Data Dan: Is it time to consider a universal basic income?

With the economic effects of the pandemic, and mass automation just around the corner, is it time to consider this socialist notion, asks Dan Petrie.

The thought of universal basic income (UBI) is often categorised as a ‘Utopian’ style construct which

despite a lot of discussion, typically on university panels and parliamentary papers, was an

experiment we Australians pretty much conducted during 2020.

The idea of a UBI has been discussed for more than 70 years and was initially proposed as basic income by British economist and United Kingdom Liberal politician, Dame Juliet Rhys-Williams. Rhys-Williams’s unsuccessful proposal for a basic income was borne out of her work as part of the Beveridge report which laid the foundation for the welfare state in the United Kingdom.

A UBI is as it its name suggest, typically a monthly payment in cash to individuals without conditions of reporting.

Arguably a universal basic income was a missed opportunity but with the rise of the digital economy, automation and increasingly the gig economy, uncertainty over secure work has seen the UBI make a comeback in the last decade.

In 1978, 85% of the workforce was engaged in full-time work which in the 40 years since has fallen to 68%.

It was Nobel-prize-winning US economist Milton Freidman who championed the UBI, and more recently Dutch historian Rutger Bregman’s best-selling book Utopia For Realists has been winning a new generation of fans as it basically espouses a “let the individual work it out” viewpoint.

Interestingly Rhys-Williams and Freidman were both politically conservative, and the ideas around a UBI often meet opposition from those with the similar political leanings as it would come at great cost to the state.

The provision of better government services and welfare in Australia is on any historical measure a narrative seen as a strength of the Australian Labor Party.

However, by providing money with no strings attached does enable the individual to solve more of their own challenges in theory. An ALP-LNP-Greens meeting of the minds could pave the way?

In terms of payments and the levels, the most recent examples of a UBI internationally in the United States have set a benchmark of $1500 ($A2054) monthly for a such a payment with no consideration of whether a person is employed or not.

Former Hawke government economic advisor Ross Garnaut, in his book Reset: Restoring

Australia After the Pandemic Recession, has proposed $15,000 per year as a UBI in

Australia, with the tax rate for every Australian lifting to 37 per cent to pay for it.

During 2020, many of us were engaged in the JobKeeper or JobSeeker program and had our first dealings with the Australian government portal that for all intents and purposes worked well during the first pandemic in living memory.

A UBI could conceivably remove the stigma of being unemployed, help improve mobility (one of the biggest barriers to growing the regions is the cost of moving to a place with no job prospects), changing careers (non-employing small businesses would have a greater survival rate) and older workers could ease their way to retirement.

From a societal perspective, a universal basic income could help reduce financial and domestic abuse as it provides some means to starting a new life. Additionally, the opportunity to better care for families and neighbours is also appealing.

The obvious arguments against a UBI are cost to the government to implement such a scheme and setting a benchmark rate that doesn’t discourage people from work.

That said, there is a growing wealth gap, ageism, and the ability for many in our community to attain regular work remains challenging.

A UBI trial in Australia would provide some answers to these questions or at the very least, recast perceptions on how we value the contributions of our citizens within daily society.

Dan Petrie is the chief information officer of data analytics firm Grafa and a former economic data editor at Bloomberg LP. Have a data question?Email Data Dan

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