UBI at $211 a week?

Grant Robertson and Labour are talking up the idea of a Universal Basic Income. I agree with them that it’s a discussion worth having, but it’s going to be difficult coming up with an affordable policy.

NZ Herald: Labour considers ‘universal basic income’ policy

All adult New Zealanders could be given a Government handout of at least $200 a week under a new policy being considered by the Labour Party.

The co-leader of a global network promoting a “universal basic income”, British professor Guy Standing, will be a keynote speaker at a Labour conference on “the future of work” in Auckland next week.

He said yesterday that a system “where every legal resident of New Zealand should be entitled to a modest monthly basic income” would reduce inequality and give some security to people who increasingly have to earn a living from insecure casual and short-term work.

And Labour finance spokesman Grant Robertson said Labour was considering a local version of a scheme developed by economist Gareth Morgan, who proposed paying every adult a basic income of $11,000 a year ($211 a week).

“I’ve spoken to the Morgan Foundation about it. They are continuing to work on the idea,” Mr Robertson said.

“We are looking at how do we ensure income security, and one of the things we are looking at is whether or not a universal basic income could form part of that policy. It’s very early days.”

Robertson was questioned about the level of payment on Twitter and he made it clear it was only a suggestion from Morgan and was nowhere near Labour policy, yet.

They are talking about it being a universal payment from age 18 but that would have to exclude superannuants.  The current living alone super rate is significantly higher than that at $374.53 going down to $288.10 for one partner of a couple.

It would be an increase for youth on Jobseeker Support, which is 156.51, but substantially less than other rates that go up to $244.54.

They can hardly cut Super and Jobseeker rates to a universal basic income level.

A lot of people currently not on benefits would presumably get it, for example non-working partners of people who are working.

There’s a lot of discussing to do on this if it is to become policy for next year’s election.

More Labour information: Towards a shared prosperity

Future of Work Conference — Towards a shared prosperity here.

 

58 Comments

  1. Kevin

     /  22nd March 2016

    A UBI that is actually practical will mean that people currently on benefits will get substantially less than what they are getting now. Plus there will be no rocking up to the local WINZ office asking for an emergency loan because there will be no WINZ offices.

    What hasn’t been mentioned though is that a UBI at least in theory will get people who shouldn’t be in the job market out of the job market, e.g. those types of employees who cost the employer more than what they are worth and jump from one job to another and don’t really want to work. This will free the job market up for those who do want to work but are finding it difficult finding a job.

  2. Dougal

     /  22nd March 2016

    Looks to me like more Robin Hood style economics in the making. The money has to come from somewhere and no doubt it will start with income earners over 90k moving back to 39%. There is no need for them to test the water with this policy other than to sell a bribe. Watch as it becomes policy followed by a newly released tax policy. Hard not to be skeptical given Labour have offered little else in the way of policy in the last few years.

    • Pantsdownbrown

       /  22nd March 2016

      As I mentioned yesterday: It appears to me Labour are thinking of using a watered down UBI as an excuse to raise taxes, whilst keeping the welfare system the UBI is meant to replace (making it not work as intended). They would be too scared to scrap superannuation for instance.

      Essentially this is socialism by stealth. $200.00/week will be the starting point, obviously once it is established the left will say it isn’t enough and from there to eternity continue to raise it.

      Robertson is seemingly using Morgan’s scheme as the basis of Labour’s plan but Labour won’t get rid of the entire welfare state that is required to make it work and more importantly make it more affordable. From Morgan’s website:

      “This basic income replaces all other government-provided cash transfers—NZ Super, DPB, Unemployment Benefit, Working for Families”.

      It is also disingenuous to say this will make people out of work feel ‘better about themselves’ when in actual fact the UBI will become just another govt welfare payment under a different name. People not working will still be paid by people that work via higher taxes.

      David Farrar of Kiwiblog suggests that even without our entire welfare system the cost of a UBI still leaves us $19 billion in the hole – add the additional cost of topping up the $200.00 for people not working (because they can’t live on $200 a week) and the costs skyrocket, as do the tax rates to pay for it.

