Newfoundland and Labrador has undergone significant economic and demographic shifts in the past few decades, marked by the decline of traditional industries such as fishing and mining, and the outmigration of young people seeking job opportunities elsewhere. These changes, among others, have led to an above-average poverty rate in the province. Particularly concerning are the poverty rates in rural areas and among Indigenous peoples. Over half of Inuit children in Newfoundland and Labrador live below the poverty line, according to a 2019 report by the Canadian Centre for Policy Alternatives.

Inadequate and overcrowded housing is a pressing concern for many households in Newfoundland and Labrador that are living on low incomes, and it is aggravated by the high cost of living in remote areas. As a result, a significant portion of residents in the province continue to grapple with poverty and an inadequate social safety net. Furthermore, declines in traditional industries and outmigration have hurt the province’s economy and contributed to an increase in poverty.

Newfoundland and Labrador captures the true challenges of Canadian poverty. With unacceptable working and economic conditions, people in the province are struggling to make ends meet. With that, many are forced to turn to social assistance and Employment Insurance (EI), but because rates are inadequate, they continue to struggle to get food on the table and pay rent.

Working in a Struggling Economy

When it comes to work, 18% of Newfoundlanders are receiving EI payments compared to only 6% nationally. Low wages are affecting 2 in 5 people’s ability to make ends meet. More people are reporting that it is difficult to access stable employment opportunities in Newfoundland than anywhere else in Canada, which is resulting in the country’s worst unemployment rate of 10%.

As such, 54% of residents stated that they wanted to see an increase in the minimum wage, 42% want policies that promote decent work, and 47% want new opportunities in the job market along with training opportunities.

Cost of Living Skyrockets

As the challenges with work persist, the cost of living will continue to be a real problem for the 46% of people in Newfoundland who struggle to access fresh and affordable food. The proportion of income that households in Newfoundland with low incomes are paying toward fixed costs for things like utilities and transport is one of the highest in Canada. This explains why 2 in 3 residents are asking for a reduction in the cost of utilities.

A Failing Social Assistance System

In the meantime, more and more people may need to rely on a broken social assistance system. In Newfoundland, 1 in 5 people are already receiving social assistance from the province, and 37% of those people say that the rates are not high enough to keep up with the cost of living. The evidence backs this up, as social assistance rates in the province provide amounts equal to less than half of the poverty line (for single working-age adults).

Newfoundland and Labrador’s 2006 poverty reduction strategy was an early success story, as it supported focused efforts to reduce the proportion of residents on social assistance and provided a way to think about necessary government actions long before other provinces were active in this area. However, momentum has since been lost and no similar strategy has subsequently been implemented. Almost two decades on, there is little framework in place to support the elimination of poverty in Newfoundland and Labrador.

The current government of Newfoundland has chosen to tackle the cost of living crisis. In 2022, it announced an investment of $22.2 million in five key areas, four of which were directed to the cost of living:

1. 1. Increasing the Income Supplement by 10%—providing up to a total of $1,000 per year for a family of four and up to $715 per year for individuals with disabilities.
   2. Increasing the Seniors Benefit by 10%—with eligible families receiving up to $1,444 annually.
   3. Creating a one-time benefit for people currently receiving income support—$200 for individuals and $400 for families.
   4. Providing an additional $2 million to transition homes from oil heating to electric—providing a rebate of up to $5,000.

Newfoundland and Labrador’s 2023 budget is a bare-bones budget that does little to address unaffordability and support individuals and families experiencing poverty. It includes a meagre investment of $140 million for new and affordable housing. Lumping together funding for these two categories of housing in this manner also makes it unclear how much will be allocated to affordable housing and misses the mark on providing effective and reliable assistance to people struggling with the rising cost of living. There were some other minor initiatives to support vulnerable people, such as a 5% increase to the NL Income Supplement and NL Senior’s Benefit, and $19.2 million for settlement supports, including support for Ukrainians.

