In this newsletter:

* More thoughts on Basic Income

*A look at the Opportunities Party (TOP) Basic Income policy

*The Finland Basic Income trial now finally properly evaluated

*Senior United Nations official calls for UBI to tackle inequality

*Proposed radio talk-back campaign

More thoughts on Basic Income

By Gaylene Middleton BINZ acting chair

Covid-19 has brought a hiatus into our lives with our economic landscape experiencing a cataclysmic seismic shift. We have been holed up in our separate bubble's, a discontinuity impacting on the future. What will be our new future? Jacinda Ardern has said we are in the 'waiting room of recovery'.

Grant Robinson has said 'stimulus of the economy is getting the timing right'. In New Zealand and worldwide the idea of Basic Income as a stimulus for a new economy is floating in the media 'ether'. Basic Income New Zealand (BINZ) is in firm agreement that now is the time for Basic Income.

Will our Labour led government announce a plan to introduce a Basic Income for all New Zealanders in this week's May 14 Budget?

Our Minister of Finance, Grant Robertson, in the early stages of the Covid-19 economic upheaval briefly commented that Basic Income was among measures on the table for consideration.

A Universal Basic Income (UBI) is among The Opportunities Party (TOP) policies released last week. (see comment later in this newsletter) There is a vast literature associated with Basic Income including contributions from New Zealanders supportive of Basic Income. Advocacy for Basic Income in New Zealand has occurred since the 1980's. BINZ is affiliated with BIEN, the Basic Income Earth Network, founded 34 years ago in 1986, by Professor Guy Standing, Philippe Van Parijs, and others. Guy Standing has spoken in New Zealand on various occasions including at the Labour Party Future of Work conference in 2016.

Most people understand that a Basic Income is a basic amount of money, paid unconditionally to all individual citizens at regular intervals. However, a Basic Income is more than this. Fundamental to Basic Income is the understanding of the distinction between work and labour. The ancient Greeks understood this distinction better than our own contemporary society. In Greek society those who 'laboured' were slaves who could never participate in the life of the polis-the body of citizens. Citizens did not labour, they indulged in work in and around the home with family and friends. Work was 'reproductive activity' done for its own sake, strengthening personal relationships, combined with public participation in the life of a person's community.

Over the centuries labour has gained a dominance at the expense of work. The 'work' of maintaining a home for a family or oneself, and fostering community networks has lost its value in the eyes of political and economic thinking. This 'work' of home and community is undervalued and unpaid. The worth of a person is now measured in their paid labour. We now define labour as 'work' and work as 'non-work'.

Basic Income is about addressing this imbalance, removing the arbitrary distinction between work and non-work and giving value to what is commonly seen as non-work.

Guy Standing's new book Battling Eight Giants, 2020, was released in mid-March just as the Covid-19 Pandemic was making itself felt. Guy's discussion is immensely applicable to the renewed interest in basic income as a solution to the economic turmoil that has erupted with the global lockdown.

The global effect of this Covid-19 Pandemic is akin to the disarray that engulfed the world with both World Wars and the Great Depression in-between.William Beveridge a British economist and a progressive and social reformer wrote a 1942 report- Social Insurance and Allied Services, which was the basis for the post World War II Welfare State put in place by the British Labour government. New Zealand developed its own Welfare State during the Labour Government of Michael Savage when it introduced the 1938 Social Security Act.

This Act emphasised that all New Zealanders had the right to a reasonable standard of living and equal opportunities to participate in society. These very words are now used today to advocate for a Basic Income.The post war challenge as seen by Beveridge was to slay five giants - disease, idleness, ignorance, squalor and want. This was also the hope of Michael Savage's 1935 Labour government.These five giants remain, but Guy Standing writes that 'today there are eight more giants stalking the land.' They are Inequality, Insecurity, Debt, Stress, Precarity, Automation, Populism, and Extinction. Just like the Welfare State 'battled the five', Basic Income 'battles these eight.'

Over the last twenty years punitive measures have been enacted and the Welfare State has fractured with many accounts of misjudgements of entitlements by WINZ staff. People who have found themselves out of work because of Covid-19 Lockdown measures are experiencing the full force of the New Zealand 'no longer fit for purpose' Welfare system. This system has become very intrusive in the lives of people whose circumstances, due to no fault of their own, have tipped them into the Welfare System.

