tag:theconversation.com,2011:/us/topics/patrick-mcclure-12739/articlesPatrick McClure – The Conversation2016-09-20T07:31:27Ztag:theconversation.com,2011:article/656282016-09-20T07:31:27Z2016-09-20T07:31:27ZThe $4.8 trillion dollar question: will an ‘investment approach’ to welfare help the most disadvantaged?<figure><img src="https://images.theconversation.com/files/138212/original/image-20160919-11127-zko8ej.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Christian Porter is championing a new approach to the way welfare is distributed in Australia.</span> <span class="attribution"><span class="source">AAP/Lukas Coch</span></span></figcaption></figure><p>Social Services Minister Christian Porter on Tuesday <a href="https://www.dss.gov.au/sites/default/files/documents/09_2016/baseline_valuation_results_report_accessible_version_12_july_2016_2pwc._2.pdf">released a report</a> on the lifetime costs of the social security system for the Australian population, putting it at close to A$4.8 trillion.</p>
<p>The report was an initiative of the 2015-16 budget, when the government allocated A$33.7 million to establish an Australian Priority Investment Approach to Welfare based on actuarial analysis of social security data.</p>
<p>Groups identified by the approach will receive support from current programs and from new and innovative policy responses to be developed through the A$96.1 million Try, Test and Learn Fund, which was announced in the 2016-17 budget.</p>
<p>The development of an investment approach was one of the recommendations of the <a href="https://www.dss.gov.au/review-of-australias-welfare-system">McClure review</a> of Australia’s welfare system. </p>
<p>The New Zealand government <a href="https://theconversation.com/australia-should-think-twice-before-adopting-nz-welfare-model-38105">originally developed</a> the investment approach in response to a review on welfare dependency, which was specifically asked to look at the insurance industry for ideas on reform. The government has subsequently commissioned four <a href="https://www.msd.govt.nz/about-msd-and-our-work/publications-resources/evaluation/investment-approach/index.html">actuarial valuations</a> – in 2011, 2012, 2013 and 2014.</p>
<h2>How did we arrive at the figures?</h2>
<p>The report released by Porter, and the <a href="https://www.theguardian.com/australia-news/2016/sep/20/coalition-to-reveal-plan-to-tackle-welfare-dependence-across-generations">media stories on this approach</a>, have highlighted the very large number of A$4.8 trillion. Understanding how this number is derived can help put it in context, however.</p>
<p>The report takes the population of Australia in 2015. Then, on the basis of past patterns of receipt of payments, it projects the amount of money the population will be paid over the rest of their lives and converts this into the present value of this lifetime spending, with a discount rate of 6% – reflecting the fact a dollar is worth more today than in the future given the capacity to earn interest.</p>
<p>The population modelled in the report includes:</p>
<ul>
<li><p>around 5.7 million people currently receiving various income support payments (of whom 2.5 million are age pensioners);</p></li>
<li><p>2.3 million people not receiving income support payments but who receive other payments (mainly families receiving the Family Tax Benefit); </p></li>
<li><p>around 3.9 million who were previously receiving payments; and </p></li>
<li><p>just under 12 million people who are not receiving any payments currently or have not in the past.</p></li>
</ul>
<p>The lifetime valuation is about 44 times the total amount of payments in 2014-15 (A$109 billion). But it also includes people’s future age pension entitlements. Given the average age of the total population is 39 and that on average Australians can expect to live into their 80s, it is not surprising the estimated lifetime cost is more than 40 times the current level of spending on cash benefits.</p>
<p>In fact, more than half the total estimated lifetime spending will be on age pensions. The average lifetime cost per current client is made up of A$150,000 in age pensions and A$115,000 in all other benefits. </p>
<p>For previous clients, the corresponding figures are A$114,000 in age pensions and A$60,000 in other payments. For the balance of the Australian population it is A$88,000 in age pensions and A$77,000 in all other benefits. </p>
<p>However, for people of working age who are currently receiving benefits it is these other payments that figure larger than age pensions. This is particularly the case for people receiving parenting payments, where the age pension is only around one-quarter of their total lifetime costs.</p>
<p>New Zealand’s actuarial model does not include family payments. And nor does it include national superannuation – their equivalent to the age pension – as it is provided free of any income test to people aged 65 and over.</p>
