Looking into Australia Together - Part 6

Strategies for fairness in Australia including a National Accord on Wealth, Welfare and Wellbeing and a Universal Basic Income.

In this series of articles I’m providing brief summaries featuring some of the Targets and Strategies in Australia Together.

Australia Together is the nation’s first long term, integrated plan for a better future for everyone. It is being progressively developed by Australians for Australians so that we can tell our governments what we want them to do for us as a cohesive, democratic community. Read the latest draft of Australia Together – Issue No. 7 – here.

Today I’m focussing on what might be one of the most important Strategies in Australia Together – the proposal to develop a National Accord on Wealth, Welfare and Wellbeing. This is an Accord between Australians and their parliaments and governments, not between governments and vested interest groups like unions, business owners or multinational corporations. It’s designed to give everyday Australians much greater influence in plans and decisions made about the collection and expenditure of public funds and about the structure of the national economy.

The fact that our governments are making decisions on these things in the absence of an agreement with the Australian people about the purpose of their economy is a key, if not the key reason why so many decisions on taxation and redistribution of national income and wealth have resulted in a growth in inequality, poverty, hunger, homelessness and ill-health in Australia in the 21^st century.

Until this agreement or accord is in place, governments will not have the guidance they need from the Australian people as to what constitutes a good and fair law, policy or decision on national wealth and finance, and what constitutes a bad law, policy or decision – in other words, what constitutes a decision that is contrary to the public interest.

We need to specify the public interest in relation to national wealth, public finances and the economy before we can reasonably expect laws, policies and decisions to be made that are consistent with the public interest. Until we specify what the public interest actually is we will be unable to build a fair system for raising and sharing national wealth and a strong economy that offers opportunity fairly to everyone.

Click here for a Fact Sheet containing the details and benefits of the proposed National Accord on Wealth, Welfare and Wellbeing. But I will summarise here the main features of this Accord, what it is, why it’s so important and the considerable benefits it offers to Australians and parliamentarians alike. There are no downsides to this Accord.

What is the proposed National Accord on Wealth, Welfare and Wellbeing?

The National Accord on Wealth, Welfare and Wellbeing is typical of a number of other Strategies in Australia Together in that it’s really all about giving Australians a practical and efficient means of creating a much better relationship of mutual respect and terms of trust with the parliaments and governments we elect. Trust between us and our governments ranges between neutral and non-existent in Australia and unless we can restore this trust there is little hope of being able to deal with the serious threats we’re facing to our future such as climate change, wars, nuclear contamination and pandemics. The proposed Accord is designed to improve trust in the fair management of national wealth and the economy. If we can improve trust in that area, it’s highly likely that we can improve other aspects of our relationship with those we elect.

A key function of the Accord would be to enable Australians to reverse the deadly impact that neoliberal policies have had on the Australian economy and the resultant trend of growing social, economic and political inequality that has been evident for Australians throughout the 21st century. Unless this trend of inequality is reversed it will not be possible to make the Vision for Australia Together a reality, especially those aspects of it in which Australians aspire to ensure that:

• “national wealth is fairly raised and fairly shared,” and that

• “our economy supports rewarding opportunities and continuous improvements in living standards, wellbeing and security for everyone.”

The National Accord on Wealth, Welfare and Wellbeing, as it’s been proposed thus far in Australia Together, would:

1. provide Australians with a formal acknowledgement – preferably in legislation – that the purpose of their national economy is to provide for the welfare and wellbeing of all Australians;

2. ensure that the federal government’s decisions on budgets and economic policies for the nation are made in accordance with the public interest, rather than in favour of vested interests such as those of multinational corporations; and

3. establish - again, preferably in legislation - the basis for participation of the people of Australia in:

   1. ongoing design of their own national economy, and in

   2. the financial planning necessary for strong taxpayer and public sector contributions to that wider economy.

Such an Accord is unprecedented in western nations but is it indispensable to economic sustainability, fairness, reduction of all forms of inequality, and to establishing sustainable patterns of resource consumption that are vital to the health of the natural environment on which all life depends.

Strategies in Australia Together for fair management of our wealth, welfare and wellbeing

The proposal for a National Accord on Wealth, Welfare and Wellbeing appears in Australia Together under the map reference number Econ04.02 and under a range of other related Targets and Strategies. The proposal under Econ04.02 envisages that the Accord would be designed as a statement of the agreed principles which are to be adhered to by parliaments and governments when making budgetary and economic plans, laws, policies and decisions for the nation.

