Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 4 - Evidence - Meeting of February 12, 2008
OTTAWA, Tuesday, February 12, 2008
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 (Chair) in the chair.
[English]
The Chair: Good evening, honourable senators, and to all of you who have tuned in to watch the Standing Senate Committee on Agriculture and Forestry's hearing on rural poverty and rural decline.
We are very pleased this evening to have with us, by video conference, all the way from Australia, Peter Kenyon, Founder and Director, Bank of I.D.E.A.S., a consulting service established in 1990 to help communities evaluate, design and implement economic development policies and strategies. Thank you for taking the time out to be with us tonight, Mr. Kenyon.
In May 2006, our committee was authorized to examine and report on rural poverty in Canada. Since that time, the committee has released an interim report. We have travelled to every province in Canada. We have visited 17 rural communities and talked with over 260 individuals and organizations, but the committee's work is not yet done.
Next week, some of us will travel to the northern territories of our country, where it is very cold, to listen to the concerns of rural citizens and organizations in those regions.
Rural regions across the globe are undergoing change. Canada is not alone among developed countries, and we ought to be concerned about the present and future states of our rural areas. It is important to find out how other countries, through policies, programs and practices, have addressed poverty and rural decline.
There are many similarities between Australia and Canada: a vast geography; densely populated and growing cities; sparsely populated rural areas; an Anglo-Saxon culture; significant minority and Aboriginal populations; federal structure; economic wealth, including natural resources; and the list goes on.
Given these similarities, it is not surprising that the nature of rural poverty and rural decline between Canada and Australia resemble each other.
We are very pleased to have you with us. Mr. Kenyon has helped rural communities throughout Australia, and his expertise has taken him to a number of countries including Southeast and Central Asia, South Africa, the Pacific Islands, New Zealand, Western Europe, the United States, the Middle East and even Canada.
We wish you were here with us tonight. You would enjoy how very cold it is. We have one hour with Mr. Kenyon to cover a wide variety of issues.
Peter Kenyon, Director, Bank of I.D.E.A.S.: Thank you very much. It is a pleasure to be with you. Today in Perth, it is 38 degrees, so we certainly do not share the same climate at the present time. It is a hot day here.
It is a privilege to speak with you about this area that we do share in common, and that is with respect to rural development and issues to do with poverty and economic development.
Very briefly, I have a background in terms of teaching and youth development, most of which were in rural areas. For a number of years, I was director of employment for the state government here. Therefore, I have a strong interest in employment issues and economic development.
In 1990, as you mentioned, I helped to create an organization called the Bank of I.D.E.A.S. — I.D.E.A.S. is an acronym for Initiatives for the Development of Enterprising Actions & Strategies. We are interested in how we build healthy communities, how we stimulate enterprise in local economies and thirdly, we have a passion about how we engage young people in a leadership role within those two particular areas.
We tend to work with a range of communities, including urban communities, but my particular interest is small town rural communities. I am particularly passionate about small — and as you probably experience in a similar way — declining, rural communities.
I suspect, here in Australia, that somewhere close to 70 per cent of our small, inland, rural communities are actually dying. They are losing population and businesses; and certainly our young people do not want to be found dead living in many of these places. I am passionate about promoting the strengths and attraction of these particular communities and the unique advantages that life, both socially and economically, can bring within these communities. Similar to Canada, it is certainly a struggle here.
The fundamental issue we face is the same as you: The future is not what it used to be for small town and rural areas. Back in 1900 when we became a federated nation, the simple fact was that the majority of population, close to 55 per cent of our population, actually lived on farms and in small towns across the country. However, today, the pendulum has moved in the other direction.
It is often stated that after Belgium, we are the second most urban country in the world. We are certainly one of the most coastal countries in the world. Approximately 84 per cent of our population now live in 10 cities, and close to 90 per cent of our population live within 100 kilometres of the coast. We have become an incredibly urban and coastal- based nation despite the size and the extent of our nation.
With that demographic decline in rural communities, we face other issues that have impacted those communities. Not only the loss of population but also the aging of the population is a critical issue. I suspect one of the most critical issues we face in rural areas is a growing skills shortage in terms of the labour force.
We have also seen the loss of many of our traditional jobs. Initially, we were very much focused on agriculture. However, that is changing, particularly in the job situation. It is estimated that we now have about 100,000 fewer jobs on farms than we had back in 1970. We are losing much of that traditional employment associated with agriculture, and I suspect a declining proportion of our population is directly connected to working on farms.
Also, in this country, since World War II, we talk about having regional development policies. It has been a major thrust of both our federal and state governments. It is a bit of a misnomer. It would have been better to call it a regional centre development policy. We have seen the development of major regional centres in rural areas. Many of these regional centres continue to grow, and we have a significant number of them. However, we are seeing the decline of many of the small towns around them.
The popular term these communities use for these centers is ``sponge communities'' because they are sucking the life out of surrounding areas. People are moving to these centres, and jobs, businesses and particularly government services and banking services are being rationalized and regionalized into these centres. That obviously has a major impact on the host of small towns throughout Australia.
Australia is also experiencing an incredible attraction to the coast; ``sea change'' is the term that is often used. Many people are moving, not just from rural areas but also from suburban areas. There is a particular appeal to the retiring baby boomers and others to move into coastal areas. Many of these lie within rural areas. However, they are distinctively coastal communities as opposed to our inland towns. That is probably where we are seeing the greatest population growth, particularly in that 50 to 70 age group that are seeking the retirement lifestyle appeal there.
We have a small, what I call, tree change movement where people still have that attraction toward the rural village, the rural life mindset. That has perhaps been activated recently with a steep rise in housing prices within capital cities. Many people seeking cheaper housing have made the decision to move toward rural areas. However, most of those tend to be fringe areas to regional centres and capital cities where they can still commute back for jobs.
Therefore, we have a massive commuting issue with people commuting out of these small towns into regional centres for employment on a daily basis. That has implications in terms of the contribution back into their small towns.
In terms of what we would refer to as the social capital value, we are seeing a decline in the social capital, where many people leave early, return late and contribute very little to their towns. That is a real social issue on which we, as an organization, have focused. How do we rebuild the stocks, the social capital and social connections within these particular communities?
I have mentioned that the importance of agriculture is still very significant, as an export value to the country. In terms of economic production, we are still a very strong agricultural-producing country. However, it does not occupy the workforce or the population as it has in the past.
I believe government policy is critical in that we still tend to think rural equals agriculture, and that certainly is not the case. Although there is always the interrelationship between the farm and the town, I suspect the majority of the rural population now are not directly connected to agriculture.
The health of the small towns is still important to those farms. That is an important focus for our work because we believe there is an interconnection between the health of the farm and the health of the town. Those towns are very important for off-farm employment. Most farms in Australia still require a member to work off the farm. The economic and job life of these towns is an important issue. Part of our work has been focused on how to look at off- farm employment and business development as an important issue directly related to agriculture as well.
We are seeing two other major economic developments impacting on rural Australia. First, tourism is growing to be the biggest industry in the country as it is in Canada and internationally. It is certainly the fastest growing industry, and rural Australia has much to contribute. Many of our towns have embraced tourism and its associated business activities. Given that 75 per cent of the jobs in that industry are for under-25-year-olds, it is an important industry that communities need to embrace for its job value and particularly its appeal to young people.
Second, Australia is going through a massive resources boom at the present time. It is probably the greatest mining era this country has ever known. We have always been a traditional mining area, similar to Canada. However, the present appetite of the Chinese, and increasingly the Indians, for our iron ore, petroleum, natural gas, gold and the whole range of other minerals means that we have got a massive mining boom underway. Most of that is within remote areas.
