Giving people more money is a good thing according to Ron Hikel, political scientist and management consultant. The government funded program Hikel has been promoting since the 1970’s goes by a variety of names including a basic income (BI), guaranteed livable income (GLI), social dividend (SD), and the trending basic income guarantee (BIG).
In a recent interview with rabble.ca, Hikel said the fundamental objective of a BI and how it’s implemented matters far more than what it’s called.
Despite talking about a BI for the past 52 years, Canada has no program in place. Hikel points out that there’s already a large body of solid, reliable, analyzed behavioural data detailing the positive impacts of a BI from pilots carried out around the globe.
“What we don’t have is a test of the actual administrative detail of the operation of the program. And, that is all important,” he said.
Hikel attributes that to the fact that there has been very little discussion around the goal of a BI program. Without that information it’s difficult to create the system of delivery needed to achieve that outcome while ensuring it’s operationally, administratively, and financially viable.
An income fit to each individual’s needs
To successfully implement a BI program, the federal government needs to have a mechanism in place to ensure payments to lower income Canadians.
At present, no mechanism exists that would let the federal government collect the information needed to calculate and deliver BI payments in exactly the right amount for a specified period.
Canada Emergency Relief Benefit (CERB) illustrated the importance of ensuring Canadians have access to sufficient income to meet the fundamental cost of living during a pandemic and at a time of increased inflation.
A failure of design meant everyone receiving CERB got the same monthly amount of $2,000. For some Canadians that was inadequate to cover the cost of their basic needs. Meanwhile, others are now having to repay unexpected overpayments.
“Paying people a flat rate amount is one of the great bad ideas of all time,” maintains Hikel.
Former U.S. Presidential candidate, Andrew Yang, wanted to create a Universal Basic Income (UBI) that paid every adult $1,000 per month. Hikel says that would be incredibly, and needlessly, expensive.
It also fails to accomplish the objective of helping the lowest income earners. A flat $1,000 per month would be grossly insufficient for meeting their cost of living leaving those most in need living under the burden of constant psychological stress due to chronic financial insecurity.
Basic Income is not a new idea
Mental illness, addictions, accidents and physical disease account for a substantial portion of health care costs in Canada. Data collected in the 1970’s Mincome pilot proved that health care demands and costs decrease substantially as financial security increases.
In the summer of 1972, Manitoba Premier Ed Schreyer contacted Hikel – then, a professor of political science at the University of Winnipeg – to ask him to negotiate the province’s Guaranteed Basic Income (GBI) program with the federal Liberals.
Hikel then set up and managed the joint NDP – Liberal program known as the Mincome pilot. The four-year project was successful because Schreyer was in power for two terms which accommodated both planning and full implementation.
As the GBI pilot was winding down, the Conservatives were voted in provincially and the remainder of the program was cancelled. By that time there was ample data detailing the behavioural effects of spending $17 million of public money on a GBI for the entire town of Dauphin and selected sites in the city of Winnipeg.
A record of effectiveness
Hikel was instructed by the Conservative government to take all existing documentation to a warehouse in the north end of Winnipeg. The information sat untouched until 2011 when Professor Evelyn Forget, University of Manitoba Department of Community Health Sciences, discovered the 18,000 boxes and undertook the first analysis of the data.
The results resoundingly proved that receiving a BI decreased the physical and psychological effects of living with the stress of constant financial insecurity.
To put it simply, the social determinants of health improved while addictions, accidents, and mental health issues declined. There was an overall 8.5 per cent reduction in hospitalization rates for participants when compared to control subjects and a decline in doctor’s visits.
However, the actual goal of the Mincome pilot was to determine if a GBI would encourage people to stop working. The results identified two distinct groups that either chose not to enter the workforce or left it all together. The clusters included young, unattached males and married women.
Closer inspection by Forget determined that the young, unattached males were in fact, boys in high school who stayed in school because their families received a GBI. They were able to graduated rather than dropping out to find work in order to help support their families.
In the 1970’s women had access to 15 weeks maternity leave at 66 per cent of their pay. The married women who stopped working turned out to be new mothers who used the GBI to extend their maternity leaves. They eventually returned to the workforce.
