Canada: time for a Basic Income?

Canada: time for a Basic Income?

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.