The concept of providing all Canadians with free money to alleviate poverty has been gaining traction on social media, as a universal basic income (UBI) bill works its way through Parliament.
Bill S-233, which would require development of a national framework for a guaranteed livable basic income, is currently being reviewed by the Standing Senate Committee on National Finance (NFFN), while an equivalent private member’s bill has been tabled in the House. It is rare for private member’s bills to become legislation unless they get the backing of government.
The first place in Canada to engage with the concept of UBI was
Manitoba. The provincial government in conjunction with Ottawa launched a “Mincome” project that provided payouts to low-income households between 1974 and 1979, in parts of Winnipeg and the rural community of Dauphin in western Manitoba. The administrators said the experiment led to a decline in hospitalizations, but the program was ended after the government cited issues with unsustainable rising costs.
Then in 2017, the province of
Ontario under then-Liberal Premier Kathleen Wynne rolled out a basic income pilot for the cities of Thunder Bay, Hamilton, and Lindsay. The three-year study aimed to give 4,000 low-income single Ontarians up to $16,989 annually over the study period, less 50 percent of any earned income, but it was
shut down after Progressive Conservatives formed government in 2018.
“The research project had an extraordinary cost for Ontario taxpayers which, according to the Ministry of Finance, would require increasing the HST from 13 percent to 20 percent if implemented across the province,” the Ontario government said at the time.
Quebec launched a basic income program that came into effect on Jan. 1, 2023, providing $1,211 a month, or $14,532 per year, to those with “severely limited capacity for employment.” In November,
Newfoundland and Labrador introduced a similar program for residents aged 60 to 64 as part of its new Poverty Reduction Plan, which also increased the province’s Child Benefit program by 300 percent.
The federal government already has a UBI-like scheme in place, with the
Guaranteed Income Supplement (GIS) providing a non-taxable monthly benefit for Canadians 65 and over who collect Old Age Security (OAS) benefits and who fall below maximum income thresholds.
Basic Income Legislation
At the federal level, delegates at the
Liberal Party of Canada’s April 2021 policy convention endorsed establishment of a universal basic income plan for Canada, with 77 percent of delegates voting in favour of a resolution on it.
When it comes to technicalities, a UBI scheme means everyone would receive the same monthly payment while higher-income earners who didn’t need the extra money would have it taken back as identified by the tax system at the end of each year. A guaranteed basic income (GBI) scheme, on the other hand, means that only low-income families and individuals would receive payment.
When asked about the policy vote, Prime Minister Justin Trudeau told reporters that many ideas and initiatives brought up at Liberal Party conventions, such as same-sex marriage, eventually went on to become government policy.
In February 2021, Liberal MP Julie Dzerowicz tabled a private member’s bill,
Bill C-273, calling on the finance minister to develop a national GBI strategy, but the legislation was terminated after a federal election was called in August 2021.
Senator Kim Pate and NDP MP Leah Gazan later introduced two new GBI bills, both in December 2021:
S-233 in the Senate and
C-223 in the House of Commons.
Both bills are worded the same, calling for the finance department to create a national framework for a GBI program for anybody in Canada over the age of 17, including temporary workers, permanent residents, and refugee claimants. The bills also call for such a program to not “result in a decrease in services or benefits meant to meet an individual’s exceptional needs related to health or disability.”
Ms. Pate noted that programs during COVID-19, such as the Canada Emergency Response Benefit that doled out $2,000 a month to millions of Canadians, had demonstrated Canada’s ability to “deliver meaningful, innovative and flexible economic supports to individuals in need.”
PBO Details Costs of Program
According to an
April 2021 report from Parliamentary Budget Officer (PBO) Yves Giroux, a national GBI program would initially cost $85 billion a year in 2021–22 and rise to $93 billion in 2025–26. The report used the parameters set out in Ontario’s 2017 basic income pilot project, which gave single persons and couples annual incomes of up to $16,989 and up to $24,027 respectively, as well as an additional up to $6,000 per year for people with disabilities.
Based on the models used, the PBO’s report said a GBI program would reduce poverty rates in Canada by almost half in 2022—though this would vary across provinces—while having low impacts on the country’s labour supply.
The incentive and disincentive aspects of the scheme used in the modelling were
based on academic literature, Mr. Giroux told senators in his testimony before the NFFN committee on Oct. 17, 2023.
However, he said that implementing such a scheme would come at the cost of the middle class.
“Obviously, if you want to create a program of this scale at zero cost, you need losers. Yet the losers would mostly be found in the top 60 percent of income earners, which I believe includes a good portion of the middle class,” he said.
The PBO’s
first report on the estimated cost of establishing a national GBI program using Ontario’s model was released in April 2018 upon the request of Conservative MP Pierre Poilievre, now the Conservative Leader, who was at that time the shadow finance critic.
While Mr. Poilievre has not commented on the basic income issue as Tory leader, previous leader Erin O'Toole said he did not want to “incentivize a permanent CERB [Canada Emergency Response Benefit], because we have actually seen how that has hurt small businesses by distorting the labour market.”
As well, Conservative senators have been opposing the proposed bill during deliberations in the Senate.
“Common sense dictates that giving people large, unconditional cash payments is bound to make work less attractive and rewarding, not least because now recipients are only working for the difference between their basic income entitlement and wages,” Conservative Sen. Michael MacDonald said during
second reading of Bill S-233 on April 18, 2023.
