Eliminating the web of financial programs and social assistance would offset the cost of a GLI, and a five percent hike in GST could cover it.
What’s next?” That is the question on the mind of every Canadian since the economic shutdown in March. While the Canadian Emergency Response Benefit (CERB) and subsequent extensions have helped ease the financial burdens of 8.6 million recipients, it is still unclear what Canada’s economic safety net will look like in the future. Now more than ever it is important that Canada consider the implementation of a national Guaranteed Livable Income (GLI). Failing to do so risks reverting to reliance on a patchwork of assistance programs that too often fail to provide adequate income stability to many Canadians.
This past spring, the Employment Insurance system (EI) was overwhelmed by millions of applicants and exposed for what it was: discouragingly complex, providing inadequate levels of income support, and full of onerous conditionalities and qualifications that hindered access for those most in need. Just prior to COVID-19, 1.2 million Canadians were unemployed but an estimated 719,000 were not in receipt of EI benefits, primarily due to the system’s extremely restrictive eligibility requirements.
While the CERB helped to temporarily address some of these flaws in the EI system, it still left out too many people, particularly those struggling to get by, some without even access to provincial and territorial social assistance programs such as Ontario Works.
If EI is broken, social assistance is all the more so. Onerous and stigmatizing application processes for Ontario Works and the Ontario Disability Support Program require applicants to provide countless documents including birth certificates, rent receipts, immigration documents, health cards, pay stubs and bank statements to demonstrate eligibility.
Eligible applicants are then subject to the discretion of individual caseworkers with the power to judge what they see as their “real” needs. Even when their circumstances do not change, every month and usually in person, recipients must provide caseworkers with documentation of their financial situation. With over 800 rules, 240 benefit rates, 50 children’s benefit rates, and more than 30 specialized benefits in Ontario’s social assistance programs alone, applicants face the stress and uncertainty of not knowing whether they will receive the same or any benefit each month.
By comparison, the availability and ease of access to CERB point to the multiple potential benefits of a Guaranteed Livable Income.
For instance, in Ontario, a couple with two children could receive a total of $30,998 per year through basic social assistance, federal and provincial child benefits, GST credits and provincial tax credits. This is a far cry from the nation-wide low-income measure of $48,108 for that household size that CERB benefits provide. Social assistance is even more grossly inadequate for those who do not receive child benefits. A single person qualifies for only $9,646 per year in Ontario, well below the low-income measure of $24,054. A mere 15-20 percent increase in benefit levels for single employable people would result in a 15-20 percent decrease in demand for shelter beds.
Work-search conditionalities required by social assistance schemes often overlook the barriers to seeking work for those in poverty. Such realities as lack of transportation, poor health (including mental health and mobility issues), and care for dependants are often neglected or ignored. Despite data to the contrary, critics of a Guaranteed Livable Income claim that it will disincentivize work. Few consider the disincentivizing nature of current social assistance approaches, however. Recipients of Ontario Works are permitted to earn only $200 a month before their benefits are clawed back: 50 cents for every additional dollar they earn.
Drastic change is needed, and Canadians are increasingly looking to the potential of a Guaranteed Livable Income. A GLI could provide livable levels of income assistance to Canadians in need in a way that recognizes and accounts for unique circumstances. Critics of GLI often cite exorbitant costs as a key reason to oppose the program. Canada’s parliamentary budget officer (PBO) recently estimated the cost of a GLI for six months during the COVID-19 pandemic could range from $46 billion to $96 billion. This cost is based on record-breaking pandemic unemployment rates that are expected to decrease, which would result in a significantly lower cost estimate of a GLI, particularly as the economy recovers. Nevertheless, even the PBO’s costing falls easily within the realm of other pandemic emergency social and economic spending. For example the PBO estimated that the CERB will cost at least $71.3 billion, not counting the government’s latest one-month extension of the program.
Why continue to fund social assistance programs that fail to provide adequate support when poverty in Canada could be eliminated?
In a non-pandemic context, in 2018, the PBO estimated that a national GLI constructed along the lines of Ontario’s basic income pilot program could cost as much as $79.5 billion. The net cost could drop to around $44 billion by rolling in and replacing federal financial programs such as the GST/HST tax credit and Working Income Tax Benefit, both of which support low-income Canadians and vulnerable groups. (Programs geared specifically to seniors, children, Indigenous Peoples or those with disabilities are among those that would be left intact.) Further savings of at least $15 billion for provinces and territories could come from replacing social assistance programs — sometimes known as welfare — with a GLI. The financing of this proposal and many others does not require the defunding of social programs such as affordable housing and childcare.
While a comprehensive income tax reform plan may be required to finance the initial costs of GLI, the task is feasible. All it would take is an estimated five percent increase in GST to fund this program. Why continue to fund social assistance programs that fail to provide adequate support when poverty in Canada could be eliminated? Eliminating poverty will also undoubtedly lead to further cost savings in other sectors such as housing, health care, and the criminal legal and prison systems.
While the latest announcement to extend CERB and relax eligibility requirements for Employment Insurance is a necessary measure to ensure income stability for Canadians, it fails to address the persistent deficiencies of income assistance measures. Once again Canadians risk being subjected to a patchwork of inadequate programs whenever the temporary CERB supports end.
Real and adequate change must be considered, and 75 percent of Canadians support the implementation of a Guaranteed Livable Income. And, let’s not forget that it was a minority government that introduced Canadian Medicare in 1966. Despite early pushback, no subsequent government was willing to backtrack, and Canada has dined out on our international reputation as promoters of universally accessible health care. People (and politicians) saw for themselves the lifelong benefits of accessible health care. In a country that prides itself on upholding human rights, it became unconscionable to advocate that the health and well-being of Canadians should depend on how much money they have in their pocket.
The recent motion submitted in the House of Commons by MP Leah Gazan proposes the conversion of CERB to a permanent GLI. While the coming months are still clouded with uncertainty, one thing remains clear: we cannot go back to how things were. We can no longer pretend that Canada’s inadequate social assistance programs are a sufficient response to poverty. Not when a GLI could offer so much more. Canadians are clear; hopefully this government’s legacy will be the actualizing of robust social, health and economic systems that enable individuals, the economy and the country to rebound.
This article is part of the Tackling inequality as part of Canada’s post-pandemic recovery special feature.