Key issue
Both Income Management and the Cashless Debit Card (CDC) set aside a proportion of a welfare recipients’ income support payments and attempt to stop recipients from spending it on restricted goods such as alcohol. This is intended to make more money available for spending on essential goods.
The incoming Labor Government has committed to deliver on its election promise to abolish the Cashless Debit Card. However, the ‘voluntary measure’ which the Government has stated will replace the controversial program has not yet been specified, and the question of the future of Income Management arrangements is yet to be addressed.
Just one day after the publication of an Australian
National Audit Office (ANAO) report on 2 June 2022 that reaffirmed the
Auditor General’s view that evaluations of the Cashless
Debit Card (CDC) program failed to provide evidence that it was effective,
incoming Social Services Minister, Amanda Rishworth announced
that she was in the process of being briefed by her department on how the
program could be terminated. The ANAO
report, which followed up on a July
2018 report on the same topic, did not recommend that the Government abolish the
CDC, but instead that it improve its evaluation measures (p. 10). However, the Australian
Labor Party (ALP) committed
to scrapping the CDC as part of its election platform.
In her media release announcing discussions on terminating the CDC, Minister Rishworth
stated that she would be ‘working with local communities on better local
solutions’, presumably to the problems the CDC was originally intended to
address- namely, harms associated with alcohol and drug abuse, and the insufficient
allocation of funds to essentials such as food, clothing and housing. Proponents
of the CDC claimed that these problems are associated with ‘welfare
dependence’, necessitating
controls on how individuals receiving welfare spend their payments. Minister
Rishworth subsequently
stated that a ‘voluntary measure’
will be maintained where the CDC was in place ‘if communities want it’. She spoke further of a ‘transition’ and the need to put supports in place for the
communities affected by the abolition of the CDC.
While the CDC has dominated media coverage as well
as public and political discussion in recent years, it is not the only program that
restricts how welfare recipients can spend their welfare payments. The future of
Income Management, which operates in a similar way to the CDC, is more
uncertain, as the ALP has not voiced any specific plans to change or abolish the
scheme.
Income Management: a brief overview
The term Income Management refers to a scheme where
a
portion of a welfare payment is restricted so that it can only be spent on
essential goods such as food, clothing and housing, rather than restricted
goods such as alcohol. The CDC, described in more detail below, is a program
administered via a card which sets aside funds for that purpose. While the CDC
and Income Management are separate schemes that seek to achieve similar ends,
comments from the previous government indicated that they considered
them both to be forms of ‘income management’, broadly defined.
Income Management is a more complex scheme than the CDC program. It is structured
around a series of ‘measures’. Each measure applies to a particular group of
income support recipients, for example, long
term and disengaged youth, vulnerable
welfare payment recipients or those
subject to child protection orders. Each measure also operates in particular
income management locations and applies to a particular percentage of a
person’s income support payments. Income Management in the Northern Territory was
initially administered through a mishmash
of existing card platforms and other payment methods (pp. 3–4), and from
July 2008 via the BasicsCard. The BasicsCard, which prevented
the purchase of alcohol, tobacco, illegal drugs, pornography, or gambling
products or services, then became the fundamental platform for Income Management,
although participants can also choose to have a portion
of their payments directly debited to pay for essentials such as rent.
The scheme has developed since
its introduction in 2007 as part of the Northern Territory Emergency
Response, with successive governments
adding new locations and measures. The 2 earliest locations were the Northern Territory (2007) and Cape York
(2008). In the Northern Territory, Income Management was applied to entire categories of people receiving income support, while in Cape York,
conditional Income Management was applied to individuals on a case-by-case basis. Most Income Management arrangements were put in
place before the CDC trial commenced.
Additional Income Management
sites fall into 3 categories:
Income Management has been replaced with the CDC in
Cape York, and the Government has encouraged
Income Management participants in the Northern Territory to voluntarily transfer to the CDC. Income Management operated in Ceduna (SA) before it was
replaced by the CDC.
From the BasicsCard to the Cashless Debit Card: an
incomplete transition
The CDC is a program administered via a
card that blocks the purchase of alcohol
and gambling products (but not pornography or tobacco like the BasicsCard) and
allows
only 20% of payments to be withdrawn as cash (which also inhibits the user’s
ability to purchase illegal drugs). It operates under its
own legislative framework and was rolled out in various ‘trial sites’ in
line with the evaluative nature of the program’s objects.
