Chapter 1Introduction
1.1On 9 March 2023, the Social Security (Administration) Amendment (Income Management Reform) Bill 2023 (the bill) was introduced into the HouseofRepresentatives by the Minister for Social Services, theHonAmandaRishworth MP.
1.2On the same day, the Senate referred the provisions of the bill to the CommunityAffairs Legislation Committee (the committee) for inquiry and report by 6 June 2023.
Purpose of the bill
1.3This bill seeks to amend the Social Security (Administration) Act 1999 (the Act) to continue the Government’s income management reforms by building on the changes made by the Social Security (Administration) Amendment (Repeal of Cashless Debit Card and Other Measures) Act 2022. These changes established the Enhanced Income Management (eIM) regime in Part 3AA of the Act and repealed cashless welfare arrangements (also known as the Cashless Debit Card [CDC] program).
1.4The purpose of the bill is to:
extend the eIM regime to include all the measures currently covered by the existing Income Management (IM) regime;
allow individuals currently subject to the IM regime to voluntarily move onto the eIM regime; and
close the existing IM regime to new entrants and move all new individuals subject to income management onto the eIM regime.
1.5Under the eIM regime, eligible welfare recipients would have access to improved technology through the SmartCard which offers modern banking features such as ‘Tap and Go’, online shopping and BPAY.
1.6The Department of Social Services (DSS) and Services Australia clarified that the bill does not:
repeal the IM regime in Part 3B of the Act or change its underlying policy;
change current categories of excluded goods and excluded services (which include alcohol, gambling services, pornography and tobacco);
change the portion of welfare payments that cannot be spent on excluded goods or excluded services;
expand the locations in which IM programs operate.
1.7Further details on the bill’s schedules are provided below.
Background
1.8This section provides a brief history of income management, as well as information on the Government’s recent reforms known as ‘eIM’.
Income management
1.9Income management refers to a policy where a percentage of a person’s welfare payment is set aside to be spent only on essential goods and services such as food, housing, clothing, education and health care.
1.10The IM regime was created in 2007 as part of the Northern Territory Emergency Response (NTER) and was initially introduced to prescribed areas of the Northern Territory (NT), including 73 remote communities, associated outstations and ten town camp regions. It formed part of the 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.
1.11The key objectives of IM under the Act are to:
reduce immediate hardship and deprivation by directing welfare payments to the priority needs of recipients, their children, their partner and any 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.
1.12Shortly after IM was introduced in the NT, a different model of IM was introduced through the Cape York Welfare Reform trial communities. The CapeYork model is a more targeted approach whereby IM is used as a sanction for individuals who have breached their obligations, as determined by the Family Responsibilities Commission.
1.13Between 2008 and 2014, IM was extended to a number of smaller sites across Australia. Currently, IM operates the Northern Territory (NT), Cape York, and 12 other communities across Western Australia (WA), Queensland (QLD), South Australia (SA), New South Wales (NSW) and Victoria (VIC).
1.14In the NT, IM applies to entire categories of income support recipients. In other areas, IM operates in a more targeted way.
1.15Initially, IM had no dedicated platform and utilised a combination of existing products and services such as direct debit and store cards. In 2008, the BasicsCard was introduced where participants could make purchases at approved merchants with a card that was PIN-protected and used the EFTPOS network.
Cashless Debit Card
1.16The CDC program, initially rolled out in 2016, was an income management program administered via a card which blocked the purchase of alcohol and gambling products and allowed only 20 per cent of payments to be withdrawn as cash. The CDC was a Visa debit card issued by payments company Indue (and more recently in the NT, by the Traditional Credit Union).
1.17The CDC program was in operation at the same time as IM, but at specified trial sites, and was designed to respond to concerns that paying income support in cash could contribute to alcohol and drug abuse and that, in turn, alcohol and drug abuse could contribute to long term reliance on income support.
Enhanced Income Management
1.18In 2022, the Social Security (Administration) Amendment (Repeal of Cashless Debit Card and Other Measures) Act2022 gave effect to the Government’s election commitment to abolish the CDC program and establish the eIM regime in Part 3AA of the Act.
1.19eIM adopts the policy parameters of the IM regime but introduces the contemporary technology of the SmartCard.
