How do we bring them security to the community so they can be resilient to propaganda, fear mongering and protectionism? There is only one solution that I can see and that is Universal Basic Income. In the face of climate change, political disruption and big business vested interests we need a solution that provides for the little guys so we can survive the turbulent period ahead.

Resilience

There is a lot of talk about resilience in government recently. As a nation we are reeling from large-scale weather-related events such as the Victorian bushfires, and multiple Queensland floods. I’m not an academic or a climate scientist but I can see that things are changing, and uncertainty is increasing. Australians are being forced to react dramatically to a range of disruptive events – and we’re unprepared. It’s difficult for emergency services and the military to respond to the surge in scale and frequency of calls for help both in our communities and overseas. Help is too late and not there when it’s needed. Are you prepared?

An increase in storms, fires and floods

We’ve been warned about climate change since the 1970s. Scientists are generating more and more evidence that as the planet warms the will be an increased frequency and size of storms, floods, cyclones and fires. I discovered climate change later than some, but I realized I needed to do something. I voted, I joined community groups, I signed petitions and bought electric vehicles. It’s not going to be enough. I used to believe that science and global governments would lead us out of this dilemma. I thought it was some far-off generation that would have to deal with the impacts. Now I know the world is not going to avoid drastic change while I’m alive. There will be years increased extreme weather before we can turn it around.

The Intergovernmental Panel on Climate Change (IPCC), which pools information from the world’s climate scientists, says that even with all the renewable energy solutions we are currently planning to build ,we are still going to warm the planet by more than 1.5°C. ¹ 2024, looks like it will be the first year global warming exceeds 1.5°C. ² It’s a sign that we have failed in our global commitment to prevent massive changes to our climate, and we are in for a wild ride.

The best-case scenario is that we slowly start to undo what has been done and get it back under control by 2100, in seventy years’ time. The Potsdam Institute modelled 1,200 scenarios for the planet’s future using a range of to see how likely we were to be able to meet the target and goal set for most international bodies for less than 1.5°C heating. ⁵ Achieving that goal is now in grave doubt. They modelled the future planetary temperature with various rates of change of fossil fuels to renewable energy. Then assuming a reasonable (instead of challenging) rate of change they found that there were only 6 possible paths available to us that kept the warming in 2050 below 1.5°C and all of them had an overshoot. That means that in all the reasonable scenarios they modelled the planet warmed by more than 1.5°C from 2030 to around 2090, some reaching as high as 1.8°C above preindustrial levels of warmth before returning under 1.5°C.

My earlier optimism has been crushed. Even with us working to make a difference, over the next seventy years we are going to experience significant warming. This will be more change than most people alive today in Australia have ever experienced. Climate change is affecting many weather and climate extremes in every region leading to adverse impacts, losses and damages to nature and people. Globally, the IPCC confirmed this year, there is expected with high confidence to be an increase in the hazards experienced by people including heat-related deaths, increased diseases that thrive in hotter weather, mental health challenges, increased flooding especially in coastal areas and a decrease in food production in some regions. The IPCC stated this year that “the overwhelming majority of tracked climate finance is directed towards mitigation, but nevertheless falls short of the levels needed to limit warming to below 2°C or to 1.5°C across all sectors and regions.”

Population and migration changes

There are other changes we are and will be experiencing over the next seventy years that will make our lives unpredictable and uncertain. We can expect mass population migration from unlivable areas due to heat, famine, and lack of water. This might cause nations and people to fight over resources and land in which to live. Indirectly there are financial and global market disruptions being experienced as we transition from fossil fuels to renewable energy. There are continued changes to what work is available and the skills needed due to technology advancements, automation and mechanization. Businesses are uncertain too and are rapidly trying to increase productivity to compete in a global marketplace. They have increased their casual workforce, and encouraged a gig economy, to help respond quickly to changes. This has a significant flow on effect in the labour force as more and more jobs are not permanent and don’t provide financial or mental security.

Can you handle it?

We can be prepared. People will save, they will build stronger houses. We’ll put up flood barriers and take out insurance policies to protect us against flood, fire, drought and loss of income. I challenge you to think about all Australian’s. Do they see this coming? Can they all prepare? Most people aren’t looking ten years ahead – they’re looking forward to their next pay check. We’ve known about pandemics and climate change for a long time and yet they’ve still taken us by surprise. Most people are unprepared. Those Australian’s who are on lower incomes, in housing that is not adapted for increased floods, fires and storms, are more likely to be impacted. Income inequality is rising, and with it the number of people that cannot insure effectively for changing circumstances.

What we need is resilience built into our social system. We need a way to help individuals and communities immediately when there are sudden changes and disruptions in their lives. We need a budget and taxation system that is ready to handle pandemics, global crises, war, supply restrictions, massive population migration and demographic change as they occur and be able to follow up with other support as it becomes available. The current economic system is set up for stability and predictable change. It can’t handle large numbers of people needing assistance at short notice. We have a welfare system that assumes people can find a job, regardless of the global and technological changes to work. We have a super and pension system that assumes a stable split between our populations’ age groups, and we have a banking and housing system that assumes a stable global economy and a growing population. We can’t guarantee stability over the next seventy years.

Let’s take a closer look at demographic change. Currently, globally we have 10% of people over 65 years of age. In 2100, one in four people will be over 65.⁶ According to this United Nations modelling, we are going to dramatically increase the total global percentage of people over 65.⁷ How will our current economic system cope? It relies on the income tax of the working to pay the pensions of the retired. Governments around the world are struggling with this puzzle. One solution is to encourage retired people to keep working in some form. To take their 8-month trip around Australia in their campervan but move in and out of ad hoc work while their travelling and come back to a part time job. Though the current pension system penalizes people if they’re in casual and intermittent work both financial and by increased administration and reporting.

