It seems everyone from Richard Branson to researchers at the Green Institute has an opinion on universal basic income (UBI), the idea that all citizens should be paid an unconditional monthly allowance. The benefits of putting a floor beneath earnings so that no one falls into poverty are obvious – but the inevitable question is, can we afford it?

At a recent two-day workshop at Melbourne University, academics, union representatives and individuals from the private and welfare sectors were presented with modelling that suggests we can.

Although at first blush, UBI sounds like some idealistic, leftwing idea, the reality is it has long had support in rightwing politics and economics. Richard Nixon nearly introduced a type of basic income when he was the US president, while Milton Friedman – one of the most influential champions of “free” markets and small government – promoted a basic income scheme known as a negative income tax. Even today, right-of-centre organisations such as the Adam Smith Institute argue for the introduction of such a scheme.

This rightwing pedigree makes many on the left suspicious of UBI, and former union head Tim Lyons speaks for many when he says he is “deeply unconvinced by the push for a universal basic income”.

What the left fear, not without some justification, is that instead of UBI being used as a supplement to other forms of service provision, it would be used to replace them. Citizens would then be forced to use their UBI to buy health, education and pension services from private providers. This sort of rightwing UBI would simply be a transfer of public wealth to private businesses, a further marketisation of democratic society.

Of course, a UBI needn’t work that way, but such concerns mean the design and implementation of a scheme – the politics – are as important as the economics.

Speaking at the workshop, John Quiggin, professor of economics at the University of Queensland, described the implementation of a UBI in Australia as “challenging but possible”. He calculated the cost at between 5-10% of GDP, and he rejected outright earlier claims by the Labor MP Andrew Leigh that the cost would reach 23% of GDP.

Quiggin argued the introduction should be gradual, saying “UBI is not a short-term policy option but a vision to be realised over coming decades.” He also said a UBI would need to be large before it could be useful. Although a UBI of $6,000 a year would cost as much as the existing welfare budget, he said an amount that small would not enable anyone to live independently.

To get the payment high enough to be serviceable, the effective marginal tax rates would need to be adjusted. Rather than beginning with a payment that is universal and unconditional, Quiggin said Australia could start with “an income-contingent guaranteed minimum income implemented with a combination of a clawback rate, and a marginal tax rate equal to 40% over the relevant range, and a 40% marginal tax rate on incomes above that level”.

In other words, the country could move towards a UBI financed by a 40% tax on market income.

Political economists Troy Henderson from the University of Sydney and Ben Spies-Butcher from Macquarie University set out what they called a “stepping-stone approach” to implementation. This would involve two initial stages: redesigning Australia’s pension system to make it genuinely universal (by removing means testing), and then introducing a new youth allowance.

They noted the current cost of the pension is $42bn. Making it available unconditionally to all 3.74 million eligible citizens “would cost around $78.5bn”. The increased cost would, according to their modelling, be met by a combination of removing or reducing the concessional tax treatment of superannuation and the capital gains tax exemptions for the family home.

There’s a definite mood for big, radical ideas to put control back in the hands of the people Tim Hollo

For simplicity, their calculations were based on paying those eligible the maximum basic single rate ($21,015 per annum), but they noted costs would be substantially further reduced by continuing with single and couple rates for the age pension, and by removing a number of tax offsets and exemptions targeted at older Australians.

By eliminating the exemption for the family home from capital gains tax, they argued, significant distortions in the Australian housing market would be addressed and potentially assist younger households currently locked out of the market. Furthermore the amount of tax funding available in general would also be increased. This could then be used to fund the other step in their approach to UBI – a youth basic income (YBI).

A YBI would be targeted at people aged between 20 and 24, a group that research by the Australian Institute of Health and Welfare shows is overrepresented in terms of insecure work and low pay. They often experience financial insecurity as they move between paid work, education and training.

Henderson and Spies-Butcher calculated a YBI on the basis of a payment of around $14,000 per annum for those not working or studying and those in full-time study, and around $11,000 for those in part-time work or combining work and study. Although they conceded that both are relatively small amounts, they said their proposal would increase the incomes of the lowest-income young people.

They calculated that a YBI of between $11,000 and $14,000 per annum would cost approximately $17.5bn, that is, around 4% of federal government outlays or around 1% of Australia’s GDP.

Once the redesigned pension and YBI are in place, the path to full UBI is achieved by gradually increasing the number of people entitled to each benefit.

“Creating universal payments for younger and older Australians creates a framework for a transition to a full basic income. It becomes economically feasible for governments to make incremental extensions, say lowering the pension age to 60 or increasing the YBI to 30, and it creates real constituencies of voters who can see the benefits of the scheme and mobilise behind expansion,” Spies-Butcher said.

These schemes have much to commend them, not least putting actual numbers against what until now has tended to be a very theoretical public discussion of UBI.

Still, the stepped, or gradual approach favoured by these economists potentially works against one of the great strengths of UBI, namely, the enthusiastic support it receives from ordinary voters.

“There’s a definite mood for big, radical ideas to put control back in the hands of the people,” said workshop participant Tim Hollo, executive director of the Green Institute. “Moves to a UBI have to be designed to support that rather than stifle it.”

Another argument against incremental implementation was raised in discussion of trials of UBI, such as the one currently under way in Finland. Karl Widerquist, former co-chair of the Basic Income Earth Network (BIEN), the world’s biggest advocacy group for a UBI, told the workshop that such trials were a “bad choice”.

He said the universal and unconditional aspects of a UBI are difficult to replicate at the level of a trial and that looking at how it works for a thousand people would be different to what would happen if everyone had it. He drew the comparison with the herd effects of immunisation, adding “you need everyone involved to gain the benefits and see the results”.

Another key question frequently arises in this debate: even if we can afford a UBI and find a way to implement it, does that mean we should we do it?

Given that all wealth is socially generated, that is to say, is totally dependent on investments in infrastructure, healthcare, education, a legal system etc that citizens have all contributed to over many generations, then it follows that every member of society has a right to share in that wealth.

This “common wealth” argument is greatly strengthened, too, as we continue to transform into an information economy. Increasingly, businesses rely on access to data in order to succeed, to the extent that some have called data the new oil.



Most of that data is self-generated every time we do something online, use a store loyalty card or turn on our phones. Indeed, companies like Google and Facebook rely entirely on the free labour we provide every time we update our status or do a search. The argument, then, is that just as mining companies pay a royalty recognising the common ownership of the products they extract from the earth, a UBI would be a way of recognising the common ownership of the data that tech companies extract from us.



The consensus at the Melbourne workshop was that the current welfare system is broken. With inequality demonstrably increasing, automation in the labour market likely to keep downward pressure on wages and a growing problem of reduced home ownership among young people adding to intergenerational inequality, it seems reasonable to suggest something has to change. Something big.



Under such circumstances, UBI presents itself as a way to totally reimagine the nation’s approach to social security and address the structural inequities that are making Australia a less fair society.



Tim Dunlop is appearing at the Brisbane writers’ festival on 10 September. He will be in discussion with Rutger Bregman, Clair Brown and Paul Barclay about the end of capitalism, among other events. Find out more about his sessions here.