Not addressing poverty's root causes costing Ontario $13B annually: study

ik - from CBC.CA

 

Not addressing the root causes of poverty is costing the Ontario economy about $13.1 billion annually, according to a study released on Thursday.

The study, entitled The Cost of Poverty, was conducted by the Ontario Association of Food Banks in collaboration with Canadian economists over a six-month period.

"It is wrong that so many Ontarians are forced to turn to food banks in our province," said Adam Spence, executive director of the food bank association. "But there is also an economic imperative to reduce poverty."

The study examines the relationship between poverty, poor health, lower productivity, and the social and economic future of children. It provides a cost-benefit analysis of poverty in Ontario from the standpoint of lost government revenues and lost economic activity.

"Poverty is a personal tragedy for everybody it inflicts. That alone justifies action," said Don Drummond, chief economist for TD Bank Financial Group, who served as a project adviser for the report.

The study's findings further strengthen the need to address poverty because it clearly illustrates the impact it is having on society, Drummond said.

The study finds that because of poverty, all Ontarians pay through increased costs for health care, crime and social assistance and in the loss of tax revenue that accompanies low earnings.

The social costs of poverty, in the private and public sectors, make up about 6.6 per cent of Ontario's gross domestic product, according to the report.

The study concludes the federal and provincial government are losing a combined total of as much as $13.1 billion a year in foregone tax revenues because of poverty.

Report says everyone pays for poverty

By not addressing poverty, every household in the province is paying an up to extra $2,895 each year.

"The cost is so large that substantial efforts are warranted to fight it," Drummond said.

The research confirms that poverty has implications for all Ontarians, not just the poor, said James Milway, executive director of the Institute for Competitiveness and Prosperity.

"Whenever we hear that a program to help alleviate poverty by removing barriers or providing resources is going to cost X million dollars, there is seldom any mention of the savings that will accrue — there is an assumption that there are no offsetting savings — but nothing could be further from the truth," said John Stapleton, an innovation fellow with the George Cedric Metcalf Charitable Foundation.

Developing a strategy that is primarily focused on attacking the roots of poverty could generate substantial government savings, the report indicates.

The study doesn't say how much the Ontario government would need to spend to end poverty but it urges the government to invest in areas such as childhood development, programs to improve school performance, higher education for at-risk youth, language training and workforce integration for new immigrants.

With files from the Canadian Press