Update: Five-Year Cost Estimate of the Guaranteed Basic Income

On July 7, 2020, the Parliamentary Budget Officer (PBO) reported on costs arising from the implementation of a guaranteed income program for the last six months of 2020-21. The program parameters were based on Ontario’s basic income pilot project. [i] PBO presented three estimates based on scenarios that phase out the benefit by $0.50, $0.25 and $0.15 for each dollar of employment income. Additionally, participants receiving Employment Insurance or Canada Pension Plan payments would have their basic income reduced dollar for dollar.

At the request of a parliamentarian, PBO has extended this cost estimate over the next five fiscal years. The updated estimates include the new employment insurance temporary benefit enhancements. In addition, these estimates also consider the latest LFS data of August 2020 and the income level characteristics of the people laid off because of COVID-19. [ii]

As can be seen in Table 1, 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.

A lower phase-out rate will result in more eligible individuals and therefore higher overall costs. As shown in Table 1, for a phase-out rate of 50% (1^st scenario) more than 7.4 million people would benefit from the basic cost of GBI. The average benefit per person would be $4,099 in 2020-21. From 2021-22, the average benefit per recipient would be between $9,917 and $10,462.

For a phase-out rate of 15% (3^rd scenario), the number of beneficiaries will increase to almost 20 million people with an average per capita benefit of $3,757 in 2020-21 rising to $9,887 in 2024-25.

Gross cost of a guaranteed basic income
Table 1-1
Canada		2020-21		2021-22	2022-23	2023-24	2024-25
1st scenario	Basic cost of GBI ($ million)	30,544	78,486		80,871	82,420	84,169
	Number of recipients (000s)	7,452	7,914		8,071	8,054	8,045
	Average GBI ($)	4,099	9,917		10,020	10,234	10,462
	Supplemental disability cost ($ million)	1,448	3,505		3,615	3,743	3,813
	Total gross cost ($ million)	31,992	81,991		84,486	86,163	87,983
2nd scenario	Basic cost of GBI ($ million)	50,143	127,953		133,178	135,958	139,034
	Number of recipients (000s)	13,893	14,432		14,660	14,661	14,671
	Average GBI ($)	3,609	8,866		9,084	9,274	9,477
	Supplemental disability cost ($ million)	1,448	3,505		3,615	3,743	3,813
	Total gross cost ($ million)	51,591	131,458		136,793	139,701	142,847
3rd scenario	Basic cost of GBI ($ million)	71,435	180,812		188,369	192,573	197,238
	Number of recipients (000s)	19,012	19,603		19,886	19,911	19,950
	Average GBI ($)	3,757	9,224		9,472	9,672	9,887
	Supplemental disability cost ($ million)	1,448	3,505		3,615	3,743	3,813
	Total gross cost ($ million)	72,883	184,317		191,984	196,316	201,052

The provincial distributions of the GBI for different scenarios are presented in Appendix A. Overall, among provinces, Ontario obtains the highest share of the GBI benefit, representing a range between 41% and 44% of the total across all three phaseout rate options for the five fiscal years.

With respect to the average value per recipient, Ontario has the highest average GBI benefit per recipient within the 2^nd and 3^rd scenarios and the 2^nd highest value for the 1^st scenario. This variability of the average value by recipient across provinces is explained by the distribution of employment earnings among low-income Canadians and the distribution of persons that are eligible for the new EI benefits.

