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Sneak preview of a neoliberal UBI

Written By: - Date published: 1:27 pm, November 23rd, 2020 - 21 comments
Categories: benefits, labour, welfare - Tags: , , , , , ,

Labour have decided that non-residents still in New Zealand who have a visitor, student or work visa will be eligible for the Emergency dole from December. The ODT reports,

The Government has extended an olive branch to thousands of desperate foreigners on temporary visas who can’t support themselves or return to their home countries.

From December 1, they will be able to apply for an emergency benefit, Social Development Minister Carmel Sepuloni announced today.

The Ministry of Social Development estimates about 5800 will receive the benefit out of about 267,000 temporary work, student and visitor visa holders currently in New Zealand.

This assistance – $250.74 a week for a single person, $428.06 for a couple, $375.17 for a sole parent – will be temporary and last until the end of February.

I see what you did there ODT, with the olive branch.

This is a very good move from Labour.

However non-residents will get the base benefit only, not the supplementaries that most beneficiaries rely on, for example Accommodation Supplement or emergency good grants.

Imagine the government thinking you can live on $250/wk just because you’re not a citizen/resident. I haven’t seen a rationale for that but am guessing it’s financial coercion to go pick seasonal vegetables and fruit. I guess this is considered a necessity because of the worker shortage now that we’re currently not allowing horticulture to import workers from countries with even worse work conditions than here. Rather than the government stepping up and working with industry to create proper jobs (the ones where people can earn enough to have a decent life). Killing two birds with one stone.

What this reminds me of is Gareth Morgan’s original UBI model from the Big Kahuna. His idea was to do away with welfare, and give everyone the dole with no strings attached. People who couldn’t live on the dole would work and earn extra money without financial penalties from the state. There would be no more extra assistance if you couldn’t get by, a kind of land or your feet and pull yourself up by your bootstraps UBI, designed by an economist who believed that without financial pressure people would be too lazy to work and presumably the economy would founder.

Too bad if there weren’t enough jobs, or enough hours that week, or you were sick, or needed to take time off to look after a child or any number of reasons why our large underclass, precariat workforce that is continually being forced to chase its tail might not have enough to pay the rent or feed themselves in any given week.

Of course Labour’s Emergency Benefit over the next three months will still have all the punitive rules attached to it that the dole does, including most of the ones they used last time they were in government along with most of the ones that Paula Bennett brought in during the long welfare bashing years of the FJK government.

So it’s not an unconditional basic income at all, but I think this is instructive on what a neoliberal UBI would probably look like. UBIs designed by economists are tools to manage the economy, they’re not primarily social security, and in the hands of the right and the centre, they’re not going to be good for people in need. Morgan was openly anti-welfare. TOP, who adopted his UBI model, have better intentions, but their most recent leader, Geoff Simmons, continued to express anti-welfare sentiment in election year. National are the leaders in welfare bashing and would jump at the chance of getting rid of WINZ. Anti-welfare motivation exists in varying degrees within Labour as well, who still appear to believe that work is the solution to need, and that sticks are at least as useful as carrots.

Best we stop calling for the end of welfare and replacing it with a UBI, and instead push for a Guaranteed Minimum Income for the people that need it, a UBI with welfare bolted on.

And while we still have the punitive welfare system that Labour have inherited but allegedly are going to remedy, in the interim Labour could mend WINZ so that the ability to treat beneficiaries as individuals and assess based on need is restored. That way, if you don’t have enough to eat you can buy food in any given week no matter the status of your visa or residency.

21 comments on “Sneak preview of a neoliberal UBI ”

  1. Craig H 1

    GMI and UBI are really just ways of presenting the same idea, but agree that the Greens GMI was superior to the TOP UBI for the reasons stated. It's not that difficult to make them look the same, but GMI is probably easier to get people to buy into since the presentation looks more like standard taxation, so requires less of a leap of faith.

    • weka 1.1

      Agreed about the standard taxation bit being easier for people to accept.

      The targeted nature of a GMI (it's for people who need it rather than everyone) is an important distinction from a UBI.

      We can probably design a good UBI, I just haven't seen a model developed in NZ (imo because they're all designed by economists rather than starting with the wellbeing of people and their needs. As such NZ UBIs are economic tools not social security).

