In mid-March of 2020, during the first wave of COVID-19 when Canada and the world were on the brink of the first lockdown, Heart Richards got a call she’d been dreading.
The Calgary-based preschool teacher was told that she would no longer be working.
Just one week after that, Richards’ now former employer told her to sign up for the Canada Emergency Response Benefit (CERB), which provided financial support to Canadians who lost their jobs or experienced lowered income as a result of COVID-19.
When the time came to get called back to work, Richards says the call never came.
“Since I was one of the last people to get hired there, I was one of the first to get let go,” she says. “Because that’s just the way it was – whoever was there the longest got priority.”
With a certificate in early childhood education, Richards searched for any job openings in daycares or preschools with no luck.
“I was not getting any job offers because people in preschools and in daycares were already cutting their staff too,” she says. “So they couldn’t hire new people.”
Richards even broadened her search to include babysitting and nannying, but it produced no results.
“I was really struggling with just living off the EI because it was around $400 less than what my actual paycheque would be,” she says.
With 40.5 per cent of businesses having laid off some or all of their employees due to the COVID-19 pandemic, Richards wasn’t the only one left struggling financially.
CERB saved a lot of people such as Richards from financial disaster and sparked new discussions about a broader source of social support known as universal basic income (UBI).
Universal basic income is unconditional financial assistance aimed at ensuring all Canadians can afford basic needs such as food and shelter.
This means that there are no restrictions on how you spend the money, similar to other programs such as Canada Child Benefit. The experience with CERB has sparked a new interest in the idea of a national UBI program.
Richards says she applied for every program she could but was denied by all except for CERB.
“I would not have been in that situation if there was already a guaranteed income,” Richards says. “Because the only reason we were struggling was because we had to pay rent still.”
She says that this was an especially hard time for her mentally and financially.
“Already, my stress was just through the roof because COVID was scary at first,” she says. “And I was worried because I was asking my parents for money because even if I did use my credit card for anything, I wouldn’t be able to pay it back.”
Without her family support system, Richards says she and her dogs wouldn’t have been able to survive.
“There were a couple of weeks where I would just eat noodles because we couldn’t go grocery shopping anymore because we had run out of money so we paid rent and we bought dog food and noodles because that was all we could afford,” she says. “We were like, we can’t let our dogs starve – we’ll starve.”
Basic human rights are often brought up as a reason behind the push for universal basic income.
“Everybody should be able to have shelter and food,” Richards says. “Because stuff does happen in life, things that are unpredictable to everybody and especially through COVID, a lot of people struggled.”
Richards says that poverty and a lack of a basic income create major problems in Canada.
“A big problem in our country is homelessness and people dying because of homelessness,” she says. “If you lose your job, you can lose your house. You can lose everything.”
Others share similar perspectives.
Floyd Marinescu, the founder of the UBI advocacy group UBIWorks, said that he first discovered universal basic income as a concept in 2017 following a tweet from Elon Musk.
“I was very captivated when I first imagined a world where we could have no poverty and where people can pursue their potential,” he said. “And that was very important to me because it also would correct power imbalances. and I was raised in a house that had domestic violence and if my mom had a basic income, it would’ve really changed things.”
He says the purpose of UBIWorks is to build engagement as well as a visible voter base so that politicians can see the support that this movement has garnered.
Universal basic income has often been critiqued for disincentivizing work and its hefty cost. But in areas where UBI has been tested, evidence shows that it has no effect on employment and that it stimulates the economy.
Marinescu says that the only two groups who do work less are students who stay in school longer and parents who stay out of the workforce to be with their children.
“The actual prevalence of working-age adults working less is so minor,” he says. “It’s not really statistically significant. We’ve also seen trials that actually showed that spending on vice goods, like alcohol and tobacco, went down because people have hope.”
Richards echoes this idea.
“The problem with homelessness is also that people are very susceptible to addiction and alcoholism and that’s how they deal with the stress of being homeless,” she says. “If everybody had a backup plan to feel safe, then they don’t need to turn to alcohol or drugs.”
Universal basic income has been trialed in areas in Canada and other countries with positive results.
