Welfare Rights Review

Billionaire’s plan for a ‘Healthy Welfare Card’ – coming to a supermarket near you!

Income Management in the Northern Territory has not led to people sending their children to school more often, to people purchasing healthier food, or to people drinking less alcohol, the final report from a three-year study commissioned by the Department of Social Services has found. But this hasn’t stopped the juggernaut of the Healthy Welfare Card being supported by Andrew Forrest.

These disappointing findings have not deterred supporters of mining magnate ‘Twiggy’ Forrest who has recommended that all people receiving social security payments – apart from the politically sensitive groupings of Age and Veteran pensioners – have 100 per cent of their income quarantined. The mechanism for doing so is an EFTPOS-style card that would operate through the banking system using the ‘tap and go’ faculty.

Dubbed the “Healthy Welfare Card” by Andrew Forrest, a ban on access to all cash has been rejected by the Government, which recently announced its intention to introduce trials of a new card system in “disadvantaged communities” before the end of the year. The card, which would work alongside the existing BasicsCard, would be blocked from being used to purchase alcohol or for gambling.

The Government has claimed that the Healthy Welfare Card would reduce levels of domestic and family violence. Claims that a system modelled on Income Management would help to limit the scourge of domestic violence is contrary to findings of a 2011 report into family violence by the Australian Law Reform Commission. It accepted evidence from stakeholders that people experiencing family violence are likely to be more reluctant to disclose their circumstances where such disclosure may lead to compulsory Income Management, which may result in the victim missing out on appropriate services and support.

The Law Reform Commission, in its final report to Government, recommended that the federal government should amend the Social Security Act to ensure that anyone experiencing family violence is not subject to compulsory Income Management.

More questions about Income Management:

We do not know any of the details about when it would start, who will be impacted, or what percentage of a person’s income will be quarantined. But what we do know is that Income Management, which is similar to what’s being proposed, has been in place for the last seven years. It has made no lasting or significant improvements to the lives of people who have been forced into the scheme.

Parliamentary secretary to the Prime Minister Alan Tudge has confirmed that the Government has been in talks with the major banks about the debit card proposal.

"We're predominantly looking at how it might apply to vulnerable and at-risk people," explained the Minister, who noted that "vulnerable" could include people who were in danger of becoming homeless, or those with substance abuse issues. 

“It would involve both indigenous and non-indigenous Australians. Importantly, the Minister indicated that the Government would initiate consultations with affected communities before the new policy was rolled out.

“But let’s look at what we know from all the evaluations that have been done on Income Management to date: it’s costly, it’s demeaning for many, it doesn’t stabilise people’s lives, it doesn’t lift them out of poverty, and it doesn’t help people find work where they want it.

“The best that can be said is that the scheme may help some people who are vulnerable and who volunteer to take part in it. It’s been found to make life worse if placed mandatory on the scheme.

“There is no case for expanding the system of income controls, which to date, has cost more than $1 billion dollars since 2007. At a time when the Federal Government is taking the razor to social welfare programs, and was forced to back down on $25 million worth of cuts to legal assistance programs, is now the right time to spend even more money to manage the spending habits of people receiving social security payments?

“It would be deeply disturbing to waste more Commonwealth funds on a paternalistic and bureaucratic scheme, said the National Welfare Rights Network President Maree O’Halloran.

“Even the Australian Bankers Association (ABA) found that the Forrest welfare card had ‘technology and infrastructure limitations’, and that ‘the technology to develop the card would be costly and complicated.’ Additionally, the peak banking lobby stated that it disapproved of the Government seeking to use the banking industry to ‘prohibit the purchase of goods and services available to other Australians.’

“Our experience is that the overwhelming majority of people living on low incomes know how to budget well. Some people may experience problems budgeting, but Income Management or a discriminatory, welfare card is not the answer.  Other options include Centrepay, used by over 640,000 people receiving Centrelink payments. An additional options is the expansion of weekly payment of income support, which is currently being used by 20,000 people.

“People living on low and inadequate incomes do not need an army of Canberra bureaucrats to micro-manage their finances, to tell them when whether they can buy a newspaper, purchase a lamington from the school tuck shop or have a gold coin to visit the local swimming pool.”

“The cost of income managing some people is over 60% of the basic yearly rate of the Newstart Allowance.   Between 2005-06 and 2014-15, Income Management will cost $1 billion according to estimates by the Parliamentary Library.

As at 2 January 2015, there were 24,845 people subject to Income Management Australia-wide, with 20,165 located in the Northern Territory.

Two recent evaluations into Income Management have found the scheme wanting. A report into ‘Place-Based Income Management’ by Deloitte Access Economics found that those who volunteered for Income Management may have received some benefits from participating, but young people subject to mandatory triggers experienced problems as a result of their participation program.

The other recent evaluation of report in late 2014 found “no evidence of changes in spending patterns, including food and alcohol sales, other than a slight possible improvement in the incidence of running out of money for food by those on Voluntary Income Management, but no change for those on compulsory Income Management. The data show that spending on BasicsCard on fruit and vegetables is very low.”

The Income Management scheme was found to have failed and caused difficulties for many people:

  • Income Management has made little difference to alcohol sales, and “rather than building capacity and independence, for many the program has acted to make people more dependent on welfare”.
  • Measures of well-being at the community level show no evidence of improvement, including for children.
  • While people liked access to fee-free banking, particularly in remote locations, people experienced problems with the BasicsCard including the imposition of minimum purchase limits, card surcharges, and had limited access to outlets that accepted the card. People also reported having to purchase items at higher costs at approved merchants.
  • Payment of rent was a problem for some, particularly where landlords required cash payments.
  • A substantial group of people subject to Income Management felt that it is unfair, embarrassing and discriminatory.

The NWRN recommends that the Government abolish Compulsory Income Management or introduce a genuinely voluntary scheme of Income Management for people who believe they would benefit from this program. In the alternative, that the government move to a case-by-case Income Management model.  

Forrest is reportedly unhappy with the Federal Government’s rejection of his proposal for a 100 per cent cashless card, and time is running out for the various Income Management scheme, with funding due to expire on 30 June 2015 and June 2016.

Watch this space for more on Income Management and the Forrest Review. NWRN’s Submission on the Forrest Review, which contained 36 other recommendations, aside from the plan for the Healthy Welfare Card, can be found here.