Basic income proposal seeks to ease post-pandemic poverty

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A basic income support system could lift half a million Australians above the poverty line, according to a new study, with a big proportion of that number older unemployed Australians.

The study’s lead author, Macquarie University senior economics lecturer Ben Spies-Butcher, told The New Daily that the JobSeeker initiative during the pandemic had loosened means testing of income support, but that we are now returning to a “stingy” system.

“The medium-term problem of high unemployment is also one of high under-employment and creating a secure income source now for those (workers) is psychologically extremely important,” said Dr Spies-Butcher.

“We have to give people income security, and we need to make it easy for them to manage while there are going to be very unpredictable labour market earnings.”

Projections indicate that unemployment will remain above pre-pandemic levels for four years.

Researchers say a basic income scheme of $18,500 per annum would cut Australia’s poverty rate from 11 per cent to 9.1 per cent.

They investigated replacing JobSeeker and Youth Allowance with government payments to most people of working age but concede such a policy is “not a straightforward political choice”.

That’s mostly because taxation would need to rise.

“Our results suggest basic income has the potential to significantly reduce inequality and poverty while also requiring taxes to rise substantially. Placing these trade-offs in international context, we find the policy would reduce inequality to levels similar to Nordic welfare states while increasing overall taxation to approximately the OECD average.”

The federal government came to office with income tax cuts a cornerstone policy.

The pandemic has revived interest in ‘universal’ basic income schemes, long proposed but never implemented. A universal basic income (UBI) is defined as “a payment made to all adult individuals that allows people to meet their basic needs. It is made without any work or activity tests.” In 2016, an Australian parliamentary paper discussed the idea.

“UBI has returned to the policy agenda as the result of concerns about technological change. Some commentators argue that new technology will permanently reduce the demand for labour leading to job losses, stagnant incomes and worsening inequality,” the paper stated.

It cited common objections to UBI including “scepticism about the idea technological change will lead to widespread job destruction, concern about the high cost of a UBI, concern about the likely impact of a UBI on the economy, and concern that a UBI will undermine social solidarity and support for the social contract”.

The Guardian reported on a Finnish UBI trial in 2017 and 2018: “Europe’s first national, government-backed basic income experiment did not do much to encourage recipients into work but did improve their mental wellbeing, confidence and life satisfaction …”

“The basic income recipients were more satisfied with their lives and experienced less mental strain than the control group,” the study, by researchers at Helsinki University, concluded. “They also had a more positive perception of their economic welfare.”

In the trial, 2000 randomly selected unemployed people were granted a regular monthly income of €560 ($1021) with no obligation to seek a job and no reduction in their payment if they accepted one.

Governments monitored the trial as a potential means to reduce dependence on the state and cut welfare costs.

“Some people said the basic income had zero effect on their productivity, as there were still no jobs in the area they were trained for,” said Professor Helena Blomberg-Kroll, who led the study. “But others said that with the basic income they were prepared to take low-paying jobs they would otherwise have avoided.

“Some said the basic income allowed them to go back to the life they had before they became unemployed, while others said it gave them the power to say no to low-paid insecure jobs, and thus increased their sense of autonomy.”

The scheme also gave some participants “the possibility to try to live their dreams”, Prof. Blomberg-Kroll said. “Freelancers and artists and entrepreneurs had more positive views on the effects of the basic income, which some felt had created opportunities for them to start businesses.”

“The security of the basic income allowed them to do more meaningful things, as they felt it legitimised this kind of care work. Many of the people who performed such unpaid activities during the two-year period referred to it as work.”

Prof. Blomberg-Kroll said the results of the study could support arguments both for and against basic income.

“But as we’ve all learnt in the early part of 2020, insecurity is not a good way to live,” he said.

“While basic income can’t solve all our health and societal problems, there is certainly a discussion to be had that it could be part of the solution in times of economic hardship.”

Is enough being done to tackle the challenges faced by older unemployed Australians? Does 2021 loom as a test once COVID support payments come to an end?