However, as a country, we have very much embraced ``fly-in, fly-out'' arrangements. That means that, despite the boom, we are not creating communities. In fact, it is having a devastating impact on many traditional communities nearby simply because it has meant that the price of housing, services and so on, has increased dramatically. This is particularly in the northwest of my state, which is probably the strongest mining area. Many of our rural communities there are under huge stress simply because we have these large labour forces flying in and out on a 10- or 14-day basis.
However, many of these mining companies are purchasing housing stock. In fact, in one of their major centres, they have purchased nearly every pub, caravan park and accommodation. This has had major impacts and forced up the price of housing, rent and the cost of living dramatically. Therefore, for those not caught up in industry, it has had major impacts.
Finally, this is a very significant day in Australia's history. About an hour and a half ago, our Prime Minister and our federal Parliament issued the official apology to what we call the ``stolen generation,'' indigenous children taken away from their homes and families. Many of us are optimistic that this very important symbolic apology will also be the start of seeing a focus on trying to eliminate the massive poverty levels that indigenous people, particularly in remote and rural Australia, face. Their lifespan is almost half of non-indigenous people. Their employment and their educational levels, on all indicators, are significantly below any national and any acceptable levels. Housing conditions, education and employment options in rural areas and particularly remote communities where many of our indigenous people live are very poor. That is an area of immense concern to many of us. We hope that today's symbolic gesture from the federal Parliament will lead to action on the ground. That is one area of rural poverty that I feel would probably be our number one area of concern and focus at the present time.
In terms of our work with rural communities, we have borrowed ideas from across the globe. We have been particularly connected to the State of Nebraska in the United States, which has many similarities with my own State of Western Australia. We have benefited greatly with many of the community economic development initiatives that a state such as Nebraska has put in place to reverse the depopulation that happened through the 1980s and 1990s.
Through that, we have developed a number of frameworks that we, the Bank of I.D.E.A.S., have tended to try to lead and promote. Through government associations and a number of state and federal government departments with responsibility for rural areas, we have had an opportunity of influencing policy and, more importantly, strategy. I am a great believer in policy and in creating the framework. However, I am much more excited about putting in place practical strategies on the ground and looking at the role of government.
In terms of the cocktail of response that we have been advocating, there are probably five areas I would like to quickly mention in closing that I hope you might want to take up and discuss further. These are areas that we believe any policy and strategies need to tackle in an integrated and comprehensive way.
The first issue has to do with mindset. I suspect one of the greatest problems that rural residents face is simply that they have not been able to embrace the fact that the future is not what it used to be. Many people hunger for when the price of oil and wheat were at all-time highs; people hunger for the 1950s, the 1960s and the 1970s. However, we no longer live in those days and a mindset shift is necessary. Many of these small towns need to reinvent themselves. That certainly starts with mindset. People need to stop waiting for the cavalry to arrive from Canberra, Sydney and Melbourne, the capitals, to sort out their problems. Rural residents need to become far more engaged in planning and implementing a more positive future. In this, I see the role of government as trying to facilitate that as opposed to continuing what I call the ``cavalry approach'' where we march in and out of these communities and deliver from a central base.
The second issue is one of leadership. We have had a significant number of reports done on rural development. They all share in common the most critical issue for the success of rural communities, local leadership. One of the areas I believe we have to invest far greater in is generating and developing local leadership.
We had a significant report done here. It would be a good one for your committee to peruse if you have not seen it. It was put out by McKinsey & Company, an international consultancy company. Just over 12 years ago, they were commissioned by our federal government to look at why certain regional areas in Australia were doing well and others were doing badly. What is it that makes the difference in terms of regional development?
This particular study cost a million dollars, which makes it a significant piece of research. At the end of the day, though, the value of that research was captured in one simple sentence, where this particular report said, ``Given the choice of $50 million or $10 million and 20 local leaders, we would go for the 20 leaders and the lesser amount of money.''
I thought that particular statement crystallized that the critical issue in rural Australia is leadership; every report comments on it; we all accept it. However, I suspect in terms of investing in its development, we have not done anywhere near what is actually required.
The third factor that is important is what I would call ``opportunity obsession.'' These communities need to start thinking outside of the box. The residents and leadership within these communities need to start looking much more creatively at diversification of their economies, the way they embrace new industries, the way technology, tourism and other industry areas provide new possibilities for rural areas. Again, how do we foster that type of opportunity obsession? How do we support people in the planning and analysis and that invention?
We have recently been responsible for implementing a simple program called Create. The program focuses on creating rural enterprising attitudes through education, working with young people in the primary and secondary schools and helping young people think about what it means to be an enterprising person within this particular context. It exposes them to other enterprising models of towns, people and businesses.
The fourth area that I feel is vital is the area of business development, enterprise development. We have been in a position to do much case-study work on successful businesses across rural Australia. It is amazing when we have that opportunity to really focus on ones that have been incredibly successful, to look at what those ingredients are and how we can spread those ingredients across.
I can give you numerous case studies. However, my favourite is of a fellow who was brought up in absolute poverty in a small town. He still cannot read and write and was kicked out of school at 12 years of age. However, from a small town of only 3,000 people, this fellow by the name of Tom O'Toole now runs the largest turnover retail bakery in the southern hemisphere. It is three and a half hours from a capital city. It is on a road to nowhere. In a town of 3,000 people, he employs 74 staff in a retail bakery cafe. He now has seven of these bakeries, all of them performing at that level and all of them in small, remote towns. He has spread his message of how he became so successful.
We are keen to pick up on the lessons from these types of people. There is a pub that is the most-awarded outback pub we have in Australia. It is in a town of seven people, but it employs 29 staff. Ten years ago, it was a typical, rundown, derelict, country pub. Now people fly there from all over the world for Friday lunch. What is behind it? Those are some of the experiences that are significant to help to rebuild and reinvent these small towns.
Finally, we need to focus on attracting young people back into these communities. I focus particularly on the 25 to 35 age group. That is the critical issue. There is not much hope for these towns retaining young people at age 15. We do not have the education opportunities to keep them there. However, that 25 to 35 age group is critical. That is the age that they start families, buy houses, start businesses and provide coaches for football teams and the like.
One of the most critical areas on which we need to focus is helping communities put strategies in place while those young people are there, up to age 15, how to keep lines to these young people open as they move away, and how to provide incentives to bring them back when they are in that 25 to 35 age group.
Skill shortage is a massive issue for this country, and rural communities are now finding that that is one of the by- products they now experience given the loss of many of their young people in the population.
That is a bit of a background of what we are, our interests and perhaps some of our insights into where Australia has headed or should be heading.
The Chair: Thank you very much. Listening to you, I would say Australia is way ahead of us, but you are talking about what we are doing our study on. I know that my colleagues here will want to ask questions of you. What you have been telling us is very helpful.
Senator Gustafson: We welcome your exchange, even though we are thousands of miles apart. It is certainly interesting to hear your situation in Australia.
You say that 84 per cent of the people live in the cities.
Mr. Kenyon: We have 84 per cent of our population now residing in 10 cities in Australia.
Senator Gustafson: We have the same problem here in Canada. We can get young people to work on the oil rigs, in the oil field, but if we try to hire them for the farm, we have problems.
Is Australia self-sufficient in energy?
Mr. Kenyon: We have massive energy resources here and massive investment going particularly into the North West Shelf in terms of natural gas and oil, et cetera. We still import some petrol oil, but we do have massive rich resources and hope to move toward being self-sufficient in that area.
I am not an expert on that subject. I could not tell you what the proportion is at the present time. All I know is we still seem to be connected globally to petrol price rises and so on, despite the fact that we have massive oil resources. We are very rich when it comes to natural resources. At the present time, we have the biggest mining era that this country has ever known, and we have always been known as a mining country; it is unbelievable.
It is sucking the population out from everywhere. I live in a small town outside of Perth. We had two restaurants close down because they cannot get enough labour. We have a bakery that cannot open on Sunday because it cannot find labour. We have a major skill shortage, and it will only be accentuated by the mining boom.
