Research Projects

Analyzing Canada’s Welfare State Research Project

Submitted on Feb, 2015

Should Canada Reduce Its Welfare-State?

    During the Great Depression in 1930’s, Canada’s government had no official system in order to aid the people in need and to provide monetary assist to unemployed Canadians. During this period, governments of Canada, decided to started spending on social aid programs through transferring tax money to individuals in need and by selling bonds. In forty years, Canada transferred into a Welfare-State leaving its old system of government, Laissez-Faire behind. Today, Social programs in Canada are designed to aid Canadians who are having a hardship in acquiring their needs and Canada’s social safety net includes many different programs provided by provinces, plus Medicare and public education. Supporting Canada’s social programs is extremely expensive which leaves Canada’s federal and provincial governments in debt. Many people in Canada are really dependent these social programs to a point that they are dishonest about the status they are in. Should Canada keep its current system of Welfare-State? Should it be reduced? Should Canada move toward Laissez-Faire system? In my opinion, Canada’s Welfare state should be reduced in order to lower the yearly debt, lower the number of people who are abusing the programs and also to create more competition in the economy.
First, Canada’s Federal debt is increasing by the hour and a great portion of the tax paid by tax payers goes toward the interest of this debt. Below, you can see a chart of Canada’s Federal debt from 1930 to 2013.

As you can see Canada’s Federal debt has increased dramatically in 70 years of running the Welfare-State. In 2010-2011 fiscal period, governments of Canada contributed 1,380.29 in millions for social safety programs. According to Ministry of Finance, Social Programs Spending increases by %8 every year because of growing population, unemployment rate and many other contributing factors and Bank of Canada believes that this Federal debt can be reduced without paying the debt but with investing more money in the economy. This approach requires much less spending by the government in order to be successful. By reducing the budget from the largest portion of these spending, Social Assistance, governments of Canada can save millions of dollars every year which can help in paying Canada’s Federal debt.

       Second, Canada’s Welfare-State system must be reduced in order to force those who abuse it to be removed from the programs and become independent. Currently Canada holds 6.6% unemployment rate and they need financial assistance from the government in order to acquire their needs. A portion of those who are included in government’s programs, take advantage of it to a point where they start being dishonest about their life status to stay in these aid programs. Many other claim the need to be provided with a shelter from the government where they do not have to pay rent and they rent the shelter out with a low price to someone else. In recent years many rules were set by the ministry of justice for those who take advantage of the programs and these rules did not help the situation. If the Welfare-State system reduces the finance it contributes to these programs, the qualification for these government aids will become harder and harder and since less people are being supported, the number of individuals abusing it will decrease and it is much more fair for tax payers and this way they know that their tax dollars are being transferred to those who are really in need of it. According to Governments of Canada website,
You may be entitled to receive EI regular benefits if you:

* are employed in insurable employment;
* lost your employment through no fault of your own;
* have been without work and without pay for at least seven consecutive days in the last 52 weeks;
* have worked for the required number of insurable hours in the last 52 weeks or since the start of your last EI claim, whichever is shorter;
* are ready, willing, and capable of working each day; and
* are actively looking for work (you must keep a written record of employers you contact, including when you contacted them).

These factors set by Governments of Canada can be easily abused or taken advantage of and Employment Insurance is just a small portion of benefits that government provides for unemployed and low income families. In conclusion, many of the governments social aid programs such as EI, EI Maternity and Parental Benefits, EI Family Supplement or GST/HST Credit are easily being abused today and by reducing these programs and their budget, many of these frauds can be stopped and those who really need these programs can fairly benefit from it.

       At last, if governments of Canada reduce the Welfare-State system by privatizing many sections of the government, it creates a competition in those sectors between the private companies and businesses which brings quality and efficiency. For example, Canada is spending 214.9 billion dollars on health care which is 11% of the total GDP. If Canada’s health care system becomes a mix of health care from government and also private clinics, the spending on health care is reduced, those who can afford the private health care can receive it with good quality, and the time spent in hospitals will be much lower since the number of individuals in need of health care is being divided into two sectors.

There are many other sectors which can be privatized to create competition for between businesses. For example, Toronto city privatized the garbage collection of a part of the city and the result was saving $11-million dollars annually. These private companies have profit motives which forces them to do things more efficiently comparing to government workers doing the same activity.

       In conclusion, it has been more than 80 years that Canada is using the socialist Welfare-System and during these years, social aid programs are getting more and more expensive to run which leaves annually deficit for governments of Canada. I do not believe going back to Laissez-Faire system is the right thing to do, but reducing expenditures of the current system is the right method in order to lower the annual debt and deficit in Canada. Governments of Canada need to lower the spending on the social programs, start privatizing some of the public sector and also force those who abuse it to be removed from the programs by making the qualifications for these aids harder. This might seem like a big step toward the left side of the political spectrum but it also allows Canadians to enjoy all the positive qualities of a Welfare-State.



Sources:

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