Universal basic income would aid Australia’s virus fight

Over the past week, I have gone to pains to explain why I believe a temporary universal basic income (UBI) is necessary to ease the acute liquidity crunch afflicting Australian households and small businesses.

To refresh, the UBI that I have proposed would work as follows:

  • Every taxpayer and welfare recipient would receive a $1,500 taxable income payment each fortnight for three months from the government, with an option to extend the scheme for another three months if necessary.
  • Business owners that have been forced to close, and have stood down staff, would not be required to pay sick leave or entitlements while the UBI is in effect.
  • The UBI would supersede all other forms of welfare while it is in operation.
  • The amount of tax owing would be worked out during the subsequent annual tax returns process.

The benefits of this UBI are as follows:

  1. Speed and simplicity: the UBI can be implemented within a fortnight during the usual welfare payments cycle. Every taxpayer and welfare recipient receives the payments, so there are no eligibility hoops to jump through. It would eliminate the need to apply to Centrelink or MyGov, thereby relieving administrative resources.
  2. UBI would ensure that everybody can meet their basic living expenses over this difficult time.
  3. Businesses would be able to close their doors and pause their operations without having to pay their staff, which is generally their biggest expense.
  4. Because it is universal, it avoids ‘picking winners’ and leaving losers.

In short, a temporary UBI would provide an economic and social safety net that would avoid a household and business liquidity shock while the economy is placed on ice. It would ensure that the Australian economy does not descend into another Great depression with widespread business collapses, mass unemployment, and poverty.

While the economic arguments are robust, there is also a strong medical case for implementing a temporary UBI as soon as possible.

As reported yesterday by The ABC, the coronavirus can only be controlled if 8 out of 10 Australians stay home:

The success or failure of Australia’s coronavirus fight relies to a remarkable degree on just one thing, new modelling has found.

And that thing is whether individual Australians now follow official advice — and just stay home.

The data comes from a complex model of how COVID-19 could spread in Australia, which finds:

Coronavirus will continue to spread virtually unchecked unless at least eight in 10 Australians stay home as much as possible.

If that slips even slightly — to seven in 10 people — the fight to ‘flatten the curve’ will be lost…

80% of Australians – effectively all non-essential workers –  will only stay home if they are paid to do so and do not have to go out and work to stay afloat financially. A UBI is the best way to ensure this happens.

What Australia certainly does not need is to experience a repeat of the scenes that we witnessed on Monday whereby thousands of people queued outside Centrelink offices in a bid to access welfare under the current complicated and convoluted system, in turn spreading the virus.

A UBI would avoid these scenes because it would apply automatically without needing to lodge an application nor gaining bureaucratic approval. In turn, it would aid social distancing.

The absolute last thing Australia needs during a pandemic is people huddling together while they queue for welfare. People need to stay home.

Once the pandemic has passed, we also want the economy to be able to resume normal operations without the loss of thousands of otherwise viable businesses and mass unemployment, which could take years to recover from.

UBI is a policy no-brainer, given the circumstances.

Leith van Onselen

Comments

    • Yep. The only changes I’d make:

      1) Have the ATO administer the payments (not specified by Leith) because their systems can handle it.
      2) Delay discrepancy settlement to the 2022 year to allow for the inevitable snafus on all sides.

  1. I don’t have a problem with a UBI if it is seen as a nation’s dividend to all (except corporations), greater for those over 65 and disability. With a tax system that incentivises real work as opposed to tricky tax concessions. Close centrelink.

    We can avoid foreign debt by printing local money as why should govt have to pay interest on foreign printed money that we loan. The wealth creation of the project derived to the nation (not mates) ie dam building, value creation backs the printed currency. Things such as land banking wealth creation can belong to the people. But somebody has to invoke perpetual war with repression du jour.

    Some propose doing away with people’s taxation altogether, whereby govt just prints a percentage of GDP for revenue, and run lean.

