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Solving Four Problems at Once with a Guaranteed Basic Income for Canada

by John Brian Shannon

How could a Guaranteed Basic Income solve four problems in Canada, and what four problems might they be?

It’s a good question which can only be answered in the context of how these four things are being handled/not handled now.

So let’s see how a Guaranteed Basic Income could help Canada to care for people (including seniors, economic migrants to Canada, and refugees living in Canada) more efficiently than the present multilayered system.

Before we go any further, every group or individual who supports a Guaranteed Basic Income (GBI) may have a different idea of what constitutes a Guaranteed Basic Income. So to keep things simple for the purposes of this discussion, let’s agree for the rest of this post that a Canadian GBI would offer the following benefits to recipients:

  1.  $1088. per month (a standard anti-poverty metric)
  2.  Free provincial healthcare with no deductible
  3.  Free provincial dental care with no deductible
  4.  Free prescriptions with a $50 annual deductible
  5.  Low entry bar to access: Must be a Canadian citizen or legally landed immigrant
  6.  Over the age of majority in the province in which they reside
  7.  A person earning less than the official poverty line amount in the province in which they reside
  8.  Not a person serving time in prison
  9.  Not a person serving in Canada’s military
  10.  Not a person under 24/7/365 medical care (like a person in a long-term coma)

With that said, let’s see what a GBI can do for all Canadians — and not just the actual recipients of those benefits.


GBI Benefit Number One for Canada and its Provinces:

Saving Provinces and Taxpayers Money

Kick every welfare recipient in Canada off of provincial welfare and provincial disability programmes the moment the GBI comes into effect.

Yes, end provincial welfare and provincial disability programmes completely!

It sounds traumatic, but every province in Canada spends multi-millions (and depending on the size/population of the province) billions on the administrative support (administration buildings, office staff, other personnel, IT costs, security costs, land costs, property management costs, management training/seminars, etc) to pay provincial welfare and provincial disability recipients. This is known as the ‘overhead’ cost of running these programmes, and the gross annual totality of those administrative costs can be more than all of the welfare cheques combined.

For each welfare recipient who gets a $700 monthly welfare cheque, there is obviously a per capita cost for every person receiving a monthly welfare cheque; There is a person being paid $50,000/yr (or more) to administer a certain number of recipients, there is a building (or buildings) dedicated to that city, town, or region of the province, and there are other costs associated with running provincial social assistance programmes.

Every province has its own welfare and disability administration. That’s overlapping and duplication of services tenfold (10 provinces) and three territories, plus the federal government.

By paying poverty-stricken people via the federal CPP payments system only, the provinces would no longer be obligated to pay provincial welfare or provincial disability payments. At all. Ever.

After the transition period to a pan-Canadian GBI each province could lower the taxes it charges to its residents by a corresponding amount. Some provinces might be able to drop their provincial sales tax in half or better! Other provinces might be able to abolish provincial income tax altogether.

This is especially true if provinces decide to sell-off all the infrastructure associated with welfare and disability payments. Which (land and buildings especially) could net them many billions of dollars.

‘Yi-Haw!’ — said every Canadian premier.

In short, instead of 13 multilayered, overlapping and duplicated provincial and federal income assistance programmes (now that’s approaching communist-era levels of duplication my friend!) there would be one payer of income assistance only — Canada’s federal government — which would be 100% responsible for administrating the GBI programme.

To finance the GBI, the federal government might need to raise the GST rate by 1% (don’t forget that your provincial taxes would be dramatically lowered) or the feds might decide to raise the federal income tax rate by 1% on the richest Canadians instead.

Either way, provincial taxes would fall dramatically, while federal taxes would see a fractional increase.


GBI Benefit Number Two for Canada and its Provinces:

A GBI Would End Homelessness in Canada

Welfare rates in Canada are based on each province’s ability to pay, not on how much it actually costs to feed, clothe, and shelter a human being in that province. Which is why there is homelessness in a rich country like Canada.

