Pandemic puts basic-income programs back in the spotlight

The pandemic, the lockdowns that followed and resultant financial support programs have brought to the fore the usefulness of a universal basic income program, something that would help with future such crises and actually do something about poverty.

The first step to a universal basic income would be to eliminate all or most social assistance programs, replacing them with a program that tops up the income of everybody living below a determined poverty line, no matter why that is. Whether someone’s income was low due to a disability, family responsibilities or host of other reasons people fall into poverty, the idea would be to provide support.

The concept is nothing new, of course. Known as a guaranteed annual income, a guaranteed minimum income, a negative income tax or simply as a basic income, the idea is to provide some level of income for every citizen. It’s been endorsed by figures as diverse as Martin Luther King and Milton Friedman.

A truly universal income scheme would see everyone receive an equal payout, regardless of need. The revenue-neutral option would see governments eliminate all existing payouts, thus reducing administrative costs and allowing yet more money to be funnelled into the program. That would be easier to sell in some cases – everybody gets something – but would make some people worse off, sending poverty rates skyward, unless spending was increased dramatically.

The compromise, then, would be to stick with the formula whereby recipients are those most in need – poorer citizens would see overall increases, while those on the other end would get nothing, which is often the case today.

It’s the latter option that Ontario adopted with a pilot project launched in the dying days of the former Wynne government. The Ontario program proposed to supplement the earnings only of individuals whose incomes are below a certain level, such as the poverty line. In that respect, the pilot was similar to Manitoba’s well-known “Mincome” experiment of the 1970s.

From 1974 to 1979, some of the poorest residents of Dauphin, Manitoba were ensured a basic annual income, receiving monthly cheques with no strings attached, a departure from means-tested and targeted payouts. The program essentially ended poverty there, with many societal benefits. A changeover to Conservative governments, first provincially and then in Ottawa, saw the effort not only axed but buried.

One Conservative has been a long-time supporter of a basic income plan, however. Hugh Segal was in fact tapped by Wynne for the Ontario study. A former Conservative senator and chief of staff to Ontario premier Bill Davis and later to prime minister Brian Mulroney, he’s no radical, albeit considered a red Tory.

Segal suggested a basic-income pilot project should look at replacing Ontario Works and ODSP, and would include a negative income tax or refundable tax credit that tops up all recipients to 75 per cent of the province’s low-income measure (LIM), regardless of their status in the labour market. For a single individual on Ontario Works, for example, that would correspond to having income support move from roughly 45 per cent to 75 per cent of the LIM, and to receive a minimum of approximately $1,320 per month, non-taxable, with an opportunity to keep partial additional income earned from participation in the labour market.

Today, in light of the pandemic and support programs such as the Canada Emergency Response Benefit (CERB), Segal still sees the need for a universal basic income plan. He sees that as a much better and more efficient replacement for many existing welfare programs, which often serve to entrench poverty than to fight it. He vigourously shoots down any suggestion a basic-income program would be a disincentive for people to work.

“For those of you who might be of the view that ‘we have welfare to do that’, let me be perfectly clear – welfare doesn’t do any of that. In every Canadian province, including Ontario where the program is called Ontario Works, the average payout to a welfare recipient is less than half of the low income cut-off, the poverty line or the market basket measure,” he said in a Kiwanis Club videoconference earlier this summer. “There is no program that discourages work more intensely than welfare, because it’s a bureaucratic, case-managed proposition with a rulebook … that is about 300 pages long. And if you receive welfare and you want to earn a little more to help your family, if you earn any more than a few hundred dollars, the province will claw that back from the basic grant dollar for dollar. That is the largest disincentive to work and the highest level of earned tax paid of any category of Canadians. That’s what welfare does right now and right across Canada.

“I run into people who are disbelievers, people who don’t think this change would work, we can’t afford it, people will never want to ever work again because as we all know everyone is lazy and no one wants to make a contribution – they all want to sit on their couches at home, eat chocolates and watch soap operas, which in my experience is not anywhere close to the truth.”

Segal notes that 70 per cent of the 3.5 million Canadians living below the poverty line have jobs, sometimes more than one.

He likens his idea for a basic income to the Guaranteed Income Supplement aimed at seniors, which is based on income – if you’re beneath a certain level, you get topped up automatically.

“(Basic income) is what we do for seniors, and what we are doing in terms of the child benefit, which helps lower middle income and low income families with kids get a top-up on a tax free basis per child, which helps them fight poverty effectively,” he said. “But if you happen to be in that dash between 18 and 64, you don’t receive any support if you fall into poverty. And before we get all steamy-eyed about Employment Insurance, let us be clear: it costs Canada $20 billion in a good year. And 40 per cent of people who are unemployed aren’t even eligible. It’s gotten tighter and tighter in its rules and regulations, which means that a lot of people who should apply can’t. And then they’re left with welfare.”

Some kind of wide safety net will be even more essential as automation and globalization, already killing off jobs even as the population continues to rise, take deeper root.

Once upon a time, automation was a panacea that was to lead to a mythical leisure society – the machines would do the work, while we reaped the benefit of reclaimed time to do what we wanted rather than the drudgery of work. As we’ve seen so far, technology has extended workweeks and displaced people from high-paying to lesser jobs.

Another question is who is going to pay the taxes when the tax liability makes it impossible to make a living wage while a person tries to string together a series of low-paying, temporary and casual opportunities to work? The fanciful gig economy leaves people impoverished and no cohesive tax system.

A guaranteed income could allow workers to regain the upper hand, enabling them to reject low paying or insecure jobs or choose to devote their time to traditionally unpaid work such as care and community support. A basic income starting with bringing people out of poverty is back atop the agenda.

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