Providing a nationwide safety net for low-income Canadians in the form of a guaranteed basic income would cost roughly $43 billion a year, a new report from Parliament’s fiscal watchdog suggests.
The report was requested by Conservative finance critic Pierre Poilievre.
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“The total annual estimated gross cost of the defined GBI (guaranteed basic income) would range between $76 billion and $79.5 billion for the period 2018-2023,” the report notes.
“The guaranteed income for disability would range between $3.2 billion and $3.5 billion.”
But that doesn’t take into account the money already being spent by the federal government on support for low-income Canadians and vulnerable groups, which the PBO estimates at around $32.9 billion a year. A GBI program would replace those supports.
Once you subtract $32.9 billion from the $76 billion in gross GBI spending, the net cost to taxpayers of implementing the guaranteed income plan comes out to $43.1 billion. But it could be even lower if the GBI were administered by the federal government in cooperation with the provinces.
“This would replace some provincial transfers for low-income individuals and families, including many non-refundable and refundable tax credits, thereby reducing (the GBI’s) net cost,” the PBO notes.
Overall federal government program spending for the 2016-2017 fiscal year was $287.2 billion.
The PBO forecasts that more than 7.5 million Canadians would benefit from a national GBI program. The annual cost per person would range between $9,421 and $10,169 for each of the next five years, the report estimates.
Pros and cons
Basic income programs have been the subject of serious — and heated — debate among academics and policymakers for years. Essentially, they provide a set payment to eligible families or individuals to ensure a minimum income level, with no strings attached and regardless of whether those people are working.
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Ontario’s pilot model ensures that people or families with no income at all receive the maximum amount (for singles it’s $16,989, and for couples $24,027), which is reduced as income from other sources increases.
People lose $0.5 of the basic income transfer for every $1 they make, meaning that anyone with earnings around $34,000 and over doesn’t get anything.
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In the short term, GBI may cost governments more money than the current system, but by alleviating poverty, supporters argue that it can actually save more money over the long-term in areas like healthcare, public safety and social programs.
Opponents of GBI counter that it would be far too expensive, discourage people from seeking full-time work, and wouldn’t address some of the root causes of poverty like mental illness and addiction.
— With files from Erica Alini