Written By: Stefan Venceljovski
The concept of Universal Basic Income (UBI) is a contentious topic that has seen a lot of news coverage over the last few months in Canada. The basics are simple: UBI provides all citizens of a particular nation or state with a regular, unconditional sum of money, regardless of their employment status (1). However, there is significant nuance in implementing a policy like a UBI. The idea has gained traction globally as a potential solution to economic inequality, the changing nature of work, and the rising cost of living, and this has caused an increasingly complex and contentious conversation that can be difficult to navigate.
In the Canadian context, where concerns about the rising cost of living are particularly prominent, the discussion around UBI has gained much momentum to the point that the Canadian Senate is seriously considering implanting a UBI scheme (2). Nevertheless, with this consideration and the divisive narrative around UBI, much clarity remains to be desired regarding what UBI is and is not and what it could look like in a Canadian context. This paper addresses these questions, aiming to unravel the intricacies of Universal Basic Income and, more importantly, its implications within the Canadian socio-economic framework.
The looming possibility of UBI as a hot-button issue in Canadian politics underscores the importance of comprehending the basics. This paper delves into the nuances of UBI, drawing on historical perspectives, analyzing its potential pros and cons, and scrutinizing contemporary developments such as Senate Bill S-233 and Bill C-223. Through this exploration, readers are invited to form a well-informed opinion on a policy that is not only gaining momentum but has the potential to reshape the socio-economic landscape of Canada.
What is Universal Basic Income – A Context
Before diving into universal basic income as an economic and political policy, we must first lay out a brief history and define what we mean by UBI and, more specifically, what we mean by UBI in a Canadian context. This will provide a shared groundwork and understanding that can be used to analyze the questions further.
UBI, or Universal Basic Income, is a policy rooted in political and economist thinkers like Thomas Paine (1797) in the form of a lump sum payment given to all citizens when they become adults (3). Joseph Charlier (1848) argued for a “territorial dividend,” which would generate a regular income (4). More recently, American politicians like Bernie Sanders and Andrew Yang argued for similar policies with much vigour (5). Each, while differing in terminology and method of implementation, shares the same value best articulated by Standford scholar Juliana Uhuru Bidadanure: the idea that “a share of the wealth produced by all in common or by previous generations should be redistributed to all in the form of a direct payment to an individual (6).”
And while this idea may seem borderline communist, it is not entirely out of the blue. Take, for example, Canadian GST rebates or the Ontario Trillium benefit, which, while organized in the context of yearly federal and provincial tax collection, do not change the fact that the government is actively taking money from taxpayers (the commons) and distributing it back to the collective to provide additional earnings for the citizen (7). The critical difference is that UBI is not based on arbitrary tax brackets and income earned but instead is given based on belonging to society. The principle, however, remains the same.
However, take the Ontario UBI pilot project from 2017-2019 for a more direct example of UBI in practice (8). The pilot targeted individuals aged 18 to 64 earning less than CAD 34,000 and couples earning less than $48,000, with benefits decreasing by 50 cents for every dollar earned through employment (9). The basic income significantly increased compared to traditional social assistance, ranging from $721 to $1151 monthly. During the pilot, individuals received up to $1415 per month, and those with health conditions received up to $1915 (10). An evaluation team assessed work-life outcomes, using pilot participants as key informants. However, due to a change in government, the pilot was abruptly terminated after only 18 months, leading to a halt in data collection and analysis efforts. However, an analysis of the UNESCO Inclusive Policy Lab found that across the board and by almost every metric, there was an increase in the quality of life for citizens receiving UBI (11). A further study by Leah Hamilton James P. Mulvale in the Journal of Poverty found the same (12).
In summary, Universal Basic Income embodies the notion that a portion of collectively generated wealth via tax collection and other means should be redistributed directly to individuals of society to supplement and add to privately developed income. UBI has been an idea for centuries and has been penned and championed by many scholars in one form or another. And while this may draw parallels with existing government rebates systems like Canadian GST rebates or the Ontario Trillium benefit, the critical distinction lies in UBI’s foundation; UBI is granted based on one’s belonging to society.
The Pros and Cons – A Brief Analysis
Before continuing, a brief aside is necessary to lay the groundwork for our understanding of UBI. Though entire books can be written on the pros and cons of universal basic income, and in fact, many books have been, we must outline a few of the pros and cons of UBI so that we are on the same footing when analyzing it in the Canadian context in the future.
UBI holds several compelling advantages. Firstly, it has the potential to alleviate poverty by guaranteeing a basic income to all citizens, irrespective of their employment status. This inclusive approach aims to elevate the standard of living, particularly benefiting marginalized communities and reducing income disparities. Secondly, proponents argue that UBI can serve as a robust economic stimulus. By placing more disposable income in the hands of citizens, increased consumer spending is anticipated, leading to heightened demand for goods and services, thereby fostering economic growth and job creation. Thirdly, UBI offers individuals financial security and flexibility, enabling them to pursue education, training, or entrepreneurial ventures without fearing financial instability. This enhanced flexibility contributes to a more dynamic and adaptable workforce, fostering innovation and creativity. Finally, the implementation of UBI has the potential to simplify and streamline existing welfare programs. By replacing the complex structure of means-tested benefits with a universal and unconditional income, administrative overhead can be reduced, ensuring more efficient support for those in need. Overall, UBI provides continuous economic stimulation while fostering continued economic growth, allowing for more spending and consumption within a given society.
