Newfoundland has had a promising year in terms of policy action on poverty reduction. While many promising announcements have been made, follow-through with concrete planning and long-term targets is needed if Newfoundland is to turn things around as one of the provinces with the worst grades in 2024.

Poverty Overview

Although the progress made on poverty reduction has been 15 per cent slower in NL than the national average between 2018 and 2021, the overall poverty rate of 9.8 per cent is on par with Canada as a whole (9.9 per cent). 

Newfoundland and Labrador faces similar age-related challenges to other provinces across the country, and poverty rates for seniors in NL are similar to the national rate. For example, seniors living alone in NL and across Canada face a 10 per cent poverty rate, which is more than double the rate among seniors who live with others. 

Children (aged under 18) in NL experience a child poverty rate of 10.4 per cent, which is notably higher than the national average of 8.5 per cent. This figure underscores the importance of the government’s recent focus on reducing child poverty. Youth aged 18–24 have a poverty rate of 14.5 per cent, which is similar to the national rate of 14 per cent for youth. 

In NL, the poverty rate people who live alone was 22.3 per cent, which is higher than the Canadian rate of 21.5 per cent for this group in 2021. A lone adult caring for children had a poverty rate of 19.3 per cent, which is significantly higher than the overall Canadian rate of 14.1 per cent and more than six times the poverty rate for couples with children in NL (3.1 per cent).

Labour and Education

Results from our national poll show that labour conditions remain a large issue for many people in NL. In their responses to the poll, many people across the province said that the current employment system is not working for them and their community. For example, 60 per cent said that increasing the minimum wage is very important to them, 23 per cent agreed that low wages are affecting their ability to make ends meet, and 39 per cent agreed that they have difficulty accessing stable employment. These responses are 13, 6, and 9 percentage points, respectively, above the national average, and are the highest among all the provinces.

As of March 2024, the unemployment rate in NL was 10.1 per cent, which is substantially higher than the national rate of 6.1 per cent. Additionally, also as of January 2024, the percentage of people who were participating in the workforce was lower in NL (58.9 per cent) than the national average (65.3 per cent).

Although overall unemployment has trended down in the province in the last few years, NL still has one of the highest youth unemployment rates in the country. Youth aged 15–29 who are not in employment, education, or training (NEET) are at particular risk of poverty. In 2022, 17 per cent of youth in NL were in this situation, compared with 11 per cent in Canada as a whole. The rate was higher (21 per cent) for male youth in NL than for female youth. Among NL adults aged 25–64, 14.4 per cent did not have a high school diploma or equivalent. This is significantly higher than the rate of 11.6 per cent in Canada as a whole. It is particularly concerning, as education is a crucial factor in poverty reduction. 

There also seems to be some discontent in NL about the structuring of the tax system. Respondents noted that they would like to see wealth redistribution from people in the upper tax brackets, reduced taxes for households with low incomes, and higher taxes for large corporations.

The Cost of Living and Affordable Housing

Between December 2022 and December 2023, the overall price of goods and services in NL increased by 3.4 per cent, which is the same as the national average. Food increased at a rate of 6.6 per cent, which is slightly higher than the rate in Canada as a whole (5 per cent).

Additionally, the cost of shelter increased by 5.7 per cent in NL, which is similar to the rate of 6 per cent for Canada as a whole. However, certain types of shelter costs experienced higher increases. For example, the cost of owning a home increased by 7.1 per cent in NL, the second-highest provincial increase after Quebec. The cost of rent increased by 4.7 per cent, which is significantly lower than the 7.7 per cent increase in Canada as a whole. This is significant, because NL does not have a provincial rent control policy and there are no guidelines to direct, or limit, landlords on annual rent increases.

While these increases match increases in Canada as a whole in many respects, the increase in the cost of living has had a serious impact on people in NL. This year, 50 per cent of Newfoundlanders stated that they are financially worse off than they were a year ago. Forty-three per cent of people said they are struggling to access fresh and affordable food—the highest rate of any province—and nearly 40 per cent of the province is worried about feeding themselves and their family, which is 10 percentage points higher than the national average and the highest rate of any province.

Other fixed costs are also taking up a large portion of people’s incomes. In our poll, 72 per cent of people said that reducing the cost of utilities is very important to them. This figure is by far the highest in the country, and it is significantly higher than the national average of 51 per cent. Reducing the cost of transportation was important for 86 per cent of the province, which is 8 percentage points higher than the national average.

