A Basic Income Guarantee can end poverty in Canada

“Why I Am Looking Forward to Being 65.” That was Wayne MacNaughton’s topic at a free conference held Saturday in Halifax’s Central Library. It was sponsored by Dalhousie University, Basic Income Nova Scotia, and the Mayor’s Office. More than 100 people turned out to hear the local anti-poverty activist, as well as politicians and advocates for the introduction of a Basic Income Guarantee to replace welfare.

The Basic Income Guarantee (BIG) was formerly known as the Guaranteed Annual Income. The GAI was the focus of a federal-provincial experiment in the town of Dauphin, Manitoba from 1974 to 1979, when another Trudeau was in power. Regardless of the acronym, the program is designed to provide adults with enough money to meet basic needs (food, water, shelter) whether they work or not.

Among advocates, there’s disagreement over how much that income should be and who should be eligible to receive it. But there was agreement among participants at the conference that the current system isn’t working for 44,000 people in Nova Scotia who receive income assistance today — all of whom are living below the poverty line.

MacNaughton has lived on welfare for 20 years, since a detached retina sidelined him from his customer service job and left him with permanent vision loss. He says today’s welfare system is “broken and inadequate.”

The disabled single man lives on about $1,000 per month, which hasn’t changed since July 2013.  Of that, $535 pays his rent — which is well below market rates, thanks to a housing subsidy unavailable to many others on welfare. Paid contract work is sometimes an option, but MacNaughton risks losing his welfare cheque if he earns more than $150 a month.

MacNaughton describes living on welfare as “a subsistence existence. You don’t have any extras and you don’t have money for participating in a normal way in your community.”

As an example, he told the conference his budget allows him to eat out “once every two to three months at the food court in Scotia Square — usually a hamburger and a root beer.” He would like to get out more often, but bus passes cost $80 a month, and the Community Services Department only pays for people who can prove they have 10 or more medical appointments a month.

More mobility in the community is one reason MacNaughton says he’s excited about his 65^th birthday this year. That’s when he will get off welfare by becoming eligible for Old Age Security and the Guaranteed Income Supplement (GIS) — a type of reliable Basic Income Guarantee which advocates  argue should be available to poor people who aren’t seniors.

“With the GIS, my income is going to go up 40 to 50 per cent,” says MacNaughton, with an audible trace of excitement. “I won’t be living high on the hog, but I will be able to make choices. Most activities involve money to get there. Three days before the end of the month, I won’t be wondering, ‘do I have enough money to go for coffee?’  That will change for me when the GIS kicks in, but it could change for every Canadian if we adopt a universal basic income.”

That statement drew sustained applause from the audience that filled the room. It included many people who volunteer with groups that help the poor, or, who – like MacNaughton — are disabled. Of Nova Scotians who receive income assistance, 60 per cent have either short-term or long-term disabilities that interfere with holding a job. Patricia Williams, who holds the Canada Research chair in Food Security & Policy Change at Mount Saint Vincent University, told the conference her research shows that 85 per cent of provincial welfare recipients worry about how they will get enough to eat.

Meanwhile, the idea of a Basic Income Guarantee seems to be gaining political traction. Last month, Ontario Premier Kathleen Wynne said welfare isn’t working and committed her province to a pilot project in 2017. A poll last month of 1,225 Ontarians by Forum Research showed 41 per cent support the idea while 33 per cent oppose it. The Ontario pilot will test whether a Basic Income will provide a more efficient way of delivering income support.

It will also explore whether a Basic Income Guarantee might allow the province to achieve savings or other positive effects in areas such as health, housing, and education. A research study of the pilot project in the town of Dauphin 50 years ago by University of Manitoba economist Evelyn Forget found admissions to hospitals and ERs decreased, and the grades of students in school improved over the period that each family received a government cheque.

The federal Minister for Families, Children & Social Development is an economist by training. Jean-Yves Duclos told The Toronto Star last week that the Trudeau government’s Canada Child Benefit coming this July is a type of Basic Income Guarantee. Duclos said he is “open” to further expansion of the idea, provided the Provinces take the lead. A Basic Income Guarantee was not part of the Trudeau election platform, but the policy has been approved by the Liberal Party.

Both Halifax Liberal MP Andy Fillmore and Mayor Mike Savage told Saturday’s audience that the time for action is now. Savage, a former MP for Dartmouth, was part of a parliamentary Committee that made 70 recommendations on how to reduce poverty in 2010 before the report was shelved by the Harper government. Savage is now part of the Big City Mayors group which intends to make reducing poverty a focus.

“There is momentum around this,” said Savage. “It’s not radical idea. It’s been around since Toronto Mayor Art Eggleton. Conservative Senator Hugh Segal has championed it for 25 years. Even Richard Nixon mused about a basic income — although it’s not something Donald Trump is talking about! There is no easy solution, but this is the time to take a serious look at Basic Income. If we don’t do it now, we never will.”

