Canada's Original Think Tank

Motion to Encourage the Government to Evaluate the Cost and Impact of Implementing a National Basic Income Program

Motion to Encourage the Government to Evaluate the Cost and Impact of Implementing a National Basic Income Program

Motion to Encourage the Government to Evaluate the Cost and Impact of Implementing a National Basic Income Program

Motion to Encourage the Government to Evaluate the Cost and Impact of Implementing a National Basic Income Program


Published on 25 February 2016
Hansard and Statements by Senator Art Eggleton

Hon. Art Eggleton:

It’s a basic income pilot project that this motion relates to. In past it was known as guaranteed annual income. I would like to read the motion just so that it’s perfectly understood the context in which I make my comments today:

That the Senate encourage the federal government, after appropriate consultations, to sponsor along with one or more provinces/territories a pilot project, and any complementary studies, to evaluate the cost and impact of implementing a national basic income program based on a negative income tax for the purpose of helping Canadians to escape poverty.

As we know, honourable senators, I’ve mentioned in this chamber a number of times that we have immense challenges in our country when it comes to poverty. We have families that struggle to pay rent. We have children that can’t afford school supplies or to go on school trips. We also have many that can’t afford to put good food on the table and have to rely on donations at the food banks just to feed their families.

According to Statistics Canada, one in seven Canadians live in poverty. That’s over 5 million people, with over 1 million being children. What a staggering statistic. What a shameful statistic that is in such a rich country as ours.

There are over 4 million people in need of decent affordable housing, according to Canada Mortgage and Housing Corporation, and an estimated 150,000 to 300,000 people are homeless, according to the Canadian Alliance to End Homelessness.

In 2015, according to Food Banks Canada, almost 900,000 Canadians used food banks every month, with over a third of those being children. Despite this, one in seven children go to school hungry every day, according to the organization Breakfast Club of Canada. Again, I say, what a staggering set of statistics in such a rich country as ours.

When it comes to health, the Canadian Medical Association declared that “Poverty makes us sick.” In their 2013 report, they showed that over half of health outcomes could be attributed to the social determinants of health — such social determinants as housing, poverty and homelessness.

We also have increasing income and wealth inequality that is changing the very nature of our society and threatening our social fabric. The Conference Board of Canada gave Canada a C grade for inequality, ranking us 12 out of a 17-country study.

Between 1980 and 2005, earnings for those in the top income group increased by over 16 per cent. Not so for the bottom income group. They saw their income fall by 20 per cent. And for the middle, their earnings were basically stagnant.

The top 20 per cent of Canadians now account for 70 per cent of the total wealth in this country. This is staggering.

For many people — our fellow citizens — every day is a battle. Dreams are diminished; hopes are dashed. I remember the words of social activist Michael Creek, who experienced poverty as a result of a medical condition — a cancer — that took him out of the business community. He ended up in poverty, and he said these very profound words:

Poverty steals from your soul, leaving you with little or no hope. It robs you of all that can be good in life. It leaves you isolated, lonely and hungry. Every day is a struggle.

Make no mistake, colleagues. Poverty continues to rage in our communities. It continues to have a stranglehold on many Canadian families. Particularly hard hit nowadays, especially since the 2008 recession, are single men, a lot of whom are recent immigrants; Aboriginal people; visible minorities; lone mothers; and the disabled.

I remind senators of a report produced by this chamber. It was produced out of the Senate Social Affairs Committee and was titled In From the Margins: A Call to Action on Poverty, Housing and Homelessness. It was unanimously adopted by the Senate in 2010. Our committee found that decades of social-policy-making by all levels of government, well-meaning as it may have been, has resulted in two equally devastating results. First, even when all the programs are working as they should, the resulting income is often only enough to simply maintain them in poverty. Second, at their worst, existing policies and programs actually entrap people in poverty, creating unintended but nonetheless perverse effects that make it almost impossible to escape the reliance on income security programs and homeless shelters. You make a little money, they cut you off there, and you can’t get ahead. We all know these kinds of stories.

That is why I believe we need a new way — a new approach. In From the Margins called for a study of basic income, or guaranteed annual income, as it has also been known, but that was not pursued by government. Hopefully, this time will be different.

If passed, through this motion, we would encourage the new government to test a basic income based on a negative income tax. It would be a tax credit administered through the tax system whereby if someone earns or receives less than the poverty line, they would simply be topped up to a point just above the poverty line.

Now, this wouldn’t be the good life, honourable senators. It wouldn’t provide for that, but it is to ensure that all Canadians would have income that pays for the basic necessities of life: food, clothing and decent shelter. It would provide a floor; a foundation that low-income people could then build upon for a better life.

This idea is supported by many Canadians. A 2013 poll by Environics found that 52 per cent of Canadians are in favour of a basic income. The support does not fall along a particular party line or political philosophy. People from across the political spectrum are in favour.