    Better national income from resources and banking with drastic changes to banking. Problem with MMT is bankers control it, plutocratic marxists love the control. I don’t like land value tax, we need to have minimal yearly audit-able taxation in general dis-empowering govt. against individual. Freeing up tax compliance sector to other wealth building endeavours.

    marxism is to workers rights as to what greens are for the environment – only a vehicle to power and other agendas.

    If Australia needs a 15% free carry on corporation’s capital, price of doing business, raising 1% every year in leau of a death tax of an ongoing body corporate. The free carry via debt in their favour has to stop or be balanced. Also death taxes on the wealthiest 1% with far reach.

    The rights of the 90% does not have to be considered ‘left’, it can be apolitical people’s interests.
    It is plutocracy vs people.

    • If you were to design a fair economy from scratch what would it look like? Could it be max $300k earnings per year per adult, to max $10mil in total assets – the rest back to gov with penalties for hoarding. When someone dies (in transition to this) their heirs (family only) receive within these rules. Overseas hidden assets criminal offence. Enables UBI national dividend society. Ensures diversification of ownership of corporations, as these assets returned to the nation via funding govt programs.

      • Under that model, no one does ikea in australia, or lego, or any other large international corporation bec ause the government confiscates most of it from you. They will all be pushed overseas.
        A local food canning factory would probably exceed that threshold, and the TP factory.

          • Good luck with getting a group of people all on the same page enough to start anything up though.

          • Ermo, where would you classify me politically? I consider myself apolitical, knowing Christian foundations provide blessing and stability. Even some atheists embrace secular Christian model for society ie dawkins.

        • ‘A local food canning factory would probably exceed that threshold, and the TP factory.’
          The income threshold is for the owners of capital/shares for all sources of income (and wealth), the company can divide large profit up amongst many shareholders and destroy plutocratic concentration of wealth. It would break up companies owning other companies ie the plutocratic model etc.

          • Thats great for a while with a wealth of companies all built up.
            Who will create the new companies, to replace the old? There is no longer any incentive.
            A public float of shares is usually the point where the original owner realises their investment to build the company. Why go to all the trouble and risk millions if total return is capped?

          • Plenty of incentive if low/no taxes to $300,000 per year. Create middle class wealth, transferred from the plutocratic corporate sector. Reverse anti-trust to localised businesses and supply chains. Just smaller mkt cap co’s. except many more of them. Ie many soft drink manufacturers supplying local markets instead of centralised few.

          • The “many soft drink manufacturers supplying local markets instead of centralised few” model is very inefficient. It is akin to each farmer looks after a small block of farmland and each needs to invest in their own machinery.

          • Darth Sidious I disagree.
            Robotics will change everything, including nature of employment.

          • No, robotics won’t change the basics of capital investments. The smaller the size of each local market it makes less sense for each local manufacturer to invest in robotics.

          • If the US navy can 3d print submarines, I think low cost 3D printing of robotics is not too far away. The next wave of deflation in manufacturing must not go as hidden cream via debt to the corporates.

  2. So if a UBI is introduced will the previous welfare recipients ie. those on Jobseeker (Newstart) payments still have to do mutual obligation, such as job searches or would everyone get a respite during the period of the UBI?

  3. 7 hours ago

    Farage Calls for Temporary Universal Basic Income

    https://www.breitbart.com/europe/2020/03/25/farage-calls-helicopter-money-ubi-during-coronavirus-crisis/

    Nigel Farage

    The Government must support Britain’s forgotten workers – or face disastrous consequences

    smallholders are worried that people might soon start stealing their eggs, chickens and even this season’s lambs.

    the desperate plight faced by the self-employed

    If the Government is perceived to be helping big corporate entities while throwing to the wolves the 11 million-strong army of men and women described above, the reaction could be very ugly. The idea of wages still being paid to somebody who works for a mothballed company, and a family living next door whose main earner is self-employed not being able to buy staple foods, is unthinkable.

