Evelyn L. Forget is the author of Basic Income for Canadians, which was nominated for the Donner Prize in 2018, and a professor of health economics at the University of Manitoba’s department of community health sciences.
Hugh Segal, author of Bootstraps Need Boots, is the Mathews Fellow in Global Public Policy at the Queen’s University School of Policy Studies and a senior advisor at Aird & Berlis LLP.
Last month, at remarkable speed, national politicians from all parties set aside their usual partisan dynamics to introduce the Canada Emergency Response Benefit (CERB) in response to the coronavirus-generated economic crisis. The federal government, Parliament and officials involved deserve great credit, and while the CERB currently does not provide benefits to all Canadians, the program is still evolving.
COVID-19 has forced federal and provincial governments to see the limitations of our current income-security framework. Employment insurance (EI) has been revealed as a creaky relic of a bygone economy. Forty per cent of unemployed Canadians are ineligible for EI. Today’s freelance and gig workers, who piece together part-time jobs and short-term contracts, were the first to feel the effects of the shutdown, unable to qualify for EI or receiving too little to survive. The CERB is both more inclusive and generous.
Provincial welfare and disability supports are punitive, stigmatizing and offer less than half the income needed to stay above the poverty line. Adult supports are expensive, unwieldy and ineffective – a disorganized patchwork that condemns people to poverty, rather than offering them a hand up. Low-income recipients who work are penalized for their efforts, and those eager to build job skills through education and training are not encouraged to do so.
CERB offers Canada an opportunity to learn how to design better income supports for ordinary times. Some commentators have argued that a better approach would be to introduce a “crisis basic income” that sends an equal monthly cheque to all taxpayers, and claws back from higher-income earners part or all of the benefit when they complete their income tax. But that approach would deny necessary money to those who need a top-up to survive, as cheques would also be sent to those with no need. It’s both an expensive and insensitive solution.
We have both been on record for many years as supporting a more targeted version of a basic-income top-up, which would tie support to income (as seen with the CERB) and includes low-income working people and those traditionally dependent on provincial income assistance. Why? Because some low-income people do not complete income-tax forms – their earnings are beneath the filing threshold.
The upfront costs of a targeted basic income are much lower than sending everyone a cheque. It’s also a more affordable plan, especially if we take into account the savings to other social programs such as EI, provincial income assistance and the additional burden that poverty places on other programs such as health care.
Some argue that targeting takes too long to deliver support, but the speedy delivery of the CERB suggests otherwise.
High-, middle- and low-income countries around the world have experimented, and continue to experiment, with basic income, and the results are surprisingly similar. There is no flight from work; almost all people who can work, do so; and those who have worked in the past, continue to work. The few who reduce their work hours are usually engaged in education and job training. Mental and physical health improves. In the Finnish experiment, while there was no discernible effect on employment, social trust was enhanced. People were more involved in their communities and more optimistic about their own prospects, and those of society.
The largest experiment in basic income that anyone could imagine has been forced upon us by COVID-19. It has produced a national awareness that any Canadian, except for the very wealthy, might need an income top-up for reasons completely beyond their control.
In the “lessons learned” process that will follow the pandemic, we have a historic opportunity for Ottawa, the provinces and territories to reshape cash transfers for Canadians who have low incomes, regardless of the reason why.
COVID-19 could create a legacy: an income-support system that is efficient, non-stigmatizing, encourages work and is sufficient to provide better health outcomes and liquidity for people and communities. This would be a streamlined national reform vital to the economics of rebuilding and recovery.
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