Welfare Rights Review

Income Management gets new lease on life (and another $146m)

This year’s Federal Budget saw a further $146.7 million to fund the current Income Management arrangements until July 2017. Other changes to the scheme, opposed by NWRN, are being considered in a bill before the Parliament.

The bill proposes measures which would continue funding of current Income Management for a further two years and achieve savings by abolishing the Voluntary Income Management Incentive Payment and the Matched Savings Scheme ($6 million over two years).  It will also deliver a saving of $4 million over two years by removing social work assessments of vulnerable welfare recipients and replacing it with Ministerial determination of classes of people to be subject to this type of income management.   

Further savings of $26 m are expected to result from administrative changes, such as streamlining third party referral mechanisms, limiting the number of compulsory contacts that a person who is income managed has with Centrelink staff and aligning funding end dates for Income Management.

NWRN supported the measure to abolish the Matched Savings Bonus, where a maximum of $500 is paid to as person who can manage to save $500 in their Basics Card account. In nearly 8 years only 60 people have been able to reach the target and save $500. Survey after survey shows that most people on low incomes simply cannot save from their meagre income support payments, which are way below the poverty line.

However, NWRN opposes the other measures, particularly those which remove the Voluntary Income Management Incentive Payment and case by case vulnerable social work assessments.

Under the Voluntary Incentive Payment a person is paid $250 at the end of each consecutive 26 week period that the person remains on voluntary income management. This payment will cease, under proposals before the Parliament. With income support payments so low, some people have signed up for the scheme, just to receive the extra $10 a week.

As at March 2015, around 9,500 people have received more than one bonus payment. One-in-five people on Income Management, about 5,300 people are voluntary participants and will be financially worse off.

The largest group of income support recipients to miss out are the 3,200 people on the Disability Support Pension. Over 3,300 mainly Indigenous people in the Northern Territory will lose up to $500 a year if the Senate supports the removal of this incentive payment.

The Vulnerable Income Management measure operates on both a case by case basis and can apply to a class of people, as in the youth triggers measure. The Bill would remove the protections provided in the 2010 Bill where social workers were principally charged with making assessments about whether or not a person is vulnerable and would benefit from income management.  The change to Ministerial Determination of classes of people increases the likelihood that welfare quarantining would be compulsorily applied to those who may not need it and who would not benefit from it. It could be harmful to individuals.

As a Parliamentary Library Bills Digest from June 2015 pointed out: “the Government plans to retain a measure that appears to be relatively ineffective but widely used, (Vulnerable Measure (youth triggers)) while eliminating a measure that it not widely used but appears to be effective (Vulnerable Measure (social worker assessed)).”

In our submission on the bill, NWRN noted that less than 200 people had been assessed by Centrelink qualified and experienced social workers as being likely to benefit from Income Management, and argued against imposing income management on classes of people without any assessment of individual circumstances. Decision makers should have discretion to exempt a person from Income Management, based on their individual circumstances. 

To date, Income Management has cost in excess of $1 billion. Patrick McClure’s report to government in February 2015 on welfare reform urged a cautious approach to income management, and suggested that any further changes should be informed by evaluations. With a number of reputable researchers releasing solid evaluations that recently have called into question the value of continuing with income management, the decision to continue to spend more money on income management is questionable.