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6 October 2020updated 27 Jul 2021 5:00am

Why Canada is now debating a basic income model

In the wake of the pandemic, Justin Trudeau’s Liberal Party is seeking to forge a more interventionist state.  

“This is not the time for austerity,” said Julie Payette, the governor general of Canada, as she read the latest Canadian throne speech on 23 September. “Canadians should not have to take on debt that their government can better shoulder.”

As in the UK, Canada’s Westminster-style parliament opens new sessions with a speech outlining the government’s forthcoming legislative priorities. Attendance this year was strictly limited to a handful of high-ranking officials, with other governing elites watching online as Payette delivered a programme of spending promises designed to help the country withstand the Covid-19 pandemic.

Although short on specifics, the speech left open possibilities for Justin Trudeau’s centre-left Liberal government to adopt radical, longer-term measures. It contained promises of expensive extra support for child care and prescription drugs, as well as millions of new jobs and additional emergency support for small businesses. And while the speech made no direct mention of a basic income model, the concept has been gaining momentum on the Canadian left.

Six Liberal MPs have since proposed a policy resolution for a guaranteed minimum income, which party delegates voted to fast-track to the debate floor ahead of their national convention in November. Under the proposed guaranteed income model, the government would top up low incomes until they reached a designated minimum, which may differ based on the local cost of living. (This is distinct from the unconditional receipt of a base payment, as under some universal basic income models.) It is currently the top priority policy motion out of more than 50 planned for debate – virtually guaranteeing a vote on whether the Liberals adopt it as an official policy.

“We have learned lessons in the course of this crisis, and one of those lessons is that our social safety net was not fit for purpose,” resolution co-sponsor and Toronto MP Nathaniel Erskine-Smith said in a TV interview. “Millions of Canadians would have been left behind if the government had not moved quickly to reinvent our social safety net through the CERB,” he added, referring to the Canadian Emergency Response Benefit, a $500 (£300) weekly payment sent to previously employed and self-employed people whose work has dried up during the pandemic.

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The MP and his resolution co-sponsors have also been in regular recent contact with Evelyn L. Forget, the author of Basic Income for Canadians, who, in April, co-wrote an editorial arguing that CERB was an “unintended experiment in basic income”. 

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There are signs that this line of thinking enjoys the tacit support of the party leadership. Trudeau and his former finance minister Bill Morneau were rumoured to have privately clashed over CERB. Morneau wanted payments to be less generous and more in line with the minimum wage, so as not to disincentivise work. Before Morneau’s resignation in August, the prime minister’s office was said to have increasingly overruled the finance ministry. By contrast, newly-appointed finance minister Chrystia Freeland, the author of Plutocrats, a 2012 book on wealth inequality, is thought to have greater affinity with Trudeau’s redistributive agenda.

[See also: This is the moment for Universal Basic Income]

Morneau isn’t alone, however, within the Liberal Party. John Manley, who served as finance minister from 2002 to 2003, co-authored a recent report warning there was little room for further post-crisis spending without tax increases. He pointed out that government debt, now projected to surpass 120 per cent of GDP this year, had already prompted the credit rating agency Fitch to downgrade Canadian bonds from their previous AAA rating.

In a TV interview, Manley also described the brief suggestion of some form of wealth tax: “one of the dumbest things in the throne speech.” He reasoned there weren’t enough rich people in Canada to fund all the items on the government’s agenda, adding: “if you tax them enough, they’ll leave.”

Manley’s warnings are typical of the Liberal’s fiscal conservatives, who took office at a time when debt servicing costs absorbed 37 per cent of every dollar spent. But the pandemic has given Trudeau and party progressives an opportunity to sideline the party’s Liberal deficit hawks – and some Canadian political observers expect him to take it. 

“Back in the early 1990’s [then Liberal finance minister] Paul Martin showed up to deliver his first budget in work boots,” says Lori Turnbull, director of the School of Public Administration at Halifax’s Dalhousie University, referring to the Canadian custom of finance ministers buying a new pair of shoes the day their budgets are tabled. “His message was: ‘it’s going to be a tough couple of years.’ Chrystia Freeland though, is not that finance minister.”

As with deficit hawks such as Martin, Morneau’s priority was to restore the economic status quo, says Turnbull. “But Trudeau is looking to use Covid as a chance to reimagine a very different role for the state – one that, in his view, is more compassionate.”

Would Canadians support basic income as part of that reimagining? While one poll finds 59 per cent of Canadians in favour, only 36 per cent say they would be willing to personally pay more tax to help fund it. But if the Liberal convention passes a guaranteed income motion, it’s likely to find support from other left-leaning parties in parliament. The New Democratic Party, whose 24 seats would combine with the Liberals’ 157 for a majority – has already proposed a basic income motion of its own. By announcing that it will support the throne speech, the NDP has also prevented a snap general election. 

With the last election only a year ago, and the Liberal government’s survival assured for now, we may yet discover the extent of Justin Trudeau’s redistributionist vision.

Aaron Burnett is a German-Canadian journalist specialising in international security, as well as European and Canadian politics.

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