Trending: Should Canada replace social programs with cheques for everyone?
Posted December 8, 2015 1:30 pm.
This article is more than 5 years old.
With all the new initiatives on Prime Minister Justin Trudeau’s plate – bringing 25,000 Syrian immigrants to Canada, legalizing marijuana, setting up an inquiry into missing and murdered aboriginal women – how about an easy win, like giving every Canadian adult $15,000 a year?
Don’t laugh. It’s something Finland’s government is seriously considering as a way to reduce poverty and unemployment in that country.
According to CNN Money, Finland is looking to give every adult Finn a monthly stipend of 800 euros (which works out to about $1200 Canadian) as a replacement to existing state benefits. So, this would replace welfare, employment insurance, child tax benefits – anything that we may be currently receiving. Instead, we’ll each get a flat cheque from the federal government each month.
The logic behind the idea is that the current welfare system in Finland is extremely complicated and expensive to maintain, and removing all the infrastructure required to maintain state benefits would result in a massive savings for the country.
And they believe it would encourage people currently living on government benefits like welfare to look for work, because many currently make more on welfare than they would taking a low- or minimum-wage job. With the stable, monthly cheque coming in, they would be more inclined to take low-paying jobs to improve their incomes without the penalty of losing their benefits.
As for wealthiest people receiving the cheques, they would pay most of the stipend back in taxes.
It’s a scenario that sounds eerily familiar to Canada. Our welfare system has been described as “a box with a tight lid” by former chief economist Don Drummond because people must become destitute before they qualify, and once in the system, there’s little motivation to get out of it. “You have no means to absorb setbacks in income or unexpected costs,” Drummond said. “You can’t afford to move to where jobs might be or upgrade your skills.”
Each year the Canadian government pays out over $11 billion a year in social assistance, and the bureaucracy required to maintain social programs like welfare and employment insurance cost millions each year. Replacing these costs for a small, centralized department focused on issuing monthly cheques would represent a huge savings for the government.
Between 1974 and 1979, Canada experimented with a similar project in the city of Dauphin, Man., in which the social programs were removed and the city’s poorest people were given cheques to boost their incomes to a livable wage. In five years, poverty in the city was completely eliminated and unemployment levels disappeared. Unfortunately, Joe Clark’s Conservatives eliminated the test program when they took office.
Finland continues to carefully examine the idea, with a finalized proposal expected for 2016 and a pilot program slated for 2017. In the pilot program, some people will receive 550 Euros ($813 CAN) while maintaining some of their existing benefits, like housing allowances.
According to CNN, 69 per cent of Finns are in favour of the system.
It’s a program Canada would be wise to monitor closely.