Chapter 2Background
2.1This chapter sets out the background to policies and legislation which have provided for compulsory income management in Australia.
2.2Compulsory income management refers to the compulsory quarantining of a portion of a person’s social welfare payments to a bank card, which will prevent the quarantined funds from being used to purchase certain classes of goods and services. It has existed in various forms in Australia since 2007.
2.3Section 243AA of the Social Security (Administration) Act 1999 requires the committee to examine the human rights compatibility of income management (and enhanced income management) on an ongoing basis. This being the first such inquiry, it is instructive to set out the legislative history of (and the corresponding inquiries and evaluations completed regarding) compulsory income management measures in assessing the human rights compatibility of the current framework. This chapter also outlines this committee’s consideration of legislation relating to income management since 2012.
Iterations of Income Management
NTER income management
2.4Income management was first legislated for in 2007, pursuant to the Social Security and Other Legislation Amendment (Welfare Payment Reform) Act 2007, as part of a policy known as the ‘Northern Territory National Emergency Response’ (NTER). This inserted new Part 3B into the Social Security (Administration) Act 1999, which provided that a person receiving certain social welfare payments may be subject to income management where they were: living in a declared area of the Northern Territory; where concerns had arisen in relation to child protection or school enrolment or attendance; or where they were required to participate by the Queensland Commission. For those persons in the Northern Territory, income management applied to people who received income support payments and who lived in one of 73 prescribed Indigenous communities, their associated outstations, or the 10 town camp regions. The legislation contained provisions that limited the application of (effectively suspending) the Racial Discrimination Act 1975 (Racial Discrimination Act) and Northern Territory and Queensland anti-discrimination legislation.
2.5The portion of a person’s social welfare payment which was income managed was quarantined to a bank card called the ‘BasicsCard’. The BasicsCard allowed people to spend income managed funds at certain businesses, and did not allow the card holder to withdraw the funds as cash. In 2008, further trials of income management were rolled out in Cape York and selected areas in Western Australia.
2.6NTER income management operated until August 2010. At this time there were 16 726 income support recipients on NTER Income Management.
New Income Management
2.7In 2010, the Social Security and Other Legislation Amendment (Welfare Reform and Reinstatement of the Racial Discrimination Act) Act 2010 amended the income management scheme. In particular, it extended income management to the entire Northern Territory (not just prescribed Indigenous communities), and repealed the provisions limiting the application of the Racial Discrimination Act.
2.8New income management applied to people deemed to be at risk due to receipt of particular welfare payments for specified periods of time, including:
‘Disengaged Youth measure’ (people aged 15-24 years who had been receiving one of the following payments for three out of six months: Youth Allowance; Newstart Allowance; Special Benefit; or Parenting Payment Partnered or Single); and
‘Long-term Welfare Payment Recipients measure’ (people aged 25 years and older who had been receiving one of the following payments for more than one year (within the previous two years: Youth Allowance; Newstart Allowance; Special Benefit; or Parenting Payment Partnered or Single)).
2.9People referred for income management by child protection authorities; and people assessed by Centrelink social workers as vulnerable to financial problems could also be subject to compulsory income management.
Stronger Futures
2.10In 2012, the legislation providing for the Northern Territory National Emergency Response was repealed and replaced with a package of legislation known as ‘Stronger Futures’. This legislation extended income management beyond the NT, enabling income management referrals from a range of state and territory authorities. The scheme was extended to five locations across Australia: Bankstown (NSW); Greater Shepparton (VIC); Rockhampton and Logan (QLD); and Playford (SA). Between 2012 and 2014, income management was further extended to Anangu Pitjantjatjara Yankunytjatjara Lands and Ceduna in South Australia, and Laverton and Ngaanyatjarra lands in Western Australia. In 2015, Child Protection Income Management and Voluntary Income Management was expanded in the Greater Adelaide region of South Australia. In 2017, the Social Services Legislation Amendment (Queensland Commission Income Management Regime) Act 2017 enabled income management to continue in Cape York and Doomadgee for a further two years, until 30 June 2019.
