Differences in contributions, services and need
Now it’s time to talk about rights and human dignity – but I want to set the table first. I’m also not going to repeat too much from the first three entries. I am going to assume you have read them if you are now reading entry #4.
In the previous three parts of this series, I talked about unicorns, contribution vs. needs based programs and the role of emotion and values in the design of our income security system.
In this entry, I want to start by talking about the essential character of our existing income security programs. They basically divide into three categories:
- Monetary contribution based programs: CPP, Worker’s Compensation, EI and workplace programs
- Service based programs: OAS and Veterans’ benefits; and
- Income or need based programs: GIS, Refundable credits, social or income assistance, child benefits, and the WITB
Monetary contribution based programs are not payable to Canadian residents unless they contribute money into them on their own or payments are made into them on their behalf. As these programs are not income tested, millionaires with fabulous paychecks get the same amounts as paupers when they apply and are eligible for benefits.
Service-based programs are based on notional or real service to Canada. You can’t get full OAS without living in Canada for 40 years between ages 18 and 65. Partial OAS has residency requirements that range from one to 39 years residence. OAS payments are based on notional service to Canada and are only subject to clawbacks at high income levels. In other words, you lived here, paid taxes, worked and contributed to Canada. You get OAS when you turn 65 (or 67).
Veterans’’ programs are based on real military service to Canada and can be reduced based on need but most programs are not income tested. Some are based on need.
Income or needs based program all have one characteristic in common and that is that they fade out with increased income. Every income and needs based income security program can be reduced to zero if income is sufficiently high. The exception is the UCCB and it is about to go the way of the dodo.
So there you have it: a three part system based on three organizing principles: monetary contribution, service and income/need.
Target Groups: Disability, Age, Children and Unemployed
This is where it gets interesting for different target groups. For example, persons with disabilities can get income security benefits from all three sets of programs based on their personal history. Some will get benefits through contribution (CPP, EI sickness, Worker’s compensation), others will get benefits through service (Veterans’ benefits) while others will obtain benefits based on need (social assistance). Only one program, the Disability Tax credit, does not fit easily into these categories.
Like the programs for person with disabilities, programs for the aged are available in all three categories. Some will get benefits through contribution (CPP); others will get benefits through service (OAS) while others will obtain benefits based on need (GIS and provincial supplements).
Unemployed people receive benefits from two categories: Contribution based programs (EI) and income or need (social assistance and the WITB). It’s only when you get to target groups like children that all the available benefits are based on income or need (social assistance, CCTB, NCBS, UCCB and provincial programs).
The whole point of talking about target group and program category is to show first that there is no uniformity according to program category among target populations. I also want to dramatize that various self-organizing groups within society now benefit from very different sets of programs across conceptual categories. No one is going to be able to appeal to a particular target group to arrange a guaranteed annual or basic income that only takes income and need into account. There are just too many allegiances to monetary contribution and service to Canada.
Canada’s income security history
Canada’s history of income security also doesn’t help us much. We started out with a contribution based program over 100 years ago with workers compensation and then moved into a variety of programs in the 1920’s based on need (Old Age pensions, mothers’ allowances, Relief etc.). Then we went on a quarter century tear with contribution based programs that included payroll taxes for Unemployment Insurance (1940), pensions (1951 and 1964), and CPP in 1966.
Not until 1966 with the establishment of the Canada Assistance Plan (CAP) did Canada start seriously down the road of providing benefits by income and need. This was followed by the sweeping reforms in OAS in 1977 to develop a service to Canada model with full benefits based on 40 year residency in Canada. Veterans’ benefits were usually supplied in non-monetary form through the provision of jobs, education, training and land grants. But cash payments to veterans based on service now comprise an important aspect of these payment especially as it relates to various iterations of the Veterans’ Charter and Canada’s increased reverence for its men and women in uniform.
This is all to say that there is no Lamarckian inheritance or manifest destiny in our income security programs. We don’t seem to be headed in any particular direction in our program category types. In fact, the Harper government implemented a big savings program (TFSA) along with the UCCB and the WITB. There may be a certain tendency to move towards income and need with refundable credits in the tax system but there has been equally lots of talk recently about CPP reform and Ontario going it alone with its ORPP.
Endless Tinkering but no conversation about rights
When I think of what Canada has been doing for years in the arena of income security, all I can think of is that we endlessly tinker with our programs; and now we are going to have more of it. A sprinkle of pension reform here and refundable child credits there – welfare reform here and a bit of EI reform there – but there is no real appetite to take on the whole system either by category or by target population. It is very Canadian of us. (Apologies to Dennis Guest).
But let’s go back and think about my father and Linda Chamberlain for a minute. My father will continue to get 74% more from our income security system even though he doesn’t need it. Linda will live in poverty and continues to be unable to make ends meet.
This means that we are really not thinking about need and it also means that we are not thinking straight about rights, contributions and service.
I don’t have to explain my father’s service to his country and his contributions. These are well known and the type of service and contributions he represents are equally celebrated.
Yet a simple search of Linda Chamberlain’s name online demonstrates that she is a human rights hero. She saves pets; she speaks up for people with mental health issues and she has personally and selflessly won numerous battles that don’t result in contributions that get paid into unemployment or pension benefits. Decades of volunteering doesn’t translate into a defined benefit pension. In fact, it doesn’t get you any kind of pension at all.
It does tell you a lot about what we value as a society. Most of all we value monetary contribution and economic activity. Make money on a stock and we tax you less and allow you to put the proceeds into a tax free instrument. Contribute money into a company pension plan and we will provide you with a subsidized pension and give you a tax credit on your income tax return.
But if you are poor and haven’t made monetary contributions to a pension plan and you have been kept from saving money because welfare based income support asset rules make you choose between eating and saving, any money you are able to make is neither supported nor sheltered. As I pointed out earlier, if Linda makes any money through speaking engagements, it is 100% confiscated from her income support programs. If she works, any money she makes after St. Patrick’s Day is reduced by 50 cents on the dollar while her rent goes up.
So perhaps the endless tinkering that we do could be better informed by a conversation of Linda’s rights as a senior citizen. It could centre on the denial of rights that comes about through 100% confiscation of benefits while the rest of our system goes through contortions to ensure that people who already have loads of money are provided incentives to save and then keep their gains tax free.
Perhaps we could also think about the living standard poverty that is ever present on Canada’s reserves.
There are different kinds of contributions. There are different types of service and there are different types of need. Perhaps that’s a better starting point for our conversations about guaranteed or basic incomes.
Js Feb 21/2016