Is the fix for poverty as simple as a cheque in the mail?

Coming to an Ontario city near you: cheques for every resident as part of a "mincome" experiment to reduce income inequality

Buried under a whack of promises, the Ontario budget contains an unusual pledge. Kathleen Wynne and company are on the hunt for a guinea pig, a city willing to pay each of its residents hundreds of dollars a month, no matter their employment status or salary, in return for absolutely nothing.

The idea’s called “guaranteed basic income,” or “mincome,” and it’s being hailed as a possible answer to income inequality. 

The single-city project is “still in its inception stage” and has yet to be designed, according to a Ministry of Finance spokesperson. But in theory, it’s a simple fix for poverty, underemployment, precarious work and the rising cost of living.

Of course, if you’re already raking in cash from a decent job, you’ll end up paying the windfall back and then some at tax time. But if you’re on sick leave, have lost your job or are going back to school, mincome ensures you won’t go hungry.

Mincome proposals have been bouncing around in various forms since the days of Thomas Paine, championed by economists and politicos of all stripes ever since and invariably discarded, like other unorthodox ideas, as a pipe dream – a potentially expensive one at that. 

Back in the 1970s, a pilot in Dauphin, Manitoba met with reasonable success. Recent months have seen mincome once again garnering attention from the feds. Justin Trudeau’s Liberals have resolved to develop and deploy a mincome experiment, potentially in Prince Edward Island. Calgary mayor Naheed Nenshi endorses the idea, as does Alberta’s finance minister, Joseph Ceci. 

The Association Of Local Public Health Agencies (alPHa) officially supports mincome as the best means to prevent illnesses inflicted by poverty. And federal Minister of Social Development Jean-Yves Duclos, in a 2008 report, recommended mincome as the leading solution to economic instability for working-age adults. Duclos told the Globe and Mail last month that he’s interested in making basic income a part of his poverty-reduction mandate.

There’s an economic advantage to mincome when you consider the growing costs of poverty. Factoring in health, employment insurance, social transfers and justice system expenses, the national annual burden exceeds $70 billion. Although solutions stare us in the face, we continue to pay for widespread destitution. For example, it’d be cheaper to provide the homeless with their own apartments than having them sleep in a shelter bed that can cost $1,200 a month.

Our safety nets are all over the place: a medley of cash transfers for the old, debt relief for students, monthly support for parents and 13 distinct welfare programs make up the Canadian social assistance model.

What we’re left with is a disjointed system that sometimes fails to help much at all. To compound the problem, “welfare rates fluctuate according to political whim,” says Sheila Regehr, former director of the National Council of Welfare. “There is no rationale. There’s nothing that pegs it at a rate that means something substantial. It’s just ‘How low can we get it?’”

Regehr and her colleagues established the Basic Income Canada Network seven years ago as a national offshoot of a larger global movement. Chaired by Regehr, the network consists of municipal groups made up mostly of regular people fed up with an irrational system.

Mincome is “far more possible in Canada than just about anywhere else,” says Regehr, pointing out that we already have a kind of basic income in place for seniors, with a universal benefit and a top-up for those in need. 

“We’ve been doing that for years, and we have proof that it works in lots of ways,” she says. “Seniors eat better, they have less stress, they’re more active – and healthier – than their younger counterparts.”

But despite growing support, mincome has its opponents. 

Jonathan Rhys Kesselman, a public policy researcher at Simon Fraser University, points out that allotting an average of $10,000 in annual benefits per person would result in a gross expense of $350 billion, an amount far exceeding the current annual federal budget. The Canadian Centre for Policy Alternatives, in a 2009 study, estimated an amount comparable, concluding that a full mincome policy is “out of our immediate financial reach.”

Richard Pereira, a basic income researcher at the University of Birmingham, disagrees with Kesselman’s number-crunching. His 2015 study in World Economic Review demonstrates that most of the funds would come from a systemic overhaul, funnelling money from redundant programs into a basic income pool. Kesselman’s figure, he concludes, overshoots the real cost of mincome. He places the net expense at $76 billion, or about what poverty costs us today.

Nobody’s numbers seem to agree, but to proponents, that doesn’t matter. Regehr insists that the money exists and funding options abound. In every financial transaction, for instance, lies a latent source of millions, provided we tax a penny on every exchange. 

Corporate levies can be raised, says Regehr. Doing away with parts of the tax credit system would also provide a solid mincome basis. “Canada gets the gold medal for the biggest amount of tiny, stupid tax -credits,” says Regehr. 

Perhaps as precarious employment rises from its current 52 per cent in Canada’s largest city, mincome will emerge as a viable means of keeping both the standard of -living and poverty spending at reasonable level. 

Some people find the idea of replacing the welfare system difficult to accept. Mincome’s “getting a little bit more publicity now,” says Regehr, but “it needs to go off as light bulbs in people’s heads.”

A trial project would provide experimental data, but Toni Pickard, a mincome supporter and professor emeritus of law at Queen’s University, cautions that a pilot could stand in the way of progress. 

“Pilots risk delaying implementation,” she says. 

She points to successful basic income initiatives in other countries, like Brazil’s Bolsa Família grant program, which supplements the incomes of families with children (provided kids attend school and get vaccinated). Brazil wants to universalize the grant, which has not only helped the poor, but the economy as a whole – for every Brazilian real spent, the government receives a 178 per cent return. 

“Our economy is supposed to be driven by demand,” says Regehr, but if people don’t have money to spend, their demand means little. “That’s why a basic income has such a profound effect. You’re not just giving individuals or families a basic income – you’re actually providing the basis of an economy.” | @nowtoronto

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