Bill M212: Poverty Reduction and Economic Inclusion Act

2014 Legislative Session: 2nd Session, 40th Parliament

Related article:
Time for bipartisan action to address root causes of poverty in B.C.
By Ted Bruce and Seth Klein are co-chairs of the B.C. Poverty Reduction Coalition (BCPRC), and Trish Garner is the community organizer. Ted Bruce is also the past president of the Public Health Association of B.C. and Seth Klein is the B.C. director of the Canadian Centre for Policy Alternatives.

May 8, 2014
Georgia Straight
Stephen Hui

This week, in the B.C. legislature, the official Opposition (MLA Michelle Mungall) introduced a private member’s bill proposing a B.C. Poverty Reduction and Economic Inclusion Act. The Act, were it to be enacted, would see the government develop a comprehensive poverty reduction strategy within one year, and legislate specific targets and timelines to reduce the breadth and depth of poverty.

British Columbia has had the highest poverty rate in Canada for the last 13 years, yet is now one of only two provinces left without a poverty reduction plan. It is about time B.C. caught up with the rest of Canada in tackling poverty upfront and saving lives and money through this approach.

According to a poll released last year by the B.C. Healthy Living Alliance, 78 percent of British Columbians think it is important for political leaders in B.C. to address poverty with a provincial poverty reduction plan with clear targets and timelines. Clearly, the public is ready for political leadership on this issue, so it is gratifying to see a proposed Act such as this.

Importantly, the proposed Act includes extensive community consultation, including with those living in poverty, and also outlines how a government should be held accountable for progress. It commits to embed targets in legislation, to appoint a lead minister, to have a cabinet committee to oversee the strategy co-chaired by the premier, to have an outside advisory committee to hold the government to account, and to annual reporting to monitor progress.

However, the process of implementing a comprehensive strategy should not serve to delay urgent first steps, as there are immediate actions needed, such as raising inadequate welfare rates that have been frozen since 2007 and continuing to raise the minimum wage.

It is significant that the guiding principles of the Act include protecting human rights, addressing the social and economic costs of poverty, and addressing the social determinants of health.

First, at the international level, Canada, in consultation with the B.C. government, has committed to several human rights obligations that guarantee social and economic rights to all citizens. In the International Covenant for Economic, Social and Cultural Rights (CESCR, 1966), which Canada ratified in 1976, Article 11(1) recognizes “the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing and housing, and to the continuous improvement of living conditions.” A comprehensive poverty reduction strategy would be a critical step in honouring this commitment.

Second, in relation to the costs of poverty, the costs of health care alone in relation to poverty are $1.2 billion per year. Adding criminal justice costs and lost productivity gives a grand total of $8-9 billion per year. A comprehensive poverty reduction strategy, including building affordable housing and providing universal childcare, would cost approximately half that at $3-4 billion per year. The question is not can we afford to do it but can we afford not to.

Finally, the growing literature on the social determinants of health reveals that tackling poverty upfront is the single biggest factor in improving health outcomes for everyone, not just those living in poverty.

The Act was previously introduced by the Opposition in June 2011 but did not receive a second reading in the legislature. There have been no significant changes in public policy to address poverty since that time. Rejecting this call on the grounds that the B.C. Jobs Plan will suffice, as the government has done, is clearly not working.

Despite a strong recommendation from the Budget Consultations report to “introduce a comprehensive poverty reduction plan,” the government failed to include any substantial measures to address poverty in this year’s recent budget.

This recommendation received the unanimous support from the members of the Select Standing Committee on Finance and Government Services, which listen to voices from communities around B.C. before making their decisions. Perhaps the government needs to reconsider their position on this recommendation?

All parties need to support the Act, as has happened in other provinces across Canada. Now is the time for bipartisan collaboration and action in addressing the root causes of poverty.

Living Wages in BC

Working for a Living Wage 2014
By Iglika Ivanova and Seth Klein, CCPA BC
Reports and docs

Living Wage rates in BC
Living Wages in BC – Map

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2014 living wage calculation: Parents need two minimum wage jobs each to support a family in Metro Vancouver
April 29, 2014

A report released today finds that the wage needed to cover the costs of raising a family in Metro Vancouver is $20.10 per hour. This is the 2014 Metro Vancouver living wage rate, the hourly wage that two working parents with two young children must earn to meet their basic expenses (including rent, child care, food and transportation), once government taxes, credits, deductions and subsidies have been taken into account.

