Utopia, you are standing in it!

A clever man can climb out of the hole a wise man would not have fallen into. In responding to my Taxpayers’ Union paper on a Universal Basic Income, Gareth Morgan just kept digging.

His first response was to say a Universal Basic Income would not be implemented immediately. This avoids retirees taking home $50 per week less than currently under NZ Superannuation.

Gareth Morgan’s solution is to say that only those currently under 50 will have to rely on a Universal Basic Income.

Only people who are today under the age of 50 could be expected to retire under the UBI policy, the policy would not apply to existing superannuitants.

Generation Rent have to pay higher taxes to keep current retirees in the superannuation style they have become accustomed. Those aged over 50 are also grandfathered in to the existing level of income support from New Zealand Superannuation.

Home ownership rates among Millenials are on average 16 percentage points lower than those recorded by Generation X https://t.co/QNcCXvFbif—
ResolutionFoundation (@resfoundation) February 13, 2016

Generation Rent will have to save their Universal Basic Income so they do not live in poverty when they retire in as little as 15 years from the date of introduction. As Gareth Morgan explains when referring to 40-year-olds:

For the 25 years prior to retirement they will receive the UBI on top of their wages. If they save a good portion of it they will have nest egg at retirement which they can use in retirement to supplement the UBI (which is more modest than today’s NZ Super).

At least the Labour Party admitted that a Universal Basic Income of $11,000 per adult was inadequate and will have to be supplemented so that no one is left worse off:

After all, $11,000 is a lower income than what is currently paid out as part of New Zealand Super. If the figure is too low, then the benefits of security and freedom promised by a UBI may not be realised.

On the other hand, if the figure is pushed higher, taxes will have to rise, possibly to an unrealistically high figure. (Morgan’s $11,000 UBI is funded through a flat tax of 30%.) There is, therefore, a real feasibility-sufficiency trade-off.

It may be that a UBI has to be supplemented by other transfers to ensure that the most vulnerable groups have enough income.

As for single parents relying on a welfare benefit, they are $150 a week short under a Universal Basic Income. Where is Sue Bradford when you need her to go on about beneficiary bashing.

Gareth Morgan’s proposed solution to this $150 per week cut in the incomes of the needy is to suggest that the non-custodial parent of the child should give up part or all of their Universal Basic Income to support their child:

Each child has two parents, the UBI is paid to both whether they live together or not.

It is totally feasible that the UBI of both parents could be required to be directed to support the children in the event of separation. In the Kahuna the amount paid per family would be $22,000 after tax – more than is paid to a sole parent family now.

This hard line on child support will make being a non-custodial parent of a child a rather risky venture under a Universal Basic Income. A Universal Basic Income is supposed to make you feel very secure against misfortune as Gareth Morgan explained back in 2011:

…let’s agree on what is a minimum income every adult should have in order to live a dignified life and then see what flows from that. We begin by specifying the income level below which we are not prepared to see anyone having to live.

If you are the non-custodial parent and down on your luck – unemployed, sick or an invalid – you cannot rely on your Universal Basic Income as a backstop because part or all of that is already transferred to support your child.

Paternity suits will take on a new meaning because you can lose your Universal Basic Income. The Universal Basic Income with Gareth Morgan’s ad hoc amendments this week has strings attached on whether you or someone else receives your Universal Basic Income. That make or break decision will be up to the Family Court and the Child Support Agency at IRD.

I am not sure how a Universal Basic Income deals with deadbeat dads at home and living abroad. Central to its funding is abolition of the welfare state bureaucracy to save $2 billion.

Those down on their luck will not have a welfare state bureaucracy to turn to if their child support does not come through or have nothing to live on after their child support is paid.

Now let Gareth Morgan explain why he wanted to get rid of that welfare state bureaucracy and replace it with a Universal Basic Income:

We must finally admit that with all the paternalistic will in the world there is no chance that public servants can adequately identify and monitor eligibility for a needs-based benefit regime.

We should save ourselves the torture of continuously getting it wrong and designing an endless stream of discriminatory “fixes” to cover our mistakes in finding targeted perfection.

The reality is that people’s circumstances are dynamic and that they will change their behaviour to suit the design of the benefit regime making the chicken and egg nature of determining “needs” an exercise in futility.

The important thing is to be fair and to have a consensus on the level of income that we all have an unconditional entitlement to in order to live a dignified life.

Gareth Morgan seems to throw Generation Rent and non-custodial parents under the bus to deliver on his dream. They both have to give up much of their Universal Basic Income either to their children or their KiwiSaver to fill the growing number of gaps in his Big Kahuna. Their unconditional entitlement to be able to live a dignified life through a Universal Basic Income of $11,000 per adult has a lot of strings attached to it and cracks to fall through with no safety net.

Wear a condom, do not divorce and do not be under 50 are the secrets to enjoying a Universal Basic Income. If not, you are on your own. Your Universal Basic income is already spoken for.