The Case for A Basic Income for Families with Children in New Zealand

Jess Berentson-ShawTax and Welfare12 Comments

It is amazing what a difference a few miles (and a totally different political paradigm) can make to the vulnerable in society. While in the US life looks like becoming a lot harder for those on low incomes with the possible repeal of Medicare by the new Trump Administration, in Ontario, Canada they are working hard on making life for those without enough a lot better.

In 2017 Ontario is going to start giving free money to the poor via a Basic Income (sometimes called unconditional cash assistance). They are going to observe what happens when those on low or no incomes are given C$1320 per month with no strings attached. Have those Canadians gone mad and thrown all caution to the wind? Don’t they know the poor are poor because they are just no good with money?

Well it turns out the Canadians like facts and they like research and evidence too – and so they use it to inform their social policy. Social policy that they use to try and make Canada a fair and thriving place for all its citizens.

The realities about those living without enough

The realities for those living without enough are thus: current welfare polices have not worked to improve outcomes for those who don’t have enough (not here and not in the US or Canada). I focus on outcomes because, while we can measure incomes and wealth or being off a benefit and use this as an indicator of policy success, it does not tell us if anything has actually improved in terms of quality of life. Because being poor leads to a pretty poor quality of life. Poor health, low educational attainment, reduced earning power, exclusion from feeling connected with the rest of society, poor mental health etc are all experienced at a significantly higher rates by those with fewer resources, including those in New Zealand. If polices don’t improve quality of life for those suffering the most from current economic imbalances, then those policies are a moral and fiscal failure.

Another reality is that the poor are not poor because they make poor decisions. While science shows us that grinding poverty does not lend your brain to optimal development and performance, this is really an effect of poverty related stress not the cause. The poor remain poor, and fail to thrive, because social policies have not worked to right things.

Unconditional money works – just look at superannuation

While we can argue for a long time about what leads to a life with insufficient resources, finding out what works to lift people out of it is a more important and immediate focus for policy. And this is what the Canadians are doing. A basic income has promise in the evidence and in practice so they are going to implement it as part of a series of policy experiments (hopefully high quality ones) and note what works best and what happens to those who receive it in different forms.

We have our own evidence of a basic income working in practice in New Zealand. Just look at universal superannuation: a government policy that has successfully reduced New Zealand’s rates of poverty in the over 65s to equal rates to those in Scandinavian countries. We saw a vulnerable group and a need and we implemented a successful policy based on the idea of providing a basic income.

material

We should be proud of that. While some argue that superannuation is a ‘return for tax paid’ the reality is that the tax paid by older people is long spent by the time they get to 65 on the basics like roads and schools and their healthcare. We should not minimise superannuation by calling it a return on payments made. Rather super is something we do as a ‘Good Society’; we use taxpayer dollars to support a segment of our population during what can be a vulnerable period of their lives.

There are of course questions about exactly how we continue to implement this policy given its ballooning costs (see the figure below as Super rises to near $15billion per year in 2019). But good evidence-based policy undergoes tweaks and adjustments based on societal values, need and costs, so I am confident that in New Zealand, a country that values fairness and transparency so highly, we will get there with Super too.

super

We can and should implement a Basic Income in New Zealand for families with children

So we know how to fix things with a basic income for older people, but in failing to balance this policy for older people with a similar policy for our other vulnerable group (children) we now have a huge gap between the wellbeing of children and older New Zealanders. Such a gap seems out of kilter in a country that prides itself on taking care of each other. Compare the graph below with that on material derivation in people over 65 we showed earlier and you can see than New Zealand social policy has a major imbalance that needs correction.

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A policy correction is necessary if we want to thrive as a country. Investment in the start of life has massive benefits for our society and the individuals in it, benefits that far outweigh the costs over the long term. In doing the good thing we are also doing the economically sound thing.

