Seven questions on universal basic income

While there's broad support for a universal basic income, advocates say any new program must add to and not just replace existing social services

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      With the winding down of the Trudeau government’s Canada Emergency Response Benefit (CERB) later this month, talk in social service circles has turned to the Throne Speech next Wednesday (September 23).

      Some three million Canadians lost their jobs during the pandemic. More than half of those jobs have been recouped. About 8.75 million Canadians have applied for CERB.

      As Prime Minister Justin Trudeau has talked up the need for Canada to pursue an ambitious social agenda post-pandemic, calls for a universal basic income (a.k.a. UBI) to replace CERB have grown louder.

      What is basic income?

      It’s important to make a distinction between universal basic income—which would mean a benefit for everyone—and the idea of a universal basic income to replace or top-up social supports for targeted low-income groups, like those on welfare or disability.

      It’s the latter that the feds are likely to introduce.

      The Parliamentary budget office’s costing of a UBI includes a list of programs that would be eliminated to help finance the idea.

      Those include the disability tax credit, the caregiver tax credit and “social assistance”.

      How would a basic income work?

      It’s not a new concept. Manitoba piloted a project back in the 1970s in Dauphin and other rural communities.

      The program was considered a success. But the Progressive Conservatives axed the program when they came to power in the province. A similar scenario played out recently in Ontario.

      Kathleen Wynne’s Liberal government appointed former Bill Davis chief of staff Hugh Segal to conduct a study on basic income.

      The study looked at “whether a basic income can better support vulnerable workers and give people the security and opportunity they need to achieve their potential.” Segal’s study also looked at whether a basic income “can be a simpler and more economically effective way to provide income security support to people living on low incomes.”

      Segal’s 2016 report found that a basic income dispersed to low-income Ontarians who need it would help reduce poverty, whereas current social supports like Ontario Works and ODSP were only alleviating the symptoms of poverty. 

      Segal recommended the establishment of a three-year pilot project. Four thousand participants were selected randomly for the program in Hamilton, Brantford and Brant County, Thunder Bay, and Lindsay.

      Single people in the pilot received $16,989 per year (less 50 percent of any earned income). Couples involved in the pilot received up to $24,027 (also less 50 percent of any earned income). People with disabilities were given an additional $6,000 per year. The province’s total investment in the program amounted to some $50 million.

      Participants reported spending their income on better food, staying in school, improving their housing situation and, in some cases, starting a small business. Participants also reported being more financially independent.

      But Premier Doug Ford pulled the plug on that experiment, breaking an election promise to maintain the program. The government claimed people were dropping out of the program.

      Would a basic income program cost more than current social programs?

      That depends. A universal basic income program implemented on top of current supports, which is what many groups are calling for in addition to investments in affordable housing, childcare and pharmacare (to name a few) would cost more.

      But Segal’s report notes the social costs associated with poverty have already been draining provincial and federal government coffers in Canada between $10 and $13 billion annually since 2008.

      How the program would be delivered is another question.

      Most social programs in Canada are administered through the tax system. But that risks missing the most vulnerable in society.

      For example, most homeless people and one-third of people on social assistance do not file taxes. Also, an estimated 40 percent of First Nations do not file taxes.

      Would universal basic income create a disincentive for people to work?

      The Ontario program wasn’t up long enough for a qualitative assessment outside of anecdotal support for the program.

      But the Manitoba pilot found that workforce participation continued as usual with two exceptions: new mothers stayed at home longer to care for children, and young people who would have had to quit school to help support their families stayed in school longer. The pilot project also reported some 10 percent fewer hospital visits by participants. Advocates say a basic income can also contribute to substantial cost savings in the justice system and the prison pipeline, where many economically disadvantaged end up.

      Why the push now for universal basic income?

      We’ve heard it once, we’ve heard it said a million times—the pandemic has laid bare the inequities of many of our systems, including the holes in our social safety net. Women have been among the hardest hit by the pandemic. And that’s what’s at the heart of the Liberals’ plan to introduce a basic income.

      Votes also have something to do with it. If you haven’t heard, we may be headed for a fall election.

      But the idea of a basic income didn’t come completely out of left field for the Liberals. In fact, the House of Commons finance committee recommended the feds move forward with a basic income pilot project in its 2016 pre-budget report.

      The CERB and Canada Emergency Wage Subsidy are variations of a universal basic income. So is the Canada Child Benefit which was introduced in 2015 as part of the government’s poverty reduction agenda.

      It’s not just the usual suspects on the left calling for basic income. The Conference Board of Canada has embraced the concept. Its chief economist has called the measure an “efficient and intelligent way to fund and deliver social assistance.”

      The presidents and CEOs of some 120 businesses signed a letter in 2018 asking the Ford government to reconsider its decision to end the pilot project.

      Research in the Netherlands suggests that the benefit is an incentive for consumer spending and small business.

      Prominent health advocacy organizations have also come out in favour of a universal basic income. Among them: the Canadian Medical Association, the Registered Nurses’ Association of Ontario and the Ontario College of Family Physicians.

      What’s the downside?

      Administratively, a universal basic income is easier to deal with than other social supports. It requires little or no monitoring of recipients like Ontario Works and ODSP, which have eligibility conditions.

      The hazards of unemployment caused by technology and automation is another argument in support of universal basic income.

      But the conservative think-tank Fraser Institute has a different take. It argues that universal basic income would cost too much; and that any universal basic income program would have to mean the scaling back of other social programs.

      In an article published in the National Post earlier this year, executives with the think-tank say that “it’s worthwhile to have a genuine public discussion about replacing existing provincial and federal income support and related programs with one program that reduces administrative costs.”

      But the article also notes that “the costs and benefits, and the complicated nature of such reforms, must be recognized.”

      Jake Fuss, an economist with the Fraser Institute, said in a statement this week that a basic income program would cost between $131 billion and $464 billion annually. The first number would apply if the feds extended a universal basic income to only seniors on Old Age Security. The second would apply if the feds provided a $2,000 benefit similar to CERB to all eligible Canadians.

      The numbers provided by the Parliamentary budget office are different. They estimate a guaranteed basic income for eligible Canadians would cost around $180 billion a year.

      Will opposition parties support basic income?

      Opposition parties have threatened to push a non-confidence in the government when the House reconvenes. The Bloc have already tabled a motion.

      But the Liberals only need the backing of the NDP to survive a vote of non-confidence. And the NDP has already signalled its support for a basic income. Whether that will be enough for the party to back the government is an open question.

      But not everyone on the Left supports the idea of a universal basic income. Some view it as a way to subsidize low wages and get rid of other worthwhile social services. Indeed, the Ontario Coalition Against Poverty opposed the Liberals’ basic income plan.

      “The hope that there is any realistic chance of ensuring a truly adequate, universal payment that isn’t financed by undermining other vital elements of social provision, is misplaced,” the group wrote in a position paper.

      It’s a more strident position than most on the Left. But notable among the signatories was CUPE Ontario.