Basic income deserves a try

An editorial from the Waterloo Region Record, published April 26:

In this era of rising insecurity and inequality in the working world, Ontario is launching a timely experiment in paying people a free, basic income. It’s an appealing notion that could reduce poverty, improve people’s lives and boost their job prospects. Beyond this, a guaranteed basic income could replace a host of government programs with a single, more efficient and economical support payment.

That, at least, is the theory. It appeals to those on both the left and right of the political spectrum, and there are strong moral and economic arguments in its favour.

But could it work in practice? Ontario’s Liberal government will test the idea in a three-year pilot project.

The trial itself is modest. The province will provide a basic income to a total of 2,000 people in Hamilton, Brantford, Thunder Bay and Lindsay who are living in poverty, are unemployed, underemployed or working for minimum wage.

What happens to them will be closely compared to a group of 2,000 others not receiving the payments.

The basic income will give an individual up to $16,989 a year and as much as $24,027 annually to a couple.

No one will get rich this way. But recipients should be better off financially than with Ontario Works or the Ontario Disability Support Program – both of which the basic income will replace.

In doing all this, Ontario is following the example of Finland and Netherlands which have also been experimenting with a basic income.

Yet the fact that both of these countries are moving slowly shows how many questions must be answered before any commitment is made.

The Ontario government needs to know if such a basic support payment would not only increase incomes but create a happier, healthier, more equitable society. Who would be eligible? Would a basic income be a smarter use of public money than current welfare and disability support programs? Would it reduce health-care costs?

Is a basic income affordable? If you increase the number of people getting provincial support and pay them more, will that require vast new expenditures and higher taxes? We also need to discover whether a basic income is an incentive or disincentive to work.

The pilot project aims to encourage work. Recipients who are employed would be allowed to keep what they earn from their jobs, but their basic income payment would decrease by half of their earnings.

So, for example, a single person earning $10,000 a year from a job would get $11,989 in basic income – the maximum $16,989 minus $5,000 from his or her wages. The recipient’s total income would be $21,989 for that year. Ontarians can look forward to seeing the results of this experiment. Perhaps it won’t succeed. But kudos to the government for trying it.

As we move into an unpredictable, unsettling age of automation, rewarding jobs may be scarce.

If that happens and for everyone’s sake, societies and their governments will have to do more for those left behind by the latest industrial revolution.