15 November 2022
Mayor Kate Rogers
City of Fredericton
397 Queen St., Fredericton NB
Via email: firstname.lastname@example.org
Re: Universal Basic Income
Dear Mayor Rogers:
I am writing today on behalf of the Fredericton Chamber of Commerce’s board of directors to express concerns with the resolution passed by city council on 24 October 2022 which directs the City of Fredericton to write a letter to the Prime Minister, New Brunswick Members of Parliament and the Premier of New Brunswick that calls “…on these orders of government to work towards implementing a Guaranteed Livable Basic Income to eradicate poverty and homelessness, and ensure that everyone has sufficient income to meet their basic needs.”
In our opinion, while laudable goals, eradicating poverty and homelessness are incredibly complex issues and city council should have a better understanding of the implications of such a broad and far-reaching policy as UBI before advocating to other levels of government. Our concerns fall into three main categories:
- Costs and related effects on inflation
- Effects on the workforce
- Targeted programs/supports/tax credits that will be lost
Cost / Inflation
The federal government’s Parliamentary Budget Officer examined the cost of typical UBI proposals in 20201. The PBO estimates that the basic gross cost of the Guaranteed Basic Income (GBI) would range between $30.5 billion and $71.4 billion based on the three scenarios for the period from November 2020 to March 2021 (inclusive). The supplemental guaranteed income for disability would be $1.4 billion. The basic gross costs will grow each year to reach values between $84.2 billion and $197.2 billion per year in 2024-25. The cost of a guaranteed income for disability would be $3.8 billion in 2024-25. The cost for New Brunswick alone is estimated at $466M in Year 1, reaching $1.2B in Year 5.
Availability of workforce is already the number one issue that businesses and not-for-profit organizations are facing across the country, including here in New Brunswick. In fact, it is the worst workforce situation in memory – partially because of similar income replacement programs. The workforce still has not recovered from temporary programs during the pandemic such as CERB and the federal government is currently in the process of expanding Employment Insurance to make it more easily accessible and to provide benefits for a longer duration. This expansion will move EI further away from its original scope – an insurance program for a limited and defined purpose – and makes it closer to a general social program where employers pay the majority of the bill.
Coming out of the pandemic, it is becoming clearer that we’re in a new workforce landscape that we don’t fully understand and UBI would further complicate the situation in unknown ways. This is an evolving and complicated situation and more similar reports could be counterproductive – all revenue that governments of all levels receive ultimately comes from the private sector. Policies that limit private sector growth eventually limit the tax revenue that governments need to deliver social programs and services.
Targeted Programs Lost
Social programs and benefits are further threatened by basic income proposals as eliminating current targeted benefits is how they are funded (in part). From the PBO report referred to above, Table A-1 lists some of these programs and benefits that could be cut to achieve $30B in “savings” to partly pay for basic income:
Ivey School of Business economist and disabilities advocate Mike Moffat has written extensively about this particular aspect of basic income2:
“Most follow a “cheques-for-cuts” approach: Partly finance their BI system through theelimination of (supposedly) redundant programs, with the rest being financed by higher taxes or increased deficits. The problem with this approach: Those programs aren’t redundant at all, and their elimination would grievously harm the most disadvantaged in our society, including disabled Canadians and orphans.”
Given these extensive complexities, it is our position that governments and organizations should be seeking to better understand basic income programs before advocating for implementation. In fact, the Canadian Chamber of Commerce passed a policy resolution in 2020 that calls on the federal government to do just that – study basic income and its long-term implications. It should also be noted that if we get to this point of understanding, “eradicating poverty and homelessness” is not purely a financial issue. Basic income will not solve the related issues of mental health, addictions, generational trauma and others that often accompany people experiencing poverty and/or homelessness.
CEO, Fredericton Chamber of Commerce
cc: Hon. Blaine Higgs, Premier, Province of New Brunswick
cc: Jenica Atwin, MP, Fredericton
cc: Steven Hart, CAO, City of Fredericton