The CDC is easier to administer than the
BasicsCard, as the latter
requires the Department of Social Services to approve merchants with which
cardholders can then make purchases (specifically, merchants who do not sell
restricted items such as alcohol and gambling products), while the former
enables the blocking of categories of merchants who sell restricted goods. The
CDC also looks
more like a normal debit card than the BasicsCard, which clearly
identifies the user as someone subject to Income Management, potentially making
them feel stigmatised (p. 102).
The CDC program was first rolled out in Ceduna,
South Australia in March
2016. It was subsequently expanded to trial
sites in the East
Kimberley and Goldfields
regions of Western Australia, and the Bundaberg-Hervey
Bay region in Queensland (the boundaries of the federal electorate of
Hinkler), none of which previously had Income Management arrangements in place.
The Morrison Government also planned
to replace the BasicsCard in the Northern Territory and Cape York with the CDC.
As with Income Management sites, not all CDC trials
applied to the same groups of people in the same way. For example, the trial
in Bundaberg-Hervey Bay is only compulsory for those 35 years of age or younger,
whereas the other trials apply
to those receiving restrictable payments regardless of age (p. 18).
As the CDC trials progressed, the Coalition expressed
its intention to make the CDC the ‘universal platform’ for restricting welfare
payments. While these comments suggested that the BasicsCard would be
compulsorily phased out, it was subsequently
announced that the transition to the CDC in the Northern Territory and Cape
York would be voluntary, meaning that both platforms would, at least for some
time, function concurrently in these locations. However, Income Management in
Cape York expired
on 1 January 2022, triggering a transition
to the CDC on 17 March 2021. Both the CDC and Income Management are operating
concurrently in the Northern Territory.
What options does the Government have regarding income
management?
As outlined above, the CDC and Income Management
are both currently in place in various locations across Australia, in some
cases alongside each other. As at May 2022, a total of 24,888
people had an active BasicsCard, representing most individuals on Income Management,
and 17,432
were on the CDC. CDC and Income Management operate under different parts of
the Social
Security (Administration) Act 1999, and therefore changes to one set of
arrangements will not have an automatic effect on the other.
The CDC program is legislated
to expire on 31 December 2022. To act on its commitment to abolish the
CDC the Albanese Government could simply wait to let it expire, or abolish it in
the intervening period via amendment to the Social Security
(Administration) Act 1999. It cannot be immediately terminated
by the minister. As the Government has indicated that a program with similar
objectives to the CDC will remain for those communities that want it, an orderly
timeline for the transition to another program will likely be necessary. Relevantly,
subsection
124PF(2) of the Social Security (Administration Act) 1999 allows the
minister to ‘make rules
prescribing matters of a transitional nature’ in relation to the sunsetting of
the CDC.
The Government has not provided any detail on what
replacement ‘voluntary measure[s]’ will look like, but has indicated
that it will consult with the communities that are subject to the CDC.
Questions remain concerning how Income Management
arrangements will be dealt with moving forward. The Government’s statements
have been explicitly limited to the CDC, which it has committed to replace with
measures that are ‘voluntary’. However, Income Management arrangements are
mostly compulsory.
Income Management in Cape York is administered by
the Family
Responsibilities Commission, which was established by and operates under Queensland
Government legislation. As Income Management participants in the Cape have
fully transitioned to the CDC, the Australian Government would have to work
with the state-based commission to put a ‘voluntary’ replacement program in
place there.
As noted above, in the Northern Territory both the CDC
and Income Management are in place. If the CDC is abolished, the original Income
Management arrangements administered via the BasicsCard would remain for those
who did not transition to the CDC. Income Management in Western Australia and Place
Based Income Management would also remain in place (including in the Kimberley,
where both the CDC and Income Management are in place). The Government will
have to decide whether to end some or all of these Income Management
arrangements by revoking the relevant legislative instruments, maintaining them as
they are, or transitioning to something different. It must also decide whether
those who voluntarily signed up to Income Management will be treated the same
way as compulsory participants.
Whatever action the minister takes regarding Income
Management, the power to reinstate or modify these arrangements, or to establish
new ones, will remain in the Social Security (Administration) Act 1999, posing
a separate question for the Parliament as to whether this power should be
modified, replaced, or repealed entirely.
Further reading
Don Arthur, Income Management: a Quick Guide, Research paper series, 2015–16, (Canberra: Parliamentary Library, July 2015).
Don Arthur, ‘Cashless Debit Card and Income Management’, Budget Review 2021–2022, Research paper, 2020–21, (Canberra: Parliamentary Library, May 2021).
Australian National Audit Office (ANAO), Implementation and Performance of the Cashless Debit Card Trial- Follow-On, Auditor-General Report, 29, 2021–2022, (Canberra: ANAO, 2022).