1.1
On 4 August 2022, the Senate referred the Social Security (Administration) Amendment (Repeal of Cashless Debit Card and Other Measures) Bill 2022 (the bill) to the Senate Community Affairs Legislation Committee (the committee) for inquiry and report by 31 August 2022.
Conduct of inquiry
1.2
Details of the inquiry were made available on the committee’s website. The committee also contacted a number of organisations and individuals inviting written submissions by 10 August 2022. The committee received 83 submissions, as detailed at Appendix 1.
1.3
The committee held four public hearings:
Bundaberg, Queensland (Qld) – 16 August 2022;
Darwin, Northern Territory (NT) – 17 August 2022;
Alice Springs, NT – 18 August 2022; and
Canberra, Australian Capital Territory – 22 August 2022.
1.4
The witness list for the hearings can be found at Appendix 2.
1.5
Over the course of the public hearings and via written submissions, the committee received evidence from stakeholders across all of the cashless debit card program trial sites.
Compatibility with human rights
1.6
The statement of compatibility with human rights for the bill states that the bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Consideration by other committees
1.7
At the time of writing, neither the Parliamentary Joint Committee on Human Rights nor the Senate Standing Committee for the Scrutiny of Bills had considered the bill.
Financial impact
1.8
The explanatory memorandum (EM) to the bill does not contain a financial impact statement. It states:
Abolishing the Cashless Debit Card has commercial implications for contractors. Due to these commercial implications the financial impacts are not for publication. This is consistent with the financial impacts disclosed in previous budget statements.
Acknowledgments
1.9
The committee thanks those organisations and individuals who, within the compact timeframe of the inquiry, contributed by preparing written submissions and giving evidence at public hearings.
1.10
The committee acknowledges that many of the witnesses who appeared before the committee participated in separate consultations with the Minister for Social Services, the Hon Amanda Rishworth MP and the Assistant Minister for Social Services, the Hon Justine Elliot. These consultations took place in recent weeks in the communities of Bundaberg, Hervey Bay and the Cape York region in Qld, the East Kimberley and Goldfields regions in Western Australia (WA), Ceduna in South Australia (SA), and the NT.
1.11
The committee thank all witnesses for their time, particularly those who participated in both processes.
Structure of the report
1.12
This chapter contains brief background information on the cashless debit card (CDC) program, as well as on income management and the BasicsCard.
1.13
Chapter 2 provides an overview of the bill.
1.14
Chapter 3 outlines the key issues raised by submitters, including:
support for the abolition of the CDC program, including the lack of evidence that the CDC program met its objectives and the negative impact of the program on individuals and communities;
issues specific to the NT and Cape York;
the impact of the bill on the operation of the Family Responsibilities Commission;
concerns relating to the future of compulsory income management; and
support for the CDC program.
1.15
Chapter 4 canvasses evidence related to matters not addressed in the bill, including the transition process out of the CDC program for participants and communities, and the broader future of income management in Australia.
1.16
Chapter 5 sets out the committee’s concluding views and recommendations.
Background information on the cashless debit card program
1.17
The objectives of the CDC are set out in section 124PC of the Social Security (Administration) Act 1999 (Administration Act).
1.18
The CDC program is designed to:
reduce the amount of money from income support available for the purchase of alcoholic beverages, gambling and illicit drugs;
support participants with their budgeting strategies; and
encourage socially responsible behaviour.
Areas of operation
1.19
The CDC program is currently in operation across parts of SA, WA, Qld and the NT.
1.20
The specific areas of operation are:
Ceduna, SA (since 15 March 2016);
the Goldfields region, WA (since 26 March 2018);
Kununurra and Wyndham in the East Kimberly, WA (since 26 April 2016);
the Bundaberg and Hervey Bay region, Qld (since 29 January 2019);
Cape York, Qld (since 16 March 2021); and
the whole of the NT (since 16 March 2021).
Number of participants
1.21
According to data provided by the Department of Social Services (DSS) and Services Australia, as at 27 May 2022, the CDC program applied to 17 322 people.
1.22
The following table provides a breakdown of CDC program participation by location as at June 2022.
How the CDC works
1.23
The CDC cannot be used for the purchase of alcohol, gambling services, open-loop gift cards, or to withdraw cash.
1.24
The CDC program relies on Visa debit cards issued by:
payments company Indue; and
the Traditional Credit Union (in the NT only).
1.25
The card operates like a standard, mainstream banking product and enables a range of flexible payment options including online transfers, BPAY, online shopping and recurring deductions.
1.26
According to information provided to CDC participants by DSS:
As part of the Cashless Debit Card program, you will receive an interest-bearing, fee-free account, which is where a portion of your income support payments will be deposited. You can use internet banking through the Cashless Debit Card and tap to pay is available.
