Does Australia need a universal basic income?

Dr Tom Skladzien (former ACTU & AMWU Economist) and Natalie O'Brien (Economic Fairness Director at GetUp!) debate whether Australia needs a universal basic income.

 

Dr Tom Skladzien

No - we don't

As Prime Minister Turnbull was once fond of saying, we live in exciting times. I suspect when most Australians contemplate the exciting times we live in, their thoughts are drawn to the Chinese proverb warning about the ill fortune of living in exciting times more than the optimism of a multimillionaire politician who sees himself as the vanguard of a brave new techno-centric world.

This scepticism about exciting times is easily understandable for anyone not living in a harbour side mansion. Record inequality, wage stagnation, an epidemic of precarious work, climate change, collapsing housing affordability, an economic deck that is clearly stacked against the great mass of ordinary people; these realities don’t excite ordinary people to anything but dismay and anger.
But as if today’s challenges weren’t enough, we’re constantly reminded of the challenges that tomorrow’s technology will bring. To name just a few; big data, artificial intelligence, 3D printing, robotics, quantum computing, nano-technology and the internet of things; these and other technologies all combine to promise the unthinkable and threaten the unimaginable – utopia and dystopia in one, depending on where you sit.

In this context, it’s no wonder people who ponder the big challenges are drawn to a Universal Basic Income (UBI); an idea that against the backdrop of an ever complex and incomprehensible world provides comfort in its universality and its simplicity. But to be a serious policy proposal a UBI should be clear about the problem it seeks to solve and how it would solve it. Too often, this isn’t the case, with contradictions and inconsistencies barely disguised by back of the envelope calculations that invariably spit out a promise of utopia for all. 

A UBI can only be a serious proposal in a world where technology has made the vast majority of labour obsolete. In any other context, it is an impossible solution for a problem that doesn’t exist. 

This world where a UBI makes sense is a world where the labour share of income becomes relatively negligible and insufficient to support the mass of people who now work, while the vast majority of income is earned by ever advanced capital. It is a world where the government’s tax base is much more precarious than it is today, due to the relative mobility of capital and the practical elimination of the most reliable tax base, labour income. It is a world where new technology doesn’t just usher in a rapid transition to new jobs and occupations; it permanently eliminates new jobs and occupations. It is a world where the driver of prosperity is also the only real taxable factor of production; mobile capital. In this world, any notion that taxes can support a living income for the entire population as well as meet all the other legitimate roles of government can only be described as fantasy.

In this world people would still need to live on some form of income, but only one type of income remains – the technology intensive capital income that has replaced labour. In this world, the way that ordinary people survive is through a share of ownership in the almost unique factor of production, not through its taxation. This means that a UBI, in the economic context that calls for it, is a minimum share of ownership in the economy’s capital stock and the income stream that ownership brings.

Perhaps this ownership would be accumulated by government as a national wealth fund on behalf of citizens, perhaps through some other mechanism, but it is not the UBI we hear discussed so often today. That UBI too often assumes a world with no labour income to justify itself, while also assuming enough labour income to pay for itself.

If we are honest, a world where a UBI is both needed and is possible is a very different world to anything we have ever known. Maybe it is our future, but today it is the economic equivalent of science fiction; fun to contemplate, potentially useful as a thought experiment, but not an agenda to address the hard problems we are facing today.

The world where a UBI is a solution doesn’t yet exist, and based on hundreds of years of experience, it is unlikely to. One could list the numerous reasons why people will always value the work of other people, including the noneconomic, social and psychological value of work. Perhaps this impending technological revolution will see work like teaching, care provision and the various forms of artistry paid something resembling their real value? But ultimately this is an unknowable future. 

Economic science fiction has merit. We should cast our thoughts forward, even to strange potential futures. But the thing that should really occupy those of us who want to see a better world for workers and ordinary people today is more difficult, tedious and much less glamourous.

That is doing the hard work of developing and implementing policies to reverse growing inequality, to ensure economic transitions don’t leave people behind, to ensure quality and affordable education and healthcare and an adequate welfare system, to address climate change and environmental degradation, to put in place the drivers of broad based inclusive economic growth, to tackle and beat precarious work – and the list goes on. These are the challenges that face us today and will face us next month, next year and in five years’ time. 

Like many others, I will occasionally ponder a UBI. But also like many others, when I do, it will be as a distraction from the main game, doing the unglamorous, hard and tedious work of trying to make the world a better place.

 

Natalie O'Brien

Yes - we do

CHRIS BOWEN VERSUS ELON MUSK: WHO WILL YOU CHOOSE?

Australia recently claimed a dubious title – world record-holder for the longest stretch of uninterrupted economic growth. We can hang it on our wall of bittersweet achievements alongside our silver medal for the world’s highest median wealth per capita and bronze for highest GDP per capita. These “accolades” do little more than shine a garish light on how our economy is failing everyday people.

Almost three million Australians – 1 in every 8 of us – are forced to live below the poverty line, including over 750,000 children. Meanwhile, wage growth languishes at a fifty year low and the chasm between those on the highest and lowest incomes continues to grow. Australia’s economy has become defective, unable to distribute wealth and opportunity to those who need it the most. Which prompts the question: how can we use the levers at our disposal – our tax and transfer system, social safety net, industrial relations law – to rebalance the equation and make the economy work for everyone?

