How can we not afford a ‘basic annual income’?
TheStar.com – Opinion/Commentary – What is most needed now in Canada is a basic income guarantee for working-age adults.
Feb 27 2014. By: Rob Rainer, Kelly Ernst
Toronto Star columnist Carol Goar suggests providing an income guarantee for all Canadians will break the bank (‘Basic annual income’ loaded with pitfalls, Feb. 25). Moreover, writes Goar, “it would be divisive, pitting those who stood to lose benefits and services against those whose incomes would rise… These pitfalls explain why no political leader in the world has moved to a full guaranteed income system.”
Such claims are erroneous.
Basic income, money paid by government to eligible persons with few conditions attached, is not a dream. Canada already has cash transfer programs simulating basic income, such as the Canada Child Tax Benefit, Old Age Security and Guaranteed Income Supplement. Though each of these programs should be enhanced, they have nonetheless significantly reduced Canada’s rates of child and seniors’ poverty.
The efficacy of cash transfer programs is evident by their spread worldwide. A 2011 report by the U.K. Department for International Development stated, “Over the past 15 years, a ‘quiet revolution’ has seen governments in the developing world invest in increasingly large-scale cash transfer programs. These are now estimated to reach between 0.75 and 1 billion people.” In Latin America one in four citizens now receive cash directly from their governments.
What is most needed now in Canada is a basic income guarantee for working-age adults. Millions of them suffer in poverty, including many working one or more jobs. Millions more are in precarious work—employment at risk from outsourcing and “robosourcing,” annual incomes in stagnation, and one or two paycheques away from serious hardship.
In the face of such trends and with economic disparity increasing, basic income is vital for workers to navigate the roiling economic rapids of the 21st century.
Yes, it will take political courage to move on this. Widespread and unsubstantiated views about the effects of a basic income program are the greatest barrier. One myth suggests a basic income will encourage people to stop working or bettering themselves. However, research from Canada, the United States and overseas demonstrates that basic income has no meaningful effect on work incentive.
This makes sense: basic income is only meant to supplement one’s income so that one’s basic needs are met, nothing more. Bettering oneself beyond basic needs – attaining higher education and pursuing a rewarding, long-term career – are aims that a basic income was never intended to replace.
The idea that basic income “would be divisive” is also misinformed. A recent poll for the Pierre Elliott Trudeau Foundation suggests slight majority support exists already for basic income. As Canadian awareness and understanding of basic income advances and as poverty, inequality and precarious employment endure, there is potential for this support to grow substantially.
Moreover, basic income already has champions across the political spectrum. Conservative Senator Hugh Segal has long represented the right-of-centre voice of support. The Green Party of Canada has signalled official interest in testing basic income. It was a New Democratic premier and a Liberal prime minister who brought in the bold “Manitoba Mincome” experiment of the 1970s, from which encouraging findings have been documented. Most recently, delegates to the biennial convention of the Liberal Party of Canada voted in favour of two resolutions concerning basic income.
The myth that basic income “would be extremely expensive” is often stated as fact without supporting evidence. To realize it fully in Canada could require an investment in the range of $32 billion, as Goar mentions. Such a number seems large but in 2013 it comprised but 0.017 per cent of the value of Canada’s gross domestic product, estimated at $1.82 trillion.
What must also be factored are (1) the efficiencies from redirecting the funds of ineffective and even harmful programs (notably stigmatizing welfare) into a basic income, and (2) the savings from avoiding poverty’s immense cost. A 2008 study estimated $72 billion to $86 billion as the price Canadians pay for health care, criminal justice and lost productivity costs associated with poverty. Poverty’s demand on health care alone may now approach $40 billion per year.
In the wake of fiscal realities such as these, the question is not can Canada afford basic income, but rather, how can we not? With all the rhetoric about reducing public spending and economic disparity, a basic income would help achieve both goals.
Canadians must ask which politicians have the courage to eliminate the costs of poverty by implementing a universal basic income guarantee, not ditching good ideas before examining them with solid evidence.
Rob Rainer is the founder and director of The BIG Push campaign ofBasic Income Canada Network. Kelly Ernst is the Chair of the Board of Basic Income Canada Network.
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