A universal basic income for Australians - Sustainable Australia Party

An unconditional universal basic income provides a simple and eloquent foundational step to resolve many of our growing environmental, economic, and social problems.

Australia is headed in the wrong direction. At speed.

The rich get richer. The poor get poorer. Recent research shows that we have reached a stage of shocking inequality.

Australia’s wealthiest 20 per cent are now worth 90 times the country’s poorest 20 per cent.[1] More broadly, half of the population currently owns over 95 per cent of the country’s net wealth, while the other half owns less than 5 per cent.[2]

Surely something in the order of a 75/25 wealth split between these ‘halves’ would be a more reasonable outcome in our supposedly ‘egalitarian’ democracy.

Australia’s inequality crisis runs deep, and young Australians are particularly vulnerable. Recent research by headspace asking young people to name their top three concerns found that the single biggest concern for young Australians is the cost of living. It showed that 54 per cent of participants ages 18 to 25 wanted to see this addressed urgently.[3] NAB research reveals similar cost of living concerns, showing a 67 per cent of Australians under the age of 50 saying rising cost of living is their biggest cause of stress.[4] But financial stress is certainly not limited to younger Australians. Australians of all ages are feeling the pain. In October 2022, a parliamentary inquiry found the "face" of homelessness is “an older person aged over 55 — particularly women”.[5]

In this context, can a system that also rewards bankers $1 million a week in salary, including recent major personal income tax cuts, really be considered fair?[6]

Think about this. The median house price in Sydney is now just over $1.1 million.[7] Since January, values have increased by around 8.1 per cent on average, meaning an untaxed capital (wealth) gain this year alone of around $89,000 dollars per home owner. Why is this housing wealth increasing? Through deliberate government decisions. To be specific, through government-engineered hyper-demand for housing (property investor tax concessions, the green light to foreign ownership, record high immigration, lax bank lending regulation, etc). In other words, we are seeing massive wealth gifts by the federal government to some, but not many others.

No wonder we are becoming a nation of ‘haves and have-nots’. Australians should be treated more equally when it comes to government wealth distribution. Every Australian deserves their basic fair share of Australia’s prosperity.

So, Australia, we need to have a D&M* about how our ‘egalitarian’ nation came to this – and what to do about it.

The road to inequality

This extreme divide is not due to laziness or ‘dole bludging’. It’s mainly due to successive federal governments operating a crony form of capitalism, with a range of very deliberate policies that spur wealth inequality and “disproportionately benefit those with the most.”[8] Our political system feeds significant ‘unearned’ wealth to the rich. The wealthy usually get the big superannuation, property and income tax breaks, while the powerless poor get, well, shafted.

For example, modelling on the distribution of the 50 per cent capital gains tax discount indicates that the top 10 per cent of households by income receive nearly three-quarters of the benefit – a policy supported by both major parties.[9]

Further, the top 1 per cent of taxpayers receive about 14 times as much in superannuation tax concessions as the bottom 10 per cent of income earners.[10]

Does our tax system sound fair? Or does it sound like largess?

Don’t get me wrong, I am not a ‘socialist’. I believe in entrepreneurship and reasonable capitalism. I’ve run small businesses for over 20 years and warmly welcome wealth generation through hard work. But the form of capitalism the Liberal and Labor governments run is deeply corrupt. These parties and their politicians are captured by vested interests and powerful vocal minorities including property and business ‘Councils’. They ‘rent seek’ their way to extreme riches, by showering politicians in political donations and handsomely paid post-politics job opportunities.

We need a de-corrupted capitalist market, not the manipulated market we have now. The housing market is a prime example. Rather than running a ‘free’ market with normal demand and supply levels, we have government-engineered hyper-demand through tax concessions, foreign ownership, record high immigration and lax bank lending practices, among other things.

Australians are seeing through it. We have never been more distrusting of corporate Australia.[11] But many feel powerless. Well, it’s time to fight back - and get our fair share. We need big, bold change, which we can and should demand.

