In Canada, basic income has become a central issue in the debate on a post-pandemic recovery. Recent steps taken by the governing Liberal Party to endorse the policy has begged the question whether this might represent a serious step towards a permanent national basic income.
In their annual convention in mid-April, Liberal Party grassroots, MPs and delegates voted overwhelmingly in favour of making universal basic income a top policy priority for the party going forward. The policy earned a second place out of 26 policy resolutions to come out of the convention. Although the vote is not binding and does not guarantee that the party will go further with the policy resolution, and further, does not detail what such as Canadian basic income might look like, the move adds to growing momentum surrounding basic income in the national debate.
While the idea has garnered significant national attention previously in Canada, particularly surrounding the recent pilot project in the province of Ontario that was prematurely cancelled, the pandemic has accelerated that debate. At the onset of the country’s first national lock-down in March of last year, there was a significant push for the government to implement an emergency basic income by various advocacy groups such as Basic Income Canada Network, its provincial affiliates as well as by individual long-time basic income proponents. It also garnered significant media attention, with the debate often being centered on the ways in which the current income support system in Canada was inadequate to address the situation.
Many argued that the current employment insurance scheme and the social assistance system were out-dated models not equipped to deal with a changed, and changing, workforce. The New Democratic Party to the left of the Liberal party, which has not traditionally supported basic income but rather a strengthening of the employment insurance system, came out in favor of a universal guaranteed income as a pandemic measure and joined the push for the government to adopt such a policy.
At the time, however, Liberal Prime Minister Justin Trudeau rejected the idea of implementing a universal basic income and opted instead for a more targeted approach. This gave rise to the Canada Emergency Response Benefit (CERB), which was meant for those who did not qualify for existing support programs. The benefit provided individuals who had lost all or part of their income due to the Pandemic with a direct deposit of $2000CAD per month for up to six months. Among the five eligibility criteria for the program, an individual had to have earned minimum $5000CAD in employment income in the previous year, and, as such, it still to some degree tied eligibility to formal employment status.
There was both approval and criticism of the program from all sides of the political spectrum. The Conservative Party argued that the policy was too costly, enabled people to cheat and would prove a disincentive for people to look for and find new work, while the New Democratic Party criticised the policy for being too heavily conditional, not sufficient and not accessible to all who need it.
The program was nonetheless seen by some as a precursor to a potential basic income and as an unintended national experiment with basic income. Amid positive stories published in media on how the CERB had helped people get by, there were further calls to turn the program into a basic income – something that was again, however, rejected by the Prime Minister. Nevertheless, acknowledging that taking away this income support from people in the midst of an ongoing pandemic and new impending lock-downs, the program was replaced by a similar one called the Canada Recovery Benefit, set to end in September 2021.
Now, with the prospect of the pandemic coming to an end, the focus is on basic income as a part of the post-pandemic recovery. Further advocacy groups such as LeadNow and UBI Works have campaigned for the governing party to endorse the policy, and in February a Liberal member of parliament introduced a bill calling for national guaranteed basic income. A vote to determine whether the bill will be brought to committee is expected in coming weeks. If indeed based on the CERB, a hypothetical permanent Canadian basic income would likely not include the pandemic-specific work requirements, but further details as to what such a policy would look like are not provided in the motion.
Additionally, a week before the Liberal convention, the parliamentary budget office issued a report on the cost and the impact on poverty of a national guaranteed basic income, which has significant differences to the “basic income” as defined by BiEN. The report estimates the costs of a model akin to the one that was tested in the pilot project in Ontario to be $87.6 billion in 2022-23. This amount does not take into consideration the potential cost savings of repealing social assistance programs it might replace, as well as the potential savings in terms of health care costs, reduction in crime and less pressure on other social support systems that such a policy might have – something which Evelyn Forget’s groundbreaking work on the Mincome Project in the 1970s in Manitoba shows to be the case. The report concludes that this kind of basic income model could reduce poverty rates by 49% and further estimates that the effect on labour supply is a 1.3 percentage drop in hours worked per week on a national average. Both the cost of a national basic income and the effects on behaviour relating to work have been central concerns in the debate.