Between the years of 1974 and 1979, the town of Dauphin in Manitoba piloted an experiment, dubbed “Mincome,” where the entire town population was given a guaranteed basic income. This resulted in a decline in doctor visits, an 8.5 per cent reduction in the rate of hospitalization and higher rates of high school graduation.
Mincome was discontinued after the Manitoba provincial government and the federal government agreed that it was no longer viable.
This money ranges from $1,000 to $2,000 USD, depending on revenues from mines, oil and gas and comes from a state-owned investment fund that invests 25 per cent of mineral revenues from that year, called the Alaska Permanent Fund.
The dividend was found to have no effect on employment overall but has had an effect on fertility by promoting families to have more kids.
Although social programs are already in existence to help with poverty, Marinescu says that basic income is much different from existing welfare programs.
“The big difference between basic income and existing welfare programs is that you have the long-term income security,” he says.
Some have struggled to get by with social programs currently in place to assist low-income individuals.
Marinescu believes that scaling back on these programs will allow that same money to be allocated to a universal basic income program.
“Existing programs could all be rebuilt on top of a national basic income, meaning that a lot of programs would no longer need to be,” he says.
He says that supporters of universal basic income are not advocating to end programs that provide assistance to those who have special needs, such as Canadians with disabilities, specific medical support or the Canada child benefit.
“What we are saying is that instead of having hundreds of programs delivering cash to people in need, you could have one program delivering cash and all the other programs could be built on the assumption that a basic income is already in place, meaning they might deliver a little bit more cash if necessary,” he says.
However, some experts in the economic field do not agree.
Jake Fuss, a senior economist at the Fraser Institute who specializes in fiscal policy and co-authored a research article about UBI, says that he and a colleague looked at different models of universal basic income to establish different cost estimates.
“One of the things that we looked at was doing a universal model, based on the CERB framework of giving everybody between the ages of 18-64 $2,000 a month or $24,000 a year,” he says. “The number that we actually calculated was about $465 billion a year, so that’s obviously an enormous expense – it’s almost $100 billion more than the entirety of federal spending in 2019.”
He says they then looked at taking away universality while introducing clawbacks and income thresholds based on the old age security (OAS) framework to target lower-income individuals.
“Instead of giving people $24,000 a year, now you’re giving people about $7,300 a year because that’s the amount that was given for OAS in 2019 and that brings the cost down to about $132 billion a year, which is still significant,” he says. “But then that starts to introduce other problems into the actual design of the system, so maybe payments aren’t sufficient to actually alleviate poverty or you have other problems in the design as well.”
Despite these concerns, some economists believe in the viability of UBI.
Wayne Simpson, a professor of economics at the University of Manitoba and a research fellow with the School of Public Policy at the University of Calgary, got his appointment at the University of Manitoba in 1979, the very same year that Mincome came to an end.
In his new position, Simpson worked with Derek Hum, the research director for Mincome, to conduct post-Mincome research on labour disincentives.
“Our conclusion to the experiments was that the concerns that there would be a large labour supply response to negative income tax programs were not found,” he says.
Simpson co-authored a research article in 2017 about how a universal basic income could work and how it could be funded through refundable tax credits.
“The results that we got from the spot experiment were that you could make a pretty significant impact on policy for people at the lower end of the income distribution,” he says. “So this was kind of an experiment to say what if the tax system had evolved differently to favour refundable tax credits rather than non-refundable ones?”
Refundable tax credits, like the name suggests, are tax credits that are refunded to you if you are eligible. For example, if you owe $500 in taxes and qualify for an $800 credit, you will be refunded $300.
To put into perspective, Canada has some refundable tax credits in place currently.
“Canada Child Benefit is a refundable tax,” he says. “It is substantial and it’s had a significant impact on poverty and families.”
He says another refundable tax credit that has had a significant impact on poverty is the Guaranteed Income Supplement, which was put into place in 1967 for senior citizens.
But, Simpson says this leaves a gap for those aged 18-64 who do not have children. He explains how negative income tax would be implemented to benefit this group.