Appendix A – Provincial breakdown of the guaranteed basic income cost

Gross cost of a guaranteed basic income with a phase-out rate of 50%
Table A-1
1st scenario		2020-21	2021-22	2022-23	2023-24	2024-25
Canada	Basic cost of GBI ($ million)	30,544	78,486	80,871	82,420	84,169
	Number of recipients (000)	7,452	7,914	8,071	8,054	8,045
	Average GBI ($)	4,099	9,917	10,020	10,234	10,462
	Supplemental disability cost ($ million)	1,448	3,505	3,615	3,743	3,813
	Total gross cost ($ million)	31,992	81,991	84,486	86,163	87,983
BC	Basic cost of GBI ($ million)	3,681	9,721	9,869	10,037	10,216
	Number of recipients (000)	913	985	1,015	1,013	1,012
	Average GBI ($)	4,032	9,872	9,723	9,907	10,094
	Supplemental disability cost ($ million)	185	448	459	473	471
	Total gross cost ($ million)	3,866	10,168	10,329	10,511	10,687
AB	Basic cost of GBI ($ million)	3,309	8,583	8,849	9,138	9,462
	Number of recipients (000)	785	843	864	873	882
	Average GBI ($)	4,217	10,180	10,241	10,464	10,730
	Supplemental disability cost ($ million)	158	385	403	423	438
	Total gross cost ($ million)	3,468	8,968	9,252	9,561	9,900
SK	Basic cost of GBI ($ million)	813	2,080	2,161	2,220	2,288
	Number of recipients (000)	197	207	212	213	213
	Average GBI ($)	4,121	10,057	10,211	10,437	10,719
	Supplemental disability cost ($ million)	43	104	108	113	117
	Total gross cost ($ million)	856	2,183	2,269	2,333	2,404
MB	Basic cost of GBI ($ million)	1,036	2,623	2,687	2,742	2,806
	Number of recipients (000)	255	266	270	270	270
	Average GBI ($)	4,062	9,848	9,945	10,155	10,398
	Supplemental disability cost ($ million)	77	188	194	202	207
	Total gross cost ($ million)	1,114	2,810	2,881	2,944	3,013
ON	Basic cost of GBI ($ million)	13,267	34,338	35,644	36,414	37,250
	Number of recipients (000)	3,133	3,359	3,440	3,439	3,440
	Average GBI ($)	4,235	10,223	10,362	10,589	10,830
	Supplemental disability cost ($ million)	625	1,514	1,564	1,621	1,656
	Total gross cost ($ million)	13,892	35,852	37,208	38,035	38,907
QC	Basic cost of GBI ($ million)	6,819	17,017	17,490	17,686	17,943
	Number of recipients (000)	1,751	1,816	1,831	1,814	1,802
	Average GBI ($)	3,895	9,371	9,553	9,752	9,956
	Supplemental disability cost ($ million)	207	499	510	525	534
	Total gross cost ($ million)	7,026	17,516	18,000	18,211	18,477
NB	Basic cost of GBI ($ million)	466	1,190	1,203	1,205	1,209
	Number of recipients (000)	125	130	130	129	127
	Average GBI ($)	3,736	9,127	9,227	9,370	9,524
	Supplemental disability cost ($ million)	43	103	105	108	110
	Total gross cost ($ million)	508	1,293	1,309	1,313	1,319
NS	Basic cost of GBI ($ million)	722	1,832	1,870	1,883	1,898
	Number of recipients (000)	186	195	196	194	191
	Average GBI ($)	3,883	9,373	9,544	9,729	9,932
	Supplemental disability cost ($ million)	65	157	160	164	166
	Total gross cost ($ million)	787	1,989	2,030	2,047	2,064
PEI	Basic cost of GBI ($ million)	96	246	252	257	263
	Number of recipients (000)	29	31	31	31	31
	Average GBI ($)	3,270	7,990	8,055	8,244	8,451
	Supplemental disability cost ($ million)	12	29	30	31	32
	Total gross cost ($ million)	108	275	282	288	295
NFL	Basic cost of GBI ($ million)	334	857	845	839	835
	Number of recipients (000)	78	82	81	79	77
	Average GBI ($)	4,266	10,416	10,376	10,591	10,821
	Supplemental disability cost ($ million)	33	80	80	82	83
	Total gross cost ($ million)	368	937	925	921	917

