UBI “deserves consideration”

Today’s Dominion editorial says that a Universal Basic Income merits “a close look”.

Labour’s ‘universal basic income’ idea deserves consideration

Labour is flirting with a “universal basic income” – a radical and intriguing idea that is having a moment in several countries around the world.

There are plenty of questions about such a policy, but it merits a close look.

I agree it merits a close look, but that doesn’t mean a look should lead to a policy.

On the other hand, Labour is only “considering a limited trial of a universal basic income-type system in a town or region”. (Count the qualifiers there).

How long would they run a trial for to see if it’s going to work successfully?

A minimum income would recognise the value of domestic work: parents at home would, along with everyone else, receive the payday. It might also encourage innovation by giving entrepreneurs a small safety net while they try a new venture.

Which could result in more risk taking and more failures.

All of that adds up to something, but it isn’t enough to be convincing yet. The questions around a universal income are serious. The fiscal cost is one. The political hurdles are another – a reduction in the pension, say, would be hard to justify as well as electoral dynamite.

The UBI would have to be set lower than current Super levels, which wouldn’t be universal, or Super would need to be lowered, which would have serious implications for many retired people, or the UBI would have to be set the same as Super, which would be horrendously expensive (that is, taxes would have to rise a lot).

Labour deserves some credit for starting a useful debate. But if it wants it to go any further, the party needs to get beyond the “dole for everyone” caricature and prove that the serious critics have it wrong – that there’s a feasible way to really make it happen.

That’s going to be a significant challenge for Labour.

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20 Comments

  1. Kevin

     /  29th March 2016

    I’ve been advocating a form of guaranteed minimum income for a few years now. Labour’s version just happens to suck.

    1. They’re keeping the current welfare system which defeats the entire purpose.
    2. They’ve made it way too high. The income level should be set at existence level, not “living wage” level.

    Reply
    • Oliver

       /  29th March 2016

      At least Labour is talking about it.. National have their head stuck in the sand.

      Reply
      • Pantsdownbrown

         /  29th March 2016

        No point even talking about it if Labour just add an additional ‘universal’ cost on top of all the welfare payments taxpayers already make as they are suggesting – National at least are economically savvy enough to know it wont work thus there is nothing to ‘talk’ about.

        Reply
  2. Chwaga

     /  29th March 2016

    I assume that if a trial is being done in one region it will be ring fenced to ensure that the area is self supporting and that any tax changes to support it will also apply only to that region and that the costs will not be subsidised by others outside the trial area. Good luck with that as I foresee an exodus of businesses and higher paid individuals.

    Reply
  3. Looking long term, something needs to be done, as the possibility of full employment for everyone continues to drift into the distance alternatives will need a serious look, UBI is one of them, the other is shrinking the 40 hour working week to boost employment numbers. Neither of these look attractive to the pro small govt, pro Business > People end of the political spectrum. It may seem fanciful and unneeded now, but 2 decades from now we would be ruing that it wasn’t taken seriously, even talking about it now and smashing out some number crunching is a useful snapshot for when the situation deteriorates and Pollies grow a pair to tackle the issues.

    Reply
    • Pete Kane

       /  29th March 2016

      Very well (and presciently) said Shane.
      “It may seem fanciful and unneeded now, but 2 decades from now we would be ruing that it wasn’t taken seriously………..”

      Reply
    • Alan Wilkinson

       /  29th March 2016

      There is no evidence of a decline in employment rate. Speculation is not evidence, particularly speculation that has been consistently wrong for many decades.

      Reply
      • Pantsdownbrown

         /  29th March 2016

        But Alan – those business guru’s Little/Robertson have put their great minds together and know how to ward off future global work issues, and in turn know what is best for you to.

        Reply
  4. Pantsdownbrown

     /  29th March 2016

    “Labour is flirting with a “universal basic income” – a radical and intriguing idea that is having a moment in several countries around the world”

    Greece…….enough said

    “On the other hand, Labour is only “considering a limited trial of a universal basic income-type system in a town or region”.

    But let me guess the wider taxpayer is going to be paying the universal payment? If you were to TRULY test the UBI out the towns inhabitants would have to be able to fund it themselves, taxing the workers of that town the 50%+ income tax required to fund the one’s not working. My guess is the ‘workers’ would soon leave town if that happens and then the whole system falls down.