When it comes to the largest cost of all—housing—41 per cent of the province is paying 30 per cent or more of their income for shelter, which leaves little money for other necessities. Fortunately, after a severe contraction in housing starts in late 2023, the recent provincial budget forecasts that this sector will recover moderately over the next two years. While shelter costs in the province remain low relative to other provinces, residents’ incomes are not high enough to cover the current costs of living.

Poverty and Inequality in Newfoundland and Labrador

In NL, 3.4 per cent of the population self-identified as belonging to the racialized population. The poverty rate for this group (25.5 per cent) was more than double the Canadian rate (12.1 per cent) in 2021. In addition, 76 per cent of racialized individuals in NL were first-generation immigrants (born outside of Canada). This group experienced a poverty rate of 28.6 per cent, which is also higher than the rate for this group in Canada as a whole (14.1 per cent). The poverty rate among all immigrants was 13.4 per cent, but it was 22.4 per cent for recent immigrants, which is higher than the poverty rate for recent immigrants in Canada as a whole (16.1 per cent).

Non-permanent residents (people who have a work or study permit or have claimed refugee status) experience a poverty rate of 46.5 per cent in NL. This is higher than the poverty rate for non-permanent residents in Canada as a whole (41.8 per cent), and it is significantly higher than the rate for the racialized population as a whole in NL.

NL has historically struggled with economic downturns, outmigration, and demographic shifts, all of which exacerbate poverty and inequality in the region.

Indigenous communities, people living in remote areas, and households with low incomes often face significant barriers to accessing essential services and opportunities for employment. Despite these challenges, however, the poverty rate among the Indigenous population in NL was 8 per cent in 2021, lower than the national average of 12 per cent.

Households that identify as Chinese and West Asian are 15–16 per cent more likely than non-racialized households to spend more than 30 per cent of their income on rent and utilities. Furthermore, 30 per cent of households that identify as Chinese spend more than 50 per cent of their income on rent and utilities, compared to 12 per cent of non-racialized households.

If NL is to foster equity and inclusion and address the systemic barriers that make it difficult for certain groups to access a decent standard of living, it must encourage collaboration between regional governments, Indigenous organizations, and community stakeholders.

In 2006, Newfoundland and Labrador became the first province in Canada to introduce a strategy to tackle poverty. In late 2023, it released a new poverty reduction strategy, which builds on its original one. This was our top recommendation for the province in our report last year. Although the revised strategy lacks a measurable target for poverty reduction, it does take a broader view of the social determinants of health and treats poverty reduction as an influencing factor in its separate objective of having the healthiest population in Canada by 2031.

In that respect, the new strategy represents a partial step forward. It comes with increased investments, including an immediate increase in benefit rates of between $50 and $175 per month, but it does not include broader structural reforms like accelerated investments in affordable housing or guarantee the future indexation of benefits. In 2023, we also recommended that a new poverty reduction strategy focus particularly on how to reduce child poverty. The new strategy clearly addresses this priority with its commitment to tripling the Newfoundland and Labrador Child Benefit (NLCB) top-up over the next year. Starting in March 2024, with retroactive payments to January 2024, the increase in this benefit offers up to $1,788 per year in new, tax-free assistance to eligible families for their first child. An estimated 14,000 children are expected to benefit from the changes. However, the cut-off rates for eligibility are still very low: families need to earn less than $28,500 in adjusted net income to be eligible. In addition, only households with an income of under $17,397 will receive the full amount. Households with incomes of between $17,397 and $28,500 will receive a reduced benefit. The poverty line in St. John’s is $50,931 by the Market Basket Measure, so this support is only available to households that make less than half the poverty line—and many households living in poverty are entitled to no support at all.

The new strategy also includes expanded investments for the Prenatal-Infant Nutritional Supplement, which was renamed the Prenatal-Early Childhood Nutrition Supplement (PECNS); eligibility and scope was expanded to support low income families from pregnancy until their child reaches age 5. It also extends the provincial school food program to all elementary grade levels. These investments are welcome, but the province should also focus on building the capacity it requires to deliver on the commitments of the early-learning and childcare framework. The availability of childcare spaces has not yet returned to pre-COVID-19 levels, and the proportion of children in childcare is the second-lowest in the country. The province must close these gaps and continue to implement the bilateral framework so that working parents have the flexibility and support they need to find and maintain a well-paying job.

