Edmonton Social Planning Council

Tag: Basic Income

  • Blog: The Renewed Push for a Basic Income During the COVID-19 Pandemic

    Blog: The Renewed Push for a Basic Income During the COVID-19 Pandemic

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    Basic income is an old idea that is getting renewed and fresh attention as a result of the COVID-19 pandemic. Even before the pandemic occurred, the idea was starting to gain traction. This was observed through the candidacy of Andrew Yang seeking the Democratic nomination for U.S. president, the scholarship of University of Manitoba professor Evelyn Forget, and the advocacy of former Canadian senator Hugh Segal. Now with the economic upheaval triggered by public health measures to slow the spread of the virus, basic income has catapulted from being considered a fringe idea to one garnering mainstream interest and increased public support.

    We’re even starting to see the implementation of a basic income in some form rolled out in different jurisdictions around the world as a result of the pandemic. This includes Spain, Brazil, Germany, as well as efforts to implement pilot programs in 11 major U.S. cities as a result of Stockton, California’s pilot program that has shown early signs of success. The idea is also being given consideration in Scotland. Within our own backyard, the Canada Emergency Response Benefit (CERB)—an income support program implemented in April 2020 to address the loss of income and employment experienced by millions of Canadians—has even seen calls to convert it into a basic income program. While the federal government has not shown an interest in pursuing this direction thus far (they plan to transition CERB recipients to a modified form of the Employment Insurance program), it’s clear that advocacy for a basic income will not be going away anytime soon.

    At its core, basic income is about providing a certain sum of money to a country’s citizens with no strings attached. This ensures that everyone—regardless of their employment status and income levels—receives a guaranteed income so that they are able to afford the basic necessities that make life enjoyable (e.g. food, shelter, medicine, clothing, transportation, and recreation). Depending on the design of a basic income program, these cash payments could either reach everyone equally—rich, poor, or in-between—or target those with the lowest household incomes, and then progressively phase out as a household’s income rises. The idea has received support from a variety of quarters throughout history, including proponents across the ideological divide: progressive civil rights leader Martin Luther King, Jr. and conservative free-market capitalist Milton Friedman can be counted as supporters of the idea. Long-time followers of the Edmonton Social Planning Council may recall that we have advocated for some type of basic income going as far back as the 1970s, when a guaranteed annual income (with work incentives) was recommended in our 1973 report, Alternatives to Poverty and Welfare in Alberta.

    Supporters of the basic income program see it not only as a poverty reduction tool, but as a way to address other systemic problems our society has not adequately confronted, such as systemic racism and domestic violence (the rationale being that this will empower marginalized groups to achieve greater autonomy and financial security to improve their situation). Previous trials of basic income pilot programs (which include studies in Dauphin, Manitoba in the 1970s and most recently Ontario in 2018) have shown evidence of improved health and well-being among participants, by way of nutrition, mental health, housing security, better employment prospects, and improved educational outcomes.

    Amid all the buzz and activity surrounding discourse on basic income in Canada and around the world, the release of two major new reports bring forth important policy nuances to the discussion. The United Nations Development Programme’s (UNDP) Temporary Basic Income: Protecting Poor and Vulnerable People in Developing Countries makes the case for an emergency basic income as a measure to mitigate the worst immediate effects of the COVID-19 pandemic on poor and near-poor households that do not have access to social assistance or insurance protection. The report presents a number of policy options available to protect vulnerable people in 132 developing countries and helps to inform a larger conversation about how to build comprehensive social protection systems. The report notes that while there has been an expansion of social protection and assistance measures implemented on a global scale, the vast majority of this spending has occurred in high-income countries (including Canada) while developing countries have lagged behind. As a result, people in developing countries are less resilient to these kinds of economic shocks.

    The World Bank’s Exploring Universal Basic Income: A Guide to Navigating Concepts, Evidence, and Practices takes a broader and more generalized approach to the basic income concept, presenting policy options and how they would align with the stated objectives of the program (i.e. a social justice initiative to address inequalities, or a measure to mitigate the negative effects of job loss due to automation). The document explores the appropriateness of a basic income program depending on the context of the country or region in question, providing options for areas where social assistance is patchy, limited, regressive, or otherwise inadequate.

    The document does not make specific recommendations for or against a basic income, but provides a compass for policy-makers to help navigate key issues, contemplate trade-offs, and offer new data and analysis to better inform choices around the appropriateness and feasibility of a basic income program.

    The World Bank and the UNDP’s reports help provide much-needed data and evidence to inform the conversation around basic income, especially for policy-makers looking to make an advocate’s hope for a more equal and just society come to fruition. The welfare and betterment of our most vulnerable populations depend on all of us to get this right.

