Universal Basic Income

The idea of a universal basic income as an alternative to social security payments and income tax exemptions has a long history and has attracted support from both the right and the left.

The concept is simple: replace all social security income support payments with a single, tax-free government payment at a level set to ensure the recipient then has the means to house, feed and clothe themselves, and then deal with the ‘necessities’ of modern life – health, transport, information and basic entertainment. As the payment is universal ‘everyone’ gets it, though decisions still have to be made about the age at which it is first paid, and whether it should be paid to citizens, permanent residents, all residents, or some other specified subset of the population of Australia.

Funding for the basic income comes from ending the tax-free threshold for income tax (as everyone now receives a tax-free basic income), the low and middle income and related tax offsets; ending all income support social welfare payments such as the age and disability pensions; and ending the bureaucracy that supports those payments.

The model allows you to choose:

• the annual amount of the universal basic income
• whether this payment is indexed, and if yes, whether it is indexed by the consumer price index or the wage price index
• whether it applies to:
  • resident Australian citizens
  • Australian and New Zealand resident citizens
  • all residents with two years residency
  • all residents
• the age of recipients between 16 and 25;
• whether the offsets from existing social security payments are defined:
  • narrowly (which encompasses only payments identified as income support)
  • broadly (which includes a range of income-like payments or subsidies)

A key consideration is the relativity of the UBI payment with current income support payments. A sample of the most common payments is shown below.

Income Support Payment	Annual Amount (Aug 2018)
Youth Allowance (Single, >18, no children, living with parents home)	$7,634
Austudy – secondary (age 16 to 25, single, no children)	$11,591
Youth Allowance – Student (Single, >18, independent)	$11,591
Newstart/Job Seeker (Single, no children)	$14,305
Disability Pension (Single, under 21, independent)	$14,895
Age Pension (member of a couple)	$17,958
Parenting Payment (Single)	$19,822
Age Pension (Single)	$23,598
Carer Payment (Single)	$23,598
Disability Pension (Single, over 21)	$23,824
Service Pension (Single)	$23,824
Veteran Pension (Single)	$25,766
Totally and Permanently Incapacitated Veteran Pension (Single)	$36,608

The model takes account of either the reasonable direct offsets from introducing a Universal Basic Income, or, if you choose, a wider range of potential offsets. Beyond this the model does not take account of any second round effects from introducing a universal basic income.

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