Premier Kathleen Wynne announced the details of the province’s three-year basic income project during a speech in Hamilton Monday.
“The project will explore the effectiveness of providing a basic income to people who are currently living on low incomes, whether they are working or not,” Wynne said. “People participating in our pilot communities will receive a minimum amount of income each year — a basic income, no matter what.”
The pilot will launch in the Hamilton area — including in Brantford, and Brant County — and the Thunder Bay-area late this spring, and in Lindsay this fall, with a minimum payment of nearly $17,000 for an eligible single person.
Ontario is also in the early stages of developing a First Nations basic income pilot project.
Wynne said the level of support isn’t extravagant, but will make real difference to a person “striving to reach for a better life.”
Technology and automation have changed the nature of work, she said, and some existing jobs have been put at risk.
“What is the best way to help people manage or endure this uncertainty and give them the opportunity to success over the long term? Is it our current system of social assistance? Or is there a better way,” Wynne said. “For months, we have been doing the background work to explore the idea of a basic income.”
Basic income payments are designed to be streamlined compared to traditional social assistance and aim to encourage people to work, without the disincentive of losing social supports.
The province consulted former senator Hugh Segal for advice on building its pilot project.
Segal said the basic income should replace Ontario Works and the Ontario Disability Support Program payments, but be slightly more generous, and it should come with less monitoring and administration than those programs.
In his report, he noted the “Mincome” experiment conducted in Dauphin, Man., and Winnipeg between 1975 and 1978 saw health improvements in the test recipients and the potential for government health savings, with no drop in employment.
Other jurisdictions, including Finland, Kenya and the Netherlands, have launched basic income experiments in recent years.
In Ontario’s pilot project, single people will receive up to $16,989 per year and couples will receive up to $24,027 per year. People with disabilities will receive up to an additional $6,000 per year.
Recipients who are employed will keep what they make from their jobs, with their basic income payments decreasing by half their earnings.
For example, a single person earning $10,000 per year from a part-time job would receive $11,989 in basic income ($16,989 less 50 per cent of their earned income), for a total income of $21,989.
Participants will continue to receive provincial and federal child benefit payments on top of the basic income.
Ontario Minister of Community and Social Services Helena Jaczek said the majority of the people invited to the pilot project will be “working poor.”
“We’re not just talking about people on social assistance, not just (Ontario Works and the Ontario Disability Support Program), in fact 70 per cent of the population who are low income are actually those who are in precarious employment, they are working, and they will also be invited,” Jaczek said.
The project will also include those who aren’t working and those who are homeless.
The government will be looking at several metrics in the test recipients to gauge the pilot’s success, including food security, stress, mental health, health and health-care usage, housing stability, education and employment.
Participants in three regions will be randomly chosen and invited to apply to the pilot project, in which 4,000 people will be selected. It will cost the government $50 million a year.
The Liberal government first announced the pilot project in the 2016 budget.
Ontario basic income pilot project to be tested in Hamilton, Lindsay, Thunder Bay
Residents living in the Ontario communities of Hamilton, Lindsay and Thunder Bay will be the first to receive a guaranteed minimum income as part of a new provincial pilot project.
Premier Kathleen Wynne made the announcement alongside Minister of Community and Social Services Helena Jaczek and Minister of Housing Chris Ballard in Hamilton, Ont. on Monday.
“In the three communities, it won’t be every person that applies. We won’t be able to do that,” Wynne explained. “There will be a limit to that number. There will be an application process and there will be criteria that will be very clear to people as they apply.”
The province has already earmarked $75 million for the three-year pilot project which is set to begin this year.
“We chose these communities intentionally because they are the right size and they have the right kind of mix of population,” Wynne said.
Wynne said the level of support starts at just under $17,000 a year for single people, and while that isn’t extravagant, she says it will make a real difference in people’s lives.
“We want to find out whether a basic income makes a positive difference in people’s lives,” Wynne said. “Whether this new approach gives them the ability to begin to achieve their potential and whether it is an approach that can be adopted across our province as a whole.”
The criteria for implementing the basic income plan is based on a discussion paper released by former senator Hugh Segal last fall, who recommended a monthly income of $1,320 with another $500 for people with disabilities, to replace the Ontario Works and Ontario Disability Support Program.
The government recently completed a three-month public consultation phase in which 1,200 participants attended and over 34,000 online surveys were filled out.
A report on the consultation feedback released in March revealed that many agreed the pilot participants should be between the ages of 18 to 64 and living in various settings such as urban, rural and northern locations.
“It says to them, ‘The government is with you. The people of Ontario are with you.’ We’re here to help you get through the hard times as you get back on your feet,” Wynne said.
Basic income has only been tried once before in Canada back in the 1970s in Dauphin, Man.
A subsequent study found hospital visits and domestic abuse dropped, with the rate of high school completion going up.
However, critics argue the strategy can discourage people from working and may simply be a Band-Aid solution to poverty.
