A Basic Income for Australia, a fair go for all

By Brian Donaghy

A Basic Income for Australia

A Fair Go for All

How it works

What it costs

How to pay for it

There are other books on universal basic income.

This is the short and readable one for Australia.

• Language: English
• Publisher: Adelaide Independent Reporter
• Release date: Jan 27, 2021
• ISBN: 9780648957102

Book preview

The times they are a-changing

THE ECONOMIC disruption caused by Covid-19, and the sudden and dramatic increase in social welfare that has resulted, has highlighted the need, and created a once-in-a-lifetime opportunity, to reform our dysfunctional welfare system.

In response to the crisis, the Australian Federal Government, to its credit, initially shelved ideology and acted quickly and decisively to stop the spread of the virus and to minimise the economic impact of the shut down.

The government’s previous determination to achieve a budget surplus was tossed out the window. The dole, formerly known as Newstart, was renamed Jobseeker and doubled overnight. The government pledged up to $130 billion for firms to keep their employees on their books during the lockdown.

It was a dramatic acknowledgement that the existing system was woefully inadequate.

But the assistance was still targeted because, in the words of the Minister for Energy and Emissions Reduction, Angus Taylor, We have to draw the line somewhere.

The virus has highlighted the weaknesses of targeted assistance like never before.

More than a million people – casuals, seasonal workers, legitimate migrants, (some of whom have been living and working in Australia for years) were excluded. Overseas students, who had paid tens of thousands of dollars up front in university fees, were left stranded with no means of support.¹ The federal government just told them to go home, but there were no flights.

Foodbank Australia chief executive Brianna Casey told The Guardian newspaper in early May 2020 that demand for emergency food has risen about 50 per cent since the virus emergency began. Foodbank distributes food to 2,400 charities.

There’s an unprecedented spike in demand for food relief, Casey said, with much of that new demand coming from temporary migrant workers and international students.

The Jobkeeper scheme undoubtedly saved many small businesses, but it was something of a bureaucratic nightmare.² Certain sectors, such as the major universities and local councils, were excluded. Applications for the $130 billion fund fell short by a whopping $60 billion, so the scheme supported only around 3.5 million employees, not the 6.5 million the government expected.

Only about half the firms that were expected to benefit from Jobkeeper were able to access the scheme, not just because the application form was badly designed, but allegedly because databases in different government departments did not communicate with each other.

Targeting is difficult, and inevitably involves arbitrary rules and omissions which treat some people unfairly.

Spain, meanwhile, has become the first country in the world to take a major step towards a Universal Basic Income. The scheme was introduced early in direct response to the virus, and began on June 1, 2020.

Even before the Covid-19 crisis, in Europe, north and south America, Canada, Africa and even in Australia, political parties have been flirting seriously with the idea of a Universal Basic Income. It’s a serious discussion across the internet. Nations and even individual cities are commissioning research and conducting trials of different versions of Basic Income.

There has been growing dissatisfaction for a long time with the shortcomings of traditional social welfare systems but the unemployed and disadvantaged have little or no political voice.

Suddenly millions of people in Australia who had never been in a Centrelink queue are directly affected.

That shifts the politics. The times they are a-changing.

A Basic Income for all

OVER THE YEARS, Australia’s taxation and welfare systems have become an absolute shambles.

They don’t have to be.

There is an alternative which has been sitting on the shelf in various reports around the world for years.

It is a solution which will be strongly opposed by most in the Coalition, the Australian Labor Party and in the Canberra bureaucracy.

But anything with the sort of international support that the Basic Income idea has generated deserves serious consideration from the rest of us.

Look at our social security system.

Benefits, subsidies and allowances are administered by the Department of Social Services, the Department of Agriculture and Water Resources, the Department of Jobs and Small Business and the Department of Education. The Federal Government’s compact summary of the various benefits and allowances applicable in the year up to September 2019 ran to forty-four A4 pages!

And that does not include various tax reliefs and allowances administered by the Australian Tax Office or the scores of subsidies provided by state governments.

Some of these benefits are overlapping, some are mutually exclusive, all with different amounts, cut-off points, means tests and eligibility rules. And every year the rules change, payment rates change, new allowances are invented or renamed and old ones are phased out or scrapped.

Then there are the subsidies. For rent, for telephone, for travel, for education, for medicines, for different age groups, different regions, different income groups … the list goes on and on.

This targeting of benefits amounts to micro-managing individuals on a mind-boggling scale.

Thousands of people are employed full time purely to make sure that people don’t get these rebates, benefits or allowances, or don’t get more of them than they might be entitled to.

Thousands are employed to explain the systems to the public, to train the staff who have to administer the frequently changing rules, process payments and keep the books for all the separate schemes.

It has got to the point where poverty must be one of Australia’s greatest job-creating industries. This is the economics of Looneyville.

And yet the system fails to support some of the most vulnerable, leaving charities such as the Smith Family, the Salvation Army, St Vincent de Paul, Anglicare, the Red Cross and many others to fill the gaps.

So let’s take the existing welfare and personal taxation systems and scrap the lot.

Instead, let’s pay every citizen and permanent resident an index-linked minimal living wage.

Everyone.

Automatically.

Whether they are unemployed or not, young or old, rich or poor.

This is not a new notion. It goes by a number of names but it is probably best known as a Universal Basic Income. In the US and Australia it is often referred to as a Basic Income Guarantee, or Basic Income, but those who use these terms are often not talking about a universal system.

People will tell you we can’t afford it. In Australia at least, that is not true.

People will tell you they see no reason why we should pay a Basic Income to people who are already wealthy. But the rich would pay more in extra tax under a transparent, streamlined system than the Basic Income they’d receive. (There are are a number of ways in which this would be achieved. One of the simplest options is set out in Chapter 7.)

The knee jerk reaction by many people is to object to paying people who do nothing.

But we already do. Retirees over a certain age, the unemployed and the disabled, for example. Moreover, the abolition of Centrelink rules and restrictions and penalties would undoubtedly see more people doing useful things.

Because a Universal Basic Income is so much simpler and transparent than the present mess, it is something of a dole bludger’s nightmare – the fewer and simpler the rules, the fewer loopholes there are.

It also eliminates, once and for all, the so-called poverty trap, where the combination of income tax and loss of benefits means there is little or no incentive to take paid work.

At present, those with jobs, especially those who have jobs they dislike, but persevere anyway, tend to assume that anyone who is not working is a bludger.

That doesn’t worry the small proportion of genuine bludgers, but it is demoralising for tens of thousands of people for whom there are simply no jobs.

If everyone receives a Basic Income, no one needs to be classified as a second-class citizen because they earn little or nothing.

People will tell you that if you pay people to do nothing, they will do nothing. Numerous Basic Income trials around the world have shown that that is not in fact the case. It is true that children tend to stay at school longer and more mothers opt to stay at home more with young children.

What’s so wrong with that?

The creation of more jobs is potentially one of the greatest benefits of a Basic Income system.

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