The federal government could save billions of dollars if it tackled the roots of poverty, according to a new report from a government advisory body.

The report from the National Council of Welfare urges the governing Tories to take a long-term "investment" approach to preventing poverty, rather than a short-term program spending approach.

It says the public cost of poverty is easily $25 billion a year, and climbing — all while the poverty rate does not improve.

Conservative Senator Hugh Segal says the new report uses hard numbers to link poverty to the cost of productivity, health care and the justice system. (Frank Gunn/Canadian Press)

"The costs and consequences of poverty are much larger than direct spending on social programs. We see the total costs when indirect and societal costs are taken into account," the report says.

The council has been able to look at the cost of poverty in a way that federal departments can't, said Conservative Senator Hugh Segal, who has long been involved in poverty eradication.

Federal departments analyze poverty programs with a simple cost-benefit analysis, while the council report is able to look at "the cost of inertia, the cost of not doing anything," Segal said.

But the new report uses hard numbers to link poverty to the cost of productivity, health care and the justice system, he added.

"It's a very good way to encourage public debate and discussion."

Savings to be found at hospitals, prisons

The long-term preventive approach would eventually save taxpayers significant amounts in emergency health care, prisons, shelters and other social services that are used in floundering attempts to keep poverty under wraps, the report says.

There's a catch. Overhauling social supports would require up-front funding.

"An investment model is geared towards the longer term," says the report titled "The Dollars and Sense of Solving Poverty." "It may require larger initial resources and may take time, but there will be a far greater and more permanent pay-off."

While many an anti-poverty advocate has argued that reducing poverty would also reduce health-care costs, the council's report documents case after case of communities saving money by changing their approach.

A homeless person in Calgary, for example, can run up $42,000 a year in costs at emergency shelters. Putting that person in a prison or psychiatric hospital would cost about $120,000. But giving that person access to supportive housing and social services would cost between $13,000 and $18,000, the report says.

'Canadians are paying the most in the least productive areas, trying to fix costly problems linked to inequality, insecurity and poverty that are preventable.'—The Dollars and Sense of Solving Poverty report

Similarly, about 20 per cent of health-care spending in Canada is attributed to socio-economic factors such as income, the report says, citing research from the Public Health Agency of Canada.

"Canadians are paying the most in the least productive areas, trying to fix costly problems linked to inequality, insecurity and poverty that are preventable," the report states.

The council recognizes there is a general public concern that spending money on the poor would come at a cost to other people and services.

But it argues that poverty reduction benefits society at large, and not just the poor.

Pressure on hospitals would be alleviated. The Canadian population would have higher levels of literacy and numeracy, benefiting the economy. And a healthier workforce would dramatically reduce companies' costs of absenteeism.

The council, tasked with advising the federal government on dealing with poverty, says Ottawa should start by setting out a long-term vision that identifies needed resources and sets up a way to measure success.

The recommendations are similar to those put forward by Canada Without Poverty. In its pre-budget submission, the national activists' group urges the federal government to set firm targets and timelines to reduce poverty, and work with all levels of government to that end.

Both groups warn that dealing with poverty is a far more efficient way to reduce crime than passing tough crime legislation that would hit the poor hard.

"People who face poverty combined with other factors such as addiction, mental illness and discrimination, and who are mixed with those inclined to inflict evil on these victims, equals crime," the pre-budget submission states.

'Poverty is a hard sell. It shouldn't be, because it costs everybody.'—Liberal Senator Art Eggleton

But the federal government has repeatedly resisted calls for a national anti-poverty strategy, saying such issues are better dealt with by local and provincial levels of government.

And, indeed, most provincial governments are seized with designing new, long-term anti-poverty strategies. But they also argue that they have neither the scope nor the money to do it alone.

"It is still a hard sell. Poverty is a hard sell. It shouldn't be, because it costs everybody," said Liberal Senator Art Eggleton, who led a massive study on poverty two years ago, only to see it dismissed by the federal Tories.

"Our future prosperity may well depend on how we address our current level of poverty. I quite simply don't believe we can afford poverty any more."

Human Resources Minister Diane Finley will be less likely to ignore this anti-poverty report than others, added Segal. That's because it comes from a group of advisers chosen by the government for their apolitical work in the field.

"It should have greater impact," Segal said.