<p>By including both age pensions and family payments, the Australian report produces significantly higher lifetime costs relative to the size of the economy.</p>
<p>The report also highlights three groups of people who are expected to have very-high average lifetime costs and poor lifetime outcomes:</p>
<ul>
<li><p>for 11,000 young carers, it is expected, on average, they will access income support in 43 years over their future lifetime;</p></li>
<li><p>for 4,370 young parents it is expected, on average, they will access income support in 45 years over their future lifetime; and</p></li>
<li><p>for 6,600 young students it is expected, on average, they will access income support in 37 years over their future lifetime.</p></li>
</ul>
<p>These projected future histories will involve lifetime costs for these three groups of between A$2 billion and A$4 billion. In all of these cases, however, a substantial part of their estimated costs relates to years to be spent on the age pension.</p>
<p>Also, while some of these groups are very disadvantaged, they make up roughly 22,000 people out of a current group of 3.2 million people receiving working age payments. This is well under 1% of these recipients.</p>
<h2>Will it help?</h2>
<p>Porter <a href="https://www.theguardian.com/australia-news/2016/sep/20/coalition-to-reveal-plan-to-tackle-welfare-dependence-across-generations">has argued</a>:</p>
<blockquote>
<p>The future foundation measure of success must be whether we can improve individual prospects for a better life, made meaningful by employment, community contribution and self-reliance.</p>
</blockquote>
<p>In this context the key to creating better policy will be the Try, Test and Learn Fund. This will enable organisations to compete for a chance to try a policy that proposes to create a path out of the welfare system. The fund will be open by the end of the year for not-for-profit organisations, governments, social policy experts and industry to pitch their ideas.</p>
<p>The government also appears to have learned from some of the issues raised in New Zealand – both by looking at policies that improve lifetime outcomes and not just reduce welfare costs, and by constructing the model in such a way that it is less sensitive to changes in economic parameters.</p>
<p>The government appears to be committed to rigorous evaluations of these policy experiments. This is very welcome. The commitment to early intervention is also welcome, but the proof of whether this approach actually does improve outcomes for the disadvantaged is still some years down the track.</p>
<hr>
<p><em>Editor’s note: This piece was amended post-publication to correct the “discount rate” to 6%.</em></p><img src="https://counter.theconversation.com/content/65628/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Whiteford has received funding from the Australian Research Council.He is affiliated with the Centre for Policy Development and with the Chifley Research Centre Commission on Inclusive Prosperity. He is an independent member of the Sustainability Committee of the Board of the National disability Insurance Agency.</span></em></p>The proof of whether an investment approach to welfare actually does improve outcomes for the disadvantaged is still some years down the track.Peter Whiteford, Professor, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/381052015-03-08T19:03:46Z2015-03-08T19:03:46ZAustralia should think twice before adopting NZ welfare model<figure><img src="https://images.theconversation.com/files/73776/original/image-20150304-15287-z3r3q9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Patrick McClure's recently released review of Australia's welfare system borrowed heavily from the reform agenda across the ditch.</span> <span class="attribution"><span class="source">AAP/Dave Hunt</span></span></figcaption></figure><p>The McClure <a href="https://www.dss.gov.au/our-responsibilities/review-of-australias-welfare-system">review</a> of Australia’s welfare system, whose <a href="https://www.dss.gov.au/sites/default/files/documents/02_2015/dss001_14_final_report_access_2.pdf">final report</a> the federal government recently released, proposed an “investment approach” to welfare. This approach was taken explicitly from reforms in New Zealand that were introduced in 2012 and 2013.</p>
<p>The aim of the investment approach is to estimate likely lifetime benefit costs for everyone on welfare – the so-called “future liability” – and then target resources at those groups who represent the highest future liability.</p>
<p>The review’s chair, Patrick McClure, enthusiastically <a href="http://www.abc.net.au/news/2015-02-25/welfare-system-reveals-five-basic-payments-plan/6259982">promoted</a> the New Zealand approach:</p>
<blockquote>
