The post-pandemic future: A basic income will bring millions of people out of poverty
Michael Coteau is the MPP for Don Valley East
Three years ago, under Premier Kathleen Wynne, Ontario implemented a basic income pilot project in three communities that provided roughly $1,400 per month for participants. People found stability and used this financial floor to seek new or better jobs and upgrade skills. In Hamilton, one of the pilot cities, there were encouraging reports of people enrolling in community college, and of minimum-wage workers applying for new and better jobs. Suddenly they had the confidence that came from being able to buy a new outfit for the interview, and the peace of mind that they could afford a transit pass to fund their commute. Critically, the results obliterated the myth of the “slacker” that people who are ideologically opposed to basic income tend to perpetuate—because any basic income will be insufficient without additional earned monthly revenue; rent alone in most Ontario cities tops $2,000 per month for two-bedroom apartments.
When Premier Doug Ford aborted the pilot program after little more than 11 months, we lost the valuable data that could help to design a national basic income program. This loss is a shame, because the nature of the global economy and the jobs it creates are changing, and Covid-19 has only quickened the pace. We face unprecedented disruption from automation, globalization and the looming climate crisis. We see tensions in our social fabric arising from a sense of economic insecurity and a fear that the future will be worse for our children than it was for ourselves. Right-wing populists have seized power across the Western world, and they exploit a very real anxiety. On top of that, nearly two million people have lost their jobs and millions more are facing irregular work or pay during the Covid-19 pandemic.
We need a long-term, national basic income project in Canada. And effectively, we’ve had one since March, when the federal Liberals implemented the Canada Emergency Response Benefit. With some 8.4 million workers receiving CERB, millions of parents receiving the Canada Child Benefit, millions of seniors receiving a public pension, plus some 1.2 million Canadians on social assistance, the overwhelming majority of Canadian adults are now receiving some form of monthly government support.
CERB has been monumentally successful, and it’s proved that basic income works. It has stabilized the economy and prevented the worst-case scenario of a full economic collapse this spring. A basic income provides a slab of granite beneath every household income, and it keeps consumers consuming. In Spain, government officials have pledged to make their version of CERB permanent.
If $2,000 per month is the basic income the federal government felt workers needed during the pandemic, why are those on social assistance or public pensions expected to make do with less than half that amount in normal times? There is no doubt that CERB was a revolutionary program fit for an extraordinary time; it was also designed to urgently meet the needs of a country in crisis. A national basic income program would have a different, long-term goal, and the design could be different. We’d need to consider the minimum wage in different jurisdictions and the cost of living across the country. The philosophy, however, remains the same: to make sure every person has enough money to cover their needs.
A 2018 estimate from the parliamentary budget officer suggests a national basic income modelled after the Ontario pilot would cost $76 billion per year to fund for some seven million Canadians. However, offsets in rolling in other programs could make the net cost of the program only $44 billion per year. (For comparison, CERB is estimated to cost roughly $80.5 billion, with an additional $83.6 billion allocated for employee wage subsidies.)
Even when factoring in offsets from folding in other support programs, we are significantly underestimating how a basic income, in one form or another, would save money by dramatically reducing the costs in health care, housing subsidies and other support programs that would be aided by an overall reduction in poverty.
A basic income will allow people to prioritize spending on their needs proactively before a situation worsens. For instance, in Peterborough during the Ontario pilot, a senior citizen was able to visit an eye doctor thanks to the financial peace of mind from the basic income. He caught a developing problem early enough to avoid more advanced degeneration and more expensive procedures.
A national basic income, designed correctly, could renew our social contract, restoring the notion that the government must support its citizens. That’s part of the bargain at the heart of our society.