However, UBI also has some notable criticisms that are worth considering. Despite its potential benefits, UBI faces significant challenges in terms of financial feasibility. One primary concern revolves around the substantial cost of implementing such a program nationally. Questions arise regarding the impact on government budgets and the potential necessity for increased taxation. Critics argue that funding UBI could result in higher deficits or require cuts in other essential public services.
Additionally, skeptics express worries about the possibility of UBI creating work disincentives. Some argue that providing a guaranteed income may reduce individuals’ motivation to seek employment, potentially leading to decreased overall productivity. Striking a balance between providing financial security and maintaining a motivated workforce poses a significant challenge. Furthermore, although UBI aims to reduce overall income inequality, concerns linger about its potential failure to address vulnerable groups’ specific needs adequately. Another criticism relates to the potential impact on inflation. The injection of a substantial amount of money into the economy through UBI could drive up prices, particularly for essential goods and services, potentially offsetting the intended positive effects on the standard of living.
These financial and economic concerns weighted with the possible benefits highlight the intricate challenges associated with the feasibility of implementing Universal Basic Income on a national scale. It is not as simple as just giving away a cheque every month, as the crisis of UBI rightfully posits; additionally, specific criticisms remain more valid than others. Overall, the pros and cons are compelling and without a straightforward set test on a national scale, one can not correctly test them against each other, and we are left in the theoretical world. Nevertheless, it is essential to consider both sets as we delve deeper into this policy to understand its implications and possibilities fully.
Contemporary UBI in Canada as it Exists Today
The most recent example of UBI in Canada is Senate Bill S-233 and its sister bill in the House of Commons, Bill C-223. S-233, also known as the National Framework for a Guaranteed Livable Basic Income Act. Introduced to research and create a framework for a UBI scheme in Canada, it recognizes the potential of a guaranteed livable basic income to alleviate poverty, promote income equality, and improve overall well-being. S-233 and C-223 emphasize the importance of inclusivity and protection for vulnerable members of society and recognize the need to ensure the UBI is provided equally to members of Canadian Society. The proposed national framework, to be developed by the Minister of Finance should the bill pass in the Senate and House of Commons, involves extensive consultation with key stakeholders, including Indigenous governing bodies, and aims to establish regional standards for what is referred to as a dignified life (13). The bill mandates periodic reports to Parliament, ensuring transparency and accountability, with a commitment to regularly review and assess the framework’s effectiveness in meeting social, health, and economic objectives (14). Ultimately, the legislation seeks to create a robust and responsive structure that respects the dignity and security of all individuals in Canada while effectively providing a universal basic income (15).
The bill is in its final few stages, having passed both the first and second readings and having just started committee hearings to consider proper implantation and frameworks (16). In the most recent report on October 17, 2023, the Standing Senate Committee on National Finance reported that addressing critical aspects, such as its relationship with existing social programs, should be a top priority in the future in drafting UBI legislation (17). It also concluded through a series of vigorous studies that the potential impacts on homelessness would be a net positive as UBI would be a huge factor in reducing homelessness across Canada (18). Preliminary reports also seemed to alleviate inflation concerns, arguing that, more likely than not, the addition of UBI supplements will not cause severe inflation. However, this is often hotly contended and would require more study than possible in the scope of this paper, or the briefing given by the Senate (19). Concerns about UBI discouraging work are addressed as well through empirical evidence, indicating a minimal impact on labour supply. The passages cite studies and experiments, including the Canada Emergency Response Benefit (CERB) during the pandemic, demonstrating positive outcomes regarding workforce re-entry, career revaluation, and job training or education investment (20).
One thing that this most recent study does not conclude is where the money could come from. This area is still debated and has no clear and solid answer. Something that will hopefully be rectified in future committee meetings and draft legislation going forward. Additionally, a more solid framework for how UBI payments will function is also necessary in future reports if supporters seek to convince voters of the feasibility of UBI in Canada. Will it look and function like CERB or other similar COVID-19 relief payments or closer to tax credits? Going forward, these questions need to be clarified to understand Canada’s UBI policy.
In conclusion, implementing Universal Basic Income in Canada carries significant advantages and challenges. While UBI has the potential to alleviate poverty, stimulate economic growth, and provide financial security, concerns about its financial feasibility, work disincentives, and potential impact on inflation must be addressed. Moreover, the relationship between UBI and the rising cost of living crisis in Canada is complex, with potential benefits in housing affordability and healthcare accessibility but also potential drawbacks in increased demand and strain on public services.
