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June 26, 2006
Published in Edmonton Journal
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In November 2001 a report from a Government MLA Low-Income Review
Committee recommended changes that - had they been fully implemented -
could have significantly improved the lives of Albertans who rely on
the Assured Income for the Severely Handicapped (AISH) and social
assistance (Alberta Works) programs.
It took until May 2002 for the provincial government to release the
committee’s report. The government responded to the key
recommendations calling for enhanced financial support by saying they
would be implemented “as budget allows.” Despite running multi-Billion
budget surpluses, only limited changes have been made. These include
allowing some parents leaving social assistance to retain health
benefits and providing supplementary benefits to those leaving abusive
relationships.
During the fall 2004 provincial election campaign, the Premier created
a political firestorm with some ill-considered comments about AISH
recipients. In the political damage control that followed, the
Conservatives promised to take another look at the AISH program if
re-elected.
As part of a government re-organization after the election, the AISH
program was moved into a new Ministry of Seniors and Community
Supports. The Alberta Works program remained in the Ministry of Human
Resources and Employment.
Since then, these income support programs have gone in sharply
different directions. Significant enhancements have been made for AISH
recipients. However, very little has changed for those on Alberta
Works.
In January 2005, Seniors and Community Supports Minister Yvonne Fritz
appointed a second Government MLA committee to consult and make
recommendations for improving the AISH program. While many government
committees work at a glacial pace, this one managed to complete its
work within three months. As a result, AISH recipients received an 18
per cent increase in their monthly benefit levels to $1,000 per month
consisting of a $100 increase effective April 1, 2005 and a further $50
increase on April 1, 2006.
By contrast, there was no follow-up committee appointed by the Minister
of Human Resources and Employment. Alberta Works recipients did
receive an average 5 per cent increase in their monthly benefit level
on May 1, 2006, but only for recipients not expected to work. Over
one-half of recipients expected to work received no increase. Rates
remain at the same low level where they have languished since 1993,
despite huge increases in housing costs and significant erosion of the
real value of benefits due to inflation. A single person considered
employable receives $402 per month, far below what is needed to meet
basic needs in today’s booming economy.
Effective October 2005, AISH recipients also get to keep more of what
they earn through employment without suffering a corresponding claw
back of their benefits. The amount they could earn per month that was
fully exempt doubled to $400. Thereafter the claw back was reduced to
50 per cent to a maximum monthly employment income of $1,000 for
singles and $2,000 for couples.
Again by way of contrast, earnings exemptions for Alberta Works
recipients remain at the same low level of $115 monthly for singles.
While an adjustment to $230 monthly for single parents and couples was
made in late 2001, this is still well below the AISH earnings
exemption. The Alberta Works’ claw back on earnings above this level
remains at 75 per cent.
The average Albertan would not be highly motivated to work harder if
they were taxed at a rate of 75 cents of every additional dollar
earned. Yet that’s the unfortunate situation of 27,000 Albertans
receiving Alberta Works benefits.
If we truly want Albertans on low and limited incomes to work and
better themselves, why do we penalize them for doing so? If high
marginal tax rates are seen as a disincentive to work harder for
high-income earners, why are they not seen the same way for those with
low incomes?
A recent study published by the Institute for Research on Public Policy
finds that this policy keeps people trapped in poverty (IRPP Choices,
June 2003, p.40). The poverty trap occurs when low-income earners
cannot improve their income by increasing their work hours or wages,
because any earnings increases are off-set by withdrawal of income
support payments, child tax benefits, health care premium subsidies,
and other benefits. The withdrawal of benefits sometimes exceeds
increases in earnings resulting in an effective marginal tax rate of
over 100 per cent.
A number of straightforward changes could be made to provincial
low-income support programs at minimal cost to the public purse. These
modest needed changes include:
- Increasing earnings exemptions for the Alberta Works program to
the same level as those in the AISH program. The annual cost of
doubling earnings exemptions for AISH recipients was a modest $4.8
million.
- Tying monthly allowances to costs of basic necessities like food,
shelter and clothing. MLA salaries and benefits are tied to changes in
living costs. So should income support programs for Albertans
struggling to make ends meet.
Longer-term both AISH and Alberta Works rates should
be brought up to the poverty line. Several years ago, the federal and
provincial governments developed a ‘Market Basket Measure’ (MBM) to
establish a poverty line reflecting actual living costs for food,
clothing, shelter and other essentials. Now most governments –
including the Alberta government - are refusing to follow through by
basing their income support programs on the MBM they themselves
developed.
Alberta’s strong economy and robust job market has led to a two-thirds
reduction in the number of Albertans receiving Alberta Works benefits
over the past twelve years. Most people receiving benefits can’t work
due to illness or other factors. It’s time they received an income
allowing them to pay for necessities and live with some measure of
dignity.
John Kolkman is the Research and Policy Analysis Coordinator for the Edmonton Social Planning Council .
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