Over the past few days a small group of enthusiasts has been meeting to discuss an idea which seems totally out of sympathy with our mean-spirited time - a basic income for everyone.

Universal Basic Income New Zealand attracted 50 people, including three academics from Australia and Canada, to its second conference in Wellington.

They came together out of abhorrence of today's welfare system, a belief that paying everyone a living wage could be an enormous force for good, and a confidence that it is feasible.

Waikato anthropologist Michael Goldsmith expressed abhorrence of the system when he told of a domestic purposes beneficiary's dealings with Social Welfare. When she needed an emergency loan, the department gave it only after a lecture and on condition that she never asked for one again.

The department often made mistakes, then claimed back its overpayments. It allocated her a "customer services officer" who left her telephone on voice-mail for days at a time, ignoring urgent messages.

All these things were "not aberrations of the system but expressions of its innermost logic", he said.

They follow from the principle that welfare is only for those who can prove that they have tried and failed to provide for themselves. The natural result is that beneficiaries are treated by officials with contempt.

Moreover, the system can actually make people worse off if they get low-paid part-time work. Out of every extra dollar they earn, almost 90c is clawed back through reduced benefit plus tax. After paying for transport and clothing, they end up poorer than on the benefit.

In complete contrast, if the state paid everyone a basic wage then there would be no need to pry into the way people live their lives, or to claw back the basic wage. The wage could be paid through the tax system, as a "negative income tax", in the same automatic way that income tax is paid now.

If everyone knew that they would get a minimum of, say $100 a week from the tax system, whether they worked for not, then everyone would have some control over their own lives. Although there might still be extra benefits available to those in need, no one would be totally controlled by Social Welfare.

People who become unemployed would be better off by doing even low-paid, part-time paid work because they would still get the basic living wage as well.

People who wanted to work only part-time, so they could spend time with their children or with aged parents, could better afford to do so.

Workers could afford to pick and choose their jobs more, so the workers bargaining power against employers would be strengthened and wages and working conditions would have to improve in the jobs that people don't want to do.

Workers would be in a better position to demand more say in the work they did, and to refuse to work altogether for companies that exploited others or damaged the environment.

Everyone would have enough income to take their full part in democracy and in society generally.

And the extraordinary thing is that all this is feasible. It is just a reformulation of the present system.

We already have a state-backed basic income, which is the dole plus family support. For a single person aged 25 or over, it is $146 a week; for a couple with children it is $259 a week plus $47 a week for the first child and $32 for each extra child.

People receiving benefits can earn up to $80 a week without it affecting their benefits.

Above $80 a week they lose 70c off their benefits for every extra $1 earned, as well as paying tax of 15 per cent up to $182 a week and then, from July, 21 per cent. This means they lose a total of 91c out of every extra $1 earned above $182 a week.

Families with children also have support reduced by 18c or 30c for every extra $1 earned above $385 a week, so if their pay goes beyond this they can end up with less money in the hand.

The basic income system would reduce these savage clawbacks by letting everyone keep their basic income, and then taxing extra income at a standard tax rate.

The standard tax rate would have to be higher than the 19.5 per cent that will apply to most people after July-perhaps 30-40 per cent or higher, depending on the level at which the basic income is set. But this would still be much less than today's effective tax rate on low-income people of 91 per cent or more.

In effect, a basic income for everyone would be just a fairer version of the existing system. We would do well to plan future changes with this end in view.
 

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