Time to get serious about a BIG idea

In the past weeks, the federal government and the government of Ontario have both mused aloud about bringing the idea of a basic income guarantee (BIG) to the front burners in their next budgets.

Opposition parties in other provinces have also promised to put this in their next election platforms, and even the mayors of both Edmonton and Calgary have expressed support for testing BIG.

It's become a make-work program for economists and pundits of all stripes to weigh in on both sides of several complicated questions:

• Would a guaranteed annual income for every Canadian adult significantly reduce poverty in Canada?

• Would it be a cheaper, fairer redistribution of tax revenue than the paintbox of welfare, disability support, senior support, child support, student support, employment insurance and minimum wage policy that requires massive federal and provincial bureaucracies across the country?

• Would BIG become a disincentive for people to look for better work than part-time minimum wage — or to look for a job at all?

There are enough studies out there and enough economic projections both for and against BIG to warrant a field trial. And if Ontario wants to host a pilot project on that, then all of Canada should watch.

My bet (more on gut instinct than anything else) is that we can do more good and less harm for more people, with less money, through BIG, than with any amount of tinkering with the status quo.

We can pretty well take it as read that current supports like welfare, tax credit programs, EI, GIS, student loans/grants and all the rest add up to a bureaucratic nightmare. Here in Alberta, we are well aware how long wait times and the burden of paperwork for assistance for newly laid-off workers has become a huge stress both on the people affected and the offices that are supposed to help them.

We also know that there's opposition in small business and the service trade to raising the minimum wage to a living level.

We're also no strangers the the disincentive for the levels of advanced training Canada needs, in ever-rising tuition and living costs for students.

And we know the current welfare system across Canada is costly, and isn't reaching its goals.

So why not test the idea of the basic income guarantee, to see if it's an improvement on all of the above?

Right now, the accepted poverty rate in Canada is about nine per cent. Let's just include the bottom decile of incomes in that category.

The number most people bandy about for BIG is a guaranteed income of $18,000 a year — just to start the discussion.

What would be the administrative cost savings if we eliminated welfare, the child tax credit, the working income tax benefit, the GST refund, the GIS for seniors — the whole menu of income-tested government supports that require regular reporting and constant tinkering to function?

Do you meet the mandate of the particular program, is every line of the application done perfectly? Can you wait weeks or months to find out if you are accepted, or have to go back and apply all over again?

Nationally, admin costs for these systems must be in the high tens of billions a year.

Instead of paying an army of bureaucrats large salaries to monitor it all, we direct a few platoons to issue monthly cheques, based on tax or payroll returns so that nobody slips below $18,000 a year. If you find employment, you don't lose all your benefits — you should always be better off working than not working.

Additional tax savings could be found in reduced public expenditures like emergency ward visits, mental health care costs, prescription drug expenses and crime, costs which are all strongly linked to poverty.

Canada's decades-old experiment in Manitoba reported that BIG did not create a class of welfare layabouts. Only two groups of people took BIG exclusively rather than work: women with infants who used BIG to “buy” their maternity leave; and older teen males who decided in greater numbers to graduate high school rather than drop out for a low-skill job.

But it's true, all the talk about a guaranteed income as a means of reducing poverty — and the total tax cost of our attempts at reducing poverty — are speculative. Economic projections are still theory, and you can buy any kind of economic projections your political views might support.

All the more reason to test the idea over a period of several years. The potential gains right now seem much greater than the losses.