Checking In On Ontario’s Basic Income Experiment

Earlier this year, the idea of a guaranteed annual income (GAI) was in the news, including in The Cape Breton Spectator where yours truly wrote about Ontario’s plan to “launch a pilot project to assess whether a basic income can better support vulnerable workers, improve health and education outcomes for people on low incomes, and help ensure that everyone shares in Ontario’s economic growth.”

A significant factor in my article was the “Community Impact Summit” hosted by the United Way of Cape Breton and the CBRM in March 2017 with the aim, according to the United Way’s Erin Gallagher, of “creat[ing] a poverty reduction strategy.” Poverty reduction, it seemed, was a worthy goal being pursued by organizations across the country.

A downside to the “summit” was a presentation by “activist and fundraiser” Dan Palotta, who advocated, without shame, paying big bucks to guys like him to help run campaigns to assist the poverty-stricken – “running charities,” in other words, “more like businesses.” But if your business is helping the poor, and you’re making big bucks doing it, are you really going to be motivated to end poverty?

Luckily, around the same time, other guys — like former senator Hugh Segal, who has been promoting a guaranteed annual income for years — were advising the Ontario government of Kathleen Wynn on the “Basic Income Project” it had introduced in its March 2016 budget. Segal released a report on the project in November 2016, as a result of which consultations were held across the province — consultations that “were broad and inclusive” and included “in-person public meetings, online surveys and written submissions.” In the end, 32,870 people responded to the public survey and 1,194 attended in-person meetings.

 

Kristen Tedesco of Ontario’s Community and Social Services Ministry described the experiment to me this way:

Basic Income provides a different approach to income security and reducing poverty by guaranteeing a minimum level of support to help all low-income individuals and families, not just people in the workforce and those who receive a minimum wage.

In part, Ontario’s Basic Income Pilot aims to test how a Basic Income could provide more consistent and predictable support for those who experience more precarious employment or have no attachment to the workforce.

The Basic Income amount is based on 75% of the Low Income Measure (LIM), which is a benchmark to define the poverty line. The pilot will test whether the basic income amount, plus other broadly available tax credits and benefits, will provide enough support to meet average household needs and result in positive outcomes regarding the health and wellbeing of participants.

The pilot launched in July 2017 in Hamilton, Brantford, Brant County and Thunder Bay and area while residents in Lindsay will receive their first checks this month. Under the program, single people will receive up to $16,989 per year, “no strings attached,” less 50% of any earned income (including Canada Pension Plan or Employment Insurance payments) while  couples will receive up to $24,927 per year. Disabled people are eligible for an additional $6,000 per year. Anyone receiving the Ontario Drug Benefit or in the Ontario Disability Support Program will continue to receive drug and dental benefits. As well, the Canada Child Benefit and the Ontario Child Benefit remain available to those receiving them so that, for example, a single individual with two children and no earned income could receive $33,657, instead of $28,896.

Eligible individuals accepted into the BIP either receive checks or are part of a control group that does not receive them, allowing organizers to evaluate the impact of the program. The pilot will last three years and include 4,000 recipients. The Ontario government is also, in a “ separate but parallel process” working on a similar basic income pilot for First Nations, “co-created and designed in collaboration with First Nations partners.”

The Wynn government has also introduced a program covering prescription drugs for those under 24 years of age — it comes into effect as of 1 January 2018 — and has also introduced Bill 148, the Fair Workplaces Better Jobs Act, which would raise the province’s minimum wage to $15 an hour from the present $11.40 per hour. Passage of the bill, which is currently in second reading debate, would mean people working full-time might not require assistance from the basic annual income program.

Reaction to the pilot program from the mayors of the communities involved ranged from “hopeful to positive.” As reported in Basic Income News, Mayor Andy Letham of Kawatha Lake (which includes the community of Lindsay) was hopeful the new program would address the “cost of poverty on people’s mental health.” Thunder Bay Mayor Keith Hobbs, a 34-year veteran of the local police force, said that as a police officer he “saw the same people all the time, like a revolving door” and expressed excitement at the possibility of this project improving the lives of those with whom he had consistently interacted. Brantford Mayor Chris Fial was “anxious to take part in a project that will reduce poverty and improve health and educational outcomes” while Rod Eddy, mayor of Brant County, looked forward to “observing the results of the project. We have to try it to see if it works.”

 

Could this happen in Nova Scotia where we’re told that one in five children lives in poverty, (in Cape Breton, the figure is one in three), where the minimum wage is $10.40 per hour, where single mothers have child support payments deducted from their social assistance and where food banks have become an acceptable way of feeding those on below-the-poverty line incomes?

In a March article for the Spectator, I reviewed the The 2016 Child and Family Poverty Report Card for Nova Scotia (no report for 2017 was available at the time of writing). Author Lesley Frank, who has been generating the poverty report cards for 13 years, concluded that 37,450 children in our province were living below the poverty line. The fact was that without government programs, the figure would be 32.5% higher, a disastrous total given that in 1989, the federal government of Jean Chrétien had made a commitment to eradicate child poverty by 2000. Well, that’s only 17 years ago!

NYC Rally and March to raise the minimum wage in America, 2015. (Photo by The All-Nite Images from NY, NY, USA (Fight for $15 on 4/15) [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons)

NYC Rally and March to raise the minimum wage in America, 2015. (Photo by The All-Nite, CC BY-SA 2.0, via Wikimedia Commons)

In 2016, the lowest levels of child poverty in Nova Scotia were in the Halifax area (and they were still high, at 18.8%) while in the Cape Breton Regional Municipality, five communities had child poverty rates of 30% or higher, all in all making child poverty in Nova Scotia the highest in the Atlantic provinces and the 3rd highest in Canada. It seems not much has changed in 2017 despite the efforts of many concerned groups to assist those in need. One major problem is that government social assistance programs are not pegged to the cost of living, and the $37 per month increase (between 2013 and 2016) in the “personal allowance” for those on assistance was not expected “to lower the poverty rate given that the “median income for families on such assistance is approximately $800 below the poverty line.”

 

Perhaps it boils down to whether citizens who support the various community activities designed to assist those in need would be willing to pay a bit more in taxes to support a basic annual income for those very people. No, we are not Ontario, whose economy is said to be doing well, although there is still high unemployment (obviously one reason for the Basic Income Pilot), but surely the amount of provincial funding for social assistance now in place combined with a small, dedicated tax hike, would make a basic annual income a serious possibility. Raising the minimum wage would also offset some of the cost of such a program, since that alone would bring many above the poverty line, reducing the amount paid out by the basic income program.

It’s worth looking back at what multimillionaire Nick Hanauer had to say in a Ted Talk I quoted in my May Spectator story. Hanauer, a self-described “plutocrat,” advocated a higher minimum wage and a guaranteed annual income, something he has been pushing since 2012. Hanauer has only contempt for politicians and CEOs who insist that a higher minimum wage would result in higher unemployment, arguing instead that “giving the middle class tax cuts and lower wage earners a higher wage or giving all a guaranteed annual income allows them to buy more goods.” Manufacturers have to hire more workers to make more products, creating what he calls an ‘economic circle of life.” Hanauer also points out that Seattle increased the minimum wage to $15 per hour and has since become one of the “fastest-growing economies in the United States.”

Worth a try? Have you heard a better idea lately?

 

 

 

Dolores Campbell

 

Dolores Campbell, a lifelong resident of Sydney, is a freelance writer whose work has appeared in The Cape Breton Highlander, the Nova Scotian, Cape Breton Magazine, Catholic New Times and The Cape Breton Post.

 

 

 

The Cape Breton Spectator is entirely reader supported. Please consider subscribing today!