Tag Archives: Australia

universal basic income 2: how to finance it

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Imagine this highly unlikely scenario. The current conservative Australian government loses the 2022 federal election in a landslide, due to widespread financial corruption, inaction on addressing global warming – brought into relief by another devastating summer in 2020-21- and the rise of a young, charismatic leader of the leftist Labor opposition, who has managed to sell voters on an Aussie version of the Green New Deal, as well an ambitious Basic Income policy. 





It’s okay to dream, but we have to get real. How do we make such a policy work? 





I will rely on the ideas and calculations of finance journalist and author of A basic income for Australia, Brian Donaghy, for the following. First, based on the Australian Council of Social Services (ACOSS) campaign of March 2020 which advocated a rise in what’s now called Jobseeker to $755.70 per fortnight (of course, the Covid19 pandemic has caused the current government to raise the previous payment, with obvious reluctance, to a figure which is still well below the ACOSS recommendation), together with an increased rent assistance payment of $158 per fortnight, the Basic Income payment should be set at $913.70 per fortnight, for every adult. Children would be given a percentage, depending on age. The total cost of such a package would be about $526 billion per annum. Alternatively, the payment could be set at the aged pension rate, plus supplements – $944 fortnightly – totalling about $544 billion per annum. The OECD takes the poverty line to be about $1000 per fortnight, and Australia’s minimum wage for the 2019-20 year was around $1481 per fortnight. 





So, how do we find, let’s say, $544 billion dollars a year to finance this scheme? According to Donaghy’s costings, savings on welfare payments and administration would bring the figure down to about $415 billion. Next, Donaghy looks at ‘individual tax offsets and deductions’, which he claims the government should scrap. I can’t pretend to understand this, but scrapping these perks would, he claims, bring the basic income cost down to $377 billion. 





All of this should simplify the tax system, making tax evasion and avoidance more difficult, and increasing revenue to the ATO, though putting a dollar amount on this might be difficult. However, tax avoidance task-forces have been in operation for some years and have collected billions of dollars. Their job would be made easier by a a more simplified system. 





Another factor which would increase tax revenue by a hard-to-calculate amount would be the increased spending power created by the basic income. Remember, its universality would provide lower and middle income earners with the opportunity to spend more on dining out, home improvements, internal tourism and the like. Australia’s corporate profits would increase, according to economic modelling, enough to bring the cost of the UBI down to about $282 billion, though Donaghy has chosen to be more conservative, lowering the cost to around $320 billion.





The UBI goes to everyone, so that for many taxpayers it would be additional income at the top marginal rate. Without going into detail, this would bring in further tax revenue, totalling almost $81.7 billion, and bringing the cost of the UBI down to somewhere around $240 billion – with nobody suffering since that extra tax would only be a percentage of the extra income provided to the wealthy. 





One could go on tweaking the system and working out theoretical savings, such as a restructuring of the government subsidies paid to particular industries, often described as business or corporate welfare. Australia’s Productivity Commission estimated that government ‘budgetary assistance’ to corporations totalled approximately $12 billion in 2018-19. Arguments as to whether such assistance constitutes sound government investment will run the gamut, and will of course depend on how much potential each corporation has – prediction about the future being particularly tricky. However, as Donaghy points out, modern companies have become increasingly technocratic and international, tending to shed rather than increase workers, and if they need hands-on work, may be able to source it from developing countries with cheap labour rates. Government handouts end up mostly if not entirely at the top end of town. Our federal government apparently subsidises the fossil fuel industry to to the tune of $12 billion annually, always using the ‘jobs jobs jobs’ mantra, but these industries are shedding jobs and are not major employers. 





Other ways of tweaking the system include taxing multinational tech companies such as Google, Apple and Facebook – always risky, as they tend to respond with ‘big money muscle’, threatening to limit services. the Goods and Services Tax can also be looked at. Many European nations impose a higher GST on luxury items. Even raising the basic rate by one percent will bring in an extra $7 billion. Since the UBI would lead to greater spending, much of the money raised would be recirculated through the system. 





Again I should emphasise that this is a very rough guide, largely based on Brian Donaghy’s rough guide to funding a UBI. However, I’m not optimistic enough to believe that anything like a UBI will operate in Australia in the near future. Meanwhile, with the current jobs crisis and shutdowns caused by the pandemic, the Australian government is operating with an online compliance system for jobseekers which is near-criminal in its stress-inducing incomprehensibility, and touting an increase in jobseeker payments, which, as mentioned, will keep these payments far below any reasonably projected UBI. The current government’s support of those most damaged by the pandemic – for example, those, like myself, who work in the international student sector – has been as minimal as it feels it can get away with. Of course the current government has essentially prided itself on its ‘if it isn’t broken, don’t fix it’ lack of innovation, so we clearly need to look elsewhere. The 2022 election is one source of hope, but there are other options besides a UBI (and of course there also many options within UBI). In her recent (2020) book, Glimpses of Utopia , Jess Scully, arts entrepreneur, curator and Deputy Lord Mayor of Sydney, has promoted the idea of Universal Basic Services as a less ‘libertarian’ and more community-oriented approach to reducing disadvantage and improving inclusivity. I’ll explore this concept further next time. 





References





Brian Donaghy, A basic income for Australia, 2020





Jess Scully, Glimpses of utopia, 2020


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				electric vehicles in Australia, a sad indictment
			

										

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(this is reblogged from the new ussr illustrated, first published August 15 2017)






Toyota Prius




I must say, as a lay person with very little previous understanding of how batteries, photovoltaics or even electricity works, I’m finding the ‘Fully Charged’ and other online videos quite addictive, if incomprehensible in parts, though one thing that’s easy enough to comprehend is that transitional, disruptive technologies that dispense with fossil fuels are being taken up worldwide at an accelerating rate, and that Australia is falling way behind in this, especially at a governmental level, with South Australia being something of an exception. Of course the variation everywhere is enormous – for example, currently, 42% of all new cars sold today in Norway are fully electric – not just hybrids. This compares to about 2% in Britain, according to Fully Charged, and I’d suspect that the percentage is even lower in Oz.


