Reduce income gap through guaranteed annual income, former Tory senator says

The rich are getting richer and Oxfam International says there’s no sign that’s going to change in the near future. The agency predicts the richest one per cent of the population will own more than half the world’s wealth by 2016.

“Do we really want to live in a world where the one per cent own more than the rest of us combined?” Winnie Byanyima, Oxfam’s executive director, said in a statement.

Among the organization’s suggestions to reduce inequality in the world is an idea that has been around for decades: a guaranteed annual income.

READ MORE: Rich get richer, and Canadian companies want their business

The idea is simply that the government provides everyone with enough money to ensure they don’t fall below the poverty line.

It might sound radical but it’s been tried before in Canada. An experiment ran in Dauphin, Manitoba between 1974 and 1978 to see if the plan would prompt people to take advantage of the money and leave the labour market.

WATCH: West Block primer – Canada’s guaranteed annual income experiment

During the experiment the community saw visits to the doctor and hospital go down, domestic abuse decreased, as did the need for mental health treatment.

Students also stayed in school longer.

Master of Massey College and former Conservative senator, Hugh Segal, is a strong supporter of the idea.

“Very simply, the cost of poverty is in the hundreds of billions of dollars every year,” Segal said in an interview on The West Block.

Tweet This Click to share quote on Twitter: "Very simply, the cost of poverty is in the hundreds of billions of dollars every year," Segal said in an interview on The West Block.

“Our existing welfare system, while well intentioned is not working very well. There’s a better way to do it, one that is efficient and focused and fair, and I believe that a negative income tax or an automatic top up for people who fall beneath a certain level, as we do for senior citizens, is the right way to proceed.”

The Fraser Institute recently published a report suggesting while the idea is appealing, it will never work in Canada.

“I think the practical hurdles involved with actually making the reform work are insurmountable,” said the Fraser Institute’s Charles Lammam on The West Block, “and because of that, I think it’s better to focus our attention on what we can do and how we can improve the existing system to make it work better for Canadians.”

READ MORE: Activists push for guaranteed minimum income

The biggest hurdle according to Lammam is getting all levels of government on board with a single program instead of the number of social assistance programs that exist today.
“Because of the way of governing responsibilities are divided, I don’t think it’s realistic to have this major reform that would be reforming about a quarter of all government activity in Canada for the fact that governments, provincial and federal, can’t agree on small reforms,” he said.

Segal points to successes of the past.

“You know, the same things were said about Universal Health Care in the early sixties. There’ll never be a province-wide national agreement. It won’t transpire. And look where we are now.”

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Plus, he points out, there are some big financial incentives for other levels of government.

“If we brought everybody up through a federal negative income tax or guaranteed annual top up, to a certain level they would be no longer eligible for welfare in their own province which would generate hundreds of millions of dollars of free spending capacity for the provinces to cut taxes or do whatever they want,” Segal told Clark.

While no federal party has endorsed the plan recently, Segal hopes the core issue of poverty becomes one of the main issues of the coming election and welcomes any idea that would help Canadians.