The choice in Australia is stark. Citizens can let governments continue down the existing economic fundamentalist path towards even more minimum income support, increasingly targeted, with greater selectivity and increasingly compulsory ‘mutual obligation’ or they can work to convince government that it should adopt a more liberating, universal, unconditional income support system.
Social theorists suggest we have passed over to a post modern state. Science is reaching into the recesses of the universe and the darkest depths of the oceans. Military experts consistently vacate the moral sphere in favour of smart bombs. Therefore one might expect human beings, at least in what we quaintly call the developed world, to have an advanced understanding of the basis on which we supply income support to the least affluent in our community. After all we have the capacity to measure the negative effects of poverty and maldistribution. We are surrounded by economic and social modellers who claim predictive capacities for their constructions at which the architects of the modern welfare state, like William Beveridge, could only marvel. Yet in Australia we still maintain an income support system remarkably similar to that which prevailed in Britain at the time of the 1834 Poor Law legislation.
I propose we abolish the entire patchwork of government provided income support programs and replace them with a universal Basic Income paid to each individual who is a permanent resident. Such an income guarantee would be paid irrespective of wealth, marital status, preparedness to work, child minding responsibilities or the lack of them, education, moral virtuousness or any other social feature. In order for the payment to act as an alternative income support system the level of payment would need, at a minimum, to be set at the rate of the single age pension. This form of basic income is affordable and could be implemented within one year of the government agreeing to legislate for its introduction. But first let’s consider the history of income support and the reasons to change from the current system of income support.
In feudal England a number of support systems existed for members of the community who fell on hard times – their extended family in the first instance, others in the village with a surplus, the lord of the manor or the church. Strangers might not be helped and could be banished from the village and left to die at the crossroads. Each area had its own helping characteristics. However, before one was assisted others in the village had to have sufficient resources to help, there was an expectation of ‘mutual obligation’ and one had to be in good standing with other community members. In times of widespread crop failures these local helping systems broke down.
Not much changed in relation to the way poor people were helped until towards the end of the 18th Century. At Speenhamland, Berkshire in 1795 a number of landlords were unable to pay sufficient wages to ensure their farm labourers had an adequate income to sustain themselves and their families. The system provided a fixed scale of relief in line with the size of the labourer’s family and the price of wheat. In return labourers were required to continue to work. The scheme involved topping up the wages paid by the individual farm owners.
The scheme was criticised by workers organisations because they saw that the minimum assistance had the capacity to become the going wage and that it was a subsidy to employers. Many trade unions to this day have opposed income guarantee schemes on similar bases. Others criticised it as a form of ‘work for the dole which they saw as undermining the dignity of paid labour.
The early 1800s saw the continuation of in-door work houses (principally for widows, orphans and invalids) and for the able bodied out-door charity relief work to assist those unable to gain paid employment. These schemes relied upon two principles: the first was determining who was worthy to receive assistance, and the second principle was less eligibility, that is any assistance provided had to be of a lesser amount than could be obtained through paid work.
Many of the moral attitudes which led to the creation of work houses (which later came to be known as poor houses) and the outdoor relief schemes persist to the present day. The ideologies implicit in the system of 18th and 19th century welfare relief continue though the methods of delivery have changed. For instance, following the reforms in Bismarck’s Germany, relief in kind was increasingly replaced by cash with some attempt to codify what eligibility /worthiness meant in practice.
In 1908 legislation was passed to pay age and invalid pensions to those who met the required eligibility criteria. Until 1973 applicants for social services could be refused payments because “they were deemed not to be of good moral character”. In the 21st. century eligibility requirements for social security no longer have such explicit moral requirements but the way in which need / eligibility is construed in the legislation implies approval for some social actions and disapproval of others. Eligibility still equates with worthiness.
When, in the 1930s, confronted by 30% of its male labour force unable to find paid work it was to an outdoor work relief system that Australia turned. The ‘Susso’ scheme involved single and sometimes married men being required to move from town to town looking for work and in its absence engaging in make-work jobs for local councils in return for their sustenance. This ‘work for the dole’ idea was reintroduced for young unemployed people by the Howard Government in 1997 and is in the process of being extended to older unemployed people, sole parents and Disability support Pensioners.
Governments have since 1908 been concerned to ensure that income support payments are not a more attractive alternative than paid work and have legislated extensive restrictions on who can and who can’t get paid. The unemployed, to be paid a benefit, have to be willing, ready and able to take any paid work. They can be compelled to move from their home town, undertake training however inappropriate, and so forth. Less eligibility lives. The existing system is widely perceived as a hand out when what is needed is a hand up.
While the Australian welfare system has evolved from the Poor Laws to poor laws there has been another debate proceeding apace. That debate draws different conclusions from the Speenhamland experience. It finds in Speenhamland a kernel of trust in others, a way to get the productive needs of society met through utilising the available labour and the provision of a base below which no one would fall.
In 1848 Karl Marx and Friedrich Engels wrote The Communist Manifesto which heralded a system where the basis of production and distribution would be “From each according to ability and to each according to need”. Though such a system has not been implemented in any country the promise of the Manifesto has presented a challenge to all other systems of income distribution since that time. Bismarck’s reforms were measured against the Manifesto. The early Australian welfare state was described by visiting European social scientists as ‘Socialism without ideology’.
Though some aficionados suggest earlier writers, I think the earliest fully elaborated comprehensive income guarantee plan was put forward by Dennis Milner in a book called Higher Production by a Bonus on National Output: A proposal for a minimum income for all varying with national productivity. After a brief flurry of activity by him and his fellow Quakers the idea submerged until British Liberal economist Lady Rhys-Williams in 1943again raised it. Her book was called Something to look forward to. Lady Rhys-Williams’ aim was “To provide a floor below which no one could fall without imposing a ceiling beyond which no one could rise.” The economic fundamentalist writer Milton Friedman claims that year also as the time during which he developed his ideas on his form of income guarantee (the Negative Income Tax) but it took him a further 18 years before he published his ideas.
In 1975 Professor Ronald Henderson in the First Main Report of the Poverty Inquiry, borrowing heavily on Lady Rhys -Williams’ ideas, advocated a Guaranteed Minimum Income for Australia.
Since that time many different forms of income guarantees have been promoted around the world. The major point of difference is the degree to which authors wish their income guarantee to ape the welfare income support system with its various categories of payment and means test or instead argue that income support should be in the form of a truly universal payment to all as a right of citizenship.
The system of basic income which I advocate would be paid to each individual over the age of 16. A different rate would need to be struck for younger children. The only eligibility requirement being that applicants establish their status as a permanent resident.
This system would replace all other income support systems, be paid fortnightly and at least at the rate of the single age pension. It would be paid by the Tax Department. All tax free areas would be abolished. Tax would be paid on the first through to the last dollar earned. People, unlike most social security and family allowance recipients now, would always be financially better off for every extra dollar earned. If Australia really wants a deregulated labour market then it should introduce such a system. At present it has a highly deregulated mode of production on one side of the equation. On the other side Australia maintains one of the most confusing and contradictory yet highly regulated (targeted) social safety nets in the world.
A basic income would be simple, comprehensive and understandable. It would remove financial disincentives to seek employment. Above all it would be liberating of labour and intellect. It is now time to remove the constraining withered hand of welfare. It should be replaced by a determination to reach back to those of our fellow citizens lagging behind us in order to provide them with a hand up.
Copyright © 2021 John Tomlinson