We need to move towards a more equal Canada

February 2013

How do we do that?

  • Engage in a serious discussion, as a country, about income inequality in Canada.
  • Understand how inequality has gotten to the levels it’s currently at, and how it can be fixed.
  • Choose to create a Canada where inequality is not tolerated.
  • Insist on political leadership & action to make it happen.

Inequality isn’t inevitable. It’s a political choice. We have the power to do something about it. 

Why are we talking about this now?

The issue of growing inequality is common in today’s political discourse because of how dramatically it affects other aspects of society.

Inequality in Canada has a major impact on things we care deeply about as a country:

  • our democracy
  • economic stability
  • individual & collective well-being
  • environmental sustainability
  • our international reputation & performance

To check how Canadians feel about growing inequality and what should be done about it, we (the Broadbent Institute) commissioned a poll by Environics in the spring of 2012. The results could not be clearer:

of Canadians deem income inequality a "serious problem"

of us believe the widening income gap undermines Canadian values

9 out of 10 think reducing inequality should be a government priority

How did we get here?

Canada was one of the original signatories to the Universal Declaration of Human Rights, which was adopted by the United Nations in 1948. The Declaration asserts economic & social rights to make it possible for everyone to live “a life of dignity”. 

  • Who was the Canadian who served as principal author of the Universal Declaration of Human Rights?

    • a) William Lyon Mackenzie King
    • b) John Humphrey
    • c) Ellen Fairclough
    Show Answer
  • The correct answer is b.
    John Humphrey

    It was around that same time when Canada was entering a great period of economic prosperity: the proliferation of good, middle-class jobs; major investments in social programs & public services; increased taxes for celebrated initiatives like Medicare, Unemployment Insurance, public pensions; commitment to well-supported public services.

    In 1981, we adopted our own Charter of Rights & Freedoms – a proudly Canadian document that enshrines the rights of everyone to have equal opportunities no matter who, what or where we are.

    But as the economy weakened in the 1980s, so did Canada’s commitment to promoting equality. Free market fundamentalism persuaded governments that we could no longer afford good social programs while an excessive emphasis on the market resulted in the lowering of taxes.
    Unfair taxation continues to make things worse, even today.

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  • The effective tax rate of our top 1% of earners is lower than that of:

    • a) the middle class
    • b) the bottom 10%
    • c) both of the above
    Show Answer
  • The correct answer is c.
    Both of the above

    What they call the income gap – the distance in salaries between top earners and the rest of us – has widened dramatically in recent decades. Experts see this as the biggest inequality problem.

    The Occupy Movement has done a good job of reminding us how few people fall within that famous 1%. Not only have their incomes risen rapidly, the distance between their earnings & that of regular folks is now considered normal.

    Meanwhile, Canada has lost over 500,000 jobs in the manufacturing sector since 2002, which impacts other good jobs and the wellbeing of communities.

    And even though the labour movement helps raise wages for all workers – unionized and not – unions have been under serious attack and now represent much fewer workers than before.

    You’ve no doubt experienced first-hand how our workforce is altering. Gone are the days of finding a decent, stable job and sticking with it for life. The rise in contract, temporary, part-time, and precarious jobs has been steady. This isn’t necessarily a bad thing, but it contributes significantly to income inequality.

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  • Which province or territory has the lowest
    minimum wage rate in Canada?

    • a) Alberta
    • b) Prince Edward Island
    • c) Nunavut
    Show Answer
  • The correct answer is a.

    No matter where in Canada, minimum wages are not enough to bring even a full-time worker, working all year, above the poverty line.

    Globalization and economic forces have a lot to do with the erosion of secure middle-class jobs; trade with lower-wage countries, rapid technological change, downturns & downsizing, attacks on the public service.

    So those equal opportunities envisioned by the Universal Declaration of Human Rights and Canada's Charter of Rights & Freedoms? They don't really exist. At least not for all of us.

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What's so bad about income inequality?

On paper, we are all equal. This is something Canada is infinitely proud of. But income inequality is undemocratic because it undermines the real balance of
power among us.

