Does Work Work? The Case for Universal Basic Income and Fresh Economic Thinking

By Bella Ruskin

Photo by Karolina Grabowska from Pexels

Last year, 2020, shone a glaring light on the failures of many long-accepted conventions. Arguably, the concept of employment as welfare — that is, employment being required to provide individuals with a basic income — is the most radical, and most necessary, to be brought under the spotlight. 

There are around 4 million Victorians from ages 15 to 65, with 3 million people in the labour force.¹ During the first stage of JobKeeper, 1.1 million Victorians relied on it.² Given that over a quarter of working-aged Victorians survived on government income without turmoil, it may be time to rethink our current income model.

Even before lockdowns, people fell through the cracks of the employment as welfare approach. The clearest candidates include many MLS students: Centrelink recipients. For people who seek welfare outside of employment, the punishment is immense: 83% of Newstart and Youth Allowance receivers don’t have enough money to live on and 20% cannot even afford basic necessities.³ Full-time paid work is not universally feasible. A law student enrolled in a full-time degree may already be working 40 hours per week, likely more come exams. Expecting students to perform different, additional work, because it provides remuneration, alongside full-time study inevitably creates burnout. This calculation does not consider the endless volunteering and interning required to even dream of a graduate offer, let alone potential health problems and carer commitments. Of course, under-loading is possible in some circumstances, but the point is that students shouldn’t have to stretch themselves to, quite literally, survive. 

While flexible working arrangements might be manageable for students, there are many others who do not have this privilege, yet should still be permitted to buy food, glasses⁴ and, god-forbid, the occasional treat. Dignity should not be limited to those who are able to work.

When the issue is relying on employment for income, the radical response is to provide unconditional income separate from employment. Fortunately, this isn’t radical at all. One potential solution is Universal Basic Income (‘UBI’) — a model where all people receive an unconditional liveable income — which has philosophical roots in the 16^th Century, particularly through Thomas More,⁵ and was first discussed in Australian Parliament in the 1920s.⁶ 

While there is much debate around UBI implementation, the fundamentals are clear. It must be: (1) universal, with money given to all adults; (2) unconditional, provided regardless of financial need and without preconditions; and (3) basic, able to cover the cost of living.⁷ Some theorists support dropping part of the trifecta to make UBI more feasible,⁸ but all three are critical to create a genuine safety net.

Recently, the global appetite for UBI has grown. Both Finland⁹ and the Netherlands¹⁰ have experimented with the ‘basic’ element by increasing income for some existing welfare recipients. Other countries, including India¹¹ and Kenya,¹² trialled a more authentic UBI by giving a basic income unconditionally and universally to the residents of set geographical areas. The most significant study is Mincome: a 1970s study in rural Manitoba, Canada, where every resident in the town of Dauphin received a monthly income.¹³ The results were overwhelmingly positive. In the four years that Mincome ran, hospitalisations reduced by 8.5%, particularly for alcohol and mental health admissions, and less people visited doctors overall.¹⁴ Like nearby rural towns, many Dauphin teenagers usually quit high school to work, but this trend decreased during Mincome. In Mincome’s second year, 100% of students enrolled for their final year of school.¹⁵ While the great UBI anxiety is that everyone will abandon employment, Mincome found that only high school students and new mothers stopped working.¹⁶ 

At the very least, COVID-19 lockdowns have quashed the fear of a lazy population. From complicated TikToks to marathon baking, it’s clear that humans like to work and produce. The current welfare model only recognises one form of work, but UBI could financially recognise others including study, care work, domestic labour and volunteering. So why didn’t the world follow the Mincome path? Because Canada’s newly elected conservative government prematurely ended the study, with the results only analysed in 2009.¹⁷

Australia is not immune to the expansion of UBI support. A recent YouGov survey for the Green Institute found that 58% of Australians supported UBI, with 18% in opposition.¹⁸ An Anglicare survey recorded an even stronger endorsement of the concept, with 77% of participants in favour of the idea and only 3% in strong opposition.¹⁹ If UBI were a political party, Anthony Green would have called the election.

