Introductory Info

Date introduced: 8 October 2020
House: House of Representatives
Portfolio: Social Services
Commencement: Various dates as set out in this Digest.

Purpose and structure of the Bill

The purpose of the Social Security (Administration) Amendment (Continuation of Cashless Welfare) Bill 2020 (the Bill) is to establish the Cashless Debit Card (CDC) as an ongoing program rather than a time-limited trial, to transition Income Management in the Northern Territory and the Cape York region to the Cashless Debit Card and make a number of other amendments.

The Bill has one Schedule which is divided into three Parts.

Part 1 amends the Social Security (Administration) Act 1991 (SSA Act) to remove the trial parameters to make the CDC a permanent measure in the Ceduna, East Kimberley, Goldfields, Bundaberg and Hervey Bay areas (items 7-10). Part 1 also:

• removes the current cap of 15,000 CDC participants (item 16)
• enables a voluntary participant to continue to utilise the CDC even if they no longer reside in a program area (item 29)
• allows the Minister to determine decision-making principles for the purposes of determining whether a person can demonstrate reasonable and responsible management of the person’s affairs (item 37) and
• extends the sunset date for income management in Cape York from 31 December 2020 to 31 December 2022 (item 5).

Part 2 amends the SSA Act to establish the CDC program in the Northern Territory and Cape York area and transition income management participants in those areas onto the CDC. Part 2 also:

• enables people in the Bundaberg and Hervey Bay areas to volunteer to participate in CDC arrangements (item 75)
• enables the Secretary of the Department of Social Services (the Secretary) to advise a community body when a person has exited the CDC trial (item 93)

Part 3 of the Bill:

• enables the Secretary to issue a notice informing the person that they are a CDC program participant. The Secretary may also issue a notice revoking that notice (items 101 to 113) and
• amends the CDC program review and evaluation process (items 47 and 48 in Part 1; item 114 in Part 3).

Commencement

• Sections 1 to 3 commence on Royal Assent
• Part 1 of Schedule 1 commences the day after Royal Assent
• Part 2 of Schedule 1 commences the day after three months from Royal Assent
• Items 101 to 113 in Part 3 of Schedule 1 commence on 8 March 2021
• Item 14 in Part 3 of Schedule 1 commences the day after Royal Assent.[1]

History of the Bill

This Bill includes amendments that are contained in the Social Security (Administration) Amendment (Income Management to Cashless Debit Card Transition) Bill 2019 (2019 Bill). In particular, proposed amendments in the 2019 Bill include:

• extending the CDC trial to the Northern Territory Cape York area and transition income management participants in these areas onto the CDC trial
• extending the CDC trial end date to 30 June 2021 for all trial areas including the proposed NT CDC trial site and
• establishing an end of 31 December 2021 in the Cape York area CDC trial site.[2]

The 2019 Bill passed the House of Representatives with Government amendments on 27 November 2019. It was introduced in the Senate on 2 December 2019. While the 2019 Bill received a third reading in the House of Representatives it has not been debated in the Senate.[3] If the current Bill is passed by Parliament, the 2019 Bill will be redundant.

The Bill replicates many of the proposed amendments in the 2019 Bill; a Bills Digest was prepared for the 2019 Bill.[4]

Background

Income management and the cashless debit card are both designed to prevent income support recipients from spending a significant portion of their payments on potentially harmful goods such as alcohol, illegal drugs and gambling. According to Anne Ruston, the Minister for Families and Social Services, the cashless debit card is ‘a personal development, capacity and financial literacy tool aimed at reducing the social harm caused by welfare fuelled drug and alcohol misuse and problem gambling.’[5]

Both income management and the cashless debit card were first implemented in Indigenous communities. Concerns that access to cash in Indigenous communities fuels alcohol abuse and other problems are not new. In 1976 House of Representatives committee reported:

Significant increases in income, due mainly to award wages and improved social security payments such as unemployment benefits and child endowment, have given Aboriginals large amounts of money. Much of this may be spent on alcohol as the Aboriginal is unaccustomed to having so much ready money and is unable to understand concepts of budgeting and saving.[6]

Restricting access to cash has also been suggested in the past. For example, commenting on drinking problems in Ceduna in 1974, South Australian state MP Graham Gunn suggested that unemployment payments to Indigenous people should be replaced by ‘rations and clothing.’[7]

Both the cashless debit card and the income management BasicsCard attempt to restrict access to cash by blocking cash withdrawals and transactions involving excluded goods or at merchants that sell excluded goods.[8] While the cashless debit card and the BasicsCard are provided by payment company Indue,[9] they were developed separately and operate in different ways. Some of the differences in how the systems work are the result of policy decisions while others are the result of differences in technology.[10]

The Government operates income management and the cashless debit card in a number of locations around Australia.

The majority of income management participants are in the Northern Territory. As at 4 September 2020 there were 24,718 income management participants with an active BasicsCard in the Northern Territory. At the same time, around 130 individuals were subject to income management under the Cape York measure.[11] Of the 24,974 people on income management as at August 2019, 79 per cent were Indigenous.[12]

The total number of participants currently on the cashless debit card is smaller. The largest site is the Bundaberg and Hervey Bay region with 6,084 card users followed by the Goldfields region with around 3,473.[13]

One of the changes proposed in this Bill replaces income management with the cashless debit card in two locations—the Northern Territory and Cape York. This would leave income management operating at a handful of small-scale sites around Australia. These are:

• place-based income management (PBIM) sites of Logan (Qld), Rockhampton (Qld), Bankstown (NSW), Greater Shepparton (Vic) and Playford (SA)
• child protection sites in Western Australia and South Australia and
• the APY Lands (SA), Ngaanyatjarra (Ng) Lands (WA) and Kiwirrkurra Community (WA).[14]

It is not clear whether the Government plans to eventually move these sites to the cashless debit card. However, the Government has announced plans to use income management in a number of the PBIM sites for its proposed drug testing trial.[15]

How income management and the cashless debit card work

For Government, one of the major advantages of the cashless debit card over Income Management is that it places less of an administrative burden on Centrelink and the Department of Human Services.

The cashless debit card can be used at a far larger number of merchants than the BasicsCard and, unlike the BasicsCard, can be used for online purchases at approved merchants.[16]

Income management and the BasicsCard

Income management sets aside a proportion of a recipient’s 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).[17]

Payment amounts subject to income management are to be paid into a person’s income management account. Each person’s income-managed funds are held in an income management account within the Income Management Record.[18] Amounts standing to the credit of the income management record may be kept in a single bank account.[19] Individuals can transfer funds between their income management account and their BasicsCard.[20]

The BasicsCard was developed specifically for income management. It is a PIN protected card that operates on the EFTPOS system. It replaced an earlier system that relied on vouchers and store cards.[21] A merchant can only accept the BasicsCard if they have signed an agreement and Services Australia has approved them.[22]

Cashless debit card

The cashless debit card is a Visa debit card issued by payments company Indue. Cardholders can use their card at any physical store that accepts Visa debit unless the store has been blocked. Cardholders can also use the card to make online purchases at approved online merchants.[23]

Each person on the cashless debit card has a bank account known as a ‘welfare restricted bank account’.[24] The restricted portion of the person’s income support payments is placed in this account and the person accesses this amount using the cashless debit card, direct debit, BPAY or other transfers.[25]

The cashless debit card system works by using merchant category codes (MCCs) to block certain merchant categories. An MCC is a four digit code that identifies merchants by the kind of goods or services they sell.[26] The system automatically blocks a number of MCCs including those covering drinking places, packaged liquor stores, gambling venues and a category known as ‘quasi cash’ (a category that includes things such as traveller’s cheques).[27]

On its own MCC blocking is too blunt—MCCs are a longstanding feature of the financial services system and were not designed around the needs of income management. One example of the difficulties of relying on MCC blocking is dealing with ‘mixed merchants’. A mixed merchant may sell alcohol or other excluded goods in addition to other goods and services that policymakers want cardholders to be able to access. These mixed merchants include restaurants, takeaway food shops, grocery stores and supermarkets. To deal with this problem, either Indue or the department has to make decisions about whether particular merchants should be blocked or approved. Merchants that sell excluded goods can be approved if they agree to have their staff identify customers who are using the cashless debit card and refuse to put through transactions that include excluded goods.[28]

The Department of Social Services is currently trialling a more automated solution to this problem that relies on changes to merchants’ point of sale systems.[29]

What the differences mean in practice

Some important practical differences between the income management and cashless debit card schemes are:

• Who can accept the card. The BasicsCard can only be used at merchants that the Department of Human Services has approved. The cashless debit card can be used at any merchant the Department has not blocked (provided it is able to accept Visa Debit)
• Merchant responsibilities. All merchants who accept BasicsCard must sign an agreement not to process transactions for excluded goods such as alcohol or tobacco. In contrast, most merchants who accept the cashless debit card have no agreement with either the Department or the card provider[30]
• Face-to-face assistance with budgeting. When a person is placed on income management they attend an interview where the person and a Centrelink officer decide how to allocate the person’s income managed funds. Centrelink can make payments on the person’s behalf for expenses such as rent with the balance of the person’s income managed funds being allocated to the BasicsCard.[31] People placed on the cashless debit card do not receive an interview and are responsible for setting up their own direct debits, transfers and BPAYs for rent and other bills.[32]

Both cards prevent income support recipients from withdrawing cash. Income support recipients receive part of their payment on their card with the remainder transferred to their bank account in the normal way.[33]

Because all BasicsCard merchants have to sign an agreement, it is relatively straightforward for policymakers to add or remove goods and services from the list of goods and services that are excluded and instruct merchants to manage BasicsCard transactions accordingly. This is not the case with the cashless debit card. With the cashless debit card, the major way of blocking transactions is by blocking entire merchant categories (for example, ‘package stores—beer, wine and liquor’). For merchants that sell a mixture of restricted and non-restricted goods (such as a supermarket that sells food and alcohol) policymakers must identify each merchant and have them sign an agreement. This means it is not feasible to block goods such as cigarettes that are sold across a wide range of merchant categories.[34]

One of the chief advantages of the cashless debit card for government is the cost of administration. Income management imposes a significant administrative burden on Centrelink, the Department of Human Services and on merchants. Centrelink must conduct interviews with clients, the Department of Human Services must approve merchants, and merchants must police transactions to ensure that the BasicsCard is not used to purchase excluded goods.

