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A Way Forward After the Basic Income Pilot Cancellation

by Dionne Pohler

(with Kourtney Koebel)

No policy of the newly elected provincial government in Ontario has sparked more controversy than the proposed cancellation of the basic income pilot. Academics have criticized the government for wasting an opportunity to collect data on an important policy issue, and basic income advocates have undertaken a massive lobbying effort to convince the government to reverse its decision.

The announcement raises serious ethical concerns around how participants relying on the basic income for the next two years will be treated during the pilot phase-out. This should be addressed by continuing payments to all participants until the original proposed end of the pilot.

However, we don’t believe the pilot’s cancellation is problematic for the realization of a basic income in Canada, and the awareness it has created among the public may provide a unique opportunity to move toward something better.

We’re both supporters of a basic income guarantee for evidence-based efficiency and equity reasons that are too numerous to outline, but, we’re also not supportive of basic income pilot experiments for a number of reasons that we discuss here. (See also another recent academic critique of the basic income pilot here.)

We’d rather see implementation than experimentation. Those who are supportive of the implementation of a universally accessible basic income guarantee, and/or the removal of work disincentives for those on social assistance, and/or greater income security for working-age Canadians, should focus their efforts toward developing options for the phased but permanent implementation of such programs, rather than critiquing the pilot cancellation.

We already have a robust body of work in Canada and other countries on the positive outcomes of basic income pilots (including one in Dauphin, Manitoba), and also on several non-experimental cash-transfer policies and programs. The Ontario pilot was unlikely to tell us anything we don’t already know from previous pilots about the probable effects on recipients’ labor supply, education, and health outcomes. Research on the Universal Child Care Benefit in Canada and the Earned Income Tax Credit (the largest cash-transfer program in the United States) also provide evidence about the effects of programs that offer larger coverage than any pilot. We also have widely accepted theories about the possible labour supply responses of those who would be “net contributors” to funding a basic income.

So, while nothing as generous as the prototype of the basic income pilot in Ontario has ever been comprehensively implemented in any context, we do have theory, models, and studies from across academic disciplines that provide some clue about what to expect. As with any theory, model, or study, however, estimated effects rely on an informed set of assumptions applied to a particular context, and we can never be 100% certain about anything, especially when it will occur in the future.

This is why we propose that the best way forward would be a staged phase-in of a basic income guarantee. There are multiple ways this could be done. One option we are currently working on in more detail elsewhere proposes to: a) undertake the collaborative development of a framework that includes direct involvement of both levels of government and First Nations, b) expand the current Canada Workers Benefit (formerly the Working Income Tax Benefit) to include all low-income persons working or not, partially funded by removal of many non-refundable tax credits and replacement of welfare, and c) eventually fold in OAS/GIS, the Canada Child Benefit, and employment insurance.

An adequate basic income is not financially sustainable unless the federal and provincial governments collaborate in its development and share the funding burden. While there are ways the framework could be designed so that not all provinces and First Nations would have to sign on (see a two-stage proposal for a federal-provincial basic income here), individual and household arbitrage between provinces that choose to implement a basic income or not (and also on and off-reserve) may lead to greater income inequality between the provinces and on and off-reserve First Nations peoples, which would ultimately threaten the program’s viability.

Federalism remains the greatest political barrier to the implementation and sustainability of income security for all Canadians. Overcoming this barrier requires a substantial amount of political will and co-operation, and the support of Canadians from all walks of life and communities. The implementation of a basic income guarantee is something the entire country must decide to do, together.

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