Why the ALP should introduce a basic income

At the July 2018 Basic Income Earth Network Congress in Tampere, Finland, Rutger Bregman author of Utopia for Realists said that when he asked well off people about universal basic income they asked him what the rate of payment would be. He said that when he asked less affluent people about universal basic income they asked what conditions would apply to the receipt of the payment. I am pretty sure he’d find a similar phenomenon in Australia. You only have to look at the increasingly punitive conditions being imposed on recipients of Centrelink payments to understand why.

Unemployment Benefit (now called New Start Allowance) has always required recipients to establish they were fit, able bodied and ready for work. Since the rise of neo-liberalism, in the late 1970s, there has been an expansion of the additional obligations placed upon those forced to rely upon such payments. Keating’s 1994 reciprocal obligations at least came with the promise that the government would guarantee to provide a job to those without work for 18 months. This was just the prelude to Howard’s increasingly onerous mutual obligation and work for the dole regimes.

Aboriginal people, who are living in rural and remote regions, are subjected to the most arduous requirements and are the most frequently breached of all categories of people subjected to work for the dole programs. This is symptomatic of all forms of targeted/categorical/means-tested welfare payments. The least bureaucratically sophisticated, the most remote, the least educated, and the poorest citizens are the ones most likely to miss out on some or all of their income support assistance.

Politicians of all persuasions are fond of suggesting that social security payments are paid to those in most need. During my 50-year involvement in the welfare industry, in Australia, I have never found this to be the case. Instead of assistance going to those experiencing the greatest financial difficulties, it is directed towards those with the most political clout such as age pensioners and others who are the most socially valued. Such evaluations are only tenuously tied to need.

A major problem with selectivity/targeting/means-testing and conditionality occurs at a societal level. Such programs undermine social solidarity, evoke downward envy, devalue citizenship and undermine generosity of spirit. The entire neo-liberal philosophical emphasis is devoted to enhancing a dog eat dog competitive spirit by not relying on others (particularly the state). Such non-reliance on others which neo-liberals mistakenly term “self-help” is in reality a fig leaf for the neglect of less fortunate citizens. At its most extreme it is a call to glorify the survival of the fittest economic players. The end result is a mean-minded society without a soul.

It’s Time

Neo-liberal economics has brought us the global economic recession, precarious employment, declining unionisation, stagnating wages, skyrocketing profits and all the other joys of their dog eat dog world. Now is the right time for the ALP to reject the neo-liberal economic model and return to orthodox social solidarity thinking.

By committing itself to a universal basic income, the ALP would go some considerable distance to demonstrating it was really committed to the welfare of all Australian permanent residents. It would be the 21stcentury equivalent of Ben Chifley’s “light on the hill”.

Ideally a universal basic income would be paid at an above the poverty line rate to every individual permanent resident whether they lived alone or with others. It would be provided to all irrespective of whether they worked or not and without paying any regard to wealth or income. It would not be able to be garnisheed by governments, companies or other individuals. It would end enforced dependency on others. Such a payment would allow governments to know the minimum income that every citizen had at their disposal and would provide a basis on which governments could develop their education, health, disability, housing and other community services.

The basic income would not be taxed. But all other income, from whatever source would be taxed from the first to the last dollar received. The rate of income tax required to pay for such an income support policy would depend on what other revenue measures, such as consumption taxes, pollution taxes and wealth taxes were imposed. Because everyone would receive the basic income people earning up to average weekly wages would find they were paying about the same net rate of tax as at present. Those earning more than average weekly wages would pay more than at present. It is worth remembering that two thirds of Australians earn less than the average weekly wage.

Many workers are facing the prospect of being replaced by robots, others are experiencing increasingly casualised and precarious employment and all who have to rely on social security will be the big winners once a basic income was in place. As Philippe Van Parijs and Yannick Vanderborght write in their 2017 book Basic Income: A radical Proposal for a Free Society and a Sane Economy a basic income’s “point is not just to soothe misery but to liberate us all.” (p. 12)

The big end of town would be required to pay the appropriate amount of tax, the black economy would need to be decreased, multinational companies and the resource sector would need to pay their fair share of tax. Negative gearing would need to be abolished and capital gains taxes restored to original levels. Family trusts would become a thing of the past.

A universal basic income, unlike the existing targeted, means-tested welfare system with its combine benefit withdrawal and income tax deductions on earned income would not create poverty traps and adverse incentives. Any additional income earned would be taxed and so there would always be an incentive to earn. Under the existing welfare system people can lose between 50 and 150% of additional income once their income free limit has been reached.

A basic income is universal citizenship right not a handout. It increases social solidarity amongst all permanent residents because it treats all equally. It provides the basis for governments to improve equity through its other social programs. It increases personal satisfaction by allowing people to pursue their vocation, education or artistic endeavour whilst encouraging them to engage in whatever employment is available. At the same time, because it provides a guaranteed livable income it prevents people being conscripted to work in unsafe, exploitative or undesirable jobs.