Gross cost of a guaranteed basic income with a phase-out rate of 25%
Table A-2
2nd scenario		2020-21	2021-22	2022-23	2023-24	2024-25
Canada	Basic cost of GBI ($ million)	50,143	127,953	133,178	135,958	139,034
	Number of recipients (000)	13,893	14,432	14,660	14,661	14,671
	Average GBI ($)	3,609	8,866	9,084	9,274	9,477
	Supplemental disability cost ($ million)	1,448	3,505	3,615	3,743	3,813
	Total gross cost ($ million)	51,591	131,458	136,793	139,701	142,847
BC	Basic cost of GBI ($ million)	6,439	16,612	17,307	17,679	18,073
	Number of recipients (000)	1,814	1,893	1,929	1,933	1,937
	Average GBI ($)	3,549	8,777	8,973	9,144	9,328
	Supplemental disability cost ($ million)	185	448	459	473	471
	Total gross cost ($ million)	6,624	17,059	17,766	18,152	18,544
AB	Basic cost of GBI ($ million)	5,415	13,907	14,583	15,066	15,600
	Number of recipients (000)	1,516	1,584	1,619	1,636	1,655
	Average GBI ($)	3,571	8,781	9,006	9,207	9,425
	Supplemental disability cost ($ million)	158	385	403	423	438
	Total gross cost ($ million)	5,573	14,293	14,986	15,489	16,038
SK	Basic cost of GBI ($ million)	1,334	3,379	3,531	3,628	3,740
	Number of recipients (000)	378	388	396	397	399
	Average GBI ($)	3,530	8,698	8,922	9,143	9,379
	Supplemental disability cost ($ million)	43	104	108	113	117
	Total gross cost ($ million)	1,377	3,483	3,639	3,741	3,857
MB	Basic cost of GBI ($ million)	1,736	4,373	4,519	4,618	4,732
	Number of recipients (000)	494	508	515	516	518
	Average GBI ($)	3,513	8,609	8,771	8,949	9,143
	Supplemental disability cost ($ million)	77	188	194	202	207
	Total gross cost ($ million)	1,814	4,561	4,713	4,820	4,939
ON	Basic cost of GBI ($ million)	20,998	54,012	56,546	57,851	59,246
	Number of recipients (000)	5,631	5,898	6,010	6,025	6,038
	Average GBI ($)	3,729	9,157	9,409	9,602	9,811
	Supplemental disability cost ($ million)	625	1,514	1,564	1,621	1,656
	Total gross cost ($ million)	21,623	55,527	58,110	59,472	60,902
QC	Basic cost of GBI ($ million)	11,567	28,980	29,837	30,215	30,686
	Number of recipients (000)	3,287	3,367	3,396	3,369	3,350
	Average GBI ($)	3,519	8,606	8,786	8,968	9,161
	Supplemental disability cost ($ million)	207	499	510	525	534
	Total gross cost ($ million)	11,774	29,478	30,347	30,741	31,220
NB	Basic cost of GBI ($ million)	798	2,003	2,055	2,065	2,079
	Number of recipients (000)	252	257	258	253	250
	Average GBI ($)	3,163	7,792	7,965	8,148	8,322
	Supplemental disability cost ($ million)	43	103	105	108	110
	Total gross cost ($ million)	840	2,106	2,161	2,173	2,189
NS	Basic cost of GBI ($ million)	1,189	2,996	3,083	3,114	3,148
	Number of recipients (000)	329	339	340	336	333
	Average GBI ($)	3,618	8,849	9,074	9,261	9,464
	Supplemental disability cost ($ million)	65	157	160	164	166
	Total gross cost ($ million)	1,254	3,153	3,243	3,278	3,314
PEI	Basic cost of GBI ($ million)	177	444	461	471	482
	Number of recipients (000)	56	58	59	59	59
	Average GBI ($)	3,131	7,691	7,810	8,017	8,197
	Supplemental disability cost ($ million)	12	29	30	31	32
	Total gross cost ($ million)	188	472	490	502	514
NFL	Basic cost of GBI ($ million)	491	1,247	1,257	1,251	1,247
	Number of recipients (000)	135	140	139	136	132
	Average GBI ($)	3,638	8,918	9,054	9,232	9,441
	Supplemental disability cost ($ million)	33	80	80	82	83
	Total gross cost ($ million)	525	1,327	1,338	1,333	1,330