      The benefits of working far outweigh the benefits of not doing so (and if you think those people not working/opting out of work will all go and do unpaid work you are in la la land….).

      • Dougal

         /  22nd March 2016

        Little confirmed on TVNZ Breakfast that all resident working age kiwi’s would be entitled to $200/week regardless of their financial position over and above any benefits already collected. So yes, he has already admitted there will be no scrapping of WINZ benefits and in his words “something similar to working for families”. it’s nothing more than a bribe and that’s all. It’s no secret the great majority of WINZ customers are Labour votes so for them to scrap this in favour of the UBI is ridiculous and political suicide. Scrapping or reducing super would only anger Winston First voters so no harm done there. Lastly, what student wouldn’t want $200/week for doing bugger all? So perhaps more safe votes there. So, as I said, it’s a bribe, plain as the nose on littles face.

    • Oliver

       /  22nd March 2016

      The money will come from the welfare system and the bureaucratic system which chews up millions of dollars every year. It’s sounds good to me, it’s basically a tax cut.

      • Pantsdownbrown

         /  22nd March 2016

        You’re not listening Oliver – Labour is looking at implementing a form of UBI WITHOUT getting rid of the welfare system hence is totally unaffordable.

        • Oliver

           /  22nd March 2016

          No you have it wrong. I saw Little in an interview and he said he will replace the current welfare system with the UBI. So you have your facts wrong again.

          • alloytoo

             /  22nd March 2016

            After doing away with the existing welfare system you’re still left with a shortfall of about $20 Billion dollars.

            Which means we’re left with the stupid insanity of raising people’s taxes in order to pay them a benefit.

            There’s no overall improvement to NZ inc, there’s only increased churn which wastes money and leaves everyone worse off.

          • Pantsdownbrown

             /  22nd March 2016

            So explain Oliver how people are going to live in Auckland on $200 a week?

            You are the Martyn Bradbury of Yournz with your wrongness……

            • Oliver

               /  22nd March 2016

              Labour will fix the housing crisis and immigration problem this is causing Auckland to be the most expensive city to live in.

            • Pantsdownbrown

               /  22nd March 2016

              Whilst negotiating world peace and an end to all religious wars……..

            • Gezza

               /  22nd March 2016

              No. Dat am de Donald’s job. You am confusing de two. 😎

            • John Schmidt

               /  22nd March 2016

              Sure they will. Look forward to seeing Jacinta swing a hammer.

            • Kitty Catkin

               /  22nd March 2016

              Labour’s new theme song….’Dreamer, you’re nothing but a dreamer….’

          • Kitty Catkin

             /  22nd March 2016

            Well, if AL thinks that cutting Super by half (almost) is a vote-catcher, he’s insane. Paying everyone $200 a week will mean that they’ll be paying it themselves in some form. It’s $20 billion a year, Oliver, wakey wakey, and it’ll have to come from somewhere. It’s like when our council announced that our rates would now be in two parts, as if this was a great thing-all it meant was that we were paying the same (or it might have been more-I seem to remember that it was) but because it was in two parts they thought that we wouldn’t notice.

            If Labour reduced the value of my house DELIBERATELY so that I was paying a mortgage on a far greater amount than the house was likely to be worth in my lifetime, I’d be furious. Anyone would be.

            I found a bag of marbles-has anyone lost theirs ?

      • Kitty Catkin

         /  23rd March 2016

        It won’t be a tax CUT, Ollie, it’ll be a tax RISE, and some people will be losing more in tax at the proposed new tax rates than they’ll be getting on the UBI. Who on earth would be willing to do that ?

  3. kiwi guy

     /  22nd March 2016

    UBI can be seen as a form of Quantitative Easing.

    Maybe a more effective one than that used in USA and Europe which only inflates financial asset prices, propping up the FIRE ponzi and makes the 1% a whole lot richer. And the result has been anemic growth and surging economic inequality.

    A UBI would at least pump the money into the real economy.

    • alloytoo

       /  22nd March 2016

      How can it pump more money in than it takes out?
      It can’t, churn costs money.

      • Kitty Catkin

         /  23rd March 2016

        Well, it will be pumping money, certainly 😀 At best it would be pumping it in a circle-at best. I can’t see even that happening, though.It’ll pump it OUT.

