Toward a new balance in social policy: the future role of guaranteed annual income within the safety net.

Author:Hicks, Peter
 
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A comprehensive, one-size-fits-all GAI should not be seen as the ideal goal by policymakers. Long-standing social objectives, including antipoverty goals, can be met by a more multidimensional understanding of poverty and by developing a new generation of social programs.

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THE STUDY IN BRIEF

Guaranteed Annual Incomes (GAI) proposals attracted much support in the 1960s and early 70s but, for a variety of reasons, they slipped off mainstream policy agendas in the following decades. They were too expensive given new budgetary priorities and implementation was difficult for jurisdictional reasons. Over time, the concept of poverty shifted away from focusing on lack of income towards the lack of resources that cause exclusion and that prevent people from developing their capacities to fully participate in society.

Concerns increasingly focused on siloed programs that provided one-size-fits-all benefits, ignoring individual and family diversity. New research paints a different picture of poverty, one where traditional GAI programs are less useful than had been previously assumed. In particular, most periods of low-income are relatively short, requiring supports that can only be awkwardly met by traditional tax-based GAI designs. As well, for the minority of low-income people who are persistently poor, the best solutions involve integrated mixes of income supports and, often, a variety of services.

Yet, despite all the factors above, interest in GAI schemes has increased in recent years. This Commentary briefly reviews current proposals and explains that the resurgence of interest in them likely lies in a deep desire to make things better, in the lack of progress to date in fighting poverty, and in frustration with the inability of existing policy tools to get results.

However, the Commentary argues that the effective, and affordable, way ahead lies not in big GAI programs taken in isolation, but rather in the use of newly available technology and data sources to steadily improve three kinds of programming: 1) integrated services tailored to individual needs, such as skill-enhancing programs that are intended to address unique needs of those who are persistently poor; 2) supporting people who can save for occasional periods of low-income by allowing more flexible access to income supports over the course of one's life; and, 3) GAI programming that extends existing measures, such as supports directed to children, seniors and those with disabilities.

This bottom-up reform based on an evidence-driven approach would have a better chance of succeeding if GAIs are realigned to support this vision.

Proposals to introduce a Guaranteed Annual Income (GAI) or basic income are once again making news in Canada, with increasing interest in proposals from the academic, NGO and think-tank worlds (1)

The Quebec, Ontario and Alberta governments have taken an active interest in exploring options and several mayors across the country have expressed support. Prominent figures include former Conservative Senator Hugh Segal, a strong GAI advocate who the Ontario government has named as an adviser on the issue, while Francois Blais, now Quebec Employment and Social Solidarity Minister, seems supportive of the idea, based on his book Ending Poverty: A Basic Income for All Canadians. Furthermore, economist Jean-Yves Duclos, the current federal minister responsible for developing a poverty-reduction strategy, wrote on these topics as an academic.

While this Commentary recognizes the merit in developing GAI proposals, it urges that other approaches to fighting poverty have greater potential and face fewer obstacles to implementation. It maintains that the recent GAI momentum should be channelled into an examination of a range of anti-poverty policies including, but not limited to, unconditional point-in-time money transfers to those with low incomes.

Many GAI options are currently being discussed, but all share a common theme; namely, that governments should provide financial support to individuals such that everyone has an adequate income, regardless of their personal characteristics including whether or not they are working. (See Box 1 for four possible directions for GAI reform.) This Commentary does not assess the proposals that are currently on the table, but rather puts GAIs in the broader context of changes that are taking place in social policy. More specifically, it explores other approaches to fighting poverty.

Nevertheless, a few observations on current GAI discussions are worth mentioning. Firstly, the debate often proceeds as an unstructured discussion among many participants with quite different points of view, with some of the arguments difficult to grasp because underlying assumptions are not always evident. (2) Indeed, it is not always clear what version of comprehensive reform is being discussed, although variations are profoundly different (Zon 2016). (3)

Box 1: Main GAI Options under Discussion in Canada Possible Reform Direction Commentary NIT as soon as possible. Most past proposals for Introduce a negative income tax comprehensive GAIs have been (NIT) version of a universal GAI. based on NIT designs. They often Under NIT, the income of those involved topping up, rather than whose incomes would otherwise be replacing, existing programs that low is topped up in order to provide cash to low-income eliminate or greatly relieve people. Many current reform poverty. proposals also appear to be of this sort, including the Ontario pilot (Segal 2016). However, it is not always clear which type of comprehensive reform is being proposed. Demogrants as soon as possible. Reflecting international trends, Similar to NIT, except that a calls for this more radical type fixed amount of money would be of reform have become more common transferred to all Canadians. In in recent decades. Demogrants some proposals, demogrants would would involve a fundamental replace many existing forms of re-shaping of Canadian social income support. This is in policy, not only in the type of contrast to many NIT proposals programming that would result, that would be designed only to but also in placing greater eliminate or greatly reduce weight on the role of the social assistance payments. individual rather than the family--a topic discussed later in the text. A comprehensive GAI, but Ontario's GAI proposal is based proceeding incrementally. Many on pilot studies in order to test proposals recognize that it would likely future directions before be difficult to achieve either a implementation. Boadway (2016) NIT or Demogrant version of a GAI proposes to build a NIT version in one sudden step. by converting non-refundable credits in the income-tax system to refundable credits. Hunsley (2016b) proposes that deep reform be pursued by establishing common goals and then implementing them incrementally. His focus is on overcoming jurisdictional barriers to reform--a critical obstacle that is given insufficient weight by many reform advocates Incremental expansion of existing This has been the main approach targeted measures. Gradually characterizing Canadian policy strengthen and extend existing for many decades. Although the refundable tax credits and result is an unfinished patchwork similarly targeted measures that approach to fighting poverty, it are directed to reducing or has worked reasonably well, has alleviating poverty in key groups been efficient and is consistent at risk, such as seniors, people with jurisdictional realities. It with disabilities, children and has many advocates including the the working poor. Caledon Institute (Batde 2015), which has long supported this kind of targctted reform. In particular, much confusion results from the use of the term 'pilots.' For some, pilots refer to the mega-experiments of the past, such as "Mincome" in Manitoba, based on rigorous but costly random assignment techniques that required long periods of time before results were known. Such pilots are needed to measure the indirect benefits of a GAI over the longer term, especially in reducing healthcare spending (following work by Forget 2011). The use of random assignment is also present in the latest thinking about the Ontario Basic Income Pilot Project (Segal 2016) although the proposed approach appears to be flexible (and highly ambitious) in the range of outcomes that will be measured. To others, pilots simply refer to a series of often small-scale initiatives to try out various different design and delivery options, with a view to assessing their cost, feasibility and public acceptability rather than their ultimate outcomes. (4)

In this context, the argument of Hunsley (2016a)...

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