The Regional Municipality of Halton. Chair and Members of the Health and Social Services Committee

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1 The Regional Municipality of Halton Report To: From: Chair and Members of the Health and Social Services Committee Alex Sarchuk, Commissioner, Social and Community Services Date: January 10, 2017 Report No. - Re: SS Provincial Basic Income Pilot RECOMMENDATION 1. THAT staff be authorized to submit the attached Halton Region Basic Income Pilot Project Consultation Submission to the Ministry of Community and Social Services in response to the Honourable Hugh Segal s Discussion Paper, Finding a Better Way: A Basic Income Pilot for Ontario. 2. THAT the Regional Clerk forwards a copy of Report No. SS to all Halton MPs and MPPs for their information. REPORT Executive Summary Basic Income is generally understood as an unconditional payment from the government to individuals or families to ensure a minimum income level. Typically, a basic income has no strings attached. Recipients are not required to work, look for work, or participate in education or training to receive the payment. The overarching intent of a Basic Income is to reduce poverty and achieve associated impacts such as health equity/reduced health care pressures and increased economic productivity. In November 2016, the Ministry of Community and Social Services released a report commissioned by the Honourable Hugh Segal titled Finding a Better Way: A Basic Income Pilot for Ontario 1. The province is requesting feedback regarding Segal s recommendations as well as the design and implementation of a Basic Income pilot

2 Staff review of the Segal report found that the report outlines key considerations regarding the potential planning, implementation and evaluation of a Basic Income pilot; however, it is silent on numerous critical issues, does not address the implications of the Basic Income on other fundamental low income programs (e.g. assisted housing, employment supports, child care fee subsidy, etc.), does not entertain the possibility of substantive, beneficial reforms within the existing OW/ ODSP program context, and lacks clarity on the fiscal plan to test the Basic Income in a responsible manner. The purpose of Report No. SS is to: outline the key elements of the Basic Income approach provided in Segal s report; and, highlight Halton Region s proposed response to the Province s request for feedback. Background Social assistance rates in Ontario provide a minimal income to individuals and families allowing them to subsist and may result in precarious housing and food insecurity. In its 2016 budget, Ontario committed to charting the path to comprehensive reform that effectively reduces poverty, supports people in their efforts to participate in the economy, and provides human services in a way that makes sense to the people who need them. The budget further identified that a component of comprehensive reform would be the implementation and evaluation of a Basic Income pilot. The Basic Income pilot is intended to test a perspective that a basic income could provide a more consistent and predictable income support in the context of today s dynamic labour market. The pilot would also test whether a basic income would provide a more efficient way of delivering income support, strengthen the attachment to the labour force, and achieve savings in other areas such as health care and housing supports. In June 2016, the provincial government appointed the Honourable Hugh Segal as an advisor on the design and implementation of a Basic Income pilot. Segal s report, released in November 2016, provides a number of recommendations related to the design, implementation and evaluation of a basic income pilot. Discussion Finding a Better Way: A Basic Income Pilot for Ontario The Hugh Segal Report The following provides an overview of the key considerations and recommendations identified by Segal in his report to the province: 2

3 Overall Considerations: Segal asserts that a pilot project must begin with an understanding of the costs of poverty, not only in present social assistance payments, but also in terms of added pressures on our health system, and the Ontario economy as a whole, through its impacts on economic productivity and existing government revenues. Further, a pilot must take into consideration how the Guaranteed Annual Income Supplement in Ontario in the mid-1970s, aimed at residents over the age of 65, radically reduced poverty for this group. This led the way to the federal Guaranteed Income Supplement, for all Canadian residents over the age of 65. The main purpose of a Basic Income pilot would be to test replacing the broad control and monitoring now present in Ontario Works and the Ontario Disability Support Program (ODSP), with a modestly more generous Basic Income, disbursed automatically to those living beneath a certain income threshold. The pilot would be structured to test the impacts of a Basic Income on the net fiscal position of the province, on labour market/work behaviours, on health and educational outcomes for recipients, on food security, on mobility and housing, and on net economic and community outcomes in targeted areas of the pilot. Age eligibility for the pilot would be 18 to 65 years of age. Organization of a Basic Income Pilot: The Segal report suggests that the legitimacy of the pilot would be enhanced if it were managed by an arm s length consortium of not-for-profit research organizations. The pilot's key governing principles would include: Voluntary participation. No individual would be made worse off during or after the pilot as a result of participation in the pilot. All personal data collected or accessed would be kept private. Aggregate data in the form of preliminary results, once it starts to flow, must be accessible to Ontarians in a transparent fashion. Key Evidence the Pilot Should Generate: Segal recommends that investigation of the Basic Income impacts should consider the following types of outcomes: Health outcomes for participants in the pilot compared to those living in poverty and not in the pilot. 3

