Unconditional Cash Transfers Better Than Ineffective Welfare Programs

Audio, Equalization, Frontier Centre

Politicians are fond of championing the middle class, but a recent study by Statistics Canada shows that middle income Canadians are doing relatively well compared with those who fall below the poverty line and younger Canadians are falling behind older cohorts.

Traditional welfare programs have done little to help those who need it most. One option would be replacing transfer payments to provinces with cash transfers to individuals.

Those transfers would go directly to every Canadian. Since it would be taxable, those above the income tax exemption level would see clawbacks that would ensure that low income Canadians benefit the most.

Economists on both the left and the right now see cash transfers as an improvement over programs that lock many Canadians into a cycle of dependence.

As far back at the 1970s, Manitoba showed some positive results with a guaranteed income pilot program in Dauphin, but there wasn’t much follow-up. Unconditional transfers also have less administrative cost than traditional assistance.

Experience has shown that families are generally better at budgeting their money than governments.

Additionally, recent graduates who rarely see any of the federal government’s largess would get a little bit of help during a time of high youth unemployment and increasing costs for first time home buyers.

We need better outcomes in the fight against poverty, and transferring money directly to individuals would be a good start.

I’m Roger Currie. Join us again next week for more thoughts on the Frontier.

For more on income policy, visit our website www.fcpp.org.