Universal Wellbeing Payment vs Basic Income Australia Comparison

On 26th – 28th September 2022, Australia hosted the 21st Basic Income Earth Network (BIEN) Congress in Brisbane. The aim of BIEN and its annual Congress is to offer education and a global platform for wide debate on basic income as an idea and policy option. 

This edition of Congress surfaced two substantial Australian universal basic income (UBI) proposals. The first is from Greens New South Wales MP Abigail Boyd titled the ‘Universal Wellbeing Payment’ and the second is by grassroots basic income advocacy group Basic Income Australia

Boyd’s contemporary platform on basic income is significant since the last major Australian political discourse on the topic occurred during the 1970s and 1980s and was driven by the Australian Labor Party (Arthur 2016). This level of interest mirrored the wave of North American basic income experiments featuring projects such as the Canadian ‘Mincome’ and a number of ‘income maintenance’ schemes across the several US states. 

Against the backdrop of a global COVID-19 pandemic, Basic Income is an idea that has regained traction in Australia in recent years with a 2021 Anglicare poll demonstrating that 77 percent of respondents (n=1000) support a basic income. Once again, BI momentum in Australia mirrors a resurgence in global interest as seen by the 100+ basic income pilot programs in the US as part of the Mayors for a Guaranteed Income initiative, GiveDirectly’s work in Kenya and Finland’s UBI trial amongst many others. 

Even more recently, the sharp global inflationary pressures in 2022 brought on by supply chain disruptions associated with Russia’s invasion of Ukraine have further compounded the wellbeing and financial stress for many. This in turn accelerates the need for transformative policies such as UBI to address today’s acute challenges.

With this economic and policy context in mind, this article prepares a high-level summary comparison on the key policy elements between the Universal Wellbeing Payment and the Basic Income Australia proposal that serves as a social policy conversation starter.

Section 1: Eligibility

AgeNSW resident 16+ years old18+
DisbursementIndividualIndividual
Citizenship statusResident or citizenCitizen, resident or refugee

For its first iteration the UWP intends to roll-out to New South Wales residents 16-years old and above with the intention for a future federal roll-out. The BIA policy targets nationwide 18-year olds and above and specifically includes refugees. 

Section 2: How much and how do we do it?

UBI weekly amountHenderson Poverty Line (~A$615)Henderson Poverty Line (~A$615)
Implemen-tation12-18 month rollout, replace benefits currently in CentrelinkStart at a low nominal amount, e.g., $10, phase up amounts per week up to the HPL over time (e.g., 5 years)
FundingFossil fuel levy, supplementary banking levy, overhaul of the stamp duty and land tax framework and borrowing
Central bank money creation

Both policies directly address poverty by setting their UBI amounts to the HPL, however the policies fundamentally differ in their funding approach; the UWP policy proposes new taxes whilst the BIA policy proposes money creation. The policies also differ drastically in terms of their roll-out periods with the UWP proposing a tighter one-year turnaround whilst the BIA policy proposes lengths of up to five years to start slow and gradually ramp up UBI payments to manage risk.

Section 3: How will certain groups be affected?

Both the UWP and the BIA proposals are largely comparable in how they intend to streamline and replace the current welfare support payments across various groups. The UWP proposal specifically outlines the provision of supplemental benefits for people with disability, whilst the BIA policy specifies a ‘no-worst-off’ approach to benefit replacement. 

People with disabilityUWP replaces the Disability Support Pension (DSP), but a supplement will provide for additional needs. National Disability Insurance Scheme (NDIS) payments persist.UBI replaces the DSP, except where the welfare benefit exceeds the UBI, the person receives the extra amount. Individual also receives any other ancillary benefits.
Age PensionUWP replaces the Age Pension.UBI replaces the Age Pension. Where the welfare benefit exceeds to the UBI, the individual also receives any other ancillary benefits.
ParentsThe UWP will replace the Carer Payment, the Farm Household Allowance, the Parenting Payment and ParentsNext.UBI replaces the relevant payments. Where the welfare benefit exceeds to the UBI, the individual also receives any other ancillary benefits. 
CarersUWP replaces the Carer Payment.UBI replaces the carer payment. Where the welfare benefit exceeds to the UBI, the individual also receives any other ancillary benefits. 
StudentsUWP replaces the Student Payment.UBI replaces the carer payment. Where the welfare benefit exceeds to the UBI, the individual also receives any other ancillary benefits. 

Section 4: Political viability discussion

Of the two proposals, the BIA policy is the incrementalist option compared to the UWP. As such, the Basic Income Australia proposal appears more politically feasible as it proposes how to implement a UBI without extra tax, debt or inflation, nor negatively impacting welfare recipients via a UBI authority and money creation. This is compared to the Universal Wellbeing Payment which proposes to fund the UBI through new taxes such as a fossil fuel and supplementary banking levy. 

