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A Basic Income for Ending Poverty

Posted on May 19, 2021
By Natasha Pei

Basic Income cash transfers are a well-evidenced high-impact strategy for widespread poverty reduction in Canada.

juliane-liebermann-O-RKu3Aqnsw-unsplashThe success of Basic Income as a pathway to ending poverty is evidenced by its long history around the world, including two Canadian pilots – one in the 1970’s in Dauphin, Manitoba, and one that began in 2017 in three Ontario cities: Hamilton, Thunder Bay, and Lindsay, which was cut short in 2019. 

COVID-19 brought Basic Income back into the spotlight in 2020 as the pandemic revealed how many Canadians were only one paycheck away from poverty, and how, across levels of governments and sectors, our systems are woefully under-prepared to withstand widespread shocks.

The Parliamentary Budget Officer of Canada recently released a report confirming that a national Basic Income program for Canada would cut poverty dramatically. Their findings, based on the Ontario pilot experience, indicate that a national program would reduce poverty by 50%. Other recent in-depth studies by the Basic Income Canada Network (BICN) and the Canadian Centre for Economic Analysis (CANCEA) estimate the reduction in poverty could be as dramatic as 95% to 100% depending on the chosen model.

In one scenario proposed by BCIN, an income-tested model with a benefit set at $22,000 ($31,113 for couples divided equally), with a 40% reduction rate (avoiding a cliff effect), and including benefits for seniors while leaving child benefits and social services as-is, would drop poverty rates to 1.2-2.0% for two-parent working-age families, working age couples, and senior couples. Senior poverty rates for singles would be reduced to 5.6%. Absolute poverty would be reduced by 95.6%, and relative low-income would be reduced by 75.2%

Basic income is more than an income security intervention. It also acts as a pool ball strategy creating positive cascading effects in other domains such as food security, employment, physical and mental health, inclusion and belonging, gender equality, and economic recovery to name a few.

McMaster University’s sample of 257 participants of the Ontario pilot revealed stunning results:

  • Participants who were already employed before the pilot began benefitted the most by gaining enough financial security to take risks with longer term rewards. 1/3 of employed participants reported salary increases and 1/3 found a job with better safety. The majority all stayed working.
  • Of the 27% who stopped working, 50% did so to go back to school and upgrade their skills, and 30% were caring for a family member or left an abusive work situation.
  • 20% of those receiving social assistance when the pilot started transitioned into work.
  • Physical and mental health improvements were reported universally by all participants.
  • Participants engaged more positively with the community due to a better outlook on life.
  • Participants used the public health system less.
  • Participants experienced greater food security.
  • Participants adopted better life choices – such as less drinking and smoking – due to less stress.
  • Participants improved their family dynamics with less anxiety and fighting, and provided a more stable environment for their children.

CERB showed that Canada is already set up to deliver Basic Income payments quickly through the tax system. Research from Canada and around the world shows us this can be a juggernaut strategy for eliminating income poverty as well as challenges associated with income. Now more than ever, the time is right to be bold and push for a Basic Income for ending poverty.

 

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Topics:
Natasha Pei, Poverty Reduction, Cities Reducing Poverty, Basic Income


Natasha Pei

By Natasha Pei

Natasha Pei brings online content to life and engages our members in the Vibrant Communities learning centre for poverty reduction. Natasha's involvement with Tamarack began with the Communities First: Impacts of Community Engagement (CFICE) project, where she worked as a Research Assistant in the Poverty Reduction Hub, studying effective ways community-campus engagement can be undertaken to have real benefits for the community.

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