The costs of providing a basic annual income for Canadians with a neuro-developmental disability equal to that provided to Canadians 65 and over would increase annual total government expenditures by only 1 percent.
Canadian policy-makers have for decades expended considerable effort and devoted large amounts of tax revenue toward ensuring adequate standards of living for the elderly. The introduction of the Canada Pension Plan (CPP) in 1966 provided income support in addition to that provided through Old Age Security (OAS). The Guaranteed Income Supplement (GIS) was added soon after the CPP and since that time provisions to index benefits against inflation and provisions to provide shelter and caregiver support have significantly lessened what were high rates of poverty among the elderly population and significantly lessened the burden on their families. Of late, an aging Canadian population and rising numbers of people with dementia/Alzheimer’s have increased the public’s awareness of the challenges for families with members incapable of living independently. It seems opportune to propose, as part of these policy discussions, that the scope of the policies under consideration be broadened to include another group in society that has similar income, shelter and caregiving needs. Canadians with neuro-developmental disabilities do not benefit from the same systematic policy developments as seniors, and their needs are not being addressed through existing disability policy agendas. Many of the same concerns that prompted a public response in the form of age-dependent public pensions are equally or even more relevant for this sizable fraction of the Canadian population.
In this article, we provide evidence on the size of the nonaged population living with neuro-developmental disabilities, describe their labour market experiences and describe the levels of income they realize. On the basis of this evidence, we discuss the challenges faced by policy-makers hoping to respond to the needs of those with neuro-developmental disabilities. Taking into account the policy challenges as well as the needs and characteristics of those with neuro-developmental disabilities, we recommend a guaranteed annual income. We conclude with a broad idea of the cost of our proposal and suggest that it is modest in comparison to the benefits, and modest relative to the necessity that those with neuro-developmental disabilities be treated consistent by governments the way the aged are treated.
The human brain is important for every component of our life functions and has much capacity built into its 100 billion neurons. However, the brain is also highly vulnerable and can be easily injured. Often subtle influences of both genes and environment on the developing brain, spinal cord and nervous system are at the root of the more than 1,000 diseases, conditions and injuries affecting close to one-third of Canadians.
The prevalence of neuro-development injuries and conditions prompted former senator Sharon Carstairs to propose, in February 2011, that the federal government fund the development of a national brain strategy. She identified dementia, Alzheimer’s, multiple sclerosis, epilepsy, cerebral palsy, brain tumours, autism, schizophrenia, spinal cord injuries and brain stem injuries as prominent examples of neuro-developmental conditions that affect the health and social and economic well-being of Canadians. Her proposed strategy would “focus on innovative approaches to address research, prevention, integrated care and support, caregiver support, income security, genetic discrimination, and public education and awareness.”
Carstairs’s interest in the development of a national brain strategy emphasized the expected rise in the prevalence of dementia and Alzheimer’s in Canadian society as the baby boomers age. While this is clearly an important consideration, it tends to distract attention from the already high prevalence of brain and neurological conditions in the Canadian population that is not associated with aging. For neuro-developmental conditions like autism, the impacts are lifelong rather than emerging only later in life. Thus a national brain strategy should not be limited or defined by age; it should be developed in a way that recognizes the needs of those with neuro-developmental conditions regardless of age.
The November 2010 Report of the Standing Committee on Human Resources, Skills and Social Development and the Status of People with Disabilities described Canadian policies and programs for income supports for the disabled as largely designed to address the needs of the physically disabled. Many features of provincial Social Assistance programs are suited to dealing only with transitory periods of unemployment rather than prolonged disability. The Canada Pension Plan Disability Benefit and other tax benefits and savings vehicles promoted by governments to support people with disabilities are geared toward people who become disabled after having been in the workforce for some time. While important, these support programs are not likely to benefit people with lifelong disabilities who have never significantly participated in paid employment. For example, a recent report entitled “Youth Employment” by Renée Cameto and colleagues indicates that only 15 percent of adults with autism spectrum disorders are likely to be able to maintain full-time employment. Another recent report shows that only 30 percent of Albertans with severe and permanent mental illness are eligible to receive income support in the form of CPP disability benefits. The tax system offers a number of opportunities for people with disabilities to reduce their taxable earned income but, of course, taking advantage of these opportunities requires that they have earned income. Similarly, voluntary savings strategies promoted by instruments like the Registered Disability Savings Plan (RDSP) introduced in 2007 will be useful for the disabled only if their guardians have sufficient income to make deposits to garner matching contributions from the federal government. To the extent that having a disabled dependant imposes higher expenditures for households and often disrupts the labour supply of guardians, many families of people with neurodevelopmental disabilities may not be able to take advantage of this plan.
