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Centretown News Online
Wednesday, April 23, 2014
Viewpoint: Ottawa's social finance scheme not a cure-all for social ills
Friday, 07 December 2012
By David Gordon Koch
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Poverty is impossible to ignore on the streets of downtown Ottawa and in other cities across Canada.

The poor and homeless we encounter on Rideau and Bank streets, many of whom struggle with mental illness and substance addiction, signal deep social problems that the federal government is now asking big business to address through “social finance.”

It’s a fishy proposition and one that deserves scrutiny.

Federal Human Resources Minister Diane Finley, speaking alongside Royal Bank of Canada CEO Gordon Nixon, announced at a Toronto conference recently that the government is seeking ideas from businesses interested in solving social problems “by harnessing private sector best practices.”

Underfunded community groups and charities would receive much-needed cash from private businesses that stand to generate a solid financial return if the partnership can produce a better social return.

The idea is that, given a sufficient profit motive, private companies would do a better job than inefficient governments in addressing social ills.

It’s mind-bogglingly ironic that big businesses would actually generate a profit this way after benefiting from low corporate tax rates linked to cuts in social spending that caused these social crises.

But it’s the growing trend across the Western world.

In Canada, the Conservative government is taking a cue from countries such as the U.S., where the financial giant Goldman Sachs is lending about $10 million to an initiative aimed at keeping young inmates from reoffending after doing time at the Rikers Island prison.

If the people running the education and counselling program for inmates in the New York City prison can meet certain targets for recidivism, then Goldman Sachs (a Wall Street icon known as the “great vampire squid” for its role in the subprime foreclosure crisis, which has seen millions evicted from their homes) stands to be repaid with more than $2 million in profits.

Social finance is not a bold new idea, but a continuation of trends we’ve seen for decades. While social spending shrinks, governments download their responsibilities onto charities and community groups that are forced to seek funding from private sector “partners.”

To be fair, some businesses clearly have social and environmental goals at heart when they support community groups and find clever ways to make such ventures profitable.

For example, Five Star Asbestos Removal (featured above) does this by filling a labour shortage while employing ex-convicts involved with the John Howard Society, a prisoner reintegration group that ensures these workers get adequate training for a potentially hazardous occupation.  

It’s not glamorous, but it gives a second chance to folks who too often find themselves stuck in an endless loop between overcrowded jails and emergency shelters, without hope of employment.

But such employment schemes are only necessary because we’re living in a social system that’s in disrepair, where decent jobs are scarce and people fall through the cracks.

There are alternatives. Instead of profit-driven social financing schemes, big businesses and wealthy individuals should offer no-strings-attached funding to groups that push for programs of social change that include robust social services and employment.

And the federal government should raise corporate taxes on big businesses such as RBC, which is raking in record profits while many among us struggle to make ends meet.

This is a trend of increasing social inequality that numbs the human heart. Businesses should help face this crisis in the spirit of social solidarity.

Last Updated ( Friday, 25 January 2013 )
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