Income management limits the amount of income support paid to recipients
as unconditional cash transfers and imposes restrictions on how the remaining
'quarantined' funds can be spent. Income management was first introduced in
prescribed areas of the NT, including 73 remote communities, associated
outstations and ten town camp regions, in 2007 as part of the NTNER.
This measure formed part of the government's response to the 2007 Little
Children are Sacred report.
While the Board of Inquiry into the Protection of Aboriginal Children from
Sexual Abuse did not directly recommend introducing an income management
scheme, it noted:
The Inquiry was told by some people that they would like to
see at least 50 per cent, if not all, of the total sum of individuals'
"welfare" (Centrelink) payments made in the form of food vouchers.
The view was expressed that this may impact positively on alcohol consumption.
The Inquiry believes it is worth investigating.
Under the 2007 NTNER, the majority of Aboriginal and Torres Strait
Islander people on income support in the NT had half of their payments income
Income managed funds could not be used to purchase excluded items such as
alcohol, tobacco or pornography, or be used for gambling. Because of the
targeting of substantially Indigenous communities, the implementation of the NTNER
required the suspension of the Racial Discrimination Act 1975 (Racial
In 2010 legislation was passed to extend income management to all
welfare recipients in the NT,
regardless of where they lived in the Territory, if they met certain criteria.
This legislation also reinstated the application of the Racial Discrimination
The 2012 Stronger Futures package amended these income management
measures so as to apply income management beyond the NT, and to enable income
management referrals from a range of state and territory authorities.
As at 2016, income management applies to 15 locations outside of the NT.
In its 2013 report, the committee scrutinised the income management
scheme as it operated in the NT as a whole, not limited to the Stronger Futures
Whether a person is subject to the income management regime differs
according to where the person lives. For income management in the NT, a person
on welfare benefits can voluntarily sign up for income management, or be made
subject to compulsory income management in the following circumstances:
Long-term welfare payment recipients: persons aged over 25
(but under the pension age) who have received unemployment benefits, youth
allowance, or parenting payments for 12 of the last 24 months;
Disengaged youth: persons aged 15 to 24 who have received
youth allowance, unemployment benefits or parenting payments for three of the
last six months;
Vulnerable income management referrals: persons on most
types of welfare benefits who are referred for income management by:
a Centrelink social worker;
a child protection worker;
the Northern Territory Alcohol Mandatory Treatment Tribunal
(NT AMT Tribunal);
Automatic vulnerable income management for young people
those aged under 16 years receiving Special Benefit;
those aged between 16 and 24 years who have been granted a level
of Youth Allowance at the Unreasonable to Live at Home level of payment;
those aged under 25 years who have received Crisis Payment on
release from prison or psychiatric confinement.
Although income management applies to 15 locations outside of the NT, it
is only the NT program that primarily involves people subject to income
management because of the length of time they have been receiving benefits
(long-term welfare recipients and disengaged youth).
Income management limits the amount of income support a person will be
directly paid and restricts how the remainder of the income support payment can
be spent. Most people subject to income management have 50 per cent of their
Centrelink payments income managed, but this rises to 70 per cent for those on
Child Protection Income Management.
Income managed funds can be subject to automatic deductions to meet
'priority needs'. Priority
needs' are defined as:
Food, non-alcoholic beverages, clothing, footwear, basic personal
hygiene items, and basic household items;
Housing (including rent, home loan repayments, repairs, and
maintenance), household utilities (including electricity, gas, water, sewerage,
garbage collection, and fixed-line telephone), rates and land tax;
(including medical, nursing, dental or other health services, pharmacy items (the
testing of eyes, the prescribing of spectacles or contact lenses, the supply of
spectacles or contact lenses); the
management of a disability; child care and development, and the supply,
alteration or repair of artificial teeth, artificial limb (or part of a limb),
artificial eye or hearing aid, or of a medical or surgical appliance);
for the purposes of the person's employment (including a uniform or other
occupational clothing, protective footwear, and tools of trade);
services, where the services are used wholly or partly for purposes in
connection with any of the above needs;
repair, maintenance or operation of a motor vehicle, a motor cycle, or a
bicycle that is used wholly or partly for purposes in connection with any of
the above needs; and
anything else specified
in a legislative instrument made by the minister.
The remainder of the restricted funds can only be accessed using a
'BasicsCard' which allows funds to be spent in stores that accept the card on
essential 'basic' items and not on 'excluded goods' or 'excluded services'.
Excluded goods are alcoholic
beverages, tobacco products, pornographic material, and goods specified in a
legislative instrument made by the minister. 'Excluded services' are
gambling or a
service specified in a legislative instrument made by the minister.
Around 90 percent of those subject to income management in the NT are
Indigenous (around 60 per cent are female),
with estimates that just over one-third of the total Indigenous population is
subject to income management.
Around 78 per cent of all people on income management are on compulsory
The largest numbers of people subject to income management are on
Newstart, Disability Support Pension, Parenting Payments and Youth Allowance.
A person subject to compulsory income management because they are considered to
be a long-term welfare payment recipient or a disengaged youth can seek an
exemption for 12 months from income management if they meet specified criteria.
