Last Updated:Friday - 09/24/2010

Guaranteed annual income long overdue

I have long advocated collapsing all federal (and ideally provincial as well) welfare/income support programs into a single, means-tested, guaranteed annual income (GAI) program to be administered through the existing income tax bureaucracy.

Consequently, I was both gratified to note that the Chretien Liberals have a plan of this sort under study, and also dismayed at the knee-jerk negative response from the Canadian Alliance and the Tory parties.

According to reports, the Liberals' minimum-income supplement would be developed by merging the federal Child Tax Credit benefit, welfare, Employment Insurance and Old Age Security pension programs into a single, omnibus program.

The Canadian Alliance came out swinging, saying that the prime minister has no mandate to build a costly new social program, having not mentioned this idea during the election campaign, and warning that such an initiative could trigger a new round of constitutional conflicts between Ottawa and the provinces.

Alliance House leader Chuck Strahl commented that: "This would be a huge socialistic experiment unheard of anywhere else. It's pretty incredible given the socialistic record around the world."

An interesting observation, considering that a guaranteed annual income was proposed by the Canadian Alliance's predecessor, the Reform Party, during the 1993 federal election campaign as a means of rationalizing Canada's chaotic income security programs. Nor is the GAI a quintessentially socialistic idea. Economist Milton Friedman, usually considered a conservative, is credited by some as having originally come up with the concept as early as 1962.

I'm no socialist, but what would the Alliance, and the Tories - who also waxed negative about the Liberal idea - propose as an alternative to a GAI? Maintaining the crazy-quilt status quo system of sometimes overlapping programs administered by competing bureaucracies, that all too often let people in genuine need slip through the cracks, while paying benefits to others who would be perfectly capable of managing on their own resources?

I'm assuming here that no one is proposing that we do away with government income support programs, so if we all can agree that they are necessary in a decent and civilized society, then does it not make sense to design a system that works efficiently, and that directs benefits to those in the greatest need?

Of course, being generally in favour of a GAI does not mean that I'm likely to approve unreservedly what ever specific plan the Liberals come up with, presuming that they actually have the guts to do something this revolutionary, which I seriously doubt.

In my opinion, no one who makes more than, say, $30,000 in a 12-month period should be eligible for a penny of government income support, although that is $10,000 lower than the threshold that ignited the backlash that decimated Liberal support in Atlantic Canada in the 1997 election.

The problem with the GAI concept is its potential to derail initiative and create dependency, although it is highly arguable that the present concatenation of government welfare and handout programs already does just that anyway.

Therefore, the trick would be to determine a basement level of support that would keep recipients clothed, fed, sheltered and medicated, but not one so generous that there would be no strong incentive for able-bodied clients to seek employment in order to supplement their GAI stipend. Persons with illnesses or disabilities would of course receive a more substantial level of support.

One reason why I'm highly skeptical about the Grits having the resolve to go through with a GAI reform, at least a properly-engineered one, is the political ramifications. For one thing, the Alliance is right that this sort of initiative could be a minefield of conflict with the provinces, especially since social welfare is a provincial responsibility.

Also, through most of the year prior to the election, the Chretienites were promising to fatten up the sacred cow of government entitlement handouts such as an Employment Insurance, especially in Atlantic Canada where seasonal benefits are almost religion, and where there was a cacophony of mewling and whining after the Liberals modestly reformed and rationalized the EI qualification requirements in 1996.

However, if Chretien can pull this off and actually give Canada an efficient and equitable GAI system I will be happy to give him full credit for a worthy and overdue accomplishment.

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