An ‘Age Pension’ for all Australians?

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The economic crises that have punctuated the 21st century, most notably the global financial crisis and the COVID-19 crisis, have led to a growing realisation that alternatives to our present system are possible and perhaps inevitable.

In particular, there has been an erosion of the belief that the economy is able to provide a decent income to everyone who wants to work.

A number of proposals have been put forward in the wake of this realisation, among them:

  • universal basic income, which would unconditionally provide every resident (children and adults) with a regular subsistence wage
  • a job guarantee in which the government would provide real jobs, at the minimum wage, to all unemployed Australians.

Many seem utopian, which isn’t necessarily a bad thing – it’s good to look beyond the day-to-day to consider how things could be done differently.

In a new Australian National University Policy Brief we propose something practical, which we are calling a Liveable Income Guarantee (LIG).

Take the Age Pension …

It starts with one of the most successful institutions we’ve got: the Age Pension.

Before the Age Pension was introduced in 1908, retired Australians were highly likely to be poor. But now, on some measures, retired Australians are less likely to be in poverty than Australians of less than pension age.

Our proposal is to replicate this success for the entire population.

We are proposing a payment equal to the pension, and subject to the same asset and income tests, that would be provided to everyone who is willing to make a contribution to society consistent with their ability to do so.

… extend it to others

‘Contribution’ would be defined broadly to maximise contributions. Examples would include full-time study, volunteering, caring for children, ecological care and starting a small business.

The biggest shift relates to the treatment of unemployed workers and single parents.

JobSeeker is set to return to the unliveable rates of the former Newstart after the end of December.

We are suggesting that instead it be lifted to the rate of the Age Pension, which is about where it used to be before unemployment benefits were frozen in real terms in the 1990s.

Newstart versus the Age Pension

Dollars per fortnight, single. Source: Ben Phillips ANU, DSS

Parenting payments have also been notoriously low, especially for single parents, whose support has been cut consecutively by five prime ministers from Howard to Turnbull.

Unlike some proposals for a universal payment to all citizens, the increased expenditure required for the liveable income guarantee would be relatively modest, as little as $20 billion a year.

Do it for the price of tax cuts …

This is roughly comparable to the budget cost of the income tax cuts, primarily directed to high earners, legislated to take effect in 2022 and 2024.

The real barriers to the adoption of the proposal are ideological. The central assumption underlying economic policy in Australia has been that in a market economy everyone who wants a decent job is capable getting one.

It has followed that the unemployed are seen as either unwilling to work or suffering from particular deficits that need to be remedied by training and job readiness programs case by case.

Read more: ‘If JobSeeker was cut, the unemployed would be picking fruit’? Why that’s not true

Over the first two decades of this century, it has become evident this assumption is incorrect. The global financial crisis and the subsequent swing to austerity produced sustained high unemployment in much of the developed world.

While Australia avoided the worst consequences, thanks to well-timed stimulus (here and in China), the unemployment rate has failed to fall below 5 per cent as underemployment has climbed for more than a decade.

Any prospect of a rapid return to full employment has been dashed by the pandemic.

Read more: The jobs market is nowhere near as good as you’ve heard, and it’s changing us

Longer term, it is clear that many existing jobs will disappear as a result of technological change, and it isn’t clear that our current institutions will be able to manage the process.

While governments should commit to a return to full employment, they are unlikely to be completely successful.

Ready us for the future

The implementation of a liveable income guarantee would allow us to be better prepared in case they are not and to be better prepared for future disruptions, be they pandemics or anything else.

On the brighter side, technological progress has increased our productive capacity to the point where we can afford to support a much wider range of non-market contributions to a market economy. The crisis has shown us how important many of those contributions are.

Looking beyond the crisis, it is possible (relatively simple) to create a society in which everyone has a decent standard of living, and no-one is excluded.

Providing dignity to everyone who makes a contribution would benefit us all.The Conversation

John Quiggin, Professor, School of Economics, The University of Queensland; Elise Klein, Senior Lecturer, Australian National University, and Troy Henderson, Lecturer in Political Economy, University of Sydney, University of Sydney

This article is republished from The Conversation under a Creative Commons licence. Read the original article.