When Andrew Forrest first proposed the cashless debit card in his 2014 review, he argued that income management was ‘unaffordable on a large scale’ and that a cashless debit card would be cheaper to maintain and easier for Government to administer.[35]

How the schemes are structured and legislated

Both income management and the cashless debit card are restricted to particular locations around Australia. Within these locations the schemes target particular groups of income support recipients. To administer each of the schemes, policymakers need to identify:

• the locations where the scheme will operate
• the income support recipients to which the scheme will apply
• the payments that will be income managed or placed on the cashless debit card
• the proportion of the payments that will be income managed or placed on the cashless debit card.

Policymakers have taken different approaches for legislating each scheme.

Income management

Income management is structured around ‘measures.’ Each measure applies to a particular group of income support recipients (for example, disengaged youth or long-term welfare payment recipients), operates in particular income management locations, and income manages a particular percentage of a person’s income support payments.

The measures identify recipients in two steps. First, a person must be receiving a ‘trigger payment’. Second, people receiving this trigger payment must also meet a set of criteria that are specific to the measure (for example, the length of time they have been on payment).

Different income management measures can have different trigger payments.[36] The SSA Act groups payments into categories (E, H, I, O, Q, R and S). These categories are also used to identify the payments that are subject to income management. The categories are defined at section 123TC of the SSA Act.

Details for each measure are listed in Table 1 and Table 2 below.

Table 1: existing income management measures

Income management measure (and relevant section of SSA Act)	Trigger payment	Additional eligibility criteria (and relevant section of SSA Act)	Payments subject to income management (instalments)	Income managed % (instalments) (and relevant section of SSA Act)
Child protection measure (section 123UC)	Category H Person or their partner	Notice from state/territory child protection officer	Category I	70%a (s123XI(3))
Vulnerable (s123UCA)	Category H Person	Determination by Secretary (s123UGA)	Category I	50% (s123XJA(4))
Disengaged youth measure (s123UCB)	Category E Person	Aged at least 15 and under 25 (s123UCB(1)(b)) Has received a category E payment for at least 13 of the previous 26 weeks (s123UCB(1)(g)) Is not an ‘exempt welfare payment recipient’ (s123UCB(1)(d)c)	Category I	50% (s123XJC(4))
Long term welfare recipient measure (s123UCC)	Category E Person	Aged at least 25 and under pension age (123UCB(b)) Has received a category E payment for at least 52 of the previous 104 weeks (s123UCB(g)) Is not an ‘exempt welfare payment recipient’ (s123UCB(d)c)	Category I	50% (s123XJC(4))
Queensland Commission (Cape York) (s123UF)	Category P or R Person or their partner	Notice from the Queensland Commission (Family Responsibilities Commission) (s123UF(1)(b)) (s123UF(2)(c))	Category Q or Category S	60, 75, or 90%b (s123XM(3)) (s123XO(3))
Other State/Territory referrals (Supporting People at Risk) (s123UFAA)	Category H Person or their partner	Notice from a recognised state/territory authority (s123UFAA(1)(b))	Category I	70% (s123XPAA)
Voluntary income management (s123UFA)	Category H Person	Person enters into a voluntary income management agreement (s123UM)	Category I	50%d (s123XPA(3))

Source: DSS, Child Protection Income Management, fact sheet, DSS, [Canberra], June 2019; DSS, Vulnerable Welfare Payment Recipient measure of Income Management, fact sheet, DSS, [Canberra], 4 June 2019; DSS, Long Term Welfare Payment Recipient and Disengaged Youth measures of Income Management, fact sheet, DSS, [Canberra], June 2019; DSS, Income Management for Cape York Welfare Reform and Doomadgee, fact sheet, DSS, [Canberra], June 2019; DSS, Supporting People at Risk measure of Income Management, fact sheet, DSS, [Canberra], June 2019; DSS, Voluntary Income Management, fact sheet, DSS, [Canberra], June 2019; DSS, ‘11.1.1.50 Trigger payments for income management’, Social security guide, DSS website, last reviewed 21 September 2020; DSS, ‘11.1.1.60 Payments Subject to Income Management’, Social security guide, DSS website, last reviewed 20 September 2018; DSS, ‘11.2.5.10 Category P welfare payment’, Social security guide, DSS website, last reviewed 21 September 2020; DSS, ‘11.2.5.20 Category R welfare payment’, Social security guide, DSS website, last reviewed 11 November 2019; DSS, ‘11.2.5.30 Category Q welfare payment’, Social security guide, DSS website, last reviewed 21 September 2020.

a. A rate of 100% is set by legislative instrument (Social Security (Administration) (Deductible portion — section 123XI) Specification 2019 for certain ABSTUDY payments.
b. This amount is determined by the Secretary (subsections 123XM(3) and 123XO(3)). The Act does not specify a default amount. See: DSS, ‘Income Management for Cape York Welfare Reform and Doomadgee’, June 2019, p. [1].
c. ‘Exempt welfare payment recipient’ is defined in sections 123UGB, 123UGC, and 123UGD. Section 123UGB allows the Minister to specify a class of welfare payment recipients as exempt from income management (see: Social Security (Administration) (Classes of Exempt Welfare Payment Recipients) Specification 2020). Sections 123UGC and 123UGD allow recipients to seek exemptions from income management under certain circumstances (see DSS, ’11.1.14.10 Overview of exemptions from income management’, Social security guide, DSS website, last reviewed 11 November 2019).
d. This amount is set by a determination by the Minister: Social Security (Administration) (Deductible portion — section 123XPA) Specification 2020. 100 per cent is specified as the deductible portion of an instalment of certain ABSTUDY payments.

Table 2: locations where income management measures apply[37]

Income management measure	Locations
Child protection measure	Northern Territory Place-based income management sitesa Child protection sitesb APY Lands (SA), Ng Lands (WA), Kiwirrkurra Community (WA)
Vulnerable	Northern Territory Place-based income management sitesa APY Lands (SA), Ng Lands (WA), Kiwirrkurra Community (WA)
Disengaged youth measure	Northern Territory
Long term welfare recipient measure	Northern Territory
Queensland Commission	Cape York
Other state/territory referrals (Supporting People at Risk)	Not currently in use
Voluntary income management	Northern Territory Child protection sites Place-based income management sitesa APY Lands (SA), Ng Lands (WA), Kiwirrkurra Community (WA)

Source: DSS, Income management locations, DSS, [Canberra], 19 April 2018.

a. Logan (Qld), Rockhampton (Qld), Bankstown (NSW), Greater Shepparton (Vic) and Playford (SA).
b. Perth metropolitan (WA), Peel and Kimberley regions (WA), Greater Adelaide (SA).

Cashless debit card

The administration of the cashless debit card is simpler than the administration of income management.

The individual cashless debit card trial areas are defined in section 124PD of the SSA Act. For all of the trial areas except the Bundaberg and Hervey Bay site, a person is a ‘trial participant’ if:

• they receive a ‘trigger payment’,[38] that is, a particular welfare payment that will automatically trigger participation in the CDC trial and
• their usual place of residence is, becomes or was within a particular trial area.[39]

In the Bundaberg and Hervey Bay area there is an additional condition—to be a trial participant a person must also be aged under 36 years.[40]

Under the current cashless debit card scheme the default amount of a person’s payment that is placed on the card is the same for all participants—80 per cent.[41] This amount is known as the ‘restricted portion’ of a person’s payment.

History of income management in the Northern Territory

The Northern Territory Emergency Response

Income management was first introduced by the Howard Government as part of the Northern Territory Emergency Response (NTER). The NTER was announced in June 2007 as a response to what the Government described as a crisis of child sexual abuse in Indigenous communities. In addition to income management, the NTER included alcohol restrictions, measures to enforce school attendance, bans on pornography and a number of other initiatives.[42]

At the time, the Minister for Indigenous Affairs, Mal Brough, likened the NTER to the Australian Government’s response to the Indonesian tsunami. He spoke about returning communities to normality over a five year period through a three phase approach of stabilisation, normalisation and exit.[43]

The Government’s response was triggered by the Little Children are Sacred report of the Northern Territory Board of Inquiry into the Protection of Aboriginal Children from Sexual Abuse.[44] While the Government’s response to the report’s revelations was swift, many of the problems it identified were already known. For example, in 2001 the report Violence in Indigenous Communities (Memmott Report), reported that some communities were struggling with problems such as ‘male-on-male and female-on-female fighting, child abuse, alcohol violence, male suicide, pack rape, infant rape, rape of grandmothers, self-mutilation, spouse assault and homicide.’ The report warned that these communities should ‘be viewed as in states of dire emergency.’[45] One of the report’s authors, Paul Memmott, argued that the problem was getting worse with each generation. ‘It’s very despairing’ he said, ‘because it is like sitting on a time bomb’.[46]

The Government received the Memmott Report in August 1999 and publicly released it in January 2001.[47] In August 2003 then Prime Minister John Howard announced a number of measures aimed at reducing violence in Indigenous communities including Communities in Crisis, a small program aimed at ‘stabilising communities that are suffering from an intolerable incidence of alcohol abuse and violence’.[48]

When the NTER was introduced in 2007 it applied to 73 prescribed communities, their associated outstations and the ten town camp regions of the Northern Territory. In 2008 over 70 per cent of the Northern Territory’s Indigenous people lived within the prescribed areas.[49]

Income management

The idea of using a card to set aside money for essentials had been proposed well before planning for the NTER began. For example, in 2003 Acting Aboriginal and Torres Strait Islander Commission (ATSIC) Chairman Lionel Quartermaine suggested paying income support using a smart card that prevented recipients from buying alcohol and drugs.[50] Indigenous leader Noel Pearson supported the proposal, arguing that it could help ensure that parents used income support money to feed, clothe and care for their children.[51] Mr Quartermaine’s proposal was rejected by the then Minister for Indigenous Affairs, Amanda Vanstone.[52]

At a local level, the Arnhem Land Progress Association (ALPA) developed a card system as part of a Shared Responsibility Agreement with the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA).[53] The community was concerned that families were running out of money for food at the end of each pay cycle. The ALPA FOODcard card was designed as a budgeting tool that would help families set money aside for food and resist pressures for non-essential expenditure.[54]

The card was voluntary and could only be used in community stores. It was able to block purchases at a product level. Because the FOODcard was part of health and nutrition initiative it was designed to block purchases of products such as tobacco, soft drinks and unhealthy takeaway food.[55]

When planning to roll out income management as part of the NTER measures, policymakers improvised a solution using a combination of existing products and services. These included direct debit, store cards and the ALPA FOODcard.[56]

In June 2007 then Prime Minister, John Howard, announced that the Government would be ‘quarantining ... 50 per cent of welfare payments to stem the flow of cash going towards alcohol and other substance abuse and to ensure that funds meant to be used for children's welfare are actually used for that purpose’. He also said that the Cabinet would consider extending income management ‘in certain circumstances to the wider community where individuals are abusing their children or failing to fulfil their parental responsibilities.’[57]

The roll-out of income management took place during the lead up to a Federal election. The Australian Labor Party (Labor) Opposition promised bipartisan support for the Northern Territory intervention while seeking some changes. One of these was the Government’s decision to legislate for an exemption to the Racial Discrimination Act 1975.[58]

From income management to new income management

After winning office, Jenny Macklin, the new Minister for Indigenous Affairs, announced that the Government would immediately begin work on a compulsory income management scheme that did not require the suspension of the Racial Discrimination Act.[59] This meant changes to income management.

