RESEARCH PAPER SERIES, 2015–16              15 JULY 2015

Income management: a quick guide

Don Arthur

Social Policy Section

Introduction

Income management sets aside (or ‘quarantines’) a proportion of a recipient’s Australia Government income support payment to pay for necessities such as food, clothing, housing and utilities. Recipients can spend their income-managed funds using a PIN protected debit card, known as the BasicsCard, or by arranging for Centrelink to make payments on their behalf (for example, regular rent and utilities payments).

What is income management for?

The objectives of income management are to:

•        reduce immediate hardship and deprivation by directing welfare payments to the priority needs of recipients, their partner, children and any other dependents

•        help affected welfare payment recipients to budget so that they can meet their priority needs

•        reduce the amount of discretionary income available for alcohol, gambling, tobacco and pornography

•        reduce the likelihood that welfare payment recipients will be subject to harassment and abuse in relation to their welfare payments and

•        encourage socially responsible behaviour, particularly in the care and education of children.

Who is placed on income management?

There is no simple answer to the question of who is placed on income management because different rules apply in different places.

Centrelink places people on income management only if they volunteer or meet certain criteria. These criteria are set out in a number of income management ‘measures’. Each measure targets a particular group of income support recipients. As well as having different eligibility criteria, different income management measures quarantine different proportions of a person’s income support payment and have different exemptions and other conditions.

Income management can be voluntary or compulsory. Compulsory measures fall into two main groups: those where people are placed on income management on a case by case basis and those where people are placed because they are members of a category or ‘class’.

The tables below outline how each measure works. Full details on each measure are available in the Guide to Social Security Law.

Case by case measures

Case by case measures are those where a decision maker considers a person’s individual circumstances before referring them for income management. These measures are set out in the table below.

Measure

Details

Guide to Social Security Law reference

Voluntary

Referred by: Individuals can volunteer for income management.

Percentage of payment income managed: 50%

11.7 Voluntary Income Management

Vulnerable
(social worker assessed)

Referred by: State/territory housing authorities, community agencies and others can refer a person to a Centrelink social worker for assessment. According to a measure announced in the 2015–16 Budget, Centrelink social workers will no longer carry out assessments for the Vulnerable measure from 1 July 2015. However, this measure requires legislation and the Bill to enable it is yet to pass the Parliament.

Percentage of payment income managed: 50%

11.4 Vulnerable Welfare Payment Recipients Measure

Child protection

Referred by: State/territory child protection workers.

Percentage of payment income managed: 70%

11.3 Child Protection Measure

Supporting people at risk (NT only)

Referred by: Northern Territory Alcohol Mandatory Treatment Tribunal.

Percentage of payment income managed: 70%

11.9 Supporting People at Risk Measure

Compulsory income management (Cape York only)

Referred by: Family Responsibilities Commission.

Percentage of payment income managed: usually 60%, 75% or 90%

11.2 Cape York Initiative

Membership of a class measures

The membership of a class measures are those where individual circumstances are not considered (unless an individual seeks an exemption). These measures are set out in the table below.

Measure

Details

Guide to Social Security Law reference

Vulnerable
(youth triggers)

Target group: Young people are placed on the Vulnerable measure (unless an exclusion applies) if they:

•        are granted the Unreasonable To Live At Home rate of Youth Allowance, Disability Support Pension (DSP) or ABSTUDY by a Centrelink social worker or

•        are under the age of 16 and are granted Special Benefit by a Centrelink social worker or

•        are under the age of 25 and receive a crisis payment due to prison release.

Under certain circumstances a Centrelink social worker can decide to exclude a person from the Vulnerable measure.

Percentage of payment income managed: 50%

11.4 Vulnerable Welfare Payment Recipients Measure

Disengaged youth
(NT only)

Target group: Young people who are:

•        aged 15 to 24 and have been receiving one of the following payments for three of the last six months:

–      Youth Allowance

–      Newstart Allowance

–      Special Benefit

–      Parenting Payment Partnered or Parenting Payment Single.

Under certain circumstances a recipient may be able to receive an exemption from income management.

