Australia is in the midst of a debate about how to pay for universal basic income, a concept championed by former US President Barack Obama in the US.
The idea is to offer a guaranteed minimum income to all Australians.
The Government says it would help ease the burden on low-income households, which currently receive only about $3,300 a year.
A ‘universal’ basic income?
‘Universal basic income’ is a phrase coined by former Labor PM Julia Gillard, who introduced a plan for a basic income in 2007.
The government has so far proposed a maximum of $60,000 per person per year.
But some experts argue the policy would have a limited impact.
“People will need to adapt to the changes to their circumstances and what the needs of society are going to be,” says Dr Daniel Dennett from the Australian National University.
“If you have a universal basic amount of money, it’s not a very good deal for people who are trying to make ends meet.”
‘Unlimited flexibility’ Dr Dennett is one of the proponents of a universal income.
“The idea that you can put something like a basic cash payment in the budget that everybody has a say in, I think is an important thing,” he says.
What about the social implications? “
There are a lot of things that governments can do, including through taxation, to improve the situation.”
What about the social implications?
Dr Denny argues the Government has already shown the feasibility of a basic pay-check.
But he is concerned about the potential negative social impacts of a system in which everyone receives the same amount.
“You might be getting people on welfare, you might be doing the right thing, but you might also be going out of your way to be nicer to people,” he explains.
“So what does that say about a universal, unconditional income?”
‘An interesting concept’ Dr Mitchell agrees.
“What I think would be interesting about a basic, unconditional basic income is the fact that it would be an interesting concept for people to try and work out how to implement,” he adds.
“And then to see what the social consequences would be.”
The idea of universal basic payments is not new.
The US has experimented with a universal universal income since the late 1990s, with the idea of a cash payment and a benefit cap.
But the scheme was abandoned following the Great Recession.
The UK has experimented extensively with the concept of universal cash payments, with its scheme in place since 2001.
The concept of a guaranteed cash payment is also part of the debate around the basic income.
But what is a universal ‘basic’ income?
The concept was first introduced by economist Robert Merton, who proposed a basic wage to be paid to every worker at a rate of 1.5 per cent of gross domestic product.
The scheme was initially developed as a way to create a “universal basic wage”.
In practice, the idea was to increase the size of a pay-table, with a guaranteed payment equal to the cost of the basic food and shelter for the entire workforce.
Dr Dennison says the system was also designed to ease the financial burden on the poorest people.
“That was one of my primary arguments for the scheme, because we thought that if you had a guaranteed basic income and you made a contribution to society you were going to do a lot better than the current system,” he said.
“We didn’t think it would reduce the burden.”
Dr Dennis agrees.
He points to the positive social effects of universal income schemes, such as reducing unemployment and reducing the welfare bill.
“One of the things that I really like about universal basic incomes is that they actually do seem to be good for the economy,” he suggests.
“They make it a lot easier for people in need of some support to get it.”
What would the benefits be?
A universal basic wage would cost $2.2 trillion over the next five years.
Dr Mitchell argues that a universal cash payment would have the potential to reduce poverty, increase employment and reduce the cost to governments.
He argues that the benefits would include: reducing inequality by reducing income inequality.
“In the current society, there’s no doubt that there’s been a lot more inequality than is currently there,” he argues.
“More inequality means people are getting less.
Dr Mitchell says universal basic cash payments would also improve the welfare system, with those receiving the cash having more time to apply for work. “
For example, if you’re poor, you can be worse off in terms of your standard of living than if you were rich.”
Dr Mitchell says universal basic cash payments would also improve the welfare system, with those receiving the cash having more time to apply for work.
He says the benefits also go far beyond basic cash.
“Universal basic cash will be a huge benefit to all those who don’t have the cash to live on, because they’re going to get the extra cash,” he predicts.
“All those people who get that cash