Would a Liveable Income Guarantee solve many of society’s problems? Do you support the concept?

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Total Comments: 54
  1. 0

    Absolutely! We live in a rich moral country. The least we can do is help our pensioners who are doing it though.

    • 0

      But nothing in this proposal is about helping pensioners who are doing it tough, Bernie. Much less aged non-pensioners who may be struggling for various reasons. It’s about giving everyone who doesn’t work and hasn’t lived responsibly and saved a handout and depriving anyone who has a go, or has had a go and put a nest egg aside. It’s about handing out to bludgers, cheats, manipulators and no-hopers, along with some genuinely needy – rewarding the irresponsible and the unproductive and punishing workers, savers and investors, just as the OAP system currently does, but extended to the entire population.

      I actually support the universal income idea, but with no means test attached. The means test makes the whole system a stupid farce and will destroy the economy.

  2. 0

    I’m over academics spending other people’s money. This proposal would be easily rorted and a nightmare for bureaucrats to administer.

    • 0

      Rorted? Everyone gets an equal payment.

    • 0

      Maggie, they only get the equal payment if their assets are below a certain level – which is not mentioned in the article – only in the paragraph above which says it is still dependent on the amount of assets people have, only those without any assets will qualify for the “payment to all Australians”.

    • 0

      Correct, AutumnOz. Savers and planners continue to be punished and deprived until their savings disappear, while the rorters and cheats have a party. There are already too many rorting the system.

      This universal income is a nice theory, and I support to ideology, but applying a means test wipes out all semblance of fairness and invites major rorting. Give EVERYONE the same, regardless of income and assets – or a least regardless of assets, so income is guaranteed. Currently, many retirees with assets live below the poverty line, and selling assets is not always an option for a number of reasons. Tax can even out inequity if everyone is given the same. Depriving savers is Communism, and it has failed everywhere it was tried.

  3. 0

    A universal payment made to all citizens to cover the most basic needs of food and shelter should be considered as a matter of urgency. It should be irrespective of income or means test, where a person with the drive to work can do so and be rewarded accordingly. The free market of demand and supply would determine pay rates. This would free people to follow their passion and interest in life without having to worry about survival. This would lead to better work performance and a happier, healthier and freer population. To finance this we should consider a government bank like we used to have, where money is issued not as debt to be repaid (with our taxes) but as a credit. Our Commonwealth Bank used to fulfil that role before we privatized it and came under the umbrealla of the world central bankers. The current monetary system is a fraud and unsustainable.

  4. 0

    The government could save a lot of money if they stopped paying pensions to people overseas especially if they have left the country for a long time. Maybe just pay 1/2 the amount if they stay away for more than 2 years.

    • 0

      That is already happening. If you have not lived in Australia for 35 years you will get a reduced pension when overseas. One 35th deduction for every missing year – so if you have only been here 17 years you get half. And you get no Medicare facilities in most countries overseas. The govt is saving money if people elect to stay overseas at pension age as there are no people on free hospital lists.
      A problem exists when Aussies bring in aged relatives from countries with no pension and then they do access our free medical facilities.

    • 0

      Well for your information any Australian that lives overseas does get a reduced pension and they do not get any of the handouts that those living in Australia get. They have to cover themselves for their own medical, they do not get free travel, they do not get utilities subsidy, they do not get rent assistance. Because of being shafted by my employer, the insurance company and the government when I got injured at work at the age of 68 when the retirement age was still listed as 65 in the workers compensation act. I got NO SUPPORT from any of the parties and I had to use my super to live but by me moving overseas I at least save on the daily painkillers that I would need in Australia because of the climate there and now you want to take what I believe I am entitled to with the age pension away from me. So the Australian government does save a lot of money from those pensioners that do live overseas. By the way I am an Australian born citizen who served in the armed services for Australia and never claimed the dole in my whole life and I worked pasted the retirement age so Mr Scumbag you can try and take my pension away from me and I will return to Australia and then the amount that would have to be paid to me would be double of what I get now.

