Richard Shillington's great adventure began with a call out of the blue from a veteran Toronto social worker. Would the Ottawa statistician, who specializes in social policy, agree to work with real needy people for eight weeks? He could stay at the University of Toronto’s hallowed Massey College, making his way each day to the gritty neighbourhood around St. Christopher House. And he could teach the staff of the 90-year-old community organization how to pick their way through the thicket of income-support programs. As soon as CEO Susan Pigott described her novel notion, Shillington agreed. “I had been really uncomfortable about the role of poverty advocates with university degrees speaking on behalf of low-income people,” he says. “Her timing was perfect.” And so began an experiment in the autumn of 2000 that brought frontline workers who grapple with the woes of the unemployed, low-income elderly and welfare mothers into
contact with theorists who devise solu_
tions to those problems. It was an enormous gulf to span. And it taught jarring lessons to both parties about how good programs can intersect to create grimly punitive, completely unintended results. “I wanted the chance for us to improve our understanding of how policy is made,” recounts Pigott, who hit on the idea of asking Massey College and the Atkinson Charitable Foundation to support the experiment. “And I wanted somebody who works in the policy world to meet low-income people and see that some policies just aren’t working.”
The first sessions were rocky. Shillington is a self-employed consultant who often briefs parliamentary committees or legal tribunals as an expert witness. So when he told St. Christopher House staff about how marginal and effective tax rates worked, few were enthralled. “Richard was talking and drawing graphs—and we were just looking at each other,” recalls client services co-ordinator Susy Nunes. “We did not know what he was talking about. In our daily work, we often see people who do not speak English or who are illiterate in their mother tongue. So we started doing role-playing with Richard, pretending we were people like senior citizens, using Monopoly money, so that we could understand.”
For Shillington, it was an unnerving, often emotional experience. He knew in theory how federal, provincial and municipal programs could clash with unintended results. “But now I had a name and a face,” he says. He heard about the diligent student, desperate for funds, who was informed that his federal Millennium Scholarship had been automatically used to pay down his provincial student loan. He met people
For an Ottawa policy expert, meeting the people social programs are supposed to help was an eye-opener
like 21-year-old Felecia Vito, a single mother of two daughters who was on social assistance. When her elder daughter, Bianca, was born in 1999, Vito, who receives $895 a month from the province, opened a registered education savings plan for her, putting aside $22.50 each month. Her social worker warned her that when the fund reached $895, she would be cut off—because welfare recipients are not allowed to put aside savings. “I wanted Bianca to have something to fall back on, to be able to go to school,” says Vito. “I tried to explain that I could not touch the money. They didn’t listen.”
For the St. Christopher House staff, it was equally eyeopening—because Shillington eventually found a way to explain tax rates. He oudined, for example, how the Guaranteed Income Supplement (GIS), which boosts the Old Age Security pensions of low-income elderly, is clawed back by 50 cents for every dollar they receive from outside sources such as RRSPs. Some low-income elderly draw enough extra money that they also have to pay tax on a portion of it—at a rate of about 25 per cent. So their so-called marginal tax rate—the rate on the last dollar of income—can reach 75 per cent. Meanwhile, programs such as Meals on Wheels and home care are priced according to a recipient’s gross income. So the seniors with extra income who need a lot of such help have an “effective tax rate” of more than 100 per cent—because everybody takes a chunk of that extra income, not realizing that it is already subject to the double whammy of taxes and clawbacks.
Most important, Shillington put the staff in touch with federal policymakers. Early this year, because of research he did while at St. Christopher House on people who are eligible for the GIS but do not receive it, Ottawa will belatedly contact about 200,000 seniors to see if they are entided. He is also campaigning for the creation of tax vehicles that will allow low-income Canadians to save for their old age—without fear of punitive taxation rates. As it stands, it is clearly counterproductive for them to put money into RRSPs because of the confiscatory tax effects in retirement. “I am concerned about fairness for modest-income people who work and save and get no benefit,” says C. D. Howe Institute research director Bill Robson, who has joined the new blue-ribbon St. Christopher House advisory committee. “And I care about sustainability for those programs, should people learn that working and saving provides no benefit.” Not bad for eight weeks of Shillingtons work. Pigott tried to get a federal civil servant to conduct the same experiment this fall. No one could find the time.
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