Universal basic income program could cut poverty up to 40%: Budget watchdog
PBO estimates most of cost could be recouped by cutting other social supports
The government's fiscal watchdog says a guaranteed basic income program at the federal level could cut poverty rates in Canada by up to 40 per cent.
In a new report, the Parliamentary Budget Office (PBO) says that a Canadian family in the lowest earning group could expect to receive an average of $6,100 in annual disposable income through such a program.
Higher earners could see their income drop because of changes in the tax system to implement the basic income support.
The report says introducing a federal basic income program would cost up to $107 billion in 2025.
But the PBO also assumes that other social supports would be cut to implement the basic income, resulting in a net cost to the federal government of between $3.6 billion and $5 billion, depending on the exact model and family definition.
The PBO's analysis is based on Ontario's 2017 basic income pilot project and uses as its foundation the nuclear family — any unit consisting of an individual and a possible spouse or common-law partner, plus their children under 18 years old.
The PBO says this definition has flaws, since one dwelling can house multiple nuclear families if older generations or adult children are living there.
More modest impact with cost of living increase
Wednesday's report updates a similar study from 2021 and includes analysis for an "economic family" — a unit that encompasses all relations by blood, marriage or adoption living in the same dwelling.
Under that definition, the cost of administering the program would be cut by more than half to $53 billion in 2025, before taking into account any changes to the tax system or social supports.
The impact on poverty rates also would be greater, with a 40 per cent reduction for the economic family definition, compared to 34 per cent under the nuclear family model.
The PBO says that the economic and nuclear definitions have "comparable" impacts on disposable income among the lowest earners in Canada, and the economic definition leads to a lower tax burden overall for Canadians, giving it the edge on cost and effectiveness.
Wednesday's report is predicting a more modest impact on poverty rates than the PBO's 2021 report did. That report said a guaranteed basic income could cut national poverty rates almost in half.
The PBO says that reduced impact is due to the wages of lower-earning Canadians not keeping pace with the surging cost of living.
"This finding suggests that more families are now classified as living in poverty according to the updated official rates, highlighting the growing challenges of meeting basic living standards," the report said.
Reductions in the poverty rate vary provincially, the PBO says.
Under the economic family definition, Manitoba would see the highest reduction in poverty rates — 53 per cent in 2025 — followed by Quebec at just over 50 per cent. British Columbia would see the smallest decrease at 26.2 per cent.
Efforts to establish a basic national income in Canada have been met with mixed success.
A basic income pilot for older adults launched last year in Newfoundland and Labrador has seen only 110 people register — less than a third of those eligible.
Federally, the NDP pushed for a guaranteed livable basic income with a private member's bill that failed to pass through the House of Commons last fall. A similar bill remains in limbo in the Senate.
Liberal Party leadership candidate Karina Gould pledged last week that she would begin the process of establishing a basic personal income within a year if she wins the top job.
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