There was much anticipation leading up to the convention, and the vote to endorse basic income as a top policy priority signals a shift in the party’s stance on the policy, even though it is not binding. And while basic income was not a part of the Liberal’s federal budget for 2021-22, which was unveiled following the convention, the endorsement comes in an election year, which could make it a key election issue.
In Canada, certain conditions apply to the unconditional and not everyone qualifies for universal benefits. [version française]
The Basic Income Earth Network (BIEN) defines a Basic Income as a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.
I do not think this idea will ever be fully implemented in Canada nor anywhere else in the world. This causes me little concern because UBI will forever exhibit the traces of its origins in the very imperfect social safety net we have today and have always had. Human institutions evolve from common ancestors: two very different policies are still linked by evolutionary history. A horse’s leg corresponds to the bones in our middle toe, not the same function at all, yet equivalent from an evolutionary point of view.
There are no social programs in Canada that are universal. Some condition always applies to reduce the amount and eventually eliminate the benefit completely. This is quite apart from any discussion of whether the program is sufficient, necessary, feasible or even appropriate.
When Canada implemented income tax in 1917 one of the features of this temporary program was the personal exemption: $1,500 for singles and $3,000 for others, $24,500 and $50,000, in today’s dollars. While this benefit was cash, it was hardly a transfer, since you just got to keep some of the money you already had. It was individual, a couple getting twice the benefit of an individual. It was unconditional in the sense that there were no strings attached, no work requirement, no declaration of any means (property or possessions) other than income. It was universal, except that the amount depended on revenue. The 4% of earnings on the first $1,500 dwindled to nothing if you had no income.
Fast forward 99 years to when the Canada Child Benefit (CCB) was introduced in 2016. Today we distinguish between reimbursable tax deductions and non-reimbursable tax deductions. The personal exemption is one of the later. Benefits only pay down your tax burden. You get no benefit if you pay no income tax. The Canada Child Benefit is one of the former and is a bona fide Basic Income, even if certain conditions apply.
The Canada Child Benefit (CCB)
The Canada Child Benefit is paid out even if no income tax is due. It is clearly a cash transfer.
Is the CCB universal? It’s paid to all families with children. Or is that all children with families? Of course you can’t send a monthly cheque to a toddler. The caregiver receives the money with no strings attached. When Universal Basic Income is distributed to all adults, its universality is never questioned in proposals such as BIEN’s or Andrew Yang. Is restricting the benefit to children less legitimate because they are dependants? In fact, children “without families,” that is “maintained by an agency” also receive the benefit. The amounts are identical; just the name of the program changes. I think that this settles the question: it is a benefit for children, not a benefit for families with children.
Is the CCB individual? If you consider that it’s paid to families, then no. If, however, as I argue, it benefits individual children and is just turned over to their caregivers, then yes.
Is the CCB unconditional? All social programs have some condition which excludes some recipients or reduces benefits. Universality and unconditionality are inextricably linked.
Both arise from a desire to allocate or distribute ostensibly scarce resources according to the opposing principles of fairness and efficiency. The issue is presented as a trade-off: Either the quantities are sufficient to fulfill the needs of the recipients and not everyone receives the benefit or everybody receives a diminished allocation and no one has enough.
The application of such conditions which eliminate recipients or slash benefits is what is referred to as means-testing. This exists in Canada. The welfare system is the classic example. Benefits are cut dollar for dollar if your earnings exceed a paltry threshold. For example, in Quebec, welfare provides $690 per month: 29.6% of what it takes to avoid poverty. Any earning above $200 is deducted 100% from your cheque. The welfare system intrudes into your private life: a couple receives 29% less than two individuals, so undeclared roommates are committing fraud, as far as the authorities are concerned.
Another way of distributing scarce resources is what is known in Canada as income testing. Benefits depend on how much revenue you declare on your income tax returns, which brings us back to the personal exemption of 1917.
You may not agree that this taxation feature qualifies as an embryonic social program and find it far-fetched to call it a cash transfer. Identity of form and function is not required to establish evolutionary kinship.
Means-Testing vs. Income-Testing
Means-testing and income-testing certainly have the same ancestor: the need for a fair and efficient distribution of putative scarce resources. In form they are virtually identical yet in the Canadian context, their function could not be more different.
