What’s the Status of Universal Basic Income in Canada?

A worker inspects lumber on a conveyor belt at West Fraser Pacific Inland Resources sawmill in Smithers, British Columbia, Canada, on Feb. 4, 2020. (Reuters/Jesse Winter)

By Matthew Horwood

The concept of providing all Canadians with free money to alleviate poverty has been gaining traction on social media, as a Universal Basic Income (UBI) bill works its way through Parliament.

Bill S-233, which would require the development of a framework for a Guaranteed Livable Income, is currently being reviewed by the Standing Senate Committee on National Finance, while an equivalent private members’ bill has been tabled in the House. It is rare for private members’ bills to become legislation, unless they get the backing of government.

The first place in Canada to engage with the concept of UBI was the province of Manitoba, which launched a “Mincome” project that provided payouts to lower-income households from 1974 to 1979, in parts of Winnipeg and Dauphin. The administrators said the experiment led to a decline in hospitalizations, but the program was ended after the government cited issues with unsustainable rising costs.

Then in 2017, the province of Ontario under then-Liberal Premier Kathleen Wynne rolled out a basic income pilot for the cities of Thunder Bay, Hamilton, and Lindsay. The project aimed to give 4,000 low-income Ontarians up to $16,989 annually over three years, but it was shut down after Progressive Conservatives formed government in 2018.

“The research project had an extraordinary cost for Ontario taxpayers which, according to the Ministry of Finance, would require increasing the HST from 13 percent to 20 percent if implemented across the province,” the Ontario government said at the time.

At the beginning of 2023, Quebec also launched a basic income program providing $1,211 a month or $14,532 per year to those with “severely limited capacity for employment.” In November, Newfoundland and Labrador introduced a similar program for residents aged 60 to 64 as part of its new Poverty Reduction Plan, which also increases the province’s Child Benefit program by 300 percent.

The federal government already has a UBI-like scheme in place, with the Guaranteed Income Supplement providing a non-taxable monthly benefit for Canadians over 65 years who fall below maximum income thresholds and collect Old Age Security.

UBI Legislation

At the federal level, the Liberal Party delegates endorsed the establishment of a UBI plan, with 77 percent of delegates at the Liberal Party of Canada’s policy convention voting in favour of a resolution on it in April 2021. When asked about the policy vote, Prime Minister Justin Trudeau told reporters many ideas and initiatives brought up at Liberal Party conventions, such as same-sex marriage, had eventually gone on to become government policy.

In February 2021, Liberal MP Julie Dzerowicz tabled a private members’ bill on implementing a UBI. Bill C-273 called for Finance Minister Chrystia Freeland to develop a national UBI strategy, but the legislation was terminated after a federal election was called in August 2021.

Senator Kim Pate and NDP MP Leah Gazan introduced two new bills on UBI, C-223 for UBI in the House of Commons and S-233 for a Guaranteed Livable Income (GBI) Bill in the Senate. While UBI means every Canadian would receive the same monthly payment, GBI means payments would only be made to low-income families.

Both bills are worded the same, calling for the finance department to create a national framework for a UBI program for anybody in Canada over the age of 17, including temporary workers, permanent residents, and refugee claimants. The bill also calls for such a program to not “result in a decrease in services or benefits meant to meet an individual’s exceptional needs related to health or disability.”

When discussing the bill in the Senate in February 2022, Ms. Pate cited the federal government’s data from 2019 that found 3.7 million Canadians are below the poverty line, while Canadian billionaires increased their wealth during the COVID-19 pandemic. She said the Canada Emergency Response Benefit that doled out $2,000 a month to millions of Canadians during the pandemic had demonstrated the ability to “deliver meaningful, innovative and flexible economic supports to individuals in need.”

PBO Details Costs of Program

According to an April 2021 report from Parliamentary Budget Officer (PBO) Yves Giroux, a national UBI program would initially cost $85 billion a year in 2021–22 and rise to $93 billion by 2025–26. The report used the parameters of Ontario’s UBI scheme, which gave individuals and couples at least $16,989 and $24,027 of income per year, respectively, as well as an additional $6,000 per year for people with disabilities.

Based on the models used, the PBO’s report said a UBI program would reduce poverty rates in Canada by almost half while having low impacts on the country’s labour supply. The incentive and disincentive aspects of the scheme used in the modelling were based on academic literature.

However, Mr. Giroux told senators in October 2023 that implementing such a scheme would come at the cost of the middle class.

“Obviously, if you want to create a program of this scale at zero cost, you need losers. Yet the losers would mostly be found in the top 60% of income earners, which I believe includes a good portion of the middle class,” he said.

The PBO’s first report on the estimated cost of establishing a national UBI program was released in April 2018 after being requested by current Conservative Leader Pierre Poilievre, who was at that time the shadow finance critic. While Mr. Poilievre has not commented on UBI as Tory leader, previous leader Erin O’Toole said he did not want to “incentivize a permanent CERB [Canada Emergency Response Benefit], because we have actually seen how that has hurt small businesses by distorting the labour market.”

As well, Conservative senators have been opposing the proposed bill during deliberations in the Senate.

“Common sense dictates that giving people large, unconditional cash payments is bound to make work less attractive and rewarding, not least because now recipients are only working for the difference between their basic income entitlement and wages,” Conservative Sen. Michael MacDonald said on April 18, 2023.

Canada News

What’s the Status of Universal Basic Income in Canada?

UBI Legislation

PBO Details Costs of Program

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