Some of you may have listened in to the webinar co-hosted by BFF and the PSA, New Zealand’s largest union, which featured leading UBS expert Andrew Percy, from the Institute of Global Prosperity. If you missed it, you can watch it at the link above. In this article, Sally Faisandier reflects on what she learnt from the webinar and contemplates how UBS might work in Aotearoa New Zealand.
BFF proposes introducing UBS in its Manifesto, so discovering that Andrew Percy had already spoken at the launch of the PSA Aotearoa Wellbeing Commitment, for the ‘Let’s Do Even Better’ campaign,* presented the ideal opportunity for him to speak to a wider group. I explain some UBS concepts here, for others like me who are not economists.
The problem: If we don’t look after our most vulnerable, we all lose. Some people are so financially vulnerable that they are prepared to work even if they have come into contact with Covid-19. This may be understandable, but it puts our whole society at risk.
UBS suggests a new model that would allow all of us to get our basic needs met, and reduce socioeconomic disparities in Aotearoa. UBS could permanently solve such issues as lack of computers and access to the internet for children; and accommodation for the homeless.
What does UBS set out to do? 1) address poverty; 2) support infrastructure that individuals could never pay for themselves (e.g., public transport); and 3) achieve all of this within the limitations imposed by the environment.
These three goals are achieved through finding a balance between shared needs (‘safety’) and collective responsibilities (‘opportunity’). Safety is achieved when expectations are met for such things as high quality infrastructure provided by councils, health, education, housing, etc. Andrew Percy reported that OECD countries with high levels of wellbeing allocate almost 50% of their economies to pay for such services. In NZ it is 32%.
Society also needs people with a wide range of roles (‘expertise’) to meet our collective responsibility of keeping the infrastructure running smoothly, and support ongoing development. Opportunity, then, provides the motivation for ‘experts’ to undertake satisfying and meaningful work that, in turn, supports the infrastructure so that everybody benefits.
During the Covid lockdown, the government focused on safety more than opportunity, because it needed to, and most Kiwis supported that. Similarly, the UK government increased its provision of public services following both world wars, because the economy would not have recovered otherwise.
Normally, public sentiment directs how safety and opportunity are balanced, through taxation. It will be interesting to see how Kiwis vote this year: Do we want more money in our pockets as individuals (opportunity)? Or would we prefer central government to increase the provision of public services, so that we can all benefit equally (safety)?
UBS is fundamentally about efficiency. Even though UBS requires higher taxes, Andrew says it is more efficient, overall, than reliance on the private sector. A good analogy in Aotearoa is ACC, which uses public money to pay for a range of coordinated health services to treat someone for free after an accident, but simultaneously reduces its costs through its injury prevention programmes. Thus, the agency can maximise its efficacy through prevention at the top of the cliff, while remaining available with an ambulance at the bottom.
“Using centralised public services that can use economies of scale and do not have a profit motive is a lot more efficient than relying on the private sector to provide our basic needs …”
Using centralised public services that can use economies of scale and do not have a profit motive is a lot more efficient than relying on the private sector to provide our basic needs, because of primary prevention programmes, shared administrative resources, and coordinated responses.
UBS differs from public services because current public services fall short in addressing the full extent of basic needs to be addressed. For example, socioeconomic status in Aotearoa comprises nine separate indicators – all of which should be addressed to reduce disparities.
UBS is different from a Universal Basic Income (UBI), because it is a more efficient way of reducing social inequities. A UBI might allow the wealthy to spend more on their holiday, but poorer people would still have to spend scarce resources on long commutes to work if (for example) public transport was not available, and not free.
To apply UBS in practice, Andrew suggested that communities would know best which services were most important. So, while funding would come from central government, services could differ by regions.
As campaign organiser for the ‘Let’s Do Even Better’ campaign for the PSA, Brendan Lane directed viewers to that website, which lists six areas for basic services they are campaigning for, including public transport and access to the Internet. The BFF supports the PSA campaign.
Can we afford UBS in this country? I think the question should rather be, ‘Can we afford not to do this?’ If we want Aotearoa to become a highly functioning society with fewer disparities, better educational outcomes for all, reduced obesity rates, etc. then ensuring that all Kiwis can reach their potential will benefit us all. I am really excited by Andrew Percy’s vision, and the webinar will inform the forthcoming BFF Economic report, too.
*See here for his followup commentary on the New Zealand situation.