Beneficial as it may be, UBI is a big investment. If every Australian adult received $500 per week, an amount above the poverty line, it would cost $520 billion per year.²⁰ Yikes. No single, feasible funding proposal currently exists but ideas include combinations of carbon tax,²¹ reducing defence spending, inheritance tax and quashing tax evasion.²² The ATO predicted that $13.2 billion was owed in unpaid tax by individuals and large corporations in 2017–18.²³ With this contribution, the unfunded UBI figure is $507 billion. For reference, Australia spent $196 billion on social security and welfare last year.²⁴ While some money would still be needed for services, individual incomes wouldn’t be paid twice. Thus, the unfunded portion could be reduced to a maximum of $311 billion without much effort.

UBI must be universal to ensure that even high salaries earners are instantly protected if they are suddenly fired/too unwell to work/awakened to a hatred of their job and decide to farm potatoes, but this is uncommon. Tax rates would need to be adjusted for UBI, so that the net earnings of a highly-paid individuals remain unchanged but the UBI income is removed.²⁵ Under a theoretical system where people earning below $300 per week (less than 25% of the median Australian income) keep their full UBI, people earning above $1576 per week (top 25% of earners) are taxed to remove the UBI payment and people earning between those amounts are taxed 40c per dollar earned in non-UBI income, approximately $170 billion is saved.²⁶ Now only $141 billion still needs financing: 72% of UBI could be funded without revenue raising or unrelated cuts.

These calculations don’t include money saved by UBI, particularly for public services.²⁷ Poverty contributes to expensive health risks.²⁸ Argentinian evidence suggests that increased welfare spending significantly and negatively correlates with all almost crimes:²⁹ notable as the yearly net operation and capital costs for Australian imprisonment and community corrections orders is $946 million,³⁰ let alone court costs. A US UBI study predicted that paying all adults $1000 monthly would contribute $2.5 trillion to the US economy over eight years.³¹ While the JobKeeper-induced budget deficit may cause anxiety around large scale welfare programs, JobKeeper lacked proper economic planning and the opportunity to generate long-term benefits.

The future is looking rather bleak, job-wise. Climate change is expected to destroy lifestyles through disasters and disease. Automation is threatening more jobs than ever before³² (yes, even lawyers).³³ For young people, the job market is a source of angst and unlikely to become more welcoming. As work is soon to become more unstable, now is the time to contemplate tactics to soften the harsh knock-backs to come. COVID-19 demonstrates only one instance where a different income approach protected wellbeing and financial security. However, the long-term nature of UBI could enable it to help address homelessness, domestic violence and unpaid domestic labour.³⁴ With unemployment and financial insecurity no longer a threat,³⁵ individuals can demand better conditions,³⁶ wait for desired jobs and attempt entrepreneurship.³⁷ 

Just as the welfare state grew out of post-World War II austerity, COVID-19 is an opportunity to question the present and think unconventionally about economic equality. This is not simply another new policy: UBI has the potential to end poverty. That’s metamorphic. It’s time to rip the bandaid off and start treating the injury itself.

