Hon. Senators: Agreed.

Senator Woo: If you allow me a minute, I can answer the question.

The Hon. the Speaker: Senator Woo, you will run out of time in 10 seconds. Will you be asking for more time to answer the question?

Hon. Diane Bellemare: I have a question for you.

You support a pilot project like the one proposed by Senator Eggleton, which I voted for at the time. It was very focused.

I would like your thoughts on this. Bill S-233 is about developing a framework to implement basic income for all Canadians 18 and over. Don’t you think that has financial implications? Does this kind of bill not necessarily push us to really study the issue? The indirect financial implications alone may disallow this bill because, in law, you can’t do indirectly what you can’t do directly, and this bill is about developing a framework.

[English]

Hon. Yuen Pau Woo: Honourable senators, I would like to offer a modest intervention on Bill S-233. I support sending Bill S-233 to committee as soon as possible so we can have an informed discussion about the complex issues around basic income. Whether you support a basic income or not, I think it is fair to say that there is growing interest in the idea. Earlier this month, the Union of British Columbia Municipalities voted in favour of a resolution calling on the federal government to implement a guaranteed livable basic income.

However, the problem with the public debate — and here I am setting aside the conspiratorial end of basic income critics — is that advocates and opponents are often debating different versions of basic income and hence talking past each other. If a Senate committee can clarify the issues and shed light on the varieties of basic income proposals, that will be a positive contribution on an important public policy issue regardless of whether this bill is adopted. To this extent, my speech is about what I think the most important issues are and what I would suggest are some of the questions that a committee should be asking.

The fundamental question is this: What is a basic income for? Most advocates of basic income, including many senators, argue that it is to eliminate poverty. Poverty is an income-based measure and as such can be solved, in theory, by augmenting the incomes of those who fall below a defined cut-off level. That is why so many anti-poverty activists support basic income. The question is how to identify people whose incomes are below the poverty line and to ensure that the income supplemented to those individuals is provided on a timely basis.

There are basically two approaches. The first is to provide a basic income to everyone and then claw back a percentage when reported incomes exceed the cut-off. The second is to target income supplements to vulnerable groups with varying conditions attached. The former is what might be called a classical approach to basic income, since it is provided to everyone, whereas the latter might be called targeted basic income, or social assistance, and it’s roughly the way the system currently works.

If our goal is poverty alleviation, which approach works better? Well, for any given level of poverty reduction, the answer is the latter — the targeted approach — for the obvious reason that it is directed at only the people who are below the poverty line and not “wasted,” if you will, on those who are not poor. This is not to say that targeted social assistance, which is the status quo, has eliminated poverty; it hasn’t. But if we are to pour substantial new resources into poverty alleviation and have a choice between the two approaches, based on the criteria of efficiency, the targeted social assistance approach wins, hands down. That is the conclusion reached by the expert panel commissioned by the B.C. government in 2018, which released its study in 2020. They rejected basic income in favour of expanding targeted income supplements and social programs.

Basic income advocates will counter that the solution to the wastefulness of a basic income is to claw back any income earned above the cut-off. This is technically known as the benefit reduction rate. The higher the benefit reduction rate, the more efficient the basic income in targeting people under the poverty line. A very high benefit reduction rate, however, runs counter to one of the key principles behind the basic income, which is to not disincentivize people from earning additional income. There is a trade-off between the efficiency of a basic income program and the disincentive effects of clawbacks.

To underscore the point of how inefficient a basic income program would be as a remedy for poverty per se, the B.C. panel authors created an online interactive table where you can choose your preferred basic income amount and your preferred benefit reduction rate to generate a scenario showing the cost of the program and its impact on poverty reduction. Colleagues, if you like spreadsheets, you can have hours of fun on this one. What you will find is that the lower the benefit reduction rate, the more expensive the program and the less efficient it will be in reducing poverty. For example, a basic income of $20,000 for an individual in B.C. with zero benefit reduction would cost $51 billion and would reduce poverty incidence by about 7,000 people per billion dollars. Compare that with the cost of $11 billion for a reduction of 32,000 people in poverty per billion dollars at the benefit reduction rate of 75%.