    • 0

      Viva, so what do you do with all the people in Australia that receive a pension from overseas & there are thousands of them, take half of what they receive like a non Australian income tax, only fair.
      And how much in the big pond will the government really save by your proposal taking into consideration that expats are still income & asset tested no matter where they live on this earth.
      Not much thought has gone into your comment has it, how old are you 16, 18 maybe.

    • 0

      Karl, I am getting a small pension from overseas. C/L helped with that and indeed, there are thousands of us. Our problem now is all the new chums come from needy nations with no pension systems and they are costing us money. None coming in but plenty going out to other needy rellies overseas.

  5. 0

    Giving those who leave school the same allowance as those who have given 45 years plus to the economy is completely farcical. I do agree with a universal OAP with the relevant assets and income tests.

    • 0

      Yes indeed and tax payable on all the items, including the universal pension, no problem with that at all. I might add that personally I would not gain anything but it would make the system fairer for the aspirational Aussie (the ones who put their kids thru exxy schools).

    • 0

      Pancake the rubbish you are espousing is COMMUNISM. Go live in North Korea and experience it first hand. You won’t own a house, you will have no spare bedroom for the grandkids to come and stay, you will have, in all probability, an illegal migrant family living in it, sharing the bathroom, kitchen and living area. They will dominate what you watch on TV and you will be looking after their kids whilst they work. You have given NO thought to how the governments, both state and federal, are going to fund your communist utopian dream. I can assure you it will be subsistence level at best. Are you used to missing meals and having no control over your life. Keep spouting the rubbish you are and it will become reality. Look at Victoria and Queensland, one is there and the other nearly so.

    • 0

      Pancake, the whole idea of a universal pension is to do away with all asset & income testing. As Mariner said all income earned through working, super, interest, OAP, investments etc would be taxed the same as all workers are today.
      Mariner, the OAP is included as an income for tax purposes already.

  6. 0

    The recipients would all be in favor the people having to bleed for it not so much. As Jesus said: “The poor will always be among us”. True, some are genuinely in need and other have themselves to blame. How do you sort them out? As Horace Cope stated the system will be easily rorted and the cluey ones get the dough not the needy.

  7. 0

    I have only worked for 50yrs they tell me I can work till I am 67yrs I am so sorry master I did not release you were going hungry please don’t knock on my door with a blue tie on

  8. 0

    Because people are becoming lazy and enjoying jobseeker too much. I believe if someone wants to work they should be compensated. Don’t make it detrimental for people to work and save. Make it more attractive. Because many are reviewing their lifestyle at the moment because they have enjoyed the time off too much. Make it worth while for workers.

  9. 0

    This article would have been written by an academic or some other such person who has never actually worked in their lives. These people are professional students who continually study and never contribute in monetary terms. They follow the beliefs of other such bludgers and exist in most cases on the public purse. They live in a utopian world we’re no bad ever really happens and we must look after everybody, no matter how little they they contribute to society, or what criminal acts they may perform. It’s akin to there’s no such thing as a bad child. This attitude and nonsense has been spreading since the 60s whereby the ignorant believe anybody with a host of letters after their name are intelligent and not simply con men and women such as Peter Foster etc. Everybody should work, take pride in themselves and their communities and what they can do for their country. This is what once made Australia great and not the blood just ate that it is now everyone wants to sit on their ass and look for a hand out as soon as their children leave school they’ve got them down at Centrelink learning to follow in their parents footsteps as 3rd 4th 5th generation of bludgers. if there’s a job,it should be taken, no matter what it entails. Something to keep you busy and support yourself until something better comes along. That’s how you improve Australia not by listening to academics. My God. Jacka.

    • 0

      I agree Jacka. I do think we undervalue some genuine ‘jobs’, such as caring, for example. And I think we fail to assess disability correctly. But able people should be doing something productive in society. I support the idea of a universal basic income – NOT means tested – as a safety net, but it should not be anywhere near the level of the OAP and should not serve as a disincentive to working and saving.

  10. 0

    It’s not that we can’t feed the poor, it’s because we can’t satisfy the rich

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