        Was it Labour who wanted to stop the GST on healthy food even though it was going to cost the taxpayers more than they’d save, because they’d have to pay the admin costs which were a lot more than the amount saved by the GST cut ?

        Who’d vote for something that means that they lose more in tax than they get back in UBI ?

  4. It’s fundamentally a bad idea because it implies a universal obligation to pay for it.

    It’s another example of the universalist vanity of Rome.

  5. probably a few years away yet, but as more industries get automated (services are next) 3d printing kicks in, we will have to accept that there is more wealth and yet less jobs to go round, so looking beyond the next decade a UBI will be captain obvious, as for tax rates, jack em up, they are plenty low compared to Australia….. that 33% rate could easily move to the greens preferred 40% if we look at international trends.

    • Pantsdownbrown

       /  22nd March 2016

      “that 33% rate could easily move to the greens preferred 40%” – that sounds easy except for the inconvenient truth that once you get into the high 30%’s the % tax income generated in NZ actually DECREASES.

      • Dougal

         /  22nd March 2016

        Correct, because clever people over or just over the threshold will take a pay cut as that is cheaper than paying the extra tax.

        • Kitty Catkin

           /  23rd March 2016

          I remember hearing that someone in the Government Department where I worked found that her pay rise meant that she took home less money because she was unlucky enough to be just in the next tax category. You may imagine her reaction to this.

  6. alloytoo

     /  22nd March 2016

    The stupid part is deducting an additional $200 (probably more) from a partner/spouse who is working to give to the partner/spouse who is not working. (Why we need government to do that is beyond me)

    The truly bloody insane part is increasing my taxes in order to pay me a UBI.

    This seems, like many of Labour’s policies, to be a make work scheme for the bureaucracy.

    Of course you could just grant all taxpayers a basic $200 pw tax rebate, this would be administratively easy to do (simply deduct less PAYE), but the shortfall to the treasury would have to be made up elsewhere, say by increasing GST.

    • Kitty Catkin

       /  23rd March 2016

      Sorry, Alloy, I can only give you one upvote-consider it as counting for 10 more.

  7. Pantsdownbrown

     /  22nd March 2016

    I note on Morgan’s website (http://www.bigkahuna.org.nz/) that he can only get the $11k/annum/per person to possibly happen by doing the following;

    *Implementing a Comprehensive Capital Tax on ALL assets (yep, those expensive paintings you might have as well) that INCLUDES the family home.
    *Getting rid of ALL benefits including superannuation.
    *Raising GST to 20%.

    The elderly who may only have a mortgage free home get especially hammered with the triple-whammy of the CCT, higher GST and lower govt income than they are currently receiving.

    Labour is trying to have their cake and eat it too…….

    • Oliver

       /  22nd March 2016

      you righties always saying how you think the welfare system should be scrapped. And now Little is prepared to do just that and now you’re complaining. I don’t think you righties will ever be satisfied.

      • Pantsdownbrown

         /  22nd March 2016

        Stop posting stuff you know nothing about Oliver – Labour are not suggesting getting rid of ALL benefits – people can’t live on $200 a week. So simple even you can (possibly) understand it.

        Alloytoo says above Little confirmed on breakfast TV this morning that their UBI would run ALONGSIDE the current welfare system.

        That isn’t a UBI system that is just another form of taxing workers.

        • Oliver

           /  22nd March 2016

          Yes but what Labour will do is get rid of the bureaucracy of the welfare system, which will free up millions of dollars.

          • Pantsdownbrown

             /  22nd March 2016

            So the bureaucracy they initially created to run the welfare system will still need to be in place to pay the welfare they will still be paying under their ‘UBI’ scheme?

          • alloytoo

             /  22nd March 2016

            Oh yes, remove a bureaucracy servicing about 5% of the population and replace it with a bureaucracy servicing 100% of the population.

            Not withstanding the fact that you’re will still have the original bureaucracy because Labour will never do away with it.

            Not withstanding the increased bureaucracy required to administer all the new taxes.

      • David

         /  22nd March 2016

        Friedman wanted the welfare system scrapped and replaced with negative taxes. That’s a far more sensible approach than paying people their own money back to them.

