Australia proposes cashless welfare card expansion

Will it fly? The South Australian town of Ceduna has been piloting the cashless welfare card, whose rollout has been criticised by Aboriginal groups. (Image courtesy: Naparazzi/flickr)

Australian prime minister Scott Morrison has signalled that he intends to expand the use of a cashless card for distributing welfare payments, limiting recipients’ ability to choose how they spend the money.

Speaking earlier this month, Morrison said that the system – which has been trialled in selected localities for the past two years – will be extended to further territories across the country. The plan immediately drew fire from welfare experts, Aboriginal organisations and opposition MPs.

The PM, who has held office since August last year – when his conservative coalition clinched an unexpected victory in May’s general election – has made welfare reform a priority for his government, a coalition between his Liberal Party and the National Party.

Spending controls

Australia’s Cashless Debit Card programme, administered by the country’s Department of Social Services (DSS), has been trialled since 2016 in a limited number of locations, including the small town of Ceduna in South Australia and Western Australia’s also-remote East Kimberley region. These are, the DSS says, places where high levels of welfare dependence co-exist with “high levels of social harm”.

Eighty per cent of people’s welfare payment is placed onto the card, which cannot be used to withdraw cash, purchase some gift cards, gamble or buy alcohol. The remaining 20% goes into recipients’ normal bank account. The DSS says that the card is a “useful tool operating alongside other reforms to address the devastating impacts of drug and alcohol misuse and problem gambling”.

The grey-coloured card – which some refer to as the Indue Card, after the firm that provides it – is similar to a green-coloured income management card, known as Australia’s BasicsCard. The latter can only be used at approved merchants. 

A pocket policeman

The scheme has been criticised for stigmatising welfare recipients and disproportionately targeting Australia’s Indigenous communities. Media reports have also highlighted concern about the trial’s cost to taxpayers.

The Australian National Audit Office released a report in July 2018 concluding that monitoring and evaluation of the card’s trial was “inadequate”. But the National Party’s federal council has this month voted to roll out use of the cards for all those who are unemployed or receiving parenting payments and aged under 35.

Morrison – who argues that the card has been effective in cutting youth unemployment – has said that “further improvements” may be needed ahead of plans to launch the cards in Australia’s Northern Territory and remote Cape York Peninsula, ABC reported.

Hard to leave

Morrison’s plans to extend the card have coincided with a fresh wave of criticism. Adelaide news outlet Indaily focused on people’s experiences with the card in the original trial locations, while the Guardian raised concerns over the system designed to allow responsible spenders to leave the pilot.

The DSS says that in order to exit the programme, participants need to demonstrate “reasonable and responsible management of their affairs generally, including financial affairs”. Each application to exit takes into account criteria such whether the participant has been convicted of an offence in the past year. On 12 August 2019, the Social Security (Administration) Amendment (Cashless Welfare) Act 2019 legislation was passed, broadening the assessment criteria to consider participants’ personal circumstances as well as their financial management.  

So-called ‘welfare quarantining’ was first introduced in Australia in 2007, as part of the government’s controversial Northern Territory National Emergency Response.

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3 Comments

1. 

   Ben Stewart

   26/09/2019 at

   What is with this obsession we have for tracking the peanuts we throw to our poor. Meanwhile, in many western countries, ninety-five percent of the wealth can be found buried deep in the pockets of our richest citizens who are constantly defrauding the taxman with foreign accounts and tax loop holes. Way to go Australia! Why don’t you lobotomize them. Might be cheaper.

   Reply
2. 

   Adrienne

   02/10/2019 at

   This would be an interesting way to model basic universal income. What percentage of each of our income would be appropriately limited? Would it remove stigma if we all were on the program? If everyone were on the program, how would it change the program. I have heard 50% for necessities, 30% for savings/debt reduction, 20% for fun, so the 80% necessities of this card isn’t out of nowhere (assuming the amount is so small that there would be no saving or debt reduction feasible).

   If things I proposed were able to be actually viewed by people able to affect change who cared about things I proposed (ha ha), I would suggest identifying what the basic needs of a person in the relevant society should be based on economic modeling and set that number at 50% of potential income and have the spending on that money restricted to basic needs suppliers (rent, insurance, transportation, heat, electricity, food, medical). Then, have 20% of that potential income put into the bank for “fun” things like daycare for your kids, vacuums and appliances when they break, etc. – the discretionary payments. And then have 30% available through collaboration with the government for training. This would be an equivalent to investing or saving. Maybe even some small investment in RRSPs. Things that legit model how the expert economists and home money management experts suggest money should be budgeted.

   Reply
3. 

   Alan

   18/10/2019 at

   The present way the world is being organised is plainly not working so why not try changing it and making it fairer, I would start with taking the profit out of food find a way of feeding us all without any organisations making any profits. I often wonder how we came up with the idea that we have to pay for food, we don’t pay to breath but it’s as necessary as eating.
   When this becomes the norm we can start looking at energy, housing and see where it takes us.

   Reply