Standing writes: 'The first giant blocking the road to a Good Society is inequality.' In New Zealand inequality is clearly seen in child poverty rates:In the year ended June 2019, about one in seven New Zealand children (168,500) lived in households with less than 50 percent of the median equivalised disposable household income before housing costs are deducted. After housing costs have been deducted, the number of children living in New Zealand in relative poverty rises to one in five children (235,400). In the year ended June 2019, about one in five Maori children (55,000) lived in households with less than 50 percent of the median equivalised disposable household income before housing costs are deducted. After housing costs have been deducted, the number of Maori children living in New Zealand in relative poverty rises to about one in four children (69,100).

Designed properly a Basic Income provides a base income floor. The individual can then determine for themselves how best to use this income. The payment of basic income allows additional supplements to cover the special needs of some individuals such as invalids

The giant of insecurity sits alongside inequality. Basic security is a fundamental human need. One person having security does not deprive others of their security. Our modern insecurity is also associated with chronic uncertainty. Basic security has not been given priority by governments and economic models. A Basic Income would change this.

Debt is the third Giant. It is also hidden inequality. In response to the job losses in the hospitality and tourism sector, where New Zealand students find employment to finance their studies, the Government has offered increased student loans. This will increase student debt. A Basic Income would not eradicate debt but would help to give people more control of their finances. Basic Income pilots have shown that even a small basic income results in less indebtedness.

Fourthly stress. We have the Covid-19 Pandemic now, yet in our society we have been experiencing a growing quiet pandemic of stress. Stress, reduces the capacity to think clearly and long term. Along with money concerns, fulfilling the conditions when applying for a New Zealand Welfare benefit compounds stress. Stress and insecurity lead to a lowering of short-term IQ with more focus on short term choices rather than longer-term strategic thinking.

Precarity is the fifth giant. The 'precariat' is a developing class in society where people lack a secure work-based identity. People in the precariat are forced to ask for assistance. The use of Food banks is increasing in New Zealand and has soared in the weeks of the Covid-19 Lockdown. A Basic Income will allow a person to feel more in control and able to exert greater freedom of choice. The New Zealand Welfare System controls disadvantaged people's lives. Introducing a Basic Income will empower the disadvantaged.

Automation is another justification for Basic Income. Basic Income may be a policy for a future where there are fewer jobs as AI is developed to perform more and more tasks. A Basic Income would enable people to do fewer hours of paid work per week as we adjust to life with automation.

Climate change and global warming is confronting every individual as the ecological crisis of Extinction looms. Our reliance on economic growth is in need of re-examination. A Basic Income could change society thinking that only paid work counts. A Basic Income rewards and encourages unpaid work both in the home and in the community. The coming ecological crisis may become the decisive justification for Basic Income.

Finally, the eighth giant Populism is concerning. Recent elections in a number of countries epitomise this final giant. The definition is vague but populism includes aggressive nationalism, is anti-migration and will tolerate authoritarianism and anti-democratic policies. Populism is a looking back to an imagined gilded past where there is a falsely remembered security and well-being. A basic income system by lessening insecurity, precarity, debt and inequality could reverse this populism drift.Guy Standing concludes 'that a basic income and an income distribution system in which it is an anchor would help to weaken the threat posed by all eight of the modern giants blocking our route to a good society.'

Basic Income with Standing's analysis is more than solely a response to one issue such as increasing unemployment, poverty or automation.BINZ is strongly supportive of the introduction of a Basic Income for New Zealand.

Will our Labour led government take the courageous step with the 2020 Budget and introduce a Basic Income for all New Zealanders?

Note: An extensive discussion of these eight giants is found in Guy Standing's book Battling Eight Giants 2020The themes of the book Battling Eight Giants can also be read in an article written January 2019: How a basic income can battle the eight giants of a faltering economy. https://www.weforum.org/agenda/2019/01/battling-eight-giants-with-basic-income/

The Opportunities Party TOP Universal

Basic Income Policy

BINZ would prefer to see the policy named Basic Income Policy. While it is universal in the sense that all New Zealand citizens will receive a basic income payment, the monetary amount will differ with age and top ups are allowed for personal circumstances.

The new policy will pay a Basic Income of $250 per week or $13,000 per annum to each adult and $2,080 for each child paid to a parent or caregiver. Those who currently receive larger amounts, such as those with special needs or those on New Zealand Super, will have their payments topped up to current levels.

The value for the adult payment is about right at $13,000 per annum for adults and TOP have realised the value of combining a Basic Income with a 33% flat tax. A flat tax alone is not desirable but when combined with a Basic Income it targets the Basic Income toward those on low incomes.

