John Tomlinson argues there should be equality for all, not just the rich. - On Line Opinion - 26/5/2005

Here is an extract from an excellent article.

John Tomlinson argues there should be equality for all, not just the rich. - On Line Opinion - 26/5/2005

The foresight of a blind worm and the hindsight of Mr McGoo

If the Government wants to increase the number of people in the workforce and believes that the differentials in payments between Newstart and disability support pension and parenting payments are causing people to opt for the latter, then there are options more viable than these draconian policies it is implementing. Rather than lowering the rate of payment for disability support pensions and parenting payments, it could raise the level of Newstart to make it commensurate with disability payments. This would combine these payments into a 'guaranteed minimum income' (GMI) as Professor Ronald Henderson, head of the Poverty Commission, suggested in 1975.

If such a GMI were installed, there would be no financial advantage accruing to people wishing to “benefit shop”. Presently, for those on Newstart, the combined income tax and social security withdrawal rates applying to income from work are at least 62.5 per cent and can be up to 200 per cent of additional income. This causes poverty traps and perverse financial disincentives to earning extra income. The Government has announced it will slightly decrease the withdrawal rates in July 2006 - but it will by no means eliminate them.

A far smarter idea would be to introduce a basic income paid to all permanent residents at slightly above the single age pension rate. This would abolish poverty traps, income insecurity and perverse financial disincentives simultaneously."