Alternative federal budget would include a basic income

By Sid Frankel, University of Manitoba

On September 22 the Canadian Centre on Policy Alternatives released Alternative Federal Budget 2023: Rising to the Challenge: An Agenda for Public Leadership. Its chapter on Income Security and Poverty recommends measures which would take us a long way toward an adequate basic income in Canada if the federal government accepts them.  The basic architecture involves four pillars, which collectively would provide support for all citizens and residents of Canada.  Two of the pillars already exist, although the alternative budget recommends significant improvements to their adequacy and accessibility.  These are:

  1. Families with Children – Since its introduction in 2016 the Canada Child Benefit has significantly reduced poverty in families with children.  It is a partial basic income on the guarantee model. Rising to the Challengeadds the Canada Child Benefit End of Poverty Supplement, a partial non-taxable basic income on the guarantee model for families earning less than $19,000 annually.  The Supplement would provide $8,500 for the first child with reducing amounts for additional children.  The benefit would be reduced by $,50 for every dollar of taxable income earned.  The Supplement would halve the expected child poverty rate in 2023 (Canada’s Official Poverty Line) at a cost of just under $6.5 billion.
  • Seniors – Old Age Security is a taxable partial basic income on the universal model which is taxed back from affluent Canadians at a higher rate than other income.  The Guaranteed Income Supplement is a partial basic income on the guarantee model for low income seniors.  Together they have significantly reduced senior poverty rates.  Rising to the Challenge would lower the eligibility age of the Guaranteed Income Supplement from 65 to 60 to reduce unacceptably high poverty rates in 60 to 65 year a cost of just under $2.4 billion.

Two pillars are new:

  • Working Age Non-Disabled Adults (18-64) Without Children under 19.- Rising to the Challenge ends the Canada Workers Benefit (for which only those with employment income are eligible) and establishes the unconditional Canada Livable Income, a partial basic income on the guarantee model.  It would be available for single persons earning less than $19,000 and couples earning less than $21,000.  Benefits would be reduced by $.50 for each additional dollar of taxable income earned.    The maximum benefit would be $5,000 for singles and $7,000 for couples.  It would cost just under $3.9 billion in addition to saved expenditures for the Canada Workers Benefit.
  • Non-Senior adults with disabilities – Rising to the Challenge creates the Canada Disability Benefit, a partial basic income on the guarantee model.  The benefit would provide $11,040 a year until recipients make up to $15,000 a year in earnings, then would phase out at 0.50 per dollar in earned income. The benefits would phase out at $37,000 in employment income.  The cost would be $913 billion.

In addition, Rising to the Challenge moves toward universal coverage by making the children of refugees eligible for the Canada Child Benefit and the Canada Child Benefit End of Poverty Supplement.

A basic income must be responsive to changes in income, family composition and disability status.  Rising to the Challenge recommends a Rapid Response Guarantee, that beneficiaries of all four pillars will receive benefits of the appropriate amount in less than a month after a change.  In addition, automatic tax filing and benefit enrollment based on information already held be government is suggested to improve responsiveness.  Finally, alternative means of enrollment will be available for eligible persons who do not file taxes.

Basic Income Canada Network congratulates the Canadian Centre on Policy Alternatives for pragmatic affordable recommendations which can be quickly implemented.  If the government accepts these recommendations poverty will be significantly reduced, and Canada will take a big step on our path toward a livable basic income for all.

–Dr. Sid Frankel’s program of study focuses on poverty reduction policy, including basic income and the nonprofit sector.