There’s so much to find out about and write about in this field it’s hard to know where to start, so I’m going to limit myself in this post to electric cars and the situation in Australia.


First, as very much a lower middle class individual I want to know about cost, both upfront and ongoing. Now as you may be aware, Australia has basically given up on making its own cars, but we do have some imports worth considering, though we don’t get subsidies for buying them as they do in many other countries, nor do we have that much in the way of supportive infrastructure. Cars range in price from the Tesla Model X SUV, starting from $165,000 (forget it, I hate SUVs anyway), down to the Toyota Prius C and the Honda Jazz, both hybrids, starting at around $23,000. There’s also a ludicrously expensive BMW plug-in hybrid available, as well as the Nissan Leaf, the biggest selling electric car worldwide by a massive margin according to Fully Charged, but probably permanently outside of my price range at $51,000 or so.


I could only afford a bottom of the range hybrid vehicle, so how do hybrids work, and can you run your hybrid mostly on electricity? It seems that for this I would want a (more expensive) plug-in hybrid, as this passage from the Union of Concerned Scientists (USA) points out:


The most advanced hybrids have larger batteries and can recharge their batteries from an outlet, allowing them to drive extended distances on electricity before switching to [petrol] or diesel. Known as “plug-in hybrids,” these cars can offer much-improved environmental performance and increased fuel savings by substituting grid electricity for [petrol].


I could go on about the plug-ins but there’s not much point because there aren’t any available here within my price range. Really, only the Prius, the Honda Jazz and a Toyota Camry Hybrid (just discovered) are possibilities for me. Looking at reviews of the Prius, I find a number of people think it’s ugly but I don’t see it, and I’ve always considered myself a person of taste and discernment, like everyone else. They do tend to agree that it’s very fuel efficient, though lacking in oomph. Fuck oomph, I say. I’m the sort who drives cars reluctantly, and prefers a nice gentle cycle around the suburbs. Extremely fuel efficient, breezy and cheap. I’m indifferent to racing cars and all that shite.




Nissan Leaf




I note that the Prius  has regenerative braking – what the Fully Charged folks call ‘regen’. In fact this is a feature of all EVs and hybrids. I have no idea wtf it is, so I’ll explore it here. The Union of Concerned Scientists again:


Regenerative braking converts some of the energy lost during braking into usable electricity, stored in the batteries.


“Regenerative braking” is another fuel-saving feature. Conventional cars rely entirely on friction brakes to slow down, dissipating the vehicle’s kinetic energy as heat. Regenerative braking allows some of that energy to be captured, turned into electricity, and stored in the batteries. This stored electricity can later be used to run the motor and accelerate the vehicle.


Of course, this doesn’t tell us how the energy is captured and stored, but more of that later. Regenerative braking doesn’t bring the car to a stop by itself, or lock the wheels, so it must be used in conjunction with frictional braking.  This requires drivers to be aware of both braking systems and how they’re combined – sometimes problematic in certain scenarios.


The V useful site How Stuff Works has a full-on post on regen, which I’ll inadequately summarise here. Regen (in cars) is actually celebrating its fiftieth birthday this year, having been first introduced in the Amitron, a car produced by American Motors in 1967. It never went into full-scale production. In conventional braking, the brake pads apply pressure to the brake rotors to the slow the vehicle down. That expends a lot of energy (imagine a large vehicle moving at high speed), not only between the pads and the rotor, but between the wheels and the road. However, regen is a different system altogether. When you hit the brake pedal of an EV (with hand or foot), this system puts the electric motor into reverse, slowing the wheels. By running backwards the motor acts somehow as a generator of electricity, which is then fed into the EV batteries. Here’s how HSW puts it:


One of the more interesting properties of an electric motor is that, when it’s run in one direction, it converts electrical energy into mechanical energy that can be used to perform work (such as turning the wheels of a car), but when the motor is run in the opposite direction, a properly designed motor becomes an electric generator, converting mechanical energy into electrical energy.


I still don’t get it. Anyway, apparently this type of braking system works best in city conditions where you’re stopping and going all the time. The whole system requires complex electronic circuitry which decides when to switch to reverse, and which of the two braking systems to use at any particular time. The best system does this automatically. In a review of a Smart Electric Drive car (I don’t know what that means – is ‘Smart’ a brand name? – is an electric drive different from an electric car??) on Fully Charged, the test driver described its radar-based regen, which connects with the GPS to anticipate, say, a long downhill part of the journey, and in consequence to adjust the regen for maximum efficiency. Ultimately, all this will be handled effectively in fully autonomous vehicles. Can’t wait to borrow one!




Smart Electric Drive, a cute two-seater




I’m still learning all this geeky stuff – never thought I’d be spending an arvo watching cars being test driven and  reviewed.  But these are EVs – don’t I sound the expert – and so the new technologies and their implications for the environment and our future make them much more interesting than the noise and gas-guzzling stink and the macho idiocy I’ve always associated with the infernal combustion engine.


What I have learned, apart from the importance of battery size (in kwh), people’s obsession with range and charge speed, and a little about charging devices, is that there’s real movement in Europe and Britain towards EVs, not to mention storage technology and microgrids and other clean energy developments, which makes me all the more frustrated to live in a country, so naturally endowed to take advantage of clean energy, whose federal government is asleep at the wheel on these matters, when it’s not being defensively scornful about all things renewable. Hopefully I’ll be able to report on positive local initiatives in this area in future, in spite of government inertia.