Basic Income most expensive and complex way to achieve social equity

Diane Bellemare QUOI Media

There’s much to say about ‘basic income’ Bill S-233 tabled in the Senate. The bill promotes an unconditional guaranteed basic income program (GBI), which strives to eliminate poverty and establish social equity — laudable goals. There’s also no doubt about the positive effects of a stable basic income on an individual’s physical and mental health, as ample research has demonstrated.
But a GBI is not the only way to achieve these noble ends. In fact, GBI is among the most constitutionally complex and prohibitively expensive ways to tackle poverty and inequity. Its blanket approach also lacks fairness and important public buy in.
Of course, that doesn’t mean we do nothing and settle for the status quo. Issues of poverty, chronic unemployment or under-employment, training and education deficits, among other social problems, can be better addressed through targeted social programs delivered through all levels of government working together. It’s also simply more feasible.
Bill S-233 proposes to oblige the federal Minister of Finance to develop a national framework to implement a basic income that unconditionally guarantees sufficient income (equivalent to or near the low-income threshold) for all Canadian citizens over age 17, as well as Canadian residents, refugees and temporary workers.
Let’s first address cost. According to the analysis of the Parliamentary Budget Officer (PBO), the gross cost of a guaranteed minimum income program for Canada, similar to the one adopted in the Ontarian basic income pilot, varies, depending on the preferred recovery rate, between $95B and $196.2B per year. Similarly, the Basic Income Canada Network estimates that a guaranteed income through a negative tax program of $22K per adult over 17-years-of-age would cost $187B per year.
Whichever figure you go with, these ballpark ranges are near the equivalent of all the federal personal income tax paid in 2021-22 ($189.4B). In another scenario, the Network estimates a tax-free universal allowance of $22K per adult at $637B. That’s almost twice all the budget revenue of the federal government (in 2021-2022, $394B).
Financing a GBI would put an end to personal tax exemption and all other tax deductions. It would involve a complete transformation of our income tax system at the federal and provincial levels.
It would also have detrimental economic effects that would likely hamper participation in the labour market – not because people are lazy but because they are rational. Fewer working hours in the labour market would mean less revenue for governments. A GBI, in other words, would be financially unsustainable.
Not surprisingly, both Quebec and British Columbia recently rejected the feasibility of a GBI after extensively studying the issue. They also raised issues of fairness.
A basic equal income for all is not necessarily fair because it does not guarantee equal opportunities. Individuals and families have different needs that the actual social system acknowledges. According to the PBO analysis of the redistributive effects of a basic income, a low-income single-parent family would lose $5,315/year with a basic income program. These families are exactly the ones we want to help.
A GBI lacks the ability to target diverse needs and circumstances so as to provide for equal opportunities.
And then there’s politics.
Bill S-233 raises real constitutional issues. The abolition of Canada transfers for social programs that would be necessary to afford a GBI would require negotiations with the provinces/ territories, who would not easily abandon their responsibility for social assistance to the federal government.
Canadians are also not willing to finance a basic income.
In March 2022, I commissioned a public opinion poll on the topic from Angus Reid. Seventy-nine per cent of the over 1500 respondents believe all working age adults in Canada should work to earn a living. While just under half (46 per cent) of respondents said they’d support a federal GBI, that number dropped to 19 per cent when presented with the budget implications of financing such a program.
That doesn’t mean Canadians aren’t interested in giving each other a helping hand. On the contrary.
When asked about targeted programs, such as a Youth Guarantee Program, that would support a job pathway program for unemployed Canadians under age 30, 59 per cent of respondents were in favour; a Job Path Program for all unemployed Canadians was supported by 65 per cent; while a Professional Training Program for all Canadians, was supported by 74 per cent of survey respondents.
There are many solutions we can work on to eliminate poverty and inequity in Canada. But a GBI should not be one of them. It’s time we abandoned this utopian dream for pragmatic, rigorously tested, targeted programs that will reduce poverty, provide skills and training and create an inclusive labour market.