The Government commissioned an independent review of the NTER. The review offered qualified support for income management while recommending that it only be applied on a case by case basis and to people who volunteered:

The benefits of income management are being increasingly experienced. Its compulsory, blanket imposition continues to be resisted, but the measure is capable of being reformed and improved. People who do not wish to participate should be free to leave the scheme. It should be available on a voluntary basis and imposed only as a precise part of child protection measures or where specified by statute, subject to independent review. In both cases it should be supported by services to improve financial literacy.[60]

The review recommended that compulsory income management should only apply on the basis of child protection, school enrolment and attendance and other relevant behavioural triggers; however, the Government decided not to take up this recommendation.[61]

The new Government also moved away from its predecessor’s three phase, stabilise-normalise-exit model, arguing that moving beyond stabilisation was complicated and would take time.[62] The Government indicated that it would develop a new approach to income management that did not involve the suspension of the Racial Discrimination Act.[63]

The new approach was announced in November 2009. In a policy statement titled Landmark Reform to the Welfare System, Reinstatement of the Racial Discrimination Act and Strengthening of the Northern Territory Emergency Response, the Government announced plans for a national roll-out of income management to disadvantaged regions across Australia.[64]

The new scheme extended income management across the Northern Territory to targeted groups of people the Government believed would particularly benefit from it. The categories were:

• disengaged youth: people aged 15 to 24 who have been in receipt of Youth Allowance, Newstart Allowance, Special Benefit or Parenting Payment for more than 13 weeks in the last 26 weeks
• long term welfare recipients: people aged 25 and above (and younger than age pension age) who have been in long-term receipt of specified payments, including Newstart Allowance and Parenting Payment
• vulnerable: people assessed by a delegate of the Secretary (in practice, a Centrelink social worker) as requiring income management for reasons including vulnerability to financial crisis, domestic violence or economic abuse and
• child protection: people referred for income management by child protection authorities.[65]

These measures are currently in place in the Northern Territory. The major change is the expansion of the vulnerable measure to include young people who are automatically deemed to be vulnerable because they meet certain ‘youth triggers’. These are where the recipient is:

• granted the ‘unreasonable to live at home’ rate of payment for Youth Allowance, Disability Support Pension, or ABSTUDY
• under the age of 16 and granted a Special Benefit or
• under the age of 25 and receives a Crisis Payment due to prison release.[66]

Income management in Cape York

Income management was introduced in the Cape York Welfare Reform trial communities in July 2008, shortly after income management was introduced in the Northern Territory.[67] However, it was developed independently and the two income management models differ significantly.

Bottom-up versus top-down

The Cape York model was developed by the Cairns-based Cape York Institute for Policy and Leadership (Cape York Institute) with some assistance from outside experts including staff on secondment from the Treasury.[68] Then Cape York Institute Director and Indigenous leader Noel Pearson drove the process. The Northern Territory model was developed by the Australian Government with limited consultation in the affected communities.[69] According to Noel Pearson:

... in Cape York the reform agenda was the initiative of Aboriginal leaders, and the policy proposals came from the Cape York Institute–not from government. The Northern Territory policy was unilaterally decided by government.[70]

Targeting

In Cape York, conditional income management is used as a sanction for individuals who have breached their obligations. In the Northern Territory it is applied in a blanket way to entire categories of income support recipients. According to researchers from the Social Policy Research Centre:

The [Cape York Welfare Reform] model of income management is far more targeted than that in the Northern Territory ... Clients on income management in the [Cape York Welfare Reform] trial communities are case managed to a much higher degree, and their progress is closely monitored by the [Family Responsibilities Commission] as well as the other case management arrangements. This approach appears to be successful, and has a number of advantages for the individuals concerned and for the communities more generally, as is evidenced by the results of the social change survey.[71]

According to Pearson, ‘the difference from the Territory is that the Cape York scheme encourages community members to take up their responsibilities. If people are being responsible, they are not affected by income management.’[72]

Cape York model uses income management as a tool to encourage responsible behaviour

In the Cape York model income management is designed as ‘a catalyst for behavioural change’.[73] In the long term, it attempts to reduce problems such as alcohol abuse by encouraging responsible behaviour. In contrast, the Northern Territory model applies income management in a much less targeted way in order to ‘reduce the amount of cash available in communities in which substance abuse, gambling and other anti-social behaviours are problems that can lead to child abuse and community dysfunction’.[74]

One of the most disturbing findings from the evaluation of income management in the Northern Territory was that it seemed to encourage dependence on the welfare system. According to the researchers:

... rather than the program building people’s capacity and motivating them to take responsibility and become independent and self-reliant, for these people it has acted to make their lives more comfortable by relieving them of having to take responsibility for some aspects of their financial management. This in turn has made them more dependent and reliant upon welfare.[75]

The Cape York model does not appear to have the same effect.

2005–2007—development of the Cape York welfare reform trials

In 2005, as Director of the Cape York Institute, Noel Pearson called for a welfare reform trial in Cape York Indigenous communities. Under the proposal, communities would opt-in to the trial and would set up a new welfare reform model that moved beyond the Government’s mainstream approach. A key part of the model would be to create mechanisms that ensured ‘monies received for family go to the wellbeing of the family’.[76]

With support from both the Australian and Queensland governments, and assistance from staff seconded from The Treasury, the Cape York Institute produced a plan for welfare reform trials in the Cape York communities of Aurukun, Coen, Hope Vale and Mossman Gorge.[77] The 2007 report From Hand Out to Hand Up, set out an analysis of the problems in Cape York Indigenous communities along with detailed policy recommendations. According to the report, Cape York communities had experienced a collapse of social norms with widespread social dysfunction as a result. The report set out a strategy designed to rebuild norms and restore Indigenous authority. The aim was to reinforce norms and values that community members already endorsed rather than to impose norms from outside.[78]

To reinforce social norms, the welfare reform trial would make income support payments conditional on a broader range of obligations. These would include the proper care of children, abiding by tenancy conditions in public housing and not committing drug, alcohol, gambling or family violence offences. To enforce these obligations a new statutory authority—the Family Responsibilities Commission (FRC)—would be established. Where an individual breaches their obligations, the FRC could issue a warning, direct the person to attend support services or place them on ‘conditional income management’.

According to the 2007 report, conditional income management ‘would be the ultimate tool available to the FRC to counter breaches of obligations and encourage individuals to take responsibility for themselves and others in their family and community’.[79]

Conditional income management was designed to serve two purposes. It would act as a deterrent to encourage community members to abide by their obligations and:

... will effectively prevent the flow of welfare income to substance abuse and other behaviours that impact upon the welfare of children and dependents in the Welfare Reform communities. The conditional income management sanction will help to provide a family with a break from dysfunctional behaviour, supporting the success of other support services such as drug and alcohol counselling.[80]

Conditional income management was designed to be targeted and temporary. As From Hand Out to Hand Up explained:

The conditional income management sanction is meant to be a catalyst for behavioural change. In the longer term an individual must take personal responsibility for meeting their obligations. The prospect of sanctions being in place for an indeterminate period would undermine this outcome. Individuals should also be provided with the opportunity to have a sanction lifted once they demonstrate that they can meet their obligations.[81]

2007—legislation

In July 2007 then Minister for Families, Community Services and Indigenous Affairs, Mal Brough, announced that the Government had accepted the Cape York Institute’s proposal.[82] The Social Security and Other Legislation Amendment (Welfare Payment Reform) Act 2007 enabled conditional income management in the Cape York Welfare Reform trials and a separate model of income management that formed part of the NTER.[83]

2014—trial extended to include Doomadgee

Doomadgee joined the Cape York Welfare Reform trial in August 2014.[84]

Development of the cashless debit card

In 2013 the Abbott Coalition Government commissioned Andrew Forrest to chair a review of Indigenous training and employment programs.[85] One of the review’s recommendations was to introduce a new cashless debit card for working age income support recipients. According to the review’s 2014 reportThe Forrest Review: Creating Parity:

The current income management system, which operates via the government BasicsCard, is providing very valuable support to women, in particular making sure welfare stretches over the fortnight and that bills are paid and children are fed. However, it is not part of the mainstream banking system, it is very expensive for the government to administer and it has some stigma associated with it for the recipient.

Despite the benefit of the financial stability for individuals, expansion of this system is financially unsustainable, with the existing 23,000 income management recipients making over 46,000 calls a week to Centrelink to change their arrangements.[86]

Mr Forrest referred to the proposed card as the ‘healthy welfare card’ and argued that it would overcome problems with the existing income management system.

One problem was the high cost of income management. In a 2013 report on income management in the Northern Territory, the Australian National Audit Office (ANAO) reported that the estimated cost per person per year could be as high as $7,900 for income support recipients in remote areas.[87] According to the Forrest Review, the cost of income management made it ‘unsustainable and unsuitable for broader application’.[88] The Review implied that the cashless debit card would be cheaper because it relied on the mainstream banking system.[89]

Another problem is that income support recipients can only use the BasicsCard at approved retailers. In contrast, the cashless debit card could be used anywhere that accepted mainstream debit cards (except retailers that are blocked because they sell alcohol or gambling products).[90]

Stigma was also a problem according to Mr Forrest. He wrote that ‘the BasicsCard readily identifies its user as a welfare recipient, unnecessarily degrading someone who has fallen on hard times’ and argued that the healthy welfare card would be different because it would ‘look and work like any other debit card’.[91]

Mr Forrest also argued that income management allowed income support recipients too much cash. This left recipients with enough cash to ‘fuel alcohol or drug dependency.’ He proposed that the healthy welfare card would allow little or no access to cash.[92]

According to the Forrest Review, the ultimate aim of the cashless debit card is to help people move off income support and into work. The card is designed to provide ‘stability for families and individuals so they can concentrate on finding employment, providing adequately for their families, and sending their children to school.’[93]

The cashless debit card scheme operates in a number of sites around Australia. These are the Ceduna region (South Australia), the East Kimberley and the Goldfields regions (Western Australia), and the Bundaberg and Hervey Bay region (Queensland). Currently these trials can operate until 31 December 2020.[94]

Committee consideration

Community Affairs Legislation Committee

The Bill was referred to the Senate Community Affairs Legislation Committee for inquiry and report by 17 November 2020. Details of the inquiry are at the inquiry homepage. The Committee received 145 submissions and conducted a public hearing on 5 November 2020 and delivered its report to the Senate on 17 November 2020.[95]

The Committee tabled a majority report, a Dissenting Report by Labor Senators and a Dissenting Report by the Australian Greens.

