Efficiency strategies | Food Policy for Canada

Adjustments to social assistance rules and support levels

Changes to Canada's approach to Employment Insurance (EI)

Minimum wage increases

This section addresses the general economy wage situation. For more on strategies to improve wages in the food system specifically, see Goal 8, Labour Force Development.

Provincial/territorial minimum wages varied significantly, however, across the country as it falls within their jurisdiction. In the face of wage suppression (see, for example, Get Started, Problems, Corporate Concentration and Zizys, 2015) and its impacts of labour and poverty, several provinces/territories have recognized the need to improve minimum wages. In Ontario, the general minimum wage was increased annually between 2004 and 2010, then frozen for three years before being increased again from $10.25 per hour to $11.00 per hour in 2014. Then it increased to $14/hour, and was scheduled to go to $15 but the progression halted at $14.35 when the current government rescinded the earlier plan, in part because it continues to believe in the contested economic idea that minimum wage increases suppress employment. However, in late 2021, the government changed its mind and will increase minimum wage to $15/hr, including for liquour servers, in January 2022. Manitoba announced an increase to $14.25 for April 1, 2023 with the expectation it would rise to $15.30 by October based on an inflation formula. NS will rise to $14.65, Saskatchewan to $14, PEI and Newfoundland and Labrador to $15 by Oct. 1, 2023. Ontario recently announced increases to $16.55 / hr for that date. BC's rate will rise to $16.75 June 1, 2023. Yukon appears to have the highest minimum wage in the country at $16.77.

Sectors under federal control followed the minimum wages in the province of work, but the 2023 federal minimum wage is $16.65/hr. Those provinces/territories under this level should take no more than 5 years to get to this level, with other rates relatively adjusted. Assuming full-time work for 2 parents, this rate would get a family of four just over the poverty threshold (the national average is around $40000/year with the federal government's Market Basket Measure). Of course, many minimum wage workers are also not employed full time and child care expenses for two children of working parents can be significant (rollout of the new federal / provincial childcare subsidies have been slow), so this only represents a movement in the right direction. All this means that minimum wage increases must be part of a broader set of strategies, as set out with these ESR solutions.

Adjustments to social assistance rules and support levels

The Maytree Foundation (Tweedle and Aldridge 2019) provides an overview of 2018 social assistance programming in each province and its adequacy. Tweedle and Aldridge (2019) report that 2 million Canadians have provincial social assistance as their main source of income. Social assistance levels are clearly inadequate across the country, for both general welfare and disability recipients. Depending on province and family unit, levels in 2018 ranged from 39-85% of the Market Basket Measure. Since about 2000, the percentage of Canadians who are beneficiaries has fallen substantially below the rate of unemployment, after many years of moving in parallel. Disability benefits have declined in real terms in all provinces except Quebec since 1989 (Food Banks Canada, 2019).

But also important are the conditions and rules that reduce recipient's ability to weather fluctuations in income and expenses. Because social assistance is positioned as last resort financial support, other sources and assets must be largely exhausted. "Households on social assistance, by design, lack savings, property, or other assets that could buffer unexpected expenses or income shocks; thus their vulnerability to food insecurity extends beyond their income levels" (Li et al., 2016). It's clear from the literature that the lack of buffering capacity is as significant as the lack of income (see Stapleton, 2008a,b,c).

Eligibility is determined in each province by a means test assessing income and relatively liquid asset levels. According to Tweedle and Aldridge (2019), in 2018, liquid asset exemptions ranged by province/territory from $50 - $10000 for a single person considered employable. Monthly earnings exempted are very low in several provinces and zero in others, with ongoing earnings typically resulting in dollar-for-dollar reductions in assistance or reduction rates of 30-50% after the exemption.

There is evidence from the literature that modest improvements in assistance program designs can have positive impacts on food security. In BC, a small one-time improvement in social assistance levels had a positive impact on those with low to medium food insecurity. From 2005-07, social assistance levels rose by up to 11.7% among single-parent households. The increases were, however, insufficient to buffer recipients for the economic downturn of 2008 and the food price increases of 2012 (Li et al., 2016). More recently, the BC Expert Panel on Basic Income set out a series of recommendations to make social assistance more effective (Green et al., 2020).

