The government’s fiscal watchdog says a guaranteed basic income program at the federal level could cut poverty rates in Canada by up to 40%.
In a new report published last week, Parliamentary Budget Officer Yves Giroux said a Canadian family in the lowest earning group could expect to receive an average of C$6,100 in annual disposable income through such a program.
Higher earners could see their income levels drop because of changes in the tax system to implement a basic income.
While the cost of sending out cheques to qualifying Canadians could reach $107 billion in 2025, the net cost to the federal government would be between $3.6 and $5 billion, depending on the exact model used. The rest would be offset by cuts or changes to tax credits aimed at low-income Canadians, the PBO said.
That would include a reduction in the amount of income individuals can claim free of tax, known as the basic personal amount.
The PBO analysis said the number of hours worked by guaranteed income recipients could drop slightly—up to 1.4%.
In a media response, the Basic Income Canada Network (BICN) said most participants in past basic income pilots who “opted not to work while receiving cash transfers instead attended school or raised children.”
Giroux told The Canadian Press the analysis did not look at knock-on impacts from lowering the poverty rate, such as a possible reduction in pressure on health care or social services.
“When you get in the realm of people’s behaviour and exactly what they do when they’re provided with additional money, there are positives, but there may be a negative impact that we haven’t thought about. So it’s very difficult to determine the second-order effects,” he said.
In a series of community conversations dating back to 2022, the Green Resilience Project (GRP) found that people facing income insecurity or other forms of financial precarity “are increasingly exposed to climate impacts but are often unable to participate in proportionate climate solutions due to systemic barriers.” The GRP, co-convened by BICN and Energy Mix Productions, urged governments to include a basic income in their climate transition plans, adding that communities “are ready to take action but lack political and economic agency to effect the scale of change that is needed.”
CP said the PBO’s analysis was based on Ontario’s 2017 basic income pilot project, which uses as its foundation the “nuclear family”—any unit consisting of an individual and a possible spouse or common-law partner, plus their children under 18 years old.
Giroux said this definition has flaws, since one dwelling can house multiple nuclear families if older generations or adult children are living there. That can lead to “strange situations” where otherwise wealthy families end up receiving a cheque for basic income, he said.
Wednesday’s report also includes an analysis of what a basic income would look like based on an “economic family” —a unit that encompasses all relations by blood, marriage, or adoption living in the same dwelling.
Under that definition, the cost of administering the program would be cut by more than half to $53 billion in 2025, before taking into account any changes to the tax system or to social supports.
The impact on poverty rates also would be greater, with a 40% reduction for the economic family definition, compared to 34% under the nuclear family model.
That’s down from the estimate in a 2021 study, which forecast a 49% drop in poverty rates.
Last Wednesday’s report said the reduced impact was due to the wages of lower-earning Canadians not keeping pace with the surging cost of living.
On Feb. 27, CBC reported “a wider gap between Canadians who are financially stable and those who are struggling with debt” due to inflation. A credit reporting agency calculated total debt across the country at $2.56 trillion in the last three months of 2024, up 4.6% from the same period the previous year. Fort McMurray and Calgary placed first and second across the country for average debt excluding mortgages, at $37,861 and $24,078, respectively, and missed payments in Ontario were 50% higher than they were before the pandemic.
Advocates for guaranteed income programs say the punishing nature of traditional welfare programs is likely a barrier, as it often leaves clients reluctant to make changes because they’re afraid of losing benefits, CP writes.
Still, “guaranteed liveable basic income is not a new idea,” Sen. Kim Pate (ISG-Ontario) said in last week’s release. “It is an idea whose time has come. Especially as Canada faces unprecedented economic challenges, it is time to invest in communities.”
The federal NDP pushed for a guaranteed liveable basic income with a private member’s bill that failed to pass through the House of Commons last fall. A similar bill sponsored by Pate was still in limbo in the Senate when Parliament was prorogued in January.
Liberal party leadership candidate Karina Gould pledged earlier this month that she would begin the process of establishing a basic personal income within a year if she wins the top job. In an email to supporters, BICN praised Gould’s statement and urged leadership frontrunner Mark Carney—and all other federal parties—to follow suit.
Gould spokesperson Emily Jackson said in an email to The Canadian Press that the candidate would focus on simplifying existing supports, reducing bureaucracy and reforming employment insurance.
“The PBO report makes it clear that a universal basic income could significantly reduce poverty, but getting it right means ensuring it works within Canada’s broader social safety net,” Jackson said.
The main body of this report was published by The Canadian Press on Feb. 19, 2025.