    • Kitty Catkin

       /  22nd March 2016

      I doubt if the bureaucracy cuts would save 20 billion. Gareth Morgan must think that we are all stupid. Spend $200 a week more on taxes and be given $200 a week-what a generous deal, I don’t,/i> think. There won’t be much cake on the menu for people who have to try to live on the UBI.

  8. Dougal

     /  22nd March 2016

    Yanis Varoufakis, Ex Finance minister for Greece has given his support for a worldwide UBI. We all know how well he did as some kind of reformist utopian. Greece is a basket case for exactly this kind of misguided socialist free money for all attitude.

    • Brown

       /  22nd March 2016

      Whenever you hear ”worldwide” anything you know who is driving it. Stupid, unaffordable and complex though this Labour suggestion may be what will be worse is the rich who will complain about it in principle while taking it anyway because its the law. Watch for eye watering top tax rates to kick in just above whatever MP’s get. Amazing that the liberterians, postmodernists and philosophers think us religious types are nuts because we think man is flawed.

    • David

       /  22nd March 2016

      That would be the same ex finance minster who took Greece from the bottom of a deep hole and left it in an even deeper one, but somehow came out of it with a lot of lucrative speaking fees ($40k a pop) on the lecture circuit?

      • Dougal

         /  22nd March 2016

        Yes, that’s him. Another socialist hypocrite.

        • Kitty Catkin

           /  22nd March 2016

          Well, he had an impact on the Greek economy, anyway. Oh, er….

  9. Haven’t had a big rave for a while. 😉 If you’re not inclined to read it all there’s 2 good links.
    PDB – We’ll have to agree to disagree on “la la land” because I notice you provide no more evidence of your contention regarding “community work” than I do. :-/ Mine is anecdotal evidence of numerous people I personally know. Where does your contention of the bone-idle laziness of your fellow human beings come from?

    It’s all too easy to just dismiss the idea of UBI. What shall we do instead, simply carry on as we are? In an endeavour to keep an open mind though, one might first ask : Why has UBI become such a popular idea or issue lately? :-/

    Clearly, for all the benefits of neoliberal capitalism-mixed-welfare, the system has grave shortcomings which seem to be getting more exaggerated? Some of these are –
    A) income and wealth inequality (50% wealth enjoyed by top 10% population)
    B) depressed low wages (bottom 50% population enjoy 20% or less of wealth)
    C) ‘necessary’ or built-in unemployment (to maintain B)) “Workers in Abatement”.
    D) growing poverty – a relative failure to trickle down or ‘uplift’

    Despite the indications on here, I believe a great many people are actually motivated by macro-compassionate ethics. There are many middle-and-higher income earners who do not like what they see happening with a widening inequality gap, increased poverty etc as above. I believe there are people who would readily agree to a revised tax and transfer regime if it addresses the problems. [These are arguably the people who need to change things?]

    Targeted welfare can’t seem to fix the situation. There are people capable of working who live in places where there isn’t any work and who can’t live on $200 a week (the basic benefit) as most objectors to UBI freely acknowledge. They should move to where the work is, right? And their communities should die? But even if they did move, there is ultimately not going to be work for 5 – 6% of the workforce?

    I can’t help seeing these people as a necessary component of the total system – the economic ‘organism’ – from which other people benefit dramatically. Some very dramatically indeed! And yet we expect them to live on $200 per week (or supplementary whatever) which we all acknowledge is impossible.

    I have never seen any statistics or even acknowledgement of the “circulation” of people through benefits like unemployment and DPB either. Beneficiaries are not just a small portion of the population but an ever changing one, at least partially. I wonder how big the “long term” component actually is?

    So, anyhow, quite naturally when something isn’t working as well as it might, people look for alternatives. Something better than targeted welfare which will address inequality to some extent, perhaps along with creating a more co-operative, less Darwinian paradigm of economics and life, whereby the entire organism supports all its component fauna and flora, as to speak – because arguably we are in a position to leave jungle law behind, by our own choice.

