Ontario plans to launch universal basic income trial run this summer

Ashifa Kassam in Toronto
Ontario’s premier, Kathleen Wynne, announced on Monday details of her basic income pilot program, the first in North America in decades. Photograph: Darren Calabrese/AP

The Canadian province of Ontario will launch a trial run of universal basic income with about 4,000 participants this summer, making it the first North American government in decades to test out a policy touted as a panacea to poverty, bloated bureaucracy and the rise of precarious work.

Participants in the three-year, C$150m pilot program will be drawn from the cities of Hamilton, Thunder Bay and Lindsay. A randomly selected mail-out will invite applications in the coming months, with participants screened to ensure they are between the ages of 18 and 64 years and living on a low income.

The pilot will include a mix of those who are working in low-paying or precarious jobs and those on social assistance, with participants able to opt out at any point during the three years.

“This is a new world with new challenges,” Kathleen Wynne, Ontario’s premier, said on Monday as she announced details of the highly anticipated pilot. “From technology to Trump, it is a time of greater uncertainty and change.”

The pilot aims to answer whether basic income – an idea long touted by those on the left and right – is an effective means of addressing this unpredictability. Unconditional monthly payments will begin to flow this summer; single people will receive up to C$16,989 ($12,570) while couples will receive C$24,027. All participants will continue to receive child or disability benefits, if applicable.

The monthly income represents a slight increase for those currently on social assistance or disability support but come with less monitoring and administration. Those who work will see the amount of their basic income reduced by 50 cents for every dollar they earn.

“It’s not an extravagant sum by any means,” said Wynne. “But our goal is clear. We want to find out whether a basic income makes a positive difference in people’s lives. Whether this new approach gives them the ability to begin to achieve their potential.”

The outcomes of the monthly stipend will be monitored on an ongoing basis, with researchers delving into its impact on health, education, housing and labour market participation. The province is also in the early stages of working with aboriginal partners to develop a parallel pilot that would test the idea among First Nations communities.

The scheme began last June, when the provincial government tasked a Conservative political strategist and longtime advocate of the idea with exploring potential directions for the pilot.

The trial run in Ontario comes as the idea of basic income is undergoing a popular renaissance. As leaders around the world struggle to find a balance between fighting poverty, the push for austerity and the steady erosion of stable jobs with pension and benefits, basic income projects are in the pipeline in Finland, the Netherlands and Kenya.

Canadian officials have long held an interest in the merits of the idea – the country was once home to one of North America’s largest and most ambitious experiments in basic income.

In 1974, about 1,000 residents in Dauphin, a small farming town of 10,000 people in Manitoba, began receiving monthly payments with no strings attached. The pilot, a joint effort by the federal and provincial government, set the stipend at around 60% of Statistics Canada’s poverty threshold, translating to roughly C$16,000 a year in today’s dollars for a single person. For every dollar earned from other income sources, 50 cents were scaled back from the monthly payment.

The payments flowed for four years, turning Dauphin into a potent test site for the policy. Research found little change in the residents’ work habits, save for new mothers who took longer maternity leaves and teenage boys who were more likely to stay in high school.

Instead the monthly income became a source of stability, buffering residents from financial ruin in the case of sudden illness, disability or unpredictable economic events. Hospitalisations dropped, as did injuries and mental health issues.

But the budget of $17m – the equivalent of about $85m today – ran short halfway through the project, hindering data collection. A growing federal push for austerity along with a change in Manitoba’s government in 1977 sounded the final death knell for the project.

Ontario’s pilot project risks falling victim to the same pressures. A provincial election is expected to be held by mid-2018, coming one year into the pilot program. Polls currently suggest that the Liberal government, who have held power in the province for some 14 years, are unlikely to win another majority government. Soaring electricity prices and allegations of bribery in a 2015 byelection are among the issues that have sent Wynne’s approval ratings tumbling to around 12% – the lowest of any premier in Canada.

By using Yahoo you agree that Yahoo and partners may use Cookies for personalisation and other purposes