As the province looks to reduce poverty by 50% by 2030, it will need to tackle the cost of living and lack of affordable housing. Experts in the field believe mirroring PEI’s approach, with all three official political parties signing a letter of recommendation for a universal basic income, would help in Newfoundland and Labrador.

The government must take drastic measures. The cost of living nationally continues to rise and housing is becoming less attainable for those looking to buy or rent. Poverty rates in Newfoundland remain high, with rural communities and Indigenous peoples disproportionately affected. While the government has taken some steps to combat the crisis, there is still much work to be done.

The government must make a concerted effort to tackle housing affordability and the general high cost of living so that all residents—and especially key groups of people with particular needs—experience meaningful change.

Accountability

1. Introduce a new poverty reduction strategy

As the provincial energy sector continues to recover and grow, now is the time to develop a new poverty reduction strategy. It is critical that Newfoundland and Labrador chart a plan that will ensure an equitable and inclusive future for the province that reduces inequality and poverty.

2. Focus on reducing child poverty

As part of this strategy, the province should prioritize the near-term objective of reducing child poverty rates in Newfoundland and Labrador to at least match the national average. Approximately 1 in 10 children in the province live in households that experience poverty. This is the highest rate in Canada. Although lower than in 2015, much of this reduction occurred during COVID-19 and was just over half the reduction experienced nationally. Prior to COVID-19, child poverty in the province had effectively remained stable over the prior four years (2015–2018) despite the introduction of the CCB.

Inflation Protection

3. Implement widespread indexation of benefits and brackets

Newfoundland and Labrador has previously recognized indexation as an important aspect of providing adequate support to help people in households with low incomes, as evidenced by its inclusion in the 2006 poverty reduction strategy. While the Newfoundland and Labrador Child Benefit (NLCB) continues to be indexed, other benefit indexing was ended in 2012. Ensuring that all benefits and brackets are comprehensively indexed so that residents can count on the government to keep up with the changing affordability context is a critical success factor in poverty avoidance and reduction. Given that Newfoundland and Labrador is now projecting budget surpluses from 2024–25 to 2027–28, there is no reason for the province to delay any further.

Accountability Work and Opportunity

4. Work with the federal government to pilot new employment initiatives targeting youth and the long-term unemployed

While the province’s economic outlook has improved in recent years as global commodity prices have rebounded, Newfoundland and Labrador continues to experience the highest percentage in the country of young people who are neither in work nor education or training (NEET), and the highest percentage of workers experiencing long-term unemployment (27 weeks or longer), which is also particularly concentrated among younger cohorts. There are several steps the province can take to address this, including:

• improving the affordability of and access to post-secondary training and apprenticeships, and
• investing in several job development programs with employers to build training, demonstration, and work-integrated learning opportunities for aspiring and young graduates.

However, given the scale and enduring nature of the challenge to the province’s future, the federal government will need to be a partner. In particular, a partnership of this nature would allow the federal government to leverage its tools for investing in a variety of EI-related pilot projects that could be scaled up, including efforts to help workers facing long-term unemployment with greater ease in job re-entry.

5. Reduce claw-backs on employment income

The current Moving into the Workforce program provides little incentive for labour force engagement and has a sizable claw-back on its benefits. For example, a single person can access an earnings exemption only on the first $75/month plus 20% of their earnings balance. This is the lowest earnings exemption in Canada. In tandem with similar changes made in recent years in other provinces, this initial exemption should be raised to a minimum of $500 and then total earnings phased out in a progressive manner so that recipients keep at least 50 cents per dollar earned.  

Broadband Infrastructure

6. Expand broadband infrastructure

Newfoundland and Labrador has the lowest rate of access for broadband Internet: 77%. Post–COVID 19, access to high-speed Internet is as much about quality of life as it is a basic economic necessity, and in some cases it enables workers to pursue jobs and economic opportunities while living in lower-cost communities.

The province should augment recent federal investments in universal broadband with its own accelerated provincial initiative. It should dedicate up to one-quarter of future surpluses to broadband investment, with the goal of reaching 90% penetration as quickly as possible.