‘Basic annual income’ loaded with pitfalls
TheStar.com – Opinion/Commentary – By endorsing a basic annual income, Liberal party delegates have forced Justin Trudeau to choose between social justice and fiscal rectitude.
Feb 25 2014. By: Carol Goar, Star Columnist
The Liberal Party has handed Justin Trudeau a gift he dared not refuse, but will soon regret accepting.
One of the “priority resolutions” approved by delegates at their biennial convention in Montreal this past weekend calls for a Liberal government to “work with provinces and territories to design and implement a Basic Annual Income” for all Canadians.
The same gift was thrust into his father’s hands 42 years ago. Sen. David Croll, author of agroundbreaking parliamentary report, entreated Pierre Elliott Trudeau to introduce a Guaranteed Annual Income. “Let this be our priority project; a project that will stir the world’s imagination,” he urged Canada’s 15th prime minister. “We need search no further for a national purpose.”
Trudeau’s heart said yes. His head said no.
He chose reason over passion. “It’s a good theory,” he acknowledged. “But we cannot guarantee to bring everyone over the poverty line by giving them part of the taxpayers’ pocket.”
His son now faces the same dilemma. Promising a basic annual income in the 2015 election would demonstrate that the Liberals are progressive, compassionate and willing to take risks. It would make them Canada’s social policy leaders.
But it would be extremely expensive. It would be divisive, pitting those who stood to lose benefits and services against those whose incomes would rise. And it would require an unprecedented degree of federal-provincial-municipal co-operation. These pitfalls explain why no political leader in the world has moved to a full guaranteed income system.
The Liberal resolution, put forward by the Prince Edward Island delegation, didn’t provide much practical guidance. It didn’t define a basic annual income. It didn’t specify which programs and services would be subsumed into the new entitlement. And it didn’t talk about the cost.
That leaves Trudeau and his campaign team to come up with a model that is affordable; helps more Canadians than it hurts; and ensures that those who rely on existing services — social housing, subsidized child care, prescription drugs — remain whole.
Their task begins with three pivotal choices:
- Where do they set the income floor? A Senate committee seeking solutions to urban poverty did some rudimentary calculations six years ago. It found that bringing everyone up to 70 per cent of Statistics Canada’s low-income cut-off would cost roughly $20 billion. Using that as a yardstick — and taking inflation into account — it would cost about $32 billion to set the income floor at the poverty line.
- What programs would be collapsed into the new benefit? The wider the net is cast, the lower the cost would be. Welfare and disability support andemployment insurance are the obvious candidates. Beyond those three, tensions arise. Old age security is a possibility. But very few seniors live in poverty. The national child benefit could be included. But it, too, keeps thousands of low-income youngsters out of poverty. What about war veterans’ allowances, the universal child care benefit, funding to aboriginal organizations, support for agencies that serve the poor, the mentally ill, the homeless and hungry, new immigrants and racial minorities? What about the all the tax breaks targeted at low-income Canadians? The longer the list grows, the more potential losers there are.
- How much are they willing to spend? If they opt for a lean, administratively efficient benefit, they could keep the cost almost as low as the existing array of social programs and services. But that would merely redistribute poverty, not reduce it. If they decide to lift Canadians out of poverty without asking seniors, children, First Nations or charities to sacrifice, they’d have to impose a substantial tax increase, which Trudeau has ruled out.
He could quietly drop or defer the resolution. It is not binding.
But there is a better alternative. He could follow his father’s example. Although Pierre Trudeau did disappoint proponents of a guaranteed annual income, he went on to triple family allowances and create the child tax credit.
If his son can accomplish as much, socially progressive Liberals will have a proud record to uphold.
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