Hot! Consider guaranteed annual income to reduce poverty

TheRecord.com – opinion/columns
Oct 19 2012.    Cameron Dearlove

Instead of aiming to reduce poverty, why don’t we aim to eliminate it?

In 2008, the Ontario government adopted the Ontario Poverty Reduction Strategy, with a goal to reduce child poverty by 25 per cent in the province within five years. While there’s nothing ignoble in trying to reduce child poverty, a 25 per cent reduction isn’t particularly bold. It chips away at the edges without tackling the problem head on.

The government also committed to consulting with Ontarians and revisiting the strategy every five years. With the anticipated release of the Review of Social Assistance, and MPPs at Queen’s Park prorogued, now would be a great time to begin discussing the next poverty reduction strategy.

This time we should seek a bolder and more comprehensive strategy by putting the guaranteed annual income on the table.

I recently read about a guaranteed annual income pilot project in Otjivero, Namibia. Otjivero was a dearly poor village that benefited from an experiment: give every resident 100 Namibian dollars each month and see what happens.

Our default biases tell us that “free money” will make people lazy and dependent. Instead, Otjivero became a village of entrepreneurs. Freed from spending their days trying to meet basic needs, folks focused on bettering their lot. People started small businesses, more children were enrolled in school, and people with chronic illnesses benefited from better nutrition.

Ontario is a long way from Otjivero, but we do have a Canadian example to pull from.

In the 1970s, the Canadian government conducted a comprehensive guaranteed annual income experiment in Dauphin, Man. For four years, people earning below a certain threshold were eligible for top-up payments, no questions asked, guaranteeing that no family lived in poverty. The political winds had changed by the study’s end and the collected data was packed up into boxes, unanalysed.

A few years ago, Evelyn Forget of the University of Manitoba took an interest in Mincome, as the Dauphin project was known, and began studying Canada’s guaranteed annual income experiment in the Manitoba city.

I recently asked Forget why she thinks the guaranteed annual income is more effective in tackling systemic poverty. “The one thing we don’t do well in this country is deal with the working poor,” she said. “If you go out and work, you should be better off than on social assistance.”

A guaranteed annual income works with, rather than against, low-wage earners, and removes the “welfare wall” — that point when there is no financial incentive to working.

The guaranteed annual income challenges our assumptions about motivation and personal responsibility. At first glance, guaranteed income experiments in Canada and the United States show a modest reduction in labour market activity. Peering closer, Forget saw that much of this reduction resulted from improved student enrolment and parents staying home a little longer with their children.

In fact, student enrolment was one of the most striking outcomes of Mincome. Dauphin students before and after the project had Grade 12 registration rates lower than their Winnipeg peers. During Mincome it was much higher. Forget dubs these students “the lucky cohort.”

Not surprisingly, Forget studies the social determinants of health, providing her with an understanding of the connection between social realities and health outcomes. Using government data, she identified a range of positive health outcomes from Mincome, particularly a major reduction in hospital visits, including declines in visits for mental health and accidents and injuries.

This is where the guaranteed annual income has potential to pay for itself. Poverty increases strain on our health system, negatively impacting all of society. Forget identified an 8.5 per cent drop in hospital visits under Mincome. With hospital visits accounting for more than $50 billion in national spending, this is a significant savings. Add in other health savings, reduced costs from a simplified welfare bureaucracy, and lower incarceration rates found with lower poverty, and we may have a financial winner.

Politically, the guaranteed annual income is tough, as it goes against our basic assumptions about money, work, and personal responsibility. Yet forms of guaranteed income already exist in child benefits, old age security, and disability benefits. We brought in these programs because they were the most simple and obvious ways to tackle poverty. So why wouldn’t this work for society as a whole?

We’ve tried simple solutions and poverty is persistent and growing. We know, then, that we need bold solutions to poverty. So when we consider Ontario’s next poverty reduction strategy, let’s not aim simply to reduce — let’s eliminate poverty.

Cameron Dearlove is a community developer who lives in Kitchener.

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1 Comment

  1. Natasha Harding

    I completely agree with the idea of implicating a minimum income level in order to tackle poverty rather than simply reducing it. There are many assistance programs in place that do not eliminate the underlying causes of poverty. Implementing a mandatory minimum income level the all members of society will receive the same chances and opportunities. With increased cost of living there are so many people in our communities that cannot afford both food and shelter, there are many different reasons for people ending up in vulnerable situations. With that each member of society has the right to earn a minimum amount of income in order to complete and thrive in society. In this article the author talked about removing the welfare wall and how a guaranteed income works with the low wage earner rather than against them. In my opinion this could not be a more true statement, when you consider other social assistance programs it is almost more responsible to stay home from work and collect government assistance. For the simple fact that you are able make more money on social security’s than working a full or part time minimum wage job. If we implicated a guaranteed annual income low wage workers would possible be more inclined to continue their employment increasing their chances for promotions or better employment opportunities because at the end of the year they will know that they make enough money to provide food and shelter to their families.

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