    “A minimum income would recognise the value of domestic work: parents at home would, along with everyone else, receive the payday. It might also encourage innovation by giving entrepreneurs a small safety net while they try a new venture”

    Or alternatively grow our obesity & crime levels as people have more time on their hands, reduce our productivity (and GDP) whilst encouraging more ‘under the table work’ as well as push higher tax payer’s money overseas and the inevitable price increases of goods and services.

    “The questions around a universal income are serious. The fiscal cost is one”

    Even if it was the only ‘question’ the fact an UBI is unaffordable even with a total dismantling of the welfare state means Labour are dreaming.

    “Labour deserves some credit for starting a useful debate”

    Nothing useful when you talk about implementing a UBI but also want to keep the welfare system in place.

    It’s like telling the world you are going on a brand new diet and eating an apple instead of the usual chocolate cake but end up eating both AND THEN telling the world you are still staying true to the brand new diet because you ate the apple.

    Reply
  5. Kitty Catkin

     /  29th March 2016

    If taxes are going to rise to pay for it, what’s the point ? It’s giving with one hand and taking away with the other ! 10.5% to 35% is a massive rise, and the others would have to go up accordingly. I am acquainted with a billionaire-he hardly needs an extra $200 a week ! He wouldn’t even notice it, it would be like me being given 20c a week 😀

    Reply
    • Pantsdownbrown

       /  29th March 2016

      KC: Well we do have many anti-sugar people saying a few extra cents on a can of coke is going to cure obesity (funny though that with record chocolate sales this Easter those same people are nowhere to be seen), maybe a rich mans tax will cure people of rich person envy?

      Reply
      • Kitty Catkin

         /  29th March 2016

        Someone on $14,000 a year is rich ? I think that it was Gareth Morgan who wants to put their tax up from 10.5% to 35% to pay for the UBI, but I can’t remember what everyone else’s tax would have to rise by. Basically, people would be paying for it themselves in many cases and other people’s as well. One wouldn’t have to be on an enormous income to be worse off, even with the UBI coming in. The NZ taxes would be prohibitive. I seem to remember that the top tax would be 60%+.

        Reply
  6. Kitty Catkin

     /  29th March 2016

    The usual people were complaining in papers about the huge Easter eggs sold in the Warehouse, as if it was compulsory to buy them and eat the whole thing oneself.

    Reply
  7. @ Shane Le Brun & Pete Kane – “Something needs to be done”. Aside from your options a) UBI or b) Shorter Working Week, there might be ways of having a simpler targeted benefit system rather than UBI, while also shrinking the workforce somewhat?

    First, IMHO shorter working week seems great in theory but involves 1) extreme coercion and 2) major logistic difficulties. Do we force people/businesses to work shorter hours? What of hospitals, police, emergency services et al on 24/7 rosters?

    One of the objectives of UBI (or similar) is the commendable maintenance of human dignity.

    Reduce size of workforce: By their own agreement, ‘unproductive’ peripheral workers – the so-called unemployed or ‘workers in abatement’ – (possibly including the disillusioned like myself) might be removed from the workforce using positive alternatives rather than punitive measures? For example, based on my own experience in rural settlements where people are not going to get work anyhow, short of relocating –
    1) Community Work – an additional payment sufficient for basic living (eg + $50 – $100 per week) for specified hours of work in and for the community?
    2) Early Retirement – payment of a portion of Super after a certain age, eg 60? 55? (This has already been suggested in the form of Flexi-Super).
    3) Business start-up incentives – as per 1). A version of this exists already …
    4) Caregiving – this is already widespread too. I guess you could call the DPB a form of caregiving? Childrearing? Plus there is much caregiving of the elderly within families.

    Other measures might be –
    5) More incentives to stay in education and gain qualifications. Scholarships and fees subsidies, perhaps with conditions, eg student returns to community of origin to work during holidays?
    6) Student Holiday Work Programs as per 3) & 1) rather than simply Student Unemployment Benefit? There may be many other ideas?

    These measures might raise the welfare spend somewhat, possibly counter-acted by savings in health (including mental health), policing, courts, prisons and the ancillary benefits of generally improved community wellbeing? Such ‘active’ measures might also inspire some people to find traditional paid work and hence re-enter the ‘paid workforce’?

    Just some thoughts. I still can’t see how a UBI or any other system will adequately compensate for WFF and Housing Supplements (plus other supplements?) which seem to have become deeply entrenched?

    Reply

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