to be able to purchase the goods and services they need.
In Canada, because we do that off the combination consumption income measure, the LICO, I do not think there are huge differences between rural and urban areas. If anything, probably because of the cost of living under that, the urban areas may have higher incidents of poverty than rural communities. However, that may be a little bit misleading because of the particular way in which the measure has been built over time.
I want to take a look at a couple of things that I think are crucial in terms of the policy areas. One of the obvious things is that you address poverty by ensuring that people have adequate incomes to be above the poverty line, whatever measure you are using. Poverty is simply not having enough income to purchase those goods and services you need. We need policies that will address both market incomes as well as tax transfers.
A recent report has been brought out that deals with changes in the federal labour code. This will be important in farm communities, in particular for farm workers, as well as other workers in small and rural communities. This will ensure that everyone is paid fairly for the work that they do. Most minimum wage and labour standards fall under provincial jurisdiction. Clearly, the federal government, through the Canada Labour Code, could take a leadership role by going forward with the recently released recommendations through the commission.
Another area in which there was some concern — and it is unclear about jurisdictional and funding issues and it ties in with the educational question that came up earlier and links to the question you asked, Madam Chairman — is with regard to early childhood care and development. There was an attempt to establish some national standards through funding agreements between the provinces and the federal government. That was changed by the new government that came in.
One of the things that I argue on education is that it is not just an issue of the completion of high school but of lifelong learning. In any knowledge economy, learning is constantly changing. We know that we get the biggest bang for the buck if we can beef up and strengthen the early childhood development and education component, in addition to continuing education as adults, let alone all the education in primary and secondary that falls under provincial jurisdiction.
In terms of transfers, there is a number that the federal government already takes care of. Clearly, there is the Canada Child Tax Benefit. There are farm income assurance programs. There are public services that can be provided that will reduce requirements for income or assistance, as I mentioned, like on medical transportation, et cetera. These are all roles the federal government can play, either directly in terms of transfers to individuals or indirectly through agreements that can be raised with the provincial governments in terms of cost-shared jurisdiction requirements.
These are all things that could help address poverty both in rural Canada as well as in urban Canada.
The Chairman: That is a good way to start off, Mr. Goldberg.
Senator Mercer: I want to start by thanking the witness for being here tonight.
You are the second witness to tell us that there is not much difference between urban and rural poverty. As someone who grew up in a city, I am a little surprised by that. Are there two types of poverty in rural Canada, such as poverty in the general community and poverty in the Aboriginal community? Does it differ dramatically?
Mr. Goldberg: Yes. One of the dilemmas that we have is that, for a variety of reasons, we do not get good numbers about poverty among on-reserve Aboriginal people. We do get reasonable numbers that affect urban Aboriginals, whether in small towns or in larger cities. However, we do not get any kind of good numbers in terms of on-reserve Aboriginals. If those numbers were counted, the incidence of poverty would be higher.
One of the dilemmas with the LICO, if you use that as a measure, is that as we go back to the first table you will see the actual income threshold is about $10,000 lower than it is for the big metropolitan areas. Consequently, you need more income to get above the threshold in urban areas. That would account, in part, why we see an increased number when we look at census data in urban areas compared with rural communities, as well as the numbers of people who are poor. I would argue that the MBM is a better measure in this case because it takes into account probably one of the biggest expenses in rural Canada, transportation, which is not adequately covered under the LICO.
Senator Mercer: Transportation costs are higher in rural Canada because of the distances. Is housing not much cheaper in rural Canada?
Mr. Goldberg: Yes. That is why when you look at the MBMs you get numbers for rural and urban Canada that are very similar. If you go to the detailed tables in the report, which I did not produce for you, housing is higher in urban areas, although much higher in Vancouver or Toronto, for example, than in Montreal. However, rental housing is almost the same. The trade-off overall is between transportation and housing in rural communities, where there is virtually no public transit or access to subsidized transit as in urban areas, but more expensive housing. It is a wash in the long term.
Senator Mercer: You mentioned early childhood education and lifelong learning. I suspect I know the answer, which is that rural Canadians are disadvantaged by living in rural Canada because of a greater lack of early childhood education and lifelong learning opportunities. Is that true? Is there data that shows us that that helps perpetuate the poverty in rural Canada as opposed to in urban Canada where the opportunities are greater?
Mr. Goldberg: I do not know whether we have the data to show the linkage. At least I have not seen that data and I am not familiar with it. I would suggest that economies of scale have a little bit to do there, but there is no reason that the trading centres of rural Canada could not in fact support a significant early childhood development, either family based or centre based, as long as it had high-quality care and was affordable. The issue of affordability is crucial.
