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Introduction Of A Universal Basic Income (UBI) Now Is Totally Unaffordable And Wrong

The introduction of a Universal Basic Income (UBI) now is totally unaffordable and wrong says Peter Malcolm spokesperson for Income Equality Aotearoa NZ Inc.

A UBI or Universal Basic Income is a Government payout to all adults and some say for children too, that replaces most benefits ie does away with the welfare system, supports all workers in the days of many redundancies and a “precariate” workforce, and pays the many people working for nothing, volunteers and careers among others. This is wonderfully idealistic. But a UBI must be at a reasonable level otherwise it just leaves many people in poverty. And there would still have to be some additional benefits such as sickness benefits.

Currently in the light of the corona virus 19, a UBI is being suggested as a way of supporting those most at risk.

This is wrong! It is totally unaffordable in the current climate, gives money to those that do not need it, and if it was affordable it would not help those most at risk. There are better alternatives.

In the future a UBI may, and perhaps should be revisited when all the ramifications, consequences and cost and cost savings can be investigated. There would be significant changes required of our welfare system, taxation system and superannuation schemes and this seems to the wrong time to undertake such a major task

In the past the suggested UBI payouts have been $10,000 or $11,000 (Gareth Morgan's figure) per year which is about the current dole rate - just over $200 per week or $10400 per year. Enough to live on and replace all benefits?--a joke! A level of UBI at $11000 just for adults would cost about $30 billion with very little savings from reductions in the cost of administering the present schemes. And this would have to be paid out of a total Government income for the 18/19 year of $93 billion. Affordable for the Government? I think not.

The living wage is about $40,000 per year ie about $800 per week If the payout for a UBI was anywhere near what you could live on (survive might be a better word) the payout would have to be about $21000 per year some have suggested. This is about $400 per week, a bit more than the GRI, about $10 per hour for a 40 hour work week, and would cost, after savings, about $60 billion per year - nearly two thirds of the total Govt income. And this money would go to all including the rich unless there were massive changes to the tax system.

A much better approach would be to target those who really need it ie those on benefits and the lower waged. To double all the core benefits that are currently paid would cost only $2 billion per year. This would be a much more “needs based“ and realistic alternative. And it would be clearly affordable.

To fully implement the recommendations of the Welfare Expert Advisory Group which many people support would cost around $5.2 billion per year, over 4 years. Again a realistic and a much better option than a universal UBI.

As for those on low wages, we are known as a low wage and low productivity economy. Clearly these are related and there are some obvious conclusions. And most of the negative arguments about significantly increasing the minimum wage are just plain wrong!

When one surveys the literature on UBI's there are some very positive statements about its effects and there is no question that to have a decent level UBI would have some huge advantages, But I have yet to find any such report that clearly "does the sums". Why? Because those sums show that without significant changes to our welfare system, superannuation schemes and our tax system, a UBI at a realistic level is currently grossly unaffordable.

A UBI is a lovely idea but totally unaffordable. Let’s not waste time on talking about it now and target our efforts to those who definitely need the support. That is affordable. Let us do it now.

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