In this paper I presented at the Tenth Annual North American Basic Income Guarantee Congress in New York City, I compare the costs and consequences of prison spending with a guaranteed annual income.

Executive Summary

Critics of guaranteed annual income allege that the program costs too much. However, despite the claim that the era of big government is over and the call for austerity measures, government spending is increasing. As a way of understanding the outcomes and opportunity costs of the current government budgetary priorities, this paper explores two guaranteed income programs and their outcomes.

Prison is a guaranteed income program that provides all food, clothing, housing and educational programs for its recipients. The average provincial prisoner costs the Canadian taxpayer $84,225 a year. The average federal prisoner costs the Canadian taxpayer $147,467 a year.

Since 2006, the Conservative government has pursued a tough‐on‐crime agenda that is increasing both the number of prisoners and the length of time they spend in prison. They are pursuing this agenda despite the fact that both the crime rate and crime severity in Canada have been steadily falling. Major changes include elimination of the two‐for‐one credit for time served before sentencing, elimination of conditional sentences for certain crimes, rule changes to make it more difficult to achieve parole, and new mandatory minimum sentences for a range of crimes.

The government has not been very transparent about the costs of its crime agenda. It tabled documents in Parliament stating the total cost will be $2.75 billion. However, estimates from other organizations suggest that the government’s estimates are too low. For instance, the Parliamentary Budget Officer has calculated that the cost of the Truth in Sentencing Act will be $1.8 billion in capital costs for the federal government and $5.1 billion in annual operating costs. Provinces are already committed to spending $2.7 billion on new prisons, with a $300 million increase in annual operating costs. Together with the elimination of the Accelerated Parole Review, mandatory minimum sentences for drug crimes and the elimination of conditional sentences, the total cost estimates come to $8.9 billion over five years for capital costs and $5.8 billion annually in operations and maintenance costs by 2015‐16.

Increasing the number of people in prison and the length of time they spend there has important consequences for both individuals and Canadian society. These outcomes include increased recidivism, over‐representation of the poor, mentally ill and Aboriginal Canadians, spread of infectious diseases, a negative impact on children and families, lower earning potential, fueling of public fears and emotions of revenge and vindictiveness and a reduction in spending capacity for other priorities.

An alternative guaranteed income program is a guaranteed annual income for all Canadians that provides a modest but decent standard of living. In 2008, the poverty gap in Canada was $13.1 billion. If the $5.8 billion of federal and provincial revenue that will be spent on prison operation and maintenance annually by 2015‐16 were to be invested in a Negative Income Tax to low income Canadians, we could nearly halve poverty in Canada. If we wanted to fund a more generous guaranteed annual income that not only got Canadians to the LICO line but put them $2000 above it, this $5.8 billion would represent 30% of the $19.2 billion required.

Unlike prison spending, the social outcomes of investing in a guaranteed annual income are positive. They include greater well‐being and social cohesion because of better income equality, lower costs associated with poverty, and the possibility of a reduction in crime.

The choice is ours: we can continue to pay to lockup an increasing number of Canadians at a high cost to our budgets and to our social fabric, or we can invest in a guaranteed annual income for all Canadians that would pay dividends in social benefits. We cannot argue that guaranteed annual income is unaffordable and continue to pay ever increasing amounts on incarceration. We can choose dignity, improved well‐being and social solidarity, or we can choose punishment, fear and marginalization. The upfront cost is not that different.

Punishing Costs: Budget Priorities and Guaranteed Income

This month’s issue of Canadian Dimension also has an article based on this paper, 25 to Life or $25,000 for Life?