(Image Credit: piqsels.com; the image is at this link. Used without modification under Creative Commons Licence)
As Bills C-223 & S-233 for providing a ‘guaranteed livable basic income’ make their way thru parliament, our commentariat is silent on the implications on public finance & immigration. But, as the expression goes, ‘We need to talk’.
Over the past several years, I saw some online discussions about a rumored plan to bring in some form of ‘Universal Basic Income’ to Canada at the federal level. Anyone talking about this was, typically, dismissed as a ‘conspiracy theorist’. But as we have seen in the Covid Era (CE), yesterday’s conspiracy theories have a way of becoming today’s official policies.
It was therefore not surprising to learn that not just one, but two separate Bills had been introduced in the parliament to usher in a policy that, until recently, was a ‘conspiracy theory’. It was equally unsurprising that a policy idea that had been tried at the provincial level under the previous Liberal government of Ontario was making a national appearance under the current federal Liberal government.
However, in fairness, I must say that support for this idea exists across the partisan divide; the Conservative government of Prince Edward Island has a pilot project going for ‘targeted basic income guarantee’ (see this report by CBC on October 01, 2021). Under this policy, recipients would get 85% of something called ‘Market Basket Measure’ which, according to this link at the Canada government website, is defined as:
“… a specific set of goods and services that represent a basic standard of living”.
The CBC story quotes PEI Minister Brad Trivers as saying that 625 recipients had been identified by then. On February 24, 2022, Senator Diane Griffin stated, during a debate on the Bill, that “So far, 590 Islanders have benefited from this targeted basic income program.” One is left wondering why the remaining 35 did not receive the benefit.
Separately, it is worth pondering the curious phenomenon whereby two separate – but identical – Bills were introduced in the parliament for the same policy measure, on in the House of Commons and the other in the Senate. Their language is identical throughout the texts of the Bills. In Indian English, they are ‘same to same, ditto to ditto’ (Bill C-223 is available at this link, and Bill S-233 is available at this link). Respectively, they were sponsored by MP Leah Gazan (NDP) and Senator Kim Pate (of the Independent Senators’ Group – which many people believe is a euphemism for ‘Liberal’, and with good reason).
The fact that neither Bill is sponsored by a parliamentarian formally attached to the governing Liberal party adds to the speculation as to the real objective here.
In the online discussions that I mentioned earlier, one point of argument used to be about the distinction between ‘Universal Basic Income’ and ‘Minimum Basic Income’. According to some, the former would be available to every individual regardless of their income from other sources (and therefore considered less desirable), whereas the latter was means-tested and therefore more preferred.
Both the Bills, C-223 and S-233, simplify this terminology by calling it ‘guaranteed livable basic income’ – or perhaps they complicate it because ‘livable’ income can have different values at different places and points of time. There can even be individual variation depending, for example, on dietary preferences such as vegan or organic.
According to this and this link on the website of the Parliament, both the Bills were in the ‘First Reading’ stage on December 16, 2021. Further, this link shows that Bill S-233 is currently in its ‘Second Reading’ stage and was debated on February 8 & February 24. Bill C-223 is listed as ‘Outside the order of preference’ according to this link; its ‘Second Reading’ is shown as ‘Not Reached’.
In light of all of the above, it is surprising – in an unpleasant but not unexpected way – that there doesn’t seem to have been any reporting or commentary in our media on the impact of this hugely important proposal.
The Bills themselves are surprisingly, even refreshingly, short – just about three and a half pages in size 11 font. But appearances can be deceptive, as we know only too well. A careful reading of either shows that my assessment of them being ‘hugely important’ is warranted.
At first glance, I identified four areas of concern that deserve public scrutiny: the category of people who would be eligible, the conditions under which they would be eligible, clubbing different regional factors into one policy and the fanatical desire to plug ‘climate crisis’ into anything and everything.
Let us look at each of these in detail. In the interest of brevity, I will use the term ‘basic income’ where appropriate, to mean ‘guaranteed livable basic income’.
Section 3(1) of the Bill requires the finance minister to develop a framework for ‘basic income’ throughout Canada for “any person over the age of 17, including temporary workers, permanent residents and refugee claimants”.
A natural question arises here: Does the term ‘temporary workers’ include ‘temporary foreign workers’? If it does, then how is it possible for a foreign national who is in Canada specifically on the strength of a work visa to be earning less than a ‘livable wage’? The requirements of our Temporary Foreign Worker policy would prevent such a thing from happening. If that policy is being flouted by any employer, then the correct remedy is to force the employer pay their temporary foreign workers more, so as to comply with the policy. Shifting the burden of the amount of underpayment to the public purse is, without a doubt, unfair. In fact, it would amount to corporate welfare masquerading as compassion for the downtrodden.
