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Why universal basic income isn't the best way to tackle poverty

Roslyn Kunin: Far more effective are carefully targeted programs specifically aimed at dealing with the issues that put people into poverty and keep them there

In a country as rich as Canada, no one should have to be hungry or homeless.

We do have people who can’t provide for themselves and we rely on the government to provide a floor below which Canadians can’t fall.

We have to remember that this support comes from us, the taxpayers, so we need to ensure that providing support for the vulnerable isn’t punishing the productive. Most of us are happy to see our tax dollars supporting those in need. What bothers us is seeing the tax dollars we’ve paid going to those who are no more needy than we are.

An example of this appeared in the recent federal budget. We expected government programs and spending to continue as we shepherded the economy through the COVID-19 pandemic. Such spending should help those in need and/or make investments that contribute to future productivity.

One budget item that doesn’t meet these criteria is the 10 per cent increase in the universal Old Age Security (OAS) payments for those over 75 who will also receive a one-time $500 bonus.

Not all seniors are poor, with many significantly better off than their grandchildren who are struggling in these uncertain times.

Those seniors with higher incomes will have all or part of their OAS clawed back at income tax time. But should we be wasting administrative resources shelling out funds that we then have to collect back?

What’s really surprising is that we already have a program that identifies and supports low-income seniors – the Guaranteed Income Supplement (GIS) goes to all low-income Canadians over 65.

A much better program change would have been to raise the GIS, knowing that all of the increased spending would go where it’s needed. The increase could be greater than 10 per cent when directed to this smaller number group and the starting age could have been closer to 65 than 75.

When government spending is needed to support our economy, we have a right to expect carefully targeted government programs. Not only should they increase overall spending, but they should also be effective and efficient in solving problems such as poverty.

One solution to the poverty problem often mentioned is setting up a universal basic income available to all. The B.C. government went to the Vancouver School of Economics at the University of British Columbia and set up a panel chaired by David Green to look into the feasibility of setting up universal basic income and initiating a pilot project.

The panel took two years, commissioned 40 pieces of original research and (unlike many other studies) consulted with the people who would be affected.

The report of that panel, Covering all the Basics: Reforms for a More Just Society, strongly agrees with the idea of basic income as necessary for a society where no one gets left behind.

Money for those in need is required but, in many cases, it’s not sufficient.

Along with financial support, most potential basic income recipients need housing, counselling, medical support, and help in finding work, etc.

It’s the universal in universal basic income that the panel objects to. Instead, they recommend carefully targeted programs specifically targeted to deal with the issues that put people into poverty and keep them there.

Among these are groups in transitions, such as those ageing out of care or fleeing violence, the disabled, low-income workers without extended medical coverage, children in poverty, etc.

In addition to providing funds, programs for these groups would have been available to wrap around services to help them deal with the likely causes of their poverty, whether it be immaturity for 19-year-olds dropping out of care, drug use, mental health issues, or low-paid and insecure employment without benefits.

They make 65 specific recommendations, including reforming disability assistance and temporary assistance (welfare), reducing disincentives by lowering the clawback on benefits, providing full health-care benefits to all on low incomes and improving delivery systems.

Implementing these recommendations wouldn’t cost more than a universal program where we just spread more money around. And it would go a long way to helping poorer people find real solutions to their long-term problems.

Troy Media columnist Roslyn Kunin is a consulting economist and speaker.

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