Where to for Income Management and the Cashless Debit Card?

Anthony Lotric, Social Policy

Key issue

Both Income Management and the Cashless Debit Card (CDC) set aside a proportion of a welfare recipients’ income support payments and attempt to stop recipients from spending it on restricted goods such as alcohol. This is intended to make more money available for spending on essential goods.

The incoming Labor Government has committed to deliver on its election promise to abolish the Cashless Debit Card. However, the ‘voluntary measure’ which the Government has stated will replace the controversial program has not yet been specified, and the question of the future of Income Management arrangements is yet to be addressed.

Just one day after the publication of an Australian National Audit Office (ANAO) report on 2 June 2022 that reaffirmed the Auditor General’s view that evaluations of the Cashless Debit Card (CDC) program failed to provide evidence that it was effective, incoming Social Services Minister, Amanda Rishworth announced that she was in the process of being briefed by her department on how the program could be terminated. The ANAO report, which followed up on a July 2018 report on the same topic, did not recommend that the Government abolish the CDC, but instead that it improve its evaluation measures (p. 10). However, the Australian Labor Party (ALP) committed to scrapping the CDC as part of its election platform.

In her media release announcing discussions on terminating the CDC, Minister Rishworth stated that she would be ‘working with local communities on better local solutions’, presumably to the problems the CDC was originally intended to address- namely, harms associated with alcohol and drug abuse, and the insufficient allocation of funds to essentials such as food, clothing and housing. Proponents of the CDC claimed that these problems are associated with ‘welfare dependence’, necessitating controls on how individuals receiving welfare spend their payments. Minister Rishworth subsequently stated that a ‘voluntary measure’ will be maintained where the CDC was in place ‘if communities want it’. She spoke further of a ‘transition’ and the need to put supports in place for the communities affected by the abolition of the CDC.

While the CDC has dominated media coverage as well as public and political discussion in recent years, it is not the only program that restricts how welfare recipients can spend their welfare payments. The future of Income Management, which operates in a similar way to the CDC, is more uncertain, as the ALP has not voiced any specific plans to change or abolish the scheme.

Income Management: a brief overview

The term Income Management refers to a scheme where a portion of a welfare payment is restricted so that it can only be spent on essential goods such as food, clothing and housing, rather than restricted goods such as alcohol. The CDC, described in more detail below, is a program administered via a card which sets aside funds for that purpose. While the CDC and Income Management are separate schemes that seek to achieve similar ends, comments from the previous government indicated that they considered them both to be forms of ‘income management’, broadly defined.

Income Management is a more complex scheme than the CDC program. It is structured around a series of ‘measures’. Each measure applies to a particular group of income support recipients, for example, long term and disengaged youth, vulnerable welfare payment recipients or those subject to child protection orders. Each measure also operates in particular income management locations and applies to a particular percentage of a person’s income support payments. Income Management in the Northern Territory was initially administered through a mishmash of existing card platforms and other payment methods (pp. 3–4), and from July 2008 via the BasicsCard. The BasicsCard, which prevented the purchase of alcohol, tobacco, illegal drugs, pornography, or gambling products or services, then became the fundamental platform for Income Management, although participants can also choose to have a portion of their payments directly debited to pay for essentials such as rent.

The scheme has developed since its introduction in 2007 as part of the Northern Territory Emergency Response, with successive governments adding new locations and measures. The 2 earliest locations were the Northern Territory (2007) and Cape York (2008). In the Northern Territory, Income Management was applied to entire categories of people receiving income support, while in Cape York, conditional Income Management was applied to individuals on a case-by-case basis. Most Income Management arrangements were put in place before the CDC trial commenced.

Additional Income Management sites fall into 3 categories:

Income Management has been replaced with the CDC in Cape York, and the Government has encouraged Income Management participants in the Northern Territory to voluntarily transfer to the CDC. Income Management operated in Ceduna (SA) before it was replaced by the CDC.

From the BasicsCard to the Cashless Debit Card: an incomplete transition

The CDC is a program administered via a card that blocks the purchase of alcohol and gambling products (but not pornography or tobacco like the BasicsCard) and allows only 20% of payments to be withdrawn as cash (which also inhibits the user’s ability to purchase illegal drugs). It operates under its own legislative framework and was rolled out in various ‘trial sites’ in line with the evaluative nature of the program’s objects.

