Evelyn Forget has quite literally written the book on basic income for Canadians. It’s called, you guessed it, Basic Income for Canadians.
As a health economist at the University of Manitoba, Forget re-discovered the Manitoba Mincome experiment of the 1970s, and undertook to analyze some 1800 cubic feet of data from the decades-old experiment. She found evidence of improved health and high school completion, and even an overall improved sense of community in the town of Dauphin, the one and only saturation site for the Mincome experiment.
In advance of her talk at this year’s Basic Income NS conference on Saturday at the Central Library, I called up Forget to ask her about the basics of basic income.
The interview has been edited for length & clarity, and to make my rambling questions sound snappy and to the point.
What is basic income?
When we talk about basic income in Canada, we’re almost always talking about something that looks sort of like the Canada Child Benefit. That is, it’s a very targeted program. If you have no income from any other source you receive a certain amount of money, and as your wage income increases, your benefit declines, but it declines less than proportionately.
And that’s a bit different from what some people are talking about in other parts of the world, where they talk about everybody, no matter how rich you are, receiving $500 dollars a month or 500 euros a month or whatever they happen to be talking about.
In some ways, children already have a basic income. That is, families with kids under age 18 already receive a Canada Child Benefit. And in a sense, seniors are already receiving a basic income in Canada. If you’re a low income senior not only do you get OAS (Old Age Security pension) but you also get the Guaranteed Income Supplement (GIS) which means that nobody over age 65 is living on less than about $17,000 a year.
Where the real gap in Canada occurs is for adult benefits, where it’s sort of a hodgepodge system where every province is doing something a little different. But the one thing they all have in common is that people really aren’t receiving enough to live a reasonable life.
In most provinces, for example, two days before your 65th birthday if you’re a single adult receiving benefits you’re probably getting something like $7000 or $8000 a year. Then the day you turn 65 your income more than doubles.
What’s the idea behind basic income?
What a basic income is trying to do first of all is to ensure that everybody has enough to live a reasonable life. Not a generous life but a reasonable life, a dignified life. Enough to ensure you’ve got a roof over your head and decent food to eat. So it is a way of dealing with poverty.
And I think of a basic income as a way of addressing some of the issues of a changing labor market as well. Some of the data we’re looking at says that 50% of the new jobs that are being created are precarious jobs. Especially young people, they end up working part time jobs or seasonal jobs or contract jobs without the sorts of benefits and continuity that we’d like to see.
And I mean it’s always been true for some people. But what’s happening now, of course, is that these kinds of changes are affecting good, middle class jobs. The kids with PhDs and the kids with Master’s degrees are finding themselves in the same position.
So basic income is both a way of ensuring that people without resources have enough resources to live a reasonable life, and it’s also a top up for people who find themselves working precariously. So the working poor would receive support as well.
If this were to happen in Canada, would it be happening on a provincial or federal level?
Well, yeah. You live in a little province and I live in a little province. And I think those of us who live in smaller provinces realize that this is probably not something that’s going to happen in Nova Scotia or in Manitoba. I think that most of us require the physical capacity of the federal government for this to happen. Now that’s probably not true of Ontario and some of the larger provinces, but practically, I think, if this is going to happen, it will happen nationally.
Can we afford it?
Well, you know the really nice thing was when Ontario was running their project, Pierre Poilievre decided that this would be a nice opportunity to embarrass the Ontario Liberals, and so he asked the Parliamentary Budget Officer to estimate the cost of the Ontario scheme if it were rolled out across the whole country.
Let me walk you through how he did it. He said okay, suppose we keep everything else in place and we roll this out? The Ontario scheme, on top of all of other programs — if we do that, he came up with the first estimate of about $78 billion a year. Which is a lot of money.
Then he said, but of course we’ve got lots of other programs in place, even at the federal level, that are focused on low income Canadians. So if we roll those in and we actually do some work at the federal level, this will cost $43 billion dollars rolled out across the whole country.
Now that doesn’t take into account provincial income assistance, which costs about $20 billion dollars a year. So if you actually replace provincial income assistance you’re down to $23 billion dollars a year.
Now that sounds like a lot of money, but it’s exactly what we pay every year to deliver the Canada Child Benefit. It’s less than half of what we pay for OAS and GIS. So in terms of feasibility, the cost is actually coming in at about the same level that other programs, ones we’ve decided we can afford, cost. It’s about 6% of total federal government expenditure.
So it’s not impossible.
As part of the same exercise, the Parliamentary Budget Officer estimated the cost of all of the various deductions and non-refundable tax credits in the income tax system. And by and large these are benefits that mostly go to high income people, and that comes out to about $122 billion dollars a year.
So raising $23 billion a year is not impossible in a country like Canada. It’s something that we could do quite readily.
Since we want policy to be evidence-based, what do you think are our main gaps in the evidence around basic income?