The biggest and boldest change we can strive for right now to address this extreme inequality and to claw back some of the excesses of their crony capitalism is an unconditional universal basic income (UBI).

That will immediately bring cries of ‘leftie’ and ‘welfare state’ from some. But none of that is true. Please hear me out.

A UBI is a payment from the state to every citizen with no strings attached, like a ‘citizen dividend’ for being a ‘shareholder’ in Australia.

But the main reason we should introduce a UBI is not our extreme wealth inequality.

To coin a phrase: It’s the environment, stupid.

The environment is the most important reason - and political issue we face - because it is our life support system. But with a growing number of consumers dependent on the finite and non-renewable resources it provides, we need to take action to lighten our individual and collective footprint.

This leads me to the concept of planetary boundaries, safe environmental limits and ultimately, the bottom line of ecological sustainability.

What are ‘planetary boundaries’? The planetary boundaries concept presents a set of nine planetary boundaries within which humanity can continue to develop and thrive for generations to come. They include biodiversity, fresh water, land use and greenhouse gases.[12] We humans need to keep our collective activity, including resource consumption, to a safe level that our environment can handle.

Things are not looking good.

World Wide Fund for Nature (WWF) reports that “In 2023, Earth Overshoot Day falls on August 2. Earth Overshoot Day marks the date when humanity has exhausted nature’s budget for the year. For the rest of the year, we are maintaining our ecological deficit by drawing down local resource stocks and accumulating carbon dioxide in the atmosphere. We are operating in overshoot.”[13]

Put another way, we need to ease our foot off the economic accelerator.

Overshoot, or resource overconsumption, is at the heart of all our environmental problems. Yet our government, at the urging of vested interests in the bureaucracy, business and the mainstream media is using growth in the production of goods and services (effectively measured by ‘gross domestic product’ or ‘GDP’) as the basis upon which its success should be measured. To impress mainstream economists, Liberal and Labor governments are consequently both aiming for increased per capita consumption and importing record numbers of new consumers!

Talk about suicidal, or more aptly, ecocidal.

This government-engineered ‘hyper-demand for everything’, including for housing, energy and fuel also puts significant upward pressure on the inflation and cost of living exacerbating the wealth divide.

To put it bluntly, we need to reduce our demands and impacts on our environment to avoid an ecological collapse, with devastating results for humans and other species. We need to put our environment first, and therefore allow it to sustain our health, economy and quality of life.

Australia desperately needs an environmental party or movement inside the Federal Parliament that will do this.

Our focus as a society should be growing our health and wellbeing, more accurately measured by a range of genuine progress indicators, rather than economic activity as measured by the crude and misleading statistic known as ‘GDP'. GDP metrics indicate little or no social or environmental causes for concern – and GDP growth disproportionately benefits the wealthy. We could also then jettison related arbitrary statistical terms like ‘recession’. In short, we need to redefine ‘growth’.

Tapering off our working hours will help us to rebalance our economy and environment. This should also lead to a tapering of spending on ‘stuff’ and hence of the overconsumption degrading our planet. There is a better way forward – one in which growth in human health and wellbeing takes priority over growth in economic production, and ultimately consumption.

That’s where a UBI comes in.

Remember, we cannot grow forever in a finite world - and need to operate within the safe limits. A UBI can help to turn things around. It can help us to ease off the economic accelerator and to focus on more than just having more ‘stuff’.

Fortunately, there has already been many UBI studies and trials around the world. Indeed, the concept has been around since the 1800s and proposed by many on both the left and right side of politics. Even Milton Friedman supported a form of basic income in his book “Capitalism and Freedom”.

Developed world studies show important results including: Positive effects on economic and general wellbeing; Households enjoyed better physical and mental health, educational performance, and homeownership rates, and a modest reduction in work effort; Primary earners worked about 5-10 per cent less and were unemployed for longer stretches of time; The reduction in working hours was much larger for secondary and tertiary earners (15-30 per cent), who devoted more time to childcare and education.[14]

While these findings may present challenges for some, they should be welcomed.

