A universal basic income: Basically, its better for everyone

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A universal basic income could combat the inequality driven by governments when it comes to welfare support, writes Dr John Tomlinson.

SOME AUSTRALIANS ARE old enough to remember a time when a fair day’s work meant receiving a fair day’s pay, when unions were strong enough to represent their members and few were left to languish without access to some form of social support.

Nowadays, we have decreasing numbers of people with secure full-time employment, casualised work is becoming the order of the day, insecure and part-time work has become the norm.

The gig economy is upon us and robots look increasingly likely to destroy many jobs. The system of social security which had existed in last half of the 20th Century has been eroded by governments enamoured with neoliberal economics.

There is a nostalgia for a more stable and secure life. However, the past was never a golden age. Fortunately, there is an exciting way forward which can guarantee a livable income for all permanent residents and ensures there are incentives to produce and earn. This is through the introduction of a universal basic income (UBI).

The idea of generalised income guarantees paid to the entire populous is a very old idea. Professor Guy Standing in his book Basic Income, And How We Can Make It Happen traces its beginnings as far back as ancient Greece 400 years before Christ. In 1920, a group of Quakers led by Dennis Milner attempted unsuccessfully to convince the British Labour Party to adopt a "State Bonus" scheme which was a form of a universal income guarantee.

In 1975, the Ronald Henderson 'Poverty in Australia' inquiry recommended a two-tiered form of guaranteed minimum income in Australia which the then Minister for Social Security, Bill Hayden, supported. Unfortunately, the Governor-General, Sir John Kerr, dismissed the Whitlam Government before they could implement such a system.

Why we need a UBI

For the last 43 years, Australia has seen governments of Labor and conservative persuasions increasingly committed to a neoliberal agenda. Our social security system has been transformed from one which, though targeted and means-tested since the mid-1940s, had managed to ensure few were left without some form of income support.

Social security is now becoming like the Poor Law system of 19th Century England. Politicians continue to claim that people are paid according to need, when in fact they are paid according to their perceived worthiness. Universality is fast disappearing. Increasing numbers of people are having their income support payments stopped for periods of up to eight weeks.

Asylum seekers, recently arrived migrants, Indigenous Australians living in regional regions, inarticulate applicants, people with several forms of disabilities (particularly those with mental health issues) and the bureaucratically least-sophisticated are the most likely to find their income support payments suspended or cancelled. People are paid not according to who is in need but rather who is in favour.

A universal income would be paid to every permanent resident without any requirement other than they establish that they live permanently in Australia and are legally entitled to do so. It would be paid on an individual basis irrespective of whether they live alone or with others. It would take no account of wealth. People would not be required to demonstrate work willingness or the lack of the ability to work. A basic income would replace all other forms of government provided income support but not affect any other aspect of the welfare state.

What would a UBI achieve

A universal basic income would dramatically clarify the central income support system for all Australians, it would improve equity by ensuring that everyone has access to a livable income. It would end stigma and downward envy because all would have an equal entitlement. Discretion and moral judgement would disappear from income support. It would also remove racial bias from the system. Unlike the present social security system, there would always be a financial incentive to undertake available work and encourage productive capacity.

Governments would no longer be able to impose obligations upon citizens. Work for the Dole would become a distant nightmare. Young people would not be forced to work for a pittance for an employer on the grounds that they are trainees, not workers. Employers would have to pay award wages and even above award wages to attract the most sort after workers. Dangerous and undesirable jobs would either be phased out or at least pay a decent wage.

Once a basic income was in place, there would be less need for people without income to engage in economic crime because they would have a regular income on which they could rely. People coming out of gaol would be assured that they too had access to a regular livable income to sustain them until they found work. There would be less need to build gaols and the court system would no longer be clogged with petty criminals forced into crime to survive.

Historian Rutger Bregman explains the positive outcomes of a UBI on ABC Q&A

"But they would leave work in droves"

Opponents of basic income claim that, if people were provided with a regular income paid at above the poverty line, it would encourage shirking. It's true that many hold such views but all the evidence from trials around the world in places such as Canada, Namibia, India, Kenya and the Netherlands do not support such ill-founded fears.

Hand in hand with this common objection is the question “why pay millionaires when they don’t need it?” and is usually followed by the assertion that because “there are limited funds to pay for income support, all available funds should be expended on the poor”.

The answer to the question is that a universal basic income is far cheaper to implement than targeted categorical systems. It will also greatly improve tax compliance because welfare tax officials won’t be chasing small overpayments and they can be redirected to go after tax evasion. I believe that paying millionaires would make tax avoidance harder for them.

In addition – because there would need to be an income tax imposed on all income additional to the basic income – millionaires would not be net beneficiaries in straight financial terms. Because workers up the average wage would get the basic income and pay tax, most would be marginal net beneficiaries.

There is no set amount available to pay for income support. In every budget, governments prioritise some welfare groups over others. Universal services attract far greater public support and are likely to see such systems consolidate and improve over time. Medicare and the Pharmaceutical Benefits Schemes are prime examples.

All Alaskan residents receive a partial basic income and, in my research, I've found that it's become the most egalitarian state in the union. A basic income paid to all Australians would have a similar effect. People living in more equal societies have better happiness and health outcomes. So, were a universal income come to be paid here, both rich and poor would see their health and well-being improve. Everyone would be a winner.

Dr John Tomlinson is a retired social scientist whose PhD looked at the political obstacles to introducing a guaranteed minimum income in Australia.

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