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A Canadian province is about to start trialling universal basic income

"The government remains committed to leaving no one behind."

FIONA MACDONALD
10 MAR 2016
 

People living in the Canadian province of Ontario could soon start receiving an unconditional allowance each month, with the government this week announcing that it'll begin trialling a pilot version of universal basic income in 2016.

The idea is that by giving everyone a set amount of money regularly, regardless of whether they need it or not, the government will increase the general standard of living, while greatly reducing the financial burden on those who fall through the cracks of the welfare system, such as stay-at-home mums (who often receive no compensation) or those who don't qualify for payments. 

 

"As Ontario’s economy grows, the government remains committed to leaving no one behind," the government wrote in a budget statement this week. "Maintaining an effective social safety net is one part of the government’s broader efforts to reduce poverty and ensure inclusion in communities and the economy."

The government is now working with stakeholders and the community to nut out exactly what the pilot project will look like, so we don't have any specific details to go on just yet. But they're not the only ones looking to supplement or replace welfare payments with universal income - countries such as the Netherlands, India, Finland, and France are also trialling (or have trialled) similar projects.

For many, the idea of universal basic income seems counterintuitive - why would you replace welfare payments, which are only given to society's most needy, with a system that gives the same amount of money to everyone?

But the reality is that the welfare model we currently rely on is clearly not working - in Ontario, one in five children in the province face poverty. And in 2013, 45 million people in the US lived below the poverty line.

Universal basic income could offer an alternative model. A pilot project of the model took place in the Canadian town of Dauphin in Manitoba between 1974 and 1979 and showed that basic income greatly reduced poverty, while also reducing the government's costs by cuttings hospital visits and mental health-related complaints in the town.

A study in the US also showed the health benefits of giving people 'free money' - poor children whose parents were given an extra US$4,000 each year were less likely to have behavioural and emotional disorders compared to their peers, and were also more conscientious and agreeable - traits that are linked to future success and happiness. 

Scientists don't fully understand how extra income can have such significant health benefits - obesity and diabetes are also linked to poverty - but a recent study showed that financial stress can actually change people's DNA, and make it age faster.

Despite this, there are plenty of arguments against universal basic income - most commonly that if everyone gets handed money by the government, they won't be as motivated to find jobs.

And in Dauphin, the number of hours worked did decrease slightly during the five-year trial period. But instead of working so much, men actually spent more time in school, and women chose to stay longer on maternity leave, so there were still benefits to society.

What's more, when a similar system was trialled in Uganda, working hours increased by 17 percent, and average earnings increased by 38 percent.

Even if universal basic income does make us work fewer hours, is that really a bad thing? After all, we're all working longer hours than ever before, with no sign that it's improving productivity

"When discussing inequality, we usually focus on employment and production. Yet, much of the world’s population has no realistic prospects of employment, and we already produce more than what is sustainable," economic historian Ralph Callebert from Virginia Tech writes for The Conversation. "Basic income, however, separates survival from employment or production."

It's much too early to say whether universal basic income will have benefits for Ontario - and certainly no economic system is perfect - but with the long-lasting damage of poverty being made increasingly clear by science, it's nice to see alternative models being tested.

Look out, Sweden, you might soon have some competition for the most progressive place to live.

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