is there any framework of timeline on Labour's investigation or anything more concrete than looking into etc.? Will they co-ordinate or co-operate with the Greens on this progressive piece of potential policy? If not why not?
Can we expect something to be presented pre next election or will this be a longer term project - I appreciate the complexity (actually I don't, its beyond my understanding).
I've seen nothing more specific that "looking into it" at this stage. As you note, it's an enormously large and complex possible policy change. Much better to do it right than do it immediately.
I'm sure there will be broad co-operation with the Greens on this type of issue, but confident Labour's policy at the election will be a "Labour" proposal rather than a "Labour and Green" proposal.
I was most surprised to see this headline in The Independent last week (March 15):
New Zealanders want to give everyone a 'citizen's wage' and scrap benefits
New Zealand could become one of the first developed countries to scrap benefits and introduce a basic citizens’ income.
Leader of the opposition Andrew Little said his Labour party was considering the idea as part of proposals to combat the "possibility of higher structural unemployment".
"We are keen to have that debate about whether the time has arrived for us to have a system that is seamless, easy to pass through, [with a] guaranteed basic income and [where] you can move in and out of work on a regular basis."
The debate does not mean the policy will be included in the party’s manifesto at the next general election - which is likely to take place next year - or that the ruling National party will consider the proposals.
Much ado about nothing, then?
confident Labour’s policy at the election will be a “Labour” proposal rather than a “Labour and Green” proposal.
It's past time that Labour got with the Greens and showed the public a collaboration which could govern capably and with integrity. Labour has no show alone.
What I like about Andrew Little's announcement is the openness - that Labour are looking at the matter, that it is complex, no decisions have yet been made and that we will have a debate about it.
Much more of this openness and perhaps we will see less of the media's attempts to take 'different' policy ideas down to bury them, and more of their engaging people in discussing the ideas.
Interesting that it is described as a citizen's income rather than a resident's one. Or is it just semantics?
agree in the do it right, my fear is this is exciting policy and change in direction... the catalyst for so much other stuff that could radically change the nature of our society and economic framework... and while I get excited for those that will benefit from this I am also weary as I am still waiting for the much talked about knowledge economy...
Like others have said - Labour really need to get with the Greens, sure have your own policy and them theirs (both should be almost the same) but have a united front
I’m not sure where you’re getting your efficiency savings on a $11,000 per annum UBI.
$11,000 matches the base Jobseekers, but it doesn’t meet the Jobseekers plus Accommodation Supplement – Morgan had this at $2,000 pa on average for people on the old Unemployment in ’11. So either you have a system for paying the Accommodation supplement to most current Jobseekers (i.e very limited efficiency savings possible), or you cut rates for those on Jobseekers by 15%, or you increase the UBI to $13,000 with a consequent increase in the cost of the scheme from ~$19B to ~$25B.
Finland of course...
Actually there's a really good tax reason to do this. It's effectively a tax free allowance: you slice it off the bottom and add it on the tope. One effect is that people join the system who otherwise might not.
It's fundamentally a simplification mechanism, and flattens out all (yes, all) the terrible marginal tax rates that arise in the current mess. It's a bit like introducing a flat tax... so why do some groups rail against it?
I guess it's partly because it eliminates the ability to moralise and penalise lifestyles. How could we target specific voter groups if you can't differentiate...?
If Labour do actually make this their policy (given that it's not insane as Farrar asserts, and is coupled with other changes to make it affordable), I will actually vote Labour. This is a big enough issue, and a bold enough move, for me to decisively say that.
I guess it’s partly because it eliminates the ability to moralise and penalise lifestyles. How could we target specific voter groups if you can’t differentiate…?
I think it's actually entirely about that. Because everyone can see given even one second, that it is possible to rejig all the taxation so that it's a cost neutral change.
It would be useful if the problems that the UBI is meant to address were recognised as a starting point so that the UBI 'hammer' can be compared with other approaches.
e.g. Getting rid of the marginal tax rate insanity for those receiving government support (WFF, a benefit etc). Surely you can improve that situation without such a big hammer, and perhaps that's one way to move towards a UBI (or make it politically palatable) in the longer term?
It would be useful if the problems that the UBI is meant to address were recognised as a starting point so that the UBI ‘hammer’ can be compared with other approaches.
I think it would be hard to enumerate them into a small list. It's a change in the way we even think about human value. Basically, it's seeing that people have the right to a small return from society no matter what. How can you really compare that in some one-to-one way? Currently no such assumption is made, but we recognize (if we believe in the welfare state at all) that people undergoing hardship due to poor financial circumstances should be assisted. The help is thus covered in caveats and hobbled with moral judgments, and can be withheld easily, and frequently is withheld.