The 2014 Metro Vancouver living wage rose by 48 cents from the 2013 figure of $19.62/hour, according to Working for a Living Wage 2014: Making Paid Work Meet Basic Family Needs in Metro Vancouver, a report published by the Canadian Centre for Policy Alternatives-BC office, First Call: BC Child and Youth Advocacy Coalition, and the Metro Vancouver Living Wage for Families Campaign. This represents an increase of 2.4%, much higher than the general inflation rate of 0.2% for Vancouver.

Living wage rates have also risen faster than inflation for the Fraser Valley and the Capital Regional District, to $17.02 and $18.93 respectively, where reports were also released today.

“The Metro Vancouver living wage rate has crossed an important threshold – it is now over twenty dollars – almost double the current minimum wage,” says Michael McCarthy Flynn, Campaign Organizer with the Living Wage for Families Campaign. “The stark reality of this is that workers in minimum wage jobs in Metro Vancouver have to work two jobs just to make ends meet.”

Child care and shelter costs are the two big drivers of the living wage increase. Child care costs rose by $48 per month, while rent costs were up by $50 per month. Other items in the family budget that saw increases higher than inflation were clothing and footwear (2%), MSP premiums (4%) and non-MSP healthcare expenditures (2%). MSP premiums rose in 2014 for the fifth consecutive year, and have added $30.50 to the family’s monthly expenses since the Metro Vancouver living wage was first calculated in 2008.

“Though a $20.10 hourly living wage rate may be a surprise to some, it is important to remember that this high wage rate reflects, in part, a failure of public policy to ensure affordability and a decent quality of life for all families,” says Iglika Ivanova, CCPA economist and co-author of the report. “Investing in universal affordable childcare, more affordable rental and social housing, or better public transportation would significantly reduce the costs of raising a family and lower the living wage. For example, the $10/Day Child Care Plan proposed by the Child Care Advocates of BC and the Early Childhood Educators of BC, would reduce the Metro Vancouver living wage by $3.57 per hour, bringing it to $16.53.”

BC now has the highest child poverty rate in Canada, and has ranked worst in Canada for nine out of the last ten years (we were second-worst in 2010). The story of child poverty is very much a story of low wages. In 2011 (the last year for which we have data), one out of every three poor children (32%) lived in families where at least one adult had a full-time, full-year job and a majority lived in families with some paid work (part-year or part-time).

“The living wage is one of the most powerful tools available to address BC’s troubling state of child poverty and working poverty more broadly,” says McCarthy Flynn. “It calls on employers to pay wages that reflect the actual costs of living in their communities.”

Thirty-six organizations in Metro Vancouver, employing over 6,000 workers and covering many thousand more contracted service workers, have been certified as Living Wage Employers. These include SAP-Vancouver, Vancity, The Canadian Cancer Society – BC and Yukon Division, the City of New Westminster and Eclipse Awards, winner of Small Business BC’s “Best Employer” in 2012 and “Best Green Business” in 2014.

Working poverty is a Canada-wide issue. 25 communities across the country, including 11 in BC, have calculated their local living wages and are campaigning to improve quality of life for low-wage workers. Metro Vancouver’s is in the unenviable position of being the first community where the Living Wage rate has broken the $20 per hour mark.

Ontario teachers shouldn’t invest in for-profit child care

By Charles Pascal, professor at OISE, University of Toronto, and former early learning adviser to the premier of Ontario
Toronto Star

Ontario Teachers’ Pension Plan recently purchased Britain’s largest for-profit child-care chain. Will new owners improve quality or cut back on salaries?

While there have been a few lean years, it’s nice to see the Ontario Teachers’ Pension Plan making tons of money for its more than 300,000 retired and current Ontario teachers, with a $5.1-billion surplus for this past year.

Ontario’s teachers have among the best retirement benefits in Canada. While some might think they are a bit too generous, I am not among them. The majority of our publicly supported teachers work hard in service of a better future for all of us and deserve to be properly compensated. But I do wonder if the rank and file would be comfortable with how their pension plan generates some of the resources that feather their nests.

Ontario’s teachers might wish to know that its pension plan leadership recently purchased Busy Bees, Britain’s publicly traded and largest for-profit child-care chain for more than $400 million and have plans for major expansion in other parts of the world.

Busy Bees was previously owned by the now-disgraced ABC big-box child-care company in Australia, known for its cut-rate approach to kids. ABC spent a good deal of energy fighting Australian regulations designed to improve quality while employing poorly qualified staff and spending little to assist their professional development.

When ABC bought Busy Bees from its founders, it partnered with a U.S. junk bond dealer who had spent a few years in the pen for securities no-nos. ABC went bust in 2008 as a result of huge debt repayment challenges, having overextended itself to become the world’s largest corporate kid’s-care business. Busy Bees’ original owners then bought back a majority equity position, with the highest-paid director earning a cool million this past year. Enter stage right, the Ontario Teachers’ Pension Plan, the new Busy Bees proprietor as of late last year.