The reason there is homelessness in Canada are threefold:

  • A person lives in a city where rents are high and therefore can’t afford to pay rent, nor do they have enough money to be able to afford to move to a rural area where rental rates are a fraction of the lowest rents in Canada’s biggest cities.
  • A person becomes depressed or violent on account of not being able to afford rent, and ends up committing offenses (like sleeping in someone’s backyard, pickup truck box, or dumpster) or commits property crimes (and gets caught and jailed) and subsequently, no one will rent him or her a place.
  • A person is disabled and is unable to afford rent, nor can they move to a cheaper rental market because they need to be close to a hospital, a clinic, or other medical facility. In some cases, it’s that they have enough money for their rent, or their meds, but not both.

A federally funded GBI would pay enough to allow low-income people to pay rent, eat, receive their prescription medications, buy clothing — and yes, unlike provincial welfare schemes — allow them a little extra money so they can purchase work-related clothing, get a haircut and take the bus to work if they land a job.

Not only all that, but many welfare recipients have serious dental problems. If you’re an employer and you have 50 people apply for 1 job opening, are you likely to hire that one guy who is missing his front teeth? Not likely. With a GBI, those people can get their dental work done and appear as presentable as the rest of the job-seekers and have as good a chance to land the job as the other 49 people.

Provincial welfare systems just can’t afford to provide all that, which means that once people get on welfare, they’re often on it for life.

And they can face reductions in their monthly benefit amount if they do earn money. That just doesn’t happen with a GBI.

Indeed, provincial welfare systems can reduce monthly benefits for many reasons, such as more than one person living in a dwelling. In British Columbia for example, the rent portion of the welfare cheque is regulated to $375. per month (not too many places available for rent in BC for $375/month!) but if two people on welfare live together at the same BC address, both will have their monthly welfare cheque reduced. Now you have ‘two upset homeless people’ instead of ‘one homed couple’.

Which directly impacts crime stats. See how that doesn’t work for taxpayers?

Paying people a standardized $1088 per month (no matter how many people live in the same house or apartment as long as all zoning bylaws are met) will allow people to share accommodations — leaving them enough money every month to eat, buy work-related clothing, haircuts, bus passes, etc. and eventually get them back into the workforce.

Hey! Even if they can work part-time that is a benefit to them and to society because it means that eventually they’ll find permanent employment and they won’t need GBI.

That is the ultimate goal of GBI: Temporary assistance to get back to work — instead of welfare for life.


GBI Benefit Number Three for Canada and its Provinces:

Streamlining the Payments System for Canadian Citizens, Refugees and Economic Migrants

Some poverty-stricken refugees and economic migrants to Canada receive higher amounts of assistance from the federal government than poverty-stricken Canadians.

For instance, some Syrian refugees are receiving $2600 per month from the federal government — that’s per family member!

So, a Syrian refugee family of five receives $13,000 per month no matter where they live in Canada, while a poverty-stricken Canadian-born family of five might receive $1600 per month (or less!) depending on the province in which they reside.

Is that right? Is that how generous Canada is to refugees, but not to its own citizens?

It’s an honourable thing for Canada to accept refugees from war-torn countries and help them to establish a new life here. But isn’t that a little extravagant?

Shouldn’t refugees and economic migrants to Canada as well as Canadian-born adult citizens who earn less than the poverty line amount and Canada’s senior citizens all receive the same level of benefit?

The GBI would pay the same amount to everyone without any reductions in the monthly benefit amount for those who share accommodations, for those who earn money up to the poverty line amount, nor reductions for any other reason, except to pay fines as adjudicated by the courts like vehicle fines or alimony payments, etc.

In this way, every adult who earns less than the official poverty line amount would receive the same monthly benefit amount instead of wildly different amounts. Doesn’t that seem more fair?

Isn’t that a better way to treat citizens and immigrants than the various overlapping and duplicated payments systems? Of course it is.


