In his 1973 maiden speech to the House of Commons, Marc Lalonde, then newly appointed federal minister of health and welfare, designated as a “main national priority” reform of Canada’s tangled social welfare system. The first step toward that goal followed in the same year with publication of a government “orange paper” that proposed, as a key element of reform, the provision of “an acceptable basic annual income for all Canadians”—in effect,
a guaranteed annual income aimed especially at the “working poor.” Earlier this month, a meeting in Ottawa between Lalonde and his provincial counterparts— the eighth such meeting over the past three years—seemed to bring his cherished dream no nearer fruition. Attacked for being both inadequate and too costly, the proposed federal-provincial, shared-cost program was effectively vetoed by provincial ministers and consigned, at least temporarily, to legislative limbo.
From the start, controversy has accompanied proposals for a guaranteed annual income (Ottawa even avoids using that term since, for some, it evidently conjures visions of a nation of freeloaders living off those who choose to work). In fact, the combined effect of various welfare and social insurance programs already provides for a kind of guaranteed income. But Lalonde argues that the patchwork of programs is the outcome, not of a coherent plan, but rather of a half-century of ad hoc measures—old-age pensions in 1927, unemployment insurance in 1940, family allowances (1944), the Canada Pension Plan (1965) and, in 1966, the Canada Assistance Plan (known to most Canadians simply as “welfare”). The federal bill for the programs will total more than $10 billion this year. Yet, according to Ottawa, the system remains inequitable because it misses some 500,000 families of the working poor—those who earn between $4,000 and $8,500 but receive no government aid other than family allowances.
Lalonde’s dual aim has thus been to help the working poor and restore a work incentive under welfare. Rejecting any single sweeping measure, such as the negative income tax recommended in 1971 by Liberal Senator David Croll’s committee on poverty, Lalonde chose an incremental approach. In 1973, family allowance payments were roughly tripled from about seven dollars to $20 a month. Then, in 1975, an “income support and supplementation” plan, including payments to the working poor, was proposed to replace the Canada Assistance Plan. Under that proposal, a family of four earning around $4,000 annually would receive up to $270 a month in government assistance; as family income rose, payments would be reduced—but by an amount lesser than the increase to maintain an incentive to work. The snag lay in the price tag for the plan— between one and three billion dollars a year—which resulted in heavy resistance from an increasingly cost-conscious government. This year the plan was replaced by one that would provide payments of just $80 a month to families of the working poor and cost only around $350 million a year.
Even in its scaled-down version, the proposal ran into heavy opposition from some provinces at this month’s Ottawa meeting. Only Quebec and British Columbia offered firm support for the idea with the New Democratic Party provinces of Manitoba and Saskatchewan objecting that the plan was not generous enough. The four Atlantic provinces said flatly they could not afford the plan. But the major stumbling block was Ontario. James Taylor, Ontario’s new Minister of Social Services, sat mutely through most of the meeting, then blasted Lalonde’s proposal asjust another patch on the welfare quilt. Rather unhelpfully, he added that “we’re looking for something simple,” but declined to elaborate.
There are still several courses of action open to Ottawa, each with its attendant problems. The government could opt for tax credits for the working poor, paid entirely out of the federal treasury. But at a time when it is freezing family allowances and cutting back on unemployment insurance, that seems unlikely. Another possibility, suggested by Lalonde, is that Ottawa introduce income supplements without unanimous provincial consent and hope that the provinces join in after the fact, as they did with Medicare during the 1960s. The problem with that option is that, in all likelihood, the have-not Maritimes could not afford to pay their one third share even if they wanted to. Thus, if Ottawa were to go ahead, the plan might bypass one of the country’s neediest regions. IAN URQUHART
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