1.20The bill builds on amendments previously introduced by facilitating a broader transition towards the eIM regime. Existing IM participants will only move to eIM on request and can otherwise stay on the BasicsCard, however all new participants will begin on eIM.
1.21Services Australia will facilitate participants to transfer to eIM via the SmartCard eIM hotline or at a Services Australia service centre. Eligible participants in the NT will continue to be able to choose the Traditional Credit Union or Indue Limited as their SmartCard issuer.
Key provisions of the bill
1.22This section provides details on the two schedules contained in the bill. The amendments made by the bill would commence on 4 September 2023.
Schedule 1
1.23Schedule 1 would amend Part 3AA of the Act to facilitate access to the eIM regime by enabling people who would previously have become subject to the IM regime under Part 3B to instead enter the eIM regime. Schedule 1 also would expand the scope of voluntary eIM to enable individuals who live in existing voluntary IM locations to instead volunteer for the eIM regime.
1.24Schedule 1 of the bill incorporates provisions for each of the existing IM measures into Part 3AA of the Act. Part 3AA of the bill sets out the circumstances in which individuals can become subject to the eIM regime, based on the equivalent sections under the old IM regime. These include measures relating to:
child protection;
vulnerable welfare payment recipients;
disengaged youth;
long-term welfare payment recipients;
school enrolment and attendance;
Queensland Commission (Cape York);
other state/territory referrals; and
voluntary income management agreement.
1.25Welfare recipients who are subject to the eIM regime will have access to a BasicsCard bank account accompanied by a debit card, known as a SmartCard, which is administered by Services Australia. This card will operate like a standard Visa debit card with the exception that cash cannot be withdrawn. The SmartCard can be used to make purchases at most merchants who can undertake EFTPOS transactions unless they primarily offer excluded goods or excluded services. The SmartCard can also be used to access a range of mainstream banking functions, including ‘Tap and Go’ payments, online shopping and BPAY.
1.26The terms ‘excluded goods’ and ‘excluded services’ are defined in section 123SB to have the same meaning as in Part 3B of the previous IM regime. Excluded goods include alcoholic beverages, tobacco products, pornographic material and goods specified in a legislative instrument made by the Minister. Excluded services include gambling or a service specified in a legislative instrument made by the Minister.
1.27The bill also enables the Minister, by legislative instrument, to expand the locations the eIM regime applies to. The relevant provisions providing for the expansion of each eIM measure are:
eIM measure | Proposed subsection |
child protection | 123SCA(7) |
school enrolment and attendance | 123SCF |
other state/territory referrals | 123SCK(1) |
vulnerable welfare payment recipients | 123SCL(5) |
disengaged youth | 123SDA(2) |
long-term welfare payment recipient | 123SDA(6) |
voluntary | 123SF(5) |
Source: Don Arthur and Michael Klapdor, Social Security (Administration) Amendment (Income Management Reform) Bill 2023, Bills Digest No. 67, 2022–23, Parliamentary Library, Canberra, 21 March 2023, p. 13.
1.28However, the EM states that the Minister intends the ‘Disengaged youth’ and ‘Longterm welfare payment recipients’ measures to continue to operate only in the NT.
Schedule 2
1.29Schedule 2 closes the IM regime to new entrants from the time the bill commences, 4 September 2023, by amending Part 3B. It also allows for people who are subject to the IM regime immediately before the commencement date to be able to choose to remain on IM unless and until they choose to move to the eIM regime.
Compatibility with human rights
1.30The statement of compatibility with human rights in the bill’s EM 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.
1.31The Parliamentary Joint Committee on Human Rights (PJCHR) considered the bill in its Report 4 of 2023. The PJCHR was of the view that the measure seeking to provide superior technology and improved banking functions is a positive measure that would improve participants’ access to businesses and may reduce the stigma associated with the existing BasicsCard. However, the committee noted that in facilitating this transition:
… the bill and related instruments extend all measures relating to income management to the enhanced income management regime. Thus, in effect, the legislation remakes the law relating to income management and possibly expands its scope. The committee therefore needs to scrutinise the enhanced income management regime more broadly (and not just the specific measures relating to improving the technology of the BasicsCard bank account and accompanying debit card).