Basic Income is not welfare
The Mincome data proved without a doubt that people not only want to work but enjoy working. It also highlighted the reality that working poor people are employed in occupations that don’t provide enough income to meet their basic expenses and that necessitates having multiple jobs.
It’s important to point out that a basic income is not welfare. Hikel should know because while running the Mincome pilot, he was also responsible for Manitoba’s welfare system.
Later, Hikel was responsible for the welfare system in Saskatchewan. He was also consulted on problems with the welfare system in at least 4 other provinces.
“The fundamental difference is in the intention. People who apply for welfare must convince the province why they are unable to meet the basic cost of living and need welfare,” said Hikel.
He went on to say, “the psychological approach to welfare, to this day, is fundamentally demeaning because it assumes there is something wrong with you if you are unable to provide sufficient income. However, the reality is that there is an incredibly complex number of factors that make the inadequacy of a family’s income insufficient.”
The Canadian Constitution states that provinces have jurisdiction over welfare programs and as such they make the rules including the questions applicants must answer.
In his experience, many of the people applying for welfare are women with children. Inevitably, the mother is asked if there is a man in the house? That welfare lingo translates into: in her bed, and that’s something Hikel says is none of their business.
The assumption that recipients are ripping off the system is without merit. According to Hikel, an RCMP investigation into Manitoba welfare fraud found two per cent of recipients abuse the system.
Yet, the 98 per cent who need this social safety net are stigmatized by the few who break the rules. Unfortunately, clamping down on those ‘ripping off the system’ often becomes the focus of politicians hoping to win favour with voters.
“A fundamentally sound program should be concerned with one factor only – what is your income need, what do you have, and what is the difference between the two,” Hikel said.
Closing the gap between income and expenses — food, housing, basic utilities, and transportation — requires no further qualifications.
In 1973, Federal Minister of Health and Welfare, Marc Lalonde, announced the Federal government was going to establish a BI program.
A mere four months later the Federal Minister of Finance decided the government didn’t have the capacity to meet the cost and cancelled the program.
Despite growing need, that’s the closest we’ve come to getting a BI.
“There is never a perfect time to bring in a basic income program because it’s going to establish new public sector costs and governments are always leery of accepting obligations to meet new costs – particularly if they don’t have total confidence they can establish what the cost is going to be,” Hikel observed.
Bringing a new program to fruition without knowing the cost, or the behavioural impact, or if it will operate efficiently, can make members of the cabinet believe it’s not a good time. Cabinet members need to be convinced that the program is achieving the greatest possible benefit with the least risk of fraudulent conduct.
People still want to work
Both Mincome and the Ontario pilot proved that a BI doesn’t deter people from working. But that means the system will need to implement a reduction rate for money earned over a certain amount.
Hikel provided this example, the first $500 per month earned by working could be completely ignored. Additional income over that amount may reduce the BI transfer payment by 25 per cent. Then, at some point, a maximum of 50 per cent reduction is implemented until the recipient reaches the equivalent of the BI monthly payment.
Everyone in the system is better off if they work and are paid BI as per the amount of money earned rather than hours worked. That makes it sellable politically because the government is reaping the greatest benefit for the least cost with a built-in work incentive.
Both the provincial and federal governments are currently dealing with the consequences of inflation. That means having to index existing program payments to the rising cost of inflation.
The federal Liberals and the NDP have just agreed to collaborate until 2025. To seal the deal, the NDP is getting expanded Medicare to cover eye and dental care. That is an enormous benefit for Canadians but at a hefty price to the public purse.
The escalating conflict between the North Atlantic Treaty Organization (NATO) and Russia will undoubtably add to federal costs.
According to Hikel, while there’s never a perfect time, there’s always a time that government could make opportune if they design the program properly.
Every once in a while, Hikel plays Charlie Parker’s magnificent song, Now’s the Time, and thinks, “If only the politicians could hear that about basic income. Because, damn it, now’s the time!”
Hear more of Nicoll’s conversation with Hikel in the latest episode of rabble radio.
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Nick Seebruch, editor