<p>We also talk about and recommend an investment approach. This is based on a New Zealand model that’s been very successful – one, in getting people into jobs, but also in making considerable savings over the longer term.</p>
</blockquote>
<p>However, the claim that the NZ investment approach has been “very successful” is at best unproven. Arguably, it is plain wrong.</p>
<h2>A flawed approach to welfare reform</h2>
<p>The concept has two fundamental flaws. The first is that at the heart of the investment approach is actuarial valuation of the “future liability”. </p>
<p>Future liability is an estimate of how much a government is likely to pay in future welfare costs for all current welfare recipients, taking into account future periods on benefits that they might have. The problem is that future liability measures the wrong thing. </p>
<p>The task of any government is to determine how best to spend the revenue it raises to maximise the population’s well-being. The orthodox means of ranking alternative expenditure options is a <a href="http://www.treasury.govt.nz/publications/guidance/planning/costbenefitanalysis/primer">cost-benefit analysis</a>. A cost-benefit analysis considers all the costs and benefits, public and private, of any intervention.</p>
<p>As the University of Otago’s Simon Chapple has <a href="http://igps.victoria.ac.nz/publications/files/e2aca8c99ff.pdf">pointed out</a>, actuarial valuation – an accountancy methodology – is concerned with only a narrower subset of concerns: the <a href="http://www.oag.govt.nz/2014/cg-2013-14/part3.htm">costs to one vote</a>, or portfolio, in the government’s budget. Even within an accounting framework, it takes no consideration of the assets that match the “liability”. </p>
<p>The difference is far more than arcane. For example, a training program for welfare beneficiaries could easily show a net positive cost-benefit analysis outcome – taking into account future earnings and taxes paid – and yet be deemed too expensive to be worthwhile using actuarial valuation methodologies.</p>
<p>In New Zealand, this approach’s consequences are illustrated by the 2013 actuaries’ <a href="https://www.msd.govt.nz/about-msd-and-our-work/newsroom/media-releases/2014/taylor-fry-welfare-valuation.html">report</a> and the Ministry of Social Development’s <a href="https://www.msd.govt.nz/about-msd-and-our-work/publications-resources/evaluation/investment-approach/index.html">2013 Benefit System Performance Report</a>. These contain no mention whatsoever of employment or earnings outcomes for ex-welfare beneficiaries. </p>
<p>What happens to people when they leave welfare is irrelevant to this sort of analysis – just so long as they leave and don’t come back.</p>
<p>The second problem follows from the first. The focus on actuarial valuation creates strong perverse incentives for welfare delivery services. Far from being an “investment” approach, it promotes disinvestment by encouraging the creation of barriers to entering welfare. An applicant turned away is as “valuable” in the annual liability valuation as a similar welfare recipient placed in employment.</p>
<p>Administrative barriers to entry – and suspensions and cancellations – are often less time-consuming than the hard graft of matching job seekers to jobs. In New Zealand, this has happened in the development of a less facilitative, more punitive, approach to welfare recipients and applicants. It is formalised in a ministry performance <a href="http://www.treasury.govt.nz/budget/votehistory/socdev/">target</a> that 35-40% of “clients who participate in a triage service … do not require a benefit within 28 days”.</p>
<p>That “triage service” – the initial assessment of the job seeker – doesn’t necessarily mean people placed into jobs, just that they are not receiving a benefit.</p>
<h2>What has happened in New Zealand?</h2>
<p>So, in practice, what is actually known about the success or otherwise of the New Zealand investment approach so far? </p>
<p>First, let’s look at the latest actuarial valuation. As the McClure review’s report correctly cites, the 2013 valuation showed a reduction in future liability from NZ$86.8 billion to NZ$76.5 billion. Most of this reduction in costs was due to changes in forecasting assumptions, but the valuation attributes NZ$1.8 billion to “more ‘leaves’ and fewer ‘joins’”. It said:</p>
<blockquote>
<p>It is probable that policy and operational changes contributed to this reduction in liability. </p>
</blockquote>
<p>In other words, in the best employment growth year since before the global financial crisis, there was only a 2.07% reduction in welfare costs due to lower welfare numbers. This is hardly a resounding endorsement.</p>