Below are some preliminary comments, some positives and some issues:

* This is a much better proposal than the TOP party had for the 2017 election.
* This time, they allow top ups for those who currently receive greater welfare payments - BINZ is very much in agreement with this.
* Because it allows top ups, it should be called a Basic Income (BI) scheme rather than a Universal Basic Income.
* The word "universal" in front of Basic Income is a major turn off for a majority of people. It seems that while people are happy with the idea of everyone receiving a Basic Income, they are not happy when it is called a Universal Basic Income. Putting the Universal in front makes some people think of those who they feel should not receive a Basic Income. 
* $13,000 p.a. = $249.32 per week, though only a very small difference, this is not the $250 that TOP state and is slightly less than the current adult Jobseeker Support rate of $250.74. If they made the Basic Income the same value as the adult Jobseeker Support rate this benefit and all benefits of lesser value could be abolished, significantly simplifying the welfare system and saving money.
* Indexing a Basic Income Scheme to inflation is a must. Using a $13,000 p.a. figure as suggested by TOP, suggests that they like nice round figures and may not intend to index it with inflation. They have not stated their intention here but if it is not indexed the value of the BI will decline over time.
* Other increases in tax may not be necessary. Here are some approximate costs:
o The cost of giving everyone between 18 and 65 (about 3 million people) a $250 per week Basic Income is in the order of $39 billion dollars per annum.
o But changing to a 33% flat tax raises extra tax. Those with no income pay no extra tax. The extra tax paid increases progressively to a maximum of $9,080 per annum from every person earning $70,000 or more. In total an extra $20 billion dollars p.a. is raised with most of it from people earning $70,000 p.a. or more. This reduces the cost of the Basic Income to $19 billion dollars, $(39-20) billion.
o A Basic Income plus a flat tax still leaves everyone better off. Those with no income will receive the full $13,000 p.a. This reduces progressively until earnings of $70,000 are reached. Those earning $70,000 or greater will receive a constant $3,920 p.a. ($13,000 less $9,080) or $75.18 p.w.
o The Basic Income will save about 40% of 18 billion worth of current welfare costs or about $7.2 billion (before covid-19) so this reduces the cost to $11.8 billion. This means an extra $11.8 billion will be paid into the economy each year, boosting GDP.
o Spending the $11.8 billion by those who receive an increased income will generate about 27% in taxes (15% from GST on money spent and 12% from income tax, profit tax, tax on dividends, and so on. This returns $3.2 billion to the government reducing the cost to $8.6 billion.
o The remainder of the money continues to circulate. Each time the money circulates the government takes another 27% in taxes. After a number of cycles most of the money is returned to the government. As the money is returned to the government the government is able to spend it again. This means that the government does not need to use additional taxation.
o Calculations show that with less than a billion dollars, less than 1% of GDP, the government can start a Basic Income scheme paying every citizen the first fortnightly payments of $13,000 p.a. and that within 9 months more than the initial payments will be returned in taxation. The Basic Income then becomes self-funding.
* The TOP proposal includes increasing company tax from 28% to 33%. This may be a good thing to do but there will be a lot of opposition to this. Companies will argue that this will make them uncompetitive with Australian companies. In Australia, company tax rates are 30% reducing to 27% for small businesses.
* TOP also propose a 1% tax on all properties to pay for the Basic Income. This effectively increases the rates you pay on your home. You will pay an extra $3,500 for a home worth $350,000, or $5,000 for a $500,000 home. This will make it difficult for some people who have their own home but low incomes, and particularly so for many retired people.
*  People will receive the Basic Income of $13,000, but with the 33% flat tax will have to pay extra tax if they are working, and then will have to pay extra tax on their houses as well. They suggest that retired people can just owe it to the government and the government will take the money from the sale of their homes after they die.
* However, as explained above, extra taxation may not be necessary.
* TOP say that if they get seats in parliament they hope to be in a position where they will only go into a coalition with other parties if the parties agree to a Universal Basic Income. This might be good, apart from the extra taxation, but unfortunately, they also have a "fall back" position where they may agree to go into coalition with other parties that agree to their 2017 UBI election policies. The 2017 policy included means testing all people over 65 before they are eligible for current NZ Super rates. This was to reduce expenditure in order to pay a "Universal Basic Income" for young people aged 18 to 23 and to pay for a UBI to those with families (children under 3 years). A Basic Income is only a Basic Income when it is paid to all individuals. BINZ does not favour TOP's 2017 policies because under their 2017 scheme means testing of NZ Super destroys what is in effect a Basic Income scheme in order save costs to make payments to 18 to 23-year olds or those with children under age 3. Because they make NZ Super means tested and because their UBI payments were limited to 18 to 23-year olds or those with young children, this scheme could in no way be called a Universal Basic Income or even a Basic Income. 