Percentage of payment income managed: 50%

11.5 Disengaged Youth Measure

Long term welfare payment recipient
(NT only)

Target group: People who are

•        aged 25 years and above and have been receiving one of the following payments for more than one of the last two years:

–      Youth Allowance

–      Newstart Allowance

–      Special Benefit

–      Parenting Payment Partnered or Parenting Payment Single.

Under certain circumstances a recipient may be able to receive an exemption from income management

Percentage of payment income managed: 50%

11.6 Long-term Welfare Payment Recipients Measure

Where does income management operate and how many people are subject to income management?

Income management operates in a number of locations around Australia. The following table sets out which measures apply in which location, and the number of people subject to income management in each location as at 27 March 2015.

Locations

Measure

No. of people

Cape York Welfare Reform (Queensland)

153 (total)

•        Aurukun

•        Coen

•        Hope Vale

•        Mossman Gorge

Voluntary Income Management

N/A

Conditional Income Management (Cape York only)

N/A

Income management in the Northern Territory

20,655 (total)

•        Entire Northern Territory

Voluntary Income Management

3,524

Vulnerable Measure (Social Worker Referrals)

178

Vulnerable Measure (Youth Trigger)

449

Child Protection Measure

68

Disengaged Youth Measure

4,279

Long Term Welfare Payment Recipient Measure

11,963

Supporting People at Risk

194

Income Management in Western Australia

1,613 (total)

•        Metropolitan Perth

•        Peel region

•        Kimberly region

Voluntary Income Management

1,333

Child Protection Measure

280

Place based income management

2,738 (total)

•        Bankstown (New South Wales)

•        Logan (Queensland)

•        Rockhampton (Queensland)

•        Playford (South Australia)

•        Greater Shepparton (Victoria)

Voluntary Income Management

611

Child Protection Measure and

Vulnerable Measure (Social Worker Referrals)

75

Vulnerable Measure (Youth Trigger)

2,052

Indigenous communities in South Australia and Western Australia

504 (total)

•        APY Lands (South Australia)

•        Ceduna region (South Australia)

•        Ngaanyatjarra Lands including Kiwirrkurra (Western Australia)

•        Laverton (Western Australia)

Voluntary Income Management

435

Child Protection Measure

Vulnerable Measure (Social Worker Referrals) and

Vulnerable Measure (Youth Trigger)*

69

*According to the Department of Social Services, the Vulnerable Measure (Youth Trigger) is available in the Ceduna region but not the APY Lands, Ngaanyatjarra Lands or Laverton. However, the most recently published statistics show no participants under this measure in Ceduna.

Source: Department of Social Services, ‘Income Management Summary Data’, data.gov.au website, 2015.

How income management has developed over time

Income management was first introduced into a number of Northern Territory Indigenous communities in 2007 as part of the Howard Government’s Northern Territory Emergency Response. It was then extended to other locations in stages:

•        2008—Indigenous communities in Cape York as part of the Cape York Welfare Reform trial

•        2008—selected communities in Western Australia as part of a child protection initiative (Income management in Western Australia)

•        2010—extended across the entire Northern Territory as part of New Income Management. The Rudd Government made changes to income management to make it compatible with the Racial Discrimination Act

•        2012—extended to five communities around Australia under a new Place Based Income Management model

•        2012–2103—introduced into the APY Lands in South Australia and then Laverton and the Ngaanyatjarra Lands (including Kiwirrkurra) in Western Australia

•        2014—introduced into the Ceduna region in South Australia.

As shown in the table above, in March 2015 there were 25,663 income support recipients on income management across all locations with 80 per cent (20,655) of participants in the Northern Territory. Outside of the Place Based Income Management sites, the majority of participants are Indigenous.

The BasicsCard

The BasicsCard allows people to spend income managed funds at shops and other businesses. It works in a similar way to bank issued debit cards but does not allow the card holder to access cash.

Not everyone on income management needs to use a BasicsCard. For example, a person who has 50 per cent of their income support payment managed may spend all of this on rent and utilities and rely on their non-income managed funds for food, clothing and other expenses.