How much?

Every Australian should be entitled to a minimum basic income – or citizen dividend - of $500+ pw, being $26,000 per year (indexed from 2021). Importantly, this is not a ‘comfortable’ income, but a ‘basic’ income. A UBI would also not replace special needs payments required by some, such as disabled Australians. No Australian welfare recipient would be worse off.

You are probably now starting to do some sums. And the gross number is big.

There are around 18 million adult citizens in Australia. At $26,000 per person, you reach a figure of around $470 billion per year. That’s not the only reason I see this as the biggest, boldest policy initiative in Australian political history.

That amount can actually be afforded by a responsible Federal Parliament. More on the funding side later.

The main benefits of a UBI

First, let’s delve a little further into the benefits of a UBI, that are so profound, we can only touch on them here. I’ve said it will address inequality, fairness and sustainability, but there’s much more to this groundbreaking initiative. In no particular order:

A UBI will provide greater financial security and relieve the cost-of-living crisis
A UBI will reduce homelessness
A UBI will simplify our bureaucracy
A UBI will reduce public sector consulting costs (e.g. ‘Big 4’ consulting firms working on projects like Robodebt)
A UBI will help fix our punitive and conditional welfare system, which is no longer fit for purpose
A UBI will remove the stigma involved with receiving some government payments
A UBI will help avoid the bad incentives and rorting created by traditional welfare programs (e.g. you don’t have to prove you are trying to get a job, or that you are a single pensioner, because there would no longer be a lower ‘partnered’ payment level. Everyone is treated equally!)
A UBI will simplify job application processes and stop the time-wasting need to, say, apply for 20 jobs per month just to receive the JobSeeker Payment
A UBI will give us more time to study and/or upskill
A UBI will help Australian casual staff to rent housing in areas where casual labour is most needed, thereby resolving many skills shortages
A UBI will allow senior citizens to work a day or two a week without losing their pension-now-UBI, thereby resolving many more skills shortages
A UBI will encourage economic entrepreneurship, innovation, dynamism and risk taking by financially supporting people to set up new businesses because they have greater income security
A UBI will help protect business owners from any economic downturn, particularly in small business
A UBI will reduce personal accounting and financial management costs
A UBI will help us manage the rise of AI[15]
A UBI is an additional safety net for those seeing downward wage pressure from automation and globalisation, at a time where real unemployment and under-employment in Australia is already around 3 million people[16]
A UBI will help deliver greater fairness between labour and capital
A UBI will help increase volunteering in community projects, parenting and caring within our society
A UBI will allow for more charitable donations
A UBI will allow more personal savings and paying down of debt
A UBI will help reduce mental illness given many won’t have to worry about living on the street, affording basic medicine, etc
A UBI will reduce systemic, intergenerational, etc poverty and related crime, dysfunction and emergency service work
A UBI will give financially vulnerable Australians more power in their personal relationships
A UBI will efficiently direct money to where it is needed, being the opposite of ‘trickle down economics’
A UBI will help ensure a fairer distribution to Australian citizens from the ongoing mining boom (also see ‘How do we fund a UBI’ below)
A UBI will allow for more personal freedom to be who we want to be, pursue hobbies and/or follow your dreams to be an artist, sportsperson, or yes, even a beach bum who consumes less ‘stuff’!
A UBI will help to reduce Aboriginal and Torres Strait Islander disadvantage and support the practice and continued renaissance of Australia’s ancient cultures
A UBI will help Australia to restore much of its lost and stolen egalitarianism
A UBI will increase our health, wellbeing and happiness

What are the cons?

No society is perfect and therefore no social system is perfect. There are legitimate questions: Will it be affordable? Will people waste it or drink it away? Will taxes go up for some? Will it be inflationary? Will it lead to some labour or skills shortages?