As Canada grapples with the economic and social implications of the rising cost of living, a careful and comprehensive assessment of the pros and cons of UBI is essential. Policymakers must consider Canada’s unique economic landscape and its population’s diverse needs to determine whether UBI is a viable and effective solution to the pressing challenges.
- This definition is drawn from two sources; Maura Francese and Delphine Prady, “What Is Universal Basic Income? – IMF Finance & Development Magazine: December 2018,” IMF, December 1, 2018, https://www.imf.org/en/Publications/fandd/issues/2018/12/what-is-universal-basic-income-basics; and 1. World Bank Group, “Exploring Universal Basic Income : A Guide to Navigating Concepts, Evidence, and Practices,” World Bank, February 4, 2020, https://www.worldbank.org/en/topic/socialprotection/publication/exploring-universal-basic-income-a-guide-to-navigating-concepts-evidence-and-practices.
- “Senate Finance Committee Studies Guaranteed Livable Basic Income This International Day for the Eradication of Poverty,” Senate of Canada, October 17, 2023, Office of The Honorable Kim Pate: Senator for Ontario, https://sencanada.ca/media/t1lbx5qy/pate_en_news-release_backgrounder_bill-s-233-committee-study_oct-17-2023.pdf.
- J. E. King, and John Marangos. “Two Arguments for Basic Income: Thomas Paine (1737-1809) and Thomas Spence (1750-1814).” History of Economic Ideas 14, no. 1 (2006): 55–71. http://www.jstor.org/stable/23723271.
- John Cunliffe and Guido Erreygers, “The Enigmatic Legacy of Charles Fourier: Joseph Charlier and Basic Income,” History of Political Economy 33, no. 3 (2001): 459–84, https://doi.org/10.1215/00182702-33-3-459.
- See Scott Santens, “On the Record: Bernie Sanders on Basic Income,” Medium, August 27, 2019, https://medium.com/basic-income/on-the-record-bernie-sanders-on-basic-income-de9162fb3b5c; and Abby Vesoulis, “2020 Candidate Andrew Yang Wants to Give You $1,000 a Month,” Time, February 13, 2019, https://time.com/5528621/andrew-yang-universal-basic-income/#:~:text=The%20%E2%80%9CFreedom%20Dividend%E2%80%9D%20as%20Yang,to%20think%20it%20might%20work.
- Juliana Uhuru Bidadanure, “The Political Theory of Universal Basic Income,” Annual Review of Political Science 22, no. 1 (2019): 481–501, https://doi.org/10.1146/annurev-polisci-050317-070954.
- See Canada Revenue Agency, “Government of Canada,” Canada.ca, May 12, 2023, https://www.canada.ca/en/revenue-agency/services/child-family-benefits/gsthstc-amount.html; and “Ontario Trillium Benefit,” ontario.ca, accessed November 9, 2023, https://www.ontario.ca/page/ontario-trillium-benefit. for breakdown of yearly pay out of the HST credit and Ontario Trillium credit
- Ontario Government, “Ontario Basic Income Pilot,” Government of Ontario, August 20, 2021, https://www.ontario.ca/page/ontario-basic-income-pilot.
- Mohammad Ferdosi et al., “On How Ontario Trialed Basic Income,” UNESCO, February 24, 2022, https://en.unesco.org/inclusivepolicylab/analytics/how-ontario-trialed-basic-income.
- Leah Hamilton and James P. Mulvale, “‘Human Again’: The (Unrealized) Promise of Basic Income in Ontario,” Journal of Poverty 23, no. 7 (2019): 576–99, https://doi.org/10.1080/10875549.2019.1616242.
- See the actual text of the bill here “An Act to Develop a National Framework for a Guaranteed Livable Basic Income,” bill, Senate of Canada § (2021), https://www.parl.ca/Content/Bills/441/Private/S-233/S-233_1/S-233_1.PDF.
- See following for in depth discussion and summaries of the pros and cons of UBI and the merits of each of those arguments that are beyond the scope of this paper: Robert E. Wright and Aleksandra Przegalińska, “Debating Universal Basic Income,” Exploring the Basic Income Guarantee, 2022, https://doi.org/10.1007/978-3-031-17513-8; Brian McDonough and Bustillos Jessie Morales, Universal Basic Income (London: Routledge, Taylor & Francis Group, 2020); further readings can also be found here Various Authors, “Selected Online Reading on Universal Basic Income,” European Parliament EP Library – Libguides, accessed November 10, 2023, https://eplibrary.libguides.com/EPOL/SR/Universal_basic_income/e-books.
- “S-233, LEGISinfo – Parliament of Canada, November 22, 2021, https://www.parl.ca/legisinfo/en/bill/44-1/s-233
- Senate of Canada, 2023.Pages 7-8.
- Senate of Canada, 2023.Page 5.
- Senate of Canada, 2023. Pages 9-10.
- Senate of Canada, 2023. Pages 11-12.