The other thing that child care especially has enabled other countries to do — we still do it here in Canada but we do not have anywhere near the advantage of the Nordic countries — is that it enables women particularly to enter the labour market. As your previous speaker noted, when you have two adults in a household, one of the quickest ways to get out of poverty is to make sure that both are able to use the labour market, either full-time or part-time, or some combination. Two potential earners in a household is a real key to avoiding poverty.
Senator Callbeck: I want to ask you a question that really pertains to your former position. I understand you have just retired as director of the Social Planning and Research Council of British Columbia. That council has a program called Community Development Education, working with rural communities and northern communities in British Columbia. I wonder if you could talk about that program, describe it to us. In your opinion, how successful is it?
Mr. Goldberg: I was the research director. There is an executive director of the Social Planning and Research Council of British Columbia, Nancy Henderson, who is still there, and there is a coordinator of the Community Development Education program. For a while, I was also responsible for the Community Development Institute. These were opportunities to help build capacity and knowledge within, particularly local communities, both urban and rural and some emphasis on smaller communities in terms of building their capacity to address some of the issues in their community and to become more engaged in the issues in their community.
It has been quite successful over the last number of years. I think it is an interesting program. There are similar programs in other parts of Canada. Probably the one that was best known and was similar to our institute was the program offered out of Concordia in Montreal on community development, which is another community development institute in the East.
Senator Callbeck: Can you talk a little bit about that? How did that program work?
Mr. Goldberg: It has been changing, and in its newest carnation SPARC BC had some additional funding that it had. It had a capacity to hire a coordinator. If communities are interested in having some courses, SPARC BC would actually cover the cost of running those courses in those communities via a bid process. Communities put in proposals saying they would like courses on the following items. My understanding is that, in the last year, and again I do not have all the details because I am not there now, the program received a grant from the Vancouver Foundation to help expand the curriculum that will be offered.
Senator Gustafson: Your graphs here are very helpful. In the case of farm income, does that include off-farm jobs?
Mr. Goldberg: Yes, the average does. If you look at the farming line, it says in that particular case, this is again tax year 2002, that there were 160,000 individual tax filers who averaged about $17,000 in employment income and about $15,000 in net farming income as an average, so their total income was just under $32,000, and then after tax and other deductions it became $21,000, net after debts or disposable income, net after taxes and expenses.
Senator Peterson: Utilizing the measurement tools that you have outlined to us this evening, have you been able to quantify the number of families in poverty and where they are located?
Mr. Goldberg: That information is available. I did not bring it with me. We do get those kinds of numbers from every census. From the census data, this would be 2001 — 2005 is not available yet — we can get the incidence of poverty by province and by size of community. Statistics Canada should be able to develop that for you. I am sure that information is there, although again it would be dated. It would be based on the 2000 income year. The new data would be available in about a year. I am not sure when the new census data will be available for the committee.
The trends in what is happening do not change that dramatically unless there is a huge change in the economy. If we look at changes in poverty generally right across the country, urban and rural, the highest incidents of poverty always occurred during a recession. If you look at the LICO, the number of people who were poor in Canada was at its height in 1993, when we were just coming out of the recession in various provinces across the country, and then have fallen fairly regularly in all provinces.
If I can give you the numbers here in Canada, child poverty — we are just finishing our report on that — was just under 24 per cent in 1996. That was at the peak. It was fairly level throughout that period of the recession. It is now down to about 17.7 per cent during these good economic times. That is not very low when you consider that in 1989, when the House of Commons passed the resolution to eliminate child poverty by 2000, we were at 15 per cent.
Some provinces have not done very well. My own province of British Columbia seems to be doing badly compared to elsewhere. I mentioned that the poverty rate has come down since the mid-1990s. The previous witness said, if you use a relative measure like the LIM or the LICO, that is, incomes going up among the top group, the incidence of poverty will go up as well; but you now know that the incidence of poverty has come down over the last 12 years. However, with respect to the distribution of income, if you look at the decile files — that is the top 10 per cent, the next 9th percentile, the 8th percentile, et cetera — incomes to the top decile have gone up dramatically in this last decade, from 1993 to 2004, whereas incomes for the bottom two deciles have been virtually flat.
Hence, while low-income people have not been getting their share of the economic boom, based on the distribution by decile, the incidence of poverty has still been coming down, because the people in the third and the fourth groups are now above the poverty line, whereas during bad economic times they are often below the poverty line. The notion that if you use a relative measure it will always go up whenever the top groups go up is just not true.
