Should Australia consider a universal basic income?
Australia has enjoyed continuous economic growth and prosperity for the last 26 years. We have been a lucky country where there has been an abundance of natural resources, a decent minimum wage, universal health care, a high life expectancy (with some exceptions), and numerous other benefits.
But alongside this growth and prosperity, something critical has been missing. The lack of wage growth has meant people are not earning in real terms to keep up with the increasing cost of living. Rent and property prices are sky high, amenities are bursting the bank for some, and critical projects that are supposed to make life cheaper and more accessible are failing to provide – think the NBN.
As this continues to unfold, another element has crept into the labour market and is throwing our systems, laws and processes into chaos – I’m talking about insecure work.
Insecure work is carving out its place in the market. Whether it’s in the form of fixed-term contracts, freelance projects, casual work or the more murky gig economy subcontractor work, with these types of employment arrangements benefits are limited such as sick or annual leave, and income becomes less predictable.
Our institutions certainly haven’t kept up. You still need a fairly secure full-time or part-time job to qualify for a bank loan, rental agents are quick to avoid those with applications underpinned by freelance or gig economy work, and our legal understanding of whether on-demand employers like Uber, Foodora, and Deliveroo are employing their drivers or riders or not has left many workers in the lurch, potentially exploited by the advances in technology and business models.
Alongside this, the Newstart and Youth allowances remain unchanged for more than 20 years, and those reliant on this kind of support during times of unemployment or underemployment find themselves living below the poverty line and, in some cases, trapped in a cycle of bad employment experiences.
The reality is work is changing for good. It is predicted that a third of Australian jobs will be lost to automation and digital technology by 2030. This will likely leave human workers with jobs that require key human characteristics like critical thinking, creativity, problem solving and human-to-human communication.
Sounds great – right? But what happens if there aren’t actually enough jobs for the number of people looking for jobs? Well, that’s currently already happening. In late 2018, for every 1 job there were 15.79 workers. Traditionally, the income support safety net would provide some support to those experiencing unemployment. But if more and more people become unemployed or underemployed due to automation and digital technology, then we will begin to see an increasing number of frustrated citizens who are kept living hand to mouth, and unable to contribute meaningfully to Australia’s overall economic and social prosperity.
Is it time to consider a Universal Basic Income?
A Universal Basic Income (UBI) is a payment that is automatically made to all people of working age to cover their living costs and basic needs not in exchange for work activities or labour. A UBI is thought of as having three characteristics: it is given to all and does not require specific test or criteria to secure; it is paid without conditions (unlike working for the dole); it is a high enough income for an individual to live off.
A key reason that UBI has come back into debate is because of automation and digital technological advancement. Some argue that it is inevitable that technology such as this will eradicate jobs and work functions permanently. As a result, people will lose jobs and inequality and poverty will grow. Alongside these job loses, rent will still need to be paid and food will still cost money. In essence, life will continue to have a dollar cost to it, but people won’t have dollars to spend.
Some criticism of the UBI argument is that it’s not guaranteed technological development will equate to permanent job losses. Others believe the cost of UBI is too much and would have a devastating impact on the economy. However, this sort of prediction glosses over the adjustment that would happen to other welfare payments and services that already cost a significant amount.
Another concern is that unconditional payments that are high enough to live off would result in able-workers withdrawing completely from the workforce. As a follow on from this, It is suggested that the UBI will not be able to mitigate the secondary impacts of long-term unemployment such as mental health and social isolation.
These appear to be valid concerns. However, it doesn’t render a UBI completely baseless. It merely shows that the policy idea needs to be adapted in such a way in order to address these issues. A UBI may not need to be accepted completely, and instead be adapted to ensure a fair system (that isn’t punitive) but promotes equality and social health for communities across Australia. For now, it may be worth watching the various trials of UBI schemes planned globally in Finland, Canada, and the Netherlands.
There are some overlooked benefits of a UBI or some kind of adaptation as a social policy. The UBI could be an effective way to release people for the poverty trap and advance social equality. This would happen by relieving the pressure of short-term contracts, insecure incomes, and casualised workers. It also has the potential to cut the bureaucracy of compliance and a means-tested welfare system – something which recently has come under fire after a government commissioned review, I Want to Work: Employment Services 2020 Report, found that low levels of employer engagement, ongoing issues of long-term unemployment and high staff turnover are all contributing to a lack of quality outcomes for unemployed people. Another overlooked benefit of the UBI is that, if such a policy were in place, unpaid domestic labour could indirectly be recognised as a valid work activity and be remunerated accordingly.
Ultimately, opponents to the idea of adopting a UBI for Australia may have the disadvantage of looking at the proposal through the lens of the old world of work. The belief that a good education leads to a good job with stability and less pressure for individuals and households to survive. But this reality is changing, and while it may not be as dramatic as some predict – with all jobs disappearing to robots and AI – there will be less early-career and entry-level jobs available to new generations coming up in the workforce.
Because of this, something needs to be done. And the current system of welfare which has been proven to pay below the amount necessary to meet basic needs must be reimagined in the new world of work.
Nina, please see Number 10 at: https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/Newstartrelatedpayments/Submissions
The most important benefit of a UBI, which is rarely recognised, is that it would address current punishingly high effective marginal tax rates resulting from the withdrawal of welfare benefits as income is earned.
A UBI could be readily afforded if it replaced current tax-free allowances and tax exemptions for the rich – see my analysis here: https://www.openforum.com.au/australia-should-introduce-a-universal-basic-income/
The answer is yes. Good for the country, good for the people, the miriad benefits pay for themselves over and over. It is, among the more obvious advantages, a blow to the criminalisation of poverty that is used to mistreat workers and the unemployed.
Why only working age? Should apply to all.
All citizens are equal.
Should replace aged pension , and be at least in part for children.
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