However, very few exemptions from income management have been granted, with
most being obtained by non-Indigenous people (the exemption rate for
non-Indigenous people is 36.3 per cent compared to 4.9 per cent for Indigenous
As noted above at paragraph [4.7], in the NT there are three categories
of vulnerable income management referrals; referral by: a Centrelink social
worker; a child protection worker; and, the NT AMT Tribunal.
A person may be placed on income management via referral by a Centrelink
social worker where the worker assesses the person as being vulnerable to
financial crisis. This could include people referred to state housing
authorities because they are at risk of homelessness due to rental arrears.
A person may be referred by a case worker from a child protection
authority where the case worker believes that income management can help the
person and her/his family. In these cases, income management will run for an
initial period of three to 12 months, and following assessment of a person's
progress, may be extended for another three to 12 months. No exemptions are
possible but a person may appeal the decision of a child protection case
Referral by the NT AMT Tribunal was introduced with the Stronger Futures
measures. Under this process, a person receiving welfare will also be subject
to income management if the NT AMT Tribunal makes a mandatory treatment order
in relation to that person.
A mandatory treatment order will be made when the NT AMT Tribunal considers
that an adult is misusing alcohol, has lost the capacity to make appropriate
decisions about their alcohol use or personal welfare and the misuse is a risk
to their health, safety or welfare or to others. A person affected by the
decision can make an application to the NT AMT Tribunal for it to vary, revoke
or replace the income management order, but there is no access to independent
merits review of the NT AMT Tribunal's decision (appeals can only be made to
the Local Court on questions of law).
The Senate Community Affairs Legislation Committee, in its report on the
Stronger Futures measures, recommended that the legislation be amended so that
only agencies that have in place appropriate internal and external review and appeal
processes are able to refer people for income management.
The government has committed to extending the income management program.
In the 2015-16 Budget, funding was provided to extend income management for a
further two years. Unspecified funding was also provided for a trial to
evaluate the effectiveness of restricted debit card arrangements, which will
limit access to discretionary cash for certain welfare recipients. This is
based on the recommendation made in the Creating Parity report (the Forrest
Review), that a Healthy Welfare Card should be introduced preventing welfare
recipients from accessing any cash and restricting purchases that can be made
using their welfare payments.
In light of the government's commitment to extend the income management
regime, the report of this committee is particularly vital.
Findings of the 2013 report on
The committee's 2013 report found that the income management regime in
the NT overwhelmingly applies to Aboriginal communities and so engages the
right to equality and non-discrimination. That report also found that the
income management regime limits the right to social security, the right to an
adequate standard of living, and the right not to have one's privacy, family
and home unlawfully or arbitrarily interfered with.
The 2013 report considered that the regime pursued a legitimate
objective, but questioned whether the measures were rationally connected to
achieving the stated objective and proportionate.
The 2013 report concluded that the government had not yet clearly
to the extent that the regime may have a differential impact
based on race, it is reasonable and proportionate and therefore not
the regime is a justifiable limit on the right to social security
and the right to privacy and family.
New information post-2013 report
Since the committee's 2013 report, three significant reports
commissioned by the Australian government evaluating the effectiveness of the
income management regime have been released, though only one examines its
operation in the NT. These reports are the Social Policy Research Centre's
Voluntary Income Management in the Anangu Pitjantjatjara Yankunytjatjara (APY)
Lands, and Deloitte Access Economics' Placed Based Income Management
Evaluation, which examined how income management operated in five disadvantaged
locations across Australia since July 2012: Logan (Qld), Rockhampton (Qld),
Shepparton (Vic), Bankstown (NSW) and Playford (SA).
The third report, also conducted by the Social Policy Research Centre,
examined the operation of income management in the NT, and is titled Evaluating
New Income Management in the Northern Territory: Final Evaluation Report
(Final Evaluation Report). The committee relies on these detailed
evaluations, as well as correspondence with the current and former ministers,
and submissions to this inquiry for its present review.
The government has stated that the goals of income management are to achieve
results that would advance the enjoyment of a number of rights. Quarantining
income support payments of vulnerable individuals and families to ensure that a
portion of a person's income support payments are spent on essential needs, and
limiting expenditure on excluded items, including alcohol, may contribute to
the enhanced enjoyment of a number of rights. In particular, the right to
may be advanced by helping to ensure that a portion of a person's income
support payments is spent on rent. In addition, the right of children to
benefit from social security,
the right of children to the highest attainable standard of health,
and to an adequate standard of living,
will all likely be advanced by income management as income support payments are
used to cover minimum basic essential goods and services necessary for the full
development of the child.
However, in addition to seeking to promote these rights, the
committee considers that the income management regime engages and limits the
the right to equality and non-discrimination;
the right to social security;
the right to an adequate standard of living;
the right to privacy.
