April 28th, 2018

The Inaccessible Rock


Canada calculates expanding Ontario's guaranteed income to the entire nation

Canada’s Parliamentary Budget Office looks at the cost of expanding the Ontario pilot nationwide. Full report here popup: yes. ht Lauren

ANDREW COYNE of the NATIONAL POST summarizes the findings (all figures are in Canadian dollars):

“The results, speculative as they are, are intriguing. The PBO puts the cost of a nationwide rollout of the Ontario program, guaranteeing every adult of working age a minimum of 16,989 CAD annually (24,027 CAD for couples), less 50 per cent of earned income—there’d also be a supplement of up to 6,000 CAD for those with a disability—at 76.0 billion CAD.
“Even that number, eye-watering as it is (the entire federal budget, for reference, is 312 billion CAD), is a long way from the 500 billion CAD estimates bandied about in some quarters.
“But that’s just the gross figure. The PBO estimates the cost of current federal support programs for people on low-income (not counting children and the elderly, who already have their own guaranteed income programs) at $33 billion annually. Assuming a federal basic income replaced these leaves a net cost of 43 billion CAD. That’s still a lot—one seventh of current federal spending.”

Full article here popup: yes.

  • A few features of the Ontario model differentiate it from a a prototypical (universal) basic income: 1) the Ontario pilot is not universal: only those “living on low income (under 34,000 per year if you’re single or under 48,000 per year if a couple”) are eligible, according to the Ontario government popup: yes. 2) It functions as a negative income tax—50% of any earned income above a set threshold is subtracted from the benefit. 3) If implemented, this guaranteed basic income would popup: yes "replace Ontario Works and the Ontario Disability Support Program." The PBO report uses similar parameters expanded to the federal level.
  • In an article in Fast Company from February on the pilot, Ontario premier Kathleen Wynne explains the thinking behind using basic income to replace other social assistance: “‘I’ve met lots of people on social assistance who give a lot to the community and I have often thought ‘why aren’t we paying you to do this?’ Wynne says. ‘I envision a world where we help people to do the work that they can do. By work, I mean involvement in human society. I hope that, as we go through this project, we will see how that will work better.’” Link popup: yes.
  • A HuffPost article imagines other ways the guaranteed income might cost even less over time: "This raw cost estimate is a very simplified snapshot. It just models what the government would have to spend to deliver the basic income, if nothing else changed. But with a basic income, plenty would change. First, we could expect a steep drop in the poverty rate. And that, in turn, could mean big savings for governments, because poverty is a major expense—particularly when it comes to health care." Link popup: yes.
 Full Article