Society

Children who experience poverty, especially persistently, are at higher risk of suffering health problems, developmental delays, and behaviour disorders. They tend to attain lower levels of education¹ and are more likely to live in poverty as adults.²

Moreover, it has been suggested that the failure to address poverty places a heavy burden on a country’s economy. As the OECD has concluded, “failure to tackle the poverty and exclusion facing millions of families and their children is not only socially reprehensible, but it will also weigh heavily on countries’ capacity to sustain economic growth in years to come.”³

The Conference Board of Canada uses the OECD’s relative measure of child poverty,⁴ which calculates the proportion of children living in households where disposable income is less than 50 per cent of the median in each country.

At 15.1 per cent, Canada’s child poverty rate is higher than the 17-country average. More than one in seven Canadian children lives in poverty. Canada ranks 13^th on this indicator and scores a “C” grade.

The Nordic countries—Denmark, Finland, Norway, and Sweden—have the lowest rates of child poverty, with less than 5 per cent of children living in poor households. The relationship between social spending and poverty rates has become more obvious over time, so it is no surprise that the leading countries boast strong traditions of wealth distribution.

The U.S. continues to have the highest poverty rate among industrialized countries. Along with Germany and Ireland, the U.S. earns a "D" grade.

Not according to the latest statistics from the Organisation for Economic Co-operation and Development (OECD).⁵ In 1989, the Canadian House of Commons unanimously resolved to eliminate child poverty by the year 2000, and there was some initial success; the child poverty rate fell from 15.8 per cent in the mid-1980s to 12.8 in the mid-1990s. Since then, however, the rate has increased—to 15.1 per cent in the mid-2000s—reversing earlier progress.

Of the 14 countries for which historical data are available, Canada experienced the second-highest jump in the child poverty rate between the mid-1990s and the mid-2000s. Germany had the largest increase—from 11.2 per cent to 16.3 per cent. Four countries—the U.K., Italy, the U.S., and Australia—succeeded in reducing their child poverty rates, although the U.S. still has the highest child poverty rate. The U.K. made the most progress during this period.

In 1999, the U.K. set out on a 20-year mission to end child poverty through a series of integrated policies, including strengthening early learning, education, affordable housing, and health services, as well as raising the minimum wage and augmenting child benefits. The original target was to halve child poverty by 2010 and to end it by 2020. The latest poverty figures show that, between 1998 and 2006, 600,000 children were lifted out of poverty.⁶ While still somewhat short of the government target of helping 850,000 children, the U.K. now has a lower child poverty rate than that of Canada. In last year’s report card, the U.K. ranked 16th out of 17 peer countries for child poverty rates in 2000. This year, with new data from the mid-2000s, the U.K. ranks in 9th place—a significant improvement. To make the 2020 target, a report by the Joseph Rowntree Foundation asserts that both more resources and new programs are needed: “Further progress depends on a big shift that raises the level of resources invested and widens the scope of anti-poverty measures. [for example] . . . Improvement of in-work incomes is particularly needed—there has been little progress on reducing in-work poverty and existing policy tools seem inadequate.”⁷

Canada, like Australia, has received steady “C”s since the 1980s for its child poverty rate.

Four Nordic countries have been consistent “A” performers—Denmark, Finland, Norway, and Sweden. The U.S. has been the only consistent “D” performer.

The Nordic countries have long been upheld as leaders in maintaining low rates of poverty. Their success lies in universal welfare policy that has been effectively combined with job creation strategies that support gender equality and accessibility.

There is a long-standing debate about the most effective means of reducing poverty. A recent OECD study on the effectiveness of child poverty strategies in OECD countries determined that the answer lies in striking the appropriate balance between a “benefits strategy” and a “work strategy.”⁸ The debate hinges on the apparent trade-off between ensuring adequate income assistance for families and providing incentives for people to work and provide for themselves.

On the surface, a benefits strategy appears to be most effective in reducing child poverty. Certainly, the relationship between social spending and poverty rates is striking. Denmark, Finland, Norway, and Sweden—four of the top performers on this indicator—all allot about 3 per cent or more of gross domestic product (GDP) for direct public spending on families, a full percentage point higher than the OECD average. And among the working-age population, relative poverty rates are lowest among OECD countries where social spending is the highest.

A clear link has been made, however, between joblessness and poverty. In Canada, relative poverty rates are highest among single parents and even more pronounced among non-working single parents. Across the OECD, non-employed families are the most economically disadvantaged, which means job creations strategies are an integral part of tackling poverty.