Compatibility of the measures with multiple rights
Right to equality and
The government maintains that the income management regime does not
involve racial discrimination on two grounds. First, because the income
management regime makes no reference to race in the criteria for those who are
liable to be subjected to compulsory income management or who may elect
voluntary income management, the measures do not involve differential treatment
that is racially based. Second, in any case, income management does not breach
the right to equality and non-discrimination because it is a reasonable and
proportionate means of ensuring the well-being of vulnerable individuals and
The former minister explained:
Income management, including as amended by this Bill, is
consistent with the obligation of the State to undertake not to engage in any
act or practice of 'racial discrimination' against persons, groups of persons
or institutions (art 2(1)(a) of the ICERD).
Income management applies in the same way to any person
receiving a social security payment in a designated income management area
regardless of race.
Income management does not apply in every part of Australia,
although its operation is being expanded, and the legislation is capable of
national application. The areas into which the measure will be expanded from
1 July 2012 were chosen having regard to a range of objective, non race‑based
criteria, including unemployment levels, youth unemployment, skills gaps, the
number of people receiving welfare payments, and the length of time people have
been on income support payments.
The former minister reiterated this position:
In areas where income management applies or will apply, it is
and will be applied to income support recipients on the basis of non race-based
criteria related to indicators of risk for the welfare recipient or to children
in their care; following assessment by a delegate; or following assessment by a
state or territory body exercising a discretionary power to apply income
The current minister has made a similar argument. In a letter to the
committee, the current minister noted that 'income management is not an
This is true, and the expansion of the income management regime to communities
outside the NT is further evidence of this fact.
However, even though the income management regime is not based on race,
many submissions to this inquiry noted that it appears to apply overwhelmingly
to Indigenous people. For example, in a joint submission, the Australian
Council of Social Service and the Northern Territory Council of Social Service
explained that 'despite amendments to achieve compliance with the RDA [Racial
Discrimination Act 1975]', they remained concerned that 'the policy's
design and implementation ensures its disproportionate impact on Aboriginal and
Torres Strait Islander peoples'.
The former minister recognised that the income management regime may
disproportionately affect Indigenous Australians. However, the former minister
explained that, rather than a result of design, this fact simply:
...reflects the fact that the proportion of Indigenous people
in the Northern Territory on income support payments is high; and also reflects
the fact that of the 4,096 people who chose voluntary income management in the
Northern Territory, more than 98 per cent are Indigenous.
This has not changed in the intervening period. Indeed, the current minister
has acknowledged that the additional sites where income management applies are
predominately Indigenous communities:
Of the income management sites outside the NT, the majority
of the population (exact percentages are not disclosed) is Indigenous in the
four Cape York communities, APY Lands, Ng Lands (including Kiwirrkurra) and
Ceduna. In Perth Metro and the Kimberly, 63 per cent of the population is
Indigenous and in locations where place-based income management is implemented
(Bankstown, Greater Shepparton, Logan, Playford, Rockhampton) 18 per cent of
the population is Indigenous.
Data, current as at 28 August 2015, collected by the Department of
Social Services and provided by the current minister to the committee indicates
that, in the NT, 88 per cent of people on income management are Indigenous.
Across Australia, 78 per cent of people on income management are Indigenous.
The ICCPR defines 'discrimination' as a distinction based on a personal
attribute (for example, race, sex or religion),
which has either the purpose (called 'direct' discrimination), or the effect
(called 'indirect' discrimination), of adversely affecting human rights.
The UN Human Rights Committee has explained that indirect discrimination is 'a
rule or measure that is neutral on its face or without intent to discriminate',
which exclusively or disproportionately affects people with a particular
This understanding is congruent with the definition of racial
discrimination in article 1 of the ICERD, which refers to measures as racially
discriminatory if they have 'the purpose or effect' of restricting the
enjoyment of human rights.
As such, in order to be non-discriminatory the income management
measures will need to be shown to be based on objective and reasonable grounds
and be a proportionate measure in pursuit of a legitimate objective. The
analysis conducted under this test is essentially similar to that considered
when assessing whether a limitation on a right is permissible.
Right to social security
The right to social security is protected by article 9 of the ICESCR.
This right recognises the importance of adequate social benefits in reducing
the effects of poverty and plays an important role in realising many other
economic, social and cultural rights, particularly the right to an adequate
standard of living and the right to health.
Access to social security is required when a person has no other income
and has insufficient means to support themselves and their dependents.
Enjoyment of the right requires that sustainable social support schemes are:
available to people in need;
adequate to support an adequate standard of living and health
accessible (providing universal coverage without discrimination
and qualifying and withdrawal conditions that are lawful, reasonable,
proportionate and transparent; and
affordable (where contributions are required).
Right to an adequate standard of
The right to an adequate standard of living is described above at
paragraphs [2.31] to [2.32].
Right to privacy
Article 17 of the ICCPR prohibits arbitrary or unlawful interferences
with an individual's privacy, family, correspondence or home. However, this
right may be subject to permissible limitations which are provided by law and
are not arbitrary. In order for limitations not to be arbitrary, they must seek
to achieve a legitimate objective and be reasonable, necessary and
proportionate to achieving that objective.