1.27
The CDC system works by using merchant category codes (MCC) to block certain merchant categories. An MCC is a four digit code that identifies merchants by the kind of goods or services they sell. The system automatically blocks a number of MCC, including those covering drinking places, packaged liquor stores, gambling venues and a category known as ‘quasi cash’ (which includes items such as traveller’s cheques).
1.28
There are special arrangements for merchants that sell a mix of excluded and non-excluded goods (for example, a venue that sells alcohol as well as meals).
1.29
The CDC does not change the amount of money people receive from Services Australia (Centrelink); instead, it changes the way in which people can receive and spend their payments.
Payment splits
1.30
In CDC sites, between 50 to 80 per cent of a participant’s welfare payment is placed on a Visa debit card that can be used at any merchant that accepts EFTPOS and Visa and does not primarily sell restricted goods.
1.31
Recognising that participants still need cash for minor expenses, such as for children’s lunch money or garage sales, the remaining amount of the welfare payment is deposited into the participant’s regular bank account and can be withdrawn as cash.
1.32
In the Ceduna, Goldfields, East Kimberley and Bundaberg and Hervey Bay regions, CDC participants receive:
20 per cent of their welfare payment in their regular bank account.
80 per cent of their welfare payment onto the CDC.
1.33
In the NT, participants receive the same payment split they received under the Income Management (IM) scheme, which predates the CDC program. In most cases, CDC participants in the NT receive:
50 per cent of their welfare payment in their regular bank account.
50 per cent of their welfare payment onto the CDC.
1.34
For participants in the NT that have been referred under the Child Protection Measure or by a recognised authority of the NT (the Banned Drinkers Register), the split is:
70 per cent of their welfare payment onto the CDC.
30 per cent of their welfare payment in their regular bank account.
1.35
For participants in the Cape York region, the payment split is the same as the split they received on income management. The Family Responsibilities Commission continues to determine the payment split for participants. In addition, 100 per cent of lump sum welfare payments from Centrelink are also placed onto the CDC.
Exits and exemptions
1.36
CDC participants are able to apply to exit the program at any time if they can demonstrate ‘reasonable and responsible’ management of their affairs, including financial affairs. As the DSS website sets out:
Applications to exit are considered on a case-by-case basis and take into account legislated criteria such as the interest of children, if the participant has been convicted of an offence or served a sentence of imprisonment at any time in the last 12 months, risk of homelessness, and health and safety of the participant and community.
1.37
CDC participants can also apply for a wellbeing exemption if being on the CDC would seriously risk their mental, physical or emotional wellbeing.
Income Management scheme
1.38
The IM scheme pre-dates the CDC program. It has been operating for more than ten years in the NT, Cape York, and 12 other communities across WA, Qld, SA, New South Wales and Victoria.
1.39
IM was created in 2007 as part of the Howard Coalition Government’s Northern Territory Emergency Response (NTER), often referred to as ‘the Intervention’. As part of the NTER, IM was initially introduced to prescribed areas of the NT, including 73 remote communities, associated outstations and ten town camp regions. It formed part of the Howard Government’s response to high levels of alcohol and substance abuse that were linked to child protection issues described in the Little Children are Sacred Report released in April 2007. The IM scheme was further developed and expanded under the Rudd Labor Government.
1.40
IM is for people who are on income support payments, live in an IM location, and who would benefit from assistance in managing their budget. It is a tool that helps individuals budget their welfare payments to ensure they are able to pay for essentials such as food, clothing, housing and electricity. It works by making a proportion of a person’s welfare payment ‘income managed’ and directing it towards these essentials.
1.41
The key objectives of IM under section 123TB of the Administration Act are to:
reduce immediate hardship and deprivation by directing welfare payments to the priority needs of recipients, their partner, children and other dependents;
help affected welfare payment recipients to budget so 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.
BasicsCard
1.42
Under the IM scheme, individuals can spend their income managed funds by:
using their BasicsCard; and
organising direct payments to people or businesses (such as stores, landlords, or utility providers).
1.43
The BasicsCard is a PIN protected, reusable ‘stored value’ card which can be used at approved stores and businesses through the EFTPOS system. It can be issued at either a Services Australia service centre, or by remote servicing teams via a face-to-face interview. It can also be issued via mail following a phone consultation with the participant.
1.44
The BasicsCard is not an ATM card and will not release income managed money for cash or credit. It cannot be used to buy any of the following items:
tobacco and tobacco products;
home-brew kits and home-brew concentrates; or
gift cards or vouchers that can be transferred for cash or credit.
1.45
BasicsCard merchants are stores or businesses that have been approved by Services Australia to accept the BasicsCard through the EFTPOS system.
1.46
Merchants are assessed against the Merchant Approval Framework (MAF), which is administered by DSS. The key criteria for approval includes the merchant’s:
main business activity being the sale of priority goods or services as defined in the MAF;
ability to prevent the sale of excluded goods and services; and
ability to comply with the obligations set out in the BasicsCard Merchant Terms.