By Robin Boadway and Roderick Benns
For too many years Canada has danced around what is perhaps the central issue in social policy development. What are the most basic needs of Canadian citizens?
If one were to read a recent report from the Mowat Centre called Working Without a Net: Rethinking Canada’s Social Policy in the New Age of Work one wouldn’t think it was money.
The new report written by Sunil Johal and Jordann Thirgood attempts to make sense of of the real problems facing labour markets in a thorough way, particularly the increasingly precarious nature of work.
However, the authors curiously limit themselves to six social policy areas – Employment Insurance and training, pensions, healthcare, child care, housing and employment standards. The report then does a pretty good job of showing how these particular programs are not meeting the challenges facing the labour market.
The problem with their selective focus is that it leaves out an obvious contender for retooling social policy – income transfers. Wouldn’t basic needs include a Basic Income for Canadians? This is vital to deal with increasing inequality and poverty, coupled with decreasing opportunity.
In fact, one of the challenges they pose asks “how we best move forward with a society that provides all citizens with basic needs…”
The paper seems to accept counter-intuitively that the basic needs of citizens are dominated by childcare, healthcare and affordable housing. These are called the foundational programs that the report suggests needs strengthening. What about adequate incomes with which to buy the necessities of life like food, clothing, transportation and more — things not directly provided by public programs?
Some recognition is given to selected transfers, such as reforms of Canada Pension Plan and the Guaranteed Income Supplement, the Canada Child Benefit and the Working Income Tax Benefit, which should be “reviewed for adequacy and coverage.”
Some lip-service is also provided to the inadequacy of social assistance. But it is very selective. Only once in the entire report do the authors even ponder transformational change when they discuss the issue of a guaranteed annual income (or Basic Income) and then only dismissively.
Depicting this Basic Income as a payout to every Canadian of $15,000 each per year (i.e., $500 billion based on a population of 33 million) is nonsensical. Almost no one is arguing for a fully universal Basic Income in that sense. However, a Basic Income that is there to ensure people do not drop egregiously below the poverty line – say $15,000 or even $20,000 per year – and with a tax-back rate of 30-50 per cent is perfectly affordable. We would do this by rearranging the existing system of non-refundable and refundable tax credits. As well, there will be substantial savings by collapsing the inadequate welfare system. All of this can be done without reducing spending on other programs.
A Basic Income is the most cost-effective way of addressing both low incomes and volatile earnings, and would be a complement to affordable housing, health care and childcare, not a substitute. Indeed, it seems to be an ideal instrument for dealing with the problems of precarious employment so well outlined in the first half of the Mowat paper.
The paper makes the absurd claim that a Basic Income “would become a more realistic alternative in a job-free future, where capital resides in the hands of the few, who are taxed to provide for the needs of the many.”
The need for a Basic Income Guarantee cannot wait for such an unlikely future. It is important for policy makers and think tanks not to fall victim to what Professor Deborah Stone calls ‘path dependence.’ This is the idea that early policy decisions establish institutions and procedures that perpetuate themselves, making it difficult to find other solutions or even to adjust original policy at all.
Canada can’t afford to stay on the same path. We can’t afford a lack of creativity in social policy any longer as the inequality gap widens. The most basic needs of all Canadians are not being met and a Basic Income would address this challenge head on.
— Robin Boadway is an economist at Queen’s University and is former editor of the Canadian Journal of Economics. Roderick Benns is the publisher of Leaders and Legacies and is the author of Basic Income: How a Canadian Movement Could Change the World.