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 Parliamentary Budget Officer published its estimate on Tuesday morning, outlining the financial impact of a basic income program modelled off of Ontario’s current pilot model.
The report was requested by Conservative finance critic Pierre Poilievre.
WATCH: Ontario launches basic income experiment to tackle poverty
“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.”
READ MORE: What you need to know about Ontario’s basic income plan
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.
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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.
COMMENTARY: The problem(s) with a guaranteed annual income
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