Opponents of a basic income, the B.C. panel included, argue that a maximalist approach to basic income, one with little or no benefit reduction, is too costly, especially if a province were to attempt basic income on its own. This objection, however, is addressed in a new study from the School of Public Policy at the University of Calgary, which concludes that a federally funded basic income could be both effective and affordable, which is a finding that was already foreshadowed by the Parliamentary Budget Officer in a report a couple of years ago. According to the Calgary authors, a federal program could create more fiscal capacity for the provinces to provide other cash and in-kind social supports, allowing for greater provincial benefit targeting.

I support the principle that proposed solutions to policy problems should be cost-effective. That is different from saying that they should not be costly. Solving poverty could well be a very costly public investment, but if our goal is the eradication of poverty, and it is costly to do so, so be it. But we should make every effort to find the most cost-efficient solution for the problem at hand.

This is why I think the case for basic income cannot be based solely on poverty alleviation. If near-term poverty eradication is the only objective, I agree with the B.C. number crunchers that targeted programs focused, for example, on youth aging out of care, the disabled, or single parents with or without children are likely a better approach. But if the policy objective is broader, and it includes social and economic indicators such as health care, human capital, the criminal justice system, volunteering, creative activities and entrepreneurship, the calculus of a basic income program could be much more favourable.

The B.C. panel ruled out these second-order benefits because they focused their study narrowly on poverty alleviation. They did not give any serious consideration to the broader benefits of basic income and whether these benefits might offset the considerable cost of a basic income program with a low benefit reduction rate.

The B.C. panel also offers a philosophical argument against basic income, which our colleague Senator Bellemare has also advanced. It is premised on the primal importance — even duty — of paid work and on a strict view of reciprocity in social relations. This normative framework is associated with the writings of John Rawls and Elizabeth Anderson on the meaning of a just society. It is a view of the world which values what might be called “participation income” over “basic income,” and it assumes the economy offers dignified participation opportunities along the lines of what politicians like to call “decent, middle-class jobs.”

The reality is that there are a lot of non-decent jobs in our market economy that challenge the assumption of a just society. The idea of participation income also values formal paid jobs over non-formal, unpaid forms of work that may, in fact, offer greater personal reward and social good, which contribute to a more just society.

The blinkers used in the B.C. report effectively turned a study that was supposed to be about the feasibility of a basic income in B.C. into one that was about designing a better income transfer scheme without using basic income.

Insofar as the framework chosen for their study is concerned, the report is correct in its conclusion that an untargeted poverty reduction program, such as basic income, would be less efficient than a targeted program. That is why I fear that any campaign for basic income that is focused solely on poverty alleviation will be ruled out on efficiency grounds and will not make much headway intellectually or politically.

When I last spoke about basic income in this chamber, it was on a motion introduced by former senator Art Eggleton, in which he proposed basic income pilot projects led by the federal government working with the provinces. I argued at the time that the foundational case for basic income is personal autonomy and the expansion of collective freedoms.

I believe that freedom is not so much about the right to do as one chooses, but more about having the capability to do so. Freedom is an end in itself and therefore an important social value, but it is also a means for individuals to work toward other ends, such as a fulfilling career, acquiring goods and services or artistic pursuits.

A guaranteed basic income can be an important plank in advancing an individual’s freedom in both a constitutive as well as an instrumental sense. Providing the means for individuals to address their basic needs is a way of giving them the freedom to develop and expand their capabilities for even greater freedom.

At heart, basic income represents an evolution of the social safety net that values the rights of individuals to exercise their freedoms without stigma. This may sound a bit like a libertarian creed, but the idea is also rooted in egalitarianism and in the belief that there is a collective responsibility for empowering individuals to exercise their freedoms.

