The Cashless Debit Card Trial

On 15 March 2016, the Federal Government announced a trial of the cashless card trial in Ceduna, South Australia. Co-designed with community leaders, alcohol and drug and other services, the card will be issued to all working age income support recipients, and looks like any other bank card. It is aimed at ensuring that a sizeable portion of people’s income is spent on basic needs.

A range of supports is available to the Ceduna community to ensure the success of the trial. These include $1 million dollars in additional services such as drug and alcohol, mental health, family violence, financial counselling and 24/7 mobile out-reach; $127,000 in telecommunications infrastructure and other services to support the transition to the card.

The cashless debit card

Similar to a regular bank debit card in appearance and function (bar one), the cashless debit card can be used to purchase and pay for all services (including online) except to buy alcohol, to gamble or withdraw cash. The card is loaded with 80% of fortnightly payments, with the other 20% paid into the recipient’s bank account. People can still continue to use other Centrelink services such Centrepay and Rent Deduction Scheme.

The card is compulsory for those receiving Newstart, Disability Support Pension, Parenting Payment and Carers Payment. It is voluntary for those on Age Pension, a veteran’s payment or who earn a wage.

Precursors to the cashless debit card

Income management is a welfare payment that directs a proportion of funds towards specific purpose, that is, to meet ‘basic needs’ such as food, clothing, housing and utilities, and cannot be spent on alcohol, tobacco, pornography or gambling. Income management has been implemented in Australia since the Northern Territory Intervention in 2007 (‘the intervention’). Initially aimed at Indigenous communities, the scheme had been broadened to include non-Indigenous welfare recipients. New Income Management consists of a number of streams, ranging from voluntary to compulsory for specified groups of recipients. Income management was operationalised through the mechanism of a Basics Card, an EFTPOS card that can be used in approved stores and services to purchase non-prohibited goods, and which cannot be used to withdraw cash.

In 2014, the Forrest Review: Creating Parity, recommended a Healthy Welfare Card as a mechanism “to support welfare recipients to manage their income and liabilities, save for the occasional bigger expenses like Christmas or school camps, and encourages welfare income to be invested in a healthy life…The Healthy Welfare Card gives people the capacity to stabilise their financial arrangements to ensure secure housing, payment of regular bills and food on the table. It means that individuals and families can then concentrate on what they need to get a job and to ensure children go to school.”

Does income management work?

In reviewing the evidence on income management as it had been implemented in Western Australia, the Northern Territory and Queensland, a Parliamentary Library Background Note in 2012 concluded that the overall picture is one in which positive changes have been uneven and fragile. There is not clear evidence that income management have made things worse, but neither have there been unambiguous evidence for or against its effectiveness in any of the trial sites.

More recently, a four-year evaluation (2010-2014) conducted of New Income Management in the Northern Territory (NT Report) produced mixed findings, with the final report indicating fewer positive findings than previous reports. The Report concluded that evaluation data does not indicate income management improved outcomes that it was intended to have an impact on. Rather, it can have the opposite effect of creating more dependence on the welfare system, particularly where it had become an instrument that relieves financial management burden. The authors also pointed out that for some individuals, income management can be an effective tool; though there is no evidence that it has effects at the community level or in itself facilities long-term behaviour change.

Interesting findings from the four-year review included:

  • 90.2% of those being income managed are Indigenous.
  • Of those on Compulsory Income Management, among Indigenous people, 41.2% want to get off, 45.4% want to remain on it; while 56.2% of non-Indigenous want to get off the program compared to 31.4% who want to remain. Conversely, 80% of those on Voluntary Income Management would like to stay on.
  • Mixed sentiments as to how income management changes people’s lives: two-fifths thought it made thigs better, one-third thought it made no difference, one-quarter thought it made things worse. A substantial group of people felt that income management is unfair, embarrassing and discriminatory.
  • Many people report having largely been untouched by the measure since they are already managing effectively.
  • No substantive evidence of the program having significant changes relative to its key policy objectives, including changing people’s behaviours.
  • More general measures of wellbeing at the community level show no evidence of improvement, including for children. Only those on Voluntary Income Management reported a relative reduction in alcohol problems in their family, but, along with others, no improvement in problems with drinking in their community.

The controversies and broader reform agenda

Australia’s complex welfare payment system was the subject of a review, A New System for Better Employment and Social Outcomes (McClure Review). Released in February 2015, the Final Report proposed a new architecture for income support with a greater focus on employment. Income management is a part of a broader welfare reform project as it seeks to achieve behavioural change through a payment mechanism in conjunction with a range of support services.

Income management is controversial because icommentators point out time and again that it doesn't work. It is also controversial in that its approach is based on a deficit framework that pathologises poverty; that not only says the roots and causes cause of poverty lay in the individual, but also pathologises specific behaviour (alcohol and gambling addiction, lack of financial management skills) as contributing to impoverished conditions. This approach does not consider factors such as lack of income, and the structural and social forces that shape and influence poverty.

Indigenous Australians, who so far make up the bulk of people placed on income management, have been subjected to waves of government policies and control since first contact. Income management, with its genesis in the Intervention and requiring the suspension of the Racial Discrimination Act 1975, is controversial for its blatant (and near blanket) application to Indigenous Australians. This was yet another wave of government policy that continues to control, regulate, and contain Indigenous Australians.

The worrying aspects of the cashless debit card lie in the fact that it is compulsory and works on the basis of one-size-fits-all, despite findings from the NT Report that these assumptions are not supported by the evidence. However, it is also noted that the Ceduna trial comes with a support structure that includes additional support services and operational support aimed at smoothing the transition to the new system. Additionally, the trial was co-designed over a twelve-month period, although not without its own controversies. Ultimately, in a social policy environment focused on achieving outcomes and evidence-based interventions, income management -and now the cashless debit card- raises important questions about the relationship between evidence and social policy. 

The issues that income management seeks to tackle are complex social problems that are structural, historical and systemic in nature. It remains to be seen where this trial leads to, whether contextual or other limitations constrain further scaling, or whether it is considered an effective mechanism to deliver behavioural change. It might well be that in our eagerness to pathologise poverty, we risk treating the symptom rather than its causes.