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1. https://quickstats.censusdata.abs.gov.au/census_services/getproduct/census/2016/quickstat/2#employment
2. https://www.smartcompany.com.au/coronavirus/stimulus/state-by-state-jobkeeper-numbers/
3. https://www.acoss.org.au/media_release/budget_must_not_forget_the_unemployed_83_dont_have_enough_to_live_on/
4. https://www.abc.net.au/news/2021-08-10/basic-income-attracts-77pc-support-in-anglicare-poll/100362528
5. Rutger Bregman, Utopia for Realists, tr Elizabeth Manton (Bloomsbury, 2017) 33.
6. https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1617/BasicIncome
7. https://basicincomeaustralia.com/; Nick Srnicek and Alex Williams, Inventing the Future: Postcapitalism and a World Without Work (Verso, 2^nd ed, 2016) 119.
8. https://www.abc.net.au/news/2021-08-10/basic-income-attracts-77pc-support-in-anglicare-poll/100362528
9. https://www.bbc.com/news/world-europe-47169549
10. https://worldcrunch.com/culture-society/universal-basic-income-5-experiments-from-around-the-world-1
11. https://worldcrunch.com/culture-society/universal-basic-income-5-experiments-from-around-the-world-1
12. https://www.givedirectly.org/ubi-study/
13. Rutger Bregman, Utopia for Realists, tr Elizabeth Manton (Bloomsbury, 2017) 35.
14. https://www.bbc.com/worklife/article/20200624-canadas-forgotten-universal-basic-income-experiment
15. https://www.bbc.com/worklife/article/20200624-canadas-forgotten-universal-basic-income-experiment
16. Rutger Bregman, Utopia for Realists, tr Elizabeth Manton (Bloomsbury, 2017) 37.
17. Rutger Bregman, Utopia for Realists, tr Elizabeth Manton (Bloomsbury, 2017) 34–6.
18. https://www.abc.net.au/news/2020-12-11/survey-says-most-australians-welcome-universal-basic-income/12970924
19. https://www.abc.net.au/news/2021-08-10/basic-income-attracts-77pc-support-in-anglicare-poll/100362528
20. https://michael-haines.medium.com/how-to-fund-a-ubi-in-australia-e4946fc0ee39
21. https://medium.com/ubicenter/distributional-analysis-of-andrew-yangs-freedom-dividend-d8dab818bf1b
22. Nick Srnicek and Alex Williams, Inventing the Future: Postcapitalism and a World Without Work (Verso, 2^nd ed, 2016) 123.
23. https://www.ato.gov.au/about-ato/research-and-statistics/in-detail/tax-gap/large-corporate-groups-income-tax-gap/; https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Tax-gap/High-wealth-income-tax-gap/; https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Tax-gap/Individuals-not-in-business-income-tax-gap/.
24. Australian Government, Budget 2020–21 (Budget Strategy and Outlook Budget Paper No 1, 6 October 2020) 6-51 <https://archive.budget.gov.au/2020-21/bp1/download/bp1_w.pdf&gt;.
25. David Graeber, Bullshit Jobs (Penguin, 2018) 279.
26. https://michael-haines.medium.com/how-to-fund-a-ubi-in-australia-e4946fc0ee39
27. David Graeber, Bullshit Jobs (Penguin, 2018) 280.
28. Nick Srnicek and Alex Williams, Inventing the Future: Postcapitalism and a World Without Work (Verso, 2^nd ed, 2016) 119; https://www.acoss.org.au/images/uploads/ACOSS_poverty_report_October_2010.pdf.
29. Osvaldo Meloni, ‘Does Poverty Relief Reduce Crime? Evidence from Argentina’ (2014) 39 International Review of Law and Economics 28, 33.
30. https://www.aic.gov.au/sites/default/files/2020-05/rr_05_240418_2.pdf
31. https://www.huffpost.com/entry/how-to-fund-a-universal-basic-income-without-increasing_b_59d7c73ae4b0705dc79aa775
32. Carl Benedikt Frey and Michael A Osbourne, ‘The Future of Employment: How Susceptible are Jobs to Computerisation? (Working Paper, Oxford Martin Programme on Technology and Employment, 17 September 2013).
33. Carl Benedikt Frey and Michael A Osbourne, ‘The Future of Employment: How Susceptible are Jobs to Computerisation? (Working Paper, Oxford Martin Programme on Technology and Employment, 17 September 2013); https://www.nytimes.com/2011/03/05/science/05legal.html
34. David Graeber, Bullshit Jobs (Penguin, 2018) 274-8.
35. Nick Srnicek and Alex Williams, Inventing the Future: Postcapitalism and a World Without Work (Verso, 2^nd ed, 2016) 120.
36. David Graeber, Bullshit Jobs (Penguin, 2018) 283.
37. https://www.abc.net.au/news/2021-08-10/basic-income-attracts-77pc-support-in-anglicare-poll/100362528