One obvious way in which to test basic income is to conduct pilot projects and to measure not just the impact on poverty alleviation, but also on other social indicators such as health care, educational attainment, crime and volunteering. A pilot project could provide answers to these very worldly questions as well as to broader philosophical objections that have led some to rule out basic income.

For example, the hypothesis that society would reject unconditional transfers because they violate the work obligations and social reciprocity necessary for a just society is just that — it’s a hypothesis. The B.C. panel ruled out the need for a pilot project in part because they took the hypothesis as a given. My own preference is to look to the empirics rather than relying on political theory. That is why I support more research on basic income and especially pilot projects along the lines of what has been proposed for Prince Edward Island. In fact, I would support a flowering of pilot projects across the country, including in my home province of British Columbia, that could be used to compare with each other.

Colleagues, there are still many unanswered questions about basic income and its efficacy as a new form of social safety net for Canadians, but I think we would do well to study the issue further and this bill allows us an opportunity to do so. Let’s send it to committee. Thank you.

The Hon. the Speaker: Is leave granted, honourable senators?

Some Hon. Senators: Hear, hear.

[Translation]

Senator Lankin: Thank you very much. I can’t tell you how much I agree with what you said to Senator Downe. I thought it was right on point.

A lot of what we hear in terms of pushback to this idea comes from a sense of intuition and not from any evidence. The evidence that we have seen, whether via pilot projects completed or partially completed, shows the opposite.

But what we hear is that marginal effective tax rates will make it very difficult for us to determine where the clawback is or at what level to set the benefit. We hear that it would be a disincentive to work. I think some of the evidence you alluded to disproves that.

I wonder if you could just expand on that a little bit in terms of what we do know from the evidence and why this is worthy of the next step in a national collaborative study with P.E.I.

Senator C. Deacon: Thank you, Senator Lankin. I can only speak from personal experiences of times when my life was really tough. My ability to see opportunity and my willingness to take risks to step out of the circumstances that I found myself in — things just close in on you.

I don’t know how to quantify that at this point in time, but I believe that, personally. I see that with people in my life, where things just become overwhelming and their ability to see what might be obvious to you and me as a next step — they just can’t get there; they can’t imagine that change.

I look at my own community where there have been people who have had the courage to create new opportunities. Invariably, there’s been a little bit of a cushion underneath them that has allowed them to go and take a risk and maybe fail. But it’s that controlled risk that I think is essential for us to make progress in every community, in every life and every family.

I don’t know how to quantify it. I have the examples I gave. The Housing First example from Medicine Hat I found so inspiring. If I couldn’t have a good night’s sleep, a shower in the morning and a meal, how could I deal with any major issue in my life? Telling people they have to do X, Y and Z before they get that key element puts them in an impossible position.

I don’t have an answer, but that’s why we need to do a study.

(On motion of Senator Martin, debate adjourned.)

On the Order:

Resuming debate on the motion of the Honourable Senator Griffin, seconded by the Honourable Senator Tannas, for the second reading of Bill S-236, An Act to amend the Employment Insurance Act and the Employment Insurance Regulations (Prince Edward Island).

Hon. Frances Lankin: Will Senator Deacon take a question?

Senator C. Deacon: I would be honoured.

Hon. Percy E. Downe: Thank you, Senator Deacon, for taking my question.

As you are aware, the three parties in the Legislative Assembly of Prince Edward Island — the Conservative Party, which is the government; the official opposition, which is the Green Party; and the Liberal Party — have all passed a motion asking the federal government to support a trial project in Prince Edward Island. It would be a continuation of what was undertaken but stopped in Ontario, as you indicated in your speech.

The federal government, so far, has not agreed to doing that because, as you know, there are two schools of thought. Prince Edward Island thinks it is a substantial replacement for existing programs and would target the very people you talked about in your remarks, whereas the other concern is that the report done by the Government of British Columbia indicates that the costs would not be sustainable over the long term.

One of those views is obviously wrong.

Would you agree with me that the child benefit, in the case of Prince Edward Island, has had a tremendous impact? Over $500 million has gone to Prince Edward Island in the last four years in tax-free benefits, affecting 25,000 families and 13,000 children. In my view, a pilot project in P.E.I. would also work. Would you share that view as well?

