What Happened to Welfare Applicants Who Dropped from Radar?

Government failed to track those who stopped applying, then didn't file tax returns.

By Andrew MacLeod 3 Feb 2011 |

Andrew MacLeod is The Tyee's legislative bureau chief in Victoria. Reach him here.

Many people who started applying for welfare in British Columbia but didn't finish the application process made more money than they would have had they received assistance, a British Columbia government study said.

But the study only included people who filed income tax returns for three years in a row, leading one welfare observer to conclude the government still knows little about how changes to the system in 2002 affected the most vulnerable.

At that time the government introduced, among other changes, a three-week delay in the process where applicants were expected to look for work. Murray Coell was the minister responsible, and his cabinet colleagues included current Liberal party leadership candidates Christy Clark, Kevin Falcon, George Abbott and Mike de Jong.

Before the change, eligibility for welfare would have been determined on the first visit, the "Outcomes of BCEA Applicants that do not Complete the Application Process" report said. The report was released to The Tyee in response to a freedom of information request, and has also been posted on the social development ministry's website.

After 2002, the number of people receiving temporary assistance declined rapidly, shrinking by about 65 per cent from 108,000 cases in 2001 to a low of 37,700 in 2006. The numbers, according to the most recent statistics the ministry's released, have since risen.

The government long argued that the shrinking caseload was the result of an increased emphasis on employment, and people were leaving welfare to take jobs. Observers, including the Canadian Centre for Policy Alternatives, said that while some people were of course leaving for jobs, the government had made it much harder for people to get welfare in the first place.

Six out of 10 dropped applications

In a March 2009, report called "Last Resort," the B.C. ombudsperson's office said the ministry had agreed to find out whether people who discontinue their application process move on to employment or educational programs within two months, and to report their findings publicly.

While the government's outcomes report obtained by The Tyee confirms many people fail to complete the application process, it adds little to what's known about what happens to those people.

"After the [2002] change in the application process, 58 per cent of applicants that were not exempted from the three-week work search requirement did not return for the second stage of the application process," the report said.

In other words, nearly six out of 10 people who turned to the ministry for financial help didn't come back for their second appointment three weeks later. "As these applicants do not return for the eligibility interview, little is known about their circumstances," the report noted.

The government's report used Statistics Canada tax data to track those people who didn't complete their welfare applications. A previous report on what happens to people who've been on welfare who leave it used a similar method. To be included in either study they couldn't have made another application for welfare and they had to have "filed their tax returns for three consecutive years."

That meant that more than four out of 10 of the people who didn't complete the application process were left out of the study.

Low tax-filing rate 'considered normal'

The government's report is silent on the question of whether it can be assumed the people who didn't file income tax returns would be in any way different from the people who did.

Instead the report notes that the filing rate was "considered normal for this population" and argues that "Tracking clients who have filed for three consecutive years provides a more robust analysis by allowing us to track income levels in each year following the application for assistance."

It is also worth noting that the number who filed income tax returns declined over time. Of people who applied for welfare in 2000, 62.3 per cent filed returns. By 2004 the number had dropped to 55.4 per cent.

Despite the flaws, the report concludes that people who don't complete the application process are financially better off. "The median after-tax income of non-returning applicants is higher than what they would have received on full-time, full-year income assistance," it said.

And, "The median income of non-returning applicants increases over the two-year follow-up period, indicating that they are financially better off in the years after their uncompleted application for income assistance."

Too many missing from study: Klein

It's not surprising that many people move from needing welfare into work, said Seth Klein, B.C. director of the Canadian Centre for Policy Alternatives and a co-author of the 2006 report "Denied Assistance".

"We also clearly found that many of them did not land on their feet and many ended up homeless, and those are the ones we should be concerned about," he said. People who end up homeless are unlikely to file tax returns for the next three years, he said.

"Their study covers those who are of least concern to us in the grand scheme of things," he said. "The sample misses the people of main concern to us."

Klein also noted that even for those included in the study, while the incomes were significantly higher than they would have received on welfare, many remained below the poverty line. That goes to a key question the officials responsible for the system need to ask themselves, he said. "What's your goal? Is your goal to get people off assistance or out of poverty?"

Single women and families, with either one parent or two, were particularly likely to remain below the poverty line even with employment income according to data included in the government's report, Klein pointed out.

Homelessness continues to be a problem for communities throughout the province. Media reports this week on Vancouver's housing initiatives note that while 1,640 units will open in the next three years for people now living in shelters or on the street, it doesn't keep pace with the number of people who are becoming homeless.  [Tyee]

Read more: Rights + Justice

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