Technological change does not justify ‘free money’

Simon Cowan

05 November 2017 | MEDIA RELEASE

Embargo: 11.59PM, Sunday 5 November 2017

cis logo 640x360Universal Basic Income (UBI) is a deeply flawed idea and the case for introducing one is weak, new research from the Centre for Independent Studies finds.

A coming Senate inquiry into the Future of Work and the Future of Workers will consider the impact of new technologies in Australia, but the research outlines that these are not expected to be substantial.

“One of the main justifications heard for a UBI is change to the labour market as a result of technology, but there is little evidence of technological unemployment in current employment data,” research author Simon Cowan says.

“Further, technological change does not justify government intervention, and UBI is a bad idea for many other reasons as well.”

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“UBI trials systemically underestimate the disincentive effects of a UBI because they do not include the effect of additional taxation needed to fund a UBI,” Mr Cowan says.

“A UBI where welfare recipients are not worse off and everyone over the age of 18 is provided with a payment equivalent to the age pension will have a net cost of $230.9 billion a year.

“If the entire welfare budget, including support for families and children, was reallocated to a UBI for all citizens 18 years and over, the payment would be just over $9,870 a year, a substantial reduction in income for pensioners and single mothers.

“The combined value of all current proposals to raise additional revenue by both Labor and the Coalition would cover less than 10% of the cost of a UBI.

It is not clear that those benefiting from a UBI are the right targets for additional income support, nor is it clear that they are the people most likely to be affected by technological unemployment.”

Simon Cowan is Research Manager at the Centre for Independent Studies and author of the research report Universal Basic Income is an Unbelievably Bad Idea.

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