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Written by Will Brodie

25 Comments

Total Comments: 25
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    8 months to Aged Pension with no job prospects while looking after my aged parents. My own health is not good and I had the job placement agency hounding me. The job placement agency caused a lot of emotional and mental anguish.
    I finally jumped through the hoops to get the Carers Payment for my aged parents which was a huge relief. Even negotiating obtaining the Carers Payment was difficult.
    At a time when CoVid is taking down people over 60yrs of age I don’t believe they should be forced to look for work or volunteer as it only exposes them to risk of exposure to a possible CoronaVirus infection. Especially as the country plans to open up again.

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    Congratulations Toots on achieving the number one goal on retirement,and that is to retire with dignity,you are so close to 66 they should accept your situations and move on,keep well,and your family will be ever grateful……seize each day with vigor

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    Keeping jobseeker payments at a livable or survivable level is definitely important. I had three very tough years as a single parent years ago BUT then you could still afford basics like rent, food, power on it – plus I could choose whether to study or try to get a job. Childcare was an issue so I chose to study. Life was not fun – op shop clothes, no going out unless it was local and frer or very cheap, calculating whete every single cent went – but the difference between then and now is that it was doable. I graduated, and got the job that meant childcare was now affordable and that was our life from then on. I ws also younger then though and my age not an issue. Ageism exists. Things like important volunteer services and carer situations – ie much of what is vital to keep our society and our economy going – is not included under the term ‘job’ but is required to get the support offered by the Gov under the jobseeker definition for eligibility. ‘Job’ is taxable thing, ‘work’ is not yet work is much more than what a job is and work applies to taxable and not taxable. Most of us want to work, to contribute or to give back (esp those like me who are grateful to the taxpayers who fund it) or to fill empty time or for social reasons or to feel useful or to continue todevelop or educate ourselves or to help those we care about or – countless other reasons. Our country is well off. We just need to be clear of what is actually being prioritised – and then our taxpayer owned Government needs to be open at all times to accountabilitiy for the decisions it makes.

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    How awful if taxes were to rise a little in order to keep people above the poverty line. The current government seems concerned only with giving more to the wealthy, but ultimately I believe society will be compelled to review its attitude, return to more progressive taxation, and do more to raise the less fortunate out of poverty. It’s sad that it is so difficult for the privileged to understand that progressive taxation is equitable and promotes both social and economic health. They enjoy far more benefits from living in our society than the unemployed, sick, disabled, etc. Why can’t they understand that fairness demands they pay tax accordingly. Scandinavian countries have proved that everyone wins when there is greater equity and reasonable security for all.

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      Would not like to live there, Youngagain. Visited them a few times yes but paying half your earnings in income taxes and bar prices far above Australia’s is not to my liking. As a native of Switzerland I was used to lower taxes and not many freebies like free libraries, free school lunches etc. They are not really free, somebody puts the money in and quite often the ones who do not want/need it.

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    There’s no job in the area I trained for but $1100 a week in a local factory.It’s hard dusty work and that’s not popular.

    I also believe teaching saving first will help.

    Put 10% away first and only spend the 90% and it certainly helps over time as there is an end to never having any money.

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      That’s a good habit to form, Rae, but it’s pretty much impossible if expenses for absolute unavoidable expenses total 110% of your income, and there is no way to either reduce expenses or increase income. I’m a saver by nature – always have been. But I’ve spent years in a situation where saving was, quite simply, impossible – unless I wanted to starve my kids or cast them out in the street. I suspect some of the unemployed were in that situation before the COVID supplement kicked in, and will be again.

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      Youngagain, Like you I prefer to save if I am able but for many, many years I was the sole wage earner in our house. After all bills were paid, plus travel costs to get to work there was very, very little left over.
      If we needed anything it went on layby and the budget was rearranged so that payments could be made. Even laybys were kept under a certain amount otherwise we just could not afford it. It took over 25 years before we could go ‘away’ for a holiday.
      Have never been able to afford to buy our own place and at this late stage doubt that we ever will. But at least now I am able to save a little every fortnight which is a huge relief if needed for emergencies.

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    The difficulty in locating employment in later life is not a new situation. My father went through the same issues when he was in his mid fifties. That was some 44 years ago. Nothing has really changed in that time except the government has made it harder to obtain and retain the Jobseeker payments.

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    “while others said it gave them the power to say no to low-paid insecure jobs, and thus increased their sense of autonomy”

    Of course why would you bother to look for work at all (or be very picky over what you will take) if you are given a universal payment with no conditions attached?