Critics will claim that it reduces incentives to work and leads to less labour input. The research shows there is a modest reduction in labour input, as noted above. We should face up to this and more so understand that overall, this is in our collective best interests.

I would also argue that Australia’s economic ‘growth’ in recent decades has been more about quantity than quality. Remember, economics should be about the efficient allocation of resources and meeting people’s real needs, not manufactured wants.

Australia’s economic and political settings have created too many struggling and/or unsustainable businesses that rely on labour exploitation and systemic wage theft, and/or the importation of ever more consumers. An example of the latter would be the housing and construction industry.

It’s a pyramid scheme Charles Ponzi would be proud of.

Economic research institute e61 makes important points about what they term “creative destruction” in our economy.[17] They say that when seeking workers, the political debate can fall into the trap of focusing on skills and increasing immigration, which can take a long time to reap the benefits, and offer no guarantee. Instead, they say, “Allocating the existing stock of human talent efficiently is just as important as increasing the stock.”

It can be strongly argued that we need a period of structural reform including some consolidation, or ‘creative destruction’ in our economy to free up inefficient labour and capital resources to re-allocate them into much more productive uses and industries – such as manufacturing and IT. Remember, we couldn’t even make a medical mask during COVID.

The transfer of misallocated capital will create a more sustainable, efficient and effective economy for all Australians. In effect, it would help to de-corrupt our economy and to transition to a more economically, environmentally and socially sustainable Australia.

That is to say nothing of the inefficient (non-)use of the over three million Australians Roy Morgan finds are under or unemployed! For this among other reasons, lowering immigration levels should not be considered ‘anti-immigration’ as claimed by some.

On the question of wasting or drinking the UBI away, research shows no noticeable increase, and frequently a decline, in consumption towards “temptation goods” (e.g. alcohol, tobacco).[18]

The short answer is that the sky won’t fall in and that all of these challenges can be managed. We would need a fairer political and taxation system - and better politicians.

Given the advances in automation and productivity over the last century and more, some suggest a four-day week is a better way. While broadly supporting this, I would stress that a UBI is a much simpler way forward as it effectively offers this choice to individuals and avoids the complexity of trying to roll out a four-day week (while being paid for five) across the public, private and small business sectors.

I will deal with the major questions around funding below and see this as a conversation starter rather than an exclamation mark. It will involve choices about what sort of society we want to be and what sort of example we want to set for the rest of the world.

On the question of inflation, the tax and funding mix will be important. Stabilising Australia’s population at the same time will help to offset the significant inflationary impacts of rapid population growth. Worst case, it may even be necessary to phase the UBI in over a (say) five year period to offset any initial inflationary concerns.

How do we fund a UBI?

In order to fund a UBI, significant bureaucratic and taxation reform will be needed – and it’s the sort of reform Australia has needed for decades. Funding a UBI is simply a matter of priorities, and here are some of the choices, in no particular order:

A UBI would provide significant savings by replacing a range of welfare payments, such as Austudy, Veteran Payments, Parenting Payments, the age pension, carer payments, disability support pension, JobSeeker Payment, etc. This alone would likely cover around 25 per cent of the UBI
A UBI will relieve huge upward pressure on a range of state and federal government budget areas such as health, education, and police and other emergency services, by directly tackling and preventing poverty root causes and preventing many flow-on effects
A UBI would be subject to income tax at standard marginal rates, meaning a good chunk of up to around 20-25 per cent could come straight back from taxpayers (note, the tax-free threshold could be raised to the UBI level from the current $18,200, so that only income above the UBI amount is taxed)
Phase out all superannuation-related tax concessions, currently costing up to $45 billion a year [19]
Abolish negative gearing on taxable Australian property
Abolish the 50 per cent discount of capital gains tax on taxable assets, including Australian property (non-principal place of residence)
Introduce an economy-wide super profits tax, including a Resource Super Profit Tax for iron ore and coal[20]
Phase out fossil fuel subsidies
End multinational tax avoidance and profit shifting to low or no-tax jurisdictions, including by introducing a 50 per cent Diverted Profits Tax (or ‘Google Tax’) on profits sent overseas for corporations deemed to have arranged their business structure to avoid tax
Prohibit corporations from claiming tax deductions for any interest paid to related entities based overseas
Increase tax on all excessive personal income, through a more progressive tax system, meaning multi-millionaires would not be net beneficiaries of the UBI
Introduce a (say, 10 per cent) inheritance tax on wealthy estates, to claw back some of the largess
End tax avoidance through private trusts[21]
Phase out tax shelters including offshore bank accounts
Broaden the base of the 10 per cent GST

