May 26, 2020
The COVID-19 pandemic has led to much discussion about a basic income program for Canada. The Basic Income Waterloo Region advocacy group is pleased to see increased recognition that if a basic income program had been in place prior to the current crisis, the government would have had a firmer foundation on which to build the crisis response.
A basic income program would have been much more inclusive of those who most need assistance compared to the Canadian Emergency Response Benefit (CERB), which has required numerous revisions to address the many people who are suddenly without income, and who were, at least initially, neglected.
It is important readers be aware that people are often thinking of different designs when they talk about a basic income program. Terms used include universal basic income (UBI), universal demogrant, basic income guarantee, minimum basic income, guaranteed annual income, and guaranteed livable income among others.
The term “universal basic income,” as defined by the Basic Income Earth Network, is “a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.” This design is also called a universal demogrant.
In Canada, the current program closest to a UBI is the Old Age Security (OAS) program that provides a monthly payment to Canadian citizens and legal residents over the age of 65 years (who have lived in Canada at least 10 years since the age of 18).
The OAS is subject to a recovery tax for individuals whose income exceeds the “maximum annual income” — and the payment received gradually declines as income increases to a point where high-income seniors do not receive any OAS payment.
Some advocates envision a UBI as a program in which all citizens and legal residents receive the same basic payment regardless of income level. No one would have to apply for it — it would come automatically; however, similar to the OAS, there would be a “recovery tax” where those individuals whose incomes were above a specific threshold would repay some or all of the UBI payment. The rationale for this design, where every individual would receive the Basic Income payment, is that it would reduce any stigma associated with the payment because everyone would be receiving it. This design would also ensure that if an individual’s income suddenly dropped significantly, the regular basic income payment would provide money for immediate needs.
“Basic income guarantee,” “minimum basic income,” “guaranteed annual income” and “guaranteed livable income” usually refer to a cash payment that is unconditional in terms of work or behavioural requirements, but is paid only to those whose income is below a specific threshold. So, it is “means-tested” or “income-tested” and is similar in design to the current Guaranteed Income Supplement for Seniors and the Goods and Services Tax Credit for low-income individuals.
What is important for people to understand is that both types of basic income are affordable. The benefits and savings created by a basic income program far outweigh the costs. The Basic Income Canada Network recently published “Basic Income: Some Policy Options” that models three ways a basic income could be delivered, and demonstrates that all three designs are affordable. See the report here.
Most people who advocate for a basic income program are motivated by the failures of our current income support and social assistance programs. The income for many people in Canada who are working full time falls below what is required to meet basic needs. That significant numbers of people who are employed still need to use food banks is evidence of this fact. Close to 70 per cent of the participants in the Ontario pilot study that was prematurely cancelled were employed.
Social assistance programs do not provide enough money to cover basic needs; the monthly Ontario Works allowance for a single individual is $721. For a couple, it is $1,178. And these programs include significant disincentives to seek employment. They are also very costly to administer, and are stigmatizing and punitive in their approach.
Furthermore, as employment conditions change and automation increasingly eliminates many jobs, more Canadians worry about paying bills. The COVID crisis has made the current and future transformations in available jobs even more evident. The solution is to provide citizens with a financial floor below which no one falls.
The goal of any basic income program is “to ensure that everyone can meet basic needs, participate in society and live with dignity regardless or work status,” the Basic Income Canada Network states.
Another important principle is that no one should be worse off than they are in the current system. For example, individuals with disabilities, who currently receive social assistance and are eligible for help with the cost of medical supplies/devices related to their disability, should continue to receive such assistance over and above the basic income.
We trust that the discussion about the need for a basic income in Canada will lead to a permanent government program that minimizes poverty and stimulates economic recovery, while making Canada better prepared for future crises.