The Morning Brief – 04.23.20

By Bruce Carson


Economy—Canada 2020: The Recovery Project

Second Discussion in this Series

Re-stitching the Social Safety Net

The Morning Brief of April 8 set out the first discussion in this series entitled “The Big Picture for Canada” which dealt with broad themes such as what comes next and what Canada will look like when we emerge from COVID-19 strictures now governing our day to day lives.

Lessons we have learned and what we need to do next as a country to smooth the road to recovery were discussed.

The second discussion in this series took place a week ago today, and dealt with a topic which arises almost daily during Prime Minister Trudeau’s media availability—why did the government not adopt a basic income approach when it decided to provide monetary help to Canadians through its new Canada Emergency Response Benefit (CERB) so that it would reach all Canadians?

Almost every day, those who are not eligible for CERB are dealt with in a one-off announcement. Yesterday, it was $9 billion in help for students, a matter which initially fell through the CERB cracks and even during that announcement, it was signalled that help is coming for seniors.

All of this leads naturally to a discussion as to whether in the post COVID-19 world; Canada should adopt some form of basic income or guaranteed annual income for those at the low end of the income ladder?

The Canada 2020 discussion last week took place under the heading “Re-stitching the Social Safety Net.” It featured former Senator Hugh Segal, a long-time advocate of basic income and author of a recent book on this subject, “Boot Straps Need Boots” in conversation with Helaina Gaspard, Director of Governance and Institutions at the Institute for Fiscal Studies and Democracy located at the University of Ottawa.

The session began with Hugh Segal being asked his view of the role of the state as that sets out the fundamental relationship as to how the most vulnerable are to be treated. Segal responded that the role is to determine how best to serve its citizens. The state in his view should be modest in its aspirations and respectful of the rights of people. There should be a framework of opportunity where rule of law is sustained as well as respect for equality of opportunity.

Canada’s response to the economic challenges which have come from COVID-19 has shown the weaknesses in our existing social safety net. It was pointed out that we have a disparate system where the pieces don’t connect. An example is the request by the federal government that provinces not claw back CERB payments.

It was also noted that Canada doesn’t do as well as we think it does in this area, as a number of countries do better than we do in reducing poverty. There are still 3-4 million Canadians living below the poverty line and this increases exponentially when Indigenous Canadians are included.

Provincial welfare systems are labour intensive, governed by a large book of rules with case workers continually passing judgement on the people the system is supposed to be helping. And even then, the system only gets those involved half way to the poverty line and discourages work by clawing back earned income.

Segal sees a Universal Basic Income as more of a top up, not a cheque for a $1000 as proposed by former Democratic candidate for president, Andrew Yang. The top up would be delivered through the CRA and how that money is spent is the business of the recipient. There would be no case workers as the simple premise is, people who need it, get it.

The CRA has proven to be efficient and reliable in the delivery of CERB and should be used to deliver the basic annual income. The challenge in a post COVID-19 world will be to find a way for provinces and territories to deal with Ottawa on income security.

The goal would be to have a system which gets recipients to within 75%-80% of the poverty line with no disincentive for work. The Ontario pilot project encouraged work and Segal said that is actually what happened. Those who didn’t use it for access to work used it as a base to pursue education.

There is growing international interest in basic income and it will be introduced in Scotland and Spain.

With regard to cost, the Parliamentary Budget Officer took the Ontario pilot and costed in across the country with the conclusion being a gross cost of $60 billion annually. But as was pointed out, federal support programs could be peeled away, bringing the cost down to $40 billion and provinces would do the same, bringing costs down to $20 billion. Also this amount does not take into consideration reduced health care and associated costs as recipients become healthier and productive members of society and issues associated with poverty diminish.

The federal government, post COVID-19 will have the most fiscal space and a basic income program is within provincial jurisdiction, so implementation will require fed-prov- territorial discussions also involving Canada’s Indigenous people.

After COVID-19, it was pointed out that there will be serious discussions about equalization as well as fed-prov transfers, particularly with regard to health care and that is where funding basic income fits in. As Hugh Segal pointed out, the provinces and federal government are equal partners in pursuing social justice, which is what a basic income is actually all about.

In turning this crisis into an opportunity, there are roles for politicians, Indigenous leaders and civil society debating the priorities of the post-COVID-19 agenda. Together a consensus should evolve, based on the CERB experience, for a program providing economic certainty for Canadians with low income; that is a basic income.

As Segal indicated “this is not rocket science.”

Summing up with Helaina Gaspard, Segal pointed to the age gap in the social safety net between those who receive the Canada Child Benefit and those who receive OAS with the Guaranteed Income Supplement. The goal, post COVID-19 should be to help those between 18-64 years of age, who have no safety net.

To Come

  • EI numbers for February to be released
April 24
  • Virtual vigil to celebrate the lives of those murdered in Nova Scotia last weekend
April 27
  • Applications open for the federal wage subsidy program
April 28-29
  • U.S. Fed meets
April 29
  • House of Commons due to meet in person
April 30
  • GDP numbers for February to be released

As usual, The Morning Brief will return on Tuesday, April 28.

– BC