A program that would provide a cash transfer from government to households to ensure a minimum annual income, known as a Guaranteed Annual (GAI) Income program, would not work in Canada.
This is according to a Fraser Institute study, The Practical Challenges of Creating a Guaranteed Income in Canada, released January 6.
A GAI program would replace income support structures that are already in place, which include Old Age Security, the Canada Pension Plan, Employment Insurance and the Child Tax Benefit.
While in theory, the advantage of a GAI program from the perspective of government would be to increase efficiency and cut costs, designing a program that would actually accomplish this would face many roadblocks, according to the report. One reason for this is that all levels of government would need to work together.
“With federal and provincial governments disagreeing regularly on much smaller issues, it seems unlikely they would all agree to implement a reform as large as a guaranteed income program,” said Fraser Institute associate director of tax and fiscal policy Charles Lammam, who is co-author of the study.
Overall, the Fraser Institute argues that the idea of a GAI is based on “an oversimplification of a complex issue.”
“Despite being a relatively straightforward concept in theory, designing a guaranteed annual income would encounter many practical challenges—some of which threaten its conceptual appeal,” said the institute.
“The practical challenges stem from a lack of clarity on even basic design features.”
The Fraser Institute did offer other arguments for such a program, including providing greater autonomy for recipients, easier access to help and the elimination of poverty. However, the report argues that the program would lead to dependence on the support and disincentives to work.
The idea of a GAI program has seen support from a wide range of champions across the political spectrum, from the Broadbent Institute, which was founded by former federal NDP leader Ed Broadbent, to Hugh Segal, a former Conservative senator. The Fraser Institute also points out that a significant number of Canadians – 46% – were found to be in favour of a GAI program in a poll conducted by the Trudeau Foundation.
A Canadian organization called the Basic Income Canada Network (BICN) has the principal goal of promoting the establishment of a GAI in Canada.
“The Basic Income Canada Network believes that all Canadians should have universal and unconditional access to a regular income that pays for the basic necessities of life, such as food, clothing, and a warm place to live,” the organization asserts.
“If implemented, regardless of your wages or other earning, your income would never fall below a minimum level.”
According to this organization, a GAI is necessary to alleviate and prevent poverty, improve health and reduce inequality. This would in turn promote entrepreneurship and creativity.
The network said minimum annual income levels could range between $20,000 and $25,000 for an adult and $6,000 and $7,000 for a child.
“Of course most people may not need or want a basic income, many may have a mix of earned and basic income, and others may need to rely upon a basic income,” the BICN said. “So, the amount to each person would vary widely.
Regarding the argument that the program would provide a disincentive to work, the BICN said there would still be sufficient motivation to seek employment, as the program should meet basic needs but no more. It would not be enough to pay for vehicles, luxury goods or post-secondary tuition.