The Chamber of Commerce came out with a figure that in the next 10 years, they expect they will need an additional 70,000 skilled workers. That in a country with a population of 20 million will draw the population — and it already does — and has implications, particularly in small towns. Farms now cannot find the labour they need. There is a call for introducing guest labour programs, bringing in people from Pacific and Asian countries. There is a strong debate going on at the present time. We are relaxing our immigration rules to bring people in. I read the other day that we just brought 400 electricians from Vietnam into our state. The skill shortage issue is major, and rural communities are facing that in a big way.
Senator Gustafson: In regard to your directorship and the banks, what is the condition of your farmers? Are they in debt or are they quite fluent? What is the situation? Here in Canada, our grain prices have gone through the roof. Is that happening in Australia?
Mr. Kenyon: It certainly is. I need to say first that we are not a real bank. We are a bank of ideas. We instigated the organization in a redundant, closed down bank in a small town, and we very much see ourselves as collecting, receiving and distributing good ideas.
Yes, we are experiencing phenomenal prices in agriculture. The fact that much of the country is experiencing drought is having a major impact; some of our best areas are in the third year of drought. I was in one small town community running a workshop not long ago, and they told me that they consider this their fourteenth year of drought.
Drought has had a major impact. In the northern regions of my state, which is the biggest grain state in the country, they had an appalling season last year. It was probably their third season. I suspect if we do not get decent rains this year that some of those farms will not be viable any longer. The towns within them have really suffered dramatically. Yes, prices are great and certain farmers are doing incredibly well, but there is a whole other force, simply the drought issue.
We have massive flooding on the East Coast at the present time, which you may be of, and that will impact us as well.
Senator Callbeck: Thank you very much for your opening remarks. I too am from a rural area, so I understand your passion about the decline in our rural communities.
You are the founder and director of the Bank of I.D.E.A.S. That is a consulting service to small areas to evaluate, design and implement economic development. How are you funded?
Mr. Kenyon: We are funded purely by contracts or projects that are funded by either different levels of government or communities; for example, the Chamber of Commerce. We also do a fair bit of international work. We have had projects in over 50 countries. Currently, one of my jobs is to manage the implementation of a youth strategy for UNICEF Somalia, so we have been funded in that direction.
Although we are a typical private company that is required to fund all of our operations through project work, we put in tenders for certain projects. However, most of it is being requested by a local or state government to instigate certain work.
Currently, I am producing a program for the Municipal Association of Victoria on business expansion and retention, which they are funding. We are doing a youth strategy for the Djirbalngan remote Aboriginal communities in the north and that is with the Department of Transport and Regional Services, the federal government department.
As I said, we are funded by UNICEF. We have been doing a lot of work in South Africa, and that has been funded by economic development agencies there. Yes, it is a range of different people who are actually funders. The work I have done in Canada has been with your provincial departments of agriculture and regional development in Ontario and Saskatchewan on two different occasions.
Senator Callbeck: You mentioned that tourism is the fastest growing industry in Australia. Are there programs or plans implemented in your country that have helped increase tourism in rural areas?
Mr. Kenyon: We have had a number of programs, not major but rather funding programs that have enabled rural communities to develop new tourism products, which have been significant. At least 50 per cent of the regional funding initiative for our regional development department would go to projects in towns that have either tourism or economic impact. They also have been a major contributor. We have had a number of initiatives geared at supporting certain sectors, for example, the renewal of country pubs and such. This is part of the nostalgia in which people are interested.
We have also had programs that target customer service. The hotels association and the Western Australian Tourism Commission asked me to do case studies on country pubs that have successfully reinvented themselves. Their concern was that we had just introduced smoke-free legislation, which means no smoking allowed in any country hotels or restaurants. For many of these country pubs that were probably being propped up by the four drunks who spent the day drinking and smoking at the bar, it looked like it could put the pubs out of business. This focused on a program to help country pubs face this challenge of the introduction of smoke-free legislation and use it as an opportunity to reinvent themselves, particularly within the tourism sector. Many of those initiatives that have been very successful in helping people move forward.
Senator Callbeck: You mentioned five areas that we need to tackle. One was to attract the young people back, especially those aged 25 to 35. Can you give us examples of communities or rural areas that have been successful in doing that?
Mr. Kenyon: Yes, I can. One of my favourite towns is a place called Hyden, which is about a three-and-a-half-hour drive from Perth. It is right on the edge of farming, what we call the rabbit-proof fence. It has a population of 200 people; 600 people in the region. It is one of the most youth-orientated and successful towns that I have ever encountered. If you go to the pub there on a Friday night, I doubt you would find less than 100 people. A good indicator of appeal is the number of local people found in a pub on a Friday night.
It is a town that has not only one football team but two of them. Most towns there have no football teams left. It is a town that has recently built about 15 adolescent youth accommodation units. One must be under age 30 to go there. Most of our towns focus on building accommodation for the elderly and those who are retiring, but here is a town that said, ``Young people have special accommodation needs. Let us cater to that.'' This is a town that supports young people who come back to start up businesses. This is a town where, I learned, their attitude is that the process starts while the children are very young in the town; ensure that their experience at ages one through to fifteen is one where the town has been youth friendly and provided facilities that they felt were valued. This is a place that they can always call home.
In addition, they say that when these young people go off to school, work, university and wherever they go around the world, we must keep our lines of communication open to them. In this particular town, they put out both a weekly and a monthly newsletter that is automatically emailed to every young person who attended primary school there. They are regularly sending letters to these young people saying, ``Dear Joanne, your hometown of Hyden remembers you. Have you thought of coming back?'' They use it as an excuse. They ask, ``Are you aware of the type of business investment opportunities here?'' They constantly look at that and keep in touch with young people.
It is important to have practical strategies in place that particularly target that age group of 25 to 35 year olds. I have learned from some American states the importance of school reunions and such. Many of their chambers of commerce foster these events, bringing young people back and giving them a good night. The next morning, they then have the bus ready to take them to look at housing, economic, workspace and business options. It is about being practical.
A number of our regional centres that are experiencing a major skill shortage are now beginning to focus on this strategy. If we want to attract young people back to a town, start with those who have an emotional attachment to the town. There are good feelings associated with these places; they build upon that. That is the group to start with. We have some wonderful examples of towns, but they are in the minority. We are trying to wind up this three-pronged approach: Deal with them, keep lines to them while they are away and have practical strategies to bring them back, particularly in the 25-to 35-year age group.
Senator Mahovlich: When I think of rural Australia, I think of Alice Springs. I would like to know how Alice Springs is doing. I have not been there for 25 or 30 years. It was as rural as you can get. I believe Prince Charles and Princess Diana visited there. Can you tell me what you have done for Alice Springs? I know the tourist attraction there is Ayers Rock. Is it still active?
Mr. Kenyon: Alice Springs has grown dramatically in population and certainly would have all of the services that most of our cities have. It is the second city of the Northern Territory. The population is probably around 100,000 people. It has certainly embraced all sectors. They have very impressive educational services, but, as you have indicated, tourism is the icon of outback-Australia. Many people still come to this particular rock. That rock is a good four- or five-hour drive from Alice Springs, so it is not on the doorstep. Alice Springs, in its own way, has developed its own set of attractions. Most of that would be around indigenous tourism, art galleries and many neat restaurants and so on that have evolved there.
We have done a number of case studies of innovative, indigenous people who have started up business life in the Alice Springs area. It is about time you came back. You would be surprised. It is stunning. As part of that commitment by national government to strengthening rural tourism, we have re-established the famous railway that runs now from Adelaide in the south, through Alice to Darwin in the north. It is one of the most popular train trips in the country. Improvements such as that have helped dramatically. Alice Springs is a wonderful community, a wonderful town, and a place that has many lessons to share in the way it has diversified its economy. However, it is a town with many challenges when it comes to indigenous Australian poverty, unemployment and issues still to do with that. It would be at the heart of where strategies are needed in that field.