How do you measure that? The change in attitudes towards people who are in poor circumstances, as no longer "beneficiaries" but rather "people on the smallest possible income". Their choice to work is not then nobbled by the brutal removal of any assistance, and the prospect of a stand-down if the work they get is precarious (as it usually is for people in such circumstances). Indeed, any paid work they choose to do is their business, they just have to pay their taxes like everyone else.
But yes, absolutely, if it were to go ahead many statistics would need to be kept, to evaluate how well the idea is doing. Which ones were you thinking of?
Treasury has a page that describes a simple method for modelling raising revenue through income tax. It takes into account reduced GST revenue and wages from changes to the income tax rate. Obviously there’s more to a UBI then that, but it’s a good start if you’re thinking about how feasable it would be.
I’ve made a spreadsheet that implements it. Feel free to see what you can come up with.
It’s set for a $11,000 Adult UBI and $4000 child UBI that completely replaces jobseekers, dbp, student allowance, invalids benefits and offsets student loans by 50% (i.e. living expenses), but leaves pensioners no worse off. I get a net cost of $26,763 billion.
It can be done with the following tax rates on the current brackets plus a new ‘above $150000’ bracket. It results in net income increase for people on and below the median income from wages and salaries. Negative transfers kick in just above that:
up to $14000: 35%
up to $48000: 38%
up to $70000: 46%
up to $150000: 56%
above $150000: 66%
Those tax brackets are never going to work if the corporate rate stays at 30%.
I also think that the top tax rate should never exceed 50% on principle.
Good point re: corporate tax. I hadn't thought of that.
I get a shortfall of $2.7b by reducing the above $70000 rates to 46%. Way less than my lefty prejudices would have me think. If you bumped the corporate rate back up to 33% (and, you know, actually collected it) that might make up for it?
the top tax rate should never exceed 50% on principle
Because if we did that, the Julie Christies, Paul Reynolds and Rod Petricevics of this world would flee the country, unable to live on a mere million or so a year after tax?
Get up off your knees!
There are so many of these "non-truths" that take hold, never to be dislodged. It's one of National's propaganda strengths - and a source of my constant frustration with Labour. Would it be so hard to have used somewhere like Red Alert to have an instantly accessible list? Instead, when they are trotted out in daily discourse, I rely on memory (imperfect) and Google (also imperfect for older facts, like when Labour were in power and not all news was online). Don't have time, would much rather just point people in the direction of FactCheckersDotSomething.
Two of my regular bugbears: people referring to the Labour-Green government (there never was one) and Clark ignoring the result of the smacking referendum (wrong date, wrong PM). Those statements are repeated so often I'm starting to believe them myself ...
the Labour-Green government (there never was one)
I always wince/cringe when I hear of National’s Bluegreens initiative
– I instantly think of cyanobacteria and cyanotoxins.
Strangely apt though….
Algae are a natural component of aquatic ecosystems; however, when present in large quantities as “blooms”, they can pose a significant potential threat to human and ecological health. These harmful algal blooms (HABs) are often composed of microorganisms known as cyanobacteria, some of which with the potential to produce toxins that can cause adverse health effects in humans and animals through the contamination of waterways used for recreational purposes and as drinking water supplies.
Perhaps they could add consideration of land taxes into the mix and truly revolutionise the economic footing on which our country is based.
Would be awesome as the current system doesn't appear to be working or sustainable for much longer.
It's a start! It does look horrible to have all those tax rates jump, until you consider that the benefit offsets them so the actual cash in hand for many will go up. I guess you could model that with your numbers, so that we can sort of see the "effective tax change". but it's complicated by all the benefits that are replaced. Hard to model an "average" case in each tax bracket.
UBI is a great opportunity to shift from taxing people's labour to taxing wealth accumulation and resource usage. Let's see that modelled properly by someone before the national discussion gets highjacked by Farrar and co's tantrums about personal tax rates oppressing their weiners.
Perhaps they could add consideration of land taxes
This sort of option, yes.
There's some pretty good data available on the IRD website, downloadable in excel and csv form.
I also think that the top tax rate should never exceed 50% on principle.
It's hard to pick a number for this, it being rather arbitrary. 50% is a psychological magic number. Your other point is much more salient - that if the corporate rate stays at 30% then pretty much everyone would be better off working as a company. No one would want to be PAYE.
There's probably a way around that. Make corporate tax the same as personal, with all the same brackets? That would favor small companies over large, which isn't the worst thing in the world? Especially since large companies already fiddle tax around the world to essentially pay squat.
OTOH, they are a primitive form of life that evolved eventually into slightly more advanced organisms.