GBI Benefit Number Four for Canada and its Provinces:

Treating Canada’s Senior Citizens Better

Under the existing CPP and OAS system, some of Canada’s senior citizens receive small amounts of money to live on.

Let’s look at a comparison of a Canadian-born senior citizen couple vs. a Syrian-born refugee couple, both couples reside in Canada.

a) The Canadian-born senior citizen couple may receive as little as $920 per month, and are allowed to work.
b) The Syrian-born senior citizen refugee couple will receive $2176 per month, and aren’t allowed to work.

It seems unfair in the extreme that the people who built this great country should receive far less reward than recent immigrants, doesn’t it?

Of course, it goes without saying that accepting refugees from war-torn countries is a truly noble thing to do. No true Canadian begrudges law abiding persons a better life here in Canada. The country is practically empty and our cities are just tiny dots in a 9.985 million square kilometre landscape so we’re glad to have them.

And paying them $1088 per month (each adult) along with the other GBI benefits seems reasonable, just like it seems reasonable to pay the same amount to Canadian-born seniors who live under the poverty line.

It’s wrong to pay the people who built this great country into what it is today such pitiful amounts of money (which they paid into the CPP fund their entire working lives) while we pay refugees many times more.

It’s like a scene from The Twilight Zone.

By topping-up the pension amount of Canadian citizens to the $1088/mo GBI amount + the GBI benefits, we can do away with the OAS programme completely, do away with pharmacare for senior citizens, and eliminate other overlapping federal and provincial programmes in place to support seniors.

Getting rid of all these layers of duplication will save various levels of government billions of dollars per year, and put the administration of all citizens who live under the poverty line under one roof, one payments system, and one jurisdiction. And we know that ending government waste, overlapping programmes between the federal and provincial governments, and duplication of services between the provinces will save taxpayers billions of dollars every year!

It’s time to streamline Canada’s income assistance systems, it’s time to top-up the incomes of senior citizens to $1088 per month + benefits, it’s time to pay refugees the same amount as Canadian citizens living under the poverty line would receive, and it’s time to put a stop to the costly multilayered benefit systems in Canada.

A GBI would be less costly for taxpayers, it would reduce homelessness and property crimes, it would streamline the benefits payment system and it would help poverty-stricken senior citizens live healthier lives and reward them in a small way for their contributions to our great land.

What Could a Guaranteed Basic Income do for Canada?

by John Brian Shannon

Canada’s Parliamentary budget watchdog says it would cost $76 billion per year to fund a nationwide Guaranteed Basic Income (GBI) — which seems a wildly inflated price.


If it Costs $76 Billion, You’re Doing it All Wrong!

(a) For starters, even the Parliamentary Budget Officer (PBO) admits the federal government already spends $33 billion annually to support low-income Canadians — many of whom are senior citizens receiving the Old Age Supplement (OAS) — therefore, what the budget officer really means is the federal government would need an additional $44 billion to fund a universal GBI.

Suddenly, we’re talking $44 billion, not $76 billion

(b) Also, every province in Canada already has monthly social assistance payments to help those adults with no income, or whose Employment Insurance (EI) has run out and who can’t find work, or who live on a monthly disability benefit. There are other situations where people qualify for social assistance but those three groups represent the largest percentage of recipients.

From the federal perspective, a GBI is about the federal government ‘topping-up’ the monthly amount that provincial social assistance and OAS recipients already receive to a reasonable amount that a person could actually live on, sans luxuries.

See? It isn’t about paying the whole shot, it’s about replacing the many overlapping federal and provincial social assistance plans that are available to people trapped in the bottom economic quintile.

Now it’s $15 billion, not $44 billion

(c) Another reason the PBO numbers are so high is that he claims every adult on social assistance needs $17,000+ per year which is still well below the official ‘poverty line’ in most provinces. But it’s just too high. The PBO also says that couples who live together would receive $25,000 per year.

If a person lived in rural Canada he or she could get by on a lower amount than suggested by the PBO, but if they live in Toronto even his higher amounts won’t be enough.

