Why Australia needs a temporary universal basic income

So, the Morrison Government has announced a second round of economic stimulus worth $66 billion with money for those made unemployed by the coronavirus, households, pensioners, and small businesses. Details of the second package are found here and here.

Certainly, the complexity surrounding the Government’s stimulus measures has increased with the second package, with multiple rules and payments applying to people in different circumstances. And as inevitably happens with these types of packages, there are always those that slip through the cracks and miss out on meaningful assistance.

The Morrison Government has also suggested that more rounds of stimulus are in the works and will be announced in due course. Therefore, we can expect complexity to increase even further.

Instead of all these different forms of stimulus applying to different cohorts, it is time for the Morrison Government to instead announce a universal basic income (UBI) for the next three months, with plans to extend it for another three months if required.

This UBI could work as follows:

  • Every taxpayer and welfare recipient receives a $1,500 taxable income payment each fortnight.
  • Business owners that have been forced to close due to the coronavirus, and have stood down staff, are not required to pay sick leave or entitlements while the UBI is in effect.
  • The amount of tax owing will 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. Everybody receives the payments, so there are no eligibility hoops to jump through.
  2. UBI would ensure that everybody can meet their basic living expenses over this difficult time.
  3. Small businesses would be able to close their doors and pause their operations without having to pay their staff, which is usually their biggest expense.
  4. Because it is universal, it avoids ‘picking winners’ and leaving losers.

The only negative from a UBI is that those that retain their jobs and maintain their salaries will unnecessarily receive additional welfare support. However, this concern is mitigated by the fact that a significant proportion of this income would be paid back via the tax system when they lodge their annual tax returns.

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

The Morrison Government should give a temporary UBI serious consideration.

Leith van Onselen

Comments

  1. Not temporary UBI, permanent UBI. Same as how we should permanently: ditch the NAPLAN torture, ditch the sacred surplus, raise the dole, lower migration, reduce overseas student numbers, and so on.

    But it will be easier to prise Abe and Coates off the July Olympics, than prise Morrison and Frydenberg off business as usual. It’s the only thing they understand, and barely at that.

  2. Or you could just end a ridiculous shutdown and quarantine at risk persons……crazy idea right. Waaaay crazier than shutting down an entire country and causing a depression

  3. Ronin8317MEMBER

    The queue outside Centrelink for the new unemployed is massive, and no social distance of 1.5 meter either. When they are all closed due to coronavirus infection there will be complete chaos.

  4. Yeah but if you give everyone security of food on the table, how do you control them through fear?
    Servitude to the top 1% doesn’t have the same ring to it if your livelihood doesn’t depend on it.

    • You are thinking correctly, Divya. Almost alone amongst the many who miss this important point.

  5. MB readerMEMBER

    I think it difficult to justify giving every taxpayer $1500 as UBI. A lot of wealthier people just won’t spend it. As for the rest of the country, I am not sure where they will spend it. Apart from mortgages, at Woollies and on Netflix?

    • boomengineeringMEMBER

      Reader,
      the amount of wealthier people doesn’t justify the huge expense of means testing everyone.

    • Just listening now to the stories of Centrelink queues and MyGov crashing, a simple easy to deliver temporary UBI makes perfect sense. If nothing else it will significantly reduce the tsunami of mental health problems about to hit.

      At the same time have a temporary CV levy of say 1% into the top marginal rate for FY 2021.

    • drsmithyMEMBER

      As for the rest of the country, I am not sure where they will spend it

      On survival – food, shelter, utilities, medical care.

      There’s probably an argument that it should only be available to people who have lost their job (or contracts gone to zero hours), rather than just “everyone”. Should be a couple of big dumb rules that don’t create too much of an additional administrative burden but exclude a majority of those who shouldn’t need assistance.

  6. Here’s the good news: the number of people you’d need to hire to expedite a complex program like this is off the dial. There’ll be whole new departments of people trying to figure it all out and fck it all up.

