Among Jim Flaherty’s many proficiencies I would add poverty fighter. No one knew this better than Canadians with disabilities and their families. Next to social isolation, poverty is their biggest handicap. There are many reasons for this. A big one is that government resources are invested in rehabilitation programs that people with disabilities have no control over. It’s true that programs and services are needed. However the net result is that people with disabilities are program rich and cash poor – even though they are better judges than service providers of what to spend their money on.
Jim Flaherty knew that, and he did something about it. He created the Registered Disability Savings Plan (RDSP), a tool to fight poverty that puts money directly in the bank accounts of Canadians with disabilities. It also them to control expenditures. In just a few years, 75,000 Canadians with disabilities have accumulated more than $1-billion dollars in assets. In five years, those totals will triple.
To give you an idea of how the RDSP works, imagine investing the daily equivalent of a Tim Horton’s ‘double double’ and doughnut for twenty years in an RDSP for a baby born with Down syndrome. By the time she turns 30, her RDSP will be worth at least $350,000. This is thanks to the federal government’s matching Disability Savings Grant and Bond plus the power of compound interest. It’s also thanks to Jim Flaherty.
He understood what poverty activists around the world understand – the path out of poverty begins when you can accumulate assets. Unfortunately, government funded disability programs and benefits prohibit asset accumulation, thus perpetuating a vicious cycle of dependency.
If you look ‘under the hood’ of the RDSP you will notice three spanners in the works of the disability welfare system: One, it removes the asset limits, which determine eligibility for welfare; two, it eliminates claw-back and all the disincentives to earning your way out of poverty; and three, it challenges provincial and territorial governments to eliminate the costs of administering the disability welfare system. This last point bears further reflection.
Jim Flaherty designed the RDSP with elegant simplicity. Of course you had to prove your disability was prolonged and serious. After that he let the existing tax system handle RDSP withdrawals rather than creating yet another welfare bureaucracy. In effect, Jim Flaherty is the first Canadian politician to say, ‘I trust people with disabilities to make the right decisions with their money.’ He was right. Whenever I speak to Canadians with disability about the RDSP, they talk about saving for retirement, investing in a condo, taking courses that will qualify for a job. They speak with pride. Of fulfilling their dreams. Of making a bigger contribution to society.
Jim Flaherty understood because he was the father of a son with a disability. I believe this fuelled his determination to leap over out-of-date mentalities toward people with disabilities. I watched him enlist financial institutions to become the providers of the RDSP and encourage provincial governments to change their welfare rules to maximize RDSP benefits. I also witnessed his quest to constantly improve the RDSP. He was making it better up until his last budget.
On a broader level, Mr. Flaherty also understood that despite an annual expenditure of $150-billion by federal and provincial governments we are losing our battle with poverty. The same old, same old isn’t working. The RDSP points to a new approach. This is a Jim Flaherty lesson other countries are paying attention to. There is a now a bill before the U.S. Congress to establish tax-advantaged savings accounts for people with disabilities and their families. The new disability insurance scheme in Australia was similarly inspired. In fact with his announced retirement, I was hoping he would accompany me to Brazil where families, government and bankers want to adapt the RDSP to Brazilian circumstances.
This is a sad time for Canadians with disabilities and their families. We’ve lost one of our own. Jim Flaherty was a shining example that whatever your talent, it is always enlightened by love.
Al Etmanski is co-founder of Planned Lifetime Advocacy Network. He worked closely with Jim Flaherty on the development and implementation of the RDSP.