New social assistance asset test welcome news

The 50 year experiment forcing welfare recipients and low income persons with disabilities into financial destitution finally appears to be over.

In Charles Sousa’s Budget 2017, asset limits for single welfare recipients will be raised from $2,500 to $10,000 for a single person and to $11,000 for a lone parent with two children. Persons with disabilities will have their asset limits raised from $5,000 to $40,000 for singles and from $7,500 to $50,000 for couples.

The amount families will be able to donate to family members receiving assistance will go from $6,000 a year to $10,000.

This is welcome news after the initial moves in 2013 that quadrupled asset limits for single welfare recipients from the equivalent of one month’s assistance (about $650) and allowed families to donate money to welfare recipients without penalty for the first time. In the four years since 2013, policy analysts learned what the province of Quebec and Alberta and the states of Ohio, Illinois and Virginia had known for some time – that keeping recipients of social assistance in complete destitution does not save money.

It is all well and good to rationalize welfare programs by saying that they provide a floor below which no recipient should fall. It is quite another thing to say that the floor should be a ceiling above which no one should be allowed to climb.

Many people will think that these new and welcome asset limits raise social assistance generosity to unprecedented heights – but they would be wrong.

There was a long period before the era of destitution when recipients of public assistance were able to keep a cushion of assets that allowed them to save the required resources to climb out of poverty. For example, the Mothers Allowances Act   of 1948 allowed a lone parent mother with two children to have liquid assets of $1,000. In today’s terms, that $1,000 would be $11,400, an amount that is actually $400 higher than the $11,000 proposed in the Budget.

Similarly, the asset limits in the Blind and Disabled Persons’ Allowances Act of 1951 were $50,000 in 1951 dollars or an amount of almost $500,000 in today’s terms, far above the proposed limits proposed for low income people with disabilities.

Those generous asset limits of yesteryear were abolished with the advent of the Canada Assistance Plan (CAP), the federal cost sharing vehicle that shared social assistance costs with provinces and territories from 1966 to 1996. During that period, the federal government and provinces alike were seized with the idea that social assistance and destitution should go hand in hand.

And even after CAP was decommissioned, provinces moved in the mid-1990’s to reduce limits far below the levels that CAP allowed. In 1995 in Ontario, the Harris government reduced the asset limit for a single welfare recipient to an unheard of amount of $520. Anyone who had more than $520 in liquid assets to their name became categorically ineligible for social assistance.

It has taken 20 years of progressive thinking to finally take the blinders off and see that enforced destitution does nothing to help anyone get back on their feet. All it does is artificially prolong the period of time the poorest among us must endure periods of poverty.

When asked in focus groups how poor Ontarians can dig themselves out of poverty, two of the most frequent answers from ordinary Ontarians are to build a cash cushion for a rainy day and to get help from family. It sounds like the Ontario government is finally listening.

But the surprisingly generous post war period in which social assistance asset limitations provides a cautionary tale for the future of social assistance in Ontario.  We have come a long way since 2013 but we can do a lot better in the future. Let’s hope that government continues to listen.

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