Basic-income model is already here

Hey there, time traveller!
This article was published 13/04/2021 (1997 days ago), so information in it may no longer be current.

My colleague Evelyn Forget has argued forcefully that the time is right for a basic income (”Canada can afford a basic income,” March 3) and draws a parallel with our universal health-care plan developed a half-century ago.

Medicare is a popular but distinctly different social policy, however, and there is a more recent popular initiative that provides a better model to build on when the time is right: the National Child Benefit Initiative.

The NCBI grew out of Ed Broadbent’s final parliamentary motion in 1989 to eradicate child poverty in Canada by the year 2000. The 1992 budget of the second Mulroney government introduced the refundable Child Tax Benefit to replace the existing patchwork of support programs for families with children, and the Chretien Liberals formed a NCBI working group of federal, provincial and territorial representatives that was charged with three objectives ― decreasing childhood poverty, encouraging labour market participation and improving the efficiency of the federal and provincial/territorial child benefit programs, especially monetary and administrative barriers to work that constituted a “welfare wall.”

In 1997, the governments agreed in principle to a series of design features which would effectively replace provincial and territorial child-welfare benefits with a national platform of income-tested child benefits, while allowing provinces to reinvest any savings in social assistance in complementary programs targeted at improving work incentives, benefits and services for low-income families with children.

Ensuing budgets increased the benefit levels and income eligibility thresholds for both the child tax benefit and the National Child Benefit Supplement, an earnings supplement program also directed to low-income families with children.

Evaluations of the NCBI were positive. It had reduced the incidence and depth of poverty among both lone-parent and dual-parent families with children, although the parliamentary goal of eradication of child poverty had not been achieved. The NCBI design had made work more financially attractive than social assistance for families with children, and dependency on social assistance among families with children had declined.

And the OECD had singled out the NCBI for improving efficiency and co-ordination in federal, provincial and territorial programming. Provinces used surplus social-assistance funds to design income-tested child benefits that were combined with federal child benefits into a single monthly payment from the Canada Revenue Agency. Clientele surveys and focus groups lauded the administrative simplicity of the NCBI payments.

The Trudeau government elected in 2015 extended the principles of earlier refundable child tax credits to introduce the Canada Child Benefit (CCB) as a simple, more generous and income-tested benefit that would assist both low-income and middle-class families with children with additional assistance in certified cases of disability. The CCB lifted 300,000 children out of poverty during the Liberals’ first term, provided emergency COVID-19 relief to the lowest-income families in 2020, and is consistent with the basic income principles of universal and regular income payments to allow recipients to meet basic needs without work conditions.

The time may soon come to extend the framework established by the NCBI to a universal basic-income program. The Poverty Reduction Act commits the federal government to cut the poverty rate from 12 per cent in 2015 to six per cent in 2030, which will be more challenging and virtually impossible unless single individuals and families without children receive additional assistance.

The provinces should welcome discussions that address social-assistance caseloads if they are accompanied by federal funding directed at reducing poverty, enhancing employment incentives and harmonizing income support programs in the spirit of the successful NCBI.

The pandemic has exposed glaring gaps in income support for Canadians, and a proposal for a federal-provincial conference on poverty reduction in its aftermath should be well received. The objective would be to reach agreement on the basic principles of a national basic-income plan to reduce poverty and barriers to employment that would also allow a degree of provincial autonomy consistent with these agreed-upon principles.

Provisions for provinces to opt out of the plan, provided that their plan adhered to the national standards to be eligible for federal funding, would likely be necessary as it has been in the past. The 2019 Poverty Reduction Act provides an opening template for the measurement of poverty, the establishment of poverty-reduction goals and the assessment of progress, but it would be subject to provincial agreement and possibly refinement during this process.

Although discussions would likely be complex, the lesson from the NCBI is that significant new basic-income support for Canadians can be achieved. Agreement should be possible for an integrated income-conditioned transfer delivered through the tax system, even if its design is left to the separate provincial governments and their federal counterpart, or a federal-provincial-territorial working group.

It would supplement, not replace, provincial social assistance to directly address income poverty and welfare dependency and their harsh social impacts.

Wayne Simpson is a professor of economics at the University of Manitoba, a research fellow at the University of Calgary School of Public Policy and author of Is Basic Income Within Reach?: Building the Case Amidst Progress and Poverty.