Budget officer pegs cost of basic income as calls for it grow due to COVID-19

Budget officer pegs cost of basic income as calls for it grow due to COVID-19

Budget officer pegs cost of basic income as calls for it grow due to COVID-19

OTTAWA — Providing almost all Canadians with a basic income for six months beginning this fall could cost about $98 billion, the parliamentary budget officer said in a report on the eve of a preview of how COVID-19 will shape government spending until next spring.

The figure is the upper range of the scenarios the budget watchdog was asked to research as part of a report released Tuesday morning as policy-makers consider how to shape emergency supports set to expire in the fall.

Planned federal spending to date on pandemic-related aid now tops about $174 billion, in a range of programs meant to provide a financial floor for individuals and businesses.

The idea of giving a government-guaranteed basic income to Canadians has gained steam as millions have watched their jobs or earnings evaporate in the COVID-19 pandemic.

Finance Minister Bill Morneau and other senior cabinet ministers have repeatedly been asked by senators and MPs about the concept. Advocates argue that it would be an expansion of the $80-billion Canada Emergency Response Benefit for workers who saw their incomes crash.

The CERB and a $45-billion wage-subsidy program are set to expire in October.

Providing six months of a basic income starting that month could cost between $47.5 billion and $98.1 billion, depending on how much of the benefit is clawed back from people whose other incomes increase.

Budget officer Yves Giroux’s report says the average benefit to Canadians aged 18 to 64 would range between $4,500 and $4,800, with the number of recipients depending on the phase-out rate.

Sen. Yuen Pau Woo, who asked for the costing, said a basic-income program could fill in the gaps in Canada’s social safety nets, a patchwork largely run by provinces, that have been exposed by the pandemic.

“It’s a huge undertaking to launch a basic income for the whole country on a permanent basis. The costs are extremely high and the political resistance is likely to be fierce, but we are in a period where it is likely we will have to spend large sums of money on income support going into the balance of 2020 and into 2021,” Woo said in a telephone interview.

“The question to my mind is how we spend it, and in what form.”

A basic income means different things to different people, but it is usually viewed as a no-strings-attached benefit that governments provide to citizens instead of various targeted social benefits.

Also known as a guaranteed minimum income, it can be delivered as a universal payment, or as a means-tested benefit that declines as a recipient’s other income rises.

Giroux’s report says the government could repeal $15 billion in tax measures to offset the overall cost of a basic-income program, which Woo added would likely have to wrap in existing measures to avoid duplication.

The overall cost of the program might be higher than the budget office estimates. The PBO’s estimates rely on some Statistics Canada income data that doesn’t include people living in the northern territories or in First Nations, or some military members.

Nor can the figures simply be doubled to determine a full year’s cost because that might overstate the financial impact. The economy appears to be bouncing back slowly from a bottoming-out in April, and the cost of the program would depend on how many employees are rehired or find new jobs.

The Canadian Federation of Independent Business, which represents small businesses nationwide, said Tuesday that about one-third of members responding to a survey reported being back at full staffing levels, but suggested many believe it will take six months to get back to normal profitability.

Statistics Canada is to release June’s jobs report on Friday.

Projections released Tuesday by the Organisation for Economic Co-operation and Development estimate Canada’s unemployment rate at 11 per cent for the second quarter of the year.

The 37-member international body predicted the national unemployment rate would decline to 7.7 per cent by the end of the year, or to 8.4 per cent should a second wave of the novel coronavirus force renewed lockdowns.

NDP finance critic Peter Julian said Tuesday that the uncertain economic path ahead requires the Liberals to say how the government plans to reshape emergency aid in Wednesday’s fiscal update.

He said a more universal benefit, which the NDP has pushed, would have helped more people and cost less had the Liberals used it from the start.

“It makes more sense to make sure that everybody who needs the benefit can actually get it than the government’s approach,” Julian said.

The Liberals have said the update on Wednesday will provide an economic outlook, an accounting of spending to date and projections for the remainder of the fiscal year, including the expected deficit. The PBO and others estimate that to be at least $250 billion.

This report by The Canadian Press was first published July 7, 2020.

