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Another major stress on today’s families is the high rate ofmarriage breakdown and remarriage. Canada has one of the highest divorcerates in the world, along with Sweden, Denmark and the United Kingdom.Four in ten marriages end in divorce, though seven in ten divorced Canadiansget married again. More and more parents and children have to adjust tolife in ‘blended’families from two previous marriages.

Divorce and separation also create single-parent families.One out of every five families with children is now headed by a single parent,most of whom (82 percent) are mothers. Single parents not only have tocarry most, if not all, of the burden of caring and providing for theirchildren. They also run a high risk of poverty. Six in tenone-parent families led by women live on low incomes. Many (42 percent)end up on welfare, although the majority of single parents work in the labourforce, typically in low-wage jobs.

Families are smaller today; most have only one or twochildren. Unlike earlier generations, they cannot rely upon olderchildren to help take care of their younger brothers and sisters.Families also move more often, so many are isolated from traditional supportnetworks of relatives.

These social changes are placing heavy demands onCanada’s socialprograms  welfare,child care, child welfare and health care  which were not built for theworld of the 1990s. An added stress is the aging of the population, whichwill place increasing pressure on the pension system, social services andhealth care as the baby boom generation reaches old age.

Moreover, these demographic, social and economic forces areadditive. Divorce, unemployment and low earnings threaten to condemn agrowing group of Canadians to poverty in old age. Child poverty brings anabove-average risk of a range of health problems, accidents and below-averageschool performance. These risks can work against poor children when theyreach adulthood, resulting in a greater likelihood of unemployment and lowwages, increased demands for social programs and lost tax revenues.

Political Changes

Political changes also have motivated and shaped changes to socialpolicy and challenged the universalist model. The Keynesian-inspiredcivil servants and politicians who designed and built the postwar welfare statehave long retired. They have been replaced by neoconservativebureaucrats, especially those in the federal Finance Department that hasdominated social policy over the past two decades. Both financial andpolitical elites in Canada have proved more conservative than the generalpopulation, and more supportive of cuts to social spending andtaxes.

The major social policy changes made by the Conservativegovernment in the 1980s built a momentum that prepared the way for even moreradical changes by the Liberals in the 1990s and into the new century.The Conservatives proved that the universalist welfare state was no longer a‘sacredtrust,’ if it everhad been. Polls taken for the Social Security Review, which the Liberalgovernment undertook in 1994-95, found that a majority of Canadians believethat social programs require substantial change.

Central to this readiness for social security reform was theConservatives’successful campaign in convincing Canadians about the serious problem of themounting debt and the need to put the nation’s finances in order. Inaddition, federal cuts to Unemployment Insurance and to social transferpayments to the provinces under the Conservatives began to break downtraditional resistance to federal social policy change from the provincialgovernments. So the Liberals have advanced the move towards thepost-welfare state that was begun by the Conservatives.

The other political factor that has played an important partthroughout the history of Canada and its social programs is federalism.For much of the postwar period, Ottawa played a leadership role in thedistribution of power and influence over social programs as between the federaland provincial governments. But the pendulum has been swinging back inthe 1990s and first decade of the new century. The two levels ofgovernment now play equally important roles. This power shift is soimportant a force in understanding the current reforms to Canadian socialpolicy that it merits a somewhat longer explanation.

Canada is a federated structure whose governance framework is setout in the British North America Act of 1867. The framework wassupplemented by the introduction of the Constitution Act in 1982.

Under the British North America Act, the federal government wasdesignated as responsible for the peace, order and good government of thecountry. The Act confers a federal spending power that allows Ottawa tomake payments to individuals, institutions or other governments for purposesthat the national Parliament does not necessarily have the power toregulate. The federal government claims that this Constitutionalinterpretation gives it the power to spend money and attach conditions to thesefunds even if the purposes fall within the clear purview of theprovinces.

This constitutional interpretation has resulted in the followingdivision of powers. The federal government is responsible for issues ofnational and international concern. Primary federal areas ofresponsibility include customs, foreign policy, fisheries and oceans,communications and transportation. Provinces, by contrast, are concernedwith municipal issues and services to people such as health, education, welfareand social services.

Ottawa generally has jurisdiction over areas that affect thewell-being of the entire nation, including the armed forces, internationaltrade and communications. The federal Department of Human ResourcesDevelopment is responsible for several national income security and employmenttraining programs, although the latter recently have been devolved to theprovinces. (The province of Ontario has not yet signed a bilateral labourmarket agreement with Ottawa.) Both the federal and provincialgovernments are involved in the areas of justice, finance, revenue andtransportation.

In the area of transportation, for example, the distinction injurisdiction is made along the lines of scale. Transportation concernsthat apply to interprovincial or international travel lie in the federaldomain. By contrast, provincial and, in some cases, municipal governmentsare responsible for local or intra-provincial transportation.

Constitutional responsibility for health and welfare-relatedissues was accorded clearly to the provinces. The jurisdictional splitwhen it comes to income programs is more complex.

In the area of income security, the federal government hasresponsibility for certain income programs. For example, it takes primaryresponsibility for the major programs deemed to be social insurances namely EmploymentInsurance and the Canada Pension Plan. Even here, the issue is not‘neat’; the province of Quebec runs asister program called the Quebec Pension Plan and significant changes to theCanada Pension Plan require the agreement of a majority of the provinces.Provincial governments administer workers’ compensation programs as well aslast-resort social assistance programs.

