Some may consider basic income a radical idea, but in 2020 we lived it and it worked

Juanita McLaren says living on welfare payments means "you can't save anything. In fact, there's a shortfall".

By Daniel Ziffer

Original article:

Single mother Juanita McLaren never stops thinking about money, because she doesn’t have it.

“It’s the number one thing that is going on in your head at all times,” she says.

“If someone invites you to a job interview, your first thought is, ‘How am I going to afford to get in there? Do I have access to [the] internet?’

“It’s just relentless. You’re just constantly coordinating your unemployment basically.

“And it just goes on all day. And when you go to bed at night, you feel crap about yourself because you’re not doing as well as you’re supposed to be.”

But it hasn’t always been this way — and it might not have to be.

Tomorrow a conference called Basic Income after COVID-19 — Social Security, Work and Wealth will discuss the concept of giving a living wage to everyone who needs it.

It’s an economic idea that has rocketed from being a fringe academic theory to being debated in the US presidential primaries and a key policy of what is potentially South Korea’s next government.

Universal basic income (UBI) is the concept of providing a low payment to everyone, removing the stigma of welfare payments. Its trimmed-down cousin, basic income, sees an amount that covers living expenses provided to those who need it, such as the unemployed, the elderly and carers.

For conference organiser, Elise Klein, the economic crisis of 2020 proved the merit of the idea, as a $550 a fortnight coronavirus supplement essentially doubled the value of welfare payments such as JobSeeker and gave millions of people enough money to live on.

Elise Klein
Elise Klein is one of the organisers of the basic income conference.

“This idea that if you just give people money, people do nothing, actually wasn’t the case at all,” she says.

“People are extremely busy, extremely productive. And we saw that with this natural experiment from the federal government that acted like a basic income.”

“People used the money. They didn’t have to ration food, ration medicine, they’re able to afford accommodation.

“The money made it easier for people to engage back into the labour market, people were able to afford a bike to get to job interviews … to take public transport, people were able to start study.”

COVID shock

The rapid spread of COVID-19 in early 2020 shocked the world.

Australia’s economy shuddered to a stop as concepts that then seemed far fetched — lockdowns, social distancing, working from home, travel bans — took hold.

Pressed by unions, employers and long queues outside Centrelink, the government announced two radical programs: the JobKeeper wage subsidy and the coronavirus supplement that virtually doubled existing payments for people on welfare.

By giving people an amount of money that put them above the poverty line, more than a million welfare recipients took part in a natural experiment.

For Ms McLaren, the mother of three boys, 2020 was a great year. Increased financial support allowed her family to eat regularly, pay down debt and it saw her better prepared for work.

“To get that supplement meant that I was able to go and get the vacuum cleaner fixed. I know that sounds ridiculous!” she says, laughing.

“It gave me something to live off. And so that in itself was great.

“And because I had three kids at home — all homeschooling — and I was either working or looking for work, it allowed me to just catch up on some of the expenses that I can’t normally meet.”

Billions in cost

The biggest barrier is the obvious one: cost.

There were more than 5.4 million people who received an income support payment in June this year, according to government data. People on the age pension make up 2.6 million of that figure.

Welfare services and payments equated to about $196 billion in 2019-20, or around a third of the overall federal budget.

“I think what we learned is that welfare can be very expensive,” says Simon Cowan, research director for conservative think tank The Centre for Independent Studies.

“I think there’s a lot more drawbacks than we saw positives.”

In 2017 he estimated a UBI where everyone over the age of 18 was given $10,000 a year, with a “top-up” for welfare recipients, would cost $103 billion per annum.

Simon Cowan stands in front of house holding his mobile phone.
Simon Cowan says the COVID-19 payments showed “welfare can be very expensive”.

Mr Cowan is not alone in criticising the level and composition of the JobSeeker payment, previously called Newstart or, colloquially, the dole.

He sees it as lumping together disparate groups — the temporarily employed, single working parents, the long-term unemployed — who need different types of assistance.

“It was introduced at a time when unemployment was below 2 per cent,” he says.

“The idea of long-term unemployment — that someone that could go years, and even potentially decades, without having a job — was almost unknown.

“So it really wasn’t designed for the purpose that it serves.”

But he’s not sold on the idea of introducing a UBI, pointing to an academic’s summation: You can have a broad-based system, you can have a generous system, and you can have a system that’s affordable.

“However, you can only pick two of those things,” he warns.

Peter Burn, chief policy adviser for business lobby AI Group, makes the point that the exceptional nature of the COVID-19 crisis needs to be considered when weighing an issue like basic income.

He saw a disincentive to work come from the way some payments were made. The design of JobKeeper meant some part-time workers received more money for doing nothing than when they were working their previously scheduled hours.

“Their employer had said, ‘You can return to work. We now have work for you.’ And they didn’t do so. That was a frequent complaint,” Mr Burn says.

But that doesn’t mean it’s the full picture of the impact of a basic income. It’s a contested field.

“The academic literature is divided on it, as you might expect,” he says.

“Different academics coming from different perspectives, and certainly using different methodologies, don’t come down on a universal answer.

“And, sadly, that often matches the answer they want to get.”

Cost shifting

Susan Maury is a policy expert at Good Shepherd, an organisation that provides support for women suffering family violence, financial insecurity and disadvantage.

She says the coronavirus supplement acted as a pilot program for what a basic income could look like in Australia — and she was encouraged by the results.

Susan Maury
Dr Susan Maury, policy and research specialist at Good Shepherd, says the welfare system is deliberately complex.

“The impact was phenomenal,” she says.

People surveyed for the report titled Social security and time use during COVID-19 said they used both the money and time well.

With mutual obligation programs like the Work For The Dole program suspended, respondents noted increasing physical and mental health, more time studying and preparing to work. 

“It really had an incredible impact,” Dr Maury says

“People said it was actually a time of great peace with the family because the children also felt more relaxed knowing that there weren’t these financial pressures.”

The coronavirus supplement cost taxpayers $20 billion and supported nearly 3 million people (It was subsequently stepped down before ending in March 2021).

Dr Maury argues the money was well spent, and that without it the expenses would have been “pushed into other categories” like the social services which charities such as Good Shepherd provide.

“The way productivity tends to be measured currently is through employment, it’s through our economy,” she says.

“But with the basic income, and also with the coronavirus supplement, as it showed, it was much more supportive of a very holistic perspective on productivity.

“So people were more productive and looking after their children … in looking after their mental health, their physical health. It’s a much more a whole-of-life approach to what a productive life is.”

Political momentum

Tomorrow’s conference is hosted by the Australian Basic Income Lab, a research collaboration between the University of Sydney, Australian National University and Macquarie University.

It is being held just months before a federal election in which housing affordability and inequality are shaping up as key issues and after a period in which millions of people have been supported by the welfare system, many for the first time.

For people like Ms McLaren, who interviewed participants for Good Shepherd’s research, her lived experience and that of the women she spoke to is that the “hoop jumping” involved in getting help from Centrelink is as taxing as the low rate of support given.

Juanita McLaren (1)
Juanita McLaren says 60 per cent of her income and welfare payments is spent on rent.

“The system in itself keeps you in a state of constant poverty,” she says.

“You’re actually working virtually full time to be just trying to get the basic income that you deserve.”

Ms McLaren argues a basic income — providing enough to deal with soaring housing costs — would help people contribute more to society and move into paying work.

“It would just give you the opportunity to sell yourself (as an employee) and create the life you want, rather than being constantly reminded that you don’t fit in.”

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