More UBI discussion

Labour have succeeded with one thing – getting some discussion going on a Universal Basic Income.

Gareth Morgan has been promoting his interest at the Morgan Foundation blog:

Scott Yorke (I think still an active Labour supporter) posted The terrifying cost of Labour’s UBI at Imperator Fish.

This has been reposted at The Standard – Imperator Fish: The terrifying cost of Labour’s UBI – where there is a good comment thread with a lot of discussion on numbers.

And Rob Salmond continues his spat with Matthew Hooton on behalf of Labour with a post at Public Address – Eleventy billion dollars!

In this morning’s National Business Review (paywalled), Matthew Hooton estimates Labour’s Universal Basic Income Policy could cost up to $86 billion.

This is the latest in a series of escalatingly absurdist claims about the UBI, starting with David Farrar’s $38 billion, John Key’s $76 billion, and Stephen Joyce’s 80% tax rates.

By next week, I expect Cam Slater to estimate the UBI costs $240 billion, New Zealand’s entire GDP.

Salmond goes on the critique Hooton’s numbers, then concludes:

Instead, all these insane figures are part of a deliberate, coordinated strategy of scaremongering, coming from many of the usual Dirty Politics suspects, aimed at shutting down an important policy debate just as it’s getting started.

But I think the media and the public are smarter than this crowd give them credit for. They can see this con-job a mile off.

So the Labour strategy seems to be to create a fuss and complain about all the discussion they have generated.

Hooton makes this point in response:

Labour still has quite a few MPs in parliament. I would have thought if Labour wants a public discussion on a UBI those MPs should be getting involved, rather than putting a staffer up on Public Address to rebut a column in the NBR. But far be it for me to give Labour political advice.

Labour seem to have an aversion to sensible advice.

Hooton defends and explains some of his numbers.

Just a few brief(ish) points.

1) For those with a subscription or working for someone who has one (and I think students at some universities), the actual column is here:http://www.nbr.co.nz/opinion/ubi-just-cynical-ploy-increase-welfare-and-tax-mh

2) The column makes clear at the outset this is an idea not policy. The word policy appears only once, and in the sentence: “It’s difficult to think of a policy proposal with more going for it.” I don’t know why Rob claims I said it was Labour Party policy. The column also makes clear I support a UBI in principle and I outline the key policy benefits, especially around EMTRs, administrative savings and reducing indignity for beneficiaries. I mention the huge amount of work that Lockwood Smith did in opposition in the 2000s trying to make something like a UBI work. (In fact, and I don’t mention this, I first encouraged him to do so when he became National revenue spokesman after the 2005 election).

3) The $86 billion gross cost assumes:
(i) a UBI is indeed “universal” in that:
(ii) everyone gets it from aged 18 until they die;
(iii) there is a top up for children under 18 as with the current Jobseekers’ Allowance and Working for Families;
(iv) it is enough to survive on, and
(v) there are no financial losers among existing beneficiaries.

4) Rob acknowledges I discussed the potential $25 billion saving if the full $86 billion model was implemented. He seems to have missed the bit when I said tax changes would be needed to bridge whatever difference remains, specifically “higher income and company taxes, new taxes on carbon and capital gains, and a tougher IRD.” Is there anyone who thinks a UBI can be implemented without those things?

5) I criticise Andrew Little’s “little helpers” for calling people liars for trying to put some numbers around a UBI. Labour has called for a discussion and public debate on its idea.

6) It is perfectly OK for Labour (or its paid proxies) to say that the $86 billion gross cost is too high. But then they need to say which of the assumptions in 3 above should be relaxed. If they won’t relax any of those assumptions, then $86 billion gross is a fair estimate of what the policy would cost.

7) If a party wants to have a public debate on a major policy idea, that is great, but how can people debate an idea if they are told they are liars for considering the fiscal side? For example, if a UBI of the type I describe in 3 above could be implemented at a cost requiring tax increases of only $10 billion I would be all for it. Who wouldn’t be? But how can anyone even begin to consider the matter without some parameters, including fiscal parameters? To initiate a discussion without providing some information on the fiscal implications is entirely disingenuous. It would be like National saying “we’re thinking of $100 a week tax cuts for everyone”, refusing to give further information and then calling people liars if they tried to work out what that might cost.

Let the discussion continue – thanks to Labour initiating the UBI debate, but no thanks to how they have conducted themselves in discussions.

Next Post
Leave a comment

34 Comments

  1. Iceberg

     /  2nd April 2016

    Labour gor their election strategy from Bradury (Dotcom is the saviour), trade advice from Kelsey (don’t have any), and their welfare advice from Salmon (give it to everyone). When it all turns to shit (couldn’t see that coming), they blame Hooton.

    The end is nigh.

    Reply
  2. Pantsdownbrown

     /  2nd April 2016

    Labour has shot themselves in the foot on the UBI – the only way Labour can contest the figures others are coming up with is if they have alternative costings themselves……….