2.11Eligibility for compulsory income management at this time varied depending on where a person resided. In the NT, a person on social welfare could be subject to compulsory income management following an individual assessment and referral to income management by a Centrelink social worker, child protection worker, or the Northern Territory Alcohol Mandatory Treatment Tribunal. Other people in the NT were subject to compulsory income management because they were members of a category or ‘class’:
‘Long-term welfare payment recipients’;
‘Disengaged youth’; or
‘Automatic vulnerable income management for young people’.
2.12While compulsory income management applied to 15 locations outside of the NT at that time, only the NT program primarily involved people subject to income management because of the length of time they had been receiving benefits (long-term welfare recipients and disengaged youth).
2.13At this time, approximately 90 percent of people subject to income management in the NT were Indigenous (and around 60 per cent were female). It was estimated that just over one-third of the total Indigenous population was subject to income management. Around 78 per cent of all people on income management were on compulsory income management.
2.14Part 3B income management provides that between 50 and 70 per cent of a person’s social security payments are quarantined to the restricted ‘BasicsCard’.
The Cashless Debit Card Trial
2.15In 2015, the Social Security Legislation Amendment (Debit Card Trial) Act 2015 provided for a trial of the Cashless Debit Card (CDC) from 2016 to 30 June 2018 in three locations. Those locations were subsequently determined (by legislative instrument) to be Ceduna, Wyndham, and Kununurra/East Kimberley (WA). When compared with the BasicsCard, the CDC could be used at a wider range of merchants and tobacco purchase was permitted. A higher proportion of a person’s income support, 80 per cent, was quarantined.
2.16From 2018, the Social Services Legislation Amendment (Cashless Debit Card Trial Expansion) Act 2018 increased the total number of trial participants overall, and expanded to the CDC trial to the Goldfields region (WA), and the Bundaberg and Hervey Bay region. In the initial three sites, the program applied to all persons on working age income support payments. In Bundaberg and Hervey Bay it applied to those aged 35 years and under on Parenting Payment, JobSeeker Payment and Youth Allowance (Job seeker).
2.17In April 2019, the Social Security (Administration) Amendment (Income Management and Cashless Welfare) Act 2019 extended the operation of the cashless debit card trial in three sites, and the income management program in Cape York, to 30 June 2020.
2.18In September 2019, further legislation was introduced to extend the end date for existing cashless debit card trial areas to 30 June 2021, establish an end date for the CDC trial in the Cape York area of 31 December 2021, and remove the cap on the number of trial participants. This legislation did not pass into law.
2.19The operation of the CDC trial (and the Cape York income management scheme) was subsequently extended to 31 December 2020 by delegated legislation made in the context of the COVID-19 pandemic.
2.20In December 2020, the Social Security (Administration) Amendment (Continuation of Cashless Welfare) Act 2020 then extended the operation of the CDC trial to 31 December 2022.
2.21In 2022 (following a change in government), the Social Security (Administration) Amendment (Repeal of Cashless Debit Card and Other Measures) Act 2022 abolished the CDC program and transitioned certain individuals to the income management regime under Part 3B of the Social Security (Administration) Act 1999. The Act also provided that persons in Cape York may be required to transition from the CDC program to income management if the Queensland Family Responsibilities Commission required them to. All persons in the Northern Territory who had been subject to the CDC were subsequently transferred back to the income management BasicsCard.
Enhanced income management
2.22The Social Security (Administration) Amendment (Repeal of Cashless Debit Card and Other Measures) Bill 2022was subject to significant amendment in the Senate before it finally passed the Parliament. These amendments included introducing a new Part 3AA into the Social Security (Administration) Act 1999 to provide for an ‘Enhanced’ income management regime for some social welfare payment recipients.
2.23The Social Security (Administration) Amendment (Income Management Reform) Act2023 then expanded the enhanced income management regime to include all of the eligibility measures that were in place under Part 3B. The explanatory materials accompanying this legislation stated that this was to give people subject to the Part 3B regime the choice to move to the enhanced regime, and to direct all new entrants to the enhanced regime ‘while further consultation is undertaken on the long-term future of [income management]’. Consequently, since 4 September 2023, participants on income management have been given the option to move to enhanced income management, and newly eligible participants have been subject to enhanced income management.
