The parliamentary budget officer estimates the costs of three scenarios of a basic income guarantee

Le directeur parlementaire du budget évalue les coûts de trois scénarios de revenu de base garanti

Le directeur parlementaire du budget évalue les coûts de trois scénarios de revenu de base garanti

The parliamentary budget officer Yves Giroux

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7 July 2020 14: 14

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The parliamentary budget officer estimates the costs of three scenarios of a basic income guarantee

Jordan Press

The Canadian Press

OTTAWA – The parliamentary budget officer estimates that it could cost up to 98 billion dollars to the federal government to provide almost all Canadians a basic income guaranteed for six months, starting in the fall.

This figure is in the upper range of scenarios that the director parliamentary budget (DPB), Yves Giroux, has been invited to evaluate. This is the senator Yuen Pau Woo, who had asked him to estimate the cost of a federal program of guaranteed basic income (RBG), using the parameters of a pilot project launched in Ontario.

The idea of providing Canadians with a guaranteed basic income (RBG) is back in the news when millions of people have seen their employment or their income evaporate with the pandemic COVID-19. The federal government has spent to date approximately 174 billion $ to help individuals and companies to float during the crisis.

The minister of Finance, Bill Morneau, and other colleagues in the Firm were interviewed several times by the senators and deputies on the idea of a guaranteed basic income. Supporters of the RBG argued that it would be an extension of the Delivery canadian emergency programme of $ 80 billion, for the workers who have seen their employment incomes collapse. This PCU and a program of wage subsidies of 45 billion $ must end in October.

4500 to $ 4800 $ in average

The DPB was introduced Tuesday three estimates from scenarios that gradually reduce the provision of $ 0.50, $ 0.25 and $ 0.15 for each dollar of employment income, for the last six months of the fiscal year 2020-2021, from October. According to the DPB, the cost of such a programme could be between 47.5 billion $ and 98.1 billion $, according to the three scenarios ‘rate of progressive reduction”.

Yves Giroux indicates that the average benefit for Canadians aged 18 to 64 years is estimated to be somewhere between 4500 and $ 4800 $; moreover, the number of beneficiaries is expected to increase if the “phase-out rate” was lower.

Senator Yuen Pau Woo argued that such a program could fill the gaps that exist in the mosaic of social safety nets in the country, largely managed by the provinces – of the shortcomings that were exposed by the pandemic.

“Launching a basic income for the whole country, on a permanent basis, constitutes an enormous undertaking, admitted Mr. Woo in a phone interview. The costs are enormous and the political resistance could be fierce, but we are also in a period where we should be spending a lot in income support by the end of the year and in 2021. The question is how we will spend these amounts.”

If all do not agree on the exact definition of a “guaranteed basic income”, it is generally considered to be a benefit without a requirement that governments pay to citizens and replaces various other benefits targeted. Also called a “guaranteed minimum income”, the RBG can be offered in the form of a universal benefit or a benefit in terms of resources, which decreases as increase in other income of the recipient – what the DPB is called “phase-out rate”.

The office of Mr. Giroux was also estimated by the potential sources of revenue to federal and provincial funded program of the basic income. It is estimated that $ 15 billion in existing tax credits in the country could be eliminated by creating such a program of guaranteed basic income.

The post-pandemic

The overall cost of the program could be higher than expected, warns the DPB: its estimates are based on the income data from Statistics Canada, which does not take into account the territories, persons living on reserves and members of the armed Forces living in barracks.

The numbers cannot simply be doubled to determine the cost on a full year basis, as this could overstate the financial impact. The economy seems to bounce back slowly after a slump in April, and the cost of the program will depend on the number of employees who will be rehired or find a new job.

The canadian Federation of independent business, which represents small and medium-sized businesses, said Tuesday that about one-third of its members who responded to a survey said to be back to full speed, but many SMES believe that it will take them six months to find a return to normal.

Statistics Canada should publish on Friday the employment data for the month of June. According to forecasts published Tuesday by the Organization for economic cooperation and development, the unemployment rate in Canada could reach 11 % in the second quarter of the year. The OECD predicts that the national unemployment rate will fall to 7.7% by the end of the year, or 8.4 % if a second wave of the sars coronavirus force another “paused” of the economy.

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