      • UncookedSelachimorpha 1.1.1

        " The targeted nature of a GMI (it's for people who need it rather than everyone) is an important distinction from a UBI. "

        Sort of – but in a sense the GMI is still for everyone – everyone and anyone who has income below the GMI can get it at any time, no questions asked (or asset tests, relationship questions etc).

        The big advantage of the GMI is it can be set much higher than a UBI, for the same total expenditure (so much more help given to those who need it).

        • weka 1.1.1.1

          yes, everyone can have it unconditionally once eligible, but unlike the UBI models, it's not paid to everyone and then clawed back from those that don't need it via IRD. That only people who need it get it will appeal I think.

          We probably need lots more discussion about it in NZ so people can get their heads around it.

      • Craig H 1.1.2

        I'm a big proponent of anything that provides for adequate support for a decent life, and consider that UBI, GMI, UBS and various social insurance and welfare models could all be designed to provide for that. Even the current system could be made to work if the prosperity gospel was discarded from the thinking around it, the issues caused by concurrent abatements rates were fixed and some more money found.

        It's entirely possible to design GMI and UBI systems with abatement rates and tax systems to give the same or very similar mathematical in-the-hand outcomes. The principal difference is in the message that can be used to sell them. What makes the Greens' GMI so much better than TOP's UBI is the specifics of the policy such as a higher rate and adequate support elsewhere in the system.

        All that said, the political saleability of a system is arguably the most important factor since the point is to get something actually adequate, rather than continue with not much. Social insurance would arguably work better than welfare, for example, because people would buy into it since they are contributing to something they are automatically eligible for even if they never actually need it. It's what makes ACC palatable, for example.

        • weka 1.1.2.1

          How would social insurance work for people with no income? Would social insurance pay out more to people with more income?

          I agree about the salability, but I think equally important is action to shift the Overton Window on social security, so that people come to understand what is needed and why it's a good thing. I think NZ still has enough values to manage this, covid showed us that it is possible.

          • Craig H 1.1.2.1.1

            Depends on the design, but social insurance would normally have a minimum payment, so even if someone is not paying into it, or has never paid into it e.g. a student who is between school and university and has never been employed, would be paid the minimum figure, whether included directly in the social insurance model or as a welfare payment of some sort. Social insurance in other countries is normally along the lines of ACC, but it could be set as a flat rate or abating rate funded by a hypothecated tax or levy, and just called insurance for the sake of marketing.

            Agree on the Overton Window, but possibly the easiest way to move it is to design something saleable, implement it, and then review and upgrade later to a better model. I'd strongly prefer the perfect model from day one, but also think that an improved but imperfect system is better than sticking with the current system.

    • mikesh 1.2

      GMI and UBI are two different things. The first is just a top-up for persons earning below a preset level; whereas the second is fixed amount paid to every adult person. A GMI, I think would be awkward to operate since we would not know in advance how much persons who might be eligible were likely to earn in any given year, A UBI would be much simpler and, coupled with a flt rate of income tax, would greatly simplify the tax system.

      Keith Rankin, one of the principle proponents of UBIs, at one time suggested a payment of $200 p/w ($10,400 p/a), coupled with a flat tax of 35 cents per dollar on all income; and further, suggested this should be paid on top of any welfare payments a person might be receiving. If this arrangement was financially viable, it would suggest that a UBI was not inconsistent with the operation of a welfare system.

      • weka 1.2.1

        Afaik none of the NZ models has addressed the welfare top up issue, but if Rankin has I'd love to see what he said.

        The problem with the UBI is that it's too easy for the right to dismantle welfare around it. And as we have seen with Labour, they're quick or even philosophically motivated to roll back a lot of what National does with welfare. They've done a bit, but there are obvious problems with Labour's approach.

        • mikesh 1.2.1.1

          The problem with both the GMI and the current welfare arrangements is that benefits are reduced if the beneficiary finds a part time job. This is a job seeking disincentive that doesn't exist with a UBI.

          • Nic the NZer 1.2.1.1.1

            As I understand New Zealands welfare system and its history these kinds of sanctions have been unnecessary and typically harmful to welfare recipients.

    • Pat 1.3

      As always the devil is in the detail.

      My sense is that an employment guarantee is the best option, which is closer to a GMI than a UBI.