2.24Enhanced income management operates in a similar way to Part 3B income management. The primary difference is that people subject to enhanced income management are provided with a ‘SmartCard’ as opposed to the BasicsCard. The SmartCard contains the quarantined portion of a person’s social welfare payment. It can be used at most shops that accept Visa or eftpos, but cannot be used to purchase certain goods (alcohol, some gift cards and cash-like products, tobacco, pornography), and cannot be used to withdraw cash.
Figure 2.1: Income Management and Enhanced Income Management Participation (at 31 May 2024)
Source: Income Management (IM) and enhanced IM – Participant Data | Department of Social Services, Australian Government (dss.gov.au).
2.25Enhanced income management currently operates in:
Northern Territory
Logan, Rockhampton, Livingstone, Bundaberg, Hervey Bay, and Cape York (Queensland)
Bankstown (New South Wales)
Greater Shepparton (Victoria)
Greater Adelaide, Ceduna, Playford, Anangu Pitjantjatjara Yakunytatjara (South Australia); and
Ngaanyatjarra (NG Lands) and Kiwirrkurra Community, Kimberley Region, Perth Metropolitan and Peel District (Western Australia).
2.26Eligibility for enhanced income management differs in each location. A person may be individually assessed and subject to compulsory income management where:
the Queensland Commission requires the person to be subject to the enhanced income management regime (Cape York Welfare Reform Communities and Doomadgee; 60–90 per cent of income support payments are income managed);
a child protection officer of a state or territory requires the person to be subject to the enhanced income management regime (Queensland, Northern Territory, South Australia, Victoria, NSW and WA; 70 per cent of income support payments are income managed);
the person, or the person’s partner, has a child who does not meet school enrolment requirements or has unsatisfactory school attendance; or
an officer or employee of a recognised State/Territory authority requires the person to be subject to the enhanced income management regime (currently where the Northern Territory Registrar of the Banned Drinker Register refers a person in the Northern Territory participants in relation to alcohol abuse; 70 per cent of income support payments is income managed).
2.27People may be subject to compulsory enhanced income management where they fall within a class of persons classified as ‘Vulnerable Welfare Payment Recipient’ (in which case 50 per cent of their income support payments are income managed). People in the Northern Territory who are a member of the classes of persons known as ‘Long Term Welfare Payment Recipients’ or ‘Disengaged Youth’ may also be subject to compulsory enhanced income management (50 per cent of their income support payments are income managed).
2.28At 31 May 2024, 30 655 people were subject to Part 3B income management or Part 3AA enhanced income management. Between 50 and 90 per cent of a person’s social welfare payment may be restricted to the ‘SmartCard’ where they are on enhanced income management.
2.29Temporary exemptions from enhanced income management may only be sought for one year, where a person is subject to income management pursuant to the ‘disengaged youth’ or ‘long-term welfare payment recipient’ measures.
Evaluations and assessments of income management measures
2.30Numerous evaluations of the iterations of income management (and relatedly, of cashless welfare trials) have been conducted independently, and at the request of the Department of Social Services. These evaluations have broadly found mixed results in relation to the efficacy of income management and cashless welfare. These are discussed in more detail in Chapter 3.
2.31The Australian National Audit Office has also conducted performance audits of the cashless welfare trials. These audits have concluded that: the department’s approach to monitoring and evaluation of the trial was inadequate, meaning that it is difficult to conclude whether there had been a reduction in social harm; the department had not demonstrated that the cashless debit card program was meeting its intended objectives; and that the management of the transition from the CDC program to the enhanced income management program was largely effective.
2.32In May 2024, the University of Adelaide published a review of the cessation of the CDC, setting out elements of the CDC program transition which were perceived to have worked well and the challenges that were experienced.
Consideration by the Australian Human Rights Commission
2.33The Australian Human Rights Commission has also assessed the utility of income management measures on several occasions, including through consultation with affected people.
