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November 23, 2021

Should Canada have a guaranteed annual income?

Does it make economic sense to provide each Canadian with a guaranteed annual income?

Cheque Sure, the question sounds like the latest topic from the Saint Ignatius debating club, but many analysts believe that the answer is yes, according to the Globe and Mail. 

This week, a House of Commons committee on poverty released a report proposing a guaranteed basic income for Canadians with disabilities, on the model already available to seniors. Earlier this year, a similar report outlined how such a scheme would work for all low-income Canadians.

The idea of giving money to the poor without strings isn’t new. It melds altruism and libertarianism, the Globe reports, saying both that the best way to fight poverty is to put cash in poor people's pockets and that people can make their own choices better than bureaucrats can.

It has been tested with success in other countries, and now it has re-entered the Canadian political conversation.

Conservative Senator Hugh Segal, one of the more vocal proponents of no-strings-attached aid for the poor, argues that giving money with no conditions removes the stigma and shame around poverty, allowing people to focus instead on how to improve their lot.

Requiring the poor to prove continually that they are deserving of assistance or threatening to cut benefits without notice only discourages the risk-taking and confidence required to get out of poverty, he says.

Part of what's holding back a guaranteed annual income is perception and language. People don't like the idea of entitlement, when they hear guarantees they think of rights without responsibilities.

Even a more scaled-back GAI proposal that just replaced social assistance at a provincial level might still be very expensive, admits UBC economist Kevin Milligan.

Having a transfer large enough to satisfy those worried about the wellbeing of the very poor, and also a clawback rate small enough to satisfy those concerned about work incentives, might yield a very expensive policy.

Make sense to you? Or is a guaranteed income program just another misplaced Robin Hood policy?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

James HaversJames Havers

James is the senior editor of MSN Money living in Toronto. He has worked for the Nikkei Shimbun (Tokyo),,, Canadian Business and other publications. Havers turned to journalism after teaching overseas.

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...