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Centralize, digitize, privatize: unpacking Ontario’s welfare reforms

Changes open the system up to privatization by for-profit multinationals

May 10, 2022

9-minute read

Ontario’s social assistance system is currently undergoing a protracted and radical transformation. Rather than addressing pathetically low benefit rates, the provincial government is spending millions on administrative reforms aimed at reducing case numbers and opening the system up to privatization by for-profit multinationals.

While the changes are presented as administrative fixes, aimed at finding efficiencies and improving the client experience, the stated aim is explicit: to reduce reliance on social assistance. In 2019, the provincial budget anticipated $1 billion in savings through social assistance modernization. This goal has shaped the recent Recovery and Renewal Plan: Ontario’s Vision for Social Assistance Transformation, which proposes a range of reforms aimed at changing the client intake process, the role of case workers, and the actors providing employment services.

In many ways, the changes mirror welfare reforms we’ve seen in other countries, where digital technologies, private actors, and the collection of client data are used to increase surveillance, automate eligibility, and reduce reliance on benefits. In Ontario, these reforms occur at a time when social assistance rates have been declining in real terms for years. Rates for Ontario Works (OW) and the Ontario Disability Support Program (ODSP) are abysmally low—$733 a month for a single adult without dependents on OW and $1169 for ODSP. After failing to increase social assistance rates through the 2022 provincial budget, and under pressure from advocacy groups, the Progressive Conservatives recently announced a paltry 5% increase to ODSP, which still puts recipients below the poverty line.

Let’s review three of the most important changes underway and their impact on clients.

Centralizing and digitizing social assistance

Currently, ODSP is administered by the province while OW is run through municipalities and local social service boards. Under the new model, the province will assume responsibility for benefit administration and eligibility determination for both programs.

This centralization relies on a range of digital tools. Applicants can apply for benefits and track their applications online or through the MyBenefits App. The province describes this as a way to reduce paperwork and (ostensibly) allow caseworkers at local offices to spend more time providing non-income based services to clients.

Under the new model, caseworkers will use a digital Common Assessment Tool to assess and stream clients into three unemployment risk categories (A, B & C). Those deemed as having a low risk of long-term unemployment fall into stream A, those at medium risk into stream B, and those at high risk into stream C. These details are then shared with an array of agencies, companies and caseworkers providing employment services to clients.

The digitization of social assistance in Ontario is hardly new, and its history reveals some of the risks involved. In 2014, Ontario purchased a software package (the Social Assistance Management System or SAMS) to manage and automate OW registration and payments. SAMS resulted in thousands of errors with eligibility determinations and payment amounts. Rather than freeing up case workers to focus on high-needs clients, it created more work, turning skilled frontline workers into data-entry clerks.

At the time, researchers warned that SAMS was largely aimed at shifting discretionary power away from frontline workers, who were increasingly tasked with inputting client details into pre-determined menu categories. Software was used to nudge caseworkers away from client-centred work and toward the collection of increasingly complex data points.

Another element of this digital monitoring is the shift toward “Risk-based Eligibility Reviews,” aimed at detecting fraud and identifying clients who should be employed. Each month, software will draw on detailed client data and consumer credit reports to determine which OW and ODSP clients exhibit a high likelihood of change in financial eligibility.

Once again, digital tools are being used to move decision-making power away from frontline workers who deal directly with clients. For Devorah Kobluk at the Income Security Advocacy Centre, centralization and digitization efforts could reinforce client exclusion. “If you are a relatively simple case, applying online may work for you. But if your case is more complex, then there’s a danger that people are excluded pre-emptively. Our concern is that these reforms fail to recognize the barriers that people face when they try and access these services.”

From social assistance to ‘life stabilization’

The second major shift underway is the move toward “life stabilization services” by local offices, an innocuous enough term for what is, in fact, a significant redefinition of social assistance.

With the province focused on overseeing the eligibility process, frontline case workers will provide “knowledge of local community supports to provide all activities that support people on a pathway to greater independence and employment.”