Means-testing is a human activity whereby a bureaucrat gathers information on helpless and vulnerable people to determine how little they deserve. It is directed specifically at lower-earning people to make sure that they don’t receive more than they deserve. It is an evil system in which, if you are not destitute enough, requires that you divest of your property or savings regardless of your interests. Means-testing is a social policy tool reserved for those living in poverty and designed to punish them for their condition.
Income-testing is an algorithm which applies in the same way to everyone based on tax returns. The testing part of income-testing is achieved through tax self-reporting. Canadians don’t consider filing your income tax as an invasion of their private life. In any case, the government already knows how much tax you’ve paid because your employer turns over your tax deductions to the authorities every month and has been doing so since 1943. Revenue Canada doesn’t know or care what you do with your take-home pay nor tell you how to spend it. Unlike with means-testing, there is no stigma attached to phasing out benefits for the rich.
No one questions the practice of taxing back from the rich funds equivalent to the Canada Child Benefit from which they derive no important advantage and thereby recover some of the cost of a program which is immensely useful for everybody else. Conscientious objectors to means-testing will insist that even when this clawback is done specifically for the purpose of recouping UBI payments, it does not infringe on the principle of universality because it is done in separate operations, the right hand not knowing what the left hand is doing. In Canada, we tend to view this as an elaborate and unnecessary fiction. Covering up the mechanism does little to hide the process, which serves no other purpose than to claw back UBI from the rich.
In the FAQS page of BIEN, under the caption: “WHY PAY MONEY TO THE RICH WHEN THEY DON’T NEED IT?” we read:
“It is efficient to pay the same level of income to everybody of the same age and then tax it back from those who don’t need it. The alternative is to means-test incomes so that only those who are poor receive them: but that results in complexity, stigma, errors, fraud, and intrusive bureaucratic interference in people’s lives.”
First of all, “those who don’t need it” is a very unfortunate choice of words. There is no more reason to ask the rich than the poor to justify their needs, as means-testing does. Only the poor bear the brunt of the evils of means-testing. “Taxing back,” never questions your needs. That is all that “income-testing” is.
This distinction between means-testing and income testing is not hotly debated within BIEN: Most mainstream member philosophers and economists dismiss it out of hand, considering both concepts violations of the principles of universality and unconditionality. I can’t accept this argument because it is based on concepts which aren’t actually found in the real world. At least not in Canada!
UBI vs. NIT
Another thorny issue in the Basic Income community which may seem quibbling to the un-initiated is the distinction between Universal Basic Income and the Negative Income Tax. Every party to the debate agrees that in terms of net income in the pocket of the beneficiary, these measures are identical. Also, their net cost to the state is also the same. Finally, both programs can be engineered so that the beneficiary is unable to tell the difference. Doesn’t that make all discussion of their relative merits moot? Perhaps I am missing something. Let me quote Davide Tondani in full:
From the distributive point of view, the constraint of equal spending leads to distributive outcomes where NIT is effective at the bottom of the distribution, while UBI also distributes income to the middle incomes. This seems to suggest that in NIT, a minority of “poor” citizens are financed by people with middle and high pre-tax income. In UBI, a minority of wealthier citizens redistribute part of their income to people with lower incomes. Greater efficiency in fighting poverty by NIT and the presence of high marginal tax rates on low incomes reduces the labour supply formed by the same individuals. On the other hand, in UBI the lower benefits for poor people associated with lower marginal tax rate provide an incentive for low-income people to participate to the labour market. Preference for NIT seems to favour redistribution towards a wider range of low-income people. In the absence of a legal constraint to accept a job offered by the government, no personal effort in terms of a more intensive labour supply is required from these individuals. Opposite to this is a model of “residual welfare,” UBI on the other hand is less efficient in raising low incomes, but is more sensitive to inequality and social inclusion, and supporting labour supply and citizenship.—page 18
Tondani comments further on how identical outcomes can arise from divergent aims:
“Although NIT and UBI policies tend to lead to very similar, if not identical, distributive outcomes there is great epistemological difference between the two. Treating them as equal can thus lead to the risk of very real confusion about the real distributive aims of the policy maker.”—Tondani page 44
So there is no confusion about outcomes, only the aims of the policy-maker. I don’t see why motivation is relevant when outcomes are identical. If the road to hell is paved with good intentions, it might as well be paved with bad ones.
Shouldn’t good policy even backed by bad intentions be preferred over bad policy supported by good ones?