Senator Mahovlich: Thank you. I am glad to hear that.
Senator Mercer: Thank you very much for speaking with us this evening. You said the temperature was 38 degrees there. We have 38 degrees here, but there is a line in front of it. Our temperature is minus 8 degrees. I was interested in what you had to say about the town of Hyden, with about 200 people. They maintain contact with the young people who have lived there, have a focus on young people, attract 150 young people in the pub on a Friday night and have two football teams.
Who pays for all this? Who pays for the contact that is maintained with the young people who started off in that town and branch off to other parts of Australia? Who pays for the infrastructure to maintain that contact?
Mr. Kenyon: One of the reasons I promote this is that my favourite small town anywhere on the globe is a community where things have happened. We must make it happen. One of the biggest problems in rural Australia is that most towns are waiting for the cavalry to turn up. Some towns cannot move unless they get a government grant to pay for it. I was in one community where they asked, ``Where do we get a grant to become sustainable?'' That is almost a contradiction in terms. Hyden has taught us that if things will move in the community, then the population and the leadership of that town must invest in it and make it happen.
It is one of the most popular tourist destinations. They have a rock three kilometres out of the town called Wave Rock. Back in the early 1960s, this was a town that did not have a hotel, a caravan park or any tourism infrastructure whatsoever. When suddenly it appeared in National Geographic magazine and a few tourists started turning up from around the globe to look at this feature, local people came together. In fact, 10 farmers decided to put 70 quid each into a local fund to start building tourism infrastructure.
Today, that Hyden owns trust infrastructure that is probably worth $10 million. It has the best regional hotel that I know of anywhere in the country. It has two conference facilities, a restaurant with facility areas built in. They have done amazing things.
Five years ago, the sons and daughters of that group of farmers who invested in that town came together and decided that not one of their young people was able to have a full-time job back on the farm. They could not provide additional full-time employment back on the farm, but they wanted these young people in town. Therefore, 21 farmers put $10,000 each into a community fund to create the Hyden Business Development Pty Ltd. Those farmers do not want a financial return; they want a jobs return.
With that money and using it to broker government money, they have put the infrastructure in to create an amazing little business area there. They have put in the infrastructure to create an industrial park. They have done their own surveys to work out what business gaps exist, built that infrastructure and went to Perth to advertise it. For example, the first thing they worked out was that they did not have an auto electrician, yet amongst themselves they estimated that $700,000 worth of auto electrician work went out of the town. Therefore, they built the best auto electrician workshop and a house to go with it. They landscaped it over four weekends because they knew it would be harsh to get an auto electrician to come out with a family and a spouse. It is always a battle.
They again went to Perth and announced that they had a business for sale and will guarantee the first year in income of $700,000. They had 14 expressions of interest, and I believe they chose a good Catholic because he had seven kids, which would help the local primary school. That is the way that town operates.
That is the type of mindset that communities need. The farmers out there have formed a cooperative marketing initiative. They recognize that ``if it is to be, it is up to me.'' That is the type of attitude they have. With respect to that mindset, that first point I mentioned, we need to change the mindset of rural people from one of dependency and expecting others to always come in and sort out their lives. We must engage rural people in taking responsibility for their own destiny and give them the skills to be able to provide the leadership to move forward. It is exciting to see that happen.
We have learned much from Nebraska in the U.S. with their focus on community foundations. It is no surprise that the very first town in Western Australia to set up a community foundation was Hyden. This is a town that recognizes the need to put its own investment in. Needless to say, it also happens to be one of the most popular towns that governments want to invest in because they see it as a town going forward and a town that is willing to make a contribution as well.
We have some good examples of that happening, and that is the model we promote.
Senator Peterson: When you said you try to encourage seniors to stay in rural areas or move to rural areas, and the ones that are there to stay there, is health care an issue? How do you deal with that?
Mr. Kenyon: Obviously, it is one of the real challenges. Health departments are under increasing budgetary pressures. We are continuously fighting over closure of country hospitals. Most country towns are finding it incredibly hard to attract doctors into their areas, given the type of incomes they can earn as compared to urban centres.
I suspect now that within rural Australia, at least one third, if not one half, of our doctors would consist of people brought in from overseas. We have had a massive number of South African doctors brought into country towns. Health is a major issue that really must be considered.
I have been excited about the number of communities that have reinvented their health services themselves and created their own health outlets through cooperative efforts in creating cooperatives and so on.
Some of those case studies, including that and the one I mentioned in Hyden, we put together in a publication called A Kit for Small Town Renewal, which is a collection of good stories about towns and examples of what people are doing. I will make sure copies of that, together with one about the 20 exciting rural businesses that we found and the publication dealing with indigenous enterprise. I will ensure copies of those are made for you via the clerk.
Senator Peterson: You have indicated that your government recently made an apology to the indigenous people. What other responsibilities does your government have to these people?
Mr. Kenyon: That apology is only two hours old. It happened this morning in our federal Parliament. It was a massive symbolic and significant event.
Our Prime Minister used the occasion to invite the opposition to join him in a warlike cabinet arrangement to have a joint government opposition approach, where both the Prime Minister and the Leader of the Opposition would co- chair a committee to achieve tangible targets.
He wants the life expectancy gap between indigenous and non-indigenous people to be halved within a five-year period. Within that same period, he also wants to have pre-primary school education in every remote community, and he has made a whole commitment in terms of housing and education.
That is a very daring initiative by a prime minister. He closed by saying that this government will be judged on its ability to deliver on those promises, both moving toward a bipartisan approach, trying to take the indigenous area out of the political football area and, second, having some tangible targets that he is now working toward.
Similar to you, however, we have both federal and state or provincial governments, and our provincial governments have the bulk responsibility for Aboriginal affairs, particularly in areas of health and education. Again, it is about them coming on board.
We do have significant programs happening at both federal and state levels to do with indigenous people, but I feel all of us would be very disappointed with the results that have been achieved over a 30-year period. Many of us are optimistic that today's symbolic gesture in the federal parliament will lead to a more coordinated and integrated approach.
Part of our problem — and I am sure it does not happen in your country, but it happens in ours all the time — is governments act like a collection of warring tribes in trying to get ministries to work with each other, let alone state and federal governments working together, which is always a challenge, but it has to happen. This is one area where we do need to see change.
I hope today, simply because of its prominence and the fact that a prime minister was willing to step out and make some very ambitious targets, we will work toward that goal. I am optimistic and hopeful that the opposition will join his proposal to join what is similar to a war cabinet arrangement on this particular issue. That is an exciting initiative alone.
The Chair: It is an exciting initiative. We have those problems here in Canada and are trying to deal with them. That sounds very vigorous, and we wish you good luck.
Senator Callbeck: Do most of immigrants from other countries that come to Australia live in your large centres, or are you successful in getting some of them to rural areas?
Mr. Kenyon: Most, as the rest of the population, love to be attracted to the cities and the Melbournes of this world, and we have massive immigrant populations in those cities. However, we also have a number of programs, particularly business programs, dealing with business migration to regional areas. Some of those have been very successful.
Many of our larger councils will often employ, through government assistance, a person targeting that type of area. Certainly, in a number of our regional areas, I am aware of significant populations of Vietnamese, particularly in the horticultural area. Cobram has a significant Afghan population that arrived there as refugees.
Yes, there has been some movement into these areas. Obviously, the mining sector is one. However, again that is a fly-in and fly-out arrangement. Many people find that an attractive area to move into because of the types of salaries they can make and so on. We do have some, particularly in the area of business migration targeting the movement of business migrants into regional and rural areas.
The Chair: Obviously, you like what you are doing, and it was a very vigorous presentation tonight. I am sure it will inspire us to keep going in what we are trying to do. It is difficult. However, you certainly have done a remarkable job in your country. We thank you for giving us your time and wish you the best.