Rob Rainer, a basic income advocate from Ontario, also addressed the conference. He’s a volunteer with a national, not-for-profit group called Basic Income Canada Network. It’s been pushing for a guaranteed income since 2008, and Rainer argues that the benefits — especially in savings to the health care system — would outweigh the potential cost.

Rainer points to recent studies showing about 20 per cent of health care costs (an estimated $40 billion a year) can be attributed to poverty and the chronic diseases and mental health problems that result from it. In terms of Canada’s Gross Domestic Product, he says some economists estimate poverty costs the country  five to six per cent of its GDP — an amount ranging from $80 billion to $130 billion a year.

“The Basic Income Guarantee is an investment in human capital,” says Rainer, a longtime anti-poverty activist.  “The cost will depend on the design of the program and the details. But don’t let anyone say we can’t afford this.”

How to pay for a guaranteed income

Rainer says the release of the Panama Papers gives Ottawa new ammunition to outlaw tax havens and close loopholes that would allow it to re-direct billions of dollars from the richest Canadians to finance a basic income for the poorest. There’s another $100 million available to Ottawa if it eliminates some or all of 200 tax credits on the books. The Basic Income Canada Network also suggests levying “a small tax on technology that involves robotics or automation,” based on a 2013 Oxford University study which shows technological change will dramatically reduce the number of fulltime jobs over the next 20 years.

The precarious nature of work is another trend which advocates use to bolster their argument for a tax-free Basic Income. Statistics Canada reports that one in five Canadians — many of whom are young graduates — now rely on part-time, contract, or self-employment for an income.

Basic Income Network Canada says that if a Basic Income gets introduced, programs such as Employment Insurance, the Canada Pension Plan, Old Age Security, and the Canada Child Benefit should remain untouched, while programs that provide special or targeted assistance to low-income people in the areas of housing, transportation or education would need to be re-evaluated by government.

Rainer supports a basic income “in the range of $20,000 – 25,000 a year” to boost people over the poverty line. When pushed, Rainer will say he expects a Basic Income Guarantee to replace welfare will  cost Ottawa (i.e. taxpayers ) “tens of billions of dollars a year”.

When it comes to who should be eligible to receive it, Basic Income Network Canada supports an income-tested program similar to Old Age Security and the Canada Child Benefit. BINC’s proposal uses a graduated scale, where a person earning $60,000 a year would receive zero dollars in Basic Income and a person earning $10,000. a year would receive a basic income of $15,000.

Wayne MacNaughton, however, doesn’t agree with an income-tested approach. He prefers a universal system where every adult (rich and poor) receives a cheque primarily to ward off complaints from people who will object to paying for something if they don’t get any benefit. MacNaughton views it as “buy in” tactic, and argues the Basic Income received by millionaires should simply flow back to government in the form of higher corporate and personal taxes.

Rainer worries about tax evasion, but says the biggest problem with universality is that the cost would be “off the charts unsustainable — more than the whole federal budget”.

That’s not the only issue a change of this magnitude would create. Some liken the Basic Income Guarantee to introducing Medicare or passing the Charter of Rights. It’s a seismic shift with many moving parts to consider, and the usual spate of unintended consequences. Would a Basic Income include First Nations people — some of whom already receive a tax-free income from Ottawa through their Band leaders if they live on reserve? Those living off-reserve present a different set of circumstances.

And what would happen to the price of rent and food if consumers had more money jingling in their pockets?

“There would have to be regulated measures in place to prevent food and housing prices from rising,” said Rob Rainer. “And aboriginal leaders and representatives will have to start to become engaged in the conversation about a basic income with the federal government.”

Another concern Rainer hears often is that introducing a guaranteed annual income would discourage people from seeking work. Call it “The Sloth Factor.” Rainer counters it would have the opposite effect. He believes a modest amount of reliable income would give people the ability to pursue work that is meaningful but generally under-valued — from care-givers for pre-schoolers, the sick, and elderly, to volunteers, musicians, and writers.  A modest income would also “top up” people who are already working long hours, but don’t make enough money to pay the bills or provide a decent standard of living.

Rainer says the challenge is to get government to accept what groups like his see as “core principles.” Halifax Liberal MP Andy Fillmore closed his remarks by saying “let’s make this Guaranteed Income a reality”.  Mayor Mike Savage said “it’s up to non-activists to make poverty a political issue.”

Directly across the street from the Central Library, a bundled-up Darlene Coulstring was panhandling pedestrians from her wheelchair.  “A basic income would be an improvement,” she said.

Wayne MacNaughton doesn’t want to wait for another pilot project — a Dauphin 2.0. He wants to see welfare abolished and replaced by a Basic Income Guarantee. He says, “Roll the damn thing out and get going.”