05/06/2018 08:43 EDT | Updated 08/02/2018 14:52 EDT

Ontario's Bold Basic Income Experiment Creates High Expectations

The pilot project is already creating a huge impact.

Sherry Mendowegan/Luis Segura
The Mendowegan and Segura families are participants in Ontario's basic income pilot project.

Sherry Mendowegan has accomplished a lot in the past six months. The mother-of-two bought her first vehicle and graduated with her high school diploma in March.

"Next is my college, post-secondary, and then hopefully I get some work," she told HuffPost Canada.

Going to college would have been out of reach for Mendowegan even last year. But as a participant in Ontario's basic income pilot program, she and her husband, Dan, can now afford the tuition. She starts at Thunder Bay's Confederation College in September to study office administration.

"Our life has changed," Mendowegan, 41, said in an interview. "We're not struggling where we're paying our bills and that's it."

Sherry Mendowegan
Sherry Mendowegan graduated with her high school diploma in March.

Ontario is one of the first places in the world to test out a guaranteed basic income. Launched in April 2017, the program has enrolled more than 4,000 people who live on less than $34,000 individually or $48,000 as a couple. This includes people who are working, going to school or living on financial assistance.

For three years, single participants will receive $16,989 annually and couples will receive $24,027. People making other income will see this amount reduced by 50 cents for every dollar earned. Participants with disabilities are eligible for another $6,000 per year.

A third-party research team will evaluate the effects on people's physical and mental health, food security, stress and anxiety, housing stability, education and employment. Their responses will be compared against a control group — low-income participants who won't receive the basic income but will fill out surveys about their life and well-being.

'I want my kids to look up to me'

Growing up in the Ginoogaming First Nation, an Anishinaabe community in northern Ontario, Mendowegan said she didn't see the point in staying in school. She dropped out when she was about 15.

"I just didn't want to go to school, I guess," she said. "But now that I'm an adult and have responsibilities, it's very important to have your Grade 12. I'm very glad I went back to get it. I want my kids to look up to me."

Sherry Mendowegan
Sherry Mendowegan and her husband, Dan, have two children. They've been receiving basic income since November under Ontario's pilot project.

Before being accepted to the basic income program, Mendowegan and her husband were living on money from Ontario Works, the province's financial assistance program. Because she's Aboriginal, she could have received funding for college from her community, but that would have been seen as "income" by the government. Her payments would have been reduced.

"I wouldn't ever have been able to afford it," she said.

There are hefty requirements to be eligible for Ontario Works. Even though Mendowegan was completing high school and her husband stayed at home raising their infant daughter and 12-year-old son, both had to look for work constantly and report proof of that ongoing search to the government.

"You have to hand in everything that comes to you. If my mom were to give me $40 if I was running short, I had to report that," Mendowegan said. "I feel that I'm more in control [on basic income]. I don't have to look up and say, 'OK, we got this. We have to show it to somebody.' There's more privacy."

For backers of the basic income, that's one of the key upshots of the idea — it's a no-strings-attached benefit, making it a less intrusive and less judgmental way of delivering financial assistance.

Designing the experiment

Current welfare programs are "means-tested," meaning government officials have to pry into the details of your life to determine whether you qualify, said Hugh Segal, the Conservative senator — and former chief of staff in the government of Brian Mulroney — who essentially designed Ontario's basic income pilot project.

"That is stigmatizing and unproductive, whereas if there was an automatic process where people (had their incomes) topped up, and did not isolate them, that would be better," he said.

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Under Ontario's version of the basic income, if it were implemented, tax returns would be used to determine who receives a basic income payment, significantly reducing government meddling.

Segal, a longtime advocate of basic income, also argues the scheme will eliminate a key disincentive for low-income people to join the workforce. With traditional welfare, any money you earn is clawed back from your benefits. But under the basic income pilot, the government lets you keep part of what you earned in the workforce.

"That does not build in the massive disincentive to working when you're on welfare," Segal told HuffPost Canada.

Luis Segura
Luis and Leanna Segura opened their own business in Lindsay, Ont. two years ago.

In fact, the majority of people participating in Ontario's pilot project — about 70 per cent — have jobs of some sort, according to the provincial government. One couple in the town of Lindsay shatters the expected stereotype of basic income recipients: Luis and Leanna Segura are business owners.

Two years ago, they sold their house and quit their jobs to take a chance on entrepreneurship, opening Fresh Fuell, a restaurant on the town's main street that serves healthy meals.

"Like any new business, it's a struggle and a gamble," said Luis Segura, who saw his first basic income payment just before Christmas. "It's going great. We have great community support. Our sales and projections are on point."

Despite their solid numbers, money was tight. He and Leanna decided to apply for basic income right before she gave birth to their youngest child.

"Being a sole proprietor, she's not really able to take mat leave," he said. "As tight as it was, we knew it was going to get tighter."

Luis and Leanna Segura run Fresh Fuell restaurant in Lindsay, Ont.

Basic income has been a huge help while raising their now six-month-old baby and three older children, Segura said. They're able to afford kids' activities that would have been luxuries before. Their daughter is a competitive gymnast and their son is now learning jiu jitsu.

Segura said he thinks the program has been a boon for local businesses. Since the program launched, Fresh Fuell's customers have been spending more, he said.

"Business has been great. I wonder if it has that ripple effect here now because other people are on basic income in the community and have that little extra to come in ... go out for dinner, go out for lunch," he told HuffPost.

