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The unprecedented volatility of global markets and the extreme fragility of giant financial institutions are casting long shadows on Canada and Ontario.
As Finance Minister Dwight Duncan gets set to release a fiscal update, Ontarians will be asking: What can our provincial government do to blunt negative effects on our own economy?
Taking action on poverty reduction will be crucial for our ailing economic fortunes.
In fact, just one year ago, Ontario Premier Dalton McGuinty spoke directly to the economic vulnerability many in his province feel when he promised to implement a comprehensive poverty reduction strategy.
But now the premier is signalling a retreat on the timing for that goal, citing a slowing economy, insufficient provincial revenues and lack of federal support as excuses for inaction.
As economists, we believe the exact opposite is in order. Now is the very time to act &em; and there are several well-founded economic reasons why we cannot afford to delay action against economic insecurity.
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But investments on poverty reduction are important not just because of the need for a short-term fix. Acting on poverty reduction is also smart economics because of what it means for Ontario's future prosperity.
One of the fundamental tenets of economic thinking is the return-on-investment principle. And there is overwhelming evidence that investments we make in poverty reduction today will pay huge returns tomorrow.
Take education. Every dollar spent on early childhood education &em; key to school success for all children &em; eventually returns $9 to the economy over time. And yet the vast majority of poor children in Ontario do not have access to early learning and childhood care.
It's a lesson about poverty prevention that we ignore at great peril because the child we neglect today pays the price in later years. For instance, a Grade 10 student who drops out of high school loses out on more than $120,000 in lifetime earnings.
This kind of lost potential has repercussions for all of us.
As McGuinty has repeatedly stated, poverty reduction is an essential strategy in ensuring Ontario can compete, and win, on a global stage.
He is right. It is the job of governments to look beyond the immediate crises and plan for the challenges that lie ahead.
The mass retirement of baby boomers will slow labour force growth substantially and create a great demand for a highly skilled, well-educated and productive workforce.
But poverty robs people of their health, their hope, and their potential. We cannot afford such losses. Ontario, and Canada, needs all hands on deck now to prepare for our future.
The best and cheapest poverty reduction strategy is to move swiftly with investments on affordable housing, education and training, early learning and child care, public transit, income supports and jobs that pay living wages.
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The sooner we act, the sooner everyone benefits.
- reprinted from the Toronto Star