The Budget includes funding for an extension of income
management across Australia until 2017, and a trial of a new type of debit card
as recommended by the Indigenous Jobs and Training Review (the Forrest Review).
The Review recommended the new debit card arrangements as a simpler and cheaper
alternative to current income management arrangements.
Income management was first introduced in 2007 as part of
the Howard Government’s Northern Territory (NT) Emergency Response and was
initially restricted to Indigenous communities in the NT.
Subsequent governments have expanded it to include Indigenous and
non-Indigenous people across the NT and at a number of other sites around
Income management sets aside (or ‘quarantines’) a proportion
of a recipient’s income support payment to pay for necessities such as food,
clothing, housing and utilities. Recipients can spend their income-managed
funds using a BasicsCard or by arranging for Centrelink to make a payment on
their behalf (for example, regular rental payments).
Recipients can only use their BasicsCard at approved merchants and cannot use
it to buy excluded goods, such as tobacco, alcohol, pornography or scratch
Income management does not operate uniformly across
locations and target groups. Different locations target different groups for
income management and different groups of recipients have different proportions
of their payments set aside for necessities. Income management is part
of a package of measures that currently includes access to Money Management
courses, a Matched Savings Scheme and an incentive payment for people who
volunteer for income management.
Income management is a costly measure. From 2005–06 to
2014–15, it has cost the Commonwealth around $1.0 billion.
The Forrest Review proposed a less costly approach that relies on bank issued
debit cards. The Government is planning to trial this new approach (see below).
The Government will extend income management in all current
locations until 30 June 2017 under a measure providing $146.7 million over
three years. Income management
currently operates across the NT and in discrete locations in every jurisdiction
except Tasmania and the Australian Capital Territory.
As part of the extension of income management, the
Government will also continue funding for Financial Counselling and Capability
support services in existing income management locations for another two years.
The Government is phasing out two payments associated with
income management—the Voluntary Incentive Payment and the Matched Savings
Payment. The Voluntary Incentive Payment is designed to encourage people to
volunteer for income management. Volunteers can receive a $250 payment for
every six months they participate in the scheme. The Matched Savings Payment,
of up to $500 for participants, is designed to encourage people on income
management to complete an approved money management course and demonstrate a
record of savings. Evidence from a recent evaluation of Place-Based Income
Management suggests that neither measure is effective in changing client
New debit card trial and industry
In response to recommendations in the Forrest Review’s
report, the Government will trial new debit card arrangements in up to three
communities. The Government will decide on locations after consultations with
stakeholders. Parliamentary Secretary to the Prime Minister, Alan Tudge, has
indicated that trials could include both Indigenous and non-Indigenous
The Government will provide $2.7 million in 2015–16 for
consultation and engagement of the new debit card arrangements. Funding for the
trial itself is not for publication because the Government has not completed
negotiations with potential commercial providers.
The Forrest Review recommended introducing new debit card
arrangements as a less costly alternative to current income management
arrangements. Andrew Forrest argued
that a new debit card would allow recipients more choice about where to shop
and that, because it would look like any other bank-issued debit card, would be
less stigmatising than the BasicsCard. The Review’s original
proposal was to completely block access to cash for people using the new debit
card. However, Parliamentary
Secretary to the Prime Minister, Alan Tudge, has indicated that most debit card
users will be able to access part of their payment as cash.
The Forrest Review’s debit card proposal differs from the
current income management system in a number of ways. These include:
The debit card will rely on existing technology: the Forrest
Review argued that the new debit card would be cheaper for government because
it would rely on existing technology in the mainstream banking system. The
current BasicsCard requires additional infrastructure including dedicated
electronic kiosks in income management areas that allow recipients to check
Merchants do not have to opt in: in the current income management
system, merchants have to apply to the Department of Human Services (DHS) in
order to accept payments through the BasicsCard.
Under the Forrest Review’s proposal, any merchant that accepts Visa and
MasterCard with electronic and EFTPOS payment facilities would be able to
accept payments made with the new debit card unless they had been excluded. The
new debit card would automatically block purchases from certain merchant
categories, such as alcohol and gambling outlets.
The range of excluded goods may be narrower: the Basicscard
cannot be used to purchase alcohol (or home brew kits or concentrate), tobacco
products or pornography. There are also restrictions on the kinds of businesses
that DHS will approve. According to the Forrest Review’s proposal, the new
debit card would allow purchases at a wider range of merchants (including
online merchants) and would only prevent purchases of alcohol, gambling and
‘illicit services’. As with the BasicsCard, the proposed debit card would
prevent the purchase of gift cards.
In a submission to the Forrest Review, the Australian
Bankers’ Association (ABA) opposed the proposal and warned that there were a
number of technical challenges involved in its implementation. The ABA also
stated that it does not ‘support using the banking industry to block access to
cash or prohibit the purchase of goods and services available to other
According to the ABA, one technical challenge is how to
prevent income support recipients from buying alcohol at supermarkets and
grocery stores that sell alcohol alongside other goods.
Merchants that accept payments by card are assigned a merchant category code
(MCC). It is relatively
straightforward to block payments to all merchants in a category (for example,
‘package stores – beer, wine and liquor have an MCC of 5921). However,
purchases of alcohol from supermarkets cannot be blocked using a MCC without
blocking all purchases from supermarkets (‘grocery stores and
supermarkets’ have an MCC of 5411). One alternative is to rely on supermarket
checkout operators to identify restricted cards and refuse to allow customers
to purchase alcohol.
In March 2015 Alan Tudge said that the Government had been
consulting with the banks about how the technology could work.
Forrest Review, Creating parity, Department of Prime Minister and
Cabinet, Canberra, 2014, p. 28.
L Buckmaster, C Ey and M Klapdor, Income
management: an overview, Background note, Parliamentary Library,
Canberra, 21 June 2012.
L Buckmaster, ‘Does
income management work?’, Parliamentary Library Briefing Book :
key issues for the 44th Parliament, research paper series, 2013–14,
Parliamentary Library, Canberra, 2013.
Department of Human Services (DHS), ‘About
income management’, DHS website.
Australian Government, BasicsCard
Merchant Approval Framework policy guidelines, August 2014.
For details on the different income management models see individual
evaluation reports at: Department of Social Services (DSS), ‘Income
management evaluations’, DSS website.
DHS, op. cit.
L Buckmaster, C Ey and M Klapdor, Income
management: an overview, Background note, Parliamentary Library, Canberra,
21 June 2012.
The information in this article has been taken from the following
document unless otherwise sourced: Australian Government, Budget paper
no. 2: budget measures 2015–16.
For a full list of locations see: Department of Social Services, ‘Income management locations and map.’
Deloitte Access Economics, Place
Based Income Management – process and short term outcomes evaluation, report
for the Department of Social Services, August 2014, pp. 95 and 114.
A Tudge, ‘5AA
Adelaide Interview with David, Mark and Jane’, transcript, 23 March 2015.
Forrest Review, ibid, p. 102.
A Forrest, ‘Healthy
welfare card will protect the vulnerable’, The Daily Telegraph, 24
Forest Review, op. cit., p. 28.
A Tudge (Parliamentary Secretary to the Prime Minister), Doorstop
4 Treasury Place, Melbourne, transcript, 22 March 2015.
Australian Bankers’ Association, Submission
on the recommendations of Creating Parity – The Forrest Review, 19 September 2014.
For a list of MCCs see: ANZ, ‘Commercial
Cards Merchant Category Code Controls’, [form].
A Tudge, ‘6PR
Perth, interview with Gary Adshead’, transcript, 23 March 2015.
All online articles accessed May 2015.
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