Poverty in Canada – October 2016

By: Paul Young, CPA, CGA

Agenda

• What is poverty?• Household Spending• Conservative Party of Canada – Taxation Policies• Liberal Party of Canada – Family Benefits• Poverty Rates• % of low income Canadians• Wages and employment• Income inequality

What is Poverty?

• Poverty is about not having enough money to meet basic needs including food, clothing and shelter.  However, poverty is more, much more than just not having enough money.

• The World Bank Organization describes poverty in this way:• “Poverty is hunger. Poverty is lack of shelter. Poverty is being sick and not being able to see

a doctor. Poverty is not having access to school and not knowing how to read. Poverty is not having a job, is fear for the future, living one day at a time.

• Poverty has many faces, changing from place to place and across time, and has been described in many ways.  Most often, poverty is a situation people want to escape. So poverty is a call to action -- for the poor and the wealthy alike -- a call to change the world so that many more may have enough to eat, adequate shelter, access to education and health, protection from violence, and a voice in what happens in their communities.”

Source: http://www2.gnb.ca/content/gnb/en/departments/esic/overview/content/what_is_poverty.html

What is household spending?

Source: http://www.economicsonline.co.uk/Managing_the_economy/Household_spending.html

Household Spending / Canada

Source - http://www.statcan.gc.ca/daily-quotidien/160212/dq160212a-eng.htm

Household spending – by income

Source – Stats Canada

Comments• Shelter is biggest costs for low income Canadians. 1/3 spending is tied to shelter. Shelter

includes Rent and utilities • Food is 3rd largest. Food budgets will be impacted by key policies like hydro rates and carbon

tax

Conservative Party of Canada • Tax cuts – Over the past 8+ years the government has gave back $30B to Canadians:

http://globalnews.ca/news/1356467/tax-cuts-since-2005-net-canadians-30b-pbo/. • You have provinces like Ontario that have introduced health premium tax:

http://www.cra-arc.gc.ca/E/pbg/tf/5006-c/5006-c-13e.pdf. People making from 50K to 72K are paying from $450 to $600 more in taxes. So, how is the health premium tax helping the middle class or low income Canadians

• Cost of Living – Ontario has increase the price of hydro rates: http://www.thebarrieexaminer.com/2014/11/27/common-sense-reality-check-needed or http://news.nationalpost.com/full-comment/andrew-coyne-forget-the-liberal-mythology-canadas-middle-class-is-not-struggling

• Income inequality – Income inequality has been going on for the better part of 40 years. The Liberal in the 1990s did nothing on income inequality: https://www.policyalternatives.ca/newsroom/news-releases/martins-economic-record-marked-increased-income-inequality-no-real-wage-gains Here is what is said on income tax splitting: http://fullcomment.nationalpost.com/2014/11/05/andrew-coyne-conservatives-tax-package-with-income-splitting-corrects-inequality/. Justin says he would take the $2B income tax splitting and put it into infrastructure!

• Ontario has introduced the HST. HST now applies to many items that were exempt from PST: http://www.taxtips.ca/salestaxes/sales-tax-rates-2014.htm. So, how is HST helping the middle class? Additional Links: http://www.bdo.ca/en/Library/Services/Tax/pages/Tax-Factors/2014-01/Canadian-sales-tax-implications-of-selling-goods-over-the-internet.aspx

• All level governments are looking for more money as such property taxes have increases as well as the potential for new taxes/user fees: http://www.theglobeandmail.com/report-on-business/economy/economy-lab/kathleen-wynne-left-with-few-options-to-fix-ontarios-revenue-problem/article19813010

Liberal Policy – Poverty

Source - https://www.pressprogress.ca/liberal_government_decides_low_income_children_will_receive_500_less_than_originally_promised

Canada Poverty Rates

Source - https://www.fraserinstitute.org/sites/default/files/an-introduction-to-the-state-of-poverty-in-canada.pdf

Person(s) with low income

Source: http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil41a-eng.htm?sdi=low%20income

Summary1. Employment rose by 67,000 (+0.4%) in September, with most of the increase in part-time work. The

unemployment rate was unchanged at 7.0%, as more people participated in the labor market.2. In the third quarter of 2016, employment gains totaled 62,000 (+0.3%). This followed little change in

employment in the second quarter and a slight increase of 33,000 (+0.2%) in the first quarter.3. Compared with 12 months earlier, employment rose by 139,000 (+0.8%), with most of the gains in

part-time work. Over the same period, the total number of hours worked edged up 0.2%.4. In September, there were more employed people aged 55 and older. At the same time, there was little

change in employment among both the 15-to-24 and 25-to-54 age groups.5. Provincially, employment rose in Quebec, Alberta and New Brunswick. There was little change in the

other provinces.6. In September, more people worked in public administration, educational services, and transportation

and warehousing. At the same time, employment declined in health care and social assistance.7. Self-employment increased in September, while there was little change in the number of private and

public sector employees.