2.34In 2020, Aboriginal and Torres Strait Islander Social Justice Commissioner June Oscar AO conducted an extensive consultation process with Aboriginal and Torres Strait Islander women and girls, including relating to economic empowerment and income management. The report noted comments from Aboriginal and Torres Strait Islander women regarding the ‘top-down approach’ to the design and application of the cashless welfare card and lack of genuine consultation around its implementation; the absence of free, prior and informed consent; evidence that people affected by the card did not support the cashless welfare trial; and the perception that promising funding for wraparound services in the community only if the trial for the Cashless Card is accepted was coercive. It included comments from affected women that cashless welfare measures were applied discriminatorily:
Different rules for White people. They think Aboriginal people are the only people who watch porn and drink alcohol. You live in the suburbs, you don’t have a Basics Card, but if you live in a Blackfulla camp, you have a Basics Card, a card where you can’t even draw money out. Is that racist? Discrimination? Impacting on our human rights. Borroloola women.
2.35The Commissioner’s report also noted concerns regarding the practical realities of using the cards, particularly in very remote areas where key vendors were not participating or where an insufficient amount of income was convertible to cash to allow women to take advantage of value-for-money opportunities to buy second-hand goods, or pay for their children to access leisure activities; and a sense of loss of control, shame and disempowerment associated with compulsory participation. The report noted that studies evaluating the effectiveness of welfare cards have had methodological limitations and produced mixed findings, and considered that there was no clear and compelling evidence that the cards have delivered on their objectives. In particular, it stated that women questioned the efficacy of welfare cards in addressing the underlying causes of harmful behaviour, stating that income management ‘rarely motivates forced participants to develop skills to manage their finances or obtain paid employment, or to better their parenting skills,’ and questioning the effectiveness of the card in meeting the more immediate objective of limiting the consumption of alcohol in their communities.
2.36The Australian Human Rights Commission has also made broader comments regarding the compatibility of income management measures, and the cashless welfare trial, with human rights.
Consideration by Senate committees
2.37The Senate Standing Committee on Community Affairs has considered income management and cashless welfare measures on several occasions (including holding public hearings in affected areas).
Consideration by the Parliamentary Joint Committee on Human Rights
2.38As part of its scrutiny function, the committee has examined all bills and legislative instruments related to income management (and cashless welfare) since the committee commenced operation in August 2012. The committee also conducted an inquiry into three Acts providing for income management (known as the Stronger Futures package of legislation) in 2013.
2.39The committee has stated on numerous occasions that subjecting an individual to mandatory income management and restricting how they may spend a portion of their social security payment engages and limits the rights to: social security, privacy and equality and non-discrimination, and may limit other human rights (including the right to an adequate standard of living and the rights of the child).
2.40In 2013, the committee considered that there was little evidence to support claims that compulsory income management has brought about behavioural changes on a significant scale, and the evidence also suggests that many people subject to compulsory income management 'appear not to demonstrate the behaviour problems or financial difficulties which the measure was intended to remedy'. It concluded that, notwithstanding that the income management regime pursues legitimate goals, the government had not clearly demonstrated that: the income management regime constituted a permissible limit on the right to equality and non-discrimination, or that it constituted a justifiable limitation on the rights to social security and the right to privacy and family.
2.41In 2016, the committee again expressed concern that the income management regime was not rationally connected (that is, capable of achieving) its stated objectives (noting that three substantial evaluations of different aspects of the income management regime have been released indicating that income management is effective only when it is applied to participants after considering their individual circumstances, rather than applied coercively and compulsorily). The committee concluded that, in any case, compulsory income management was a disproportionate measure, having regard to:
the imposition of significant conditions on the provision of income support payments being an intrusive measure involving a significant interference into a person's private and family life;
the inflexible operation of the scheme, noting in particular that the exemptions process appeared to discriminate in effect against Indigenous Australians; and
the availability of a range of less rights restrictive measures that may be developed and implemented in place of compulsory income management (including removal of compulsory categories of income management and trialling a voluntary program).
