Welfare

B

Social Assistance

Canada’s primary welfare system, called Social Assistance (SA), encompasses a number of programs. The federal government set the structure of the SA system with the passage of the Canada Assistance Plan (CAP) in 1966. Parts of SA resemble the former AFDC program in the United States, but SA is much more comprehensive and covers more types of households. Between the early 1980s and the early 1990s, recipients of SA doubled from about 1.5 million people to about 3 million. The legislation for SA also laid out arrangements for the division of welfare administration between the federal and regional governments. Canada’s provincial and territorial governments determined SA needs and managed distributions, while funding and broad policymaking were split between the federal and regional levels.

As part of its reforms in 1996 and 1997, the Canadian government is changing how it administers SA. In the newer system, called Canada Health and Social Transfer, the federal government gives block grants to provinces and territories.

C

Unemployment Insurance

In the early 1970s, the Canadian government greatly expanded the country’s Unemployment Insurance (UI) program, which had existed in other forms since 1940. UI became the most widely used Canadian social security program for adults. The program provides assistance to both unemployed and working Canadians as a supplement, with benefits exceeding those in most other developed nations.

Annual costs for the UI program roughly doubled between 1973 and 1994. In 1996 the federal government reformed UI and renamed it Employment Insurance. This new program of federal block grants to provinces and territories gave work incentives to people having difficulty finding desirable full-time jobs by providing wage supplements to part-time workers. It also provided funding for employers to create jobs, subsidies to employers who hired welfare recipients, and job-seeking assistance.

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D

Universal Health Care

The Canadian welfare system is also strongly focused on providing health care to citizens. Between the mid-1950s and the 1970s, Canada’s federal, provincial, and territorial governments progressively joined together to create nationwide health-care programs and programs for the elderly. Unlike U.S. citizens, all Canadians receive health care as part of a national plan. Canada’s Medicare program—no relation to U.S. Medicare—is known as a single-payer system, and is funded primarily by income, corporate, sales, and other taxes. The governments, the so-called single payers, then fund private health-care providers to supply all basic and emergency medical services. Some services remain privately funded.

VII

Programs in Other Developed Countries

Relative to the United States, and to some extent Canada, the social welfare systems in other developed countries, especially in western Europe, are far more comprehensive and better financed. In particular, the Scandinavian countries, Australia, and New Zealand have developed generous public assistance programs.

Except for the United States and South Africa, all developed countries guarantee health-care access to all citizens or subsidize national health care. Coverage often includes both sickness and maternity support. Some nations, including the United Kingdom and the Russian Federation, provide the care directly through some form of national health service, in which the government administers health care through public facilities. Other countries, such as New Zealand and Australia, distribute public funds for privately provided health care.

Several developed countries have established a variety of other programs that are available to all citizens. Money for these programs comes primarily from general government funds. Some of these programs provide support to everyone, rich and poor alike, while others are means-tested or otherwise restricted. For example, Australia, New Zealand, Israel, many western European countries (the United Kingdom, Ireland, Germany, France, and the Scandinavian countries, for example), and some in eastern Europe (for instance, the Russian Federation, Poland, and Romania) offer family allowances. These are payments made to parents to offset some of the costs of raising children. In some cases these programs provide benefits to adult dependents who do not work in the formal economy, such as homemakers, or who continue in school or apprenticeships. In much of Europe, childcare is widely available and publicly subsidized. A few developed countries—such as Australia, New Zealand, and some of the Scandinavian countries—offer universal old age, disability, and survivor benefits. Many governments also subsidize training for workers.

Since international comparisons of poverty were first begun with the Luxembourg Income Study in the early 1980s, it has been found that all other developed nations have lower poverty rates than the United States, particularly for children. For example, poverty rates for children in France have been about four times lower than those in the United States. In Sweden, less than 10 percent of children living with a single parent are poor, while over half of single-parent children in the United States live in poverty.

Achieving low poverty rates can be costly, however. Sweden and Denmark, for instance, spend slightly more than 50 percent of their gross domestic product (GDP) on forms of public support. In France, Germany, the United Kingdom, and many other countries, citizens and politicians question whether their national welfare systems can be maintained into the indefinite future.

Not surprisingly, many European countries—including the United Kingdom, France, The Netherlands, and Denmark—have recently discussed whether U.S.-style reforms that emphasize personal responsibility and work are appropriate for them. The common theme in policy proposals in Europe is to combat what many Europeans call “social exclusion,” the situation in which certain vulnerable groups do not fully participate in society. Policymakers tend to favor initiatives designed to facilitate full participation in society, not necessarily to reduce dependency on government.

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