Senator C. Deacon: Thank you, Senator Downe, for the question. I would offer that if P.E.I. gets to it first, that would be great. I totally believe it’s worth doing and that you’ve got an advantage over other provinces and territories on having that all‑party support in your legislature. I would love it to happen in Nova Scotia, but the point is that I would love it to happen, period. We assume what the costs are, but we don’t know what programs and overlap can be eliminated. We don’t know what opportunities can be created by empowering people and freeing them.

There are examples from the past and from other countries where, if there is a second income that comes into the house, you will lose your benefits. Then you choose to push one parent out of the house, in effect.

If they can’t get jobs that employ them at a certain level, we have to look at how rules are creating opportunity and preventing opportunity. We don’t know about that opportunity side of the equation.

That’s why I would love to see it go ahead in P.E.I., but I want to see it go ahead. I want us to have a controlled study that really gives us insight into all the different areas where impacts, negative and positive, will occur.

I may be proven wrong, but the evidence right now does not exist to say that helping people first will not create greater opportunities. The evidence certainly isn’t there that our status quo is performing to the level it needs to.

Hon. Senators: Agreed.

The Hon. the Speaker pro tempore: Is it agreed, honourable senators?

The Hon. the Speaker pro tempore: Senator Deacon, your time has expired. Are you asking for five more minutes?

Senator C. Deacon: Yes, if it is the wish of the chamber.

Senator Bellemare: Here’s my question. I believe, as you do, that it is very important to empower people. In your opinion, what level of guaranteed income should people receive as part of a guaranteed minimum income program so they can truly escape poverty?

Which programs do you believe involve so much red tape they should be abolished?

[English]

Senator C. Deacon: Senator Bellemare, those would be the questions I hope we would answer in committee as we look at this program and see all the areas that it reaches into, such as health care services and paramedic services. Certainly in my own community, the fire department recognizes that a great many of their calls relate to health crises and issues from those who are not getting appropriate health care.

So who knows to where we should limit this and who knows what programs could be delivered more effectively? But it’s arguable that the patchwork — and I would argue this — provides the evidence to the contrary that a great many efficiencies can be gained.

To answer your question, I would look at that as being something that would come from a Senate study.

Hon. Diane Bellemare: Would Senator Deacon take a question?

Senator C. Deacon: Yes.

Hon. Colin Deacon: Honourable senators, I rise to speak in support of the principle of Bill S-233 and ask the Senate to have the courage to vote in favour of studying this bill.

Let me start by reminding us of the fact that, contrary to the vast majority of the 10,000-plus emails that we have received on Bill S-233, it’s not about controlling people’s lives or arbitrarily cutting off access to cherished government programs. On the contrary, Bill S-233 is designed to explore how to better empower some of our society’s most marginalized and vulnerable in a more effective and, potentially, more cost-efficient manner.

There are two reasons why I think the study of Bill S-233 is so important. The first is the deeply troubling level of disinformation associated with this bill. Some groups are knowingly creating and sharing false information, and too many vulnerable Canadians believe and share this false information. They are fearful that their access to various government programs will be arbitrarily cut off if Bill S-233 somehow becomes law.

As our colleague Senator Simons said in a well-articulated Twitter thread, an unelected Senate “. . . CANNOT commit the government to spend any money.” Studying this bill, let alone passing it, will not take away people’s rights to existing social programs and does not initiate the World Economic Forum’s takeover of our democracy. Rather, the bill proposes to look into how our social support programs and payments might be streamlined with the intention of improving delivery of such programs, particularly to vulnerable Canadians.

I believe that the scourge of disinformation can only be countered with evidence and transparency, and that’s something we can proudly say is reliably delivered through our Senate reports.

The second reason I would like us to study Bill S-233 is that I’m increasingly worried about Canada’s addiction to creating, and never reducing, regulatory burden. Particularly, we have a concerning affinity for command-and-control regulations, regulations that maintain the status quo, limit innovation and too often create economically unsustainable programs. In business terms, we call this “red tape.”

