Income for all

Could there become a time when all our basic needs are paid for by the government? That’s the question many economists and politicians around the world are starting to explore. With automation altering the future of work and studies showing that financial stress can lead to unhealthy life choices, there’s a growing movement to introduce minimum income for all.

In April 2017, the Ontario government announced a basic income pilot project to see if giving people a base salary would change their quality of life. People who barely have enough money to scrape by tend to get sicker than those who have enough to at least cover their basic necessities. They’re also at risk for substance abuse problems, education challenges and other issues says a government report. By paying a minimum income to cover people’s needs, people should be healthier, which would be better for them but it will also put less stress on provincial healthcare systems.

Ontario’s three-year-project will give 4,000 people in Thunder Bay, Lindsay and the Hamilton and Brantford area, plus a not-yet-named First Nations community, $17,000 a year per person or $24,000 for a couple (more if you have a disability). Instead of filling out onerous paperwork at a welfare-type office, this program involves getting a cheque in the mail.

A third party will assess the program and some participants will receive lower or no benefits, to act as a control group for study purposes.

But concerns around basic income linger. Some experts see the Ontario basic income program as too much of a one-size-fits-all solution. Under it, people with sudden financial problems must wait because benefits are linked to last year’s tax return and people with disabilities may miss out on extra services and benefits, because it will replace Ontario Works (welfare) and the Ontario Disability Support Program. As well, parents could get dinged by federal and province child benefits clawbacks.

The high cost of a permanent program could also trigger more taxes or cutbacks to things like healthcare, both of which would actually hurt those who get the basic income.

Guaranteeing everyone a small but steady income could work -- but it’s too early to tell. The data that will ultimately come from the Ontario pilot project, and others around the world, could change poverty’s most worrisome — and expensive — impacts.

By getting the right advice and having the right financial plan for your situation, you can rid yourself of financial stress – and when you know your financial life is healthy, you can focus on ensuring your own health is as good as it can be for a long lifetime.

This column, written and published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), and Investors Group Securities Inc. (in Québec, a firm in Financial Planning) presents general information only and is not a solicitation to buy or sell any investments. Contact your own advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.