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Cobe Nelson, 7, and his mother, Nikki Gray, at their townhouse in Victoria. Ms. Gray is hoping the government will help low-income households struggling to make ends meet. (ARNOLD LIM FOR THE GLOBE AND MAIL/ARNOLD LIM FOR THE GLOBE AND MAIL)
Cobe Nelson, 7, and his mother, Nikki Gray, at their townhouse in Victoria. Ms. Gray is hoping the government will help low-income households struggling to make ends meet. (ARNOLD LIM FOR THE GLOBE AND MAIL/ARNOLD LIM FOR THE GLOBE AND MAIL)


To end poverty, guarantee everyone in Canada $20,000 a year. But are you willing to trust the poor? Add to ...

Essentially, Dr. Hanlon says, people will make the right choices without an aid worker peering over their shoulders. "Poverty is fundamentally about a lack of cash. It's not about stupidity," he says in his speeches. "You can't pull yourself up by your bootstraps if you have no boots."

In Britain, an experiment was recently conducted with a small group of people who had been living on the streets for more than five years. They were given a budget that they could spend however they wished. The idea was to see whether the "personalized budgets" Britain gives to seniors and people with disabilities to pay for care (which include some conditions) would work for the very poor as well.

Within a year, working with counsellors who helped them with their plans and purchases, nine of the 15 participants were moving to some form of housing.

The results were not perfect: A couple of people moved back out of housing again, and at least one was imprisoned. But most spent far less than the money available to them, mostly on clothing, food and rent. On the other hand, one person who chose to remain on the street asked for music lessons, and that was all right too.

"Very often, services are about getting people off the streets, come what may," says Joe Batty, who managed the program. "This is about normalizing people." The program was considered so successful, he says, that the city of London is now providing financial support to expand it.

Canada's forgotten experiment

The idea of a guaranteed annual income has been tested before in Canada - in the mid-1970s, in Dauphin, Man., a farming town with then about 10,000 residents.

In the only experiment of its kind in North America, every household in Dauphin was given access to a guaranteed annual budget, subject to their income level. For a family of five, payments equalled about $18,000 a year in today's dollars.

Politicians primarily wanted to see if people would stop working. While the project was pre-empted by a change in government, a second look by researchers has found that there was only a slight decline in work - mostly among mothers, who chose to stay home with their children, and teenaged boys, who stayed in school longer.

Evelyn Forget, a researcher in medicine at the University of Manitoba, reports that Dauphin also experienced a 10-per-cent drop in hospital admissions and fewer doctor visits, especially for mental-health issues.

Dauphin resident Amy Richardson, now 84, was then trying to run a beauty parlour out of her living room, with four kids, an elderly mother and a disabled husband who could work only at odd jobs. The money eased the burden of costs such as school textbooks. "It helped out," she says. "It just made things easier."

Can we afford it - and can we afford not to?

But a guaranteed-annual-income program would be expensive. In developing nations, a small amount of money can bring about big changes. In a country like Canada, the basic income needed to pull everyone out of poverty would have to be larger, balanced against higher taxes.

"We'd probably have to settle for something much less generous," says Guy Lacroix, an economist at the University of Laval. "And is that better than what we already have?"

His cost analysis of the Quebec proposal estimated it could run the province as much as $2-billion, including the cost in lost taxes if minimum-wage workers did the math and left those jobs.

Other experts argue that poverty reduction needs to be tailored to individual circumstances, especially in cases involving mental health and addiction.

But many of those arguments are already made about our current welfare system, with all its costly and often overlapping bureaucracies.

It's not efficient to have case workers deciding whether someone merits assistance for a new bed because their low-rent basement apartment has flooded.

And governments have struggled for years to solve the problem of the "welfare wall," the point at which working a minimum-wage job is less beneficial and secure than collecting a cheque by staying home.

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