But too often we forget that it is not just businesses that have to deal with Canada’s OECD-leading levels of regulatory burden; it is all of us, and it is also our country’s most vulnerable. That is why I think it is important for us to study Bill S-233, to address the plague of disinformation head-on and to reduce regulatory burden and red tape.

Interestingly, the desire to reduce regulatory complexities and red tape is what caused guaranteed annual income to be studied at a major policy conference for a national political party back in 1969. A fellow Nova Scotian tabled the idea of implementing a simple and effective guaranteed annual income and highlighted its promise of ending costly and inefficient rules-based income support programs that were weighed down by overlapping and often competing federal, provincial and territorial authorities.

Over 50 years ago, the principle of Bill S-233 was being discussed and debated at a national policy conference. The focus was on replacing the inefficient status quo with an income-tax-based minimum income that would be available to all Canadians if and when their income fell below a predefined level. So who was that Nova Scotian, and what was his political party? It was the Honourable Robert Stanfield, leader of the Progressive Conservative Party of Canada.

The reality is the idea behind Bill S-233 is far from new and might even represent one of the first times that Senator Pate has actually promoted Conservative Party policy. Actually, Senator Pate, I am hoping that Senator Plett does not accuse you of plagiarism.

More seriously, I want to see S-233 go to committee so that the Senate can explore, identify and better understand innovative approaches to addressing pervasive poverty. I believe Robert Stanfield’s vision of our inefficient status quo being replaced with a more efficient system of helping Canadians if and when their income falls below a predefined level is a very powerful one indeed.

Perhaps unfairly — but prove me wrong — I believe that our income support to vulnerable and marginalized Canadians is fraught with inefficiency, limitations and constraints that severely limit how effectively we enable these Canadians to access the support needed to create success in their lives. In addition, this support exists at the always complex intersection of federal, provincial and municipal jurisdictional authorities and the oft-competing departmental authorities within each level of government. It’s a recipe for program gaps, overlaps and administrative burden.

I’d like to describe four stories that have shaped my support for the study of Bill S-233 and have me believing in its promise.

The first story is from my youth, retold to me more recently. The increasingly neglected plight of Ontario’s seniors in the early 1970s resulted in a bit of shenanigans at the powerful Treasury, Economics and Intergovernmental Affairs Committee, TEIGA, of the Ontario legislature.

At the time, newspapers were telling stories of seniors whose only source of affordable protein was cat food because 35% of them over 65 in Ontario had incomes below the poverty line. My dad, who was an Ontario MPP at the time, found this to be reprehensible as the vast majority were women, and they were the ones who had struggled through the Great Depression and then worked tirelessly to hold Canada’s families, factories and country together during World War II.

I had never heard about the shenanigans part of the story from my dad. I did hear about it from retired senator Hugh Segal about three years ago. At a TEIGA committee meeting during a minority government, the majority of members voted to reduce the salaries of the minister and deputy minister of what would now be Ontario’s Ministry of Finance to $1 per year. The purpose was to familiarize those gentlemen with the effects of poverty. Former Senator Segal was working with Premier Bill Davis at the time and suddenly he had a very worried group of MPPs arriving at the door of his office. Hugh’s response was to learn more.

The result was that, within six weeks, the Ontario legislature unanimously passed a new guaranteed income supplement. What were the results? The supplement helped to reduce the poverty rate for those over 65 to under 5% of the population within three years.

The second story I want to tell you was also discussed around our kitchen table when I was in my youth; it was Manitoba’s MINCOME program, which ran in Dauphin, Manitoba, from 1974 to 1979. The focus was to empower versus control those living in poverty. It became highly politicized and was shut down, with all the data collected being locked away in the Winnipeg regional office of Library and Archives Canada.