Conservative economist Milton Friedman was a proponent of the basic income. He said “. . . governmental action to alleviate poverty . . .” is justified to set “. . . a floor under the standard of life for every person in the community.”

Our former colleague Conservative Senator Hugh Segal, Green Party leader Elizabeth May, Alberta NDP Finance Minister Joe Segal and Quebec Liberal Minister of Employment and Social Solidarity François Blais are among the many who have expressed support for this idea, again, across the political spectrum.

We see also that communities across the country are supporting the idea. Many mayors have shown support, including Halifax’s Mayor Mike Savage, Calgary’s Mayor Naheed Nenshi and Edmonton’s Mayor Don Iveson. The City of Kingston just passed a resolution calling for a national conversation and encouraged all levels of government to work together to “. . . consider, investigate, and develop a basic income guarantee for all Canadians.”

We also have organizations like the Canadian Medical Association, the Canadian Public Health Association and the Canadian Association of Social Workers, amongst others, are calling for action along these lines.

We can see that a growing number of Canadians realize the way that we have dealt with the scourge of poverty has failed. We need a new way. They realize that there may be a lot of positives to this approach: A basic income is a simpler, more transparent administrative approach to fighting poverty than currently exists, and it would extend benefits to those not covered by social assistance programs, such as the working poor.

Instituting a basic income could also be a stimulus initiative by immediately injecting money into the economy. Those of low income spend the money as they get it. They need it to survive. That puts more money back into the national economy.

Also, as Glen Hodgson, from the Conference Board of Canada, said a basic income “. . . could strengthen the opportunity for labour force engagement and social mobility, especially for young people and disadvantaged groups living in poverty.”

Now, colleagues, in the 1970s a basic income program was piloted in Manitoba, mainly in the town of Dauphin. It was known as Mincome. Research done by Professor Evelyn Forget from the University of Manitoba found that hospital visits dropped 8.5 per cent.

Fewer people went to the hospital with work-related injuries and there were fewer emergency room visits from car accidents and domestic abuse. There were also far fewer mental health visits.

She found that from the statistics in the study.

What about employment? Research showed that by and large it was new mothers and teenagers who worked less. Mothers stayed home with their babies longer. Youth worked less but spent more time in school and graduated in higher numbers. Overall, the attachment to the workforce remained strong.

In the United States, basic income pilot projects began in the late 1960s and took place in North Carolina, Iowa and Indiana, among others. Research showed similar results to that in Dauphin. Hospital visits decreased and there was a marginal effect of decreased work hours from secondary and tertiary earners — women and youth again. Women had longer maternity leaves and youth stayed in school longer and their school scores increased. They had that foundation.

More recently, Brazil created a basic income in 2003 called the Bolsa Familia. It was a countrywide basic income that reached 46 million people, contributed to a 20 per cent drop in inequality and improved education and health outcomes.

Honourable senators, looking at these results we could see not only an upsurge in the living conditions for our most vulnerable but we could also realize a decrease in costs. Yes, I said a decrease in costs. As we know, poverty is costing each and every one of us. It forces up our tax bills, depresses the economy, increases health care bills and breeds alienation and crime.

A 2008 study guided by economists and policy experts Don Drummond, Judith Maxwell and James Milway estimated that poverty costs this country about $7.5 billion every year in health care costs alone. Lowest income Canadians use much more in the health care system than the higher level of income people in this country. They also estimated that between $8 and $13 billion was in lost productivity. All told, they set poverty’s bill at $30 billion annually, and that was in 2008. That doesn’t include the cost of the social welfare bureaucracy or administration by the provinces.

On the other hand, the now-closed National Council of Welfare put the poverty gap in Canada at $12 billion in 2011. That’s $12 billion over and above the levels of support now to bring people up to the poverty line. That is what they said it would take to bring everyone up to the poverty line. Honourable senators, $12 billion or $30 billion — which one makes more sense?

Let’s not get ahead of ourselves. Let’s take this step by step. We need a pilot project that can provide new Canadian data under current-day circumstances, determine how much a system would function in this day and age and what the benefits and costs would be.

Cost estimates of a pilot project can vary depending on how the program is designed and the level of support provided. The Manitoba experiment in the 1970s cost $17 million.

In conclusion, moving forward, we need to adopt a simple, common-sense premise: social programs should lift people out of poverty, not keep them there. They should give them a leg up so that they can then go on to a better life. Poverty is not benign. It affects us all and costs us all. We spend a lot of money and we don’t get the results we should. We need a new way forward.

A basic income is a new approach, a new path that has shown great potential. Let’s get the evidence. Let’s study this approach. If proven, we not only end poverty but we spend smarter, more efficiently and effectively.

Thank you.

 

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