Questions from ZOOM event on Basic Income with Hugh Segal - October 1, 2020

Questions from ZOOM event on Basic Income with Hugh
                      Segal - October 1, 2020

The questions below are a combined list of those answered directly by Hugh Segal after his interview
as well as some that he addressed during his remarks, and a few that were submitted but not
answered due to time constraints. NLC conducted further research using available online resources to
provide responses to these questions.

What criteria would go into determining the amount of dollars for Basic Income for an
individual or family?
The focus is on the welfare poor and the working poor. Currently welfare discourages work. Basic
Income programs differs by party and jurisdiction. Universal basic income could mean everyone receives
a cheque which would be taxed back for the better-off in the population. The Canadian tradition, as
evidenced in the Guaranteed Income Supplement for seniors, is in response to a demonstrated level of
income through a tax filing and if you fall below a certain level you will be topped up. The first proposal
is wildly expensive at the beginning. The basic income premise is that no one should live below the
poverty line or have to live under a provincial welfare system that has within it strict claw backs rules
that massively discourage work. Any earnings are clawed back dollar for dollar which discourages work.
For a Federal basic income the amount would be tied to your level of need (difference between income
and poverty level). Currently provincial welfare is 40 to 45% below the poverty level. Poverty level
varies by region and is now related to the Market Basket Measure in Canada which is the cost of
standard essentials. https://www150.statcan.gc.ca/n1/pub/75f0002m/75f0002m2019009-eng.htm .

Please explain in plain language why UBI would not cause inflation.
Assume you are a landlord and know your tenants are getting a top up; wouldn’t you want to get some
of that money for your own purpose? Rent control would govern this. A landlord can’t raise the rent
because tenants have more money, only for improvements. There are rent control tribunals. Rent is
often the largest cost for people below poverty line. There are balances and controls for this.

Another reason for basic income not causing inflation is that we are dealing with 10% of population, not
the majority which would drive inflation. These are not people who take luxury holidays or set up tax
accounts in other countries, these are people who spend on rent, food and clothing for kids and these
are not inflationary especially when only starting with 10% of the population to begin with.

Would $1300/ month be a sufficient amount to start?
There is debate on an ongoing basis of how much is enough. The Federal government sets the low
income cutoff as half the median income in your province which is the poverty line. A new measure,
Market Basket Measure is the actual cost of food, clothing and rent in your part of the country
https://www150.statcan.gc.ca/n1/pub/75f0002m/75f0002m2019009-eng.htm. The good news is that
the government must set the number for different areas of the country based on regional cost structure
i.e. Vancouver is different from rural New Brunswick. The Canadian Revenue Agency (CRA) has
experience doing this. The number may be higher or lower depending on where you live. The concept

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is to design something sustainable, affordable and reflective of getting people out of deepest recesses of
poverty.

The McMaster University report on the Hamilton and Brantford UBI pilots showed that over
70% of participants did not participate in education or training. How can UBI recipients be
incentivized to participate in education and training so that they can find sustainable
employment?
Hugh Segal said that wasn’t the case in Manitoba. He then elaborated on the Finland pilot where a
cheque was given to the unemployed not those under the poverty line. There would have had a
different result with a different target population. It didn’t increase the number who stopped working.
Finland measured the number of people who looked for work or used the income to further education
but all began as unemployed. The Finish ambassador gave a presentation at Munk School and was very
clear on how they defined the project.

Hugh Segal also discusses the McMaster study around the 39:11 mark of the recording. He states the
analysis of recipients is very similar to the Dauphin Manitoba project of the 1970s. The Dauphin study
found a greater number of high school graduates in families with basic income, indicating drop out to
work to help family income was no longer required. Hugh states that “some” people went on to retrain
which corresponds to the roughly one quarter cited in the study below. The reference document for the
McMaster study (https://labourstudies.mcmaster.ca/documents/southern-ontarios-basic-
income-experience.pdf) shows a graph (pg 14) indicating that in response to the question, Did you
start an educational or training program while receiving basic income? 73.8% replied “No” and 26.2%
replied yes. However this response only covered the first 9 months of the proposed study period of 3
years. Returning to school/training could have been a secondary option to finding better paying work,
had the initial alternate job search not been successful. Two indicator questions relate to the latter -
78.9 % were motivated to find a better paying job and 61.5% indicated that it was easier to job search.
It could be argued that those outcomes are as or more important as training/education depending on
the study participant’s situation.

