In our pre-budget Reality Check, we noted that a recession would lead to upwards pressure on social assistance expenditures. The 2009 Budget notes that every 1% increase in the temporary assistance caseload increases expenditures by $3.5 million (and $7 million for the disability caseload). During a major recession it would not be unrealistic to project that this could translate into cost pressures in the hundreds of millions of dollars. And that is not mentioning the various punitive reforms made to the system that make it much harder to get on to access what is a very meager level of benefits.
Alas, in its 2009 budget the government planned for only a small rise in temporary assistance caseload of 6%, and for the total caseload, 4.6%. We noted on budget day that given a then-50% (now 60%) increase in the numbers of unemployed over the past year, the budget is essentially on a different planet.
So just as February’s unemployment rate has exceeded the budget’s projection for the whole year, budget projections for social assistance are essentially out the window a month after the budget was tabled. As reported in the Sun:
Welfare numbers in B.C. soared by 36.5 per cent in January compared to the previous year, and government expects the figures to keep increasing. Between January 2008 and January 2009 — the last month for which the province has figures — the number of people in the temporary assistance/ expected to work category rose from 20,800 cases to 28,391. In the month between December last year and the end of January this year, the caseload increased by 10.8 per cent.
The grim reality that this recession is going to be worse than the BC government is admitting. That increase alone if annualized will add about $128 million to provincial expenditures, and I would not be surprised if the caseload continues to rise at a rapid clip over the remainder of 2009.
But let me get this straight: when the budget was tabled in mid-February, the government did not know that the social assistance caseload from January had shot way up? Surely, it cannot be correct that the officials in the Ministry of Finance were ignorant of this fact, even if just anecdotally, even though everyone has been talking about a recession for months, and even though this is a major source of cost pressure in the budget.