When we talk about basic income people immediately fixate on these big experiments. These experiments take a long time; they cost tremendous amounts of money. And when you get right down to it I’m not sure that the kind of data you’re collecting is going to convince anybody that that a basic income can work or ought to be introduced.
I think we know from the work that’s already been done either in other experiments or from other kinds of social policies we offer… we know what the impact of raising people’s income is. We know it makes them happier and we know it makes them healthier. We know that they’re less likely to use hospital resources. Their kids are more likely to do better in school because they’re not switching schools as their parents change apartments because they can’t afford to make the rent.
I mean, we know what the costs of poverty are. We know what the impact of ensuring that people have reasonable incomes is. And that’s basically what an experiment can tell you. And I’m not sure that it can answer the questions that people really have, and that is, how is this going to work on society? What’s going to happen if we roll this out generally? Can we afford it? What are the costs going to be? You can’t really find those kinds of things out using experiments. You can estimate it using simulations the way the Parliamentary Budget Officer did.
So do we need another experiment? To my mind, no. I think that in some ways [experiments] are a way of delaying decisions that in my opinion need to be made.
Had the Ontario experiment continued, it was intended to be a three-year experiment, and it would take another year to do the analysis afterwards. So we’re talking about four or five years before you could actually think about introducing a policy.
We already have quite a lot of evidence out there.
I was first introduced to the whole concept of basic income because of an experiment that ran in Manitoba in the mid-70s. A few years ago I went back and tried to find that data and did some analysis on that. So we already know quite a lot about what happens even in the Canadian context. And it’s true, things change over 40 years, but they don’t change dramatically. In the 1970s [in the Manitoba experiment] we saw a lot of high school kids finishing high school who otherwise wouldn’t have. And in Ontario, one of the first things that people said they were doing when they received their basic income was to register in community college and get some additional job training. So people invest in education. They invest in activities for their kids. They access better housing. They did that 40 years ago in Manitoba. They did it in Ontario.
And you think, well, of course they would. What else would they do with the money?
How much should basic income be? The Ontario program didn’t sound like a whole lot of money…
No, it was not. It was set up tied to the rates that are paid for OAS and GIS. And that was partly a political decision. The political staff were very nervous about giving working age Ontarians more money than you were prepared to give people who were retired, who’d worked all their lives. And so the basic payout for an individual was just under $17,000 a year, which is not a lot of money — unless you’re on income assistance, in which case it more than doubles your income.
It would be nice to give people more money, but of course the higher the rates are, the more expensive the entire program is to run. And most of the people who participated in the experiment, in fact everybody, found their incomes increase. The idea was that nobody should be worse off. If people received disability support before they entered the program, they received an extra $6,000 a year. If you were working in a low wage job, your income would certainly increase under the scheme. If you were being supported by the two basic welfare programs in Ontario, your income would increase pretty substantially. And the child benefit of course would pay out on top of that, so there would be no reduction for receiving the child benefit.
Doesn’t this give companies a sort of licence to pay people poorly?
I think it does just the opposite.
I know that there’s a concern about that. But what you’re really doing is you’re giving people access to another source of income. And I think what you’re doing for low wage workers is you’re giving them the capacity to walk away from demeaning work, from work that offers them poor working conditions or very, very low pay. So I think what it will do is put some upward pressure on very low wage employers.
It’s all about who has the power. And it seems to me that right now, certainly if you’re a low wage employer, you’re the person with all the power, because people are pretty desperate to access the resources just to survive. They really have no alternative. But if they have $17,000 a year, that’s very close to what a full time minimum wage worker will earn. And so if you’re going to fill some of these jobs, you’re going to have to do a little bit better. You don’t necessarily have to pay more money, because people work for all kinds of reasons. But you’re going to have to make sure that job is attractive, in some way.
Is there a lot of money to be saved just by no longer enforcing provincial income assistance programs the way they’re enforced?
Yes, we spend a lot of time and money policing people on that system. And if you have that many regulations, you’re always, always in violation of something. Because who can possibly even know what the regulations are? And they are putting caseworkers in a very terrible position, too, because these people on the one hand are supposed to be offering assistance to help people better their lives. And at the same time they’re riding herd on them to make sure that they’re not breaking rules or defrauding the government. So yeah, a lot of money gets spent just enforcing the system, administering the system.
It’s almost impossible to get an estimate of what it costs to administer these programs because every province manages to report their figures in ways that make it almost impossible to find.
I think costs would go down, but the other side of it is… It’s not like we have a surplus of caring people working within the system who could be doing useful work. Even if we maintained employment and maintained all of those case workers, we could be putting those highly skilled people to work doing the things that they were trained to do rather than just making sure people aren’t breaking the rules.
The Basic Income Nova Scotia conference is happening Saturday, April 27th from 9:30am to 4pm at the Halifax Central Library. The event is free, pre-registration is not required, and lunch is provided. Other speakers include Senator Wanda Thomas Bernard, Catherine Mah, Kourtney Koebel, and lawyer Vince Calderhead.
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