Thus, it appears for most participants, the focus was on more immediate job improvement rather than
entering re-training/education with a delay to greater income security. There could be compelling
socio-economic reasons for this approach. Social benefits such as improved physical and mental health,
less stress, depression, anger, improved family relations and motivation to seek a better paying job and
ease in job seeking, the other indicator questions, are all societal benefits. Evaluating the success of a
basic income on the single parameter of how many were incentivized to educate/retrain is not a holistic
evaluation.

What about the debt and deficit?
If we look at revenue flow to the federal government, after COVID that is, looking at a normal revenue
flow from various sources, the number is in the area of $350-400 billion a year. The notion that we’d
invest, after reducing the cost of $30 billion for provincial jurisdiction, is roughly 10% of that number to
eradicate poverty and ravages al pathologies of poverty. That is a good return on investment. We are
now running on a historically high deficit, similar to that after war and depression. If we fail to put
liquidity in the population and go to austerity, that’s how to make a depression worse and longer.
Putting liquidity into the marketplace would encourage work which would then generate money from

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taxation. Hugh Segal feels over a period of time, a basic income would become quite affordable and
reduce costs in penal and health care system. So it is affordable but the federal government can decide
how to phase it in, there are many of options. The notion, since current Covid expenditures contribute
to the high deficit, that we should say forget basic income for 10 years is fiscally irresponsible. In
response to Modern Monetary Theory, the debt limit is defined not by size of debt but ability to service
the debt. There is nothing wrong with 10-year program to reduce the debt and reduce poverty
together. Hugh Segal saw one financial institution give a billion-dollar loan at 2%. The cost of money is
low as interest rates are as low as they have ever been. But we need to do it responsibly, to be fiscally
responsible over medium and long term.

Would aboriginal people be included in the guaranteed annual income, and what effect
would that have on the Indian Act or whatever it is called now?
Hugh Segal responded that for the pilot in Ontario in Hamilton, Thunder Bay and Lindsay, First Nation
people were eligible for participation. But it was also decided that for First Nation reserves where
poverty was a real issue, in the spirit of reconciliation, the Ontario government would work with the
Chiefs of First Nations in a test while respecting the sovereignty of First Nations. In fact, in the Murdered
and Missing Indigenous Women report, one of strong recommendations was that there be a basic
income. It was also a recommendation from Truth and Reconciliation Commission chaired by Senator
Sinclair. We need to do it within their own structure run by Band Councils not the Indian Act which is a
whole other issue. We need to be respectful of their right to self-governance.

Is this program different from universal basic income?
There are numerous terms used within Canada and globally. Basic Income, Guaranteed Annual Income,
Basic Income Guarantee, Guaranteed Basic Income, Universal Basic Income (NDP Party), Guaranteed
Liveable Income (Green Party) are all used. As described above there are two basic implementation
mechanisms. First to universally give a basic income to every adult as like Old Age Security for those over
65 years, termed “demogrant.” Or a second way to only give basic income as a top-up to low income as
like Child Tax Credit or Guaranteed Income Supplement for seniors in Canada. Details are described in
different political parties’ platforms.

Do you think the part time workers like those in healthcare who have taken on 2 or more jobs
would benefit from this program by sticking with one position?
Hugh Segal answered that question around the 36-minute mark in the recording. He said that the
working poor who need 2 or 3 jobs to make ends meet, like personal support workers in long term care
homes would have benefitted by being able to work one job as would society as they wouldn’t have
spread the disease.

