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The Upside of a Guaranteed Annual Income in Canada

01/08/2015 12:39 EST | Updated 03/10/2015 05:59 EDT

In Canada, the possibility of a guaranteed annual income (also known as a basic income) is a topic that seems to never go away, yet the prospect of a national program remains elusive.

A new Fraser Institute study looking at the issue has revived this policy debate in Canada.

The study basically says Canada couldn't implement such a program because it would be too hard to make happen. But there are examples in Canada where pilot projects were launched and yielded interesting results.

Pilot projects in Dauphin and Winnipeg, Manitoba, and in British Columbia and New Brunswick, have shown that there are positive benefits to a basic income program that builds upon and improves existing social supports.

Let's look at one of those projects: the 1970s pilot project in Dauphin, called Mincome, provided a basic annual income to all town residents who qualified. The goal of the program was to evaluate whether an unconditional cash transfer would lead people to reduce the amount of time spent working in exchange for more leisure.

It's a classic question waged by labour economists: at what point do people earn enough money that they stop working and take more time off, lounging in their back yards or jetting off to Mexico for vacation?

An analysis of the project found that most Mincome recipients in Dauphin did not reduce their hours of work. Instead, qualifying for the program led to increased food security and an ability to pay the bills. When a participant did reduce his or her hours of work, it often led to an increased likelihood of finishing high school, staying home with a newborn child, or pursuing more suitable and stable work.

It meant no longer desperately bouncing from job to job trying to make ends meet.

People were empowered to make good decisions for themselves and their families, which led to better, long-term outcomes.

There were other unpredictable spinoffs associated with the Mincome project: hospital visits related to workplace accidents and domestic violence decreased over the length of the study as well.

All of this was dismissed as irrelevant in the Fraser Institute study. Instead, the institute took a curious approach to the discussion: their starting assumption is that a basic income program would serve to eliminate all other existing income support programs.

That would be folly.

Poverty is a complex state of being that requires a multi-faceted approach. Eradicating poverty is possible, but money alone will not suffice. For example, people with mental health issues often require additional supports in order to heal or even to function day-to-day. Veterans would still benefit from rehabilitation supports. The unemployed would still benefit from a well-functioning Employment Insurance system that includes training as well as financial support. Women fleeing domestic violence will still benefit from counselling supports. It goes on.

The Fraser Institute study also suggested scrapping the Canada Pension Plan and Employment Insurance program in favour of a basic income program -- but there's no need to throw the baby out with the bathwater. Both programs are administered by the federal government, but they are not income supports in the traditional sense -- they are a savings scheme and an insurance program paid for by workers and employers to stabilize income in the event of job loss and to help save for a decent retirement. A basic income program would have different objectives.

For instance, new research from the OECD suggests that boosting incomes for the bottom 40 per cent of the income spectrum can help to reduce income inequality and have positive effects on economic growth. From my perspective, this can happen through many channels.

Government can bolster, strengthen, and improve income supports -- both those currently in existence or through a basic income program.

The bottom line is the way the Fraser Institute approaches the issue outlines what's wrong with the discussion: they treat the idea of a basic income program like it's a cash grab by the desperate. Even the cover page of their report depicts a sea of hungry hands desperately trying to grab a wad of cash.

That depiction is the opposite of how basic income proponents talk about the idea. They talk about it as bringing dignity, a sense of belonging and empowerment into a social safety system that otherwise stigmatizes and disempowers people as well as limits their options in life. That's why many refer to our current system as a poverty trap. The idea of a basic income comes from a line of thinking that social programs should offer a way out of the trap.

That said, implementing a basic income program in Canada is not without its challenges. But there is no question that the social problems that a well-executed basic income program could mend -- such as high levels income inequality, poor health outcomes, and precarious incomes for many of Canada's workers -- is something that we should be talking about.