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No Fair: a Critical Analysis of Ontario's Welfare System

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No Fair: a Critical Analysis of Ontario's Welfare System Welfare—No Fair: A Critical Analysis of Ontario’s Welfare System (1985-1994) Welfare—No Fair: A Critical Analysis of Ontario’s Welfare System (1985-1994) by E. (Rico) Sabatini with Sandra Nightingale The Fraser Institute Vancouver, British Columbia, Canada Copyright © 1996 by The Fraser Institute. All rights reserved. No part of this book may be reproduced in any manner whatsoever without written permission except in the case of brief quotations em- bodied in critical articles and reviews. The author of this book has worked independently and opinions ex- pressed by him, therefore, are his own, and do not necessarily reflect the opinions of the members or the trustees of The Fraser Institute, or any other organization, agency, or government. No grants in any form or from any source were used in the writing of this book. Printed and bound in Canada. To our children and their generation, that they may leave a better society to their own children than we have left to Canadian Cataloguing in Publication Data Sabatini, E. (Enrico), 1955– Welfare, no fair Includes bibliographical references. ISBN 0-88975-163-3 1. Public welfare—Ontario—History. 2. Public welfare administration—Ontario—History. 3. Ontario—Social policy— History. I. Nightingale, Sandra, 1959–. II. Fraser Institute (Vancouver, B.C.) III. Title. HV109.05S32 1996 361.6’09713 C96-910376-X Table of Contents Dedication ............................ iv Acknowledgements ....................... vi Foreword by Michael A. Walker ................ vii Preface ..............................ix About the authors ........................ x Introduction .......................... 1 Chapter 1: Ontario’s Welfare System ............ 17 Chapter 2: The Social Assistance Review Board (SARB) . 37 Chapter 3: Youth and Student Welfare .......... 77 Chapter 4: Spouse in the House .............. 105 Chapter 5: Welfare Fraud .................. 129 Chapter 6: Adequacy .................... 173 Chapter 7: Dependency ................... 217 Conclusion .......................... 255 Postscript ........................... 265 Appendix: STEP Examples ................. 275 Glossary of Abbreviations .................. 279 References ........................... 281 Acknowledgements HIS ACKNOWLEDGEMENT WOULD BE COMPLETE by simply saying that I Tcould not have written this book without Sandy. Period. She atten- tively listened to my ideas, which of course would come in flashes at the most inconvenient times. She patiently endured forfeiting the dining room table for six months to a computer, papers, and books. She edited and re-edited my chapters while writing and defending her own Mas- ter’s thesis in English literature, and while starting her Doctorate and raising our children. Professor Chris Sarlo’s comments on the manuscript were invalu- able. The suggestions offered by Thom Corbett have also been much ap- preciated. There are others who must be mentioned, including my parents, family, and friends for their continual support, and especially our five children who would occasionally give up their computer games to let me write. Lastly, I am indebted to The Fraser Institute for agreeing to publish this book. Foreword HE FRASER INSTITUTE HAS LONG BEEN CONCERNED about the condi- Ttions under which welfare is advanced in Canada. There are two reasons for this. First, generous welfare programs can have a negative effect on recipients. Second, the conditions under which welfare is de- livered may create an inequity between donors and recipients. For a long time, economists and sociologists have recognized that the availability of support from the state creates an incentive for people to organize their lives in such a way as to take advantage of the benefits available. At the margin, people’s decisions are influenced by the incen- tives that are provided. Young people faced with what they regard as a “tyrannical regime” in their home, opt for an independent life at the tax expense of their parents and their neighbours. Workers with seasonal employment begin to rely on, and then plan on, collecting welfare as bridging financing to tide over them from when their unemployment insurance runs out to when their next job starts. Single mothers, seeing no husbands with equal earning power, in effect marry the state as their best available option. The academic literature has insufficiently recognized the extent to which people are willing and able to subvert the original intent of wel- fare, and essentially engage in the fraudulent use of the program: single mothers teaming up with welfare-recipient males; people collecting welfare while working; couples collecting multiple benefits and accu- mulating incomes which are above the community average. viii A principle reason for the underestimation of the effect has been the simple lack of knowledge about how people use and abuse the system. This book fills that gap in knowledge; it is a thorough documentation of the way welfare works in practise. The insights that are provided