Gross cost of a guaranteed basic income with a phase-out rate of 15%
Table A-3
3rd scenario		2020-21	2021-22	2022-23	2023-24	2024-25
Canada	Basic cost of GBI ($ million)	71,435	180,812	188,369	192,573	197,238
	Number of recipients (000)	19,012	19,603	19,886	19,911	19,950
	Average GBI ($)	3,757	9,224	9,472	9,672	9,887
	Supplemental disability cost ($ million)	1,448	3,505	3,615	3,743	3,813
	Total gross cost ($ million)	72,883	184,317	191,984	196,316	201,052
BC	Basic cost of GBI ($ million)	9,360	23,833	24,881	25,457	26,080
	Number of recipients (000)	2,479	2,560	2,604	2,610	2,617
	Average GBI ($)	3,776	9,311	9,557	9,754	9,965
	Supplemental disability cost ($ million)	185	448	459	473	471
	Total gross cost ($ million)	9,545	24,280	25,341	25,931	26,551
AB	Basic cost of GBI ($ million)	7,996	20,374	21,385	22,108	22,909
	Number of recipients (000)	2,221	2,307	2,354	2,382	2,413
	Average GBI ($)	3,601	8,832	9,084	9,283	9,494
	Supplemental disability cost ($ million)	158	385	403	423	438
	Total gross cost ($ million)	8,155	20,759	21,788	22,531	23,347
SK	Basic cost of GBI ($ million)	1,952	4,913	5,128	5,270	5,434
	Number of recipients (000)	551	563	572	576	580
	Average GBI ($)	3,545	8,724	8,961	9,155	9,371
	Supplemental disability cost ($ million)	43	104	108	113	117
	Total gross cost ($ million)	1,995	5,017	5,236	5,383	5,551
MB	Basic cost of GBI ($ million)	2,505	6,276	6,496	6,648	6,823
	Number of recipients (000)	676	691	699	701	704
	Average GBI ($)	3,705	9,078	9,287	9,480	9,687
	Supplemental disability cost ($ million)	77	188	194	202	207
	Total gross cost ($ million)	2,582	6,463	6,690	6,850	7,030
ON	Basic cost of GBI ($ million)	29,267	74,695	78,150	80,066	82,125
	Number of recipients (000)	7,549	7,839	7,975	7,999	8,027
	Average GBI ($)	3,877	9,529	9,799	10,010	10,231
	Supplemental disability cost ($ million)	625	1,514	1,564	1,621	1,656
	Total gross cost ($ million)	29,893	76,209	79,714	81,687	83,781
QC	Basic cost of GBI ($ million)	16,573	41,253	42,604	43,218	43,962
	Number of recipients (000)	4,444	4,530	4,566	4,542	4,520
	Average GBI ($)	3,729	9,108	9,332	9,516	9,726
	Supplemental disability cost ($ million)	207	499	510	525	534
	Total gross cost ($ million)	16,780	41,752	43,115	43,743	44,496
NB	Basic cost of GBI ($ million)	1,184	2,953	3,031	3,052	3,081
	Number of recipients (000)	362	368	368	363	359
	Average GBI ($)	3,267	8,031	8,242	8,403	8,576
	Supplemental disability cost ($ million)	43	103	105	108	110
	Total gross cost ($ million)	1,227	3,056	3,137	3,161	3,191
NS	Basic cost of GBI ($ million)	1,665	4,170	4,293	4,343	4,397
	Number of recipients (000)	451	461	463	459	454
	Average GBI ($)	3,691	9,046	9,272	9,470	9,695
	Supplemental disability cost ($ million)	65	157	160	164	166
	Total gross cost ($ million)	1,730	4,327	4,453	4,507	4,563
PEI	Basic cost of GBI ($ million)	260	650	676	692	710
	Number of recipients (000)	78	80	81	81	82
	Average GBI ($)	3,327	8,140	8,339	8,508	8,703
	Supplemental disability cost ($ million)	12	29	30	31	32
	Total gross cost ($ million)	272	679	706	723	742
NFL	Basic cost of GBI ($ million)	672	1,695	1,724	1,719	1,716
	Number of recipients (000)	201	206	204	199	194
	Average GBI ($)	3,351	8,245	8,461	8,639	8,850
	Supplemental disability cost ($ million)	33	80	80	82	83
	Total gross cost ($ million)	705	1,774	1,805	1,801	1,799

[i] Office of the Parliamentary Budget Officer. (2018). Costing a Guaranteed Basic Income During the COVID Pandemic. Retrieved from https://www.pbo-dpb.gc.ca/web/default/files/Documents/Reports/RP-2021-014-M/RP-2021-014-M_en.pdf

[ii] Statistics Canada, 2020. The Daily: Labour Force Survey, August 2020. Retrieved from: https://www150.statcan.gc.ca/n1/daily-quotidien/200904/dq200904a-eng.htm

7 July 2020

Costing a Guaranteed Basic Income During the COVID Pandemic

This report responds to a request from Senator Yuen Pau Woo to estimate the post-COVID cost of aguaranteed basic income (GBI) program, using parameters set out in Ontario’s basic income pilotproject. PBO presents three estimates based on scenarios that phase-out the benefit by $0.50, $0.25 and $0.15 for each dollar of employment income for the last six months of 2020-21. Also, this reportconsiders the provincial breakdown of the GBI cost. The total estimated gross cost of the defined GBI would range between $47.5 billion and $98.1 billion based on the three scenarios for the six-monthperiod from October 2020 to March 2021. In addition, the report provides an estimate of the federaland provincial programs for low-income individuals and families, including many non-refundable andrefundable tax credits that could be replaced by the GBI program. PBO estimates the potential offsetsfrom repealing these measures would be just over $15 billion for the same period.