When it released its revised poverty reduction strategy, the province indicated that at some point there will be a separate action plan that focuses on seniors. This plan will include a specific new basic income pilot to assist adults who near retirement age – those aged between 60 and 64 - and have low incomes until they reach the typical age for claiming pension and old age benefits. For many seniors, access to affordable homecare options is an important quality of life issue, a point which the provincial Seniors’ Advocate underlined in a recent report released in the same month as the new strategy.

While the generosity of supports in Newfoundland and Labrador  is greater than those in New Brunswick and Nova Scotia, both neighbouring PEI and Quebec provide more significant supports for single people and people with disabilities. In addition, social assistance rates are not indexed the same way tax-administered supports such as the provincial top-up to CCB are.

The province is currently projecting a balanced budget in 2025, which is also when the next provincial election will be held. Its overall debt load has severely limited its ability to make critical investments in the past, but overall fiscal sustainability has improved in recent years thanks to population growth. Despite a temporary decline in oil activity last year, Newfoundland and Labrador is expected to lead all provinces in GDP growth in 2024 before moderating in 2025. In 2022, the province committed to creating a long-term investment fund for its non-renewable resource wealth. It is only in its first year of operation, but if it is properly structured, it could become a recurring income stream to help support long-term investments in addressing the social determinants of health.

Lastly, in late 2023, the province released its own housing strategy, with a focus on helping to increase both the construction of for-profit purpose-built rental units and the development of secondary suites for gentle densification. This is consistent with the actions taken by other provinces, but Newfoundland and Labrador has put no real focus on the development of non-profit affordable housing options.

Accountability

Newfoundland and Labrador announced their new Poverty Reduction strategy in fall of 2023. While the full plan is not yet released and announcements so far are lacking details, this is a strong step in the right direction.

The 2023 policy recommendations included a secondary policy ask attached to the implementation of a new poverty reduction strategy, which was that the province should focus specifically on reducing child poverty. The government also achieved this objective, however, have not gone so far as to include specific targets which we did recommend.

While we commend the province for updating and significantly enhancing its poverty reduction strategy in 2023, the revised strategy lacks measurable targets and there is no commitment to monitoring and evaluating it. The absence of measurable targets weaken accountability and makes it difficult to assess the impact of policy initiatives. In view of the stated aim to focus on two aspects of poverty reduction in particular—children and seniors—we recommend the province’s strategy be updated with two specific goals in mind by 2028: ● Closing the gap in child poverty so that Newfoundland and Labrador at least match the national average before the end of 2028 and is ideally below it. ● Matching Quebec for the lowest rate of poverty among seniors. While the forthcoming basic income pilot for seniors aged 60–64 will not address this objective (as seniors are considered aged 65+), it will help to bring consistency in planning for a smooth and stable transition in living standards as working-age adults approach retirement.

Income Support and Inflation Protection

NL has previously recognized indexation as an important aspect of providing adequate support to help people with low incomes, as evidenced by its inclusion in the 2006 poverty reduction strategy. While the NLCB is still indexed, other benefits were de-indexed in 2012. Ensuring that all benefits and brackets are comprehensively indexed so that residents’ supports keep up with the changing affordability context is a critical factor in poverty avoidance and poverty reduction.

This would help to address competitiveness and labour market distortions associated with the implementation of narrower programs. It could be funded over time with a dedicated source of funds from the province’s newly created Future Fund, which intends to reinvest a portion of the proceeds from provincial oil royalties.

Work and Opportunity

NL has one of the highest rates of both youth unemployment and the share of young people who are not in employment, education, or training (NEET). The province can take a variety of steps to address this issue, including: • improving the affordability of and access to post-secondary training and apprenticeships, and • investing in job development programs with employers to build work-integrated learning opportunities for aspiring young graduates. However, given the scale and enduring nature of this particular challenge, and its potential impact on the province’s future, the federal government will need to be a partner. It could leverage its tools for investing in a variety of EI-related pilot projects that could be scaled up, including changes to early access to Part II job supports and the development of a wage insurance model that would help workers facing long-term unemployment move back into the workforce more easily.

The current Moving into the Workforce program offers little incentive for recipients to enter or return to the labour force and has a sizable clawback on its benefits. For example, a single person can access an earnings exemption on only the first $75 per month plus 20 per cent of their earnings balance.  

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