    We already know through research that having any job is better mentally than having no job. The very act of having a routine (getting out of bed, dressed and going to work) provides a sense of identity and self worth. We also know that having a job makes it easier to get another/better job. We have seen already with jobseeker extra COVID payments that some are refusing work because the unemployment benefit is higher than their regular wage (perhaps because they work part time or a few shifts a week). Unless there are conditions attached, what is to stop people of any age simply deciding not to work because they will have enough welfare either way?

    This needs a great deal more thought put into it. And of course who is going to pay for such largess?

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      Easy to answer that one, KSS. The tax payer will have to foot the bill, plus more tobacco and alcohol taxes, maybe an inheritance tax, possibly a capital gains tax on your principal residence when you move. This stuff could have been written by Bernie Saunders of Vermont – why not give it a shot and see how the wind blows?

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      Sorry, KSS, but you are showing your ignorance. Firstly, an increased sense of autonomy doesn’t mean people won’t bother to look for work or be unreasonably picky. It simply means they are not forced into jobs that will destroy them completely, or jobs where employers act illegally to compromise health and safety or exploit (and yes, despite all the regulation in the world, it continues to happen and workers have very little recourse if they have no other source of income support).

      Secondly it is definitely NOT easier to get a job when you are stuck in an unsatisfactory job and can’t travel, take time out for interviews and job searches, etc. References present problems because you either have to lie about your current situation and risk being caught out, or admit you are employed – and then employers don’t want someone who is not loyal and won’t commit to them.

      Thirdly, any job is NOT mentally better than no job. There needs to be some reasonable degree of satisfaction and/or hope of improvement or a completely unsatisfactory job will destroy completely – mentally and possibly physically. Physical capacity also needs to be considered. Not everyone can pick fruit. Lots of people struggle to work a full week due to sickness, yet don’t meet Centrelink’s criteria for sickness or disability benefits. Forcing them into physically strenuous work or work in harsh conditions can kill.

      We have always had folk who just won’t work, and we always will – benefits, UBI, or whatever. Nothing will change them. We have to accept that a percentage are quite simply lazy and useless. But the majority of people will work if they are offered a half-way reasonable opportunity. Most will work at unsatisfactory jobs if there is genuine hope of improvement. But forcing people into ANY job is akin to murder. If it doesn’t kill them, it will kill their soul. It’s cruel and inhuman.

      Yes, we need to put a great deal more thought into this issue. And yes, it’s a dilemma how we would pay for a UBI. But simplistic responses from arrogant people who are too privileged to understand just how destructive ‘any job’ can be can’t be allowed to dictate policy. We need to grow up enough, as a society, to understand that people are not machines. They have hearts and minds and souls, and they should be treated with respect and compassion when society lets them down (and they would not be unemployed if society hadn’t let them down one way or another).

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      Seems to me you are the ignorant one youngagain shackled to your one eyed view of the word. But that’s OK. You are entitled to your personal opinion of course no matter how out of touch with reality you may be.

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      It’s you who is out of touch with reality, KSS. Obviously enjoyed too much privilege to appreciate the horrific challenges faced by the deprived in our society. You have no idea.

      Of course a stupid skewed ‘survey’ will show that, for the majority of people, any job is better than no job. Take ten people and push them into just any job and perhaps eight of them will say they are better off and happier, because the job happens to be one they can do without suffering harm, it gives them more income, and they feel better about themselves for not taking welfare. But what about the two who are forced into work that destroys them mentally and physically, offers no scope for advancement of any kind, and possibly imposes conditions that make their family life intolerable?

      Unlike you, KSS, I DO NOT have a one-eyed view of the world. A very wide and diverse range of experiences and life in a variety of countries and cultures, experiencing everything from abject poverty and desperation to considerable affluence and elevated social standing, has given me a rare understanding of life and the vastly different perspectives that drive people from different worlds.

      It is you who is one-eyed and out of touch. Your dogmatic statements expose a narrow-minded and judgmental view of the world and a complete lack of empathy and compassion.

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      What a rude, nasty and utterly offensive little person you are youngagain. Please keep your abusive comments to yourself. You have absolutely no idea what my background is or whether I come from poverty or priviledge. And if anyone is being judgemental it is you. You are not the only person to have ‘experienced’ life and your opinion (for that’s all it is) is NOT the law of the land nor does it govern me or anypone else.

