Why Basic Income? Why now?
As well as being the week of the Power to Persuade Symposium, this week is also International Basic Income Week. In recognition of this, we will be running a series of posts on basic income (as well as some lead up pieces to the symposium). Below Dr John Tomlinson outlines the case for basic income. John has campaigned and published widely on the need for basic income.
It has been fashionable to claim that Australia never had a system akin to British Poor Law welfare relief. To some extent it is true that prior to federation there was no formalised poor law system in place but the churches, lodges, state governments and charities ran shelters for orphans, invalids and widows that bore similarities to those, operating in England at the time. The treatment of Aborigines on missions and settlements was not out of keeping with the way Irish peasants were treated by the English gentry in Ireland.
The first Australian federal income maintenance legislation concerned age and invalid pension and was passed in 1908; it came into effect in 1910. This was the first of many targeted, categorical and means tested payments. From 1910 until 1973, when Bill Hayden was the minister responsible for social security, applicants for pensions had to establish they were of good moral character before they would be paid. When I worked in the department (responsible for social security) in the late 1960s and early 70s, I regularly saw letters which had been sent to applicants advising that they were “not deemed worthy to receive a pension”.
At that time a number of staff in the Brisbane office believed that many of those who were unemployed were likely to shirk work and that those applying for sickness benefit or invalid pensions were probably malingerers. Such attitudes were common in English Poor Law institutions and in fact predated the 1601 Poor Law. Joel Handler traced injunctions against assisting “sturdy beggars” back to 1348. (1)
The point I am making is that whilst we may not have had exactly the same welfare institutions as in the British Poor Law system, our social welfare system was imbued with many of the same attitudes that informed English Poor Law administration. Examples abound that these same attitudes exist in the 21st century. For example:
- Julia Gillard’s statements about “The simple dignity that work brings.”
- John Howard’s oft repeated demand that those who receive social security “should give something back”.
- The current claim raised by the Coalition side of the House that women on maternity leave who are assisted both by their employer and by the government maternity leave scheme are “double dipping”.
- Mal Brough’s and Jenni Macklin’s bipartisan support for paternalistic intervention into the lives of Northern Territory Aborigines.
- The suggestion made by members on both sides of the House that pensions can be cut because they are welfare but that excessively generous superannuation tax concessions are untouchable because they are individually earned.
Hugh Stretton in 1996 entitled his address to The Brotherhood of St Laurence
“Poor Laws 1834 to 1996”. He did this to demonstrate the continuation of the British Poor Law belief system in ideologies prevalent in the modern Australian welfare state.
Joe Hockey’s “end of entitlement” 2014 budget was just one outstanding example of the cutbacks to income maintenance that the 21st century has inflicted on disability support pensioners, lone parents, students and those without work. These cutbacks reveal arcane attitudes to welfare assistance that have survived from the earliest days when charity was doled out of the parish poor box.
Though many less affluent people have been assisted by Australia’s income support system, they are not assisted equally. Many do not apply for benefits and pensions to which they may have an entitlement. Discretion is widespread in social security legislation and not all with an entitlement receive their full entitlement. Those less bureaucratically sophisticated, less affluent and less educated are the least likely to receive their full entitlement. One hundred and five years of social security administration has demonstrated that clients of the department are not treated equitably – nor are they treated equally.
The rise of Neo-liberalism with its demand that the mode of production be unregulated whilst the mode of distribution be highly regulated so as to avert “malingering” and “shirking” has underlined the excessive discretion imbedded in the categorical system. This has renewed the need to find other methods of poverty relief besides those of our means tested, targeted, categorical social security system.
There are alternative ways of approaching income maintenance. One option would be to guarantee every permanent resident a minimum income, irrespective of their circumstances.
Universal income guarantees
There have been many advocates of universal income guarantees in Australia, the one who had the greatest impact was Professor Ronald Henderson. In 1975, in the first main report of the Poverty Inquiry, he recommended the introduction of a system of income guarantees that had the potential to ensure that no one remained in poverty. He called this proposal a Guaranteed Minimum Income.
What he proposed was basically a two-tiered system where those who had already qualified for a social security payment would be paid at 100 per cent of the poverty line whilst others in financial need who had not established their entitlement to social security would be guaranteed an income of 55 per cent of the poverty line. Henderson’s proposal resembled that of economist Lady Rhys Williams, a British Liberal MP, who had in 1943 written a book entitled Something to look forward to in which she had championed the idea of a universal guaranteed minimum income.
In1975, a group of Commonwealth public servants, calling themselves the Priorities Review Staff proposed a different income guarantee in the form of a Negative Income Tax along lines not dissimilar to that put forward in 1962 by Milton Friedman in Capitalism and Freedom.
Whilst the Guarantee Minimum Income and the Negative Income Tax are more comprehensive approaches to the abolition of poverty, both still embody forms of mean testing and claw backs. Both involve complex assessments of eligibility. There is a better way of abolishing poverty and that is by means of a universal Basic Income.
A Basic Income would be paid at a rate above the Henderson poverty line to each and every permanent resident of Australia, irrespective of work contribution, marital status, whom they live with or any other social status. Children would have an entitlement in their own right that would be paid at a lower rate.
A Basic Income has the capacity to abolish poverty. It would end the need for much of the existing categorical system of welfare assistance. One exception to this is the area of disability where special services and payments would be required to assist those who are severely disabled. It would not involve claw backs or means testing. It would be an efficient way of banishing poverty and would end Australian politicians’ capacity to refuse assistance to those they consider unworthy, malingerers or shirkers.
A Basic Income’s only eligibility requirement is the need to establish that one is a permanent resident of Australia. It is essentially a rights based approach to income security based on citizenship/residency that has the capacity to build a more egalitarian society through mutual support and social solidarity. It abolishes the scourge of downward envy that is generated by those who believe that recipients of social security “should give something back”. Yet it allows those who are excluded from the labour market sufficient funds for them to participate and contribute to society on their own terms.
A Basic Income treats everyone equally. It does not purport to treat everyone equitably. But, because the amount of Basic Income is known, it is much easier to then develop other social policies that can then lead to equity.
I wish to thank Penny Harrington for her editorial assistance and continuing encouragement.
(1) Joel Handler (2004 Footnote 217, p. 56.) traces the English legislative origins of such policies to the 1348 Statutes of Labourers with its concern to avoid assisting the “sturdy beggars”. Handler, J. (2004) “Social Citizenship and Workfare in the United States and Western Europe.” Basic Income European Network 2002 Congress.
(accessed May 2006)