Majority report

The Committee recommend that the Bill be passed.[96] The Committee was of the view that:

• technological issues which have been raised in relation to the functionality of the CDC are being ‘actively addressed by DSS’ and ‘the CDC Technology Working Group established by DSS will continue to consider technology options to improve the operations of the CDC’
• IM participants transitioning to the CDC will benefit from the increased functionality of the CDC
• reports of ‘significant improvements in the welfare of children in various communities indicate that the [CDC] program is achieving its objective of reducing hardship and deprivation’ and
• ‘making the CDC an ongoing measure will provide stability and sees significant benefit in the continuation of the program’.[97]

Dissenting report by Labor Senators

Labor Senators recommended that the Bill not be passed and made the following observation:

Around 68 per cent of the people impacted by the restrictions and controls in this bill are First Nations Australians. Labor Senators believe this makes the bill racially discriminatory.[98]

Labor Senators called on the Government to:

• listen to local communities, including First Nations communities
• invest in job creation, evidence-based services and partnerships with communities, rather than continuing to pursue CDC and broad-based compulsory income management policies and
• abandon its Technology Working Group—and preparations for a national rollout of the CDC.[99]

Dissenting report by the Australian Greens

The Greens also recommended that that Bill not be passed and made the following additional recommendations:

• that all forms of compulsory income management currently operating in Australia should be abandoned
• that the Government carries out extensive consultation around Australia for any move to make income management voluntary and ensure that any new program is co-designed and
• that the Government consult immediately with communities in Cape York and the Family Responsibilities Commission on any further operation of the Cape York Scheme.[100]

2019 Bill Senate Committee Inquiry

The 2019 Bill was referred to the Senate Community Affairs Legislation Committee for inquiry and report. The Committee delivered its majority report into the inquiry to the Senate on 7 November 2019; both Labor Senators and the Australian Greens issued separate dissenting reports.[101]

The Committee recommended the Department of Social Services clarify proposed changes to the Minister’s discretionary powers to determine the rates of quarantined income and recommended that the 2019 Bill be passed.[102]

Labor Senators recommended that the Senate not pass the 2019 Bill in its current form.[103] Labor Senators considered that the CDC trials should not be extended or expanded unless:

• the regime is made voluntary
• it is only applied in specific instances, with intensive case management and is time limited, for example, child protection or
• a community genuinely gives their informed consent to trial the card, consistent with self-determination.[104]

The Australian Greens’ recommended that the 2019 Bill not be passed. The Australian Greens Senators expressed broad opposition to both income management and the cashless debit card and questioned its effectiveness in reducing social harm and disadvantage.[105]

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills (Scrutiny Committee) raised concerns about:

• the Secretary’s ability to revoke a person’s exemption from the CDC program in circumstances where the Secretary has received a request from the officer or employee of a State or Territory who considers that is necessary for medical or safety reasons relating to the person or their dependents to be part of the program
• the Minister’s proposed power to determine ‘decision-making principles’ which the Secretary must follow for the purposes of determining whether a person can manage their affairs and should therefore be exempt from the CDC program
• the ability for the Cape York program area to be determined and parts of the Northern Territory to be excluded from the program area by notifiable instruments which are non-disallowable
• the proposed use of notifiable instruments to vary the restricted and unrestricted portion of a CDC participant’s social security payments in the Northern Territory and
• the lack of guidance in the Explanatory Memorandum on the types of information that will be collected by the Secretary and shared with specified state and territory government officials, as well as the lack of guidance in place to protect individuals’ privacy.[106]

These concerns are discussed at various points throughout the Digest save for the Scrutiny Committee’s privacy concerns, dealt with below.

Privacy concerns

Proposed sections 124POB, 124POC and 124POD of the SSA Act will allow the Secretary and specified State and Territory officials to share information relating to current or prospective program participants.[107] The proposed amendment to paragraph 192(db) would permit the Secretary to require a person to give information or produce a document to the Department where the Secretary considers it relevant to the operation of the CDC program.[108] These provisions remain the same as those in the 2019 Bill and are discussed at pages 38–40 of the Bills Digest to that Bill.

The Scrutiny Committee considers that the Explanatory Memorandum to the Bill does not adequately address privacy concerns and requests the Minister’s advice on:

• the type of information that would be collected
• the type of information that would be shared under the proposed sections and
• and any relevant safeguards in place to protect individuals’ privacy.[109]

The Scrutiny Committee raised the same concerns in relation to the 2019 Bill—these concerns are discussed at pages 22–23 of the Bills Digest to the 2019 Bill.

Policy position of non-government parties/independents

Australian Labor Party

Australian Labor Party Senators and Members have indicated that they support income management and the cashless debit card when the measures are targeted and where individuals and communities have been consulted and have consented. In a second reading speech for the Social Security (Administration) Amendment (Income Management to Cashless Debit Card Transition) Bill 2019, the Shadow Minister for Families and Social Services, Linda Burney, said:

We are not opposed to income management in all circumstances, but we are opposed to this broad based, compulsory program that catches and disempowers the wrong people. Income management can be justified when it is targeted, such as for child protection, but it should not be indiscriminate or broad sweeping, such as this across the Territory. For example, in Cape York, where the local community is applying income management based on individual circumstances, supporting families and monitoring outcomes, that is appropriate. Why it cannot happen in the Northern Territory is absolutely beyond me.[110]

Commenting on the current Bill’s extension of the cashless debit card to the Northern Territory Senator Malarndirri McCarthy said ‘Labor is fighting this vehemently.’[111]

As noted above under the heading ‘dissenting report by Labor Senators’, Labor Senators issued a dissenting report on the Bill, recommending that it not be passed.[112] 

Australian Greens

The Australian Greens have consistently opposed both Income Management and the cashless debit card. As noted above under the heading, ‘dissenting report by the Australian Greens’, the Greens issued dissenting reports in the case of both the 2019 Bill and the current Bill in which they recommended that the Bill not be passed.[113]

Commenting on the Government’s plan to entrench the cashless debit card as a permanent measure, Greens Senator Rachel Siewert said: ‘This is yet another attempt to stealthily entrench this racist and punitive card that it is not accepted by the community or has any evidence that it is achieving its purported outcomes.’[114]

Other minor parties and independents

At the time of writing, the position of other minor parties and independents was not clear. According to a report by Adam Holmes in The Examiner, Senator Jacqui Lambie wants to see changes to the cashless debit card scheme:

I've made it crystal clear to the government where I stand on the cashless debit card, and I've told them they've got to iron out the problems with it before pushing ahead ...

If they insist on pushing this through the Senate without doing that basic legwork, it'll only be because they don't need my vote.[115]

Position of major interest groups

The majority of groups making submissions to the Senate Community Affairs Legislation Committee’s inquiry opposed the Bill.

Groups that support the Bill

Submissions in support of the Bill include those from Generation One, the Wunan Foundation, the Cape York Institute, the Families Responsibilities Commission and the Shire of Coolgardie—Generation One and the Wunan Foundation are involved in promoting the cashless debit card.

Generation One

Generation One is an initiative of the Minderoo Foundation, a foundation established by Andrew and Nicola Forrest. The card was originally developed in response to a recommendation from Andrew Forrest in his 2014 report: The Forrest Review: Creating Parity.[116]

Generation One’s submission welcomes the establishment of the CDC as an ongoing program, arguing it provides certainty to current trial sites and participants, allows ‘positive outcomes supported by the CDC to continue and compound’, and enables the ‘realisation of improvements currently underway, including technology upgrades’.[117] The submission also makes a number of recommendations that go beyond the measures proposed in the Bill. These include:

• amending ‘the transition from the BasicsCard to the CDC with emphasis on 80 per cent quarantine of income, as opposed to 50 per cent of income’
• using the cashless debit card to restrict the sale of tobacco in all cashless debit card sites as well as the NT and Cape York
• considering a broader rollout of the cashless debit card to ‘to targeted cohorts, such as all Youth Allowance recipients’ and
• ‘Further legislative amendment be considered to streamline the capacity of communities to opt-in voluntarily to the CDC trial without further legislative amendments each time.’[118]

The submission also emphasises the role of the cashless debit card as part of a broader approach that includes ‘wrap-around services such as training and employment pathways, alcohol and other drug support and financial counselling.’[119]

Shire of Coolgardie (Goldfields region)

According the Shire of Coolgardie’s submission:

Qualitative information received by the Shire from its communities has been neutral or positive in relation to the introduction of the [cashless debit card] in the region. Positive trends include improvements in the welfare of children, purchasing choices (food), community involvement/engagement and employment.[120]

The submission highlights the work done by the Department of Social Services to establish the trial ‘and the outstanding support their Officers have provided in each community during the roll-out of this program.’[121]

Wunan Foundation (East Kimberley)

In the Wunan Foundation’s submission, executive chair Ian Trust argues that the cashless debit card is a ‘first step in a more comprehensive strategy of change.’[122] According to the submission:

It is Wunan Foundation’s view that, more than four years on from the beginning of the CDC trial, circumstances in the East Kimberley today represent an improvement on the lived experience of people before the trial began in April 2016.[123]

The submission also discusses measures introduced alongside the cashless debit card that Wunan believes have also contributed to positive outcomes. These include halving the maximum daily takeaway alcohol limit in Kununurra and Wyndham.[124]

Trust is critical of academics and commentators who, he claims, ‘endlessly examine the data in the East Kimberley and elsewhere and look for reasons to support their ideological opposition to the Cashless Debit Card’.[125]

Cape York Institute and Family Responsibilities Commission

The Cape York Institute and Family Responsibilities Commission support the continuation of the distinctive Cape York welfare reform model. In their submission the Cape York Institute states:

We support these changes affecting First Nations families of Cape York to the extent that the critical work of the Families Responsibilities Commission (FRC) and its Local Commissioners continues. We understand that the intent of the amendments is for Cape York and the Northern Territory to be subject to different approaches to ensure current income management settings and the role of the FRC in managing their clients will be maintained under the transition to CDC.[126]

According to their separate submission, the Family Responsibilities Commission ‘considers that the Australian Government’s commitment to maintain the existing policy settings for [Cape York Income Management] have been effectively met by this Bill.’[127]

The Family Responsibilities Commission stresses that: ‘Income management is just one tool in a suite of options available to Local Commissioners under the [Family Responsibilities Commission Act 2008 (Qld)] and is generally used as a last resort.’[128]

Groups that oppose the Bill

The majority of submissions oppose the Bill. These include submissions from Indigenous organisations, community sector organisations, academic researchers and the Northern Territory Government.

