Chapter 2
Key issues
2.1
Most submissions did not support the extension of compulsory income
management and associated measures outlined in schedule 1.[1]
Submissions expressed particular concerns about the following measures:
-
extending compulsory income management for two years;
-
removal of incentive payments; and
-
changing the process for determining vulnerability.
2.2
The committee did not receive any submissions on schedule 2 (ceasing the
pre-entry residential care subsidy) or schedule 3 (abolishing the Aged Care
Planning Advisory Committees).
2.3
The Department of Social Services (department) advised the committee it
did not wish to submit any additional materials or documentation in relation
the Bill.[2]
However, the committee notes that a number of issues relevant to the Bill were
addressed by the department at the 2015 Budget Estimates hearings.[3]
Extension of income management
2.4
Most submissions expressed broad opposition to compulsory income
management and did not support extending current programs for two years.[4]
The Australian Council of Social Service (ACOSS) noted it has expressed strong
opposition to compulsory income management since it was introduced in 2007, and
recommended existing programs should be phased out.[5]
2.5
Submissions expressed concerns about a lack of evidence to demonstrate
that compulsory income management is effective.[6]
Drawing from a range of studies, UnitingCare noted:
[T]here is no substantive evidence to demonstrate that
compulsory income management has resulted in any measurable reduction in social
harm through its implementation to date.[7]
2.6
ACOSS drew the committee's attention to its 2014 report Compulsory
Income Management: a flawed answer to a complex question that concluded
compulsory income management was 'poor policy' due to a number of factors,
including the lack of 'evidence it results in widespread or long‐term benefit'.[8]
Similarly, the National Welfare Rights Network (NWRN) noted there is 'no case
for expanding the system of income controls'.[9]
2.7
The National Council of Single Mothers and their Children (NCSMC) expressed
concerns about how evidence on the efficacy of income management is collected. NCSMC
noted anecdotal evidence indicates compulsory income management has not
reduced, and in some cases has exacerbated, social harm:
[W]e hear from women who report that they are more unsafe,
endure stigma, have less control within their family and feel that they must be
complicit in this social security policy. They are keen not to ‘rock the boat’
and do not want to risk a suspension, reduction or removal from income.[10]
2.8
UnitingCare expressed concerns income management diverts funds from
alternative programs 'for which there is evidence of efficacy in fostering
sustained changes in behaviour' and argues:
the funding prioritised for income management could be better
directed to support services in the early intervention and prevention spheres
(at lower unit costs), or towards more intensive interventions to address the
underlying causes of financial disadvantage or entrenched unemployment, such as
alcohol or substance misuse, poor mental health or homelessness.[11]
2.9
UnitingCare recommended that the committee seek:
evidence demonstrating improved outcomes that have been
measured and are attributable to involuntary income management; and evidence of
improved outcomes that have been measured and are attributable to the
BasicsCard.[12]
2.10
Following the 2015–16 Budget, the Minister for Social Services, Minister
the Hon Scott Morrison MP, announced the government would be investing $147
million to deliver 'more streamlined and cost‑effective income
management' to assist the approximately 25,000 Australians receiving income
management. The government further noted it would be investing $25.6 million to
provide financial counselling and money management skills to 'help improve the
capacity and resilience of families and individuals to manage their finances,
avoid the risks of poor financial literacy and help people move out of debt'.[13]
Removing incentive payments
2.11
Several submissions expressed concerns about removing the Voluntary
Income Management Incentive Payment (incentive payment) and Matched Savings
Scheme Payment (matched savings) schemes which provide payments for remaining
on voluntary income management for periods of six months or more, or for
accumulating savings of income managed funds.[14]
2.12
While opposing compulsory income management, UnitingCare, NCSMC and
Anglicare Australia supported retaining these payments for voluntary income
management. UnitingCare noted that 'if income management is to be used as a
policy instrument, then incentives to support it should be encouraged'.[15]
Similarly, NCSMC noted the payments are:
a small compensation of the addition cost and the limitations
of compulsory income managements such as not purchasing food from a local
market, travelling to the large participating outlets and not capitalising on
‘sale items’ from stores than do not accept the basis [sic] card.[16]
2.13
NCMSC recommended 'administrative corrective action' be taken to address
concerns about the low 'take up rate' of voluntary income management, rather
than ceasing incentive payments.[17]
2.14
In contrast, ACOSS expressed support for abolishing income management
incentive payments, noting 'these payments were poorly designed and
administratively inefficient to administer'. ACOSS recommended the savings from
this measure be diverted to strengthening financial counselling and support
services to build people's capacity to manage finances.[18]
2.15
NWRN supported abolishing the matched saving scheme as 'the onerous
requirements of the scheme acted as disincentives and rendered it an
unattractive offer'.[19]
However, NWRN recommended maintaining the incentive payment, noting those
people who have already signed up for voluntary income management:
have done so in the expectation that they would receive the
incentive payment for the duration of income management. The removal of the