Newfoundland and Labrador's poverty reduction strategy halved food insecurity rates from 2007 - 2011, even while unemployment increased, associated with the financial crisis of 2008. Among other things (see Substitution), the poverty reduction strategy, which began in 2006, provided for incremental increases in minimum wage from $6-10 per hour from 2006-2010, better support to move from social assistance into the workforce (benefits would not be clawed back for the first month), reduced income tax for low to middle-income earners in 2009, reducing cost of living especially related to housing affordability for renters, health benefits, special diet allowances and prescription drugs. In 2011 they allowed higher liquid asset levels. As a result, food insecurity among households whose main source of income was social assistance was 46 percent compared to 65 percent in Ontario and up to 79 percent in Alberta (Loopstra et al., 2015).

In support of the evidence that modest improvements in program design can be significant, and given the nature of Efficiency stage proposals (ie, rapid transition to a state where all rates meet MBM thresholds will not be acceptable to most governments), a combination of rate and liquid asset exemption increases is proposed. The long-term objective is to create a more uniform approach across the country, with the federal government using CST negotiations to achieve a more consistent approach.

The median liquid asset exemption for single employable recipients as of Jan. 2018 is $1500. Within 2 years, that should become the baseline level, in other words, no province/territory should have an exemption below that level. Two years after implementation, the average level should be estimated and that should become the new baseline. This calculation should be conducted for each recipient category.

The median monthly earning exemption for single employable recipients is harder to calculate, but is estimated to be $200/month with a 30% reduction after that. This should be established as the new baseline for all provinces/territories. As with liquid assets, the average baseline should be established 2 years later.

For payment levels, with rates ranging from 39-85% of MBM, there's an immediate need to raise up the lowest rates. The median rate for each category should become the new provincial/territorial baseline within 2 years. Then the average should become the new baseline 2 years after that.

Tax system changes

Adjustments to tax benefit programs have proven successful at reducing food insecurity. For example, the 2016 federal shift from the Child Tax Benefit to the Canadian Child Benefit (CCB) resulted in an average of $2300 increase to eligible families (Brown and Tarasuk, 2019). The previous program had itself reduced food insecurity (Ionescu-Ittu et al., 2015). With the new program, generally, those with children improved their food security status compared to those without who were not eligible for the benefit. Kesselman (2019) modeled a re-targeting of existing CCB payments towards low and moderate-income households, and this suggested benefit increases of from 8 to 50% are possible. Brown and Tarasuk (2019) concluded that this re-targeting could contribute to more significant reductions in food insecurity.

The Ontario Child Benefit, a non-taxable, income-tested benefit paid monthly to low- and modest-income families with children younger than age 18 years, was partially successful at reducing food insecurity in 2009-10 and 11-12. It was designed to reach very low-income working families but only produced very small increases in income, suggesting some design flaws. One identified flaw was that the benefit phaseout threshold remained fixed at $20,000 and was not increased with inflation, which removed a significant number of families from the benefit after 2014. Overall, eligible families were a relatively small proportion of food-insecure households in Ontario and this may also have made the identification of a significant benefit more difficult (Tarasuk et al., 2019). All this suggests that modest design adjustments could produce significant improvements in the program.

Foodbanks Canada (2019) proposed that the federal government convert some federal non-refundable tax credits into refundable tax credits, including the Disability Tax Credit, credits for family caregivers, and credit for public transit users. This could gradually roll out so that the budget and impact effects could be monitored over a 5-year period. As part of the 2021 federal budget, the government pledged to make changes to eligibility for the Disability Tax Credit that it believes will help 45000 more people have access. Related to this, Bill C-22, a Disability Tax Benefit, has been adopted by the House of Commons and is now before the Senate (as of April, 2023). The regulations will be critical to making the benefit effective for poverty reduction.

Changes to Canada's approach to Employment Insurance (EI)

EI is designed to provide support during temporary periods without work, and historically is one of Canada's most important poverty prevention tools (Wood, 2019), but progressively the number of people eligible for regular and special benefits has fallen, partly because of policy changes, partly because of changes to the nature of work that have yet to trigger changes in the program. "As recently as the 1990s, EI covered 80 percent of Canada’s unemployed workers. Today, it is somewhere closer to 40 percent, largely due to non-contributors forming a larger share of the unemployed population" (Lim, 2020). Coverage is as low as 20% in our large cities. The growth in long-term unemployed, the gig economy, and self-employment (categories that don't typically produce EI contributions to the insurance scheme) challenge the underlying design features which are not suitable for the kinds of precarious work that many experience. Eligibility requirements/disqualifications and benefit duration and levels are the main limiting features, typically varying by unemployment rate in different regions. The Canadian EI system has been characterized as favouring seasonal workers over long-tenured employees and those facing short-term and episodic unemployment. The most penalized demographics are immigrants, young workers, and parents re-entering the workforce (Wood, 2019). Many times over the past 25 years, these restrictions have produced surpluses in the EI fund which have been used for other purposes by the federal government.

