The Cost of Poverty in BC

07-15-11

Funding for social services and assistance has consistently been cut in recent years, and it is not only to the detriment of individuals with low income, but to society as a whole.  A new study titled The Cost of Poverty in BC, co-published by the Canadian Centre for Policy Alternatives, the Public Health Association of BC, and the Social Planning and Research Council of BC, looks at the actual cost of poverty in BC versus the cost of addressing it head-on.  The numbers are in, and they are telling: poverty costs BC between $8-9 billion a year, where as investing in a poverty plan would cost $3-4 billion.  It just makes sense to invest in poverty elimination.

CCPA Economist Iglika Ivanova crunched the numbers and found that by doing nothing, governments are actually spending  more.  This is because the impact of poverty is felt in our healthcare, education, and criminal justice systems through increased costs and policing, not to mention the blow to the economy through lost productivity and lower consumer spending capacity (the economic loss estimated between $6-7 billion).  Direct costs of poverty to the provincial government are estimated at $2.2 billion, while society bears the larger burden with every individual paying out $2,100 (totalling $8-9 billion).  Ivanova notes,

“Governments often balk at the price tag associated with poverty reduction policies like investing in new social housing, increasing welfare, or implementing universal access to child care. What governments often fail to consider, however, is the large amount of resources that we spend, year after year, paying for the consequences of poverty.”

BC is known as the province with the worst poverty record overall, and highest child poverty rates for eight years running.  Over half a million people in BC lived in poverty in 2009, and 100,000 were children.  Individuals and families with low income must make difficult choices:  work multiple jobs to survive, pay the rent or buy food, live in inadequate housing conditions.  Add in to the mix mental and physical stress, and you have a person with profound impacts on their health.

This report recognizes the valid call to action around poverty based on a moral or ethical perspective, but adds that now the argument to end poverty has been strengthened with sound economic analysis.   In 2010, a similar report was produced in Ontario by the Ontario Association of Food Banks.  It estimated that poverty cost the province between $32-38 billion annually, with households carrying the weight of this cost by paying $2,300 per year.

Considering that the cost to create a poverty plan is less than half the cost of keeping the status quo, it makes economic sense to address poverty.  The report lists the areas where the plan would focus, costing between $3-4 billion annually:

  • End homelessness, and make sure all British Columbians have access to safe, affordable housing;
  • Make sure no one in BC goes hungry;
  • Improve pay and working conditions for people in low-wage jobs;
  • Provide access to high quality, public child care; and
  • Make training and education more accessible to low-income earners.

Currently, no poverty plan exists in BC, although recently the NDP introduced a Bill into the BC legislature proposing the development of a strategy, and at the federal level, An Act to Eliminate Poverty in Canada was re-introduced in June, supporting the establish of federal plan that would compliment provincial/territorial action.

The Cost of Poverty in BC makes a compelling case for ending poverty – one that speaks to greater prosperity for everyone.  As Ivanova notes, “The real question is not ‘Can we afford to reduce poverty?’ but ‘Can we afford not to?’”.  We think the answer is clear.