Yes, profit-driven preschool is big business, especially if corporations like ABC undercut the already low wages paid to early childhood educators and skimp on better working conditions that would promote children’s learning, health and safety. Will Busy Bees’ new owners ensure proper investments in quality? Or will the pressure to earn enough to deal with unfunded liability challenges of the teachers’ pension plan lead to cutting back on staff salaries, professional development and educator-child ratios?

No question, the objective of the pension plan leadership is to produce maximum profit for teachers’ retirement. Over the years, they have done it extremely well. It is also true that most of us who still have pensions don’t know what’s in our pension holdings and/or the process for stock picking.

But there is an increasing desire on the part of big and small investors for a socially responsible approach that makes money while making a difference. The notion that a values-based approach to the markets cannot reap healthy profits is pure hogwash.

Given the huge assets of the teachers’ plan, it has the potential for meaningful engagement with the companies it owns about things like employment practices and the environment. A while back, I had a conversation with a previous head of the teachers’ plan about the social and economic impact of promoting a healthier, safer and more prosperous future that could derive from even a modest approach to socially responsible investing. He showed no interest, save for the influence the plan has tried to exert to improve governance practices of its “holdings.”

I’m certain that teachers and their unions, who valiantly fight for publicly funded education, would not want to be party to turning early education into a stock market commodity. And even when a union rep on a pension board raises an objection to a purchase infused with ethical contradiction, how often are they successful in swaying the “real” money-making experts around the table?

It’s crucial that our teachers and their reps pay closer attention to the holdings of their pension investments. In Ontario and elsewhere, we have seen an extension of publicly funded learning beginning earlier and earlier; inserting the profit motive of these big-box chains into the mix is simply not aligned with teachers’ belief in the importance of public investment in education.

How would teachers feel if their pension managers started buying up private elementary and secondary schools in Ontario and beyond? My guess is they would feel much better if their retirement investment objectives were more aligned with the aspirations they have for the future social context of the students they mentor.

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International Family Policy Comparisons: Why Canada lags behind

The Keeping in Touch enewsletter, a summary of Lynell Anderson’s keynote address at the UBC’s Human Early Learning Partnership (HELP) Fall 2013 Research Exposition.
Posted on 27 March 2014.

Canada lags behind most other industrial countries on many of the international family policy rankings, including public investments. In most provinces, this reflects the on-going fragmentation of both our systems for and our thinking about families with young children.

In her keynote address (which can be viewed here) to the UBC’s Human Early Learning Partnership (HELP) Fall 2013 Research Exposition, Lynell Anderson, Senior Researcher for the Generation Squeeze campaign at HELP, and a Certified General Accountant, explored what we can learn from international policy comparisons (with a focus on OECD countries including Norway, France, the United Kingdom, the U.S. and Australia), and highlights policy changes required to help children and families thrive in Canada. Her research focuses on the financing of family policy in Canada, especially with respect to child care services.

The shaky business of childcare and past lessons

Sydney Morning Herald
By Lisa Bryant, convener of Australian Community Children’s Services (NSW)

Australians seem, on the whole, to be happiest when our government is quietly taking charge of things without really bothering us with the ins and outs. We like it best when it acts like benevolent parents, efficiently cleaning up our messes, footing the bills and occasionally splashing out on the odd treat. But much like we expect of parents, we expect the government to get it right and without embarrassing us too much….

Parents are also supposed to act in our interests. We expect them to have long memories of our misdemeanours and to put limits in place to ensure that we don’t make the same mistake twice.

The Australian government cleaned up and paid the damage bill for one childcare mess after that spectacular failure of publicly listed provider, ABC Learning. Will the listing of a new childcare company on the stock exchange mean another damage bill for the country?

When ABC Learning went bust in 2008 it cost the Commonwealth $56 million to keep the centres operating until buyers were found for them. At the time it went under, ABC Learning provided almost 20 per cent of Australia’s childcare. Post the bailout, the government made strong noises about ensuring that it would put in place effective measures to ensure that never again would so many families’ childcare be put at risk.

But somehow, unlike the watchful parent we would like it to be, the government seems to have forgotten the misdemeanours of the corporate world when it comes to childcare and is now watching on the sidelines while three new corporate providers arise. The first company to list publicly after ABC Learning’s demise, G8 Education, holds about 3 per cent of the market with its 233 centres. The second one, Affinity Education started trading in December and will operate 68 centres. A third one, Sterling Early Education was supposed to go public early this week. This has been delayed while management recheck its forecast figures. Sterling hopes to purchase 77 centres.