Scarcity vs. Policy
A final point about scarcity. The paucity of resources is often presented as a fact. It’s actually a policy decision, a choice of priorities.
A frequently heard argument is that if you give resources to those who don’t need them and provide free services for those who can afford to pay for them, you are depriving others who don’t have the resources and can’t afford the services. This argument only works if the resources and the services are scarce. This is not a question of objective fact. Scarcity is a question of political choice, the setting of priorities. For example, public housing could be more abundant if battleships and fighter jets were scarcer.
It is not often that rationing of a resource is unavoidable.
Conclusion
What social programs are, the intentions behind them, and their history is of little importance in comparison to what they do.
I have argued that the Canada Child Benefit is a Canadian-flavoured Basic Income which is as close as it gets to a UBI in the real world. It is universal because all humans go through childhood, it is individual because strictly based on headcount and it is unconditional because you don’t have to do anything special to deserve it, and you can do with it as you please, no questions asked. Furthermore, it is a regular, predictable, cash transfer paid monthly, for which you can sign up before you are even born. Does it deviate in some way from the ideal, orthodox form of Basic Income? Of course! Where do we find ideal forms in the real world?
Some will claim the Child Benefit is not important as a putative example of a UBI or will argue that the Child Benefit is not close enough to being a UBI to qualify as such. How close is close enough? What constitutes important? There is no objective way to decide these questions. The answers are not falsifiable.
Will calling the CCB a Basic Income hurt the brand and confuse people about what a Basic Income really is? The confusion has nothing to do with the shortcomings of the Canada Child Benifit as a Basic Income. Every example helps promote the concept, regardless of deviations from the ideal. And the more familiar the public is with Basic Income, the more likely it will spot the points to improve in existing implementations such as the CCB. It is the scarcity of concrete examples to point to that makes it difficult for people to establish connections. The more examples you find, the better people will understand. Far from confusing people, a consistent terminology with variegated examples will help crystallize the concept in peoples’ minds.
Basic Income is not something that can be summed up in a definition, it is a living thing, constantly adapting to a changing local environment. It is less man-made than responsive to conditions. Certain conditions apply.
Canada is taking measures to face the Covid-19 pandemic. The situation requires, together with radical and fast actions in medical terms, radical and fast actions in economic and social terms.
The introduction of a Basic Income has been a topic for years in Canada and with the current crisis, it is showing even more possible benefits. While one can always approach a private money lender for emergencies, having a basic income can better sort the situation.
On the 18 March the Prime Minister, Justin Trudeau, announced the federal response to the crisis: a $82 billion relief plan which allocates $27 billion in direct support and $55 billion to help businesses liquidity through tax deferrals. So far, the Opposition parties have been supportive, especially the New Democratic Party which is pushing the Government for more generous and comprehensive measures.
The Canada’s Covid-19 Economic Response Plan includes a temporary boost to Canada’s Child Benefit payments, a new emergency Care Benefit to provide income support to workers, the Canada emergency response Benefit (CERB) and other targeted measures. The CERB is a monthly payment of 2000$ a month for a period of 4 months that will go to any worker who earned at least 5000$ in the past 12 months and has suddenly lost their job as a result of the pandemic. The Government has estimated that more than 2 million Canadians will receive a temporary Basic Income through the CERB. Understandably, Basic Income advocates have stressed the desirability of a more universal approach, as opposed to the long list of targeted measures such as those above, which can represent a cost in terms of classifying the beneficiaries due to long and sometimes bureaucratic processes. They have pressed for keeping a Basic Income model which can last after the pandemic is over, because Covid-19 will probably not be the last major setback to the Canadian economy. The next time it could be the shock from climate crisis or technological unemployment.
The CERB is not the first measure something like a Basic Income that Canada has experienced. An experiment called a Basic Income pilot was introduced in April 2017 by Kathleen Wynne’s liberal Government. The program consisted in monthly payments for 4000 randomly chosen individuals living under the poverty line, without work conditions, in three communities in Ontario. The program, originally stated to be for 3 years, ended prematurely, but showed interesting effects: the majority of the people who had low wage jobs before the trial remained in the workforce. Many went back to school, and mental health improved. The payments were like a Basic income in that they were not work-tested, but because they were income-tested and based on the structure of the household, the experiment was not a Basic Income pilot experiment.