Furthermore, the BIA policy proposes a very conservative phased-in UBI approach at $10/week that will gradually ramp up to the Henderson Poverty Line (HPL) over a five-year period. The intention of the BIA proposal is to allow supply chains to adjust to the slower increase in money in the economy and theoretically stave off demand side inflation. This approach is compared with UWP delivering the full UBI (approximately $615/week) from the outset. 

Section 5: Progressivity comparison

The two policies treat the UBI as part of an individual’s gross income which in turn determines their tax-free threshold. They both recapture the full UBI benefit after a certain point. UWP opts for the median salary (~$70K) as its threshold whilst the BIA policy opts for ~$81K (where 75% of the Australian population earns this amount or less). 

Both are progressive in that the more the individual earns, the less effective benefit they receive after paying taxes up until the point they become net contributors into the system. 

Threshold approach
(individual is a net beneficiary until earning this amount where they become a net contributor)
The Australian median wageApproximate salary for 75% of the Australian population
Threshold amount (individual benefits in decreasing amounts as their income increases up to this point)$1,344.70 p.w. or $69,924 p.a.
(Median wage source:
ABS May 2022, seasonally adjusted all employees average weekly total earnings)
$1,550 p.w. or $80,600 p.a.
(Source: ABS Characteristics of Employment, Australia, August 2017) 

Section 6: Poverty alleviation comparison

Both policies set the UBI at the Henderson Poverty Line however the implementation plans are starkly different. The UWP would address poverty immediately whereas the BIA proposal suggests a small nominal UBI, say at $10/week that ramps up to the HPL in a target period (e.g., five years). 

The BIA suggestion to start at, for example, $10/week may prove distasteful to, or be rejected outright by some poverty advocates who are demanding immediate increases to JobSeeker above the Henderson Poverty Line to address the acute needs of 3M Australians in poverty. 

The BIA policy’s five-year roll-out approach trades off meaningfully addressing poverty in the immediate term for political feasibility and inflation/economy shock risk management. The benefit of this approach, should the modest $10/week approach deem the BIA policy benign enough to pass into law, is that popular social welfare policies tend to have staying power once introduced. Examples include superannuation policy in Australia and social security in the US (NASI n.d.). In taking a long-term perspective, this five-year roll-out may not only have a higher chance of becoming a reality, but also give the whole country (as UBI is universal) a chance to enjoy the benefits. In turn the desired outcome is that UBI becomes an established and enshrined institution such as mandatory superannuation in Australia, social security in the US and the Alaska Permanent Fund.  

Despite the potential political viability of the ‘start small’ approach and long-term outlook, the BIA proposal does not compare in the short term to the UWP proposal in terms of providing rapid relief to acute poverty.

Section 7: Managing inflation

The two policies tend to treat the inflation question differently, with UWP largely omitting intervention options if inflation occurs after the introduction of UBI. Instead, the UWP policy suggests that potential inflation could be offset with entrepreneurship and cites that other basic income trials around the world have not reported inflation, which is corroborated by Santens’ research. The UWP policy however does acknowledge that luxury products are more likely to become expensive.

In contrast, BIA’s five-year phase-in approach allows the UBI authority to monitor the economic and behavioural impacts over time. If inflation occurs, the BIA policy suggests raising interest rates to dampen borrowing and if necessary implement a flat spending tax as a last resort. 

However, both the UWP and BIA proposals state that their respective basic income amounts will be tethered to CPI. 

Final thoughts: how do the two policies compare? 

Across the four key policy design elements of 1) current welfare benefit replacements, 2) UBI recovery approaches, 3) funding mechanisms and 4) policy roll-out approach, the UWP and BIA policies are aligned on half. 

Overall, they both seek to streamline the current welfare system and replace the various benefits at the same dollar rate or better, especially in the case for people with disability.

They both propose a UBI clawback design through the taxation system whereby individuals earning approximately the median wage (~$70-$80K per year) and above become net contributors into the system. 

The two policies diverge significantly regarding their funding mechanisms with the UWP proposing revenue raising through new taxes and the BIA policy proposing the creation of money via the Reserve Bank of Australia and a dedicated UBI Authority. 

The two policies also differ drastically regarding their roll-out periods where the UWP is proposed to roll-out over 12 to 18 months at the full HPL amount compared to the BIA’s proposal of incremental payment increases up to the HPL over a few years, say five.

These last two points of divergence will be the likely drivers of UBI policy debate, where trade-offs on political feasibility, economic sustainability and poverty alleviation effectiveness must be considered against the backdrop of a challenging global macroeconomic environment.

The instance of two substantial UBI proposals in Australia, one of which is authored by a representative of parliament, is a significant advancement for the UBI agenda. Opportunity exists to further engage the public through continued comparative policy debate and raise awareness and support in the community.

Author: Jessica Chew
This blog alongside others on basic income can also be found at
https://basicincomeaustralia.com/blogs/

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