Subject to community engagement about the exact wording, the intention of the Accord would be bind parliaments and governments to:

1. engage with the Australian community as partners in building long term plans for the nation and its finances; and

2. protect, promote and secure the economic and social wellbeing of all citizens by adherence to principles of:

   1. equality of opportunity,

   2. fair sharing of the burden of raising national wealth,

   3. fair and more equitable distribution of national wealth,

   4. public responsibility by Australia as a community for those unable to avail themselves of the minimum provisions for a dignified life, and

   5. any other principles deemed essential by the Australian community in accordance with the public interest.

The above proposal is, however, not a stand-alone Strategy. It is linked with, supported by and supportive of several other Strategies in Australia Together including:

1. Econ04.02.01 – which requires revocation of current policies that restrict government sector and taxpayer participation in Australia’s economy;

2. Econ04.02.02 – which requires community engagement on and justification of national budget priorities – in other words it requires the introduction of participatory budgeting;

3. Econ04.02.03 – which calls for the establishment of a new 100% publicly owned (government administered) Community Australia Bank to compete with the big four banks that currently dominate finance in Australia and to provide a greater share of returns to Australians from investment of public funds in nation building projects;

4. Econ02.05 – which requires establishment of a National Economic Transitions Commission; and

5. Econ06.01, Econ06.01.01 and Econ06.01.02 – which require development of a program for recovery of ownership and operation of government trading enterprises. This is a program to reverse recent privatisation of key government services and natural monopolies.

Most notably, the Accord is central to Strategies for introduction of what up until this point in Australia Together has been called a social wage but which is these days more commonly called a universal basic income. These strategies appear primarily under:

• Econ02.04 – which proposes a national plan for full employment supported by a social wage – that is, it proposes introduction of a universal basic income for all Australians; and

• Econ02.04.02 – which proposes community engagement on introduction of a social wage or universal basic income.

Strategies in Australia Together for a social wage - a universal basic income

The biggest benefit of a National Accord on Wealth, Welfare and Wellbeing is that it could pave the way for the introduction of a “universal basic income” or “UBI” for all Australians. This in turn would pave the way for amazing economic benefits and reduction of inequality in Australia.

The UBI is not a new idea and it is not an idea supported only by progressive politicians and economists and social welfare advocates. It has also been supported by arch conservatives such as former UK prime minister Margaret Thatcher and right-wing economists Friedrich Hayek and Milton Friedman. As the prominent Australian economist Professor Ross Garnaut has stated, a UBI “has no political colour”. Several countries around the world including Finland, Canada, Kenya and India have either introduced or run trials of a UBI. And since its economic benefits are many, it is long overdue for introduction in Australia.

A Universal Basic Income is a continuous uniform taxpayer funded payment to all citizens made regardless of any other income they may freely obtain. If introduced in accordance with principles of fairness that had already been agreed to by Australians in a National Accord on Wealth, Welfare and Wellbeing, it would:

1. collapse the barriers to fairness in our current welfare and wealth sharing systems;

2. significantly reduce gender inequality and poverty traps particularly for women and children;

3. significantly reduce the cost of a wide array of services especially in health;

4. create a solid basis for the maintenance of full employment and continuous growth in productivity.

A Universal Basic Income would also:

• open the way to a genuinely fair personal taxation system;

• remove the current incentives in our social security and tax systems that act to discourage many Australians, particularly women, from participation in the workforce, because with a UBI they would retain more income after tax;

• provide stimulus to the economy by boosting spending capacity in places where there is little or none now – that is, among the growing numbers of the poor – more than 3 million of them in Australia;

• raise disposable income for everyone and thereby create enough new demand for jobs growth in both the public sector – especially in education – and in the private sector in trade exposed industries;

• make re-training and career transfers possible for those who are in jobs which offer them no life satisfaction or ability to reach their full potential; and

• allow trade exposed industries to remain more competitive than they otherwise might because, going forward, it can help keep wages affordable for those industries without lowering the standard of living for workers. New and small business owners benefit significantly from a UBI.

All in all there are so many benefits that would arise from a UBI that we are shooting ourselves in the foot by not doing it.

Nor is there a leg to stand on in any neoliberal argument that it would send the nation broke. Many Australians will tend to reject a UBI if they have become accustomed to believing that we can’t possibly afford to pay ourselves a basic income from our own taxation revenues or that it is unfair to pay it to rich people or to poor people who aren’t in the workforce. However, the UBI simply re-orders the sequence that we use to collect and redistribute national revenues from taxation and other investments. It doesn’t pay out any more national income than we are capable of generating and spending as a nation. It just tends to ensure that more of that money gets spent here in our own economy by ourselves on ourselves. Unlike subsidies for big businesses who then transfer their profits offshore and pay little if any tax, a UBI keeps that money circulating in Australia.