So the question is:

  • Do we want to pay people living on social assistance a large enough amount that allows them to live in Canada’s most expensive cities?
  • Or do we want to pay people living on social assistance an amount that allows them to live in the other 99% of Canada’s landmass?

If we use the figure of $1088/month per individual (a number that is widely accepted by anti-poverty groups across North America) instead of the PBO’s inflated number, suddenly our 15 billion dollar problem turns into 2.2 billion dollar problem.

Now it’s $2.2 billion, not $15 billion

But it means that a person couldn’t afford to live in expensive cities like Toronto, Vancouver, or Ottawa as real estate prices there (and therefore, rent prices) are too high.

Q: Is it really that onerous to suggest to people on social assistance that they don’t live in Canada’s most expensive cities?

Q: From their point of view, isn’t it better for them to seek out lower-cost rents in Canada’s small towns and live there?

Q: Why would anyone want to spend almost all of their monthly social assistance payment to rent a room in a house in one of Canada’s largest cities when they could rent an apartment or even a small mobile home in small-town Canada?

As the Canadian government spends a lot of time and money to convince people to move to smaller centres (sometimes paying new Doctors and other professionals a higher rate to relocate to small towns so that residents there can receive medical care on a timely basis) wouldn’t GBI recipients moving to smaller towns and cities lessen the need to pay Doctors and other professionals more than the normal rate to practice in those regions?

Many Doctors would no longer need to be paid extra to base their practice in Canada’s small towns once large numbers of GBI recipients would move to small-town Canada. (Many of whom would be senior citizens who could finally afford to move, it must be said)

Let’s pretend that factor represents a future savings of 200 million/yr — which sounds like a lot but it isn’t — because in addition to the premium that Canada pays new Doctors to practice in marginal areas of the country, the federal government must also fund the monitoring and management of that system. It isn’t run by one person in a telephone booth earning minimum wage.

Also, many Doctors contest their small-town posting decision which must be adjudicated at significant cost to the government.

Now it’s $2 billion, not $2.2 billion


Streamlining the System

We know that duplication of services costs money.

That covers anything that is done twice (2x) but how much money is wasted when there is duplication across ten provinces? (That’s 10x by the way — which is called a ‘decuple’) Because that’s what is happening with social assistance across this country.

Each of the ten provinces of Canada has its own Income Assistance programme and the government of Canada has various Income Assistance programmes for each of the ten provinces and three territories to support those who can’t afford to live on their own.

Also, Canada ‘tops-up’ the monthly income of senior citizens across the country through the OAS to something approaching half of the official poverty line in some cases. (Let’s not forget it was seniors that built this great country, and they deserve better than that)

Centralization can save duplication of services 10x over

Imagine if all social assistance benefits were paid out from one centralized location (say, in Winnipeg) and most of those provincial Income Assistance offices could close down.

Each provincial ‘welfare office’ with 20 to 100 staff, must cost well over a million dollars (the cost of the real estate alone) and must cost over one million dollars per month to staff and maintain — perhaps more. (Some of these offices would remain open because they offer other provincial services besides managing social assistance recipients)

Not only would each province save multi-millions, so would the federal government!

Now we’re saving the provinces money!

And, the federal government could close many offices across the country on account of being centralized and a social assistance ‘supercentre’ could handle every social assistance need across the country — whether it’s topping-up a senior citizen’s monthly income to $1088/month, or ‘topping-up’ a part-time worker’s monthly income to $1088/month, or paying those on social assistance or disability $1088/month — and save money compared to the way it’s presently operated!

Now we’re saving each province multi-millions (the amount of savings depend on the total population of the province) and we’re saving the federal government about $2 billion compared to the way it’s run now.

Now we’re down to $0, not $2 billion

Hey, this is fun! Wanna save some more?


Means Testing

NOTE: The GBI itself is based on having no ‘means test’ so every Canadian adult resident who earns less than $1088/month would automatically be eligible to receive either the full amount (if they’re earning nothing at all) or a ‘top-up’ to $1088/month.