The province defines these life stabilization supports as housing, mental health, addiction counselling, and domestic violence supports, among others, but there’s little information on what this means for intake workers beyond referrals and, moreover, if sufficient funding will be attached to the provision of these supports. Ontario’s municipalities are suffering from significant funding shortages. It’s difficult to imagine how they could possibly meet demand for these services given their current funding status.

As Trevor Manson of the ODSP Action Coalition warns, this move saddles municipalities with the provision of these supports without recognizing that they cannot possibly take this on. “What this creates is a system where we’re simply adding more names to already long wait lists.”

The focus on life stabilization is explicitly aimed at reducing reliance on social assistance by addressing some of the foundational issues which make it challenging for individuals to pursue, secure and retain employment. This is not to suggest that clients do not need support in a range of other areas, from housing to child care, but there is something particularly sinister about labelling these as “life stabilization” services when abysmally low OW and ODSP rates inject so much instability into clients’ lives.

In theory, the life stabilization model allows frontline workers to spend more time providing comprehensive social supports for clients. This seems like a sound approach in dealing with clients with a complexity of social needs. But as a report on the SAMS fiasco revealed, changing the role of frontline caseworkers, particularly by requiring them to collect data rather than developing relationships with clients, can significantly undermine their role.

For the moment at least, the province has hit pause on this move toward life stabilization until the fall in order to study results and coordinate with municipalities. We will likely hear more on this once the result of the provincial election become clear.

Privatizing employment services

The third element of these reforms moves the provision of employment services for OW and ODSP clients from 47 municipal and district boards to 15 regional catchment areas.

Currently, OW clients, and the partners of ODSP recipients, are required to access employment services as a condition of receiving financial support, unless they meet various exemptions from this condition. Employment services can include skills training, literacy assessments, or preparation for job interviews. Under the new model, responsibility for the provision of employment services for social assistance recipients will be contracted out to Employment Service System Managers (ESSMs) selected by the province through a competitive tender process.

In 2019, the province announced an ESSM pilot model in three regions—Hamilton-Niagara, Peel, and Muskoka-Kawarthas. In all three cases, municipalities applied for the contract but were unsuccessful. In Hamilton-Niagara, the contract was awarded to U.S.-based Fedcap Inc.; in Peel, to the Australian-based International APM Group; and in Muskoka-Kawarthas, to Fleming College.

By reviewing the list of applicants for this tender, we can get a clear sense of the actors waiting to benefit from contracts in the remaining regions. Among others, we have U.K.-based SERCO (known for running private prisons and immigration removal centres), Res-Care Inc. (with a documented long history of client neglect, poor care standards, and billing fraud), and Maximus (which has secured record profits by administering workfare programs in the U.S.). In the U.K., Maximus has been criticized for wrongly assessing people with mental health problems through the controversial Work Capability Assessment model. Doctors involved with the company reported that meeting company targets meant limited face-to-face time with high-risk clients who were frequently deemed “fit for work.”

The next phase of this transformation was just announced, with contracts awarded to the APM Group in York; Fedcap Inc. in Halton; and the County of Bruce in Stratford-Bruce Peninsula. Upcoming phases include major urban regions, including Toronto, Ottawa and Kitchener-Waterloo. Thus far, only one municipal government has been successful in acquiring an ESSM contract.

One particularly concerning part of this arrangement is that it is subject to performance-based funding models. What this means is that the funding model incentivizes ESSMs to place clients in the labour market fast, particularly those at highest risk of unemployment, which may include those with major disabilities and addiction issues. While the aim of OW has always been to discourage welfare reliance, the current reforms introduce financial incentives to this process, with private companies benefitting from each client moved off benefits.

Funding formulas will use existing Employment Ontario rates as a baseline, but ESSMs are expected to reach targets, “above the baseline of current system performance rates.” A high-performing ESSM, for example, would exceed these targets by more than 5% for all client streams, with the highest proportion of funding directed to those in Stream C (those who face the high risk of unemployment). In return, ESSMs will be permitted to enter negotiations for a two-year contract renewal.

