Canadian Strong: Basic Income Trials on Track

The Canadian province of Ontario is moving forward with its highly anticipated plans to test universal basic income (UBI). The provincially sponsored C$25m initiative is expected to be finalized by Spring 2017 and will make Ontario the first North American government in decades to trial the controversial public policy. Designed to combat poverty, UBI is a form of social security distributed to citizens on a periodic basis as guaranteed income, regardless of their employment status. While many different and often extreme variations of basic income exist, Ontario is expected to implement a moderate version that only supplements the earnings of adults between the ages of 18 and 65 with annual wages below a certain threshold. The subsidy would act to modify and fill the gaps in existing social welfare programs without collectively eliminating them.

Former Senator Hugh Segal, a conservative strategist and long-time advocate of the concept, was appointed earlier this year to provide recommendations on how the pilot project should be administered and evaluated. In a discussion paper released 3 November, Segal suggests providing a non-taxable minimum monthly payment of C$1320 for a single person with an additional C$500 per month available to participants with disabilities. He recommends trialing the program in three ‘saturation sites’ located in Northern Ontario, Southern Ontario, and an Indigenous community where all eligible residents would receive the benefit as well as one randomized control trial within a larger urban area. This structure would allow the Ontario government to compare outcomes relating to areas like health, education, work incentives, food security, and crime rates across each of the cohorts during an advised testing period of at least three years. The province plans to hold open consultations between now and January 2017 to garner public input before the specifics of the plan are officially confirmed.


Image courtesy of quinntheislander, © 2015, some rights reserved.

The pilot basic income payments are expected to replace funding provided under Ontario Works (a financial and employment assistance program) and the Ontario Disability Support Program but would not follow a ‘Big Bang’ approach in which all social welfare systems are substituted with a monthly cheque. This temperate implementation plan is certainly more immediately socially palatable than the more aggressive versions that exist, however could have the potential to become very economically and administratively costly in the long-term. It is likely that significantly more people will receive increased funding under this scheme than the two-abovementioned programs, since employment status will no longer be a considered factor. If substantial savings are unable to be transferred from existing social programs or other budget areas, the financing source (should the policy be permanently implemented) remains unclear. Though there is a whispered hypothesis many seem to cringe at: taxpayers.

Against the traditionally individualistic North American backdrop, the decision to formally consider basic income may appear as a somewhat radical step towards more socialist thinking. While UBI is hardly a new idea, it is a proposition steeped in a long history of heated debate. Implementing basic income is not simply a question of policy effectiveness and federal affordability— it highlights fundamental differences in how people view justice, equality, the role of government, and rudimentary human rights. In a recent interview, Segal stated that basic income could ‘give people a floor beneath which they are not allowed to fall.’ Although many will applaud this goal, some will counter that in the Canadian land of opportunity the elevation and quality of the floor upon which you stand should be nobody’s responsibility but your own.

Opponents of the policy argue that assuring income regardless of employment status will negatively impact work incentives. If a person in a low paying occupation knows the government will meet their basic needs regardless of whether they have a job or are actively seeking one, why would they continue to worry about working? And if people below a certain income threshold are unmotivated to work entirely, does it fall on those above the threshold to pay their way indefinitely? While this line of thinking ignores the point that individuals often want a life which satisfies more than just their basic needs – and so some will always strive to continue rising, it is still a valid concern. In a sense, Ontario is testing a bigger social question than the mere statistical effectiveness of a poverty-fighting public policy. They are attempting to understand whether people are inherently idle and satisfied with a hassle-free minimum standard of living or inherently motivated to utilize support in order to better their situation long-term. Granted, it may take longer than three years to answer this query.

On the other side of the discussion, UBI supporters expound the merits of a population entirely rendered free of acute poverty. Potential spillover benefits range from lower rates of petty crime such as theft to increased entrepreneurship as a result of greater income flexibility. Along the same lines, individuals could be liberated to obtain higher education, spend more time volunteering, and care for children and elderly parents personally; all activities that typically impose considerable financial hardship and consequently stress. Theoretically, basic income could apply not only to those in desperate circumstances but also to everyone below the annual income threshold like stay-at-home parents and university students. Perhaps the Ontario Student Assistance Program (OSAP) could then also act as a transferrable source of long-term funding? In the more traditionally economic sphere of rational, some people believe UBI may also help counter the rising wave of technological unemployment. As human capital is increasingly replaced by computers and robotics, basic income could be the perfect cushion to help ease the transition into a world where fewer jobs exist.

The list of speculated UBI pros and cons is extensive. However, there simply isn’t enough reliable data to conclusively refute or confirm the many outcome theories. Moreover, it is incredibly difficult to directly translate results from one country to another since differences in culture and economic infrastructure could cause substantial practical variability. Ontario is undoubtedly taking a step in the right direction by formally testing and evaluating the policy within its local environment. As a result, Canada as a whole will likely undertake a more substantial role in the growing global UBI conversation and simultaneously join the ranks of other nations like Finland, the Netherlands, and Kenya who are proceeding with similar projects.

Almost 16 per cent of Ontario adults were living below the poverty line in 2014. For a wealthy province within a highly developed country, it is difficult to believe public policy is operating anywhere near optimal effectiveness. The only way to make improvements is to critically examine existing norms and explore alternatives. In order to find the right answer, you first need to ask the right questions. Universal Basic Income might not turn out to be Ontario’s golden poverty solution, but it is certainly a question worth asking.