Britain's Royal Society of Arts is a large, long-established social research body, which seeks to find innovative, practical solutions to today's social challenges. In December 2015, the RSA released an important discussion paper based on 12 months of research, entitled "Creative citizen, creative state; the principled and pragmatic case for a Universal Basic Income".
The 51-page report describes succinctly, the background to the idea of a government-provided, obligation-free universal basic income to all its citizens; its practicability and its feasibility. The authors believe it offers a response to the difficulties that face countries everywhere, as they struggle with increasing unemployment, inequality and the intrusiveness and unsustainability of the modern welfare state.
Mykayla Novak ("Welfare experiment may have applications in Australia", canberratimes.com.au, January 8) wrote about the growing interest around the world in this possibility of giving every citizen an obligation-free basic income and the fact that Finland is currently running a pilot study of this concept. Novak recognised both potential benefits and difficulties of such schemes and acknowledged the shortcomings of the current approach to welfare. She said that the idea appeals to people on both the progressive and conservative sides of economic policy and that it is being considered to eliminate the implicit poverty traps that come when welfare subsidies are circumscribed by extensive rules and bureaucratic limitations.
The RSA report argues strongly for the trial of a universal basic income in England. It points out that the spread of intelligent machines and new technology will affect the world of work in unpredictable ways, and that many people, through no fault of their own, will be unable to obtain adequate work to meet their basic needs. The scheme would impose no financial penalty on people for topping up their basic income entitlement with various forms of paid work. Indeed, the incentive to increase income through training, entrepreneurship, and part-time or full-time paid work would if anything, be greater. But, the worst kinds of inequality and poverty would be avoided. Carers, the handicapped, the disabled, and retired people would all be treated equally. The massive costs of policing welfare payments and entitlements would disappear. No means test would apply to the allowance, which would be at a level that would enable basic sustenance, shelter and education.
The report thus describes a system that would radically change the organisation of society. It justifies such a change as a response to radical changes that are inevitably coming and are already having their costs. Automation, globalisation, artificial intelligence and outsourcing of conventional work to other nations will have a profound impact on employment possibilities in Australia in coming decades. Having a guaranteed basic income would enable us all to optimise our creativity and our ability to contribute to the well-being of the community. In fact the report talks about all recipients of the basic income being expected to make a declaration, recognising their responsibility to the community at large.
The report canvases a number of ways in which the program could be implemented and funded and concludes that it would be best funded through a progressive income tax on earned income over and above the basic universal income. It presents the calculations, which led the researchers to advocate for a pilot of this approach in a city or segment of the British population.
The report draws attention to the fact that already there are some elements of a basic income policy operating in Alaska. It argues that there are likely to be both macro and micro economic benefits from such a policy and that it is likely to increase, rather than diminish societal productivity. It explores the idea from all perspectives – moral responsibility, fiscal viability, distributional fairness and support for creativity.
We should be considering this in Australia also. Why are we not discussing more than modest tinkering with an unfair tax system to manage an overwhelmingly growing and unsustainable welfare system? In the past 20 years Australia has lost its egalitarian spirit and we have very significantly increased both the wealth of the wealthy and the poverty of the disadvantaged.
Australia should be joining the international movement to consider the practical feasibility of providing a universal obligation-free income to all.