There are many terms in use for the same concept of reforming social programs to provide security to all citizens, but universal basic income (UBI) is gaining on all other forms, in part due to the US presidential campaign of Andrew Yang. 

Few Canadians are aware that the implementation of a guaranteed minimum income model is a 2018 policy resolution of the Liberal Party;

Implementation of a Guaranteed Minimum Income Model

My comments pick up from here;

The latest Canadian UBI pilot in Ontario (Hamilton, Brantford, Thunder Bay & Lindsay) was cancelled by Doug Ford (Ford Island), the populist right leader of the Province of Ontario. Details via the link "Piloting Basic Income" below, (page 66).

It is critical that robust Canadian pilot programs for UBI be re-established, and to ensure the pilots run their full planned term. Cessation of well designed pilots (Ontario's was ceased 1 year into a 3 year plan) have the dual effect of negating the value of the analytics and, perhaps worse, dashing the hopes of pilot participants who were doled hope in their quest to find bootstraps to pull up on in their goal to lift themselves a full rung, to the increasingly elusive Canadian middle class.

The ethical argument for UBI appears to be beyond assail. As Guy Standing puts it, "By providing citizens with security for their basic needs of a home, subsistence and health we lay the foundation for a prosperous and sustainable economy for the benefit of all." It is the transformative potential of UBI, which must be tested via well structured pilot programs.

The are thousands of shipwrecks in the waters surrounding Nova Scotia, and all of the ships had chart rooms. UBI has not been formally adopted in any country to this point, we are in many ways navigating uncharted waters. Well structured pilot programs can build the legitimation process for UBI (Richer, healthier, smarter as Rutger Bregman would put it); 

• Effect on work/labour
• Effect on both mental and physical health
• Effect on social attitudes

UBI is meant to provide every recipient with basic security. Security it a national public good - you having it does not deprive me of it, and we all gain if others have it too. Unless someone has basic security, the ability to make rational decisions diminishes and in many cases health is threatened. In many ways, as George Orwell put it, "Poverty annihilates the future."

I would argue that universal basic income is neither left or right, but rather 'forward" from a political standpoint. That said, Scheer's Conservatives are not likely to give UBI the oxygen it needs to get past the pilot stage, let alone a national roll out.  

I'll get into the fiscal side of the UBI equation shortly (i.e. how we finance such a bold reform without exacting more taxes from an effectively tapped-out populace), but replacing the highly-conditioned, high-admin, means-tested programs in place presently will potentially reduce the net UBI cost by more than 50%. Estimates of the cost of a UBI of $12,000 (C$16,000) in the US is $1 trillion dollars, but the net is est. at $450bln. Put another way, the bulk of UBI already exists, just in hugely inefficient form. If a nationwide UBI in Canada cost $45bln (C$60bln) that would be equivalent to 3% of GDP. To put this number in context, federal equalization payments are C$19bln per annum, approx. 1% of GDP and defense spending is C$25bln per annum, 1.3% of GDP.

The estimated budget for the US to bring all citizens above the poverty line is $175 billion, or 1/4 of 1% of GDP. Social programs are more extensive in Canada than the US, but 13.5% of the population are reported as being below the poverty line in both countries (5 million of 37 in Canada's case). 

All this spending coverage without consideration of how to pay for it makes a Liberal shudder, so let's turn to the credit side of the ledger. Two other 2018 Liberal Party policy resolutions that "bundle" well with UBI are tax related;

#23 Redressing Tax Avoidance (profit shifting)

#28 Tax Recovery from Offshore Havens

Globally profit shifting costs tax authorities $500bln and tax havens an additional $200bln for $700bln in total "slippage", an opportunity cost if you will (almost 1% of global GDP). This is an enforcement and extraction exercise. Canada's share of global GDP of $80 trillion is 2% (C$2.1bln), hence it stands to reason that 2% of a $700bln tax recovery would be achievable, i.e. C$19bln (CAD/USD 1.34, approx 75 cents/US$1).

As detailed in the "Piloting Basic Income" link below (appendix A, page 61) the most successful wealth transfer mechanism ever created in the US is the Alaska Permanent Fund (est. 1976). The fund invests the cash received from oil & gas royalties into financial assets, the income flow from which equal annual dividend payments are made to all Alaskan citizens. Stay with me. This is far from an apples to apples comparison you might say. Where would the proposed UBI Fund get it's funding/financial assets from? A learned scholarly friend of mine, Scott Solomon, has crafted a securitization plan for a global wealth tax that could have ready application here (link provided below). The tax cheats are, upon conviction, given a choice as to how they can remedy their debt owing with financial advantage offered to the scenario where they agree to have a bond issued in their name (a bank loan also acceptable). The Canadian banks underwrite the bond issue (perhaps the first "full fees" debt capital markets deals they have written since the global financial crisis) and the UBI Fund administers the portfolio of debt instruments with the portfolio income used to fund a portion of annual UBI payments on a "funded" basis, much like a pension fund would (i.e. CPPIB, NSTU or NSNU). The devil is in the details of course, but a funding plan that ferrets out cheats and bad actors rather than adding to the tax burden of honest everyday workers, paying their tithe via direct payroll deductions would certainly likely garner broad support. Potentially covering 1/3 of a national UBI plan would certainly be a good start. 

My nomination paperwork was submitted the last week of April and I am hopeful of being "green-lit" this week. I've heard many issues raised by Sydney-Victoria constituents on the campaign trail since early March. I'm listening. I've got my thinking cap on. Together, we can find the way forward. Grow Cape Breton.

Happy Mother's Day,

Caleb 

[email protected]

Attachments:

Liberal Party 2018 biennial convention Policy Resolutions, some of which will incorporated into the 2019 Liberal Party Platform;

https://2018.liberal.ca/resolutions/

2015 Liberal Party platform;

https://www.liberal.ca/realchange/

Andrew Yang, US Presidential Candidate 2020, UBI advocate; link to Rutger Bregman TED talk on basic income guarantee (2019 Davos speech worth watching as well);

https://www.yang2020.com/additional-resources/

Bregman; Davos 2019;

https://www.youtube.com/watch?v=r5LtFnmPruU

'Piloting Basic Income" a UK perspective by Guy Standing. Hot off the presses, and a highly compelling read, for those with some time (80 pages);

https://www.progressiveeconomyforum.com/wp-content/uploads/2019/05/PEF_Piloting_Basic_Income_Guy_Standing.pdf

"Stump speech", Caleb Gibbons, seeking the federal Liberal nomination for Sydney-Victoria, NS. Posted prior, as loyal lokol.me readers will be aware. #JCG19

https://medium.com/@firehorsecaper/cape-breton-2-0-charting-course-for-a-better-tomorrow-b293d95fbd93

Scott Solomon;

Canada's share of a US$10 tln global wealth tax would be C$268 billion (90% of our current budget revenues of C$294 billion).

https://medium.com/@scottpsolomon/how-to-achieve-a-10tr-yr-global-wealth-tax-2ed0769cbb86