APPENDIX 12
Memorandum submitted by the Citizen's
Income Trust (CP 10) Promoting a Citizens Income Support Scheme:
Creating Community Benefit
1. THE VALUES
OF A
CISS
A new framework, which dismantles the idea of
the contributory principle, is proposed. The framework focuses
on the implementation of a Citizens Income Support Scheme, which
tackles the, sometimes conflicting, tactics of social and economic
policies and practices towards social cohesion. A CiSS is an income
support system unconditionally granted to all on an individual
basis, without means test or work requirement. It is a form of
minimum income guarantee that differs from those that already
exist because it is paid:
1. to individuals rather than households;
2. irrespective of any income from other
sources; and
3. without requiring the performance of any
work or the willingness to accept a job offered.
Promoting a system of social cohesion is the
first and foremost social duty of a government, although economic
benefits may flow from it. One way of describing the ways in which
social cohesion may appear as "Agenda" for government
is illustrated below:
Agenda for Social Cohesion
Commitment
| Shallow
| Deep |
|
| Broad |
TokenStrategic |
| Focus | |
|
| Narrow |
ShortConvergent |
|
Therefore, social cohesion implies:
1.1 Equal Chance. Everyone has the same chance.
Although, all citizens may be formally the same, this does not
mean that some will not encounter informal barriers, which because
of some characteristics prevent them from taking their equal chance.
1.2 Equal Access. Equal chance operates effectively
to the extent that under-represented groups are not prevented
from gaining access to social support at the first hurdle. This
will enable them to seek their equal share.
1.3 Equal Share. This is the ideal, which a CiSS,
aims to secure. Not only is accessing social support and representation
gained, there is participation at all levels.
2. A REVIEW FOR
REFORM
Society seems to be immune to the need for social reform
to accompany economic reform. Also, society accepts increasing
inequities in income distribution, continuing high levels of unemployment
exacerbated by so-called early retirements through retrenchment,
and creation of a new social class without hope. This is a pressing
time for social reform, which needs to counter the ill-effects
of economic reform. Yet, there is limited political desire to
consider such reform. Therefore, there needs to be social advocacy,
economic provision, and political leverage for some significant
change to our system of income support and redistribution to help
offset the income distribution changes arising from economic reform.
3. MEETING CHANGE
The political environment has changed. The social and economic
environments have changed too. Emphasis must be placed on the
future, ie on the role of a universal income support system in
a new social and economic environment. This is the promotion of
one single proposal to help solve a range of social problems—without
repetition.
4. TOWARDS A CITIZENS'
INCOME SUPPORT
SCHEME (CISS)
4.1 A Means to an End: A CiSS in various guises
has been under consideration for a number of years. It was suggested,
by Cole and Mead, in Oxford in the 1930's. The concept was given
upheld by Milton Friedman, with his principle of Negative Income
Tax, and Lady Rhys-Williams, with her proposal for a Social Dividend,
in the 1940's. In all these proposals the nature of the income
support was qualified by being directly or indirectly subject
to means test. Negative income tax, for example, is directly subject
to means test, ie the level of income support (negative income
tax) is determined after assessment of personal income. The social
dividend proposal, on the other hand, envisages payment to all,
but the income support is clawed back from those not in need through
the taxation system. The income support is indirectly subject
to means test through the income tax system, and requires very
high rates of income tax to feed the scheme.
4.2 Weaknesses: This awareness of the inherent
weakness of means testing income support led to studies into the
viability and practicability of delivering universal income support,
free of means test. Non means tested CiSS, at a level sufficient
to provide a basic standard of living, would be enormously expensive
if it were to replace social welfare transfer payments and be
additional to existing personal income. Such a proposal would
be financially and politically unacceptable. However, there is
an obvious need to develop proposals, which could be financially
viable and administratively practical.
4.3 Options
4.3.1 Partial CiSS: Two such proposals were developed.
These are based on two quite separate approaches. In the UK, a
proposal has been developed by the Citizens Income Research Group
(CiRG), for a partial universal income, ie a universal income
less than sufficient to provide a basic standard of living, but
one which would be financially viable without very high rates
of income tax. Alhtough, it would require some topping up in the
early years, it is envisaged it could grow to a realistic level.
This proposal would be administratively simple to introduce, and
has received support in Europe through the Basic Income European
Network (BIEN).
4.3.2 Replacement CiSS: In Australia a proposal
for a CiSS free of means test, and at a level which would provide
a basic standard of living without high income tax rates has been
developed. In this proposal an additional principle was introducted—the
principle that the support income is to be a replacement for part
or all of present income, both personal and transfer income, and
not additional to existing personal income.
5. THE FEATURES
OF AN
ADVANCED CISS
Incorporation of this principle may lead to greater administrative
complexity, but the principle has three quite distinct features
which are relevant to today's economic and social environment.
5.1 First, it retains to a large extent the existing
relationships between the levels of personal and transfer incomes
eg the current relationship between the single social security
pension rate and average weekly earnings.
5.2 Second, it enables savings in labour costs, including
on-costs, which accrue from the reductions in earned incomes to
help offset the overall costs of the support incomes.