In effect, by introducing a UBI all we would be doing is reversing the sequence of who gets to use national revenues first and who gets to decide how they can best be used to service our individual essential needs. By allowing everyone to draw out from national revenues in equal measures and then put back in to their fullest capacity as individuals (by working and paying tax) this reversal would significantly enhance each individual’s chances of pursuing education and employment in areas that suit their desires, talents, aptitudes, and needs – in other words in the areas where they can contribute to the national economy most productively. This in turn would raise national productivity which is essential to the growth of national wealth.  

A UBI would also allow individual Australians to be the first to decide how they wish to spend the extra income that would arise from it. In other words it would give buyers rather than sellers the greater capacity to shape demand. This would reverse the way we tend to shape new markets now. At the moment governments use much of our national wealth to subsidise businesses to supply whatever they prefer to supply, regardless of whether it’s what we as the buyers want and need. But with a UBI much of the money we preferentially grant to businesses now in the form of subsidies can instead be circulated first to Australians, who can then establish buying patterns that suit them, stimulating the creation of markets that match their needs. This in itself provides a natural check on inflation. It does this because a UBI draws more of us into participation in the economy as both sources of genuine domestic demand and sources of the most efficient supply of productive labour and services. It can release the potential in our economy for sustainable growth, where supply and demand are balanced. Getting both those things balanced is the key to preventing excessive inflation.

So in short, if it’s well set up, a UBI is something that can provide ongoing steady stimulus to the economy and the employment and productivity growth we need without setting off uncontrollable inflation.

More information on the benefits of a UBI made under the sort of National Accord on Wealth, Welfare and Wellbeing proposed in Australia Together is available on the ACFP webpage called Snapshots from Australia Together. This includes a video showing an example of a relatively small social wage and how it would work in practice. It provides a model of the financial benefits for those in different income brackets. The modelling shows everyone is better off. ACFP is currently building a new model of the costs and distributed benefits of a larger UBI. Updated modelling of the results of this larger scale Universal Basic Income and the sources of funding for it will be released soon.

In summary, because it significantly increases participation in the workforce, a Universal Basic Income results in a simultaneous growth of both personal incomes and total national revenues from taxation, all of which can be reinvested fairly in Australians – as long as it is designed in accordance with principles already agreed in something like the proposal in Australia Together for a National Accord on Wealth, Welfare and Wellbeing.

To find out more about the benefits of a UBI explore these references:

• Professor Ross Garnaut’s book – Reset: Restoring Australia after the pandemic recession, 2021;

• Brian Donaghy’s book – A Basic Income for Australia: A fair go for all, 2020; and

• The above mentioned ACFP video on YouTube – Snapshots from Australia Together, Episode 2 Part 3: A New Economy Based on an Accord on Wealth, Welfare and Wellbeing - The benefits of a social wage for all Australians. This video shows how incomes for individual Australians and wealth for the nation would both rise if a social wage or UBI were to be introduced consistent with the principles of a National Accord on Wealth, Welfare and Wellbeing.

The above Strategies are the product of research by a range of experts. ACFP is particularly indebted to Professor Ross Garnaut, Brian Donaghy, Dr John Tons, the Australian Institute for Health and Welfare, the Parliamentary Budget Office, the United Nations, the Centre for Policy Development, and Essential Research.

National Integrated Planning & Reporting - inclusive, community-driven national planning

Australia Together is generated using a process developed by ACFP called National Integrated Planning & Reporting or National IP&R. This process allows any and all Australians to select Targets and Strategies that are safe and discard ones that are unsafe or which will have the effect of disabling other safe Strategies. The plan contains 57 generic safe Direction statements for our society, environment, economy and governance. These function as a signpost system for arriving at our preferred future without excluding anyone, without tripping each other up and without slowing our progress. They chart the safe course towards realisation of the Vision for Australia Together.

Any Australian can comment on or make suggestions about the Vision and Directions for Australia Together at any time. Provide feedback on the Vision and Directions here.

Any Australian can also suggest targets and strategies for inclusion in Australia Together. Find out how to suggest inclusion of a Target or Strategy in Australia Together here.

Next week in the State of Australia on Substack

Next week in the State of Australia on Substack I’ll post about: Strategies for electoral reform in Australia. In the meantime, the Australia Together Podcast this week will feature a conversation about strategies for ensuring every Australian can have a greater influence on how national wealth is fairly raised and fairly shared.  A link will be circulated in a couple of days.

Find out all about ACFP

Become involved in building plans for a better Australia here.