incentive payment may reduce the number of people on Voluntary Income
Management. If the change is retained, the cut-off date should be extended to
31 December 2015 to qualify for payment.[20]
2.16
The Explanatory Memorandum noted these payments are being abolished as
they are 'no longer needed'.[21]
The department further indicated during Budget Estimates that the very low take
up of these initiatives was the reason for their removal.[22]
Vulnerability assessments
2.17
A number of submissions expressed concerns about proposed changes to empower
the Minister to prescribe classes of people as vulnerable. ACOSS expressed
strong opposition to any proposal that would 'reduce the capacity for social
workers to make assessments about whether or not an individual meets the
vulnerability criteria and would benefit from compulsory income management'.[23]
ACOSS expressed concerns that:
instead of moving towards careful individual assessment, this
Bill will make the imposition of compulsory income management an administrative
decision exercised by Centrelink officers without social work qualifications,
against rigid external criteria, not focussed on the best interests of the
individual affected.[24]
2.18
Similarly, NWRN notes the risk of prescribing classes of vulnerable
people is:
there is no assessment or consideration of whether income
management will benefit that particular person, or assist them to overcome
their vulnerability, or whether income management may in fact be detrimental to
their wellbeing.[25]
2.19
The Commonwealth Ombudsman (Ombudsman), responsible for independent
oversight of income management programs, also expressed concerns:
the sole use of an automated decision-making process to
determine that a person is a vulnerable welfare payment recipient creates a
risk that vulnerable customers might be further disadvantaged through the
application of income management in their particular circumstances.[26]
2.20
The Ombudsman noted it is currently preparing a report on a similar
measure used by Centrelink, called the 'vulnerable youth' measure, that
automatically applies income management to young people who live in an income
management declared area and are classed as 'vulnerable youth' based on age and
qualification for a particular Centrelink payment.[27]
The Ombudsman highlighted:
the subjective consideration of an individual's circumstances
when applying income management is important, both to ensure that the
individual is afforded natural justice, and that the application of income
management will be consistent with its intended purpose of supporting and
assisting the individual.[28]
2.21
The Ombudsman expressed further concerns about the proposed streamlining
measure to limit exemptions from income management for vulnerable welfare
payment recipients to refer solely to a person's rate of income payment, rather
than also require a subjective assessment. The Ombudsman noted limiting the
exemption:
may also mean that some customers will be stuck in a system
that could potentially exacerbate their disadvantage.[29]
2.22
Similarly, Ms Patricia Lucas expressed concerns about the lack of
restrictions on who may be defined as vulnerable and that, over time, the
measure may 'lead to increasing numbers of welfare recipients being subjected
to income management without sufficient public consultation or parliamentary
oversight'.[30]
2.23
NWRN recommended the introduction of an incentive based voluntary income
management model, or alternatively, a genuine case-by-case income management
model (rather than declared areas or targeting specific classes of people).[31]
2.24
The Explanatory Memorandum noted the current vulnerable income management
measure was 'under-utilised and administratively burdensome' and that
prescribing the class by legislative instrument will 'allow continuing
flexibility about who this measure covers'.[32]
2.25
During Budget Estimates on 4 June 2015, the department indicated that
current vulnerability assessment processes detracted from the support social
workers could provide. The department further noted that removing the
vulnerability assessments:
is not changing the person’s ability to access a social
worker or social workers being able to make assessments. It was a specifically
set out, intense mechanism in addition to the other triggers. It was not being
utilised to the degree expected in the original design.[33]
Committee view
2.26
The committee acknowledges concerns raised by submitters about extending
compulsory income management for a further two years. However, the committee notes
income management programs have been in place since 2007 and have assisted
around 25,000 Australians. The committee is satisfied the proposed changes,
together with the government's additional investment in financial wellbeing,
will deliver more streamlined and cost-effective income management programs.
2.27
The committee also acknowledges the concerns raised about removing
incentive payments for people entering voluntary income management. The
committee supports measures to assist people seeking to better manage their
incomes, but accepts the existing measures are administratively inefficient and
that these funds are better directed at initiatives to improve financial
management skills.
2.28
The committee further acknowledges the concerns raised about changes to
the process for determining classes of vulnerable persons, particularly the
possibility that objective criteria may cause people to enter income management
programs when their particular circumstances may not warrant this. The
committee accepts that the existing case-by-case process is under-utilised and
administratively burdensome. Moreover, the committee is satisfied that by
requiring the Minister to determine classes by legislative instrument, the Parliament
will have opportunity to ensure the criteria are appropriate and retain
adequate flexibility.
Recommendation 1
2.29
The committee recommends that the Bill be passed.
Senator Zed Seselja
Chair
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