means testing – Michal Rozworski

Confused about universality? So are NDP leadership candidates

There was some pretty confused stuff on universality and means-testing during last night’s NDP leadership debate. Here are some thoughts that might help clear things up.

First, Singh’s attack of Caron on means-testing early in the debate was a bit bizarre seeing as both of them have major new means-tested transfers among their policy planks. Caron did a good job in fighting back and hit back at Singh’s move to fold near-universal OAS into a more aggressively targeted benefit. Not a very enlightening exchange.

Not to be outdone, Angus’s attack on Singh at the end of the debate was even more confused. This time, Singh did a good job of defending himself and made a clear argument on the differences between means-tested cash transfers versus universal social programs.

On OAS in particular, Singh is right: not everyone receives it because claw-backs start at $75,000 in income and the benefit is gone for those making roughly $120,000. But Caron is right in that a vast majority of income earners ($120,000 in income lines up with the top 5% of overall tax filers) will get some benefit from the program so it is de facto universal. This makes OAS very different from things like GIS for seniors or WITB for low-wage workers, which phase out much quicker and are targeted at low income folks.

The problem of middle income seniors falling behind is an important one and tied up in so much else about the economy (the decline of unions and pensions; the housing bubble where some have won the lottery and others have not; and so on). The NDP does have to think about what combination of new social programs (pharmacare in particular because it disproportionately helps seniors), expanded public pensions and income transfers will do most to improve people’s lives, and also be a foundation to build on politically—in terms of policy staying power and building winning electoral coalitions.

Means-test the rich, or another argument for eliminating tuition

Here’s an oversimplified choice for how to fund post-secondary education. Imagine you have two options for dealing with how people pay for post-secondary education:

Universal free tuition, means-testing to see if you are rich enough to pay
Universal tuition fees, means-testing to see if you are poor enough to not pay

Either of these can be brought into being in many ways. At base, however, these are two roughly symmetrical ways of achieving the same thing. Right now in Canada, we have a version of (2): tuition and a complex system of need-based grants and scholarships, student loans and tax rebates largely available if you prove yourself poor enough to deserve them. The thought of (1) instead occurred to reading Dr. Dawg’s excellent reply to the pro-tuition argument. Dawg, however, ends by saying that “[post-secondary education] should not be means-tested, any more than medicare or our highway system should be.” But why not means-test those who can afford to pay for higher education in a society as unequal as ours and where the benefits from education are so unequally distributed?