Guaranteed income program appealing but implausible, Fraser Institute says
Program would reform 25% of all government activity, think-tank finds.
“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.