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The ONW Salon:  Is The Basic Income Project A Good Idea?

Ontario Premier Kathleen Wynne has announced that Hamilton, Thunder Bay and Lindsay will be the pilot sites for the Basic Income Project.  Under the pilot, 4,000 low-income people will be given up to $17,000 annually. It's an effort to stamp out poverty and has been tested in several other countries. Is the Basic Income Project a good idea? We asked Richard Mahoney, John Capobianco and Tom Parkin.

 

Richard Mahoney:

The guaranteed basic income is a good idea. In fact, it is a great idea, and I am really quite excited about the possibilities that it presents.

Increased automation and other developments in the global economy are making it harder and harder for people to make ends meet. Inequality is on the rise and we no longer live in an era where job stability, or any kind of economic stability, is the norm.

So our policies have to try to keep up with this fact. We need to ensure that all of our citizens can get to a basic wage. Now this is not new, and Canadians and Ontarians have built a society with various social programs that help our citizens.

The idea of this pilot project is to try something new, something more flexible and more generous than our traditional approaches. In three Ontario communities, Thunder Bay, Lindsay and Hamilton, a guaranteed basic income will be provided. Details of the program are set out here. The idea is that this program will replace existing programs, and the government and citizens will be able to see how this works - whether the details are correct and how this program might need to be adjusted or altered if it is to be implemented province wide. It is an exciting, bold and socially progressive idea, and one that should make a significant difference in the lives of lower income Ontarians.

Further, the idea is to make this program less rigid, so that those on the program will be able to work and earn extra income from that work, on top of the guaranteed income from government (about $17,000 for an individual, and about $25,000 for a family).

This will help Ontario build a society that can adapt to the challenges of a 21st century economy and reduce poverty across the board.

 

Tom Parkin:

A guaranteed minimum income could be good or bad, depending on how it is done. And for exactly that reason, for those of us who want to eliminate poverty, it’s no silver bullet. In fact, it could make things worse.

At its worst, as the concept was promoted by free market fundamentalists like Milton Friedman, the guaranteed minimum income is a strategy to relieve social demands for “market distortions” like minimum wage laws or collective bargaining. In this libertarian view, once again, the failures of the market are paid for by the public. In this view, a guaranteed annual income is corporate welfare dressed up as human welfare.

The Ontario Liberals’ economic strategists Ed Clarke and Don Drummond share this concern about “distortions” which is why they are reluctant to push the private sector to pay a living wage.

For 14 years the Liberals have kept almost all the barriers Mike Harris put up to prevent collective bargaining. They froze the minimum wage from 2010 until 2014. The current minimum wage, at $11.40 an hour, is a poverty wage that does not pay for the basics of life – food, transit, housing, utilities, clothing, etc.

A job needs to provide a living wage. At $11.40 per hour, a minimum wage job (based on 50 weeks of 40 hours of work) pays $22,400 a year. After tax, that’s about $20,100 - which is substantially higher than the minimum income of $17,000 proposed by the Liberals.

An after-tax income of $17,000 would require a pre-tax income of about $18,350 – about $9.18 an hour. So somehow Kathleen Wynne thinks $9.18 is a living wage.

I don’t know, Richard, why you think this is generous, bold or socially progressive – but I know why I worry.

 

John Capobianco:

There is never an easy way or a quick fix to address poverty in our province or, indeed, across Canada, as we have seen over many years from governments of different political stripes. There have always been adjustments to tax credits and allowances for low-income individuals and families, and there have been many attempts at job creating programs to incent folks who are able to work to find work.

This plan has been debated and tried in a number of jurisdictions and the success of it has been mixed - depending on whom you talk to.  But having it as a pilot project is helpful. There should always be solutions to try to address poverty and this guaranteed basic income project is an attempt to fix the problem.

The good thing about the plan is that it is straight forward, with no strings attached (or so they say) and it gives individuals and families money that they will likely turn back into the economy in some way.

The only down side to this is that many will say that it takes away the incentive for those receiving the benefit to find work. However, if the plan is set up properly, this will and should be addressed by ensuring those who find work will still get the benefit, albeit reduced, based on the salary of the job they end up with.

 

Richard Mahoney:

Tom makes many interesting points about Milton Friedman and collective bargaining, but none of them have much or anything to do with the social innovation that this pilot project represents. I suspect that is because he knows this is a good idea and is loath to admit it.

He is right to say that it really depends on the details. That is why this is a pilot - so we can collectively learn from it. This project will give us hard evidence about the effectiveness of a basic income program. It has only been tried once in Canada before - in the Seventies in Dauphin, Manitoba under an NDP government, with positive results from that pilot.

We now have an opportunity to see how best to ensure that growth in Ontario is inclusive and that everyone shares in it. This should help people on low incomes, almost 70 per cent of who do not receive social assistance. This could and should help their health and their prospects for education, training and employment. As John points out, it will be more flexible than current social programs when it comes to issues like additional income from work.

It is exciting to me that Ontario is a leader in testing exactly what the real world impacts of providing a basic income to lower income people are. This is the challenge of our times - how do we build a modern society, with all of the benefits of technology, but still deal with the inequality that that economy produces?

I am hopeful that what we learn from this project is such that Ontario is able to modify and improve the idea as required and then extend this to all its citizens. I also hope that is something that all Canadians will eventually see. And I am proud of the Ontario government and Premier Wynne for having the guts, the wisdom and the leadership to bring this idea in.  


Tom Parkin:

Many people who have a proven long-term commitment to eliminating poverty do support the idea of a generous, socially progressive and bold guaranteed annual income. I have yet to see that from the Kathleen Wynne, Ed Clark or Don Drummond.

Kathleen Wynne is tired and defeated. She’s playing trick one trick after another to distract from the right-wing policies she implemented after her election. The policy wonks will be interested in this one, but it offered none of the magnetism that Andrea Horwath is offering.

Recently Horwath's been on a tear. She’s positioned herself as the defender of Toronto transit. She’s committed to a $15 per hour minimum wage. She’s tabled a plan to drive out the inflated costs the Liberals put into electricity prices. She pushed Wynne on rent control. Now she’s capped it all with a plan for universal pharmacare.

Finally we have some energy and hope back at Queen's Park.

 

John Capobianco:

I am not sure I would describe this as a win for the current government.  The fact that it took this long seems to me to be a measure of last resort, given that the real problem of stimulating the economy never materialized. Another last minute effort, like the Hydro rates and addressing the housing issues. All problems that should have been addressed early on to prevent them from getting out of control, but that never happened.

This plan is a solution, but make no mistake about it, it is certainly not the ideal solution. Governments can't be going off and giving people money: people need and want to work for their money if they are able to do so. This is a way to give folks some hope and an opportunity to be in a position to find work, but the government's responsibility is to ensure jobs are created and maintained and that has been a struggle for the Trudeau Liberals.

It is a pilot project and it is geared to areas of the province where this plan will be welcomed. It is our responsibility to assess if this works, but we can allow ourselves to think that we can implement a plan like this while also carrying out the responsibility to always focus on our economy and making it strong and vibrant so people are able to find work.

 

Richard Mahoney is a lawyer with deep experience in politics and governance.  He is a former senior advisor to the Rt. Hon Paul Martin, a former Campaign Chair and President of the Ontario Liberal Party. John Capobianco is a Senior Partner and National Public Affairs Lead at FleishmanHillard. He has been a Conservative strategist with over 30 years of political activism at all three levels, including as a former federal Conservative candidate. Tom Parkin is a veteran NDP strategist and a frequent commentator on national issues. 

 

 

 

 

Posted date : April 27, 2017
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