Privacy is linked to notions of personal autonomy and human dignity: it
includes the idea that individuals should have an area of autonomous
development; a 'private sphere' free from government intervention and excessive
unsolicited intervention by others. The right to privacy requires that the
state does not arbitrarily interfere with a person's private and home life.
Compatibility of the measure with
In its 2013 report the committee found that the income management regime
limits the right to social security, the right to an adequate standard of
living, and the right to privacy. In particular, the committee held that the
a significant intrusion into the freedom and autonomy of
individuals to organise their private and family lives by making their own
decisions about the way in which they use their social security payments.
In introducing the Stronger Futures measures, the former minister
argued that the income management regime is consistent with the right to social
security, noting that:
income management does not limit access to social security, nor
does it reduce the amount of the benefit provided. Rather, it provides that the
benefit is provided in a particular way; and
the Committee on Economic, Social and Cultural Rights has stated
that the right to social security encompasses the right to access and maintain
benefits 'in cash or in kind'.
The committee agrees with this analysis. However, the Committee on
Economic, Social and Cultural Rights has also stated that the provision of
social security should aim to prevent social exclusion and promote social
Evidence indicates that despite some mixed support for the system, the income
management regime fails to promote social inclusion, but rather stigmatises
individuals, and as such, limits the enjoyment of the right to social security,
an adequate standard of living and privacy. This evidence will be examined
Accordingly, it is necessary to justify that the measure pursues a
legitimate objective, is rationally connected to achieving that objective, and
that it imposes only a proportionate limitation on these rights.
The rationale for the income management regime has been set out in a
number of explanatory memoranda and statements accompanying the Stronger
Futures legislative measures. For example, the statement of compatibility
relating to one of the more recent legislative instruments made under the
Stronger Futures legislation states that the key objectives of income
management are to:
reduce immediate hardship and deprivation by directing welfare
payments to the priority needs of recipients, their partner, children and any
help affected welfare payment recipients to budget so that they
can meet their priority needs;
reduce the amount of discretionary income available for alcohol,
gambling, tobacco and pornography;
reduce the likelihood that welfare payment recipients will be
subject to harassment and abuse in relation to their welfare payments; and
encourage socially responsible behaviour, particularly in the
care and education of children.
As noted above at paragraph [4.26], the income management regime is also
intended to advance a number of other rights, including the right to housing
and the rights of children to: benefit from social security; an adequate
standard of living; and the highest attainable standard of health. The former minister
identified this and reiterated that the 'central purpose' of income management
...ensure that a portion of income support payments are used to
cover minimum basic essential goods and services, including food, rent and
utilities. This improves living conditions for the children of income support
recipients subject to income management.
In its 2013 report, the committee accepted that the objective of income
management is to support vulnerable individuals and families by helping to ensure
that a portion of a person's income support and family payments is spent on
essential needs, and limiting expenditure on excluded items, including alcohol,
tobacco, pornography and gambling goods and activities. The committee remains convinced that improving living
conditions for the children of income support recipients, encouraging socially
responsible behaviour and reducing harassment and abuse of income support
payment recipients is an important and worthwhile objective.
In terms of rational connection, the key question is
whether the measures are likely to be effective in achieving the objective. On
that basis, the committee must assess whether the income management regime is
likely to be effective in achieving the aim of supporting budgeting skills and
financial acumen, ensuring that the priority needs of housing and food are met,
and increasing socially responsible behaviour, including care and education of
When introducing the Stronger Futures legislative measures to amend the
operation of the income management regime, the former minister argued that the
regime was achieving its objectives:
Evaluations in the NT and WA indicate that income management
is having a positive effect on the lives of many individuals. In a WA
evaluation a majority of participants believed income management has had a
positive impact on the wellbeing of individuals, children and families. In
relation to income management's application in the NT, there is evidence that
income management is achieving positive outcomes, particularly for children.
Noting this statement, the committee's 2013 interim report found
that there is 'a range of evidence available on the effects, positive and
negative, of income management'.
Indeed, some evidence suggested that income management was having a
minimal effect on limiting purchases of excluded goods and increasing purchases
of 'beneficial' goods. For example the Menzies School of Medical Research
compared expenditure patterns of stores in the NT from 2006 to 2009. It found
that income management 'appeared to have no effect on total store sales, food
and drink sales, tobacco sales, and fruit and vegetable sales, independent of
the government stimulus payment'.
At the time of the committee's interim report, the First Evaluation
Report commissioned by the Department of Families, Housing, Community Services
and Indigenous Affairs had been published. This report examined income
management in the NT up until October 2011 and found diverse impacts across the
schemes, both in how those subject to income management viewed and experienced
the process and also in the effect it had on their lives so far as ensuring
that the priority needs of themselves and their families were concerned. That study
The evidence gathered to date for this evaluation suggests
that NIM [New Income Management] has had a diverse set of impacts. For some it
has been positive, for others negative and for others it has had little impact.
Taken as a whole there is not strong evidence that, at this stage, the program
has had a major impact on outcomes overall. Although many individuals report
some gains, others report more negative effects.