  2. RedLogix 2

    The problem space here is the divergent views on whether we should prioritise the 'basic' or the 'universal' elements of such a program. Implementing a UBI that is both adequate and universal right from the outset presents political hurdles. And while I still think a strong, adequate UBI is the ultimate goal, a GMI may well prove a good starting point:

    The main difference is that the UBI requires collecting more taxes from people on high incomes and returning some of that revenue to the same people in the form of a universal payment. The appeal of making the payment universal must be weighed against the “churning” costs of collecting and returning it. In an integrated tax-welfare system, such as that we have in Australia, these costs, while real, are not huge. For taxpayers, the UBI could be implemented as a tax rebate, which would cancel out the extra tax relative to a GMI. So, if we actually achieved a genuine GMI, transforming it to a UBI would be largely a matter of definitions.

    But the problem of the ultimate design is less important than the choice of a path to get there. Compared to “universal first” the “basic first” approach has the merit that we are already part of the way there, and the next steps involve clear, and feasible, political demands.

    https://www.theguardian.com/commentisfree/2017/feb/07/why-we-should-put-basic-before-universal-in-the-pursuit-of-income-equality

    It seems to me that getting actual reform delivered to real people, struggling with low and precarious incomes has to be more important than quibbling over definitions and nuances of approach. So if a GMI can be done now, and takes us in the right direction, then lets go with that.

    • Nic the NZer 2.1

      In my opinion this trade-off between basic and universal income is what UBI advocates need to produce a justification for.

      As said its a political trade-off between people with and without access to employment. But its also a macroeconomic issue which turns up at full employment levels of economic activity. The issue being that you need to collect a higher level of tax at this level to balance the higher UBI payments which are not purchasing any output. This is sometimes referred to as an inflationary bias. Note the same kind of issue occurs with welfare payments to people who can't (or won't) work but given first world productivity levels its no longer a problem. As Gareth Morgans UBI argument starts from a position where productive activity is already heavily taxed this conundrum is resolved by a low UBI replacing welfare while a higher UBI or welfare is going to require a higher tax take.

      The advantage of conventional welfare on the other hand is that it acrues to people without a bid in the jobs market. Either they are surplus to requirements (e.g unemployed) or they not participating (e.g don't want to or can't work) so the balancing of these payments against the occuring activity is more or less automatic. Of course this trade off may also occur with basic income but at a much higher level where its widely discouraging people from bothering to work.

      We should also recognise that its not just a wage issue. By way of example Noel Pearson is an Australian Aboriginal leader who traces the disolution of his community back to benefit dependency. Prior to the reforms many Aboriginies were employed but at worse pay than European Australians. When this became illegal were often laid off and went on welfare which notably paid more than their jobs had. But simultaneously these communities appear to have started suffering from mental health, alcohol, drug and other social issues which they had not previously suffered from.

      A job guarantee program would effectively allow people to address these issues for themselves. Doesn't introduce an inflationary bias and would benefit the whole country to the tune of all the additional goods and services produced by job guarantee workers.

      • Craig H 2.1.1

        Simplicity is the main reason for UBI over GMI – easier to actually operate and design systems around. If one takes the view that the net outcome is the important one, not the distribution to get there, then the tax is not a purchase, just a simpler distribution model than a GMI alternative which achieves the same outcomes.

  3. Chris T 3

    So it’s not an unconditional basic income at all,

    I always assumed the U stood for "universal"

  4. Jackel 4

    A UBI or a GMI could just be another attempt by the rich man to throw some scraps to the pack of wolves at his door to try to placate them.

    I guess if someone knew there was always going to be something there to catch them if they fell then they might be more inclined to take a few more risks.

    I'm curious to know how a UBI or GMI would work for someone with negative equity?

  5. mikesh 5

    I'm curious to know how a UBI or GMI would work for someone with negative equity?

    Difficult to see what you're driving at.

    • Jackel 5.1

      Someone who's got significant debts and who loses their income stream, a UBI or GMI is going to be superfluous to them. It works if your starting point is a zero but not if it's a negative. What's their safety net other than declaring bankruptcy?

      • mikesh 5.1.1

        Other than bankruptcy there is no safety net. But that is no different from the situation with ordinary welfare.

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