Buying an end to poverty
A conference of academics held over a five-day long weekend, when more people are watching rain clouds than news reports, is hardly a time to make a splash of chatter among Canadians.
But such a conference was held last weekend at McGill University. It drew more than 100 speakers and what they had to say should not be lost, just because there were important soccer games on the television and even more important meals cooking on the barbecue.
So let’s spare a moment or two to think about their topic: a guaranteed minimum income plan to reduce the effects of poverty.
Now there’s a idea that doesn’t get a lot of traction in a place like Alberta, where it’s an article of faith that good people work for good pay and people who don’t work ... may not be so good.
But even here, where the good people want to keep more of their good pay, people who crunch numbers suggest a program ensuring every person has the means to cover the cost of basic living may be cheaper than the patchwork quilt of social programs that provides more warmth for bureaucracy than people in need.
Here’s the question the conference was talking about: if government ensured that no adult earned less than $20,000 a year, would the nation as a whole be better off?
In the minds of most of the academics at the conference, the answer is yes.
Half of all families in Canada make less than $76,000 in total income, half make more. On average, an employed Canadian makes $48,250 a year.
The low-income cutoff (LICO) — one of the best understood measures of poverty in an industrialized country like ours — is 50 per cent of the median income, with adjustments for local factors like housing and transportation costs.
In Ontario (where I was able to find data easily enough for discussion purposes), the LICO for a family of two adults and one child is $28,000. Federal statistics tell us that of all the families below the LICO standard, just under half have members who work.
That makes them good people, right?
But boosting this family’s income to $40,000 with direct federal subsidies is a rather large step. You’d have to find a lot of tax savings from other programs — and convince a lot of taxpayers that doing this is worthwhile — for the idea to fly.
So first, where would the savings come from?
Well, here’s an unintended boost that might have helped former Tory party leader Tim Hudak in Ontario last month: a guaranteed income plan needs only a federal tax return to qualify. Administration would cost no more than expanding the system that sends GST refund cheques to low-income Canadians.
There would be no army of caseworkers doing screening interviews, scrutinizing documents, keeping track of monthly earning statements and doing follow-up visits with welfare clients. There would be no bureaucracy watching how much a disabled person earns working part-time, in case the next month’s support cheque can show a deduction. That’s more than the 100,000 civil servants in Tim Hudak’s Ontario to lay off the public payroll.
Where $12,750 for an individual on welfare in Alberta becomes a trap against trying to re-enter the workforce (you lose your benefits if you try — it’s practically a 100 per cent tax on income), $20,000 becomes a more comfortable floor (with a roof over your head).
A person on the program can attempt to find work at the bottom of the income scale, knowing the gap between wages and expenses can always be covered.
A retired guy — like me — can leave a job after 40 years and be a volunteer. StatsCan puts the value of volunteer work at about $50 billion a year. Include stay-at-home parents and all other types of unpaid work, and that total rises to about $297 billion a year.
Crime costs attributable to poverty would drop $1 billion to $2 billion a year, according to the academics at the conference. Health-care costs attributable to low income could drop anywhere between $8 billion and $17 billion a year.
And there’s that old study from Dauphin, Man., to consider. A guaranteed annual income experiment was done there under Pierre Trudeau in the 1970s. The data from that was compiled, but never digitized and fully studied, and only recently have academics begun sifting through boxes of documents in archives to quantify what really happened when everyone in town was guaranteed a minimum income.
All we know is that a socialist Armageddon of layabouts did not rise in Dauphin. Poor people still went to work, their kids stayed in school longer and had better lives.
They were good people. Are good people worth $20,000 a year?
As the long weekend winds down, let’s not allow what was said at this conference to simply fade away.
Greg Neiman is a retired Advocate editor.