“Poverty is much more than just a lack of income,” Charles Lamman, director of fiscal studies at the Fraser Institute, said. “There are fundamental root drivers of poverty, things like mental health, addiction that a guaranteed income can’t fix.”
Segal wrote in his discussion paper that the pilot should look at health outcomes for those involved as well as the life and career choices they make, education outcomes, work behaviour, changes in food security and impacts on their housing arrangements.
Ontario to roll out basic income in three cities
Ontario will provide residents in Hamilton, Thunder Bay and Lindsay with free income, part of the government’s plan to test whether the extra funds will help improve their job prospects and quality of life.
The idea is to give the province’s working poor, unemployed and homeless residents an income to pay for their basic needs of food and housing.
About 4,000 recipients will be randomly chosen from the three regions. One group will start receiving the so-called basic income as soon as this summer, and the remainder will be part of the control group, which will not receive any payments, according to a provincial spokesman. A single person could receive up to $16,989 per year. A couple could get up to $24,027 annually.
Initially, government officials said 4,000 recipients would receive the funding. A spokesperson later said half of the 4,000 would receive the basic income. Later in the day, the province said it could not confirm how many would receive the basic income.
“One income used to be enough for most families,” Ontario Premier Kathleen Wynne said in Hamilton to announce the three-year pilot.
“Now even with two people working, it is tough to feel as though you are getting ahead and it is tough to feel confident that your job will still be yours or even still be around in 10 years, in five years or even less,” she said.
Ontario has emerged as one of the country’s stronger economies amid the energy downturn, which has wiped out thousands of high-paying jobs in oil-producing Alberta. However, certain parts of Ontario have struggled for years to recover from the loss of major industries.
The provincial government did not provide details on why or how the three regions were selected. Thunder Bay has suffered from the elimination of forestry jobs and Hamilton has undergone years of economic woes with the decline of the steel industry.
Meanwhile, other cities such as Waterloo have experienced strong job growth from the tech sector.
“Technological progress and automation are creating new industries. But they are also creating new pressures and they are putting existing jobs at risk,” said Ms. Wynne.
The project will cost the province $150-million or $50-million a year. About 1,000 individuals will be selected from the Thunder Bay region and 1,000 from Hamilton and the nearby Brant region. The remaining 2,000 will be selected Lindsay.
It’s not just people receiving social assistance who will be eligible for the basic income. The government is also targeting those who are underemployed, earning minimum wage and/or living in poverty.
However, if an individual is receiving income from a job, the government will deduct half of his or her earned income.
For example, if a single person earned $10,000 from a job, the government would provide $11,989 in basic income – the maximum $16,989 minus $5,000 from his or her wages. That recipient would then have a total income of $21,989 for the year.
One economist said the basic income plan could become a disincentive to work, because every dollar earned would reduce the amount of government benefits paid.
“There would be an incentive to get basic income. But then the incentive to earn more through work would be blunted by the fact that each dollar one earns would reduce your basic income by 50 cents,” said Douglas Porter, chief economist with Bank of Montreal, who called it “an effective tax rate of 50 per cent.”
The Wynne government did not say how it came up with the basic-income amount and said it was “something we want to test.”
Chris Ballard, the province’s minister in charge of housing and poverty reduction, said other basic-income projects have shown that the approach improves people’s lives.
“People get a chance to go back to school. They don’t have to work low-paying dead-end jobs. They get a chance to go finish college or go on to university,” he told reporters.
The idea of providing people with a basic income has gained popularity in Silicon Valley and among some tech executives in Canada, who believe that their creations are helping put people out of work.
The provincial government, which will soon hire researchers to conduct the pilot, plans to mail out requests to participate in the program and will include homeless shelters.
The government said it would be examining the impact on health, education and employment over the course of the pilot.
Ontarians who are already receiving social assistance through programs such as Ontario Works or the Ontario Disability Support Program will have a choice of getting the new basic income or staying on their current benefits if they are selected. Anyone who receives other aid such as free dental and prescription drugs would not have to give those up.
It will be at least three years until a decision will be made whether to roll out basic income across the province.
The outcomes for those chosen to take part in the pilot will be examined to see what kind of impact the extra funds will have on their lives. Lindsay will be analyzed for the program’s impact on the entire community.
A separate program for First Nations people living on reserves will be rolled out later this year; however, First Nations people living in the selected areas are eligible to participate in the pilot.
What is basic income?
A guaranteed annual income designed to pay for basic necessities such as food and housing. In Ontario, the provincial government will provide income to certain residents who are living in poverty, unemployed, underemployed or working minimum-wage jobs.
Only residents from the following regions: Thunder Bay, Hamilton, Brantford, Brant County and Lindsay. A separate basic income plan for First Nations communities will be rolled out later this year.
Where else in the world do basic income pilots exist?
Finland, Kenya, The Netherlands, and Oakland, California.
Are other provinces looking at Ontario’s pilot project?
PEI lawmakers are supportive of a basic income, but the province would need Ottawa to provide the funding.
At this time, the Trudeau government will not support a basic income plan for the country and has highlighted its child tax benefit as a form of guaranteed income for families with children.