Will a basic income work for families with children? The evidence says yes. In ‘Money Works’, the book we are releasing next year, we cover in depth the scientific studies and natural experiments showing that a Basic Income provided free from conditions to low income low opportunity families with children works to improve outcomes and ensure they have the opportunity to thrive. It leads to significant improvements in their quality of life: children do better at school, engage in less crime, have fewer mental health episodes and better relationships with their parents. While parents themselves do better as well. It is not a silver bullet, but it has been modelled to halve the gap in multiple outcomes between children on low incomes and other children. This is much more than any other focussed policy intervention (like parenting programmes or food in schools) can achieve. That is not to say we should not do some of those other things that work, but it makes sense to do the thing that works best first.

Why does a basic income work? It is all about relieving stress

The lives of low-income low opportunity families and individuals are stressful, but that stress is unique to each family. However, when we give families more resources and choices via an unconditional cash payment, in the main, they behave like any other family in New Zealand – they do the best they can for their children to make their lives work and it pays off in the long-term.

When we talk about what works for low-income low opportunity families releasing stress is a major part of the puzzle. We can of course provide additional opportunities for low-income families, via work, for example, but the science tells us that if stress is not released or is simply moved to another aspect of their lives, outcomes don’t improve. That is a policy failure. We cannot design people into a policy; we have to design policy for how people actually are.

Unconditional cash assistance is the ultimate multidisciplinary policy tool. We need not know what the particular problems are in a family’s life, or direct them how to behave to achieve improved outcomes. We just need to know that it works.

Should it only be low-income families who get a Basic Income?

Interestingly, data from a Statistics New Zealand study that followed families for 8 years has shown us that more than half of all New Zealand families experience at least one year of very low incomes after having a child. Having a child is what we call an economic stress point in many people’s lives – this is now the reality of modern societies. As such this reality places many children at risk of the poorer outcomes associated with growing up with insufficient resources. Again we come back to what works to mitigate these risks? A reductionist response is to argue that only the wealthy should have children. Along with being quite offensive and having extremely sinister overtones, further delineating society into the haves and have nots simply creates more of the current economic and social imbalance. Such imbalance has not worked out very well for many countries around the world recently in terms of fostering social cohesion, applying principles of fairness or achieving wellbeing for all. Rather correcting the imbalance by using social policies that actually work should be our focus. Evidence tells us that investment in all children in the first five years of life has significant benefits for those children and families, but also the economy. We cover this in further detail in the book too, but certainly there is an excellent case to be made for a basic income for all young families in New Zealand.

A progressive country like ours can implement brave progressive policies that work

Like Canada, we can experiment with our social policy in an ethical and evidenced based way. We need not be lead by assumptions, fears and mean spiritedness. Rather we can look at where we have been progressive, supportive and empathetic to New Zealanders and do more of it to help more people. We need not wait for big earthquakes and natural disasters to show the best and most innovative of ourselves.

The Case for A Basic Income for Families with Children in New Zealand was last modified: November 18th, 2016 by Jess Berentson-Shaw
About the Author

Jess Berentson-Shaw

Dr Jess Berentson-Shaw is a science researcher working for the Morgan Foundation. Jess holds a PhD in Health Psychology from Victoria University. Jess has over 10 years’ experience working on applying science and evidence to public policy. She worked on improving the use of science in public health practice in NZ, before working as a Research Fellow at University College in London, where she researched how doctors and clinicians translate scientific evidence into their clinical practice. While in the UK she also developed a national data collection system, which was used to determine what factors contribute to poor outcomes for women and babies during pregnancy and birth. On her return to New Zealand she directed a research group that specialised in the independent evaluation and application of research and science to health policy and practice. Jess loves science and what it can do to make the world a fairer place.

12 Comments on “The Case for A Basic Income for Families with Children in New Zealand”

  1. I’m in! Let’s have the discussion, let’s have the debate. The notion looks very promising. It values people as human beings, not as units of production.

    It is time for a country-wide forum on UBI and it’s corollaries (such as this idea). Which groups will take the lead?

