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Standard of living

Could a guaranteed annual income work in N.L.?

By Amy Jones

Yaffle.ca is Memorial’s online connecting tool.

One of its most significant jobs is to provide a way for people outside Memorial to ask for research help. With hundreds of community-suggested opportunities to choose from, your next project is just a click away. Here’s one:

The opportunity

Guaranteed annual income has been considered in Canada since the 1970s when it was tried as a pilot project in Manitoba.

At a basic level, guaranteed annual income refers to various income redistribution policies to guarantee a basic income to all citizens. A popular model works like a refundable tax credit. If an individual has no income from any source, they would receive a basic entitlement.

As their earned income increases, their benefit is reduced, but by a smaller margin than their added earned income. As a result, low-income earners benefit more from working and receiving partial benefits than they would if they didn’t work and relied solely on income assistance.

“Could a guaranteed annual income eliminate some of those disincentives and help people transition to work?” — Rob McLennan

The potential costs and benefits of these policies have been debated by economists and welfare theorists across the political spectrum. Advocates argue, however, that more research into the possibility of a guaranteed annual income (GAI) in Newfoundland and Labrador is needed.

“I know that people living in poverty or who are unemployed are generally looking to improve their lives; however, there are disincentives inherent in our current system that do not help or motivate people to enter or return to the workforce,” said Rob McLennan, director, employment services, Stella’s Circle.

Rob McLennan
Rob McLennan is director of employment services with Stella’s Circle in St. John’s.
Photo: Submitted

“Could a guaranteed annual income eliminate some of those disincentives and help people transition to work? Could it help decrease the stigma surrounding poverty or help reduce intergenerational poverty? We need to look at how we are helping people overcome barriers for long-term change, rather than unintentionally maintaining a poverty trap.”

The project

Determining the feasibility of a GAI in Newfoundland and Labrador, and examining what type might work best in the province, could provide insight into this issue.

This research could study both the potential positive and negative effects of a GAI, including lessons learned from experiments in other jurisdictions. For example, the Manitoba town of Dauphin implemented a GAI program for four years in the 1970s that resulted in higher high school graduation rates and improved health.

“Creating a guaranteed annual income for all citizens could be an innovative way to put into action the notion we don’t want people in the province to fall behind a certain standard of living.” — Rob McLennan

The research could also explore the potential costs and compare them to the costs of the current income assistance system. An analysis may reveal that a GAI would come at an increased cost; however, it could also show cost savings in the form of streamlining the current system, increasing employment rates or decreasing dependence on assistance.

“Creating a guaranteed annual income for all citizens could be an innovative way to put into action the notion we don’t want people in the province to fall behind a certain standard of living,” said Mr. McLennan.

“Research on this topic could possibly include a qualitative component that incorporates perspectives of people from various age groups, as well as educational and employment backgrounds, to see how a guaranteed annual income could impact their lives.”

Find out more about this project here.

The Harris Centre’s co-ordinator of knowledge mobilization can also tell you more. Email Amy Jones or call her at 709-864-6115.


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