BILLS DIGEST NO. 110, 2016–17              14 June 2017

Social Services Legislation Amendment (Queensland Commission Income Management Regime) Bill 2017

Don Arthur
Social Policy Section 

Date introduced:  24 May 2017

House:  House of Representatives

Portfolio:  Social Services

Commencement: On Royal Assent

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at June 2017.

Purpose of the Bill

The purpose of the Social Services Legislation Amendment (Queensland Commission Income Management Regime) Bill 2017 (the Bill) is to amend the Social Security (Administration Act) 1999 to extend the income management element of the Cape York Welfare Reform initiative until 30 June 2019.

Background

Income management was first introduced in the Northern Territory in 2007 as part of the Northern Territory Emergency Response (NTER).[1] The Howard Coalition Government announced the NTER in response to the release of Little Children Are Sacred: Report Of The Northern Territory Board Of Inquiry Into The Protection Of Aboriginal Children From Sexual Abuse.[2]

Then Indigenous Affairs Minister, Mal Brough, likened the intervention to Australia’s response to the 2004 Indian Ocean tsunami. He envisaged the NTER as a relatively short-term exercise with three phases: stabilisation, normalisation and exit.[3] The Rudd Labor Government continued the NTER after winning office in late 2007.[4]

Income management was initially introduced in 73 prescribed Indigenous communities.[5] Initially, it relied on a variety of approaches including supermarket store cards. The Government later replaced these improvised arrangements with the BasicsCard—an electronic funds transfer at point of sale (EFTPOS) card that can only be used at approved merchants, and cannot be used to buy excluded goods such as alcohol, pornography, gambling products and services, and tobacco products.[6] Under ‘New Income Management’, income management was extended across the Northern Territory in 2010.[7]

From 2008, income management was extended to a number of other locations around Australia. These include areas in Western Australia, the Anangu Pitjantjatjara Yankunytjatjara (APY) lands and Ceduna in South Australia, and the Place-Based Income Management trials in Bankstown (NSW), Logan (Qld), Rockhampton (Qld), Playford (SA) and Greater Shepparton (Vic). All of these sites use the BasicsCard.[8]

More recently, the Australian Government has introduced a cashless debit card as an alternative way of restricting access to cash, alcohol and gambling services.[9] The cashless debit card has been introduced in Ceduna and in the East Kimberly.[10] Since the introduction of the cashless debit card, there have been no new trial sites using the BasicsCard model.

For an overview of income management see Income Management: A Quick Guide.[11]

Cape York—a distinct model of income management

Income management was introduced in the Cape York Welfare Reform trial communities in July 2008, shortly after income management was introduced in the Northern Territory. However, it was developed independently and the two income management models differ significantly.

Rationale

The Cape York model was developed over a considerable period of time and has a well-articulated rationale (see discussion below). The Northern Territory model appears to have been developed much more quickly and its rationale is less well articulated.

Bottom-up versus top-down

The Cape York model was developed by the Cairns-based Cape York Institute for Policy and Leadership with some assistance from outside experts including staff on secondment from the Treasury.[12] Then Cape York Institute Director and Indigenous leader, Noel Pearson, drove the process. The Northern Territory model was developed by the Australian Government with limited consultation in the affected communities.[13] According to Noel Pearson:

… in Cape York the reform agenda was the initiative of Aboriginal leaders, and the policy proposals came from the Cape York Institute–not from government. The Northern Territory policy was unilaterally decided by government.[14]

Targeting

In Cape York, conditional income management is used as a sanction for individuals who have breached their obligations. In the Northern Territory it is applied in a blanket way to entire categories of income support recipients. According to researchers from the Social Policy Research Centre:

The [Cape York Welfare Reform] model of income management is far more targeted than that in the Northern Territory ... Clients on income management in the [Cape York Welfare Reform] trial communities are case managed to a much higher degree, and their progress is closely monitored by the [Family Responsibilities Commission] as well as the other case management arrangements. This approach appears to be successful, and has a number of advantages for the individuals concerned and for the communities more generally, as is evidenced by the results of the social change survey.[15]

According to Mr Pearson, ‘the difference from the Territory is that the Cape York scheme encourages community members to take up their responsibilities. If people are being responsible, they are not affected by income management.’[16]

Cape York model uses income management as a tool to encourage responsible behaviour