  2. I have been for UBI for decades – I remember mentioning it to the late Matt Rata in Whangarei around 1990. He did not know about it. Jess makes the case for evidence-based policy discourse – let’s hope that with the total deligimation of neoliberalism since 2008 and Trump, that this is the time to engage NZ citizens in a new nation-building korero. The 2014 Sir Douglas Robb Lectures convinced me, with Wilkonson and Picket’s presentation of their Spirit Level slides..There was just one in which NZ was at the extreme end of the OECD – it was the results of surveys designed to test the internalisation of the “It ain’t the governments role to fix these soc problems”. any advocate of the idea of the public good and commonwealth of nations needs to address this barrier to public policymaking. Truly neoliberal executive activism (eg. ECA in 1990 and RMA “Reform” today) and radical lack of responsiblity for the negative externalities of a weak market regulatory framework makes it a radical force for negative model of globalism. They love to be mislabelled “conservative” – Edmund Burke would;d roll over in his grave. https://www.equalitytrust.org.uk/ Good luck TOP!

  3. All families – that’s important as it removes the stigma – that alone is actually worth quite a bit – studies in countries with generous safety nets find that the stress on unemployed people drops significantly when they reach “retirement age” and go from being an exception to just the same as their peers

    Why have the payment to “Families with Children”? – why not have it to the Children? – it will still have to go to the child’s care-giver but if we call it a child payment it will make it very clear just who it is intended to benefit and will also help children in non standards situations – looked after by grandparents for instance

  4. I love your earthquake analogy because it illustrates how a spectacular calamity typically attracts more attention than gradual decay that is right under our noses and may be more destructive.
    Are you familiar with the book The Fight Against a Jobless Economy and a Citizenless Democracy by Robert McChesney & John Nichols? It paints a picture of job losses of up to 50% in the western world by information technology and artificial intelligence over the next 10 years. Watch https://www.youtube.com/watch?v=JMLESEobnFU If anything like this comes to pass there will be many more “middle class” poor who will need some income support.
    A big rethink of work and income is needed. Christchurch City Councillor Raf Manji puts together the UBI idea with advances in technology. Here he is on Radio NZ this week http://www.radionz.co.nz/national/programmes/afternoons/audio/201823755/is-ubi-an-idea-whose-time-has-come

  5. I would like to recommend as required reading a book by Martin Ford titled Rise of the Robots. A treatise on the effects of increased disconnect between employment and production, the loss of consumer spending as more and more jobs are lost and wages continue to contract. A cogent essay on the need for and justification of a universal basic income.
    I would also suggest that the UBI be universal not just for persons with children.

  6. Well said. In 2011 Analytica estimated that Child Poverty was costing NZ over $8 billion annually; and perhaps 75% avoidable cost. Since then its only got worse. And as far as I can see the Government is totally uninfluenced by evidence based policy options. I hope you can get their attention, we couldn’t. Sec of Treasury told me that having Treasury estimate the costs of child poverty in NZ “wasn’t a priority”.

  7. I am not keen on benefits, however, I do believe strongly in paying a decent wage. It sickens me when i see retirement companies make millions, but they still pay their staff the minimum wage. How about reducing the company tax rate, and then increase the minimum wage. I am ok with trainees getting a slightly less wage while in basic training, and I see that as not being any more than 12 months for some jobs, and even lees time for others. I would also like to see a longer period of time for maternity leave. A parent should be encouraged to stay at home with their child while it is young. At least 12 to 18 months as a minimum. I know families where one or both parents wont dont work very much as it effects there ” working for families”

    1. I take it you did not accept Education for your children, use roads, call the police or use any other “benefits” we provide as a society.

  8. Of course we had a UBI for children, for decades. The universal family benefit, paid to the children’s mother.
    We already have the evidence from that period that it was affordable, effective and kept the majority of children from poverty, just like universal super does for the elderly.
    Unfortunately our Government either does not do “evidence based policy” Or, they are perfectly happy to have people in poverty to meet other goals, such as suppressing wages, or reducing taxes to the top.
    The discussion should be, do we want a UBI, or are we happy to have many in our, very resource rich country, living as if they were born in Somalia

  9. Interesting. Rather than white male privilege dishing out a token UBI why not have universal basic housing, universal basic job universal basic freedom from state intervention universal basic access to all health services and universal basic access to a number of paid lawyers hours per year, or better still remove the legal profession and have lay carers, like we do in hospitals, rest homes, charities, women’s refuge, homecare etc. Jess loves research that keeps researchers paid and undergraduates to supervise and more people’s lives to control. What more evidence than Maslow do we need?

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