To address the shortcomings of the existing income support arrangements for people with disabilities in Canada, the November 2010 report proposed a federal basic income for people with disabilities along the lines of the OAS and GIS for seniors. Under a federal basic income program, these individuals would no longer be clients of provincial and territorial Social Assistance programs, creating savings that could, for example, be reinvested in a better system of disability supports delivered by the provinces and territories.
For neuro-developmental conditions like autism, the impacts are lifelong rather than emerging only later in life. Thus a national brain strategy should not be limited or defined by age; it should be developed in a way that recognizes the needs of those with neuro-developmental conditions regardless of age.
The 2010 report raised the issue of the costs of a program designed along the lines of an OAS demogrant benefit and an income-tested GIS benefit that would provide a maximum transfer to those eligible of $13,700. As Ronald Kneebone and Oksana Grynishak have recently shown in a study entitled “Income Support for People with Disabilities,” few provinces provide social assistance to people with disabilities as generous as that of OAS and GIS. The new federal program would therefore require a net increase in public expenditures. The 2010 report also discussed concerns about “work disincentive” effects of such transfers that would further raise the costs of providing a “basic income.” Thus the 2010 parliamentary committee report included recommendations from some witnesses that a federal basic income program be created that would initially be only for people with severe and prolonged disabilities, including those with a mental illness, who cannot reasonably be expected to earn adequate income from employment.
As we discuss below, we believe that despite these policy challenges, people with neuro-developmental disabilities would be a high-priority group for introducing a federal basic income. Among this disabled population, labour force participation rates are already low, suggesting limited incentive effects of a guaranteed annual income. Further, when affected people work, their employment incomes tend to be low. Given the low rates of participation in the labour force, Canadians with neuro-developmental disabilities are unlikely to benefit from most of the federal policies to support the incomes of the disabled that are tied to previous work activity through the CPP Disability Benefit and various tax benefits and so are currently receiving little in the way of effective support. We suggest that a basic income, or guaranteed annual income, provided to the neuro-cognitively disabled along the lines of the OAS and GIS pensions for Canadians over age 65 would lead to immediate improvements in the well-being of this disadvantaged population.
The Participation and Activity Limitation Survey (PALS) is a postcensal national survey designed to collect information on adults and children with disabilities, that is, those whose everyday activities are limited because of a condition or health problem. The 2006 PALS adult survey population consisted of all people 15 years of age or older living in households who reported at least one limitation to the census questions on activity limitations and who were living in Canada at the time of the 2006 census. The Public Use Microdata File (PUMF) classifies seven types of disabilities, namely hearing, seeing, speech, mobility, agility, pain and “other limitation.” Of particular interest to us is the PALS “other limitation” category since it includes many conditions and limitations that could be considered neuro-developmental such as psychological, memory, learning and developmental disabilities. The conditions included in this residual category are distinct from other classifications of disability in the PALS 2006, which are more “physical” in the nature of the limitation. The “other limitation” category for disability classifications is strikingly large. Whereas the overall prevalence of disability of all types for Canadians aged 15 and over is around 14 percent of the population, the prevalence of those with “other limitations” is 5 percent, amounting to nearly 1.3 million Canadians over age 15.
We suggest that a basic income, or guaranteed annual income, provided to the neuro-cognitively disabled along the lines of the OAS and GIS pensions for Canadians over age 65 would lead to immediate improvements in the well-being of this disadvantaged population.
Table 1 shows the estimated size of population groups and disability prevalence by age group. While physical disability in the Canadian population is associated with higher age groups, the “other limitation” disabled population is represented much more proportionately across all age groups and make up slightly more than half of the disabled population aged less than 45 years.
