Experts support the idea of guaranteed income in Canada
Economist Paul Summerville says one thing confuses people when he talks about the idea of a guaranteed annual income. It’s the fact that he was an investment banker.
His stints include Lehman Brothers during the 1990s. That was long before the spectacular collapse of the American financial giant in 2008, which sent tremors across global markets.
Although he worked as one for 20 years, investment bankers typically don’t think like he does. “A guaranteed annual income would be like some travesty, you know,” Summerville told the Georgia Straight in a phone interview. “Why would you ever give someone money for nothing, right? Poverty is your problem, not mine.”
The idea of a guaranteed annual income has been around since the 1930s. In contemporary times that saw anger against corporate greed crystallized in last year’s Occupy protests, the Conference Board of Canada, through its chief economist, Glen Hodgson, suggested in December 2011 that it may be time to revisit this topic.
Its supporters include Senator Hugh Segal. Speaking before economists at a gathering in Ottawa last year, Segal said that the best and most cost-effective way to deal with poverty and its negative social outcomes is to bring everyone above the poverty line.
Summerville, now an adjunct professor at the University of Victoria’s Peter B. Gustavson School of Business, is rebranding the concept as a “Canadian citizenship wage”. “You would design the Canadian citizenship wage in such a way that families wouldn’t live below poverty,” he said. “What you’re trying to do is make sure that no Canadian lives below a certain income line.”
Summerville proposes doing this through a negative income tax. Espoused by the late American economist Milton Friedman, this model establishes a minimum annual income of which each citizen is assured, employed or not. For example, if the minimum is set at $15,000 and an individual declares an earned income of $10,000, the government cuts a cheque for $5,000.
“First of all, it’s designed to remove the stigma of welfare,” he said. “The second thing it’s designed to do is create a conversation about the rights and obligations of citizens.”
Summerville spoke at two recent events in Victoria where he included the subject of guaranteed annual income. One was before a gathering of the Association of Professional Economists of B.C. on May 29. The other was during the May 26 annual general meeting of the Green Party of B.C.
In both presentations, Summerville discussed the Canadian citizenship wage in the framework of a strong economy, social justice, and environmental responsibility. He proposed the elimination of all corporate taxes, and of all taxes on the first $20,000 of personal income.
Summerville likewise recommended the establishment of a Canadian carbon tax; he estimated that this would generate at least $15 billion in revenue. And he suggested increasing the GST from the current five percent to 10 percent, with no exceptions. He said that this would raise $90 billion in revenue.
“Capitalism is not the problem; the problem is what we do with capitalism,” Summerville declared in his speech before the B.C. Green Party.
In 2006, Summerville ran federally for the NDP in Ontario. In that same year, he left that party and joined the federal Liberal party.
Vancouver-based Michael McCarthy Flynn, a campaign organizer with the First Call: B.C. Child and Youth Advocacy Coalition, supports a guaranteed income. According to him, it would complement a living wage, or the basic income that workers should earn to meet basic needs.
“If everybody gets a guaranteed income, then the income people need from employment is reduced, which makes it more affordable for employers to pay a living wage,” Flynn told the Straight in a phone interview.
But Flynn also noted that Canada remains far from having this system because of the “very regressive” views of many people on the unemployed and welfare recipients.
Former Reform MP Herbert Grubel is also in favour of a guaranteed annual income. Grubel, a professor emeritus in economics at SFU, is a senior fellow at the Fraser Institute think tank.
According to the former Capilano–Howe Sound representative and finance critic in Parliament, the current welfare and income-assistance programs are “extremely wasteful” because of the huge public resources needed to administer them.
“I would be very happy to get rid of all the bureaucracy and all the vested interests that are now behind the maintenance of the current programs,” Grubel told the Straight in a phone interview.