In terms of potential long-term impact, the report found:
There is little evidence to date that income management is
resulting in widespread behaviour change, either with respect to building an
ability to effectively manage money or in building 'socially responsible
behaviour' beyond the direct impact of limiting the amount that can be spent on
some items. As such, the early indications are that income management operates
more as a control or protective mechanism than as an intervention which
As noted above at paragraph [4.25], since the committee's 2013 report,
the Final Evaluation Report into income management in the NT has been
published. This substantial report provides detailed evaluation of the effectiveness
of the income management regime and has found that it has been of mixed
In particular, for persons subject to compulsory income management, the
Final Evaluation Report found no evidence that income management has achieved
its intended outcomes. Rather than promoting independence and building skills
and capabilities, it appears to have 'encouraged increasing dependence upon the
welfare system', and there is no evidence to indicate its effectiveness at the
community level or that it facilitates long-term behaviour change. 
The evaluation found further that:
income management has been relatively successful in ensuring
income managed funds are not spent on proscribed items;
there is little evidence to show funds have been used simply for
priority needs (for example, spending on fruit and vegetables on the BasicsCard
is very low);
significant problems have been reported with the BasicsCard (such
as not supporting the payment of rent in group housing situations requiring
cash payments, and the limited number of outlets at which it can be used),
although some people value the fee-free banking service it provides;
around two-fifths of people on income management thought it had
made things better for them, about one-third thought it had made no difference
and about one-quarter thought it had made things worse for them;
a substantial group of people felt that income management is
unfair, embarrassing and discriminatory;
there was no substantive evidence that the program had made
significant changes, including changing people's behaviour;
there was no evidence of changes in spending patterns, other than
a slight possible improvement in the incidence of running out of food for those
on voluntary income management;
there was no evidence of overall improvement in financial
there were some positive outcomes for those assessed as
vulnerable income management (referred by a Centrelink social worker); and
many of those on income management want to remain on it
indefinitely as it was easier to stay on; therefore, rather than building
capacity and independence, the program has made many people more dependent on
Taken holistically, the Final Evaluation Report indicates that income
management is most effective when it is applied to participants after
considering their individual circumstances, rather than applied coercively and
Consistent with the findings of the Final Evaluation Report, is an
August 2014 evaluation of the Place-based income management sites (at the time:
Playford, Greater Shepparton, Bankstown, Rockhampton and Logan). This report
found that while voluntary income management participants benefited from the
scheme, persons referred to income management based on their membership of a
category (i.e. compulsory income management participants) did not show positive
improvements in financial stress indicators, or in expenditure on tobacco or
A third report, evaluating income management in the Anangu
Pitjantjatjara Yankunytjatjara Lands was more positive. This report found that
a majority of community members and other stakeholders who participated in the
study were positive about the introduction of income management. The report
found further that income management may have made a 'modest contribution' to
addressing challenges within the community, but that responses were mixed in
relation to its impact on the wellbeing of the community as a whole.
However, critically, the report notes that 'the fact that the communities had
requested income management, and had been consulted about its introduction,
appears to have had a major influence on the communities' view of income
Significantly, the design of a compulsory income management regime
appears to hamper its possible effectiveness, by failing to properly target
those who would be assisted by income management. The Final Evaluation Report
noted that the targeting strategies employed under the income management regime
were not appropriately adapted to achieving its objectives:
There was no evidence that targeting income management on the
basis of duration in receipt of income support payment provides an effective
basis for identifying those with particular vulnerabilities or a low level of
money management skills. Similarly, there is no evidence that the range of
income support payments at which Compulsory Income Management is targeted
reflects the groups at highest risk. Compulsory Income Management is imposed
upon a large group of people whom income management does not assist. This
imposes costs upon those subject to income management and to the government.
This is consistent with the report's findings that individual
consideration, rather than blanket application of a rule, is integral to
building financial capability and ultimately ensuring that sufficient levels of
income support payments are used to cover minimum basic essential goods and
services—the aims of the program.
On the basis of these three reports, the compulsory income management
regime does not appear to be an effective approach to addressing issues of
budgeting skills and ensuring that an adequate amount of income support
payments is spent on priority needs. While the income management regime may be
of some benefit to those who voluntarily enter the program, it has limited
effectiveness for the vast majority of people who are compelled to be part of
In assessing whether a measure is proportionate some of the relevant
factors to consider include whether the measure provides sufficient flexibility
to treat different cases differently or whether it imposes a blanket policy
without regard to the merits of an individual case, whether affected groups are
particularly vulnerable, and whether there are other less restrictive ways to
achieve the same aim. It is also relevant to consider whether the communities
affected by the measure have been consulted and agree to the measures imposed.
The government maintains that the income management regime is a
reasonable and proportionate means of promoting the right to housing as well as
the rights of children to: benefit from social security; the highest attainable
standard of health; and an adequate standard of living. This position is neatly
encapsulated in explanatory statements accompanying a number of the legislative
instruments adopted to implement the Stronger Futures measures. For
example, in relation to declarations of voluntary income management that
specify the Greater Adelaide region, the explanatory statement provided:
The Determination is compatible with human rights. Income
management will advance the protection of human rights by ensuring that income
support payments are spent in the best interests of welfare payment recipients
and their dependants whilst also helping to improve their budgeting skills so
they can meet their priority needs. To the extent that they may limit human
rights those limitations are reasonable, necessary and proportionate to
achieving the legitimate objective of reducing immediate hardship and
deprivation, encouraging socially responsible behaviour, and reducing the
likelihood that welfare payment recipients will be subject to harassment and
abuse in relation to their welfare payments.