Is there any value to talking about the various international programs that were mentioned in
the early part of this discussion?
A wealth of international programs and research on basic income are available on the Basic Income
Earth Network https://basicincome.org/ and on Basic Income Canada Network
https://www.basicincomecanada.org/. A wonderful graphic from the Stockholm International Peace
Research published in September 2020, https://www.visualcapitalist.com/map-basic-income-

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experiments-world/ is available which describes all past current and planned basic income pilot
projects.

Questions submitted but not posed to Hugh Segal; researched by NLC

Why not expand ODSP to basic income and get rid of all the ODSP workers who administer
the income?
The Ontario Disability Support Program could be incorporated into a basic income program depending
on how it is structured by the federal government. In Hugh Segal’s book and other interviews,
particularly the one with Michael Enright in March of 2020 of the CBC
https://www.cbc.ca/radio/sunday/the-sunday-edition-for-march-29-2020-1.5509908/amidst-a-global-
pandemic-hugh-segal-s-call-for-a-guaranteed-annual-income-is-even-more-timely-1.5509938 Hugh
Segal identifies 3 groups with the 3rd group being those currently engaged in social welfare programs
that would be displaced by a basic income. “There are three groups who are deeply opposed: every
employee of every finance minister anywhere in the world is opposed. Why? Because when you have a
statutory program that says when a person reaches a certain income level it is automatically topped up,
that means you lose discretion over spending because the law says the money has to go out as it does
now for the OAS and for OHIP and for all those other things. So they oppose it as a matter of principle.
Secondly, my friends on the far right have this meme which they are totally taken up with, if you pay
someone to do nothing, they will do nothing. To which my response is: so why is it that 80 per cent of the
people who live beneath the poverty line in Canada have a job? Why is it that some of them have more
than one but they can't earn enough, depending on where they live, to get above the local poverty line?
So it's not about people sitting on their couch eating bonbons and watching soap operas. It's about
people who are working very hard but can't put it together. The third group who are opposed, are our
friends on the far left. They come at it this way — we have properly designed programs, run by civil
servants in government departments. Those civil servants are doing a good job, the best they can.
They're good people. They're all members of our unions, which is legitimate and they pay their dues. We
have a job to protect that. This could get rid of all those jobs because it's an automatic cash payout. My
view has always been that the basic income is only to replace welfare and programs that are cash
transfers. All the other programs that we have, we need to keep, because they're important.”

How likely is it that a UBI would never be raised, leaving folks in poverty again a decade or
two from now?
The concept of a basic income was raised in 1516 by Thomas More to reduce robbery then revised by a
friend of More’s Johannes Vives to reduce poverty a decade later. A good review of basic income
experiments around the world appeared in Visual Capitalist in September 2020
https://www.visualcapitalist.com/map-basic-income-experiments-world/. It shows over 16 completed,
15 on-going and 4 planned pilots between 1968 to 2020. One of the last questions that Hugh Segal
responds to is concerning potential further pilots in Canada in British Colombia and Prince Edward
Island. He continues to have hope but history has not yet yielded a positive result. We need to consider
that we already have income support (Old Age Security for all over 65) and supplement programs (Child
Tax Credit and Guaranteed Income Supplement for seniors) in Canada as well as our recent experience
with Canada Emergency Relief Benefit (CERB) which could pave the way for a basic income program.

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Given that CERB and other funding mechanisms are showing the incremental way forward to
GAI/Basic income - can you foresee a staged phased way of bringing this policy to reality?
At 11:00 minutes into the recording when responding to a question about the throne speech, Hugh did
say he was optimistic from what he saw in in September. They did make some changes in EI for part
time and gig workers but did not do anything for welfare and working poor. He says the budget may
reflect that the Liberals realize that you can’t solve the poverty problem using EI and uses the analogy
that putting a new roof on a house which is on fire does not solve the problem. He is optimistic that
motions in the House and the Senate will yet address the issue of poverty and basic income.

