A universal basic income is not the answer

Gareth Morgan's answer to the burgeoning welfare system, the Universal Basic Income (UBI) of $11,000 per year for every adult, leaves three acknowledged cohorts worse off - superannuitants, sole parents and the asset rich - probably a third of the adult population. Gareth addressed those but ignored a fourth group - 144,000 sickness and invalid beneficiaries many of whom are receiving more than $211.50 per week. Over half receive an accommodation supplement and many receive disability allowances. The targeted assistance Morgan wants to dispense with helps these people to a much greater extent than the UBI would.

Treasury modelled a Guaranteed Minimum Income for the Welfare Working Group (at the group's request after Gareth and Sue Bradford both proposed some form of universal basic income at its initial conference). It pointed out that some of the neediest welfare recipients would be worse off even at a level of $15,600 per annum. As well Treasury noted the negative effect these schemes would have on productivity, savings and investment, none of which can be over-emphasised in my opinion.

Similar experiments have been tried before, notably negative income tax in the US, and did not have beneficial outcomes. Which is hardly surprising. Paying all adults - Treasury modelled from 16 years up - with or without productive return, is surely more of what has unhinged the present system which provides a viable alternative to work but indulges family breakdown and self-destructive behaviour. Morgan is extolling more of the state-legislated wealth redistribution which has us in the mess he now wants to 'fix'.

Surely the point is that individuals used to rely far more heavily on each other. They formed stable and committed families that provided for raising children, caring for the elderly, and supporting each other in times of adversity. Incidentally, very much the Asian way of providing welfare. For three decades after the 1938 social security net was created people relied on it sparingly and treated the system and, by inference, each other with respect. That was the overriding value that has weakened and needs to be restored.

People are born to make their way in life through endeavour and forming positive partnerships. Not to wait till they reach 16 and have the state chuck a couple of hundred bucks their way unconditionally for the duration. Morgan fails to acknowledge the enormous personal disincentive effect such a practice would incur.

For instance, drug and alcohol abuse are increasing problems in society. Young people could pool resources and lead lives that require none of the discipline associated with working for a living. All of the social fall-out and intergenerational dysfunction would continue.

Rather than re-invent 'welfarism' - broadly speaking, any subsidy from the state - New Zealand needs to reduce it. That begins with the clear, unequivocal message that welfare is a strictly temporary hand-up for any person capable of working and supporting themselves. As well, the eligibility age for Super must be lifted to match lengthening life expectancies. That will enable lower taxation - not greater as required by the UBI - and will bring investment, entrepreneurship and jobs to a country that is now blessed with its geographic position in relation to the rapidly economically transforming world.