Eva Cox on the politics of Income Management

by Eva Cox, Professorial Fellow, Jumbunna IHL UTS. 

Learn more about income management from the F blog here.

This post describes some recent changes which may radically alter the basis of our welfare payments system. The introduction of a series of policies and programs labelled Income Management as part of the NT Intervention, was the start of a major shift in the delivery of income support (welfare) payments. In the past, the Australian welfare state was based on the assumption that people had a right to receive public non-contributory income support payments when other forms of income were not available. While there have been many debates about eligibility and levels, once the payments were made it was without conditions on how the money was spent. The amounts paid were usually quite frugal, but it was left to the recipient to manage as they could.

Income Management (IM), introduced by the Howard Government in 2007 in the Northern Territory, involved quarantining 50% of fortnightly payments and 100% of lump sums paid to welfare recipients.

It was compulsorily applied to all Commonwealth income recipients, including age pensioners and veterans, in 73 specific Aboriginal communities – thus requiring the suspension of the Racial Discrimination Act (RDA). It banned the purchase of grog, porn and cigarettes, and required the purchasing of food and other goods only from participating stores that would monitor the proscribed goods. Later came the BasicsCard, which identified people on IM and functioned as a debit card for spending the quarantined income.

There were many documented difficulties and objections to the compulsory nature of IM, as well as some support. The UN criticised its racist focus; the government responded by extending the program to non-Aboriginal welfare recipients, which meant the RDA could be reinstated. This extended version was introduced despite the lack of valid evidence that IM had been of benefit to the original communities.

The ALP Government extended IM across the NT, making it compulsory for anyone on unemployment, sole parent and similar benefits for a specified length of time. The more respectable or valued categories of welfare recipients were excluded, such as veterans, aged pensioners, carers, and people with disabilities.

The latest change is five new IM pilot programs: at Bankstown (NSW), Shepparton (VIC), Playford (SA), Logan (QLD) and Rockhampton (QLD), expected to cost $173M in administration over five years. These started operating on July 1st. Two other programs, which have been running in WA and North Queensland, will also continue. The new sites were chosen because they have high unemployment; some have rural challenges, others have high refugee and other culturally and linguistically diverse groups. This version of IM is based on the WA model with certain changes. It is claimed to be a five-year pilot program, with an estimated 1000 participants each per annum, but can be extended to further sites or applied more generally at any time. Thus the government has already extended IM, before completing evaluation of the amended NT model. Indications are that the program is almost certain to be universalised, despite the lack of debate and evaluation.

The version of IM in the pilot projects has three components, but no indication of how many clients are expected for each:

A. Compulsory Income Management Scheme (CIM) 50% – applies to people deemed by Centrelink to be financially vulnerable, i.e. not paying their rent or bills or showing other forms of financial stress, including seeking emergency relief. Many recipients will fall into this category, simply because their income is too low to cover the cost of living.

B. Voluntary Income Management Scheme (VIM) 50% – is being marketed by Centrelink to prove that people want to have their income managed. It includes a bonus (100% managed) of $250 after six months. Anecdotal evidence suggests that some people are being pressured to sign on or stay on IM when they are released from the compulsory version.

C. Child Protection Scheme (CPIM) – certain clients selected by state welfare officials are automatically put onto 70-100% income management, ostensibly as a case management tool. However, state-based child welfare workers have no experience in income support and little in financial management. Clients who want to challenge their referral to IM cannot use the Social Security Appeals mechanism; there is only the state complaints system, which raises issues of due process.

These categories are not the same as the NT version which includes all income recipients in particular payment categories. This change suggests that universal compulsion, still operating in the NT, is not seen as appropriate in other areas of the country. Why the difference? Are there inbuilt prejudices in the NT that need to be explored?

Public discussions on IM are often confused, because people may not realise they are talking about different versions of the policies. The key question to ask is who are the IM clients? Genuinely voluntary participants or seriously impaired people who need to be compelled for their own good versus people with no serious difficulties who are unfairly compelled to take part in the process. The NT versions included all people in a category. First all income recipients, then longer term unemployed etc. plus voluntary people, usually ex-compulsory categories. The other versions start with a mix of voluntary and those officially defined to have particular issues requiring compulsory participation.

Taking away people’s ability to decide how to spend even a limited government payment should require a clear, legally defined, individual form of due process with built-in protection of their rights. Assumptions based on category of payment or presumed vulnerabilities may reduce rights without any evidence that the results benefit the individuals concerned. If people really choose to be managed on a voluntary basis, this process should ensure the choice is genuinely free, not pressured, and they are informed of its implications.

Some income recipients can already make the free choice to have some of their income put aside for certain payments through a program, Centrepay, which has been offered by the Centrelink for some time. Similarly, recipients of income support with serious difficulties in managing their money because of mental health issues are already covered by appropriate legal processes for assistance. Neither of these has the same punitive, stigmatising overtones as IM.

Minister Macklin and some others argue that IM is necessary to protect women and children from gender threats that operate in some Aboriginal communities. The Anangu Pitjantjatjara Yankunytjatjara (APY) women have publicly supported compulsory IM as a protection against male humbugging and recently asked for it to be imposed in the SA areas where they live. These local gender issues require more complex solutions than IM can offer; but communities should be given the ability to ask to be put on IM – using a collective version of the basic voluntary model. However, the needs of specific communities does not justify the wider imposition of compulsory IM on other communities or individuals who do not choose to be part of the process.

The evidence base

Measuring the effect of a complex set of policies is not easy so claims about what works require a degree of scepticism about cause and effect. I examined a range of studies and found only two offered some credible evidence. One was the ERA study whose 180 respondents expressed clear negative attitudes to IM; the other was the Menzies study of the Arnhemland Progress Aboriginal Corporation (ALPA) shops before and after IM, which showed no improvement in food purchasing patterns. Some wider social indicators such as school attendance, crime and health status have failed to show improved social indicators.

The Parliamentary Library, which provides objective policy advice to the Government, has confirmed the lack of evidence that IM is working. The final paragraph of its June 2012 parliamentary briefing note says:

In none of the locations in which it operates is there unambiguous evidence for or against the effectiveness of income management..

One likely explanation for the lack of public debate is a kind of casual racism: since the program started as a targeted Aboriginal program. other sectors of the population assumed it had nothing to do with ‘people like us’. We need to have the debate we should have had before the government made the changes. Is this really the social security system we want? 

Or can we work out how to have social security that recognises questions of race and gender as well as structural and individual problems? As a wealthy country, can we have income support that offers decent pay, support, social wellbeing and mutual respect for those who are not well served by our current economic models?

You can read F Collective member Jane Bullen’s further reflections on why income management is a feminist issue here.

Some references:

Jumbunna Research Unit, Journal of Indigenous Policy, Issue 12, ‘Evidence-Free Policy Making? The Case of Income Management (September 2011).

Eva Cox and Terry Priest,Evidence-Free Policy Making? The Case Of Income Management’ Addendum to the Journal of Indigenous Policy Issue 12, , May 2012

Luke Buckmaster, Carol Ey and Michael Klapdor, Income management: an overview, Parliamentary Library, Canberra 21 June 2012, p45.

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