Boring, but crucial: Indexing social assistance

The 2023 provincial budget had me thinking back to 2013 with some regret. Here is why:

In 2013, the Government of Ontario was led by Kathleen Wynne’s Liberals, a minority government needing support of Andrea Horwath and the NDP to survive. In 2009, the Ontario Legislature had unanimously passed a provincial Poverty Reduction Strategy, with targets and timelines to reduce the number of Ontarians living in poverty. Mennonite Central Committee was part of the 25 in 5 Network for Poverty Reduction which advocated for a poverty-free Ontario.

On budget day 2013, I was deeply disappointed to see that the budget offered no increase to the incomes for either Ontario Works (OW) or Ontario Disability Support Program (ODSP) recipients. People living in the deepest poverty would not even get an adjustment to match the rising cost of living.

I spoke to my MPP, John Milloy, on budget day. At that time he was the Minister for Community and Social Services, the Ministry overseeing ODSP and OW. I told him that not increasing ODSP and OW rates was a mistake, and I urged the government to raise the rates.

During budget negotiations, the NDP demanded a meagre 1% increase -- but only for people receiving ODSP. I was flabbergasted, not so much by the measly 1% increase but by the implicit distinction between “deserving” poor -- people with disabilities -- and the “undeserving” poor (those relying on Ontario Works).

In the end, the Wynne Government offered a 1% increase to both OW and ODSP. A minor win, but a big missed opportunity. In hindsight, I wish advocates like myself had called on the government to simply index OW and ODSP rates to inflation. Inflation at the time was low. So, the actual increase that year would not have been much more than 1%.

The importance of indexing income supports

What is indexation and why is it important? These days, we are all aware of rising prices or inflation. Everything seems to cost more. If your income does not go up, you will find it harder to make ends meet. Inflation robs people of real income. Indexation means raising incomes to catch up to those rising prices. That is why most parts of Ontario’s tax and transfer system are indexed to inflation.

The basic personal exemption is indexed, as are the tax rate thresholds. Most Ontarians benefit from the indexing of each of those thresholds.

Some Ontario tax credits are also indexed. These include the Ontario Child Benefit and the Trillium Benefit.

Even the provincial minimum wage has been indexed to inflation, something the Wynne Government brought in and the Ford Government has left in place. On March 31, the Ford Government announced that the minimum wage would increase by 6.8% -- the rate of inflation -- in October, bringing the minimum wage to $16.55 an hour.

However, several other key parts of Ontario’s income security system have not been indexed for decades. These include ODSP, OW and the Ontario Guaranteed Annual Income System payments for seniors (GAINS), whose benefit level and income eligibility thresholds have been frozen since 1986.

This has meant that while the majority of Ontarians receive inflation protection of their income through the tax system, the most economically vulnerable Ontarians do not.

The Ford Government, to their credit, has begun to rectify that problem. Their decision to index ODSP rates to inflation starting in July 2023 will protect the incomes of recipients from inflation. They also increased base ODSP rates by 5% in 2022. Unfortunately, the Ford Government had previously frozen the rates since 2018.

In Budget 2022, the Ford Government doubled the GAINS, albeit only temporarily, acknowledging the injustice poor seniors in Ontario have faced for decades. Budget 2023 promises to index that benefit to inflation going forward.

Ontario Works, on the other hand, is a different story. The Ford Government’s plan for social assistance renewal identifies why people turn to OW:

“They may have experienced family violence, illness or an accident, be facing physical or mental health challenges, or find themselves homeless, or at risk of losing their home or accommodations.”

Inexplicably, OW rates remain frozen, effectively cutting the real incomes of “people who have experienced family violence, illness or an accident, be facing physical or mental health challenges, or find themselves homeless, or at risk of losing their home or accommodations.”

What would have happened if, in 2013, the provincial government had indexed OW and ODSP rates to inflation? The average inflation rate from 2013-23 was 2.3% a year.

  • OW rates for a single adult would be $788 a month. It is currently $733 a month. That means people relying on OW have lost $55 per month in real income. Someone I know who is on OW is stressed after her rent increased by $50 per month. This amount seems small, but it can have a huge impact.
  • For an individual relying on ODSP, their monthly income would be $1,367 a month. It is currently $1,169 a month -- a difference of $198 a month. Ontario’s food banks were used over 400,000 times per month last year -- an all-time high. Indexing these social programs would have lessened reliance on food banks significantly. Daily Bread Food Bank is advocating for emergency top ups for those on social assistance to keep up with inflation. You can sign here.

In our submission to the 2022 Ontario pre-budget hearings, MCC urged the Ford Government to fully index ODSP, OW and the GAINS. We also called on the government to implement a plan to increase income supports to the poverty line. Budget 2022 included indexation of ODSP and the GAINS. We commend the government for those two measures and will continue to press for people receiving OW to receive inflation protection, too.