And before anyone accuses me of reading too much into the Bill and arriving at unnecessarily alarmist conclusions, allow me to point out that throughout the Bill, the reference is always to ‘all persons in Canada’ or ‘every person’. Being a Canadian (whether as a citizen, a Permanent Resident or a refugee) is not mentioned as a condition for eligibility at all, anywhere in the Bill.
Given that understanding, the next question is: Would this policy also extend to international students also, as they are ‘persons in Canada’? If it does, then this is a true game-changer: Canadians would be funding the post-secondary education in Canada of foreign nationals who aren’t permanent residents or refugees.
And finally, since this ‘basic income’ would be available to everyone above the age of 17, a person pursuing post-secondary education immediately following their graduation from high school would be eligible to receive that ‘basic income’. This has the effect of reducing, or perhaps eliminating entirely, their need to go into student debt for getting a post-secondary education. I will go into my estimate of what that ‘basic income’ could be in dollar terms later in this article, where it will become clear that for most post-secondary students, their ‘basic income’ would be at least equal to – or exceed – their tuition.
What this means is that we will have made post-secondary education ‘free’. Of course, it won’t be ‘free’ in the real sense, as we all know too well. The net effect here would be to transfer the burden of student debt from the individual on to the taxpayers collectively, in the form of public debt. I say ‘public debt’ because for a long time, we have been running deficits at the federal level ranging from substantial to gargantuan amounts. Barring a seismic event, that it unlikely to change for a couple of generations – at the very least. Any additional outlay of public funds, therefore, must come via increased borrowing. In a nutshell, we will have made post-secondary education ‘free’, without officially making it ‘free’ – including for international students.
What this would do to our fiscal situation is too scary to contemplate.
Section 3 (3) (d) of the Bill stipulates that the policy framework to be developed by the finance minister should “ensure that the implementation of ‘basic income’ program does not result in a decrease in services or benefits meant to meet an individual’s exceptional needs related to health or disability”.
In all the discussions that have hitherto taken place on ‘universal / minimum basic income’, one of the main arguments in its support has been that its introduction would be accompanied by the removal of the existing social support programs. The resulting savings – in terms of payments to beneficiaries or provision of services to them as well as the associated costs of manpower and other administrative apparatus that would no longer be required – would at least partly offset the cost of the ‘universal / minimum basic income’ program. This Bill makes a 180-degree turn on an article of faith in relation to the idea of a ‘basic income’; if the recipients are already beneficiaries of certain other social support programs, their eligibility under those programs will continue unaltered.
In Section 3 (1) (a) of the Bill, it is explicitly acknowledged that the need for ‘basic income’ depends on regional factors:
“The framework must include measures … to determine what constitutes a livable basic income for each region in Canada …”
Given this, one wonders if the provincial / territorial governments may not be better placed to formulate this ‘framework’ in light of the local factors at play in each region. Certainly, the requirements of a beneficiary of ‘basic income’ (assuming one agrees in principle with the policy idea) would be materially different in Yukon as compared to the GTA. Would this policy, if implemented, expand the ambit of the federal government at the expense of provincial / territorial ones? Separately, perhaps the experts in Constitutional law can opine on whether this policy would amount to the federal government encroaching on the jurisdictions of the provinces and territories.
The most laughable aspect of the Bill is that it tries to attach this ‘basic income’ idea to fighting the ‘climate crisis’. Its Preamble reads, in part, as follows:
“Whereas the provision of a guaranteed livable basic income would benefit individuals, families and communities and protect those who are mademostvulnerable in society, while facilitating the transition to an economy that responds to the climate crisis and other current major challenges;”
One fails to understand how helping people to escape poverty (if the policy manages to achieve that objective) leads to ‘an economy that responds to the climate crisis’. If anything, the CO2 emissions of the beneficiaries would increase as a result of the improvement in their lives (which, to be amply clear, I consider to be a good bargain).
On one hand, I am tempted to laugh at this reference to ‘climate crisis’ as gratuitous virtue signaling of no consequence, engaged in by a combination of a desire to conform with our current secular theology and inability to think outside the box. On the other hand, however, I am apprehensive that inserting ‘climate crisis’ into the process would make it difficult – if not impossible – to object to the policy proposal without being called a knuckle-dragging Neanderthal. It is therefore likely that the insertion of the mandatory buzzword was done deliberately.
Let us now turn to the task of estimating the magnitude of the financial burden that would entail if we adopted this policy.
THE NUMBERS GAME
Obviously, we must begin by estimating the dollar amount that would suffice as ‘livable basic income’. There are, of course, regional variations – as the Bill itself acknowledges. In addition, other factors may also affect the computation in different case.
That said, the minimum wage across Canada is in the range of $ 15.00 per hour, give or take. By the proclamations of the governments themselves, this is supposed to be a ‘living wage’. In the absence of anything else to go on, let us treat this number as our starting point.
