BC Social Services

Contact:

Owen Lippert, Director, Law & Markets
The Fraser Institute, (613) 565-0468, Email owenl@fraserinstitute.ca

Release Date: 9 April 1996

As One of Canada's "Have" Provinces, British Columbia Has…

We live in a beautiful and wealthy province. But British Columbians can no longer ignore the truth. Every province in Canada and the federal government have accepted that they spend too much money and get too little for what they spend.

Without change, B.C. may face a serious fiscal crisis before the end of this century, just when it could emerge as a powerhouse on the national and international stage.

Any party can initiate change. In Saskatchewan, the NDP acted to clean up its provincial finances. In New Brunswick and PEI, it was the Liberal party. In Alberta and Ontario, it was the PC party. In Ottawa, the federal Liberals have made real cuts.

All you need is a plan. Today, The Fraser Institute announced that it will release over the next two weeks the results of its 18-month study, Change and Choice: A Policy Vision for British Columbia - 101 Ways to Save the Province. It will present 101 recommendations that would lead, among other things, to savings of $3 billion, and a balanced budget by 1999/2000.

Policy recommendations will cover the following areas:

• A Fiscal Plan to reach a comprehensive balanced budget by 1999/2000
• An Economic Growth Strategy for more private sector jobs and higher wages
• A set of principles for Federal Provincial Relations to help save Confederation
• A method to privatize Crown Corporations in order to pay down the debt
• A rationalization of Government Services
• A plan to save public Health Care with competition and incentives
• A plan to return Social Services to emergency assistance for those in need
• A plan to reform Education by giving real choice to parents
• A plan to free Post Secondary Education institutions to pursue excellence
• A plan to fight Crime and to reduce cost and delay in the Justice System
• A plan to make Labour Law a reason to, rather than not to, invest in B.C. jobs
• A means to reach Aboriginal Treaties which respects the law and the bottom line
• A reconciliation of the Economy and Environment and Land Use decision-making
• A reform of the Legislature and Politics to ensure accountability

Finally, we invite British Columbians to use Change and Choice: A Policy Standard for British Columbia - 101 Ways to Save the Province as a guide to public policy as viewed from the perspective of market economics. No endorsement of any political party or candidate is made by The Fraser Institute, nor should it be implied.

This summary focusses on Social Services. The 11 April summary will cover Education and Advanced Education.

Change and Choice: A Policy Vision for British Columbia - 101 Ways to Save the Province

Part I: Social Services

Clarify the goals of the welfare system by adopting five "common sense" tenets:

1. Reaffirm that the purpose of welfare is to provide people in need with basic necessities.
2. Reduce the number of people on income assistance and increase services to those most in need.
3. Move away from bureaucratic check-delivery towards more personal supervision and motivation through greater community involvement.
4. Remove the disincentives that inhibit an individual's transition from welfare to work.
5. Increase efforts to eliminate fraud and wasteful complexity in the system in order to restore public confidence and ensure that public money helps those most in need.

• The goal is to achieve a 20% reduction ($400 million) in welfare spending, equal to the savings achieved in Alberta between 1992/93 and 1993/94. Such a reduction would take welfare spending back to its level in 1992/93.
• Limit Basic clients to drawing two years of benefits during any five year period. The goal is that time limits will lead to a 10% reduction in welfare use.
• Use the Basic Necessities Index (BNI), as developed by Professor Chris Sarlo, to set income assistance rates. A BNI measures the cost of the basic necessities of food, clothing, shelter, communications, and toiletries in a particular community.
• Keep welfare rates for single employables at their current level of 88% of the 1992 Basic Necessities Index line. (By way of contrast, Alberta's current rate for single employables is 73% of its 1992 Basic Necessities Index.) Maximum rates for single employables, enrolled either in a school or job-training program, could rise to 95% of the Necessities Index level (the same percentage as in Alberta). The rates for single parents are currently 25 percent above the level of the Necessities Index. Freeze rates for single parents until the level of the necessities index caught up to them. This is an adequate level of assistance when other factors are considered -- consolidation of shelter and support allowance and the removal of the earned income limit.
• Require single employable recipients to participate in Workfare projects as a condition for receiving public assistance.
• Maintain the three month eligibility rule for new arrivals in the province. They should continue to offer access to emergency shelter, food, and clothing. Require single employables to wait one month before they qualify for continuing benefits. The target should be to reduce intake of single employables by 10%.
• Incorporate the shelter payment into the social assistance check.
• Adjust the allowable asset level for those qualifying for welfare to reflect the actual asset level of British Columbians, about 20% of the yearly income. The limits would still be higher than the pre-1992, but only one-half of its current level.
• Eliminate the earnings limits on welfare recipients to remove the disincentive to work even part-time. The potential benefits outweigh the potential risks if firm time limits are placed on benefits.
• Remove the disabled from the welfare system and increase their assistance rates to the level of Professor Sarlo`s Social Comfort Line. That line is defined as twice the Basic Necessities Index.
• Do not change the current definition of physically disabled. Only nine percent (16,000) of income assistance clients are disabled. Their current benefits are 30% below the Social Comfort Line, some $6300 on average. It would cost roughly $100 million to bring them to that level of support.
• Place alcohol and drug dependent clients under the supervision of community and treatment groups. The disaster known as "Welfare Wednesday" must end. The only way to stop the abuse is to stop giving one big check.
• Reduce the opportunities for fraud using incentives and technology. Make it someone's business to combat fraud. Contract out fraud detection to collection agencies and check issuance to private payroll companies.
• Issue "smart cards" that would provide identity and benefit information. Smart cards are now being adopted in Ontario, the U.S., Europe, and Japan. Costs range from $1.50 to $5 per card. The cost at $3 per card is roughly $1,500,000. If improper payments were only 10% of the welfare bill, the savings from prevention and anti-fraud measures still adds up to $190 million.
• Rely solely on competitive bidding for social service delivery contracts. Allow both private companies and non-profit agencies to bid for all contracts. Set a goal of 2% for savings from greater competition among private and non-profit providers. This equals $14 million.
• Reduce by 10% the $110 million spent annually on direct administration of income assistance programs by the Ministry of Social Services. One way to do this is to reduce the number of regional Social Services offices and co-locate them with the Canada Employment Centres and the Ministry of Skills, Training and Labour's Skills Development Centres. There are approximately 425 regional and district Social Services offices in B.C.
• Devolve the administration of welfare to the community level in order to provide more direct and more effective support for people in need. Community Assistance Councils (CACs) should be established to work with ministry personnel to review and make recommendations on welfare applications, classifications, benefits, rates, and extensions.
• Stop building public housing and offer the management and eventual ownership of the existing public housing stock to the tenants. Proceeds from the sales should be applied to reducing the Social and Government services debt. New housing program grants currently run about $60 million a year and $5 million a year is spent on the acquisition of social housing sites. The target is to reduce spending in this area by 75% with no new additional land purchasing.
• Continue to rely on family and private child and day care. Child and day care subsidies can be held constant as the number of single parents on welfare declines and more private sector options become available.

Total Savings for Social Services

Established in 1974, The Fraser Institute is an independent public policy organization based in Vancouver.

For further information contact:

Suzanne Walters, Director of Communications,
The Fraser Institute, (604) 714-4582,
Email suzannew@fraserinstitute.ca

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