Senator Bellemare’s opinion piece [ A basic income would be an unfair, complicated and costly way to eliminate poverty, Globe and Mail, April 27 2022] rendered a cheerless endorsement of a guaranteed basic income (GBI) program in Canada. The costs of a GBI have indeed been estimated by various groups and organizations over the years, yielding wildly divergent estimates. Yet what is far less frequently estimated, or discussed, are the costs of not delivering such a program. What would have been the cost, for example, of not offering the CERB, a cash transfer program, at the height of the pandemic?
Poverty is the most significant cause of suffering in the world, as the World Health Organization reported in 1995. It not only strips people of their dignity and denies them innumerable opportunities, but it also kills. As the now voluminous social determinants of health literature shows, it is our social conditions, not individual behaviours, that largely shape our health and wellbeing.
Maintaining poverty is costly. In addition to taking a significant toll on human lives, it exacts huge sums of dollars every year in health and social care expenditures. Feed Ontario’s estimates suggest that the annual cost of poverty in the province of Ontario alone is roughly $30 billion in health, social and opportunity costs. Combine those figures across the provinces and territories, and the costs add up quickly.
Income security programs rife with eligibility rules and conditionalities make them more administratively cumbersome, and often less effective. If a GBI program had been integrated into the tax system before the CERB, it would have saved money, according to the Parliamentary Budget Officer, and been far more efficient. And GBI programs do not cause people to suddenly leave their jobs. Research by Robert Gilbert and colleagues in 2018 examined 16 GBI programs around the world and found they had “no substantial impact” on labour market participation. Notions that people are lazy and lack the motivation to work prevail, yet such myths are not substantiated by research. The suggestion that all people needing a GBI “should earn a living” rather than get assistance smacks of unfairness to people already working two to three jobs just to get by.
The Parliamentary Budget Office itself has released a series of reports over the years costing out a GBI, citing dramatically different figures – $44 billion in 2017 and doubling to $88 billion in 2022. Economist and Mincome expert Evelyn Forget and Metcalf Foundation Fellow John Stapleton pegged the number closer to $30 billion in 2017, once you take away the $15 billion already spent on provincial social assistance programs.
Rather than debating whether improving our gaping social safety net through a GBI would be sufficiently economical, it may be time for us to re-consider our expenditures on corporate welfare, and the billions that get wasted, as John Ivison from the University of Calgary points out, each year on subsidizing (already wealthy) businesses. These subsidies have not been shown to generate jobs or improve economic performance. Phasing out corporate subsidies ($34 billion in subsidies and support to the fossil-fuel sector alone, according to Energy Policy Tracker Canada) and imposing a 1% wealth tax on incomes over $20 million ($20 billion according to economist Alex Hemingway), and we’d have roughly what we’d need. Cutting corporate welfare to other sectors, taxing capital gains, and tackling tax havens would yield substantially more.
Research has shown that it is more costly to maintain a system of homelessness, and the institutionalized forms of care it requires, than it does to provide affordable and supportive housing options. The same is likely true of poverty – it takes more money to deal with its consequences than to actually eliminate it. The Canada Child Benefit offers a useful exemplar of a GBI program at work in Canada. According to the Canadian Income Survey in 2020, child poverty was cut in half over the 2015-2020 period, largely arising, as economics professor Michael Baker and his colleagues have shown, from changes to CCB benefits. How can the impacts of this GBI program be considered unfair, complicated and costly?
Tracy Smith-Carrier PhD, MSW
Canada Research Chair (Tier 2) Advancing the UN Sustainable Development Goals & Associate Professor, School of Humanitarian Studies | Royal Roads University 2005 Sooke Pronouns: she/her/hers
Adjunct Research Professor, Arthur Labatt Family School of Nursing, Western University