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Nearly half of all Canadians just a few paycheques away from welfare in Canada, warns finance committee

The Globe and Mail (Toronto, ON)
Friday, December 13, 2002
Page: A10
Byline: Amy O’Brian, Social Policy Reporter

When the House of Commons finance committee tabled its wish list for the next budget two weeks ago, a proposal to boost the amount of money Canadians could stash in their registered retirement savings plans every year was high on it.

Raising the RRSP limit from $13,500 to $19,000 a year was billed as a change that would entice Canadians, who are saving less these days, to set aside more income for their retirement years.

To Steve Kerstetter, a social-policy consultant and former executive director of the National Council of Welfare who has studied the growing gap between rich and poor Canadians, it was another blatant example of a government fixated on lining the pockets of the country's wealthy few at the expense of struggling families."

Who's that going to benefit?" he asks. "This is the group that by and large is financially secure already, and here you have a Commons committee recommending even larger tax breaks for them at a cost to taxpayers in general."

In a report called Rags and Riches released yesterday, Mr. Kerstetter draws on Statistics Canada data on wealth, collected four times in the past three decades, to show that the richer are richer, the poor are poorer, and nearly half of Canadians are a few paycheques away from the welfare office.

The report, published by the Canadian Centre for Policy Alternatives, found that the average fortunes of the richest 10 per cent of Canadians more than doubled in the past 30 years, from $442,468 in 1970 to $980,903 in 1999.Over the same three decades, the poorest Canadians suffered an average loss in personal wealth of $2,355, with their debts swamping their assets by $10,656.(The report calculates wealth as the value of all personal assets such as houses, vehicles and bank accounts minus all debts, expressed in 1999 dollars.)

"Do governments have sensible tax policies? The answer, clearly, is no," Mr. Kerstetter said."

Politicians over the last little while have been obsessed with how we can give tax breaks on things like RRSPs, and capital gains and stock dividends, and all these things are assets concentrated among wealthy Canadians. It seems governments have spent inordinate amounts of time in devising tax policies that benefit primarily people who don't need it."

In B.C., where the Liberal government of Gordon Campbell swept to power on a platform of income-tax cuts, the 1.1 per cent of tax filers with incomes of at least $150,000 a year stand to pocket 20 per cent of the forecast $1.3-billion drop in tax revenue, the report says.

Ottawa and the provinces have slashed the social safety net that cushions those down on their luck, cutting welfare rates and drafting tough new Employment Insurance rules. And funding has been pared for medicare and education.

While Canada's large middle class grew richer over the past three decades, the personal fortunes of the wealthiest slice of the population increased most sharply and the poorest 10 per cent lost ground.

In 1999, the richest 10 per cent of Canadians had 53 per cent of the country's personal wealth; the wealthiest 2.5 per cent of families alone command 29 per cent.

Debts among the poorest, meanwhile, have mounted. Of the $15-billion in outstanding student loans, for example, nearly $8-billion was owed by the poorest 20 per cent of families.

Expressing the growing gap in Canadians' wealth a different way, the report states that the richest half of families possess 94.4 per cent of personal wealth; the poorest half share what is left. The median level of wealth (assets minus debts) in 1999 was $81,000. 

Economic inequality in Canada pales next to that in the United States: While the richest 20 per cent of Canadians control 70.4 per cent of the wealth, the top 20 per cent of fortunes in the United States account for 83.4 per cent of all personal wealth."

The bottom line on this is we have a political democracy. One person, one vote. Everyone is the same," he said. "But we have an economic system where there are huge extremes of wealth. How does that affect democracy when everybody knows money talks?"

© 2002 Bell Globemedia Interactive Inc. All Rights Reserved.

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