It’s not just about wel­fare re­form ...

Ba­sic in­come is in­evitable sooner or later as au­toma­tion in­creases

The Peterborough Examiner - - Opinion - EVE­LYN L. FOR­GET

In Cana­dian pol­icy cir­cles, ba­sic in­come has come to mean a stipend paid to fam­i­lies or in­di­vid­u­als with­out the many con­di­tions and rules that gov­ern ex­ist­ing in­come as­sis­tance pro­grams.

The amount re­ceived is grad­u­ally re­duced as in­come from other sources in­creases.

How­ever, ba­sic in­come is not just about wel­fare re­form.

A ba­sic in­come is most valu­able to peo­ple in the mid­dle class and those hop­ing to join them. Here’s why a Cana­dian ba­sic in­come is in­evitable.

Con­sider Cana­di­ans who al­ready ben­e­fit from some forms of ba­sic in­come —fam­i­lies with chil­dren un­der 18 and peo­ple aged 65 and above.

The poor­est fam­i­lies with chil­dren ben­e­fit from the Canada Child Ben­e­fit, but many pro­fes­sional fam­i­lies re­ceive at least par­tial ben­e­fits.

The Guar­an­teed In­come Sup­ple­ment helps the poor­est se­niors, but Old Age Se­cu­rity pro­vides at least some sup­port to most of those with higher in­comes.

The re­cently can­celled On­tario ba­sic in­come ex­per­i­ment, which was in­tended to pro­vide adult ben­e­fits ac­cord­ing to the same model, en­rolled more work­ing peo­ple than peo­ple re­ceiv­ing in­come as­sis­tance.

The need for in­come se­cu­rity among mid­dle-class Cana­di­ans is ac­cel­er­at­ing as the labour mar­ket changes.

Sil­i­con Val­ley hy­per­bole imag­ines ro­bots re­plac­ing hu­man labour, and that has hap­pened for many fac­tory jobs, but a much more im­me­di­ate out­come is that au­toma­tion will change the way work is done.

The lead­ing edge of pro­fes­sional job change can be seen among jour­nal­ists, trans­la­tors and pro­fes­sors, who used to en­joy well-pay­ing, se­cure ca­reers.

The same work is now much more likely to be pack­aged as “projects” — sto­ries, doc­u­ments or classes — that can be hired out to in­de­pen­dent con­trac­tors at a much lower cost. Some of these con­trac­tors find them­selves com­pet­ing with oth­ers from around the world.

Sim­i­larly, phar­ma­cists are be­ing re­placed by lower-paid phar­macy tech­ni­cians or even pill-count­ing ro­bots.

These changes lead to a form of gen­teel and hid­den job in­se­cu­rity that ex­ist­ing so­cial pro­grams can­not ad­dress. These are peo­ple who vote and who know how to make their voices heard.

At the same time, gov­ern­ment fi­nances make ba­sic in­come an in­creas­ingly at­trac­tive op­tion.

A re­cent re­port by the Par­lia­men­tary Bud­get Of­fice em­pha­sizes the un­sus­tain­abil­ity of provin­cial bud­gets com­pared to the fis­cal strength of the fed­eral gov­ern­ment. This means that, over the long-run, ei­ther the fed­eral gov­ern­ment must trans­fer ever larger amounts of tax rev­enue to the prov­inces or the prov­inces must trans­fer some re­spon­si­bil­i­ties to the fed­eral gov­ern­ment.

The Par­lia­men­tary Bud­get Of­fice es­ti­mated the net costs of a Canadaw­ide ba­sic in­come mod­elled on the On­tario pro­posal at $44 bil­lion an­nu­ally.

This did not take into ac­count the money that might be saved by other so­cial pro­grams such as health­care if poverty is ad­e­quately ad­dressed, or the re­duced need for provin­cial in­come as­sis­tance and dis­abil­ity sup­port pro­grams.

If the $20 bil­lion that the prov­inces col­lec­tively spend on in­come as­sis­tance and dis­abil­ity sup­port could be used to fund the ba­sic in­come, the re­main­ing cost would be $24 bil­lion — al­most ex­actly what the Canada

Child Ben­e­fit costs each year.

While it would be po­lit­i­cally dif­fi­cult to ne­go­ti­ate such a sig­nif­i­cant change all at once, the fed­eral gov­ern­ment could in­tro­duce a ba­sic in­come at half or a quar­ter of the On­tario rates, and ne­go­ti­ate an agree­ment with the prov­inces not to re­duce in­come as­sis­tance or dis­abil­ity sup­port.

Over time, the fed­eral ba­sic in­come could grow as the econ­omy grows, while trans­fers to the prov­inces could be frozen.

As the fed­er­ally funded ba­sic in­come cov­ers a grow­ing pro­por­tion of the ba­sic needs of re­cip­i­ents, the prov­inces could turn their at­ten­tion (and their con­strained bud­gets) to the sorts of things prov­inces should be able to do bet­ter than the fed­eral gov­ern­ment — ad­dress­ing lo­cal needs through the de­liv­ery of job train­ing and hous­ing sup­ports, for ex­am­ple.

Even a mod­est Canada-wide ba­sic in­come will re­quire ad­di­tional tax rev­enue, but the fed­eral gov­ern­ment has the fis­cal ca­pac­ity to raise taxes in many ways.

Tax rev­enue will grow as the econ­omy grows, al­low­ing the ba­sic in­come to grow pro­por­tion­ately.

Eve­lyn L For­get is the au­thor of “Ba­sic In­come For Cana­di­ans: The Key to a Health­ier, Hap­pier, More Se­cure So­ci­ety for All.” She is a health econ­o­mist at the Univer­sity of Man­i­toba and a con­trib­u­tor with Ev­i­denceNet­, based at the Univer­sity of Win­nipeg.

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