No immediate wage clawback reform; working poor left in lurch

The Common Front for Social Justice is criticizing the slow pace of the Higgs government’s approach to the province’s social assistance reforms.

Minister of Social Development Bruce Fitch continues to dither on whether to reform the province’s draconian clawback policy, which prevents people receiving social assistance from earning additional income without seeing their social assistance payments reduced.

The Common Front, along with 40 professional, community, and non-governmental organizations, have urged the government to change the clawback policy, which they say prevents people on social assistance from becoming self-supporting.

A five person Common Front delegation met with Fitch on June 15, but came away very disappointed.

“Minister Fitch told us that serious reforms are being planned in the Department of Social Development, but that changes to the wage exemption policy mean changes to the Act itself, and that has to go through a full legislative process,” Common Front spokesperson Auréa Cormier said.

“We were told that among these changes under consideration were increased support for disabled people and changes to the wage clawback policy,” Cormier said. Beginning in September, “this long process will involve pubic consultations, the drafting of legislation, getting that legislation through three readings in the legislature, and so on. We thought the change could be made by Cabinet order.”

The current clawback policy locks people into poverty by authorizing the provincial government to seize 70 percent of all wages that single people on social assistance are paid after the first $150 a month earned. Groupings of more than one person, such as a family, are only allowed to earn $200 a month before the Social Development Department seizes 70 per cent of their wages.

The bottom line is that single people receiving social assistance have their wages reduced to $3.52 an hour after working a mere 13 hours in a month. Couples and other groupings of two or more persons, such as families with children, working minimum wage jobs, can only work 17 hours a month before the province reduces their wages to $3.52 an hour.

“We had asked Minister Fitch to modify legislation through an order by Cabinet so that all social assistance recipients who find a job can keep the first $500 per month they earn before any wages are clawed back,” Cormier said. “But the whole legislative process takes many months.”

Despite the long pandemic and the economic slowdown it triggered, as well as rapidly rising prices for necessities like food and rent, Cormier notes that no help has been given to the very people who need it most, that is, those on social assistance.

While the Common Front members who met with Fitch came away from that meeting thinking that legislation was required to change the wage clawback policy, Section 17 of the Family Income Security Act does, in fact, give explicit authority to “the Lieutenant-Governor in Council,” that is, to the Cabinet, to make and change regulations for the Act as it sees fit. Whatever their reason, Fitch and his Cabinet colleagues have opted for a more expensive, much lengthier process that will leave the vicious wage clawback in place for many months, perhaps even a year or more.

That decision is difficult to understand. In April, the Canadian Centre for Policy Alternatives (CCPA), one of Canada’s most respected policy evaluation think tanks, released a report showing that poverty costs New Brunswick $1.4 billion a year.

That report, “The Cost of Poverty in the Atlantic Provinces,” details the cost of poverty in the Atlantic provinces, and the loss of economic growth it represents for each province. In New Brunswick, the failure to act to eliminate or even greatly reduce poverty costs the province 3.71 percent in economic growth each year.

The CCPA reports that the most significant costs of poverty are associated with lost productivity, and that means provincial revenues are lower than they would otherwise be. In the case of New Brunswick, this loss amounts to $938 million a year. The bottom line is that the decision not to reform New Brunswick’s wage claw back policy now is retarding the province’s economic growth and reducing desperately needed government revenue.

The cost of inaction in terms of human suffering is also immense. Studies have conclusively demonstrated that people living in poverty have poorer diets and more health problems than people with adequate incomes. One in five New Brunswick children is forced to live in poverty because of the poverty trap created by starvation social assistance rates and the savage 70 percent wage clawback policy for those welfare recipients who do find work.

The Common Front, meanwhile, will be waiting anxiously to see the September reforms promised by Social Development Minister Bruce Fitch. For people living in poverty and the working poor, talk is still cheap, and promises of reforms someday won’t feed hungry children today.

Dallas McQuarrie is a NB Media Co-op writer who lives on unceded Mi’kmaq territory in Kent Country.