Basic income piloting in Ontario
In his acceptance speech for his honourary degree at the 2017 Harvard graduation, Mark Zuckerberg flirted with the possibility of a universal basic income – a necessary expenditure, he argued, given the future automation of workforces. His remarks came on the heels of a similar speech by Tesla CEO Elon Musk, in which Musk remarked that in order for money to keep running through economies as people are replaced by robots, governments will have to invest in basic income plans. Workforce automation isn’t a reality yet in Canada, but basic income could be, if the Ontario Liberal government’s pilot projects rolling out at the end of this year are successful.
The goal behind basic income is to provide “a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.” If it sounds like a radical idea – regular cash payments to everyone of employable age without government scrutiny as to how the money is spent – that’s because it is. While countries have run basic income trials in the past, like India’s two trials in 2011, and Canada’s similarly oriented 1970’s Mincome test case in Manitoba, the projects have historically been more restricted than those that the founding principles of basic income originally called for.
Take the provincial Liberal government’s 2017 test plans set to operate in Hamilton, Brant County, Thunder Bay, and Lindsay, areas specifically chosen because of their vulnerable economies. Although titled and marketed as basic income, this project is not really basic income in the original sense. Only select participants from among the three areas will be invited into the study, though low-income households are said to be targeted. Periodic payments to single persons aged 18-65 will be around $17,000, and $24,000 for couples. (Children and seniors are excluded on account of federal and provincial child-benefit and senior’s assistance programs.) For single recipients, that’s a payment ranging 20-25% below the poverty line of around $20,000 in Ontario. It’s a conscious gap on the part of Hugh Segel, the former Conservative senator and mastermind behind the project, who noted it would “strengthen [people’s] incentive to work.”
But while participants can work and receive basic income, their payments will be reduced by half of what they earn. This means if a university student working part-time earns $20,000 over the year, their basic income cash-flow will be slashed from $17,000 to $7,000. If it’s a full-time worker earning $34,000 or higher, their basic income payments are voided by their earnings.
The situation becomes precarious for those relying on social assistance programs like Employment Insurance or the Canadian Pension Plan. If individuals are on either program, basic income will be reduced dollar for dollar. For those on welfare or Ontario Disability Support Payments (ODSP), basic income will replace these programs entirely, but free drug and dental care will remain available if they were entitled to them before. As it is, this basic income pilot sounds like a sit-in for other social assistance programs, with the government benefit of it being more streamlined.
However, one benefit to basic income for social assistance users like those on ODSP is the lack of vetting and checking by the government as to how this money will be used. Recipients often find themselves in a bureaucratic nightmare, from a convoluted application process and unclear eligibility criteria to exhausting surveillance of ODS-related usage and future eligibility. Basic income provides more autonomy because its users won’t have to account for their spending or maintain eligibility; their basic income payments are reduced according to what they earn.
This pilot project could signal the start of something new. From data compiled by Stats Canada in 2014, there are around 4.9 million Canadians living in poverty; that’s 1 in 7 Canadians. Many proponents of the pilot believe it will offer a new solution to poverty. However, many anti-poverty activists urge against this way of thinking.
“What they’re really experimenting with is not really an income for poor people, but a de facto subsidy for low-wage employers,” says John Clarke, organizer with the Ontario Coalition Against Poverty. The Coalition members believe that a basic income pilot simply shifts the focus away from national poverty issues to a pilot that will takes years to run successfully and whose main aim is not the elimination of poverty.
In spite of this, a basic income plan could prevent the economy from imploding by putting cash in people’s hands for spending. This way, episodes such as the manufacturing layoffs of 2002 and 2007 will not be repeated, especially as the threat becomes more prominent with a technologically advanced automation industry. Before any of this can happen, the Liberal Ontario government has to be honest with itself about what its pilot project really is.
“Anyone taking on a complex problem is going to get blamed for not fully understanding it,” said Zuckerberg in his speech, “Even though it’s not possible to know everything upfront.” Poverty reduction is a complex problem; there are bound to be flaws in novel efforts to combat it. Can this pilot project lead to a productive basic income plan? It’s not just Ontarians and Canadians wanting to know. With companies like Facebook and Tesla invested in its outcome, this project is premiering on a global stage, where the pressure is high, and the stakes are even higher.