Universal Basic Income

April 2021

The 2020 Programme for Government includes a commitment to deliver a universal basic income (UBI) pilot “in the lifetime of the Government”. An architect of the Green Party’s UBI policy, Neasa Hourigan TD explores the concept which could transform social welfare.

The idea of universal basic income has been gaining significant traction over recent years. Its advocates range from Pope Francis to President Micheal D Higgins and to NGOs such as Social Justice Ireland.^{1 2} But what is it and what would it do? Well in simplified terms it would comprise a fixed, regular sum of money being paid to every resident in the country. It is seen as a means to tackle the inherent economic inequality in our society and provide those participating in vital societal functions that are often neglected (such as caring for a loved one) with a means to support themselves.

UBI has been a core belief of the Green Party for the last 30 years and the party managed to secure a commitment in the Programme for Government for a UBI pilot during the lifetime of this government. It sits alongside a suite of universal supports that include the provision of public housing and universal healthcare. Green Party Deputy Leader and Minister for the Arts, Catherine Martin TD, has since been working on extending this pilot to creatives and those working in the arts and this is likely to happen in the near future.

What is universal basic income?

But what is UBI? Why do it and how would it work? Firstly UBI is a well-established Green Party policy.³ UBI would operate as a standard payment to every individual that is resident in the State without reference to your means or ability/availability for employment i.e. you would not have to prove that you are ready to work to receive the payment. You would be able to choose how you spend the payment however you wish. It would not be means tested and would not increase or decrease as your income changed. Under Green Party policy, UBI would be paid to all legal, permanent residents of the State. Those under the age of 18 would receive a universal child allowance payment and those reaching retirement age would move to a universal basic income pension payment.

The Green Party believes UBI would lead to lower rates of poverty and help ensure that all members of our society enjoy a decent quality of life. It would help to begin the process of decoupling social function from employment. So, whether you are experiencing a phase of unemployment, volunteering, caring for a child or an elderly parent, it would give you a secure income. The concept supports the principles of sustainable development where the right to a humane standard of living is untethered from relentless growth in consumer production.

Would I lose out?

Understandably, with such systemic changes to our social protection system, those on lower incomes may fear they will lose out. And while the introduction of UBI would see the replacement of a number of current social protection payments such as the Old Age Pension, Unemployment Benefit and Children’s Allowance, we seek to ensure a system where everyone is better off under UBI and those receiving additional social protection payments will continue to receive them. As mentioned above, those under the age of 18 would receive a Universal Child Allowance payment and those reaching the retirement age would move automatically to a universal basic income pension payment.

Under the Green Party’s model all Child Dependent allowances would also continue. Other entitlements such as medical cards would not change and the same terms and conditions as currently applied would continue to do so. We would also work with carers and those in receipt of payments such as the Blind Pension to optimise their financial outcomes.

How much does it cost and how would we pay for it?

Under Green Party policy, to pay every resident in Ireland the rates we have proposed would cost about €6.5 billion each year. While this is an estimated cost and will need further investigation as part of any proposed trial, to put this figure into context, the total social protection expenditure in Budget 2021 was €25.1 billion, and €3.1 billion of this was Covid-19 related spending.⁴

We would help pay for all of this by raising money through a number of different taxes. There have been studies in the United States that have set out to calculate a budget-neutral UBI and the Green Party policy itself provides for the discontinuation of a number of current social protection payments (and almost all means tested payments) which would provide significant savings in the administration of the social protection system.^{5 6}

Has it been tried before?

Yes! UBI pilots have been trialled in a number of countries including Finland, Germany, Kenya and Canada.⁷ A trial in Finland was conducted over a two-year period with over 2,000 people receiving a payment of €560 a month regardless of whether they were employed, seeking work or not seeking work.⁸ It found that UBI improved wellbeing, with participants more satisfied with their lives and experienced less mental health strain, depression, sadness and loneliness.⁹ These trials also found little evidence to substantiate the frequent criticism of UBI by business and employer confederations that unconditional payments would result in labour supply shortages. The evidence of the trials to date have found that payments have little effect on a person’s willingness to work.¹⁰

What is being done and what happens next?

The Programme for Government contained a commitment to have the Low Pay Commission examine UBI and to initiate a pilot within the lifetime of this Government.¹¹ The huge levels of government support that has attempted to sustain the businesses and workers hit hardest by the current Covid-19 pandemic has proved that mass payments are feasible. The Arts Council has proposed to government that the pilot should be aimed at creatives and those working in the arts. This is a group of people who were among the first to be impacted by the pandemic when our art and cultural events were forced to close their doors over a year ago, and unfortunately this is also the group of people likely to be affected long-term.

Minister for the Arts, Catherine Martin TD is now working to introduce a UBI pilot for creatives and those in the arts, and indeed this was independently recommended in the Report of the Arts and Culture Recovery Taskforce last November.¹²

“Our new normal recognises that everyone deserves a minimum standard of living and that the State can and should play a role in that.”

Neasa Hourigan TD

As Minister Martin recently mentioned in an op-ed, many creatives are freelance and move frequently between self-employment, PAYE employment and periods of little or no employment at all.¹³ This fact coupled with the devastating affects the Covid-19 pandemic has had on the creative industry makes this group a useful test for UBI and would help mitigate some of the precariousness of the sector’s future.

To date, Minister Martin has met with the Low Pay Commission to discuss the options for progressing a pilot and her officials are engaging with other relevant government departments including the Department of Enterprise, Trade and Employment, the Department of Social Protection and the Department of Finance. Currently we await the Low Pay Commission to complete an examination and analysis of UBI pilots in other countries before progressing to considerations on how best we can develop and implement a UBI pilot within the lifetime of the Government.¹⁴

Conclusion

Up until now there has been a real resistance to the idea that our current taxation system and economic model could support a UBI system. But the Covid-19 pandemic has refocused the minds of many towards the health, wealth and well-being of our communities and UBI provides an interesting route forward. Through pensions and child allowance we already recognise the value of a universal safety net for everyone. UBI would replace a number of social welfare payments and would be a new way of providing a social safety net.

UBI would help to address poverty and economic inequality, but it would not necessarily promise to eradicate either. In the grander scheme of things, we must move towards a circular economy i.e. a regenerative system in which resource input and waste are minimised by narrowing and closing energy and material loops. UBI is part of the evolution of this system. But during this current Covid-19 pandemic, UBI has never been more important and viable as a policy position.

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