We know very little about the outcomes of the prototypes in these three regions. In a statement, the Ministry of Labour, Training and Skills Development told me that 43% of social assistance clients in these three regions have been referred to ESSMs for employment supports. Does this mean they have found jobs? Does it mean they have left social assistance? Does it mean they’ve attended a resume-writing workshop? We just don’t know.

Another significant concern is the pace of employment services transformation. While an evaluation of the prototype regions is currently underway, the subsequent phases of the plan are being implemented before the evaluation is complete. The rapid rollout of this plan, combined with limited opportunities for community input, could lead to a failed model being rolled out province-wide at significant public cost.

For Laura Cattari, from the Hamilton Roundtable for Poverty Reduction, “there’s always a concern when you have private actors involved in, and benefitting from, this system, particularly when they have power over clients' lives. We have real concerns that the performance-based funding model will be used to push people off the supports they need.”

A leaner, meaner social assistance system

Welfare modernization, particularly digitization, is often presented as a benign initiative, aimed at empowering clients and making systems more user friendly. In this case, the broader aim is to save the province money by moving people off benefits and into jobs as fast as possible. Doug Ford made this clear in a recent press conference. When asked about increasing ODSP rates, he remarked that, “the best way to support them is to get them a job.”

As the SAMS fiasco revealed, the introduction of digital tools into welfare delivery can negatively impact clients by limiting caseworker’s ability to focus on their individual and complex needs. There is a risk that the current reforms turn caseworkers into referral agents for social and employment services, rather than skilled and compassionate professionals responding to client needs over the long-term.

In 2019, a report by the UN’s Special Rapporteur on Extreme Poverty named Ontario specifically as a case where digital tools were reconfiguring the purpose of the welfare state, “reflecting values and assumptions that are far removed from, and may be antithetical to, the principles of human rights.”

For clients, this will only add to the uncertainty they already experience on social assistance, compounding fears that their benefits will be cut off by missing an assessment or employment training session. It will create a more fragmented and confusing social assistance system, involving additional layers of administration and surveillance. For example, in order to receive financial support, OW clients must develop and follow an employment plan. Progress on this plan will now be monitored and shared between ESSM staff and OW caseworkers, creating the risk that information is lost or miscommunicated along the way. This will also make an already onerous appeals process even more cumbersome—do clients appeal decisions through ESSMs, through their caseworkers, or through the province?

By emphasizing employment as the solution to poverty, these reforms also fail to understand what has changed in Ontario’s labour market in the last two decades. The jobs available to those on OW are typically non-standard and precarious. In the GTA and Hamilton this type of work is now the norm, with research revealing that around 50% of workers are in temporary, contract or part-time positions. Researchers have shown that those who transition from OW into employment often find themselves in low-quality jobs that don’t allow them to escape poverty.

The pandemic has shown us that providing direct cash assistance to people in need, without onerous means-testing, has a significant impact on physical and mental health. We know that administrative practices have, by design, acted as a barrier to OW access—closer scrutiny of job searches and monitoring of personal behaviour and financial histories have all been used to discourage reliance on benefits. The current reforms are the logical continuation of Mike Harris’s welfare reforms of the 1990s, in which low benefit rates, employment requirements, and punitive surveillance are aimed at increasing labour market attachment. 

There is simply no need to outsource employment supports to third parties, particularly for-profit companies. As we’ve seen in other contexts, privatizing elements of welfare delivery has a negative impact on the lives of clients, with researchers in the U.K. connecting it to increased levels of psychological distress. These services should be retained by municipalities who are already equipped to respond to client needs. Involving private actors risks creating a more fragmented system, exacerbating confusion among clients, and increasing costs. Life stabilization services such as housing and addictions counselling are important but should be accompanied by dedicated funding. Finally, any reforms to social assistance should be guided by the human rights and dignity of clients rather than concerns over cost savings.

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