"You can see people out with that flexibility to spend a little more. That's a plus for everyone — for the person spending, for the person receiving."

Global interest in basic income

Ontario is by no means the only place experimenting with a basic income of some sort. Over the past few years, projects have been set up in the Netherlands, Kenya, and Stockton, Calif., among other places, although Finland has announced its basic income experiment won't extend past its scheduled end this year. A number of municipalities in Scotland are currently setting up basic income projects as well.

In fact, Ontario officials have compared notes with those running the basic income projects in Finland and the Netherlands; the province's project was designed not to copy the European experiments.

All these schemes are happening today because of a recent, fundamental shift in thinking about work and inequality.

"Our economy has been creating vast wealth for people at the top and not doing the same for others," Segal said.

"A lot of thoughtful governments are beginning to ask themselves, are we dealing with the gap between rich and poor as effectively as we might, and what are the political costs of not doing so?"

Michael Hudson/Canadian Press
Hugh Segal is the retired Conservative politician who essentially designed Ontario's basic income pilot project.

The rapid rise of automation in the workforce has created the spectre of machines taking many of our existing jobs. A 2013 study from Oxford University estimated that 47 per cent of jobs in the U.S. are at risk from automation. We are facing the growing prospect that new industries and jobs will not appear quickly enough to employ all those who have become obsolete in the digital economy.

That's certainly the concern among many of the prominent high-tech executives who have come out in favour of a basic income scheme — among them Facebook founder Mark Zuckerberg and Tesla and SpaceX CEO Elon Musk.

Our economy has been creating vast wealth for people at the top and not doing the same for others.Hugh Segal

It's also among the reasons Ontario's Liberal premier, Kathleen Wynne, gives for launching the province's basic income project.

"The realities of our uncertain economy, the technological change going on right now, the uncertainty of what work is going to look like ... all of that points to the fact we need to look at everything," Wynne said in an interview with HuffPost Canada.

She said that, growing up in the 1960s and 1970s, there was a lot of talk about how work would change.

"The three-day day work week hasn't come to fruition; instead, we see people piecing together different jobs," she said. "The disruption of technology that we might have expected then is actually on us now. The urgency of this question has increased over the last decade. It's important and people are interested."

Manu Fernandez, Stephan Savoia/Associated Press
Facebook CEO Mark Zuckerberg and Tesla and SpaceX CEO Elon Musk are proponents of basic income.

But if the basic income has any chance of widespread adoption, it will have to overcome bipartisan political opposition. The criticism from conservatives is obvious — giving away "money for nothing" is morally objectionable from the right-wing point of view.

But there is resistance from the left as well. A number of socialist thinkers have come out against the idea, arguing that with a basic income, there will be less incentive to pay workers a living wage.

In the words of City University of New York professor and renowned anti-capitalist David Harvey, oligarchs like Musk and Zuckerberg "know their technologies are putting people out of work by the millions and that those millions will not form a market for their products if they have no income."

The cost of basic income

There is, of course, the elephant in the room when it comes to the basic income: its cost.

Ontario's government is nowhere near estimating what a province-wide scheme would cost, but this month, the federal Parliamentary Budget Office issued a report estimating that if Ontario's scheme went nationwide, it would cost Canada $43 billion a year.

But proponents of the basic income say these studies fail to take into account the savings government would see in other areas if poverty was reduced.

"Poverty is the greatest predictor of hospitalization and health problems," Segal said. He points to research by University of Manitoba professor Evelyn Forget, who is credited with rediscovering a long-forgotten basic income experiment in Dauphin, Man., in the 1970s. When the town's residents were given a "mincome" for three years, use of the publicly funded health insurance system dropped by eight per cent, Forget's research showed.

Poverty is the greatest predictor of hospitalization and health problems.Hugh Segal

Given that Canada spent an estimated $242 billion on health-care costs in 2017, a decrease of eight per cent nationally would amount to a savings of more than $19 billion on health care costs nationally, offsetting nearly half of the estimated cost of a basic income.

Meanwhile, many wonder whether Ontario's basic income project can withstand the winds of political change. The province is heading towards an election in June, and "there is a lot of risk" that the project could be shelved by a future government, Wynne said, which would be "a great shame."

"The info we can gain from this will be invaluable going forward," she said.

Canadian Press
Ontario Premier Kathleen Wynne introduced the basic income project, and a spokesperson for Conservative Leader Doug Ford said he would continue it if elected in June.

The governing Liberals are trailing in the polls to Doug Ford's Progressive Conservative party, and political commentators are urging Ford to end the basic income experiment as one way to reduce government spending.

But, in a move that surprised many observers, the Ford campaign has said it supports the pilot project.

"We look forward to seeing the results," a party spokesperson said in April — highlighting, again, the potential for a basic income to become a policy championed by both sides of the political aisle.

I've got no bad reviews of it. Nothing.Sherry Mendowegan

For her part, Mendowegan hopes it isn't just seen to completion but also extended beyond three years.

"I've got no bad reviews of it. Nothing," she said. "It's a huge difference in our lifestyle right now. It's more positive, the way that we're raising our kids now.

"When I was on Ontario Works, I did feel stressed, living monthly to monthly. With the pilot program, it's just a little bit more, but it helps us. We can do more with our families."

This story is part of HuffPost Canada's No Strings Attached project, which follows Thunder Bay's Sherry Mendowegan, Lindsay's Segura family and Hamilton's Jessie on their journeys with the Ontario pilot project. Through them, we examine the debate over the potential for basic income in a future where precarious work is increasingly common.

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