Why the government's grocery rebate may not do enough to help struggling Canadians
Move to offer one-time payment a 'legitimate' trade-off in fight against inflation, economist says
Grocery rebate cheques are landing in Canadian bank accounts today, but some residents say it isn't nearly enough to tackle the problem of food insecurity and the rise in cost of living.
Toronto resident Diane Lane says she received about $200 in her bank account Wednesday. While she's thankful for the help, she says it's only enough to keep her going, not get ahead.
"I'm a senior, I live on old age pension, I pay market rent, I live alone, and the food is taking everything I have," Lane, 70, told CBC News outside a Toronto Walmart.
"It'll fill my freezer, I might be fine for maybe two months," she said. "And then I'll be right back to where I am right now."
The federal government has billed the one-time payment as targeted inflation relief for some 11 million low- and modest-income households. Single Canadians without children are no longer eligible for the rebate if they earn more than $49,166 a year, while families with four children continue to receive the payments until they earn more than $64,946.
But residents like Lane say that while the rebate can ease difficulties temporarily, it falls short of tackling the issues underpinning food insecurity and the rising cost of living. Still, thousands of Canadians aren't covered under this new program, even if they're struggling to make do.
"Even working couples, the raises aren't coming fast enough to compensate with the cost of living, especially food," said Lane.
"And I don't know anybody who can survive without food."
One-time payment is a 'legitimate' trade-off: economist
Despite the overall slowdown, the price of food continued to rise at a fast pace in May. Grocery prices went up almost nine per cent on a year-over-year basis — barely lower than the 9.1 per cent rate clocked in April and still almost three times the overall inflation rate.
Peter Dungan, an economic analysis and policy associate professor at the University of Toronto, says that as a rule of thumb, government spending aimed at offsetting the effects of inflation will, to some extent, make the problem worse.
"Any expenditure will make the Bank of Canada's job harder in terms of cooling down the economy, which is what needs to be done to mitigate inflation," said Dungan.
But inflation, combined with high interest rates, has likely been hurting low to middle-income earners more than high earners, he said. Despite the hiccup the move to offer a one-time rebate can produce, Dungan said it's a "legitimate" reaction and "trade-off" between equity and the fight against inflation.
"It's being very much directed at lower-income families," Dungan said. "I don't really have a problem with it."
What more can be done?
Derek Cook, the director of the Canadian Poverty Institute in Calgary, says the policy is a "welcome" start aimed at helping low-income Canadians.
But he said the federal government can't do everything itself — provincial governments need to do their part in raising social assistance rates and keeping wages in line with the cost of living.
"We need to think about this in terms of human rights, that we actually have an obligation to guarantee the right to food for people in this country," said Cook.
Jim Mulvale, a social work professor at the University of Manitoba, says the move is particularly helpful because it gives people freedom in where to spend their money — some residents may choose to dedicate the extra funds to housing or childcare costs instead.
That's why he hopes the rebates will help spur a broader and more comprehensive measure, like a basic income program.
"If one wants to be optimistic, one might see this as a signal that the Liberal government is open to … income tested, unconditional transfers to people that need money," Mulvale said.
While it's possible the amount of the rebate is only a "drop in the bucket" when it comes to meeting each family's expenses, Dungan said that overall, the measure will likely cost upwards of $1 billion. Additionally, he said it allows the government to claim it's doing something about the problem.
But over the long-term, Dungan says the government may be able to offset the pressures of high grocery prices by encouraging more competition in the sector, or, in light of the rising cost of living, changing the tax scheme so less is taken from lower-income households.
"There's certain things that could be done to perhaps mitigate some of the price pressures we're under, but those should have been done whether we had two per cent inflation or six per cent," said Dungan.
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