Senator Mitchell: I have a technical question. You mentioned early in your presentation that in Europe one measure of poverty that is used is something that designates 60 per cent of the median income. Did I get that right?
Mr. Goldberg: Yes.
Senator Mitchell: Using that measure you would never get rid of poverty.
Mr. Goldberg: It is interesting that Northern Europe especially has a much lower poverty rate than we have in Canada. You need to look at the UNICEF reports or other UN reports on well-being that use this common measure. The international measure uses 50 per cent of median income. Europe is now making stronger standards. One of the things that Europe has done, especially Northern Europe, is that the number of people who are employed who receive wages below 50 per cent of the median or 60 per cent of the median runs about 5 per cent to 8 per cent. In Canada, 25 per cent of our population earns low incomes. That is where the big difference is. That is from international reports.
Senator Mitchell: What would you say accounts for that difference? That is quite startling.
Mr. Goldberg: Yes, it is. The biggest thing that accounts for it is labour standards. Northern European countries have placed a real value on making sure that all workers get what they call living wages, as compared to Canada, where we do not have a living wage policy. We have minimum wage policy, but it is pretty weak in terms of B.C., which has the highest. It was established based on a report I did in 1999; however, that level has not changed in six years, as though the cost of living in B.C. has not changed in six years, which, of course, is clearly not the case. The cost of living has increased everywhere.
Therefore, low-income workers do not see their wages raised in terms of the floors that are established by standards, whereas in European countries those standards are pegged to inflation. Consequently, people stay closer together, in terms of living.
The other thing of note is that Northern European countries, particularly if you look at farm and food security issues like in Norway, much more heavily subsidize their local farmers to ensure that farms stay alive and that farmers can afford to continue to prosper in their countries. Consumers, in turn, pay a higher price for their goods.
Senator Mitchell: That is very interesting. It is also interesting that some Scandinavian countries are rated as having the most productive economies and workforces. It is counterintuitive to the Conservative model, which would be lower taxes, lower taxes, lower taxes and you obtain greater productivity. However, that is not the case.
Mr. Goldberg: If we get away from the theory and look at what has actually happened, not focusing on Conservative or Liberal or anyone else, there is a body of evidence, in terms of thinking about the well-being of all — in the Scandinavian countries, they have reduced the distances between top and bottom; however, there are still very wealthy people in Scandinavia — that if you bring people close together, everyone benefits. Therefore, the very wealthy do better in terms of outcomes in health care, longevity, literacy and numeracy — Scandinavia is far ahead of everyone else in terms of these outcomes — but also, the poor do better. On studies of life expectancy, we see the poor do better than the rich in countries where you have greater inequality.
One thing that is starting to emerge is that if we look at the outcomes we want to achieve — we must get an agreement about what those outcomes ought to be — there may be some approaches that are more productive than others. It is interesting that, because there is such a high participation in the labour force in Northern Europe, their productivity is just out of sight.
Canada participated in a study in terms of education and numeracy, and when you look at the gradients there the Nordic countries are outstanding compared to Canada and the U.S. The Nordic countries are way ahead of us in knowledge economies.
Senator Mitchell: What are their rates of illiteracy?
Mr. Goldberg: Among older adults, it is similar to what we have here. It is getting better, however, because they have run a lot of adult literacy programs. We are just starting such programs here. We have not put any real money into it, but we are talking about it.
Senator Mitchell: We have actually cut funding back recently.
Mr. Goldberg: In some cases, there have been minor reductions. Canada has not had the programs on adult literacy that they have in Northern European countries. These are longer-term solutions.
More important is what has happened with children. I think they have had fundamental early childhood programs for 20 years now. Their kids are doing far superior — again, these are all standard measures, taking into account immigration — than the kids here. We are doing better than the United States. We are not worst off. The U.S. is actually finding a big portion of its population is not literate or numerate.
Senator Mitchell: I want to ask you about the impact and importance of early childhood education. What are your feelings about the adequacy of that in Canada? Do you feel the $1,200 a year is helping?
Mr. Goldberg: First, we should use OECD data. As a researcher, I tend to use evidence.
The evidence is absolutely clear. As a proportion of GDP or any other measure we want to use, Canada is a laggard in terms of early childhood education. That is not just because of the changes occurring. To be fair, we have been a laggard for a long period of time. It is something that both Conservatives and Liberal Prime Ministers have promised.
The first promise I think was under the Brian Mulroney government to have a national child care program. Then, of course, we had two promises under the Chrétien government, neither of which was fulfilled. There was a little inkling a couple of years ago with some foot-dragging by the provinces.