In the Cape York model income management is designed as ‘a catalyst for behavioural change’.[17] In the long term, it attempts to reduce problems such as alcohol abuse by encouraging responsible behaviour. In contrast, the Northern Territory model applies income management in a much less targeted way in order to ‘reduce the amount of cash available in communities in which substance abuse, gambling and other anti-social behaviours are problems that can lead to child abuse and community dysfunction’.[18]

One of the most disturbing findings from the evaluation of income management in the Northern Territory was that it seemed to encourage dependence on the welfare system. According to the researchers:

… rather than the program building people’s capacity and motivating them to take responsibility and become independent and self-reliant, for these people it has acted to make their lives more comfortable by relieving them of having to take responsibility for some aspects of their financial management. This in turn has made them more dependent and reliant upon welfare.[19]

The Cape York model does not appear to have the same effect.

History of income management in Cape York

In the early 2000s Noel Pearson and other Cape York Indigenous leaders argued for a voluntary scheme of Family Income Management. This scheme was designed to help households manage their income support payments so that essential expenses such as rent, utilities and food were budgeted for before money was spent on alcohol.[20]

2003—early proposal for income management

In 2003 Acting Aboriginal and Torres Strait Islander Commission (ATSIC) Chairman Lionel Quartermaine suggested paying income support using a smart card that prevented recipients from buying alcohol and drugs.[21] Indigenous leader Noel Pearson supported the proposal arguing that it could help ensure that parents used income support money to feed, clothe and care for their children.[22] Mr Quartermaine’s proposal was rejected by the then Minister for Indigenous Affairs, Amanda Vanstone.[23]

2005–2007—development of the Cape York welfare reform trials

In 2005, as director of the Cape York Institute for Policy and Leadership, Noel Pearson called for a welfare reform trial in Cape York Indigenous communities. Under the proposal, communities would opt-in to the trial and would set up a new welfare reform model that moved beyond the Government’s mainstream approach. A key part of the model would be to create mechanisms that ensured ‘monies received for family go to the wellbeing of the family’.[24]

With support from both the Australian and Queensland Governments, and assistance from staff seconded from the Treasury, the Cape York Institute produced a plan for welfare reform trials in the Cape York communities of Aurukun, Coen, Hope Vale and Mossman Gorge.[25] The 2007 report From Hand Out To Hand Up, set out an analysis of the problems in Cape York Indigenous communities along with detailed policy recommendations. According to the report, Cape York communities had experienced a collapse of social norms with widespread social dysfunction as a result. The report set out a strategy designed to rebuild norms and restore Indigenous authority. The aim was to reinforce norms and values that community members already endorsed rather than to impose norms from outside.[26]

To reinforce social norms, the welfare reform trial would make income support payments conditional on a broader range of obligations. These would include the proper care of children, abiding by tenancy conditions in public housing and not committing drug, alcohol, gambling or family violence offences. To enforce these obligations a new statutory authority—the Family Responsibilities Commission (FRC)—would be established. Where an individual breaches their obligations, the FRC could issue a warning, direct the person to attend support services or place them on ‘conditional income management’.

According to the 2007 report, conditional income management ‘would be the ultimate tool available to the FRC to counter breaches of obligations and encourage individuals to take responsibility for themselves and others in their family and community’.[27]

Conditional income management was designed to serve two purposes. It would act as a deterrent to encourage community members to abide by their obligations and:

… will effectively prevent the flow of welfare income to substance abuse and other behaviours that impact upon the welfare of children and dependents in the Welfare Reform communities. The conditional income management sanction will help to provide a family with a break from dysfunctional behaviour, supporting the success of other support services such as drug and alcohol counselling.[28]

Conditional income management was designed to be targeted and temporary. As From Hand Out To Hand Up explained:

The conditional income management sanction is meant to be a catalyst for behavioural change. In the longer term an individual must take personal responsibility for meeting their obligations. The prospect of sanctions being in place for an indeterminate period would undermine this outcome. Individuals should also be provided with the opportunity to have a sanction lifted once they demonstrate that they can meet their obligations.[29]

2007—legislation

In July 2007 the Minister for Families, Community Services and Indigenous Affairs, Mal Brough, announced that the Government had accepted the Cape York Institute’s proposal.[30] The Social Security and Other Legislation Amendment (Welfare Payment Reform) Act 2007 enabled conditional income management in the Cape York Welfare Reform trials and a separate model of income management that formed part of the NTER.[31]