Education is an important investment for improving the standard of living of Canadians.
More education leads to higher income and more stable employment. People with neuro-developmental disabilities have not enjoyed the benefits of educational investment to the same extent as the physically disabled and nondisabled in Canada. Table 2 shows that two-thirds of people with neuro-developmental disabilities aged 25 to 64 have high school or less than high school as their highest level of schooling attained. For the nondisabled population, two-thirds of the population have more than a high school education.
Table 3 shows that adults aged 25 to 64 with an “other limitation” have remarkably low employment rates and labour force participation rates relative to those with no disability and those with physical disabilities. Only 35 percent of adults classified with an “other limitation” condition are employed, and only 40 percent participate in the labour force (employed or unemployed but looking for work). These employment outcomes are half of the levels for the nondisabled population and almost 20 percentage points lower than that observed for physically disabled people aged 25 to 64. The broader classification for disability shows some improvements in labour market outcomes but it must be kept in mind that this population group is disproportionately in higher age groups that would be nearer to usual retirement from paid work.
Given the employment outcomes of adults within the “other limitation” category, it is not surprising to see that this group has a high reliance on Social Assistance and disability benefits for their income (table 4). Consequently, a basic annual income would simply substitute for Social Assistance income with limited incentive effects on labour supply.
Figure 1 shows the distribution of employment income for the “other limitation” population, the physically disabled and the nondisabled. Due to high rates of nonparticipation/non-employment of the “other limitation” population, there is a large mass point at zero income. Even among the proportion with earned income, incomes of the “other limited” are low with less than 20 percent of this population earning more than the nondisabled median income of $20,000 to $29,000 per year. Few people with an “other limitation” will ever earn what Canadians would consider to be a high income.
Figure 2 shows that nondisabled Canadians aged 25 to 64 years in the PALS data have a median household income in the range $60,000 to $79,999, while for the physically disabled median income is between $50,000 and $59,000. For those with “other limitations,” median household income is less than $50,000. Only 22 percent of those with “other limitations” live in households with more than $80,000 in annual income compared to 30 percent of the physically disabled and 44 percent of the nondisabled. At the other end of the income spectrum, just over one-quarter of those with “other limitations” have total household incomes below $20,000 per year, compared to 15 percent of the physically disabled and just 7 percent of the nondisabled.
It is important to understand that when making these income comparisons, the cost of care for those with physical and neuro-developmental disabilities can be very high, making the purchasing power of household income much lower for these groups than a simple income comparison might suggest. What’s more, these relatively low income levels and high cost-of-care expenditures mean that voluntary tax sheltered savings vehicles like the Registered Disability Savings Plan (RDSP) will be of limited impact. Affected families simply do not have the after-care disposable income necessary to take advantage of tax incentives.
Figure 3 compares incomes for those aged 65 years and over. It is interesting to note that median household incomes for those with “other limitations” and those with physical disabilities over age 64 are between $30,000 and $39,999, while the median household income for the nondisabled is between $40,000 and $49,999. These income comparisons show that much of the income disparities between the disabled and the nondisabled are dramatically reduced when incomes are generated through public pensions rather than through paid employment. The most remarkable outcome in figure 3 is the elimination of very low incomes for the “other limitation” disabled over age 65 compared to “other limited” disabled under age 64.
An inevitable response to the suggestion of a basic annual income for people with neuro-developmental disabilities will be that it would be costly. The statistics presented in this report provide some insight on how large these costs could be.
Let’s consider the possibility of a guaranteed annual income of $13,700 per year. This is the income currently guaranteed to Canadians aged 65 years and above paid to them through OAS and the GIS. The simplest calculation involves measuring the cost of ensuring people with employment earnings of less than $15,000 per year a minimum income of $13,700 per year. Based on the frequency of employment earnings in figure 1, of 967,000 people with “other limitation” disabilities between the ages of 15 and 64, 667,000 would receive an average transfer from the federal government of approximately $10,950 per year. This would cost the federal government about $7.3 billion annually.