4 Life/career choices made by participants during the pilot, such as training, family formation, fertility decisions, living arrangements, parenting time, etc. Education outcomes for participants and their children. Work behaviour, job search and employment status. Community level impacts where the pilot operates in local areas, on a focused basis. Direct administrative costs or savings of replacing, for pilot recipients, Ontario Works and ODSP with a Basic Income. Changes in food security status for pilot participants. Perceptions of citizenship and inclusion for participants. Impact on mobility and housing arrangements. Impact for Basic Income participants in terms of their relationship to Employment Insurance, provincial and federal child benefits, and other existing social programs. What the Pilot Should and Should Not Test: Segal provides some clarity as to a recommended Basic Income model and suggests that the pilot should test: A Basic Income paid to individuals replacing Ontario Works and ODSP. A negative income tax (NIT), or refundable tax credit, that tops up all recipients to 75% of the Low-Income Measure (LIM) 2 regardless of their status in the labour market. For a single individual on Ontario Works, for example, this would correspond to having income support move from roughly 45% to 75% of the LIM, and to receive a minimum of approximately $1,320 per month, non-taxable, with an opportunity to keep partial additional income earned from participation in the labour market. Individuals with disabilities would receive an additional monthly sum of at least $500. A Basic Income that would not be associated with rules limiting earned income and work participation, such as those associated with Ontario Works and ODSP. In a Randomized Control Trial (RCT) held in a major urban neighbourhood/ community, different treatment arms for various levels of Basic Income (starting at 75% of the LIM) and different tax rates on income earned on top of the Basic Income. The report argues that testing different parameters should help identify the best combinations to reduce poverty, while not discouraging people from improving their incomes through labour force participation. The pilot should also include saturation sites in which community level impacts of a Basic Income could be investigated. Ideally, one saturation site would be located in southern Ontario, one in northern Ontario, and one would be chosen and planned in close collaboration with First Nations communities. 2 The LIM is a fixed percentage (50%) of median adjusted household income where adjusted indicates that household needs are taken into account. 4

5 The pilot should not test: A Big Bang approach, in which all social supports, including those not specifically related to poverty, would be replaced with a single monthly cheque. A universal basic income under which all adult Ontarians, living in poverty or otherwise, would receive a fixed amount taxed according to a general income tax schedule. Implementation of the Pilot: Segal has proposed that the pilot be comprised of three phases: Planning and selecting the pilot sites; Proceeding with the distribution of Basic Income payments (for a minimum period of three years), gathering quantitative and qualitative data through access to administrative records, questionnaires and interviews, making aggregate data/ preliminary results available broadly and transparently; and, Evaluating the pilot's results through data analysis, projecting long-term outcomes and consequences as well as evaluating the costs and benefits of replacing the current social assistance system with a Basic Income. Halton Region s Proposed Response to Provincial Consultation on a Basic Income Pilot The province is currently seeking input and engaging with communities to better understand the views of Ontarians, organizations and municipalities regarding a basic income. It is noted that the Halton Poverty Roundtable has supported a community consultation process to provide input to the Ministry of Community and Social Services. That feedback is independent of the Halton Region response. Feedback regarding the design and implementation of the Basic Income pilot can be submitted to the province until January 31, 2017 and will be used to finalize the pilot design and inform the implementation of the project. The province is expected to prepare a final report and introduce a plan for the pilot by April The recommended Halton Region position is support for provincial poverty reduction efforts, if they are undertaken in a fiscally responsible manner, and which recognize the critical, long-standing role of municipalities in the delivery of low income programs. However, much greater clarity regarding the intended, and potentially unintended, impacts of a Basic Income model on other municipally delivered low income programs is required. The Basic Income pilot as outlined in the Segal report provides insufficient detail regarding the interdependency of social assistance/basic income and other established cost shared benefits such as assisted housing, child care fee subsidy and employment services. 5

6 A key premise of the provincial consultation paper is that higher benefit levels and more favourable tax rates on earned income (sometimes referred to as a claw back) will result in positive outcomes related to health, labour market attachment, social inclusion, etc. The paper is much less compelling by suggesting that a radical shift away from the existing OW/ODSP programs is required at this time. For example, benefit rates could be increased and the treatment of earned income in the current programs could be modified with substantially less disruption and complexity. Therefore, as part of the consultation submission, staff recommend that the province redouble efforts on broader social assistance reform. This work could consider some of the ideas generated by Segal. Finally, the Segal report is largely silent on the fiscal impacts, both provincially and municipally, of a Basic Income pilot, and a potential full implementation. Clarity regarding the financing of the higher Basic Income benefits is required and in no instance should the implementation of a Basic Income rely on the municipal tax base. The proposed Halton Region consultation submission outlines these overarching concerns and cautions. Attachment # 1 to Report No. SS provides Halton Region s proposed response to the provincial consultation. Approval to submit the paper to the Ministry of Community and Social Services is requested of Council. 6

7 FINANCIAL/PROGRAM IMPLICATIONS There are no financial implications associated with this report. Respectfully submitted, Jodi Guilmette Director, Employment and Social Services Alex Sarchuk Commissioner, Social and Community Services Approved by Jane MacCaskill Chief Administrative Officer If you have any questions on the content of this report, please contact: Jodi Guilmette Tel. # 2730 Attachments: Attachment # 1 Halton Region s Basic Income Pilot Project Consultation Submission 7