19 Jul 2017

Gareth Morgan defends unconditional income policy

10:04 am on 19 July 2017

Video: Giving young New Zealanders $200 a week each would help them get into the workforce, The Opportunities Party leader Gareth Morgan says.

Watch Gareth Morgan and Max Rashbrooke on Morning Report:

The party wants to give the unconditional basic income (UBI) - equivalent to $10,000 per year - to New Zealand citizens and allow them to spend it however they choose.

Mr Morgan told Morning Report that for people who lost more in benefit payments than they could get in work, a basic income increased their ability to participate in the labour force.

"The cost of doing work for a lot of these people in these low wage jobs far exceeds the benefits they're getting from low paid work so it helps labour force participation because it covers some of the costs."

If the unconditional basic income was set higher, for example around the minimum wage, there was a "moral hazard" that people would not want to work.

He said the cost of the policy would be $2.5 billion, with two of that coming from cancelling planned tax cuts and $500,000 coming from ongoing budget surplus.

Inequality researcher Max Rashbrooke said a universal income that provided a decent life would be expensive and the tradeoff was to pay it at a lower level such as the $200 a week.

He said a guaranteed minimum income, gradually removed as earnings increased, would be more effective.