    Our human tendency to seek better ways and solutions speaks well of us, doesn’t it? 🙂

    I tend to agree with Shane that as techneconomy (new word # 50!) progresses, UBI or some version of “well fair” with UBI perspectives will become “captain obvious”. However, here’s an interesting article from The Guardian which concludes UBI per se is relatively impossible – http://www.theguardian.com/commentisfree/2015/dec/10/finland-universal-basic-income-ubi-social-security – (I think I’ve posted this before?)

    I agree with David that Juliet Rhys-Williams’ and Milton Friedman’s Negative Income Tax probably makes the most sense and would be the easiest to administrate. I wonder if the same arguments about disincentives to work would arise? People will just give up working to collect negative income tax, right? Personally, I consider this widespread negative view of humans as inherently lazy, good-for-nothings to be largely fear-mongering anyway, a form of systems justification. How many individuals do you know who are like this? Are you? Do you believe you can tell, simply by looking at them, that every single person you see at the WINZ office is like this?

    https://en.wikipedia.org/wiki/Negative_income_tax

    At least Labour have recognised that enormous changes are taking place in work, employment and welfare, and they are investigating ways of dealing with it. Credit for that I reckon. I hear yesterday the Employers Federation saying despite immigration there are still skill shortages in the labour market. I wonder how much of this has to do with employers wanting a tradesman or skilled worker only on short-term contract? No assurance of consistency, longevity or continuity of work? The Labour Party is trying to address this dipping in and out of the workforce which is a contemporary phenomenon …

    • Robby

       /  22nd March 2016

      The negative income tax idea sounds a lot more realistic than the UBI that Labour are proposing. It already exists in a way through WFF.

      • @ Robby – Yes, I just think having the level of benefit or UBI (or whatever) set so low a person cannot live on it ignores the reality that at any given moment in time, 5 or 6% of the workforce will be unemployed and many of those through no fault of their own.

        WFF as I understand it is still overly complicated? The beauty of Negative Income Tax may be its simplicity and also its universal applicability? To put that another way, compensating people with children for their ordinary wages or salary not being enough to adequately support their family seems kind of in keeping with our generally negative, minimalist, patch-it-up, piecemeal transfer payment system?

        • Robby

           /  22nd March 2016

          The real problem with the current system is that a large portion of the welfare budget seems to be wasted on administration. Also, quite a few people getting WFF end up ‘owing’ the IRD at the end of the tax year, due to being overpaid by small amounts each week, ie- $20/week = $1040. If the whole system could be simplified, it would make life a whole lot easier for everyone, except perhaps the WINZ and IRD staff who are no longer required.

          • @ Robby – Yes, and half the country losing their jobs ain’t gonna be a vote winner for any political party either. I detect “rocks and a hard places” and “catch 22s” all over the place here? Which I guess is why we just go on toying with it around the edges?

            • Robby

               /  22nd March 2016

              Yes PZ, exactly. No matter what they give, they have to take it from somewhere. Labours policy of giving is a little scant on details about where the money is coming from.

  10. If you don’t get rid of “benefits” in the whole manner in which they exist then what is being proposed is not “universal” basic income just a tax credit. Robertson sounded very wobbly on it and I think as a policy they have jumped the gun without having thought of how to deal with any questions…I wonder if Andrew Little is making a Jacquim Phoenix (?) style parody movie of his turn as Labour leader ….

  11. Pantsdownbrown

     /  22nd March 2016

    PZ: “PDB – We’ll have to agree to disagree on “la la land” because I notice you provide no more evidence of your contention regarding “community work” than I do”.

    I think as a society in general community work is completed far less than in days gone past – a by-product of consumerism, breakdown of communities, and the advent of being constantly on-line/ social media and the like. I’d doubt many of the unemployed today, in particular the one’s who have no desire to work, actually fill their idle time with community work.

    PZ: “It’s all too easy to just dismiss the idea of UBI. What shall we do instead, simply carry on as we are?”

    Here’s the rub – as it stands Labour’s idea is not a workable UBI at all in the fact that they seem to have taken the piece of the UBI they like (give everybody money) without also implementing the piece they don’t like (get rid of the welfare state). At it’s heart it appears labour’s idea is to give people on welfare another extra $200 no questions asked, whilst pretending to give $200.00 to other people even though that will be eaten up in increased tax obligations for those people.