    Where are they?

    Reply
    • Iceberg

       /  2nd April 2016

      Of course they have them. That’s why they’re not talking about them. It’s why no one else will front it.

      Reply
      • Pantsdownbrown

         /  2nd April 2016

        Who knows with Labour? They had no detail at all from memory regarding ‘NZ Power’, mind you them and the Greens just did that to lower the amount of money this country would earn from partial asset sales (people can say anything they like about National but they would never in spite deliberately sabotage/reduce the value of taxpayers shares in a govt asset if they were in opposition).

        Reply
    • Indeed PDB…. a lot of the macro strategy thought on UBI is available in numerous papers around the world as well as in Morgan/Guthries locally published book the Big Kahuna.

      The holes in a UBI a numerous, from how to pay for it to why the hell should a person on an 80k a year plus job [arbitrary salary number not a thought through cut off] be given x amount per week they don’t need to the effect it will have on job seeking behaviour.

      Personally, if I could establish a passive income stream of 35K plus get 11k as a UBI, I would be pretty comfortable not working at times and could go skiing in winter more often. The impact on economic output from people shifting in and out of work using UBI plus savings as a buffer would be an interesting modelling exercise…. it maybe positive?

      Labours attack dog Mr Salmond is running around shouting “SQUIRREL” precisely because Labour want the idea of free stuff lodging into peoples minds without any counter factual. Its Interest Free Student loans on a grander scale. Think about the free stuff, don’t think about how it will be paid for in the bad times as well as the good times. All backed by the “Tax the Rich Pricks More” core philosophy position of Labour and the Greens

      Labour: “Back to the 1930’s Class warfare…you know you want NZ that way” should be there 2017 campaign slogan…

      Reply
      • Kitty Catkin

         /  2nd April 2016

        It’s insane to tax the person on $80,000 more and then give it back-where’s the sense in that, unless one’s employed to do it, which will shove the cost up even further ?

        Here comes the phantom downvoter 😀

        Reply
        • There is no sense in it Kitty…. UNLESS you are starting a campaign for long term no personal earnings all your income comes from the State….

          Our welfare system needs a complete revamp and so does our tax system – simplify and shrink on both fronts….

          Reply
          • Kitty Catkin

             /  2nd April 2016

            No, that’s not right, you mean ‘complicate and inflate’, surely. And why only two fronts ? Think big.

            Reply
        • David

           /  2nd April 2016

          They have no intention of giving it back…..

          Reply
  3. Kitty Catkin

     /  2nd April 2016

    I am no economist, but even I can see that the money has to come from somewhere. It will have to come from increased taxes-where else can it come from ?-and if taxes go up to pay for it, I can’t see the point. It’s like a landlord announcing that he’s going to add all sorts of nice things to a rental house to make life pleasant for the tenants-a large swimming pool, heat pumps in all rooms, a whirlpool bath, a conservatory….and put the rent up $200 a week to pay for it.

    Reply
    • Kevin

       /  2nd April 2016

      If implemented correctly a UBI will cost less than the current welfare system. That’s where the money should come from.

      Labour’s UBI isn’t even close to correct.

      Reply
      • Kitty Catkin

         /  2nd April 2016

        If it costs less, there’ll be less going out and coming in…so people will have less, surely. Those who need it, I mean. For many people, it would be going out as tax and coming back as UBI.

        Reply
        • Kevin

           /  2nd April 2016

          It really all depends on the bureaucratic cost of the current welfare system – cost of staff, buildings, systems etc – that’s where the savings will be coming from.

          But most if not all beneficiaries will get less under a UBI scheme that is actually feasible and that certainly includes people on pensions. The idea though is without a monolithic welfare system the economy will get a significant boost that will make up for this.

          Reply
          • Kitty Catkin

             /  2nd April 2016

            There are fairies at the bottom of MY garden.

            Won’t it just be musical money, the staff being saved in one area (losing their jobs) and staff being taken on in another ?

            The economy could never make up for a massive cut in income. People can do without material goods, they can’t do without food and power and a place to live.

            Reply
          • John Schmidt

             /  2nd April 2016

            Wow so you are implying it’s now Labour’s policy to slash public service numbers on a scale never seen before in NZ history. Never saw that coming given they have spent years opposing any attempt by the current government to cut or cap numbers. Is this yet another $ each way thing that Labour has become really good at.

            Reply
  4. Alan Wilkinson

     /  2nd April 2016

    The UBI falls flat on its face at the first credibility check: it will create a whole new set of beneficiaries as well as having to maintain the existing burden. No-one can explain how this can be made affordable.