2014—trial extended to include Doomadgee

Doomadgee joined the Cape York Welfare Reform trial in August 2014.[32]

Evaluation findings

In 2013 the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) released an evaluation report on the Cape York Welfare Reform trial. The report was produced by a number of independent researchers, each authoring a separate section of the report.[33]

According to researchers from the University of New South Wales’ Social Policy Research Centre (SPRC) there was clear evidence that the wellbeing of community residents had improved over the trial period. However:

… it is difficult to establish the extent to which these changes can be attributed directly or indirectly to [Cape York Welfare Reform], and it is not clear whether the four communities are faring better than similar comparison communities in Queensland, all of which have seen some improvements in outcomes over the [Cape York Welfare Reform] period.[34]

In his overview of the trial Michael Limerick, an independent consultant, reported: ‘the evaluation has found that income management imposed by the FRC has been a successful intervention in ensuring that the needs of families and children are met.’[35] According to surveys, ‘78 per cent of respondents in the four communities reported that the BasicsCard made their life better, while 12 per cent thought that it made their life worse.’[36]

However, Dr Limerick noted that income management does not operate on its own:

The trial’s positive signs of progress regarding improved money management are achieved not only through Conditional Income Management, but also through MPower. MPower is a Cape York Partnerships Opportunity Product designed to: support individuals and families to manage money for basic material needs; build capabilities through financial literacy and behaviour change; and build assets through saving and disciplined money management. MPower is the most commonly used support service introduced by the trial, with the usage rate ranging from one-third of Hope Vale residents to about two-thirds of Aurukun and Mossman Gorge residents.[37]

Number of people subject to conditional income management

According to the July 2016 to September 2016 quarterly report from the Family Responsibilities Commission:

Sixty-nine [Conditional Income Management] CIM orders were made in quarter 33, a decrease of 19 from quarter 32. Since the commencement of the Commission 1,926 CIM orders inclusive of original orders, extensions and amendments have been made relating to 767 clients. Further activity during the quarter is as follows: Aurukun, Doomadgee and Hope Vale decreased by 8, 5 and 10 CIM orders respectively, whilst Coen and Mossman Gorge increased by 1 and 3 CIM orders respectively. As at 30 September 2016, 37.6 percent of the Commission’s clients have been subject to a CIM order over the past eight and a quarter years. As at 30 September 2016 there were 173 clients subject to a CIM order which equates to 8.5 percent of clients on a CIM order at a point in time.[38]

Committee consideration

On 13 June 2017, the Senate referred the Bill to the Senate Community Affairs Legislation Committee for inquiry and report by 20 June 2017.[39] Details of the inquiry are at the inquiry homepage.[40] At the time of publishing this Digest, no submissions to the Committee had been published.

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills has not yet reported on the Bill. The next Scrutiny Digest is due to be tabled on 14 June 2017.

Policy position of non-government parties/independents

While in office between 2007 and 2013, the Australian Labor Party supported the Cape York Welfare reform trial and the use of income management. In May 2013 the Labor Government committed resources to enable the trial to continue.[41]

The Australian Greens have consistently opposed income management, including income management in Cape York. The Greens argue that income management is expensive, ineffective and reduces people’s autonomy and personal freedom.[42]

Position of major interest groups

A number of community sector groups such as the Australian Council of Social Service (ACOSS) and the National Welfare Rights Network have been critical of income management. However, these groups acknowledge that the Cape York income management is different to other models. ACOSS notes that the model was not imposed by government but was negotiated with the affected communities and that it relies heavily on case management and counselling with income management as a last resort.[43] Gerard Thomas of the National Welfare Rights Network has said that income management in Cape York is ‘a better model than blanket income management’.[44]

Financial implications

The Government has not provided separate information on the cost of extending conditional income management in the Cape York welfare reform sites. Instead, the Explanatory Memorandum for the Bill gives the cost of extending income management at all sites ($145.5m over the forward estimates).[45]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[46]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights has not commented on the Bill yet.

