Guaranteed income program appealing but implausible, Fraser Institute says

Program would reform 25% of all government activity, think-tank finds.

January 7, 2015   by PLANT Staff

CanadianMoney2VANCOUVER — Despite the conceptual appeal of a guaranteed annual income, the idea won’t work in Canada, finds a new study by the Fraser Institute.

“The idea of a guaranteed annual income has entered and exited Canadian policy discussions for decades, garnering both proponents and detractors, yet the practical obstacles to implementing such a program are likely insurmountable,” said Charles Lammam, the Fraser Institute’s associate director of tax and fiscal policy and co-author of The Practical Challenges of Creating a Guaranteed Annual Income in Canada.

A Guaranteed Annual Income (GAI) program would provide individuals or families an unconditional cash transfer to ensure a minimum annual income. It would replace Canada’s complex income support system (which includes several, often-overlapping programs within all three levels of government) with a single program administered by one level of government. (Most GAI proponents envision a program administered by the federal government.)

This single program, in theory, would increase government efficiency and reduce administrative costs, the report says.

Canada’s income support system (including federal, provincial and local government spending and tax measures) cost an estimated $185 billion in 2013 – roughly 10% of Canada’s economy. Social benefits, including cash transfers and in-kind benefits such as food subsidies, account for 22% of program spending by all levels of government in Canada.

A GAI, if implemented, would reform about 25% of all government activity, the right-leaning, Vancouver-based public policy think-tank says.

The concept isn’t without major obstacles, however, despite its appear. The think-tank says the program’s biggest challenge would be actually implementing a GAI while maintaining its simplicity and ensuring administrative savings.

For this to happen, all three levels of government (federal, provincial and local) would have to agree on a single approach with some levels abdicating their responsibility in the existing income support system. In this case, the institute says, if the federal government administered the GAI, every provincial government would have to stop providing welfare assistance. At the same time, federal programs such as employment insurance would have to be integrated into the new GAI program.

“With federal and provincial governments disagreeing regularly on much smaller issues, it seems unlikely they would all agree to implement a reform as large as a guaranteed income program,” Lammam said.

Download a copy of the Fraser Institute’s report here.

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3 Comments » for Guaranteed income program appealing but implausible, Fraser Institute says
  1. Daniel Rankin says:

    GAI won’t really help eradicate poverty, but in my opinion will only encourage a growing welfare society. It would be very inflationary as well…you’ll get less goods for the money due to supply and demand. There has to be a better way to create a safety net for people who are struggling to gain the essentials of life. So far in Canada we have gov’t healthcare, welfare assistance and other programs. If we want a free society, people have to be encouraged to take more responsibility for their well being, with some help to get a start, but not to totally take away their motivation by giving handouts. Teach the wo/man to fish….

  2. Kent says:

    Seems to me lately that Wynne is using Ontario as her personal “live” version of SimCity……Once she gets a little more bored – or a couple more bricks fall off the sanity wagon – she’s going to start clicking the disaster button……we are so sunk.

  3. Carole Rier says:

    There needs to be an overhaul of the tax system in Canada. One simple solution is to raise the old age pension. It is a disgrace what one gets now. You can’t even rent an apartment for that kind of money. Refuges coming into Canada get about $2500.00 a month, but our older people get a little over $500.00 Disgraceful.

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