At 59:30 in the recording, Karin raises the upcoming British Columbia basic income by David Green to
Hugh Segal. He responds that he went out to BC and met with NDP and Green parties to discuss the
concept. He doesn’t want to pre-judge but now nuanced in their approach with the election coming.
He then indicates BC and PEI are most likely places for the next trial. Even with a Tory government in
PEI, there is a legislative committee studying the design of a basic income study. He made a strong
recommendation. He feels all of PEI would be a good test case for the country with a good mixture of
rural and urban and only 22,000 below the poverty line. Most of country would not oppose a test in PEI.
What BC does depends on the provincial election and he feels it will likely go ahead.

What about the folks who do not have bank accounts?
The September 2020 throne speech proposed that CRA automatically complete simple tax returns as on
average 12 % (Canada) or 15.9% (Ontario) of working age adults don’t send in tax returns. Many
Indigenous people do not claim a Child Tax Credit. Most of these are people on government assistance
who don’t expect to owe anything so they seldom file. https://www.cbc.ca/news/politics/free-
automatic-tax-returns-benefits-1.5739678 . With CRA completing tax returns for low income people,
bank accounts will need to be opened to avail the recipients of the tax returns.

Could things like CERB open the door to UBI?
This is almost exactly the title of an article written by Nadine Yousif in July of 2020 that appears in
Macleans magazine https://www.macleans.ca/economy/has-enthusiasm-for-the-cerb-paved-the-way-for-a-
universal-basic-income/. There is speculation that CERB will pave the way for a basic income Program.

From your political experience, what can a municipal councilor do to advocate for UBI?
In both Canadian pilot projects, in Ontario and Manitoba, governments at all levels were involved. As a
municipal councilor, you could advocate for basic income with any political party as there are variations
of a basic income in all party’s platforms. Even the Conservative party opposes the discouragement to
work inherent in our current provincial welfare programs.

Part of “hard left” opposition to BIG that hasn’t been mentioned is that the role of
government is to implement policies that create jobs. The private sector is not willing to
compensate raising children, caring for the elderly or disabled or shopping, cooking, cleaning,
laundry etc. that enable the father to pursue and advance in his career. The left position is
not just fear that the current social services will be eroded but that the government just isn’t
doing its job when needed jobs are not being created and funded. People want meaning,
useful work. BIG is a positive step to providing a living income above poverty line; however,

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what is actually needed is transformative structural change that makes BIG unnecessary.
Why is this part of the left’s position not presented and explained?
Paraphrased by Karin Wells as ‘Does Basic income lead to job creation?’

This question comes from a good article in Centre for Policy Alternatives magazine at
https://www.policyalternatives.ca/sites/default/files/uploads/publications/National
Office/2016/05/CCPA_Monitor_May_June.pdf. One broader consideration not discussed by Hugh Segal
as the question was truncated is that there is currently a surplus of jobs in Canada which Canadians are
not willing to do. This has led to the immigrant farm labour situation where seasonal workers come
from the Caribbean and Mexico to harvest produce in Canada. Concern was expressed particularly by
Conservative voters that rather than providing University students a stipend during the summer of 2020
as they couldn’t find work, to encourage them to work in the agricultural field and minimize temporary
immigrant workers. But that’s a whole other discussion!

Hugh Segal responded to Karin’s paraphrased question that in his opinion, yes basic income would lead
to job creation. With more liquidity in the population now living below poverty line, that generates
more spending in the community, and by definition that creates jobs. Those in lower paying jobs will
have the opportunity to look for higher paying jobs maybe because they’ve gotten a bit more education
and use money constructively. Overall there would be an increase in employment and Gross National
Product (GDP). In response to the secondary question, “Would there be a rise in minimum wage?”
Hugh Segal stated that if our economic model is based on paying people not enough to live on then it is
not a workable model. Restaurants should charge for the cost of the meal including a fair wage for the
waiter.

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