It’s Time to Test a Basic Income
Recently I tabled a motion in the Senate calling on the government to create a pilot project that would test a basic income in Canada, also known as a guaranteed annual income. Canadians face immense challenges. Many families struggle to pay the rent, and some can’t afford their children’s school supplies or school trips. Many rely on donations at the food bank just to feed their families.
In numbers, one in seven Canadians lives in poverty. That equals to over five million people — including over one million children. And, there are an estimated 150,000 – 300,000 people homeless. Last year close to 900,000 Canadians used food banks every month, with over one third of those being children.
We also have increasing income and wealth inequality that is changing the core of our society. The Conference Board of Canada gave Canada a “C” grade for inequality, ranking us 12th out of 17 countries studied.
But why a basic income?
What we have done for far too long is simply not working. Even with all the social supports in place, the resulting income is often only enough to maintain a family in poverty. At their worst, existing policies and programs actually entrap people in poverty.
This is why we need a new way.
A basic income would work as a tax credit administered through the taxation system similar to the Guaranteed Income Supplement for seniors. If someone earns less or has less than the poverty line, they would simply be topped up to a point above the poverty line.
It would ensure that all Canadians would have an income that covers the basic necessities: clothing, food and decent shelter. It would provide a foundation that low-income people could then build upon for a better life.
A 2013 Environics poll found that this idea is supported by a majority of Canadians.
Interestingly, this support does not fall along party lines or political philosophy. People across the political spectrum support a basic income.
Conservative economist Milton Friedman was a proponent of basic income, as is former Conservative Senator Hugh Segal. On the other end, Green Party Leader Elizabeth May, Alberta NDP Finance Minister Joe Ceci and Quebec Liberal Minister of Employment and Social Solidarity, François Blais support the idea.
We also see communities across the country are on board. There are many other provincial, territorial and municipal leaders that have publically supported the adoption of a basic income or the adoption of pilot projects to that end. We also have organizations like the Canadian Medical Association that are calling for action on inequality.
Canadians have come to realize that there may be a lot of positives to this approach. A basic income is a simpler and more transparent approach to fighting poverty than our current patchwork of social programs. It would extend benefits to those who are currently not covered by social assistance programs, such as the working poor. And introducing a basic income could have a ‘stimulus’ effect by quickly injecting money into the economy.
In the 1970s, Canada piloted a basic income program known as ‘Mincome,’ in Manitoba, primarily in the town of Dauphin. Research done by Evelyn Forget from the University of Manitoba found that as a result “hospital visits dropped 8.5 per cent. Fewer people went to the hospital with work-related injuries and there were fewer emergency room visits from car accidents and domestic abuse. There were also far fewer mental health visits.”
What about employment? Research shows that only new mothers and teenagers worked less with a basic income. Mothers stayed home with their babies longer. Youth worked less but spent more time in school and graduated in higher numbers. Overall, labour force attachment remained strong.
Looking at these results, and other similar examples from around the world, Canada could see not only a great upsurge in the living conditions for our most vulnerable if a basic income were employed, but we could also realize a decrease in costs.
Poverty is costing us all (as much as $30 billion a year by one estimate) by slowing the economy, forcing up our tax bills, increasing health care costs and crime.
On the other hand, the now closed National Council of Welfare put the poverty gap in Canada at $12 billion in 2011.
If these numbers are correct, it’s obvious which one makes more economic sense.
But, let’s take this step-by-step. We need a pilot project that can provide new and robust Canadian data, that can determine how such a system would function in this day and age and that would make clear the benefits and costs.
A basic income is a different approach — a new path that has shown great potential. Let’s get the evidence. Let’s study this approach. If proven, we not only end poverty but we spend smarter, more efficiently and effectively.
Art Eggleton is a Canadian Senator and former Mayor of Toronto and Member of Parliament.