1.32The PJCHR raised concerns about the bill’s potential impact on human rights in the following ways:
by subjecting an individual to mandatory income management and restricting how they may spend a portion of their social security payment, the measure limits the rights to social security and a private life, and possibly the right to an adequate standard of living;
by authorising the sharing of personal information between relevant authorities for the purposes of the operation of the enhanced income management regime, the right to informational privacy is also engaged and limited; and
due to the disproportionate impact on certain groups with protected attributes, including Aboriginal and Torres Strait Islander peoples and children, the measures engage and limit the right to equality and non-discrimination and the rights of the child.
1.33The PJCHR sought further information from the Minister for Social Services to assess the compatibility of the measures contained within the bill with multiple human rights.
1.34In response to the PJCHR’s Report 4 of 2023, the Minister emphasised that ‘the purpose of the Bill is to expand access to the improved technology associated with enhanced IM. It does not change the policy settings behind the IM regime’ and:
… this Bill establishes a number of safeguards. All individuals who become subject to IM and enhanced IM do so on the basis of individual circumstances. If those circumstances change, they may exit IM or enhanced IM. Enhanced IM also significantly expands access to shopping outlets and mainstream banking functions, and the Secretary is able to vary the percentage of qualified portions of a person's welfare payment in certain circumstances that may affect an individual's ability to access money in their BasicsCard bank account.
The Government considers that the Bill, together with relevant legislative instruments provide sufficient safeguards at this time.
1.35The Minister added that the Government is committed to consulting meaningfully with affected communities—including First Nations peoples, community members and their leaders, service providers and other stakeholders—on the future of IM. The Government will not make changes to the operation of IM until that has occurred, and this bill provides participants with access to modern technology whilst that consultation occurs.
Legislative scrutiny
1.36In its Scrutiny Digest 3 of 2023, the Standing Committee for the Scrutiny of Bills noted that much of the detail of the framework established by the bill:
… is left to delegated legislation, or to non-legislative determinations. This is consistent with the approach taken within Part 3B of the Social Security Act. However, certain provisions within the bill introduce what appear to be new delegated legislation making powers.
1.37The Scrutiny Committee raised concerns that the explanatory memorandum (EM) did not provide justification for allowing these matters to be set out within delegated legislation, nor was it clear whether these powers introduce new criteria for scheme participants when compared to the existing IM regime, as well as the lack of limits or guidance on the exercise of the power.
1.38The Scrutiny Committee requested the Minister’s advice on the above matters.
1.39On 5 April 2023, the Minister responded to the Scrutiny Committee’s concerns stating:
Proposed section 123SDA does not introduce new eligibility criteria or confer any additional discretionary powers on the Minister or Secretary for the enhanced Income Management (IM) regime compared to equivalent measures in the IM regime.
The eligibility criteria set out at proposed section 123SDA mirrors sections 123UCB and 123UCC in Part 3B of the Social Security (Administration) Act 1999 (the Administration Act) which respectively establish the Disengaged Youth and Long term Welfare Payment recipient measures in IM.
…
Providing consistency across IM and enhanced IM ensures we are able to facilitate an effective and efficient transition to enhanced IM whilst we consult on the long-term future of IM and enhanced IM. It also allows the flexibility to respond to the needs of communities identified throughout that consultation.
Any legislative instruments made under the proposed subsections must be consistent with best practice and the requirements of the Legislation Act 2003, and will not be made by this Government without robust consultation with affected groups and individuals.
Financial impact statement
1.40The EM’s financial impact statement indicated:
The amendments made by this Bill have commercial implications for contracted service providers. Due to these commercial implications, the financial impacts are not suitable for publication at this time. This is consistent with the financial impacts disclosed in previous budget statements.
Conduct of the inquiry
1.41Details 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 31 March 2023. The committee received 26 submissions, as detailed at Appendix 1.
1.42The committee held a public hearing in Canberra on 15 May 2023. The witness list for the hearing can be found at Appendix 2.
1.43The committee thanks the individuals and organisations that made submissions and gave evidence at the hearing for their contributions to the inquiry.
Structure of the report
1.44This report contains two chapters. This chapter has set out the conduct of the inquiry, the purpose of the bill, background information on the Government’s broader income management reforms, and outlined the key provisions of the bill.
1.45Chapter two cavasses the key issues raised by submitters and witnesses, and sets out the committee’s concluding views and recommendations.