The Basic Income Canada Network has proposed some options for Canada: among them there is cash transfer based on household income for 18-64 year olds people, of $22.000 per year ($31.113 for a couple) that decrease gradually as other income increases. This would be similar to the Ontario experiment, and so not strictly a Basic Income, but the report does model a fully individual, universal basic income option.
The time for Basic Income may have come and Governments around the world are implementing measures to address the financial fallout of the Covid-19 crisis. To many, a Basic Income – regular payments to individuals that are not work-tested or means-tested – may sound radical, but it might be the most rational thing the Government can do for Canadians.
The findings of the McMaster University Basic Income Project (MUBIP) were released on the 4th of March 2020. The study looked into the impact of the Ontario Basic Income on over 200 recipients in one of the pilot sites, namely Hamilton-Brantford, where 1000 recipients were initially enrolled into the program. Even though the previously hired research team’s contract to evaluate the program was cancelled (by the present government), a new analysis was made possible through funding from the Hamilton Community Foundation, McMaster University and the Social Sciences and Humanities Research Council.
The findings were publicized at a lauch event on the referred day, organized by the McMaster Institute for Health Equity taking place at the L.R. Wilson Concert Hall, and having Hugh Segal as a guest. From the new study conclusions, it can be read:
Everyone who received basic income reported benefitting in some way.
Many recipients reported improvements in their physical and mental health, labour market participation, food security, housing stability, financial status and social relationships.
Basic income also had a noticeable impact on the use of health services, with many of the survey respondents indicating less frequent visits to health practitioners and hospital emergency rooms.
For a significant number of participants, basic income purportedly proved to be transformational, fundamentally reshaping their living standards as well as their sense of self-worth and hope for a better future.
The majority of those employed before the pilot reported working while they were receiving basic income. Many reported moving to higher paying and more secure jobs.
Those working before the pilot reported even greater improvements on some measures of well-being than those who were not working before.
A new report from the Basic Income Canada Network (BICN) details how Canada could improve income security for everyone, with three options for a basic income for adults, while maintaining current child benefits for those under 18.
“We’ve seen interest in basic income grow far beyond theoretical debates. BICN is now frequently asked what it would look like in Canada,” said Chandra Pasma, a member of the BICN Advisory Council and co-author of the report. “Our report clearly shows there are multiple options Canadian governments could use to implement a successful basic income program.”
A basic income is an unconditional cash transfer from government to individuals to enable everyone to meet their basic needs, participate in society, and live with dignity, regardless of work status. The call for a basic income is growing, including from public health and environmental sectors, Nobel laureate economists, marginalized communities and people concerned about precarious work and technological disruption. The urgent need to reduce inequality and its costly consequences has led some researchers, advocates, and politicians to the conclusion that basic income is inevitable.
Statistics Canada’s Social Policy Simulation Database and Model (SPSD/M) was used to model the funding of the options, combining existing resources with changes to the tax/transfer system, including tax fairness measures. All options are based on BICN’s principles and goals–to reduce inequality, including inequality between women and men; prevent poverty; provide everyone with greater income security, including middle-income earners; and ensure the wealthiest individuals and corporations contribute their fair share. Each option in the report, Basic Income: Some Policy Options for Canada, meets these overall goals.
Option 1 is for 18-64 year olds based on household income, operating much like child benefits, with the $22,000/year ($31,113 for a couple) benefit amount gradually reducing as other income increases; seniors benefits remain in place.
Option 2 is similarly income-tested and is for all adults, including seniors.
Option 3 is a universal model, sometimes called a demogrant, that provides the same benefit amount to every individual adult.
“The options vary administratively so don’t get sidetracked by the size of the different up-front costs,” notes Sheila Regehr, Chair of BICN. “It doesn’t mean one is much more expensive than another. The options have similar results for people and they are all funded from similar sources.” The report also notes that other funding sources for a basic income are possible, as well as downstream savings that can help make it even more affordable.
“Basic income in Canada is not a question of possibilities, but of priorities,” said Regehr. “It is clear from child and seniors benefits that it works for many Canadians already. The federal government’s priority now must be to take leadership to make it work for everybody; we are all part of the future of this country.”
To download the full report, click here.
To download a summary of the report, click here.