Assumptions behind the Government’s policy

A number of submissions argued that the Government’s cashless debit card policy is based on flawed assumptions. For example, a submission by think tank Per Capita, criticised the Government’s stated objective for the cashless debit card—to ‘reduce the overall social harm caused by welfare-fuelled drug and alcohol misuse and problem gambling’. The submission argued that this:

... presumes that the fact of being in receipt of income support (combined with certain discriminatory assumptions based on class, race and gender), means that a person is both more likely to experience addiction and unable to manage their financial resources. We reject these assumptions. By referring to addictive behaviours as being “welfare-fuelled”, the objective panders to the ideological position that welfare is itself the problem, ignoring issues of income adequacy, access to social supports, and the provision of social and economic infrastructure as a means of preventing poverty and, where appropriate, enabling a pathway towards employment.[129]

Similarly a submission by the Australian Housing and Urban Research Institute (AHURI) claimed that the Regulation Impact Statement for the Bill: ‘problematically links the issues of substance use, gambling, alcohol and welfare receipt without adequate justification.’[130]

Evidence of effectiveness

Many submissions argued against the Government’s claim that the cashless debit card and income management in the Northern Territory have been effective.

For the cashless debit card the Government has relied heavily on the ORIMA evaluation of the Ceduna and East Kimberley trial sites. Critics argue that this evaluation does not provide strong evidence of positive impact. For example, a submission by the Australian Housing and Urban Research Institute (AHURI) argues:

The explanatory memorandum for the Bill largely relies on the evaluation evidence from the first evaluation study by ORIMA (for Ceduna and East Kimberley), notwithstanding the fact that the Australian National Audit Office (ANAO 2018) found significant issues with the contracting and conduct of the research which undermined the credibility of its findings.[131]

The Arnhem Land Progress Aboriginal Corporation (ALPA) argue that neither the cashless debit card nor income management are effective policies. Their submission claims: ‘decision makers continue to reject evidence which provides adverse findings and instead rely upon positive anecdotal and non-objective data to justify continuing and expanding this failed policy.’[132]

A submission from a group of university academics drew on the findings of their own research on the Ceduna trial. The study used administrative data on crime rates, emergency department presentations, electronic gaming (pokies), and apprehensions for public intoxication. The researchers concluded:

Across all measures we found NO IMPACT of the CDC. Meaning, neither a decrease nor an increase in measured crime rates, emergency department presentations, electronic gaming (pokies) nor apprehensions for public intoxication.[133]

Several submissions argue that the cashless debit card and income management are not only ineffective at achieving their stated aims but are actively harmful. For example, a submission by the Aboriginal Peak Organisations of the Northern Territory (APO NT) maintains that:

... benefits attributed to compulsory income management by the Australian Government are not supported by evidence. Evaluations of compulsory income management in the NT and of the CDC trial sites are not conclusive and in fact point to concerning levels of psychological harm and a range of serious practical challenges for income recipients.[134]

Similarly, UnitingCare Australia argue that:

... there is evidence that compulsory income quarantining has led to a range of adverse consequences, including an increase in social exclusion, stigma, difficulty providing for family needs, and the erosion of individual autonomy.[135]

UnitingCare’s submission claims that the cashless debit card is: ‘a paternalistic and punitive measure, driven by ideology rather than evidence.’[136]

The Bill adds a new object for the cashless debit card into the SSA Act—supporting ‘program participants and voluntary participants with their budgeting strategies’ (proposed paragraph 124PC(b)).[137] Jesuit Social Services responded to the objective by commenting: ‘After more than four years of trials, the addition of a new objective appears to point to a policy still searching for its justification.’[138]

Disempowerment and stigma

A number of submissions argued that income management and the cashless debit card disempowered and stigmatised individuals and communities. This is a particular issue for Indigenous communities.

The Northern Land Council (NLC) argued that the Bill was inconsistent with the National Agreement on Closing the Gap which calls for formal partnerships and shared decision making. According to the NLC:

There is a substantial lack of shared decision making evidenced by the lack of consultation with Aboriginal communities affected by compulsory income management and disregard for opposition to the card from individual participants, communities and organisations.[139]

The Aboriginal Peak Organisations of the Northern Territory (APO NT) argued that ‘compulsory and conditional income management is a vehicle for disempowerment and continuing the stigmatisation and trauma of Aboriginal people.’[140]

The Salvation Army’s submission argued that the cashless debit card would stigmatise disadvantaged Australians and that this stigma would have an adverse impact on mental health:

We consider that the imposed nature of the [cashless debit card], which perpetuates the view that welfare recipients have problematic relationships with gambling, alcohol or other drugs and cannot be trusted to manage their own finances, is detrimental to the mental health and community connection of welfare recipients.[141]

The Salvation Army acknowledged that the Department of Social Services was taking steps to make the cashless debit card less identifiable and stated: ‘It is our hope that this will go some way towards reducing the stigma associated with the physical card.’[142]

Power of the Minister to increase the restricted amount to 80%

The Bill includes proposed subsection 124PJ(2A) that would enable the Minister to make a notifiable instrument to increase the restricted portion of Northern Territory participants’ income support payments to 80 per cent. A notifiable instrument made under proposed subsection 124PJ(2A) would not be subject to disallowance. This is discussed further below under the ‘Key issues and provisions’ section.

The Australian Council of Social Service (ACOSS) is concerned that, if the Bill passes, the Minister may increase the quarantined portion of income support payments to 80 per cent across the entire Northern Territory.[143] This issue was also raised by other groups including National Aboriginal and Torres Strait Islander Legal Services (NATSILS).[144]

However, in their submission Generation One advocated ‘for an 80 per cent quarantined rate [in the Northern Territory], consistent with other trial sites, in order to realise more positive impacts of the card.’[145]

Alternative policies

A number of submissions, including from ALPA and UnitingCare, argued that income management and the cashless debit card should be replaced by a voluntary scheme.

ALPA’s submission drew on the organisation’s experience with a voluntary card scheme in the past:

The ALPA Board of Directors ask the committee to recommend that this legislation is not passed and that instead a transition is made to voluntary income management. ALPA knows this works because it operates a voluntary income management system and has done so for some time.[146]

UnitingCare’s submission stated:

We support the use of a voluntary, opt-in approach developed in partnership with communities and supported by wrap-around services.[147]

Financial implications

The 2020–21 Budget included a measure to transform the Cashless Debit Card into an ongoing program rather than a time limited trial as well as to transition Income Management in the Northern Territory and the Cape York region to the Cashless Debit Card. The cost of these measures was listed as not for publication ‘as negotiations with potential commercial providers are yet to be finalised.’[148]

According to the Explanatory Memorandum, $17.5 million for support services has been allocated to assist the transition in the NT and Cape York area.[149]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[150]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights has not yet formed a concluded view on the Bill.[151]

The Committee is of the view that the introduction of a permanent cashless welfare measure ‘may potentially promote a number of human rights, but also engage and limit a number of other rights, including the right to social security, privacy, and equality and non-discrimination’.[152] However, the Committee considers that the Bill’s Statement of Compatibility with Human Rights largely mirrors the Statement which was contained in the 2019 Bill and therefore does not provide sufficient information to make an assessment on the permanency of cashless welfare:

The proposal to establish cashless welfare as an ongoing measure, and a permanent fixture in particular geographical locations, is a substantially different proposal to establishing a time-bound trial of such a measure. The trial evaluations and reviews raise a range of concerns as to whether the cashless welfare scheme is effective to achieve its stated goals, and whether it has caused or contributed to other harms. This raises questions in assessing the compatibility of the current measure, which would make the scheme permanent in certain geographical locations, with human rights.[153]

The Committee states that ‘the Bill seeks to achieve a number of legitimate objectives, including reducing immediate hardship and deprivation, and encouraging socially responsible behaviour’. However, it notes that ‘some questions remain’ about the extent to which the measures are rationally connected and proportionate to those legitimate objectives.[154]

Accordingly, the Committee has requested the Minister’s advice on:

• why these measures propose to establish the cashless debit card scheme as an ongoing measure, before the completion of the trial reviews
• what evidence demonstrates that the cashless debit card scheme is effective in achieving the stated objectives, considering the evaluation reports in their totality
• what consultation was undertaken with affected communities, seeking their views as to whether they wanted the trials to be made into an ongoing measure, or if no consultation was undertaken, why it was not undertaken
• whether the evaluation of the cashless debit card scheme, which is designed to assess its ongoing effectiveness, can operate as a safeguard to protect human rights when this Bill seeks to establish the scheme on an ongoing basis, regardless of the results of those evaluations
• what percentage of persons who would be required to participate in the cashless welfare scheme (including those transitioning from income management) as a result of this Bill identify as being Aboriginal or Torres Strait Islander
• why the onus is on the person who is already subject to the cashless debit card scheme to demonstrate that they can manage their own affairs in order to be exempt from the scheme, rather than applying the scheme on the basis of individual circumstances or on a voluntary basis
• why is the wellbeing exemption restricted to circumstances when there is 'a serious risk', rather than 'a risk', to a person's mental, physical or emotional wellbeing, and is it appropriate, when all participants are automatically included in the program, that the Secretary is not required to inquire into whether a person being in the program would pose a risk to the person's mental, physical or emotional well-being and
• what other safeguards, if any, would operate to assist the proportionality of this proposed measure.[155]

Key issues and provisions

The major issues for the Parliament to decide are whether the cashless debit card should be entrenched as an ongoing measure in the existing sites and whether the cashless debit card should replace current Income Management arrangements in the Northern Territory and Cape York.

An additional issue not dealt with by this Bill is the future of the eleven Income Management sites outside of the Northern Territory and Cape York.

If this Bill does not pass and there are no changes to existing legislation:

• the cashless debit card trials in all four sites (Ceduna, the East Kimberley, the Goldfields region, and Bundaberg and Hervey Bay) will end after 31 December 2020 with a small number of cashless debit card participants moving to Income Management in Ceduna, the East Kimberley, and the Goldfields[156]
• existing Income Management arrangements in the Northern Territory will continue
• Income Management in the Cape York region will end after 31 December 2020.