“The idea of the negative income tax was that you could design a transfer system for low-income households, which would give them what is referred to as a guaranteed minimum income amount,” he says. “Then we gradually remove the benefit as people earn income.”
Simpson says it then becomes a basic income with income conditions.
“Everyone’s eligible, but the eligibility depends upon the amount of income from earnings or other sources and the larger that is, the less of a benefit you get until you receive no benefit at all,” he says.
In regards to cost, Simpson says he’s seen various calculations that range from $20 billion annually from the PharmaCare framework to $90 billion annually from the Parliamentary Budget Office.
“Just on the surface, $465 billion is ridiculously high,” he says. “Our estimate was the amount that people in higher tax brackets would have to contribute to people in lower tax brackets to convert them to refundable tax credits was something like $57 billion [per year].”
Simpson says that because the federal government and provincial governments would have to work together, the federal government could overlay a refundable tax credit similar to what is done with the Canada Child Benefit.
“Basically, they’d be introducing refundable tax credit over top of what is now the provincial welfare or social assistance system,” he says. “And then the provinces would have to think about how they wanted to integrate their system with the federal system and use their social assistance dollars to complement what the federal government does.”
On the likelihood of a program like this being implemented in Canada, Simpson says that Canada’s Poverty Reduction Act, which was passed in 2016, requires Canada to cut poverty in half from 12 per cent to six per cent by 2030.
“The obvious way to do that, in fact, I’m not sure there is any other way, would be to introduce some form of a basic income,” he says. “So I think that the federal government, if they live up to the Poverty Reduction Act, will be under pressure to do something along these lines.”
On December 16, 2021, parliament conducted the first reading of Bill C-223, which
would provide every Canadian over the age of 17 access to a guaranteed livable basic income.
Leah Gazan, elected in 2019 as the NDP MP for Winnipeg Centre, introduced Bill C-223.
“Since being elected, one of the things that I’ve really pushed for is to implement a guaranteed livable basic income,” she says.
Gazan says that poverty is a crisis in the community she represents.
“I see poverty as one of the most violent human rights violations,” she says. “We have a charter and part of our charter is to ensure that all people can live in dignity and with security. That is not happening in this country.”
With corporate bailouts seen during the COVID-19 pandemic, Gazan says citizens need help now more than ever.
“People in my community and across the country are barely making what they need to survive, let alone thrive,” she says. “We know that there’s a high cost of poverty and it’s time to invest in people and divest from corporate bailouts.”
Gazan says Canada has the resources, but it’s about the choices made by the government.
“This current government gave $50 million to MasterCard and $12 million for fridges to Loblaws,” she says. “Never mind the billions of dollars that are given in fossil fuel subsidy to big oil.”
Similar to ideas brought up by Wayne Simpson, an economist who worked on Manitoba’s Mincome research, Gazan says current social programs don’t need to go away.
“What my bill proposes is not to replace the social safety net, but to build on our current social safety net,” she says. “It is very important that this does not result in a decrease in services and benefits meant to meet an individual’s exceptional needs related to health or disability.”
However, she says some of the current systems are not sufficient.
“We have an archaic EI system that is bulky, that is outdated and that doesn’t work,” Gazan says. “We need to find other systems that are more efficient.”
One belief that Gazan echoes is that basic income can stimulate the economy.
“Every dollar that’s provided to people goes back into our economies,” she says. “For example, if you provide people with the basic income, if they go out to eat, that goes back into a local economy.”
Instead of talking about the high cost of basic income, Gazan says we need to start talking about the high cost of poverty.
“I don’t like poverty and I don’t like how people have to struggle, it’s unacceptable to me,” she says. “We just need to redistribute that wealth so that there’s not this whole big divide between the wealthy elite and everyone else.”
But, many Canadians are left wondering what they can do to help.
Marinescu’s advocacy group offers a list of suggested actions, but he says direct contact with the government is the most productive approach.
“The best thing they could do is let their member of parliament know, as well as whoever’s representing the political party of their choice, why you support basic income and why their candidate needs it,” he says. “Because ultimately, basic income requires an election victory.”