2.42In relation to cashless welfare measure, the committee has reached similar conclusions. Its assessment was summarised, most recently, in 2022:
[M]easures relating to the CDC program engage numerous human rights. The committee has found that, to the extent that the CDC program ensures a portion of an individual's welfare payment is available to cover essential goods and services, the CDC program could have the potential to promote rights, including the right to an adequate standard of living and the rights of the child. However, the committee has found that the CDC program also engages and limits a number of other human rights, including the rights to a private life, social security and equality and non-discrimination. In particular, it limits the rights to a private life and social security as it significantly intrudes into the freedom and autonomy of individuals to organise their private and family lives by making their own decisions about the way in which they use their social security payments. Further, as the CDC program disproportionately affects Aboriginal and Torres Strait Islander persons, it also engages and limits the right to equality and non-discrimination. In relation to whether this limitation on rights is reasonable, necessary and proportionate, the committee has previously found that, while the stated objective of the CDC program – to combat social harms caused by the use of harmful products – would constitute a legitimate objective, it is not clear that the CDC program is effective to achieve this objective, noting in particular, that the evaluations are inconclusive regarding its effectiveness, and whether it has caused or contributed to other harms. Additionally, the committee has held that it has not been clearly demonstrated that the CDC program constitutes a proportionate limit on human rights, having regard to the absence of adequate and effective safeguards to ensure that limitations on human rights are the least rights restrictive way of achieving the legitimate objective, and the absence of sufficient flexibility within the program to treat different cases differently. For these reasons, the committee has previously considered that the CDC program appears to impermissibly limit the rights to social security, a private life and equality and non-discrimination.
2.43In 2022, in examining the repeal of cashless welfare and transition of individuals back to income management, the committees reiterated its prior conclusion that the income management regime (including Part 3AA enhanced income management) was not accompanied by sufficient safeguards and risked impermissibly limiting the rights to social security, privacy and equality and non-discrimination.
Consideration by United Nations bodies
2.44As this report considers the compatibility of income management measures with international human rights law, it is also instructive to note consideration of the measures by international human rights bodies.
2.45The UN Committee on Economic, Social and Cultural Rights (‘CESCR’) (the international body of 18 independent experts that monitors implementation of the International Covenant on Economic, Social and Cultural Rights by State parties) has considered Australian income management and cashless welfare provisions. In July 2017, at the conclusion of Australia’s fifth periodic report, the CESCR expressed concern about mandatory income management schemes, disproportionately affecting indigenous peoples, and recommended that Australia consider ‘maintaining only an opt-in income management scheme with appropriate oversight of decision-making and monitoring, and review existing and envisaged conditionalities for eligibility to social assistance and unemployment benefits and penalties for non-compliance, and ensure that all beneficiaries receive adequate benefits, without discrimination’.
2.46The UN Committee on the Elimination of All Forms of Racial Discrimination (‘CERD’)(the body of independent experts that monitors implementation of the UN Convention on the Elimination of All Forms of Racial Discrimination by its States parties) has been similarly critical of income management measures. In 2017, it expressed concern ‘that indigenous peoples, including those living in remote areas, face discrimination in access to social security benefits, notably through the mandatory income-management scheme’.
2.47In October 2023, Australia submitted its sixth periodic report to the CESCR, stating relevantly:
Opt-in income management
The Australian Government has abolished mandatory income management, scrapping the Cashless Debit Card program and making the income management program voluntary for individuals or communities who wish to keep a form of income management. Cashless Debit Card participants have been able to opt-out of the program since October 2022, and all remaining participants transitioned to enhanced income management on 6 March 2023. In late 2022, the Australian Government Department of Social Services and the Minister for Social Services started consultations on the future of income management with state and territory governments. The government will decide how to reform income management after those consultations.
2.48However, people may be subject to mandatory enhanced income management under Part 3AA in much the same way that they may have been subject to income management under Part 3B. As such, mandatory income management does remain Australian law.
2.49Other international law bodies have expressed concern regarding the privacy implications of cashless welfare measures and income management, including the extent to which these measures permit surveillance of social welfare recipients.