Home » OAFB in the News » OAFB in the News 2008

Poverty carries a $38 billion price tag for Ont. taxpayers: Report

Ontario residents pay an estimated $38 billion a year for poverty, according to a landmark report released Thursday that looked at the price tag of being poor.

Increased expenditures in health care, crime and social assistance due to poverty cost each household in Ontario between $2,299 to $2,895 a year according to the report, which was sponsored by the Ontario Association of Food Banks.

Poverty also results in a loss of tax revenue because the poor work in low-paying jobs that generate fewer tax dollars. It also continues the intergenerational cycle of poor children growing up to be poor adults, the report said.

The report, The Cost of Poverty, was written in collaboration with economists and public policy experts. It took six months to complete and is the first ever in Canada to quantify the economic impact poverty has on taxpayers and governments.

It's calculated that the federal and Ontario governments lose as much as $13 billion a year to poverty in social costs, the report found.

"The total figures we came up with are staggering," said Adam Spence, the executive director of OAFB. "This is proof that poverty reduction is a very powerful . . . economic strategy that would generate a return for everyone."

The report used statistics provided by a number of federal agencies, including Health Canada and Statistics Canada, and was analyzed by two economists, including TD Bank vice-president Don Drummond.

Spence said it's important to point out that nearly one million households in Ontario are living below the poverty line and pay the highest price for poverty.

"We're not saying that if you reduce poverty, you'll get the exact return of what poverty costs because so many factors can play in the circumstances that the poor live in," he said. "But by reducing poverty, we'll reduce a portion of the costs that occur."

The report found that the biggest cost associated with the price of being poor is a loss of productivity, which the report pegged at approximately $8 billion a year.

"If we don't have the right kind of jobs or opportunities and we're losing a number of manufacturing jobs and replacing them with part-time and lower-rate positions, it's going to affect everyone's quality of life," Spence said. "It's incumbent for governments to act and to know that the reality is that poverty costs a great deal. More and more families are finding themselves in tough times. We need a national strategy."

The report urged governments to invest in a number of policies and programs, including early-intervention initiatives like a program in one low-income Toronto neighbourhood called Pathways to Education. It has been credited with cutting high school dropout rates from 56 per cent to 10 per cent and increasing college and university enrolments for residents from 10 per cent to 80 per cent. The value of the program's social benefits has been estimated at $50,000 per student, the report said.

Spence also urged that more money be spent on child care, education and programs that emphasize workplace integration for new immigrants and teach new skills and literacy to low-income adults. The report said that if 25 per cent of adults were able to move from the first income bracket to the second, as much as $1.5 billion could be generated for the province.

The Ontario government is expected to release its provincial poverty reduction strategy early next month.

Canada.com
Linda Nguyen
Thursday, November 20,  2008

Our Supporters