Whether or not this Bill passes, Income Management provisions will continue to apply in the following sites:

• Child Protection Income Management sites (Perth metropolitan, Peel and Kimberley regions, Greater Adelaide)
• Place-based Income Management sites (Logan, Rockhampton, Bankstown, Greater Shepparton, and Playford)
• Indigenous communities (APY Lands, Ng Lands, and Kiwirrkurra Community).[157]

Entrenching the cashless debit card as an ongoing measure

How the Bill removes the trial’s end date

Under existing legislation, the trial of cashless welfare arrangements will end in all sites after 31 December 2020. While this end date was set by legislative instrument any further extension will require amendments to subsection 124PF of the SSA Act.

Currently, subsection 124PF(1) of the SSA Act sets an end date of the trial—it was last amended by the Social Security (Administration) Amendment (Income Management and Cashless Welfare) Act 2019 which extended the end date from 1 July 2019 to 30 June 2020.[158] However, as part of the Government’s interim measures put in place as a result of COVID-19, the trial was extended to 31 December 2020 via legislative instrument.[159]

Numerous items in Part 1 of Schedule 1 to the Bill make technical amendments to Part 3D of the SSA Act to reflect the proposed establishment of the CDC as an ongoing program rather than a trial measure. In particular, the Bill removes the end date for the cashless welfare arrangements in all sites by repealing section 124PF of the SSA Act.[160]

At commencement (the day after Royal Assent) existing CDC trial participants (including voluntary participants) will become part of the CDC program.[161] There will also no longer be a cap of 15,000 CDC participants, reflecting that the program is no longer a trial.[162]

Three months after Royal Assent, the Northern Territory and the Cape York area will fall within the scope of the CDC program—all income management participants in Cape York will be transitioned to the CDC program on the day after three months after Royal Assent; those on income management in the NT will be transitioned over a period of nine months beginning three months after Royal Assent (discussed below).[163]

The Government’s rationale

The Government has made two arguments for entrenching the cashless debit card as an ongoing measure rather than allowing it continue as a trial.

The first is that community leaders in the existing trial sites are asking the Government to ‘deliver certainty to participants, stakeholders and the communities by making the trial an ongoing measure.’[164]

The second is that making the cashless debit card ongoing will ‘encourage continued investment by the financial sector to co-design technical solutions to improve user experience for participants and merchants.’[165] The Minderoo Foundation made this argument in a 2017 report:

It is imperative that the Government, as well as the Opposition, act quickly to provide clarity over the likelihood of further [Cashless Debit Card] program expansion. This certainty will allow industry participants to prioritise the required technology investments as part of their planning roadmap, which in some cases includes pre-committed resources and dependencies up to two years in advance.[166]

The Minderoo Foundation’s vision is for an open Cashless Debit Card platform that allows new card issuers to enter the market and foster innovation and improvements in service.

Lack of interest from potential providers has been a problem for Government. DSS told the ANAO that during the 2015 procurement process the major banks ‘... were not interested in delivering a small scale trial of the nature of the CDC’.[167]

Contested effectiveness

Section 124PC sets out the objects of the cashless debit card trials. One of these is to determine whether reducing the amount of income support available to be spent on alcoholic beverages, gambling and illegal drugs ‘decreases violence or harm in trial areas’.[168] It is not clear that the trials have achieved this objective.

By focusing on community-wide harm, the Government has set a high bar for judging the effectiveness of the cashless debit card. According to the Explanatory Memorandum for the Bill:

The primary purpose of the CDC program is to reduce harm at a community level from the use of harmful products such as alcohol, illicit drugs and gambling. A flow-on impact of providing this tool to help address these issues is that participants are able to stabilise their lives, leading to an increased ability to participate in the workforce.[169]

According to a 2017 evaluation document prepared by ORIMA for the Department of Social Services, a ‘reduction in alcohol consumption and drug use is expected to lead to less alcohol- and drug-fuelled violence, fewer accidents and fewer injuries.’[170]

To date, only the Ceduna and East Kimberley trials have been evaluated. A final evaluation of these two sites was released in 2017.[171] In a 2018 report on the implementation and performance of the CDC trial, the Australian National Audit Office stated that DSS’ ‘approach to monitoring and evaluation was inadequate’ and that ‘it is difficult to conclude whether there had been a reduction in social harm.’[172]

In a short review of the 2017 evaluation, Dr Janet Hunt of the Australian National University remarked that the evaluation’s largely positive conclusions ‘are rather surprising’ given the very mixed findings set out in the report. After highlighting some of the problems facing the trial communities Hunt notes:

It seems extremely naïve to think that controlling people’s income to the degree now happening in these trials will be the solution to these complex problems. It is ‘silver bullet’ thinking to believe that these simple policy changes, which bring government increasingly into the everyday lives of welfare recipients and reduce their own capacities to control their lives, will solve the challenges they face.[173]

Key supporters of the cashless debit card in the Parliament acknowledge that the card will not solve problems of social harm on its own. For example, Senator Slade Brockman told the Parliament:

I've heard ministers on this side repeatedly say that the cashless debit card is not a silver bullet, and we on this side all understand that. It is not of itself the solution; however, it can be a part of a broader solution. It can be the circuit-breaker that helps people take back control of their lives.[174]

Similarly Keith Pitt, the Member for Hinkler, said: ‘I accept that this is not the panacea. This is not the only way to deal with this, but this is the only policy that is on the table.’[175]

A recent academic study published in Australian Social Work examined the impact of the cashless debit card in Ceduna and reported that there was ‘little evidence that showed that the Cashless Debit Card affected targeted behaviours’. The researchers relied on administrative data on crime rates, emergency department presentations, electronic gaming, and apprehensions for public intoxication. The study did report evidence of increased spending on food but the researchers noted that the greatest increase in spending on food appeared to be on less healthy discretionary items.[176]

Ministers responsible for the cashless debit card have generally been more confident about the evidence of positive impact reported in the ORIMA reports than either the ANAO or academic researchers have been. For example, Senator Anne Ruston, the current Minister for Families and Social Services, told the Parliament in July 2019: ‘The evidence on the ground shows that the cashless debit card is making a real difference, improving people's lives and improving communities.’[177]

Differences between the CDC trial and permanent program

In addition to making the CDC trial a permanent measure, the Bill proposes a number of amendments to the CDC program—the following is a summary of the differences between the CDC trial and proposed CDC program.

Exemption: Secretary’s power to revoke

The Secretary is currently required to issue a determination that a person is not a CDC participant if the Secretary is satisfied that being a trial participant would pose a serious risk to the person’s mental, physical or emotional wellbeing—the Secretary must not revoke that determination.[178]

The proposed amendments will require the Secretary to revoke the determination where the Secretary is no longer satisfied that being a programme participant would pose a serious risk to the person’s mental, physical or emotional wellbeing and the Secretary has received a request from an officer or employee of a State or Territory body who considers the person should be a program participant for medical or safety reasons relating to the person or the person’s dependents.[179]

The Scrutiny Committee expressed concern with the ‘relatively large class of persons, with little or no specificity as to their qualifications or attributes’ that can request the Secretary to revoke a CDC program exemption. It is the Committee’s preference ‘that those authorised to exercise significant administrative powers be confined to the holders of nominated offices or to members of the Senior Executive Service’.[180] The Committee has requested the Minister’s advice as to whether the Bill can be amended to limit the categories of state or territory officers or employees who may make such a request. It has also requested the Minister’s advice on why it is considered necessary and appropriate to allow such a broad class of persons to make a request of the Secretary, noting the Explanatory Memorandum does not contain such information.[181]

Minister’s power to make decision-making principles

The Secretary can currently issue an exemption from the CDC program on the basis that the person applying for the exemption can demonstrate reasonable and responsible management of the person’s affairs (including financial affairs) and the person satisfies any requirements determined by the Minister by way of legislative instrument.[182]

The proposed amendments will enable the Minister to, by legislative instrument, determine ‘decision-making principles’ for the purposes of the Secretary deciding whether, on application by a person, the Secretary is satisfied that the person can demonstrate reasonable and responsible management of the person’s affairs and is therefore exempt from the CDC program. The Secretary will be required to comply with these decision-making principles if the Minster decides to make them.[183]

While the Scrutiny Committee acknowledged that a disallowable legislative instrument is preferable to these matters being left to internal policy guidance, ‘it is unclear to the committee why at least high level guidance or principles cannot be included in the primary legislation’.[184] The Committee notes that the justification provided in the Explanatory Memorandum indicates that the Department is broadly aware of the decision-making principles it will rely on and therefore fails to explain why it is considered necessary and appropriate to leave the matter to delegated legislation—the Committee has requested that the Minister provide such reasons.[185] The Committee has also requested the Minister consider whether the decision-making principles (or high-level guidance in relation to the principles) can be included in the primary legislation. Alternatively and at a minimum, the primary legislation should ‘provide that the minister ‘must’, rather than ‘may’, determine decision-making principles’.[186]

The proposed amendments would also require the Secretary to revoke a determination that a person is exempt from the CDC program, if the Secretary is no longer satisfied that a person can demonstrate reasonable and responsible management of the person’s affairs.[187] This differs from the current requirements, which require a referral by a health or community worker before the Secretary can make such a decision.[188]

Review and evaluation of the CDC program

If the Minister or the Secretary causes a review of the CDC trial, the SSA Act requires the Minister to have the review evaluated.[189] Subsection 124PS(2) requires the review report to be evaluated by an independent evaluation expert within six months from the time the Minister receives the report. The Minister must cause a written report about the evaluation to be prepared and laid before each House of Parliament within 15 days after the completion of the report.[190]

In evaluating the report, the independent expert must consult trial participants and make recommendations about whether the CDC trial is effective and whether it should be implemented outside of the trial areas.[191]

The evaluation requirements were inserted into Part 3D of the SSA Act by the Social Services Legislation Amendment (Cashless Debit Card Trial Expansion) Act 2018 as a result of former Senator Tim Storer’s successful amendment to the Social Services Legislation Amendment (Cashless Debit Card Trial Expansion) Bill 2018.[192] In his second reading speech on the Bill, Senator Storer stated:

I will not support further trials or extensions of the cashless welfare card if these trials are shown to be detrimental to its objectives; however, I genuinely believe in giving initiatives a chance if they have the potential to help the vulnerable in society. I will always seek to conduct my politics based on reliable data and evaluation. Therefore I will be asking the Senate to support an independent evaluation of the government's review of the card. If we can get reliable data out of this trial and have the review of that data independently evaluated and reported, we will significantly better understand what we should do in the future with regard to the cashless debit card.[193]

The Government supported Senator Storer’s amendment. According to Senator Fifield (then Manager of Government Business in the Senate), the amendment required ‘the government to conduct a review of any evaluation to ensure that the findings are accurate.’[194] According to the Parliamentary joint Committee on Human Rights ‘no independent evaluations of the two reviews of the cashless welfare trial have been undertaken’[195] and notes:

The statement of compatibility does not explain why the bill proposes establishing cashless welfare as an ongoing measure before these [two 2019] trial evaluations have been completed, published, and considered.[196]

The Department of Social Services commissioned an independent impact evaluation of the cashless debit card from the University of Adelaide. According to evidence given in Senate Estimates, the Department has received a final draft of the summary report of this evaluation.[197] If the Bill’s proposed amendment to section 124PS is made, there will be no legislated requirement for the Minister to have this evaluation independently evaluated after receiving it from the Department.

