Poverty costs B.C. $9 billion each year: report
Jon Woodward, ctvbc.ca
Published Thursday, July 14, 2011 1:07PM PDT
Poverty costs B.C as much as $9 billion a year, while solutions for poverty may cost less than half that amount, according to the first study of its kind.
If the province invests to solve poverty now, anti-poverty measures could turn out to be a good investment, according to a report by Canadian Centre for Policy Alternatives economist Iglika Ivanova.
"Poverty is not free," Ivanova told CTV News. "It is more expensive to keep poverty as it is than it is to deal with it."
The conclusion is in a report that is due to be released Thursday. An advance copy was provided to CTV News by the CCPA, a left-leaning think tank.
The idea that the costs of dealing with a social ill outweigh the costs of addressing the ill head-on is not new – a study by Simon Fraser University estimated the cost of homelessness to B.C. is $644 million a year, while building social housing costs less.
But this is the first time anyone in B.C. has attempted to gauge the entire cost of the much wider issue of being poor, defined by the CCPA as being in the bottom 20 per cent of income. In the report, the CCPA used data that showed the poor are more likely to use health care services and be affected by crime.
"The realities of living in poverty drive people to desperation, panhandling and stealing," said Ivanova.
She found that the poor cost $1.15 billion more in health care and $744 million in crime than the next income bracket and cost the economy between $5.9 and $6.9 billion in lost productivity. Ivanova measured the total cost was between $8.1 and $9.2 billion per year.
As much as $2.3 billion of that figure was a direct cost to government, while between $5.9 and $6.9 billion was in lower economic activity and foregone earnings.
By comparison, a previous study by the CCPA estimated that the costs of a comprehensive poverty reduction plan would be between $3 and $4 billion. That plan involved raising the minimum wage and increasing income assistance.
Most government ministers were at a caucus retreat and could not be reached for comment Wednesday, but a government spokesman said B.C. already is investing millions in social housing because of studies that show stopping homelessness saves money on policing and health care costs.
However, the spokesman said he doubted that any anti-poverty measures could save the government or the economy billions. Instead, the cost was more likely to be borne by government with no guaranteed return.
SFU economist Krishna Penakur told CTV News that even though the CCPA report was not published in a peer-reviewed journal, he expected it would spark more research into the costs of poverty in the province.
"This is a massively under-researched area," Pendakur said. "It's a great first step to get people interested in quantifying this thing -- this waste of public sector resources associated with having people being very poor. But it's not the end of the story. It's more like the beginning of the story."
The report was no surprise to New Westminster resident Thomas Page. The 58-year-old used to run a computer business, but was diagnosed with bipolar disorder and fibromyalgia, and has been on disability ever since.
Most of his medications are covered by the provincial government, but the one that makes the most difference for his fibromyalgia, Lyrica, wasn't.
"The funding was pulled for that, and I can't afford it," he said. Two capsules of Lyrica cost about $5 a day, according to Canada's Patented Medicine Prices Review Board, or about $150 a month – about one sixth of Page's income on disability.
An investment in funding that medication – a relatively small amount, he says – would allow him to work, and save the government much more in disability payments.