Finance Work It’s time to take ‘free money’ seriously

It’s time to take ‘free money’ seriously

Plenty of experts already are. Photo: Getty
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Universal Basic Income, the idea that every citizen be granted a regular unconditional base wage, is rapidly pushing itself into mainstream politics. It’s high time we take it seriously.

While the Greens have been advocating UBI for years, earlier this month Luke Whitington, the deputy chair of NSW Labor’s Economic Policy Committee, proposed investigating a nationwide program.

A multitude of recent articles, research papers and government reports have started looking seriously into UBI’s feasibility in Australia. Some proposals suggest paying out between $10,000 and $30,000 per citizen per year, which is no small thing. And it doesn’t look like the idea’s on its way out.

Left wing proponents say a UBI would reduce crime, reward hitherto unpaid labour in the home, and massively reduce gender and income inequality, while essentially eliminating poverty – as payments would likely be set above the poverty line.

The most common funding source suggested for a UBI entails replacing elements of government welfare spending coupled with progressive taxation. There’s a lot of money to be saved via the elimination of the bureaucratic means-testing involved in programs like Newstart, for example, and the rich – who would also receive a basic income – would have their taxes increased to more than cover what they get.

There are multiple other issues a UBI could help relieve, such as the manifold economic pressures of Australia’s ageing population and jobs at risk from the rise of automation.

The number of people over 65 in Australia is projected to increase from around 2.5 million in 2002 to 6.2 million in 2042. How to pay for elderly care while 44 per cent of Australian jobs are at risk of being taken by robots in the next 20 years is a difficult circle to square.

Some visionaries, like Tesla CEO Elon Musk, think a basic income is the answer to this particular paradox and others in the tech industry are putting their money where their mouth is. Y Combinator, for example, is privately funding a pilot in Oakland, California.

UBI also has champions from the opposite end of the political spectrum, but when you dig down, what they’re suggesting isn’t quite the same.

Some Liberals believe UBI could replace the inefficient behemoth that is the Australian welfare system. Mikayla Novak, a senior researcher at the Institute of Public Affairs, Australia’s leading free-market think tank, argued that federal and state welfare spending could have been redistributed in 2013-14 to give “each adult Australian resident … about $714 per month in a basic income”. Remember, that would mean scrapping everything, including Medicare and child support.

The different funding options on the table make a significant difference to each proposal’s likely outcome. The effects of progressive taxation and restructuring Newstart are obviously worlds apart from those of eliminating the welfare state.

But around the world there’s a litany of alternative funding sources being put forward. Former Greek finance minister Yanis Varoufakis, for example, suggests taxing automation, and academic Thomas Pogge says we should put a global levy on natural resource extraction, while there are even calls for using a land value tax as a funding stream.

Financial transaction taxes and carbon taxes are other possibilities, reducing damaging economic activity for the sake of providing citizens with financial freedom. Others suggest quantitative easing, while others still say we should charge for access to common assets like the atmosphere, water and airwaves we all share.

Fortunately, some of these ideas are entering the Australian zeitgeist. Luke Whitington, who suggested UBI to the Labor party, said in July a land value tax levied on multinational corporations could help fund it.

The same Labor members who slapped down his proposal a few weeks ago are in the process of reviewing what they’ve called the “inadequate” Newstart allowance.

It’s yet to be seen whether they’ll be brave and imaginative enough to find basic income as a possible solution. With momentum picking up around the globe, it’s high time we take it seriously.

Charlie Young is a former employee of British think tank The New Economics Foundation and has studied economics and anthropology in the US and in London. He is currently studying economic transition at Schumacher College.

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