Now is the time to bring a basic income program to Canada, says B.C. senator. But the pilot project could cost $100 billion
OTTAWA — Bringing a basic income program to Canada could cost as much as $100 billion, but British Columbia Senator Yuen Pau Woo argues now is the right time to test the concept.
Woo, head of the Independent Senators’ group, asked the parliamentary budget officer to do an analysis of a basic income project, where all Canadians would receive some money from the government to keep them above the poverty line.
Woo’s proposal would put the basic income project in place for six months from October of this year until March 2021.
A basic income could replace income support programs like welfare with money everyone would receive, but the support would gradually be reduced as a person’s income rose. Woo said the COVID-19 pandemic is the ideal time to do a broad test of the idea.
“If we are entering a period where we have to spend large sums of money on income support, because we have no choice, we should do that in as deliberate a manner as possible,” he said.
The government has been providing $2,000 Canada Emergency Response Benefit (CERB) payments to anyone who needs them for months, but the program is set to expire later this year. Woo said when CERB ends, replacing it with a basic income program makes sense.
He said smaller studies of a basic income have always had a limit on the amount of information they could give governments, which made them hesitant to take the final step and approve a program.
“There will always be an element of taking a leap of faith. I fear that with basic income, we would never have come to that point where we take a leap of faith.”
But creating a full program, even if only for as long as it takes the economy to recover from COVID-19, would finally demonstrate how well a basic income program could work, Woo said.
He said it would give Canadians freedom to explore their interests without being a disincentive to working. He said all the factors are in place to do an important test.
“We may be entering a period where the fiscal circumstances allow for us to do it and the political and social context also allows for some experimentation.”
According to the parliamentary budget officer’s estimate, the six-month program would cost between $47.5 billion and $98 billion depending on how generous it was and how much income people lost when they began to make more of their own money.
The PBO used Ontario’s brief pilot program, which was cancelled by Premier Doug Ford, as a guide with a proposal that would see single people earn $16,989 and couples receive $24,027.
The most expensive version of the program would cost $98 billion and cover more than 20 million Canadians, with every dollar that someone makes causing them to lose $0.15 of the benefit.
The least expensive version of the program would still cost $47.5 billion and would see recipients lose $0.50 of the benefit for every dollar they earn.
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The parliamentary budget officer also estimated that provincial and federal governments would save $15 billion per year in programs they’re currently offering and if they were also willing to reduce a host of tax credits, they could save up to $46 billion.
But those programs would include disability supports, worker’s compensation benefits and even the basic personal amount Canadians receive on their taxes.
Mike Moffatt, an economist with the Ivey Business School and the Smart Prosperity Institute, said that is where the problem lies with giving money to everyone.
“It illustrates the problems of a one size fits all approach,” he said. “You’re giving the same amount of money to a 20-year-old university student with rich parents that you’re giving to somebody who lost their spouse in a workplace accident.”
He said the tax credits and other supports are complicated, but that’s because people need a range of help from governments, not just a cheque.
“They’re complicated because life is complicated. People are in very different situations, and we want to be able to tailor that support we give them.”
Moffatt said the government could consider adding the basic income without the support, but then the program becomes tremendously expensive.
“They’re talking about a program that’s going to cost anywhere from about $100 billion to $200 billion a year, every single year,” he said. “We kind of spent that now in a COVID year, but we’re not gonna keep CERB around forever. We’re not gonna keep all of these things forever.”
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