A full-time worker works for about 2,000 hours in a year.
By simple math, therefore, we arrive at $ 30,000 a year as the ‘livable basic income’.
Estimating the number of beneficiaries is considerably more difficult. It would include the unemployed, part-time workers earning less than the ‘livable basic income’, those not interested in working at all such as home makers etc., students above the age of 17 years, and (if my interpretation earlier is correct) even international students and temporary foreign workers.
Going out on a limb, I would say that we are possibly looking at millions of people who would benefit from this ‘guaranteed livable basic income’. If the final number of beneficiaries is 2 million, then the annual payout would be $ 60 Billion (plus costs associated with administering the policy – which would also be substantial; given the numbers, the federal government would need to do a lot of hiring). If there are 5 million people getting this payment, then the tab would be $ 150 Billion + administrative costs.
This will be a major issue for the Conservatives to figure out in the next election which, given that we are in a minority government situation, would likely be held much sooner than 2025. In fact, it is likely that the Bills have been introduced with that very possibility in mind, so as to give the Liberals an opportunity to make it into ‘the defining issue’ of the next election. The Conservatives are certain to be the ones screaming the loudest about the cost burden of this policy (and even louder if Pierre Poilievre manages to win the leadership race). Unless they figure out a way to tackle this challenge effectively, they are quite likely going to sink at the ballot box in the next election.
I often say that we have a ‘participative governance’ model. Sometimes people tell me that my view is, at best, a fond hope; the reality is materially different from my imagination.
Given the demands on our time as individuals, there is necessarily a limit to the attention we can give to issues that should be relevant to us as voters. The greater the potential impact of an issue on our lives (both as individuals and collectively), the more attention we should give to that issue.
I believe that this an issue of utmost importance to all of us as voters, in terms of its likely effect in changing the very foundations of our public finance and governance – and perhaps our society itself.
If a country’s economy is going gangbusters and its population is tiny, such outlays of public funds can be sustainable (as was the case in the Qaddafi-era Libya). But our economy is moribund, held back from achieving its potential by idealistic activists and a general lack of desire for achievement. Our public finances have been in the doldrums for a long time (both at the federal as well as the provincial levels) and Covid only added massively to the already dire situation. Adding such a major (and as of now, unquantified but likely humongous) financial burden on the public purse is definitely going to change our lives, and our society in more ways that we can imagine.
For one thing, it would greatly impact on the desire among would-be immigrants to choose Canada. When I went through the immigration process nearly 2 decades ago, one major selling point from the immigration consultants was that school education and medical care were ‘free’ in Canada. A ‘basic income’ would catapult us into a completely different orbit of allure. Without casting aspersions on any immigrants, it should be possible to say that if people are told that they will be paid a ‘livable basic income’ by the government when they don’t work (for any reason at all) and regardless of any circumstances, that would act as a major pull on them to immigrate to Canada.
The question is, how long can a country remain ‘a land of milk and honey’ for millions upon millions of people who have been told that they don’t need to produce economic value in order to receive a ‘livable income’?
As an aside, I believe that the use of the term ‘income’ in this context is athwart its commonly understood meaning, which is that one receives ‘income’ in return for giving something of economic value to another party. By completely doing away with this quid pro quo that has existed for as long as civilization has, what consequences will we be inviting upon us?
These are the questions and points that we should be discussing while the proposal is in its early stages. But our media and commentariat are completely silent on this. I suppose that it will appear on their radar once the Bill is in its Third reading stage, but I believe that it will be too late by then for public participation to change the outcome.
Additionally, it would be unwise to depend on our political class to provide meaningful critique of the proposal. For example, Senator Diane Griffin referred, during the debate on this Bill on February 24, to a pilot project of ‘basic income’ in Finland, extolling its beneficial impact on the recipients. But she conveniently omitted the fact that in April 2018, Finland discontinued the project, having paid 2,000 unemployed people 560 Euros monthly for well a year (see this report in the Guardian of UK). As I say often, the political class has its own set of priorities, and your welfare is not necessarily one of them. You must be active to protect your interests and your future.
If you truly believe that we have a ‘participative’ form of governance, then the time is now to find out more about this Bill, and to start discussing it with everyone that matters to you. And you should certainly communicate with your MP about it. This isn’t the first time in history when someone held forth that there is a money tree that can provide for everyone. In fact, in Sanskrit literature, there is the notion of ‘Kalptaru’ (the word ‘Kalp’ means ‘to think’ and ‘taru’ means ‘tree’). Accordingly, if one is standing underneath a ‘Kalptaru’, one gets any wish granted.
In the real world, as opposed the world of imagination, believing that one had a ‘Kalptaru’ at hand to fulfill all the material desires has only led to devastation and ruin. If we, as the people who will be ruined, speak up against it early enough, we may be able to stop our descent into madness and chaos.