This position has not substantially changed from 2012, when the former minister
Substantial benefits can be achieved for individuals through
income management, including ensuring that sufficient food is available to
recipients and dependents, stable and adequate housing is secured, access to
essential utilities is maintained and harassment is minimised.
However, stakeholders and submitters to this inquiry questioned this
view. In particular, many individuals and organisations were concerned with:
the compulsory aspects of the regime and the difficulty of obtaining exemptions
or exceptions; the particular effect on Indigenous Australians; and whether
less rights restrictive measures may offer a clearer path to achieving the
objectives of income management. Indeed, the joint submission of the Australian
Council of Social Service and the Northern Territory Council of Social Service,
spoke for many when it noted its concern that 'compulsory income management is
a crude, stigmatising and ineffective policy response to a range of complex
As noted above at paragraph [4.7], a major aspect of the income
management regime is that it is compulsory.
The blanket imposition of income management based on a person's
membership of a category significantly curtails the flexibility of the program.
This is particularly problematic as, as noted above at paragraphs [4.57] to [4.62],
research evaluating the effectiveness of the program demonstrates that
compulsory income management does not produce beneficial results. This research
indicates that income management is most effective when it is voluntary, or
when it is applied to individuals after considering their particular
circumstances—that is, when it is applied flexibly.
Of course, the process is not entirely inflexible and exemptions from
the compulsory income management regime are possible if a person is able to
demonstrate certain behaviour. However, the process of applying for and
obtaining exemptions is also problematic and appears to discriminate in effect
against Indigenous Australians.
The Final Evaluation Report recorded that the exemption rate between
August 2011 and December 2013 was steady at around 1600 people. Likewise, the
exemption rate has also remained steady at approximately 10 per cent.
However, as the report notes (and is illustrated in Table 4.1 set out below),
this relatively low exemption rate obscures dramatic variation by both gender
and Indigenous status.
Table 4.1 Exemption rates
by gender and Indigeneity as at December 2013
The very low rate of exemptions among Indigenous peoples can somewhat be
explained by a lower application rate. The National Welfare Rights Network
examined income management appeal data obtained through Senate Estimates and
found that despite making up approximately 90 per cent of those on income
management, Indigenous people accounted for only one-third of those lodging
This finding accords with that of the Final Evaluation Report.
In its submission to this inquiry, the North Australian Aboriginal
Justice Agency (NAAJA) argued that barriers to accessing exemptions, appeals
and information is a critical reason for the low application and low exemption
rates of Indigenous Australians. NAAJA explained:
...someone without dependent children has to be working 15
hours a week for six months, or engaged in fulltime study to obtain a 12 month
exemption from income management. This is nearly impossible in remote
communities because of limited access to employment and educational opportunities
and entrenched barriers to participation in the few jobs or fulltime study
opportunities that arise (e.g. low literacy and numeracy skills, poor health,
inadequate housing and cultural and language differences).
NAAJA informed the committee that it has previously raised its concerns
with the exemption process with the Department of Human Services. In its view,
'the process itself was contributing to the low rate of exemptions amongst
Aboriginal people in the NT', in particular:
the lack of accessibility of the exemption process, particularly
for remote clients;
the lack of information about exemptions in remote communities;
the lack of clear information about Centrelink's decisions
provided to remote Aboriginal customers in exemption rejection letters.
In her submission to this inquiry, the Northern Territory
Anti-Discrimination Commissioner agreed with NAAJA, describing the exemption
system as 'discriminatory' because it 'includes numerous structural and
systemic barriers for Aboriginal people living in remote communities of the
The Final Evaluation Report noted similar problems:
A very clear theme in views around the experience of trying
to obtain an exemption concerned the amount of paperwork people were required
to complete and records they had to obtain. In some cases this resulted in
people simply walking away from the process. This problem was often compounded
by the fact that English was not their first spoken language... A particular
issue raised by many was the reliance by Centrelink on a centralised exemptions
team that people had to deal with by phone. This presented a range of problems
for some, including: the cost of contact, difficulties relating to language,
and cultural preferences to deal with people face-to-face.
The Final Evaluation Report's conclusions demonstrate that the exemption
process is not working effectively:
Exemptions constitute a mechanism that is disproportionately
used by non-Indigenous people with children, most of whom are never actually placed
on income management. Access to exemptions by Indigenous Australians is low and
there is no evidence of the gap closing, nor is there evidence of access to
exemptions operating as an incentive for changing behaviours, or of income
management playing a role in preparing people to be in a situation in which
they can gain an exemption.