<p>New Zealanders do have one measure of employment placements. Prior to the country’s 2014 general election, ministers frequently cited a figure that “1,600 beneficiaries were being placed into employment each week” during 2013. It has been removed from the National Party website, but this statement was repeated <a href="http://www.parliament.nz/mi-nz/pb/debates/debates/speeches/51HansS_20150218_00000781/tolley-anne-debate-on-prime-minister%E2%80%99s-statement">last month</a> in parliament by the new Social Development Minister Anne Tolley. </p>
<p>The number sounds impressive. Scaling up for Australia, it would represent something like 8,000 job placements per week. However, the Welfare Working Group that designed New Zealand’s reforms also reports average placements into work in its <a href="http://igps.victoria.ac.nz/WelfareWorkingGroup/Index.html">issues paper</a>. The data cover June 1999 to June 2005 – a period of similarly good employment growth and with roughly similar total numbers on welfare. Over that period, the average number of people leaving benefits to take employment was 1,690 per week.</p>
<p>So, it does not appear that the investment approach has done anything to significantly improve the performance of Work and Income, New Zealand’s welfare agency, in its core function of helping people into jobs.</p>
<p>Lastly, despite the strong labour market being reflected in improvements in a number of social indicators, there is growing evidence that some are missing out. For example, the Auckland City Mission recently <a href="http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11388764">reported</a> a doubling in the number of homeless people living in inner-city Auckland. The mission cited welfare reforms as one reason for this.</p>
<p>Costly actuarial models are not necessary to work out who to target for assistance. The Ministry of Social Development already has the data to do that. Worse, they give the wrong answer and incentivise the wrong behaviours by Work and Income. </p>
<p>They are also no help in evaluating employment assistance. That requires more comprehensive evaluation techniques, including cost-benefit analyses as well as assessment of individuals’ needs and outcomes.</p>
<p>Australians would be wise to think carefully before importing this particular Kiwi invention.</p><img src="https://counter.theconversation.com/content/38105/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael Fletcher has worked for, or been a consultant to, a number of NZ government agencies on welfare related topics, including for the NZ Treasury and the Ministry of Social Development and briefly as a consultant on the NZ Welfare Working Group Secretariat. He currently has a contract with the Ministry of Social Development for a project unrelated to the welfare reforms and the 'investment approach'. He does not work for, own shares in, or have affiliations to any organisation that would benefit from this article.</span></em></p>The claim that New Zealand’s investment approach to welfare reform has been “very successful” is at best unproven. Arguably, it is plain wrong.Michael Fletcher, Senior Lecturer, Institute of Public Policy, Auckland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/380952015-02-26T19:30:53Z2015-02-26T19:30:53ZMcClure report is the start of a national discussion on welfare reform, not the end-game<figure><img src="https://images.theconversation.com/files/73165/original/image-20150226-1780-1duj09v.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The McClure Report should start a conversation, not be the end-point in welfare reform debate.</span> <span class="attribution"><span class="source">Image sourced from www.shutterstock.com</span></span></figcaption></figure><p>The <a href="http://scottmorrison.dss.gov.au/media-releases/final-report-of-mcclure-review-into-australia-s-welfare-system-released">McClure review into Australia’s welfare system</a> is an important milestone - but it is not the end game. The report, chaired by former Mission Australia head Patrick McClure, has undertaken an analysis of a significant and resource intensive system. It has generated a number of recommendations some of which are sound, some support laudable ideas and some appear to be less useful. </p>
<p>The report is important though because it does raise questions and issues related to disability support at a time when the National Disability Insurance Scheme is facing considerable headwinds and when the Commonwealth government is defunding or under-funding a range of disability services organisations and advocacy services. As such, the report should be taken as the basis for a national discussion rather than being an end in itself.</p>
<p>In terms of major recommendations, McClure and his colleagues argue that the number of payment types available to people receiving disability support should be reduced from over 100 to five. While those with a pathological bent toward characterising any administrative process as red tape might be excited by this proposition, it is clear that there are some significant, and hopefully unintended, consequences likely to affect people with disability if the government does not take a broader view.</p>