    https://www.telegraph.co.uk/news/2020/03/24/government-must-support-britains-forgotten-workers-face-disastrous/

  4. if they just froze stock markets, debts, payments, rents, repayments, taxes, … and provided UBI for few months, the damage would have been way lower and it would have costed a fraction of what they already spent

  5. UBI needs to replace ALL other welfare payments – from Unemployment Assistance to Student Loans to Old Aged Pension Payments – all of them.
    And….Make it permanent!
    That will remove a dozen then redundant Government Agencies ( yes, there’s be job losses, but they are around its this very day, but the savings will go towards compensating the cost of the UBI) and the tax system can be recalibrated to take into account the ‘tax rebate’ effect of UBI for those that ‘don’t require it’.
    “That will mean people get paid not to work at all!” is usually the retort. “Sure” but if you want to live on $1,500 per week, then life isn’t going to offer you much anyway. And to attract those ‘lazy’ workers off their couches, guess what? Wages would have to rise! Isn’t that what we want?

    • $1500 a week is pushing towards median full time earnings. Huge numbers of people already live on less than that.
      $1500 a fortnight is $39k a year, and still above what a large chunk of the working population actually make.

      Edit.
      I suspect all people currently not working due to closures are earning below 1500 a week, and a huge percentage are below 1500 a fortnight. Do you really think the economy can function without them working, or can afford to pay them enough above that to encourage them to work without massive price increases.

      • boomengineeringMEMBER

        I think Janet meant $1,500 per fortnight in her statement.
        btw people always want a bit more and depending on the amount of UBI, most would go to work to get the extra required.

        • To get someone to work in sydney, it’d have to be a lot more, or sydneys living costs would have to crash.
          Moving out of sydney will save you more than the extra you’d earn.

        • Yes, I’ve always thougt this, it’ll just raise the earnings floor. People will mostly be exactly the same, most will still work hard as they want to get ahead, sure there will still be that small % that aren’t interested in wealth etc & would live in Nimbin (know what I mean), but we’ve always had them they just used to be called poets, dreamers, shamans, philosophers etc. Also UBI would allow another % of the population to do better eg attend Uni, open new businesses etc.

          • JojoyubbyMEMBER

            The additional plus for the UBI is that people WILL move to regional area if they want to live on UBI alone. that will in turn boost the demand in regional area more jobs in service sector.

      • MountainGuinMEMBER

        Agree 1500 per week or 78k per year is too much in australia esp if you dont need to be paying work related expenses. But any number can be critised. What I struggle with is that as UBI levels increase over what would allow comfortable living in a place like a small local town, you almost need a national culture that fosters people generally wanting to give back or earn more, sorta like in nordic lands. I dont think Australia has that culture which would mean either a low UBI or a hell of alot of folks who choose to live off UBI which places more burden on those working which isn’t sustainable. How do you create such a culture

        • Not sure how you create it, but I can tell you how you don’t.
          Bringing in large numbers of unskilled migrants, who form themselves into ethnic ghettos.

    • the real problem is that introducing UBI without complete change of tax laws would just increase income of the rich that don’t pay any tax because they have no taxable income.

      UBI would require abolition of superannuation, removal of almost all CGT discounts, limits to tax preparation, financial advise, .. costs, charity donation, and closing all the other loopholes

      so basically it’s never going to happen without a major catastrophe on a WWII scale – this virus doesn’t look like anything near

    • This. Maybe Labour with their bold reform plan last election could have taken this next step.. But LNP won on the basis of “dont change anything”. UBI is a step way too far.
      UK govt won on the basis of “change everything, let’s get out of EU”. They have a mandate to “change” stuff. We don’t and we’re about a decade away of suffering that will get us riled up enough about it.