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      I have read quite a few studies which backs up much of what Youngagain has written here and KSS your comments are just that, comments. As for who is being rude and ignorant, KSS you need to look in the mirror.

  8. 0
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    Bring back to Mature Age Allowance for older Australians, was not quite as high as the Age Pension but it was better than Jobseeker. Do not really know why they abolished that. It would be a great help to older folks who did physical labor in their earlier years.

  9. 0
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    We currently have nearly 8M people on some form of welfare. Government debt nearly $2T and personal debt $7.5 T. What’s a few more trillion. Currently 10% of workers pay 70% of the tax. Let’s tax them more. Interest rates near zero, and assets such as shares, bonds and houses all overvalued. What would happen if inflation and consequently interest rates rise to 5% – total devastation, a huge depression. The welfare and health systems are in danger of collapsing. 35000 jobs for fruit pickers needed but the younger generation don’t want hard labour and expect to live like the Kardashians. My suggestion why don’t we give each new born baby $1M and have the funds invested for them so they can access for special requirements such as education, homes, children etc.

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      What a hell of a baby bonus, BigAl. The treasurer will love it, why didn’t he think of it, sure fire winner!

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      10% of workers pay 70% of the tax and you want to make them pay more BigAl? I can see them lining up now to hand over even more whilst the other 90% stand with their hands out!

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      10% of workers pay 70% of the tax, KSS, because that 10% enjoys far more than 70% of the net benefits of living in our society. What would you prefer to do? Tax people who have $0 income? Maybe impose a tax on welfare payments – perhaps equal to the amount the recipient receives, leaving them with a net $0 income?

      Somewhere along the line, SOMEONE has to pay the piper. In mature societies, where basic common sense prevails, it those who can most afford to and who are enjoying the greatest benefits from living in the society. Our current problem is that we’ve decided the rich should have it all and pay nothing. Greed has taken over, and it’s destroying all of us.

    • 0
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      Another jealous outpouring from you youngagain! Just because others made different decisions to you and have been able to secure their future you want to strip them of thier rewards and give it to those who didn’t bother. A true socialist!

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      Wrong,WRONG WRONG KSS. I’m among those whose decisions should have secured my future, but a stinking socialist pension system deprives me. I don’t want to strip anyone of their rewards, and I am certainly NOT a socialist. I do, however, believe that those who enjoy the greatest benefit from living in our society, and have the greatest capacity (measured in income terms – not savings accrued from a lifetime of sacrifice!) should pay the most tax.

      Money to run the nation has to come from somewhere. It should come from those who enjoy the major benefits – the big corporations, both local and foreign, making big profits from trading in our country and, in some cases, funded by our people investing in them; the executives and board members who earn outrageous salaries, politicians and bureaucrats who are paid high salaries and generous benefits out of taxpayer pockets; mine owners and owners of huge and profitable farms or grazing lands who use large quantities of water and claim ownership of natural resources that, morally, should belong to the nation as a whole.

      Progressive tax worked. It worked because it was fair and equitable and it funded the services the nation needed. Flattening the tax scales imposes excessive hardship on workers who give a great deal but are not generously paid, and results in the country having too little revenue to fund services and balance the books. The lower middle class is being screwed over to feed horrendous greed at the top end.

      There is nothing ‘socialist’ about a fair progressive tax system. It was devised by capitalists to service the capitalist economy. It maintains the health of capitalist societies, whereas flatter tax scales destroy that health and result in a greater push for socialism because the unfairness and poverty that results drives anger and resentment. That is what we are seeing now. Poverty is increasing. The middle class is being wiped out.

      People think socialism is the answer because it pretends to give more to the poor. But in reality capitalism is the best system, but it requires progressive taxation to make it work.

    • 0
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      Well put – then on the other topic so many of us are in praise of places like Aldi in preference to Woolies and Coles where most Australians are owners through their super accounts (please check!). Shares are available to Aussies where Aldi is a German family entity with all the earnings going off shore. Nothing against the supermarket but if one wants to support Australian business Aldi is not it, their taxes are paid here in salary and employee benefits but the profits go elsewhere.


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