A Basic Income for Australia? Exploring Rationale, Design, Distribution and Cost

Abstract

This paper considers the potential for a basic income (BI) or guaranteed minimum income (GMI) scheme for Australia. We examine the proposal for a GMI advocated by the Henderson Poverty Inquiry in 1975. We briefly discusses the rationale for a BI and then focus on work incentive effects, design and financing of a BI in the Australian context. The paper describes and models four options that would move the current Australian system towards a partial or categorical BI, with an innovative approach of financing the BI by a wealth tax to keep the tax rate on earned income relatively low. Such a BI could help ease the effective marginal tax rates that affect families and welfare recipients, and wou..