Given that we are moving into knowledge economies — that does not mean we do not need bricklayers and others — if knowledge economies are the way we are moving, the best bang for the dollar, bar none, based on evidence is in early childhood education.
The $1,200 going to families is a good income supplement because we need to transfer money from those of us who no longer have kids, or never had, to those that do. Raising a child takes a whole country, a whole village, to quote Margaret Mead. People who raise children need to be given assistance from those of us no longer raising children. The term for that is horizontal transfer.
The $1,200 a month is one way of doing that. It has nothing to do with child care. The market-based child care system cannot produce the kind of results you obtain from the education system we now have, which are state run. They are common goods.
Senator Mercer: Mr. Goldberg, you have both enlightened me and discouraged me. I am hoping you can give me some hope. I will ask you two questions I asked the previous witness. I was not intending to ask them, but the data you have given me has forced me back to those questions.
First, if there were three changes that we could enact tomorrow as a federal government to address rural poverty, what would those three changes be, in your estimation?
Mr. Goldberg: The very first change would be to ensure that the Canada Child Tax Benefit gets raised to — and we could afford to do this tomorrow — about $5,000 per child. We need to ensure that no provinces are allowed to reduce the income of people on income assistance, that it is not based on the source of income. We must say that no child in this country will ever again be raised in poverty. We could have done the same thing 10 years ago. In 2000, when the supposed child budget came out that was switched to a tax reduction budget, we lost the opportunity, but it is still there. We have the capacity. It is not a question of not being able to afford to do that. That is number one.
Second, we must get back on track with the federal-provincial agreement of tied federal money to early childhood education. It must be regulated, of high quality, and we want to reduce the fees parents pay. The cost of child care here is two to three times what it costs to go to a university. If you are a young family here with a one year old and you want to get back into the labour market, in B.C. you will spend $1,200 a month, not a year, on infant child care. These experiences have proven over and over again that, when there is high quality, it benefits the children, and all of us. That is the second thing I would do.
The third suggestion is something another committee member mentioned. It is very crucial. It deals with the relationships between federal and provincial governments, and that is around mobility. We have started to build in processes that discourage people moving from one province to another by charging differential rates on whether you are a resident or not. Probably the most odious one we have seen is in post-secondary education. There was a period of time when it did not matter whether you lived in B.C. and you went to Dalhousie — you paid the same tuition fee. That is no longer the case. The federal government could insist that its money for post-secondary education be linked, that we honour residency and mobility and do not charge differential fees.
Senator Mercer: That goes back to our earlier discussion in which the word "education'' kept arising. I mentioned earlier that Canada is one of the only developed countries in the world that has no national standards for education. Should we have those standards? Should there be a guaranteed education transfer to the provinces that is specific to education?
Mr. Goldberg: It is interesting. For a confederation like Canada, with major jurisdictional issues between provinces and the federal government, where we do not have a unitary state like Sweden or even Australia or Great Britain to a certain extent, the one area we have probably performed fairly well in is primary and secondary education.
I know the ministers of education from the provinces meet regularly. In fact, our standards are relatively comparable, albeit not absolutely the same. Take the example of a student from Ontario who had finished seven years of schooling and whether that student would be at a similar level in B.C. For the most part — this does not apply to everyone — they are. People can move from province to province and their kids can pick up at the same grade level, or within a year, in different provinces. Some of the outcomes are not the same, but those are unique to some of those provinces.
The senator from Prince Edward Island had mentioned that the outcomes there were getting better but still were not up to other areas. Part of that might be about the role education would play within the culture of that entire province as a rural community.
It is an artificial notion that we need to be 18 to have the base education. If you are primarily doing certain kinds of things, it might be that you need skills training at 16 less than you need the other things. I would argue that in lifelong learning, the notion of a separation between skills and the arts and other areas of education is artificial. We want people to be enthusiastic about learning and we want to ensure that there are no barriers, particularly financial, that we can eliminate by policy. I am less concerned about whether someone graduates at 18 than whether they continue on through school and graduate at 22 when they are ready to graduate.
Senator Mitchell: I have a couple follow-up questions on your point about obstacles to education. Some studies indicate that one of the most significant obstacles to pursuing a post-secondary education for a middle-class Canadian is debt. The prospect of debt is a huge inhibitor for middle-class people — however that is to be defined — but not so much for people who come from greater means, even though they could ring up an equivalent amount of debt.
Mr. Goldberg: We know that for students graduating from post-secondary education, whether from technical schools or universities — it does not matter — their debt loads are much higher than they were a decade ago, and this can cause problems. The solutions we have tried to address are tax reductions or loan forgiveness — back door solutions. Those are helpful, but I would prefer front-door solutions. The Northern European countries are ahead of us on this, where either tuition is free or nominal, where they want everyone to have access to post-secondary education or continuing education throughout the lifespan. We would do that by removing the financial barriers rather than by doing some kind of tax thing at the back door when things get out of hand, as has happened.