Key issues and provisions

Extending the sunset date

Income management in Cape York is the only income management measure with a legislated sunset date.[47] The sunset date is set out in the Social Security (Administration) Act paragraphs 123UF(1)(g) and 123UF(2)(h). Paragraphs 123UF(1)(g) and 123UF(2)(h) currently provide that a person can be subject to income management under section 123UF only after a decision by the Family Responsibilities Commission made before 1 July 2017.[48]

Item 1 amends these paragraphs by omitting the references to 1 July 2017 and substituting references to 1 July 2019, with the effect of extending the sunset date from 1 July 2017 to 1 July 2019.

Income management in Cape York was established in 2007 by the Social Security and Other Legislation Amendment (Welfare Payment Reform) Act 2007. Since then it has been extended four times (see Table 1).

Table 1: legislated sunset dates for income management in Cape York

Act

Sunset date

Social Security and Other Legislation Amendment (Welfare Payment Reform) Act 2007

1 January 2012

Family Assistance and Other Legislation Amendment Act 2011

1 January 2013

Social Security and Other Legislation Amendment (Further 2012 Budget and Other Measures) Act 2012

1 January 2014

Social Services and Other Legislation Amendment Act 2014

1 January 2016

Social Services Legislation Amendment (No. 2) Act 2015

1 July 2017

When will the trial be completed?

The objective of the Cape York Welfare Reform trial was to test the policy principles outlined in the 2007 report From Hand Out To Hand Up. According to the report ‘If the trial is successful, the policy principles may be used to inform policy across Cape York Peninsula and potentially in other regions.’[49]

It is not clear whether or not the Government has decided that the trial phase has ended.

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[1].              M Brough (Minister for Families, Community Services and Indigenous Affairs), National emergency response to protect Aboriginal children in the NT, media release, 21 June 2007.

[2].              R Wild and P Anderson, Little children are sacred: report of the Northern Territory Board of Inquiry into the Protection of Aboriginal Children From Sexual Abuse: Ampe akelyernemane meke mekarle, Department of the Chief Minister, Darwin, 2007.

[3].              M Brough, ‘Answer to Question without notice: child abuse’, [Questioner: D Fawcett], House of Representatives, Debates, 21 June 2007, p. 76.

[4].              Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA), Northern Territory emergency response: one year on, Attorney-General’s Department, Canberra, June 2008.

[5].              Australian Institute of Health and Welfare (AIHW), Evaluation of income management in the Northern Territory, Occasional paper, 34, FaHCSIA, Canberra, 2010, p. 1.

[6].              Australian National Audit Office (ANAO), Management of the tender process for a replacement BasicsCard, Audit report, 26, 2010–11, ANAO, Canberra, 2011.

[7].              JR Bray, M Gray, K Hand and I Katz, Evaluating new income management in the Northern Territory: final evaluation report, UNSW Faculty of Arts and Social Sciences: Social Policy Research Centre, Sydney, September 2014, pp. 18–19.

[8].              Department of Social Services (DSS), ‘Welfare quarantining: income management’, DSS website, 24 May 2017. Bray, et al, op. cit., p. 7.

[9].              For an explanation of how the cashless debit card and the BasicsCard differ see: D Arthur and P Pyburne, Social Security Legislation Amendment (Debit Card Trial) Bill 2015, Bills digest, 27, 2015–16, Parliamentary Library, Canberra, 9 October 2015.

[10].              DSS, ‘Cashless debit card: overview’, DSS website, 24 May 2017.

[11].              D Arthur, Income management: a quick guide, Research paper series, 2015–16, Parliamentary Library, Canberra, 15 July 2015.

[12].              Cape York Institute for Policy and Leadership, From hand out to hand up: Cape York welfare reform project: Aurukun, Coen, Hope Vale, Mossman Gorge: design recommendations, Cape York Institute for Policy and Leadership, Cairns, May 2007, p. 1.

[13].              Bray, et al, Evaluating new income management in the Northern Territory: final evaluation report, op. cit., p. 8.

[14].              N Pearson (Cape York Institute for Policy and Leadership), There is nothing the government can do for you that you are unwilling to do for yourself: Sir Robert Menzies lecture 2011, Melbourne, speech, 27 February 2011.

[15].              FaHCSIA, Cape York welfare reform: evaluation: 2012, FaHCSIA, Canberra, 2012, p. 212.

[16].              N Pearson, ‘Ineffectual bipartisanship ruins social policy’, The Australian, 26 March 2011, p. 12.

[17].              Cape York Institute, From hand out to hand up, op. cit., p. 68.

