Pandemic a ‘natural experiment’ for universal basic income proposals

The massive government support to JobSeeker and JobKeeper during the pandemic has given researchers a rare opportunity to test how a guaranteed basic income for all adults could work in Australia.

Proposals for a universal basic income (UBI) – an unconditional regular flat payment from the state to all adults – have gained international attention during the past decade amid high unemployment, weak wages growth and perceptions of growing inequality in many Western nations.

A new Australian Basic Income Lab involving academics from Sydney University, Macquarie University and the Australian National University has been established to research how basic income policies may apply here.

Ben Spies-Butcher said the pandemic offered an opportunity to study how a universal basic income could work. Credit: Fiona Morris

“The pandemic, and particularly the government support package responding to it, have stimulated interest and created a wealth of data on what steps towards a basic income approach might look like,” said lab co-director Ben Spies-Butcher from Macquarie University.

This week Anglicare became the first major charity in Australia to call for a state-funded basic income.

Anglicare said a “guaranteed basic income above the poverty line” was now necessary to offset growing employment insecurity as the labour force changes.

“Whether it is achieved through a universal payment or a guaranteed adequate income for every Australian over the poverty line, it is clear that such a scheme would tackle poverty and income insecurity across Australia,” a report by Anglicare said.

An Ipsos survey of a representative sample of 1000 adults, commissioned by Anglicare, found three in four Australians (77 per cent) back an unconditional basic income above the poverty line.

A similar YouGov poll conducted for the Green Institute last year found only 58 per cent of surveyed Australians supported the introduction of a UBI.

However, critics have warned the huge cost to the federal budget of funding a UBI could threaten the viability of public services now provided by the state such as health and education.

Dr Spies-Butcher says the COVID-19 experience has provided researchers “with a ‘natural experiment’ testing how a basic income could work here and how those lessons can be adapted to permanent practical policy recommendations.”

2020 Democratic presidential candidate Andrew Yang proposed a $1000 a month universal basic income. Credit: AP

A recent study by Spies-Butcher, Ben Phillips and Troy Henderson evaluated the effects of a basic income payment of $14,650 a year which would taper off as an individual’s income rises and not apply to those earning more than $180,000 per year. Under the scheme, JobSeeker and Youth Allowance would not be required. The proposal would have an estimated annual net cost of $103 billion. A more generous payment of $18,500 per year would have an annual net cost of $126 billion.

Such a payment would lift tens of thousands out of poverty and dramatically reduce economic inequality in Australia, the study found.

Anglicare Australia executive director Kasy Chambers said Australia had a form of basic income for the first time during last year’s pandemic’s disruptions.

“JobSeeker was lifted to the poverty line, and JobKeeper gave stability to people in insecure work,” she said. “Lives were transformed, and hundreds of thousands of people were lifted out of poverty. Our study shows that a permanent basic income would lock in these benefits and bring many more.”

The Anglicare survey found 38 per cent of respondents would use a basic income to secure their finances. Almost one in four said a basic income would allow them to spend more time volunteering while a similar share said it would allow them to spend more time caring for others.

Andrew Yang, a candidate in the 2020 US Democratic Party presidential primaries, promised a UBI of $US1000 ($1400) a month for American adults. He argued the payment was required because of the large number of jobs that will be lost to future automation.

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