Mr. Kenyon: Thank you and we wish you the best with your inquiry.
The Chair: We are very pleased to have with us this evening John Stapleton, Former Research Director, Task Force on Modernizing Income Security for Working-Age Adults, as an individual. Welcome, Mr. Stapleton. This is not the first time I have seen you, and we are pleased to have you here.
We continue our study on poverty in rural Canada. In our travels in the provinces, we were truly touched by the wonderful and diverse group of Canadians who have shared their passion, knowledge and concern of rural Canada with us. We are humbled by their generosity and how they have welcomed us with open arms into their communities and sometimes into their homes. The committee is in its final stage of the study.
Mr. Stapleton was the research director of the taskforce. The taskforce was represented by a diverse group of members, who had come together to look at ways to improve the income security system, and while the taskforce concentrated on Toronto and Ontario, its report and conclusions have been taken to apply to Canada as a whole.
John Stapleton, Former Research Director, Task Force on Modernizing Income Security for Working-Age Adults, as an individual: Thank you. I am here tonight to talk to you about the Task Force on Modernizing Income Security for Working-Age Adults, MISWAA.
It was formed in the fall of 2004. It is a broad-based coalition of civic leaders that took in the Toronto City Summit Alliance, itself a broad-based alliance of civic leaders, and St. Christopher House, a multi-service neighbourhood centre that works with low-income people in Parkdale, in Toronto's west end.
Members were experts and leaders from the non-profit, academic, business, labour and government sectors of civil society including people with first-hand experience of income security programs. In this way, it was a unique effort.
An expert working group for which I was the research director supported the task force by reviewing the existing research, filling knowledge gaps and developing potential solutions and recommendations. Task force members determined that almost 300,000 working people in Ontario cannot earn enough to make ends meet even when working full time and full year due to a combination of low wages, loss of government benefits when they become employed and increased costs tied to employment.
Ontarians who receive social assistance or disability support programs — who number over 450,000; therefore, more than those working full time and full year and are still in poverty — are often trapped in a system that provides insufficient income, yet impedes achieving stable work and meaningful community participation.
Some of the key underlying issues that the task force worked on and came to these conclusions were the lack of coordination between programs and levels of government, which resulted in a web of rules, eligibility restrictions and disincentives that often penalize adults on social assistance for finding entry-level employment, increasing their work hours or accepting raises. As a result, many adults are unable to successfully transit out of social assistance, or cycle repeatedly between weak-labour market attachments and welfare.
As an aside, I can tell you that, in the city of Toronto, the period of time spent on assistance on average has moved up to around 27 months. If we go back just nine or ten years, the period of assistance was about nine months. We are looking at a very different clientele now.
Another underlying issue is the difficulty in making changes to income security policy because support programs are each designed to minimize costs without regard for the effects that each program has on the others. Often programs that work as businesses in their own right will cannibalize another program when trying to ensure that they are delivered in a cost-effective manner. When eligibility is reduced for one, eligibility sometimes starts to reduce in another at the same time.
Therefore, the task force recognized that there is both a social and an economic urgency to tackling income security issues. Our economy needs the participation of all working-age adults and this need will grow significantly with an aging population. We are in a period of net labour market demand.
The task force developed a set of policy recommendations for transforming our current income security system into a more effective set of programs for working-age adults. We took the perspective that a multi-faceted set of solutions is required for a robust social safety net that addresses the most urgent problems facing low-income working-age adults. We must first increase their incomes, then lower their cost to live and work and protect and build their personal and financial assets. Recommendations were aimed at the federal government, the Ontario government, municipal government and also other parts of civil society that are able to contribute to solutions.
It released its report, Time For A Fair Deal, in May, 2006. The task force urged the Government of Canada to, first, reform Employment Insurance to address the significant decline in coverage of the unemployed and the related decline in access to employment supports and training. In fact, the report showed that the unemployed in the Regional Municipality of Ottawa-Carleton had the least coverage in Ontario. We talked about Toronto having a 22 per cent coverage of unemployed people in terms of the unemployment insurance program, but it is actually less than 20 per cent at the time of writing of the report.
Second, create a new, refundable tax benefit — that means you receive a refund even if you do not pay tax — consisting of a basic tax credit for all low-income working-age adults and a working income supplement for low- income earners.
Third, provide and administer a national disability income support program for persons whose disabilities are so substantial that they are unlikely to enter the paid labour force.
Fourth, implement a working income tax benefit — and, of course, we do have the Working Income Tax Benefit introduced in Mr. Flaherty's budget last year — to improve the incomes of low-income working Canadians, help off- set employment cost and make it beneficial for more people to move out of social assistance into jobs. This should be complemented in Ontario by an Ontario prescription drug and dental program for low-income, low-paid workers that will advance the same objectives.
Fifth, redesign and improve the Canada Child Tax Benefit, CCTB, with a focus on harmonizing the federal Universal Child Care Benefit, UCCB, and the new Ontario Child Benefit announced in Ontario last year to ensure adequate and equitable benefits for all while preserving work incentives.
The task force's recommendations for the Ontario government are as follows: Ensure that federal-provincial agreements, especially labour market and immigration, are fully and quickly implemented; establish a review process for minimum wages; provide basic health, prescription drug, vision care and dental coverage to low-income workers; strengthen enforcement of employment standards to protect the rights of workers; update and expand current employment standards to cover new forms of work, especially contract work; raise social assistance asset limits to $5,500 for a single person, and $9,000 for a family — these would be the levels that the Canada Assistance Plan would have had, if it had continued to function; and reinstate earlier provincial policies to set disability benefits at the same levels received by senior citizens — and we have to go back to 1975 in Ontario to be in a period when senior citizens and persons with disabilities received the same amount of money. However, since indexation is a federal rule but a provincial exception, we have disability benefits; for example, in Ontario, that are more than 20 per cent below what aged people receive.
We also recommend the government improve and expand employment supports and training, and allow persons receiving the Ontario Disability Support Program benefits who can work despite their disability to participate in the labour market without jeopardizing their health and dental coverage. I am pleased to say that that particular provision has been implemented in Ontario.
The task force expressed concern about the plight of children in the care of child welfare authorities when they age out of that system at the age of 18 with few of the supports that children living with their parents routinely have.
Task force members believe that implementation of these important recommendations would go far to provide a fair deal that ensures that working-age adults have the supports they need to live in dignity and to participate fully in our economic and community life.
In terms of recent developments: There have been a number of promising developments at the provincial and federal level since the task force released its report. At the provincial level, these include rule changes aimed at removing barriers to employment on social assistance programs, modest social assistance rate increases and the new Ontario Child Benefit, OCB. The OCB provided low-income families, regardless of source income, with a lump sum of $250 per child last July and will go to a yearly maximum at $1,100 per child by 2011.
The federal government has introduced a very modest Working Income Tax Benefit, has increased federal child benefits and is considering changes to Employment Insurance to improved accessibility and benefit levels. This was mentioned in the last Throne Speech.
All of these actions will help but most represent changes to existing programs. Deb Matthews, Ontario M.P.P. and MISWAA member, who is now the minister responsible for the poverty reduction strategy in Ontario, noted that one of her constituents recently told her that poor people do not need more programs, they need more money. The larger challenge remains: to redesign and modernize our income security system and programs to meet the needs of today's workforce and ensure that Ontarians who work here are assured a decent living and those who cannot work can live in dignity.
Implementation of these important recommendations will go far to providing a fair deal to ensure working-age adults have the supports they need to live in dignity and to participate fully in our economic community life.
Finally, the task force warned, perhaps presciently, that we should not wait until the next recession to reform our income security programs. Hopefully, we will continue to do that.
Senator Peterson: Thank you for your presentation. You say this is just a task force report and none of this is happening?
Mr. Stapleton: Some of it has been implemented.