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  • Research Update: An Alberta Guaranteed Basic Income

    Research Update: An Alberta Guaranteed Basic Income

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    Note: this is excerpted from the May 2020 edition of our “Research Update” publication. The Edmonton Social Planning Council, in collaboration with our volunteers, strives to provide stakeholders and community members with up-to-date reviews, prepared by our volunteers, on recently published social research reports and publications.

    Reviewed by Kevin Beauchamp

    Wayne Simpson and Harvey Stevens examine the potential options for an Alberta Guaranteed Basic Income (AGBI). Simpson is a research fellow and economics professor at the University of Manitoba, and Stevens is a retired Government of Manitoba senior policy analyst. This paper was published through The University of Calgary’s School of Public Policy.

    Despite the economic booms Alberta has received, poverty persists in the province; an AGBI could help address this issue. Two arguments against implementing an AGBI relate to the financial costs and potential work disincentives. Simpson and Stevens propose an AGBI model that would improve the fairness of the tax system and not require significant funding, by making six currently non-refundable tax credits (NRTCs) refundable. The NRTCs proposed to be eliminated include the Basic Personal Amount, Age 65 and over, Pension Income, Education, Tuition, and Student Loan Interest, and would create an AGBI budget of $5.36 billion.

    The equation for determining the net benefit to the recipient is “Net Benefit = G – (Family Income x BRR),” where G = size of the guarantee and BRR = Benefit Reduction Rate. As BRR increases, the depth of the benefit increases but is targeted towards a smaller number of recipients. A BRR of 10% was chosen as it benefits a larger percentage of families, minimizes work disincentives, and reduces the poverty rate by 26.3%, and poverty depth by 25.3%. Annual guarantees of $6,389 would be allocated for single-parent families and $9,305 for two-parent families. Additional “top-ups” for persons with disabilities and caregivers of disabled adults were also included. When accounting for labour supply costs, the AGBI would end up costing the provincial government $154.3 million. Net benefits would be mostly distributed to individuals in the two lowest income deciles, while higher income deciles would receive a modest income reduction of approximately 2%. In general, single-parents and single persons benefit modestly at the expense of two-parent families.

    Simpson and Stevens also outline a joint Federal/Alberta GBI option. This option would remove the same NRTCs as the AGBI, along with the federal GST credit. A federally funded national GBI, with one G and BRR set for the entire country, would be complemented by a provincial GBI with its own G and BRR values. Simpson and Stevens propose a federal BRR of 15% and an Alberta BRR of 10% that would create a budget of $11.4 billion allocated for Albertans. The estimated net costs of the joint GBI would be $801.2 million.

    Federal collaboration would have a more significant impact, as federal tax credits are about 50% higher than provincial tax credits. Single-parent families would receive annual guarantees of $13,674 while two-parent families would receive over $19,000. Reductions in poverty rates (44%) and depth of poverty (54%) would be more pronounced, and the gains/losses for each income decile level would also be approximately doubled, compared to the AGBI option. The relative impacts based on family unit type would remain consistent with the AGBI option.

    A limitation to the two models is that they had to resort to the traditional method of measuring poverty, using Low Income Cut-Offs (LICOs) which have been criticized as a poverty measure; Simpson and Stevens acknowledge that the Market Basket Measure (MBM) is currently Canada’s official poverty measure. I also noted a large discrepancy in both models regarding the percentage change of disposable incomes between elderly singles and elderly couples in the lowest income decile level, with elderly couples benefiting more. The differences between single-parent/two-parent families and non-elderly singles/non-elderly couples at the same income decile level are much more modest.

    A potential flaw in these models is that disposable income losses aren’t completely progressive along income decile levels. Higher income earners would lose a smaller percentage of disposable income compared to middle-income earners. In the joint Federal/Alberta model, the 4th and 5th income decile levels, on average, would lose more disposable income in pure terms compared to the income earners above them. Further income redistribution may be necessary to increase the equity of the GBI models for middle-income earners.

    The models presented appropriately account for changes in the labour supply and tax revenue. However, if a GBI model is ever enacted, it would be worth considering the reduced costs (healthcare, social services, policing, etc.) that would likely result from a more equal society. However, these measures were beyond the scope of the research and would be very speculative at this juncture.

    Publication Source: Simpson, W. & Stevens, H. (2019). An Alberta Guaranteed Basic Income: Issues and Options. University of Calgary. Retrieved from: https://journalhosting.ucalgary.ca/index.php/sppp/article/view/53021

    Volunteer Research Reviewer: Kevin Beauchamp spent the past year as a Human Geography student at the University of Alberta and will be entering a Master of Urban and Regional Planning program this fall. Kevin plans to explore topics such as affordable housing, social marginalization, and community development throughout his Masters studies.

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