Poverty has been a central government preoccupation in Canada since the 1940s. “Wars” have been launched against it, but it has never been vanquished. Almost five-million Canadians live below the poverty line; the child poverty rate was 17 per cent in 2017.
What if the answer were as simple as sending a monthly government cheque to people who can’t make ends meet?
Though the idea was tested in Manitoba in the 1970s and is currently the subject of a three-year pilot study in Ontario, the notion of a guaranteed income still raises an endless series of questions.
One of the biggest is cost. Last week, the Parliamentary Budget Office pegged the net annual cost of implementing Ontario’s “negative income-tax“ plan nationally (more than seven-million people would qualify) at $43.1 billion.
The figure was reached by calculating the total cost ($76 billion) and subtracting the federal benefits it would replace.
The net increase of $43.1 billion is a lot of money, but it represents just two per cent of GDP and 5.6 per cent of consolidated federal and provincial expenditures.
And since poverty is a driver of health outcomes, it’s reasonable to expect reducing it would ease pressure on medicare costs ($242 billion last year). The single payment could also replace provincial and municipal income programs, not to mention reduce overlapping bureaucratic costs.
Ontario’s means-tested pilot plan – annual benefits of $16,989 ($24,027 for couples) are clawed back above a maximum threshold – isn’t necessarily the ideal model, though.
In its most radical form, a guaranteed basic income is a universal, unconditional payment, from age 18 to death, that stands in lieu of a host of existing benefits like welfare, social housing allowances and even employment insurance.
Are we ready to countenance so profound a philosophical departure? Last week, Finland decided it wasn’t and killed a basic income pilot project aimed at the unemployed.
In Canada, is a national program even desirable? What level of benefit is best? Will it provide a disincentive to work?
Questions abound. The good news is we know Canada could potentially afford it. Now let’s talk about how it might look, and whether it’s the right plan to fight poverty.