Basic Annual Income: Muskoka Perspective

by: Hilary Maile

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Poverty is not generally a word associated with Muskoka.  The stark reality is there is a significant number of permanent Muskoka residents who are poor and live below the poverty line.  Many are single mothers.

Poverty is obviously not unique to Muskoka; it is a worldwide issue.  Several countries battling poverty have considered implementing a Basic Income Plan.   Some call it a Universal Basic Income (UBI) others a Basic Annual Income (BAI).  Canada has participated in two such experiments, the first in Dauphin Manitoba in 1974 and the second in Ontario in 2017.

What is a basic income: generally, it is a social welfare safety net specifically targeted to the poor and unemployed. There are various models, but the idea is to provide a guaranteed annual income, given in monthly instalments.  

Canada first experimented with a basic income in 1974 in Dauphin, the programme was called The Manitoba Basic Annual Income and its purpose was to address rural poverty.  The trial lasted four years and at that time the participants received $16,000 per annum, based on a family of four.  To apply the participants had to show an income of less than $16,000 PA they would then receive the difference in a monthly cheque.  

The second Canadian trial was held in 2017 but was prematurely cancelled due to a change in provincial government.  This trial lasted only 17 months and was conducted in Hamilton, Thunder Bay and Lindsay, Ontario. These regions were selected as they demonstrated a mix of rural and urban areas and were a reasonable reflection of Ontario’s population.  In total 4000 participants were chosen aged 18-64, seniors were not included as they received Old Age Security and Guaranteed Income Supplements.    A single recipient received $16,989 PA and a couple $24,027 PA.  If employed, for every dollar earned they would have fifty cents deducted from their BAI, thus this trial would only apply to singles earning less than $34,000 PA and couples earning less than $48,000 PA. Those receiving EI or CPP would have their monthly BAI reduced dollar for dollar but those eligible for child benefits would continue to receive that benefit throughout the trial.  There was also a control group for comparison who received no payments but participated in the research. 

In both Canadian studies there was clear evidence of significant positive outcomes:
– improved mental and physical health (in the 2017 study, 79% reported improved health, less stress and anxiety)
– fewer visits to their doctor (33% in Ontario)
– fewer hospitalizations
– better food security
– improved sense of security
– improved housing stability 
– improved social relationships
– decrease in alcohol and tobacco use
– empowerment to seek better jobs

In the 2017 study, 17% of participants left employment but of those 50% did so to return to school or university in order to gain improved skills.

Both of these studies are not true examples of a UBI, they are experiments to study alternative social welfare methods within the current system.  Recently former American Democratic Presidential candidate, Andrew Yang, recently campaigned for a true UBI where every American over the age of 18 would receive $1000 per month. The self-employed are not eligible for unemployment benefits and so the risk of being self-employed with no safety net can be daunting, especially to would be young entrepreneurs.  One wonders if more people would be willing to risk opening their own small business if they had a guaranteed BAI or UBI.  This could potentially open up more employment opportunities.

The cost of implementing a BAI to the poor across the country is unknown.  It would be helpful to compare that to the true cost of poverty in terms of real dollars (cost of welfare and disability payments, pressure on the health system, the impact on economic productivity and to governments revenue etc.).  The true cost of poverty in actual dollars and social outcomes has to be in the billions annually across Canada.  The benefits that a BAI could provide to the poor in terms of quality of life, effectively reducing poverty levels, providing better physical and mental health, reducing stigmatization and giving the poor a real path for success are priceless.

Our current Welfare System is based on rigid rules that the poor need to qualify for.  Often those in urgent need can fall through the cracks of such a system and have to wait weeks for the system to process their paperwork.  A BAI with a guaranteed monthly known income allowing recipients to effectively budget, would ensure more stability, less stress and anxiety and enable the poor to have more control and to make choices in their lives.  

Society’s goal needs to be a reduction in poverty, and with the reality of economic downturns as a result of Covid-19 and further potential job losses due to automation looming, we need to plan and ensure the poor are treated with respect and dignity. A Basic Income Plan could make a huge difference to Muskoka’s poor.