Senator Peterson: Okay. I will follow along then. Governments have a tendency to clawback when people try to improve themselves. People make money, they make a little bit more, the government claws it back and then it drives them back onto welfare. Has anyone done a cost benefit analysis on this? The small amount that they would top up must be much smaller than if these people are driven back onto welfare.
Mr. Stapleton: I do not know specifically on cost-benefit analysis in that regard, but there are a number of programs acting separately in what we sometimes call ministerial or departmental silos. Each of those programs is charged with the responsibility to either charge for their services — in the case of rent-geared-to-income to charge more rent — or, in the case of social assistance programs, to reduce the subsidy they provide as someone works their way out of the system.
As an example, a lone parent living in public housing decides to go out and work, and for every dollar she makes, she will lose 50 cents on her social assistance. That same person would be looking at a 30-cent increase in their rent because, of course, with rent-geared-to-income, if their income goes up by a dollar, they will lose 30 cents on that dollar.
It comes to the point when various different programs start to interact, that they do create these high recovery rates that sometimes can exceed 100 per cent. Of course, once it has exceeded 100 per cent, it is not economically rational — this is the term we use — to go out and work. It is important that these various government programs, rather than working within their departmental or ministerial silos, have program administrations that talk to each other so that those high recovery rates do not create work disincentives that will keep people from attempting to become self-reliant in the labour force.
Senator Peterson: It looked as though there was some form of guaranteed annual income. I see a number here showing the poverty line at $15,000. If that was established and that number set, then people on social assistance would know what they could earn, up to that number, and be left alone. Then if they exceed that number, perhaps there could be some form of clawback. Is this what you are getting at here?
Mr. Stapleton: We did not propose the particular scheme that we had here as a guaranteed annual income. It would not have the feature of a guarantee in the sense that some of the benefits, such as the Working Income Tax Benefit, would not be a guarantee. It would only be paid if someone was actually working. The refundable credit part of it, just as we have a secret in Canada that we already have a guaranteed annual income in the form of the GST credit, which probably has some features of a guaranteed annual income; it is just very small.
A guaranteed annual income tends to mean many different things to different people. Let me try a couple of figures. In Canada right now, our Income Security Programs spend approximately $125 billion per year in income programs of various sorts — if we put them all together, it comes to about $125 billion. We have approximately 9 million families in Canada. If we were to divide all the existing programs by the number of families in Canada, it equals $14,000 per family. Of course, under almost any notion of a guaranteed annual income, we would not pay every family $14,000. It would be much too watered down, and many families do not need it.
The question of taking all our complex array of Income Security Programs in Canada is very seductive and attractive because the programs are quite complex; some are outdated, and some, as you have already pointed out, tend to fight with each other and claw each other back. It is an attractive idea to have an overall program that breaks down those barriers: Here is a certain amount of income; we will not put much administration into it and we will dissolve all these other programs into one.
At that point, that is when we start to fine-tune, at least in our minds. We say we would not pay them to everyone; we would only give them to some people. Of course, we would want to gradually reduce the amount of income that went to any particular person or family as they started to do much better through their own means and their own employment. Therefore, we did not set out to design a guarantee, but rather to take a number of the programs we have now, improve them, and then add to them in a strategic way some income refundable tax credits and working income tax benefits that we believe would significantly improve income security without taking all of those programs into one overall program.
Senator Peterson: You could call it ``Living with Dignity,'' if you want. We are just trying to get to a level where people can live with dignity; and as you say, we could take the programs where the money is already being spent. However, it is so convoluted that most times instead of designing a trampoline, we are designing a safety net, and they fall in and stay there.
Senator Callbeck: Your programs or suggestions are really broad-based income policies. There are people that argue that that is not the way to go, that we should take the money and target it on the most disadvantaged people, such as single mothers, and the mentally and physically challenged and so on.
What are your comments on that?
Mr. Stapleton: We have done very well in Canada; we have done fairly well with our seniors, which is one of the reasons we concentrated on working-age adults. There are still seniors living in poverty, but over a period from the 1920s through to the current age, we have done well in terms of our income security for seniors. We have also done reasonably well for our children in the form of the various different benefits that are available through our child benefit system. However, both of those systems, both for seniors and children, share four interesting characteristics.
First, we have a basic benefit that we provide to seniors and children. For seniors we call that our Old Age Security, OAS, and for children we call that the Canada Child Tax Benefit, CCTB, which grew out of the old baby bonus and family allowance.
Second, we have put in place a Guaranteed Income Supplement, GIS, going back 40 years, which was an income- tested benefit that we provided to seniors in addition to that basic OAS. We paralleled that on the children's side at a different place in our history and at a different time. We now have the National Child Benefit Supplement, NCBS, that was implemented in 1998.
Interestingly, in Canada, we have registered savings instruments: the Registered Retirement Savings Plan, RRSP, where we save a pension as adults for retirement, and the Registered Education Savings Plan, RESP, for children.
Finally, we have tax advantages to help people save for their retirement and to help parents and others save for their children's future. We do not have a set of programs for working-age adults that parallels that.
We seem to have built a set of programs for seniors in our income security and our children that parallel each other in an interesting way, even though they came about at different times. For working-age adults, we start to see the beginnings of that in the sense that we saw the Working Income Tax Benefit, or at least a modest one, introduced last year for people who are working. It has a special component in it for persons with disabilities and one for low-income parents, or lone parents, in recognition of the additional difficulties that they may have, especially accessing the labour force.
However, we do not have any basic refundable credit that we provide to all people to give them a positive account with the federal government. We do not really have a registered savings plan the way that the U.K. and the U.S. have for working-age adults to save while they are in a tax-advantaged way, while they are in their adult years. In our own Canadian way, we seem to be building an infrastructure that takes us toward an income security in those four particular ways for all our population not just for our seniors and our children.
Senator Callbeck: You mentioned the disabled. One of your recommendations for the federal government was to provide and administer a national disability income support program. What did you have in mind? That is for people who cannot enter the workforce at all, is it?
Mr. Stapleton: Yes, it is. Generally speaking, it is to recognize the fact that 40 or 50 years ago, we generally tended to think of persons with disabilities as being outside the labour market. We built the Canada Pension Plan and added the Canada Pension Plan disability component for people who are not in the labour force. Now that people with disabilities have generally changed their views — and we have tended to change our views as a society over those years — we are starting to look at everyone, to the extent possible, being able to access the labour market.
When we look again at our complex array of Income Security Programs that spend $125 billion, the disability component of that is about $25 billion. It is comprised of provincial social assistance programs for persons with disabilities; the Workplace Safety and Insurance Board — formerly workers' compensation; the Canada Pension Plan; private disability programs of various types; and the federal disability tax credits. The sense that the task force had is as follows: Is there a way that we can look at the $25 billion spent on income security for persons with disabilities and rethink the spending in that area for a much more comprehensive disability program that would not have all these various historical niches, which — especially in the case of Canada pension disability — can be outdated as far as people wanting to access the labour force? That is the real difference. It was a concern for people who try to access the labour force.
Senator Mahovlich: What age group are working-age adults?
Mr. Stapleton: Generally speaking, ages 18 to 64, approximately. We think of the children's group, from an income security standpoint, from birth to age 17; and then seniors, in the category of age 65-plus. That is how the Income Security Programs tended to be tied in. Various child benefits are paid up until the eighteenth birthday, and then Old Age Security and retirement programs kick in at age 65.
Senator Mahovlich: Many people retire at age 55.
Mr. Stapleton: Yes; the lucky ones.
Senator Mahovlich: I can recall when unemployment insurance used to go for eight months. You are now saying that it is up to 22 months?
Mr. Stapleton: No, that is not what I am saying. We are talking about the percentage of people who are unemployed. How many of those people are able to access the employment insurance program? We have tough rules now in terms of accessing the program, and something called the variable entrance requirement. Depending on where a person lives in Canada and the unemployment rate, that will govern whether that person is able to access that program.