also shed light on the other concern which The Fraser Institute has had about welfare—the extent to which it treats unfairly citizens of similar prospects. This careful discussion of how welfare actually works makes it clear that there are a large number of working Canadians who work and pay taxes to support others with similar skills and opportunities who have opted for the relative ease of reliance on welfare. While it is a caricature of those who oppose gener- ous welfare payments that they unduly lionize the life that is available to welfare recipients, this book demonstrates that the concern is not without justification. Data in Welfare—No Fair indicate that when the book was written, the percentage of the population of Ontario receiving welfare benefits exceeded the percentage of the workforce that was unemployed in that province. It is now typical for 10 percent of the population of our prov- inces—including Ontario—to be dependent on welfare. This book dem- onstrates how we might have become embroiled in this situation, starting from the well-intentioned concern that there be a safety net to catch those temporarily in difficulty. This book really is a “must read” for every Canadian but especially for the citizens of Ontario who are concerned about the future of their province. The research in this study provides the basis for a complete overhaul of the welfare system. The Fraser Institute is pleased to pub- lish it and make it available to a wider audience. However, the authors have worked independently and the views they express may not accord with those of the members and the trustees of The Fraser Institute. —Michael A. Walker Executive Director, The Fraser Institute Preface NYONE WHO HAS DONE THE MOST CURSORY examination of the wel- Afare system is aware that views concerning it are politically and ideologically charged. Any attempt, including my own, to criticize the system runs the risk of being labelled “anti-poor,” or “poor-bashing.” However, I embarked on this project with a vital interest in construc- tively assessing the difficulties in the welfare system with a view to ben- efiting all Canadians, but most particularly those who are or will be ensnared in our so-called social safety net. My objective is to improve a system that has become unfair. The writing and researching of this book has strengthened my values on the importance of justice and caused me to reconsider the means by which this elusive concept might be more fully realized. I wrote the first draft of this book in the first half of 1995. The elec- tion of the Progressive Conservative government in June 1995 ended a decade of liberalism in Ontario’s social programs. The PC government made such significant changes to Ontario’s welfare system that my orig- inal critique was outdated before it could be published. I changed the parameters of the project to a study of Ontario’s welfare system between 1985 and 1994, a period dominated by a liberal approach to welfare. Because of the rate of change within the system, I would remind re- searchers to use the data carefully. The details of this book are histori- cally accurate, but the current rules, benefit rates, STEP exemption, and x other aspects of the system may quickly go out of date. Some recent changes have been addressed in a Postscript. My goal throughout the writing of this book has been to make it ac- cessible, informative, and enlightening with particular regard to the main obstacles to achieving a more just welfare system in Ontario. A better understanding of our past can only help in making wise decisions for the future. —E. (Rico) Sabatini About the authors Rico Sabatini has a Master’s degree in Sociology and has over 10 years’ experience working in the social services field in various capacities. Sandra Nightingale is currently completing her Ph.D. in Language and Professional Writing at the University of Waterloo. Introduction HE CONCEPT OF CARING FOR NEEDY community members is as old as Thumankind and has been manifested throughout history. Whether such help was sparked initially by some innate awareness of a social bond or by individual compassion for our fellows, we eventually estab- lished rules for governing our assistance to others. In Elizabethan times it was illegal to give money freely to able-bodied paupers, as it was be- lieved that such kindness would encourage them to beg instead of work. The Elizabethan poor law of 1601, in fact, marked the Crown’s first serious incursion into the field of social welfare. Throughout Canada’s early development, church and community groups assumed much of the responsibility for providing for the poor—though in our own century the provincial and federal govern- ments also developed an increasing involvement. The objectives of our early social programs were based on the commonly held beliefs and norms of a Christian society. Disaster victims, persons with disabilities, unwed mothers, and the inadvertently unemployed became eligible to receive public money. Canada was among the industrialized nations to acknowledge that the state should bear some active responsibility for its population’s gen- eral well-being.
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