Countries that have reduced poverty rates have turned away from passive, benefits-only poverty reduction schemes in favour of national anti-poverty strategies that incorporate a number of “active” policies. Active policies are social policies that integrate strategies across governments, departments, and service providers to reduce poverty and increase self-sufficiency. For example, active job policies may be set up to help people overcome obstacles to get jobs through a combination of:

• funding jobs training
• providing child care
• introducing tax incentives for lower-paid workers

The Canadian National Council of Welfare argues that the only way to reduce poverty in Canada is through a national, long-term anti-poverty strategy that includes measurable targets and timelines, as well as a plan of action to encourage cohesion among governments and departments. The publication of its report Solving Poverty: Four Cornerstones of a Workable National Strategy for Canada, in late 2007, made the issue central to the 2008 Speech from the Throne.⁹ In April 2008, the House of Commons Standing Committee on Human Resources, Social Development and the Status of Persons with Disabilities unanimously agreed to devote a series of hearings to the development of a national poverty plan.

The policy response to child poverty in the last several years has included:

• The 2009 federal budget increased the income levels on which income-testing of the base benefit under the Canada Child Tax Benefit and the National Child Benefit supplement are based.
• The 2009 Ontario budget phased in the Ontario Child Tax Benefit two years early in July 2009 and made an additional $400 million available.
• The 2009 Quebec budget earmarked an additional $22.5 million per year to offset childcare fees.
• The 2008 Ontario budget increased the Ontario Child Benefit introduced in the previous year, to assist low-income families.
• The 2008 Quebec budget created a fund to foster the development of children under the age of five living in poverty.
• The 2007 federal budget introduced a new non-refundable child tax credit and increased the spousal credit for families with one wage.
• The 2006 federal budget introduced a Universal Child Care Benefit.

Yes. Statistics Canada publishes poverty rates for Canada using a different measure of poverty than the OECD uses. Statistics Canada’s low income cut-off (LICO) is a threshold that defines the status of a family’s income. Families below the threshold spend a larger share of their income on necessities (that is, food, clothing, and shelter) than the average family does, leaving less money to spend on transportation, health, personal care, education, household operation, recreation, or insurance.

Statistics Canada reports that the proportion of Canadian children in poverty fell from a peak of 18.4 per cent in 1996 to 12.2 per cent in 2001, edged up to 13 per cent in 2004, and fell to 9.5 per cent in 2007.¹⁰ According to the LICO numbers, an estimated 637,000 Canadians under the age of 18 live in low-income households.¹¹

¹ Marc Frenette, Why Are Youth From Lower-Income Families Less Likely to Attend University? (Ottawa: Statistics Canada, 2007).

² Dominique Fleury, “Low-Income Children,” Perspectives on Labour and Income 9, 5 (Ottawa, Statistics Canada, May 2008), p. 1 [online, cited September 9, 2009].

³ OECD, Combating Poverty and Social Exclusion Through Work, Policy Brief (Paris: Author, 2005).

⁴ Absolute poverty thresholds consider people to be living in poverty if their income is not enough to cover the costs of a given basket of goods in a particular year, updated annually for inflation. Relative poverty thresholds consider people to be living in poverty if their income cannot afford them the goods and services that are customary in a given society.

⁵ OECD, Growing Unequal? Income Distribution and Poverty in OECD Countries. (Paris: Author, 2008), [online, cited September 4, 2009].

⁶ Joseph Rowntree Foundation, Child Poverty. Website content. [online, cited September 4, 2009].

⁷ Donald Hirsch, What Is Needed to End Child Poverty in 2020?. (York: Joseph Rowntree Foundation, 2008), [online, cited September 4, 2009].

⁸ Peter Whiteford and Willem Adema, What Works Best in Reducing Child Poverty: A Benefit or Work Strategy? OECD Social, Migration and Employment Working Paper No. 51 (Paris: OECD, March 2007), p. 36.

⁹ National Council of Welfare, Solving Poverty: Four Cornerstones of a Workable National Strategy for Canada, [online, cited August 28, 2008].

¹⁰ Statistics Canada, CANSIM data. #V1560777, Table 202-0802 [online, cited September 4, 2009].

¹¹ Statistics Canada, CANSIM data. #V1560777, Table 202-0802 [online, cited September 4, 2009].

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