We need a system with adaptation built in. A system that can handle your changing circumstances and not burden you with needing to inform someone. We need a system that provides financial support as soon as it’s needed. This would help all Australians. It would help artists and those with very low or intermittent work, farmers affected by climate change needing to transition permanently or periodically to something new, residents affected by bushfires, floods or storms, job seekers who are unexpectedly out of work due to changing market, technology and global conditions, the long term unemployed with complex life issues, people not-participating in the workforce because they are caring for children, parents or other family members, people moving locations to find work elsewhere and early retirees and pensioners that want to work some of the time.

The solution is a Universal Basic Income (UBI). Universal meaning that it is paid to everyone and basic income meaning you get paid a liveable income but not too generous – think the current indexed value of the pension. It would be paid to everyone, all the time, as a lifeline against emergency and change. It would provide resilience for communities and individuals.

Laziness’ isn’t a symptom of the poor

The usual fears are immediately expressed by everyone I talk to. Surely this will cost too much and be too difficult to implemented. This will encourage a low work ethic. It’s common to fear laziness especially laziness in other people (other usually poor people).  If we think of people who are well-off or have plenty of money, we don’t seem to be as afraid. It’s ok for rich people to be lazy, in fact it’s nearly expected. Let me address your fears. Thirty-nine trials of UBI globally have demonstrated that UBI doesn’t increase laziness. ^8,9

A lot of the trials show that a steady and reliable income decreases the barriers people have finding work and it empowers people to seek education and invest in their homes and children. It decreases mental health problems and encourages people to think about the future rather than living day to day. People on a reliable income present themselves more confidently and that leads to them to find work. 

Laziness and low work ethic is not dependent on poverty but a condition of human motivation. There will be a base level of laziness – or should we say a desire for leisure time – prevalent in communities regardless of income. This is more likely to be based on cultural norms and acceptance of leisure time within our society. I believe, work ethic is not a function of income but is established through social and family expectations.

We can afford it

Secondly, let’s consider the cost of a UBI. Troy Henderson from the University of Sydney and Ben Spies-Butcher from Macquarie University have demonstrated one way to pay for a UBI. The increased cost could 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. Costs would be substantially further reduced in a UBI by continuing with single and couple rates for the age pension and by removing several tax offsets and exemptions targeted at older Australians.

The exemption of the family home from capital gains tax could be eliminated to contribute toward a UBI and in doing so also remove significant distortions in the Australian housing market.¹⁰ This could potentially assist younger households currently locked out of the market.

There are of course other ways to pay for UBI – not subsidising fossil fuel producers could be another. Michael Haines, founder and CEO of VANZI, has also outlined calculations that show that if you tax people who earn more than the UBI payment sufficiently you can recover the UBI paid to them. ¹¹ In addition, the government can save enormously on the administration of the welfare system, the costs of emergency responses to pandemics, floods, fires and storms, the costs of mental health and health due to financial stress and poverty. The government can save costs on interventions that it needs to make during global financial crises, climate change and adaption and community resilience as the system will already be in place to support people.

In a national level UBI – pension like payments would be made to every Australian on a fortnightly or monthly basis whether they are working or not. If they are suddenly not working for whatever reason they can still live while they adjust their lives to new conditions. Money would be recovered from those people earning well, through taxes – perhaps a combination of GST, asset and income tax. Tax reforms will be needed and careful planning of how this could be implemented needs to be undertaken.

Howard Reed, an economist in the UK, has modelled a UBI system that is affordable.¹² It includes the creation of a modest income payment for all which would replace child and family subsidies and the pension, the removal of income tax thresholds and a small increase in income tax. He proposes options to phase in the implementation of the changes, such as removing the tax-free threshold and paying it as a cash payment in the first instance. He also highlights that establishing a system that enables a payment to every person would become a unique lever that the government could use to adjust the economy in a much fairer and distributive way than currently exists through manipulating interest rates.

Political economists Troy Henderson from the University of Sydney and Ben Spies-Butcher from Macquarie University have mapped out a “stepping-stone approach” to the implementation of a UBI.¹⁰ Firstly, by changing our current welfare programs to behave like a UBI and then introducing a UBI to people not receiving benefits. The first two steps are to remove means testing on Australia’s pension system, to make it genuinely universal, and introducing a new youth allowance. To progress a UBI further and more detailed economic modelling of staged approaches to introducing a UBI system would be needed in the Australian context.

The idea needs community support and awareness. According to The Green Institute’s YouGov survey in 2020, 58% of Australians already support a UBI.¹³ To introduce a UBI, a higher level of support within communities would be needed. UBI needs to be talked about and socialized. We need to talk about how a UBI will increase resilience and preparedness for all Australians – not just those in need right now.

UBI has advantages from all perspectives: massive savings in public service workforce, the cost savings in mental health and healthcare, the increased focus on a market-based service industry instead of government handouts and programs, and it being easier for workers to leave workplaces and work conditions that do not support them. If we take the opportunity of such a substantial change to also change the tax system – remove stamp duty, increase GST and land tax – it creates a win-win-win proposition. The more complex the change the more likely everyone will be able to see part of the change that makes them a winner. We can do something to reduce the fear and uncertainty for the future we’re about to experience. All Australians deserve to feel that they can adapt to anything, that they are proud of our country and that we are resilient.

Please reuse, quote or repurpose any of this material to further the cause. I’d love to be quoted if you use a substantial piece of it.

Carol Bracken, 7/11/2024