Income management: a quick guide

15 July 2015

PDF version [331KB]

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
Aurukun Coen Hope Vale Mossman Gorge	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
Metropolitan Perth Peel region Kimberly region	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.