Social Policy in Ontario

Vincent Gasparro is CEO of Apolo Acquisition Corp. and was an adviser to former prime minister Paul Martin.

As Ontario pilots a basic-income program, support for the concept is growing. For instance, in a recent Northeastern University/Gallup survey, 48 per cent of Americans supported the implementation of a universal basic income, up from 12 per cent in a poll 10 years ago.

What the evidence from the Ontario pilot suggests is that from a social perspective, a basic income improves mental and physical health, which in turn encourages recipients to find more gainful employment. The basic income provides a firm foundation from which people are able to afford to look after themselves, worry-free.

From an economic point of view, as the global economy continues to change more quickly and drastically than ever before – and government looks at how to ease the economic disruption it will cause – a basic income has the ability to act as a stabilizer. It becomes the granite beneath the feet of every citizen.

This sense of a solid footing is one of the reasons why the job creators in Silicon Valley – including Marc Andreessen, the founder of Netscape; Robin Chase, the CEO of Zip Car; and Elon Musk, the CEO of Tesla and SpaceX – have expressed support for the concept.

These CEOs realize – as do others – that a basic income has a direct positive impact in the fight against the rapidly increasing nature of inequality, which is exacerbated in part by the automation occurring within different sectors of advanced industrialized economies. A basic income can give those impacted most by these economic changes the ability to get re-educated and retrained.

Those on the left of the political spectrum have supported a basic income because of the impact it would have in the war on poverty, an impact which the initial Ontario data show is extremely positive. People on the right of the political spectrum support a basic income because it would allow government to become smaller by streamlining redundant government programs, which are much more costly to administer.

From a macroeconomic perspective, a basic income will create a significant multiplier effect as people have more money to spend on additional goods and services.

For example, there is a smaller-scale version of a universal basic income in Alaska. The Alaska Permanent Fund, which manages the natural resource revenue derived in the state of Alaska, provides an unconditional transfer to state residents in an amount ranging from US$2,000 to US$3,000 annually. Economists, after analyzing the impact of the dividend to state residents, observed it had no material impact on employment and did not discourage workforce participation. Instead, it was found to help provide the basic sense of security people needed to pursue further work and get ahead.

The main premise of a universal basic income is that the government sends out regular cheques to every citizen regardless of age, employment status and wealth. The amount sent is the basic amount needed to afford life’s essentials. With no means-testing, a universal basic income would be exactly that – universal.

Instead, Ontario is testing a version of a basic income for those at the lower end of the income spectrum; in other words, those who most need support from government. The evidence from this pilot will have a profound effect on how other jurisdictions around the world consider a basic income for their own citizenry.

The province’s model, which provides individuals with an annual income of $16,989 and couples up to $24,027, is a recent innovation, but the results so far are very encouraging. Now is the time to expand this program and make it truly universal.

In an ultracompetitive global economic environment, where the fight for capital and talent is ever-increasing, our governments will have to start thinking more creatively about being able to attract global pools of talent and capital. This is going to require rethinking what additional competitive advantages we offer versus other jurisdictions, particularly the United States.

At a time of uncertainty in our trade relationship with the U.S., the Ontario government is doing just that, offering innovative public policy in order to differentiate ourselves from the U.S. and attract top-level talent to our province and country. This project has put Ontario’s policy innovations on the map. The public policy rethink that has begun under the Liberal government of Kathleen Wynne is as much a social benefit as it is an economic necessity.

https://www.theglobeandmail.com/report-on-business/rob-commentary/why-the-left-and-right-should-embrace-a-universal-basic-income/article38292359/