Thriving Families and UBI

First Steps to a UBI – Thriving Families

The Opportunities Party is starting along the road to an Unconditional Basic Income (UBI) by ensuring two groups are the first to get it.

As covered in the book, The Big Kahuna, a UBI:

  • empowers people through giving them more choices on how to spend their time, invest their means;
  • recognises the contribution of the 1 million people who work but are not paid, and without whom our society would collapse;
  • provides a cushion to lessen the impact of the casualisation of work;
  • eliminates the poverty trap, the disincentive to work accompanying targeted benefits; and
  • winds back the dehumanisation and stigmatisation of benefit targeting.

The major constraints on how high that a UBI can be set includes its cost to the taxpayer and its relativity to the rewards for paid work.[i] If fiscal overload is to be avoided then the taxpayer cannot be expected to foot the bill for whatever level of UBI proponents dream of. Likewise, the incentive to seek paid work cannot be undermined by the level of the UBI otherwise the resultant lack of labour available and the rising costs of production faced by New Zealand firms, would impart serious consequences to our economy.

A full UBI is our firm objective but requires first that integrity be restored to the income tax regime as per Policy #1 and then we will introduce further taxation reform to fund this aspiration. It is unlikely that a UBI will ever totally replace targeted social assistance but it certainly will markedly reduce our reliance on targeting, with its stigma-laden selection criteria and its perverse impact on behaviour.

A UBI can relieve poverty without creating poverty traps. This will be increasingly important as the job market becomes more and more disrupted. The key difference between the UBI concept of social assistance and the targeted approach of the current regime is the absence of work testing. There may be broad criteria for certain types of UBI – age, income, family type for example – but those delineations will be nowhere near as granular and onerous as the poverty traps that targeted, work-tested benefits entail. In time there will be an underlying UBI for everybody – it must be modest of course and not compromise the incentive to take paid work.

The Policy

The first 2 groups to enter the UBI regime will be

  • all families with very young children (under 3, or under 6 if adopted or fostered) - $200 per family per week. This replaces paid parental leave
  • elders  - all those citizens over 65 years of age - $200 each per week. In addition elders who satisfy a means test will be able to top up to the current NZ Superannuation level by a further $7,500 pa. We will index the top-up to elders’ costs not to average incomes.

The UBI for families with young children provides a substantial (up to $10,000 pa) lift to those families and is the most potent boost to their ability to nurture their children in their most vulnerable years. This change starts to honour the millions of hours of unpaid work associated with child rearing, without which our economy would collapse. For low-income families we intend to make additional changes to step them back from the arduous work-testing that is proving so debilitating for these vulnerable families.

  • Low-income families with children (under 17) – an additional $72 pw ($3,744 pa) instead of in-work tax credit, no hours test required. Of course they remain eligible for the other current welfare payments (unemployment, disability, sole parent, illness etc). 
  • low income families will get free full-time childcare (for children between 1 and 3) if they are in paid work. The work test will have no minimum hours.

The changes will be fiscally neutral, with funding of the family investment initiatives above plus the free universal early childhood education initiative of Policy Priority #5 coming from reform of the State pension scheme.

Over time we will continue to align the tax and welfare regime with the needs of a society confronting increasing inequality, the casualization of paid work, and the escalating health costs of an ageing population. This will be achieved by extending the UBI across the whole population and rolling back but not eradicating the need for targeted support.

Decent Housing for decent people

Housing costs have become prohibitive in New Zealand and so The Opportunities Party is planning to reform the residential market so that secure, warm shelter becomes accessible for all. With house prices as high as they are, the reality is many more families will never own their own house. They must have security of tenure. We intend to change the regulations around residential tenancy law so leases make it far easier for a tenant to remain in the premises long term.

  • This will be achieved by restricting the conditions under which a landlord can evict a tenant to those of non-payment of rent or property damage. Sale of a property is not necessarily a legitimate reason for eviction. Tenants will be able to give 90 days notice.
  • A WOF will be required for all residential rental properties – this will ensure sanitation, warmth and energy efficiency standards.
  • We will expand provision of social housing by gifting Housing NZ houses to the voluntary sector. 

Conclusion

We are investing more in struggling families and in our coming generations while closing the income tax loophole that favours owners of assets. Finally we are aligning the benefits received by the elderly with those available to families.

We see what we’re proposing as a long overdue correction to the situation sponsored by a succession of Establishment party politicians – wherein those least in need, benefit the most from the government’s social and tax policy. We see that situation as ethically an affront to New Zealanders’ sense of natural justice.

And so to funding of the particular initiatives outlined above – the total cost of which is around $3.3 bn pa. While we favour an Unconditional Basic Income (UBI) for all, the arithmetic on that indicates a pre-requisite is that NZ Superannuation, the most generous of all social benefits, is just too high. It needs to come down – the Establishment parties are ducking and diving around raising the age of eligibility to achieve that. We don’t subscribe to that arbitrary approach and instead favour setting NZS at the level of a possible ultimate UBI as well as means testing for any top-ups.

Download the full policy document



[i] “The Big Kahuna; turning tax and welfare on its head in New Zealand” (2011), Gareth Morgan and Susan Guthrie, Public Interest Publishing (PIP)