EI and Guaranteed Annual Income

I’m back in the office after some time off for health reasons and a family vacation, so I’m catching up on several months worth of reading. Today, I came across the September issue of Policy Options, which focused on Employment Insurance. While the articles clearly present the flaws of EI – in addition to a few flaws that only economists worry about – I found the proposed solutions to be quite limited.

However, I was also surprised to discover that Tom Courchene and John Allan advocate for a revised EI in the context of a guaranteed annual income. (I can’t link to the article, but you can click through to it from the main page).They argue that EI should be restructured as an insurance program, limiting benefits to a weeks-worked basis that applies evenly across the country. But to achieve social policy goals of income security and redistribution, they propose a guaranteed annual income in a Negative Income Tax version.

They recommend “making the basic personal and spousal amounts (and perhaps others) under the income tax refundable and payable monthly to adults, with the associated tax-back occurring in the context of filing one’s tax return.” One source of funding would be the anticipated savings in the Canada Social Transfer if provinces need to pay less in welfare because of the GAI.

Courchene and Allan explicitly refer to the recommendation of the Macdonald Commission in 1985, which also proposed a restructured EI and a Universal Income Support Program. That proposal was, of course, universally unpopular among social justice advocates because of its subsistence level income. It is not clear what level Courchene and Allan think is appropriate for a GAI, but since they mention only the basic personal amount and spousal amount, it does not seem to be a very high figure.

Interestingly, the article also refers to a report that I didn’t know about before – the 1986 Newfoundland Royal Commission on Employment and Unemployment – which also recommends a GAI. Like the Macdonald Commission, this report recommended a three-fold approach comprising income support, or GAI; income supplementation, a program like the Working Income Tax Benefit; and income maintenance, or unemployment insurance.

So 25 years later, the debate seems to be in the same place.