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Proposals for Establishing
Basic Income in New Zealand

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Basic Income New Zealand supports a modest Basic Income, between 20% and 30% of GDP per capita, but does not specifically endorse any particular proposal.

This page looks at the practicalities of establishing a practical Basic Income in New Zealand.

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Not all Basic Income proposals are equal.

• Some schemes propose larger Basic Incomes than others.
  • Some may be too small to be meaningful, and others too large to be feasible.
• Some proposals are based on the standard definition of a Basic Income, a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement, while others are not.
• Some may have credible funding schemes, and others dubious or nonexistent funding proposals.
• Some proposals have credible Broad Targeting, targeting the payments to those most in need while reducing the overall cost of the scheme.
• With credible targeting:
  • Those on low incomes benefit the most.
  • The benefit reduces progressively as other income increases.
  • The targeting reduces the overall cost of the scheme.
  • The proposal does not reduce the net income of those with low incomes or increase the net income of the wealthy by providing them with tax cuts.
• In contrast, some dubious schemes may have:
  • Little or no targeting.
  • Targeting or proposals that benefit those with higher incomes more than those with lower incomes, or reduce the net incomes of those with low incomes.
  • Targeting proposals that increase the cost of the scheme.
• Some proposals provide no net benefit to the recipients.
  • They may pay a Basic Income but tax it back, so no one receives any benefit at all.
  • Some proposals are based on family incomes rather than individual incomes.
  • In such cases, the claim to be a Basic Income is dubious.
• A good Basic Income scheme results in an equitable distribution of wealth and a reduction in poverty.
  • A scheme that increases inequality or poverty cannot be considered a Basic Income scheme.
• Basic Income payments of the same or similar value as the current Jobseeker Support payments are generally recommended.

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Comparing several proposals:

We look at three proposals.

• Perce Harpham’s Proposal for a Basic Income
• Lowell Manning’s Guaranteed Minimum Income For NZ
• Gareth Morgan and Susan Guthrie’s “The Big Kahuna”.

As these proposals are now dated, monetary amounts require adjustment for inflation.

BINZ welcomes comments, suggestions, and criticisms.

BINZ welcomes information that would help the authors and others improve their proposals.

Perce Harpham Proposal

A Universal Basic Income (UBI) is an important part of reducing inequality.

Its effect can be partly negated by the taxes that are used to finance it, such as an increased GST. Also, both wealth and income inequalities need to be reduced. To understand how a UBI could be used as part of an overhaul of both the tax and benefit systems, watch a 7-minute video as an easy introduction (‘Perce Harpham Proposal Video’, on the video page and link below). 

Several papers were previously available on Perce’s webpage http://perce.harpham.co.nz , including one titled “How can we reduce inequality“. In this paper, Perce demonstrates how a UBI could be financed, and in the paper titled ‘Transition to a UBI & Asset Tax‘, Perce explores how we might get from here to there.

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Lowell Manning Proposal

You can read about Lowell Manning’s proposal in the original paper: ‘A Guaranteed Minimum Income For New Zealand’ or as a short form article ‘Replacing Welfare With Dignity And Worth’. Click on the boxes below to read more! 

This proposal is to replace the present welfare system with a uniform gross Basic Income payment for all, combined with multiple different tax scales so that no family receives more net or after-tax income than they do at present. The objective is to introduce a fiscally neutral Basic Income scheme to avoid the need to pay Jobseeker support and other welfare payments. 

This proposal has been criticised for failing to provide a Basic Income with a net, after income tax, value that is equal or similar for all individuals, for being family focused rather than individual focused, for providing little or no net benefit to individuals, or families on low income, when compared with the existing system, for the complexity of the tax system involved, for the difficulty of handling part time workers, and for the difficulty of implementing the scheme in practice.

Big Kahuna

Refer to the ‘Big Kahuna‘ page on the Morgan Foundation website
( https://morganfoundation.org.nz/kahuna/ )for information about this proposal, especially information regarding the proposed UBI. There are also videos on how to make the tax and welfare system fairer for all Kiwis on the page. The book, The Big Kahuna 2011, is available from various outlets online.
 

This proposal has been criticised for paying a Basic Income at a uniform rate to all with no allowance for those with special needs. This will result in a reduction in income and hardship for those with special needs. The scheme also proposes using a relatively low flat rate income tax that will result in tax cuts for those with high incomes.

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