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Income management: more evidence-free policymaking?

It seems the Coalition will expand the compulsory income management scheme, which has little evidence backing up its worth. AAP/Dan Peled

For a brief moment, it looked as though the Coalition would be better than the ALP on welfare policy. It appeared that the new government would listen to evidence for policy changes in its newly retitled Social Services portfolio.

In a previous positive sign for evidence-based policy, new social services minister Kevin Andrews had suggested that he would increase the pay rates for sole parents, who, since 2006, have been dumped onto Newstart when their youngest child turns eight. As there is no evidence that putting them on lower payments increased their workforce participation and there is evidence the changes made them poorer, our research called on the ALP to reverse the changes.

However, hope for evidence-based policy reform has been dashed by Andrews’ recent announcement of the expansion of compulsory income management - a policy which is extremely expensive and shows no clear evidence of benefit.

What is income management?

The first version of an income management policy was targeted to 72 Aboriginal communities covered by the NT intervention, but then morphed into a non-race based, location-directed program. From 2011, the scheme compulsorily covered all NT recipients of benefits, and offered some other variants, including a “voluntary” version.

The previous government also funded another five sites outside the NT as pilot programs to decide whether to further expand the program to other benefit recipients. This has been very limited and the figures do not suggest success.

In most cases, those who have their income managed lose control of over 50% of their benefit income and 100% of lump sum payments such as the baby bonus. There are a few forbidden purchases: grog, gambling and porn, for instance; while other costs, like rent and power, can be paid directly by Centrelink.

For most, other purchases such as food and clothing can only be made via a BasicsCard that holds the balance of their money. It does not control the quality or details of other purchases, but does limit the purchases to registered suppliers, often big chain supermarkets. It does seriously limit access to markets, wholesalers and second-hand shops.

Towards evidence-based policy

A current - but not often discussed - shift in welfare policies has been the increasing move away from entitlements to conditional welfare payments. The current emphasis on economic participation and productivity has spawned a shift towards blaming the unemployed for their lack of earnings and making their access to payments more punitive and controlled.

While this approach is usually part of conservative tendencies, both the Coalition and Labor have pursued “meaner” payment policies. Despite little evidence that low payments and harsh conditions increase workforce participation, the trend continues.

Doubts have already been raised about the value of compulsory income management, which suggests that this part of the program should be abandoned - not expanded.

The most recent relevant data is in the first stage of an evaluation report, commissioned by the Department of Families, Housing, Community Services and Indigenous Affairs (now the Department of Social Services), which covers the bigger NT versions of income management. The very thorough review drew on both survey data and official data to look for evidence of the effects of the programs.

In part, the report concluded:

…these findings point towards the conclusion that income management may assist a proportion of those on income support to cope with particular issues they face. At the same time the program has been applied to many who do not believe that they need income management and for whom there is no evidence that they have a need for, or benefit from income management. Income management has led to widespread feelings of unfairness and disempowerment.

Evaluators of the policy have not been able to find evidence of positive benefits from the data they collected. They noted that some positive responses that came from some recipients were not supported by any external data on improved community safety, child nutrition or school attendances, although these were the policy’s core aims. They also reported negative responses, particularly from those on the compulsory version that may outweigh the positives.

There is also the issue of costs. The Australian National Audit Office is reported to have found that the scheme costs between A$6600 and A$7900 per person per year to administer, equal to 62% of the $246-a-week Newstart payment. Even if costs can be cut in more urban areas, these costs suggests an excessive administrative burden on both benefit recipients and the taxpayer. An existing program, Centrepay, already offers a bill payment system to beneficiaries without stigma and unnecessary policing.

So, why is Andrews suggesting an expansion of the compulsory version? One can only assume that punitive conservative ideology is overriding the evidence that this approach doesn’t improve lives and instead damage them.

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