Item 114 in Part 3 of Schedule 1 to the Bill repeals subsections 124PS(2) and (3); while the review will still need to be evaluated, the SSA Act will no longer prescribe who must undertake the review, when it must be done by, who the evaluator must consult with nor require the reviewer to make recommendations as to the effectiveness and expansion of the CDC arrangements.

The Explanatory Memorandum asserts that the evaluation requirement is ‘circular’ and could lead to ‘ongoing evaluation’, and notes that the amendments allow for a ‘desktop evaluation’ of any review, to ‘lessen the ethical implications associated with avoidable repeat contact with vulnerable individuals.’[198] It is not clear how the proposed amendments reduce circularity given the Minister must still cause an evaluation if a review is undertaken.

Requirement for Secretary to issue participation notice

The proposed amendments would require the Secretary to issue a notice to a person that they are a CDC program participant; currently a person is automatically part of the trial if they satisfy the eligibility criteria.[199] The Secretary’s notice may be revoked at any time and will not be reviewable.[200] According to the Explanatory Memorandum to the Bill, the purpose of the notice is to ensure ‘that administrative practices are in line with the legislation and any unforeseen circumstances can be managed’ and it will ‘enable the triggering of participants to be staggered or temporarily paused, for example, in response to emergency situations such as bushfires or COVID-19’.[201] The requirement will not apply to existing CDC trial participants unless they first exit the program.[202] The notice requirement commences on 8 March 2021.[203]

Voluntary participation

The proposed amendments will allow a person to voluntarily participate in the CDC programme even if they move away from the program areas. Voluntarily participation will also be extended to the Bundaberg and Hervey Bay area which is currently not permitted.[204]

Northern Territory—transitioning from income management to the cashless debit card

On 25 March 2019 the Government announced plans to transition Income Management participants to the cashless debit card.[205] This measure was included in the 2019–20 Budget with the Government planning to begin the transition on 1 January 2020.[206] The 2019 Bill, which seeks to enable the transition, was introduced into the House of Representatives on 11 September 2019. While the 2019 Bill received a third reading in the House of Representatives it has not been debated in the Senate.[207]

As noted above under the heading ‘History of the Bill’, many of the provisions enabling a transition from income management to the CDC contained in the 2019 Bill have been incorporated into the current Bill.

The Bill does not bring Income Management to an end. Income Management would continue to operate in a number of existing sites around Australia.

The Government’s rationale

The Department of Social Services takes the position that income management ‘has a limited ability to create change within communities’. According to the Regulation Impact Statement (RIS) included as part of the Explanatory Memorandum:

... Income Management is a costly and complex program to run, that requires the Government to provide significant support to participants and merchants. Due to the complexity of the separate measures, including personalised targeting, different placement criteria and payment splits, Income Management is a largely incoherent policy that has a limited ability to create change within communities.[208]

An additional argument in the RIS is moving from the BasicsCard to the cashless debit card would allow cardholders to access a larger number of merchants and would reduce the administrative burden on merchants.[209]

Northern Territory CDC trial criteria

Subdivision A of Division 2 in Part 3D of the SSA Act sets out the trial areas for the CDC and circumstances in which a person is subject to the CDC trial (if the Bill is passed by Parliament, this will be the CDC program areas rather than a trial). Proposed section 124PGE (inserted into Subdivision A by item 74 in Part 2) sets out the criteria for a person to be subject to the CDC program within the NT program area. There will be three different sets of criteria under which a person may be required to participate in the program:

• the person or their partner is receiving a category E welfare payment—proposed subsection 124PGE(1)
• the person or their partner is receiving a category P welfare payment and a child protection officer of the Northern Territory, or a recognised authority of the Northern Territory requires the person be a trial participant—proposed subsection 124PGE(2) or
• the person is a vulnerable welfare recipient and receiving a category P welfare payment— proposed subsection 124PGE(3).

So long as a person continues to satisfy the requirements of proposed subsections 124PGE(1), (2) or (3), a person will be subject to the CDC program even if they no longer live in the NT.[210] While the Explanatory Memorandum to the Bill suggests that this is to enable voluntary participation should a person move out of the program area, it would appear to extend beyond voluntary participation.[211]

It is proposed that the Minister will have the power to exclude parts of the Northern Territory from the CDC program area by way of notifiable instrument.[212] The Scrutiny Committee is concerned with this as notifiable instruments are not generally subject to the tabling, disallowance and sunsetting requirements which apply to legislative instruments under the Legislation Act 2003.[213] The Committee does not consider that the existing power in subsection 124PD(2) of the SSA Act to amend the current trial areas provides sufficient justification as to why it is considered necessary and appropriate for the parts of the Northern Territory area to be excluded by notifiable instrument—the Committee has requested that the Minister provide such reasons.[214] The Committee has also requested the Minister’s advice as to whether the Bill can be amended so that determinations made under subsection 124PD(2) to exclude any area (excluding Cape York) from the program, can be made by disallowable legislative instrument.[215]

Disengaged youth and long-term welfare payment recipients

Under proposed subsection 124PGE(1) a person will be subject to the CDC program if:

• the person’s usual place of residence is, becomes or was within the Northern Territory
• the person receives a ‘category E welfare payment’, that is either:
  • Youth Allowance
  • Newstart Allowance
  • Special Benefit
  • pension Parenting Payment (single)
  • benefit Parenting Payment (partnered)[216]
• the person has not reached the pension age
• if the person has a payment nominee, the nominee is also a CDC program participant or subject to income management
• the person is not undertaking full-time study
• the Secretary has notified the person they are a CDC program participant and
• the person has not been excluded by a wellbeing or exit determination.

Notice required to be provided

Proposed paragraph 124PGE(1)(f) requires the Secretary to give the person a notice stating that the person is a program participant. The power for the Secretary to issue the notice is given under proposed subsection 124PGE(5) and any such notice is not a legislative instrument.[217]

The proposed changes made by items 94 and 95 in Part 2 of Schedule 1 to the Bill mean that the Secretary’s decisions relating to program participation, namely, a decision to give or a program participation notice, will not be reviewable by the Secretary (internal review) or the Administrative Appeals Tribunal.[218]

Key issue: measure is broader than under the IM regime

The Explanatory Memorandum states:

... [proposed] subsection 124PGE(1) reproduces the long-term welfare recipients and disengaged youth measures established under IM but combines the criteria into one subsection for the purposes of the cashless welfare arrangements.[219]

However, this new measure is broader than the two existing income management measures. Under the existing disengaged youth measure a person receiving a category E payment must have been receiving that payment for at least 13 weeks during the 26-week period ending immediately before the test time.[220]

Similarly, under the long term welfare recipient measure a person must have been receiving a category E payment for at least 52 weeks during the 104-week period ending immediately before the test time.[221]

The Bill’s proposed subsection 124PGE(1) does not include any restriction based on the time a person has been receiving a payment. As a result the new measure will include short-term as well as longer-term recipients of Youth Allowance, Newstart Allowance, Special Benefit, Parenting Payment (single) and Parenting Payment (partnered).

Recipients of social security referred by a child protection officer or the NT Department of Health

The same CDC participation criteria that applies under proposed subsection 124PGE(1) also applies under proposed subsection 124PGE(2), except that:

• the person or the person’s partner must receive a category P welfare payment (rather than category E)—those payments include a social security benefit or pension or a payment under the ABSTUDY scheme which includes a living allowance component[222] and
• a child protection officer of the Northern Territory, or a recognised authority of the Northern Territory must require the person be a CDC participant.[223]

Under proposed paragraph 124PGE(2)(d), the Secretary must receive a written notice from a ‘child protection officer’ of the NT, or an officer or employee of a ‘recognised State/Territory authority’ of the NT requiring the person be a trial participant:

• a ‘child protection officer’ is an officer or employee of the NT who has functions, powers or duties in relation to the care, protection or welfare of children[224]
• the current ‘recognised State/Territory authority’ in the NT is the Northern Territory Department of Health.[225]

Vulnerable welfare recipients

Proposed subsection 124PGE(3) applies to vulnerable welfare payment recipients. The same CDC trial criteria that applies under proposed subsection 124PGE(1) also applies under proposed subsection 124PGE(3), except that:

• the person must receive a category P welfare payment (rather than category E) and
• the person must be a ‘vulnerable welfare payment recipient’.

The Secretary is empowered under existing section 123UGA of the SSA Act to determine that a person is a vulnerable welfare payment recipient for the purposes of the income management regime under Part 3B—the determination must comply with any decision making principles set out in a legislative instrument made by the Minister.[226] However, it is not clear whether existing subsection 123UGA(1) allows the Secretary to rely on their power in Part 3B of the SSA Act to determine whether a person is a vulnerable welfare payment recipient for the purposes of proposed subsection 124PGE(3).[227]

The principles the Secretary must comply with are set out in the Social Security (Administration) (Vulnerable Welfare Payment Recipient) Principles 2013 (Cth) (the Principles). It is not clear whether it is intended that this instrument will be relied on for the purposes of proposed subsection 124PGE(3), given its focus and references to the income management provisions. Clause 10 of the Principles expressly excludes participants in the trial of cashless welfare arrangements from being subject to a determination by the Secretary under subsection 123UGA(1). This means the Principles will likely need to be amended for the proposed provisions to operate as intended.

Notwithstanding the above discussion, it is intended that the Secretary can rely on an existing vulnerable welfare payment recipient determination made under section 123UGA, for the purposes of transitioning vulnerable welfare recipients from income management to the CDC trial.[228]

Exclusions from CDC in the NT

Full-time students excluded

The CDC program in the NT will not apply to a person who is ‘undertaking full-time study’ regardless of whether they are in the NT or not. In the existing CDC trial areas—that is, Ceduna, East Kimberley, Goldfields, Bundaberg and Hervey Bay areas—the CDC program applies to full-time students unless they live outside their respective trial area while undertaking their study.[229] This difference may reflect the fact that the NT is likely to eventually comprise the ‘program area’.

