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Is income management working?

  Much of the debate surrounding income management of welfare payments has related to the question of evidence. That is, is there evidence to justify the policy? Alternatively, is there evidence of policy failure or harmful consequences arising from income management? In other words, is income management working?

Income management (also known as ‘welfare quarantining’) refers to a policy under which a percentage of the welfare payments of certain people are set aside to be spent only on ‘priority goods and services’ such as food, housing, clothing, education and health care. Introduced by the Howard Government in 2007, income management has been criticised by some as paternalist and stigmatising.

A new Parliamentary Library Background Note, Is income management working?, provides a brief guide to the evidence about the efficacy of income management. It highlights the absence of adequate data related to the effectiveness or otherwise of income management, noting there are very few studies available that have attempted to directly measure the impact of income management separately from other policy interventions. Such evaluations as have been attempted should be treated with caution due to a range of methodological problems such as:
  • the lack of comparison group or baseline data
  • the limited amount of quantitative data
  • the strong reliance on qualitative measures
  • questions over the independence of some evaluations and
  • problems with other design aspects of various reviews.
The Background Note also summarises the available evidence in relation to the operation of income management in the three areas in which it currently operates: the Northern Territory, Queensland and Western Australia.

In each of these areas, evidence is subject to the limitations outlined above. In none of these locations is there unambiguous evidence for or against the effectiveness of income management. The overall picture is one in which positive changes have been uneven and fragile. On the other hand, there is no clear evidence that income management is responsible for a worsening of the situation in areas in which it operates.

Indeed, the Background Note concludes, it may be that the evidence in relation to income management will only become clearer over the long term, especially given the structural nature of the social problems involved.