A positive change for parents and children

There are plenty of arguments for a basic income for families. They include overcoming poverty, removing central government involvement from people’s lives, reducing the bureaucracy of welfare systems, allowing a freer market economy, reducing government investment in core universal services, providing a sufficient standard of living for all citizens, recognising and supporting the role of unpaid labour in the economy, and encouraging entrepreneurship.

Economist Brad Olsen says a universal basic income (UBI) could reduce long-term welfare dependency because it would mean virtually all benefits being disestablished and replaced with the UBI.

It would also go some way to addressing the ‘‘benefit trap’’, by which people are reluctant to work, even if it means a better long-term income, because they lose benefits.

This is particularly true of Working for Families and the accommodation supplement. At certain income levels, almost all extra money earned can effectively be taken away by the drop in government support.

A UBI would remove that disincentive to enter employment, because workers would get the full benefit of pay for each extra hour worked.

A UBI would also remove the need for low-income earners to prove their circumstances to qualify for a benefit. ‘‘The hoops you have to jump through to ensure there is actual need are really not pleasant,’’ says Eric Crampton, chief economist at The New Zealand Initiative.

Dr Jess Berenston-Shaw, who co-wrote Pennies from Heaven with Gareth Morgan, arguing for a basic income, says a study in Canada in the 1970s, of lowincome families, showed new mothers stayed home longer with their babies and teenagers traded work for study when they were given a basic income.

‘‘I reviewed a large number of different unconditional cash payment programmes for my research on child and family poverty in different high-income countries where existing universal services were in place.

‘‘The overwhelming evidence was a positive effect in a number of key areas in children’s and parents’ lives, ranging from mothers’ mental health, reductions in violence, increased spending on children’s goods by parents, reduced spending on alcohol and tobacco, improved behaviour in children, reduced involvement in crime and improvements in educational and economic achievement of children.

‘‘The money itself has a direct and immediate povertyreduction effect, while the mitigation of the impacts of poverty would be expected to lead to improvements in intergenerational wellbeing (including reductions in poverty) as social, educational, and financial resource acquisition is known to accumulate over generations.

‘‘Unconditional cash (in various forms) for those with limited resources was simply the most powerful intervention found to overcome the impact of insufficient resources in families. Other interventions work, but not across so many domains of family and child wellbeing.’’

We already have a UBI of sorts in the pension. Almost anyone over 65 will receive the payment, no matter how much they earn elsewhere.

Tax adviser Terry Baucher says it is widely regarded as minimising the number of pensioners in poverty. ‘‘The implication must be that, if it has merits for older people, why not everyone?’’

The zero-tax bracket, used in the United Kingdom and Australia, is another form of UBI, he says. People can earn small amounts each year without having to pay any tax.

‘‘The cash benefit is the tax which would have been paid, so in cash terms is less significant than an actual cash payment.’’