The CDC is easier to administer than the BasicsCard, as the latter requires the Department of Social Services to approve merchants with which cardholders can then make purchases (specifically, merchants who do not sell restricted items such as alcohol and gambling products), while the former enables the blocking of categories of merchants who sell restricted goods. The CDC also looks more like a normal debit card than the BasicsCard, which clearly identifies the user as someone subject to Income Management, potentially making them feel stigmatised (p. 102).

The CDC program was first rolled out in Ceduna, South Australia in March 2016. It was subsequently expanded to trial sites in the East Kimberley and Goldfields regions of Western Australia, and the Bundaberg-Hervey Bay region in Queensland (the boundaries of the federal electorate of Hinkler), none of which previously had Income Management arrangements in place. The Morrison Government also planned to replace the BasicsCard in the Northern Territory and Cape York with the CDC.

As with Income Management sites, not all CDC trials applied to the same groups of people in the same way. For example, the trial in Bundaberg-Hervey Bay is only compulsory for those 35 years of age or younger, whereas the other trials apply to those receiving restrictable payments regardless of age (p. 18).

As the CDC trials progressed, the Coalition expressed its intention to make the CDC the ‘universal platform’ for restricting welfare payments. While these comments suggested that the BasicsCard would be compulsorily phased out, it was subsequently announced that the transition to the CDC in the Northern Territory and Cape York would be voluntary, meaning that both platforms would, at least for some time, function concurrently in these locations. However, Income Management in Cape York expired on 1 January 2022, triggering a transition to the CDC on 17 March 2021. Both the CDC and Income Management are operating concurrently in the Northern Territory.

What options does the Government have regarding income management?

As outlined above, the CDC and Income Management are both currently in place in various locations across Australia, in some cases alongside each other. As at May 2022, a total of 24,888 people had an active BasicsCard, representing most individuals on Income Management, and 17,432 were on the CDC. CDC and Income Management operate under different parts of the Social Security (Administration) Act 1999, and therefore changes to one set of arrangements will not have an automatic effect on the other.

The CDC program is legislated to expire on 31 December 2022. To act on its commitment to abolish the CDC the Albanese Government could simply wait to let it expire, or abolish it in the intervening period via amendment to the Social Security (Administration) Act 1999. It cannot be immediately terminated by the minister. As the Government has indicated that a program with similar objectives to the CDC will remain for those communities that want it, an orderly timeline for the transition to another program will likely be necessary. Relevantly, subsection 124PF(2) of the Social Security (Administration Act) 1999 allows the minister to ‘make rules prescribing matters of a transitional nature’ in relation to the sunsetting of the CDC.

The Government has not provided any detail on what replacement ‘voluntary measure[s]’ will look like, but has indicated that it will consult with the communities that are subject to the CDC.

Questions remain concerning how Income Management arrangements will be dealt with moving forward. The Government’s statements have been explicitly limited to the CDC, which it has committed to replace with measures that are ‘voluntary’. However, Income Management arrangements are mostly compulsory.  

Income Management in Cape York is administered by the Family Responsibilities Commission, which was established by and operates under Queensland Government legislation. As Income Management participants in the Cape have fully transitioned to the CDC, the Australian Government would have to work with the state-based commission to put a ‘voluntary’ replacement program in place there.

As noted above, in the Northern Territory both the CDC and Income Management are in place. If the CDC is abolished, the original Income Management arrangements administered via the BasicsCard would remain for those who did not transition to the CDC. Income Management in Western Australia and Place Based Income Management would also remain in place (including in the Kimberley, where both the CDC and Income Management are in place). The Government will have to decide whether to end some or all of these Income Management arrangements by revoking the relevant legislative instruments, maintaining them as they are, or transitioning to something different. It must also decide whether those who voluntarily signed up to Income Management will be treated the same way as compulsory participants.

Whatever action the minister takes regarding Income Management, the power to reinstate or modify these arrangements, or to establish new ones, will remain in the Social Security (Administration) Act 1999, posing a separate question for the Parliament as to whether this power should be modified, replaced, or repealed entirely.

Further reading

Don Arthur, Income Management: a Quick Guide, Research paper series, 2015­–16, (Canberra: Parliamentary Library, July 2015).

Don Arthur, Cashless Debit Card and Income Management, Budget Review 2021–2022, Research paper, 2020–21, (Canberra: Parliamentary Library, May 2021).

Australian National Audit Office (ANAO), Implementation and Performance of the Cashless Debit Card Trial- Follow-On, Auditor-General Report, 29, 2021–2022, (Canberra: ANAO, 2022).


Back to Parliamentary Library Briefing Book

For copyright reasons some linked items are only available to members of Parliament.

© Commonwealth of Australia

Creative Commons

With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.