In the case of the Ottawa area, when we did this report, less than 20 per cent of the unemployed could actually access that program. We see, on the one hand, a large surplus in terms of the money being paid into the program by businesses and contributors, while on the other, a significant majority of people who pay into the program who are not able to access it.
Senator Mercer: Thank you, Mr. Stapleton, for being here tonight. It was an interesting subject. You talked about dividing $125 billion into the number of families. That makes sense. When we remove the people who do not need it, then that gives us more money for the people who do.
You also said something about registered savings plans. I happen to serve on the Special Senate Committee on Aging. I learned this week, that less than 40 per cent of Canadians have non-governmental pension plans — whether that is from their company or from their own private plan that they manage. Many of these people are in a situation where, even if they have a small income from a small RRSP that they may have and are get the guaranteed supplement to their Old Age Security, it is being taxed at an alarming rate of 100 per cent when all the ways that it can be taxed are factored in.
Mr. Stapleton: Yes, it can go to 100 per cent.
Senator Mercer: You talk about a disincentive to do anything. That is certainly it for people who find themselves retired. We face a situation with a large labour shortage. We have heard testimony earlier that this is not just here; it is across the world.
In your studies, you have talked about working-age people, 18 to 64 years old. We are in a situation now, with a huge labour shortage across the country, where that group of people aged 65-plus are a target market to get back into the workforce if they have the time, knowledge, health or the ability to do certain jobs — maybe not the jobs they were doing when they were 30 years old, but certain jobs.
Have you examined any of that in your studies?
Mr. Stapleton: This is one of the issues that came before us and has arisen on a number of occasions. The whole idea behind RRSPs is that we have a larger income during our working age and then a lower income once we retire. Therefore, once we start taking the money out of the RRSP and put it into a Registered Retirement Income Fund, RRIF, et cetera, we will be paying at a lower tax rate and we will have received the benefit of the deduction when we were earning more.
Low-income people often find that when they turn age 65, their income goes up. Someone who actually has the opportunity to put money into an RRSP, if he or she is a lower-income person, ought not to do that because they will actually have a higher income when they turn age 65 and will be taxed at a higher rate.
Programs such as public assistance of various sorts and child benefits, et cetera, are not subject to tax, whereas Old Age Security and CPP are subject to tax. The situation that you were mentioning in particular was the Guaranteed Income Supplement, where if someone takes money out of an RRSP, it will cut into the GIS that he or she receives. All the tax advantages that RRSPs provide are reversed for people who are low-income; it is actually not in their interests to take those out.
Certainly, the preponderance of advertising does not make a distinction in this sense. The type of advice that one gets is that it is universally the case that one would be advantaged by taking out an RRSP and putting in those types of savings when, in fact, that is not the case.
Although we did not comment on that in this particular piece of work, it was certainly something we heard about as we were undergoing those deliberations.
Senator Mercer: One suggestion that I have heard made was that we allow a certain level of income — whether it be from their RRIF or from actually working — for those people who do not have the advantage of having an RRSP; that if we allowed a $4,000 or $6,000 income level, that would be excluded from the clawback.
That gives incentive for people who find themselves retired to go back to work on a part-time basis, which would help solve our labour shortage. Why would anyone do that if earnings will be taxed at 100 per cent? It also helps improve the retired people's situation, obviously; and it has a domino effect in that it frees up some housing that they may be occupying, because they can maybe afford something a little better.
Mr. Stapleton: Any of those jump-start income exemptions are all to the good. Of course, they will cost money in terms of the overall government programs.
Senator Mercer: They will not cost money. Yes, someone can put a dollar figure on this, but it will be a dollar figure of taxes not collected, not money coming from the government to the individual.
Mr. Stapleton: I agree.
Senator Mercer: That is a different type of incentive. If we ask governments to give people money, that is one thing; but if we do not take money from them, that is another form of incentive.
Mr. Stapleton: Absolutely.
Senator Mahovlich: What do we do for immigrants that enter the country, or do they have to have a job before they get in?
Mr. Stapleton: It depends on the particular situation under which someone comes into the country; for example, to come in as a sponsored refugee would be a particular situation. We have family-class immigrants, independent immigrants and people coming in for skilled trades; there is a variety of reasons that someone will come in.
In terms of the Income Security Programs, many of those do not kick in right away. First, you have to be a permanent resident in Canada and accepted to at least be legally in the country in order to be provided the benefits of any program. For most provincial and federal programs, there are waiting periods of various sorts for assistance; they can vary anywhere from three months to six months to a year before those programs are available.
For our Old Age Security programs, there is a much longer wait. You have to wait 10 years before you are eligible for Old Age Security. Certainly, for social assistance programs of any sort, those programs can be made available to people in the shorter term.
Senator Gustafson: The gentleman from Australia was saying that the mindset of the people is very important. I wonder if we are heading in the right direction. It seems we just throw money at a problem, and it seems to get worse. I realize there are situations where they cannot earn a living. I am not talking about that; those people should be looked after well.
However, right now, in our area at least, if we can get a carpenter — or a plumber or an electrician — for under $400 a day, we are doing very well. It is impossible to get them; yet, we do not seem to be able to move people into an area where they become someone who is putting funds into society and into their own welfare.
I wonder if it is the mindset we have created to some extent.
Mr. Stapleton: What strikes me, senator, is when we go back to the beginning of the Canada Assistance Plan in 1966. It is important to go back to 1966 and 1967 because that is when many of the programs that we have today were put into place. If we look at our CPP, our modern OAS and the GIS, all of those programs were introduced in a short period of time right before our centennial year.
When we look at the Canada Assistance Plan back in 1966, it talked about people being effectively outside of the labour force. It generally considered women to be outside of the labour force, and parents. It looked at women and described them in terms of lack of principal family provider. It talked about persons with disabilities. In each case, there was either an overt mention or the absolute understanding that many working-age adults would be effectively outside the labour force.
We come to our situation today, where we have much more robust employment. There have been so many changes in our society where now almost everyone works. Not only do we have a societal expectation that people will work if they can, but among all those groups, we do not find lone parents saying that they do not want to work. In fact, in our deliberations, it was a very distinct minority of people who did not want to work in the paid labour force.
We find that with persons with disabilities. All the people who we effectively considered outside the labour force 40 years, we consider them in, and they consider themselves to be part of that labour force, which is a happy thing.
We have these programs, many of which come out of that vintage of programs designed to pay people when they do not work. For example, with the CPP program for disability, if someone goes back to work, it just completely stops. It does not take 50 per cent of their income away, or 25 per cent; it takes 100 per cent away. That is because it is of that particular vintage.
My answer to your question and my take on it is more that society has changed. People's attitudes have changed and, in many cases, our programs have not. They are keeping people back; they are keeping them trapped and from taking on the work they otherwise could.
You are quite right when you point out these labour market demands that we have and not being able to get people. We need to be moving those people from all these groups that traditionally were outside of the labour force into the labour force.
Senator Gustafson: What about immigration coming in? It seems to me that we would rather bring in the highly educated. I suppose the thinking is that they can contribute to our society.
For instance, we just cannot get farm labour today. If we cannot get some 70-year-old retired farmer to come and help us, we will not get help; that is all there is to it.
They will work on the oil rigs and that is a tough job. They are hanging out there on the oil rig in minus 19 degrees and using that steel, and the water that comes with it. That is no fun. I am telling you, they are worth the $35 an hour that they get.
It appears to me that we have to change some things to deal with the problems. The rich are getting richer and the poor are getting poorer in our society today.
Mr. Stapleton: Certainly the statistics bear that out.
Senator Gustafson: They seem to.
Mr. Stapleton: Yes, senator. With respect to the situation that you are pointing out, where we have to import labour, I suppose there is a fairly famous saying that all our growth and our labour market — given our demographics and the baby boomers retiring — will come through immigration.
