Analyzing the Efficiency Debate of Ontario Works and the Ontario Disability Support Program

By: Anna Hardie

Ontario has two main social assistance programs to help alleviate poverty: Ontario Works (OW) and Ontario Disability Support Program (ODSP). OW provides temporary financial assistance and job support for low-income Ontarians. ODSP also provides financial assistance and aims to support people with disabilities to overcome barriers to employment. Both programs have similar goals to help people “find sustainable employment and achieve self-reliance.” Between 2017 and 2018, OW and ODSP accounted for 5.3% of Ontario’s total expenditures, or $8.1 billion. In addition, roughly half of the financial assistance from OW supported individuals in covering shelter costs, while 41.5% went towards basic needs such as food and water.  

While it is easy to get overwhelmed by the total cost of OW and ODSP, the maximum annual amount of assistance offered by the programs are just $733 and $1169, respectively. To put this into perspective, as of March 2022, the average rent for a one-bedroom apartment in Ontario was $2,118 per month. Other basic necessities such as the cost of food and electricity have also risen as Ontario’s climbing inflation rate currently sits at 5.7%. ODSP payments have not kept up with inflation since 2018, and its real value is consequently “worth less than they were 17 years ago.” Second, the $733 (OW) and $1169 (ODSP) amount per month is the maximum amount a beneficiary can receive. In 2018, the average amounts a beneficiary received through OW and ODSP were $547 and $913 per month, respectively. This average amount does not account for the mental and financial costs (e.g., transportation, mailing applications, time off work) of the application process.  

Ontario Works and the Ontario Disability Support Program have long been described as programs with poor recipient outcomes and high costs. Given these concerns, Ontario’s auditor general conducted audits in 2018 and 2019 to assess the efficiency of OW and ODSP. The conclusion reached was that OW and ODSP indeed have poor recipient outcomes. To illustrate, in 2018, “only 10 percent of Ontario Works cases exited the program to employment”. In addition, the average duration of recipients receiving OW “increased from 19 months in 2009 to 35 months in 2018”. In terms of costs, the cumulative increase between 2009 and 2018 was $3.18 billion, while the number of beneficiaries increased by 226,000.  

Increasing costs and program inefficiency of OW and ODSP have largely been attributed to issues of fraudulency, overpayment, poor service quality, and lack of oversight by the Ministry of Children, Community and Social Services (MCCSS) in how applicants are processed by service managers. One statistic that captures the fear of abused welfare programs is the following from the 2018 auditor general’s report on OW: “We noted that service managers investigated about 17,000 fraud tips in the last three years, and more than 25% of these identified overpayments and another 10% resulted in the termination of benefits.” Arguably, this one statistic is weighed heavily to justify the direction of the auditor general’s recommendations. There were no statistics showing how common fraud and overpayment cases are or how these are growing issues within OW or the ODSP. Since the gravity of the fraud and overpayment issue is unclear, the emphasis it receives in the auditor’s report relies on assumptions. The reports by the auditor general have faced public backlash for relying on inaccurate misconceptions about welfare participants and individuals with disabilities.  

As a supplement to the OW report, in 2018 the auditor general came out with 19 recommendations for the MCCSS. However, these recommendations stem from a misguided framing of the problem. Will ensuring that OW is only accessed by eligible recipients really decrease costs in the long-run? If the goal is to cut costs, shouldn’t there be greater focus on how to help recipients no longer become dependent on OW? It is also important to note the rising costs of living in Ontario. Rather than framing the issue as one where too many people are utilizing or abusing the program, one should ask why more people are becoming eligible for the program. Finally, the reports on OW and ODSP did not weigh in the programs economic benefits, positive externalities, and how it may have prevented people from falling into deeper levels of poverty (e.g., preventing further increases in costs of shelters and emergency care). With that said, OW and ODSP have lots of room for improvement in decreasing dependency.  

So, what can be done to truly improve the effectiveness of OW and ODSP? The first thing that can be done is for the MCCSS to fully implement recommendations 2-6, 10, 11, and 16-19 from the auditor general’s report. These are more focused on improving service delivery and data collection instead of monitoring eligibility and overpayment issues. Second, research by the C.D Howe Institute gives multiple recommendations that are focused on improving efficiency and service delivery. One of the recommendations made was to allow participants to access supplementary benefits in addition to social assistance. Another idea raised, supported through strong empirical evidence, was to subsidize skill-development and part-time work opportunities. Third, independent policy researchers, such as Kumiko Shibuya, state that long-term dependency and inability to leave the welfare system are attributed to barriers such as “low level of formal education, being an immigrant, raising a young child, or living in an urban area or an area with a high unemployment rate.” Shibuya emphasizes the importance of addressing these structural barriers to improve welfare policies.

Over the past six years, poverty rates in Ontario and Canada have consistently declined, in part due to increased spending on programs such as OW and ODSP. At the same time, social and unemployment assistance can have high fiscal costs. The MCCSS should try to decrease program dependency by improving the employment support services of OW and ODSP. The next report by the auditor general should place less emphasis on issues such as fraud and more on improving service delivery and data collection.

Anna Hardie is a first-year student in the Master of Public Policy program. She graduated from Mount Allison University in 2021 with a Bachelor of Arts in Economics and English Literature. Her policy interests include environmental and health policy. Anna is working towards pursuing a career in consulting for the public sector and is currently a Client Liaison at the Public Good Initiative.

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