[18].              AIHW, Evaluation of income management in the Northern Territory, Occasional paper, 34, FaHCSIA, Canberra, 2010, p. 2.

[19].              Bray, et al, op. cit., p. 319.

[20].              P Barclay, ‘Noel Pearson’, Radio National, Background briefing, transcript, Australian Broadcasting Corporation (ABC), 29 October 2000.

[21].              J Mazzocchi, ‘Proposal for “smart card” payment for welfare recipients’, ABC Local Radio, The World Today, transcript, ABC, 27 October 2003.

[22].              H Fitzsimmons, ‘Pearson supports welfare “smart card”’, ABC Local Radio, AM, transcript, ABC, 30 October 2003.

[23].              P Donald, ‘ATSIC smart card unlikely solution: Vanstone’, ABC Local Radio, AM, transcript, ABC, 1 November 2003.

[24].              N Pearson (Director, Cape York Institute for Policy and Leadership), The Cape York agenda: address to the National Press Club, Canberra, speech, Cape York Institute for Policy and Leadership, Cairns, 30 November 2005, pp. 8–9.

[25].              K Henry, Wellbeing and public policy: the Australian Treasury, paper presented to the Population Wellbeing Data Gaps Workshop, Australian Bureau of Statistics, Canberra, June 2006.

[26].              Cape York Institute, From hand out to hand up, op. cit.

[27].              Ibid., p. 67.

[28].              Ibid.

[29].              Ibid., p. 68.

[30].              M Brough (Minister for Families, Community Services and Indigenous Affairs), ‘Cape York welfare reform trials to begin in 2008’, media release, 18 July 2007.

[31].              M Brough, ‘Second reading speech: Social Security and Other Legislation Amendment (Welfare Payment Reform) Bill 2007’, House of Representatives, Debates, 7 August 2007, pp. 2–3, 7–8.

[32].              G Elmes (Queensland Minister for Aboriginal and Torres Strait Islander and Multicultural Affairs), Letter to Mr Trevor Ruthenberg, Queensland Government Department of Aboriginal and Torres Strait Islander and Multicultural Affairs, Brisbane, 17 September 2014.

[33].              FaHCSIA, Cape York welfare reform: evaluation: 2012, op. cit., p. iv.

[34].              Ibid., p. 221.

[35].              Ibid., p. 34.

[36].              Ibid.

[37].              Ibid., p. 35.

[38].              Family Responsibilities Commission, Family Responsibilities Commission: quarterly report, 33, July 2016–September 2016, Cairns, p. 10.

[39].              Australia, Senate, ‘Legislation committees – references’, Journals, 42, 2016–17, 13 June 2017, p. 1376.

[40].              Senate Community Affairs Legislation Committee, Social Services Legislation Amendment (Queensland Commission Income Management Regime) Bill 2017, The Senate, Canberra, June 2017.

[41].              J Macklin (Minister for Families, Community Services and Indigenous Affairs), $24.5 million to progress Cape York Welfare Reform, media release, 3 May 2013.

[42].              R Siewert, ‘In Committee: Social Services and Other Legislation Amendment Bill 2013’, Senate, Debates, 5 March 2014, p. 835.

[43].              Australian Council of Social Service (ACOSS), Compulsory income management: a flawed answer to a complex problem: policy analysis, ACOSS, Sydney, September 2014.

[44].              G Thomas (Policy and Media Officer, Welfare Rights Centre), Evidence to Senate Community Affairs Legislation Committee, Inquiry into the Social Services and Other Legislation Amendment Bill 2013, 10 December 2013, p. 5.

[45].              Explanatory Memorandum, Social Services Legislation Amendment (Queensland Commission Income Management Regime) Bill 2017, p. 1.

[46].              The Statement of Compatibility with Human Rights can be found at page 6 of the Explanatory Memorandum to the Bill.

[47].              A Tudge, ‘Second reading speech: Social Services Legislation Amendment (Queensland Commission Income Management Regime) Bill 2017’, House of Representatives, Debates, (proof), 24 May 2017, p. 12.

[48].              The Social Security (Administration) - Queensland Commission (Family Responsibilities Commission) Specification 2015 specifies the Family Responsibilities Commission established under the Family Responsibilities Commission Act 2008 (Qld) as the ‘Queensland Commission’ referred to in section 123UF.

[49].              Cape York Institute, From hand out to hand up, op, cit., p. 17.