Australian political leaders have just spent months promising billions of dollars to help the nation deal with what is commonly referred to as the cost-of-living crisis.
Yet few admit that the term ‘cost-of-living crisis’ really stands for wealth inequality, an inevitable consequence of the capitalist system that worsens every year.
Put simply, the rich are growing richer and there is a growing gulf to the majority that doesn’t share that wealth.
Allowing that inequity to continue and grow can only lead to an eventual breakdown of society, especially one faced with a radical transformation of what it means to be employed as technology takes jobs.
There is a better way forward and it has already been shown to work.
A relatively old concept — a universal basic income — has yet to be rolled out across a national population but numerous trials and experiments have been successfully conducted in many countries, all pointing towards it significantly mitigating economic insecurity, poverty and inequality.
It could be the answer to the cost-of-living crisis and much more.
Most proponents argue for a basic income that ensures an acceptable standard of living just above the poverty line — typically 50 percent of the median income.
In Australia today, 50 percent of the median weekly income would be around $549.00 per week after tax for individuals.
It would also require major taxation reform that would include ensuring multinational companies — some of which pay virtually no tax — pay their fair share.
What is it?
A universal basic income is a regular, unconditional payment provided by the government to every citizen, regardless of income, employment status or wealth.
It aims to reduce poverty by ensuring a minimum level of financial security for all and creating a more just society. At the same time it would give people greater freedom to pursue education, caregiving, entrepreneurship and other non-traditional work.
The concept of a universal basic income goes back centuries. Its origins can be traced to the 16th century Catholic saint Thomas Moore and advocates have included American and French revolutionary Thomas Paine and founding Liberal John Stuart Mill.
In the 20th century, American economist Milton Friedman effectively campaigned for it with his negative income tax proposals of the 1960s while Martin Luther King Jr also argued for a guaranteed income. Even US President Richard Nixon experimented with a universal basic income in the 1970s.
The rapidly increasing potential for jobs now done by human workers to be taken over by machines — leading to widespread unemployment as it is defined now — has sparked renewed interest in the idea of a universal basic income.
It is unpalatable to some who argue it could provide a disincentive to work and cost too much to give financial support to people who will not or cannot reciprocate and are deemed undeserving.
However, there is no evidence to support these claims.
People will still want more material possessions and a better lifestyle than a basic income would afford.
They will still choose to work to achieve their aspirations. A 2016 Finnish trial confirmed this as well as showing the group of unemployed people receiving the payment reported significantly less stress and better health.
Dealing with the cost
Paying for a universal basic income would require substantial tax reforms — and political courage — including a wealth tax, particularly on businesses that don’t pay their share of tax now.
Thirty-one percent of multinational firms paid almost no tax in Australia in 2022-23 even when they had huge revenues.
If companies like this were taxed at the same rate as individuals who earn more than $180,000 — effectively a marginal tax rate of 45 percent — the potential tax take from these companies alone would be enough for a full universal basic income.
In Norway, mining companies are taxed at a rate of 78 percent. The companies still make billions in profit, but every citizen is technically a millionaire thanks to the nation’s sovereign wealth fund, which provides social services such as free health care, education and social provisions.
In Australia, Medicare and the old age pension were once criticised as unaffordable but are now a fundamental part of our social fabric.
These examples speak to the feasibility of implementing ambitious social measures, like a basic income, that significantly address widespread inequalities.
Critiques of a universal income ignore the many ways that people make contributions to society that are unpaid and often unrecognised.
There are also broader benefits that come with a more equitable society. Countries that are more equitable have been shown to have lower rates of mental illness, suicide, child abuse, domestic violence and other crime.
The wealthy elite’s monopoly of resources — where the richest 1 percent have more than twice as much wealth as more than 85 percent of the global population — is not sustainable.
In Australia, the top 10 percent of income earners have an average after-tax weekly income seven times more than the bottom 20 percent and the top 10 percent of households now hold 44 percent of total wealth.
And all that is while at least 3.3 million people live below the poverty line — including 761,000 children.
The benefits
A universal basic income forms a key building block for a democratic and egalitarian society.
Such income schemes have been shown to reduce health inequalities and directly improve health and mental health outcomes. They would also help women trapped in domestic violence situations who cannot leave because of a lack of financial support.
The dramatic impact technology has had on employment has already spurred successful basic income trials in parts of Spain, Namibia, Canada, Finland, Kenya, India, Uganda and Switzerland.
Australia has already seen a temporary version.
The Morrison government’s initial pandemic response included income support through the JobSeeker scheme, which doubled payments to the unemployed, and JobKeeper, which effectively provided a basic income for casual workers, keeping them above the poverty line for six months in 2020.
A universal basic income has the potential to permanently reduce inequality and poverty to Nordic welfare state levels, which on average are about half that of Australia’s.
It would require substantial tax rises, particularly for large multinational companies, but would only put Australian tax rates up to the OECD taxation average.
A combination of taxes on asset-based wealth, could also be considered in such areas as land value, corporate stock, mining resources and transaction taxes. The proceeds could be administered through a sovereign wealth fund.
The Albanese government has revised tax cuts and offered more, but tax cuts will not address poverty and inequality or enable the introduction of a universal basic income.
Australian political leaders were warned about trends of inequality and job precarity by the Productivity Commission back in 2016, but both major political parties have so far rejected a universal basic income and remain wedded to traditional labour market growth and social policies. Such a policy was adopted by the Greens in 2018.
A universal basic income is possible and provides a way to overcome the costs of inequality. The question is whether the shift happens through ethical policy choice or the desperate necessity of last resort.
Professor Christine Morley is Head of the Social Work and Human Services Disciplines within the School of Public Health and Social Work at Queensland University of Technology. She has extensive experience as a social work researcher in a range of fields including poverty and wealth inequality.
Dr Phillip Ablett is a senior lecturer in Social Work and Human Services at Queensland University of Technology. He is interested in positively influencing the formation of critical professionals and citizens for the creation of a more socially just, democratic and sustainable world.
Associate Professor Jenni Mays works in the School of Public Health and Social Work at Queensland University of Technology. She is recognised as an international expert on basic income and social policy.
Originally published under Creative Commons by 360info™.
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