Is Labour really going to deliver a UBI?

In news stories this week, senior Labour politicians have suggested they are open to a “debate” on the idea of a universal basic income, a no-strings-attached annual salary paid to everyone in the country.

The basic income has various rationales: increasing human dignity, giving people a base from which to be entrepreneurial, simplifying the benefits system, and, uppermost in Labour’s minds, preparing for a world in which people either change jobs rapidly (and need easy, seamless support between work) or simply can’t find employment because the robots have taken all their jobs.

But is Labour really going to go there? I think not. First, a basic income would be hugely expensive. If you paid each of the 3.5 million adults in this country even a minimal amount, say the $11,000 or so that people like Gareth Morgan have modelled, that would cost $38.5 billion a year, without even thinking about support for children. Paying the basic income at a rate that would keep people out of poverty – that is, at the level of New Zealand Superannuation, around $19,500 a year after tax – would cost $68 billion.

For comparison, we currently spend about $12 billion a year on pensions and $4.3 billion a year on other benefits. So the basic income would be a colossal amount. That’s not to say that it isn’t the right policy, or that there aren’t adjustments, offsets and tax increases you can use to make the cost manageable, but merely that to prepare middle New Zealand for such a policy shift and such spending would take, I think, years of work by a mainstream political party. And Labour has ruled out all the revenue-raising options, like  a capital gains tax, that would help fund such a scheme.

Second, you can do much of what Labour is talking about without a basic income. Andrew Little, in one of the stories this week, said: “The question is whether you have an income support system that means every time you stop work you have to go through the palaver of stand-down periods, more bureaucracy, more form filling at the same time as you’re trying to get into your next job.” But if that’s what you want, you could remove stand-down periods, modernise and shift online benefit processes, register everyone in the benefit system when they start work (so that they can move seamlessly from one to another), and so on. You don’t need a basic income.

Finally, another story on this supposed debate claims that the basic income is the same as “the social wage”, and goes on to say: “All Kiwis would be paid a flat income to replace existing social security like pensions and welfare benefits. If a person earns more than the social wage, they won’t get it.”

Now, this is pretty garbled, because the social wage is something quite different; crudely speaking, it’s the dollar value of the free public services people use (which is akin to a wage top-up, hence the term). But the idea that people wouldn’t get the basic income if they earned more than it hints at some kind of claw-back for higher earners.

Assuming that this story represents Labour’s intentions, it suggests that a more likely option is making the benefit system unconditional – that is, you don’t have to be seeking work to get the dole – but not paying the basic income to higher earners. You could argue that that’s a political disaster – since it’s boring, policy-wonk stuff that involves giving some people free money but without the excitement of a full-bore basic income – or smart thinking, since it looks clever and future-focussed without outraging people by giving millionaires ten grand a year.

But either way, it’s not a basic income, nor do I think – from what I hear, and what I feel is politically feasible – that Labour will implement one. I’m happy to be proven wrong, but if not, having a “debate” on something that won’t happen very much runs the risk of looking indecisive, and of raising people’s hopes only to let them down.

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