Jordan Press, The Canadian Press

Coronavirus

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Alberta’s chief medical officer of health, Dr. Deena Hinshaw, confirmed eight additional virus-deaths Monday afternoon including one in central zone. (Photo by Chris Schwarz/Government of Alberta)
Central zone up to 1,249 active COVID-19 cases

Red Deer sits at 257 active COVID-19 cases

Executive Director and Co-Founder of Rock Soup Craig Haavalsen is sleeping in a tent outside Rock Soup’s location until the Go Fund Me for Rock Soup raises $10,000. Shaela Dansereau/ Pipestone Flyer.
Putting normalcy into asking for help: New non-profit sets up in Wetaskiwin

Rock Soup non-profit is a new secular Food Bank putting down roots in Wetaskiwin.

Alberta’s chief medical officer of health, Dr. Deena Hinshaw, confirmed eight additional virus-deaths Monday afternoon including one in central zone. (Photo by Chris Schwarz/Government of Alberta)
New record: Red Deer at 236 active COVID cases

One more death in central zone reported

file photo
County of Wetaskiwin Land Use Bylaw amendments approved

Ammendments approved by Wetaskiwin County Council at Nov. 24, 2020 Council meeting.

Idyllic winter scenes are part of the atmosphere of the holiday season, and are depicted in many seasonal movies. How much do you know about holiday movies? Put your knowledge to the test. (Pixabay.com)
QUIZ: Test your knowledge of holiday movies and television specials

The festive season is a time for relaxing and enjoying some seasonal favourites

Ash and Lisa Van carry a freshly cut Christmas tree while wearing personal protective masks at a Christmas Tree Farm in Egbert, Ontario, Sunday, Nov. 29, 2020 THE CANADIAN PRESS/ Cole Burston
‘Everyone wants a tree and they want it now’: Christmas tree sales on pace for record

Anticipated demand for Christmas trees has sparked a rush by some to purchase more trees wholesale

A scene from last year’s Light the Night fundraiser at the Stettler Town and Country Museum. This year’s rendition is on a drive-through basis only, but it still promises to be a not-to-be-missed seasonal highlight. (Independent file photo)
Stettler Town and Country Museum hosts ‘Light the Night’

This year’s rendition is drive-through only, but will still prove to be a dazzling display

(Black Press File Photo)
Rimbey woman gathering Christmas gifts for seniors at Valleyview Manor

Margaret Tanasiuk says she doesn’t want anyone to feel forgotten on Christmas morning

Paramedics register patients at a drive through, pop-up COVID-19 test centre outside the Canadian Tire Centre, home of the NHL’s Ottawa Senators, in Ottawa, Sunday, Sept. 20, 2020. A new poll suggests most Canadians aren’t currently worried that people in other countries might get a COVID-19 vaccine first. THE CANADIAN PRESS/Justin Tang
Canadians not worried other countries will get COVID-19 vaccine first: poll

Forty-one per cent of respondents say they want the vaccine to be mandatory for all Canadians

Fossil finds at Mt. Stephen. (Photo: Sarah Fuller/Parks Canada)
Extreme hiking, time travel and science converge in the Burgess Shale

Climb high in the alpine and trace your family tree back millions of years – to our ocean ancestors

Deputy Prime Minister and Minister of Finance Chrystia Freeland listens to a question from a reporter on the phone during a news conference in Ottawa, Monday, Nov. 30, 2020. THE CANADIAN PRESS/Adrian Wyld
Spending too little worse than spending too much, Freeland says as Canada’s deficit tops $381B

‘The risk of providing too little support now outweighs that of providing too much’

Lawyer Devon Page, Ecojustice Canada’s executive director, pauses during a news conference in Vancouver on Wed., Sept. 26, 2012. The environmental law group has lost its bid to pause Alberta’s inquiry into where critics of its oil and gas industry get their funding. Ecojustice sought an injunction this summer to suspend the inquiry, headed by forensic accountant Steve Allan, until there is a decision on whether it’s legal. nbsp;THE CANADIAN PRESS/Darryl Dyck
Judge tosses application to pause Alberta inquiry into funding of oil and gas foes

Ecojustice sought an injunction in the summer to suspend the inquiry

Most Read