Cashless welfare card experiments- regulating vice and virtue?

Dr Shelley Bielefeld from the Australian National University's RegNet considers the controversial cashless welfare cards introduced as part of the Northern Territory Emergency Response, and their potential introduction in the UK.


The Australian Government’s cashless welfare card policy experiments have been contested terrain since they were first introduced as part of the Northern Territory Emergency Response in 2007. Originally applicable only to Aboriginal welfare recipients there, cashless welfare cards (referred to in national debate as ‘income management’) have since been expanded and now operate in multiple Australian jurisdictions. However, indigenous welfare recipients are disproportionately represented among those subject to income management, and Aboriginal communities are grossly over-represented in the geographical locations the government has selected for income management trials. This gives rise to ongoing concerns about racial discrimination, access to justicestructural violence and denial of citizenship rights for Australia’s First Peoples.

Those targeted by income management laws have half or more of their welfare payments quarantined, depending on which income management category they fall within. These quarantined sums can only be spent at government approved retailers on government approved priority needs, and are usually spent using a government issued BasicsCard with a personal identification number. This system excludes a wide range of consumer outlets for everyday goods and services. There are numerous businesses, real estate agents and landlords who do not want to participate in the BasicsCard system, which has the effect of shrinking the market of goods and rental housing available for those on low incomes. This can worsen disadvantage experienced by welfare recipients. Evaluation of income management in 2014 also reveals that the scheme has led to an increase in the cost of goods and services for numerous welfare recipients who are poorly positioned to bear this burden.

The Australian government maintains that income management is necessary to promote socially responsible behaviour and to ensure that social security payments are not spent on drugs, alcohol, gambling or pornography. Yet many of those subject to the scheme do not have problematic spending in these areas, as evaluation of income management in the Northern Territory has shown. People can be subject to income management regardless of how responsibly they spend their social security payments, and the vast majority of welfare recipients currently experiencing income management are subject to compulsory income management rather than voluntary income management. In addition to a recent evaluation revealing that income management is ineffective in achieving the government’s stated policy objectives, numerous people subject to income management think that the scheme is unfair and discriminatory. For example, some Aboriginal people subject to the scheme have said that BasicsCards are ‘like dog tags’.

Other more culturally appropriate suggestions have been made regarding the best way to address any financial literacy issues experienced by Indigenous people in receipt of welfare payments. For instance, Dr Gondarra of the Dhurili Clan Nation contends:

The solution the Yolngu people seek is for the Australian government to remove compulsory quarantining of Centrelink payments, and instead respond to the needs of our children with education and assisting their parents with budgeting. It would also be beneficial to have a voluntary quarantining service. Yolngu people are completely capable of providing for their children without being dehumanised and humiliated by having to use the BasicsCard.

Cashless welfare cards interfere with the autonomy of welfare recipients and involve significant infringement of human rights. Australia’s Parliamentary Joint Committee on Human Rights stated in 2013 that there are numerous human rights compatibility concerns with income management. These include "restriction on the right to social security and the right not to have one’s privacy and family life interfered with unlawfully or arbitrarily". The Committee also expressed the view that Australia’s measures may be racially discriminatory due to their "disparate impact on Indigenous people". A follow-up report on this issue is due to be delivered by the Committee in February 2016.

Further reforms for welfare payments via cashless cards in Australia will commence early this year, with new legislation set to implement the Forrest Review’s ‘Healthy Welfare Card’ in selected trial areas. However, instead of Forrest’s original 100 percent income management proposal, the new cards will quarantine 80 percent of a welfare recipient’s payment to be spent via the card with prohibited expenditure on alcohol and gambling products. As was the case with the BasicsCards, in the new trial areas those subject to the card will be disproportionately Indigenous.

The transition to cashless welfare cards is also being mooted in the UK, with Work and Pensions Secretary Iain Duncan Smith an advocate for prepaid cards for welfare recipients considered to have "destructive habits". This proposal is concerning. Given the broad influence of new paternalism in western nations, advanced by Lawrence Mead and others, anyone in receipt of welfare payments runs the risk of adverse characterisation by governments intent on reducing welfare rolls. This leaves the poor in an increasingly precarious position, both in Australia and globally.

Dr Shelley Bielefeld is a Braithwaite Research Fellow in RegNet: School of Regulation and Global Governance at the Australian National University, where she is undertaking scholarship on the interaction between the regulatory state and Indigenous peoples in the area of welfare reform.

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Posted by @MsSophieRae