A basic income for working-age adults is within fiscal reach

On April 17th the federal Office of the Parliamentary Budget Officer (PBO) released a new report, titled Costing a National Guaranteed Basic Income Using the Ontario Basic Income Model. The report draws on key parameters of the Ontario Basic Income Pilot Project and data from Statistics Canada’s Social Policy Simulation Database and Model (SPSD/M) to derive an estimate of the cost of a national income-tested (i.e., not universal) basic income for adults ages 18-64.

The PBO estimates the “gross” cost of such a program at about $76 billion for 2018/19, and the “net” cost at about $43 billion should a number of existing federal income security programs (such as identified in a preceding and companion PBO report) be folded into the new basic income program. This net cost could be even lower, the PBO says, if there was to be a federal-provincial arrangement by which some provincial income security programs (e.g., social assistance) would be folded in to the basic income.

The PBO further estimates that such a basic income would financially benefit 7.7 million people in Canada who have low to middle incomes, with an average per capita basic income amounting to $9,421. The PBO did not break these numbers down more specifically, for example to identify particular demographic groups (e.g., lone working-age adults, single parent households) that might benefit more or less than others.

In his April 18, 2018 Postmedia column, Andrew Coyne, the noted opinion writer, says that with the PBO report "we now have a better handle on how much it would cost, based on a concrete proposal, with a fighting chance (depending on the results of the Ontario election) of being implemented. It’s a start." Coyne adds that if the funds allocated to provincial social assistance programs were to be folded in to the basic income, the net cost would be "something on the order of $23 billion: roughly one per cent of GDP, or about three additional points on the federal GST....Three points on the GST, to end poverty. I can’t think of a better way to spend public funds." (See also: A Canadian Basic Income Could Cost Much Less Than The $43-Billion Estimate. Here’s How.)

In a letter to the editor following release of the PBO report, Elaine Power, a professor in public health and a co-founder and member of the Kingston Action Group for a Basic Income Guarantee, wrote that "[t]he recent Parliamentary Budget Office report on the cost of a national basic income suggests that the Federal Government is taking a serious look at the idea of a basic income program, which is currently being tested in Ontario. I am heartened by this news.

"However, if we are to assess the value of a basic income program, surely we would need to factor in the savings as well as the costs. Canadians already pay a significant amount for poverty. For example, the Canadian Medical Association estimates that as much as 20% of health care costs can be directly attributable to poverty; that would mean as much as $28 billion in savings if a basic income eliminated poverty. There would also be savings in education and the justice system. A basic income that reduced poverty would also stimulate the economy because the money would be spent locally on food, clothing, housing and other basic needs, not on foreign vacations or stuffed away in off-shore savings accounts.

"Any national program could easily be designed to ensure that no one is worse off on basic income than on any other income security program. As for the objection that basic income would provide a disincentive for work, there is no evidence from the evaluations of other income transfer programs or basic income pilots, including the MINCOME pilot in Manitoba in the 1970s, that such programs disincentivize work. The evidence suggests that given a secure income floor, people invest in their own and their children’s futures, including education and entrepreneurial activities.

"It is time to consider the income security offered by an adequate basic income program as an investment—rather than simply a cost—an investment in Canadian citizens and their health, productivity and dignity."