Speaking of power, income inequality wields more of it than you might think. With so much recent talk about the health of our economy, it is important to recognize that income inequality sickens it by producing financial bubbles that inevitably burst.

Over the past decade, our economy was increasingly driven by household debt thanks to stagnant wages. But when we increase wages in line with growing productivity, our economy experiences a positive ripple effect.

  • Which community is especially vulnerable to poverty?

    • a) Single parents with children
    • b) Recent immigrants
    • c) Aboriginal people
    • d) People with disabilities
    • e) All of the above
    Show Answer
  • The correct answer is e.
    All of the above

    While income inequality does affect all of us, certain communities are more vulnerable to poverty. The growing income and wealth gap reflect major economic differences that are increasingly defined by race, and of course, by gender.

    Women are still paid significantly less than men and tend to have more precarious jobs; many women remain economically dependent upon men.

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  • How many women are among Canada's top 100 CEOs?

    • a) 1
    • b) 17
    • c) 43
    Show Answer
  • The correct answer is a.

    Very few women are among the senior managers in Canada that make up the top 1% of earners.

    Many recent immigrants and racialized Canadians fare badly in the job market because foreign credentials are often not recognized, non-Canadian work experience is de-valued, and racism persists.

    For every dollar non-Aboriginals earned in 2006, Aboriginal persons earned only 70 cents. And one in four Aboriginal children lives in poverty.

    Income inequality is one of the most critical socio-economic issues of our time. With good reason. But it doesn’t have to be.

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What can you do?

It bears repeating: Inequality is not inevitable. It's a political choice.

Even within the contexts outlined here
(the changing job market, globalization, economic forces), there are options.

  • Which country is more equal than Canada?

    • a) Slovenia
    • b) USA
    • c) Pakistan
    Show Answer
  • The correct answer is a.

    Countries like Sweden, Ireland, and Australia are much more equal than Canada.

    Countries with less inequality have better approaches to corporate governance, different social norms, and stronger unions. Perhaps most importantly, they have an ongoing commitment to shaping market outcomes, not bowing to them. So they spend much more of their national income on social programs and public services, funded by fairer taxes.

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Ultimately, equality is about values. About political will. About choices.

Here’s how inequality can become a thing of the past in Canada:

  • Inequality can be combatted with strong public services & social programs funded through fair taxation.
    • Strong, accessible public services benefit everyone and reduce reliance on market income; healthy social programs lead to equality. We need to do more – not less – to ensure the success of health care, EI & social assistance, public pensions, accessible post-secondary education, and child care. The way to do this is through taxes.

      Taxes are the hinge that links us to one another and to the common good. They are how we pay for the goods & services we value the most.

      A majority of us are more than willing to pay taxes if it means all people and communities are supported by strong social programs & public services.

      But taxes should be shared fairly across income groups. To do this, Canada needs to adopt what’s called a ‘progressive tax’ – one that treats wages & investment income equally. We also need to close costly tax loopholes.

  • Inequality can be combatted with a good jobs strategy.
    • Canada must maximize good job creation from a sustainable resource economy, transition to a green economy, invest in an innovative manufacturing sector, and expand public services. Investing in the skills of all Canadians is the best way to generate good jobs.

      What's more, trade and foreign investment policies require fundamental change to ensure the highest levels of labour rights and environmental standards.

  • Inequality can be combatted through strengthened government support programs.
    • Experts agree that the following programs promote economic security & income equality; so Canada needs to beef them up and ensure their longevity:
      • Employment Insurance (EI)
      • Old Age Security & Guaranteed Income Supplement (OAS/GIS)
      • Canada Pension Plan (CPP) for seniors and persons with disabilities
      • National Child Benefit
      • tax credits for low income persons and families like the GST credit and the Working Income Tax Benefit
      • provincial social assistance
      • provincial tax credits
  • Inequality can be combatted with a guaranteed minimum income.
    • A number of experts believe we can and should have a system to ensure a reasonable level of income for every single Canadian. Of course, issues of cost must be considered, as well as how to provide this support without discouraging work. A good place to start is to provide guaranteed minimum incomes to persons with disabilities, including those who are able to work but cannot on a continuing full-time basis.

What can you do to help end income inequality in Canada?