Documents,
released in response to a freedom of information request
for information on shelter allowances paid to income assistance
clients, indicate that the Ministry of Employment and Income
Assistance, or the Ministry of Finance, under-estimated
the cost of increasing the welfare shelter allowance by
$50 per month. Since there are about 100,000 cases (103,402
as of January 2007), a naive estimate of the annual cost
of the increase is $60 million (50 times 12 times 100,000),
but page 7 of the budget documents indicates that the estimated
cost is $33 million.
When
the Ministry of Employment and Income Assistance was asked
to explain the difference between the estimates of $60 million
and $33 million it said that 40% of income assistance recipients
do not receive the full shelter allowance because they pay
less rent than the maximum allowed for reimbursement. Finding
that hard to understand, I submitted a freedom of information
request for a frequency distribution of shelter payments
to different categories of clients. The response indicates
(click
for 741 KB pdf) that in December 2006, 27% of temporary
assistance cases and 19% of disability cases received less
than the maximum shelter allowance (those are the percentages
of clients not in the top bracket in the tables, as that
bracket includes the maximum payment). In December 2006
there were 36,960 temporary assistance cases and 60,703
disability cases. Allowing for the percentages cited here
not receiving the $50 increase, an estimate of the annual
cost of the increase is $45.7 million.
Don't
feel sorry for the government if it ends up spending $13
million more than forecast in order to pay for increased
shelter allowances. Welfare rates should have gone up a
lot more than they did. Recall that the major budget item
was a 10% cut in income taxes, strangely called part of
a housing program. The income tax cut is estimated to cost
$515
million per year on a full year basis. Those with annual
incomes over $100,000 represented 3.3% of those who filed
taxes in 2004; they will get 20.7% of the benefits from
the 2008 tax cut at an annual cost of $107 million - more
than twice the annual cost of the increase in the shelter
allowance (more than three times as much if you accept the
government's $33 million figure).
This
exercise in checking the government's figures is something
that needs to be done with most of its claims. For example,
I discovered
that although the Campbell government claimed in October
that 15,000 families would immediately benefit from the
Rental Assistance Program, raised to over 20,000 when the
income threshold was increased to $28,000, there were only
1,360 families enrolled in the program as of March 31, 2007.
Government routinely issues news releases with claims about
how many people will benefit from one program or another,
or how much a particular initiative will cost. It is useful
to request the information that is used to make the claims,
and to follow up several months later to see if the claims
meet the test of time. An open and transparent government
would freely issue reports on its claims, but when necessary
the Freedom of Information and Protection of Privacy
Act can help in testing their assertions. Perhaps that
is one of the reasons why the Campbell government recently
moved to keep its internal documents on climate change secret
and exempted from FOI requests.
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