Would a universal basic income work in Australia?
The Greens have promised to introduce a universal basic income trial in South Nowra if elected in the upcoming state election, which would see every adult paid $700 per fortnight no matter their income.
The Greens argued it was a tool to move people away from government welfare payments. But under the trial, people will still have access to Centrelink despite receiving the extra $700 per fortnight.
The trial will run over three years and take in around 800 participants, with a total cost of $55 million. If the trial is successful it would be rolled out right across NSW, which begs the question, how could the government afford to pay the entire state, and potentially the entire country, $700 per fortnight.
According to calculations by the Centre for Independent Studies (CIS), a UBI would cost the country an additional $230 billion. In order to raise that revenue, the CIS said a 60 per cent marginal income tax would be required for median earners and 80 per cent for high earners.
NSW Greens MP David Shoebridge said the UBI trial would be available to any person in South Nowra, even if they earned $2 million a year. Even though the payment is ‘universal’, most people would argue it should be means tested. It would only make the rich richer and the poor poorer, creating more of the inequality the Greens are trying to stop.
Under Newstart Allowance, every person in receipt of the payment must meet job search requirements and will not receive their payment if they refuse to do so. The purpose of the payment is to assist people in finding meaningful, ongoing work. But the Greens say they payment is detrimental to people’s confidence.
The Greens denied the UBI was a handout for doing nothing, and argued it would act as a job creator, giving people the confidence to search for work that interests them, without bureaucratic pressure.
But, it feels like the inevitable outcome of the UBI, is that people will not look for work because they won’t need to, they’re being paid for nothing. Why work when you’ll get the same result? This in turn would stretch the divide between rich and poor even further.
At their announcement last week, the NSW Greens said the UBI had proven successful in many other countries, including Canada and Finland. Finland trialled the project for more than a year, handing out free money with no restriction on how people use it. It captured the world’s attention and is probably the most well known UBI trial, but the Finnish government decided to stop the program, after finding it did not help people get into jobs. While people were happier in their everyday lives under the UBI trial, proved as more a disincentive to work, contrary to the Greens argument.
So it begs the question here in the Shoalhaven, would people in the trial find work, or instead choose to live off their $700 per week, keeping them confined to the margins of society"?