Wellbeing and exit determinations

The proposed changes do not apply to a person who is covered by a determination made under existing provisions that the program would pose a serious risk to the person’s health or the person is able to manage their affairs.[230]

Under subsection 124PHA(1) of the SSA Act, the Secretary must determine that a person is not a CDC participant if the Secretary is satisfied that being a participant would pose a serious risk to the person’s mental, physical or emotional wellbeing. However, the Secretary has no obligation to inquire into whether this is the case.[231] As discussed above, proposed amendments will also require the Secretary to revoke the exemption on referral by a state or territory officer who consider the person be a CDC participant on the basis of ‘medical or safety reasons relating to the person or the person’s dependents’.[232]

Under subsection 124PHB(3), the Secretary may also determine that a person is not a trial participant if the Secretary is satisfied that the person can demonstrate reasonable and responsible management of the person’s affairs (including financial affairs), taking into account a range of factors as well as any requirements made by the Minister set out in the relevant legislative instrument.[233] As discussed above, proposed amendments would also require the Secretary to comply with ‘decision-making principles’ set by way of legislative instrument by the Minister.[234] The Secretary will also be required to revoke a determination that a person is exempt from the CDC program, if the Secretary is no longer satisfied that a person can demonstrate reasonable and responsible management of the person’s affairs—this differs from the current requirements, which appears to require a referral by a health or community worker before the Secretary can make such a decision.[235]

Transitioning IM participants to CDC

The proposed CDC program provisions for the Northern Territory apply to persons whose usual place of residence is in the Northern Territory on or after commencement (three months after Royal Assent).[236]

As noted above, the Secretary is required to notify a person that they are a program participant.[237] The Explanatory Memorandum states that this will be used to facilitate the staggered rollout of the CDC in the NT, under which approximately 25,000 income managed participants will be transitioned over a period of nine months.[238]

The Secretary may transfer the balance of a person’s income management account to their welfare restricted bank account within sixty days of the person becoming a CDC trial participant.[239]

Items 3 and 4 in Part 1 of Schedule 1 of the Bill prevent a person from being subject to the income management regime under the disengaged youth or long-term welfare payment recipient measures, unless they were subject to it before commencement (the day after Royal Assent).[240] This means that there will be a gap in which new entrants will not be subject to income management and will instead be placed on the CDC trial as it is rolled-out.[241]

Cape York—transitioning from income management to the CDC

One of the major effects of transitioning income management participants in Cape York to the cashless debit card is that the arrangements will become permanent. Currently paragraphs 123UF(1)(g) and 123UF(2)(h) of the SSA Act include an end date for income management in Cape York.

The Government’s rationale

According to the Regulation Impact Statement, moving income support participants to the cashless debit card will give them ‘a range of flexible payment options, fewer restrictions on participants and merchants, and significant, sustained improvements in communities’.[242]

Key provision: Cape York area CDC criteria

Subdivision A of Division 2 of Part 3D of the SSA Act sets out the trial areas for the CDC and circumstances in which a person is subject to the CDC trial (if the Bill is passed by Parliament, this will be the CDC program areas rather than a trial). Proposed section 124PGD (inserted into Subdivision A by item 74 in Part 2) establishes the criteria under which a person will be a CDC program participant in the Cape York area—the following criteria must be satisfied:

• the person’s usual place of residence is, becomes or was within the Cape York area
• the person or the person’s partner receives a ‘category P welfare payment’—that is:
  • a social security benefit[243]
  • a social security pension[244] or
  • an ABSTUDY payment that includes a living allowance amount[245]
• the Family Responsibilities Commission[246] has notified the Secretary that the person be a participant and
• if the person has nominated a person as a payment nominee[247] for the purposes of the Income Management (IM) rules, the nominated person is either a CDC trial participant or subject to IM.[248]

If, after commencement, a person whose usual place of residence is within the Cape York area leaves the area, they will still remain subject to the CDC trial.[249]

Cape York area

The Minister is given the power to determine the Cape York area subject to CDC arrangements by way of notifiable instrument.[250] Under proposed subsection 124PD(3), the instrument specifying the Cape York area may rely on another instrument or ‘other writing’ in force from time to time.[251] This means that the Cape York area can be varied from time to time based on material external to the notifiable instrument, expanding or contracting the size of the CDC program accordingly. The Explanatory Memorandum provides the following justification:

This approach is necessary to ensure that the cashless welfare arrangements operate seamlessly for people who usually reside in the Cape York area. The process will also assist the FRC to perform its role effectively and according to Commonwealth and Queensland law. The Department will make any incorporated material freely available to the public either by publication of the material on the Department’s website and by allowing public inspection of any incorporated material at its National Office.[252]

The Scrutiny Committee is concerned that the program area in Cape York can be amended by a notifiable instrument as such instruments are not generally subject to the tabling, disallowance and sunsetting requirements under the Legislation Act 2003.[253] The Committee does not consider that the existing power in subsection 124PD(2) of the SSA Act to amend the current trial areas provides sufficient justification as to why it is necessary and appropriate for the Cape York area to be determined by notifiable instrument—the Committee has requested that the Minister provide such reasons.[254] The Committee has also requested the Minister’s advice as to whether the Cape York area can be set out in the primary legislation or, at a minimum, determinations of the area be made by disallowable legislative instruments.[255]

Transitioning IM participants to CDC

The proposed CDC program provisions for the Cape York area apply to persons whose usual place of residence is in Cape York on or after commencement (three months after Royal Assent).[256] Existing income managed persons will be transferred to the CDC regime on commencement so long as they satisfy the CDC program criteria.[257] This will result in approximately 150 participants within the Cape York area transitioning onto the CDC on commencement.[258] As the income management regime is due to sunset 31 December 2020, the Bill proposes to extend the regime to 31 December 2021 to enable the FRC to continue to rely on its enabling legislation to manage income managed persons and support the transition to CDC.[259]

The Secretary may, within 60 days of the person becoming a CDC trial participant, transfer the balance of a person’s income management account to their welfare restricted bank account.[260]

Percentage of payments restricted to the CDC

Item 84 in Part 2 of Schedule 1 of the Bill inserts proposed subsections 124PJ(1A) to (1D) into the SSA Act. These provisions set out the portion of benefits (‘restrictable payments’) paid by instalments which will be ‘restricted’ and therefore subject to the restrictions of the CDC in the Northern Territory and Cape York.

If a restrictable payment is payable to a CDC participant in a lump sum, 100 per cent of the gross amount of the payment is restricted.[261]

Percentage which can be restricted to CDC

Northern Territory

Proposed subsections 124PJ(1B), (1C) and (1D) set out the portion of a ‘restrictable payment’[262] paid by instalment that must be quarantined for the purposes of NT CDC participants. The default restricted and unrestricted component varies depending on the particular CDC program criteria the participant satisfies:

• for payments made to persons subject to CDC in the NT under either proposed subsections 124PGE(1) or (3), the restricted portion is 50 per cent of the gross amount of the payment. The remaining 50 per cent is the ‘unrestricted portion’ and[263]
• for payments made to persons subject to the CDC trial in the NT under proposed subsection 124PGE(2) (welfare payment recipients referred by a child protection officer or the NT Department of Health), the restricted portion is 70 per cent of the gross amount of the payment. The remaining 30 per cent is the ‘unrestricted portion’[264]

In the case of voluntary participants from the NT, 50 per cent of their income will be restricted—all other non-NT voluntary participants have 80 per cent of their income restricted.[265]

Minister’s power to vary in the NT

The proposed amendments would also enable the Minister to, by notifiable instrument, vary the restricted and unrestricted percentage for NT trial participants—notifiable instruments are not generally subject to the tabling, disallowance and sunsetting requirements under the Legislation Act 2003.[266] The percentages which can be varied by the Minister depend on the category the program participant is subject to in the Northern Territory. Table 3 compares the default portion of payments which are quarantined for the purposes of NT CDC program. It also sets out the power of the Minister to vary the restricted and unrestricted amounts for each CDC program category in the NT.

While noting the justification provided in the Explanatory Memorandum to the Bill, the Scrutiny Committee is concerned that the proposed amendments gives the Minister ‘broad powers to determine, in relation to classes of program participants, the portion of payments that are restricted, with little or no guidance on the face of the bill as to how these powers are to be exercised’.[267]

As discussed below under the heading ‘Secretary’s power to vary’, the Secretary also has the power to vary the restricted amount to zero per cent. However the Secretary may only do so where, broadly, the person’s funds cannot be accessed because of technological fault or malfunction, a natural disaster or where the person is in severe financial hardship as a result of exceptional and unforeseen circumstances.[268] The Minister’s variation does not apply to a person who is subject to a variation made by the Secretary.[269]

The Scrutiny Committee has requested the advice of the Minister about:

• how the Secretary's powers would be effective to ensure the Minister’s powers are exercised appropriately (noting that the Minister’s powers apply to classes of persons while the Secretary’s apply to individuals)
• whether (at least high-level) rules or guidance on the Minister’s powers could be included in the Bill, including a requirement that the Minister only exercise these powers after community consultation and a subsequent community request and
• whether the Bill can be amended to provide that the Minister’s determinations be made by disallowable legislative instrument rather than notifiable instrument.[270]

Table 3: default restricted and unrestricted portions for NT CDC trial participants

NT CDC trial criteria provision	Restricted portion	Unrestricted portion	Variation power by Minister for NT CDC program
Disengaged youth and long-term welfare payment recipients (proposed subsection 124PGE(1))	50%	50%	May vary the restricted amount up to 80% and vary the unrestricted amount to an amount below 50% for particular areas of the NT
Recipients referred by a child protection officer or the NT Department of Health (proposed subsection 124PGE(2))	70%	30%	May vary restricted amount up to 80% or unrestricted amount up to 100%
Vulnerable welfare recipients (proposed subsection 124PGE(3))	50%	50%	May vary restricted amount up to 80% or unrestricted amount up to 100%

Source: proposed subsections 124PJ(1B), (1C), (1D), (2A) and (2B) of the SSA Act.

Cape York

Proposed subsection 124PJ(1A) sets out the portion of a ‘restrictable payment’ paid by instalment that must be quarantined for the purposes of the CDC program in the Cape York area.

For payments made to persons subject to the CDC trial in the Cape York area, the gross restricted portion is:

• the percentage specified by the FRC under the notice provided to the Secretary (that is, the notice requiring the person be subject to the CDC trial) or
• if there is no amount specified in the notice—50 per cent.[271]

The remaining percentage is the ‘unrestricted portion’.[272]

Secretary’s power to vary

The Secretary may, in the case of a program participant (including a voluntary participant), vary the restricted amount to zero per cent where the person’s funds cannot be accessed because of technological fault or malfunction, a natural disaster or where the person is in severe financial hardship as a result of exceptional and unforeseen circumstances.[273]