There’s no evidence that income management works … so why introduce it?

Income management is being introduced in part for child protection, but is could make things harder for families. AAP/Joe Castro

The start of the new financial year has also heralded the start of one of the major reforms of our income support system, yet few know it is happening.

The Income Management program quarantines at least 50% of government income support and ties it usually to a “Basicscard” which can only be used for certain types of goods at certain stores.

Income management was originally trialled in 72 Aboriginal communities in the Northern Territory under Intervention legislation, but is now spreading throughout Australia. The amending legislation went through parliament late last Thursday night, and on Monday Centrelink started signing up “customers”.

Apart from offering voluntary income management via a promised $250.00 “bribe”, clients are being identified in five new areas: Bankstown Shepparton, Playford, Logan and Rockhampton.

There is no doubt these “pilot” sites will be rapidly expanded nationally under plans by both the present and alternative federal governments.

There is no problem with assisting people who ask for help in money managing, as long as they initiate the request. Their need is often the result of inadequate income payments, not incompetence, but if people do prefer Centrelink to manage their money, that is their choice. However, imposing compulsory income management on categories of payees, as in the Northern Territory, or those whom authorities deem to need it on relatively flimsy evidence, is hard to justify.

There is no clear, valid evidence of the benefits of income management. There is no hard data. The official line is that some people like it and it is too soon for the benefits to show. However, the many official six monthly Department of Housing, Community Services, and Indigenous Affairs (FaHCSIA) Reports on the Intervention include data that is often worse in areas like school attendance, levels of violence or health statistics which is a concern, as some areas have been under the regime for some years.

The Hansard of the final debate on the issue shows the intransigence of both the government and the opposition on the issue and reveals the gaps.

The government speakers claimed conversations as their main proof of the level of support for the reforms: some people said they liked it. They ignored the lack of evidence both from their own statistics and independent studies, as quoted by the Greens. The multiple objectors to passing this legislation included many major welfare agencies such as Australian Council of Social Service (ACOSS) and St Vincent de Paul as well as Aboriginal groups in the Top End.

The advice from the government’s own genuinely neutral advisers was also not supportive of such major changes. This is shown in the very carefully neutral final paragraph of a parliamentary briefing note on income management issued in June:

In none of the locations in which it operates is there unambiguous evidence for or against the effectiveness of income management. The overall picture emerging from the available evidence is one in which positive changes have been uneven and fragile. On the other hand, there is no clear evidence that income management is responsible for a worsening of the situation in areas in which it operates.

There are serious concerns that these legislative changes allow such further extensions of the programs without further parliamentary scrutiny. The extended model is supposedly being trialled in these five locations. It involves various assumptions about recipients of working age welfare that may actually damage their capacities to re-engage with paid work.

Income management is seen as providing order into disordered lives and necessary control over job seeking and improving caring. So despite the lack of evidence that financial control over spending does improve either parenting or social order, the program is being introduced.

The two main target groups have been specifically selected to slide under the public radar. The “vulnerable” category, to be decided by Centrelink staff, is for people they can identify as likely to be wasting money on relatives, or maybe alcohol and gambling, rather than spending it at the supermarket.

The reality is that most of these people will be those who have had to seek emergency help for inadequate income from welfare agencies or are two weeks behind in the rent, or maybe caught up in family violence. How buying food at the big supermarkets with half your income will help with this is not clear. In fact, their inability to use markets or small ethnic stores may result in their now purchasing more processed, unhealthy food buys than before.

The other target group is those referred by child protection authorities.

The Child Protection income management program creates some odd problems, including the scope and powers of the Commonwealth. The responsibility for nominating recipients will be the various state/territory based Child Protection officers, who have no experience with income support or financial issues. Centrelink staff will just be entering the names on the program.

State-based child protection authorities will send details of their clients, and decide the time period for being income managed, as well as whether at 70% or maybe 100%. There is no active Centrelink involvement in the decisions so the child protection clients will have no recourse to formal appeals to the Social Security appeals system. They will need to raise any problems through the much less accessible state type complaints systems. They lose access to their federal income payments directly as a result of state officer decisions.

The restrictions on purchasing from usual merchants are likely to lead to people feeling a loss of control over their lives. This may lead to being less able to act responsibly and manage the day-to-day activities of parenting and life.

The new approach also ignores the many studies in both Indigenous and other disadvantaged communities of the importance of encouraging autonomy and a sense of control to achieve change. Removing the limited existing control people on welfare payments have over their spending may seriously risk personal damage and shame. So why do it?

The mystery is why a government which claims to be evidence-driven has pushed for these changes and why it is getting away with it. There has been very limited public and media attention to these massive changes to policies that will gradually affect the whole community.

Is this really the social security system we are prepared to support? Or do we need to work out how to have social security that recognises structural as well as individual problems and offers decent pay, support, social wellbeing and mutual respect for those whom economic models do not serve well?