Social Policy in Ontario

Basic income? How about basic services?

Posted on July 19, 2016 in Social Security Debates

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TheStar.com – Opinion/Commentary – As Ontario studies the possibilities of a guaranteed annual income, it should consider too whether there might be more value in expanding public services.
July 19, 2016.   By ARMINE YALNIZYAN

On June 24, news of Brexit overshadowed a development with far greater potential to change your future: Ontario announced that the Honourable Hugh Segal would prepare a discussion paper on constructing a basic income pilot program for the province, launching the most significant opportunity to talk about the country we want to create since the 1970s.

I am excited about the possibilities, and hopeful the discussion will put basic income in a more realistic context: not as an all-encompassing fix, but as one half of an approach that could help us adapt to the emerging realities of the early 21st century.

Basic income is a centuries-old idea that has found new life because of two key concerns. The first is about work. Basic income either provides a remedy for a future where robots eat most of our jobs, and those that remain are increasingly precarious; or it liberates us from paid work and unleashes potential.

The second concern is poverty. Efficiency buffs say there are savings to be had by eliminating bureaucracy and reducing public spending on health and crime, while equity advocates seek a more dignified way to support the working poor or those receiving social assistance.

It’s doubtful Segal’s program will tackle the work problem. To liberate people from work, or adequately compensate them for the lack of it, a basic income would have to be set at a level that reduces the number of people willing to work at low wages. This makes it expensive to scale up. Voters in a recent Swiss referendum rejected such a proposal, which would have cost 30 per cent of GDP.

A tighter focus on poverty reduction could accomplish a lot, but there are lingering questions of how much, and for whom. For example, seniors can count on about $17,000 a year in supports, absent other income. A family with two children under six and $25,000 in income receives over $15,000 in income supports. A basic income of $15,000 would leave millions worse off. The pilot program won’t go there.

Perhaps the focus will be even narrower — improving the basic income the province already provides to working-age adults: welfare.

Today, the province provides a single disabled person $1,110 a month ($13,320 a year) if they have no other means. If not disabled, that amount drops to $681 a month, barely more than the $663 monthly amount in 1993 which, if adjusted to inflation, would be worth $995 today.

While $681 a month ($8,172 per year) isn’t much, welfare recipients may also be eligible for supports like drugs, vision, dental, as well as some access to child care, housing, hydro and, in some cases, transit.

Could a provincial basic income approach federal levels of income support, knowing even $15,000 a year is far below the poverty line for a single person?

Basic math shows this is unlikely. Anyone working under 25 hours a week, 52 weeks a year, at the minimum wage ($11.40) is better off not working — not a strong government objective.

But it’s also a safe bet that a basic income pilot proposing an amount far less than the poverty line is a political non-starter.

So, how could we use this initiative to create a policy win? By expanding the public services from which anyone can benefit, irrespective of the amount or source of income.

At the federal level, the cost of raising everyone’s income above the poverty line is an estimated $30 billion a year. The Alternative Federal Budget shows we could permanently expand the stock of affordable housing, child care, and public transit; and almost eliminate user costs for pharmacare, dental care and post-secondary schooling for half the annual cost ($15 billion).

After a decade, we would have expanded access to more high-quality, affordable necessities of life, not just for the poor but for everyone.

A little more, and you could have free access to community and recreation centre programming, expanded mental health services, universal access to low-cost internet, and more legal aid. The net result: greater participation, greater mobility, greater potential, greater health.

Both a basic income and a basic service model put more money in people’s pockets, one with a cash transfer, one by offsetting the costs of necessities.

Basic income requires everyone to pay more to provide a small number of our most vulnerable neighbours more choice and more dignity. Basic service also requires we pay more, and also helps the most vulnerable, but benefits everyone by making incomes and markets matter less. It builds both potential and solidarity, and is a far easier sell in an era of slow growth.

Basic income talk has fired imaginations across the globe. Mr. Segal’s exercise offers a unique opportunity to test whether we’re better off when we have more income, or need less of it.
Armine Yalnizyan is Senior Economist at the Canadian Centre for Policy Alternatives. You can follow her on twitter @ArmineYalnizyan

< https://www.thestar.com/opinion/commentary/2016/07/19/basic-income-how-about-basic-services.html >

Tags: budget, economy, featured, ideology, participation, poverty, standard of living, tax

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