    PZ: ” The Labour Party is trying to address this dipping in and out of the workforce which is a contemporary phenomenon …”

    Labour’s poor imitation of a UBI does nothing of the sort. All they are suggesting is adding another cost to taxpayers on top of the complicated & overly-expensive existing welfare system (which ironically is also largely a left-wing invention).

    Raising taxes to pay more money to those not working is hardly ‘innovative’ modern economic thinking – getting rid of the entire welfare system just might be.

    • PDB – No, and I totally agree with seanjm72 above that Labour have “jumped the gun”. Big time! A day or so ago they were only going to “discuss” the issue and you don’t discuss an issue like this by announcing random figures easily mistaken for policy this early in the game. When a political party talks about UBI they will need to be very well informed and thoroughly researched. They’ll need an ‘expert’ politician to sell it and the pitch will have to make damn good sense.

      But at least they are discussing it, albeit jump-the-gun and foolishly. Did you read the Guardian article? It’s not only that UBI must replace all welfare, the problem is it simply can’t replace all welfare – he cites long-term inability to work and housing costs as just two examples. It may be possible there’s a version of UBI which minimizes welfare though, eventually leaving only a relatively few people requiring bureaucratic oversight?

      I won’t be wasting my energy on here just bashing Labour.
      The UBI idea per se is ‘flawed’ but the reasons it exists are not.

      Your last point speaks to the sense and perhaps viability of Negative Income Tax?

      • Pantsdownbrown

         /  22nd March 2016

        The Negative income tax (NIT) suffers from the same problems a UBI does – at the ‘affordable’ level to a country it doesn’t pay enough for people not working to live on and with no welfare state how does one then make do? Messiah Morgan doesn’t adequately explain this either – $200.00 a week to live on with no welfare top up? (in this instance discount Labours suggestion of a $200/week plus all the same benefits we currently have as that is NOT a UBI).

        “The problem that the NIT (negative income tax) evades or glosses over is the problem of the individual or family with zero income. If an individual were given only $300 (the figure suggested in Professor Friedman’s original proposal in 1962), nobody would regard this as nearly adequate — particularly if, as Professor Friedman also proposed, NIT were made a complete substitute for all other forms of relief and welfare. If the NIT payment for a family of zero income is set at $1,700, no advocate of the guaranteed income would regard it as adequate to live on in “decency and dignity.” So if the NIT were ever adopted, the political pressure would be irresistible to make it provide the minimum “poverty-line” income of $3,400 even to families with zero earned income”. Henry Hazlitt

        • Kitty Catkin

           /  23rd March 2016

          NIT would be a better name for UBI.

          How about calling it Basic Universal Money ?

      • Dougal

         /  22nd March 2016

        @PZ

        People..(me) wouldn’t bash Labour if they didn’t keep handing us a stick to beat them with. It’s another example of poorly prepared ideas with even more poorly thought out delivery. It’s a shambles and lacks a professional policy delivery process. I’m not sure it’s entirely attributable to Little but I would certainly be asking about McCarten and his “strategic prowess”. This kite flying of “let’s debate it” as a soft poll is not clever especially when it involves something as serious as UBI. As you put it, the idea in practice, is flawed. Why not have a sensible proposition with full disclosure? Instead they are left wanting when obvious questions arise.

        • Robby

           /  22nd March 2016

          A classic case of the ‘5 P’s ‘ Dougal. Piss Poor Planning = Poor Performance 🙂

  12. jamie

     /  23rd March 2016

    Heard Guyon Espiner interviewing Grant Robertson on rnz .Grant was saying one of the problems with the benefit system that a UBI would fix is that when a beneficiary takes on part time work, the benefit is abated so steeply that it disincentivises working (and declaring).

    He’s quite right IMO, and especially as part time and casual work is so often the way people “prove themselves” into more secure employment. It’s just crazy to discourage people on benefits from trying to take those first steps to providing for themselves.

    Anyway, Guyon said “Well why don’t you just get rid of the abatement rates then?”

    Good question I thought.