It is important to recognize, however, that according to table 4, 62 percent, or 599,550 of those with “other limitations” aged 25 to 64 are already receiving provincial Social Assistance payments, Worker’s Compensation, CPP Disability Benefits or Veterans Affairs Disability Pensions. If we assume that those identified with “other limitations” currently receive half the OAS and GIS amounts via these various government-funded programs, then roughly speaking, $4.1 billion of the federal expenditure on a proposed guaranteed annual income will be accounted for by government expenditures already being made on this disadvantaged population.
How big is this net new expenditure of $3.2 billion? It is just over 1 percent of current total federal government expenditures of $270 billion. This does not seem to us to be in any way a shocking amount or an amount that might threaten the viability of other government programs. In fact, it seems to us to be a very small amount when measured against the benefits realized from this investment in people with neuro-developmental disabilities and a small price to be paid to treat in a similar way all people, regardless of age, with neuro-developmental challenges.
Although our focus in this note is on understanding the costs of extending a guaranteed annual income to all those whose disabilities might deserve consideration under a national brain strategy, advocates might reasonably argue for similar support to be provided to those with physical disabilities. Indeed, the government may balk at extending benefits to nonseniors with neuro-developmental disabilities without doing the same for nonseniors with physical disabilities. What would this extension cost?
Based on the distribution of earnings of the physically disabled shown in figure 1, and the size of the physically disabled population aged 15 to 64 reported in table 1, providing a guaranteed annual income of $13,700 to those with a physical disability would mean 765,000 people would receive an average transfer from the federal government of $10,600 per year. The gross cost of this to the federal government would be $8.1 billion annually. But, again, we note that 35 percent of those with physical disabilities are currently receiving Social Assistance benefits in one form or another from government (table 4). If we assume those 514,707 people are also currently receiving half the OAS and GIS amounts, then roughly $3.5 billion of the federal expenditure on a proposed guaranteed annual income will be displacing government expenditures already being made. The net cost to government of bringing those with physical disabilities under the proposed guaranteed annual income would therefore be $4.6 billion an amount equal to 1.7 percent of total federal expenditures.
Clearly, our cost estimates are based on some important assumptions. It’s difficult to know if we have overor underestimated the net cost of a guaranteed annual income extended to those under age 65 with neuro-development challenges ($3.2 billion) and to those under age 65 with physical disabilities ($4.6 billion). Those who challenge our net costs as being too low will suggest that current government programs provide less support than we have suggested through disability benefits, Social Assistance, Worker’s Compensation and other programs. Those who challenge our net costs as being too high will point to examples like the province of Alberta, which currently pays, through its Assured Income for the Severely Handicapped (AISH) program, an amount slightly higher than our proposed guaranteed annual income. Thus for the approximately 40,000 Albertans with physical and neuro-developmental disabilities receiving AISH payments, the net cost to governments of switching to a guaranteed annual income would be zero.
The statistics and cost estimates presented here highlight the pressing need for the development of a brain strategy, as proposed by Carstairs. It would be a missed opportunity, however, to focus on only the conditions associated with aging, at the expense of conditions that last for a lifetime.
Neuro-developmental disabilities are in many cases lifelong conditions that diminish human capital formation and severely limit opportunities for earning income in the labour market. At this time we cannot be certain that outcomes could not be improved for some cognitive conditions like autism through greater emphasis in education on life skills and vocational training. It is also possible that greater accommodation of cognitive disability in the workplace is possible. Hope for improvements in these areas comes from the fact the Canadian labour market has had some success accommodating physical disabilities.
Regardless of these opportunities, however, a sizable proportion of neuro-developmentally disabled Canadians live with moderate and severe needs that contravene involvement in, and hence potential income from, the labour market. Currently, families of people with neuro-developmental disabilities shoulder most of the financial and caregiving load for much of the affected person’s lifetime. As the neuro-developmentally disabled are also less likely to marry and/or have a partner/spouse, they less frequently move beyond the support of their immediate family. Important transitions in the disabled person’s life occur with the loss of parental support and financial resources associated with the parents’ own aging, ill health and eventual death. As this transition is likely to occur well before the age of entitlement to public old age pension support, the needs of adults with neuro-developmental disabilities are not occurring in an adequate, transparent or systematic way.