    Reply
    • Pantsdownbrown

       /  2nd April 2016

      Even Morgan’s recent replies to all the bad press lately make the UBI even more of a joke:

      *He is now saying Super could be kept and reduced over 20 or so years – so we will have to pay a UBI ON TOP of super (note that Garth still has super as ‘$0’ in his financial projections – with super back in as an expense the costs skyrocket).
      *He still avoids saying how non-working people will live on $11,000 per annum?

      Reply
      • Kitty Catkin

         /  2nd April 2016

        Unprecedentedly Bonkers Idea.

        The downvoter who objects to people mentioning that the flaw is that it has to be paid for is bonkers, too.

        Reply
      • Kitty Catkin

         /  2nd April 2016

        People can and do live on that amount, Pants.

        Reply
        • Pantsdownbrown

           /  2nd April 2016

          Not the majority of all the currently unemployed KC……..

          Reply
          • Kitty Catkin

             /  2nd April 2016

            You’d be surprised at how many are doing it. People do what they have to do, and if that’s their income-and that is actually a bit more than WINZ’s basic income-they have no option but to live on it.

            Reply
            • Pantsdownbrown

               /  2nd April 2016

              All the ‘top ups’ people can currently get wont be available under a true UBI, and life will be even more unaffordable especially taking into account Morgan’s suggestion of rising GST another 5% and taxing people’s capital at 1.8% per annum (which will just raise rent prices).

            • Kitty Catkin

               /  2nd April 2016

              I’d like to know how many people have topups and how they get them. It’s like pulling teeth to get anything at all, unless one has a child every year-or every 18 months, as the Hamilton budget advisor infamously told her clients to do.

              Does Gareth M think that we’re all so stupid that we can’t work out that it would be giving it with one hand and taking it away with the other ?

      • Kevin

         /  2nd April 2016

        So he’s now making exceptions for the elderly. How soon before exceptions are made for prisoners, people earning over 100K etc?

        So much for universality.

        Reply
  5. Traveller

     /  2nd April 2016

    Horton says : “….. how can people debate an idea if they are told they are liars for considering the fiscal side?”

    Labour can instigate a conversation on the UBI, free tertiary or whatever they damn well like. They cannot, it seems, do so without their trademark petulance. I challenge any Labour/ left block supporter to show me the statesman, the stateswoman, the reasonable, the mature, the progressive in this current mob. I cannot see any issue where Labour occupies the sensible ground. They were on the “winners” side in the flag debate, but they sat along side their win by denying their ion policy, effectively selling their soul for a political gain, acting like Luddite buffoons and spoilsports. They snatched defeat from victory and the unelectable Moroney embodied the losers they are with her hate tweet.

    Labour spoil the advancement of any progressive, transformative policy by reducing anyone who would debate the issue as a loser. How can a position be advanced, let alone sold when they can’t get the finances right. Nobody in voterland can be assed even considering a UBI( a seismic shift in the distribution of our country’s tax income making everyone a beneficiary) when those proposing it can’t even sensibly debate costs.

    Labour’s shill Salmond’s lampooning of cost analysis gives nobody confidence. What part of “elections are won and lost on the ECONOMY” don’t they understand. As a voter I want to see how the benefits conferred better the social, educational and health outcomes for the most vulnerable in society. I want to see how this is delivered rationally, thoughtfully and that non beneficiaries are taxed only fairly to achieve this.

    UBI makes beneficiaries of us all. It’s something I am most opposed to in principle. I ask only that those elected to govern us maintain a fair and equitable system that delivers equivalency. When an opposition propose such controversial tax and welfare alternatives to advance they’d better be prepared to have costed it carefully first.

    Reply
    • Pantsdownbrown

       /  2nd April 2016

      I think you conveniently forget that Labour have a proven economic guru in a certain Grant Robertson………in Grant we trust!

      Reply
      • That’s a whole other subject PDB – the dearth of intellect or economic experience in that party. When you’ve got your ranks filled with pensioners who basked in Clark and Cullen’s sun – (the likes of King, Mallard Dyson etc) how can you invigorate and give any clout to a party. It’s insanity that a pasty man like Robertson has charge of finance. Even the best of them are wanting.

        Reply
        • Kitty Catkin

           /  2nd April 2016

          Pasty man ?

          Reply
          • Iceberg

             /  2nd April 2016

            Doesn’t matter which way round the S and the T are, it’s still correct.

            Reply
            • Kitty Catkin

               /  2nd April 2016

              What’s a patsy man, apart from being the mug who’s dropped in it by the ones who organise whatever it is ?

          • Traveller

             /  2nd April 2016

            A pasty man. A man who never sees or works in the sun. Never exercises, plays sport. A flabby, uncoordinated and drippy bloke.

            Reply
            • Kitty Catkin

               /  2nd April 2016

              Not someone who eats a lot of pasties, then ?

              Or wears pasties (if they can be said to be worn, they don’t cover much) ?

  6. Traveller

     /  2nd April 2016

    That’s Hooton of course. 😀

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s