    They could have kept it simple and just sent every household a cheque (requiring no additional employees whatsoever), but no …. not too bright this Gubmint.

      • Totally. The good thing is I take Paypal, direct transfers, hard cash – the lot. 😉

    • Yep. Just pay into every bank account linked to a TFN. At the same time massively increase criminal penalties for TFN fraud.

    • drsmithyMEMBER

      Doesn’t need to be complex. The ATO knows (nearly) every taxpayer’s bank details.

      Social security administrative complexity is almost entirely due to the conservative obsession with identifying the small fraction of people who “don’t deserve” it and/or actively rort it.

  7. In Jacobstan every home has a high flow shower head.

    In Peachystan every home has 15 [email protected]

    In harrystan by 2030 no child shall be without a left handed mouse.

    In ermostan no choke shall be unjetted.

    in Mibostan every lawnmower shall be electric.

  8. Nice, including it as taxable income is an elegant way to mitigate the lack of means testing but without the bureaucracy and time delay.

    How (if at all) would it interact with welfare programs?

  9. BoomToBustMEMBER

    The thought has merit but needs some refinement. It should means test it according to income and assets. Why should the wealthy retiree’s and property developers or those who hold most the wealth get a payout?? This should go to those who NEED the money, not those who whinge the loudest (retirees – franking credits etc)

    • boomengineeringMEMBER

      The amount wasted on those not in need is much less than the amount wasted on bureaucracy and means testing.

      • BoomToBustMEMBER

        The ATO knows how much you earn via your tax return. Make everyone fill out a form and declare your assets and income, cross match it via computer. If you are found to have rorted the system you’ll get the usual ATO treatment.

    • No need to pay to retirees – they haven’t lost their income. They might just move to the pension quicker than they thought.

  10. At the moment a first year apprentice is better of quitting their job to earn more from newstart

    • Yep. I’ve got a family member that works in recreation industry. Her workplace has shut and will likely remain shut for 6 months. She’s on a part time contract for 7 hours per week. I’ve told her she’s best of quitting now and getting on newstart now….

      • Newstart now known as Jobseeker
        +550 per fortnight Corona supplement
        1100 per fortnight

        • Better than $0/fortnight for what could end up being longer than 6 months. She’s young so it all goes back on uber eats and booze anyway.

  11. Sorry not interested in bailing out those that couldn’t imagine a rainy day and went all in on the ponzi. Glad we have LNP who are anti this exactly.

  12. Reverse Transcriptase

    Hand in hand with a UBI must be massive tax increases for those who sail through in secure high paying jobs, like me. I would quite happily see a big tax hike if it would mean less chance of complete breakdown in social order which is where we are heading.

    • Ah yes let’s completely destroy class mobility , and discourage people from productive activity

      How about start taxing WEALTH instead of income

    • drsmithyMEMBER

      A few more tax brackets at the top for very high incomes (it’s ridiculous people earning a million /yr are on the same tax bracket as people earning $200k/yr).

      And a wealth tax on easily identified assets (property, shares, cash, cars, boats, artwork, etc) greater than, say, half a million bucks with exclusions for the PPoR.

  13. Who pays for this $1500 a fortnight to everyone?

    The next 12 months is going to miserable with death a constant in our lives, but we’ll get through it and we can do it without completing trashing the economy for decades to come.

    The solution to our debt fueled orgy is debt fueled UBI?

    Jobs are going to go, people will be living in backyard tents, families in a friend’s garage, formerly middle class people will queue up when the food bank makes the weekly round in their suburb, but it will go on without burdening taxpayers for decades to come.

    At some point we go to work and take our chances. The elderly isolate themselves. We survived the Spanish Flu and the Plague, measles, polio, we’ll survive this.

    Countries like Indonesia will be test cases for herd immunity because there will be mass social disorder in the coming weeks as bellies start to growl.

    • Yes, davie, it’s really not that hard. Don’t worry, they’ll get it eventually.