The compulsory income management regime does not operate in a flexible
manner. Evidence indicates that the blanket application of the regime
disproportionately affects Indigenous Australians and the exemption process is
not conducive to allowing Indigenous Australians to apply for an exemption and
to succeed in that application. This indicates that the income management
regime may be a disproportionate measure and therefore incompatible with
Australia's international human rights law obligations.
Vulnerability of particular groups
As discussed above at paragraphs [4.35] to [4.37], a measure can be
indirectly discriminatory if, though neutral on its face, it disproportionally
affects people with a particular personal attribute, such as race. In order to
be non‑discriminatory the government must demonstrate that the regime is based
on objective and reasonable grounds and is a proportionate measure in pursuit
of a legitimate objective.
Although the income management regime is not an Indigenous specific
measure, the 2014 Final Evaluation Report noted that around 90 percent of those
subject to income management in the NT are Indigenous (around 60 per cent
with estimates that just over one-third of the total Indigenous population is
subject to income management.
Across all sites around the country, approximately 78 per cent of people on
income management are Indigenous.
The Northern Territory Anti-Discrimination Commissioner has described this as
an 'ongoing concern'.
In addition, as noted above at paragraphs [4.71] to [4.77], the
exemption process seems to result in a disproportionately lower number of
Indigenous Australians succeeding in obtaining an exemption from the compulsory
income management regime (or even applying for an exemption). Indeed, the
particular vulnerabilities of Indigenous Australians subject to compulsory
income management, such as language barriers and remote location, do not appear
to have been considered in developing the measure.
Less restrictive ways to achieve
the same aim
Another important factor in assessing the proportionality of a measure
is whether there are less rights restrictive ways to achieve the same
objective. As the committee has already noted, quarantining income support
payments and precluding the purchase of proscribed items on the basis of a
category or place limits a number of human rights.
This is significant because, as the committee noted at paragraphs [4.59]
to [4.62], evidence from two Department of Social Services' commissioned
reports (the Final Evaluation Report and the Place Based Income Management
Report) indicate that compulsory income management does not produce beneficial
Indeed, both reports found that compulsory income management, rather
than encouraging individuals to take control of their financial wellbeing, may
produce negative effects. The Place Based Income Management Report noted that
people on compulsory income management reported 'more negative experiences' as
a result of their participation, including 'a greater proportion feeling judged
and embarrassed when they use the BasicsCard'.
The First Evaluation Report found that people commonly associated
embarrassment and stigma with using the BasicsCard.
Qualitative interviews of people subject to income management, Centrelink
staff, service providers, and merchants indicated that this stigma is
widespread, compromising a person's right to social security as well as
privacy. The report observed that BasicsCard users reported:
being told by shop assistants that their choice of purchases is
inappropriate, even though it did not fall within the list of excluded items;
feelings of stigmatisation surrounding identification as
'deficient' or as 'bad mothers';
being repeatedly asked by shop assistants whether they have
sufficient balance; and
that going to the supermarket can be a 'shame job', especially
where they do not know or have miscalculated their balance, forcing some people
to shop in a suburb away from their home to avoid being seen using it.
In its submission to this inquiry, NAAJA reiterated these observations.
NAAJA explained that it has:
...lodged complaints on behalf of people discriminated against
in shops because they are BasicsCard customers. We have witnessed customers
being publically humiliated by supermarket staff and noticed a marked
difference in the treatment given to Aboriginal customers paying with a
BasicsCard and the treatment of non-BasicsCard customers.
Many submissions to this inquiry noted that the focus on quarantining
income support payments was misguided. In the view of these submitters, entrenched
disadvantage and structural barriers that Indigenous Australians face and
contend with are the root cause of disadvantage. For example, NAAJA explained:
The idea that quarantining the income support payments of
individuals can address the root causes of Aboriginal intergenerational
disadvantage, in the context of significant structural barriers to economic
development, is simplistic and naïve. Addressing entrenched social disadvantage
requires sustained investment into community driven initiatives and support
services that promote self-determination and autonomy rather than control and
There is no guarantee that a person who has their income
managed will use their money 'responsibly'. Consumption and spending patterns
do not change based on income source – they are connected to availability of
fresh food, access to alternatives and education levels. Factors such as
substandard housing and overcrowding, poor health, domestic violence and
geographic isolation adversely affect child health outcomes and school
attendance and educational outcomes. These can be factors that parents have
limited ability to control.
NAAJA reiterated these comments throughout its submission:
Income management does not create employment or education opportunities
or address barriers to employment.
There is limited access to financial support and counselling
in remote communities. IM [income management] will not increase financial
literacy, without specific investment into culturally competent services.
The February 2015 Report of the Reference Group on Welfare Reform to the
Minister for Social Services also agreed. This report urged that a cautious
approach should be taken to expanding income management, noting that it should
be used 'judiciously' and delivered 'in conjunction with financial capability
and other support services'.
It is likely that these complementary services will produce greater benefits
than the current income management regime.