Since the Howard era, successive governments have been indifferent as to the ownership structure of those providing childcare. If a service can attract families it is paid Child Care Benefit on behalf of those families. This is one of the things that makes childcare look such a good investment on paper – a guaranteed cash flow paid directly into company bank accounts by the government each week.

What is never seriously considered, however, is which sort of provider offers the highest quality childcare. For some provider types, financial return on investment is more highly prioritised than quality of care on offer….

For corporate providers, growth is everything. While they can grow by opening new childcare services, they prefer to take the less risky option of purchasing existing services. This is the strategy that G8, Affinity and Sterling have chosen.

Over the past year, G8’s share price has skyrocketed from $1.35 to $3.30 on the back of capital raisings, debt issuance and service acquisition announcements. The G8 share price appears to have already fully anticipated the immediate growth prospects for the company. By failing to hose down investor expectations as the share price shot up, the company is faced with having to support what some would consider a manifestly overpriced stock. It can only do this by either cutting costs or growing.

Cutting costs in childcare generally means reducing staff costs and G8 is currently close to the bone, spending just 60 per cent of its revenue on employee expenses.

Some of us look at the inflated share price as a symptom of a problem, but those who structure finance look at it as an opportunity. Hence, the listings of Affinity and Sterling. From the perspective of a private operator, one publicly listed company is good for an exit strategy; three such companies competing for market share is Christmas. No matter that paying too much for centre acquisitions is one of the things that got ABC Learning into hot water.

Publicly listed companies’ first mandated responsibility is to increase shareholder value – this can be in conflict with the provision of high-quality childcare. But even ignoring the ethical question of who should be providing childcare, the similarities between the new corporate providers and ABC Learning should be ringing warning bells. Could possible inflated share prices, questionable quality and shareholder pressure to grow cause similar results?

Unless our government takes some action to put boundaries around the growth of these three corporate providers now, once again they could be left cleaning up a big childcare mess.

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Childcare operators being enticed away from outer growth areas

The Age

The head of Australia’s biggest childcare operator, not-for-profit group Goodstart Early Learning, says the lure of higher returns is driving private operators to set up shop in wealthy, inner-city suburbs, rather than burgeoning outer growth areas.

Goodstart chief executive Julia Davison said some operators, faced with rising costs, were choosing to set up in high-income areas where they could charge higher prices for “premium” care.

“There is much more incentive for for-profit operators to set up in those localities where you can charge a high fee and where you’re going to get a high occupancy than there is for them to set up in middle or lower economic suburbs,” she said.

“If you wanted to make a profit, those are the obvious locations to go to… I wouldn’t be rushing to the growth corridors of Melbourne or low-socio-economic corridors.”

Her warning was echoed by Professor Deb Brennan at the University of New South Wales Social Policy Research Centre, who said reforms were needed to ensure taxpayer subsidies were not used to cover luxury services such as “baby massage, on-site chefs and yoga for toddlers”.

She said childcare operators in inner-city suburbs in Sydney and Melbourne were charging as much as $170 a day for childcare – compared to the national average of about $100 a day.

“We need to make sure that public subsidies get spent on reasonable costs, and not on luxury items,” she said.

Private operator Only About Children, run by investment banker turned childcare entrepreneur Brendan McAssey, charges up to $160 a day for its centres with services that include foreign language classes, nutritionists and health checks.

Its operations are mainly clustered in well-heeled suburbs such as Mosman, Neutral Bay and Rose Bay in Sydney, and it also operates a centre in South Melbourne.

The federal government, under its Childcare Rebate, covers 50 per cent of the cost of childcare up to $7500 a year. The rebate is not means tested.

The Productivity Commission, which is currently scrutinising the sector in an inquiry, says the subsidies cost taxpayers $5 billion a year “and growing”.

The Australia Institute, in its submission to the inquiry, pointed to an “uneven availability of childcare places” in Australia, noting that competition in the sector – and therefore choice for parents – was likely to be greatest in areas where the returns were higher.

The thinktank called for means testing of the rebate and to redirect funding to centres in areas of “highest need to maximise service affordability”.

Goodstart, which took over ABC Learning’s centres after the private operator collapsed in 2009, is owned by a coalition of not-for-profit charities including Brotherhood of St Laurence. It currently operates 641 centres around the country and has a national market share of about 10 per cent, IBIS calculates.

About 40 per cent of childcare centres nationwide are run by not-for-profits.

Ms Davison said the need for private operators to keep on top of costs and make a profit meant many were pursuing a “premium” brand of quality care in inner-city areas.

“We may not see the growth that is needed in those other communities to support both children and working families,” she said.

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