What were the results? Well, 25 years later, a health economist by the name of Dr. Evelyn Forget rediscovered the project and was able to analyze the data. Dr. Forget’s analysis illuminated some successes of the project. Dauphin’s hospitalization rate for accidents, injuries and mental health-related issues dropped by 8.5% for those who received basic income. School performance for children in the town improved, with a surge in enrollment rates for Grade 12 students.

But because Dr. Forget’s analysis focused mainly on health outcomes of basic income, there was not sufficient data to assess the causal relationship between basic income and other social or economic outcomes.

The third story that I want to tell you is also from the Prairies. It’s a powerful social innovation called Housing First, developed and refined in the courageous and caring Prairie town of Medicine Hat. In 2015, Medicine Hat became the first community in Canada to end chronic homelessness, meaning that no more than three people were chronically homeless for more than three months.

Housing First worked because it identified individual and structural risk factors of homelessness, such as chronic health issues, disabilities, addictions and abuse, and centred programming on reducing these risks as well as providing opportunities to build social relationships, earn adequate income and gain access to affordable housing.

What were the results? Between 2009 and 2014, the amount of time participants spent in jail reduced by 67%; the number of days spent in hospital reduced by 32%. But some questions remain. For instance, it is unknown what the total net cost savings of the Housing First initiative in Medicine Hat are over the period it has been active, which existing programs were eliminated and which other programs may have been made redundant as a result of it.

The fourth and last story I want to tell you is about a more recent experiment, the Ontario Basic Income Pilot Project; it was commissioned as part of a larger poverty-reduction strategy following recommendations from retired Senator Segal. When asking the government to consider implementing a pilot, Segal reflected on what a pilot should and shouldn’t do. I’d like to quote him:

A pilot project must begin with an understanding of the costs of poverty, not only in present welfare and disability payments, but also in terms of added pressures on our health system, and the Ontario economy as a whole, through its impacts on economic productivity and existing government revenues.

Senator Pate reviewed the interim results of this program when she introduced Bill S-233, so I will not repeat them, despite their merit. Suffice it to say, I still find it very sad that former Senator Segal’s lifelong efforts to have a well-controlled study in GBI were cut short in Ontario in such an abrupt manner.

In closing, for me, Bill S-233 is about reducing red tape for those who require society’s support because they have not been able to get their feet under them, be it through their own choices or circumstances beyond their control.

As I’ve said, too often, accessing support is highly complex and unnecessarily restrictive. I hazard to guess that there likely aren’t many of us who would have the patience to navigate the current system. Many like to think that is a good thing, I expect, because it’s a deterrent, but I don’t agree.

Why? Because I believe it’s possible for us to have a system that empowers versus controls those who need it most. For those who are already struggling to cope, why would we ever think that imposing administrative complexities would help them turn their lives around?

I also believe that administrative burden is the enemy of productivity; moreover, due to my Scottish heritage, choosing to maintain an inefficient and less effective system causes me to have an allergic reaction.

Canada’s moribund productivity growth continues to worsen because we do not innovate in everything we do. Canadians are hard-working, innovative and determined. But too many of our public services are constrained by a legacy of habit, not evidence of effectiveness.

The OECD now predicts that Canada will have the worst-performing economy through 2060. I’m not willing to lay this at the feet of any single political party or level of government. I believe it’s due to a culture that is not committed to innovating in everything we do. We must stop tolerating the sentence, “But that’s not how we do it.”

Let’s have the courage to innovate. Yes, innovation and change bring risk, but they also bring the evidence of what to do and what not to do.

Colleagues, let’s send Bill S-233 to committee and ask them to focus on how the federal government might work with one willing province or territory to complete a well-documented study of the principle underlying Bill S-233. Let’s not just look at the costs but at all of the programs and services across all levels of government that might be replaced or eliminated, the savings potentially enabled and the opportunities that might create.

If we value the prosperity of our grandchildren, we must embrace change and innovation. We must eliminate unnecessary rules and red tape, and focus our attention firmly on the intended result. If we do not do so as it relates to supporting the most vulnerable in our society, then for whom?

Thank you, colleagues.

[Translation]