Basic Income as a Policy Option for Australia Troy Henderson A thesis submitted in fulfilment of the requirements of Doctor of Philosophy Department of Political Economy, Faculty of Arts and Social Sciences, The University of Sydney January 25, 2021 Statement of originality I certify that the intellectual content of this thesis is the product of my own work and that all the assistance received in preparing this thesis and sources have been acknowledged. This thesis has not been submitted for any other degree or purpose. Troy Henderson 2 Acknowledgement of Traditional Owners I would like to acknowledge the indigenous peoples of Australia, to recognise their continuing connection to land, water and culture, and to declare my solidarity with their unfinished struggle for justice and equality. I acknowledge the traditional owners of the lands on which this work was done: the Gadigal people of the Eora Nation and the Gadigal, Wangal and Bediagal clans of the Dharug Nation. I pay my respects to their elders, leaders and everyday battlers—past, present and emerging. 3 Abstract This thesis examines Basic Income as a Policy Option for Australia and concludes that phased implementation of an affluence-tested BI scheme would benefit Australia. It considers theories and evidence, drawing on previous literature, and presents empirical material on the likely political economic effects of basic income (BI). Chapter 1 historicises four ‘moments’ in the history of BI and advances some tentative explanations for the failure to convert BI proposals into concrete policy reform. Chapter 2 develops a normative framework for this policy option through a sustained critical engagement with the literature on the ethics of BI, including the seminal contributions of Philippe Van Parijs. It argues that BI can be justified on the basis of Van Parijs’ (1997) principle of ‘real freedom for all’, together with the concept of total social productivity (TSP), and a deep form of social reciprocity. Chapter 3 applies this set of normative criteria to the specific case of Australia, highlighting the relevant income constraints and opportunity cost constraints on real freedom. Chapter 4 examines the issue of the fiscal cost of BI in advanced countries, focusing on liberal welfare capitalist states. It contends that a negative income tax (NIT) scheme can deliver the same or similar benefits as a universal basic income (UBI) scheme, at a lower fiscal cost. Chapter 5 evaluates the pros and cons of different financing mechanisms for BI, concluding that some combination of progressive taxation and public deficits offers the best way forward for Australia. Chapter 6 interrogates the relationship between BI and wellbeing, including the incidence of poverty and the extent of distributional inequality. Although based on limited evidence, it concludes that BI has the potential to enhance wellbeing. Chapter 7 examines the effects of BI on paid work, describing the evidence, evaluating the arguments, and concluding that modest BI schemes are unlikely to threaten aggregate labour supply. Chapter 8 addresses the under-theorised terrain of the interrelationship of BI, economic growth and inflation. As with the labour supply discussion, the complexity of macroeconomic relationships admits only tentative conclusions in this chapter, pointing to the tenuous foundations of claims about adverse macroeconomic consequences. Chapter 9 explores opportunities and implementation pathways for shifting social assistance in Australia towards a more universal and less conditional model. Chapter 10 canvasses a range of political strategies that might be deployed in order to achieve BI policy implementation in Australia. 4 Table of Contents ACKNOWLEDGEMENTS .......................................................................................................................................................................... 6 LIST OF ABBREVIATIONS ....................................................................................................................................................................... 8 LIST OF FIGURES AND TABLES .......................................................................................................................................................... 11 INTRODUCTION ............................................................................................................................................................. 13 PART I – THE HISTORY AND ETHICS OF BASIC INCOME .................................................................................. 24 CHAPTER 1: THE HISTORY OF BASIC INCOME ......................................................................................................................... 25 CHAPTER 2: NORMATIVE JUSTIFICATIONS OF BASIC INCOME .............................................................................................. 53 CHAPTER 3: THE CASE FOR A BASIC INCOME SCHEME IN AUSTRALIA ................................................................................ 73 PART II – THE POLITICAL ECONOMY OF BASIC INCOME ................................................................................. 96 CHAPTER 4: THE FISCAL COST OF BASIC INCOME .................................................................................................................. 97 CHAPTER 5: FINANCING BASIC INCOME ................................................................................................................................ 117 CHAPTER 6: BASIC INCOME AND WELLBEING ...................................................................................................................... 151 CHAPTER 7: WORK AND BASIC INCOME ................................................................................................................................ 169 CHAPTER 8: BASIC INCOME, ECONOMIC GROWTH AND INFLATION ........................................................................................ 187 PART III – THE POLITICS OF BASIC INCOME ..................................................................................................... 208 CHAPTER 9: BASIC INCOME AND THE AUSTRALIAN WELFARE STATE ................................................................................... 209 CHAPTER 10: THE POLITICS OF BASIC INCOME IN AUSTRALIA ............................................................................................... 230 CONCLUSION ............................................................................................................................................................... 259 BIBLIOGRAPHY .......................................................................................................................................................... 273 5 Acknowledgements Where to start? Mum and Dad. Words shrink from the labour of adequately expressing my gratitude for all you’ve done. Tumlionel. Brahski. Glad to share genetic material with you, man. Your talents inspire. Your humour keeps me sane. Black star. Blue star. Always. Delphine. Mon amie. Merci bien pour tout. I know you understand this marathon better than most. I look forward to being a better friend from now on. Delphine. Cath. Maxi. Théo. What a beautiful family. Love you all. To all who have tended the community garden of Political Economy, thank you. It’s been a privilege to learn from you. Work with you. Fend off the odd invasive species together. If I thanked you all by name, I’d blow my word count. Jim Stanford and the CFW/TAI crew. Thanks. I learned so much from you Jimbo. The single greatest pleasure in this journey, which began with a trip to the North American Basic Income Guarantee conference in snowy New York, has been the friendships formed—and the collaborations undertaken—with brilliant scholars working on basic income in Australia and around the world. In particular I’d like to acknowledge Elise Klein, Ben Spies-Butcher, Ben Phillips and John Quiggin. I won’t thank the rest of you by name. Just in case you examine this thesis. I would like to acknowledge the very professional, high-quality copyediting of this thesis by Margie Tubbs Editing Services. All services were provided in strict accordance with University Thesis Submission and Examination Procedures, 2015. To my Associate Supervisor, Mike Beggs. For friendship and feedback. When you had so much on your own plate. Thank you. GDR time. 6 Trina. My love. Sorry. You had to witness. The last slow steps. Towards two forms of submission. I should have learned EndNote earlier. You’ve been incredible. In every way. During a very tough time. I love you. So much more than any Maine Coon called Chutney. Let’s have fun. BAB. You’re king of the best mate castle. From Karhu to Kerouac. We’ve had some interesting times. Kiitos for always having my back. As I’ve tried to have yours. Kippis for being one of the best humans on the pale blue dot. Bring the tent next time comrade. Champion. To my Supervisor, Frank Stilwell. Lighthouses may be redundant in practice. But not in metaphor. Thanks for guiding me to safe harbour. Even if you needed a few tugboats along the way. Your acuity, passion, wit and perseverance have always been an inspiration. Onwards. Towards the good society. Just around the next bend. This thesis is dedicated to two of my aunts. Like many women, they have spent decades doing hard work in the unpaid sector of the care economy. They looked after family members they loved who could not look after themselves. They did this willingly, but at great personal cost. Income