• Source – Stats Canada

Labour and Wages for Canada by key Sector

Source – Stats Canada

Employment Canada - BMO

• Source - BMO

What is income inequality

How is income inequality fix• Distribution of wealth

• Funding to Healthcare• Funding to Education• Funding to other social Programs

• Strong Middle Class/Job Creation

Ed Broadbent

LPC – Income inequality

Broadbent

• Broadbent – speech to the Finance Committee in 2013:• https://www.youtube.com/watch?v=KsUlt0bP2yU•  • Fact 1 – Harper has increased program spending either via the transfers or direct program spending. It is not

Harper’s fault if various provincial governments waste money - http://www.slideshare.net/paulyoungcga/provincial-transfers-and-program-spending. You do not have to take my word as you can watch this video - https://www.youtube.com/watch?v=xqLDHQ-iJU8.

• Fact 2 – Harper has done very good on job creation area despite lower world-wide growth. You do not have to take my word as you can review the Stats Canada results in areas like wage (reported), jobs by industry (reported), Exports (reported), etc. http://www.slideshare.net/paulyoungcga/economy-lpc-impact or http://mb.cme-mec.ca/?action=show&lid=XE8MT-GCZX2-KAD9G&comaction=show&cid=3CWP8-FKASM-JYNFE

• Fact 3 – Where is the discussion on private –vs- public sector? http://www.cfib-fcei.ca/english/article/7107-wage-watch-2015.html

• Fact 4 – Broadbent supports more moneys for daycare, right? We all know how well the PQ model has work, right? http://www.nationalpost.com/news/story.html?id=5a5e1555-093f-4959-9395-028c36daadc7&p=2

Broadbent• Fact 5 – Broadbent gives credit to the working class benefit. http://www.cra-arc.gc.ca/bnfts/wtb/menu-eng.html. So, how

come this benefit is not mentioned by either NDP or LPC? • Fact 6 – Broadbent talks about GIS increases which are now proposed by Mulcair. The issue that Broadbent does not discuss

is other programs like pension splitting. The article also is dated so it does not deal with RRIF or how many seniors are using TFSA - http://www.carp.ca/2015/04/21/carp-members-welcome-government-action-in-budget-2015/ FYI – Harper is planning to increase GIS - http://servingbrant.ca/node/48

• Fact 7 – Broadbent wants a new welfare program. It seems to me that Broadbent does not get the purpose of welfare. Welfare is not design to make people rich, but to help those that most need the support. Ontario has wasted moneys on gas plants, eHealth, etc. and that money could have went to helping the most vulnerable in Ontario. http://www.cbc.ca/news/canada/toronto/ehealth-scandal-a-1b-waste-auditor-1.808640

• Fact 8 – Broadbent is all over the stock options issues. Broadbent again does not get it about how small startup use stock options to as part of luring talent to their organization - http://www.bloomberg.com/news/articles/2015-09-24/ndp-plan-to-boost-tax-on-stock-options-seen-stunting-canada-tech

• Fact 9 – Tax avoidance was discussed and again since this is dated it does not deal with Harper and his government going after tax avoidance areas as part of taxation enforce, i.e. tax treaties, transfer pricing, OECD work, etc.

• Fact 10 – increasing the taxes to top 1% never brings in the revenue windfall due to how rich have accountants, lawyers, etc. that know how to work within the framework of the various countries’ ITA

• Summary:• I am not surprised by Broadbent as it is all about taxing the rich. It should be noted the information in Broadbent’s

statement are part of the NDP platform. This should tell you that the Broadbent Institute was directly involved with NDP platform.

Summary

• You fixed poverty several ways• Strong economy that creates jobs• Government stop hiking taxes and/or introducing new taxes• Government looks at better ways to deliver program spending• Government policies related to hydro rates • Too much focus on minimum wage hikes. Minimum wage jobs were

never design to be a career. • Education pushing people to careers that have job openings