A new report prepared by TD Economics on behalf of the Task Force for Modernizing Income Security for Working Age Adults highlights the need for broad-based income security reform in Canada.

The task force, of which TD Bank Financial Group is a member, was launched last year by the Toronto City Summit Alliance and Toronto’s St. Christopher House to identify failings in the present income security system and recommend a road map for change. The Task Force is composed of leaders from the business, academic, government and non-profit sectors, including those with first-hand experience dealing with income security issues.

“While Canadian governments have made great strides in recent years in improving the financial security of children and senior citizens, the needs of low-income working age adults have been comparatively neglected,” said David Pecaut, chair of the Toronto City Summit Alliance and co-chair of the MISWAA Task Force. “There is overwhelming evidence that current policies and programs do little to support adults in gaining economic independence and forming a stable attachment to the labour force and, in some cases, run contrary to this objective.”

There is a social and an economic urgency to tackling these problems. “The challenges posed by an aging population make it imperative that no effort be spared to bring adults who can work into the labour force,” noted Pecaut. “And, while this is true across the country, it has particular relevance in Ontario, where changes in the way that income security programs are funded and delivered mean that municipal governments will face a serious financial crunch during the next economic downturn.”

The TD paper being released today focuses on a segment of the working age population that is particularly at risk – recipients of social assistance, who have been hard hit by a decade of cuts to welfare delivered by provincial governments intent on trimming deficits. “TD’s report is a major contribution to the work of the Task Force,” said Pecaut. It clearly lays out the scope and complexity of the problem, and provides valuable insight into the policy recommendations the Task Force is weighing.”

The TD report’s findings include:
– With respect to the primary goal of ‘making work pay’, the new Ontario Works rules represent an improvement over their predecessors, delivering a measurable reduction in the marginal effective tax rates that OW recipients face as they try to work their way off welfare.
– Still, the reality is that, even with the changes, welfare recipients in Ontario still face marginal effective tax rates of well over 50% per cent.
– Similarly, the August 2005 rules exacerbate existing inequities between low-income adults inside and outside the welfare system, but a closer examination of the reasons why suggests that the main cause is weaknesses in the rest of Canada’s income security apparatus.