Universal wage must be weighed up
COVID-19 crisis has shown the value of basic income scheme, says Helen Polley
THERE has been some discussion about the possibility of Australia moving towards a Universal Basic Income, given the unbudgeted, financial support injected into the economy during the COVID-19 crisis.
A UBI is paid to individuals, rather than families or households. Every individual receives the same amount.
Their living arrangements do not affect the amount they receive. An adult child who lives with their parents receives the same as a person who lives alone or someone who lives with a spouse.
Under the current Australian income support system, people who claim payments are often required to meet certain conditions.
For example, recipients of JobSeeker payment may have to look for work, and Youth Allowance (student) recipients must be enrolled in a course of study. There are no conditions attached to a UBI.
Part of any proposal for a UBI is that the new payment would replace most existing income support payments.
The UBI would be simpler than the existing system. Services for those with special needs should remain, and a UBI would be the bottom tier of a welfare system that offers top-ups to those with disabilities and other special needs. Data shows that, as of 2014, the annual cost of a UBI in Australia would have been about $200 billion cheaper than the current system.
By 2020, it would have been about a trillion dollars cheaper.
We should also consider what other countries have achieved with UBI initiatives.
Finland’s social insurance institution, Kela, recently conducted a trial of a basic income-like scheme.
The experiment provided an unconditional income to a randomly selected group of 2000 people receiving unemployment benefits.
According to a May 2020 report by the Finnish Ministry of Social Affairs and Health, the wellbeing of the UBI recipients was better than that of the control group.
And there were better opportunities for social participation and increased autonomy. These were highlighted regardless of any change in employment status.
When a two-year trial was undertaken by the Barcelona City Council, initial results from an analysis of the people taking part showed that having a minimum guaranteed income increased their level of wellbeing and happiness, as well as fostering participation in communal activities.
The UBI also reduced financial uncertainty, reduced the likelihood of suffering mental illness, and generated greater overall satisfaction.
Groups that took part in the project, and the Barcelona City Council, are now continuing with a detailed evaluation of all outcomes that will be available mid-2020.
A UBI could work in Australia, meaning that it would replace the many existing income support programs.
Interestingly, Australian academic Elise Klein states that a UBI would allow everyone to enjoy “economic security as a basic human right” and would give people the freedom to say no to precarious work.
When considering a UBI and looking into the data, it does highlight many of the problems facing the current Australian social security system, and therefore provides an opportunity for how that system can be improved for both government and the community.
Policymakers will have to face the problem of how to manage any transition.
It could be proposed that the existing welfare system could be modified in stages so that it becomes more like a full UBI over time.
The UBI should be considered for Australia, allowing for secure regular income for everyone.
The financial savings would be enormous for government, and also flow on to taxpayers — but, importantly, the wellbeing of our communities would be enhanced.