Where can people use their BasicsCard?

Not all stores take BasicsCard. To accept payment by BasicsCard a merchant needs to apply to the Department of Human Services. To get approval their main business must be the sale of priority goods and services (for example, food, clothing, education, health).

If a person wants to buy something from a business that does not accept BasicsCard they can arrange for Centrelink to pay the business directly.

What can people buy with BasicsCard?

The BasicsCard can be used to buy any good or service available from an approved merchant except:

•        alcoholic beverages (or home-brew kits or home brew concentrate)

•        tobacco products

•        pornographic material

•        gambling products or services, or

•        Gift cards or vouchers.

Merchants cannot give cash refunds for BasicsCard transactions.

Evaluation reports

The Australian Government has commissioned a number of evaluations of income management. The reports are listed in the table below.

Cape York

Cape York Welfare Reform evaluation: 2012

Implementation review of the Family Responsibilities Commission: final report, September 2010

Family Relationship Commission quarterly and annual reports

Northern Territory

Evaluating New Income Management in the Northern Territory: first evaluation report, November 2014

Evaluation of New Income Management in the Northern Territory: final evaluation report, December 2014

Child protection (WA)

A review of Child Protection Income Management in Western Australia. February 2014

Evaluation of the Child Protection Scheme of Income Management and Voluntary Income Management measures in Western Australia, September 2010

Place based income management

Place Based Income Management: baseline evaluation report, May 2014

Place Based Income Management: process and short term outcomes evaluation, August 2014

The Department of Social Services (DSS) was due to receive a third report in January 2015, with the final report due to DSS in May 2015

Other income management sites

Evaluation of Voluntary Income Management in the Anangu Pitjantjatjara Yankunytjatjara (APY) Lands, September 2014

The evidence from evaluations suggests that income management has had a positive impact on the lives of some individuals and families. People who have volunteered for income management seemed to have benefited most. It is less clear that compulsory participation has been beneficial. The evaluation reports published to date have not provided strong evidence of benefit for those referred under the ‘membership of a class’ measures.

Future directions

The 2015–16 Budget announced a trial of a new approach to income management based on a recommendation of the Indigenous Jobs and Training Review (the Forrest Review). In its report Creating Parity, the Forrest Review recommended introducing a new cashless welfare system based on existing debit card technology.

The Forrest Review’s proposal differs from the current system of income management in a number of ways:

•        the new card would rely on existing debit card technology. Andrew Forrest, the Review’s chair, argues that it would be cheaper than the BasicsCard because it does not require specialised infrastructure such as the dedicated electronic kiosks that allow users to check their balances

•        merchants would not have to opt into the system. Any merchant that accepts Visa and MasterCard with electronic and EFTPOS payment facilities would be able to accept payments made with the new debit card unless they had been excluded and

•        the range of excluded goods may be narrower.

In a submission to the Forrest Review, the Australian Bankers’ Association warned that there were a number of technical challenges involved in its implementation.

The 2015–16 Budget provided funding over three years from 2014-15 to trial of new debit card arrangements in up to three communities. The Budget also announced a two year extension for income management in all existing locations along with a number of minor changes designed to reduce the cost of administering the scheme.

Further reading—Parliamentary Library publications on income management

L Buckmaster, C Ey and M Klapdor, Income management: an overview, Background note, Parliamentary Library, Canberra, 21 June 2012.

L Buckmaster, D Spooner and K Magarey, Income management and the Racial Discrimination Act, Background note, Parliamentary Library, Canberra, 28 May 2012.

L Buckmaster and C Ey, Is income management working?, Background note, Parliamentary Library, Canberra, 5 June 2012.

L Buckmaster, ‘Does income management work?’, Briefing book: key issues for the44th Parliament, Parliamentary Library, Canberra, 2013.

D Arthur, ‘Income management’, Budget review 2015–16, Research paper series, 2014–15, Parliamentary Library, Canberra, 2015.

D Arthur, ‘Where to for income management?’, FlagPost, Parliamentary Library blog, 25 June 2015.

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