A flow on impact of a UBI would be that it is not only federal government expenses and welfare payments that would be saved, it would also indirectly save a range of state and local governments expenses that would no longer be as necessary. For example, payments and grants for first homebuyers, sports people, artists, small business, and so on. The three levels of bureaucracy could then focus on more important priorities such as managing efforts to protect and restore our natural environment, including through job guarantee programs.

Do Australians support a UBI?

When Anglicare polled Australians in 2021 on the question of “Should every Australian have an income level above the poverty line?”, 77 per cent supported the concept.[22] The COVID pandemic also demonstrated that lifting people above the poverty line was possible and indeed preferable.

There is clearly a better way than what we’ve had with Liberal and Labor, for fairness and for our life support system, the environment. However, this proposal does take some big thinking through. Personally, it has taken me over 5 years to ‘make peace’ with the concept of a UBI. Sustainable Australia Party has had existing policies around universal welfare payments including a New Zealand-style universal age pension at around the level proposed in this article. But broadening it out for the reasons outlined above now makes complete sense to me. Given our environmental crises, I now no longer feel we have the luxury of time for more complex, orthodox, or other unrealistic solutions.

In any case, do we want a society in which a growing underclass is constantly worrying about rent anhttps://www.aec.gov.au/parties_and_representatives/party_registration/Registered_parties/d food, and don’t have enough money to be able to have a night out, socialise or relax? Do we want people in a constant state of crisis?

An unconditional universal basic income provides a simple and eloquent foundational step to resolve many of our growing environmental, economic, and social problems. We don’t need more trials, as some others propose in Australia. It’s time to go ‘all in’ on a UBI. That’s what Sustainable Australia Party is doing. You will soon see ‘Universal Basic Income’ on federal election ballot papers.**

Everyone has the right to share in the wealth of our country. It’s time to demand your dividend.

At the same time, Australia can be a global leader in sustainability, hopefully with a UBI domino effect. Courage is contagious.

What do you think?

Councillor William Bourke is Deputy Mayor at North Sydney Council and president of Sustainable Australia Party.

[1] https://www.theguardian.com/australia-news/2023/sep/27/australias-wealthiest-20-worth-90-times-the-countrys-poorest-new-report-reveals

[2] https://www.roymorgan.com/findings/9267-roy-morgan-wealth-report-june-2023

[3] https://headspace.org.au/our-organisation/media-releases/cost-of-living-housing-affordability-biggest-concerns-among-young-people/

[4] https://news.nab.com.au/news/nab-supporting-younger-australians-facing-cost-of-living-pressures/

[5] https://www.abc.net.au/news/2023-02-26/homelessness-older-women-55-nsw-inquiry/101891388

[6] https://www.theaustralian.com.au/business/financial-services/macquarie-defends-1m-a-week-pay-package-for-trading-executive-amid-protest-vote/news-story/93a9af023c65b646e652aad8a9d7b600

[7] https://propertyupdate.com.au/the-latest-median-property-prices-in-australias-major-cities/

[8] https://www.theguardian.com/australia-news/2023/sep/27/australias-wealthiest-20-worth-90-times-the-countrys-poorest-new-report-reveals