That need not be if we were able to take those parts of our labour force that we have right now that are effectively outside of it and do more to bring them into it. Those are the very types of things we were recommending in this report, so that we would be able to change those programs to give people the incentive to come into them. It would make economic sense for them to do so.
Senator Gustafson: I wonder if we will learn the lessons that the Americans never learned, even with their housing program. On CNN, I believe they said that Cleveland had 8,000 homes vacated. We are heading into an era where housing has gotten so high that even two working people will not be able to afford a home. Even two working people with an income much higher than minimum wage cannot afford a $500,000 home. People are getting older, and we have fewer people contributing to the wealth of the country.
Mr. Stapleton: On this particular MISWAA task force, we were able to attract two of the senior economists of the banks. These are people who work in downtown Toronto and see the cost structure and what it costs to live and work there. One becomes immediately very concerned about how one can make ends meet and be able to live in Toronto, where the housing is that expensive.
Of course, people often travel long distances on various forms of public transit. The cost of a GO Train ticket combined with a Toronto Transit Commission pass means people have to make a large amount of money before it will be worth their while overall. That is where we start to see some of those labour shortages in the downtown core.
Senator Peterson: You mentioned earlier that in the Ottawa area — I may have this wrong — that 80 per cent of unemployed people cannot access the program?
Mr. Stapleton: They cannot access Employment Insurance, EI.
Senator Peterson: Why would that be?
Mr. Stapleton: First, there are a number of people who do not pay into it because they are independent contractors and go into this situation where, in fact, they are not actually paid. They are not employees, but they are in an individual contractual situation where they may be sole proprietors, and that may be the only way they get a piece of that particular business. We have often seen that, for example, in immigrant communities. When those people lose their jobs, they will not have access to Employment Insurance.
Second, there is the threshold number of hours that one has to obtain in order to access Employment Insurance. Many of our jobs, especially if we look at some of the service-area type jobs — last-hired, first-fired — where people who have a tenuous attachment to the labour force try to get as many hours as they can through split shifts and various different employment where the jobs are.
Ottawa, for example, is a low unemployment area, and the Greater Toronto Area is a reasonably low unemployment area. As a result, the amount of hours under this particular provision of the Employment Insurance Act, called the variable entrance requirement, means the threshold is very high.
A third instance, of course, is people who are working part time as employees, but then they will be independent contractors for something else. They will have a hard time accumulating those hours also.
We have a situation that every wage employee, from the first dollar of income that one makes as an employee, one has almost 2 per cent come off the paycheque. We all see it on our pay where we have an EI deduction.
People pay into that program and then do not have the opportunity to be able to access it.
Senator Peterson: The employers are driving that too. They want part-time employees because they do not want to pay long-term benefits. It will probably be a perpetual problem. I imagine all the EI revenue goes into general revenue too. It is not segregated, is it?
Mr. Stapleton: It would build up as a national surplus, and then it goes to the government. The government may make the opposite point, that at times when the EI program is in deficit, that income would have to come out of general revenues for that. However, we have not been in that situation.
Senator Peterson: I guarantee you we will not be either.
Mr. Stapleton: I believe I agree with you on that.
Senator Callbeck: There are a couple of areas on which witnesses have commented. You have talked about the Canada Assistance Plan, which of course is the 50-cent dollar: The province spends a dollar on social services and the federal government puts up a dollar.
We have had witnesses who have said that the federal government should reinstate the Canada Assistance Program. You talked about it and said that that was brought in in the 1960s, but now times have changed. I take it you do not feel that that is the right course of action.
Mr. Stapleton: I will choose my words carefully, senator. When we go back to the 1960s, we had a number of different federal cost-sharing programs: programs for highways, agricultural rehabilitation, the Agricultural Rehabilitation and Development Act, or the ARDA program, and the Fund for Rural Economic Development, or FRED program, that went on top of that. It was an era in which the federal government put its own 50 cents on the table and then hoped that the provinces would put up the additional 50 cents.
With the very different fiscal situation that we have now, and especially as we moved into an era of having a Canada Health Transfer and a Canada Social Transfer, and how we have moved with equalization and the various different layer-cake funding that we have, it is probably not a point on which we could simply turn back the clock and suggest bringing in a federal cost-shared program in this one area and be able to do so without considering all of the other various areas.
We have taken the idea of equalization out of the Canada Social Transfer and made it a flat situation. However, we have the Employment Insurance program, which we have been talking about in various different questions tonight, that is a program that very much favours certain provinces because they have higher unemployment rates and certain areas of the country — because it is done by area of unemployment — where there is an equalization component to it.
Although the Canada Assistance Plan was a very good program in terms of setting national standards by the types of rules that it put in place that affected provinces and territories, before simply reinstating the Canada Assistance Plan, we would want to do a careful study of all the other funding changes that have taken place within the federation.
Having said that, there is a major federal role, in terms of federal spending power; in terms of the Income Security Programs that we have at the federal level, whether by constitutional amendment, by spending power or through the tax system. Therefore, the federal government, because it funds over 80 per cent of the income security system in Canada, should not be silent about federal expectations in terms of income security in Canada. The federal government, even though it spends 80 per cent of the income security system, does not really have an overall plan for how income security should be handled within the federation. Therefore, it would seem incumbent on the federal government — as it did with the Canada Assistance Plan, in its cooperative federalist ventures with provinces and territories — to have an overall vision for what income security in Canada should be. That is what we are really missing from not having a program such as the Canada Assistance Plan in place.
Senator Callbeck: We have heard some witnesses say that we need a national anti-poverty strategy. Are you familiar with the one they have in Newfoundland and Labrador and Quebec?
Mr. Stapleton: Yes, there are four provinces now that have brought in provincial anti-poverty strategies. Interestingly, all of the four provinces, whether it is Newfoundland and Labrador, Nova Scotia, Quebec or Ontario, have all implemented their own provincial child benefit system. It seems that that allowed them to start thinking, once they had put that in place, about having an overall anti-poverty strategy for their individual provinces. We will see, over the next period of time, coalescence among those four provinces in terms of the vision that they have to be able to bring all Canadians out of poverty.
We had an Angus Reid poll last September that said 80 per cent of Canadians are concerned that poverty is a major issue. Perhaps a different 80 per cent, but also 80 per cent said governments are not good at doing something about poverty. There is a sense amongst Canadians, if that poll is correct, that we have something that is of very great concern to Canadians; however, they do not feel government has done a very good job. It seems that the provinces hear that and believe, given Canada's economic performance — yet it has a relatively low level of social spending when compared to other Organisation for Economic Co-operation and Development countries — that we really have an opportunity and that there is a moment now in our history where we can start talking about the elimination of poverty, and there will be widespread public support for it.
Given that 80 per cent of the money being spent on Income Security Programs is at the federal level, it is certainly incumbent in my view and that of the task force that there is a major federal role in bringing about a national anti- poverty strategy.
The Chair: Thank you very much, honourable senators, and thank you, Mr. Stapleton. This is a very enlightening performance that you have given us tonight. Thank you so much for coming.
Honourable senators, before you move, we will take just a very brief break for a household matter that we need to get done.
You each have a piece of paper, and the clerk tells me that there is a housekeeping rule that we need to have before leaving on our trip to the North.
I would be asking for your approval of this, and I will simply read it the way it is:
That, pursuant to rule 89, from February 18, 2008 to February 21, 2008, the Chair be authorized to hold meetings, to receive and authorize the printing of the evidence when a quorum is not present, provided that two members of the Committee are present.
It is a ``just in case.'' We are in fine fettle.
Can I please have a mover and a seconder?
Senator Peterson: I so move.
The Chair: All in favour.
Hon. Senators: Agreed.
The Chair: Thank you.
The committee adjourned.