Millions of Canadians are now collecting a state-funded income. But what happens after the pandemic ends?

Posted on April 18, 2020 in Policy Context

Source: — Authors: – Business/Opinion

We are engaged in an immense, unprecedented experiment made necessary by the COVID-19 crisis.

In Canada and many Western countries, millions of people now find themselves on a national government payroll, their wages and household income largely provided by the state.

Without it being described as such, that is an experiment in a type of Universal Basic Income (UBI), a concept championed by Thomas More in “Utopia” (1516) and by Pope Francis on Easter Sunday.

Canada has two main income-support programs for dealing with the coronavirus crisis. There is a huge wage-subsidy program and a smaller but formidable Canada Emergency Response Benefit(CERB).

This article is focused more on the CERB, by which Ottawa for the first time is making income-replacement payments to part-time workers in the so-called “gig economy” of intermittent contract work. The CERB also covers seasonal workers, students and others deprived of income because of COVID-19.

Neither program is pure UBI, an unconditional annual income paid by the state, with no questions asked.

One has to apply for the CERB and qualify for its $2,000 monthly payments, showing that you have earned at least $5,000 in the past 12 months and have lost your employment income due to the pandemic.

That said, the CERB’s eligibility requirements are less onerous than those of Employment Insurance and traditional provincial welfare and disability income-support programs.

And the CERB will have UBI’s intended effect of maintaining a decent income and personal dignity in millions of households after a drastic loss of income.

As many as four million Canadians are expected to apply for the CERB.

The big question is: what happens after the pandemic ends?

And the answer, at this admittedly early stage, is that the CERB and Ottawa’s other emergency income-support programs will likely bring about a UBI-influenced overhaul of Employment Insurance, and significant reforms in welfare and disability income-support schemes.

The advent of UBI in its pure form is unlikely. It has its champions today as never before, but UBI is likely to fade as the pandemic does.

To start, the federal finance ministry, no fan of UBI, prefers to create targeted rather than universal programs. And never mind the streamlined efficiency of universal programs like Medicare.

Meanwhile, conservatives blanch at UBI’s cost. And while studies show that UBI recipients continue to work and develop entrepreneurial instincts, conservatives fret over a weakening of the national work ethic.

And for their part, most social progressives won’t stand for the dismantling of the existing social-assistance infrastructure, for all its shortcomings. They fought to build it, and it does provide income protections unimaginable in the not-so-long-ago Dark Ages.

But there is a strong likelihood that our current experience with UBI will see UBI principles and practices integrated into overhauled Employment Insurance, welfare, disability and other income-support programs as an outcome of the pandemic.

After all, about 70 per cent of Canadians polled on a universal basic income say they support it.

And Canadian UBI already exists in the form of the Guaranteed Income Supplement (GIS) for seniors, which effectively doubles Old Age Security (OAS) payments for seniors below the poverty line.

And the Trudeau government’s universal Canada Child Benefit (CCB) has made Canada the first country to reduce child poverty, by providing a substantial income supplement to families living below the poverty line.

The GIS and CCB kick in automatically, as OAS does, without onerous application paperwork and costly bureaucratic supervision of recipients to ensure compliance with eligibility requirements. Those are time-consuming and demeaning characteristics of existing provincial welfare and disability income-support programs.

As to cost, my Star colleague Laurie Monsebraaten, the paper’s social justice reporter, has recently noted that the Parliamentary Budget Office has calculated the cost of providing UBI to about 7.5 million low-income working-age Canadians at $43 billion.

That’s less than half Ottawa’s current costs of wage subsidies, the CERB and other emergency income-support measures.

When it cancelled Ontario’s three-year UBI project in 2018 a year ahead of schedule, the Ford government claimed that rolling out UBI across the province would require a hike in the HST to 20 per cent from 13 per cent.

Norwegians pay a retail sales tax of 25 per cent. And they enjoy one of world’s highest standards of living, with 2018 GDP per capita of $114,533 to Ontario’s $64,826.

So, the issue isn’t affordability. It’s culture. People either embrace or reject paying the freight for ensuring that everyone has a decent, dignified way of life.

Finally, there are the millions of Canadians currently experiencing the biggest income-protection scheme in our history.

Many of the CERB and federal wage-subsidy recipients are learning for the first time how precarious their employment income is, and that their federal government has the means and the will to cover a large portion of their massive income loss.

That’s likely to change more than a few minds about the need for adequate social protections for us all.

The COVID-19 crisis will pass.

But the crisis of income inequality, which the secretary-general of the UN has equated with climate crisis, will remain.

The widening gap between rich and poor is an ever-increasing drain on government treasuries, in the form of additional burdens on the welfare, health-care and criminal-justice systems.

And it is a prime culprit in Canada’s chronic underperformance in productivity and global competitiveness, through worker absenteeism and high turnover.

It also fuels the crisis in skills shortages that holds Canada back in countless ways.

Most worrisome are estimates that one third of Canada’s existing workforce will suffer job loss to a robot or other form of automation in the next decade.

Are there elements of Canada’s current UBI-type experiment that would provide the same bridge for workers laid off by automation as now exist for workers laid off by COVID-19?

One has to think so.

With a simple CERB application, workers receive $2,000 a month for at least four months — a period likely to be extended for the duration of the pandemic.

By comparison, Employment Insurance payouts are paltry and bureaucratically cumbersome. And the monthly stipend for Ontario welfare recipients is a mere $733. For Ontarians with disabilities, the monthly payment is $1,169.

Also, payment amounts for welfare, disability and other income-support programs vary among provinces and territories. By contrast, UBI, as with Medicare and the CERB, are universal across the country. No worries if you live in a stingy province.

It is a curious and disturbing fact that unemployed Canadians are being much better treated than people on social assistance in this crisis.

Weaving elements of a streamlined UBI into the existing social safety net does not require a leap of faith. It is the logical next step in strengthening the country.

David Olive is a Toronto-based business columnist for the Star.

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This entry was posted on Saturday, April 18th, 2020 at 9:16 pm and is filed under Policy Context. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

One Response to “Millions of Canadians are now collecting a state-funded income. But what happens after the pandemic ends?”

  1. Joao do Rosario says:

    Want to share this article.


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