<h2>People with disabilities are not all the same</h2>
<p>A critical deficiency in the debate surrounding such issues today is the tendency to treat all people with disability as an homogeneous group as if all have the same needs. For instance, the payment types in existence currently have been created to meet real needs which are complex and not uniform. The consolidation of payment types, combined with the proposed increase in needs testing, will mean that many with disability will likely no longer be considered to be entitled to supports that they might otherwise have had access to. </p>
<p>Such supports are incredibly important in sustaining them given their significantly higher costs of living, particularly as they often face medical, health and other living expenses that are not optional, and because they often live on smaller incomes.</p>
<p>The proposed reduction in payment types combined with an increased needs evaluation regime are likely to work against these people’s interests unless the needs evaluation regime is extremely sensitive to the complexity of need. If not, the regime will simply represent an opportunity to reduce payments because needs-tests are likely to be more difficult to meet, the more conflated the payment types.</p>
<p>Therefore, it is important that those people with disability and their carers and supporters have a real and effective capacity to reflect on these proposals and to join the national conversation in order to allow the system to be designed around their needs. There is also a need for disability peak bodies and advocacy groups to have a very real say in how the objectives offered in this report are intended to be achieved. </p>
<h2>Support systems are being removed</h2>
<p>For instance, there is little doubt that increasing opportunities for meaningful employment is an important objective. However, there are two key issues here. One is that the onus to prove need will fall even more greatly upon people with disability in terms of their capacity for work and their continued need for support if they cannot participate. The second is that, while the objective of getting people with disability into work is always a very laudable one, the infrastructure necessary for ensuring a successful outcome in this direction is <a href="http://www.probonoaustralia.com.au/news/2014/12/community-sector-funding-cuts-begin">slowly being broken down</a> by the Commonwealth government.</p>
<p>The Commonwealth government is keen to see more people with disability in work but is <a href="http://www.daru.org.au/resource/were-disability-advocacy-groups-too-successful-it-may-explain-their-funding-cuts">busily defunding</a> or reducing the resources available to those advocacy and peak body organisations that are incredibly important in supporting this priority. Further, and even more paradoxically, government is <a href="http://www.spinal.com.au/in-the-news/media-releases/further-budget-cuts-to-disability-services-not-the-answer/%20or%20http://ncid.org.au">also reducing the resources made available</a> to those not-for-profit and charitable organisations that are creating employment opportunities for people with disability.</p>
<p>The cost to mission-focused organisations providing employment options, supporting people with disability in work or brokering opportunities are substantial. They are unable to continue to provide these services without an increase in funding to do so. Without these organisations, the almost universally accepted aspirations related to employment and set out in this report cannot be realised.</p>
<p>Overall, it is critically important that this substantial report is used to catalyse a national discussion focused on three issues: how will people with disability participate in the debate, how will we avoid the implementation of recommendations in ways that only reduce cost, and how do we ensure the not-for-profit sector is able to play a significant role here?</p><img src="https://counter.theconversation.com/content/38095/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Gilchrist is director of the Curtin Not-for-profit Initiative and is chairman of Nulsen Disability Services and of the Kimberley Individual and Family Support Association. He conducts research activities funded by National Disability Services and by state and the Commonwealth governments pertaining to disability service provision, disability services costing and pricing, and not-for-profit and charitable governance and sustainability.