Vastly Lower Provincial Government Spending Will Allow 10 Instant Provincial Budget Surpluses

It also means that homeless people could afford to rent a home if they live in small-town Canada. (Read: No more homeless people in Canada)

It means that every person on social assistance can afford to eat properly if they live in one of Canada’s small towns. (Read: People who use part of their grocery money to pay the rent or keep the heat on during the winter… spend more time in the Hospital)

It means that poverty-stricken people won’t be tempted to commit crimes in order to pay their rent, eat, or to acquire steel-toed work boots for a temporary day labour position, or for bus fare to get to a job interview. (I’ve volunteered at a homeless shelter; I’ve seen it happen)

By simply paying a standardized monthly benefit to Canadian adults who earn less than $1088/month homelessness will cease to be an issue, property crime rates will plummet, hospital visits will decrease, provinces can free themselves of managing social assistance recipients, provincial office buildings can be sold, the federal government can streamline OAS and other federal anti-poverty programmes into one super-efficient monthly payment system — and the feds can cross-verify CRA tax returns with the GBI system to catch cheaters.

Let’s pretend that all of it together could save the federal government 10 billion dollars annually. (It would save more than that)

Now we’re SAVING the federal government 10 billion dollars per year!

On the provincial side, almost every government in Canada could stop running provincial deficits by getting out of the social assistance business, freeing themselves of overlapping social assistance programmes, selling off their Income Assistance office buildings, lower their healthcare spending, and lower their property crimes spending which requires a lot of police investigations, court time, and incarceration for offenders.

Why would every province suddenly show a budget surplus?

No more provincial deficits to worry about — because after offloading their social assistance programmes onto the federal government — Canada’s provinces would save significant sums of money.

Provincial social assistance programmes are paid for by provincial sales tax, provincial income tax, and federal transfer payments — and those tax rates are set by the provincial spending plan for the following twelve months. Therefore, once the federal government absorbs those provincial programmes, provincial taxation rates could remain the same (for a time) and every province would suddenly find themselves in a budget surplus.

After five years elapsed they would probably remove the portion of the provincial taxation that had funded their social assistance programmes, thereby saving provincial income tax payers money at tax time.

Of course, the people who work in Income Assistance offices might be wary of this change but they’re highly trained and valuable people that their respective provincial government could easily put to work on positive programmes like conservation, education, healthcare, etc. instead of having them spend their days trying to prop up financially marginal people 365 days per year.

I’d expect that each provincial government would treat their Income Assistance staff with the respect they deserve and guarantee them a minimum of five more years of employment to each and every Income Assistance employee that was no longer needed at their Income Assistance office due to their social assistance programmes being superceded by the federal GBI.


How to Pay for it Until the $10 Billion Annual Savings Kick-in

During the five year transition period, the federal government would be required to find a revenue stream for a GBI that rolls all provincial and all federal social assistance programmes into one programme that pays $1088 per month. (CPP and EI would remain completely unaffected, obviously)

As stated above, the federal government already pays 100% of the cost of existing federal level social assistance programmes across Canada, so to absorb the provincial systems and afford the slightly more expensive GBI, it would need to add an across-the-board .29% increase to the federal income tax rate and concomitantly lower transfer payments to the provinces.

Alternatively, the federal government could tax robots like it taxes people. (Yes! It’s a thing! Even Bill Gates wants to tax robots)

If each robot was taxed at 30% of the value of its annual output, it would pay for the difference between what the feds already pay for federal social assistance spending, and the cost of funding a universal GBI that would replace existing provincial social assistance programmes. (Read here about the U.S. presidential candidate for 2020 running on taxing robots)

EITHER WAY, the federal government would save a minimum of $10 billion per year, creating new revenue streams to afford the GBI until those savings kick-in is completely doable, and the feds would never need to run a budget deficit again. And many social problems (like homelessness) would disappear forever.

That’s what a Guaranteed Basic Income could do for Canada!