Basic Income read more

The Basic Income Experiment

Ontario towns of Hamilton, Lindsay and Thunder Bay to be testing grounds for basic income pilot project

Ontario announces basic income pilot project

Three Ontario towns have been identified as testing grounds for the province’s new basic income pilot project. Residents of Thunder Bay, Lindsay and Hamilton will be the first in the province to receive basic income as part of the Liberal government’s experiment to figure out if guaranteed minimum income will help in reducing inequality in Canada’s largest province.

Anyone in these three towns will be able to apply to the pilot project, but only 4000 people will be selected.

Basic income is essentially a form of social security whereby the recipient receives a guaranteed sum of money from the government on a monthly basis, in addition to income earned on their own. The three year program will begin in late spring of 2017 and will compensate participants in this manner:

  • Up to $16,989 per year for a single person, less 50 percent of any earned income
  • Up to $24,027 per year for a couple, less 50 percent of any earned income
  • Up to an additional $6000 per year for a person with a disability

“It’s not extravagant, but it will make a significant difference in people’s lives,” said Premier Kathleen Wynne at a press conference in Hamilton this morning.

Right now, two similar social security programs exist — Ontario Works and the Ontario Disability Support Program (ODSP). The first, Ontario Works, targets those specifically in financial need, regardless of whether they are employed or not. Under the program, recipients collect a certain amount of money on a monthly basis to help with the costs of basic needs like food, clothes, and shelter. Health benefits that extend to the recipient’s family, are also part of the program.

Basic income will substitute both these social services programs, and will, in theory, be less administratively cumbersome for applicants.

“There’s been a deeply rooted cynicism about what we can achieve collectively with basic income,” said Alex Himelfarb and Trish Hennessy, authors of a recent report on basic income issued by the Canadian Centre for Policy Alternatives. “That cynicism has long infused Canadian political thinking and policy-making, and prevented our House of Commons from making good on its 1989 all-party commitment to eliminate child poverty by the year 2000.”

Approximately 4.9 million people in Canada live below the poverty line. Three million of those are children. The price of poverty, is ironically extravagant — it costs Canadians between $72 billion and $84 billion annually. Ontario, in fact, spends approximately $9 billion on Ontario Works and ODSP each year, and that doesn’t even include the extra costs in our healthcare, education and legal systems as a result of poverty.

All this, mind you, takes place in a country that has one of the highest GDPs in the world, From sheerly a budgetary point of view, we do potentially have the financial resources to reduce poverty. It’s just a matter of whether or not politicians want to make poverty reduction a priority — most don’t want to risk alienating their middle-class voter base.

Proponents of basic income argue that there’s in fact, no better time to implement the system. Precarious employment and housing costs have both dramatically risen in the last five years or so, significantly widening the rich-poor gap. Approximately 800,000 Canadians are seasonally employed — when they are not bringing in an income, they rely on employment insurance.

“It is prudent to ask whether the EI system should be serving this function, and whether there might be a more promising solution like basic income to address cyclical and structural unemployment in Canada,” said Karen Foster, an Assistant Professor at Dalhousie University whose research focuses on rural, seasonal employment.

A discussion paper by basic income proponent and former senator Hugh Segal, challenges the core premise of Canada’s welfare state, calling it a set of “judgement-based” eligibility programs that discourages individuals, penalizes work and savings and imposes a degrading burden on individuals receiving social assistance.

“Basic income can enhance the capacity of individuals to make their own choices about their own lives, as opposed to being subject to a system of automatic transfers that erodes human dignity,” wrote Segal in the report.

Critics however, argue that handing an individual $17,000 a year, disincentivizes able-bodied people from seeking employment. This camp of basic income naysayers say that a one-stop solution for poverty in the form of government dough encourages dependency and discourages people from improving their situation.

And then there’s the money factor. Ontario says it will invest $50 million per year for each year of the three year pilot project, and that’s just for 4000 participants. A recent Fraser Institute report slammed the basic income idea altogether, arguing that Ontario simply does not have the money to afford it.

“Given Ontario’s current state of finances, the government would need to be clear on how exactly it can afford a guaranteed income as high as $22,000 for families, and what kind of social welfare programs will be cut in order for this to be financially viable.”

Robert Reich, former Labour Secretary in the Clinton administration and long-time basic income advocate controversially proposed that a basic income be financed out of company profits that result job automation and technological patents.

“Say, for example, 20 percent of all such profits were split equally among all citizens, starting the month they turn eighteen. The sum would be enough to ensure everyone a minimally decent standard of living, including money to buy the technologies that would free them up from the necessity of working.”

Follow Vanmala on Twitter

M-F 7:30PM HBO