</span></em></p>The McClure review into Australia’s welfare system is an important milestone - but it is not the end game. The report, chaired by former Mission Australia head Patrick McClure, has undertaken an analysis…David Gilchrist, Professor, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/326112014-10-07T19:07:50Z2014-10-07T19:07:50ZGovernment that ignores evidence sets up welfare policies to fail<p>The mess of federal budget negotiations has taken over the limited space for social policy debates. However, we are due to get final reports on a range of inquiries. These include the <a href="http://www.dss.gov.au/our-responsibilities/review-of-australia-s-welfare-system/a-new-system-for-better-employment-and-social-outcomes-full-version-of-the-interim-report">McClure report</a> on social security, which will take into account Andrew Forrest’s <a href="https://indigenousjobsandtrainingreview.dpmc.gov.au/forrest-review">Creating Parity</a> report on Indigenous welfare and employment. </p>
<p>The report will trigger major changes to income-support programs, so any input from related evaluations may have considerable impact. One of the ideas being touted, <a href="https://theconversation.com/forrest-report-ignores-what-works-and-why-in-indigenous-policy-30080">particularly by Forrest</a>, but also mentioned by Social Security Minister Kevin Andrews, is the extension of some forms of income management.</p>
<p>A range of pilot programs have run in various parts of Australia. However, these and the Northern Territory model show few if any clear benefits, despite extensive evaluations of controls on the spending rights of income recipients. </p>
<h2>Push to extend income controls is on</h2>
<p>The <a href="http://www.abc.net.au/news/2014-10-07/fred-chaney-urges-caution-on-cashless-welfare-card/5794382">debate is on</a>, as indicated by coverage of <a href="http://www.dss.gov.au/our-responsibilities/families-and-children/programs-services/income-management/income-management-evaluations">two new reports</a> just posted on the Department of Social Services website. These are already being <a href="http://kevinandrews.dss.gov.au/media-releases/187">misinterpreted by the minister</a> and <a href="http://www.theaustralian.com.au/national-affairs/indigenous/income-regime-helps-money-management-reduces-substance-abuse/story-fn9hm1pm-1227079564661">misreported</a> as offering encouragement to expand the program:</p>
<blockquote>
<p>Social Services Minister Kevin Andrews welcomed the findings of the reports, which he said proved income management was helping individuals and families to budget better and stabilise their lives. ‘The reports found that the vast majority of people who volunteered for income management were positive about the initiative, reporting lower stress levels and marked improvements in their ability to manage their money,’ Mr Andrews said.</p>
</blockquote>
<p>The Australian article suggests that the reports support the extension of the program, with the minister going on to remind us of the McClure and Forrest contributions to this policy area. However, my more careful reading of both reports finds no clear results that would endorse imposing any form of compulsory income management on income-support categories or place-based eligibility.</p>
<h2>What did the reports find?</h2>
<p><a href="http://www.dss.gov.au/our-responsibilities/families-and-children/programs-services/income-management/evaluation-of-voluntary-income-management-in-the-anangu-pitjantjatjara-yankunytjatjara-apy-lands">One report</a> covers a voluntary version in the APY lands. This program was requested by local Indigenous communities and devised in consultation with them. </p>
<p>The <a href="http://www.dss.gov.au/our-responsibilities/families-and-children/programs-services/income-management/income-management-evaluations#2">other report</a> covers pilot programs in various locations. These involve a wide range of compulsory and voluntary entry and eligibility criteria.</p>
<p>The only really clear finding of both reports was that those who had voluntarily decided to participate had more positive responses to income-management programs. </p>
<p>This included most but not all in the APY scheme who saw it as meeting some local needs. The other evaluation included about half of the interviewed group who were compelled to take part, either as a category or on social worker recommendations. Their responses to income management were often negative compared to the voluntary groups.</p>
<p>To quote from the reports, the <a href="https://www.sprc.unsw.edu.au/">Social Policy Research Centre’s</a> APY findings were:</p>
<blockquote>
<p>The majority of community members and other stakeholders who participated in this study were positive about income management being introduced into the APY Lands. The fact that the communities had requested income management, and had been consulted about its introduction, appears to have had a major influence on the communities’ view of income management.</p>
</blockquote>