There were changes in the 2016 federal budget that the government claimed would expand eligibility to an additional 50,000 people by expanding coverage periods for long-time workers in some regions, reducing wait times for benefits, and reducing hours of work required for eligibility in some regions. There were also premium reductions (Evans, 2016). These changes have produced some modest participation increases (Johal and Hartmann, 2019). However, more substantial changes are required, including removing the reliance on the local unemployment rate to determine program eligibility conditions must be changed, by either employing a more complex mix of other labour market measures (seasonally adjusted change in employment, job vacancy rate, and the rate of employee turnover) or by creating a uniform national standard of program eligibility (Johal and Hartmann, 2019). Taking either approach would result in significant increases in beneficiaries of the program.

EI training programs have also been criticized and this is addressed under Goal 8, Labour Force Development.

Canada is also lacking a program of temporary income support for those who do not qualify for either EI or social assistance. Amongst others including Food Banks Canada (2019), the Mowat Centre (Johal and Hartmann, 2019) proposed a Temporary Unemployment Assistance Program for those ineligible for EI. It would have the following design features:

flat weekly payments within a set number of weeks within a set number of years.
a forgivable job seeker's loan, with repayment level dependent on income, once employment re-established.
could apply to some employed but experience income loss.
full-time students and social assistance recipients would not be eligible.

Given all the people not covered currently, MacEwen et al. (2020) proposed changing the definition of an ‘employee’ in labour standards at federal and provincial levels and increasing enforcement, in order to assure wider eligibility and officially recognize how work has changed. Some of this has been implemented in additional emergency programs during the COVID pandemic, and some temporary changes to EI rules have been implemented, including waiving waiting periods and extending weeks of coverage. The 2021 federal budget proposes that as Canada emerges from the pandemic period, beginning in 2021-22, the following legislative changes will make EI more accessible (2021 Federal Budget, p88ff):

- Maintain uniform access to EI benefits across all regions, including through a 420-hour entrance requirement for regular and special benefits, with a 14-week minimum entitlement for regular benefits, and a new common earnings threshold for fishing benefits.
- Support multiple job holders and those who switch jobs to improve their situation as the recovery firms up, by ensuring that all insurable hours and employment count towards a claimant’s eligibility, as long as the last job separation is found to be valid.
- Allow claimants to start receiving EI benefits sooner by simplifying rules around the treatment of severance, vacation pay, and other monies paid on separation.
- Extend the temporary enhancements to the Work-Sharing program such as the possibility to establish longer work-sharing agreements and a streamlined application process, which will continue to help employers and workers avoid layoffs.
- .... consultations on future, long-term reforms to EI.

Ontario's Workforce Recovery Advisory Committee has recommended a portable benefits plan for gig workers, tied to workers not workplaces. The intention is to reduce vulnerability and poverty associated with contingent work.

Old Age Security adjustments

Canada has one of the lowest rates of senior poverty in the world, in part because of the OAS, GIS and CPP (Emery et al., 2013). However, not everyone receives substantial CPP payments because of low lifetime attachments to the labour force. Rates for OAS and GIS, however, are not ideal for improving senior food security, especially for senior single women, 30% of whom live below the poverty line. The Canadian Labour Congress proposes that the GIS minimums be raised by 15% and that this would lift all seniors above the poverty line (Canadian Labour Congress). This increase should be implemented gradually within a 5 year period. Partially addressing this need, the federal budget 2021 (p232ff) proposes:

- ..... to meet the immediate needs of this group of seniors by providing a one-time payment of $500 in August 2021 to OAS pensioners who will be 75 or over as of June 2022.
- .... to introduce legislation to increase regular OAS payments for pensioners 75 and over by 10 percent on an ongoing basis as of July 2022.