Senator Mitchell: Rural access to post-secondary education is the next area I want to address. Distance learning is thrown up as the solution, and there is more and more sophistication in that regard. How do you feel that that is working? Are standards adequate? Does it do the job?
Mr. Goldberg: You need a different expert in terms of the standards. I know that distant education has been an absolute boon to smaller communities because the kids no longer have to leave and go through the enormous expenses of settling in a place like Vancouver to attend university. We have expanded both university and college material in the last 20 years, so there is more access at local levels, but it is nowhere near to being fair and adequate.
I would argue that we should consider, for people living in rural Canada, an enriched subsidy to enable kids to leave rural Canada and come to urban universities and colleges to experience what it is like. In that way, they will see both the good and the bad of urban and rural life. However, the costs for rural children to attend university in an urban setting are outrageously high. Conversely, it would be beneficial for some urban children to have experiences in smaller communities by going to their colleges and universities, but again, leaving home is prohibitively expensive these days in terms of covering accommodation and meal costs, let alone the tuition fees.
Senator Peterson: I have a quick question on the financial barriers that you alluded to. Post-secondary bursaries in Canada, as I understand, are tax free whereas high school bursaries and sports incentives are taxed. What would be your comment on that anomaly?
Mr. Goldberg: It is an anomaly. I would prefer to see the programs being offered virtually free or at nominal cost, rather than have to track the expenses for tax purposes when bursaries and such are involved. Specifics have to be tracked, and so we have to keep all the paper to file for a tax return, whether a credit. It is too much work on everyone's part.
Again, using the front-door-back-door analogy, if we can get things at the front door at the appropriate price then we do not have all these problems when things get out of hand and we have to find an adjustment at the back end. I would ask: Do we have the right program approach? At the end of the day, the costs are the same; it does not matter. It is simply a question of how it is coming out of people's pockets. The costs end up being somewhat the same. That would be one part of it.
As well, we have a problem in our society in that the cost of recreation is very expensive. A low-income Canadian has to beg or ask to attend and have the fees waived. A recent Supreme Court decision in B.C. said that schools can no longer charge school fees for children to be able to participate. Fees are out. That will be up to all of us for the common good to ensure that those experiences are available to every child. When I talk with low-income families, the one discouraging thing they say is that their children are "cling-ons.'' They are referring to the fact that, in order to do things, they have to cling to others to be able to meet the cost of participation. That discourages people from engaging their children in sports or recreation, which in turn discourages them from other activities in their lives when they are older.
Senator Peterson: Many of these bursaries, particularly for high school students, go to inner city children whose parents cannot afford to pay the taxes. Why would this situation exist? Why is it that a high school student can get a bursary but the tax man wants his cut and yet post-secondary education is tax free?
Mr. Goldberg: I would assume we are speaking to bursaries to attend programs. If someone had a bursary to attend a hockey camp during the summer, that should not be treated as income to the family any more than a bursary given to someone attending a post-secondary institution. It is not income that you put in your pocket for disposable pleasure. It is a trade-off to be able to attend something and is more a scholarship. In that sense, it should not be taxable income. You are right, the system is inconsistent. We have a tax code that includes books, so we have a problem with our tax code as well.
Senator Peterson: We will work on that.
The Chairman: Any further questions, honourable senators?
Senator Mercer: When you find yourself in Ottawa, let us know because we would love to have you come back to talk to us a little more. It has been enlightening.
Mr. Goldberg: It has been my pleasure.
The Chairman: Certainly, you have brought some new thoughts into the discussion. We have a long way to go, so it is good to get a mix of ideas.
Mr. Goldberg: I want to mention one other thing before we close. One of your colleagues, who is not there tonight, Senator Segal, had an article in The Toronto Star about reviving the notion of a basic guaranteed adequate income. That is something whose time is coming back and needs to be looked at. I wish that Senator Segal were at the meeting tonight because what the article does not include is how to determine the threshold. If we were able to come to that understanding, we could probably find ways to deliver income security to families so that they can make real choices because the base costs would be covered. In families where there is security, we are ready to take many more risks, which would be beneficial in the long term to our overall economic health.
The Chairman: Thank you for raising that point. As you noted, Senator Segal is a vigorous member of this committee and has done a great deal of work on rural poverty, which has brought the committee into the issue.
We will ensure that he hears your words.
The committee adjourned.