<p>Responses are mixed in relation to the impact of income management on the wellbeing of the community as a whole, but overall there is a belief that it has had a positive though limited impact so far.</p>
<p>But income management has not suited everyone. A number of study participants had decided not to try it, or had tried it and decided not to continue.</p>
<p>The second report on Deloitte’s evaluations of place-based income management (PBIM) gives some measurable positive results for voluntary income management (VIM) participants. They were on the program for some time before some compulsory categories were added. The latter group showed far fewer positive responses to being deprived of control over their spending. </p>
<p>The Deloitte report observes:</p>
<blockquote>
<p>The short-term outcomes of PBIM noted in this report include the ability to pay bills and other payments on time and reduced stress or worry. The probability of reporting positive outcomes was increased for VIM customers between the survey point at baseline and the wave one survey. The probability of reporting negative outcomes increased among the surveyed VULN [vulnerable income management] cohort. </p>
<p>The level of tobacco and alcohol consumed by VIM customers decreased significantly over the period between baseline and wave one compared with the change for the comparison group. This suggests a positive impact of PBIM on these behaviours. No such significant impact was observed in the short term for VULN customers, who were less likely to engage with these behaviours at baseline than VIM customers. </p>
</blockquote>
<h2>Consent is the key to benefits</h2>
<p>The above findings are obviously limited. They certainly do not offer clear endorsements of any forms of compulsory income management, only support by those who voluntarily joined it.</p>
<p>Many of these people were reported as already using the Centrepay system for housing etc. The question arises whether this voluntary system should be expanded rather than continuing the income management program, which is linked to compulsion and costly administration.</p>
<p>Even former Liberal Indigenous affairs minister Fred Chaney has <a href="http://www.abc.net.au/news/2014-10-07/fred-chaney-urges-caution-on-cashless-welfare-card/5794382">warned against</a> compulsory income management. There is a signal lack of serious evidence in the many other earlier studies of income management that compulsory controls on benefit spending create general benefits.</p>
<p>Some recipients have indicated they like being managed. Yet seven years of NT official data covering the communities that started the program under the Howard government have produced no independent evidence of improved outcomes.</p>
<p>At this stage of policy changes, we need to note the repeated reports of failed programs that were supposed to assist Indigenous people with “Closing the Gap”. These failures often come from the inclination of ministers and advisers to follow their political beliefs instead of evidence. They fail to make effective use of any professional, rather than political, expert advisers, including impartial <a href="http://www.aihw.gov.au/closingthegap/">advice and evidence</a> from the Australian Institute of Health and Welfare.</p>
<p>It is interesting to note that the original income-management trials were part of the so-called emergency NT Intervention. Although the program was de-racialised under the ALP, its original and still majority application to the NT Indigenous population has resulted in little public scrutiny of the basic assumptions of the right to control welfare support.</p>
<p>The Forrest view of generalising it to all welfare recipients obviously echoes government beliefs that they need paternalistic controls. In times when budget cuts in welfare are touted, it is strange that the <a href="http://www.abc.net.au/news/2013-01-31/welfare-income-management-costs-report/4494054">expense of the administration</a> of social control, estimated at up to $4,000 a year per person, is not a disincentive. </p>
<p>We can only hope the government, which claims to want change, does not continue to fund <a href="https://theconversation.com/creeping-spread-of-income-management-must-be-challenged-24560">expensive but ineffective</a> programs. That will lead to cries that “nothing works” in welfare as well as Indigenous policies.</p><img src="https://counter.theconversation.com/content/32611/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Eva Cox does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The mess of federal budget negotiations has taken over the limited space for social policy debates. However, we are due to get final reports on a range of inquiries. These include the McClure report on…Eva Cox, Professorial Fellow Jumbunna IHL, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.