The federal government is responsible as well for the delivery andcosts of the three key elderly benefits: Old Age Security, the GuaranteedIncome Supplement and the Spouse’s Allowance. Ottawa also pays for and administers the CanadaChild Tax Benefit. And the federal government effects a significantredistribution of income through a progressive income tax system. It bothcollects revenues and distributes social benefits through refundable credits,nonrefundable credits and deductions.4

Social Union Framework Agreement

The division of federal and provincial powers has been influencedin recent years not only by the terms of Canada’s Constitution. Thedivision of powers also has been shaped by a new commitment signed in February1999 entitled the Social Union Framework Agreement.

The Agreement sets out the basic rules for how these two levels ofgovernments should work together in future. It is intended to promote arespectful and collaborative approach to resolving major social issues that arenot clearly defined as exclusively federal or provincial. It also seeksto ensure that governments act more responsibly with public funds.

A key feature of the Social Union is that work in any substantivearea should be conducted in a collaborativefashion. Ottawa alone no longer should spellout the rules with which provinces must comply to receive federal funds.Rather, the Social Union intent implies that any rules, whether in the areas offunding, program delivery or reporting, should be set jointly by the federaland provincial governments.

But this concept of governmental ‘equality’ does not negate the fact thatone party may be a more appropriate delivery agent than the other in certainareas. The federal government, for example, is best suited to supportincome programs because it is able to ensure the same benefits for allCanadians.

Ottawa also has the capacity to generate the revenue required toprovide adequate and equitable benefits throughout the country. Theprovinces, by contrast, are better equipped to deliver health care and socialservices. These can be tailored to individual need and regionaldifferences.

The thinking that shaped the Social Union negotiations viewedfederal and provincial relations as a partnership in which both levels ofgovernment have an important role. Partnership effectively results indifferent responses to the same problem. It can give rise to differencesacross regions in the same policy area. The resulting variabilitythroughout the country is seen not only as inevitable. It is also viewedas desirable as jurisdictions work within their respective fiscal and politicalpriorities.

Another important element of the Social Union Framework Agreementis the concept of public accountability. All governments are seen asaccountable both individually and collectively to the public and to groups thathave a special interest in certain issues, such as services for children orsupports for persons with disabilities.

In short, the Social Union is intended to operate effectively inthree spheres. First, it is concerned with the reform of socialprograms. Second, it is a means of renewing the Canadian federationthrough new forms of intergovernmental relations. Third, it is intendedto encourage public accountability.

Roots ofReform:

InternationalContext

International ‘themes’and comparative research also have had an important impact upon the shape ofincome security in Canada. The work of the Organization for EconomicCo-operation Development (OECD), in particular, has encouraged investment inactive programming. This programming seeks to discourage dependence onincome support programs and to encourage links to the paid labour market.

In the mid-1980s, the OECD identified as a problem the heavyprovision of so-called ‘passive’income support for the unemployed. Since then, it has monitored regularlythe expenditure of member countries on active and passive labour marketprograms. The OECD Jobs Study included a list of more than 60 policy recommendations forstrengthening active labour market policies.

The theme of active programming was embraced by Canada’s Social Security Review in themid-1990s. The concept certainly influenced the major outcome of theReview: the shift from Unemployment Insurance to Employment Insurance and theassociated move toward active labour market measures (described below).

The concept of active programming also has reshaped provincialwelfare systems in Canada. All jurisdictions have introduced measures toencourage the transition from ‘dependency’ to ‘self-sufficiency.’ The ‘active’programs have different titles such as the Supports to Employment Program inNewfoundland, Ontario Works, Employment First in Manitoba, the SaskatchewanTraining Strategy, Supports for Independence in Alberta and Productive Choicesin the Northwest Territories. Despite the differences in name, the intentis the same: to find ways to help move recipients off welfare and into the paidlabour market.

The OECD also has conducted research on the ‘passive’ side of the incomeequation. A three-volume OECD study on social exclusion and socialassistance presents an in-depth comparison of welfare systems in ten membercountries, including Canada.

The study found that all the countries experience a serious commonproblem: Many households find little financial reward from working.The welfare taxback rates on increased earnings are higher than in any taxregime. Social assistance provides in-kind benefits, a fact that makes itdifficult to leave the program. Recipients who leave welfare havework-related expenses such as clothing, transportation and child care.Their wages are reduced by Canada Pension Plan contributions, EmploymentInsurance premiums and income taxes.

When all factors including income taxes, payroll taxes,work-related costs and loss of in-kind benefits are taken into account, manyrecipients are better off on social assistance than at work. OECDcountries effectively face the same policy challenge with respect to socialassistance: how to balance its ‘safety net’ function with its work incentive function.

One way to resolve this tension between the active and passivedimensions of welfare is to reframe the challenge. The real challenge isnot how to redirect money away from social programs that create ‘dependency.’ The real challenge is tofind ways to help low-income households enter and stay in the labourmarket. In our view, this central challenge can be resolved through workon two related policy areas outside of socialassistance: family policy and employment support.

Family policy includes both income support and services. Onemethod of assisting low-income households is by directing more money tolower-income families. The pioneers who constructed Canada’s income security system saw akey role for child benefits in filling the gap between wages and income needsfor low- and modest-income families.

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