This is significant as the current income management regime is
expensive. In a 2014 article in the Sydney Law Review, Dr Shelly Bielefeld
Buckmaster and others estimate that the implementation of the
income management scheme will cost the government 'in the range of $1 billion'
between '2005-06 to 2014-15'. The Australian National Audit Office estimates
that income management for welfare recipients living in remote areas costs
approximately '$6600 to $7900 per annum', which is equal to 62 per cent of the
$246-a-week Newstart Payment'. The finances currently allocated to resourcing
the compulsory income management system could arguably be better spent on
providing necessary social services to effectively assist these welfare
recipients in a culturally appropriate manner.
Indeed, the Social Policy Research Centre's Voluntary Income
Management in the Anangu Pitjantjatjara Yankunytjatjara (APY) Lands report
noted that a range of voluntary measures designed to allow people to allocate
money for specific purposes existed prior (and as an alternative) to the
introduction of the BasicsCard.
At least in the APY lands, these budgetary measures were seen as
beneficial in helping individuals manage their finances. The committee
considers that it is likely similar approaches in other communities would
produce beneficial results without the stigmatising impact of compulsory income
management. The National Welfare Rights Network agrees, noting that weekly
payments of Centrelink benefits, 'an option that is currently used by around
20,000 vulnerable social security recipients' could also assist people with
Consultation with affected
Finally, as noted in the committee's 2013 report, one of the much
criticised features of the 2007 NTNER was the failure to consult with the
communities and groups affected by the measures introduced.
The 2013 report acknowledged that in developing and introducing the Stronger
Futures measures the government went to considerable effort to consult with
Indigenous communities and other stakeholders around many aspects of the
However, as stated by the Senate Community Affairs Legislation Committee,
notwithstanding this, there remained much confusion and frustration in many
communities over the measures.
Income management in the NT has never been implemented with the
agreement of, or following consultation with, the communities in which it
applies. As noted above at paragraph [4.60], consultation is recognised as
critical in the effectiveness of any income management regime.
In its 2013 report, the committee found that even though the income management regime is formulated
without explicit reference to the race or ethnic origin of the potential
participants, the history of the measure and the fact that it appears to apply
overwhelmingly to Indigenous Australians suggest that it should be
characterised as a measure that has the purpose or effect of limiting the
rights of persons of a particular race or ethnic origin within the meaning of
article 1 of the ICERD. No evidence since the 2013 report suggests that this
finding should be revisited. The income management regime continues to
overwhelmingly affect Indigenous Australians.
having the potential to advance a number of human rights, the income management
regime also engages and limits the right to social security, an adequate
standard of living, and to privacy. Accordingly, it must be closely scrutinised
and the onus is on the government to demonstrate clearly that it pursues a
legitimate objective and is rationally connected to achieving that objective,
as well as a proportionate measure.
The committee accepts
that the objectives of the income management regime are legitimate. Improving
the living conditions of children of income support recipients, reducing
harassment and abuse and encouraging socially responsible behaviour are worthy
and important goals.
However, the committee
is concerned that the income management regime is not rationally connected to
achieving its objectives. Since the committee's 2013 report, three substantial
evaluations of different aspects of the income management regime have been
released. These reports demonstrate that income management is effective only
when it is applied to participants after considering their individual
circumstances, rather than applied coercively and compulsorily.
In any case, the
committee considers that compulsory income management is a disproportionate
measure. The imposition of significant conditions on the provision of income
support payments, including what goods or services may be purchased and where,
is an intrusive measure that robs individuals of their autonomy and dignity and
involves a significant interference into a person's private and family life.
The compulsory income management provisions operate inflexibly raising
the risk that people who do not need assistance managing their budget will be
caught up in the regime. This concern is heightened by the exemptions process
which appears to discriminate in effect against Indigenous Australians.
Indeed, given the disparate impact on Indigenous people, the committee
considers that the measures may be viewed as racially based differential
treatment within the meaning of article 1 of the ICERD. Further, in light of
the fact that there is some evidence to suggest that the majority of persons
subject to income management are women, concerns also arise as to the
consistency of the measure with guarantees against non-discrimination on the
basis of sex.
The committee considers that a host of less rights restrictive measures
may be developed and implemented in place of compulsory income management.
Chief among these is removing the compulsory categories of income management
and trialling a voluntary program across all current sites.
The income management measures engage and limit the right to equality
and non-discrimination, the right to social security and the right to privacy
and family. Although the committee considers that under certain conditions
income management is a legitimate and effective mechanism, evidence before the
committee indicates that compulsory income management is not effective in
achieving its stated objective of supporting vulnerable individuals and
families. The committee considers that this objective remains an important and
A human rights compliant approach requires that any measures must be
effective, subject to monitoring and review and genuinely tailored to the needs
and wishes of the local community. The current approach to income management
falls short of this standard. As such the committee makes the following
recommendations in order to improve the human rights compatibility of the
The committee recommends the continuation of community led income
management where there has been a formal request for income management in a
particular community following effective consultation on the particular
modalities of its operation, including whether it should be a voluntary
The committee recommends that income management should be
imposed on a person only when that person has been individually assessed as not
able to appropriately manage their income support payments. Information
concerning rights and processes of appeal should be provided to the person
immediately and in a language that they understand.
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