Ontario to test guaranteed minimum income

An overlooked paragraph in the recent Ontario budget could mean big changes in the lives of some of the province’s most impoverished residents. It proposes the idea of providing a guaranteed minimum income to such Canadians.

In chapter one of last month’s provincial budget, the government says, “One area of research that will inform the path to comprehensive reform will be the evaluation of a Basic Income pilot. The pilot project will test a growing view […] that a basic income could build on the success of minimum wage policies and increases in child benefits by providing more consistent and predictable support in the context of today’s dynamic labour market.

“The pilot would also test whether a basic income would provide a more efficient way of delivering income support, strengthen the attachment to the labour force, and achieve savings in other areas, such as health care and housing supports. The government will work with communities, researchers and other stakeholders in 2016 to determine how best to design and implement a Basic Income pilot.”

As the budget’s forward states, the development of this project is in line with Ontario’s plans to “improv[e] the supports necessary to lift people out of poverty and help them live a meaningful life, to the benefit of Ontario’s economy and society. Social assistance rates will increase by 1.5%, while a further top-up will be provided to those with the lowest social assistance rates.”

Read:

• What you need to know about Ontario’s budget plans
• What eliminating Ontario education tax credits means for clients

The concept of a minimum income program is also on the radar of the federal Liberals, reports Keith Leslie of Canadian Press. So far, a Liberal-dominated parliamentary committee has called on the Trudeau government to explore the concept of guaranteeing people a minimum income in a pre-budget report tabled Friday.

Charles Sousa, Ontario’s finance minister, said the province has not decided which community will be the test site for a basic income guarantee. “It’s something that many people seem to have an interest in us testing out, so we’re looking at something in the fall,” he says. “Other jurisdictions are using it, and I want to see if it makes sense for us. So it’s important for us to pilot [and] test it out, and see what happens.”

Proponents say that providing a guaranteed minimum income top-up to families living below the poverty line would be more efficient and less costly than administering the existing series of social programs that help low-income residents. They say poverty is one of the biggest determinants of health, and a guaranteed minimum income could mean reduced health-care costs.

Read: Minimum wage hike does more harm than good: Think tank

“Poverty costs us all,” said Senator Art Eggleton last month, as he called for a national pilot project of a basic income guarantee. “It expands health-care costs, policing burdens and depresses the economy.”

Currently, about 9% of Canadians live in poverty, but the numbers are much higher for single mothers and indigenous communities. If Ontario’s basic income pilot project is designed correctly, it could help eliminate some of the “perverse incentives” that institutionalize poverty, says Danielle Martin, vice president of Women’s College Hospital in Toronto.

“We want to design programs that will give people who need it income security, but will not discourage them from entering the workforce,” she adds.

Also, she notes, “It’s entirely possible that if we design this pilot right, we [could] actually have a major impact on the health outcomes for some of the most vulnerable people in the province, and that can save tremendous amounts of money in the health-care system down the road.”

Read: Ontarians worry about poverty in retirement: poll

Canada experimented with a guaranteed minimum income in Dauphin, Manitoba in the early 1970s. The so-called Mincome project found it did not discourage people from working, except for two key groups: new mothers, and teenaged boys who opted to stay in school until graduation.

The Mincome project also found an 8.5% reduction in hospital visits in Dauphin during the experiment, said Martin. “People had fewer visits because of mental health problems,” she said. “There were fewer low birth-weight babies, so very concrete and immediate impacts in terms of people’s health.”

The Income Security Advocacy Centre says care must be taken to ensure no one is worse off as a result of the Ontario pilot for a basic income guarantee. For example, people on social assistance in Ontario also get their prescription drugs and dental bills paid for, as well as help with child care, and they should not lose those benefits with a basic income guarantee, says Martin.

However, people should not be concerned that a guaranteed minimum income would mean those on social assistance are suddenly living on easy street, says Eggleton. “This wouldn’t be the good life,” he told the Senate. “It would provide a floor, a foundation that low-income people can then build upon for a better life.”

Social programs should lift people out of poverty, not keep them there, and a basic income is a new approach that could work, adds Eggleton. “How we have dealt with poverty has failed.”

Read: Understand income inequality

Last month’s provincial budget promised a pilot project to test “that a basic income could build on the success of minimum wage policies and increases in child benefits by providing more consistent and predictable support.”

Read:

• What you need to know about Ontario’s budget plans
• What eliminating Ontario education tax credits means for clients

This concept is on the radar of the federal Liberals as well: a Liberal-dominated parliamentary committee has called on the Trudeau government to explore the concept of guaranteeing people a minimum income in a pre-budget report tabled Friday.

Charles Sousa, Ontario’s finance minister, said the province has not decided which community will be the test site for a basic income guarantee. “It’s something that many people seem to have an interest in us testing out, so we’re looking at something in the fall,” he says. “Other jurisdictions are using it, and I want to see if it makes sense for us. So it’s important for us to pilot [and] test it out, and see what happens.”

Proponents say that providing a guaranteed minimum income top-up to families living below the poverty line would be more efficient and less costly than administering the existing series of social programs that help low-income residents. They say poverty is one of the biggest determinants of health, and a guaranteed minimum income could mean reduced health-care costs.

Read: Minimum wage hike does more harm than good: Think tank

“Poverty costs us all,” said Senator Art Eggleton last month, as he called for a national pilot project of a basic income guarantee. “It expands health-care costs, policing burdens and depresses the economy.”

Currently, about 9% of Canadians live in poverty, but the numbers are much higher for single mothers and indigenous communities. If Ontario’s basic income pilot project is designed correctly, it could help eliminate some of the “perverse incentives” that institutionalize poverty, says Danielle Martin, vice president of Women’s College Hospital in Toronto.

“We want to design programs that will give people who need it income security, but will not discourage them from entering the workforce,” she adds.

Also, she notes, “It’s entirely possible that if we design this pilot right, we [could] actually have a major impact on the health outcomes for some of the most vulnerable people in the province, and that can save tremendous amounts of money in the health-care system down the road.”

Read: Ontarians worry about poverty in retirement: poll

Canada experimented with a guaranteed minimum income in Dauphin, Manitoba in the early 1970s. The so-called Mincome project found it did not discourage people from working, except for two key groups: new mothers, and teenaged boys who opted to stay in school until graduation.

The Mincome project also found an 8.5% reduction in hospital visits in Dauphin during the experiment, said Martin. “People had fewer visits because of mental health problems,” she said. “There were fewer low birth-weight babies, so very concrete and immediate impacts in terms of people’s health.”

The Income Security Advocacy Centre says care must be taken to ensure no one is worse off as a result of the Ontario pilot for a basic income guarantee. For example, people on social assistance in Ontario also get their prescription drugs and dental bills paid for, as well as help with child care, and they should not lose those benefits with a basic income guarantee, says Martin.

However, people should not be concerned that a guaranteed minimum income would mean those on social assistance are suddenly living on easy street, says Eggleton. “This wouldn’t be the good life,” he told the Senate. “It would provide a floor, a foundation that low-income people can then build upon for a better life.”

Social programs should lift people out of poverty, not keep them there, and a basic income is a new approach that could work, adds Eggleton. “How we have dealt with poverty has failed.”

Read: Understand income inequality