Basic Income in Ontario – Would It End Personal Bankruptcies?

Earlier this month the Ontario Liberal government headed by Kathleen Wynne announced plans to pilot a Basic Income program, as part of its 2016 Budget. The Federal Liberal government is also expressing interest in investigating Basic Income for all Canadians.

Basic Income is not a new idea, and there are several forms. In some schemes, all adults receive a sum that covers basic expenses, regardless of employment income. In other versions, adults receive “top-up” funds if their employment and other income does not meet a set minimum.

Question: how can we, as a province or country, afford a Basic Income scheme? – Answer: by saving costs in other areas.

Basic Income would be a single, universal program – eliminating the need for government to administer multiple social assistance programs. Basic Income programs have also been shown to reduce health care costs significantly.

Canada’s previous experiment with a guaranteed minimum income

Such systems have been under discussion for decades. They have been tried in European communities with great success, and Finland is launching its own Basic Income program this year.

Here’s a surprise – it’s already been tried in Canada! Between 1974 and 1978 (when political support for the pilot tailed off), 30% of the residents of Dauphin, Manitoba were placed on a Minimum Basic Income plan – “Mincome”, as the residents called it.

Did it work well? That’s the question! Results were never fully analyzed, although analysts at the time noted that, contrary to expectations, recipients did not reduce their work hours significantly (the two exceptions were mothers of infant children, and teenagers working to support their families).

In recent years, Prof. Evelyn Forget of the University of Manitoba’s Community Health Science Dept. has been taking a closer look at the Dauphin experiment. She has found that for those in the “Mincome” group, hospitalizations decreased significantly, and teenagers stayed in school longer.

Would Basic Income end personal Bankruptcies?

Not addressed in most news articles is the fact that, if implemented, Basic Income could be a very good thing for those most vulnerable to insolvency.

Would Basic Income end personal Bankruptcies? – No. There are diverse reasons for insolvency – life events, gambling problems and simple bad luck among them. Bankruptcies and Consumer Proposals would still happen.

However, a great number of insolvencies occur among young individuals and families due to job loss or marginal employment (for instance, juggling several part-time, minimum-wage jobs, and attempting to pay for child care). Employment Insurance and other assistance programs are a safety net, but not a sufficiently strong or speedy one. For many, the time comes when the quickest way to put a meal on the table is to use consumer credit.

Even in today’s world, many young people approach consumer credit cautiously, and avoid becoming dependent on credit cards. However, if a young person begins to use credit cards to feed or house themselves or their family, they may be initiating a pattern that can end in insolvency – simply because times may not get better. Before long, the credit card bills are one more expense that can’t be met.

If a Basic Income program were in place, a young individual or parent facing job loss or tough times could count on it to provide the essentials – making resorting to consumer credit unnecessary.

And, let’s face it, most consumer insolvency in our times is related to credit card use. If you don’t begin, you can’t be “caught.”

Food for thought as we consider what Basic Income could do for Ontarians/Canadians.

Wendy O.

My name is Wendy and I finished my consumer proposal in 2013. My goal is to help provide hope to Canadians in debt by sharing my experience, and advice as a consumer – and also to help eliminate the stigma and embarrassment surrounding people who file a consumer proposal or bankruptcy.