Universal Basic Income (UBI): an automatic living wage for every single citizen funded through the tax system, no strings attached. Or in other words: bureaucracy-free Centrelink for all – including millionaires. If we get the settings just right, for every high-income person paying more in tax, there’ll be a lower income person made better off, with most people in the middle just about breaking even. The perfect recipe for a more equal Australia. 

One of the tantalising facts of a UBI is its simplicity. Chris Bowen argued last month that the key to an affordable social safety net is keeping it “highly targeted” through “widespread meanstesting”. But keeping things “targeted” comes at too high a cost. Australia’s social security system is a maze of unnavigable bureaucracy, delays and error (did somebody say robo debt?). It frequently denies people the support they need: payment cut-offs create poverty traps, people living with mental illness are unable to keep up with the complex paperwork demands and those living in remote and rural areas struggle to meet face-to-face requirements. All of these barriers and more conspire to push people, often those most in need of support, into poverty.

Keeping things “targeted” also keeps things vulnerable. Over the past two decades, a string of cynical governments have hacked away at the system in the name of “refinement”. They’ve “tightened” eligibility requirements, “streamlined” payments and seen to ever-extending wait times. Meanwhile, payment rates have been pushed lower and lower – Newstart is now at an abysmal 32% below the poverty line. In fact, the recent meagre Clean Energy Supplement was the first real increase Australians have seen to unemployment benefits in 23 years (and it may still face the chopping block). That’s because the more convoluted the system is, the more opaque it remains to those on the outside and the more a government can get away with. Especially when the very people who rely most on this system are also those least able to advocate for it, making them ideal targets for “budget repair”. A UBI would go a long way towards safeguarding our social safety net. With the same unconditional payment flowing to the entire voting population, justifying cuts would become an impossible political feat.

Chris Bowen’s second main argument against a UBI is that it would spell the end of Labor’s commitment to “ensuring dignity through work for Australians”. But UBI does precisely the opposite – liberating people from the indignity of total dependence on their employer for survival. Where workers have the basic assurances of food, shelter and security, their hand becomes much stronger in ensuring their rights in the workplace. Moreover, a UBI would go some way to restoring dignity to often-unpaid cultural labour, homework, childcare and aged care, and so many underpaid industries that service the community – all work disproportionately borne by women.

It’s not clear exactly what automation will mean for the workforce, but large-scale, disruptive technological change is on the horizon and millions of Australians will be affected. A UBI would give Australia the flexibility to rebuild and retrain as needed, whilst ensuring that no one is pushed into poverty. It’s certainly ambitious (as all good policy agendas are), but it is by no means the utopian fantasy it’s written off as. There are already plenty of universal, non-means tested payments that function seamlessly – including the age pension in many countries around the world. Furthermore, fully-fledged UBI trials are already underway in the Netherlands, Finland and Canada’s most populous province, Ontario. And all this with the enthusiastic backing of tech billionaires Elon Musk and Mark Zuckerberg.

Australians are fed up with petty attacks on our social safety net, with a society growing ever more unequal and with politicians who refuse to act. They want policy ambition, they want to be inspired, they want a future to believe in. So if leaders on the left don’t step up to the plate and champion a vision where no Australian is forced to live below the poverty line, voters will look to someone who will.


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  • commented 2017-08-16 17:48:25 +1000
    I can understand why an economist, and particularly one employed in the union movement would suffer from ideological discomfort considering a scheme that seems to forecast the end of wage employment. Never the less, most of what Dr Skladzien offers as why the world is not ready for UBI seem based on the world of the last century; It is already the case, as pointed out by Ms O’Brien that average people are being steadily disenfranchised from society, how long does Dr S think it might be before people are disenfranchised from voting, from owning things, from safety nets? Dr S argues that we have to wait for work to be unneeded before we can transition to UBI scenarios but by what mechanism would that actually happen in a world where the 1% literally have everything and by definition no use for the rest of humanity. Dr Dr S suppose, as I believe Adam Smith did that these 1%‘ers would just give everyone this social franchise, after spending 200 years taking it off us? No Dr S, it is precisely because these things will be happening in the near future that we must act now to secure ownership of the means of production, secure the collective distribution of the wealth generated by the society we have all been a party to building, breaking the paradigm of individual ownership that locks us in to dystopian social outcomes. Advocates do not propose wholesale upheaval of the system, far from it. The idea would be to transition from laissez faire capitalism toward capitalistic socialism as the need to do paid work diminishes and the capacity for people to engage in their communities , effectively as equal partners, or shareholders if you prefer in the common weal. If not history suggests it is far more likely that the overwhelming majority of people will become surplus to need and I think we all know what businessmen do when they identify costs arising from surplus to need aspects of their business models. I wholeheartedly support Ms O’s assertions that everyday Australians are looking for someone to come forward with a vision of a fairer society where the fruits of our collective labours are shared more equitably and she is write to suggest that if the ALP doesn’t have the stomach for paradigm shifting, then someone else will stand up and do it for them; The AWP perhaps? P.S. Dr S talks of UBI proponents not providing clear pathways forward, Pot, Kettle, Black much! How about Dr S explain to us how a growth model for society can be sustained, when clearly after only 200 years of industrialisation we have all but destroyed the ecology of our planet already?