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Poverty Reduction in Alberta

February 27, 2017

5-minute read

Here are 10 things to know:

  1. Since taking office in 2015, the NDP government of Premier Notley has undertaken important steps that will almost certainly reduce poverty. These include the implementation of the Alberta Child Benefit (which will lift approximately 19,000 households out of poverty), substantial increases in funding for affordable housing (see point #5 of this May 2016 blog post), and an increase in the provincial minimum wage.Chart_01
  1. Relative to other provinces, Alberta still has a lot of income concentrated among a small group of households. Across Canada, 8% of after-tax annual income is concentrated among the top one percent of tax filers. In Alberta, the figure is 16%.
  1. Relative to other Canadian provinces, Alberta still has low tax rates. Taxes paid by Albertans to the provincial government, on an annual basis, amount to less than 8% of total income. That’s the lowest rate in Canada. Admittedly, the Notley government has recently increased both personal and corporate tax rates; but even with those increases, Albertans as a whole still pay less in taxes each year (as a share of their total income) than residents of any other province. It’s also worth noting that Alberta is the only Canadian province without a provincial sales tax.Chart_02_edit
  1. Alberta’s provincial government has less program spending than the average provincial government (as a percentage of household income). As recently as 15 years ago, provincial program expenditure in Alberta (as a percentage of household income) was similar to the average for all provincial governments. Since that time, Alberta’s expenditure has decreased relative to that average.Chart_03
  1. Relative to other Canadian provinces, Alberta has very little public debt. For Canada’s provincial governments, the average net debt [1]-to-GDP ratio is approximately 26%. For Ontario, it’s 40%. In BC, it’s just over 16%. And in Saskatchewan it’s just over 10%. Meanwhile, in Alberta, it’s -1.2% (yes, that’s a negative sign). That means that Alberta’s provincial government, in spite of the recent recession, still has more financial assets than it has total liabilities; this is largely due to Heritage Fund assets, currently worth approximately $18 billion.
  1. In ongoing talks pertaining to a National Framework on Early Learning and Child Care, Alberta has an opportunity to be a leading voice. The federal government has already announced its intention to support a National Framework on Early Learning and Child Care. And such a framework is currently being developed in partnership with provincial, territorial and Indigenous governments. Alberta has the opportunity to lead other provinces in being active at the negotiating table and proactive in offering provincial funding cooperation (it should be note that the Notley government has already made a $10 million investment that may result in 1,000 new affordable daycare spaces). In addition to helping children, child care can also have an important impact on a provincial government’s bottom line—indeed, research from Quebec makes clear that a well-funded child care program can pay for itself (as a result of more parents entering the labour force, where they subsequently pay more taxes). For an in-depth analysis of this phenomenon in Quebec, see this 2012 report; for a much shorter analysis, see this December 2016 opinion piece by Pierre Fortin.
  1. In Alberta, households relying on social assistance (i.e. ‘welfare’) don’t receive enough money to make ends meet. A single adult in Adult who is deemed “employable” by welfare officials (and who is without dependents) receives approximately $8,000 annually on social assistance. It is next to impossible to live on such a small amount of money. The Notley government should therefore increase social assistance benefit levels, especially in light of recent research supporting the argument that a modest increase in social assistance benefit levels can go a long way toward ending homelessness. (Social assistance benefit levels for Albertans receiving Assured Income for the Severely Handicapped (AISH) are considerably higher than benefit levels offered by comparable programs in other Canadian provinces.[2] However, AISH has recently received harsh criticism from the Auditor General of Alberta for being too challenging a system to navigate.)
  1. Hundreds of thousands of Albertans lack affordable housing. On a per capita basis, Alberta has approximately half the number of rental housing units as the rest of Canada—and that gap has grown in the past 25 years. Also relative to the rest of Canada, Alberta has very few subsidized housing units—as of 2011, Alberta was home to 10% of all Canadian households, but had just 7% of all subsidized housing units. (For more on both points, see points #7 and #8 of this blog post.)
  1. There’s still a considerable amount of homelessness across Alberta. Last fall’s provincially-coordinated Point In Time (PIT) Count of persons experiencing homelessness found that over 5,300 Albertans were experiencing absolute homelessness on the night of the count. It should be noted that more than one-quarter of those enumerated were Indigenous. Of course, ‘counts’ of this nature underestimate the true size of each community’s actual homeless population. More information on the 2016 PIT Count can be found here.
  1. The Alberta government should make substantial new investments in poverty reduction focused on Indigenous peoples. A May 2016 report found the ‘on reserve’ child poverty rate in Alberta to be almost 60%; the same report found the child poverty rate for non-Indigenous households living ‘off reserve’ in Alberta to be 12%. This discrepancy (along with similar such discrepancies between Indigenous and non-Indigenous Alberta households) can and should benefit from provincial leadership. Albertans must remain cognizant of the historical impacts of colonization and the residual impact of race-based policies on this subpopulation group. Both the final report of the Royal Commission on Aboriginal Peoples and the more recent Truth and Reconciliation Report outline how these practices and policies led to the present conditions for Indigenous peoples. In all program design and implementation, provincial officials should place strong emphasis on cultural appropriateness, while acknowledging diversity among Indigenous peoples across traditional territories. Provincial officials should consult with Indigenous peoples in discussing the details; they should be intentional in their discussions to overcome jurisdictional issues that often serve as a barrier to action.
In Sum. Given the province’s current fiscal situation, Albertans have the collective ability and financial flexibility to make reductions in poverty a reality.

This post originally appeared at the Calgary Homeless Foundation.

Nick Falvo Ph.D, is the Director of Research and Data at the Calgary Homeless Foundation (CHF). Chidom Otogwu is a HMIS Specialist at CHF.

The authors wishes to thank the following individuals for invaluable assistance with this blog post:  Cynthia Bird, Jordan Brennan, Robbie Brydon, Gerald Chipeur, Pierre Fortin, Joel French, Louise Gallagher, Rob Gillezeau, Nathan Jackson, Seth Klein, Ron Kneebone, Kara Layher, Lindsay Lenny, John Loxley, David Macdonald, Mel McMillan, Michael Mendelson, Allan Moscovitch, Rick Mueller, Robin Shaban, Richard Shillington, Joel Sinclair, John Stapleton, Garry Sran and Trevor Tombe. Any errors lie with the authors.

[1] Net debt refers to total liabilities less financial assets.

[2] See this report to compare benefit levels across provinces and territories.

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