Universal basic income would aid Australia’s virus fight

Over the past week, I have gone to pains to explain why I believe a temporary universal basic income (UBI) is necessary to ease the acute liquidity crunch afflicting Australian households and small businesses.

To refresh, the UBI that I have proposed would work as follows:

• Every taxpayer and welfare recipient would receive a $1,500 taxable income payment each fortnight for three months from the government, with an option to extend the scheme for another three months if necessary.
• Business owners that have been forced to close, and have stood down staff, would not be required to pay sick leave or entitlements while the UBI is in effect.
• The UBI would supersede all other forms of welfare while it is in operation.
• The amount of tax owing would be worked out during the subsequent annual tax returns process.

The benefits of this UBI are as follows:

1. Speed and simplicity: the UBI can be implemented within a fortnight during the usual welfare payments cycle. Every taxpayer and welfare recipient receives the payments, so there are no eligibility hoops to jump through. It would eliminate the need to apply to Centrelink or MyGov, thereby relieving administrative resources.
2. UBI would ensure that everybody can meet their basic living expenses over this difficult time.
3. Businesses would be able to close their doors and pause their operations without having to pay their staff, which is generally their biggest expense.
4. Because it is universal, it avoids ‘picking winners’ and leaving losers.

In short, a temporary UBI would provide an economic and social safety net that would avoid a household and business liquidity shock while the economy is placed on ice. It would ensure that the Australian economy does not descend into another Great depression with widespread business collapses, mass unemployment, and poverty.

While the economic arguments are robust, there is also a strong medical case for implementing a temporary UBI as soon as possible.

As reported yesterday by The ABC, the coronavirus can only be controlled if 8 out of 10 Australians stay home:

The success or failure of Australia’s coronavirus fight relies to a remarkable degree on just one thing, new modelling has found.

And that thing is whether individual Australians now follow official advice — and just stay home.

The data comes from a complex model of how COVID-19 could spread in Australia, which finds:

Coronavirus will continue to spread virtually unchecked unless at least eight in 10 Australians stay home as much as possible.

If that slips even slightly — to seven in 10 people — the fight to ‘flatten the curve’ will be lost…

80% of Australians – effectively all non-essential workers – will only stay home if they are paid to do so and do not have to go out and work to stay afloat financially. A UBI is the best way to ensure this happens.

What Australia certainly does not need is to experience a repeat of the scenes that we witnessed on Monday whereby thousands of people queued outside Centrelink offices in a bid to access welfare under the current complicated and convoluted system, in turn spreading the virus.

A UBI would avoid these scenes because it would apply automatically without needing to lodge an application nor gaining bureaucratic approval. In turn, it would aid social distancing.

The absolute last thing Australia needs during a pandemic is people huddling together while they queue for welfare. People need to stay home.

Once the pandemic has passed, we also want the economy to be able to resume normal operations without the loss of thousands of otherwise viable businesses and mass unemployment, which could take years to recover from.

UBI is a policy no-brainer, given the circumstances.