5.3 Third, it enables the support income to be seen as
a replcement for income foregone. All people in receipt of income,
both personal and transfer income, will have a reduction of income
in exchange for receipt of the support income, thus creating a
right to receive the income.
5.4 The existing attitude that one person's welfare benefit
is another person's income tax should disappear. People may also
elect not to seek additional income from employment without creating
any additional cost to the community. The concept of the "dole-scrounger"
should disappear.
5.5 Inhibitors: There seem to be two requirements
that inhibit or prevent innovation and implementation of a CiSS.
5.5.1 First, changes must be subject to evaluation via
some form of economic modelling.
5.5.2 Second, the reasons for our relucatance to consider
an alternate system of income support must lie far deeper than
just a basic resistance to change.
5.6 Resistance: There tends to be a strong resistance
to move away from, what is perceived as, a sound and comprehensive
system based on targeting and means testing despite its obvious
weakness in dealing with the social problems arising from continuing
high levels of unemployment and the reality of an ageing population.
And there are those in the community who are or who should be
most concerned with the social effects of our current economic
and technological environment who are not prepared to consider
moving to a system more in turn with present day needs.
6. SOCIAL AND
ECONOMIC VALUES
A CiSS engages social values such as equity and equality
promoting today's economic values of equal share; equal chance
and equal access. In the area of industrial relations these changes
in social values are most apparent in dealing with the issues
of entrenched unemployment and underemployment.
6.1 Employers too have responsibility for their employees.
There are certain responsibilities laid down in legislation or
regulations. For example, an employer must provide a safe working
environment free of discrimination, and must comply with specific
health and safety regulations, which may vary from industry to
industry. There are statutory minimum standards, and employers
who cannot comply with these standards will ultimately be unable
to employ labour. This is similar with wages and employment conditions:
there are minimum standards set down in industrial awards or agreements,
and employers must comply with these standards or ultimately be
unable to employ labour.
6.2 Government decisions tend to be driven by economic
principles and practices—not by social considerations. With
government seeking certain outcomes the bargaining process is
in favour of employers. A CiSS, free of means test, would have
a significant effect on the bargaining process, allowing government
to achieve its objectives of higher economic growth and lower
unemployment without the confrontationalist approach now being
adopted.
6.21 First, it would help to level the playing field
for the bargaining process by providing greater financial security
for employees throughout their lifetime. This individual security
would help to compensate for the loss of collective support from
trade unions or fellow workers.
6.22 Second, it would remove the need for reducing labour
costs to increase employment. As the introduction of a CiSS would
encourage greater sharing of the available work through wider
acceptance of more flexible part time and casual employment.
6.23 Third, it would help redefine the obligation of
employers by placing more emphasis on employee relationships.
It would help move towards the obligation of pastoral care.
6.3 Therefore, the implementation of a CiSS is a system
of social and economic values. However, this does not reflect
the views and attitudes of the main players in this area—the
social profession (ie the social work and social policy academics
and practitioners), labour market and social economists. Government
is concerned over the extent of poverty and social cohesion. Social
security reviews tend to look at symptoms not causes. The social
profession is now committed to the outcomes—continuing unemployment,
continuing income inequality, continuing poverty and social isolation.
They battle to ensure sufficient funds are allocated to help relieve
some of the deficiencies, and to target and means test for financial
support.
6.4 Economists tend to reject a CiSS. Economists accept
means tested income support for the aged, the infirm, and the
disadvantaged. However, in relation to the able-bodied, the unemployed,
there is not the same professional latitude. Economic theory accepts
that in the labour market there must be some unemployment. Economic
theory also requires a labour market without impediments—and
a CiSS could be seen as an impediment to a free market, in much
the same way as prescribed minimum standards and values in a regulated
market. These are economic imperatives—unemployment as an
economic tool, and a deregulated labour market—which must
be accepted in principle by all economists. It is argued that
there is a case for economists to move outside these two principles.
Adherence to these economic priniples also means there is a minimum
rate of unemployment below which the rate cannot fall. This is
the natural rate of unemployment: which could be between 5.5 and
7 per cent under a CiSS, lower than estimates by many other economists
who suggest it could be over 8 per cent. If this is the best that
can be provided by free market forces, then it is also the best
that political policy making can provide. No political party can
have as an objective an unemployment rate lower than the natural
rate. With this as their best, there surely is a case for further
reform.
7. CONFRONTING THE
TASK OF
WELFARE REGENERATION
There is a case for further reform, which extends beyond
economic reform to social reform. There is a case for greater
sharing of work, and this opens the way for consideration of a
CiSS. CiSS is a proposal, which extends beyond the boundaries
of rigid economic theory, and a proposal, which extends beyond
the boundaries of means tested income support. A programme of
promotion, guidance and action, which has an explicit focus on
countering cohesion through social and economic measures seems
a possibility. Social and economic policy can no longer be conceived
separately, and the CiSS is increasingly viewed as the only way
of reconciling the objectives of poverty relief and full employment.
There is a clear need for an understanding of how policy agenda's
about cohesion and related issues are formed and the possibilities
for change through the development, promotion and implementation
of a CiSS are realised.
12 May 1999
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