Finland Basic Income Trial-Final Verdict

Small employment effects, better perceived economic security and mental wellbeing
The final results of the Finnish trial found that the basic income recipients were more satisfied with their lives and experienced less mental strain than the control group. They also had a more positive perception of their economic welfare. The trial selected 2,000 long term unemployed people and provided them with a Basic Income of €560 per month with no questions asked and no requirements.
The results show a small employment effect that became statistically significant during the second year of the trial with recipients more likely to find employment than the control group. This was despite the introduction of an activation model half way through the trial that gave the control group greater financial incentives than the recipients to find employment. Those receiving the Basic Income were also found to have better perceived economic security and mental wellbeing. The trial was for only two years. A longer trial would have enabled trends to be seen with greater clarity. 
On January 1st 2017, Finland, a developed country, began an experiment with Basic Income. Other trials were mostly in developing countries. Two thousand long-term unemployed, aged between 25 and 58-at the time recipients of the means-tested, minimum-income benefit of €560 a month-were randomly selected. For two years, they were given that same amount unconditionally-irrespective of with whom they were living, how much they were earning and whether they were actively looking for a job.
The experiment terminated, as planned, on 31 December 2018. As the researchers wanted to observe their subjects as unobtrusively as possible, they announced that they would publish the final report only after all relevant administrative data could be collected and analysed. This report was published on 6 May 2020
During 2019 articles appeared with prominent headlines. One such headline was "One of the world's largest basic-income trials, a 2-year programme in Finland was a major flop." (Business Insider Australia Dec 9 2019)
During a 2019 public meeting convened to discuss the Well-Being Budget, Grant Robertson responded to a 'from the floor' question about Basic Income, with a comment to the effect that the Finland Trial indicated that Basic Income had had no effect on increasing job uptake.
The just released report considers the employment data on both years of the trial. In addition, the report includes the interview-based survey of basic income recipients.
In the first year of the experiment, as published in the preliminary report in 2019, the difference in working days-through a job or self-employment-with respect to the control group was slightly positive, but was not statistically significant. However, with the final report, in the second year the difference in employment with the group receiving a BI and the control group became statistically significant. In the second year, basic-income recipients worked on average six more days per year than individuals in the control group.
This result alone is not sufficient to show that BI is a good idea. However, the personal interviews revealed that the basic income recipients were more satisfied with their lives and experienced less mental strain than the control group. They also had a more positive perception of their economic welfare.
Philippe Van Parijs, a co-founder of Basic Earth Network (BIEN) commented in his article about the 6 May 2020 report that: " Most importantly, the long-term sustainability of a generous unconditional basic income hinges far less on the immediate impact on labour supply than on the structural effect on health, skills and motivation that can be expected from a smoother lifelong back-and-forth between employment, education and voluntary activities."
This is what the BI recipients showed when interviewed by phone just before the experiment ended.
Survey respondents who received a basic income described their wellbeing more positively than respondents in the control group. They were more satisfied with their lives and experienced less mental strain, depression, sadness and loneliness. They also had a more positive perception of their cognitive abilities, i.e. memory, learning and ability to concentrate.
In addition, the respondents who received a basic income had a more positive perception of their income and economic wellbeing than the control group. They were more likely to find that their financial situation was manageable and that they were protected financially. The basic income recipients trusted other people and the institutions in society to a larger extent and were more confident in their own future and their ability to influence things than the control group. 
Philippe Van Parijs observed at the end of his article: "Whatever its limitations, this experiment provides food for thought and action to all those who believe basic income is the way to go. And with the pandemic shattering the economic security of many around the world, there are more of them than ever before. Thank you, Finland!"
https://www.socialeurope.eu/basic-income-positive-results-from-finland

Senior United Nations Official calls for universal basic income to tackle growing inequality
https://news.un.org/en/story/2020/05/1063312
Basic Income advocates welcome the interest that the United Nations is taking in Basic Income. But disappointed that Basic Income is seen as temporary 'fix'. Within this article is the statement:
"UBI is not forever but given the social and economic hits by COVID-19, it is needed right now".
Kanni Wignaraja, the UN Official who runs the UNDP's Asia-Pacific bureau, and who was interviewed for this article said: "Universal basic income is not the solution to the region's economic problems, but it will save people from falling off the edge."
Again, Basic Income advocates recognise that Basic Income is not a panacea but it is definitely part of the solution.

Radio Talkback Campaign
Radio talkback is a feature of our Radio landscape with the Newstalk hosts Marcus Lush, Kerry McIvor and Jack Tame.
We invite BINZ supporters with an interest in Radio Talkback to join in this BINZ campaign to iniate a basic income conversation over the airwaves. If you would like to contribute to this means of public communication to share ideas email binzcontact@gmail.com with your contact details.