  6. Ronin8317MEMBER

    All those measures in the budget does not help a small business when you can’t open due to a government decree. The government made a lot of people unemployed in three name of fighting coronavirus, then make them infected via forcing them to queue up at Centrelink. This is as fcuk up as you can get.

    Total social breakdown is not far away.

  7. JunkyardMEMBER

    Bahahahahahahaha
    An LNP government bring in a UBI
    Aaaaahahahaha that’s a good one Leith!

    Thanks for the morning laugh. Now back to the apocalypse.

  8. Guy Standing being interviewed by Martin North.

    https://youtu.be/mJal5BiV9lE

    Mr. Standing literally wrote the book on UBI. He has run, or advised on, UBI experiments in multiple countries. He also does not see it as a silver bu11et. He recognises that a range of reforms are needed to prevent inequality from growing

  9. I think everyone is missing the end game here. In the same way that September 11 allowed massive change to be forced on society and take the lives of millions of people in the middle east that had nothing to do with the event.
    This COVID-19 will be used to restore the old order of feudalism in its original form.
    As the respected Mr Morris has highlighted on these pages before, this current way of life is in fact the interregnum between old feudalism and new feudalism.
    The people who become poor and destitute now will stay poor and destitute. Then when they get angry sent to some labor camp in Tasmania.
    Everyone intuitively knows there is something deeply wrong with the economy and society. We have been heading in this direction for a long time. Now the catalyst is here to make sweeping changes while the punter is still in shock.

    • Jumping jack flash

      Exactly!

      Nobody can point to QE and think, “now there’s a stable and sane mechanism to strengthen economic prosperity, and in next to no time after its implementation the whole economy will be humming along and we’ll be back to how it was in 2006”

      We are quickly approaching the end of the viability for this current crop of fiat money. If anyone thinks our esteemed economic and financial leaders don’t realise this then they’re crazy.

      The system is begging for a reset but nobody wants to be disadvantaged. The fundamental rule is that debt is forever until it is repaid in full plus interest. If this rule is broken then it will be catastrophic.

      The most obvious thing they can do is introduce a new currency with immense value which will reprice the existing trillions of dollars of debt to be miniscule. That way everyone gets to keep their debt repriced in the new currency, and everyone gets their interest paid.

    • The same WHO that fiddled and mumbled whilst China was on it’s knees now sh!tcans everyone else now that China is recovering? Gee, who pays their wages I wonder?

  10. Leith – you should do an article on what can be fixed in Oz (in a politically acceptable manner) while everyone is distracted with CV.

    eg:

    – end population Ponzi because we don’t need to artificially prevent recession now – will also help end PHON
    – write down NBN because who cares if another $25b hits the deficit
    – introduce proper domestic gas reservation while prices are low and under the guise of national security so the cartel can’t whinge
    – stop the SG increase to 12%.

    I’m sure you clever guys can think of many others.

  11. David WilsonMEMBER

    I don’t for the life of me see why full time employees such as those in all forms of government work and others that have to continue working in hospitals, education, transportation, police, electricity, water , food retail and distribution, farming etc should receive this payment, its crazy,
    I’m a pensioner, I don’t need the $750 they are going to send me now, why should I get an additional $1500 each two weeks, l can’t go out so will save it for the future which will do little for the economy in the near future.

    • drsmithyMEMBER

      The more complexity you introduce for eligiblity, the longer it will take to process.

      There are huge numbers of people in this country who live week to week, they will be the ones disproportionately impacted by current events, and they need money right now to do stuff like buy food and pay rent.

      Starting paying people right now so they can survive, and give the system a month to refine the criteria a bit and exclude the low-hanging fruit.

    • As DrSmtihy said – it’s about reducing complexity. Work out the details later. For people who remain in full-time employment, it might simply be a matter of taxing their overall income inclusive of the UBI for the current financial year and introducing a levy to be paid in subsequent tax years should you remain employed full time.

Leave a reply

You must be logged in to post a comment. Log in now