A ‘Basic Income’ &
Canada’s Income Security System
John Stapleton
Open Policy
November 23, 2016
Hamilton, Ontario
Order of Presentation
1. Canada’s income security system:
- Programs and Proportionality
2.
3.
4.
5.
Who is living in poverty? A closer look
A basic income: some numbers and concepts
Worrying about work…..
Some thoughts from the income security
data
Basic income & Canada's income security
system
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1. Canada’s Income Security System
PROGRAMS AND
PROPORTIONALITY
Basic income & Canada's income security
system
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Canada’s Income Security System
• Now pays out $170 billion ($153 billion in
2013)
• 8.5% of GDP ($2.0 trillion economy)
• $30 billion extra (conservatively needed to
take all Canadians out of poverty.
• $170 + $30 = $200 billion
• 10% of GDP
• 1.5 percentage points additional
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system
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Canada’s Income Security System
Canada’s Income Security System - Proportionality
Target Group
Percent of
Population
16.5%
Share of Income
Security System
52%
Difference
Children
19.3%
9%
-10.3%
Working age
adults
64.2%
38%
-26.2%
Aged
Basic income & Canada's income security
system
+35.5%
5
Basic income & Canada's income security system
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CANADA: Estimated Income Transfers by Target Group
2013
($153 Billion)
Other (local,
residual CPP/QPP)
7%
GST Credit
3%
SA includes benefits paid
to persons with
disabilities
Social Assistance
10%
EI & Quebec
Parental
Insurance
11%
DISABLED
(WComp, C/QPP-D,
Vets)
8%
CHILDREN
(CCTB, UCCB,
Q/CPP Children,
CSA)
9%
SENIORS
(OAS, C/QPP
Retirement, WWI &
WWII
52%
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CANADA: Estimated Income Transfers by Program 2013
($153 Billion)
VETERANS (WW I,
WW II, VETS
ALLOW)
2%
GST CREDIT
3%
UCCB
2%
LOCAL
3%
SOCIAL
ASSISTANCE
10%
CCTB
7%
WORKERS
COMPENSATION
3%
OAS
28%
CPP/QPP
31%
EI & QUEBEC
PARENTAL
INSURANCE
11%
Canada: Estimated Income Security Program Spending
by Program Philosophy
2013
($153 B)
Contributory
46%
Service to
Country
26%
Income-tested
28%
Sources:
CANSIM table 380-0080
Open Policy
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system
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2. Who is living in poverty?
A CLOSER LOOK
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Who is living in poverty?
• 12.7% of Canadians
• 1.7% of all Canadians are seniors living in
poverty (about 10% of all seniors – 13.3% of
poor)
• 5.1% of all Canadians are recipients of social
assistance – about 40% of the poor
• 6.0 % of Canadians are non-elderly, working
age, mostly working poor – 47% of poor
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CANADA'S POPULATION: PERSONS LIVING IN POVERTY
PERCENTAGE WHO ARE NON-ELDERLY, SENIORS AND ON SA
2014
(Based on after-tax LIM)
6.0%
5.1%
1.7%
87.3%
Not living in poverty
Seniors living in poverty
Non-elderly persons living in poverty,
not &onCanada's
SA Persons
living in poverty, on SA
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income security
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SOCIAL ASSISTANCE RECIPIENTS AND SENIORS AS A PERCENTAGE
OF THOSE LIVING IN POVERY IN CANADA, 2014
(Based on after-tax LIM)
Seniors living in
poverty
13.3%
Persons living in
poverty, on SA
39.8%
Non-elderly persons
living in poverty,
not on SA
46.9%
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SA CASES BY CHARACTERISTICS
CANADA, MARCH 2015
Non-Disabled, Other
4%
Non-Disabled
Single Parents
12%
Disability Cases
53%
Non-Disabled Singles
31%
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3. A Basic Income
SOME NUMBERS AND CONCEPTS
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Numbers and Concepts
• No agreement on GAI or Basic Income
terminology – they mean different things to
different people …………….but………………
– GAI tends to mean blowing up the existing system
and replacing it with a negative income tax or
some big benefit of some description
– Basic Income tends to mean leaving most of the
system intact but replacing/augmenting welfare
and bringing everyone to the poverty line with no
conditionality
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Numbers and Concepts
• Something to think about……………
• One could argue that seniors and children
have a basic income guarantee now:
– OAS and GIS, GAINS and Trillium credits
– A single gets $18,000 a year with no other income
– Children get about $6,000 a child (averaged out)
with the new federal child benefit program
– Question? Do we just need a new program and
more money for working age adults?
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Numbers and Concepts
• More to think about……..
• Program Administration now costs about $8
billion
• Profound cuts and rationalization could get it
to $4 billion – cut 40,000 staff
• Minimum cost of GAI or Basic income is
$25Billion to $30 billion
• Administration savings can’t pay for it!
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Numbers and Concepts
• Implement a Negative Income Tax
– Blow up everything else
– Pay everyone a set amount and tax back from 6 in
7 Canadians who are not poor using existing tax
system
– The cost soars to (up to ) $500 billion – 25% of
GDP
– Bankrupts Canada instantly
• A solution in search of a problem?
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Numbers and Concepts
• Apologies to the Bare Naked Ladies:
• “If I had 30 billion dollars….. I’d buy you …….”
– A real national child care program
– A real solution to climate change
– An end to gridlock and infrastructure decay
Many Canadians have their own ideas as to their
priorities for a spare $30 billion – They would not
start with a GAI or basic income !!!
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Numbers and Concepts
• What $30 billion means:
– $1,739 for every man woman and child in Canada
to pay up
– $3,478 for the richest 50% of Canadians if we did
not want the bottom half to pay……
– It’s not chump change!
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Numbers and Concepts
• Must also consider First Nations
– Not just income poverty
– Also what we could call ‘living standard poverty’
where heat, light, water, housing, education are
substandard
– Would raising everyone to the poverty line or
above solve living standard problems?
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Part 4
WORRYING ABOUT WORK…..
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Fraser Institute
• “Although the practical implementation challenges
make a GAI reform implausible in Canada, evidence
from five North American experiments with a
negative income tax style GAI provides some valuable
insights. A negative income tax discourages
recipients from working because it subsidizes leisure
and reduces the marginal benefit of working. The
results from the experiments generally point to a
reduction in hours worked by recipients, reinforcing
the concern about work disincentives.”
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Worrying about work…..
• Give people money and they won’t work?
– Lazy millionaires?
– Lazy poor people?
– People who “want to be poor/homeless”
The counter:
- rich people who work? Why would they?
- 2.6 million in working poor families?
- working seniors in Walmarts and Tim’s ?
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Worrying about work….
• Many people believe on balance that
motivation comes through deprivation; or
• Motivation ought to come through
deprivation .
• But it seems that almost everyone wants to
work – a tonic for the soul – heals illness – and
provides self-esteem
• Non-work is painful – not leisure!
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Some Thoughts from the Data
1. Our income security system is out of whack
with who is poor
2. It works best for people who are not poor
3. It fails people who are poor
4. The system could easily afford to provide a
basic income if there is the national will to do it.
5. Seniors are doing best but we need to ‘Grow
the pie” for all to reduce and eliminate poverty.
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